-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sQIS/z768FcQuoaqJohnwkFwbsfCyXUAt3SRcmpbtZMMsh4jVlMaElZekiuqzmKN /PPaWlGCO4Ab4mqIBkcWLg== 0000898430-94-000434.txt : 19940616 0000898430-94-000434.hdr.sgml : 19940616 ACCESSION NUMBER: 0000898430-94-000434 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WHITTAKER CORP CENTRAL INDEX KEY: 0000106945 STANDARD INDUSTRIAL CLASSIFICATION: 3490 IRS NUMBER: 954033076 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05407 FILM NUMBER: 94533988 BUSINESS ADDRESS: STREET 1: 10880 WILSHIRE BLVD STE 800 CITY: LOS ANGELES STATE: CA ZIP: 90024-4163 BUSINESS PHONE: 2134759411 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1994 Commission file number 1-5407 WHITTAKER CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-4033076 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 10880 Wilshire Boulevard, Los Angeles, California 90024 (Address of principal executive offices) (Zip Code) (310) 475-9411 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 8,484,674 shares, par value $.01 per share, as of April 30, 1994. Part I. FINANCIAL INFORMATION ============================== Whittaker Corporation ------------------------- Consolidated Condensed Statements of Income ----------------------------------------------- ($ in 000)
For the Three Months For the Six Months Ended April 30, Ended April 30, -------------------- ------------------ 1994 1993 1994 1993 ------- ------- ------- ------- Sales................................... $28,850 $29,261 $54,617 $58,541 ------- ------- ------- ------- Costs and expenses Cost of Sales........................ 17,510 17,577 31,695 37,245 Engineering, selling and general and administrative......... 7,438 7,301 15,409 13,392 Interest on long-term debt........... 882 1,047 1,788 2,079 Other interest expense............... 18 36 36 106 Interest income...................... (147) (170) (303) (381) ------- ------ ------- ------- 25,701 25,791 48,625 52,441 ------ ------ ------- ------- Income before provision for taxes and cumulative effect of accounting change.................... 3,149 3,470 5,992 6,100 Provision for taxes..................... 1,278 1,336 2,413 2,372 ------- ------- ------- ------- Income before cumulative effect of accounting change.................... 1,871 2,134 3,579 3,728 Cumulative effect as of November 1, 1992 of change in method of accounting for income taxes..................... -- -- -- 1,512 ------- ------- ------- ------- Net income.............................. $ 1,871 $ 2,134 $ 3,579 $ 5,240 ======= ======= ======= ======= Average common and common equivalent shares outstanding (000).................... 9,485 9,503 ======= ======= Earnings per share Income before effect of accounting change.................... $.20 $.22 $.38 $ .39 Cumulative effect of change in accounting for income taxes......................... -- -- -- .16 ------- ------ ------- ------ Net income........................... $ .20 $ .22 $ .38 $ .55 ======= ====== ======= =======
Unaudited See notes to Consolidated Condensed Financial Statements. (2) Whittaker Corporation ------------------------- Consolidated Condensed Balance Sheets ----------------------------------------- ($ in 000)
April 30, October 31, 1994 1993 -------- ---------- ASSETS Current Assets: Cash.................................... $ 616 $ 170 Receivables............................. 68,921 69,455 Inventories............................. 30,549 28,147 Income taxes recoverable................ 1,267 3,482 Deferred income taxes................... 14,424 13,934 Other current assets.................... 5,225 498 ------- -------- Total Current Assets.................... 121,002 115,686 ------- -------- Property and equipment, at cost......... 72,546 68,416 Less accumulated depreciation........... 34,393 32,803 ------- -------- 38,153 35,613 ------- -------- Other Assets: Goodwill, net of amortization........... 18,702 14,465 Other intangible assets................. 2,521 2,722 Notes and other noncurrent receivables.. 4,677 4,994 Miscellaneous........................... 2,528 3,751 Net assets held for sale................ 24,536 24,638 -------- -------- 52,964 50,570 -------- -------- $212,119 $201,869 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt.... $ 58,836 $ 6,362 Accounts payable........................ 9,306 13,930 Accrued liabilities..................... 23,915 21,470 -------- -------- Total Current Liabilities............... 92,057 41,762 -------- -------- Long-Term Debt.......................... 14,613 56,782 -------- -------- Other Noncurrent Liabilities............ 7,568 9,943 -------- -------- Deferred Income Taxes................... 10,454 9,634 -------- -------- Stockholders' Equity: Capital Stock Preferred stock........................ 3 3 Common stock........................... 85 85 Additional paid-in capital.............. 17,740 17,634 Retained earnings....................... 69,599 66,026 -------- -------- Total Stockholders' Equity.............. 87,427 83,748 $212,119 $201,869 ======== ========
Unaudited See Notes to Consolidated Condensed Financial Statements. (3) Whittaker Corporation --------------------- Consolidated Condensed Statements of Cash Flows --------------------------------------------------- ($ in 000)
For the Six Months Ended April 30, ------------------ 1994 1993 ------- ----- OPERATING ACTIVITIES Net Income............................. $ 3,579 5,240 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization...... 2,918 2,908 Income taxes recoverable........... 2,215 -- Deferred taxes..................... 330 (3,263) Change in operating assets and liabilities: Receivables...................... 3,951 18,084 Inventories and prepaid expenses. (3,007) 214 Accounts payable and other liabilities..................... (6,566) (18,010) ------ ------ Net Cash provided by operating activities............................ 3,420 5,173 ------ ------ INVESTING ACTIVITIES Purchase of property, plant and (1,324) (635) equipment............................. Purchased Business..................... (13,517) -- Collections of notes receivable........ 296 712 Other items, net....................... 1,167 956 ------ ------ Net Cash provided (used) by investing activities............................ (13,378) 1,033 ------ ------ FINANCING ACTIVITIES Net increase (decrease) in debt........ 10,305 (9,191) Dividends Paid......................... (7) (6) Proceeds from shares issued under 106 331 stock plans........................... ------ ------ Net cash provided (used) by financing activities............................ 10,404 (8,866) ------ ----- Net increase (decrease) in cash........ 446 (2,660) Cash at beginning of year.............. 170 2,822 ------ ------- Cash at end of period.................. $ 616 $ 162 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest............................. $1,864 $ 2,057 ====== ======= Income taxes......................... $1,721 $ 5,676 ====== =======
Unaudited See Notes to Consolidated Condensed Financial Statements. (4) WHITTAKER CORPORATION --------------------- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ---------------------------------------------------- The Consolidated Financial Statements include accounts of Whittaker Corporation and its subsidiaries. The Consolidated Financial Statements reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods reported. Since results of Whittaker's operations in interim periods are not necessarily indicative of the results for the full year, Whittaker makes no representations as to the trend of sales and earnings. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in Whittaker's annual report on Form 10-K for the year ended October 31, 1993. Assets held for sale at April 30, 1994, and October 31, 1993, include $22.7 million of land formerly used by a discontinued technology unit. The Company is in the process of obtaining entitlements -- the right granted by political authorities to develop real property -- for the land. Primary earnings per share have been computed based on the weighted average number of common and common equivalent shares outstanding, after deducting from net income the dividend requirements on the $5.00 Cumulative Convertible Preferred Stock. Common stock equivalents include Series D Participating Convertible Preferred Stock and dilutive employee stock options, calculated using the treasury stock method. Inventories consisted of the following:
($ in 000) April 30, October 31, 1994 1993 --------- ---------- Raw materials........................... $15,920 $14,477 Work in process......................... 11,814 11,061 Finished goods.......................... 1,547 483 Costs relating to long term contracts... 1,580 2,426 Unliquidated progress billings.......... (312) (300) ------- ------- $30,549 $28,147 ======= =======
The Company has typically purchased insurance annually. 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. Moreover, 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. Consequently, the Company is without insurance for various risks, including product liability for certain products manufactured in the past. The Company does, however, have product liability insurance for products it currently manufactures. The Company is a potentially responsible party in approximately sixteen actions filed under the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"). In eight other instances, the Company is a potentially responsible party under state laws patterned after CERCLA, also imposing liability on parties with respect to hazardous waste activities. The environmental matters noted above are attributable to the Company's previously discontinued operations. In nearly all of these matters, the Company contributed a small amount (generally less than 1%) of the total treated or disposed of waste. There are also various other claims and suits pending against the Company. (5) WHITTAKER CORPORATION --------------------- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ---------------------------------------------------- (Continued) At April 30, 1994, the Company provided for its aggregate liability related to various claims, including uninsured risks and potential claims in connection with the environmental matters noted above. The portion of liabilities for contingent losses estimated to be payable after one year is included in "Other Noncurrent Liabilities" in the balance sheet. 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 actual amount of probable insurance recoveries, these potential insurance recoveries are not taken into account as a reduction of those amounts provided unless an insurance carrier has agreed to such coverage. The Company does not anticipate that these matters will have a material adverse effect on the Company's financial position, or its ability to meet its working capital and capital expenditure needs. Although the Company has recorded estimated liabilities for contingent losses, including uninsured risks and claims in connection with environmental matters, in accordance with generally accepted accounting principles, the absence of or denial of various insurance coverages represents a potential exposure for the Company, and the net income of the Company in future periods could be adversely affected if uninsured losses in excess of amounts recorded were to be incurred. (6) MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF ------------------------------------------------------ OPERATIONS AND FINANCIAL CONDITION ---------------------------------- Results of Operations - - --------------------- As a result of major damage from the January 17, 1994, Northridge, California earthquake and certain of the other factors noted below, sales for the first six months of 1994 were $54.6 million as compared to $58.5 million the previous year. In addition to the sales shortfall, the Company set up a $2.5 million provision for the estimated deductible portion of its earthquake insurance and other reserves. Partially offsetting the sales shortfall and the establishment of the reserves was the approximately $3.5 million pre-tax income effect of a claim recovery for a terminated contract. Comparison of Six Months of 1994 to Six Months of 1993 - - ------------------------------------------------------ Sales for the first six months of 1994 decreased by $3.9 million from the comparable 1993 period, reflecting the sale of the pyrotechnics devices unit in the third quarter of fiscal 1993, the effect of the Northridge earthquake on sales of cable products and defense electronic products, and reduced sales of high-energy-density batteries and aircraft fluid controls. Partially offsetting these sales decreases was a $4.0 million claim recovery for a terminated contract and the effect of an acquisition made in the second quarter of 1994. Cost of sales as a percentage of sales decreased in the first six months of 1994 due primarily to a $4.0 million claim recovery ($3.5 million net of cost) in the first quarter of 1994 and a change in product mix, partially offset by the establishment of a $1.5 million reserve. The increase in operating expenses (engineering, selling and general and administrative expenses) was due primarily to a $1.0 million charge for the estimated deductible portion of the Company's earthquake insurance, increased bidding and proposal costs, and increased marketing and research and development costs as a result of acquisitions made in 1993. Interest expense was lower in the first six months of 1994 as a result of reduced amortization of debt issuance costs. Comparison of Second Quarter of 1994 to Second Quarter of 1993 - - -------------------------------------------------------------- Sales for the second quarter of 1994 decreased by $.4 million from the comparable 1993 period, reflecting the sale of the pyrotechnics devices unit in the third quarter of fiscal 1993, reduced sales of high-energy-density batteries, support services, and the effect of the Northridge earthquake on the sales of cable products and defense electronic products. Substantially offsetting these sales decreases was the effect of an acquisition made in the second quarter of 1994 and increased sales of aircraft fluid controls. Cost of sales as a percentage of sales increased slightly in the second quarter of 1994 due primarily to the establishment of a $.7 million reserve. The increase in operating expenses was due primarily to increased bidding and proposal costs and increased marketing and research and development costs as the result of acquisitions made in 1993. Partially offsetting these increases was a reduction of headcount throughout the operations. Interest expense was lower in the second quarter of 1994 as a result of reduced amortization of debt issuance costs. (7) MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF ------------------------------------------------------ OPERATIONS AND FINANCIAL CONDITION ---------------------------------- (Continued) Financial Condition - - ------------------- The Company has typically purchased insurance annually. 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. Moreover, 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. Consequently, the Company is without insurance for various risks, including product liability for certain products manufactured in the past. The Company does, however, have insurance for products it currently manufactures. The Company is a potentially responsible party in approximately sixteen actions filed under the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"). In eight other instances, the Company is a potentially responsible party under state laws patterned after CERCLA, also imposing liability on parties with respect to hazardous waste activities. The environmental matters noted above are attributable to the Company's previously discontinued operations. In nearly all of these matters, the Company contributed a small amount (generally less than 1%) of the total treated or disposed of waste. There are also various other claims and suits pending against the Company. At April 30, 1994, the Company had provided for its aggregate liability related to various claims, including uninsured risks and potential claims in connection with the environmental matters noted above. The amounts provided on the Company's books for contingencies, including environmental matters, are recorded at gross amounts. Because of the uncertainty with respect to the actual amount of probable insurance recoveries, these potential insurance recoveries are not taken into account as a reduction of those amounts provided unless an insurance carrier has agreed to such coverage. The Company does not anticipate that these matters will have a material adverse affect on the Company's financial position, or its ability to meet its working capital and capital expenditure needs. Although the Company has recorded estimated liabilities for contingent losses, including uninsured risks and claims in connection with environmental matters, in accordance with generally accepted accounting principles, the absence of or denial of various insurance coverages represents a potential exposure for the Company, and the net income of the Company in future periods could be adversely affected if uninsured losses in excess of amounts recorded were to be incurred. Other current assets of $5.2 million are up from $.5 million at year-end 1993 primarily reflecting the insured cost of repairs related to the Northridge earthquake. Accounts payable decreased by $4.6 million, reflecting payment of liabilities established at October 31, 1993 and reduced purchasing levels due to lower sales volume. Accrued liabilities at April 30, 1994, were $23.9 million, up from $21.5 million at October 31, 1993, primarily reflecting the $1.0 million earthquake related reserve and increased employee incentive compensation accruals. At the end of the first six months of fiscal 1994, $72.0 million of borrowings and $13.5 million of letters of credit were outstanding under the Company's $95.5 million bank credit facility. At the end of the second quarter of fiscal 1994, the Company had outstanding approximately $.9 million of capital expenditure commitments for the replacement and upgrading of existing plant and equipment at the Company's various facilities. Funds for these and other capital expenditures are expected to be provided from operations. (8) MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF ------------------------------------------------------ OPERATIONS AND FINANCIAL CONDITION ---------------------------------- (Continued) Capital expenditures are limited to specified annual amounts by covenants in the Company's credit agreement. It is anticipated that the amounts under the covenants will be sufficient to allow the Company to continue to maintain and upgrade existing facilities. By the end of fiscal 1992, the Company's divestiture program was substantially completed. Remaining to be divested is a 996 acre parcel of land located in Santa Clarita, California which was used, until 1987, by the Company's former Bermite division. The Company is in the process of obtaining entitlements -- the right granted by political authorities to develop real property -- for the land. The outlook for future sales is somewhat difficult to predict as it depends to a significant extent on (i) the magnitude and duration of the world-wide economic slowdown and its effect on product demand by the airline industry and aircraft manufacturers, and (ii ) the shrinking U.S. defense budget and related reductions and terminations of U.S. Government defense contracts. The aerospace market place is currently in the process of undergoing a major upheaval, not only in terms of size, but also in terms of product emphasis. Because of the foregoing, past Company performance may not be a reliable indicator of future performance. (9) EXHIBITS TO PART I ------------------ I(a) Calculation of Earnings Per Share. (10) Exhibit I(a) WHITTAKER CORPORATION --------------------- Calculation of Earnings Per Share --------------------------------- ($ In 000)
For the Six Months Ended April 30, ------------------ 1994 1993 ------- --------- PRIMARY EARNINGS PER SHARE Earnings - - -------- Net Income............................ $3,579 $5,240 Deduct: Dividend on $5.00 Cumulative Convertible Preferred Stock........ (6) (6) ------ ------ Net income used in primary earnings per share calculations............. $3,573 $5,234 ====== ====== Average Common and Common Equivalent Shares (in 000) - - ---------------------------------------------------- Weighted average number of common shares outstanding............................... 8,476 8,199 Common equivalent shares: Series D Participating Convertible Preferred Stock....................... 292 324 Stock options included under treasury stock method................. 717 980 ------ ------ TOTAL...................................... 9,485 9,503 Primary Earnings Per Share................. $ .38 $ .55* ====== ======
* Includes $1,512, or $.16 per share, for change in method of accounting for income taxes Unaudited (11) Exhibit I(a) WHITTAKER CORPORATION --------------------- Calculation of Earnings Per Share --------------------------------- (Continued) ($ In 000)
For the Six Months Ended April 30, ------------------ 1994 1993 -------- --------- FULLY DILUTED EARNINGS PER SHARE EARNINGS - - -------- Net income used in primary earnings per share calculations................. $3,573 $5,234 Adjustments............................. -- -- Net income used in fully diluted earnings per share calculations................. $3,573 $5,234 ====== ====== Average Shares Used to Calculate Fully - - ---------------------------------------- Diluted Earnings Per Share (in 000) - - ---------------------------------------- Average common and common equivalent shares (above)......................... 9,485 9,503 Add: Additional stock options included under treasury stock method.......... -- 17 ------ ------ TOTAL.................................. 9,485 9,520 ====== ====== Fully Diluted Earnings Per Share........ $ .38 $ .55* ====== ======
Note: Fully diluted earnings per share are not presented in the Consolidated Condensed Statements of Income since the calculations result in dilution of less than 3%. * Includes $1,512, or $.16 per share, for change in method of accounting for income taxes. Unaudited (12) PART II. OTHER INFORMATION -------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of stockholders of the registrant was held on March 25, 1994. (c) At the annual meeting, stockholders voted on the election of Class II Directors and on ratification of Ernst & Young as the company's independent auditors. The votes cast with respect to each of the two nominees and the ratification of the appointment of the auditors were as follows:
Against or Broker For Withheld Abstentions Non-Votes --------- -------- ----------- --------- Jack L. Hancock 7,002,253 47,687 -- -- Edward R. Muller 7,020,887 9,184 19,869 -- Ratification of the 6,980,311 69,629 -- -- appointment of auditors
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 11. Statements re computation of per share earnings for the six months ended April 30, 1994 (Exhibit I(a) of Part I to this Form 10-Q). (b) Reports on Form 8-K. No reports on Form 8-K were filed for the fiscal quarter ended April 30, 1994. (13) 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, 1994 By: /s/ RICHARD LEVIN ----------------------------- Richard Levin, Vice President Chief Financial Officer (14) -----END PRIVACY-ENHANCED MESSAGE-----