McDermott International, Inc. reports financial results.

NEW ORLEANS--(BUSINESS WIRE)--May 24, 1996--Robert E. Howson, Chairman of the Board and Chief Executive Officer of McDermott International, Inc., (NYSE:MDR) today reported that revenues for the fiscal year ended March 31, 1996 were $3,279,106,000 compared with $3,043,680,000 a year earlier.

After deducting the Series C Preferred Stock dividend requirement of $8,266,000, net income applicable to common stock was $12,359,000, or $0.23 a share, in fiscal 1996 compared with $845,000, or $0.02 a share, in fiscal 1995.

Equity in income of investees was $48,438,000 in fiscal 1996 compared with $33,852,000 in fiscal 1995. Fiscal 1996 equity included a gain of $30,612,000 from the repurchase by a utility company of two power purchase contracts from Babcock-Ultrapower, a Babcock & Wilcox joint venture.

Revenues for the quarter ended March 31, 1996 were $889,338,000 compared with $844,282,000 for the same period last year. After deducting the Series C Preferred Stock dividend requirement of $2,067,000, the net loss applicable to common stock for the quarter ended March 31, 1996 was $5,934,000, or $0.11 a share, compared with a net loss of $20,861,000, or $0.39 a share in fiscal 1995.

Results for the three and twelve month periods ended March 31, 1996 include the sale of the Company's interest in three Caspian Sea oil fields. The gain from this sale of $34,788,000 and the write-off of an insurance claim of $12,600,000 were included in other business unit income.

During the March 1995 quarter, a decision was made to close a nuclear facility. As a result, net income in fiscal 1995 was reduced by $27,121,000, or $0.50 a share, because of a provision for the decontamination, decommissioning, and closing of this facility. Previously, these costs were being accrued over the then expected life of the facility.

J. Ray McDermott, S.A.'s business unit revenues for fiscal 1996 were $1,227,841,000 compared with $1,127,320,000 in fiscal 1995. Business unit income was $29,638,000 compared with $66,828,000 last year, and equity income declined to $9,124,000 compared with $22,857,000 in fiscal 1995, primarily due to lower results from both the HeereMac and ETPM-West, Inc. joint ventures.

Revenues from North American operations were higher in fiscal 1996 than in fiscal 1995 and both fabrication and marine activity contributed to the improvement. The area generated significant income compared with a loss last year. Last year's results included losses from marine construction businesses that were not part of J. Ray McDermott after the merger with Offshore Pipelines, Inc. on January 31, 1995.

Revenues from the North Sea and West Africa increased and included revenues associated with purchased engineered equipment and subcontract activity for the Foinaven project west of the Shetlands. Income from these areas also improved. Revenues from the Middle East increased in fiscal 1996 compared with fiscal 1995, but income declined. Both revenues and income declined in Southeast Asia, an area that experienced high operating levels in fiscal 1995. The lower profit margins in these two areas reflect the completion of higher profit margin projects in the prior fiscal year.

Mr. Howson said, "Although disappointed with fiscal 1996 results, we are encouraged by recent events effecting J. Ray McDermott. Just before the close of the fiscal year, we were awarded a major contract in the Middle East and our backlog at year end was approximately $1 billion. Since the end of the fiscal year, we added two more projects in Southeast Asia with a combined value of approximately $200 million. Further, at March 31, 1996, the backlog of our unconsolidated joint ventures was near record highs at approximately $1.2 billion. With the management and organizational changes accomplished during the year, we continue to achieve cost reductions and we enter fiscal 1997 a much leaner and more efficient company positioned to execute our backlog in a timely and profitable manner. We fully expect to realize growth in our marine construction business in fiscal 1997 and beyond, resulting from the increase in exploration levels which has been occurring over recent quarters."

Revenues from B&W Operations in fiscal 1996 were $1,510,047,000 compared with $1,545,559,000 in the prior year. Business unit income was $46,499,000 compared with $21,290,000. Business unit income in fiscal 1995 included the provision for the decontamination, decommissioning, and closing of a nuclear facility. Excluding this provision, business unit income was about the same year-to-year. Equity income increased to $37,980,000 from $8,614,000 in fiscal 1995. Fiscal 1996 included the gain realized from the repurchase of two power purchase contracts.

Domestic Fossil Operations' revenues were about the same in fiscal 1996 as in fiscal 1995, but income declined. B&W International's revenues and income were up year-to-year. Construction operations had lower revenues and income. Diamond Power had improved revenues and income in fiscal 1996 versus fiscal 1995. Revenues from the Government Group were up in fiscal 1996. Excluding the provision for the clean up and closing of a nuclear facility, income was about the same.

Howson commented, "International markets for fossil steam generating systems, environmental control systems, and industrial products along with our replacement nuclear steam generator business, continue to be the strongest markets for the Power Generation Group. Since the beginning of fiscal 1996, we have been awarded major boiler contracts in Israel, Indonesia, and Egypt; a flue-gas desulphurization system in Korea; and pulp and paper recovery boilers in Australia and Canada. Our replacement nuclear steam generator operations continue at a high level, and the outlook for prospective work remains strong.

"Diamond Power continues to improve its overall operations. During the fiscal year we acquired Joy Environmental Technologies. The ash handling operations of Joy complement Diamond Power and are expected to enhance its revenues with very little increase in costs.

"The reorganization of the Power Generation Group along product lines is expected to result in more efficient operations and, along with plant closings and personnel reductions, should strengthen our competitive position as we move ahead. We expect the Government Group to be a steady, but solid, contributor to our overall results as we continue to reduce costs, adapt to market conditions, and continue to find ways to leverage our significant technological capabilities in non-defense markets."

Revenues from Engineering and Industrial Operations increased to $548,255,000 in fiscal 1996 from $441,464,000 in fiscal 1995. Business unit loss was $32,044,000 in fiscal 1996 compared with a loss of $36,300,000 in fiscal 1995. Equity income was $1,334,000 compared with an equity loss of $205,000 in fiscal 1995.

Within these operations, revenues from the Engineering and Project Management Group increased in fiscal 1996 from fiscal 1995's level, but the Group continued to operate at a loss. Improved domestic engineering and project management activity was more than offset by lower international results. Shipbuilding and Industrial Group revenues declined compared with fiscal 1995, but the Group's loss was significantly smaller.

Howson concluded, "After thoroughly reviewing our construction operations for the last year, we are exiting third- party construction markets and will focus on construction support for engineered projects which we will manage. This decision was based on the very competitive, high labor cost nature of third- party construction business.

"Our engineering and project management activity, on the other hand, positions us to become a larger and more effective competitor for onshore projects, continues to give us engineering, procurement, and construction capabilities, and satisfies the local content requirement when bidding foreign turnkey projects. In our shipbuilding operations, our shipyard at Morgan City is operating at capacity and the market for inland barges will continue to be very active for the next two years. Demand for ship repair is expected to continue to grow. Our facility at Vera Cruz, Mexico, has been profitable in the repair market, and is well situated to benefit in this growing market."

McDermott International, Inc. is a leading worldwide energy services company. The company and its subsidiaries manufacture steam-generating equipment, environmental equipment, and products for the U.S. government. They also provide engineering and construction services for industrial, utility, and hydrocarbon processing facilities, and to the offshore oil and natural gas industries. -0-

   A COMPARATIVE SUMMARY OF McDERMOTT INTERNATIONAL, INC. OPERATIONS
          FOR THE FISCAL YEARS ENDED MARCH 31, 1996 AND 1995
       (In thousands, except for shares and per share amounts)

                                      FISCAL   YEAR   ENDED
                                      March 31,      March 31,
                                        1996           1995
Earnings (Loss) Per Common and
 Common Equivalent Share
 (Primary and Fully Diluted):
 Income Before Accounting Change   $      0.23     $       0.05
 Accounting Change                         -              (0.03)

 Net Income                        $      0.23     $       0.02

 Revenues                          $ 3,279,106     $  3,043,680

 Costs and Expenses                  3,253,235        3,036,866

Operating Income before Equity
 in Income of Investees                 25,871            6,814

Equity in Income
 of Investees                           48,438           33,852

Operating Income                        74,309           40,666

Other Expense - Net                     52,605           49,833

Income (Loss) before Provision
 for (Benefit from) Income
 Taxes and Cumulative
 Effect of Accounting Change            21,704           (9,167)

Provision for (Benefit from)
 Income Taxes                            1,079          (20,043)
Income before Cumulative
 Effect of Accounting Change            20,625           10,876

Cumulative Effect of
 Accounting Change                         -             (1,765)

Net Income                         $    20,625       $    9,111

Dividend Requirements
 of Preferred Stock, Series C           (8,266)          (8,266)
Net Income Applicable to
 Common Stock                      $    12,359       $      845

Weighted Average Number of
 Common and Common Equivalent
 Shares                             54,372,084       53,748,389

  A COMPARATIVE SUMMARY OF McDERMOTT INTERNATIONAL, INC. OPERATIONS
           FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
         (In thousands, except for shares and per share amounts)

                                       THREE   MONTHS  ENDED
                                     March 31,       March 31,
                                       1996           1995
Loss Per Common and
 Common Equivalent Share
 (Primary and Fully Diluted):      $    (0.11)   $     (0.39)

Revenues                           $  889,338    $   844,282

Costs and Expenses                    906,430        891,987

Operating Loss before Equity
 in Income of Investees               (17,092)       (47,705)

Equity in Income
 (Loss) of Investees                      476           (797)

Operating Loss                        (16,616)       (48,502)

Other Expense - Net                     2,472         11,153

Loss before Benefit from
 Income Taxes                         (19,088)       (59,655)

Benefit from Income Taxes              15,221         40,861

Net Loss                           $   (3,867)     $ (18,794)

Dividend Requirements
 of Preferred Stock, Series C          (2,067)        (2,067)

Net Loss Applicable
 to Common Stock                   $   (5,934)     $ (20,861)

Weighted Average Number of
 Common and Common Equivalent
 Shares                            54,387,410     53,826,908

           INFORMATION ABOUT McDERMOTT INTERNATIONAL, INC.
               SUMMARY OF BUSINESS UNIT OPERATIONS
                            (In thousands)

                                      FISCAL   YEAR   ENDED
                                      March 31,     March 31,
REVENUES:                               1996          1995

J. Ray McDermott, S.A.             $ 1,227,841    $ 1,127,320
B&W Operations                       1,510,047      1,545,559
Engineering and
 Industrial Operations                 548,255        441,464
Other (Including Transfer
 Eliminations)                          (7,037)       (70,663)

  Total Revenues                   $ 3,279,106    $ 3,043,680

                                       FISCAL   YEAR   ENDED
                                       March 31,     March 31,
                                        1996          1995
OPERATING INCOME:

Business Unit Income (Loss):
  J. Ray McDermott, S.A.           $    29,638    $    66,828
  B&W Operations                        46,499         21,290
  Engineering and
     Industrial Operations             (32,044)       (36,300)
  Other                                 14,933         (6,189)

     Total Business Unit Income         59,026         45,629

Equity Income (Loss):
  J. Ray McDermott, S.A.                 9,124         22,857
  B&W Operations                        37,980          8,614
  Engineering and
     Industrial Operations               1,334           (205)
  Other                                    -            2,586

     Total Equity Income                48,438         33,852

Corporate G&A                          (33,155)       (38,815)

  Total Operating Income           $    74,309    $    40,666

             INFORMATION ABOUT McDERMOTT INTERNATIONAL, INC.
                        BUSINESS UNIT OPERATIONS
                             (In thousands)

                                     THREE   MONTHS   ENDED
                                     March 31,      March 31,
REVENUES:                              1996           1995

J. Ray McDermott, S.A.             $   287,845    $   321,762
B&W Operations                         427,524        429,082
Engineering and
  Industrial Operations                149,912        113,046
Other (including Transfer
  Eliminations)                         24,057
(19,608)

  Total Revenues                   $   889,338    $   844,282

                                      THREE   MONTHS   ENDED
                                      March 31,      March 31,
OPERATING INCOME (LOSS):                1996           1995

Business Unit Income (Loss):

  J. Ray McDermott, S.A.           $  (13,131)    $    (280)
  B&W Operations                        5,860       (21,672)
  Engineering and
     Industrial Operations            (14,238)       (9,954)
  Other                                14,173        (3,107)

  Total Business Unit Loss             (7,336)      (35,013)

Equity Income (Loss):

  J. Ray McDermott, S.A.           $     (721)    $      13
  B&W Operations                          385         1,199
  Engineering and
     Industrial Operations                812          (165)
  Other                                   -          (1,844)

  Total Equity Income (Loss)              476          (797)

Corporate G&A                          (9,756)      (12,692)

  Operating Loss                   $  (16,616)    $ (48,502)

CONTACT: McDermott International, Inc., New Orleans

Don Washington, 504/587-4080