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October 16th, 2008 Archive

McDermott Press Release: B&W Positioned for $960 Million in New Defense Contracts

B&W Positioned for $960 Million in New Defense ContractsHOUSTON–(BUSINESS WIRE)–

McDermott International, Inc. (NYSE:MDR) (“McDermott”) announced today that its subsidiary, The Babcock & Wilcox Company (“B&W”), has received a new award for the manufacture of nuclear components in support of U.S. defense programs. Under this award, the contracts for 2008 are valued in excess of $230 million. These are the initial contracts under a negotiated set of orders that, if executed, would total more than $960 million between 2008 and 2010.

These awards are in addition to a $1.7 billion series of contracts that B&W previously announced for 2007 to 2009. If the future orders are placed, the total value of the awards for the period of 2007 through 2010 would be approximately $2.7 billion.

The contracts employ a multiple-award approach over a number of years. This system is designed to give the U.S. government cost predictability while providing B&W with additional financial incentives based on performance.

“This multiple-award system provides additional opportunities to load level our manufacturing facilities to improve efficiency and scheduling activities,” said John A. Fees, Chief Executive Officer of McDermott International. “Both parties will benefit from improved efficiencies to control cost and schedule. All of us at McDermott are proud of our work for the government, and we look forward to continuing to provide products of the highest quality.”

The work that is funded by these contracts is conducted by B&W’s subsidiary, Nuclear Operations Group, Inc. Headquartered in Lynchburg, Virginia, the Nuclear Operations Group’s other locations include Barberton, Ohio; Mount Vernon, Indiana; and Euclid, Ohio.

McDermott is an engineering and construction company, with specialty manufacturing and service capabilities, focused on energy infrastructure. McDermott’s customers are predominantly utilities and other power generators, major and national oil companies, and the United States Government. With its global operations, McDermott operates in over 20 countries with more than 25,000 employees, and can be found on the internet at www.mcdermott.com.

McDermott cautions that statements in this press release which are forward-looking and which provide other than historical information, involve risks and uncertainties that may impact actual results. Forward-looking statements in this press release include statements about the expected timing and value contracts subject to the award and benefits or opportunities from the award. These statements are subject to numerous uncertainties and risks, including adverse changes in the needs of the U.S. government, the possibility that some of the contracts under the multiple-award system will not be finalized or awarded as expected, or other adverse changes or modifications to the award. If these or other risks materialize, actual results may vary materially from those expected. For a more complete discussion of these and other risks involved in our operations, please see McDermott’s most recent annual and quarterly reports filed with the Securities and Exchange Commission.

Source: McDermott International, Inc.

**Disclosure: I own shares of MDR as of this post.**