<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): APRIL 10, 1996
WHITTAKER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-5407 95-4033076
(Commission File Number) (IRS Identification No.)
1955 NORTH SURVEYOR AVENUE, SIMI VALLEY, CA 93063
(Address of principal executive offices)
(805) 526-5700
(Registrant's telephone number, including area code)
<PAGE>
This Form 8-K/A amends Item 7 of that certain Form 8-K filed on April
25, 1996 (the "Original Form 8-K") by including the financial statements
referred to below.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
In connection with the business acquisition described in Item 2 of the
Original Form 8-K, attached are the financial statements of the business
acquired for the required periods, consisting of (i) balance sheets of
Xyplex, Inc. ("Xyplex") as of December 31, 1995 and 1994, (ii) the related
statements of operations, stockholders' equity, and cash flows for each of
the three years in the period ended December 31, 1995, (iii) balance sheets
of Xyplex as of March 31, 1996 and December 31, 1995, and (iv) the related
statements of operations and cash flows for the three months ended March
31, 1996 and 1995.
(b) Pro forma financial information.
In connection with the business acquisition described in Item 2 of the
Original Form 8-K, attached is the pro forma financial information required
pursuant to Article 11 of Regulation S-X, consisting of condensed combining
statements of operations of Whittaker Corporation and its subsidiaries and
Xyplex for the year ended October 31, 1995, and the six months ended April
30, 1996.
(c) Exhibits.
23.1 Consent of Independent Public Accountants of Arthur Andersen LLP
23.2 Consent of Independent Accountants of Coopers & Lybrand L.L.P.
(2)
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Raytheon Company:
We have audited the accompanying balance sheets of Xyplex, Inc. as of December
31, 1995 and 1994, and the related statements of income, stockholder's equity,
and cash flows for the years then ended. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 1, interest expense associated with Raytheon Company's
general corporate debt has not been allocated to Xyplex, Inc.'s financial
statements. Also as discussed in Note 1, Xyplex, Inc. has earned interest income
primarily on its intercompany receivable from Raytheon based on an agreed-upon
rate. As discussed in Note 2, certain costs and expenses presented in the
financial statements represent allocations of the costs of services provided to
Xyplex, Inc. by Raytheon Company. As a result of these factors, the financial
statements presented may not be indicative of the financial position or results
of operations that would have been achieved had Xyplex, Inc. operated as a
nonaffiliated entity.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Xyplex, Inc. as of December 31,
1995 and 1994, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 22, 1996
<PAGE>
XYPLEX, INC.
BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 113,000 $ 140,000
Short-term investments 400,000 400,000
Accounts receivable, less reserve of $805,000 and
$719,000 in 1995 and 1994, respectively 19,584,000 18,663,000
Inventory 8,974,000 8,397,000
Other current assets 790,000 456,000
Receivable from parent company 33,774,000 35,447,000
------------ ------------
Total current assets 63,635,000 63,503,000
Property and equipment, net 7,854,000 6,386,000
Deferred tax asset 6,136,000 3,168,000
Other assets 2,032,000 1,627,000
Goodwill 85,624,000 123,982,000
------------ ------------
Total assets $165,281,000 $198,666,000
============ ============
LIABILITIES AND PARENT COMPANY INVESTMENT
Current liabilities:
Current portion of capital lease obligations 472,000 796,000
Accounts payable 7,517,000 6,504,000
Accrued payroll and employee benefits 4,749,000 3,326,000
Other accrued expenses 1,700,000 900,000
Deferred revenue 3,134,000 1,551,000
------------ ------------
Total current liabilities 17,572,000 13,077,000
Long-term portion of capital lease obligations 84,000 604,000
Commitments and contingencies
Parent company investment 147,625,000 184,985,000
------------ ------------
Total liabilities and parent company investment $165,281,000 $198,666,000
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
XYPLEX, INC.
STATEMENTS OF INCOME
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net sales $107,617,000 $ 95,233,000
Cost of sales 49,360,000 40,646,000
------------ ------------
Gross profit 58,257,000 54,587,000
------------ ------------
Operating expenses:
Selling and marketing 35,675,000 25,283,000
General and administrative 6,300,000 5,008,000
Research and development 16,039,000 13,045,000
Parent company allocations 425,000 24,000
Amortization of goodwill 8,358,000 1,393,000
Impairment of goodwill 30,000,000 -
Acquisition charges - 4,299,000
------------ ------------
Total operating expenses 96,797,000 49,052,000
------------ ------------
(Loss) income from operations (38,540,000) 5,535,000
Interest expense (74,000) (131,000)
Interest income 22,000 834,000
Interest income from parent company 2,238,000 212,000
------------ ------------
Net (loss) income before income tax provision (36,354,000) 6,450,000
Provision for federal income taxes 1,006,000 3,152,000
------------ ------------
Net (loss) income $(37,360,000) $ 3,298,000
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
XYPLEX, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Common Stock Additional Parent Total
------------ Retained Paid-in Company Stockholder's
Shares Amount Earnings Capital Investment Equity
---------- ------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 6,055,000 $61,000 $ 22,083,000 $34,537,000 $ 56,681,000
Exercise of stock options 141,000 1,000 - 46,000 47,000
Tax benefit related to employee stock options - - - 1,172,000 1,172,000
Sale of common stock under employee
stock purchase plan 60,000 1,000 - 805,000 806,000
Net income earned through date of acquisition - - 1,641,000 - 1,641,000
Acquisition by Raytheon Company (6,256,000) (63,000) (23,724,000) (36,560,000) $ 60,347,000 -
Allocation of goodwill to parent company
investment - - - - 122,981,000 122,981,000
Net income - - - - 1,657,000 1,657,000
--------- ------- ------------ ----------- ------------ ------------
Balance, December 31, 1994 - - - - 184,985,000 184,985,000
Net loss - - - - (37,360,000) (37,360,000)
--------- ------- ------------ ----------- ------------ ------------
Balance, December 31, 1995 - - - - $147,625,000 $147,625,000
========= ======= ============ =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
XYPLEX, INC.
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $(37,360,000) $ 3,298,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 13,868,000 5,239,000
Impairment of goodwill 30,000,000 -
Tax benefit from employee stock options - 1,172,000
Deferred income tax provision (2,968,000) (2,453,000)
Changes in assets and liabilities:
Accounts receivable (921,000) (5,546,000)
Inventory (577,000) (3,402,000)
Other current assets (334,000) (114,000)
Accounts payable and accrued expenses 1,096,000 893,000
Deferred revenue 1,583,000 720,000
Other assets (110,000) (18,000)
------------ ------------
Net cash provided by (used in) operating activities 4,277,000 (211,000)
------------ ------------
Cash flows from investing activities:
Purchase and sale of equipment, net (6,437,000) (3,760,000)
Purchase of licenses and other intangible assets (836,000) (1,090,000)
Net proceeds from sales of securities - 19,917,000
------------ ------------
Net cash (used in) provided by investing activities (7,273,000) 15,067,000
Cash flows from financing activities:
Increase in accounts payable related to cash overdrafts 2,140,000 1,866,000
Repayment of note payable - (253,000)
Proceeds from exercise of stock options - 46,000
Proceeds from sale of stock under employee stock purchase plan - 805,000
Payments of capital leases (844,000) (863,000)
Net receipts from (payments to) parent company 1,673,000 (33,140,000)
------------ ------------
Net cash provided by (used in) financing activities 2,969,000 (31,539,000)
Net decrease in cash and cash equivalents (27,000) (16,683,000)
Cash and cash equivalents, beginning of year 140,000 16,823,000
------------ ------------
Cash and cash equivalents, end of year $ 113,000 $ 140,000
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
------------------------------------------
Basis of Presentation
Xyplex, Inc. (the "Company" or "Xyplex") designs, manufactures, markets and
supports data networks. On October 7, 1994, Xyplex was acquired by Raytheon
Company ("Raytheon") for total consideration of $186,000,000. Pursuant to
the purchase method of accounting, the assets and liabilities acquired by
Raytheon were revalued to their fair value. The excess of the purchase
price over the fair value of the net assets acquired was approximately
$125,000,000 and accordingly, goodwill and the parent company investment
were increased by $125,000,000. Effective on the close of business on April
9, 1996, Xyplex was acquired by Whittaker Corporation.
The accompanying historical financial statements present the Company's
results of operations and its financial condition as a stand alone entity
through October 7, 1994 and as a wholly-owned subsidiary of Raytheon
thereafter. Interest expense associated with Raytheon's general corporate
debt has not been allocated to the Company's financial statements. Certain
costs and expenses presented in the financial statements represent
intercompany allocations and management's estimates of the costs of
services provided to the Company by Raytheon. (See Note 2 for further
discussion of allocations.) Additionally, as discussed in further detail
below, Xyplex earned interest income primarily on its intercompany
receivable from Raytheon based on an agreed-upon rate. As a result of these
factors, the financial statements presented may not be indicative of the
results that would have been achieved had the Company operated as a non-
affiliated entity.
The Company has had transactions in the normal course of business with
Raytheon and its subsidiaries. Revenues from these transactions, totaling
$1,172,000 in 1995 and $128,000 in 1994, are in accordance with Xyplex's
normal terms and conditions. The remaining receivables from these
transactions with Raytheon are included in trade accounts receivable and
totaled $458,000 and $28,000 as of December 31, 1995 and 1994,
respectively.
Additionally, Xyplex transferred a substantial amount of its cash and
investments to Raytheon upon the acquisition date and has subsequently
participated in the Raytheon cash management program. All of this cash
management activity is recorded in the receivable from parent company
account. Intercompany activity also includes allocations of corporate
expenses, state and federal income tax payments and credits, and interest
earned on the intercompany receivable balance itself. Interest is earned on
the intercompany receivable balance at a rate of 6.25% in 1995 and 5% in
1994 and totaled approximately $2,238,000 in 1995 and $212,000 in 1994.
Continued
6
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Parent Company Investment
The parent company investment account represents the net assets of the
company. As described above, this account was credited with the excess of
the purchase price over the fair value of Xyplex's net assets at the time
of Raytheon's purchase.
Principles of Consolidation
The accompanying financial statements include the accounts of the Company
and its wholly owned subsidiaries, Xyplex Foreign Sales Corporation, Inc.,
a foreign sales corporation formed in April 1990 and Xyplex Security Corp.,
formed in May 1991. Significant intercompany accounts and transactions have
been eliminated in consolidation. The assets of Xyplex Security Corp. were
liquidated during 1994 after the Company was purchased by Raytheon.
Effective in 1995, the Company's foreign sales were reported under
Raytheon's foreign sales corporation (RITL).
Use of Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash Equivalents and Short-Term Investments
Cash equivalents include all highly liquid investments with original
maturities of ninety days or less at the time of acquisition. All other
investments are considered to be short-term investments and are recorded at
cost which approximates fair value. Under the Company's cash management
system with Raytheon, checks issued but not presented to banks frequently
result in overdraft balances for accounting purposes. The Company has
determined the net overdraft balance by bank and has correspondingly
reclassified these amounts to Accounts Payable.
Revenue Recognition
The Company recognizes product revenue upon shipment of goods and software.
Maintenance and support fees greater than $10,000 are recognized ratably
over the life of the contract. A provision is made at the time of shipment
for estimated warranty costs to be incurred.
Continued
7
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Inventory
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
Property and Equipment
Property and equipment are recorded at cost. Expenditures for maintenance
and repairs are charged to expense while the costs of significant
improvements are capitalized. Depreciation is computed using the straight-
line and accelerated methods in amounts that allocate the cost of these
assets over their estimated useful lives as follows:
<TABLE>
<CAPTION>
Estimated
Asset Classification Useful Life
-------------------- -----------
<S> <C>
Equipment 5 years
Computer equipment 3 years
Furniture and fixtures 5 years
Leasehold improvements Term of Lease
Demonstration units 3 years
Equipment under capital lease Term of Lease
</TABLE>
Upon retirement or sale, the cost of assets disposed and the related
accumulated depreciation are eliminated and the related gains or losses are
reflected in income.
Intangibles
Goodwill, which represents the amount Raytheon incurred in excess of the
fair value of the net assets of Xyplex on the date of purchase, is
amortized on a straight-line basis over a period of 15 years. For the years
ended December 31, 1995 and 1994, the Company incurred amortization expense
related to this asset of $8,358,000 and $1,393,000. Accumulated
amortization related to goodwill totaled $9,751,000 and $1,393,000 as of
December 31, 1995 and 1994.
Other intangibles assets, consisting primarily of licenses, are included in
other assets. These assets are amortized over a one to three year period
based on net realizable value. For the years ended December 31, 1995 and
1994, the Company incurred amortization expense of $444,000 and $245,000.
Accumulated amortization related to these other assets totaled $624,000 and
$180,000 as of December 31, 1995 and 1994.
Continued
8
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The Company periodically reviews the carrying value of its intangible
assets as well as the amortization periods to determine whether current
events and circumstances warrant adjustment to the carrying values or
estimated useful lives. At each balance sheet date, management evaluates
the carrying value of intangible assets to determine whether there has been
any permanent impairment. As of December 31, 1995, the Company recognized
goodwill impairment of $30,000,000. This amount represents the approximate
difference between the fair value and the carrying value of the Company's
net assets based on the anticipated sale of the Company.
Research and Development and Software Development Costs
Research and development costs are charged to expense as incurred. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 86,
capitalization of internally developed computer software costs begins upon
the establishment of technological feasibility. The Company believes that
once a working model has been established, the additional development costs
to bring the product to a commercially acceptable level are not
significant. There were no software development costs capitalized as of
December 31, 1995 and 1994.
Income Taxes
The Company records income taxes based on an asset and liability approach
which results in the recognition of deferred tax assets and liabilities for
the expected future tax consequences of temporary differences between the
book and tax bases of assets and liabilities. For purposes of these
financial statements, income taxes have been calculated as if Xyplex had
prepared a tax return on a stand alone basis.
In accordance with Raytheon's policy, all state and local taxes have been
included in general and administrative expenses.
2. Allocated Costs:
---------------
The historical statements of operations include charges from Raytheon
representing the Company's share of the cost of support services provided.
These charges are allocations of corporate expenses associated with legal,
marketing, management, financial and facilities management services. The
basis of the allocation is dependent on the functions and includes net
sales, square feet occupied, and percentage share of all other corporate
assessments. For these services, the Company was charged $425,000 and
$24,000 in 1995 and 1994, respectively.
Management believes the methods used to allocate the costs are reasonable
based on the company's use of such facilities and services.
Continued
9
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Inventory:
---------
Inventories consist of the following at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Raw materials $ 987,000 $1,753,000
Work in process 3,856,000 2,874,000
Finished goods 4,131,000 3,770,000
---------- ----------
$8,974,000 $8,397,000
========== ==========
</TABLE>
Work in process and finished goods inventories include materials, labor and
manufacturing overhead. At December 31, 1995 and 1994, finished goods
include approximately $2,553,000 and $1,747,000, respectively, of
demonstration products located at the sales and support offices and
potential customer sites.
4. Property and Equipment:
----------------------
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Equipment $ 5,810,000 $ 3,413,000
Computer equipment 8,433,000 6,302,000
Furniture and fixtures 1,626,000 835,000
Leasehold improvements 2,515,000 2,090,000
Demonstration units 3,080,000 2,372,000
3,513,000 3,528,000
------------ ------------
24,977,000 18,540,000
Less - Accumulated depreciation
and amortization (17,123,000) (12,154,000)
------------ ------------
$ 7,854,000 $ 6,386,000
============ ============
</TABLE>
Continued
10
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Equipment under capital leases had accumulated amortization of $2,942,000
and $2,078,000 as of December 31, 1995 and 1994. Acquisitions for equipment
under capital lease obligations totaled $477,000 in 1994. There were no
such acquisitions in 1995.
5. Long-Term Debt:
--------------
At December 31, 1993, the Company had approximately $253,000 outstanding
under a term note payable. Until the acquisition by Raytheon, the Company
made the required monthly principal payments of approximately $23,000 plus
interest. In October 1994, the Company paid this note off in full.
6. Stock Plans:
-----------
During 1994, the Company had two stock options plans in effect: the 1991
Restated Stock Option Plan (the "1991 Plan") and the 1989 Consultant's
Stock Option Plan (the "1989 Plan"). Under the 1991 Plan, incentive stock
options were granted at an exercise price of not less than the fair market
value of common stock as determined in accordance with the 1991 Plan and
nonqualified options were granted at an exercise price of not less than 50%
of the fair market value of the common stock at the date of grant. Under
the 1989 Plan, stock options were granted to eligible consultants, as
defined, at a price of not less than the fair value of the common stock at
the date of grant. At the time the Company was acquired by Raytheon, the
outstanding options of both of these plans were exchanged for options to
purchase Raytheon stock.
A summary of stock option activity under the 1991 Plan and the 1989 Plan
follows:
<TABLE>
<CAPTION>
1991 1989
Restated Consultant's
Stock Option Plan Stock Option Plan
----------------- -----------------
Number of Option Number of Option
Options Price Options Price
------- ----- ------- -----
<S> <C> <C> <C> <C>
Outstanding at December 31, 1993 613,532 $ .12 - 28.62 333 $ .12
Granted 24,069 $11.63 - 18.50
Exercised (140,963) $ .12 - 26.00
Canceled (28,075) $ 1.84 - 21.25
Exchanged for Raytheon stock options (468,563) (333)
-------- ----
Outstanding at December 31, 1994 - -
-------- ----
</TABLE>
Continued
11
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Prior to the acquisition by Raytheon, the Company also had the 1991
Employee Stock Purchase Plan (the "ESPP") in effect. Under the terms of the
ESPP, the company was authorized to grant options to purchase an aggregate
of 140,000 shares of common stock in a series of six-month periods. The
purchase price was 85% of the lower of the fair value per share of common
stock, as defined in the ESPP. At the time the Company was acquired by
Raytheon, these shares were converted to Raytheon stock.
7. Income Taxes:
------------
The provision for income taxes in the accompanying consolidated statements
of income consists of the following at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Federal:
Current $ 3,450,000 $ 4,238,000
Deferred (2,444,000) (1,086,000)
----------- -----------
$ 1,006,000 $ 3,152,000
=========== ===========
</TABLE>
A reconciliation of the federal statutory rate percentage to the Company's
effective tax rate percentage is as follows for the years ended December 31,
1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Income tax provision at federal statutory rate (35.0)% 35.0 %
Amortization of nondeductible goodwill 36.9 7.6
Non-deductible acquisition charges - 16.2
Other 0.9 (9.9)
----- ----
Effective tax rate 2.8 % 48.9 %
===== ====
</TABLE>
The approximate income tax effect of each type of temporary difference
comprising the deferred tax asset at December 31, 1995 and 1994 is as follows:
Continued
12
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Inventory $1,736,000 $ 829,000
Deferred revenue 957,000 305,000
Depreciation 935,000 443,000
Accrued vacation 463,000 394,000
Accrued warranty 306,000 181,000
Bad debt 282,000 252,000
Other, net 374,000 205,000
---------- ----------
Total federal deferred tax asset 5,053,000 2,609,000
State deferred tax asset, net 1,083,000 559,000
---------- ----------
Total deferred tax asset $6,136,000 $3,168,000
========== ==========
</TABLE>
Income taxes paid totaled approximately $3,322,000 and $2,935,000 in 1995
and 1994, respectively.
8. 401(k) Retirement Plan:
----------------------
The Company had a 401(k) retirement plan covering all employees who are
regularly scheduled to work 1,000 or more hours of service per year.
Participants may elect to defer up to 15% of their compensation for deposit
under the plan, subject to certain IRS limitations. The Company may elect
to make contributions to the plan. The contributions are allocated to each
eligible participant's account in proportion to each participant's
deferrals for the plan year, subject to IRS limitations; participants'
deferrals in excess of 6% of compensation are not matched. The Company
elected not to make contributions to the plan for the year ended December
31, 1994. In 1995, the Company contributed approximately $275,000.
Continued
13
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
9. Lease Commitments:
-----------------
The Company has both operating and capital lease commitments for certain
facilities and equipment. These leases expire at various dates through the
year 2014.
Future minimum lease payments under these noncancelable leases are as
follows:
<TABLE>
<CAPTION>
Operating Capital
Year Leases Leases
---- ------ ------
<S> <C> <C>
1996 $1,458,000 $495,000
1997 761,000 85,000
1998 633,000 -
1999 416,000 -
2000 416,000 -
Thereafter 2,278,000 -
---------- --------
Total minimum lease payments $5,962,000 580,000
========== ========
Less amount representing interest 24,000
--------
Present value of minimum lease payments 556,000
Less current portion of capital lease
obligations 472,000
--------
$ 84,000
========
</TABLE>
Rent expense was approximately $1,911,000 and $1,479,000 in 1995 and 1994,
respectively.
Continued
14
<PAGE>
XYPLEX, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
10. Significant Customers and Export Sales:
--------------------------------------
During 1994, sales to one customer totaled approximately $12,045,000 or
12.5% of net sales. No single customer accounted for more than 10% of net
sales during 1995.
Export sales as a percentage of net sales for the years ended December 31,
1995 and 1994, respectively, are as follows:
<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Europe 12.5% 12.0%
Pacific Rim 5.0 4.1
Canada 4.0 4.4
Other 9.8 5.1
---- ----
31.3% 25.6%
</TABLE>
11. Employment Agreements:
---------------------
During 1995, Raytheon and Xyplex provided strategic resolution bonuses to
key employees. These bonuses, totaling approximately $1,500,000, were due
and payable on March 1, 1996 for each employee who continued to be an
employee on March 1, 1996. Of the $1,500,000 charge, approximately $250,000
was funded by Xyplex with the remainder being funded by Raytheon.
Also during 1995, Raytheon entered into employment agreements with certain
key employees of the Company which provide for salary continuation of up to
12 months in the event of termination of employment without cause. The
aggregate commitment under these employment agreements should all covered
employees be terminated is approximately $1,500,000.
15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Xyplex, Inc.:
We have audited the accompanying consolidated statements of income,
stockholders' equity and cash flows of Xyplex, Inc. (a Massachusetts
corporation) and subsidiaries for the year ended December 31, 1993. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Xyplex, Inc. and subsidiaries for the year ended December 31, 1993 in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 28, 1994
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1993
(Rounded to the nearest thousand, except for share data)
<TABLE>
<S> <C>
Net Sales $76,815,000
Cost of Sales 29,634,000
-----------
Gross Profit 47,181,000
-----------
Operating Expenses
Research and development 10,153,000
Selling and marketing 20,507,000
General and administrative 4,085,000
-----------
Total operating expenses 34,745,000
-----------
Income from operations 12,436,000
Interest income 1,183,000
Interest expense (138,000)
-----------
Income before provision for income taxes 13,481,000
Provision for income taxes 4,638,000
-----------
Net income $ 8,843,000
===========
Net income per common and common
equivalent share $ $1.41
===========
Weighted average number of common
and common equivalent shares outstanding 6,276,000
===========
</TABLE>
The accompanying notes are an integral part of the Consolidated
Financial Statements.
(2)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Year Ended December 31, 1993
(Rounded to the nearest thousand)
<TABLE>
<CAPTION>
Common Stock
------------ Additional Total
Number of $.01 Par Paid-In Retained Stockholder's
Shares Value Capital Earnings Equity
--------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1992 5,903,000 $59,000 $32,886,000 $13,240,000 $46,185,000
Tax benefit from disqualifying dispositions - - 846,000 - 846,000
Exercise of stock options 118,000 2,000 173,000 - 175,000
Sale of common stock under employee
stock purchase plan 34,000 - 632,000 - 632,000
Net income - - - 8,843,000 8,843,000
--------- ------- ----------- ----------- -----------
Balance December 31, 1993 6,055,000 $61,000 $34,537,000 $22,083,000 $56,681,000
========= ======= =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the Consolidated
Financial Statements.
(3)
<PAGE>
XYPLEX INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1993
(Rounded to the nearest thousand)
<TABLE>
<S> <C>
Cash Flows from Operating Activities:
Net income $ 8,843,000
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 2,688,000
Deferred income taxes (173,000)
Changes in assets and liabilities -
Accounts receivable (3,663,000)
Inventories (3,895,000)
Prepaid expenses (872,000)
Accounts payable 426,000
Accrued expenses 979,000
Deferred revenue 281,000
-----------
Net cash provided by operating activities 4,614,000
-----------
Cash Flows from Investing Activities:
Purchase of property and equipment (4,073,000)
Increase in other assets (246,000)
Sale of short-term investments 3,922,000
-----------
Net cash used in investing activities (397,000)
-----------
Cash Flows from Financing Activities:
Tax benefit from disqualifying dispositions 846,000
Proceeds from exercise of stock options 173,000
Proceeds from sale of stock under employee
stock purchase plan 632,000
Payments on short-term debt (47,000)
Payments on long-term debt (275,000)
Payments on obligations under capital lease (441,000)
-----------
Net cash provided by financing activities 888,000
-----------
Increase in Cash and Cash Equivalents 5,105,000
Cash and Cash Equivalents, beginning of year 11,718,000
-----------
Cash and Cash Equivalents, end of year $16,823,000
===========
Supplemental Disclosure of Noncash Transactions
Acquisition of equipment under capital lease obligations $1,361,000
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for -
Interest $138,000
Income taxes $3,750,000
</TABLE>
The accompanying notes are an integral part of the Consolidated
Financial Statements.
(4)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(1) OPERATIONS
Xyplex, Inc. (The "Company") a Massachusetts corporation, designs, manufactures,
markets and supports data networks based on the Network 9000 Routing Hub. The
Network 9000 features a robust architecture that will allow seamless integration
of emerging technologies and supports a comprehensive suite of media connection
types, routing, bridging, switching and remote access servers.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the application of
certain accounting policies described below and elsewhere in the notes to
consolidated financial statements.
(a) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Xyplex Foreign Sales Corporation,
Inc., a foreign sales corporation formed in April 1990, and Xyplex Security
Corp., formed in May 1991. Significant intercompany accounts and transactions
have been eliminated in consolidation.
(b) Cash and Cash Equivalents and Short-Term Investments
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with original maturities of ninety days or less at the time
of acquisition to be cash equivalents. All other investments are considered to
be short-term investments and are recorded at cost which approximates market
value. The Company is required to adopt Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," in 1994. The Company does not expect this to have a material effect
on its classification or results of operations of its investments. At December
31, 1993, cash and cash equivalents and short-term investments include the
following (rounded to the nearest thousand):
<TABLE>
<CAPTION>
Cash and Cash Equivalents
- -------------------------
<S> <C>
Cash and certificates of deposit $ 6,177,000
Commercial paper and U.S. agency securities 496,000
Municipal obligations 10,150,000
-----------
$16,823,000
===========
</TABLE>
(5)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) Cash and Cash Equivalents and Short-Term Investments (Continued)
<TABLE>
<CAPTION>
Short-Term Investments
----------------------
<S> <C>
Municipal obligations $17,897,000
U.S. agency securities 2,420,000
-----------
$20,317,000
===========
</TABLE>
The municipal obligations are subject to future changes in market value,
principally caused by fluctuations in interest rates.
The Company has $250,000 of restricted cash at December 31, 1993, as security
for an open letter of credit with respect to the Company's United Kingdom
occupancy lease.
(c) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market, and
consist of the following at December 31, 1993 (rounded to the nearest thousand):
<TABLE>
<S> <C>
Raw materials $1,244,000
Work-in-process 2,515,000
Finished goods 4,874,000
----------
$8,633,000
==========
</TABLE>
Work in-process and finished goods inventories include materials, labor and
manufacturing overhead. At December 31, 1993, finished goods include
approximately $2,727,000 of demonstration products located at the Company's
sales and support offices and potential customer sites.
(6)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Property and Equipment
Property and equipment consist of the following (rounded to the nearest
thousand):
<TABLE>
<S> <C>
Equipment $ 1,953,000
Computer equipment 4,822,000
Furniture and fixtures 667,000
Leasehold improvements 1,989,000
Demonstration units 1,822,000
Equipment under capital lease 3,050,000
-----------
14,303,000
Less: Accumulated depreciation and amortization 7,500,000
-----------
$ 6,803,000
===========
</TABLE>
(e) Depreciation and Amortization
The Company provides for depreciation and amortization using the straight-line
and accelerated methods in amounts that allocate the cost of the assets over
their estimated useful lives as follows:
<TABLE>
<CAPTION>
Estimated
Asset Classification Useful Life
- -------------------- -----------
<S> <C>
Equipment 5 Years
Computer equipment 3-5 Years
Furniture and fixtures 5 Years
Leasehold improvements Term of Lease
Demonstration units 3 Years
Equipment under capital lease Term of Lease
</TABLE>
(f) Revenue Recognition
The Company recognizes product revenue upon the shipment of goods and software
maintenance and support fees ratably over the life of the contract. A provision
is made at that time for estimated warranty costs to be incurred.
(7)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(g) Research and Development and Software Development Costs
Research and development costs, other than software development costs, have been
charged to operations as incurred. Statement of Financial Accounting Standards
No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed" ("SFAS 86"), requires the capitalization of certain computer
software development costs incurred after technological feasibility is
established. The Company believes that once technological feasibility of a
software product has been established, the additional development costs incurred
to bring the product to a commercially acceptable level are not significant.
There were no capitalized software development costs at December 31, 1993.
(h) Net Income per Common and Common Equivalent Share
Net income per common and common equivalent share has been computed using the
weighted average number of shares of common stock and common stock equivalents
outstanding during each period. Common stock equivalents outstanding are stock
options that have been included in the computation using the treasury stock
method only when their effects would be dilutive.
Fully-diluted net income per common and common equivalent share has not been
separately presented, as the amounts are not materially different from primary
income per share.
(3) LONG-TERM DEBT
(a) Fixed Asset Line of Credit
At December 31, 1993, the Company had borrowings of approximately $253,000,
which converted to a term note payable, on a $1,500,000 fixed asset line of
credit with a bank. The line expired in June 1993, and was renewed until June
1994. Any outstanding borrowings at the end of the drawdown period will be
repaid commencing June 30, 1994 in 24 equal monthly installments plus interest.
The Company was required to pay a facility fee of 0.25% of the total line.
Borrowings under this line accrue interest at the bank's prime rate (6.0% at
December 31, 1993) and are secured by the equipment purchased.
(8)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(3) LONG-TERM DEBT (Continued)
(b) Working Capital Line of Credit
At December 31, 1993, the Company had an unsecured demand working capital line
of credit with a bank, under which it can borrow the lesser of $3,500,000 or 80%
of qualified accounts receivable. This line expires in June 1994. The Company
was required to pay a facility fee of 0.25% of the total line. Borrowings under
this line accrue interest at the bank's prime rate (6.0% at December 31, 1993).
No borrowings were outstanding on this line of credit at December 31, 1993.
(c) Lease Line of Credit
During 1993, the Company had a $1,250,000 lease line of credit with a bank
against which the Company executed one drawdown in May 1993 for approximately
$499,000 at an interest rate approximately 250 basis points above like-term
treasury bills. Borrowings against this lease line of credit at December 31,
1993 were $684,000, and are payable in 36 equal monthly installments. This lease
line expired in June 1993, and was renewed through June 1994 with a different
bank for approximately $1,500,000 at the bank's internal cost of funds plus 150
basis points. In 1993, the Company executed two drawdowns against this lease
line, one in September 1993 for approximately $184,000 and the second in
December 1993 for approximately $679,000. Borrowings against this lease line of
credit at December 31, 1993 were $863,000, and are payable in 36 equal monthly
installments.
(d) Term Notes Payable
At December 31, 1993, the Company had approximately $253,000 outstanding under
its term notes payable to a bank. The Company continues to make payments on its
term notes in 30 equal monthly principal payments of approximately $23,000, plus
interest. Principal payments will be $203,000 and $50,000, in 1994 and 1995,
respectively. Interest accrues at the bank's prime rate (6.0% at December 31,
1993). Borrowings under these notes are secured by specific fixed assets of the
Company.
Certain of the above debt agreements require the Company to maintain certain
levels of tangible net worth, quick ratio, and debt to equity ratio, among other
requirements.
(9)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(4) COMMON STOCK
(a) Common Stock
In May 1991, the Company completed its initial public offering of 1,800,000
shares of common stock at a price of $14 per share. The Company received
$22,804,000, net of approximately $630,000 in offering expenses.
(b) Reverse Stock Split
The stockholders approved a one-for-three reverse stock split of common stock on
March 12, 1991. The accompanying consolidated financial statements have been
retroactively restated to reflect this stock split.
(5) PREFERRED STOCK
Upon the closing of the Company's initial public offering in May 1991, all of
the outstanding shares of the Class C, D and E preferred stock were
automatically converted into approximately 3,157,000 shares of common stock. The
Company had 5,000,000 shares of undesignated preferred stock, par value $0.01
per share, authorized immediately after the closing of the initial public
offering. The Board of Directors is authorized, subject to any limitation
prescribed by law, without further stockholder approval, to issue up to
5,000,000 shares of preferred stock in one or more series. The Board of
Directors shall determine the number of shares, designations, preferences,
voting powers, qualifications, and other rights and privileges of each series of
preferred stock.
(6) STOCK PLANS
On March 12, 1991, the stockholders approved the 1991 Restated Stock Option Plan
(the "1991 Plan") which restated the 1988 Incentive Stock Option Plan. Under the
1991 Plan, incentive stock options generally may be granted at an exercise price
of not less than the fair market value of common stock as determined in
accordance with the 1991 Plan. Under the 1991 Plan, non-qualified options may be
granted at an exercise price of not less than 50% of the fair market value of
the common stock at the date of grant. On May 22, 1993, four non-employee
directors were each granted 1,000 non-qualified options, at a fair market value
of $26.00 per share under the 1991 Plan.
On August 15, 1989, the stockholders approved the 1989 Consultants' Stock Option
Plan (the "1989 Plan"). Under the 1989 Plan, stock options may be granted to
eligible consultants, as defined, at a price of not less than the fair market
value of the common stock at the date of grant.
(10)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(6) STOCK PLANS (Continued)
A summary of stock option activity under the 1991 Plan and the 1989 Plan
follows:
<TABLE>
<CAPTION>
1991 1989
Restated Consultants'
Stock Option Plan Stock Option Plan
----------------- -----------------
<S> <C> <C> <C> <C>
Number of Option Number of Option
Options Price Option Price
Outstanding at December 31, 1992 672,335 $ .12 - 28.62 333 $.12
Granted 85,250 15.75 - 26.00 - -
Exercised (116,100) .12 - 21.25 - -
Canceled (27,953) .45 - 28.62 - -
-------- -------------- --- ----
Outstanding at December 31, 1993 613,532 $ .12 - 28.62 333 $.12
======== ============== === ====
Exercisable at December 31, 1993 229,126 $ .12 - 28.62 333 $.12
======== ============== === ====
</TABLE>
At December 31, 1993, the Company had 919,135 and 333 shares of its common stock
reserved for issuance upon the exercise of options granted under the 1991
Restated Stock Option Plan and the 1989 Consultants' Stock Option Plan,
respectively.
All incentive stock options granted under the 1991 Plan and all options granted
under the 1989 Plan expire not more than 10 years from the date of grant, and
the Compensation Committee, under the authority delegated by the Board,
prescribes the date or dates on which the options become exercisable.
On March 12, 1991, the stockholders approved the 1991 Employee Stock Purchase
Plan (the "ESPP"). Under the terms of the ESPP, the Company is authorized to
grant options to purchase an aggregate of 60,000 shares of common stock in a
series of six-month periods. On May 7, 1993, the stockholders increased the
number of shares subject to the ESPP by 80,000 shares to a total of 140,000
shares. The purchase price is 85% of the lower of the fair market value per
share of common stock, as defined in the ESPP. During 1992, the stockholders
amended the ESPP to eliminate the requirement that employees must first be
employed by the Company for at least 90 days before participating in the Plan.
As of December 31, 1993, the Company had 73,655 shares of common stock available
for grant under the ESPP.
(11)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(7) INCOME TAXES
During 1992, the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." Adoption of this method of accounting did
not have a material effect on the Company's financial position or results of
operations.
The provision for income taxes in the accompanying consolidated statement of
income consists of the following at December 31, 1993 (rounded to the nearest
thousand):
<TABLE>
<S> <S>
Federal
Current $3,876,000
Deferred (101,000)
----------
3,775,000
State
Current 935,000
Deferred (72,000)
----------
863,000
----------
$4,638,000
==========
</TABLE>
A reconciliation of the federal statutory rate percentage to the Company's
effective tax rate percentage is as follows for the year ended December 31,
1993:
<TABLE>
<S> <C>
Income tax provision at federal statutory rate 34.3%
Increase (decrease) in tax resulting from -
State tax provision, net of federal benefit 4.4
Research and development tax credit (2.0)
Other (2.3)
----
Effective tax rate 34.4%
====
</TABLE>
During 1993, the Company realized a tax benefit of approximately $846,000
relating to the exercise of certain stock options held by employees. This
benefit is reflected as a component of capital in excess of par value.
The approximate income tax effect of each type of temporary difference
comprising the net deferred tax asset included in prepaid expenses at December
31, 1993, is as follows (rounded to nearest thousand):
(12)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(7) INCOME TAXES (Continued)
<TABLE>
<S> <C>
Depreciation $ 305,000
Accrued vacation 341,000
Inventory 616,000
Bad debt 242,000
Non-deductible accruals 284,000
Other, net 92,000
----------
1,880,000
Less valuation allowance 357,000
----------
$1,523,000
==========
</TABLE>
The valuation allowance relates to certain deferred tax assets in state
jurisdictions for which the realization is uncertain. The balance of the prepaid
tax asset is fully realizable through carryback to prior years.
(8) 401(k) RETIREMENT PLAN
The Company has a 401(k) Retirement Plan covering all eligible employees, as
defined. Participants may elect to defer up to 15% of their compensation for
deposit under the plan, subject to certain IRS limitations. The Company may
elect to make contributions to the plan at the discretion of the Board of
Directors in an amount determined by the Board. The contributions are allocated
to each eligible participant's account in proportion to each participant's
deferrals for the plan year, subject to IRS limitations; participant's deferrals
in excess of 6% of compensation are not matched. The Company elected not to make
contributions to the plan for the year ended December 31, 1993.
(9) COMMITMENTS
The Company has both operating and capital lease commitments that expire at
various dates through 1998 for certain facilities and equipment. Future minimum
lease payments under these noncancelable leases are as follows (rounded to the
nearest thousand):
(13)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(9) COMMITMENTS (Continued)
<TABLE>
<CAPTION>
Operating Capital
Year Leases Leases
- ---- ------ ------
<S> <C> <C>
1994 $1,015,000 $ 867,000
1995 710,000 717,000
1996 630,000 364,000
1997 434,000 -
1998 325,000 -
---------- ----------
Total minimum lease payments $3,114,000 1,948,000
Less - Amount representing interest 160,000
----------
Present value of minimum lease payments 1,788,000
Less - Current maturities of capital lease
obligations 773,000
----------
$1,015,000
==========
</TABLE>
Rent expense was approximately $1,099,000 in 1993.
(10) EXPORT SALES
Export sales as a percentage of net sales for the year ended December 31, 1993
are as follows:
<TABLE>
<S> <C>
Europe 16 %
Canada 5
Other 6
--
27 %
==
</TABLE>
(11) ACCRUED EXPENSES
Accrued expenses consist of the following at December 31, 1993 (rounded to the
nearest thousand):
<TABLE>
<S> <C>
Accrued payroll and employee benefits $2,897,000
Accrued income taxes 808,000
Accrued other 967,000
----------
$4,672,000
==========
</TABLE>
(14)
<PAGE>
XYPLEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
(Continued)
(12) PURCHASE COMMITMENTS
During 1993, the Company entered into various development agreements with
unrelated companies. At December 31, 1993, the Company has purchase commitments
for the related products as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
1994 $1,200,000
1995 1,031,000
1996 628,000
Thereafter
==========
$2,859,000
==========
</TABLE>
The Company has $406,000 of prepaid royalties related to these development
agreements included in prepaid expenses in the December 31, 1993 balance sheet.
These agreements contain termination provisions, as defined.
(13) SELECTED QUARTERLY INFORMATION (Unaudited)
The following summarized unaudited results of operations for the fiscal quarters
in 1993 have been accounted for using generally accepted accounting principles
for interim reporting purposes, and include adjustments (consisting of normal
recurring adjustments) which the Company considers necessary for the fair
presentation of results for these interim periods. The operating results for any
quarter are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
(In thousands, except per share data)
-------------------------------------
<S> <C> <C> <C> <C>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- ------- ------- -------
Net sales $18,122 $19,366 $18,979 $20,348
Gross profit 11,489 12,020 11,449 12,223
Income from operations 3,335 3,531 2,687 2,883
Net income 2,307 2,439 1,998 2,099
Net income per share $ 0.37 $ 0.39 $ 0.32 $ 0.34
</TABLE>
(15)
<PAGE>
XYPLEX, INC.
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited)
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 1,007 $ 113
Short-term investments -- 400
Accounts receivable (less reserve of $980 and $805, respectively) 18,369 19,584
Inventory 9,535 8,974
Other current assets 1,030 790
Receivable from parent company 33,154 33,774
-------- --------
Total current assets 63,095 63,635
Property and equipment 26,136 24,977
Less: Accumulated depreciation (18,162) (17,123)
-------- --------
Net Fixed Assets 7,974 7,854
Deferred tax asset 6,731 6,136
Other assets 2,049 2,032
Goodwill 84,035 85,624
-------- --------
TOTAL ASSETS $163,884 $165,281
======== ========
LIABILITIES AND PARENT COMPANY INVESTMENT
CURRENT LIABILITIES:
Current portion of capital leases 390 472
Accounts payable 6,015 7,517
Accrued payroll and benefits 4,673 4,749
Other accrued expenses 2,576 1,700
Deferred revenue 3,989 3,134
-------- --------
Total current liabilities 17,643 17,572
Long-term portion of capital leases 41 84
PARENT COMPANY INVESTMENT:
Investment by parent 183,328 183,328
Accumulated deficit (37,128) (35,703)
-------- --------
Parent company investment 146,200 147,625
-------- --------
TOTAL LIABILITIES AND INVESTMENT BY PARENT $163,884 $165,281
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
(1)
<PAGE>
XYPLEX, INC.
Condensed Consolidated Statements of Income
For the Three Months Ended March 31, 1996 and 1995
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net Sales $26,388 $28,027
Cost of Sales 12,015 12,425
------- -------
Gross Profit 14,373 15,602
Operating Expenses:
Selling and marketing 8,743 8,086
General and administrative 1,837 1,564
Research and development 4,010 3,522
Parent company allocations 100 106
Amortization of goodwill 1,589 2,089
------- -------
Total operating expenses 16,279 15,367
Income (loss) from operations (1,906) 235
Interest expense (65) (26)
Interest income 5
Interest income from parent company 698 541
------- -------
Net income (loss) before income tax provision (1,273) 755
Provision for federal income taxes 152 935
------- -------
Net loss $(1,425) ($180)
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
(2)
<PAGE>
XYPLEX, INC.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1996 and 1995
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,425) $ (180)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,683 3,442
Change in deferred taxes (595) (742)
Changes in operating assets and liabilities:
Decrease (increase) in receivables 1,215 (1,840)
Increase in inventories and other current assets (801) (3,445)
Increase (decrease) in accounts payable and accrued expenses (702) 3,039
Increase (decrease) in deferred revenue 855 (13)
------- -------
Net cash provided by operating activities 1,230 261
------- -------
INVESTING ACTIVITIES
Purchase and sale of property and equipment, net (1,159) (3,490)
Purchase of licenses and other intangible assets (72) (196)
Proceeds from maturities of securities 400
------- -------
Net cash used by investing activities (831) (3,686)
------- -------
FINANCING ACTIVITIES
Payments of capital leases (125) (234)
Net payments to parent company 620 3,954
------- -------
Net cash provided by financing activities 495 3,720
------- -------
Net increase in cash 894 295
Cash at beginning of year 113 540
-------- -------
Cash at end of period $ 1,007 $ 835
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
(3)
<PAGE>
XYPLEX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Corporate Relationship
Xyplex, Inc. (the "Company") was acquired by Raytheon Company ("Raytheon") on
October 7, 1994. Effective on the close of business on April 9, 1996, Xyplex was
acquired by Whittaker Corporation.
The condensed financial statements present the Company's results of operations
and its financial condition as a wholly-owned subsidiary of Raytheon. Interest
expense associated with Raytheon's general corporate debt has not been allocated
to the Company's financial statements, which also include certain intercompany
allocations which represent management's estimates of the costs of services
provided to the Company by Raytheon. In addition, the Company earned interest
income primarily on its intercompany receivable from Raytheon based on an
agreed-upon rate. As a result of these factors, the financial statements
presented may not be indicative of the results that would have been achieved had
the Company operated as a non-affiliated entity.
Note 2. Basis of Presentation
While the quarterly financial information contained in this filing is unaudited,
the financial statements presented reflect all adjustments (consisting only of
normal recurring accruals) which the Company considers necessary for a fair
presentation of the results of operations for the interim periods covered and of
the financial condition of the Company at the date of the interim balance sheet.
The information included in this report should be read in conjunction with the
Company's audited financial statements and notes thereto.
Note 3. Inventories
<TABLE>
<CAPTION>
Inventories consist of (in thousands):
March 31, December 31,
1996 1995
<S> <C> <C>
Finished goods $4,230 $4,131
Work in process 4,106 3,856
Raw materials 1,199 987
------ ------
Total inventories $9,535 $8,974
====== ======
</TABLE>
(4)
<PAGE>
Item 7(b). Pro Forma Financial Information
WHITTAKER CORPORATION
PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
On April 10, 1996, Whittaker Corporation (the "Company") acquired all of the
stock of Xyplex, Inc. ("Xyplex"), a wholly-owned subsidiary of Raytheon Company
("Raytheon"). The purchase price was $67.5 million in cash, subject to certain
adjustments, and $50.0 million in the form of 1,974,333 newly issued shares of
the Company's common stock. Other direct costs associated with the acquisition
were approximately $1.3 million. On April 24, 1995, the Company acquired all of
the stock of Hughes LAN Systems, Inc. ("HLS"), a subsidiary of Hughes
Electronics Corporation. The subsidiary was renamed Whittaker Communications
Inc. ("WCI"), and was acquired for a purchase price of $16.0 million in cash,
subject to certain adjustments, and a $15.0 million convertible subordinated
note. The HLS acquisition agreement also provides for contingent deferred
payments, not to exceed $25.0 million, based on future sales of certain WCI
products during the period November 1, 1995 through October 31, 1999.
The following unaudited pro forma condensed combining statements of operations
of the Company and its subsidiaries are based upon the combination of the
historical financial statements of the Company, and the historical financial
statements of Xyplex and WCI prior to their acquisition by the Company. The
unaudited pro forma condensed combining statement of operations for the year
ended October 31, 1995 has been prepared to illustrate the effect of the two
business combinations, each of which has been accounted for as a purchase, as
though each business combination occurred on November 1, 1994. The unaudited pro
forma condensed combining statement of operations for the six months ended April
30, 1996 has been prepared to illustrate the effect of the Xyplex purchase as
though it had occurred on November 1, 1995.
The pro forma adjustments and the assumptions on which they are based are
described in the accompanying Notes to Unaudited Pro Forma Condensed Combining
Statement of Operations. Because the acquisitions of both Xyplex and WCI were
completed prior to April 30, 1996, the balance sheets of both entities are
included in the consolidated balance sheet of the Company as of April 30, 1996
which is included in its Form 10-Q for the period ended April 30, 1996.
The Company has not completed all appraisals and evaluations necessary to
finalize Xyplex's purchase price allocations and accordingly, actual adjustments
that reflect appraisals and other evaluations of the purchased assets and
assumed liabilities may differ from the pro forma adjustments presented herein.
Such evaluations may include restructuring or other integration actions
involving Xyplex and WCI which may result in adjustments to the purchase price
allocation and charges to income. The unaudited pro forma condensed combining
statements of operations are presented for illustrative purposes only and are
not necessarily indicative of the consolidated results of operations of the
Company that would have been reported had the business combinations occurred on
the dates indicated, nor do they represent a forecast of the consolidated
results of operations of the Company for any
<PAGE>
future period. Furthermore, no effect has been given in the unaudited pro forma
condensed combining statements of operations for operating and synergistic
benefits that may be realized through the combination of the entities. The
unaudited pro forma condensed combining statements of operations, including the
Notes thereto, should be read in conjunction with the historical consolidated
financial statements of the Company and Xyplex which are incorporated herein by
reference, and included herein, respectively.
<PAGE>
Whittaker Corporation
Unaudited Pro Forma Condensed Combining Statement of Operations
For the Year Ended October 31, 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma Adjustments
Whittaker WCI Xyplex --------------------------
Year Ended 6 Months Ended Year Ended Related to Related to Pro
October 31, March 31, December 31, WCI Xyplex Forma
1995 1995 1995 Acquisition Acquisition Combined
----------- -------------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Sales $159,479 $21,976 $107,617 $289,072
-------- ------- -------- -------- -------- --------
Costs and expenses
Cost of sales 89,974 13,410 49,360 152,744
Engineering and development 7,741 5,352 16,039 116 (a) 29,248
Selling, general and administrative 39,990 11,458 80,758 (1,336) (b) (38,358) (f) 100,781
869 (b) 7,825 (f)
(425) (g)
Acquired in-process research
and development 3,250 (3,250) (c) -
-------- ------- -------- -------- -------- --------
Operating profit (loss) 18,524 (8,244) (38,540) 3,601 30,958 6,299
Interest expense 5,897 1,016 74 (1,016) (d) (74) (h) 12,908
1,016 (d) 5,995 (h)
Interest income (568) (2,260) 2,238 (i) (590)
Other expense 169 169
-------- ------- -------- -------- -------- --------
Income (loss) before provision for taxes 13,026 (9,260) (36,354) 3,601 22,799 (6,188)
Provision (benefit) for taxes 5,161 1,006 (3,383) (e) (2,784) (j) -
-------- ------- -------- -------- -------- --------
Net income (loss) $ 7,865 $(9,260) $(37,360) $ 6,984 $ 25,583 $ (6,188)
-------- ------- -------- -------- -------- --------
Earnings (loss) per share $ .82 $ (0.58)
======== ========
Average common and common
equivalent shares outstanding 9,625 10,606
======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed combining statement of
operations.
(1)
<PAGE>
WHITTAKER CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Year Ended October 31, 1995
Note 1. General
The Whittaker Corporation unaudited pro forma condensed combining statement of
operations and related notes give effect to the business combinations of Xyplex
and WCI as purchases. The unaudited pro forma condensed combining statement of
operations of the Company and its subsidiaries, Xyplex, and WCI for the year
ended October 31, 1995 assumes that each business combination occurred on
November 1, 1994. Xyplex and WCI historical financial statements are for fiscal
years ended December 31 and accordingly, the historical information for the
calendar quarters of both entities has been combined with the fiscal quarters of
the Company for the purpose of the pro forma presentation.
All interim financial data used to develop the Whittaker Corporation unaudited
pro forma condensed combining statement of operations is unaudited, but in the
opinion of the Company's management, reflects all adjustments necessary
(consisting only of normal recurring entries) for a fair presentation thereof.
However, it should be understood that accounting measurements at interim dates
may be less precise than at year end.
The preliminary allocation of the Xyplex purchase price among the identifiable
tangible and intangible assets, as reflected in the accompanying pro forma
condensed combining statement of operations, was based on an analysis of the
fair value of those assets. The Company continues to analyze the assets acquired
and liabilities assumed and further adjustments to the purchase price and
changes in the allocation of the purchase price may occur. Acquired in-process
research and development was analyzed through interviews and analysis of data
concerning each Xyplex developmental project. Expected future cash flows of each
such project were discounted to present value taking into account risks
associated with the inherent difficulties and uncertainties in completing the
project, and thereby achieving technological feasibility, and risks related to
the viability of and potential changes in future markets. This analysis resulted
in approximately $11.7 million of acquired in-process research and development,
which, under generally accepted accounting principles, was expensed immediately
upon the completion of the acquisition in the period ended April 30, 1996 and
reflected in the historical statement of income of Whittaker for that period.
(2)
<PAGE>
WHITTAKER CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Year Ended October 31, 1995
(Continued)
Note 1. General (Continued)
Xyplex's developed technology was analyzed using the same methodology and
resulted in an estimated value of $15.0 million, which is being amortized over
five years. Xyplex's customer base was analyzed by determining the estimated
cost to reconstruct the customer base, and resulted in an estimated value of
$20.0 million, which is being amortized over fifteen years. Xyplex's workforce
was analyzed by determining, on a replacement cost basis, the cost to find and
interview candidates and train new employees in their new positions, and
resulted in an estimated value of $2.2 million, which is being amortized over
five years. Goodwill which is related to the ongoing value of the acquired
communications networking business is being amortized over 20 years.
The Company expects to incur additional non-recurring charges during the
remainder of its 1996 fiscal year related to the elimination of duplicate
facilities, relocation and severance costs, and other integration costs. These
amounts have not yet been finalized and are not reflected in the accompanying
pro forma condensed combining statement of operations.
Note 2. Earnings (Loss) Per Share
The pro forma combined primary earnings (loss) per share have been computed
based on the weighted average number of common shares outstanding during the
period, after increasing the net loss for the dividend requirements on the
Company's outstanding $5.00 Cumulative Preferred Stock. Common stock equivalents
are not dilutive for the pro forma period presented. The exercise of the
conversion option on the 7% convertible subordinated note issued in the HLS
acquisition is not considered dilutive for purposes of calculating fully diluted
earnings (loss) per share.
Note 3. Pro Forma Adjustments
(a) Reflects the additional depreciation of property, plant and equipment based
upon the allocation of purchase price to equipment depreciated using
methods and terms consistent with those utilized by the Company.
(b) Reflects the elimination of WCI historical amortization expense totaling
$1,336,000 and the additional amortization expense of $869,000 based upon
the allocation of purchase price to intangible assets.
(c) Reflects the elimination of acquired in-process research and development
which is directly a result of the acquisition.
(3)
<PAGE>
WHITTAKER CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Year Ended October 31, 1995
(Continued)
Note 3. Pro Forma Adjustments (Continued)
(d) Reflects the elimination of $1,016,000 of interest charged by Hughes
Electronics Corporation during the period and the recording of $1,016,000
of additional interest expense on convertible notes and bank borrowings
which were used by the Company to fund the acquisition.
(e) Reflects the tax benefit of operating losses incurred by WCI during the
period, limited to the Company's consolidated tax expense.
(f) Reflects the elimination of Xyplex historical amortization expense and
impairment loss totaling $38,358,000 and the additional amortization
expense of $7,825,000 based upon the allocation of purchase price to
intangible assets.
(g) Reflects the elimination of Xyplex historical allocations of corporate
expenses of $425,000.
(h) Reflects the elimination of $74,000 of interest expense of Xyplex during
the period and the recording of $5,995,000 of additional interest expense
on additional bank borrowings, and amortization of related debt issuance
costs, incurred by the Company to fund the acquisition.
(i) Reflects the elimination of historical interest income earned by Xyplex on
investment balances during the period.
(j) Reflects the tax benefit of operating losses incurred by Xyplex during the
period, limited to the Company's consolidated tax expense.
(4)
<PAGE>
Whittaker Corporation
Unaudited Pro Forma Condensed Combining Statement of Operations
For the Six Months Ended
April 30, 1996
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Whittaker Xyplex
6 Months Ended 6 Months Ended
April 30, March 31, Pro Forma Pro Forma
1996 1996 Adjustments Combined
------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Sales $ 92,025 $ 54,992 $147,017
-------- -------- ------- --------
Costs and expenses
Cost of sales 52,384 25,585 77,969
Engineering and development 6,977 8,761 15,738
Selling, general and administrative 27,555 55,898 (33,679) (a) 53,021
3,454 (a)
(207) (b)
Acquired in-process research
and development 11,700 (11,700) (c)
-------- -------- ------- --------
Operating profit (loss) (6,591) (35,252) 42,132 289
Interest expense 3,686 21 (21) (d) 6,344
2,658 (d)
Interest income (5,622) (1,346) 1,346 (e) (5,622)
Other expense 46 56 102
-------- -------- ------- --------
Income (loss) before provision for taxes (4,701) (33,983) 38,149 535
Provision (benefit) for taxes (1,701) 130 2,314 (f) 743
-------- -------- ------- --------
Net income (loss) $ (3,000) ($34,113) $35,835 $ (1,278)
======== ======== ======= ========
Loss per share $ (0.33) $ (0.12)
======== ========
Average common and common
equivalent shares outstanding 9,136 10,905
======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed combining
statement of operations.
(1)
<PAGE>
WHITTAKER CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1996
Note 1. General
The Whittaker Corporation unaudited pro forma condensed combining statements of
operations and related notes gives effect to the business combination of Xyplex
as a purchase. The unaudited pro forma condensed combining statement of
operations of the Company and its subsidiaries and Xyplex for the six months
ended April 30, 1996, assumes that the Xyplex business combination occurred on
November 1, 1995. The Xyplex historical financial statements are for fiscal
years ended December 31 and accordingly, the historical information for the
calendar quarters has been combined with the fiscal quarters of the Company for
the purpose of the pro forma presentation.
All interim financial data used to develop the Whittaker Corporation unaudited
pro forma condensed combining statement of operations is unaudited, but in the
opinion of the Company's management, reflects all adjustments necessary
(consisting only of normal recurring entries) for a fair presentation thereof.
However, it should be understood that accounting measurements at interim dates
may be less precise than at year end.
The preliminary allocation of the Xyplex purchase price among the identifiable
tangible and intangible assets, as reflected in the accompanying pro forma
condensed combining statement of operations, was based on an analysis of the
fair value of those assets. The Company continues to analyze the assets acquired
and liabilities assumed and further adjustments to the purchase price and
changes in the allocation of the purchase price may occur. Acquired in-process
research and development was analyzed through interviews and analysis of data
concerning each Xyplex developmental project. Expected future cash flows of each
such project were discounted to present value taking into account risks
associated with the inherent difficulties and uncertainties in completing the
project, and thereby achieving technological feasibility, and risks related to
the viability of and potential changes in future markets. This analysis resulted
in approximately $11.7 million of acquired in-process research and development,
which, under generally accepted accounting principles, was expensed immediately
upon the completion of the acquisition in the period ended April 30, 1996 and
reflected in the historical statement of income of Whittaker for that period.
This amount was eliminated in the pro forma condensed combining statement of
operations as it represents a material non-recurring charge.
(2)
<PAGE>
WHITTAKER CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Year Ended April 30, 1996
(Continued)
Note 1. General (Continued)
Xyplex's developed technology was analyzed using the same methodology and
resulted in an estimated value of $15.0 million, which is being amortized over
five years. Xyplex's customer base was analyzed by determining the estimated
cost to reconstruct the customer base, and resulted in an estimated value of
$20.0 million, which is being amortized over fifteen years. Xyplex's workforce
was analyzed by determining, on a replacement cost basis, the cost to find and
interview candidates and train new employees in their new positions, and
resulted in an estimated value of $2.2 million, which is being amortized over
five years. Goodwill which is related to the ongoing value of the acquired
communications networking business is being amortized over 20 years.
The Company expects to incur additional non-recurring charges during the
remainder of its 1996 fiscal year related to the elimination of duplicate
facilities, relocation and severance costs, and other integration costs. These
amounts have not yet been finalized and are not reflected in the accompanying
pro forma condensed combining statement of operations.
Note 2. Loss Per Share
The pro forma combined primary loss per share has been computed based on the
weighted average number of common shares outstanding during the period, after
increasing the net loss for the dividend requirements on the Company's
outstanding $5.00 Cumulative Preferred Stock. Common stock equivalents are not
dilutive for the pro forma period presented. The exercise of the conversion
option on the 7% convertible subordinated note issued in the HLS acquisition is
not considered dilutive for purposes of calculating fully diluted loss per
share.
Note 3. Pro Forma Adjustments
(a) Reflects the elimination of Xyplex historical amortization expense and
impairment loss totaling $33,679,000 and the additional amortization
expense of $3,454,000 based upon the allocation of purchase price to
intangible assets.
(b) Reflects the elimination of Xyplex historical allocations of corporate
expenses of $207,000.
(c) Reflects the elimination of acquired in-process research and development
which is directly a result of the acquisition.
(3)
<PAGE>
WHITTAKER CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Year Ended April 30, 1996
(Continued)
Note 3. Pro Forma Adjustments (Continued)
(d) Reflects the elimination of $21,000 of interest expense of Xyplex during
the period and the recording of $2,658,000 of additional interest expense
on additional bank borrowings, and amortization of related debt issuance
costs, incurred by the Company to fund the acquisition.
(e) Reflects the elimination of historical interest income earned by Xyplex on
investment balances during the period.
(f) Reflects the additional provision for taxes associated with taxable pro
forma adjustments.
(4)
<PAGE>
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 thereunto duly authorized.
WHITTAKER CORPORATION
Date: June 21, 1996 By: /s/ Richard Levin
-------------------------------
Richard Levin, Vice President
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ----------- ----------- -------------
23.1 Consent of Independent Public Accountants
of Arthur Andersen LLP
23.2 Consent of Independent Accountants of
Coopers & Lybrand L.L.P.
<PAGE>
EXHIBIT 23.1
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated January 28, 1994 related to the financial statements of Xyplex,
Inc. included in this Form 8-K/A of Whittaker Corporation into Whittaker
Corporation's previously filed Registration Statements Nos. 2-74481, 2-97149,
2-76480, 2-70806, 33-35762, 33-35763, 33-52295 and 33-58323 on Form S-8,
Registration Statement No. 33-04320 on Forms S-8 and S-4 and Registration
Statement No. 333-03753 on Form S-3.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 19, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Registration Statement Nos.
2-74481, 2-97149, 2-76480, 2-70806, 33-35762, 33-35763, 33-52295 and 33-58323 on
Form S-8, Registration Statement No. 33-04320 on Forms S-8 and S-4 and
Registration Statement No. 333-03753 on Form S-3 of Whittaker Corporation, of
our report dated April 22, 1996 on our audits of the financial statements of
Xyplex, Inc. as of December 31, 1995 and 1994 and for the years ended December
31, 1995 and 1994, which report is included in this Form 8-K/A of Whittaker
Corporation dated June 21, 1996.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 21, 1996
