- The company has a good number of projects that range in size between $100 million and $300 million.

Power Generation Systems generated over $600 million in revenues.

- Backlog grew about $300 million sequentially, ending the year at about $3.3 billion.
- Bookings were over $800 million as the company recorded several scrubber projects, sizeable awards for nuclear steam generators in the U.S., and nuclear components in Canada plus the engineering and procurement for the boiler and associated environmental equipment on the new Wygen III 100-megawatt coal-fired project in Wyoming.
- Even with this good bookings quarter and r growing backlog, the company has about $2 billion of bids outstanding in this segment at year-end.
- The company expects strong performance to continue in the service and environmental business as well as some new boiler opportunities in the U.S. Congress still does not seem to have a consensus around the greenhouse gas bill.

In China, joint venture remains active, with Chinese and export work to Asia and the U.S.

The company was awarded two 1000 megawatt units in China, which utilize some of most advanced technologies. In addition to pulverized coal and CFB product lines, the company is looking further to expand OEM offerings overseas, particularly in Asia and the eastern hemisphere. The company licenses sub-critical technology the Thermax for use in the Indian market as one example of how it can participate early in this market. In addition, the company is increasing R&D effort and spends on the pursuit of cost-effective CO2 solution, which will ultimately be a major business opportunity for both retrofits and new builds.

The company has offerings for solar biomass and waste energy to go with coal and nuclear capabilities. European subsidiary Volan is a leader in that region in waste energy and biomass, which may offer products also in selected U.S. markets. While these product lines as modest at this point, certainly if the Green trends continue, these areas could become much more significant and initial bidding for these types of projects has increased of late.

In the Power Generation segment, in 2007, the company formed a new nuclear power generation group combining all nuclear offerings in one entity.

Ramping up with Government Operations segment, revenues in this segment during the quarter were up to a $188 million including revenues from the recent acquisition of Marine Mechanical.

- Contract to manufacturer centrifuges at Clinch River has continued to expand in scope.
- The company continues to pursue opportunities within site management and operations'' offering. Some of the sites are large and others are smaller but goal is to add experience to projects where it will make a difference.

Fiscal 2007 Highlights

- The company retired substantially all of debt over $250 million.
- The company made two acquisitions for about $330 million, invested in capital expenditures of approximately $230 million and funded about $130 million to defined benefit pension plans.
- Another source of liquidity bank facilities is committed until about 2011 and the company has no outstanding borrowings.
- The major credit rating agencies improved their published view of McDermott''s risk profile. All together, company is well positioned to continue to pursue organic and inquisitive growth initiatives and operations are largely immune to the current credit markets.

- Revenues were approximately $5.6 billion, up 36% from consolidated full-year 2006.
- Operating income grew almost $330 million for a 2007 amount of $716 million or an increase of 85%.
- Net income totaled $608 million or $2.66 per share.

Key questions from the fourth quarter earnings call conducted by McDermott International on February 28, 2008.

Andy Kaplowitz (Lehman Brothers): The Power had a good quarter. You mentioned already that parts and service have relatively higher margins; nuclear steam generators also have high margins. How sustainable is margins that are closer to what we have this quarter?

Bruce W. Wilkinson: Looking back at the year, we achieved about 9.5% operating margin. That did include a significant number from terminated project that we referred to back in the second quarter. If I take that out, you are 8% or just under. That is a good look back. We were committed to improving margins. It is a game of inches. When we combine with B&W operations under a singular management, we began that effort, I think we are making good progress. The next several years Cambridge Energy and others that we follow are projecting a strong backdrop for basically parts and service, whether it is nuclear or fossil. We are well positioned in fossil and we are pulling out the staffs to get ourselves positioned in the lower 48 for nuclear service outage work as we already are in Canada. I do not want to talk you into 10% to happen in the future necessarily, but I think that we are going to have a secular term towards more of the traditional environmental, more service in parts, a few bigger boiler projects. If we execute well across that and we continue to reduce our cost through the singular operation we are hoping to crawl up to the higher end of the range.

Andy Kaplowitz (Lehman Brothers): You talked about your Chinese JV. You are getting more work over there to cede the Asian market. Is that a fair assessment?

Bruce W. Wilkinson: The Chinese JV greatest value will be when the U.S. market gets going post greenhouse gas legislation because we think it is the low cost producing facility anywhere and since we have not built a lot of coal plants in this country, we have not only been building a lot there we have advanced our technology and it is where we felt the biggest and the most advanced supercritical units. It is more than just projects, these are projects in which we have learnt an extraordinary amount about performance of plants. In the mean time, the Chinese market is on a roll. We also export out of China through Japanese trading companies and others have sold some units that are destined for Indonesia, some for India. What we are thinking about longer term is how to capture greater value of that beyond just equity income and royalty. We consider ways using that ramping other services around it more like we do in this country for the Asian market. It is China, but we think longer term actually India could be as good or better a market for us than even China. We have been traditionally more heavily domestic in our focus in the traditional boiler work. You will see a shifting more to Asia and I emphasize in the future.

Andy Kaplowitz (Lehman Brothers): What is going on behind the scenes with you and some of the partners you have on the new generation side in the nuclear market and when could you get significant work on the new generation side?

Bruce W. Wilkinson: Our strategy has been to not simply sit idly by waiting for that to come to us but to be more aggressive in developing and reestablishing our relationships with the nuclear generating utilities on the service side.

Michael S. Taff: While some of our peers may be relying upon and dependent upon only the new build activity, we are actively participating in the replacement markets now such as the recent award for the first synergy Davis-Besse project as well as some replacement activity going on in Canada.