This summary is based on the third quarter fiscal 2008 earnings call conducted by McDermott International Inc. (MDR) on November 6, 2008.

Management:

- President and CEO: John A. Fees
- Sr. VP and CFO: Michael S. Taff
- VP of IR and Corporate Communications: Jay Roueche

Key Investors Issues

- Net income of $85.6 million or 37 cents a share, was down 39% from last year''s $140.4 million or 61 cents per share.
- Revenues were almost $1.7 billion, 25.7% above $1.3 billion a year ago.
- Consolidated backlog was $9.4 billion, compared to $9.3 billion in 2007.

Year to Date Highlights:

- Revenues were up 20% to $4.91 billion, from $4.1 billion in the prior year.
- Net income decreased 13% to $386 million or $1.70 a share.

Third Quarter Highlights

McDermott reported net income of $85.6 million or 37 cents per diluted share, down from last year''s $140.4 million or 61 cents per share, with the $90 million of project losses at the gross margin level in offshore construction the main variant.

- Revenues were almost $1.7 billion, 25.7% above $1.3 billion a year ago with the increase coming predominantly from the Offshore Oil and Gas Construction segment, although it was again below expectations from backlog roll off.
- Power Generation Systems and Government Operations, also reported revenue growth adding a combined $109 million to a year ago levels.
- Segment income at Power Generation Systems and Government Operations increased a combined $44 million or 60% year-over-year, but the decline in Offshore Construction segment more than offset these improvements.
- Offshore oil and Gas Construction had a $19.7 million segment loss.

Government Operations had segment income of $34.5 million as both the site management activities, which largely comes in as equity income and the manufacturer of nuclear components for commercial and government use continued to perform well.

- The firm also had more timing benefits on procurement contracts which brought forward about $16 million in revenues and associated profits.
- At Power Generation Systems, existing contracts in the boiler and environmental retrofit project portfolio continue to improve and the firm continues to see a high level of parts and service work, which is traditionally the highest margin business in this segment.
- Firm ended with over $1.2 billion in cash and investments and changes in working capital were the primary reason cash and investment declined about $100 million sequentially.

Operational Highlights:

- Consolidated bookings were over $1.3 billion with oil and gas and power approaching $500 million of booking additions and the government, delivered the balance with the award of second multi year agreement which includes second Virginia class submarine.
- These bookings kept the backlog at a solid level ending the quarter at $9.4 billion, a slight increase to year ago.
- The firm has over $6 billion in outstanding bids at September 30, split about evenly between power and offshore construction.
- Looking at 2009, about half of the current backlog, around $4.2 billion is expected to roll off next year while that top line amount will grow by early suspicion is next year''s revenues will be essentially even with the full year 2008 levels.

Segment Shortfalls:

- The estimates used in the firm’s bid for the three projects (two are for LNG developments and a gas to liquids project) were based upon similar completed successful projects.
- These reference projects will perform during peak summer construction months, so they experienced high productivity and few downtime base.
- In hindsight, this joints per day or lay rates used for the bid proved to be too aggressive and the firm has not been able to achieve production at these levels.
- The projects were also affected by delays from preceding jobs in the queue.

Because productivity was less than anticipated, the firm is spending more days in the field, which increases exposure to weather and mechanical downtime.

- On certain of these jobs, there may be claims the firm can assert to the customer that impact agreed upon could potentially recover a portion of these increased costs.
- The firm is moving the DB16 vessel out of the Gulf of Mexico to the Middle East to help execute its significant backlog in this very active market.

Key questions and answers from the third quarter earnings call conducted by McDermott International Inc. (MDR) on November 6, 2008.

Andy Kaplowitz (Barclays Capital): What are your bigger customers telling you about these potential projects and what gives you confidence that we are going to see some big income across over the next couple of quarters?

John A. Fees:A couple of points. One is that the long-term agreement, we believe is going to be delivered to us more in pieces than in any single piece. In fact, in the quarter, there was a piece that was booked in the quarter of about $125 million and we would expect to see this over progressive quarters as we go into the future.