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<PAGE> 1 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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):
McDonnell Douglas Corporation
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(Exact Name of Registrant as Specified in its Charter)
Maryland
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(State or Other Jurisdiction of Incorporation)
1-3685 43-0400674
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Commission File Number (IRS Employer Identification No.)
Post Office Box 516, St. Louis, Missouri 63166-0516
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(Address of Principal Executive Offices) (Zip Code)
(314) 232-0232
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Registrant's Telephone Number
INFORMATION TO BE INCLUDED IN THE REPORT
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Item 5. Other Events. On February 9, 1994 Registrant released the
data associated with its earnings filed as an exhibit hereto,
which is incorporated herein in accordance with General Instruction F
to Form 8-K.
EXHIBITS
Exhibit No.
99 Earnings Data
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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.
Dated: February 9, 1994
MCDONNELL DOUGLAS CORPORATION
By: /s/F. Mark Kuhlmann
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Name: F. Mark Kuhlmann
Title: Senior Vice President-Administration
General Counsel and Secretary
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McDonnell Douglas had 1993 earnings of $396 million, or $10.10 per
share. That compares with 1992 earnings of $79 million, or $2.03 per
share, excluding unusual items related to the company's adoption of a
new retiree health care accounting standard. The increase in earnings
was achieved despite a 17 percent decline in revenues caused by
continued softness in commercial and military markets for aerospace
products.
Highlights for the year included strong performance across most
government aerospace programs, continued profitability in the
commercial aircraft business, and a 41 percent reduction in aerospace
debt -- from $2.767 billion at the outset of the year to a six-year
low of $1.625 billion at year end. Aerospace debt fell by $349
million in the fourth quarter, following debt reductions in each of
the first three quarters.
The 1993 results were reduced by a fourth quarter pre-tax charge
of $450 million, or $275 million after-tax ($6.99 per share). The
charge covered both an overall settlement of a range of issues related
to the C-17 military aircraft program and increased cost on the C-17
development and initial production contracts, which was in part
interrelated to the overall settlement.
Partially offsetting the C-17 charge, McDonnell Douglas had
unusual gains in 1993 from the sale of McDonnell Douglas Information
Systems International, the reversal of part of the one-time charge
taken in 1992 from the new retiree health care accounting standard,
and the successful resolution of tax issues. These gains totaled $220
million, or $5.61 per share.
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The charge in the C-17 program resulted in a fourth quarter loss
for the corporation of $132 million, or $3.36 per share. Excluding
the C-17 charge, McDonnell Douglas' earnings for the fourth quarter
totaled $143 million, or $3.63 per share, compared with $86 million,
or $2.20 per share, in 1992's fourth quarter, prior to a retiree health
care curtailment gain.
Interest expense for the aerospace segments in the fourth quarter
of 1993 was $51 million, down from $86 million in 1992's fourth
quarter. Interest expense for all of 1993 was $89 million, which
included the reversal of $135 million in previously accrued interest
expense associated with the favorable resolution of tax issues with
the Internal Revenue Service. Excluding the reversal, interest
expense for 1993 was $224 million, down from $309 million in the prior
year. The lower interest expense reflects reduced debt levels and
reduced interest rates.
Both 1993 and 1992 amounts for interest expense reflect a
$25 million reclassification of expenses in an executive life
insurance program from interest to general expenses. This
reclassification reduced segment operating earnings but had no impact
on net earnings.
Excluding C-17 charges in both years, operating earnings in the
military aircraft segment were $533 million for 1993, compared with
$391 million in 1992, a gain of 36 percent. Excluding the C-17 charge
in 1993's fourth quarter, fourth quarter earnings were $180 million,
up 61 percent from $112 million in 1992's fourth quarter. Revenues
for 1993 in this segment were 5 percent lower than in 1992, largely
due to reduced volume in the F-15 program.
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The commercial aircraft segment had its third consecutive
profitable year, with operating earnings of $40 million in 1993, down
from $102 million in 1992. Operating earnings in 1993's fourth
quarter were $2 million, compared with $34 million in the year-ago
quarter. There was a 28 percent reduction in revenues for the year
and 21 percent during the quarter due to reduced MD-80 twin jet and MD-
11 trijet deliveries.
Operating earnings for the commercial aircraft segment in 1993's
fourth quarter included a $41 million pre-tax gain from the sale of
McDonnell Douglas' 25 percent interest in Irish Aerospace and
offsetting charges of $37 million related to a commercial lease
guarantee, a product enhancement associated with a commercial
customer, and other items.
Margins in the MD80/90 program have continued to improve. But
total earnings have declined due to the sharp reduction in deliveries
caused by the continuing slump in the commercial aircraft market.
McDonnell Douglas delivered four twin jets in 1993's fourth
quarter, compared with 12 twin jets in 1992's fourth quarter. There
were 42 twin jet deliveries for the year 1993 (including eight under
lease arrangements), compared with 84 in 1992. In addition, there
were 36 MD-11 trijet deliveries in 1993 (including three under lease
arrangements), compared with 42 trijet deliveries in 1992. There were
11 trijet deliveries in 1993's fourth quarter (including two under
lease arrangements), compared with 13 trijet deliveries in 1992's
fourth quarter.
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The corporation received two new firm orders for MD80/90 twin
jets and entered into leases for two MD-11 trijets in the fourth
quarter. On Dec. 31, 1993, the MD80/90 program included 1,089
deliveries, 143 aircraft on firm order, and 185 options and reserves.
On the same date, the MD-11 program included 112 deliveries, 60
aircraft on firm order, and 101 options and reserves representing
potential future orders.
The missiles, space and electronic systems segment had record
operating earnings of $338 million in 1993, up 77 percent from
$191 million in 1992. There were strongly improved earnings from the
Harpoon, SLAM, Tomahawk, and Delta programs. Revenues for this
segment fell by 19 percent, largely as a result of the winding down of
the Advanced Cruise Missile program and reduced Delta space launches.
Earnings for the 1993 fourth quarter totaled $78 million, despite
$19 million in write-offs in several programs, including a laser
crosslink program and a plant closure and relocation. 1992 fourth
quarter earnings were $47 million, and included $29 million in pre-tax
write-offs primarily in the laser crosslink program.
Operating earnings in the financial services and other segment
were $31 million in 1993, compared with $20 million in 1992. Revenues
for this segment were 18 percent lower than in 1992, reflecting a
decision made in 1991 to streamline the finance subsidiary, refocusing
its efforts on only two markets -- aircraft and commercial
equipment leasing. Operating earnings in the 1993 fourth quarter were
$22 million, compared with $10 million in the year earlier quarter.
Most of the increase in 1993's fourth quarter earnings was due to used
aircraft and commercial equipment leasing sales.
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Excluding curtailment gains, after-tax retiree health care costs
associated with a new accounting standard (SFAS No. 106) were
$11 million lower in the fourth quarter of 1993 than in 1992's fourth
quarter and $117 million lower in 1993 compared with the same period
in 1992. The reduction reflects the elimination of company-paid
health care for many current and future retirees. The fourth quarter
of 1992 results include an after-tax curtailment gain of $676 million
($1,090 million pretax).
The corporation's firm backlog on Dec. 31, 1993, was $19.379
billion, compared with $24.052 billion on Dec. 31, 1992. Total
backlog at Dec. 31, 1993, was $35.698 billion, compared with $41.806
billion on Dec. 31, 1992. The decline in backlog reflects deliveries
and a softening of commercial aircraft orders worldwide.
Total employment of McDonnell Douglas was 70,016 on Dec. 31,
1993, compared with 87,377 a year earlier. A fifth of the total
reduction in McDonnell Douglas employment was due to the sale of non-
core businesses or outsourcing of certain support services.
Employment was further affected by lower production rates in a number
of programs and reductions in force aimed at achieving greater
efficiencies.
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MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of dollars, except share data)
<TABLE>
<CAPTION>
Three Months Ended
December 31
1993 1992
-------- --------
Unaudited
STATEMENT OF OPERATIONS
<S> <C> <C>
Revenues (A) $3,632 $4,620
Costs and expenses:
Cost of products, services and
rentals 3,475 4,047
General and administrative expenses (A) 216 220
Research and development 85 114
Postretirement benefit curtailment - (1,090)
Interest expense:
Aerospace segments (A) 51 86
Financial services and other
segment 29 34
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Total costs and expenses 3,856 3,411
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Earnings (Loss) From Continuing
Operations Before Income Taxes (224) 1,209
Income taxes (benefit) (92) 453
------- -------
Earnings (Loss) From Continuing
Operations (132) 756
Earnings from discontinued operations,
net of income taxes - 6
------- -------
Net Earnings (Loss) $ (132) $ 762
======= =======
Earnings (Loss) Per Share:
Continuing operations $(3.36) $19.30
Discontinued operations - .16
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$(3.36) $19.46
======= =======
Dividends Declared Per Share $ .35 $ .35
</TABLE> ======= =======
(A) Prior year and first nine months of 1993 data has been
restated for reclassification of certain revenues and
expenses related to an executive life insurance program.
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MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS
(Millions of dollars, except share data)
<TABLE>
<CAPTION> Years Ended
December 31
1993 1992
-------- --------
STATEMENT OF OPERATIONS <C> <C>
<S>
Revenues (A) $14,487 $17,365
Costs and expenses:
Cost of products, services and
rentals 12,822 15,567
General and administrative expenses (A) 720 825
Research and development 341 509
Postretirement benefit curtailment (70) (1,090)
Interest expense:
Aerospace segments (A) 89 309
Financial services and other
segment 126 159
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Total costs and expenses 14,028 16,279
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Earnings From Continuing Operations
Before Income Taxes and Cumulative
Effect of Accounting Change 459 1,086
Income taxes 100 388
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Earnings From Continuing Operations
Before Cumulative Effect of
Accounting Change 359 698
Earnings from discontinued operations,
net of income taxes 37 57
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Earnings Before Cumulative Effect
of Accounting Change 396 755
Cumulative effect of initial application
of new accounting standard for
postretirement benefits - (1,536)
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Net Earnings (Loss) $ 396 $ (781)
======== ========
Earnings (Loss) Per Share:
Continuing operations $ 9.17 $ 17.97
Discontinued operations .93 1.46
Cumulative effect of accounting
change - (39.53)
-------- --------
$ 10.10 $(20.10)
======== ========
Dividends Declared Per Share $ 1.40 $ 1.40
======== ========
</TABLE>
(A) Prior year and first nine months of 1993 data has been
restated for reclassification of certain revenues and
expenses related to an executive life insurance program.
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MCDONNELL DOUGLAS CORPORATION
BUSINESS SEGMENT DATA
(Millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended
December 31
1993 1992
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Unaudited
BUSINESS SEGMENT DATA
<S> <C> <C>
Revenues
Military aircraft $ 1,622 $ 2,068
Commercial aircraft 1,291 1,639
Missiles, space and electronic
systems 628 817
Financial services and other 88 91
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Operating revenues 3,629 4,615
Non-operating income 3 5
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Total Revenues $ 3,632 $ 4,620
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Earnings
Military aircraft $ (270) $ 112
Commercial aircraft 2 34
Missiles, space and electronic
systems 78 47
Financial services and other 22 10
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Operating earnings (loss) from
continuing operations (168) 203
Discontinued operations, net of
income taxes - 6
Corporate and other (5) 2
Postretirement benefit curtailment - 1,090
Interest expense (51) (86)
Income tax benefit (expense) 92 (453)
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Net Earnings (Loss) $ (132) $ 762
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</TABLE>
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MCDONNELL DOUGLAS CORPORATION
BUSINESS SEGMENT DATA
(Millions of dollars)
<TABLE>
<CAPTION> Years Ended
December 31
1993 1992
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BUSINESS SEGMENT DATA
<S> <C> <C>
Revenues
Military aircraft $ 6,852 $ 7,238
Commercial aircraft 4,760 6,595
Missiles, space and electronic
systems 2,575 3,169
Financial services and other 287 352
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Operating revenues 14,474 17,354
Non-operating income 13 11
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Total Revenues $14,487 $17,365
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Earnings
Military aircraft $ 83 $ 8
Commercial aircraft 40 102
Missiles, space and electronic
systems 338 191
Financial services and other 31 20
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Operating earnings from
continuing operations 492 321
Discontinued operations, net of
income taxes 37 57
Corporate and other (14) (16)
Postretirement benefit curtailment 70 1,090
Interest expense (89) (309)
Income taxes (100) (388)
Cumulative effect of accounting
change - (1,536)
-------- --------
Net Earnings (Loss) $ 396 $ (781)
======== ========
</TABLE>
Operating earnings of the financial services and other segment have
been reduced by interest expense, an operating expense of that
segment.
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MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED BALANCE SHEET
(Millions of dollars)
<TABLE>
<CAPTION>
December 31 December 31
1993 1992
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ASSETS
<S> <C> <C>
Cash and cash equivalents $ 86 $ 82
Accounts receivable 555 604
Finance receivables and property
on lease 2,357 2,262
Contracts in process and inventories 5,774 7,230
Property, plant and equipment 1,750 1,991
Other assets 1,504 1,612
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TOTAL ASSETS $12,026 $13,781
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued
expenses $ 2,190 $ 3,018
Accrued retiree benefits 1,388 1,544
Income taxes 574 572
Advances and billings in excess
of related costs 1,251 1,384
Notes payable and long-term debt:
Aerospace segments 1,625 2,767
Financial services and other
segment 1,513 1,474
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8,541 10,759
Minority Interest 72 -
Shareholders' Equity 3,413 3,022
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $12,026 $13,781
======== ========
</TABLE>
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CAPITAL STRUCTURE
(Millions of dollars)
<TABLE>
<CAPTION> December 31, 1993
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Financial
Services
Aerospace and Other
Segments Segment Total
--------- --------- ---------
<S> <C> <C> <C>
Debt $1,625 $1,513 $3,138
Equity 3,123 290 3,413
------- ------- -------
$4,748 $1,803 $6,551
======= ======= =======
Debt-to-equity ratio .52 5.22
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December 31, 1992
-------------------------------------
Financial
Services
Aerospace and Other
Segments Segment Total
--------- --------- ---------
Debt $2,767 $1,474 $4,241
Equity 2,750 272 3,022
------- ------- -------
$5,517 $1,746 $7,263
======= ======= =======
Debt-to-equity ratio 1.01 5.42
======= =======
</TABLE>
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