This summary is based on the fourth quarter fiscal 2007 earnings call conducted by McDermott International (MDR: chart) on February 28, 2008.

Management:

Chairman of the Board and CEO: Bruce W. Wilkinson
VP, IR and Corporate Communications: Jay Roueche
Sr. VP and CFO: Michael S. Taff

Key Investors Issues

- EPS were 70 cents per share compared to 55 cents per share last year.
- Net income was $160 million compared to $126 million in the same period a year earlier.
- Revenue was $1.53 billion, up 17% from a year earlier.

Fourth Quarter Highlights

Net income was $160 million or 70 cents per share, the best quarterly result of 2007.

This amount compares to $125.5 million or 55 cents per share in last year''s fourth quarter. However, last year’s fourth quarter included numerous items which were outside normal operations that in total benefited that quarter, all together including the related 2007 adjustments.

- The net benefit added about $41 million in the 2006 fourth quarter net income. Earnings per share figures for all periods presented include the impact of two-for-one stock split completed in the fall of 2007. McDermott''s net income increased compared to last year primarily due to a more than doubling of operating results in the Offshore Oil and Gas Construction segment and from increased year-over-year profitability in both Power Generation and Government Operations segments.

Revenue exceeded $1.5 billion, approximately 17% above a year ago.

- This top line increase was again primarily attributable to Offshore Oil and Gas Construction segment which had a 54% increase.
- McDermott''s operating income was $186.8 million, an improvement of $100 million from the prior year and 20% sequentially.
- Offshore oil and gas constructions and power generation systems segments provided most of the year over year growth, improving over $50 million and $40 million respectively.

The Power Generation segment was burdened a year ago with about $27 million of identified settlement, warranty and insurance expenses.

Government segment also recognized a nice year-over-year increase in segment income of approximately 67% compared to 2006 fourth quarter.

- McDermott''s other income and expense line item improved by $11.5 million compared to a year ago, generating other income of $7.3 million in 2007, compared to an expense of $4.2 million last year. This improvement related to lower interest expense in the current quarter combined with a loss on the early retirement of debt experienced in the 2006 fourth quarter.
- One of the largest fourth quarter year-over-year changes took place in income tax line. In 2006 quarter, the company reported a $94.1 million tax benefit. Through an accounting pronouncement the company adopted in 2007, this benefit was subsequently reduced by about $16 million. But it still had tax benefit from income taxes in last year''s quarter of $43 million, which contributed to net income.
- The company had a more traditional provision of taxes of $34 million, or over 17% of pretax income. As usual, income taxes are primarily determined by where the company is making money in the world. Taxes were over a $75 million swing between the two periods.

At $100 million of segment income, the strong offshore oil and gas construction results were the second best quarter during 2007 year.

- Three main regions, the Caspian, the Middle East, and Asia Pacific were the key drivers this period. In government operations, segment income rebounded sequentially from last quarter to a strong $33.3 million this quarter compared to $19.9 million a year ago.
- These results were driven by the best quarter of equity income of the year, representing a full third of this quarter''s segment income. The catalyst behind this equity income was exceptional full-year performance grade received by Technical Services Group from the DOE and NNSA for sites the company accounts for in this method.
- Power Generation Systems had almost $66 million. Virtually all of operations contributed.

The company ended the quarter with over $1.45 billion in cash and investments, and working capital ended the year on a positive note after a dip into the red last quarter.

McDermott''s consolidated backlog at the end of the year exceeded $9.8 billion, up a $0.5 billion from last quarter and up $2.2 billion from a year ago despite this year''s roll off of $5.6 billion in revenues. Strong levels of bookings in Government Operations and Power Generation Systems provided the sequential quarter improvement. While backlog changes will also be choppy, this period’s consolidated increase is another positive sign and leading indicator for company.

Offshore Oil & Gas Construction segment revenues up $700 million, both up sequentially and year-over-year.

- With the high levels of revenues in 25%, nearly 3 weeks well short due to holidays, this segments year-end backlog was down on a sequential basis to $4.75 billion indicating bookings in the quarter of about $580 million. However due to the active market, the company participates in worldwide bids outstanding in the Oil and Gas segment grew to over $3.6 billion at year-end, and while focused project list remains much more sizeable at about $7 billion, the company currently believes there are handful of large projects that it will book in the next month or two that will represent well over $1 billion in new awards.