McDONNELL DOUGLAS ANNOUNCES EARNINGS
McDONNELL DOUGLAS ANNOUNCES EARNINGS ST. LOUIS, Jan. 28 /PRNewswire/ -- McDonnell Douglas (NYSE: MD) set
new records for revenues, operating earnings and net earnings in 1991.
The corporation earned $423 million, or $11.03 per share, on revenues of $18.448 billion in 1991, compared with $306 million, or $7.99 per share, on revenues of $15.913 billion in 1990. The previous high for net earnings was $350 million -- in 1988. The corporation had net earnings of $211 million, or $5.50 per share, in 1991's fourth quarter, and was essentially at breakeven in 1990's fourth quarter. Operating earnings from continuing operations were a record $907 million in 1991, compared with $175 million in 1990, $261 million in 1989 and the previous high of $825 million in 1988. Total aerospace debt fell from $2.970 billion at the end of 1990 (and $3.305 billion on March 31, 1991) to $2.386 billion at the end of 1991. The 1991 results include net earnings of $68 million or $1.78 per share from discontinued operations, and this principally includes a gain from the sale of McDonnell Douglas Systems Integration Co. in the fourth quarter. McDonnell Douglas settled several longstanding issues with the Internal Revenue Service, which resulted in a positive adjustment to net earnings of $32 million, or 83 cents per share, in the fourth quarter. The 1990 results were positively affected by after tax gains of $234 million, or $6.11 per share, in the third quarter and $142 million, or $3.71 per share, in the fourth quarter from the settlement of certain pension fund obligations. They were negatively affected by a $58 million, or $1.52 per share, after tax reversal of previously recorded earnings on the C-17 program in the third quarter and a $219 million, or $5.73 per share, after tax loss provision in the fourth quarter related to the A-12 program. Both on a year-to-year and a fourth quarter-to-fourth quarter basis, improved earnings reflect major corporate-wide cost reduction efforts, lower costs expensed or written off in programs under development or in competition, and, in particular, the transition from development into production in the MD-11 commercial trijet program. On a segment basis, the improvement in financial performance was most striking in the transport aircraft business, which achieved record- high operating earnings in 1991 despite a $100 million loss in the C-17 program representing general and administrative expenses and other period costs. The segment had operating earnings of $200 million in 1991, compared with an operating loss of $177 million in 1990, which included the earnings reversal in the C-17 program (a $93 million write- off on a pretax basis). Lower costs, better margins and a high number of deliveries led to a large increase in earnings in the MD-80 program in 1991, while the MD-11 program had improved results and generated substantial revenues. High development costs during 1989 and 1990 on the MD-11 program were a major factor in the operating losses recorded in those years. The transport aircraft segment had operating earnings of $90 million in 1991's fourth quarter, compared with operating earnings of $38 million in 1990's fourth quarter. Earnings in 1991's fourth quarter were reduced by a $30 million loss on the C-17 program representing general and administrative expenses and other period costs. The C-17 program was at about breakeven in 1990's fourth quarter. McDonnell Douglas delivered 138 MD-80s (not including two deliveries involving a repurchase agreement) and 31 MD-11s in 1991, compared with 139 MD-80 and three MD-11 deliveries in 1990. The combat aircraft segment had the second highest operating earnings ever of $495 million in 1991, compared with $396 million in 1990 not including the A-12 loss provision, or $46 million including the provision. The segment had operating earnings of $107 million in 1991's fourth quarter, compared with operating earnings in 1990's fourth quarter of $96 million not including the A-12 loss provision, or an operating loss of $254 million including the provision. Earnings were up in the F-15 and F/A-18 programs both on a year-to- year and a fourth quarter-to-fourth quarter basis. Cost sharing in the ATF (a major competition for a new fighter aircraft) did not adversely affect 1991 earnings as it had in 1990. While the AH-64 Apache helicopter program remained profitable, with earnings comparable to the prior year, other helicopter programs had increased losses in 1991. The missiles, space and electronic systems segment had operating earnings of $168 million in 1991, about the same as in 1990, with operating earnings of $51 million in 1991's fourth quarter, compared with $59 million in the fourth quarter of 1990. For the year, higher earnings in the electronic systems business and the space station program were offset by lower earnings in the Harpoon missile program and several space programs. The financial services segment had $25 million in operating earnings in 1991, compared with $100 million in 1990. However, this segment had operating earnings of $11 million in 1991's fourth quarter, compared with operating earnings of $6 million in 1990's fourth quarter. The decline in annual earnings for this segment reflects lower gains from the sale of assets and difficult conditions throughout the financial services field. Earnings in 1991's fourth quarter were helped by the sale of assets, including aircraft. The 1991 fourth quarter gain resulting from the settlement with the IRS involved the reversal of interest expense accrued over several years in anticipation of a settlement. As a result, interest expense for aerospace and other segments reflects a $107 million reduction in previously accrued interest expense. Excluding this adjustment, interest expense for aerospace and other segments was $76 million in 1991's fourth quarter and $371 million for the year, compared with $103 million in 1990's fourth quarter and $379 million for the year 1990. Reduced debt and lower interest rates in the second half of 1991 were responsible for the decline in interest expense. Firm backlog on Dec. 31, 1991, was $30.448 billion, compared with $36.544 billion at the end of 1990. Total backlog was $42.577 billion on December 31, 1991, compared with $52.770 billion at the end of 1990. The decline in backlog in 1991 reflects a high number of deliveries, a softening of commercial aircraft orders worldwide and canceled orders. As of Dec. 31, 1991, the MD-11 program included 138 firm orders, 160 options and reserves, and 34 deliveries for a total of 332 aircraft. On the same date, the MD-80/90 program included 235 firm orders, 335 options and reserves, and 963 deliveries for a total of 1,533 aircraft. Employment on Dec. 31, 1991, was 109,123, compared with 121,190 a year earlier, a decline of 10 percent. The cancellation of the A-12 program in January 1991 was the biggest single reason for the decline in employment. McDONNELL DOUGLAS CORP. Consolidated Results of Operations (Millions of dollars, except share data) (unaudited) Three Months Ended Dec. 31, 1991 1990 Statement of Earnings Revenues $4,777 $4,036 Costs and expenses: Cost of products, services and rentals 4,064 3,667 General and administrative expenses 292 318 Research and development 118 142 Pension settlement --- (227) Interest expense: Aerospace and other segments (31) 103 Financial services segment 50 56 Total costs and expenses 4,493 4,059 Earnings (loss) from continuing operations before income taxes 284 (23) Income taxes (benefit) 145 (3) Earnings (loss) from continuing operations 139 (20) Earnings from discontinued operations, net of income taxes 72 19 Net earnings (loss) $211 ($1) Earnings (loss) per share: Continuing operations $3.60 ($.50) Discontinued operations 1.90 .49 Total $5.50 ($.01) Dividends declared per share $.35 $.705 McDONNELL DOUGLAS CORP. Consolidated Results of Operations (Millions of dollars, except share data) Years Ended Dec. 31, 1991 1990 Statement of Earnings Revenues $18,448 $15,913 Costs and expenses: Cost of products, services and rentals 15,750 13,594 General and administrative expenses 1,139 1,327 Research and development 450 587 Pension settlement --- (600) Interest expense: Aerospace and other segments 264 379 Financial services segment 221 233 Total costs and expenses 17,824 15,520 Earnings from continuing operations before income taxes 624 393 Income taxes 269 124 Earnings from continuing operations 355 269 Earnings from discontinued operations, net of income taxes 68 37 Net earnings $423 $306 Earnings Per Share: Continuing operations $9.25 $7.02 Discontinued operations 1.78 .97 Total $11.03 $7.99 Dividends declared per share $1.40 $2.82 Prior year amounts have been restated for discontinued operations. McDONNELL DOUGLAS CORP. Business Segment Data (Millions of dollars) (unaudited) Three Months Ended Dec. 31, 1991 1990 Business Segment Data Revenues Combat aircraft $1,503 $1,125 Transport aircraft 2,311 1,809 Missiles, space and electronic systems 734 809 Financial services 123 157 Other 103 136 Operating revenues 4,774 4,036 Non-operating income 3 --- Total revenues $4,777 $4,036 Earnings Combat aircraft $107 ($254) Transport aircraft 90 38 Missiles, space and electronic systems 51 59 Financial services 11 6 Other 5 14 Operating earnings (loss) from continuing operations 264 (137) Discontinued operations, net of income taxes 72 19 Corporate and other (11) (10) Pension settlement --- 227 Interest expense 31 (103) Income tax benefit (expense) (145) 3 Net earnings (loss) $211 ($1) McDONNELL DOUGLAS CORP. Business Segment Data (Millions of dollars) Years Ended Dec. 31, 1991 1990 Business Segment Data Revenues Combat aircraft $5,933 $5,830 Transport aircraft 8,621 5,812 Missiles, space and electronic systems 2,982 3,188 Financial services 485 619 Other 411 455 Operating revenues 18,432 15,904 Non-operating income 16 9 Total Revenues $18,448 $15,913 Earnings Combat aircraft $495 $46 Transport aircraft 200 (177) Missiles, space and electronic systems 168 167 Financial services 25 100 Other 19 39 Operating earnings from continuing operations 907 175 Discontinued operations, net of income taxes 68 37 Corporate and other (19) (3) Pension settlement --- 600 Interest expense (264) (379) Income taxes (269) (124) Net Earnings $423 $306 Operating earnings of the financial services segment have been reduced by interest expense, an operating expense of that segment. Prior year amounts have been restated for discontinued operations. McDONNELL DOUGLAS CORPORATION Consolidated Balance Sheet (Millions of dollars) Dec. 31, Dec. 31, 1991 1990 Assets Cash and cash equivalents $229 $226 Accounts receivable 780 883 Finance receivables and property on lease 2,621 3,527 Contracts in process and inventories 7,291 6,201 Property, plant and equipment 2,414 2,624 Other assets 1,506 1,504 Total assets $14,841 $14,965 Liabilities and Shareholders' Equity Liabilities: Accounts payable and accrued expenses $3,327 $2,818 Income taxes 1,273 1,000 Advances and billings in excess of related costs 2,087 2,049 Notes payable and long-term debt: Aerospace and other segments 2,386 2,970 Financial services segment 1,891 2,614 Total 10,964 11,451 Shareholders' equity 3,877 3,514 Total Liabilities and Shareholders' Equity $14,841 $14,965 McDONNELL DOUGLAS CORP. Capital Structure (Millions of dollars) Dec. 31, 1991 Aerospace Financial and Services Other Segments Segment Total Debt $2,386 $1,891 $4,277 Equity 3,517 360 3,877 Total $5,903 $2,251 $8,154 Debt-to-equity ratio .68 5.25 Dec. 31, 1990 Aerospace Financial and Services Other Segments Segment Total Debt $2,970 $2,614 $5,584 Equity 3,115 399 3,514 Total $6,085 $3,013 $9,098 Debt-to-equity ratio .95 6.55 The following is an employee message from John McDonnell, chairman and chief executive officer of McDonnell Douglas, regarding the corporation's fourth quarter earnings that were announced today. A Record Year To All Teammates: Jan. 28, 1992 Today we announced our 1991 financial results. Clearly, we have come a long way, with record revenues ($18.44 billion) and record earnings ($423 million) for the year, and with a reduction of $919 million, or 28 percent, in our total aerospace indebtedness from its peak on March 31, 1991. We should all take pride in the progress we have made. It is clear that MDC has turned the corner in terms of financial performance. The improvement is most dramatically evident in our commercial aircraft business. Our transport aircraft segment reported record operating earnings of $200 million in 1991 despite a $100 million loss in the C-17 program. The commercial aircraft business at DAC earned roughly three times as much money in 1991 as it had in the best prior year in the past two decades. Lower unit costs, better margins and high output combined to raise earnings in the MD-80 program to a record level. With 31 deliveries in 1991, the MD-11 generated close to $3 billion in revenues. There was good news as well in our combat aircraft businesses, which had operating earnings of $495 million -- exceeding every previous year except 1985. Earnings were up in the F/A-18 and the F-15 programs, and there was no recurrence of the special charges or write-offs that plagued earnings in the previous two years. Our missiles, space and electronic systems segment had operating earnings of $168 million, about the same as in 1990, on a 6.5 percent decline in revenues. The electronic systems company did especially well, almost doubling its earnings in 1991. Nevertheless, 1991 was a difficult year during which we had to reduce our total team by 12,067, or 10 percent. 1992 is going to be another challenging year. The aerospace industry is in a period of contraction that is more severe than anything we have faced since the end of the Korean war. Being "most improved" is not good enough. We need to be up among the industry leaders in every way that business and technical success is measured -- for only the leaders are going to survive and prosper in this tough environment. We have definitely turned the corner. Now we must push hard for continuous improvement in everything we do. Based on the improvement we have already made, I am more confident than ever that we have the team to do it.
John F. McDonnell
Chairman and Chief Executive Officer
-0- 1/28/92 /CONTACT: Mike Burch, 314-234-3500, or Andrew Wilson, 314-233-1038, both of McDonnell Douglas/ (MD) CO: McDonnell Douglas Corp. ST: California IN: ARO AIR SU: ERN
KJ -- LA021 -- 4413 01/28/92 16:46 EST
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|Date:||Jan 28, 1992|
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