In addition to new plants and retrofits, B&W parts and services business continues to perform well. With the coal fired plants operating at record levels, the firm is seeing the need for increasing replacement parts and service. With the power generation markets in an upswing, the firm’s primary focus will be on selectively risk management and building on its strengths.

Key questions from the second quarter fiscal 2006 earnings call conducted by McDermott International, Inc. on August 7, 2006.

In the J. Ray business, you have been talking about 8% to 10% margins on the bidding. Can you give a sense for what to expect over the next 12 months to 2 years as to where those margins on bidding can go, given the backlog and given how busy you are?

The company is still using the 8% as the general guideline. Clearly, the firm has had some quarters where it has surpassed that.

On the B&W side, you can obviously see the backlog growth is huge. What are your comments on margins there?

The company expects 6% to 8% margins. The company is still getting there. During the time, when B&W was in chapter 11, the firm’s operating norms were geared around what is called the managed entity, which tended to take all of the bankruptcy cost out of it and into a separate consolidating line item. The firm is now looking at it all in and it is still experiencing from time-to-time some trial-off to some residual expense that’s beginning to come out.

On the commercial nuclear side of the business, you were talking about some of the opportunities there. Will that stay for reporting purposes within BWXT or at some point, will that be broken out separately?

At least for the foreseeable future, until the firm gets some orders of magnitude, commercial nuclear business will be embedded within BWXT. But the management is considering popping out another segment depending upon size.

Is there a set date now on your payment to the government on the asbestos clause?

If there is legislation by November 30th, 2006 and the firm has a $25 million contribution that has to be made for the trust and the firm is finished. If there is not any legislation by November 30th, then two contingent liabilities spring into existence. The first is a $250 million contingent note that’s payable out over 5 years, $50 million a year and that bears interest at 7%. The second piece is a $355 million payment to the trust that can be made anytime between November 30th of 2006 and May 31 of 2007, and that bears interest at 7% also.

How much of that has already been through your income statement?

It’s all through it. That’s just a cash impact, all of that was reflected when the firm brought B&W back on to the books on February 22nd of 2006.

On the J. Ray side, large amount of bids are outstanding. Can you give any commentary on geographically where those bids are?

Probably 70% of the quantum is the Mid-East and Asia Pacific. The good news is that the firm does have increased activity now in the Caspian. Also on a lesser scale, the firm has actually been bidding some work in the Gulf of Mexico.

The backlog in J. Ray is up 250% to $3.2 billion, year-over-year. What part of that will actually come through 2007, 2008 and 2009?

About $800 million of J. Ray’s backlog is going to roll off in the second half of 2006, and about $1.2 million for 2007 and probably just under 1 billion for 2008.

Can you provide a similar look at the Power Generation Group backlog of just over $3 billion? How will it shakeout over the next several years?

It’s little over $800 million for the second half of 2006, and about $1.3 billion for 2007, and probably around $600 million for 2008 and the rest there after.

The corporate cost was $8.8 million in the second quarter. Going forward, is there anything that pushes that up or down in the second half of the year?

The management always thinks of that corporate overhead to be somewhere between $23 million to $25 million and hence $8 million a quarter sounds right.