FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 2004

OR

(   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission File Number 1-12815

CHICAGO BRIDGE & IRON COMPANY N.V.

Polarisavenue 31
2132 JH Hoofddorp
The Netherlands
31-23-5685660
(Address and telephone number of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the exchange act).

The number of shares outstanding of a single class of common stock as of July 31, 2004 — 47,838,345

1

CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
Table of Contents

2

CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

3

CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES

(In thousands, except share data)

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

4

CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

5

CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES

1. Significant Accounting Policies

Basis of Presentation-The accompanying unaudited consolidated financial statements for Chicago Bridge & Iron Company N.V. and Subsidiaries (“CB&I”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, our unaudited consolidated financial statements include all adjustments necessary for a fair presentation of our financial position as of June 30, 2004, and our results of operations and cash flows for each of the three-month and six-month periods ended June 30, 2004 and 2003. The consolidated balance sheet at December 31, 2003 is derived from the December 31, 2003 audited consolidated financial statements. Although management believes the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations and cash flows for the interim periods are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2003 Annual Report on Form 10-K.

Reclassification of Prior Year Balances-Certain prior year balances have been reclassified to conform with the current year presentation.

Revenue Recognition-Revenue is recognized using the percentage-of-completion method. A significant portion of our work is performed on a fixed price or lump sum basis. The balance of our work is performed on variations of cost reimbursable and target price approaches. Contract revenue is accrued based on the percentage that actual costs-to-date bear to total estimated costs. We utilize this cost-to-cost approach as we believe this method is less subjective than relying on assessments of physical progress. We follow the guidance of the Statement of Position 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts,” for accounting policy relating to our use of the percentage-of-completion method, estimating costs, revenue recognition and claim recognition. The use of estimated cost to complete each contract, while the most widely recognized method used for percentage-of-completion accounting, is a significant variable in the process of determining income earned and is a significant factor in the accounting for contracts. The cumulative impact of revisions in total cost estimates during the progress of work is reflected in the period in which these changes become known. Due to the various estimates inherent in our contract accounting, actual results could differ from those estimates.

Contract revenue reflects the original contract price adjusted for agreed upon change orders and estimated minimum recoveries of claims. We recognize claims when it is probable that the claim will result in additional contract revenue and the amount of the claim can be reliably estimated. Claims are only recorded to the extent that contract costs relating to the claim have been incurred. At June 30, 2004 and December 31, 2003, we had net outstanding claims recognized of $8,550 and $6,970, respectively. Losses expected to be incurred on contracts in progress are charged to income in the period such losses are known. Provisions for additional costs associated with contracts projected to be in a loss position at June 30, 2004 resulted in a $31,400 and $46,300 charge to income in the three and six month periods ended June 30, 2004, respectively.

Cost and estimated earnings to date in excess of progress billings on contracts in process represent the cumulative revenue recognized less the cumulative billings to the customer. Any billed revenue that has not been collected is reported as accounts receivable. Unbilled revenue is reported as contracts in progress with costs and estimated earnings exceeding related progress billings on the consolidated balance sheet. The timing of when we bill our customers is generally contingent on completion of certain phases of the work as stipulated in the contract. Progress

6

billings in accounts receivable at June 30, 2004 and December 31, 2003 were currently due and included retentions totaling $37,673 and $32,533, respectively, to be collected within one year. Contract retentions collectible beyond one year are included in non-current contract retentions on our consolidated balance sheets. Cost of revenue includes direct contract costs such as material and construction labor, and indirect costs which are attributable to contract activity.

New Accounting Standards-In December 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” The revised standard requires annual and interim disclosures in addition to those in the original standard concerning the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. This statement is effective for fiscal years ending after December 15, 2003. See Note 5 for the interim disclosure requirements of SFAS No. 132 (revised 2003).

In May 2004, the FASB issued FASB Staff Position (“FSP”) No. FAS 106-2 (“FSP 106-2”), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” which supersedes FSP 106-1. FSP 106-2 provides guidance on the accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) for employers that sponsor postretirement health care plans that provide prescription drug benefits. FSP 106-2 also requires certain disclosures regarding the effect of the federal subsidy provided by the Act. FSP 106-2 is effective for the first interim and annual period beginning after June 15, 2004. We are currently evaluating the effect that adoption of FSP 106-2 will have on our financial condition or results of operations.

Earnings Per Share Computations-Basic earnings per share (“EPS”) is calculated by dividing our net income by the weighted average number of common shares outstanding for the period, which includes stock held in trust. Diluted EPS reflects the assumed conversion of all dilutive securities, consisting of employee stock options/restricted shares/performance shares and directors deferred fee shares. Excluded from our per share calculations for the three and six month periods ended June 30, 2004 were 424 shares and 64 shares, respectively, as they were considered antidilutive.

The following schedule reconciles the income and shares utilized in the basic and diluted EPS computations:

Stock Plans-We account for stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of our stock at the date of the grant over the amount an employee must pay to acquire the stock, subject to any vesting provisions. Reported net income does not include any compensation expense associated with stock options, but does include compensation expense associated with restricted stock and performance share awards.

7

Had compensation expense for the Employee Stock Purchase Plan and Long-Term Incentive Plans been determined consistent with the fair value method of SFAS No. 123, “Accounting for Stock-Based Compensation” (using the Black-Scholes pricing model for stock options), our net income and net income per common share would have reflected the following pro forma amounts:

Using the Black-Scholes option-pricing model, the fair value of each option grant is estimated on the date of grant based on the following weighted-average assumptions:

8

2. Comprehensive Income

Comprehensive income for the three and six months ended June 30, 2004 and 2003 is as follows:

Accumulated other comprehensive loss reported on our balance sheet at June 30, 2004 includes the following, net of tax: $11,922 of cumulative translation adjustment, $211 of unrealized loss on debt securities, ($447) of unrealized fair value of cash flow hedges and $765 of minimum pension liability adjustments.

3. Goodwill and Other Intangibles

Goodwill

General-At June 30, 2004 and December 31, 2003, our goodwill balances were $232,166 and $219,033, respectively, attributable to the excess of the purchase price over the fair value of net assets acquired relative to acquisitions within our North America and EAME segments.

The increase in goodwill primarily relates to direct acquisition costs and final asset and liability valuations associated with our 2003 acquisitions of Petrofac and John Brown, a contingent earnout obligation associated with our 2000 acquisition of Howe-Baker International L.L.C. (“Howe-Baker”), the impact of foreign currency translation and a reduction in accordance with SFAS No. 109, “Accounting for Income Taxes,” where tax goodwill exceeded book goodwill.

The change in goodwill by segment for the six months ended June 30, 2004 is as follows:

Impairment Testing-SFAS No. 142 “Goodwill and Other Intangible Assets” prescribes a two-phase process for impairment testing of goodwill, which is performed annually, absent any indicators of impairment. The first phase screens for impairment, while the second phase (if necessary) measures the impairment. We have elected to perform our annual analysis during the fourth quarter of each year based upon goodwill balances as of the end of the third calendar quarter. Although no indicators of impairment have been identified during 2004, there can be no assurance that future goodwill impairment tests will not result in a charge to earnings.

9

Other Intangible Assets

In accordance with SFAS No. 142, the following table provides information concerning our other intangible assets for the periods ended June 30, 2004 and December 31, 2003:

The changes in other intangibles relate to additional amortization expense.

4. Financial Instruments

Forward Contracts-At June 30, 2004 our forward contracts to hedge intercompany loans and certain operating exposures are summarized as follows:

(1)

Represents notional U.S. dollar equivalent at inception of contract.

(2)

Contracts generally mature within seven days of quarter-end.

(3)

Contracts mature within one year of quarter-end and were designated as “cash flow hedges” under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” At June 30, 2004, the fair value of these contracts, recorded in other current assets on our consolidated balance sheets, was $687 (see Note 2). Any hedge ineffectiveness was not significant.

10

5. Retirement Benefits

We previously disclosed in our financial statements for the year ended December 31, 2003, that in 2004 we expected to contribute $4,929 and $3,006 to our defined benefit and other postretirement plans, respectively. The following table provides contribution information for our defined benefit and postretirement plans as of June 30, 2004:

The following table provides combined information for our defined benefit and other postretirement plans:

Components of Net Periodic Benefit Cost