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McDONNELL DOUGLAS REPORTS RESULTS

    ST. LOUIS, July 19 /PRNewswire/ -- McDonnell Douglas (NYSE: MD) today reported record earnings for the second quarter and for the first six months of 1993.
    Net earnings for the second quarter were $170 million, or $4.33 per share, compared with $11 million, or 29 cents per share, in 1992's second quarter.
    Net earnings for the first six months were $386 million, or $9.84 per share, compared with $35 million, or 91 cents per share, in 1992's first six months, excluding the one-time effect of the adoption of a new accounting rule related to retiree health benefits.
    Unusual gains were a factor in boosting earnings in the first and second quarters of 1993.  However, setting aside unusual gains, McDonnell Douglas had record second quarter earnings of $113 million, or $2.87 per share, and record first half earnings of $207 million, or $5.28 per share.
    Financial highlights for the second quarter and the first six months include:
    -- higher earnings in the face of lower revenues resulting from reduced defense spending and the continuing slump in the commercial aircraft market;
    -- a $137 million reduction in aerospace debt in the second quarter, following a $287 million reduction in the first quarter.  Total aerospace debt on June 30 was $2.343 billion, down 15 percent from $2.767 billion on Dec. 31, 1992;
    -- record operating earnings from the missiles, space and electronic systems segment and near-record operating earnings from the military aircraft segment;
    -- the 10th and 11th consecutive profitable quarters for the corporation's commercial aircraft business;
    -- two consecutive quarters with the C-17 program at break-even.
    The military aircraft segment had second quarter operating earnings of $122 million, compared with $46 million in 1992's second quarter, which had a $34 million write-off from military transport aircraft. Earnings for the segment in the first six months of 1993 were $225 million, compared with $70 million in the first six months of 1992, which included $114 million in write-offs from military transport aircraft.  Revenues for the six months were down by 5 percent, mostly as a result of reduced F-15 deliveries.
    The commercial aircraft segment had second quarter earnings of $14 million, compared with $6 million in 1992's second quarter. Earnings for the first six months of 1993 were $28 million, compared with $36 million in the same period of 1992.  These earnings were achieved despite a 37 percent reduction in revenues during the second quarter and a 28 percent reduction for the first six months of 1993, reflecting reduced aircraft deliveries.
    McDonnell Douglas delivered 13 MD-80 twin jets in the second quarter, including two to a customer under a lease arrangement.  That compares with 26 twin jet deliveries in 1992's second quarter.  The corporation delivered 10 MD-11 trijets in this year's second quarter, compared with 14 trijet deliveries in 1992's second quarter.  During the first six months of 1993, McDonnell Douglas delivered 24 twin jets (including four under lease arrangements), compared with 52 in the year- earlier period; and it delivered 19 trijets, compared with 21 in the year-earlier period.
    The corporation received two new firm orders for MD80/90 twin jets in the second quarter.  There were three new firm orders for MD-11 trijets in the quarter, offset by the removal of two trijets from firm order status due to increased uncertainty over the ability of a customer to take delivery on existing orders.
    On June 30, 1993, the MD-11 program included 95 deliveries, 74 aircraft on firm order, and 115 options and reserves representing potential future orders.  On the same date, the MD80/90 program included 1,071 deliveries, 155 aircraft on firm order, and 192 options and reserves.
    The missiles, space and electronic systems segment had second quarter operating earnings of $100 million, compared with $37 million in 1992's second quarter.  Earnings in the first six months of 1993 were $199 million, compared with $81 million in the same period of 1992. First and second quarter results included strongly improved earnings from the segment's principal missiles and space programs. Higher earnings were achieved even though revenues for the segment declined by 14 percent compared with the first six months of 1992, largely due to the winding down of the Advanced Cruise Missile program and the absence of any commercial space launches in the first half of 1993.
    Interest expense for the aerospace segments in the second quarter of 1993 was $42 million, down from $82 million in 1992's second quarter. Interest expense for the first six months was $60 million, down from $156 million in the prior-year period.  In both the first and second quarters of 1993, interest expense declined due to a combination of lower debt, lower borrowing rates and the reversal of interest expenses accrued in past years as a result of the successful resolution of tax issues with the IRS.
    As was announced on July 1, financial results for this year's second quarter include unusual gains totaling $57 million after tax, or $1.46 per share.  The unusual gains for the quarter consist of after-tax earnings of $14 million from the settlement of a tax issue with the IRS and an additional $43 million from the reversal of part of the one-time charge of $1.5 billion taken in the first quarter of 1992 under the new accounting standard (SFAS No. 106).  The reversal resulted from members of the Southern California Professional Engineering Association (SCPEA) accepting on June 11 a retiree-funded health care arrangement for future retirees similar to the one implemented for current and future non-union retirees in January.  Net earnings in 1993's first quarter included unusual gains totaling $122 million, or $3.10 per share, which came from the successful resolution of tax issues ($85 million) and from the sale of McDonnell Douglas Information Systems International ($37 million).
    After-tax retiree health care costs associated with the new accounting standard (SFAS No. 106), excluding the SCPEA-related curtailment gain, were $33 million lower in both the first and second quarters of 1993 than they were in the comparable periods of 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 $20.712 billion on June 30, 1993, compared with $24.052 billion on Dec. 31, 1992, and $26.438 billion on June 30, 1992.  Total backlog on June 30, 1993, was $38.360 billion, compared with $41.806 billion on Dec. 31, 1992, and $37.072 billion on June 30, 1992.  The decline in backlog reflects deliveries, a softening of commercial aircraft orders worldwide and canceled orders.
    Employment on June 30, 1993, was 74,070, down 13,307 from 87,377 on Dec. 31, 1992.  A quarter of the total reduction in McDonnell Douglas employment was due to the sale of non-core businesses in 1993's first half.
                        McDONNELL DOUGLAS CORP.
                   CONSOLIDATED RESULTS OF OPERATIONS
                (Millions of dollars, except share data)
                                                Three Months Ended
                                                      June 30,
                                                 1993        1992
                                                     Unaudited
    STATEMENT OF OPERATIONS
    Revenues                                   $ 3,817     $ 4,803
    Costs and expenses:
      Cost of products, services and
        rentals                                  3,283       4,338
      General and administrative expenses          163         210
      Research and development                     102         134
      Postretirement benefit curtailment           (70)        ---
      Interest expense:
        Aerospace segments                          42          82
        Financial services and other
          segment                                   32          41
    Total costs and expenses                     3,552       4,805
    Earnings (Loss) From Continuing
      Operations Before Income Taxes               265          (2)
    Income taxes (benefit)                          95          (7)
    Earnings From Continuing Operations            170           5
    Earnings from discontinued operations,
       net of income taxes                         ---           6
    Net Earnings                               $   170     $    11
    Earnings Per Share:
      Continuing operations                    $  4.33     $   .12
      Discontinued operations                      ---         .17
                                               $  4.33     $   .29
     Dividends Declared Per Share              $   .35     $   .35
                          McDONNELL DOUGLAS CORP.
                     CONSOLIDATED RESULTS OF OPERATIONS
                  (Millions of dollars, except share data)
                                                 Six Months Ended
                                                      June 30,
                                                 1993        1992
                                                     Unaudited
    STATEMENT OF OPERATIONS
    Revenues                                   $ 7,437     $ 8,864
    Costs and expenses:
      Cost of products, services and
        rentals                                  6,398       7,925
      General and administrative expenses          345         411
      Research and development                     174         266
      Postretirement benefit curtailment           (70)        ---
      Interest expense:
        Aerospace segments                          60         156
        Financial services and other
          segment                                   65          86
    Total costs and expenses                     6,972       8,844
    Earnings From Continuing Operations
      Before Income Taxes and Cumulative
      Effect of Accounting Change                  465          20
    Income taxes (benefit)                         116          (5)
    Earnings From Continuing Operations
      Before Cumulative Effect of
      Accounting Change                            349          25
    Earnings from discontinued operations,
       net of income taxes                          37          10
    Earnings Before Cumulative Effect of
      Accounting Change                            386          35
    Cumulative effect of initial application
      of new accounting standard for
      postretirement benefits                      ---      (1,536)
    Net Earnings (Loss)                        $   386     ($1,501)
    Earnings (Loss) Per Share:
      Continuing operations                    $  8.91     $   .64
      Discontinued operations                      .93         .27
      Cumulative effect of accounting
        change                                     ---      (39.77)
        Total                                  $  9.84     ($38.86)
    Dividends Declared Per Share               $   .70     $   .70
    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
                                                    June 30,
                                                1993        1992
                                                    Unaudited
    BUSINESS SEGMENT DATA
    Revenues
      Military aircraft                        $ 1,725     $ 1,742
      Commercial aircraft                        1,355       2,154
      Missiles, space and electronic
        systems                                    667         820
      Financial services and other                  67          85
        Operating revenues                       3,814       4,801
      Non-operating income                           3           4
      Elimination of intersegment
        interest income                            ---          (2)
    Total Revenues                             $ 3,817     $ 4,803
    Earnings
      Military aircraft                        $   122     $    46
      Commercial aircraft                           14           6
      Missiles, space and electronic
        systems                                    100          37
      Financial services and other                   5           2
        Operating earnings from
          continuing operations                    241          91
      Discontinued operations, net of
        income taxes                               ---           6
      Corporate and other                           (4)         (9)
      Postretirement benefit curtailment            70         ---
      Interest expense                             (42)        (82)
      Elimination of intersegment
        interest income                            ---          (2)
      Income tax benefit (expense)                 (95)          7
    Net Earnings                               $   170     $    11
                          McDONNELL DOUGLAS CORP.
                           BUSINESS SEGMENT DATA
                           (Millions of dollars)
                                                 Six Months Ended
                                                     June 30,
                                                 1993        1992
                                                     Unaudited
    BUSINESS SEGMENT DATA
    Revenues
      Military aircraft                        $ 3,385     $ 3,558
      Commercial aircraft                        2,604       3,604
      Missiles, space and electronic
        systems                                  1,310       1,520
      Financial services and other                 133         179
        Operating revenues                       7,432       8,861
      Non-operating income                           6           7
      Elimination of intersegment
        interest income                             (1)         (4)
    Total Revenues                             $ 7,437     $ 8,864
    Earnings
      Military aircraft                        $   225     $    70
      Commercial aircraft                           28          36
      Missiles, space and electronic
        systems                                    199          81
      Financial services and other                  11           5
         Operating earnings from
          continuing operations                    463         192
      Discontinued operations, net of
        income taxes                                37          10
      Corporate and other                           (7)        (12)
      Postretirement benefit curtailment            70         ---
      Interest expense                             (60)       (156)
      Elimination of intersegment
        interest income                             (1)         (4)
      Income tax benefit (expense)                (116)          5
      Cumulative effect of accounting
        change                                     ---      (1,536)
    Net Earnings (Loss)                        $   386     ($1,501)
    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
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Date:Jul 19, 1993
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