<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 APRIL 30, 1998
COMMISSION FILE NUMBER 0-20609
WHITTAKER CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-4033076
(State or other jurisdiction of (I.R.S. Employer
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1955 N. SURVEYOR AVENUE 93063
SIMI VALLEY, CALIFORNIA (Zip Code)
(Address of principal executive offices)
</TABLE>
(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 NO
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date: 11,204,658 shares, par value
$.01 per share, as of April 30, 1998.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WHITTAKER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
($ IN 000, EXCEPT FOR PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED APRIL 30, ENDED APRIL 30,
1998 1997 1998 1997
--------- ------------ --------- ------------
(restated) (restated)
<S> <C> <C> <C> <C>
Sales................................................ $ 34,959 $ 22,936 $ 66,758 $ 42,626
Costs and expenses
Cost of sales....................................... 18,607 14,897 37,296 27,150
Engineering and development......................... 211 286 548 510
Selling, general and administrative................. 6,941 7,119 14,216 13,196
--------- ------------ --------- ------------
Operating Profit..................................... 9,200 634 14,698 1,770
Interest expense.................................... 3,237 4,529 8,143 8,357
Interest income..................................... (762) (97) (980) (246)
Other expense....................................... 769 856 1,251 862
--------- ------------ --------- ------------
Income (loss) from continuing operations before
provision (benefit) for taxes....................... 5,956 (4,654) 6,284 (7,203)
Provision (benefit) for taxes........................ 93 -- 99 --
--------- ------------ --------- ------------
Income (loss) from continuing operations............. 5,863 (4,654) 6,185 (7,203)
Discontinued operations
Loss from discontinued operations................... -- (29,789) (45,323)
Gain on disposal of discontinued operations......... -- -- 10,085 --
--------- ------------ --------- ------------
Net income (loss).................................... $ 5,863 $ (34,443) $ 16,270 $ (52,526)
========= ============ ========= ============
Average common shares outstanding (000).............. 11,205 11,149 11,205 11,131
========= ============ ========= ============
Basic income (loss) per share
Continuing operations............................... $ 0.52 $ (0.42) $ 0.55 $ (0.65)
Discontinued operations
Loss from discontinued operations.................. -- (2.67) -- (4.07)
Gain on disposal of discontinued operations........ -- -- 0.90 --
--------- ------------ --------- ------------
Net income (loss) per share.......................... $ 0.52 $ (3.09) $ 1.45 $ (4.72)
========= ============ ========= ============
Diluted income (loss) per share
Continuing operations............................... $ 0.51 $ (0.42) $ 0.54 $ (0.65)
Discontinued operations
Loss from discontinued operations.................. -- (2.67) -- (4.07)
Gain on disposal of discontinued operations........ -- -- 0.87 --
--------- ------------ --------- ------------
Net income (loss) per share.......................... $ 0.51 $ (3.09) $ 1.41 $ (4.72)
========= ============ ========= ============
</TABLE>
(2)
See Notes to Consolidated Condensed Financial Statements
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in 000)
<TABLE>
<CAPTION>
AT APRIL 30, AT OCTOBER 31,
1998 1997
--------------- ---------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current Assets
- --------------
Cash............................................................ $ 434 $ 6,366
Receivables..................................................... 23,936 27,337
Inventories..................................................... 41,013 37,032
Other current assets............................................ 1,626 914
Income taxes recoverable........................................ 2,261 3,238
Deferred income taxes........................................... 10,893 11,244
Net current assets of discontinued operations................... (423) 7,766
--------------- ---------------
Total Current Assets............................................ 79,740 93,897
--------------- ---------------
Property and equipment, at cost................................. 30,939 31,381
Less accumulated depreciation and amortization.................. (21,473) (21,550)
Net Property and Equipment...................................... 9,466 9,831
--------------- ---------------
Other Assets
- ------------
Goodwill, net of amortization................................... 13,854 14,032
Other intangible assets, net of amortization.................... 1,025 1,119
Notes and other noncurrent receivables.......................... 3,282 3,443
Other noncurrent assets......................................... 8,931 7,672
Net assets held for sale or development......................... 15,214 15,214
Net noncurrent assets of discontinued operations................ -- 22,234
--------------- ---------------
Total Other Assets.............................................. 42,306 63,714
--------------- ---------------
Total Assets $ 131,512 $ 167,442
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
- -------------------
Current maturities of long-term debt............................ $ 86,776 $ 129,353
Accounts payable................................................ 8,588 9,579
Accrued liabilities............................................. 25,501 31,331
--------------- ---------------
Total Current Liabilities....................................... 120,865 170,263
--------------- ---------------
Other Liabilities
- -----------------
Long-term debt.................................................. 25 222
Other noncurrent liabilities.................................... 11,508 12,603
Deferred income taxes........................................... 13,567 15,077
--------------- ---------------
Total Other Liabilities......................................... 25,100 27,902
--------------- ---------------
Stockholders' Equity (Deficit)
- -----------------------------
Capital stock
Preferred stock................................................ 1 1
Common Stock................................................... 112 112
Additional paid-in capital...................................... 72,041 72,041
Retained earnings (deficit)..................................... (86,607) (102,877)
--------------- ---------------
Total Stockholders' Equity (Deficit)............................ (14,453) (30,723)
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 131,512 $ 167,442
=============== ===============
</TABLE>
(3)
See Notes to Consolidated Condensed Financial Statements
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ IN 000)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
APRIL 30,
---------------------------------
1998 1997
------------- -------------
(RESTATED)
<S> <C> <C>
OPERATING ACTIVITIES
Continuing Operations
Net income (loss)................................................................ $ 6,185 $ (7,203)
Adjustments to reconcile net income (loss) to net cash provided (used) by
operations:
Depreciation and amortization................................................... 1,431 1,427
Net periodic pension expense.................................................... 98 294
Income taxes recoverable........................................................ 977 1,500
Deferred taxes.................................................................. (1,159) 5,597
Changes in operating assets and liabilities:
Receivables.................................................................... 2,977 7,602
Inventories and prepaid expenses............................................... (4,693) (7,951)
Accounts payable and other liabilities......................................... (6,348) (212)
------------- -------------
Total from continuing operations................................................. (532) 1,054
------------- -------------
Discontinued Operations
Net loss......................................................................... -- (45,323)
Adjustments to reconcile net loss to net cash provided (used) by operations:
Goodwill and other intangibles impairment charge................................ -- 22,068
Depreciation and amortization................................................... 2,557 9,605
Deferred taxes.................................................................. 1,023 (5,482)
Changes in operating assets and liabilities..................................... 2,368 18,333
------------- -------------
Total from discontinued operations............................................... 5,948 (799)
------------- -------------
Net cash provided by operating activities......................................... 5,416 255
------------- -------------
INVESTING ACTIVITIES
Continuing Operations
Proceeds on sale of business..................................................... 35,000 --
Sale of property, plant and equipment............................................ 324 16,796
Purchase of property, plant and equipment........................................ (1,104) (1,727)
Collections of notes receivable.................................................. 585 588
Increase in assets held for sale or development.................................. -- (1,362)
Other items, net................................................................. (2,921) (703)
------------- -------------
Total from continuing operations................................................. 31,884 13,592
------------- -------------
Discontinued Operations
Net proceeds relating to discontinued operations................................. (913) 800
------------- -------------
Net cash provided by investing activities......................................... 30,971 14,392
------------- -------------
FINANCING ACTIVITIES
Net decrease in debt.............................................................. (42,774) (17,133)
Reduction in deferred debt costs.................................................. 455 415
Proceeds from shares issued under stock option plans.............................. -- 716
------------- -------------
Net cash used by financing activities............................................. (42,319) (16,002)
------------- -------------
Net decrease in cash.............................................................. (5,932) (1,355)
Cash at beginning of year......................................................... 6,366 1,566
------------- -------------
Cash at end of period............................................................. $ 434 $ 211
============= =============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest......................................................................... $ 7,385 $ 8,331
============= =============
Income taxes..................................................................... $ 157 $ 162
============= =============
</TABLE>
(4)
See Notes to Consolidated Condensed Financial Statements
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated condensed financial statements of Whittaker
Corporation and its subsidiaries ("Whittaker" or the "Company") 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/A
for the year ended October 31, 1997. 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 preparation of financial
statements in conformity with generally accepted accounting principles may
require management to make certain estimates and assumptions that could affect
the amounts reported in the financial statements and accompanying notes. These
estimates and assumptions include, among other things, future costs to complete
long-term contracts, valuation of slow moving or obsolete inventories and
amounts of estimated liabilities for contingent losses and future costs of
litigation. Actual costs could differ from these estimates. 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/A for the year
ended October 31, 1997. The results of operations for interim periods are not
necessarily indicative of the results of operations for the full year.
During 1997 the Financial Accounting Standards Board issued Financial
Accounting Standards No. 128 "Earnings Per Share" which is effective for the
Company beginning with the first quarter of fiscal 1998. Statement 128 replaced
the previously reported primary and fully diluted earnings per share with basic
and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes the potential dilutive effect of common stock
equivalents such as stock options, warrants and convertible securities. Diluted
earnings per share is similar to the previously reported primary and fully
diluted earnings per share. Earnings per share amounts for all periods have
been presented, and where necessary, restated to conform to Statement 128
requirements. See Note 3 for the computation of basic and diluted earnings per
share.
NOTE 2. DISCONTINUED OPERATIONS
During the fourth quarter of 1997, the Company, in connection with its
strategy to reduce debt and explore strategic options, sold its defense
electronics unit and discontinued its Communications segment. During the first
quarter of 1998 the Company completed the sale of Whittaker Xyplex, Inc.
("Xyplex") to MRV Communications, Inc. ("MRV"), for $35 million in cash plus
warrants to purchase 421,402 shares of common stock of MRV. The net proceeds
from the sale were used in February 1998 to reduce Whittaker's bank debt. The
Company's financial statements report the operating results and balance sheet
items of these discontinued operations separately from its continuing
operations. Previously reported financial statements have been restated to
reflect the discontinuance of these businesses.
The gain on disposal of discontinued operations of $10.1 million includes the
gain on sale of Xyplex of $12.1 million, (net of estimated selling costs of $0.5
million), $1.4 million of 1998 operating losses of Xyplex through the date of
sale which were in excess of the estimate of these losses previously recorded,
and certain other items. In calculating the gain on the sale of Xyplex, the
421,402 warrants were valued at $2.2 million based on their estimated market
value at January 30, 1998. The warrants have an initial exercise price of $35
and expire on January 29, 2001. The exercise price of the warrants may be
adjusted in the future upon the occurrence of certain events.
(5)
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
(loss) per share in thousands except per share amounts:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS
APRIL 30 ENDED APRIL 30
------------------------------- -----------------------
1998 1997 1998 1997
------------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Basic Earnings (Loss) Per Share
- -------------------------------
Net income (loss) from continuing operations available
to common stockholders $ 5,863 $ (4,654) $ 6,185 $ (7,203)
============= ============= ========= =========
Weighted average common shares outstanding 11,205 11,149 11,205 11,131
============= ============= ========= =========
Basic income (loss) per share from continuing
operations $ 0.52 $ (0.42) $ 0.55 $ (0.65)
============= ============= ========= =========
Diluted Earnings (Loss) Per Share
- ---------------------------------
Net income (loss) from basic earnings per share
calculation, above $ 5,863 $ (4,654) $ (6,185) $ (7,203)
Adjustments -- -- -- --
------------- ------------- --------- ---------
Net income (loss) from continuing operations for
diluted earnings per share calculation $ 5,863 $ (4,654) $ (6,185) $ (7,203)
============= ============= ========= =========
Weighted average common shares outstanding for basic
earnings per share calculation, above 11,205 11,149 11,205 11,131
============= ============= ========= =========
Effect of dilutive securities:
Series D Convertible Preferred Stock 188 -- 188 --
Employee Stock Options 214 -- 132 --
------------- ------------- --------- ---------
Denominator for diluted earnings per share calculation 11,607 11,149 11,525 11,131
============= ============= ========= =========
Diluted earnings (loss) per share from continuing
operations $ 0.51 $ (0.42) $ 0.54 $ (0.65)
============= ============= ========= =========
</TABLE>
Options to purchase 298,937 shares of common stock at prices ranging from
$12.06 to $26.25 per share were outstanding at April 30, 1998 but were not
included in the computation of diluted earnings per share because their
inclusion would be antidilutive. In addition, 618,556 shares of common stock
issuable upon conversion of convertible subordinated debt are not included in
the computation of diluted earnings per share because their inclusion would be
antidilutive.
NOTE 4. INVENTORIES
Inventories consisted of the following ($ in thousands):
<TABLE>
<CAPTION>
April 30, October 31,
1998 1997
------------------ ----------------
<S> <C> <C>
Parts and materials $ 21,092 $ 19,620
Work in process 17,834 15,595
Finished goods 2,087 1,817
------------------ ----------------
$ 41,013 $ 37,032
================== ================
</TABLE>
(6)
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5. 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 it
previously manufactured. The Company currently has workers' compensation
insurance and 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. There are also various other claims and suits
pending against the Company.
At April 30, 1998, 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 but excluding the
environmental remediation activities related to its property located in the City
of Santa Clarita, California. 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 has made cash expenditures of approximately $0.9
million for these environmental matters during the six months ended April 30,
1998. 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 and the filing of future environmental claims which are
unknown to the Company at this time represent 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.
As prescribed by SOP 96-1, the Company has accrued for its estimated costs,
including certain employee compensation costs, for the environmental remediation
where the Company is a potentially responsible party under CERCLA and similar
state laws. These accruals are adjusted as further information develops or
circumstances change. As of April 30, 1998 the Company estimates that the total
remaining unpaid remediation costs for the sites associated with these federal
and state actions is $4.3 million. As of April 30, 1998, all of these estimated
costs have been accrued and are reflected in accrued liabilities and, in the
case of those costs to be incurred beyond one year, other noncurrent liabilities
in the Consolidated Balance Sheet of the Company. The Company, at this time,
does not anticipate any additional significant costs, beyond those already
recognized, will be incurred in the remediation efforts for these sites. Costs
of future expenditures for environmental remediation efforts are not discounted
to their present value.
NOTE 6. LONG-TERM DEBT
On April 10, 1996, the Company increased the amount of its bank credit
facility to $170.0 million ("old facility" or "old agreement"). At April 30,
1998, the old facility consisted of an $82.4 million revolving credit facility
that was scheduled to expire in April 2001, of which the Company was permitted
to utilize $80.4 million. At April 30, 1998, the interest rate on loans
outstanding under the old facility was equal to the agent bank's prime rate plus
4.25% with interest payable monthly. At that time, the Company was obligated to
pay letter of credit fees which ranged between 4.875% per annum and 5.375% per
annum on the aggregate amount of outstanding letters of credit, and commitment
fees on the unused amount of the old facility. At April 30, 1998, the Company
had $2.1 million of letters of credit outstanding and unused and available
credit of $6.8 million under the old facility.
(7)
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 6. LONG-TERM DEBT--(CONTINUED)
At April 30, 1998 the Company's obligations under the old agreement were
secured by a pledge of shares of stock of subsidiaries of the Company, accounts
receivable, inventory, equipment, intellectual property and other assets of the
Company and its subsidiaries. The old agreement included four financial ratio
covenants with respect to financial leverage, cash flow, and net worth. Since
July 31, 1996, the Company had not been in compliance with one or more of the
four financial ratio covenants and at April 30, 1998 the Company was not in
compliance with any of such covenants. Below is a summary of the requirements of
the four financial ratio covenants and the actual ratios and levels at April 30,
1998:
<TABLE>
<CAPTION>
Minimum Required Actual
----------------------- ------------------
<S> <C> <C>
Fixed Charge Coverage Ratio 1.75 0.05
Maximum Permitted Actual
----------------------- -----------------
Leverage Ratio 0.45 1.20
Maximum Permitted Actual
----------------------- -----------------
Cash Flow Ratio 3.00 18.42
Minimum Required Actual
----------------------- -----------------
Consolidated Net Worth $138,135,000 $(14,453,000)
</TABLE>
The Company obtained successive waivers of these defaults. The latest waiver
dated March 31, 1998 waived the defaults up to but not including May 29, 1998.
On May 28, 1998, the Company and a group of lenders entered into a new credit
agreement ("new facility" or "new agreement") that consists of a $45 million
revolving credit facility that expires in May 2001 and a $40 million term loan
that is repayable in quarterly installments over five years. The new agreement
includes financial covenants with respect to financial leverage, earnings and
fixed charge coverage with which the Company expects to be able to comply.
Interest rates under the new credit agreement are substantially lower then under
the old agreement. Proceeds from the new facility were used to repay all of the
$70 million of indebtedness then outstanding under the Company's old agreement.
The new facility provides additional availability to fund working capital
requirements and acquisitions.
As a result of the Company's non-compliance with the financial ratio
covenants contained in the old agreement, bank debt in the amount of $71.5
million as of April 30, 1998, which otherwise would have been classified as
noncurrent, has been classified as current. Acceleration of the debt under the
old agreement by the bank lending group upon the Company's failure, after May
29, 1998, to comply with any of the financial ratio covenants noted above would
have been an event of default under the Company's $15 million 7% convertible
subordinated note. Because of this possible cross default, the entire $15
million principal balance of the 7% convertible subordinated note has also been
classified as current debt.
Under the Company's 7% convertible subordinated note, the Company may not pay
or declare cash dividends or redeem shares of the Company if the Company's
tangible net worth is less than $15 million. As of April 30, 1996, the
Company's tangible net worth was less than $15 million and the Company has not
paid or declared dividends (including the quarterly dividend for the Series D
Preferred Stock) or redeemed shares since that date. However, dividends on the
Series D Preferred Stock have been accrued since that date. At April 30, 1998
the unpaid dividends on the Series D Preferred Stock amounted to $1,154.35.
In order to reduce the risk of higher interest expense that could result from
an increase in the level of market interest rates, the Company in June 1996
purchased an interest rate cap with an initial notional amount of $42.5 million.
Under the terms of the interest rate cap, the Company will receive a payment at
the end of each quarterly period, as defined in the interest rate cap agreement,
if three-month LIBOR at the beginning of the period exceeds 7.5%. The amount of
such payment will be the interest for such period on the notional amount of the
interest rate cap at the beginning of such period calculated using an interest
rate equal to the positive difference, if any, between LIBOR at the beginning of
such period and 7.5%. The interest rate cap expires in July 1999. The cost of
this interest rate cap is being amortized over its 37-month term. At April 30,
1998, the unamortized cost was $106,000.
(8)
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 6. LONG-TERM DEBT--(CONTINUED)
On January 30, 1998, the Company sold Whittaker Xyplex, Inc. On February 2,
1998 the net cash proceeds of $34.5 million from the sale were used to prepay
debt under the Company's old agreement. Also on February 2, 1998, commitments
under the old facility were reduced to $82.4 million.
NOTE 7. BUSINESS SEGMENTS
The Company develops and provides specialized aerospace and data network
services to create products and customer solutions for aircraft, defense and
industrial markets and hospitals and other enterprises. The Company operates in
two business segments: Aerospace, which designs, manufactures, and distributes a
wide variety of fluid control devices and fire detection systems, and
Integration Services, which provides professional services for the integration
of data networks for hospitals and other enterprises. Prior to the second
quarter of 1997, the Company's Integration Services operation did not exist.
Operating profit is total revenue less operating expenses. General corporate
expenses have not been allocated to the business segments and are shown as a
separate expense element of operating profit to reconcile to consolidated
operating income.
Information about the Company's operations by business segment for the
periods ended April 30, 1998 and 1997 follows ($ in thousands):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended April 30, Ended April 30,
1998 1997 1998 1997
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales:
Aerospace................................ $ 33,043 $ 21,228 $ 62,023 $ 40,918
Integration Services..................... 1,916 1,708 4,735 1,708
---------- --------- --------- ---------
$ 34,959 $ 22,936 $ 66,758 $ 42,626
========== ========= ========= =========
OPERATING PROFIT (LOSS):
Aerospace................................ $ 11,618 $ 4,992 $ 19,696 $ 8,477
Integration Services..................... (971) (1,094) (1,509) (1,094)
Corporate and Other...................... (1,447) (3,264) (3,489) (5,613)
---------- --------- --------- ---------
$ 9,200 $ 634 $ 14,698 $ 1,770
========== ========= ========= =========
</TABLE>
The financial statements for prior periods have been restated to reflect the
segregation of continuing and discontinued operations. The information
presented above for 1997 reflects the removal from the Aerospace segment of
amounts relating to the discontinued defense electronics business and the
removal of the discontinued Communications segment.
(9)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Comparison of Three Months Ended April 30, 1998 and 1997
Sales. The Company's second quarter 1998 sales from continuing operations of
$35.0 million increased by $12.0 million (52.4%) over second quarter sales in
the prior year. The Company's Aerospace segment sales for the second quarter of
1998 were up $11.8 million (55.7%) from the same period in 1997 reflecting
increased sales of fluid and pneumatic control devices in the commercial and
industrial markets, higher levels of repair and overhaul business and increased
sales of fire and overheat detectors and cable products. The increase in sales
of fire and overheat detectors reflects the successful resolution, in 1998, of
the production inefficiencies associated with the 1997 move of operations from
Concord, California to Simi Valley, California. The Company's Integration
Services segment sales for the second quarter of 1998 of $1.9 million increased
by $0.2 million from the second quarter of 1997 reflecting a full three months
of operation in 1998.
Gross Margin. The Company's gross margin from continuing operations for the
second quarter of 1998 as a percentage of sales was 46.8%, compared with 35.0%
for the second quarter of 1997. The second quarter 1998 gross margin consists
of Aerospace segment gross margin of $16.0 million (48.4% of sales), and
Integration Services gross margin of $0.4 million (19.3% of sales). Aerospace
gross margin as a percentage of sales increased from 39.8% in the second quarter
of 1997 due primarily to the efficiencies associated with higher sales volume,
increased levels of higher margin repair and overhaul business and the
successful resolution in 1998 of the production inefficiencies associated with
the 1997 move from Concord, California to Simi Valley, California of the fire
and overheat detector business. Integration Services gross margin increased by
$0.8 million from a loss of $0.4 million in 1997. The Integration Services
segment was formed during the second quarter of 1997 and the 1997 second quarter
results reflect the inefficiencies associated with a start-up operation.
Engineering and Development. Engineering and development expenses for
continuing operations for the second quarter of 1998 decreased slightly from the
second quarter of 1997, from $0.3 million to $0.2 million.
Selling, General and Administrative. Selling, general and administrative
expenses (SG&A) for continuing operations for the second quarter of 1998
decreased by $0.2 million from the second quarter of 1997, from $7.1 million in
1997 to $6.9 million in 1998. The Aerospace segment SG&A expenses for the
second quarter of 1998 were $4.2 million compared to $3.2 million in 1997. The
Integration Services segment SG&A expenses were $1.3 million for the second
quarter of 1998 compared to $0.7 million in 1997. The increase in Aerospace
SG&A expenses in 1998 reflects primarily higher management incentive costs. The
higher level of SG&A expense in the Integration Services segment reflects the
results for a full three months in 1998 compared to 1997 expenses for only that
portion of the second quarter during which the Integration Services segment
existed. Offsetting these increases was a reduction in SG&A expenses at the
Corporate level of $1.8 million reflecting reduced legal costs and the
consolidation and elimination of certain functions.
Interest Expense. Interest expense decreased $1.3 million to $3.2 million
for the second quarter of 1998 from $4.5 million for the second quarter of 1997.
This decrease was the result of lower levels of debt in 1998 compared to 1997
partially offset by higher interest rates in 1998 as compared to 1997.
Interest Income. During the second quarter of 1998, the Company received an
interest payment of $0.7 million related to a $0.5 million federal tax refund
for the 1987 tax year.
Income Taxes. In compliance with FASB 109, the Company has a full valuation
allowance against its current potential carry forward benefits.
(10)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
COMPARISON OF SIX MONTHS ENDED APRIL 30, 1998 AND 1997
Sales. The Company's sales from continuing operations for the first six
months of 1998 of $66.8 million increased by $24.1 million (56.6%) over sales
from continuing operations for the first six months of 1997. The Company's
Aerospace segment sales for the first six months of 1998 were up $21.1 million
(51.6%) from the same period in 1997 reflecting increased sales of fire and
overheat detectors in the aircraft product line, fluid and pneumatic control
devices in both the commercial and military markets and cable products. The
Company's Integration Services segment sales for the first six months of 1998
were $4.7 million compared to $1.7 million for the same period in 1997. This
increase reflects sales for a full six months of operations for this segment
which was formed in the second quarter of 1997.
Gross Margin. The Company's gross margin for the first six months of 1998 as
a percentage of sales was 44.1% compared to 36.3% for the first six months of
1997. The Aerospace segment gross margin for the first six months of 1998
increased by $12.2 million from $15.9 million (38.8% of sales) for the first six
months of 1997 to $28.1 million (45.2% of sales) for the first six months of
1998. The $12.2 million increase and the improvement as a percentage of sales
from 1997 to 1998 are the result of the successful resolution in 1998 of the
production inefficiencies associated with the 1997 move of the fire and overheat
detector operations from Concord, California to Simi Valley, California,
efficiencies associated with higher sales volume and increased levels of higher
margin repair and overhaul business. The Integration Services segment gross
margin increased by $1.8 million from a loss of $0.4 million for the first six
months of 1997 to $1.4 million for the first six months of 1998. The Integration
Services segment was formed in the second quarter of 1997 and the 1997 six-month
results reflect a gross margin for less than a full six months and the
inefficiencies associated with a start-up operation.
Engineering and Development. Engineering and development expenses for
continuing operations for the first six months of 1998 were $0.5 million and
were essentially unchanged from the same period of 1997.
Selling, General and Administrative. Selling, general and administrative
expenses (SG&A) for continuing operations for the first six months of 1998
increased by $1.0 million from $13.2 million in 1997 to $14.2 million in 1998.
The Aerospace segment SG&A expenses for the first six months of 1998 were $7.9
million compared to $6.9 million for the first six months of 1997. The
Integration Services segment SG&A expenses for the first six months of 1998 were
$2.8 million compared to $0.7 million for the first six months of 1997. The
increase in SG&A expenses for the Aerospace segment reflects primarily higher
management incentive costs in 1998 partially offset by lower selling expenses in
1998 for fire and overheat detectors compared to the comparable 1997 period.
The higher level of SG&A expenses for the Integration Services segment reflects
six months of expenses during 1998 compared to 1997 expenses beginning with its
formation in the second quarter of 1997. Partially offsetting these increases
was a reduction in SG&A expenses at the Corporate level of $2.1 million
reflecting reduced legal costs and the consolidation and elimination of certain
functions.
Interest Expense. Interest expense decreased slightly for the first six
months of 1998 compared to the first six months of 1997, from $8.4 million to
$8.1 million. This decrease was the result of lower levels of debt during the
1998 period compared to 1997. The effect of lower levels of debt during 1998
was substantially offset by higher interest rates during the first six months of
1998 compared to the first six months of 1997.
Interest Income. During the second quarter of 1998, the Company received an
interest payment of $0.7 million related to a $0.5 million federal tax refund
for the 1987 tax year.
Income Taxes. In compliance with FASB 109, the Company has a full valuation
allowance against its current potential carry forward benefits.
Sales from discontinued operations for the first six months of 1998 were
$38.7 million lower as compared to the first six months of 1997. The
discontinued Communications segment sales were $13.5 million for the first six
months of 1998 compared to $43.6 million for the first six months of 1997.
Sales for the discontinued defense electronics unit which was sold in September
of 1997 were $8.5 million for the first six months of 1997.
(11)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
Gross margin from the discontinued operations for the first six months of
1998 was lower by $10.5 million as compared to the first six months of 1997.
This decrease reflects the sale of the discontinued defense electronics unit in
September of 1997 and the sale of a discontinued Communications segment unit,
Whittaker Xyplex, Inc. ("Xyplex") in the first quarter of 1998.
The gain on disposal of discontinued operations of $10.1 million includes the
gain on sale of Xyplex of $12.1 million, (net of estimated selling costs of $0.5
million), $1.4 million of 1998 operating losses of Xyplex through the date of
sale which where in excess of the estimate of these losses previously recorded,
and certain other items.
FINANCIAL CONDITION AND LIQUIDITY
On April 10, 1996, the Company increased the amount of its bank credit
facility ("old facility" or "old agreement") to $170.0 million. At April 30,
1998, the old facility consisted of an $82.4 million revolving credit facility
that was scheduled to expire in April 2001, of which the Company was permitted
to utilize $80.4 million. At April 30, 1998, the interest rate on loans
outstanding under the old facility was equal to the agent bank's prime rate plus
4.25% with interest payable monthly. At that time, the Company was obligated to
pay letter of credit fees which ranged between 4.875% per annum and 5.375% per
annum on the aggregate amount of outstanding letters of credit, and commitment
fees on the unused amount of the old facility. At April 30, 1998, the Company
had $2.1 million of letters of credit outstanding and unused and available
credit of $6.8 million under the old facility.
At April 30, 1998 the Company's obligations under the old agreement were
secured by a pledge of shares of stock of subsidiaries of the Company, accounts
receivable, inventory, equipment, intellectual property and other assets of the
Company and its subsidiaries. The old agreement included four financial ratio
covenants with respect to financial leverage, cash flow, and net worth. Since
July 31, 1996, the Company had not been in compliance with one or more of the
four financial ratio covenants and at April 30, 1998 the Company was not in
compliance with any of such covenants. Below is a summary of the requirements of
the four financial ratio covenants and the actual ratios and levels at April 30,
1998:
<TABLE>
<CAPTION>
Minimum Required Actual
----------------------- ------------------
<S> <C> <C>
Fixed Charge Coverage Ratio 1.75 0.05
Maximum Permitted Actual
----------------------- -----------------
Leverage Ratio 0.45 1.20
Maximum Permitted Actual
----------------------- -----------------
Cash Flow Ratio 3.00 18.42
Minimum Required Actual
----------------------- -----------------
Consolidated Net Worth $138,135,000 $(14,453,000)
</TABLE>
The Company obtained successive waivers of these defaults. The latest waiver
dated March 31, 1998 waived the defaults up to but not including May 29, 1998.
On May 28, 1998, the Company and a group of lenders entered into a new credit
agreement ("new facility" or "new agreement") that consists of a $45 million
revolving credit facility that expires in May 2001 and a $40 million term loan
that is repayable in quarterly installments over five years. The new agreement
includes financial covenants with respect to financial leverage, earnings and
fixed charge coverage with which the Company expects to be able to comply.
Interest rates under the new credit agreement are substantially lower then under
the old agreement. Proceeds from the new facility were used to repay all of the
$70 million indebtedness then outstanding under the Company's old agreement.
The new facility provides additional availability to fund working capital
requirements and acquisitions.
As a result of the Company's non-compliance with the financial ratio
covenants contained in the old agreement, bank debt in the amount of $71.5
million as of April 30, 1998, which otherwise would have been classified as
noncurrent, has been classified as current. Acceleration of the debt under the
old agreement by the bank lending group upon the Company's failure, after May
29, 1998, to comply with any of the financial ratio covenants noted above would
have been an event of default under the Company's $15 million 7% convertible
subordinated note. Because of this possible cross default, the entire $15
million principal balance of the 7% convertible subordinated note has also been
classified as current debt.
(12)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
Under the Company's 7% convertible subordinated note, the Company may not pay
or declare cash dividends or redeem shares of the Company if the Company's
tangible net worth is less than $15 million. As of April 30, 1996, the
Company's tangible net worth was less than $15 million and the Company has not
paid or declared dividends (including the quarterly dividend for the Series D
Preferred Stock) or redeemed shares since that date. However, dividends on the
Series D Preferred Stock have been accrued since that date. At April 30, 1998
the unpaid dividends on the Series D Preferred Stock amounted to $1,154.35.
In order to reduce the risk of higher interest expense that could result from
an increase in the level of market interest rates, the Company in June 1996
purchased an interest rate cap with an initial notional amount of $42.5 million.
Under the terms of the interest rate cap, the Company will receive a payment at
the end of each quarterly period, as defined in the interest rate cap agreement,
if three-month LIBOR at the beginning of the period exceeds 7.5%. The amount of
such payment will be the interest for such period on the notional amount of the
interest rate cap at the beginning of such period calculated using an interest
rate equal to the positive difference, if any, between LIBOR at the beginning of
such period and 7.5%. The interest rate cap expires in July 1999. The cost of
this interest rate cap is being amortized over its 37-month term. At April 30,
1998, the unamortized cost was $106,000.
The Company believes that cash from operations and available credit under its
new credit facility will be adequate to meet future operating, debt service, and
capital expenditure cash needs.
On January 30, 1998, the Company sold Whittaker Xyplex, Inc. On February 2,
1998 the net proceeds of $34.5 million from the sale were used to prepay debt
under the Company's old credit agreement. Also on February 2, 1998, commitments
under the then existing revolving credit facility were reduced to $82.4 million.
Debt as a percent of total capitalization (stockholders' equity plus debt)
was 120.0% at April 30, 1998, compared with 131.1% at October 31, 1997. The
current ratio at April 30, 1998 was 0.66, compared with 0.55 at October 31,
1997, while working capital was ($41.1) million at April 30, 1998, compared with
($76.4) million at October 31, 1997. Excluding the debt reclassifications
discussed above, the current ratio would have been 2.32 and working capital
would have been $45.4 million at April 30, 1998 and at October 31, 1997 the
current ratio and working capital would have been 1.88 and $44.0 million,
respectively.
Cash flow used by continuing operations for the first six months of 1998 was
$0.6 million, compared to cash flow provided by continuing operations of $1.1
million for the same period in 1997. The $1.7 million decrease from 1997 to
1998 was due primarily to an increase in deferred taxes in 1998 compared to a
decrease in 1997, a greater decrease in accounts payable and accrued liabilities
in the first six months of 1998 compared to the first six months of 1997 and a
smaller reduction in accounts receivable in 1998 compared to 1997.
Substantially offsetting these decreases was net income in the first six months
of 1998 compared to a net loss in the first six months of 1997 and smaller
increases in inventories and prepaids during the first six months of 1998
compared to the first six months of 1997.
Capital expenditures of continuing operations during the first six months of
1998 were $1.1 million, compared to $1.7 million for the same period of 1997.
At April 30, 1998, there were approximately $2.0 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 and advances under the
Company's new credit agreement. Under the terms of the Company's new credit
agreement, capital expenditures may not exceed specified annual amounts.
Cash expenditures related to the environmental remediation of a 996-acre
parcel of land located in Santa Clarita, California were $0.6 million during the
first six months of 1998.
DISPOSITION
During the first quarter of 1998 the Company completed of the sale of
Whittaker Xyplex, Inc. to MRV Communications, Inc., for $35.0 million in cash
plus warrants to purchase 421,402 shares of common stock of MRV. The net
proceeds from the sale were used in February to reduce Whittaker's bank debt.
The $12.1 million gain on disposal of Xyplex recorded by Whittaker was net of
estimated selling costs of $0.5 million. In calculating gain on disposal, the
421,402 warrants were valued at $2.2 million based on their estimated market
value at January 31, 1998.
(13)
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
IMPACT OF YEAR 2000
The Company has undertaken a number of initiatives to address the impact of
the Year 2000 on its business. These initiatives include assessments of its
systems and products, discussions with its suppliers and customers, and the
implementation of remedial action plans where necessary. Some of these
initiatives have been completed while others are still in progress. The Company
is currently in the process of replacing a computer system (both hardware and
software) in its Aerospace segment with a system that is fully Year 2000
compliant. The cost of this new system is estimated to be $2.0 million with a
significant portion of these costs being capitalized. The Company estimates that
all corrective actions will be completed by February 1999. Customers and
suppliers of the Company are in various stages of upgrading their systems to be
Year 2000 compliant. In view of the large number of alternative suppliers, the
Company believes that the failure of a supplier to become Year 2000 compliant
would not have a material adverse effect on the Company.
SUBSEQUENT EVENTS
On May 4, 1998 the Company and Hughes Electronics Corporation ("Hughes")
entered into an agreement (the "Amendment"), to modify certain terms of the
Company's 1995 purchase of Hughes LAN Systems, Inc. (now known as Whittaker
Communications, Inc.) from Hughes. Under the Stock Purchase Agreement between
the Company and Hughes, dated April 24, 1995 (the "Prior Agreement"), the
Company issued to Hughes a 7% convertible subordinated note in the principal
amount of $15 million, due May 1, 2005 (the "Note").
The Amendment provides that Whittaker may elect to make certain payments due
to Hughes under the terms of the Prior Agreement in cash or in shares of
Whittaker common stock. In accordance with the terms of the Amendment, the
Company has elected to make these payments to Hughes by issuing to Hughes
107,841 newly issued shares of Whittaker common stock. The Amendment also
provides that no such further payments shall be payable by the Company. The
Company and Hughes have also agreed in the Amendment to release any and all
existing claims against each other.
The Amendment modifies the Note by (a) changing the conversion price from
$24.25 per share to $16.97 per share; and (b) if the Company redeems all or a
portion of the Note prior to May 4, 2002, obligating the Company to issue to
Hughes a warrant to purchase the number of shares of Whittaker common stock
which Hughes could have received upon conversion of the principal amount so
redeemed by the Company ("Warrant"). The form of Warrant states that the
exercise price of the Warrant will be based on the conversion price of $16.97
and adjusted in accordance with customary anti-dilutive protections similar to
those affecting the conversion of the Note. The form of Warrant also provides
that the number of shares subject to the Warrant will be adjusted based upon
similar anti-dilutive principles. If the entire principal amount of the Note
was converted as of the date of the Amendment into Whittaker common stock, the
Company would be required (under the Amendment and the Note, as amended) to
issue, and has thus reserved for issuance, 883,912 shares of Whittaker common
stock.
On May 28, 1998, the Company and a group of lenders entered into a new credit
agreement that consists of a $45 million revolving credit facility that expires
in May 2001 and a $40 million term loan that is repayable in quarterly
installments over five years. The new agreement includes financial covenants
with respect to financial leverage, earnings and fixed charge coverage. The
Company expects to be able to comply with such covenants. Interest rates under
the new credit agreement are substantially lower then under the prior credit
agreement. Proceeds from the new credit facility were used to repay all of the
$70 million of indebtedness outstanding under the Company's prior credit
agreement. The new credit facility provides additional availability to fund
working capital requirements and acquisitions.
Statements made herein that are not based on historical fact are "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. The risk factors that could cause actual results to differ
from the forward looking statements include delay in developing new programs and
products, inability to qualify for new programs or to develop new products, loss
of existing business and inability to attract new business and customers,
reduced spending by commercial and defense customers and development of
competing products.
(14)
<PAGE>
EXHIBITS TO PART I
- ------------------
I(a) Calculation of Earnings (Loss) Per Share.
(15)
<PAGE>
Exhibit I(a)
WHITTAKER CORPORATION
CALCULATION OF EARNINGS (LOSS) PER SHARE
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months
Ended April 30,
1998 1997
------------- --------------
<S> <C> <C>
BASIC EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS)
Net income (loss) $ 16,270 $ (52,526)
Adjustments: -- --
------------- --------------
Net income (loss) used in basic earnings per share calculations $ 16,270 $ (52,526)
============= ==============
Weighted average number of common shares outstanding 11,205 11,131
============= ==============
Basic Earnings (Loss) Per Share $ 1.45 $ (4.72)
============= ==============
</TABLE>
(16)
<PAGE>
Exhibit I(a)
WHITTAKER CORPORATION
CALCULATION OF EARNINGS (LOSS) PER SHARE - (CONTINUED)
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months
Ended April 30,
1998 1997
------------- --------------
<S> <C> <C>
DILUTED EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS)
Net income (loss) used in basic earnings per share calculation (above) $ 16,270 $ (52,526)
Adjustments: -- --
------------- --------------
Net income (loss) used in diluted earnings per share calculations $ 16,270 $ (52,526)
============= ==============
DENOMINATOR USED TO CALCULATE DILUTED EARNINGS (LOSS) PER SHARE
Weighted average common shares outstanding for basic earnings per share 11,205 11,131
calculation (above)
Effect of dilutive securities:
Series D Convertible Preferred Stock 188 --
Employee Stock Options 132 --
------------- --------------
Denominator for diluted earnings per share calculation 11,525 11,131
============= ==============
Diluted Earnings (Loss) Per Share $ 1.41 $ (4.72)
============= ==============
</TABLE>
NOTES
Loss per share calculation for 1997 does not include the effect of the Series D
Convertible Preferred Stock or Employee Stock Options as such amounts would be
antidilutive.
(17)
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company's Annual Meeting of Stockholders was held on April 3, 1998. At
the Annual Meeting, the stockholders voted on the election of George H. Benter,
Jr., George Deukmejian and Gregory T. Parkos as directors for a three-year term
and ratified the appointment of Ernst & Young LLP as the Company's independent
auditor for the fiscal year ending October 31, 1998. The votes cast with
respect to each of these matters were as follows:
<TABLE>
<CAPTION>
Votes Against or
Votes For Withheld Abstentions Broker Non-Votes
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
1. Election of Directors 8,132,802 59,144 1,974,333 0
George H. Benter, Jr. 8,135,267 56,679 1,974,333 0
George Deukmejian 8,132,256 59,690 1,974,333 0
Gregory T. Parkos
2. Ratification of Appointment of 8,153,922 18,894 1,993,463 0
Ernst & Young LLP
</TABLE>
Directors elected at the meeting were George H. Benter, Jr., George
Deukmejian and Gregory T. Parkos and directors whose term of office continued
following the Annual Meeting were Joseph F. Alibrandi, Jack L. Hancock, Edward
R. Muller and Malcolm T. Stamper.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C>
(a) Exhibits. *
3.2 Restated Bylaws (Exhibit 3.2 to Form 10-K for fiscal year ended October 31, 1989), as amended
September 30, 1994 (Exhibit 3.2 to Form 10-K for fiscal year ended October 31, 1994), December 16,
1996 (Exhibit 3.2 to Form 10-K for fiscal year ended October 31, 1996) and June 25, 1997.
4.1 Term Note dated May 28, 1998 by the Registrant in favor of CIBC Inc. (Exhibit 4.1 to Form 8-K dated
June 1, 1998).
4.2 Term Note dated May 28, 1998 by the Registrant in favor of The First National Bank of Chicago (Exhibit 4.2
to Form 8-K dated June 1, 1998).
4.3 Term Note dated May 28, 1998 by the Registrant in favor of Van Kampen American Capital Prime Rate Income
Trust (Exhibit 4.3 to Form 8-K dated June 1, 1998).
</TABLE>
(18)
<PAGE>
<TABLE>
<S> <C>
4.4 Term Note dated May 28, 1998 by the Registrant in favor of
Banque Paribas (Exhibit 4.4 to Form 8-K dated June 1, 1998).
4.5 Revolving Note dated May 28, 1998 by the Registrant in favor
of CIBC Inc. (Exhibit 4.5 to Form 8-K dated June 1, 1998).
4.6 Revolving Note dated May 28, 1998 by the Registrant in favor
of The First National Bank of Chicago (Exhibit 4.6 to Form 8-K
dated June 1, 1998).
4.7 Revolving Note dated May 28, 1998 by the Registrant in favor
of Van Kampen American Capital Prime Rate Income Trust
(Exhibit 4.7 to Form 8-K dated June 1, 1998).
4.8 Revolving Note dated May 28, 1998 by the Registrant in favor
of Banque Paribas (Exhibit 4.8 to Form 8-K dated June 1,
1998).
4.9 Swingline Note dated May 28, 1998 by the Registrant in favor
of CIBC Inc. (Exhibit 4.9 to Form 8-K dated June 1, 1998).
4.10 Allonge No. 1 dated May 4, 1998 to 7% Convertible Subordinated
Note dated April 24, 1995 by the Registrant in favor of Hughes
Electronics Corporation (Exhibit 10.2 to Form 8-K dated May 7,
1998).
10.1 Eleventh Amendment and Waiver dated as of March 31, 1998 among
Registrant, NationsBank of Texas, N.A., as Agent, and certain
other financial institutions as signatories thereto.
10.2 Second Amendment to Stock Purchase Agreement dated May 4, 1998
between the Registrant and Hughes Electronics Corporation
(Exhibit 10.1 to Form 8-K dated May 7, 1998).
10.3 Credit Agreement dated as of May 28, 1998 among the
Registrant, Canadian Imperial Bank of Commerce, as
Administrative Agent, The First National Bank of Chicago, as
Documentation Agent, and certain commercial lending
institutions, as the Lenders (Exhibit 10.1 to Form 8-K dated
June 1, 1998).
11. Statements re computation of per share earnings for the six
months ended April 30, 1998 (Exhibit I(a) of Part I to this
Form 10-Q).
27. Financial Data Schedule.
- ------------------
* Exhibits followed by a parenthetical reference are incorporated by reference to the documents described
therein.
(b) Reports on Form 8-K.
During the quarter ended April 30, 1998, the following reports were filed
on Form 8-K:
1. A report on Form 8-K was filed on February 3, 1998. The form reports, in
Item 5 thereof, the Company's completion of the sale of its Whittaker
Xyplex, Inc. subsidiary on January 30, 1998.
2. A report on Form 8-K was filed on March 3, 1998. The form reports, in
Item 5 thereof, the Company's earnings for its first quarter of 1998 and
Restated Selected Financial Data and Quarterly Financial Data.
3. A report on Form 8-K/A was filed on April 6, 1998. The form reports, in
Items 2 and 7 thereof, the pro forma financial information in connection
the sale of its Whittaker Xyplex, Inc. subsidiary on January 30, 1998.
</TABLE>
(19)
<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 10, 1998 By: /s/ John K. Otto
------------------------------------
John K. Otto
Vice President, Chief Financial Officer
and Treasurer
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED PAGE
- ----------- ----------- -------------
<S> <C> <C>
3.2 Restated Bylaws (Exhibit 3.2 to Form 10-K for fiscal year ended October 31,
1989), as amended September 30, 1994 (Exhibit 3.2 to Form 10-K for fiscal
year ended October 31, 1994), December 16, 1996 (Exhibit 3.2 to Form 10-K for
fiscal year ended October 31, 1996) and June 25, 1997.
10.1 Eleventh Amendment and Waiver dated as of March 31, 1998 among Registrant,
NationsBank of Texas, N.A., as Agent, and certain other financial
institutions as signatories thereto.
11. Statements re computation of per share earnings for the six months ended
April 30, 1998 (Exhibit I(a) of Part I to this Form 10-Q).
27. Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
WHITTAKER CORPORATION
* * * * *
ARTICLE I
OFFICES
Section 1. Registered Office. The address of the registered office in the
State of Delaware shall be 229 South State Street, Dover, County of Kent,
Delaware 19901, and the name of its registered agent at such address is The
Prentice-Hall Corporation Systems, Inc.
Section 2. Other Offices. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation may
require.
Section 3. Books. The books of the corporation may be kept within or
without of the State of Delaware as the board of directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of stockholders shall
be held at such place, either within or without the State of Delaware, on such
date and at such time as may be determined from time to time by the board of
directors (or the chairman in the absence of a designation by the board of
directors).
<PAGE>
Section 2. Annual Meetings. Annual meetings of stockholders, commencing
with the year 1987, shall be held to elect a class of the board of directors and
transact such other business as may properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of stockholders may be
called by the board of directors or the chairman of the board of directors, the
president or the secretary of the corporation and shall be called by the
secretary of the corporation at the request in writing of holders of not less
than 10% of the total voting power of all outstanding securities of the
corporation then entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 4. Notice of Meetings and Adjourned Meetings; Waiver of Notice.
(a) Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
place, date and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by the General Corporation Law of the State of Delaware ("Delaware Law"), such
notice shall be given not less than 10 nor more than 60 days before the date of
the meeting to each stockholder of record entitled to vote at such meeting.
Unless these bylaws otherwise require, when a meeting is adjourned to another
time or place (whether or not a quorum is present), notice need not be given of
the adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the corporation
may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
(b) A written waiver of any such notice signed by the person entitled
thereto, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 5. Quorum. Unless otherwise provided under the certificate of
incorporation or these bylaws and
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<PAGE>
subject to Delaware law, the presence, in person or by proxy, of the holders of
not less than a majority of the total voting power of all outstanding securities
of the corporation then entitled to vote at a meeting of stockholders shall
constitute a quorum for the transaction of business.
Section 6. Voting. (a) Unless otherwise provided in the certificate of
incorporation and subject to Delaware Law, each stockholder shall be entitled to
one vote for each outstanding security of the corporation entitled to vote held
by such stockholder. Unless otherwise provided in Delaware Law, the certificate
of incorporation or these bylaws, the affirmative vote of not less than a
majority of the total voting power of all outstanding securities of the
corporation present, in person or by proxy, at a meeting of stockholders and
then entitled to vote on the subject matter shall be the act of the
stockholders.
(b) Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
Section 7. Action by Consent. Unless otherwise restricted by the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding securities of
the corporation having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all
securities entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section 8. Organization. At each meeting of stockholders, the chairman
of the board, if one shall have been elected, (or in his absence or if one shall
not have been elected, the president) shall act as chairman of the meeting. The
secretary (or in his absence or inability to act, the person whom the chairman
of the meeting shall appoint secretary of the meeting) shall act as secretary
of the meeting and keep the minutes thereof.
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<PAGE>
Section 9. Order of Business. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting.
ARTICLE III
DIRECTORS
Section 1. General Powers. Except as otherwise provided in Delaware Law
or the certificate of incorporation, the business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. (a) The number of
-----------------------------------
directors which shall constitute the whole board shall be fixed from time to
time by resolution of the board of directors but shall not be less than five nor
more than twelve. Each director shall hold office until such director's
successor shall have been duly elected and qualified or until such director's
earlier death, resignation or removal.
(b) No person may stand for election to, or be elected to, the board of
directors or be appointed by the directors to fill a vacancy on the board of
directors who is 70 years of age or older, who shall have made, or be making,
improper or unlawful use of the corporation's confidential information, or who
has interests which conflict materially with the interests of the corporation.
Directors need not be stockholders.
Section 3. Quorum and Manner of Acting. Unless the certificate of
incorporation or these bylaws require a greater number, a majority of the total
number of directors shall constitute a quorum for the transaction of business,
and the affirmative vote of not less than a majority of the directors present at
a meeting at which a quorum is present shall be the act of the board of
directors. When a meeting is adjourned to another time or place (whether or not
a quorum is present), notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the board of directors may transact any
business which might have been transacted at the original meeting. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting, from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
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<PAGE>
Section 4. Time and Place of Meetings. The board of directors shall hold
its meetings at such place, either within or without the State of Delaware, and
at such time as may be determined from time to time by the board of directors
(or the chairman in the absence of a determination by the board of
directors).
Section 5. Annual Meeting. The board of directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the board of directors may be held at such
place, either within or without the State of Delaware, on such date and at such
time as shall be specified in a notice thereof given as hereinafter provided in
Section 7 of this Article III or in a waiver of notice thereof.
Section 6. Regular Meetings. Regular meetings of the board of directors
shall be held without notice at the corporation's executive office or at such
other place as the board of directors may designate on the fourth Friday of
each fiscal month of the corporation's fiscal year at 9:00 a.m., local time;
provided, however, that should said day fall upon a legal holiday, then said
meeting shall be held at the same time and place on the next Friday thereafter
ensuing which is not a legal holiday. Notice of all such regular meetings of
the board of directors is hereby dispensed with.
Section 7. Special meetings. Special meetings of the board of directors
may be called by the chairman of the board, the president, the secretary or by
any two directors. Notice of special meetings of the board of directors shall be
given to each director in such manner as is determined by the board of
directors at least 48 hours before the date of the meeting.
Section 8. Committees. (a) The board of directors may, by resolution
passed by a majority of the whole board, designate an executive committee, a
compensation and stock option committee, an audit committee and one or more
other committees, each committee to consist of two or more of the directors of
the corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified members at
any meeting of the committee. Any such committee, to the extent provided in the
resolution of the board of directors, shall
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<PAGE>
have and may exercise all the powers and authority of the board of directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
but no such committee shall have the power or authority in reference to
amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the bylaws of the corporation; and unless the
resolution of the board of directors or the certificate of incorporation
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Each committee shall
keep regular minutes of its meetings and report the same to the board of
directors when required.
(b) The executive committee shall be the committee of the board of
directors, if one be appointed, to which is delegated substantially all of the
delegated power and authority of the board of other than the powers that it is
contemplated by these bylaws may be delegated to the compensation and stock
option committee and audit committee. Unless the board of directors shall
otherwise provide, special meetings of the executive committee shall be held at
the principal executive office of the corporation or at any place which has been
designated from time to time by resolution of the executive committee or by the
written consent of all members thereof, and may be called by the chairman of the
board, the president, the secretary or any two members thereof; vacancies in the
membership of the executive committee may be filled by the board of directors;
three members of the executive committee or such lesser number of members as
shall represent a majority of the members of the executive committee then in
office shall constitute a quorum for the transaction of business.
(c) The compensation and stock option committee shall be the committee of
the board of directors, if one be appointed, to which is delegated a substantial
portion of the powers and authority of the board with respect to the
remuneration of executive officers and employees of the corporation. The
compensation and stock option committee shall be composed exclusively of
directors who are not executive officers or employees of the corporation.
Unless the board of directors shall otherwise provide: regular meetings of the
compensation and stock option committee, notice of
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<PAGE>
which is hereby dispensed with, shall be held, without call, at the same place
and on the same date as each meeting of the board of directors but at a time one
hour preceding the commencement of the meeting of the board of directors;
special meetings of the compensation and stock option committee shall be held at
the principal executive office of the corporation or at any place which has been
designated from time to time by resolution of the compensation and stock option
committee or by written consent of all members thereof, and may be called by the
chairman of the compensation and stock option committee, the chairman of the
board of directors, the secretary or any two members of the compensation and
stock option committee; three members of the compensation and stock option
committee or such lesser number of members as shall represent a majority of the
members of the compensation and stock option committee then in office shall
constitute a quorum for the transaction of business.
(d) The audit committee shall be the committee of the board of
directors, if one be appointed, to which is delegated a substantial portion of
the powers and authority of the board with respect to auditing and accounting
matters including review of the performance of the corporation's independent and
internal auditors, the scope of audit procedures, and the corporation's
accounting practices. The audit committee shall be composed exclusively of
directors who are not executive officers or employees of the corporation. Unless
the board of directors shall otherwise provide, regular meetings of the audit
committee, notice of which is hereby dispensed with, shall be held, without
call, at the same place and on the same date as the meetings of the board of
directors scheduled in fiscal February, May, August and December but at a time
one hour preceding the commencement of the meeting of the board of directors;
special meetings of the audit committee shall be held at the principal executive
office of the corporation or at any place which has been designated from time to
time by resolution of the audit committee or by the written consent of all
members thereof, and may be called by the chairman of the audit committee, the
chairman of the board of directors, the secretary or any two members of the
audit committee; three members of the audit committee or such lesser number of
members as shall represent a majority of the members of the audit committee then
in office shall constitute a quorum for the transaction of business.
Section 9. Action by Consent. Unless otherwise restricted by the
certificate of incorporation or these bylaws, any action required or permitted
to be taken at any
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<PAGE>
meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Telephonic Meetings. Unless otherwise restricted by the
certificate of incorporation or these bylaws, members of the board of directors,
or any committee designated by the board of directors, may participate in a
meeting of the board of directors or such committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 11. Resignation. Any director may resign at any time by
giving written notice to the board of directors or to the secretary of the
corporation. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such notice; and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 12. Vacancies. Unless otherwise restricted by the certificate
of incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director. Each director so chosen shall hold office until such director's
successor has been duly elected and qualified or until such director's earlier
death, resignation or removal. If there are no directors in office, then an
election of directors may be held in accordance with Delaware Law. Unless
otherwise provided in the certificate of incorporation, when one or more
directors shall resign from the board, effective at a future date, a majority of
the directors then in office, including those who have so resigned, shall have
the power to fill such vacancy or vacancies, the vote thereon to take effect
when such resignation or resignations shall become effective, and each director
so chosen shall hold office as provided in filling of other vacancies.
Section 13. Removal. Any director or the entire board of directors may
be removed, only for cause, at any time by the affirmative vote of the holders
of not less than
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<PAGE>
a majority of the total voting power of all outstanding securities of the
corporation entitled to vote.
Section 14. Compensation. Unless otherwise restricted by the
certificate of incorporation or these bylaws, the board of directors shall have
authority to fix the compensation of directors, including fees and reimbursement
of expenses, provided, however, that no such compensation, fees or expenses
shall be paid to directors who are also employees of the corporation.
Section 15. Preferred Directors. Notwithstanding anything else
contained herein, whenever the holders of one or more classes or series of
preferred stock shall have the right, voting separately as a class or series, to
elect directors, the election, term of office, filling of vacancies, removal and
other features of such directorships shall be governed by the terms of the
resolutions adopted by the board of directors pursuant to the certificate of
incorporation applicable thereto, and such directors so elected shall not be
subject to the provisions of Sections 2, 12 and 13 of this Article III unless
otherwise provided therein.
ARTICLE IV
OFFICERS
Section 1. Principal Officers. The principal officers of the
corporation shall be a chairman of the board of directors, a president, one or
more vice presidents, a treasurer and a secretary who shall have the duty, among
other things, to record the proceedings of the meetings of stockholders and
directors in a book kept for that purpose. The corporation may also have such
other principal officers, including one or more controllers, as the board may in
its discretion appoint. One person may hold the offices and perform the duties
of any two or more of said offices, except that no one person shall hold the
offices and perform the duties of chairman of the board and secretary.
Section 2. Election, Term of Office and Remuneration. The principal
officers of the corporation shall be elected annually by the board of directors
at the annual meeting thereof. Each such officer shall hold office until his
successor is elected and qualified, or until his earlier death, resignation or
removal. The remuneration of all officers of the corporation shall be fixed by
the board of directors. Any vacancy in any office shall be filled in such
manner as the board of directors shall determine.
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<PAGE>
Section 3. Subordinate Officers. In addition to the principal officers
enumerated in Section 1 of this Article IV, the corporation may have one or more
assistant treasurers and assistant secretaries and such other subordinate
officers, agents and employees as the board of directors may deem necessary,
each of whom shall hold office for such period as the board of directors may
from time to time determine. The board of directors may delegate to any
principal officer the power to appoint and to remove any such subordinate
officers, agents or employees.
Section 4. Removal. Except as otherwise permitted with respect to
subordinate officers, any officer may be removed, with or without cause, at any
time, by resolution adopted by the board of directors.
Section 5. Resignations. Any officer may resign at any time by giving
written notice to the board of directors (or to a principal officer if the board
of directors has delegated to such principal officer the power to appoint and to
remove such officer). The resignation of any officer shall take effect upon
receipt of notice thereof or at such later time as shall be specified in such
notice) unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 6. Powers and Duties. The board of directors may designate an
officer as the chief executive officer. The chief executive officer shall,
subject to the direction and control of the board of directors, be the general
manager of, and supervise and direct, the business and affairs of the
corporation and the conduct of the officers of the corporation. The other
officers of the corporation shall have such powers and perform such duties
incident to each of their respective offices and such other duties as may from
time to time be conferred upon or assigned to them by the board of directors or
the chief executive officer.
ARTICLE V
GENERAL PROVISIONS
Section 1. Fixing the Record Date. (a) In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than 60
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<PAGE>
nor less than 10 days before the date of such meeting. If no record date is
fixed by the board of directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; providing, however, that the board of directors may
fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by Delaware Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by Delaware Law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the board of directors adopts the
resolution taking such prior action.
(c) In order that the corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
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adopted, and which record date shall be not more than 60 days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
Section 2. Dividends. Subject to limitations contained in Delaware Law
and the certificate of incorporation, the board of directors may declare and pay
dividends upon the shares of capital stock of the corporation, which dividends
may be paid either in cash, securities of the corporation or other property.
Section 3. Fiscal Year. The fiscal year of the corporation shall end
on the Sunday nearest October 31st of each year.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed, affixed or otherwise reproduced.
Section 5. Voting of Stock Owned by the Corporation. The board of
directors may authorize any person, on behalf of the corporation, to attend,
vote and grant proxies to be used at any meeting of stockholders of any
corporation (except this corporation) in which the corporation may hold stock.
12
<PAGE>
CERTIFICATE OF ADOPTION
OF
RESOLUTIONS
BY
THE BOARD OF DIRECTORS
OF
WHITTAKER CORPORATION
---------------------
WHEREAS, Article SIXTH, paragraph (a) of the Restated Certificate of
Incorporation, as amended, of this corporation grants to the directors the
concurrent power with the stockholders to adopt, amend or repeal the bylaws
of this corporation; and
WHEREAS, Article IV, Section 1 of the Bylaws of this corporation specifies,
among other things, the principal officers of this corporation;
RESOLVED, that Article IV, Section 1 of the Bylaws of this corporation,
designating the principal officers of the corporation, be amended by
striking out "a chairman of the board of directors,";
RESOLVED FURTHER, that Article III of the Bylaws of this corporation is
amended by adding at the end thereof the following:
"Section 16. Chairman of the Board of Directors. The board of directors
shall elect one of the directors as chairman of the board of directors, who
shall preside at all meetings of the board of directors at which he is
present and shall have such authority and shall perform such duties as may
be specified in the bylaws of this corporation. The board of directors may
specify other powers and duties for the chairman of the board of directors,
which are not inconsistent with the Bylaws of the corporation."
* * * * * * * * * *
I, Lynne M. O. Brickner, do hereby certify that I am the duly elected and
acting Secretary of Whittaker Corporation; that the foregoing is a full, true
and correct copy of the resolutions adopted at a meeting of the Board of
Directors of Whittaker Corporation held on September 30, 1994, at which meeting
a quorum of said Board was at all times present and acting and that said Board
resolutions have not been modified or rescinded and are in full force and effect
as of the date of this certificate.
Dated: June 25, 1997
/s/ Lynne M. O. Brickner
-------------------------------
Lynne M. O. Brickner
Secretary
<PAGE>
CERTIFICATE OF ADOPTION
OF
RESOLUTIONS
BY
THE BOARD OF DIRECTORS
OF
WHITTAKER CORPORATION
---------------------
WHEREAS, the Board of Directors is authorized to amend the Bylaws of this
corporation.
NOW, THEREFORE, BE IT RESOLVED, that Article III, Section 2(b) of the
Bylaws of this corporation be, and hereby is, amended in its entirety to
read as follows:
"No person may stand for election to, or be elected to, the board of
directors or be appointed by the directors to fill a vacancy on the board
of directors who is 72 years of age or older, who shall have made, or be
making, improper or unlawful use of the corporation's confidential
information, or who has interests which conflict materially with the
interests of the corporation. Directors need not be stockholders."
* * * * * * * * * *
I, Lynne M. O. Brickner, do hereby certify that I am the duly elected and
acting Secretary of Whittaker Corporation; that the foregoing is a full, true
and correct copy of the resolutions adopted at a meeting of the Board of
Directors of Whittaker Corporation held on December 16, 1996, at which meeting
a quorum of said Board was at all times present and acting and that said Board
resolutions have not been modified or rescinded and are in full force and effect
as of the date of this certificate.
Dated: December 18, 1996
/s/ Lynne M. O. Brickner
-------------------------------
Lynne M. O. Brickner
Secretary
<PAGE>
CERTIFICATE OF ADOPTION
OF
RESOLUTIONS
BY
THE BOARD OF DIRECTORS
OF
WHITTAKER CORPORATION
---------------------
WHEREAS, Article SIXTH, paragraph (a) of the Restated Certificate of
Incorporation, as amended, of this corporation grants to the directors of
the corporation the power to adopt, amend or repeal the bylaws of this
corporation;
RESOLVED, that Article III of the Bylaws of this corporation is
amended by adding at the end thereof the following:
"Section 17. Vice Chairman of the Board of Directors. The board of
directors shall elect one of the directors as vice chairman of the board of
directors, who shall have such authority and shall perform such duties as
may be specified in the bylaws of this corporation. The board of directors
may specify other powers and duties for the vice chairman of the board of
directors, which are not inconsistent with the Bylaws of the corporation."
* * * * * * * * * *
I, Lynne M. O. Brickner, do hereby certify that I am the duly elected and
acting Secretary of Whittaker Corporation; that the foregoing is a full, true
and correct copy of the resolutions adopted at a meeting of the Board of
Directors of Whittaker Corporation held on May 30, 1997, at which meeting a
quorum of said Board was at all times present and acting and that said Board
resolutions have not been modified or rescinded and are in full force and effect
as of the date of this certificate.
Dated: June 25, 1997
/s/ Lynne M. O. Brickner
-------------------------------
Lynne M. O. Brickner
Secretary
<PAGE>
EXHIBIT 10.1
ELEVENTH AMENDMENT AND WAIVER
TO WHITTAKER CORPORATION
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MARCH 31, 1998
This ELEVENTH AMENDMENT AND WAIVER (the "Amendment") is among
WHITTAKER CORPORATION, a Delaware corporation (the "Borrower"), the Financial
Institutions party to the Credit Agreement referred to below (the "Lenders"),
and NATIONSBANK OF TEXAS, N.A., as agent (the "Agent") for the Lenders
thereunder.
PRELIMINARY STATEMENTS:
1. The Borrower, the Lenders, CIBC Inc., as co-agent, and the Agent
entered into an Amended and Restated Credit Agreement dated as of April 10, 1996
(as amended to date, the "Credit Agreement"; capitalized terms used and not
otherwise defined herein have the meanings assigned to such terms in the Credit
Agreement).
2. The Borrower has requested that the Lenders, among other things,
waive, during the period starting on and including March 31, 1998 to (but not
including) May 29, 1998 (the "Waiver Period"), any Default arising as a result
of non-compliance with Section 6.04(a), (b), (c) or (d) of the Credit Agreement.
3. The Lenders are, on the terms and conditions stated below, willing
to grant the request of the Borrower.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the date
------------------------------
hereof and subject to the satisfaction of the conditions precedent set forth in
Section 5 hereof, the Credit Agreement is hereby amended as follows:
(a) During the Waiver Period, the definition of "Applicable Margin" is
amended and restated in its entirety as follows:
"APPLICABLE MARGIN" means 4.25% per annum.
-----------------
(b) During the Waiver Period, the third sentence of Section 2.01(b) of
the Credit Agreement is hereby amended and restated in its entirety as
follows:
"Each Revolving Borrowing shall be in an aggregate amount of
$500,000 or an integral multiple of $500,000 in excess thereof unless
such Revolving Borrowing is in the amount of the aggregate Unused
Revolving Commitment of each Revolving Lender and shall consist of
Revolving Advances made by the Revolving Lenders ratably according to
their respective Revolving Commitments."
<PAGE>
(c) During the Waiver Period, the proviso of Section 2.05(a) is hereby
amended to read as follows:
"provided, however, that each partial prepayment of Revolving
Advances shall be in the aggregate principal amount of $500,000 or any
multiple of $500,000 in excess thereof."
(d) During the Waiver Period, notwithstanding anything to the contrary
in the Credit Agreement, the aggregate outstanding amount of Revolving
Advances plus Letter of Credit Obligations shall not exceed (i)
$83,000,000, minus (ii) any amounts by which the Revolving Commitments
shall be automatically and permanently reduced pursuant to Section 2.05(b)
on and after January 30, 1998.
(e) During the Waiver Period, Section 3.05(a) of the Credit Agreement
is hereby amended and restated in its entirety as follows:
"SECTION 3.05. LETTER OF CREDIT COMPENSATION.
-----------------------------
(a) The Borrower shall pay to the Agent:
(i) for the account of the Issuing Bank which Issues a
Letter of Credit, an issuance fee in an amount equal to 1/8 of 1%
per annum of the average daily Available Amount of such Letter of
Credit outstanding from time to time; and
(ii) for the account of each Revolving Lender, a letter of
credit fee with respect to each Letter of Credit, in each case in
an amount equal to
(A) with respect to each Financial Standby Letter of
Credit, a percentage per annum equal to the Applicable
Margin plus 1%, times the amount of such Lender's Revolving
Pro Rata Share of the average daily Available Amount of such
Letter of Credit outstanding from time to time;
(B) with respect to each Performance Standby Letter
of Credit, a percentage per annum equal to the Applicable
Margin plus 1/2%, times the amount of such Lender's
Revolving Pro Rata Share of the average daily Available
Amount of such Letter of Credit outstanding from time to
time; and
(C) with respect to each Commercial Letter of Credit,
0.25% of the amount of such Lender's Revolving Pro Rata
Share of the Available Amount of such Letter of Credit as of
the date of Issuance thereof.
The letter of credit and issuance fees payable under this Section
3.05(a) shall be payable monthly on the last Business Day of each
month, commencing March 31, 1998, and on the Revolving Commitment
Termination Date except that the letter of credit fee payable
under Section 3.05(a)(ii)(C) shall be payable upon issuance
2
<PAGE>
of the applicable Letter of Credit. For purposes of computing
any fees under this Section 3.05(a), the determination of the
maximum amount available to be drawn under a Letter of Credit at
any time shall assume strict compliance with all conditions for
drawing. Any fees paid pursuant to this Section 3.05(a) are
nonrefundable."
(f) During the Waiver Period, the permissive exceptions to the
prohibitions of Section 6.02(g) contained in Sections 6.02(g)(v),
6.02(g)(vi), and 6.02(g)(viii) are suspended.
SECTION 2. WAIVER. (a) Subject to the terms and conditions hereof,
------
Lenders hereby waive, but only during the Waiver Period, the Specified Defaults
(hereinafter defined); provided, however, that Lenders' waiver of the Specified
-------- -------
Defaults and their rights and remedies as a result of the occurrence thereof
shall not constitute and shall not be deemed to constitute a waiver of any other
Event of Default, whether arising as a result of further violations of any
provision of the Credit Agreement previously violated by the Borrower, or a
waiver of any rights and remedies arising as a result of such other Events of
Default. As used herein, "Specified Defaults" shall mean the failure of the
------------------
Borrower to comply with Sections 6.04(a), (b), (c) and (d) of the Credit
Agreement. At the end of the Waiver Period, the waiver of the Specified
Defaults will automatically terminate.
(b) In consideration of Lenders' waiver of the Specified Defaults and
certain other good and valuable consideration, the Borrower hereby expressly
acknowledges and agrees that neither it nor any Guarantor or Grantor has any
setoffs, counterclaims, adjustments, recoupments, defenses, claims or actions of
any character, whether contingent, non-contingent, liquidated, unliquidated,
fixed, matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, known or unknown, against any Lender or Agent or any grounds or cause
for reduction, modification or subordination of the Obligations under the Loan
Documents or any liens or security interests of any Lender or the Agent. To the
extent the Borrower or any Guarantor or Grantor may possess any such setoffs,
counterclaims, adjustments, recoupments, claims, actions, grounds or causes, the
Borrower and each Guarantor and Grantor hereby waive, and hereby release each
Lender and Agent from, any and all such setoffs, counterclaims, adjustments,
recoupments, claims, actions, grounds and causes, such waiver and release being
with full knowledge and understanding of the circumstances and effects of such
waiver and release and after having consulted counsel with respect thereto.
SECTION 3. AMENDMENT AND WAIVER FEE. In consideration of the
------------------------
execution by and agreement to this Amendment by the Lenders, the Borrower shall
pay to the Agent for the account of each Lender such Lender's Revolving Pro Rata
Share of 0.25% of its Revolving Commitment outstanding on March 31, 1998.
SECTION 4. CONDITIONS TO EFFECTIVENESS. This Amendment shall not be
---------------------------
effective until all proceedings of the Borrower taken in connection herewith and
the transactions contemplated hereby shall be satisfactory in form and substance
to Agent and Required Lenders, and each of the following conditions precedent
shall have been satisfied:
(a) The Agent has received counterparts of this Amendment executed by
the Borrower and Required Lenders and counterparts of the Consent appended
hereto (the "Consent") executed by each of the Guarantors and Grantors (as
defined in the Security Agreement) listed therein (such Guarantors and
Grantors, together with the Borrower, each a "Loan Party" and,
collectively, the "Loan Parties");
3
<PAGE>
(b) The Agent shall have received for the account of the Lenders the
fee described in Section 3 above.
(c) All fees and expenses, including legal and other professional fees
and expenses incurred, payable on or prior to the date of this Amendment to
Agent, including, without limitation, the fees and expenses of its counsel,
shall have been paid to the extent that same had been billed prior to the
date of this Amendment; and
(d) Agent and each Lender shall have received each of the following:
(1) a certificate of the Borrower certifying (i) as to the
accuracy, after giving effect to this Amendment, of the
representations and warranties set forth in Article V of the Credit
Agreement, the other Loan Documents and in this Amendment, and (ii)
that there exists no Default or Event of Default, after giving effect
to this Amendment and the execution, delivery and performance of this
Amendment will not cause a Default or Event of Default; and
(2) such other documents, instruments, and certificates, as Agent
or Required Lenders shall deem necessary or appropriate in connection
with this Amendment and the transactions contemplated hereby,
including without limitation copies of resolutions of the board of
directors of the Borrower authorizing the transactions contemplated by
this Amendment.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower represents
------------------------------
and warrants as follows:
(a) AUTHORITY. The Borrower and each other Loan Party has the
---------
requisite corporate power and authority to execute and deliver this
Amendment or the Consent, as applicable, and to perform its obligations
hereunder and under the Loan Documents (as modified hereby) to which it is
a party. The execution, delivery and performance by the Borrower of this
Amendment and by each other Loan Party of the Consent, and the performance
by each Loan Party of each Loan Document to which it is a party have been
duly approved by all necessary corporate action of such Loan Party and no
other corporate proceedings on the part of such Loan Party are necessary to
consummate such transactions.
(b) ENFORCEABILITY. This Amendment has been duly executed and
--------------
delivered by the Borrower. The Consent has been duly executed and
delivered by each Guarantor and Grantor. This Amendment and each Loan
Document (as modified hereby) is the legal, valid and binding obligation of
each Loan Party hereto or thereto, enforceable against such Loan Party in
accordance with its terms, and is in full force and effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties contained in each Loan Document (other than any such
representations or warranties that, by their terms, are specifically made
as of a date other than the date hereof) are correct on and as of the date
hereof as though made on and as of the date hereof.
(d) NO DEFAULT. After giving effect to this Amendment, no event has
----------
occurred and is continuing that constitutes a Default or Event of Default.
4
<PAGE>
SECTION 6. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) Upon
---------------------------------------------
and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as modified hereby.
(b) Except as specifically modified above, the Credit Agreement and
all other Loan Documents are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Collateral Documents and all of the Collateral
described therein do and shall continue to secure the payment of all Secured
Obligations under and as defined therein, in each case as amended hereby.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as an amendment of any right,
power or remedy of any Lender or the Agent under any of the Loan Documents, nor
constitute an amendment of any provision of any of the Loan Documents.
SECTION 7. FURTHER ASSURANCES. The Borrower shall execute and
------------------
deliver such further agreements, documents, instruments, and certificates in
form and substance satisfactory to Agent, as Agent or any Lender may deem
necessary or appropriate in connection with this Amendment.
SECTION 8. EXECUTION IN COUNTERPARTS. This Amendment may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Amendment or the Consent by telefacsimile shall be effective as delivery of a
manually executed counterpart of this Amendment or such Consent.
SECTION 9. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
--------------------
LAW, EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES
ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN
TORT, CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY RELATED MATTERS, AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
SECTION 10. GOVERNING LAW. This Amendment shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK. SIGNATURE PAGES FOLLOW.]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
WHITTAKER CORPORATION,
a Delaware corporation
By: /s/ John K. Otto
----------------
John K. Otto
Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /s/ William E. Livingstone, IV
-------------------------------
William E. Livingstone, IV
Senior Vice President
Lenders:
-------
NATIONSBANK OF TEXAS, N.A.
By: /s/ William E. Livingstone, IV
------------------------------
William E. Livingstone, IV
Senior Vice President
BT HOLDINGS (NEW YORK), INC.
By: /s/ Robert W. Hevner
--------------------
Robert W. Hevner
Vice President
DK ACQUISITION PARTNERS, L.P.
By: M.H. DAVIDSON & CO., its general partner
By: /s/ Michael J. Leffell
----------------------
Michael J. Leffell
General Partner
6
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS L.P.
By: /s/ John Urban
--------------
John Urban
MERRILL LYNCH, PIERCE, FENNER, & SMITH
INCORPORATED
By: /s/ Neil Brisson
----------------
Neil Brisson
Director
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ Gilles Marchand, CFA
------------------------
Gilles Marchand, CFA
Authorized Signatory
MERRILL LYNCH SENIOR HIGH INCOME
PORTFOLIO, INC.
By: /s/ Gilles Marchand, CFA
------------------------
Gilles Marchand, CFA
Authorized Signatory
MERRILL LYNCH DEBT STRATEGIES
PORTFOLIO
By: MERRILL LYNCH ASSET
MANAGEMENT, L.P., as Investment Advisor
By: /s/ Gilles Marchand, CFA
------------------------
Gilles Marchand, CFA
Authorized Signatory
CANPARTNERS INVESTMENTS IV, LLC
By:
-----------------------
Title:
7
<PAGE>
CONSENT
Each of the undersigned, as Guarantors under the "Guaranty" and as grantors
under the "Security Agreement" (as such terms are defined in the Credit
Agreement referred to in the foregoing Amendment), each hereby consents and
agrees to the foregoing Amendment and to be bound by the terms and provisions
thereof, and agrees that (i) the Guaranty and the Security Agreement are and
shall continue to be in full force and effect and are hereby ratified and
confirmed in all respects except that, upon the effectiveness of and on and
after the date of such Amendment each reference to the Credit Agreement,
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement as amended by
such Amendment, and (ii) the collateral described in the Security Agreement
shall continue to secure the payment of the indebtedness therein described.
AVIANT INFORMATION, INC. (formerly BLUE BELL LEASE,
INC.), a California corporation, METROPOLITAN FINANCIAL
SERVICES CORPORATION, a Colorado corporation, PARK
CHEMICAL COMPANY, a Michigan corporation, WHITTAKER
COMMUNICATIONS, INC., a California corporation,
WHITTAKER CONTROLS, INC., a California corporation,
WHITTAKER CORP., a Maine corporation, WHITTAKER
ORDNANCE, INC., a Delaware corporation, WHITTAKER PORTA
BELLA DEVELOPMENT, INC., a California corporation,
WHITTAKER SERVICES CORPORATION, a California
corporation, WHITTAKER TECHNICAL PRODUCTS, INC., a
Colorado corporation, and WHITTAKER DEVELOPMENT CO., a
Delaware corporation
By: /s/ John K. Otto
----------------
John K. Otto
Treasurer of each of the foregoing Loan Parties
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS 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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> APR-30-1998
<CASH> 434
<SECURITIES> 0
<RECEIVABLES> 23,936
<ALLOWANCES> 1,699
<INVENTORY> 41,013
<CURRENT-ASSETS> 79,740
<PP&E> 30,939
<DEPRECIATION> 21,473
<TOTAL-ASSETS> 131,512
<CURRENT-LIABILITIES> 120,865
<BONDS> 25
0
1
<COMMON> 112
<OTHER-SE> (14,566)
<TOTAL-LIABILITY-AND-EQUITY> 131,512
<SALES> 66,758
<TOTAL-REVENUES> 66,758
<CGS> 37,296
<TOTAL-COSTS> 14,764
<OTHER-EXPENSES> 1,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,143
<INCOME-PRETAX> 6,284
<INCOME-TAX> 99
<INCOME-CONTINUING> 6,185
<DISCONTINUED> 10,085
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,270
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 1.41
</TABLE>
