<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE
QUARTERLY PERIOD ENDED JANUARY 31, 1996
Commission file number 1-5407
WHITTAKER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-4033076
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1955 North Surveyor Avenue, Simi Valley, California 93063
(Address of principal executive offices) (Zip Code)
(805) 526-5700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 9,046,489 shares, par value
$.01 per share, as of January 31, 1996.
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WHITTAKER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
($ in 000)
<TABLE>
<CAPTION>
For the Three Months
Ended January 31,
1996 1995
--------- --------
<S> <C> <C>
Sales .......................................... $44,420 $26,686
------- -------
Costs and expenses
Cost of sales ............................... 24,900 16,030
Engineering and development.................. 3,095 244
Selling, general and administrative.......... 11,735 6,506
------- -------
Operating profit................................ 4,690 3,906
Interest expense ............................ 1,655 1,222
Interest income ............................. (162) (128)
Other expense (income)....................... 1 (7)
------- -------
Income before provision for taxes............... 3,196 2,819
Provision for taxes ............................ 1,306 1,099
------- -------
Net income...................................... $ 1,890 $ 1,720
======= =======
Average common and common
equivalent shares outstanding (000) ......... 9,608 9,588
======= =======
Earnings per share ............................. $ 0.20 $ 0.18
======= =======
</TABLE>
Unaudited
See Notes to Consolidated Condensed Financial Statements
2
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in 000)
<TABLE>
<CAPTION>
Unaudited
January 31, October 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash ............................................... $ 674 $ 161
Receivables ........................................ 61,623 65,394
Inventories ........................................ 42,381 39,518
Other current assets ............................... 2,989 2,053
Income taxes recoverable ........................... 4,179 1,452
Deferred income taxes .............................. 16,513 15,151
-------- --------
Total Current Assets................................ 128,359 123,729
Property and equipment, at cost .................... 78,595 78,059
Less accumulated depreciation and amortization...... (38,513) (36,641)
-------- --------
Net Property and Equipment.......................... 40,082 41,418
Other Assets
- ------------
Goodwill, net of amortization ...................... 33,988 33,414
Other intangible assets, net of amortization........ 10,343 10,585
Notes and other noncurrent receivables ............. 4,092 4,218
Other noncurrent assets ............................ 10,485 10,480
Assets held for sale ............................... 27,864 27,115
-------- --------
Total Other Assets.................................. 86,772 85,812
Total Assets........................................ $255,213 $250,959
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
- -------------------
Current maturities of long-term debt ............... $ 6,300 $ 6,048
Accounts payable ................................... 13,844 14,650
Accrued liabilities ................................ 26,909 29,530
-------- --------
Total Current Liabilities........................... 47,053 50,228
Other Liabilities
- -----------------
Long-term debt ..................................... 78,168 70,694
Other noncurrent liabilities ....................... 11,187 11,340
Deferred income taxes .............................. 14,292 16,273
-------- --------
Total Other Liabilities............................. 103,647 98,307
Stockholders' Equity
- --------------------
Capital stock
Preferred stock ................................. 1 1
Common stock .................................... 90 86
Additional paid-in capital.......................... 24,700 19,261
Retained earnings .................................. 79,722 83,076
-------- --------
Total Stockholders' Equity.......................... 104,513 102,424
-------- --------
Total Liabilities and Stockholders' Equity.......... $255,213 $250,959
======== ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
3
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in 000)
<TABLE>
<CAPTION>
For the Three Months
Ended January 31,
1996 1995
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income ........................................... $ 1,890 $ 1,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization..................... 2,741 1,572
Net periodic pension income....................... (60) (550)
Decrease (increase) in income taxes recoverable... (2,727) 66
Change in deferred taxes.......................... (3,343) 844
Changes in operating assets and liabilities:
Decrease in receivables......................... 3,315 7,379
Increase in inventories and other current assets (3,799) (3,126)
Decrease in accounts payable and other
liabilities................................... (3,385) (5,813)
------- --------
Net cash provided (used) by operating activities...... (5,368) 2,092
------- --------
INVESTING ACTIVITIES
Purchase of property, plant and equipment............. (816) (899)
Purchased business.................................. (885) -
Net decrease in notes receivable...................... 582 162
Increase in assets held for sale...................... (749) (383)
Other items, net...................................... (68) 114
------- --------
Net cash used by investing activities................. (1,936) (1,006)
------- --------
FINANCING ACTIVITIES
Borrowing related to new credit agreement............. 7,726 55,500
Paydown related to previous credit agreement.......... - (59,000)
Increase (reduction) of other debt.................... - (22)
Deferred debt costs................................... 87 (752)
Dividends paid........................................ - (3)
Proceeds from shares issued under stock plans......... 4 -
------- --------
Net cash provided (used) by financing activities...... 7,817 (4,277)
------- --------
Net increase (decrease) in cash....................... 513 (3,191)
Cash at beginning of year............................. 161 3,507
------- --------
Cash at end of period................................. $ 674 $ 316
======= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ......................................... $ 1,545 $ 1,192
======= ========
Income taxes ..................................... $ 116 $ 82
======= ========
</TABLE>
Unaudited
See Notes to Consolidated Condensed Financial Statements
(4)
4
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated condensed financial statements of Whittaker
Corporation ("Whittaker" or the "Company") and its subsidiaries have been
prepared in conformity with generally accepted accounting principles, consistent
in all material respects with those applied in the Annual Report on Form 10-K
for the year ended October 31, 1995. The interim financial information is
unaudited, but reflects all adjustments which are of a normal recurring nature
and, in the opinion of management, necessary to provide a fair statement of the
results for the interim periods presented. The interim financial statements
should be read in conjunction with the financial statements and related notes in
the Company's Annual Report on Form 10-K for the year ended October 31, 1995.
The results of operations for interim periods are not necessarily indicative of
the results of operations for the full year.
Primary earnings per share have been computed based on the weighted average
number of common and common equivalent shares outstanding. Common stock
equivalents include Series D Participating Convertible Preferred Stock, and
dilutive employee stock options calculated using the treasury stock method.
The effect of assumed conversion of the 7% convertible subordinated debt was
antidilutive for the periods presented. Dual presentation of primary and fully
diluted earnings per share has not been made because the calculations result in
dilution of less than 3%.
NOTE 2. ACQUISITION
On April 24, 1995, the Company acquired all of the stock of Hughes LAN Systems,
Inc., a subsidiary of Hughes Electronics Corporation. The subsidiary was
renamed Whittaker Communications, Inc. ("WCI") and is a designer and
manufacturer of high speed switching and Asynchronous Transfer Mode ("ATM")
compatible local area network communication hubs and network management software
systems. WCI was acquired for a purchase price of $16.0 million in cash,
subject to certain adjustments, and a $15.0 million 7% convertible subordinated
note. The convertible note is due on May 1, 2005, and is convertible to the
Company's common stock at a price of $24.25 per share. The agreement also
provides for contingent deferred payments, not to exceed $25 million, over the
years 1996 to 1999 based on future sales of WCI's hub products and derivatives.
The acquisition was accounted for as a purchase and the balance sheet of WCI was
combined with the Company's balance sheet as of April 30, 1995. The transaction
resulted in the acquisition of intangible assets valued at $8.9 million which
will be amortized on a straight-line basis over periods ranging from five to
fifteen years, goodwill of $14.2 million which will be amortized on a straight-
line basis over twenty years, and liabilities assumed of $18.1 million. Acquired
in-process research and development valued at $3.3 million was expensed at the
acquisition date.
5
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 2. ACQUISITION - (CONTINUED)
The accompanying consolidated condensed financial statements reflect the
operating results of WCI since the effective date of the acquisition. The pro
forma unaudited results of operations for the three months ended January 31,
1995, assuming the consummation of the purchase and issuance of 7% debt as of
November 1, 1994, are summarized below (in thousands except per share amounts):
<TABLE>
<CAPTION>
Three Months
Ended
January 31,
1995
-------
<S> <C>
Net sales $38,915
Net loss (1,458)
Loss per share (0.15)
</TABLE>
NOTE 3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
($ in 000)
January 31, October 31,
1996 1995
----------- -----------
<S> <C> <C>
Raw materials $24,338 $23,518
Work in process 12,876 11,500
Finished goods 3,138 3,332
Costs relating to long term contracts 3,179 2,287
Unliquidated progress billings (1,150) (1,119)
------- ------
$42,381 $39,518
======= =======
</TABLE>
NOTE 4. COMMITMENTS AND CONTINGENCIES
In certain years, after evaluating the availability and cost of insurance, the
Company did not purchase insurance for certain risks, including workers'
compensation and product liability. Consequently, the Company is without
insurance for various risks, including product liability for certain products
manufactured in the past. The Company does, however, have product liability
insurance for products it currently manufactures. The Company's insurance
carriers have taken the position that in certain cases the Company is uninsured
for environmental matters, a position that the Company disputes in certain
instances.
6
<PAGE>
NOTE 4. COMMITMENTS AND CONTINGENCIES - (CONTINUED)
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted
to address public health and environmental concerns arising with respect to the
past treatment and disposal of hazardous substances. The Company is also a
potentially responsible party in a number of other actions brought under state
laws patterned after CERCLA. In nearly all of these matters, the Company
contributed a small amount (generally less than 1%) of the total treated or
disposed of waste. In addition to the CERCLA and similar actions described
above, the Company also, from time to time, conducts or participates in remedial
investigations and cleanup activities at facilities currently or formerly
occupied by its operating units. There are also various other claims and suits
pending against the Company.
At January 31, 1996, the Company had provided for its aggregate liability
related to various claims, including uninsured risks and potential claims in
connection with the environmental matters noted above. The amounts provided on
the Company's books for contingencies, including environmental matters, are
recorded at gross amounts. Because of the uncertainty with respect to the
amount of probable insurance recoveries, these potential insurance recoveries
are not taken into account as a reduction of those amounts provided unless an
insurance carrier has agreed to such coverage. The Company does not anticipate
that these matters will have a material adverse effect on the Company's
financial position, or on its ability to meet its working capital and capital
expenditure needs. Although the Company has recorded estimated liabilities for
contingent losses, including uninsured risks and claims in connection with
environmental matters, in accordance with generally accepted accounting
principles, the absence of or denial of various insurance coverages represents a
potential exposure for the Company, and the net income of the Company in future
periods could be adversely affected if uninsured losses in excess of amounts
recorded were to be incurred.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
- ---------------------
Business Segment Information
- ----------------------------
<TABLE>
<CAPTION>
UNAUDITED
For the Three Months
Ended January 31,
1996 1995
-------- ---------
<S> <C> <C>
Sales:
Aerospace $29,110 $26,686
Communications 15,310
------- -------
$44,420 $26,686
======= =======
Operating profit:
Aerospace $ 6,175 $ 5,549
Communications 297
Corporate and Other (1,782) (1,643)
------- -------
$ 4,690 $ 3,906
======= =======
</TABLE>
Operating profit is total revenue less operating expenses. General corporate
expenses have not been allocated to the business segments and are shown as a
separate expense element of operating profit to reconcile to consolidated
operating income.
Comparison of Three Months of 1996 to Three Months of 1995
- ----------------------------------------------------------
Sales for the first quarter of fiscal 1996 were $44.4 million, an increase of
$17.7 million (66.5%) from the first quarter of 1995. An increase of $15.3
million was due to the contribution of the Company's communications networking
business, Whittaker Communications, Inc. ("WCI"), which was acquired in the
second quarter of 1995. The Company's Aerospace segment sales for the first
quarter of fiscal 1996 were up $2.4 million (9.1%) from the same period of 1995,
due to increased business in commercial aircraft product lines.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations (Continued)
- ---------------------------------
Gross margin for the first quarter of 1996 was $19.5 million, or 43.9% of sales,
compared to $10.7 million, or 39.9% of sales in the same period of 1995. The
increased gross margin percentage is due to the inclusion of communications
networking results, which had a gross margin percentage of 45.8%, as well as
increased margins on commercial aircraft product, offset in part by decreased
margins in defense electronics products.
Engineering and development expenses as a percentage of sales increased from
less than a percent in the first quarter of 1995 to 7.0% in 1996. Engineering
and development expenses in the first quarter of 1996 were 13.6% of segment
sales for the Communications segment and 3.5% of segment sales for the Aerospace
segment. The overall increase was due to the addition of Communications segment
activity and up-front expenditures associated with industrial business product
lines for the Aerospace segment.
Selling, general and administrative expenses as a percentage of sales for the
first quarter of 1996 were 26.4%, compared to 24.4% for the first quarter of
1995. The increase as a percentage of sales is due primarily to the
Communications segment of the business, where the rate was 30.3% for the first
quarter of 1996. Aerospace segment selling, general and administrative expenses
as a percentage of sales were 18.3% for the first quarter of 1996 compared to
18.2% for the same period in 1995, while general corporate expenses declined to
4.0% of sales in the first quarter of 1996 from 6.2% for the same period in
1995.
Interest expense increased to $1.7 million for the first quarter of 1996 from
$1.2 million in 1995 primarily as a result of higher interest rates and
incremental debt from the purchase of WCI.
The outlook for future sales in the Aerospace segment is difficult to predict
given the uncertainties related to the U.S. defense budget. Any negative effect
on Aerospace segment sales related to this uncertainty may be offset in the
future by contracts for new, technologically advanced electronic defense
systems, new commercial products, and sales of aerospace and electronic products
into industrial markets. Thus, past Company performance may not be a reliable
indicator of future performance.
Acquisition
- -----------
On March 4, 1996, the Company announced its agreement to acquire, subject to
satisfaction of certain conditions and approvals, all of the stock of Xyplex,
Inc., a subsidiary of Raytheon Company. Xyplex is a producer of high speed
inter-networking equipment, terminal servers and shared media products for
business local area networks. Xyplex also provides remote access products that
interconnect with phone companies' wide area networks. The purchase price is
$117.5 million, consisting of $67.5 million in cash, subject to certain
adjustments, and $50.0 million in Company stock. It will be accounted for as a
purchase and will be reflected in the second quarter results of operations as
part of the Company's Communications segment.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Acquisition (Continued)
- -----------------------
The Company has begun a review and evaluation of possible one-time charges to
net income associated with the acquisition, including the required write-off of
the value of Xyplex's in-process research and development. Based on preliminary
review, the Company estimates that the amount of that write-off may be
approximately 10% of the purchase price. Any final determination of that amount
and of any other charges, however, must await completion of the review and
valuation process, and there can be no assurance that the determination of value
will be in the range indicated by the Company's preliminary review.
Although there can be no assurance of future financial results, the Company
currently expects that, excluding any one-time charges (described in the
preceding paragraph), the acquisition will not have a material effect on the
Company's net income in fiscal 1996, and that there will be a dilution of
earnings per share for fiscal 1996 in an amount that approximates the effect of
the issuance of additional shares of the Company's common stock as part of the
purchase price.
Financial Condition
- -------------------
At January 31, 1996, the Company's debt totaled $84.5 million, which consisted
of $38.5 million of loans under a revolving bank credit facility, $30.0 million
under a bank term loan, $15.0 million of convertible subordinated debt, and $1.0
million of other debt. In addition, there were $12.7 million of letters of
credit outstanding under the revolving credit facility. At January 31, 1996,
there is $6.3 million of debt which is due within the next twelve months and
therefore is classified as current.
In conjunction with the Company's announced acquisition, the Company has
received from its agent bank a commitment letter for a total credit agreement of
$170 million, consisting of $85 million under a revolving credit facility and
$85 million under a term loan. The increased credit availability is expected
to be adequate to finance this current acquisition as well as operating cash
needs. The Company intends to continue its previously announced strategy of
growth by selective acquisitions that complement the Company's core businesses,
financed by cash from operations, borrowings under its credit facility, and
where appropriate, issuance of new debt or equity securities of the Company.
The Company intends to pursue its acquisition strategy with careful regard for
profitability and the Company's need for liquidity. There can be no assurance,
however, that any acquisitions will occur or that an acquisition that does occur
will not adversely affect the Company's net income or liquidity.
The Company's ratio of long-term debt, including the current portion, to
capitalization (stockholders' equity plus debt) was 44.7% at January 31, 1996,
compared to 42.8% at October 31, 1995. The current ratio at January 31, 1996 was
2.73, compared with 2.46 at October 31, 1995, while working capital was $81.3
million at January 31, 1996, compared with $73.5 million at October 31, 1995.
The increase in debt, as well as the increases in current ratio and working
capital, was primarily the result of reductions in accrued liabilities and
payables and the buildup of recoverable income taxes as a result of certain
stock option exercises.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Financial Condition (Continued)
- -------------------
Cash flow used by operations in the first three months of 1996 was $5.4 million,
compared to cash provided of $2.1 million in the first three months of 1995.
The $7.5 million decrease from quarter to quarter is due primarily to a smaller
reduction in receivables for the first three months of 1996 relative to 1995,
and the buildup of recoverable income taxes of $2.7 million. The receivables
for the first quarter of 1996 did not decrease as much as in the first quarter
of 1995, due in part to stronger first quarter 1996 sales and in part to a
reclassification of a $1.6 million claim from receivables to long-term assets
in 1995.
Capital expenditures during the first three months of 1996 were $0.8 million,
compared to $0.9 million in 1995. At January 31, 1996, there were approximately
$0.8 million of approved capital expenditures outstanding for the replacement
and upgrade of existing plant and equipment at the Company's various facilities.
Funds for these and other capital expenditures are expected to be provided from
operations. Capital expenditures are subject to limitations by covenants
contained in the Company's credit agreement. It is anticipated that the amounts
under the covenants will be sufficient to allow the Company to continue to
maintain and upgrade existing facilities.
In February of 1996, the Congressional Joint Committee on Taxation approved a
net tax refund of $5.2 million under an agreement reached between the Company
and the Internal Revenue Service closing the audit of the 1987 and 1988 tax
returns. The Company expects to receive the refund, as well as interest income
of approximately $5 million, in late March of 1996. The interest income will
be reflected in the Company's second quarter financial results.
The Company's program for divestiture of its discontinued operations was
substantially complete by the end of fiscal 1992. Remaining to be divested is a
996-acre parcel of land, which was formerly used by a discontinued technology
unit. The land is located in the city of Santa Clarita, California,
approximately 35 miles from downtown Los Angeles. In September of 1995, the
City granted entitlements necessary to develop this property as a mixed-use
residential, commercial, and light industrial development. The initial term of
the entitlements was ten years. In February of 1996, the City approved a
development agreement which, among other things, extended the ten-year term of
the entitlements to 20 years. The Company is evaluating the most advantageous
means to realize the value of this asset.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Financial Condition (Continued)
- -------------------
In certain years, after evaluating the availability and cost of insurance, the
Company did not purchase insurance for certain risks, including workers'
compensation and product liability. Consequently, the Company is without
insurance for various risks, including product liability insurance for certain
products manufactured in the past. The Company does, however, have product
liability insurance for products it currently manufactures. The Company's
insurance carriers have taken the position that in certain cases the Company is
uninsured for environmental matters, a position that the Company disputes in
certain instances.
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted
to address public health and environmental concerns arising with respect to the
past treatment and disposal of hazardous substances. The Company is also a
potentially responsible party in a number of other actions brought under state
laws patterned after CERCLA. In nearly all of these matters, the Company
contributed a small amount (generally less than 1%) of the total treated or
disposed of waste. In addition to the CERCLA and similar actions described
above, the Company also, from time to time, conducts or participates in remedial
investigations and cleanup activities at facilities currently or formerly
occupied by its operating units.
At January 31, 1996, the Company had provided for its aggregate liability
related to various claims, including uninsured risks and potential claims in
connection with the environmental matters noted above. The amounts provided on
the Company's books for contingencies, including environmental matters, are
recorded at gross amounts. Because of the uncertainty with respect to the
amount of probable insurance recoveries, these potential insurance recoveries
are not taken into account as a reduction of those amounts provided unless an
insurance carrier has agreed to such coverage. The Company does not anticipate
that these matters will have a material adverse effect on the Company's
financial position, or its ability to meet its working capital and capital
expenditure needs. Although the Company has recorded estimated liabilities for
contingent losses, including uninsured risks and claims in connection with
environmental matters, in accordance with generally accepted accounting
principles, the absence of or denial of various insurance coverages represents a
potential exposure for the Company, and the net income of the Company in future
periods could be adversely affected if uninsured losses in excess of amounts
recorded were to be incurred.
12
<PAGE>
EXHIBITS TO PART I
- ------------------
I(a) Calculation of Earnings Per Share.
13
<PAGE>
Exhibit I(a)
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Stated in Thousands of Dollars
Quarter Ended January 31,
1996 1995
----------- -----------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
EARNINGS
Net Income................................... $1,890 $1,720
Deduct:
Dividends on $ 5.00 Cumulative
Convertible Preferred Stock............. - (3)
------ ------
Net income used in primary earnings
per share calculations..................... $1,890 $1,717
====== ======
AVERAGE COMMON AND COMMON EQUIVALENT
SHARES IN (000)
Weighted average number of common
shares outstanding......................... 8,703 8,486
Common equivalent shares:
Series D Participating Convertible
Preferred Stock......................... 266 292
Stock options included under treasury
stock method............................ 639 810
------ ------
TOTAL........................................ 9,608 9,588
====== ======
Primary Earnings Per Share................... $ 0.20 $ 0.18
====== ======
Unaudited
</TABLE>
14
<PAGE>
Exhibit I(a)
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE - (CONTINUED)
<TABLE>
<CAPTION>
Stated in Thousands of Dollars
Quarter Ended January 31,
1996 1995
----------- -----------
<S> <C> <C>
FULLY DILUTED EARNINGS PER SHARE
EARNINGS
Net income used in primary earnings
per share calculation (above).............. $1,890 $1,717
Adjustments: - -
------ ------
Net income used in fully diluted earnings
per share calculations..................... $1,890 $1,717
====== ======
AVERAGE SHARES USED TO CALCULATE FULLY
DILUTED EARNINGS PER SHARE IN (000)
Average common and common equivalent
shares (above)............................. 9,608 9,588
Add:
Additional stock options included
under treasury stock method............. 165 33
------ ------
TOTAL........................................ 9,773 9,621
====== ======
Fully Diluted Earnings Per Share............. $ 0.19 $ 0.18
====== ======
</TABLE>
NOTES
Earnings per share have been computed based on the weighted average number
of common and common equivalent shares outstanding during the periods, after
deducting from net income the dividend requirements on the outstanding $5.00
Cumulative Convertible Preferred Stock. Common stock equivalents include Series
D Participating Convertible Preferred Stock, and dilutive employee stock
options calculated using the treasury stock method.
Fully diluted earnings per share include the additional potential dilutive
effect of employee stock options. The inclusion of additional shares assuming
the conversion of the convertible subordinated debt would have been
antidilutive.
Unaudited
15
<PAGE>
Part II. OTHER INFORMATION
- ---------------------------
ITEM 5. OTHER INFORMATION
On March 2, 1996, the Company entered into an agreement with Raytheon
Company ("Raytheon") to purchase all of the outstanding shares of Xyplex, Inc.,
a wholly-owned subsidiary of Raytheon, for a total consideration of $117.5
million, which will consist of (i) cash in the amount of $67.5 million (subject
to certain adjustments), and (ii) a number of newly-issued shares of the
Company's common stock in an aggregate value of $50 million. The number of
shares to be issued shall be calculated based on a per share price equal to
$25.325, which is the average of the closing price of the Company's common stock
as reported on The New York Stock Exchange ("NYSE") Composite Transactions for
the ten NYSE trading days prior to March 4, 1996, the date of the public
announcement of the execution and delivery of the agreement. In the event
Raytheon is entitled to a fraction of a share based on the calculation set forth
above, Raytheon shall receive, in lieu thereof, an additional amount in cash
equal to the dollar value of such fractional share. The transaction is subject
to the satisfaction of certain conditions to closing, including the expiration
or termination of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11. Statements re computation of per share earnings for the quarter
ended January 31, 1996 (Exhibit I(a) of Part I to this Form
10-Q).
27. Financial Data Schedule.
99. Press Release Dated March 4, 1996
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the fiscal quarter ended January
31, 1996.
16
<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: March 14, 1996 By: /s/ Richard Levin
--------------------------
Richard Levin, Vice President
Chief Financial Officer
17
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
---------- ----------- -------------
11. Statements re computation of per share earnings
for the quarter ended January 31, 1996
(Exhibit I(a) of Part I to this Form 10-Q).
27. Financial Data Schedule.
99. Press Release Dated March 4, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 674
<SECURITIES> 0
<RECEIVABLES> 61,623
<ALLOWANCES> 0
<INVENTORY> 42,381
<CURRENT-ASSETS> 128,359
<PP&E> 78,595
<DEPRECIATION> 38,513
<TOTAL-ASSETS> 255,213
<CURRENT-LIABILITIES> 47,053
<BONDS> 78,168
0
1
<COMMON> 90
<OTHER-SE> 104,422
<TOTAL-LIABILITY-AND-EQUITY> 255,213
<SALES> 44,420
<TOTAL-REVENUES> 44,420
<CGS> 24,900
<TOTAL-COSTS> 24,900
<OTHER-EXPENSES> 3,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,655
<INCOME-PRETAX> 3,196
<INCOME-TAX> 1,306
<INCOME-CONTINUING> 1,890
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,890
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99
[LETTERHEAD OF WHITTAKER] NEWS RELEASE
Release: March 4, 1996
Contact: Richard Levin, VP & CFO
(805) 526-5700, ext. 641
James Schultz, Dir. Business Development
(805) 526-5700, ext. 638
WHITTAKER TO BUY XYPLEX, INC. FROM RAYTHEON FOR
$117.5 MILLION, BOOSTING COMMUNICATIONS POSITION
ACQUISITION OF INTER-NETWORKING COMPANY ADDS PRODUCTS,
DISTRIBUTION CHANNELS AND BUILDS INDUSTRY POSITION IN NETWORKING,
HIGH SPEED SWITCHING & ATM PRODUCTS; MOVE POSITIONS WHITTAKER AS A
BALANCED AEROSPACE AND COMMUNICATIONS COMPANY.
SIMI VALLEY, CA., MARCH 4, 1996--In its second major communications
acquisition in less than a year, Whittaker Corporation (NYSE:WKR) announced
today it has agreed to acquire Xyplex, Inc., from Raytheon Company (NYSE--RTN),
Lexington, MA.
The acquisition enhances the growing presence of Whittaker in the high
speed switching and communications networking market with the addition of new
products, technology and distribution channels. Under terms of the agreement,
Whittaker will acquire from Raytheon all the capital stock of Xyplex for $117.5
million, $67.5 million in cash (subject to certain adjustments) and $50.0
million in Whittaker stock.
The Xyplex acquisition follows the April 1995 Whittaker purchase of Hughes
LAN Systems, the high speed networking and Asynchronous Transfer Mode (ATM)
communications division of General Motors Hughes Electronics and the cornerstone
of Whittaker's growing communications business segment. The former Hughes unit
was renamed Whittaker Communications.
Whittaker Communications' position as a leading ATM product supplier will
be complemented by the addition of Xyplex given its position as a producer of
high speed inter-networking equipment, terminal servers and shared media
products for business local area networks (LANs). Xyplex also provides popular
remote access products that interconnect with phone companies' Wide Area
Networks (WANs). Combination of the two companies will make Whittaker one of the
world's top tier producers of communications networking products and a leader in
ATM-based networking products and technology.
Adding Xyplex to Whittaker will substantially increase the company's total
revenues. Xyplex had sales of $107 million in 1995. With the acquisition of
Xyplex, Whittaker will derive nearly 60% of its revenues from communications
over the next 12 months, compared with 23% a year ago. Whittaker had sales of
$159.5 million in fiscal 1995 ending Oct. 31.
<PAGE>
(more)
Page 2
"With Xyplex we are gaining a combination of products, technology, quality
distribution channels and worldwide customer base that gives Whittaker added
critical mass and a strong market position to compete on a global scale in this
fast growing industry," said Thomas A. Brancati, president and chief executive
officer of Whittaker Corporation. "Between Xyplex and Whittaker Communications
we now have a full complement of competitive, technology-packed products of the
type our customers are demanding to maintain their competitive edge and serve
their industries," he said.
"The business fit is ideal," Mr. Brancati continued. "We now have the
ingredients to make Whittaker a powerhouse in the communications networking
industry. This move is in keeping with our strategy to create and grow as a
well-balanced company operating in two principal business segments, aerospace
and communications."
Whittaker Communications, Inc. produces and sells an array of high speed
switching products to include enterprise hubs, Ethernet switches and network
access switches based on all the popular communications protocols including the
industries latest ATM technology. Whittaker Communications is the largest turn-
key network integrator of hospitals in the United States with over 370 systems
installed and has growing positions as both a high speed switching product
provider and network integrator in the banking/finance, publishing, education,
government and manufacturing markets worldwide.
Combined, the companies will build on the synergies of their existing
global sales and marketing forces and offer a migration path for customers to
employ networking technology and solutions ranging from low-cost per port shared
media and Ethernet switching to broadband ATM. An industry standard transmission
protocol, ATM is being employed broadly throughout the world as industries use
fiber optic lines to transport a combination of voice, video and data
simultaneously and seamlessly.
Founded in 1981, Xyplex initially produced terminal servers and entered the
broader inter-networking market with introduction of a switching and routing hub
in 1991. Xyplex is the industry's second largest supplier of terminal servers
and in 1994 the firm was recognized and honored by the industry consulting firm
IDC, as the fastest growing provider of remote access products and systems.
Xyplex will be combined with Whittaker Communications headquartered in
Santa Clara, Ca. and will be managed by Michael S. Gardner, president, Whittaker
Communications. Xyplex offices in the Boston suburb of Littleton, MA., which
house the firm's design, manufacturing and administrative headquarters, will
continue to operate. "We are excited about adding the Xyplex employee team
around the world to the Whittaker family," said Mr. Brancati.
Completion of the acquisition is subject to the satisfaction of certain
conditions and approvals, including clearance under the Hart-Scott-Rodino
Antitrust Improvements Act.
Whittaker is a global, customer-driven company providing products and
services with a high technology or engineering content to the aerospace and
communications markets. Founded in 1942, the company employs some 1,000 people
in offices around the globe. Further information on Whittaker may be obtained by
contacting the company's Home Page at URL address http://www.whittaker.com
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