McDonnell Douglas Net Is $248 Million
McDonnell Douglas Corp. reported a third-quarter profit of $248 million Tuesday, nearly all of it due to a one-time $234-million gain from a pension fund change.
The company also reversed all of its earnings on the C-17 transport aircraft program, which resulted in a one-time charge of $93 million to cover the elimination of previously reported earnings dating back to 1985.
McDonnell Douglas, the nation’s largest defense contractor, now estimates that it won’t make any money on the $6-billion C-17 project, which is scheduled for a first flight in June of next year and completion in 1994.
“Backing out the unusual items, these earnings were surprisingly stronger than expected,” said Howard Rubel, a stock analyst for C. J. Lawrence in New York. “The C-17 is a disappointment, but hopefully this is a clear-the-decks approach and let’s go from here.”
The big gain involving the pension fund came after McDonnell Douglas executives decided to dissolve the company’s plan covering 14,000 retired salaried employees and replace it with an annuity sold by Metropolitan Life Insurance Co.
Without the two unusual items, the company would have reported a profit of $72 million in the quarter. In last year’s third quarter, McDonnell Douglas had a profit of $38 million.
Revenue for the quarter was $4.17 billion, up 12% from $3.70 billion for the same period a year ago.
McDonnell Douglas, headquartered in St. Louis, makes aircraft for the Air Force, the Navy and the Marines, as well as missiles and space systems. The company is also the second-biggest maker of commercial aircraft.
“There was continued improvement in the operation of all of our businesses,” said John McDonnell, chairman and chief executive. “For most of them, the third quarter was better than the second and the second was better than the first. And our results to date this year are far better than last year.”
All of the company’s businesses had improved profits during the quarter ended Sept. 30 except the transport aircraft division based in Long Beach, which is still racking up losses.
