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McDONNELL DOUGLAS CORP. REPORTS EARNINGS

 ST. LOUIS, Nov. 1 /PRNewswire/ -- Despite lower revenues, caused by reduced defense spending and the ongoing recession in the commercial aircraft market, McDonnell Douglas (NYSE: MD) today reported record earnings for the third quarter and for the first nine months of 1993.
 Aerospace indebtedness fell another $369 million in the third quarter due to improved cash flow from operations -- with total aerospace debt down to $1.974 billion as of Sept. 30. Since the beginning of the year, McDonnell Douglas has reduced aerospace debt by $793 million, or 29 percent.
 Net earnings for the third quarter were $142 million, or $3.62 per share, compared with a loss of $42 million, or $1.09 per share, in 1992's third quarter.
 Net earnings for the first nine months were $528 million, or $13.46 per share, compared with a loss of $7 million, or 19 cents per share, in 1992's first nine months, excluding the one-time effect of the adoption of a new accounting rule related to retiree health benefits.
 Setting aside all unusual items, which boosted earnings in each of the first three quarters, McDonnell Douglas still had record third quarter earnings of $101 million, or $2.57 per share, and record earnings through the first nine months of $308 million, or $7.85 per share.
 The 1993 third quarter results included a net gain of $41 million, or $1.05 per share, from changes in tax obligations. A favorable resolution of several issues with the Internal Revenue Service resulted in a gain, which was offset in part by an additional tax provision resulting from the recently passed Omnibus Budget Reconciliation Act. Unusual items through the first nine months of 1993 totaled $220 million, or $5.61 per share.
 The military aircraft segment had record third quarter operating earnings of $142 million, compared with a loss of $166 million in 1992's third quarter, which had a $269 million write-off in military transport aircraft. Earnings for the segment in the first nine months of 1993 were $367 million, compared with a loss of $96 million in the first nine months of 1992, which included $383 million in write-offs in military transport aircraft. The C-17 program was profitable over the first nine months of 1993. Revenues for the segment were essentially flat at $5.240 billion for the first nine months.
 The commercial aircraft segment had third quarter earnings of $16 million, compared with $37 million in 1992's third quarter. These earnings were achieved despite a 36 percent reduction in revenues during the quarter due to reduced aircraft deliveries. This marks the 12th consecutive profitable quarter for the commercial aircraft segment. Earnings for the first nine months of 1993 were $44 million, compared with $73 million in the same period of 1992. Revenues declined 30 percent for the first nine months of 1993, compared with the same period in 1992.
 McDonnell Douglas delivered 14 MD-80 twin jets in the third quarter, including four to a customer under a lease arrangement. That compares with 20 twin jet deliveries in 1992's third quarter. The corporation delivered six MD-11 trijets in this year's third quarter, including one to a customer under a lease arrangement, compared with eight trijet deliveries in 1992's third quarter. During the first nine months of 1993, McDonnell Douglas delivered 38 twin jets (including eight under lease arrangements), compared with 72 in the year-earlier period; and it delivered 25 trijets, compared with 29 in the first nine months of 1992.
 The corporation received four new firm orders for MD80/90 twin jets and entered into a lease of one MD-11 trijet in the third quarter. On Sept. 30, 1993, the MD80/90 program included 1,085 deliveries, 145 aircraft on firm order, and 193 options and reserves. On the same date, the MD-11 program included 101 deliveries, 69 aircraft on firm order, and 109 options and reserves representing potential future orders.
 The missiles, space, and electronic systems segment had third quarter operating earnings of $65 million, which was essentially on a par with 1992's third quarter despite a $51 million pretax charge in this year's third quarter as a result of difficulties in several electronic systems programs. Including the $51 million charge, the segment's earnings for the first nine months of 1993 were a record $264 million, compared with $148 million in the same period of 1992. Higher earnings were achieved even though revenues for the segment declined by 17 percent compared with the first nine months of 1992, largely as a result of the winding down of the Advanced Cruise Missile program and the absence of any commercial space launches in the first nine months of 1993.
 Interest expense for the aerospace segments in the third quarter of 1993 was $2 million, which included the reversal of $61 million in previously accrued interest expense due to the resolution of tax issues with the Internal Revenue Service. Excluding the reversal, interest expense for the quarter was $63 million, down from $85 million in 1992's third quarter. Interest expense for the first nine months of 1993 was $62 million, which included the reversal of $135 million in previously accrued interest expense. Excluding the reversal, interest expense for the first nine months of 1993 was $197 million, down from $241 million in the prior-year period.
 After-tax retiree health care costs associated with a new accounting standard (SFAS No. 106) were $40 million lower in the third quarter of 1993 than in 1992's third quarter and $106 million lower (excluding a curtailment gain) in the first nine months of 1993 compared with the same period in 1992. The reduction reflects the elimination of company- paid health care for a number of current and future retirees.
 Firm backlog for McDonnell Douglas was $19.288 billion on Sept. 30, 1993, compared with $24.052 billion on Dec. 31, 1992, and $25.051 billion on Sept. 30, 1992. Total backlog on Sept. 30, 1993, was $36.047 billion, compared with $41.806 billion on Dec. 31, 1992, and $40.582 billion on Sept. 30, 1992. The decline in backlog reflects deliveries and a softening of commercial aircraft orders worldwide.
 Employment on Sept. 30, 1993 was 73,271, down 799 from June 30, 1993 and down 14,106 from 87,377 on Dec. 31, 1992.
 McDONNELL DOUGLAS CORP.
 CONSOLIDATED RESULTS OF OPERATIONS
 (Millions of dollars, except share data)
 Three Months Ended
 Sept. 30,
 1993 1992
 Unaudited
 STATEMENT OF OPERATIONS
 Revenues $3,436 $3,893
 Costs and expenses:
 Cost of products, services and
 rentals 2,949 3,595
 General and administrative expenses 153 188
 Research and development 82 129
 Interest expense:
 Aerospace segments 2 85
 Financial services and other
 segment 32 39
 Total costs and expenses 3,218 4,036
 Earnings (Loss) From Continuing
 Operations Before Income Taxes 218 (143)
 Income taxes (benefit) 76 (60)
 Earnings (Loss) From Continuing
 Operations 142 (83)
 Earnings from discontinued operations,
 net of income taxes --- 41
 Net Earnings (Loss) $ 142 $ (42)
 Earnings (Loss) Per Share:
 Continuing operations $ 3.62 $(2.12)
 Discontinued operations --- 1.03
 Total $ 3.62 $(1.09)
 Dividends Declared Per Share $ .35 $ .35
 McDONNELL DOUGLAS CORP.
 CONSOLIDATED RESULTS OF OPERATIONS
 (Millions of dollars, except share data)
 Nine Months Ended
 Sept. 30,
 1993 1992
 Unaudited
 STATEMENT OF OPERATIONS
 Revenues $10,873 $12,757
 Costs and expenses:
 Cost of products, services and
 rentals 9,347 11,520
 General and administrative expenses 498 599
 Research and development 256 395
 Postretirement benefit curtailment (70) ---
 Interest expense:
 Aerospace segments 62 241
 Financial services and other
 segment 97 125
 Total costs and expenses 10,190 12,880
 Earnings (Loss) From Continuing
 Operations Before Income Taxes and
 Cumulative Effect of Accounting Change 683 (123)
 Income taxes (benefit) 192 (65)
 Earnings (Loss) From Continuing
 Operations Before Cumulative Effect
 of Accounting Change 491 (58)
 Earnings from discontinued operations,
 net of income taxes 37 51
 Earnings (Loss) Before Cumulative Effect
 of Accounting Change 528 (7)
 Cumulative effect of initial application
 of new accounting standard for
 postretirement benefits --- (1,536)
 Net Earnings (Loss) $ 528 $(1,543)
 Earnings (Loss) Per Share:
 Continuing operations $ 12.53 $ (1.49)
 Discontinued operations .93 1.30
 Cumulative effect of accounting
 change --- (39.64)
 Total $ 13.46 $(39.83)
 Dividends Declared Per Share $ 1.05 $ 1.05
 Prior-year amounts have been restated for discontinued operations and the adoption of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
 McDONNELL DOUGLAS CORP.
 BUSINESS SEGMENT DATA
 (Millions of dollars)
 Three Months Ended
 Sept. 30,
 1993 1992
 Unaudited
 BUSINESS SEGMENT DATA
 Revenues
 Military aircraft $1,855 $1,617
 Commercial aircraft 869 1,356
 Missiles, space and electronic
 systems 641 834
 Financial services and other 66 83
 Operating revenues 3,431 3,890
 Non-operating income 5 3
 Total Revenues $3,436 $3,893
 Earnings
 Military aircraft $ 142 $ (166)
 Commercial aircraft 16 37
 Missiles, space and electronic
 systems 65 67
 Financial services and other (2) 6
 Operating earnings (loss) from
 continuing operations 221 (56)
 Discontinued operations, net of
 income taxes --- 41
 Corporate and other (1) (2)
 Interest expense (2) (85)
 Income tax benefit (expense) (76) 60
 Net Earnings (Loss) $ 142 $ (42)
 McDONNELL DOUGLAS CORP.
 BUSINESS SEGMENT DATA
 (Millions of dollars)
 Nine Months Ended
 Sept. 30,
 1993 1992
 Unaudited
 BUSINESS SEGMENT DATA
 Revenues
 Military aircraft $ 5,240 $ 5,175
 Commercial aircraft 3,473 4,960
 Missiles, space and electronic
 systems 1,951 2,354
 Financial services and other 199 262
 Operating revenues 10,863 12,751
 Non-operating income 11 10
 Elimination of intersegment
 interest income (1) (4)
 Total Revenues $10,873 $12,757
 Earnings
 Military aircraft $ 367 $ (96)
 Commercial aircraft 44 73
 Missiles, space and electronic
 systems 264 148
 Financial services and other 9 11
 Operating earnings from
 continuing operations 684 136
 Discontinued operations, net of
 income taxes 37 51
 Corporate and other (8) (14)
 Postretirement benefit curtailment 70 ---
 Interest expense (62) (241)
 Elimination of intersegment
 interest income (1) (4)
 Income tax benefit (expense) (192) 65
 Cumulative effect of accounting
 change --- (1,536)
 Net Earnings (Loss) $ 528 $(1,543)
 Operating earnings of the financial services and other segment have been reduced by interest expense, an operating expense of that segment.
 Prior-year amounts have been restated for discontinued operations and the adoption of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
 McDONNELL DOUGLAS CORP.
 CONSOLIDATED BALANCE SHEET
 (Millions of dollars)
 Sept. 30, Dec. 31,
 1993 1992
 Unaudited
 ASSETS
 Cash and cash equivalents $ 31 $ 82
 Accounts receivable 518 604
 Finance receivables and property
 on lease 2,252 2,262
 Contracts in process and inventories 6,525 7,230
 Property, plant and equipment 1,822 1,991
 Other assets 1,513 1,612
 Total Assets $12,661 $13,781
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
 Accounts payable and accrued
 expenses $ 2,429 $ 3,018
 Accrued retiree benefits 1,411 1,544
 Income taxes 707 572
 Advances and billings in excess
 of related costs 1,110 1,384
 Notes payable and long-term debt:
 Aerospace segments 1,974 2,767
 Financial services and other
 segment 1,398 1,474
 Total 9,029 10,759
 Minority Interest 75 ---
 Shareholders' Equity 3,557 3,022
 Total Liabilities and
 Shareholders' Equity $12,661 $13,781
 CAPITAL STRUCTURE
 (Millions of dollars)
 Sept. 30, 1993
 (Unaudited)
 Financial
 Services
 Aerospace and Other
 Segments Segment Total
 Debt $1,974 $1,398 $3,372
 Equity 3,284 273 3,557
 $5,258 $1,671 $6,929
 Debt-to-equity ratio .60 5.12
 Dec. 31, 1992
 Financial
 Services
 Aerospace and Other
 Segments Segment Total
 Debt $2,767 $1,474 $4,241
 Equity 2,750 272 3,022
 $5,517 $1,746 $7,263
 Debt-to-equity ratio 1.01 5.42
 The following is an employee message from John F. McDonnell, chairman and chief executive officer of McDonnell Douglas, regarding the corporation's second quarter 1993 earnings that were announced today.
 IMPROVED PERFORMANCE IN TOUGH TIMES
 To All Teammates: November 1, 1993
 Today we announced record earnings for the third consecutive quarter. That says something about our toughness and resilience, both individually and collectively. Together we have produced strong financial performance -- in the face of numerous challenges and the worst recession to hit the aerospace industry in two decades.
 MDC produced net earnings of $142 million for the third quarter and $528 million through the first nine months of 1993. Setting aside all unusual items, which were a factor in boosting earnings in all three quarters of this year, MDC still had record earnings of $308 million through the first nine months.
 Excluding unusual gains, our net return on sales through the first nine months was 2.8 percent. That is the highest return we have achieved in the last eight years.
 Since the beginning of the year, we have significantly strengthened our financial position by reducing aerospace debt by almost 30 percent, or nearly $800 million. We were able to pay down $369 million in debt in the past quarter alone, thanks to improved cash flow from operations.
 MDC has become a leaner and fitter competitor. That's why we have been able to produce stronger cash flows and better earnings in the face of 15 percent lower revenues in the first nine months of 1993 compared with the same period of 1992.
 All of our major military programs, including the C-17, were in the black for the first nine months of 1993, and several achieved record or near-record earnings. Our commercial aircraft business posted its 12th consecutive profitable quarter -- three full years in the black -- while operating at very low production rates. That's an impressive achievement.
 As a company, MDC has made remarkable progress over the last nine months, and we can all take pride in that. But we cannot afford to rest on our oars. We are still faced with siege-like conditions in the aerospace industry. We must continue to strive for improvement through teamwork and total quality.
 John F. McDonnell
 Chairman and Chief Executive Officer
 -0- 11/1/93
 /CONTACT: Barbara Anderson of McDonnell Douglas Corp., 314-233-2865/
 (MD)


CO: McDonnell Douglas Corp. ST: Missouri IN: ARO SU: ERN

EH -- LA019 -- 8954 11/01/93 08:13 EST
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