-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EG9bL2w0MSRLuRG2CkR/MgEJ7GiNLTenZ63KKW7jiiNugK0vh//zs935o2X1uBwj +HCrUc+5SbWIlfgm4lK9ew== 0000898430-96-000851.txt : 19960318 0000898430-96-000851.hdr.sgml : 19960318 ACCESSION NUMBER: 0000898430-96-000851 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960315 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WHITTAKER CORP CENTRAL INDEX KEY: 0000106945 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [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: 000-20609 FILM NUMBER: 96535021 BUSINESS ADDRESS: STREET 1: 10880 WILSHIRE BLVD STE 800 CITY: LOS ANGELES STATE: CA ZIP: 90024-4163 BUSINESS PHONE: 2134759411 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1996 Commission file number 1-5407 WHITTAKER CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-4033076 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1955 North Surveyor Avenue, Simi Valley, California 93063 (Address of principal executive offices) (Zip Code) (805) 526-5700 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 9,046,489 shares, par value $.01 per share, as of January 31, 1996. 1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements WHITTAKER CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME ($ in 000)
For the Three Months Ended January 31, 1996 1995 --------- -------- Sales .......................................... $44,420 $26,686 ------- ------- Costs and expenses Cost of sales ............................... 24,900 16,030 Engineering and development.................. 3,095 244 Selling, general and administrative.......... 11,735 6,506 ------- ------- Operating profit................................ 4,690 3,906 Interest expense ............................ 1,655 1,222 Interest income ............................. (162) (128) Other expense (income)....................... 1 (7) ------- ------- Income before provision for taxes............... 3,196 2,819 Provision for taxes ............................ 1,306 1,099 ------- ------- Net income...................................... $ 1,890 $ 1,720 ======= ======= Average common and common equivalent shares outstanding (000) ......... 9,608 9,588 ======= ======= Earnings per share ............................. $ 0.20 $ 0.18 ======= =======
Unaudited See Notes to Consolidated Condensed Financial Statements 2 WHITTAKER CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS ($ in 000)
Unaudited January 31, October 31, 1996 1995 ----------- ----------- ASSETS Current Assets: Cash ............................................... $ 674 $ 161 Receivables ........................................ 61,623 65,394 Inventories ........................................ 42,381 39,518 Other current assets ............................... 2,989 2,053 Income taxes recoverable ........................... 4,179 1,452 Deferred income taxes .............................. 16,513 15,151 -------- -------- Total Current Assets................................ 128,359 123,729 Property and equipment, at cost .................... 78,595 78,059 Less accumulated depreciation and amortization...... (38,513) (36,641) -------- -------- Net Property and Equipment.......................... 40,082 41,418 Other Assets - ------------ Goodwill, net of amortization ...................... 33,988 33,414 Other intangible assets, net of amortization........ 10,343 10,585 Notes and other noncurrent receivables ............. 4,092 4,218 Other noncurrent assets ............................ 10,485 10,480 Assets held for sale ............................... 27,864 27,115 -------- -------- Total Other Assets.................................. 86,772 85,812 Total Assets........................................ $255,213 $250,959 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities - ------------------- Current maturities of long-term debt ............... $ 6,300 $ 6,048 Accounts payable ................................... 13,844 14,650 Accrued liabilities ................................ 26,909 29,530 -------- -------- Total Current Liabilities........................... 47,053 50,228 Other Liabilities - ----------------- Long-term debt ..................................... 78,168 70,694 Other noncurrent liabilities ....................... 11,187 11,340 Deferred income taxes .............................. 14,292 16,273 -------- -------- Total Other Liabilities............................. 103,647 98,307 Stockholders' Equity - -------------------- Capital stock Preferred stock ................................. 1 1 Common stock .................................... 90 86 Additional paid-in capital.......................... 24,700 19,261 Retained earnings .................................. 79,722 83,076 -------- -------- Total Stockholders' Equity.......................... 104,513 102,424 -------- -------- Total Liabilities and Stockholders' Equity.......... $255,213 $250,959 ======== ========
See Notes to Consolidated Condensed Financial Statements 3 WHITTAKER CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS ($ in 000)
For the Three Months Ended January 31, 1996 1995 --------- --------- OPERATING ACTIVITIES Net income ........................................... $ 1,890 $ 1,720 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..................... 2,741 1,572 Net periodic pension income....................... (60) (550) Decrease (increase) in income taxes recoverable... (2,727) 66 Change in deferred taxes.......................... (3,343) 844 Changes in operating assets and liabilities: Decrease in receivables......................... 3,315 7,379 Increase in inventories and other current assets (3,799) (3,126) Decrease in accounts payable and other liabilities................................... (3,385) (5,813) ------- -------- Net cash provided (used) by operating activities...... (5,368) 2,092 ------- -------- INVESTING ACTIVITIES Purchase of property, plant and equipment............. (816) (899) Purchased business.................................. (885) - Net decrease in notes receivable...................... 582 162 Increase in assets held for sale...................... (749) (383) Other items, net...................................... (68) 114 ------- -------- Net cash used by investing activities................. (1,936) (1,006) ------- -------- FINANCING ACTIVITIES Borrowing related to new credit agreement............. 7,726 55,500 Paydown related to previous credit agreement.......... - (59,000) Increase (reduction) of other debt.................... - (22) Deferred debt costs................................... 87 (752) Dividends paid........................................ - (3) Proceeds from shares issued under stock plans......... 4 - ------- -------- Net cash provided (used) by financing activities...... 7,817 (4,277) ------- -------- Net increase (decrease) in cash....................... 513 (3,191) Cash at beginning of year............................. 161 3,507 ------- -------- Cash at end of period................................. $ 674 $ 316 ======= ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest ......................................... $ 1,545 $ 1,192 ======= ======== Income taxes ..................................... $ 116 $ 82 ======= ========
Unaudited See Notes to Consolidated Condensed Financial Statements (4) 4 WHITTAKER CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated condensed financial statements of Whittaker Corporation ("Whittaker" or the "Company") and its subsidiaries have been prepared in conformity with generally accepted accounting principles, consistent in all material respects with those applied in the Annual Report on Form 10-K for the year ended October 31, 1995. The interim financial information is unaudited, but reflects all adjustments which are of a normal recurring nature and, in the opinion of management, necessary to provide a fair statement of the results for the interim periods presented. The interim financial statements should be read in conjunction with the financial statements and related notes in the Company's Annual Report on Form 10-K for the year ended October 31, 1995. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year. Primary earnings per share have been computed based on the weighted average number of common and common equivalent shares outstanding. Common stock equivalents include Series D Participating Convertible Preferred Stock, and dilutive employee stock options calculated using the treasury stock method. The effect of assumed conversion of the 7% convertible subordinated debt was antidilutive for the periods presented. Dual presentation of primary and fully diluted earnings per share has not been made because the calculations result in dilution of less than 3%. NOTE 2. ACQUISITION On April 24, 1995, the Company acquired all of the stock of Hughes LAN Systems, Inc., a subsidiary of Hughes Electronics Corporation. The subsidiary was renamed Whittaker Communications, Inc. ("WCI") and is a designer and manufacturer of high speed switching and Asynchronous Transfer Mode ("ATM") compatible local area network communication hubs and network management software systems. WCI was acquired for a purchase price of $16.0 million in cash, subject to certain adjustments, and a $15.0 million 7% convertible subordinated note. The convertible note is due on May 1, 2005, and is convertible to the Company's common stock at a price of $24.25 per share. The agreement also provides for contingent deferred payments, not to exceed $25 million, over the years 1996 to 1999 based on future sales of WCI's hub products and derivatives. The acquisition was accounted for as a purchase and the balance sheet of WCI was combined with the Company's balance sheet as of April 30, 1995. The transaction resulted in the acquisition of intangible assets valued at $8.9 million which will be amortized on a straight-line basis over periods ranging from five to fifteen years, goodwill of $14.2 million which will be amortized on a straight- line basis over twenty years, and liabilities assumed of $18.1 million. Acquired in-process research and development valued at $3.3 million was expensed at the acquisition date. 5 WHITTAKER CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) NOTE 2. ACQUISITION - (CONTINUED) The accompanying consolidated condensed financial statements reflect the operating results of WCI since the effective date of the acquisition. The pro forma unaudited results of operations for the three months ended January 31, 1995, assuming the consummation of the purchase and issuance of 7% debt as of November 1, 1994, are summarized below (in thousands except per share amounts):
Three Months Ended January 31, 1995 ------- Net sales $38,915 Net loss (1,458) Loss per share (0.15)
NOTE 3. INVENTORIES Inventories consisted of the following:
($ in 000) January 31, October 31, 1996 1995 ----------- ----------- Raw materials $24,338 $23,518 Work in process 12,876 11,500 Finished goods 3,138 3,332 Costs relating to long term contracts 3,179 2,287 Unliquidated progress billings (1,150) (1,119) ------- ------ $42,381 $39,518 ======= =======
NOTE 4. COMMITMENTS AND CONTINGENCIES In certain years, after evaluating the availability and cost of insurance, the Company did not purchase insurance for certain risks, including workers' compensation and product liability. Consequently, the Company is without insurance for various risks, including product liability for certain products manufactured in the past. The Company does, however, have product liability insurance for products it currently manufactures. The Company's insurance carriers have taken the position that in certain cases the Company is uninsured for environmental matters, a position that the Company disputes in certain instances. 6 NOTE 4. COMMITMENTS AND CONTINGENCIES - (CONTINUED) As a result primarily of the activities of its discontinued operations, the Company is a potentially responsible party in a number of actions filed under the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted to address public health and environmental concerns arising with respect to the past treatment and disposal of hazardous substances. The Company is also a potentially responsible party in a number of other actions brought under state laws patterned after CERCLA. In nearly all of these matters, the Company contributed a small amount (generally less than 1%) of the total treated or disposed of waste. In addition to the CERCLA and similar actions described above, the Company also, from time to time, conducts or participates in remedial investigations and cleanup activities at facilities currently or formerly occupied by its operating units. There are also various other claims and suits pending against the Company. At January 31, 1996, the Company had provided for its aggregate liability related to various claims, including uninsured risks and potential claims in connection with the environmental matters noted above. The amounts provided on the Company's books for contingencies, including environmental matters, are recorded at gross amounts. Because of the uncertainty with respect to the amount of probable insurance recoveries, these potential insurance recoveries are not taken into account as a reduction of those amounts provided unless an insurance carrier has agreed to such coverage. The Company does not anticipate that these matters will have a material adverse effect on the Company's financial position, or on its ability to meet its working capital and capital expenditure needs. Although the Company has recorded estimated liabilities for contingent losses, including uninsured risks and claims in connection with environmental matters, in accordance with generally accepted accounting principles, the absence of or denial of various insurance coverages represents a potential exposure for the Company, and the net income of the Company in future periods could be adversely affected if uninsured losses in excess of amounts recorded were to be incurred. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations - --------------------- Business Segment Information - ----------------------------
UNAUDITED For the Three Months Ended January 31, 1996 1995 -------- --------- Sales: Aerospace $29,110 $26,686 Communications 15,310 ------- ------- $44,420 $26,686 ======= ======= Operating profit: Aerospace $ 6,175 $ 5,549 Communications 297 Corporate and Other (1,782) (1,643) ------- ------- $ 4,690 $ 3,906 ======= =======
Operating profit is total revenue less operating expenses. General corporate expenses have not been allocated to the business segments and are shown as a separate expense element of operating profit to reconcile to consolidated operating income. Comparison of Three Months of 1996 to Three Months of 1995 - ---------------------------------------------------------- Sales for the first quarter of fiscal 1996 were $44.4 million, an increase of $17.7 million (66.5%) from the first quarter of 1995. An increase of $15.3 million was due to the contribution of the Company's communications networking business, Whittaker Communications, Inc. ("WCI"), which was acquired in the second quarter of 1995. The Company's Aerospace segment sales for the first quarter of fiscal 1996 were up $2.4 million (9.1%) from the same period of 1995, due to increased business in commercial aircraft product lines. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations (Continued) - --------------------------------- Gross margin for the first quarter of 1996 was $19.5 million, or 43.9% of sales, compared to $10.7 million, or 39.9% of sales in the same period of 1995. The increased gross margin percentage is due to the inclusion of communications networking results, which had a gross margin percentage of 45.8%, as well as increased margins on commercial aircraft product, offset in part by decreased margins in defense electronics products. Engineering and development expenses as a percentage of sales increased from less than a percent in the first quarter of 1995 to 7.0% in 1996. Engineering and development expenses in the first quarter of 1996 were 13.6% of segment sales for the Communications segment and 3.5% of segment sales for the Aerospace segment. The overall increase was due to the addition of Communications segment activity and up-front expenditures associated with industrial business product lines for the Aerospace segment. Selling, general and administrative expenses as a percentage of sales for the first quarter of 1996 were 26.4%, compared to 24.4% for the first quarter of 1995. The increase as a percentage of sales is due primarily to the Communications segment of the business, where the rate was 30.3% for the first quarter of 1996. Aerospace segment selling, general and administrative expenses as a percentage of sales were 18.3% for the first quarter of 1996 compared to 18.2% for the same period in 1995, while general corporate expenses declined to 4.0% of sales in the first quarter of 1996 from 6.2% for the same period in 1995. Interest expense increased to $1.7 million for the first quarter of 1996 from $1.2 million in 1995 primarily as a result of higher interest rates and incremental debt from the purchase of WCI. The outlook for future sales in the Aerospace segment is difficult to predict given the uncertainties related to the U.S. defense budget. Any negative effect on Aerospace segment sales related to this uncertainty may be offset in the future by contracts for new, technologically advanced electronic defense systems, new commercial products, and sales of aerospace and electronic products into industrial markets. Thus, past Company performance may not be a reliable indicator of future performance. Acquisition - ----------- On March 4, 1996, the Company announced its agreement to acquire, subject to satisfaction of certain conditions and approvals, all of the stock of Xyplex, Inc., a subsidiary of Raytheon Company. Xyplex is a producer of high speed inter-networking equipment, terminal servers and shared media products for business local area networks. Xyplex also provides remote access products that interconnect with phone companies' wide area networks. The purchase price is $117.5 million, consisting of $67.5 million in cash, subject to certain adjustments, and $50.0 million in Company stock. It will be accounted for as a purchase and will be reflected in the second quarter results of operations as part of the Company's Communications segment. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Acquisition (Continued) - ----------------------- The Company has begun a review and evaluation of possible one-time charges to net income associated with the acquisition, including the required write-off of the value of Xyplex's in-process research and development. Based on preliminary review, the Company estimates that the amount of that write-off may be approximately 10% of the purchase price. Any final determination of that amount and of any other charges, however, must await completion of the review and valuation process, and there can be no assurance that the determination of value will be in the range indicated by the Company's preliminary review. Although there can be no assurance of future financial results, the Company currently expects that, excluding any one-time charges (described in the preceding paragraph), the acquisition will not have a material effect on the Company's net income in fiscal 1996, and that there will be a dilution of earnings per share for fiscal 1996 in an amount that approximates the effect of the issuance of additional shares of the Company's common stock as part of the purchase price. Financial Condition - ------------------- At January 31, 1996, the Company's debt totaled $84.5 million, which consisted of $38.5 million of loans under a revolving bank credit facility, $30.0 million under a bank term loan, $15.0 million of convertible subordinated debt, and $1.0 million of other debt. In addition, there were $12.7 million of letters of credit outstanding under the revolving credit facility. At January 31, 1996, there is $6.3 million of debt which is due within the next twelve months and therefore is classified as current. In conjunction with the Company's announced acquisition, the Company has received from its agent bank a commitment letter for a total credit agreement of $170 million, consisting of $85 million under a revolving credit facility and $85 million under a term loan. The increased credit availability is expected to be adequate to finance this current acquisition as well as operating cash needs. The Company intends to continue its previously announced strategy of growth by selective acquisitions that complement the Company's core businesses, financed by cash from operations, borrowings under its credit facility, and where appropriate, issuance of new debt or equity securities of the Company. The Company intends to pursue its acquisition strategy with careful regard for profitability and the Company's need for liquidity. There can be no assurance, however, that any acquisitions will occur or that an acquisition that does occur will not adversely affect the Company's net income or liquidity. The Company's ratio of long-term debt, including the current portion, to capitalization (stockholders' equity plus debt) was 44.7% at January 31, 1996, compared to 42.8% at October 31, 1995. The current ratio at January 31, 1996 was 2.73, compared with 2.46 at October 31, 1995, while working capital was $81.3 million at January 31, 1996, compared with $73.5 million at October 31, 1995. The increase in debt, as well as the increases in current ratio and working capital, was primarily the result of reductions in accrued liabilities and payables and the buildup of recoverable income taxes as a result of certain stock option exercises. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) - ------------------- Cash flow used by operations in the first three months of 1996 was $5.4 million, compared to cash provided of $2.1 million in the first three months of 1995. The $7.5 million decrease from quarter to quarter is due primarily to a smaller reduction in receivables for the first three months of 1996 relative to 1995, and the buildup of recoverable income taxes of $2.7 million. The receivables for the first quarter of 1996 did not decrease as much as in the first quarter of 1995, due in part to stronger first quarter 1996 sales and in part to a reclassification of a $1.6 million claim from receivables to long-term assets in 1995. Capital expenditures during the first three months of 1996 were $0.8 million, compared to $0.9 million in 1995. At January 31, 1996, there were approximately $0.8 million of approved capital expenditures outstanding for the replacement and upgrade of existing plant and equipment at the Company's various facilities. Funds for these and other capital expenditures are expected to be provided from operations. Capital expenditures are subject to limitations by covenants contained in the Company's credit agreement. It is anticipated that the amounts under the covenants will be sufficient to allow the Company to continue to maintain and upgrade existing facilities. In February of 1996, the Congressional Joint Committee on Taxation approved a net tax refund of $5.2 million under an agreement reached between the Company and the Internal Revenue Service closing the audit of the 1987 and 1988 tax returns. The Company expects to receive the refund, as well as interest income of approximately $5 million, in late March of 1996. The interest income will be reflected in the Company's second quarter financial results. The Company's program for divestiture of its discontinued operations was substantially complete by the end of fiscal 1992. Remaining to be divested is a 996-acre parcel of land, which was formerly used by a discontinued technology unit. The land is located in the city of Santa Clarita, California, approximately 35 miles from downtown Los Angeles. In September of 1995, the City granted entitlements necessary to develop this property as a mixed-use residential, commercial, and light industrial development. The initial term of the entitlements was ten years. In February of 1996, the City approved a development agreement which, among other things, extended the ten-year term of the entitlements to 20 years. The Company is evaluating the most advantageous means to realize the value of this asset. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Financial Condition (Continued) - ------------------- In certain years, after evaluating the availability and cost of insurance, the Company did not purchase insurance for certain risks, including workers' compensation and product liability. Consequently, the Company is without insurance for various risks, including product liability insurance for certain products manufactured in the past. The Company does, however, have product liability insurance for products it currently manufactures. The Company's insurance carriers have taken the position that in certain cases the Company is uninsured for environmental matters, a position that the Company disputes in certain instances. As a result primarily of the activities of its discontinued operations, the Company is a potentially responsible party in a number of actions filed under the Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted to address public health and environmental concerns arising with respect to the past treatment and disposal of hazardous substances. The Company is also a potentially responsible party in a number of other actions brought under state laws patterned after CERCLA. In nearly all of these matters, the Company contributed a small amount (generally less than 1%) of the total treated or disposed of waste. In addition to the CERCLA and similar actions described above, the Company also, from time to time, conducts or participates in remedial investigations and cleanup activities at facilities currently or formerly occupied by its operating units. At January 31, 1996, the Company had provided for its aggregate liability related to various claims, including uninsured risks and potential claims in connection with the environmental matters noted above. The amounts provided on the Company's books for contingencies, including environmental matters, are recorded at gross amounts. Because of the uncertainty with respect to the amount of probable insurance recoveries, these potential insurance recoveries are not taken into account as a reduction of those amounts provided unless an insurance carrier has agreed to such coverage. The Company does not anticipate that these matters will have a material adverse effect on the Company's financial position, or its ability to meet its working capital and capital expenditure needs. Although the Company has recorded estimated liabilities for contingent losses, including uninsured risks and claims in connection with environmental matters, in accordance with generally accepted accounting principles, the absence of or denial of various insurance coverages represents a potential exposure for the Company, and the net income of the Company in future periods could be adversely affected if uninsured losses in excess of amounts recorded were to be incurred. 12 EXHIBITS TO PART I - ------------------ I(a) Calculation of Earnings Per Share. 13 Exhibit I(a) WHITTAKER CORPORATION CALCULATION OF EARNINGS PER SHARE
Stated in Thousands of Dollars Quarter Ended January 31, 1996 1995 ----------- ----------- PRIMARY EARNINGS PER SHARE EARNINGS Net Income................................... $1,890 $1,720 Deduct: Dividends on $ 5.00 Cumulative Convertible Preferred Stock............. - (3) ------ ------ Net income used in primary earnings per share calculations..................... $1,890 $1,717 ====== ====== AVERAGE COMMON AND COMMON EQUIVALENT SHARES IN (000) Weighted average number of common shares outstanding......................... 8,703 8,486 Common equivalent shares: Series D Participating Convertible Preferred Stock......................... 266 292 Stock options included under treasury stock method............................ 639 810 ------ ------ TOTAL........................................ 9,608 9,588 ====== ====== Primary Earnings Per Share................... $ 0.20 $ 0.18 ====== ====== Unaudited
14 Exhibit I(a) WHITTAKER CORPORATION CALCULATION OF EARNINGS PER SHARE - (CONTINUED)
Stated in Thousands of Dollars Quarter Ended January 31, 1996 1995 ----------- ----------- FULLY DILUTED EARNINGS PER SHARE EARNINGS Net income used in primary earnings per share calculation (above).............. $1,890 $1,717 Adjustments: - - ------ ------ Net income used in fully diluted earnings per share calculations..................... $1,890 $1,717 ====== ====== AVERAGE SHARES USED TO CALCULATE FULLY DILUTED EARNINGS PER SHARE IN (000) Average common and common equivalent shares (above)............................. 9,608 9,588 Add: Additional stock options included under treasury stock method............. 165 33 ------ ------ TOTAL........................................ 9,773 9,621 ====== ====== Fully Diluted Earnings Per Share............. $ 0.19 $ 0.18 ====== ======
NOTES Earnings per share have been computed based on the weighted average number of common and common equivalent shares outstanding during the periods, after deducting from net income the dividend requirements on the outstanding $5.00 Cumulative Convertible Preferred Stock. Common stock equivalents include Series D Participating Convertible Preferred Stock, and dilutive employee stock options calculated using the treasury stock method. Fully diluted earnings per share include the additional potential dilutive effect of employee stock options. The inclusion of additional shares assuming the conversion of the convertible subordinated debt would have been antidilutive. Unaudited 15 Part II. OTHER INFORMATION - --------------------------- ITEM 5. OTHER INFORMATION On March 2, 1996, the Company entered into an agreement with Raytheon Company ("Raytheon") to purchase all of the outstanding shares of Xyplex, Inc., a wholly-owned subsidiary of Raytheon, for a total consideration of $117.5 million, which will consist of (i) cash in the amount of $67.5 million (subject to certain adjustments), and (ii) a number of newly-issued shares of the Company's common stock in an aggregate value of $50 million. The number of shares to be issued shall be calculated based on a per share price equal to $25.325, which is the average of the closing price of the Company's common stock as reported on The New York Stock Exchange ("NYSE") Composite Transactions for the ten NYSE trading days prior to March 4, 1996, the date of the public announcement of the execution and delivery of the agreement. In the event Raytheon is entitled to a fraction of a share based on the calculation set forth above, Raytheon shall receive, in lieu thereof, an additional amount in cash equal to the dollar value of such fractional share. The transaction is subject to the satisfaction of certain conditions to closing, including the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 11. Statements re computation of per share earnings for the quarter ended January 31, 1996 (Exhibit I(a) of Part I to this Form 10-Q). 27. Financial Data Schedule. 99. Press Release Dated March 4, 1996 (b) Reports on Form 8-K. No reports on Form 8-K were filed for the fiscal quarter ended January 31, 1996. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WHITTAKER CORPORATION Date: March 14, 1996 By: /s/ Richard Levin -------------------------- Richard Levin, Vice President Chief Financial Officer 17 EXHIBIT INDEX Sequentially Exhibit No. Description Numbered Page ---------- ----------- ------------- 11. Statements re computation of per share earnings for the quarter ended January 31, 1996 (Exhibit I(a) of Part I to this Form 10-Q). 27. Financial Data Schedule. 99. Press Release Dated March 4, 1996 EX-27 2 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS OCT-31-1996 JAN-31-1996 674 0 61,623 0 42,381 128,359 78,595 38,513 255,213 47,053 78,168 0 1 90 104,422 255,213 44,420 44,420 24,900 24,900 3,095 0 1,655 3,196 1,306 1,890 0 0 0 1,890 0.20 0
EX-99 3 PRESS RELEASE EXHIBIT 99 [LETTERHEAD OF WHITTAKER] NEWS RELEASE Release: March 4, 1996 Contact: Richard Levin, VP & CFO (805) 526-5700, ext. 641 James Schultz, Dir. Business Development (805) 526-5700, ext. 638 WHITTAKER TO BUY XYPLEX, INC. FROM RAYTHEON FOR $117.5 MILLION, BOOSTING COMMUNICATIONS POSITION ACQUISITION OF INTER-NETWORKING COMPANY ADDS PRODUCTS, DISTRIBUTION CHANNELS AND BUILDS INDUSTRY POSITION IN NETWORKING, HIGH SPEED SWITCHING & ATM PRODUCTS; MOVE POSITIONS WHITTAKER AS A BALANCED AEROSPACE AND COMMUNICATIONS COMPANY. SIMI VALLEY, CA., MARCH 4, 1996--In its second major communications acquisition in less than a year, Whittaker Corporation (NYSE:WKR) announced today it has agreed to acquire Xyplex, Inc., from Raytheon Company (NYSE--RTN), Lexington, MA. The acquisition enhances the growing presence of Whittaker in the high speed switching and communications networking market with the addition of new products, technology and distribution channels. Under terms of the agreement, Whittaker will acquire from Raytheon all the capital stock of Xyplex for $117.5 million, $67.5 million in cash (subject to certain adjustments) and $50.0 million in Whittaker stock. The Xyplex acquisition follows the April 1995 Whittaker purchase of Hughes LAN Systems, the high speed networking and Asynchronous Transfer Mode (ATM) communications division of General Motors Hughes Electronics and the cornerstone of Whittaker's growing communications business segment. The former Hughes unit was renamed Whittaker Communications. Whittaker Communications' position as a leading ATM product supplier will be complemented by the addition of Xyplex given its position as a producer of high speed inter-networking equipment, terminal servers and shared media products for business local area networks (LANs). Xyplex also provides popular remote access products that interconnect with phone companies' Wide Area Networks (WANs). Combination of the two companies will make Whittaker one of the world's top tier producers of communications networking products and a leader in ATM-based networking products and technology. Adding Xyplex to Whittaker will substantially increase the company's total revenues. Xyplex had sales of $107 million in 1995. With the acquisition of Xyplex, Whittaker will derive nearly 60% of its revenues from communications over the next 12 months, compared with 23% a year ago. Whittaker had sales of $159.5 million in fiscal 1995 ending Oct. 31. (more) Page 2 "With Xyplex we are gaining a combination of products, technology, quality distribution channels and worldwide customer base that gives Whittaker added critical mass and a strong market position to compete on a global scale in this fast growing industry," said Thomas A. Brancati, president and chief executive officer of Whittaker Corporation. "Between Xyplex and Whittaker Communications we now have a full complement of competitive, technology-packed products of the type our customers are demanding to maintain their competitive edge and serve their industries," he said. "The business fit is ideal," Mr. Brancati continued. "We now have the ingredients to make Whittaker a powerhouse in the communications networking industry. This move is in keeping with our strategy to create and grow as a well-balanced company operating in two principal business segments, aerospace and communications." Whittaker Communications, Inc. produces and sells an array of high speed switching products to include enterprise hubs, Ethernet switches and network access switches based on all the popular communications protocols including the industries latest ATM technology. Whittaker Communications is the largest turn- key network integrator of hospitals in the United States with over 370 systems installed and has growing positions as both a high speed switching product provider and network integrator in the banking/finance, publishing, education, government and manufacturing markets worldwide. Combined, the companies will build on the synergies of their existing global sales and marketing forces and offer a migration path for customers to employ networking technology and solutions ranging from low-cost per port shared media and Ethernet switching to broadband ATM. An industry standard transmission protocol, ATM is being employed broadly throughout the world as industries use fiber optic lines to transport a combination of voice, video and data simultaneously and seamlessly. Founded in 1981, Xyplex initially produced terminal servers and entered the broader inter-networking market with introduction of a switching and routing hub in 1991. Xyplex is the industry's second largest supplier of terminal servers and in 1994 the firm was recognized and honored by the industry consulting firm IDC, as the fastest growing provider of remote access products and systems. Xyplex will be combined with Whittaker Communications headquartered in Santa Clara, Ca. and will be managed by Michael S. Gardner, president, Whittaker Communications. Xyplex offices in the Boston suburb of Littleton, MA., which house the firm's design, manufacturing and administrative headquarters, will continue to operate. "We are excited about adding the Xyplex employee team around the world to the Whittaker family," said Mr. Brancati. Completion of the acquisition is subject to the satisfaction of certain conditions and approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act. Whittaker is a global, customer-driven company providing products and services with a high technology or engineering content to the aerospace and communications markets. Founded in 1942, the company employs some 1,000 people in offices around the globe. Further information on Whittaker may be obtained by contacting the company's Home Page at URL address http://www.whittaker.com # # # -----END PRIVACY-ENHANCED MESSAGE-----