HOUSTON, Aug 04, 2010 (BUSINESS WIRE) --
McDermott International, Inc. (NYSE:MDR) ("McDermott" or the "Company")
today provided information relating to tax basis allocation methodology
for shareholders of McDermott following the Company's spin-off
distribution of the common stock of The Babcock & Wilcox Company
(NYSE:BWC) ("B&W").
Tax Basis Allocation Methodology
As a consequence of the spin-off, a shareholder must allocate the tax
basis in its shares of McDermott common stock immediately before the
spin-off among its shares of McDermott common stock and its newly
received shares of B&W common stock (including any fractional share for
which the shareholder received cash). The allocation of tax basis among
shares of McDermott common stock and the shares of B&W common stock that
a shareholder received in the spin-off (including any fractional share
for which the shareholder received cash) is based on the relative fair
market values of the McDermott stock and B&W stock immediately after the
spin-off.
U.S. federal income tax law does not specify how to determine these
relative fair market values. Fair market value generally is the price at
which property would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or sell and both
having reasonable knowledge of the facts. For this purpose, the trading
prices of McDermott common stock and B&W common stock on the New York
Stock Exchange will be used, but it is uncertain which trading prices
should be used for this purpose. The following are several alternative
trading prices for determining the fair market values of the McDermott
common stock and the B&W common stock, although other trading prices
might be used:
-
The closing trading prices of the McDermott and B&W "when-issued"
common stock as quoted on the NYSE Consolidated Transactions Reporting
System on July 30, 2010, the last day of "when-issued" trading before
the spin-off;
-
The opening trading prices of McDermott and B&W common stock as quoted
on the NYSE Consolidated Transactions Reporting System on August 2,
2010, the first day of "regular way" trading for B&W common stock
after the spin-off;
-
The closing trading prices of McDermott and B&W common stock as quoted
on the NYSE Consolidated Transactions Reporting System on August 2,
2010, the first day of "regular way" trading for B&W common stock
after the spin-off; and
-
The average of the high and low trading prices of McDermott and B&W
common stock as quoted on the NYSE Consolidated Transactions Reporting
System on August 2, 2010, the first day of "regular way" trading for
B&W common stock after the spin-off.
A comparison of these alternatives is in the following tables, with an
indicative example.
Trading Prices |
Common Stock
|
|
July 30 When-Issued Closing Price
|
|
Aug. 2 Opening Price
|
|
Aug. 2 Closing Price
|
|
Aug. 2 Avg. of High & Low
Price
|
|
|
|
|
|
|
|
|
|
McDermott
|
|
$
|
12.05
|
|
$
|
12.56
|
|
$
|
12.54
|
|
$
|
12.73
|
B&W
|
|
$
|
22.75
|
|
$
|
23.01
|
|
$
|
23.15
|
|
$
|
23.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Basis Allocation Percentages (1) |
Common Stock
|
|
July 30 When-Issued Closing Price
|
|
Aug. 2 Opening Price
|
|
Aug. 2 Closing Price
|
|
Aug. 2 Avg. of High & Low
Price
|
|
|
|
|
|
|
|
|
|
McDermott
|
|
51.44
|
%
|
|
52.19
|
%
|
|
52.00
|
%
|
|
52.19
|
%
|
B&W
|
|
48.56
|
%
|
|
47.81
|
%
|
|
48.00
|
%
|
|
47.81
|
%
|
(1) Determined by computing the ratio of (a) the per share trading price
of McDermott or ½ of the per share trading price of B&W stock, as
applicable, in the table above and (b) the sum of the per share trading
price of McDermott stock and ½ of the per share trading price of B&W
stock.
Indicative Example
Assumptions
|
|
|
|
Shares of McDermott owned before B&W spin-off:
|
|
|
1,000
|
Per share tax basis in McDermott shares owned before the B&W spin
off:
|
|
|
$10
|
Aggregate tax basis of McDermott shares before B&W spin-off:
|
|
|
$10,000
|
Shares of B&W received in B&W spin-off:
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
Aggregate Tax Basis (2) |
Common Stock
|
|
July 30 When-Issued Closing Price
|
|
Aug. 2 Opening Price
|
|
Aug. 2 Closing Price
|
|
|
Aug. 2 Avg. of High & Low
Price
|
|
|
|
|
|
|
|
|
|
|
McDermott
|
|
$
|
5,144.08
|
|
$
|
5,219.20
|
|
$ 5,200.08
|
|
|
$
|
5,219.44
|
B&W
|
|
$
|
4,855.92
|
|
$
|
4,780.80
|
|
$ 4,799.92
|
|
|
$
|
4,780.56
|
(2) Determined by multiplying $10,000 by the applicable tax basis
allocation percentage in the table above.
Per Share Tax Basis (3) |
Common Stock
|
|
|
July 30 When-Issued Closing Price
|
|
|
Aug. 2 Opening Price
|
|
|
Aug. 2 Closing Price
|
|
|
Aug. 2 Avg. of High & Low Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McDermott
|
|
|
$
|
5.144
|
|
|
$
|
5.22
|
|
|
$
|
5.20
|
|
|
$
|
5.22
|
B&W
|
|
|
$
|
9.712
|
|
|
$
|
9.56
|
|
|
$
|
9.60
|
|
|
$
|
9.56
|
(3) Determined, in the case of the McDermott stock, by dividing the
aggregate tax basis allocable to the McDermott shares in the table above
by 1,000 (the number of McDermott shares owned before the spin-off) and,
in the case of the B&W stock, by dividing the aggregate tax basis
allocable to the B&W shares in the table above by 500 (the number of B&W
shares received in the spin-off).
This information is not a complete analysis of all of the potential
U.S. federal income tax consequences relating to the spin-off of B&W or
each shareholder's particular circumstances.McDermott
stockholders are encouraged to consult their own tax advisors regarding
the tax consequences of the spin-off in light of their specific
circumstances.
This information does not apply to McDermott shareholders (i) who did
not receive their B&W common stock in the spin-off on July 30, 2010,
(ii) who were not record holders of McDermott common stock as of the
close of business on July 9, 2010, (iii) who did not continuously hold
their shares from the record date through the time of the spin-off, or
(iv) who acquired blocks of McDermott common stock at different times
and prices.
To comply with Internal Revenue Service Circular 230, you are hereby
notified that this notice is not intended or written by McDermott to be
used, and cannot be used, (i) for the purpose of avoiding penalties that
may be imposed under the Internal Revenue Code or (ii) to promote,
market or recommend to another party any transaction or matter addressed
herein.
About McDermott
McDermott is a leading engineering, procurement, construction and
installation ("EPCI") company focused on executing complex offshore oil
and gas projects worldwide. Providing fully integrated EPCI services for
upstream field developments, the Company delivers fixed and floating
production facilities, pipelines and subsea systems from concept to
commissioning. McDermott's customers include national and major energy
companies. Operating in more than 20 countries across the Atlantic,
Middle East and Asia Pacific, the Company's integrated resources include
more than 16,000 employees and a diversified fleet of marine vessels,
fabrication facilities and engineering offices. McDermott has served the
energy industry since 1923. To learn more, please visit McDermott's Web
site on the Internet at www.mcdermott.com

SOURCE: McDermott International, Inc.
McDermott International, Inc.
Jay Roueche or Robby Bellamy, 281-870-5011
Investor Relations & Corporate Communications
www.mcdermott.com