-----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, Vsua4fG3fHhAKB9PYafpn1BLkkR4ePZVTMXkazFcPCLmf0UupZ7Zab6hW7Y5lTbn 6SAGE7d3yeaoUQ4BSBqBXA== 0000063917-96-000028.txt : 19961104 0000063917-96-000028.hdr.sgml : 19961104 ACCESSION NUMBER: 0000063917-96-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961031 ITEM INFORMATION: Other events FILED AS OF DATE: 19961101 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: 96651863 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 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 8-K PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 31, 1996 McDonnell Douglas Corporation - ------------------------------------------------------------------ (Exact Name of Registrant as Specified in its 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) (314) 232-0232 ----------------------------- Registrant's Telephone Number 2 INFORMATION TO BE INCLUDED IN THE REPORT Item 5. Other Events. A summary of the Registrant's third quarter financial results is filed as an exhibit hereto and is incorporated herein in accordance with General Instruction F to Form 8-K. EXHIBITS Exhibit No. 12 Computations of Earnings to Fixed Charges for Nine Months Ended September 30, 1996 and 1995 99 Summary of McDonnell Douglas Corporation's Third Quarter Financial Results SIGNATURE 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 October 31, 1996 By: /s/ Steven N. Frank - --------------- --------------------------------- (Date) Steven N. Frank Vice President, Associate General Counsel and Secretary EX-12 2 Exhibit 12 MCDONNELL DOUGLAS CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in Millions) NINE MONTHS ENDED SEPTEMBER 30 1996 1995 EARNINGS Earnings from continuing operations before income taxes $ 911 $ 806 ADD: Interest expense 187 167 Interest factor in rents 39 24 ------------ ------------ $ 1,137 $ 997 ============ ============ FIXED CHARGES Interest expense $ 187 $ 167 Interest factor in rents 39 24 ------------ ------------ $ 226 $ 191 ============ ============ Ratio of earnings to fixed charges 5.0X 5.2X ============ ============ EX-99 3 SUMMARY OF MCDONNELL DOUGLAS CORPORATION'S THIRD QUARTER FINANCIAL RESULTS McDonnell Douglas continued its record performance in 1996, reporting strong earnings for the third quarter and first nine months of 1996. Earnings for the third quarter of 1996 were led by the military aircraft segment, where operating margins exceeded 13 percent. Net earnings in the third quarter of 1996 were $195 million, or 90 cents per share, which included a charge of $9 million, or 4 cents per share, for settlement of T-45 claims. That compares with earnings of $192 million, or 85 cents per share in the 1995 third quarter, which included earnings of $25 million, or 11 cents per share, as a result of resolution of tax issues. Net earnings for the first nine months of 1996 were $581 million compared with $520 million in the first nine months of 1995. Earnings for the first nine months of 1996 of $2.66 per share were 17 percent higher than the $2.28 per share reported in the 1995 same period. Operating earnings for the third quarter of 1996 were $339 million, and $1.014 billion for the first nine months of 1996.That compares with $295 million and $888 million for the same periods in 1995. The operating earnings improvement -- 15 percent in the quarter and 14 percent for the nine month period -- was led by the military aircraft segment and, to a lesser extent, improvement in the commercial aircraft segment. Cash flow from aerospace operations was $366 million for the third quarter of 1996, prior to reductions of $164 million used by McDonnell Douglas for repurchase of its common stock. Cash flow included $209 million received from settlement of long-standing T-45 claims with the U.S. Government. Cash flow from aerospace operations was $362 million for the first nine months of 1996, prior to reductions of $541 million for common stock repurchases. From November 1994 through Sept. 30, 1996, McDonnell Douglas has acquired 25.6 million shares, or about 71 percent, of the 36 million shares of its common stock authorized for repurchase by the board of directors as part of a stock repurchase plan initiated in the fourth quarter of 1994. Total revenues for the third quarter of both 1996 and 1995 were $3.3 billion. Total revenues for the first nine months of 1996 were $9.7 billion, down from $10.6 billion in the first nine months of 1995. Lower revenue in the commercial aircraft segment was only partially offset by increased nine month revenues in the missiles, space and electronic systems segment. Operating earnings in the military aircraft segment in the 1996 third quarter were $253 million, compared with $237 million in the third quarter of 1995. The C-17 and Longbow Apache programs led the improvement in 1996. Third quarter 1996 results included an award fee on the C-17 program, partially offset by a $14 million pre-tax charge associated with the settlement of the T-45 claims. Third quarter 1995 results included award fees on both the C-17 and F/A-18E/F programs. Operating earnings in the military aircraft segment for the first nine months of 1996 were $746 million compared with $652 million in the 1995 same period, a 14 percent improvement over 1995. Improved earnings in the C-17, F/A-18 and helicopter programs accounted for most of the 1996 improvement. The 1996 nine month results included a charge for the aforementioned T-45 claims settlement, and the 1995 same period included an $18 million write-off on a modified KDC-10 Dutch tanker contract involving a new product design. Revenues for the military aircraft segment were $1.9 billion for the third quarter and $5.9 billion for the first nine months of 1996. That compares with $2.1 billion and $6.0 billion for the same periods in 1995. Operating earnings in the missiles, space and electronic systems segment in the 1996 third quarter and first nine months were $43 million and $154 million, respectively, compared to $52 million and $168 million in the 1995 same periods. Expenditures on the Delta III, a launch vehicle currently under development, were partially offset by improved earnings in the Delta II program during each of the first three quarters of 1996. Revenues for the missiles, space and electronic systems segment were $533 million for the third quarter and $1.7 billion for the first nine months of 1996. That compares with $488 million and $1.4 billion for the same periods in 1995. Higher revenue in the Delta II and Space Station programs, partially offset by lower revenue in the missiles programs, contributed to the increase in the 1996 periods. Operating earnings in the commercial aircraft segment were $23 million in the 1996 third quarter, compared with a loss of $7 million in the 1995 third quarter. Earnings from the sale of spare parts and related services continued their contribution to earnings in the 1996 third quarter and were partially offset by losses incurred on the MD-95 program which is presently in the development phase. Loss provisions on several MD-90 twin jets caused the loss in the 1995 third quarter. Operating earnings in the commercial aircraft segment for the first nine months of 1996 were $60 million, compared with $26 million in the 1995 same period. Earnings in the 1996 second quarter included recoveries from an insurance carrier of charges previously expensed related to a 1987 airline accident, and in the first quarter included recoveries associated with environmental insurance coverage. Development costs associated with the MD-95, which were higher in the 1996 first nine months compared with the 1995 same period, have more than offset these insurance recoveries. Revenues for the commercial aircraft segment were $773 million for the third quarter of 1996, compared with $663 million in the third quarter of 1995. Revenues for the first nine months of 1996 were $1.9 billion, down from $3.0 billion in the first nine months of 1995. McDonnell Douglas delivered four MD-80 and four MD-90 twin jets and three MD-11 trijets in 1996's third quarter. The 1995 third quarter had the same number of twin jet deliveries, and one less MD-11 delivery. For the first nine months of 1996, twin jet deliveries totaled 19 (11 MD-80s and eight MD-90s), a decrease of six twin jets from the same period in 1995. Trijet deliveries totaled 10 for the first nine months of 1996, compared to 13 in the 1995 same period. In addition, three twin jet and two trijet 1996 deliveries were accounted for as operating leases with minimal revenue recorded on such transactions at the time of delivery. McDonnell Douglas received orders for seven MD-80 twin jets and one MD-11 trijet in the third quarter of 1996. Recently announced orders for five MD-11s and 10 MD-80s will be included in backlog when contracts are completed. On Sept. 30, 1996, McDonnell Douglas had firm orders for 20 MD-80 twin jets, 121 MD-90 twin jets, 50 MD-95 twin jets and 17 MD-11 trijets. Operating earnings in the financial services and other segment were $20 million for the third quarter and $54 million in the 1996 first nine months, compared with $13 million and $42 million in the 1995 same periods. Revenues in this segment were up $18 million during the quarter to $99 million and were $273 million for the first nine months of 1996, $31 million higher than in the first nine months of 1995. Pension income totaled $33 million in the third quarter and $98 million in the 1996 first nine months, compared with $38 million and $131 million in the same periods of 1995. Increases announced in the second quarter of 1995 in pension benefits and a change in the actuarial interest assumption for the discount rate contributed to the 1996 reduction. McDonnell Douglas had firm backlog of $22.271 billion on Sept. 30, 1996, compared with $19.640 billion on Dec. 31, 1995. Total backlog was $45.962 billion on Sept. 30, 1996, compared with $28.353 billion on Dec. 31, 1995. The increase in firm backlog related to the Longbow Apache program and to finalizing terms for the next eight C-17 aircraft. The 62 percent increase in total backlog related largely to multi-year contracts on the C-17 and Longbow Apache programs, and to a lesser extent increases in the Space Station and F/A-18 programs. Total employment at McDonnell Douglas was 64,644 on Sept. 30, 1996, up slightly from 63,612 on Dec. 31, 1995. MCDONNELL DOUGLAS CORPORATION CONSOLIDATED STATEMENT OF EARNINGS (Amounts in millions, except per share data) Three Months Ended September 30 1996 1995 -------- -------- Unaudited Revenues $ 3,308 $ 3,346 Costs and expenses: Cost of products, services and rentals 2,666 2,784 General and administrative expenses 183 160 Research and development 94 75 Interest expense: Aerospace segments 31 14 Financial services and other segment 32 26 -------- -------- Total costs and expenses 3,006 3,059 -------- -------- Earnings Before Income Taxes 302 287 Income taxes 107 95 -------- -------- Net Earnings $ 195 $ 192 ======== ======== Earnings Per Share $ .90 $ .85 ======== ======== Dividends Declared Per Share $ .12 $ .10 ======== ======== Weighted-average Shares Outstanding 214.6 225.1 ======== ======== Nine Months Ended September 30 1996 1995 -------- -------- Unaudited Revenues $ 9,743 $10,601 Costs and expenses: Cost of products, services and rentals 7,843 8,914 General and administrative expenses 529 499 Research and development 273 215 Interest expense: Aerospace segments 93 86 Financial services and other segment 94 81 -------- -------- Total costs and expenses 8,832 9,795 -------- -------- Earnings Before Income Taxes 911 806 Income taxes 330 286 -------- -------- Net Earnings $ 581 $ 520 ======== ======== Earnings Per Share $ 2.66 $ 2.28 ======== ======== Dividends Declared Per Share $ .36 $ .30 ======== ======== Weighted-average Shares Outstanding 218.2 228.1 ======== ======== MCDONNELL DOUGLAS CORPORATION BUSINESS SEGMENT DATA (Millions of dollars) Three Months Ended September 30 1996 1995 -------- -------- Unaudited Revenues Military aircraft $ 1,902 $ 2,102 Commercial aircraft 773 663 Missiles, space and electronic systems 533 488 Financial services and other 99 81 -------- -------- Operating revenues 3,307 3,334 Non-operating income 1 12 -------- -------- Total Revenues $ 3,308 $ 3,346 ======== ======== Earnings (Losses) Military aircraft $ 253 $ 237 Commercial aircraft 23 (7) Missiles, space and electronic systems 43 52 Financial services and other 20 13 -------- -------- Operating earnings 339 295 Corporate and other (6) 6 Interest expense (31) (14) Income taxes (107) (95) -------- -------- Net Earnings $ 195 $ 192 ======== ======== Nine Months Ended September 30 1996 1995 -------- -------- Unaudited Revenues Military aircraft $ 5,864 $ 6,000 Commercial aircraft 1,923 2,965 Missiles, space and electronic systems 1,670 1,366 Financial services and other 273 242 -------- -------- Operating revenues 9,730 10,573 Non-operating income 13 28 -------- -------- Total Revenues $ 9,743 $10,601 ======== ======== Earnings Military aircraft $ 746 $ 652 Commercial aircraft 60 26 Missiles, space and electronic systems 154 168 Financial services and other 54 42 -------- -------- Operating earnings 1,014 888 Corporate and other (10) 4 Interest expense (93) (86) Income taxes (330) (286) -------- -------- Net Earnings $ 581 $ 520 ======== ======== 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 ----------------------------- September 30 December 31 1996 1995 -------- -------- Unaudited ASSETS Cash and cash equivalents $ 567 $ 797 Accounts receivable 879 821 Finance receivables and property on lease 2,819 2,347 Contracts in process and inventories 3,652 3,421 Property, plant and equipment 1,446 1,471 Other assets 1,585 1,609 -------- -------- TOTAL ASSETS $10,948 $10,466 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 2,408 $ 2,284 Accrued retiree benefits 1,131 1,205 Income taxes 76 3 Advances and billings in excess of related costs 1,252 1,147 Notes payable and long-term debt: Aerospace segments 1,196 1,251 Financial services and other segment 1,794 1,469 -------- -------- 7,857 7,359 Minority Interest 67 66 Shareholders' Equity 3,024 3,041 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,948 $10,466 ======== ======== MDC Aerospace ---------------- September 30 December 31 1996 1995 -------- -------- Unaudited ASSETS Cash and cash equivalents $ 550 $ 784 Accounts receivable 963 934 Finance receivables and property on lease 235 165 Contracts in process and inventories 3,652 3,421 Prepaid income taxes 274 315 Property, plant and equipment 1,384 1,358 Investment in Financial Services 368 331 Other assets 1,513 1,527 -------- -------- TOTAL ASSETS $ 8,939 $ 8,835 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 2,331 $ 2,183 Accrued retiree benefits 1,131 1,205 Advances and billings in excess of related costs 1,211 1,111 Notes payable and long-term debt: Aerospace segments 1,175 1,229 -------- -------- 5,848 5,728 Minority Interest 67 66 Shareholders' Equity 3,024 3,041 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,939 $ 8,835 ======== ======== Financial Services --------------------- September 30 December 31 1996 1995 -------- -------- Unaudited ASSETS Cash and cash equivalents $ 17 $ 13 Accounts receivable 3 2 Finance receivables and property on lease 2,584 2,182 Property, plant and equipment 62 113 Other assets 72 82 -------- -------- TOTAL ASSETS $ 2,738 $ 2,392 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Accounts payable and accrued expenses $ 164 $ 216 Income taxes 350 318 Advances and billings in excess of related costs 41 36 Notes payable and long-term debt: Aerospace segments 21 22 Financial services and other segment 1,794 1,469 -------- -------- 2,370 2,061 Shareholders' Equity 368 331 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,738 $ 2,392 ======== ======== 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 CAPITAL STRUCTURE (Amounts in millions, except for ratios and deliveries) September 30, 1996 ------------------------------------ Unaudited Financial Services Aerospace and Other Segments Segment Total --------- --------- -------- Debt $1,196 $1,794 $2,990 ======= ======= ======= Equity $2,656 $ 368 $3,024 ======= ======= ======= Debt-to-equity ratio .45 4.88 ======= ======= Common Shares outstanding 212.9 ======= December 31, 1995 ------------------------------------ Financial Services Aerospace and Other Segments Segment Total --------- --------- -------- Debt $1,251 $1,469 $2,720 ======= ======= ======= Equity $2,710 $ 331 $3,041 ======= ======= ======= Debt-to-equity ratio .46 4.44 ======= ======= Common Shares outstanding 223.6 ======= COMMERCIAL AIRCRAFT DELIVERIES Three Months Ended Nine Months Ended September 30 September 30 1996 1995 1996 1995 ------ ------ ------ ------ MD-80 4 4 11 15 MD-90 4 4 8 10 MD-11 3 2 10 13 MCDONNELL DOUGLAS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Millions of dollars) Nine Months Ended September 30 1996 1995 -------- -------- Unaudited OPERATING ACTIVITIES Net earnings $ 581 $ 520 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 198 197 Pension income (98) (131) Changes in other operating assets and liabilities 54 189 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 735 775 INVESTING ACTIVITIES Property, plant and equipment acquired (141) (99) Finance receivables and property on lease (506) (25) Proceeds from sale of assets - 25 Other 27 (33) -------- -------- NET CASH USED BY INVESTING ACTIVITIES (620) (132) FINANCING ACTIVITIES Net change in borrowings (maturities 90 days or less) 64 (95) Debt having maturities more than 90 days: New borrowings 366 411 Repayments (160) (327) Proceeds of stock options exercised 1 1 Common shares purchased (541) (325) Dividends paid (75) (69) -------- -------- NET CASH USED BY FINANCING ACTIVITIES (345) (404) -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (230) 239 Cash and cash equivalents at beginning of year 797 421 -------- -------- Cash and cash equivalents at end of period $ 567 $ 660 ======== ======== -----END PRIVACY-ENHANCED MESSAGE-----