-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NSxedYmumcswX0Oiblcd93oQY6gNSecNTIi1UZVWbOmGTUPj/OntBvrJXOAP5rb+ Gln9AocoJfi0vkjDUWsGwQ== 0000063917-97-000020.txt : 19970718 0000063917-97-000020.hdr.sgml : 19970718 ACCESSION NUMBER: 0000063917-97-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970717 ITEM INFORMATION: Other events FILED AS OF DATE: 19970717 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCDONNELL DOUGLAS CORP CENTRAL INDEX KEY: 0000063917 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT [3721] IRS NUMBER: 430400674 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03685 FILM NUMBER: 97642075 BUSINESS ADDRESS: STREET 1: P O BOX 516 STREET 2: MCDONNELL BLVD AT AIRPORT RD CITY: ST LOUIS STATE: MO ZIP: 63166-0516 BUSINESS PHONE: 3142320232 MAIL ADDRESS: STREET 1: P O BOX 516 CITY: ST LOUIS STATE: MO ZIP: 631660516 FORMER COMPANY: FORMER CONFORMED NAME: MCDONNELL CO DATE OF NAME CHANGE: 19670601 8-K 1 FORM 8K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) July 17, 1997 McDonnell Douglas Corporation Exact name of Registrant as Specified in Charter Maryland 1-3685 43-0400674 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) Post Office Box 516, St. Louis, Missouri 63166-0516 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (314) 232-0232 ---------------------------- INFORMATION TO BE INCLUDED IN THE REPORT Item 5. Other Events. A summary of the Registrant's second quarter financial results is filed as an exhibit hereto, and is incorporated herein in accordance with General Instruction F to Form 8-K. EXHIBIT Exhibit No. 99 Summary of McDonnell Douglas Corporation's Second Quarter Financial Results SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. McDonnell Douglas Corporation (Registrant) /s/ Steven N. Frank July 17, 1997 By: ----------------------------------------- (Date) Steven N. Frank Vice President, Associate General Counsel and Secretary EX-99 2 SUMMARY OF SECOND QUARTER FINANCIAL RESULTS Contact: Larry McCracken McDonnell Douglas (314) 233-8957 FOR IMMEDIATE RELEASE MCDONNELL DOUGLAS REPORTS SOLID SECOND QUARTER EARNINGS 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. 2 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 8 3 8 7 MD-90 4 1 11 4 MD-11 2 4 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. 3 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. 4 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 ======== ======== 5 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 ======== ======== Dividends Declared Per Share $ .24 $ .24 ======== ======== Weighted-average Shares Outstanding 209.9 220.1 ======== ======== 6 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. 7 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 ======== ======== 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 ======== ======== Operating earnings of the financial services and other segment have been reduced by interest expense, an operating expense of that segment. 8 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 ======== ======== 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 ======== ======== 9 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 ======== ======== 10 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. 11 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 12 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 ======== ======== -----END PRIVACY-ENHANCED MESSAGE-----