ITEM 1. BUSINESS
GENERAL
The Company was incorporated in Maryland in 1939 under the name McDonnell Aircraft Corporation. On April 19, 1967, the shareholders approved the merger with Douglas Aircraft Company and the name of the corporation was changed to McDonnell Douglas Corporation (the Company or MDC).
The Company, its divisions and its subsidiaries operate principally in four industry segments: military aircraft; missiles, space and electronic systems; commercial aircraft; and financial services and other. Operations in the first two industry segments are conducted primarily by McDonnell Douglas Aerospace, an unincorporated operating division of the Company, which is engaged in design, development, production, and support of the following major products: military transport aircraft; combat aircraft and training systems; commercial and military helicopters and ordnance; missiles; space launch vehicles and space station systems; and defense and commercial electronics, lasers, sensors, and command, control, communications, and intelligence systems. Operations in the commercial aircraft segment are conducted by Douglas Aircraft Company (DAC), an unincorporated operating division of the Company, which designs, develops, produces and sells commercial transport aircraft and related spare parts.
Through its McDonnell Douglas Financial Services Corporation (MDFS) subsidiary, the Company is engaged in aircraft financing and commercial equipment leasing. The Company's subsidiary, McDonnell Douglas Realty Company, was established in 1972 to develop the Company's surplus real estate. While continuing to serve that role, McDonnell Douglas Realty Company has become a full-service developer and property manager in the commercial real estate market as well as for the Company's aerospace business.
Since 1988, substantially all of the Company's information systems business has been divested. In 1991, MDC sold substantially all of the assets of McDonnell Douglas Systems Integration Company and certain related assets of McDonnell Douglas Information Systems International (MDISI). In 1992, MDC sold all the outstanding stock of TeleCheck Services, Inc. and in 1993, MDC sold its remaining MDISI business.
The business segments in which the Company is engaged and discussion of certain of their respective products appear under the captions: "Military Aircraft," "Commercial Aircraft," "Missiles, Space and Electronic Systems," and "Complementary Businesses" on pages 4 through 20, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 24 through 31 of the Company's 1994 Annual Report to Shareholders, the text portions of which are incorporated herein by this reference.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Financial information regarding the Company's industry segments is provided under the caption "Selected Financial Data by Industry Segment" on page 32 of the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference.
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MARKETING AND MAJOR CUSTOMER - MCDONNELL DOUGLAS AEROSPACE
Discussion regarding the Company's most significant customer in the military aircraft and missiles, space and electronic systems segments is included under the captions "Business and Market Considerations - Military Aerospace Business" and "Government Business Audits, Reviews and Investigations" on pages 29 through 31 in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 1994 Annual Report to Shareholders, which are incorporated herein by this reference.
COMPETITION
Programs and products comprising most of the Company's business volume are of a highly technical nature, comparatively few in number, high in unit cost, and have traditionally enjoyed relatively long production lives. There is significant competition in the aerospace industry, both in military and commercial programs.
The Company's military segments compete in an industry composed of a few major competitors and a limited number of customers. The number of competitors in these segments has decreased over the past few years due to consolidation brought about by reduced defense spending. However, competition for military programs remains significant.
The Company's commercial aircraft sales are subject to intense competition from aircraft manufactured by other companies, both foreign and domestic, including companies which are nationally owned or subsidized and have a larger family of commercial aircraft to meet varied and changing airline requirements. The Company's principal competitors in commercial aircraft are The Boeing Company and Airbus Industrie. To meet competition, the Company maintains a continuous program directed toward enhancing the performance and capability of its products. Additionally, product improvement programs which increase airplane operational capability, improve reliability, enhance maintainability and increase commonality within current airplane families and across the entire product line will continue. A vital part of the Company's strategy is a program to develop derivatives of the current product line.
MDFS is subject to competition from other financial institutions, including commercial banks, finance companies, and leasing companies. Some full-service leasing companies are larger than MDFS and have greater financial resources, greater leverage ability, and lower effective borrowing costs.
SUBCONTRACTING, PROCUREMENT AND RAW MATERIALS
The most important raw materials required for the Company's products, from the standpoint of aggregate cost, are aluminum (sheet, plate, forgings and extrusions), titanium (sheet, plate, forgings and extrusions) and composites (including carbon and boron). All of these materials are purchased from outside sources and generally are available at competitive prices. Additional sources and capacity exist for these raw materials, but it would take a year or more before they could become qualified alternate sources of supply.
The Company purchases many components, such as engines and accessories, electrical power systems, radars, landing gears, fuel systems, refrigeration systems, navigational equipment, and flight and engine instruments for use in aircraft, and propulsion systems, guidance systems, telemetry and gyroscopic devices in support of its space systems and missile programs. In addition, fabricated subassemblies such as engine pods and pylons, fuselage sections, wings and empennage surfaces, doors and
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flaps, are sometimes subcontracted to outside suppliers. The U.S. Government and commercial customers also furnish many components for incorporation into aircraft and other products they purchase from the Company.
The Company is dependent upon the ability of its large number of suppliers and subcontractors to meet performance specifications, quality standards, and delivery schedules at anticipated costs, and their failure to do so would adversely affect production schedules and contract profitability, while jeopardizing the ability of the Company to fulfill commitments to its customers. The Company has encountered some difficulty from time to time in assuring long-lead time supplies of essential parts, subassemblies, and materials. The Company's success in forestalling shortages of critical commodities over the long term is difficult to predict because many factors affecting such shortages are outside its control.
EMPLOYEES
At December 31, 1994 the total employment of the Company, including subsidiaries, was 65,760.
PATENTS AND LICENSES
The Company holds many patents and has licenses under patents held by others. The Company does not believe that the expiration of any patent or group of patents, nor the termination of any patent license agreement, would materially affect its business. The Company does not believe that any of its patents or trademarks are materially important to the conduct of its business.
ENVIRONMENTAL REGULATIONS
See "Environmental Expenditures" on page 31 in "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference.
RESEARCH AND DEVELOPMENT
A significant portion of the Company's business with the U.S. Government consists of research, development, test, and evaluation work, which are reflected as sales and costs in the Company's financial statements. Customer-sponsored research and development work amounted to approximately $1.393 billion in 1994, $1.126 billion in 1993, and $1.018 billion in 1992. Company-initiated research and development and bid and proposal work, related to both commercial business and business with the U.S. Government, amounted to $297 million in 1994, $341 million in 1993, and $509 million in 1992.
U.S. GOVERNMENT AND EXPORT SALES
Although there are additional risks to the Company attendant to its foreign operations, such as currency fluctuations and devaluations, the risk of war, changes in foreign governments and their policies, differences in foreign laws, uncertainties as to enforcement of contract rights, and difficulties in negotiating and litigating with foreign sovereigns, the Company's financial position has not been materially affected.
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Since most of the Company's foreign export sales involve technologically advanced products, services and expertise, U.S. export control regulations limit the types of products and services that may be offered and the countries and governments to which sales may be made. The Department of State issues and maintains the International Traffic in Arms Regulations pursuant to the Arms Export Control Act. The Department of Commerce issues and maintains the Export Administration Regulations pursuant to the Export Administration Act and the Department of Treasury implements and maintains transaction controls, sanctions and trade embargoes pursuant to the Trading With the Enemy Act and the International Emergency Economic Powers Act. Pursuant to these regulations, certain products and services cannot be exported without obtaining a license. Most of the defense products that the Company sells abroad cannot be sold without such a license. Consequently, the Company's international sales may be adversely affected by changes in the United States Government's export policy, the implementation of trade sanctions or embargoes, or the suspension or revocation of the Company's foreign export control licenses.
Additional information required by this item is included in Note 19, "U.S. Government and Export Sales" on page 52 of the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference.
BACKLOG
The backlog of orders follows:
December 31 1994 1993 Backlog % Backlog % ------- ----- ------- ----- (Dollars in millions) Firm backlog: Military aircraft $ 8,340 47.6 $ 7,997 41.3 Commercial aircraft 7,544 43.1 9,172 47.3 Missiles, space and electronic systems 1,619 9.3 2,210 11.4 ------- ----- ------- ----- Total Firm Backlog $17,503 100.0 $19,379 100.0 ======= ===== ======= =====
Contingent backlog: Military aircraft $ 8,597 73.3 $10,742 65.8 Commercial aircraft 2,234 19.0 3,059 18.8 Missiles, space and electronic systems 898 7.7 2,518 15.4 ------- ----- ------- ----- Total Contingent Backlog $11,729 100.0 $16,319 100.0 ======= ===== ======= =====
Backlog reported is that of the aerospace segments. Customer options and products produced for short-term lease are excluded from backlog. For a discussion of risks associated with backlog for commercial customers, see "Backlog" on page 31 in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference.
Contingent backlog includes: (a) U.S. and other government orders not yet funded; (b) U.S. and other government orders being negotiated as continuations of authorized programs; and (c) unearned price escalation on firm commercial aircraft orders.
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The backlog amounts include units scheduled for delivery over extended future periods. Since substantially all work for the U.S. and other governments is accounted for on the percentage of completion method of accounting whereby sales are recorded as work is performed, such amounts included in backlog cannot be segregated on the basis of scheduled deliveries. However, with respect to commercial jetliners and related products included in the commercial segment (which are accounted for on a delivery method), the firm backlog related to deliveries scheduled after one year was $4.8 billion at December 31, 1994, and $6.9 billion at December 31, 1993.
The Government may terminate its contracts for default, or for its convenience whenever it believes that such termination would be in the best interest of the Government. For a further discussion of termination for default and termination for convenience risks, see "Military Aerospace
Business" on page 29 in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company at February 28, 1995, were as follows:
EXECUTIVE AGE POSITIONS AND OFFICES HELD --------- --- ---------------------------
Dean C. Borgman 53 McDonnell Douglas Helicopter Systems Senior Vice President - General Manager since September 1993 and McDonnell Douglas Helicopter Company (MDHC) President since March 1992. MDHC Vice President - Commercial Programs 1992. MDHC General Manager MDX Program 1990-1992. MDHC Vice President - Advanced Product and Technology Division 1989-1990.
Robert L. Brand 57 MDC Vice President and Controller since September 1992. McDonnell Douglas Missile Systems Company (MDMSC) Vice President - Business Management and Chief Financial Officer 1992. MDC Controller 1987-1992.
Laurie A. Broedling 49 MDC Vice President - Human Resources since February 1995. Associate Administrator for Continual Improvement of National Aeronautics and Space Administration 1992-1995. Deputy Under Secretary of Defense -Total Quality Management 1990-1992.
John P. Capellupo 60 McDonnell Douglas Aerospace President since December 1994. MDC Executive Vice President 1992-1994. McDonnell Aircraft Company (MCAIR) President 1991-1992. DAC Deputy President 1990-1991. MDMSC President 1989-1990.
Stanley Ebner 61 MDC Senior Vice President - Washington Operations since December 1994. Self- employed 1990-1994. Senior Vice President- Government Relations of Northrop Corporation 1979-1990.
Patrick J. Finneran 49 MDC Vice President/General Manager - Production Aircraft Programs since January 1995. MDC Vice President/General Manager AV 8B 1992-1994. MCAIR General Manager 1992. MCAIR Deputy General Manager 1990-1992.
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Kenneth A. Francis 61 MDC Executive Vice President since August 1992. McDonnell Douglas Space Systems Company (MDSSC) President 1990-1992. MDSSC Executive Vice President 1989-1990.
Steven N. Frank 46 MDC Vice President, Associate General Counsel & Secretary since April 1994. MDC Vice President, Associate General Counsel & Assistant Secretary 1992-1994. Partner of Peper, Martin, Jensen, Maichel & Hetlage 1988-1992.
Robert H. Hood, Jr. 62 DAC President since January 1989.
Donald R. Kozlowski 57 MDC Senior Vice President - C-17 Program Manager since December 1993. MDC Vice President/General Manager, High Speed Civil Transport 1992-1993. MCAIR Vice President/ General Manager F/A-18 1991-1992. MCAIR Vice President/General Manager 1988-1991.
F. Mark Kuhlmann 46 MDC Senior Vice President - Administration and General Counsel since April 1994. MDC Senior Vice President - Administration - General Counsel and Secretary 1992-1994. MDC Vice President, General Counsel and Secretary 1991-1992. McDonnell Douglas Systems Integration President 1989-1991.
Herbert J. Lanese 49 MDC Executive Vice President and Chief Financial Officer since August 1992. MDC Senior Vice President - Finance 1989-1992.
James H. MacDonald 58 MDC Senior Vice President - Total Quality Management since September 1992. MDC Senior Vice President 1989-1992.
John F. McDonnell 56 MDC Chairman of the Board since September 1994. MDC Chairman and Chief Executive Officer 1988-1994.
Willard P. Olson 55 MDC Senior Vice President - Space & Defense Systems since January 1995. MDC Vice President/General Manager - Space & Defense Systems 1994-1995. MDC Vice President/General Manager Huntsville 1990-1994. MDSSC Director Design & Technology 1989-1990.
James F. Palmer 45 MDC Vice President - Treasurer since July 1993. MDC Vice President/General Manager - Business Management 1992-1993. MCAIR Chief Financial Officer 1991-1992. Partner of Ernst & Young 1985-1991.
James B. Peterson 50 MDC Vice President/General Manager - Missiles & Aerospace Support since January 1995. MDC Vice President/General Manager Cruise Missiles 1994-1995. MDC Vice President/General Manager Tomahawk Program 1993-1994. MDC Vice President & Deputy New Aircraft & Missile Products 1992- 1993. MDMSC Vice President Advanced Programs & Technology 1992. MDMSC Vice President Technology Division 1991-1992. MDMSC Director Tomahawk All-Up-Round (Block III) 1986-1991.
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Michael M. Sears 47 MDC Vice President/General Manager F/A-18 since January 1994. MDC Vice President/General Manager F/A-18E/F 1991-1994. MCAIR Vice President/General Manager New Aircraft Products Division 1990-1991.
James M. Sinnett 55 MDC Senior Vice President - New Aircraft & Missile Products since December 1993. MDC Vice President/General Manager New Aircraft Products Division 1991-1993. MCAIR Vice President/ General Manager ATF 1990-1991.
Harry C. Stonecipher 58 MDC President and Chief Executive Officer since September 1994. Chairman of the Board, President and Chief Executive Officer of Sundstrand Corporation 1991-1994. President and Chief Executive Officer of Sundstrand Corporation 1989-1991.
All executive officers serve at the pleasure of the Board of Directors of the Company and are appointed annually. Non-executive officers may be appointed by the Board or the Chairman. All of the executive officers have been employees of the Company at least five years except Laurie A. Broedling, Stanley Ebner, Steven N. Frank, James F. Palmer and Harry C. Stonecipher. There are no arrangements or understandings between any of the executive officers and any other person pursuant to which he was selected as an officer, except for Harry C. Stonecipher, who is party to an employment agreement attached hereto as Exhibit 10(h). A summary of a proposed amendment to Mr. Stonecipher's employment agreement appears on page 24 of the Company's definitive Proxy Statement for 1995 which is incorporated herein by the reference contained on page 10 hereof.
ITEM 2.
ITEM 2. PROPERTIES
At December 31, 1994 the Company's manufacturing, laboratory, office and warehouse areas totaled 37.1 million square feet, of which 6.2 million square feet were leased. The Company plants are well maintained and in good operating condition. The Company has long-term arrangements with airport authorities enabling it to share the use of runways, taxiways, and other airport facilities at various locations, including St. Louis, Missouri; Long Beach, California; and Mesa, Arizona. The trend of reduced defense spending and reduced commercial aircraft orders has resulted in downsizing of personnel and facility needs. In light of the Company's downsizing and current business economic conditions, many of the Company's facilities are currently underutilized. Leases related to Tulsa, Oklahoma; Columbus, Ohio; and Culver City, California terminated during 1994.
The Company's principal locations are in six states and Canada. Those in St. Louis, Missouri are chiefly devoted to military aircraft, electronics, training systems, and missiles. Those in Mesa, Arizona are primarily used for development, manufacture, and assembly of helicopters. In the Los Angeles, California area, principal properties are located in Huntington Beach and Long Beach. Huntington Beach, California properties are utilized for research and manufacture of spacecraft, launch vehicles, and electronics. Long Beach, California properties are devoted to the development, manufacture, and assembly of commercial and military transport aircraft, and to the financial services and other segment. Subassembly work for the commercial and military aircraft business segments is performed at Macon, Georgia; Salt Lake City, Utah; and Toronto, Canada for shipment to operations at Long Beach. Florida facilities are devoted to production of missiles and space operations.
In early March 1995, the Company announced that in late 1995 it will close two facilities, one in Titusville, Florida and another in St. Charles, Missouri, as part of its continuing consolidation of facilities due to excess capacity throughout the Company. The plant in Titusville will close after production of Tomahawk cruise missiles for the U.S. Navy and other operations come to an end there in August 1995. Operations at the St. Charles facility, which included production of electrical wire bundles and ground support equipment for aircraft and missile systems, will be reassigned to other Company locations.
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ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
In 1991, McDonnell Douglas Corporation and General Dynamics (GD) filed a legal action to contest the Navy's termination for default on the A-12 contract. Additional information relative to this matter and claims filed with the Navy on the T45 contract is included in Note 5, "Contracts in Process and Inventories" on page 41 of the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference. See also Note 17, "Commitments and Contingencies" on page 51 of the Company's 1994 Annual Report to Shareholders and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Government Business Audits, Reviews and Investigations," page 30, which are incorporated herein by this reference.
MDC is a party to a number of proceedings brought under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund, or similar state statutes. MDC has been identified as a potentially responsible party (PRP) at 29 sites. Of these, MDC believes that it has de minimis liability at 19 sites, including 14 sites at which it believes that it has no future liability. At eight of the sites at which MDC's liability is not considered to be de minimis, either final or interim cost sharing agreements have been effected between the cooperating PRPs, although such agreements do not fix the amount of cleanup costs which the parties will bear. At the two remaining sites, MDC lacks sufficient information to determine its probable share or amount of liability. In addition, MDC is remediating, or has begun environmental engineering studies to determine cleanup requirements, at certain of its current operating sites or former sites of industrial activity. MDC estimates total reasonably possible costs of approximately $42 million for study and remediation expenditures at Superfund sites and MDC's current and former operating sites, of which $27 million is accrued at December 31, 1994. Claims for recovery have not been netted against the disclosed environmental liabilities. While ongoing litigation may eventually result in recovery of costs expended at certain of the waste sites, any gain is contingent upon a successful outcome and has not been accrued.
On August 2, 1994 MDC received notice of a complaint filed by the Long Beach, California City Prosecutor against MDC in the Long Beach Municipal Court arising out of a spill of jet fuel in March 1994 to the storm sewer system at the Douglas Aircraft facility in Long Beach. This complaint alleges violations of state law for: disposal of hazardous waste without a permit; discharge of a water pollutant without providing the proper report; discharging oil to marine waters; failure to immediately report the spill; permitting petroleum to pass into waters of the state; and discharging a substance deleterious to wildlife. The complaint seeks statutory penalties. On December 24, 1994 a jet fuel spill to the storm sewer system at the Douglas Aircraft facility in Long Beach occurred. The South Coast Air Quality Management District has issued a notice of violation alleging creation of a nuisance and failure to obtain a permit for an oil/water separator involved in the spill. No penalty has been proposed. No charges have been filed respecting the December 24 spill. Settlement negotiations are in progress as to both events. Resolution of these matters is not expected to have a materially adverse effect on MDC's financial position, results of operations, or cash flow.
A number of legal proceedings and claims are pending or have been asserted against MDC including legal proceedings and claims relating to alleged injuries to persons associated with the disposal of hazardous waste. A substantial portion of such legal proceedings and claims is covered by insurance. MDC believes that the final outcome of such proceedings and claims will not have a material adverse effect on MDC's financial position, results of operations, or cash flow.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter.
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PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information required by this item is included on pages 45, 46 and 55 of the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data for the five years ended December 31, 1994, consisting of the data under the captions "Summary of Operations" and "Balance Sheet Information" are included at page 54 of the Company's 1994 Annual Report to Shareholders, which is incorporated herein by this reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations is contained on pages 24 through 31 of the 1994 Annual Report to Shareholders, and under the captions "Military Aircraft," "Commercial Aircraft" and "Missiles, Space and Electronic Systems" on pages 4 through 19 of the 1994 Annual Report to Shareholders, the text portions, including tables, which are incorporated herein by this reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this item is included on pages 32 through 53, and on page 56 of the 1994 Annual Report to Shareholders, which are incorporated herein by this reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
This item is not applicable.
PART III
ITEMS 10, 11, 12 and 13
The information called for by Part III, Item 10
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. LIST OF FINANCIAL STATEMENTS
The following consolidated financial statements of McDonnell Douglas Corporation and Subsidiaries included in the 1994 Annual Report to Shareholders at the pages indicated, are incorporated herein by this reference:
Report of Ernst & Young LLP, Independent Auditors, page 53.
Consolidated Statement of Operations, years ended December 31, 1994, 1993, and 1992, page 33.
Balance Sheet, December 31, 1994 and 1993, page 34.
Consolidated Statement of Shareholders' Equity, years ended December 31, 1994, 1993, and 1992, page 36.
Consolidated Statement of Cash Flows, years ended December 31, 1994, 1993, and 1992, page 37.
Notes to Consolidated Financial Statements, pages 38 through 52.
Selected Financial Data by Industry Segment, page 32.
Quarterly Results of Operations, page 56.
(a)2. LIST OF FINANCIAL STATEMENT SCHEDULES
See Index to Financial Statement Schedules on page 16.
All other schedules for which provision is made in the applicable regulation of the Securities and Exchange Commission are omitted either because they are not applicable or because the required information is included in the financial statements or notes thereto.
(a)3. EXHIBITS
See Index to Exhibits on pages 13 through 15.
(b) Reports on Form 8-K filed during the fourth quarter of 1994:
Form 8-K filed on November 3, 1994 in response to Item 5.
Form 8-K filed on December 12, 1994 in response to Item 5.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MCDONNELL DOUGLAS CORPORATION (Registrant)
Date: March 27, 1995 By: /s/ Robert L. Brand --------------------------- Robert L. Brand Vice President and Controller and Registrant's Authorized Officer (Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the date indicated below.
Signature Title Date --------- ------ -----
/s/ Harry C. Stonecipher Director, President & Chief March 27, 1995 ------------------------ Executive Officer Harry C. Stonecipher (Principal Executive Officer)
/s/ Herbert J. Lanese Executive Vice President and March 27, 1995 ---------------------- Chief Financial Officer Herbert J. Lanese (Principal Financial Officer)
/s/ Robert L. Brand Vice President and Controller March 27, 1995 --------------------- (Principal Accounting Officer) Robert L. Brand
/s/ John F. McDonnell /s/ Kenneth M. Duberstein ---------------------------------- -------------------------------- John F. McDonnell, Director Kenneth M. Duberstein, Director
/s/ John H. Biggs /s/ William S. Kanaga ---------------------------------- -------------------------------- John H. Biggs, Director William S. Kanaga, Director
/s/ B.A. Bridgewater, Jr. /s/ James S. McDonnell III, ---------------------------------- -------------------------------- B.A. Bridgewater, Jr., Director James S. McDonnell III, Director
/s/ Beverly B. Byron /s/ George A. Schaefer ---------------------------------- -------------------------------- Beverly B. Byron, Director George A. Schaefer, Director
/s/ William E. Cornelius /s/ Ronald L. Thompson ---------------------------------- -------------------------------- William E. Cornelius, Director Ronald L. Thompson, Director
/s/ William H. Danforth /s/ P. Roy Vagelos ---------------------------------- -------------------------------- William H. Danforth, Director P. Roy Vagelos, Director
Date: March 27, 1995
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22 Form 10-K Page 16
MCDONNELL DOUGLAS CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedules of McDonnell Douglas Corporation and Subsidiaries for the year ended December 31, 1994 are included herein:
Report of Independent Auditors
Schedule II Valuation and Qualifying Accounts
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REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of McDonnell Douglas Corporation and subsidiaries (MDC) as of December 31, 1994 and 1993, and for each of the three years in the period ended December 31, 1994, and have issued our report thereon dated January 17, 1995 (incorporated by reference elsewhere in this Annual Report on Form 10K). Our audits also included the financial statement schedule listed in item 14(a) of this Annual Report on Form 10K. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
St. Louis, Missouri January 17, 1995
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