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Larry McCracken
McDonnell Douglas (314) 233-8957 |
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Larry McCracken
McDonnell Douglas (314) 233-8957 |
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FOR IMMEDIATE RELEASE
97-153
ST. LOUIS, July 17, 1997 -- McDonnell Douglas (NYSE: MD) reported 1997 second quarter earnings of $195 million, or 93 cents per share. That compares to earnings of $188 million, or 87 cents per share, in the second quarter of 1996. Costs related to merger activities in the second quarter of 1997 were offset by favorable resolution of state tax issues.
Net earnings for the first six months of 1997 were $376 million, or $1.79 per share. That compares to earnings of $386 million, or $1.76 per share, in the first six months of 1996. Weighted-average shares outstanding through the first six months in 1997 are lower by 4.5 percent as compared to the same period in 1996, as a result of the Company's stock repurchase plan. The repurchase plan was suspended in December 1996 as a result of the pending merger with The Boeing Company.
"Solid financial results for the second quarter of 1997 are gratifying," said Harry Stonecipher, president and chief executive officer of McDonnell Douglas. "I am pleased to see that we kept our eye on the ball, and did not let the merger distract us from running our business."
Total revenues for the second quarter of 1997 were $3.6 billion, up from $3.3 billion in the second quarter of 1996. Revenues increased in all segments, with the largest gain in the military aircraft segment. Total revenues for the first six months of 1997 were $6.8 billion, up from $6.4 billion in the first six months of 1996.
Cash used by aerospace operations was slightly less than $300 million for the second quarter of 1997, with $655 million used for the first six months of 1997. An increase in inventory, largely in the commercial aircraft segment in advance of deliveries in the second half of 1997, contributed significantly to the use of cash in the first half of 1997.
Operating earnings for the second quarter of 1997 were $320 million, and totaled $641 million for the first six months of 1997. That compares with $328 million and $675 million, respectively, for the same periods in 1996.
Operating earnings in the military aircraft segment in the 1997 second quarter were $238 million, compared with $243 million in the second quarter of 1996. Improved earnings in the C-17 and F-15 programs largely offset lower earnings in the F/A-18 program. Earnings in the second quarter of 1996 included an award fee on the development portion of the F/A-18 program. Operating earnings in this segment for the first six months of 1997 were $497 million, compared with $493 million in the 1996 same period.
Revenues for the military aircraft segment were $2.1 billion for the second quarter of 1997. That compares with $1.9 billion for the same period in 1996. Increased revenues in the F-15, C-17 and classified programs were partially offset by lower revenues in the F/A-18 C/D program. Revenues for the first six months in 1997 and 1996 were $4.0 billion.
Operating earnings in the missiles, space and electronic systems segment in the 1997 second quarter and first six months were $45 million and $81 million, respectively, compared to $53 million and $111 million in the 1996 same periods. Profit margins in this segment were down two percentage points in the second quarter and three percentage points for the first six months of 1997, as compared to 1996. Expenditures on the Delta III, a launch vehicle currently under development, and lower earnings on the Space Station and Delta II programs caused the decrease during the first six months of 1997.
Revenues for the missiles, space and electronic systems segment were $587 million for the second quarter of 1997. That compares with $529 million for the same period in 1996. The Delta programs contributed to the higher revenues in the 1997 second quarter. Revenues for the first six months in 1997 and 1996 were $1.1 billion.
Operating earnings in the commercial aircraft segment in the 1997 second quarter and first six months were $14 million and $18 million, respectively, compared with $18 million and $37 million in the 1996 same periods. Earnings from the sale of spare parts and related services were largely offset by losses from development activities and sale of production aircraft.
Increased losses in both 1997 quarters on the MD-95 program, currently in development, were in part offset by reduction in cost estimates related to prior deliveries of trijet and twin-jet aircraft. Additionally, earnings in the 1996 first quarter included recoveries from an insurance carrier related to environmental coverage at several sites, and in the 1996 second quarter included recoveries from an insurance carrier of charges previously expensed related to a 1987 airline accident.
Revenues for the commercial aircraft segment were $805 million for the second quarter and $1.4 billion for the first six months of 1997, up from $722 million in the second quarter and $1.2 billion in the first six months of 1996. McDonnell Douglas deliveries in the first two quarters of 1997 and 1996 were as follows:
| Three Months Ended | Six Months Ended | |||
| 30 June | 30 June | |||
| 1997 | 1996 | 1997 | 1996 | |
|
MD-80 MD-90 MD-11 |
8 4 2 |
3 1 4 |
8 11 4 |
7 4 7 |
One twin jet delivery in the second quarter of 1997, two of the twin jet deliveries in the first quarter of each year and two of the 1996 first quarter trijet deliveries were accounted for as operating leases with minimal revenue recorded on such transactions at the time of delivery.
McDonnell Douglas received one MD-11 trijet order in the second quarter of 1997. On June 30, 1997, McDonnell Douglas had firm orders for 21 MD-80 twin jets, 96 MD-90 twin jets, 50 MD-95 twin jets, and 17 MD-11 trijets.
Operating earnings in the financial services and other segment were $23 million for the second quarter and $45 million in the 1997 first six months, compared with $14 million and $34 million, respectively, in the 1996 same periods. Revenues in this segment were up $10 million during the quarter to $97 million and were $198 million for the first six months of 1997, $24 million higher than in the first six months of 1996. The earnings and revenue growth reflects the corporation's continued focus on growing this segment of its business.
Interest expense totaled $21 million in the second quarter of 1997, down from $31 million in the second quarter of 1996. The decrease in 1997 largely reflects interest reductions associated with favorable resolution of prior years' state tax issues.
Pension income totaled $39 million in the second quarter and $79 million in the 1997 first six months, compared with $33 million and $65 million in the same periods of 1996. The increase is associated with a higher level of plan assets.
McDonnell Douglas had firm backlog of $21.9 billion on June 30, 1997, compared with $23.7 billion on Dec. 31, 1996. Total backlog was $42.2 billion on June 30, 1997, compared with $44.4 billion on Dec. 31, 1996.
Total employment at McDonnell Douglas was 64,322 on June 30, 1997, compared to 63,873 on Dec. 31, 1996.
MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(Amounts in millions, except per share data)
Quarter Ended
June 30
1997 1996
-------- --------
Unaudited
Revenues $ 3,559 $ 3,264
Costs and Expenses:
Cost of products, services and
rentals 2,926 2,640
General and administrative expenses 187 177
Research and development 97 91
Interest expense:
Aerospace segments 21 31
Financial services and other
segment 33 32
-------- --------
Total costs and expenses 3,264 2,971
-------- --------
Earnings Before Income Taxes 295 293
Income taxes 100 105
-------- --------
Net Earnings $ 195 $ 188
======== ========
Earnings Per Share $ .93 $ .87
======== ========
Dividends Declared Per Share $ .12 $ .12
======== ========
Weighted-average Shares Outstanding 210.0 217.9
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MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(Amounts in millions, except per share data)
Six Months Ended
June 30
1997 1996
-------- --------
Unaudited
Revenues $ 6,789 $ 6,435
Costs and Expenses:
Cost of products, services and
rentals 5,533 5,177
General and administrative expenses 358 346
Research and development 191 179
Interest expense:
Aerospace segments 56 62
Financial services and other
segment 68 62
-------- --------
Total costs and expenses 6,206 5,826
-------- --------
Earnings Before Income Taxes 583 609
Income taxes 207 223
-------- --------
Net Earnings $ 376 $ 386
======== ========
Earnings Per Share $ 1.79 $ 1.76
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Dividends Declared Per Share $ .24 $ .24
======== ========
Weighted-average Shares Outstanding 209.9 220.1
======== ========
MCDONNELL DOUGLAS CORPORATION
BUSINESS SEGMENT DATA
(Millions of dollars)
Quarter Ended
June 30
1997 1996
-------- --------
Unaudited
Revenues
Military aircraft $ 2,065 $ 1,923
Commercial aircraft 805 722
Missiles, space and electronic
systems 587 529
Financial services and other 97 87
-------- --------
Operating revenues 3,554 3,261
Non-operating income 5 3
-------- --------
Total Revenues $ 3,559 $ 3,264
======== ========
Earnings
Military aircraft $ 238 $ 243
Commercial aircraft 14 18
Missiles, space and electronic
systems 45 53
Financial services and other 23 14
-------- --------
Operating earnings 320 328
Corporate and other (4) (4)
Interest expense (21) (31)
Income tax expense (100) (105)
-------- --------
Net Earnings $ 195 $ 188
======== ========
Operating earnings of the financial services and other segment
have been reduced by interest expense, an operating expense of
that segment.
MCDONNELL DOUGLAS CORPORATION
BUSINESS SEGMENT DATA
(Millions of dollars)
Six Months Ended
June 30
1997 1996
-------- --------
Unaudited
Revenues
Military aircraft $ 4,011 $ 3,962
Commercial aircraft 1,429 1,150
Missiles, space and electronic
systems 1,140 1,137
Financial services and other 198 174
-------- --------
Operating revenues 6,778 6,423
Non-operating income 11 12
-------- --------
Total Revenues $ 6,789 $ 6,435
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Earnings
Military aircraft $ 497 $ 493
Commercial aircraft 18 37
Missiles, space and electronic
systems 81 111
Financial services and other 45 34
-------- --------
Operating earnings 641 675
Corporate and other (2) (4)
Interest expense (56) (62)
Income tax expense (207) (223)
-------- --------
Net Earnings $ 376 $ 386
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Operating earnings of the financial services and other segment
have been reduced by interest expense, an operating expense of
that segment.
MCDONNELL DOUGLAS CORPORATION
BALANCE SHEET
(Millions of dollars)
McDonnell Douglas Corporation
and Consolidated Subsidiaries
-----------------------------
June 30 December 31
1997 1996
-------- ----------
Unaudited
ASSETS
Cash and cash equivalents $ 167 $ 1,094
Accounts receivable 942 882
Finance receivables and property
on lease 3,305 3,090
Contracts in process and inventories 3,980 3,486
Prepaid income taxes - -
Property, plant and equipment 1,494 1,453
Investment in Financial Services - -
Other assets 1,740 1,626
-------- --------
TOTAL ASSETS $11,628 $11,631
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 2,472 $ 2,595
Accrued retiree benefits 1,109 1,109
Income taxes 111 83
Advances and billings in excess
of related costs 1,449 1,310
Notes payable and long-term debt
Aerospace segments 1,168 1,438
Financial services and other segment 1,877 1,995
-------- --------
8,186 8,530
Minority Interest 63 63
Shareholders' Equity 3,379 3,038
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $11,628 $11,631
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MDC Aerospace
------------------------
June 30 December 31
1997 1996
----------- -----------
Unaudited
ASSETS
Cash and cash equivalents $ 152 $ 1,077
Accounts receivable 1,024 964
Finance receivables and property
on lease 544 254
Contracts in process and inventories 3,980 3,486
Prepaid income taxes 273 278
Property, plant and equipment 1,435 1,391
Investment in Financial Services 413 383
Other assets 1,652 1,535
-------- --------
TOTAL ASSETS $ 9,473 $ 9,368
======== ========
Liabilities and Shareholders' Equity
Liabilities:
Accounts payable and accrued expenses $ 2,375 $ 2,470
Accrued retiree benefits 1,109 1,109
Advances and billings in excess
of related costs 1,394 1,265
Notes payable and long-term debt
Aerospace segments 1,153 1,423
Financial services and other segment - -
-------- --------
6,031 6,267
Minority Interest 63 63
Shareholders' Equity 3,379 3,038
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 9,473 $ 9,368
======== ========
Financial Services
----------------------
June 30 December 31
1997 1996
-------- -----------
Unaudited
ASSETS
Cash and cash equivalents $ 15 $ 17
Accounts receivable - -
Finance receivables and property
on lease 2,761 2,836
Contracts in process and inventories - -
Property, plant and equipment 59 62
Investment in Financial Services - -
Other assets 88 91
-------- --------
TOTAL ASSETS $ 2,923 $ 3,006
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 179 $ 207
Accrued retiree benefits - -
Income taxes 384 361
Advances and billings in excess
of related costs 55 45
Notes payable and long-term debt
Aerospace segments 15 15
Financial services and other segment 1,877 1,995
-------- --------
2,510 2,623
Shareholders' Equity 413 383
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 2,923 $ 3,006
======== ========
As used on this page, "MDC Aerospace" represents the
consolidation of McDonnell Douglas Corporation and its
subsidiaries other than McDonnell Douglas Financial Services
Corporation (MDFS) and McDonnell Douglas Realty Company (MDRC),
which are presented on a one-line basis as Investment in
Financial Services. "Financial Services" means MDFS and all of
its affiliates and associated companies and MDRC. Transactions
between MDC Aerospace and Financial Services have been eliminated
from the "McDonnell Douglas Corporation and Consolidated
Subsidiaries" columns.
MCDONNELL DOUGLAS CORPORATION
(Amounts in millions, except for ratios and deliveries)
CAPITAL STRUCTURE
June 30, 1997
------------------------------------
Unaudited
Financial
Services
Aerospace and Other
Segments Segment Total
--------- --------- --------
Debt $1,168 $1,877 $3,045
======= ======= =======
Equity $2,966 $ 413 $3,379
======= ======= =======
Debt-to-equity ratio .39 4.54
======= =======
Common Shares outstanding 210.0
=======
December 31, 1996
------------------------------------
Financial
Services
Aerospace and Other
Segments Segment Total
--------- --------- --------
Debt $1,438 $1,995 $3,433
======= ======= =======
Equity $2,655 $ 383 $3,038
======= ======= =======
Debt-to-equity ratio .54 5.21
======= =======
Common Shares outstanding 209.6
=======
COMMERCIAL AIRCRAFT DELIVERIES
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
------ ------ ------ ------
MD-80 8 3 8 7
MD-90 4 1 11 4
MD-11 2 4 4 7
MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
Six Months Ended
June 30
1997 1996
-------- --------
Unaudited
OPERATING ACTIVITIES
Net earnings $ 376 $ 386
Adjustments to reconcile net earnings
to net cash provided (used)by
operating activities:
Depreciation and amortization 131 130
Pension income (79) (65)
Changes in other operating assets and
liabilities (528) (252)
-------- --------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (100) 199
INVESTING ACTIVITIES
Property, plant and equipment acquired (135) (87)
Finance receivables and property on
lease (251) (318)
Other (3) (6)
-------- --------
NET CASH USED BY INVESTING
ACTIVITIES (389) (411)
FINANCING ACTIVITIES
Net change in borrowings (maturities
90 days or less) 12 33
Debt having maturities more than
90 days:
New borrowings 66 366
Repayments (466) (156)
Common shares purchased - (377)
Dividends paid (50) (49)
-------- --------
NET CASH USED BY FINANCING
ACTIVITIES (438) (183)
-------- --------
DECREASE IN CASH AND CASH
EQUIVALENTS (927) (395)
Cash and cash equivalents at beginning
of year 1,094 797
-------- --------
Cash and cash equivalents at end of
period $ 167 $ 402
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