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Records of the White House Office of the Deputy Chief of Staff (Reagan Administration)
Michael Deaver's Subject Files
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual
collections.
Collection: Deaver, Michael
Folder Title: Hold (7)
Box: 43
To see more digitized collections
visit: https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories
visit: https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives
Catalogue: https://catalog.archives.gov/
fell
I
KORN/FERRY INTERNATIONAL
here
2
Ronald H. Walker
1825 K
Street, N.W. Suite 301
Managing Vice President
Washington, D.C. 20006
mike . -
any
1/28/84
mbe
Enclosed in the
annual report an
properent
Whittaker - pn our
sood gapt info in
conversation .
goe Olibrandi is
moeting
in washington as
Including
Restricted
least ance a month.
stock
you should expect a
call in the mean future.
wheng Regards,
In
ANNUAL
REPORT
FOR
1982
Cover:
Whittaker staff nurse
with pediatric patient at
King Fahad Hospital in
Jeddah, Saudi Arabia.
PERCENTAGE OF TOTAL SALES BY INDUSTRY SEGMENT
55%
LIFE SCIENCES
16% METALS
16% TECHNOLOGY
8% MARINE
5% CHEMICALS
hittakeR
Whittaker Corporation
10880 Wilshire Boulevard
Los Angeles
California 90024
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 26, 1982
The Annual Meeting of the Shareholders of Whittaker Corporation will be held in the
Grand Ballroom of the Beverly Hilton Hotel, 9876 Wilshire Boulevard, Beverly Hills,
California, on Friday, March 26, 1982, at 10:30 A.M., for the following purposes:
1) To elect directors to serve for the ensuing year;
2) To consider and act upon a proposal to ratify the appointment of Ernst &
Whinney as the Company's independent auditor for the fiscal year ending October 31,
1982;
3) To consider and act upon a proposal to approve and ratify the action of the Board
of Directors adopting the 1981 Incentive Stock Option Plan; and
4) To consider and act upon such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on January 26, 1982 as the record
date for the purpose of determining shareholders entitled to notice of, and to vote at, said
meeting. The stock transfer books will not be closed.
All shareholders are cordially invited to attend the meeting in person. TO INSURE
YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE AND
PROMPTLY MAIL YOUR PROXY IN THE RETURN ENVELOPE PROVIDED. This will
not prevent you from voting in person, should you so desire, but will help to secure a quorum
and will avoid added solicitation costs.
By Order of the Board of Directors
ALAN D. JACOBSON
Secretary
Los Angeles, California
February 8, 1982
WhittakeR
Whittaker Corporation
10880 Wilshire Boulevard
Los Angeles
California 90024
PROXY STATEMENT
Annual Meeting of Shareholders, March 26, 1982
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors of Whittaker Corporation
(the "Company") for use at the Annual Meeting of Shareholders to be held on March 26, 1982, and at
any and all adjournments thereof. It is anticipated that such proxy, together with this Proxy Statement,
will be first transmitted to the Company's shareholders on or about February 8, 1982. All shares
represented by each properly executed unrevoked proxy received in time for the meeting will be voted.
Any proxy given may be revoked at any time prior to its exercise by filing with the Secretary of the
Company an instrument revoking it or a duly executed proxy bearing a later date.
In addition to use of the mails, proxies may be solicited by regular employees of the Company, who
will not receive any additional compensation for such solicitation, in person and by telephone and
telegraph. The Company has also engaged T. Cariota & Co., Inc. of New York City to assist in the
solicitation of proxies of brokers and financial institutions and their nominees. This firm will be paid a fee
of $3,500 and will be reimbursed for expenses incurred in connection with such engagement. The cost of
solicitation of proxies will be borne by the Company.
EQUITY SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record at the close of business on January 26, 1982 will be entitled to vote. The
outstanding voting securities of the Company consist of (i) Common Stock and (ii) Preferred Stock of
which two series are outstanding, $1.25 Cumulative Convertible Preferred Stock ("$1.25 Preferred
Stock") and $5.00 Cumulative Convertible Preferred Stock ("$5.00 Preferred Stock"). Each share entitles
the holder thereof to one vote, except with respect to the election of directors. In the election of directors,
by reason of cumulative voting, each share entitles the holder to a number of votes equal to the number of
directors to be elected, which is eleven, and such votes may all be cast for one nominee or may be
distributed among two or more nominees, as determined by the holder.
As of January 26, 1982, there were outstanding 15,851,346 shares of Common Stock, 24,118 shares of
$1.25 Preferred Stock and 123,206 shares of $5.00 Preferred Stock, net of shares in the Company's
treasury. The Preferred Stock and Common Stock vote as a single class on all matters presented to the
1
shareholders other than certain matters affecting the Preferred Stock. The Preferred Stock and Common
Stock will vote as a single class on all matters to be presented at the Annual Meeting of Shareholders. As
to these matters, the Preferred Stock represents approximately 1% of the shares entitled to vote.
To the best knowledge of the Company, no person owned beneficially as of January 26, 1982 more
than five percent of the shares entitled to vote at the Annual Meeting of Shareholders, except as set forth in
the following table.
Percent of
Amount of
All Shares
Name and Address
Beneficial
Percent
Entitled
Title of Class
of Beneficial Owner
Ownership(
of Class
to Vote
Common Stock
Olayan Investments Company
899,500 shares
5.7%
5.6%
Establishment(2)
c/o Transporting and Trading
Company
P.O. Box 46, Kallithea
206 Syngrou Avenue
Athens, Greece
(1) The Company has no reason to believe that the beneficial owner does not have sole voting power and
sole investment power.
(2) The Company has been advised that Mr. Suliman S. Olayan, a Saudi Arabian national, is the sole
beneficial owner of, and has the same business address as, Olayan Investments Company Estab-
lishment.
As of January 26, 1982, seven individuals each beneficially owned in excess of five percent of the
outstanding shares of the Company's Preferred Stock, with the largest such holding being 20,867 shares,
which represents approximately 0.1% of the shares entitled to vote at the Annual Meeting of Shareholders.
As of January 26, 1982, all present officers and directors of the Company, as a group, owned
beneficially: (1) 550,065 shares of Common Stock, including 12,240 shares issuable upon exercise of
outstanding, presently exercisable stock options and conversion of outstanding convertible debentures
(representing 3.5% of the Common Stock outstanding, based upon the number of shares which would
have been outstanding had such options been exercised and such debentures been converted in full on
January 26, 1982); and (ii) $162,000 principal amount of the Company's 4½ Convertible Subordinated
Debentures Due 1988 (representing 3.4% of the class outstanding). The Company has no reason to
believe that the officers and directors of the Company who own beneficially its outstanding equity
securities do not have sole voting power and sole investment power with respect to such securities.
2
ELECTION OF DIRECTORS
Directors are elected at each annual meeting of shareholders and hold office until their respective
successors are elected. The Articles of Incorporation and Bylaws of the Company provide that the number
of directors of the Company shall be not less than nine nor more than twelve, with the exact number to be
fixed by the Bylaws or an amendment thereof adopted by the shareholders or the Board of Directors. The
Bylaws of the Company presently fix the exact number of directors at eleven, effective with the election of
directors at the Annual Meeting of Shareholders. The nominees for whom votes will be cast pursuant to
the proxies hereby solicited are set forth below. Should any nominee become unavailable to serve as a
director, the proxies will be voted for such other person as shall be designated by the Board of Directors.
To the best of the Company's knowledge, all nominees are and will be available to serve.
Nominees for Election as Directors
Common
Stock Owned
Beneficially
Director
on January 26,
Name and Recent Business Experience
Age
Since
1982(3)
Edmund F. Ackell. Since 1978, Dr. Ackell has been President of
56
1975
1,840
Virginia Commonwealth University. From 1974 to 1978, he was
Vice President for Health Affairs at the University of Southern
California.
Joseph F. Alibrandi. For more than the past five years, Mr. Alibrandi
53
1970
88,850
has been the Company's President and Chief Executive Officer.
J. Dewey Daane. For more than the past five years, Dr. Daane has
63
1974
1,000
been the Frank K. Houston Professor of Banking at Vanderbilt
University.
Harry S. Derbyshire. Since 1971, Mr Derbyshire has been the
56
1971
41,875(4)
Company's Chief Financial Officer. He has been an Executive Vice
President since 1977 and prior thereto was a Senior Vice Presi-
dent.(1)
Walter B. Gerken. Mr. Gerken has been Chairman of the Board and
59
1974
1,000
Chief Executive Officer of Pacific Mutual Life Insurance Company
since 1975.+(2)
Carl E. Hartnack. Mr. Hartnack is presently a consultant to Security
65
1981
I
Pacific Corporation and Chairman of its International Board. He
was Chairman of the Board of Security Pacific Corporation and its
subsidiary, Security Pacific National Bank, from 1978 through
1980. Prior to 1978, he was Vice Chairman of Security Pacific
Corporation and President of Security Pacific National Bank. He
served as a director of the Company from 1972 through March
1979.+
Sanford Kaplan. Since his retirement in 1977 from Xerox Corpo-
65
1971
10,000
ration which he then served as a director and consultant, Mr.
Kaplan has been a management consultant to various public and
private companies.
3
Common
Stock Owned
Beneficially
Director
on January 26,
Name and Recent Business Experience
Age
Since
1982(3)
Joseph Kleiman. For more than the past five years, Mr. Kleiman has
62
1958
101,281
been a Senior Vice President of the Company with responsibility for
corporate development and planning.
Frank J. Rauscher, Jr. Dr. Rauscher has served as Senior Vice
50
1977
103
President for Research of the American Cancer Society since 1976.*
Robert Reznick. For more than the past five years, Mr. Reznick has
62
1974
103,104
been President, Chairman of the Board and Chief Executive Officer
of Craig-Hallum Corporation, a manufacturer and distributor of
foodstuffs and the parent corporation of a securities brokerage
firm.t*
John C. West. Mr. West is a practicing attorney and a professor of
59
1981
200
Middle East Studies at the University of South Carolina. From
1977 to 1981 he served as the United States Ambassador to Saudi
Arabia.
Member of the Audit Committee of the Board of Directors.
t Member of the Compensation and Stock Option Committee of the Board of Directors.
*
Member of the Nominating Committee of the Board of Directors.
(1) Mr. Derbyshire also owns beneficially $160,000 principal amount of the Company's 4½ Convertible
Subordinated Debentures Due 1988, representing approximately 3.4% of the outstanding debentures
of the class.
(2) As of January 26, 1982, Pacific Mutual Life Insurance Company held $3,510,000 of the $17,550,000
aggregate principal amount of the 10% Senior Notes Due 1990 issued by Whittaker General Medical
Corporation, a wholly-owned subsidiary of the Company.
(3) The number of shares of Common Stock shown as beneficially owned by each nominee represents less
than 1% of the outstanding shares.
(4) Includes 3,375 shares issuable to Mr. Derbyshire upon conversion of convertible debentures.
The nominees serve on the boards of directors of other publicly held companies as follows:
Mr. Alibrandi-Security Pacific Corporation; Mr. Daane-Tennessee Valley Bancorp., Inc.; Mr.
Derbyshire-Electronic Memories & Magnetics Corp.; Mr. Gerken-Carter Hawley Hale Stores, Inc.,
Southern California Edison Company and Times Mirror Company; Mr. Hartnack-Security Pacific
Corporation; Mr. Kaplan-Cordura Corp., Intel Corp., Standun, Inc., Wells Benrus Corp. and Yardney
Electric Corporation; Mr. Kleiman-Yardney Electric Corporation; Mr. Reznick-Craig-Hallum Corpo-
ration; and Mr. West-Donaldson, Lufkin & Jenrette, Inc. Security Pacific Corporation's wholly-owned
subsidiary, Security Pacific National Bank, with which the Company maintains a banking relationship,
provides credit facilities to the Company that totaled approximately $50,000,000 as of January 26, 1982.
Donaldson, Lufkin & Jenrette, Inc.'s wholly-owned investment banking subsidiary was the managing
underwriter of a September 1980 public offering of the Company's Common Stock.
4
The Board of Directors held twelve meetings during fiscal 1981. Attendance of the Company's
directors at all Board and committee meetings during the year averaged 90%. Each director, other than
Mr. West, attended more than 75% of the meetings of the Board and committees on which he served. Mr.
West, who joined the Board in June 1981, attended three of the five remaining meetings of the Board of
Directors during fiscal 1981, all of which had been scheduled prior to his election as a director. Directors
are reimbursed for travel and other expenses related to attendance at Board and committee meetings.
During fiscal 1981, directors other than Dr. Ackell, Eaton W. Ballard, Mr. West and those directors
who are also executive officers of the Company, received fees of $15,000 for serving on the Board and fees
for serving on various committees ranging from $1,000 to $5,000 depending on the committee and position
held. When a committee meeting was held on a day on which there was no Board meeting, an additional
fee of $750 was paid to those in attendance. Dr. Ackell's compensation during fiscal 1981 was $4,999.
Virginia Commonwealth University, of which he is President, purchases hospital supplies from a
subsidiary of the Company. As a result, Dr. Ackell's annual compensation from the Company may not,
under applicable Virginia law, exceed $5,000. Mr. Ballard, who has served as a director of the Company
since 1974 and as Chairman of its Board of Directors since 1977, received $49,000 during fiscal 1981,
which covered service on the Board and its committees. In accordance with the Company's Bylaws which
preclude the election as a director of an individual who has attained the age of 70, Mr. Ballard is not
standing for re-election as a director. Mr. West received $17,500 during fiscal 1981 for service on the
Board and its committees, including $6,250 paid as a quarterly fee for service as Chairman of the
Committee on International Business Affairs, which was established in October 1981. Executive officers
who are directors received no additional compensation for Board and committee services.
The Audit Committee, which met five times during fiscal 1981, reviews and acts or reports to the
Board with respect to various auditing and accounting matters, including the selection of the Company's
independent auditor, the scope of audit procedures, the nature of services to be performed for the
Company by and the fees to be paid to the independent auditor, the performance of the Company's
independent and internal auditors, and the accounting practices of the Company.
The Compensation and Stock Option Committee, which met eleven times during fiscal 1981, has been
delegated the functions of the Board with respect to the compensation of executive officers and the
administration of the Company's stock option and restricted stock plans, including the granting of options
and restricted stock.
The Nominating Committee, which met three times during fiscal 1981, recommends nominees for
election as directors at Annual Meetings of Shareholders and to fill vacancies which may occur between
annual meetings. The Committee will consider as potential nominees persons recommended by
shareholders. Recommendations should be submitted to the Nominating Committee in care of the
Secretary of the Company.
5
Remuneration of Officers and Directors
Remuneration for services in all capacities for the fiscal year ended October 31, 1981 which the
Company and its subsidiaries paid to or accrued for each of the five most highly compensated officers and
directors of the Company and to all officers and directors (including those named) as a group, while
serving as officers or directors, is set forth in the following table.
Cash and Cash-Equivalent
Forms of Remuneration
Securities
or Property,
Insurance
Salaries, Fees,
Benefits
Aggregate of
Directors' Fees,
or Reim-
Contingent
Name of Individual
Commissions
bursement,
Forms of
or Number of Persons
Capacity in Which
and
Personal
Remunera-
in Group
Served
Bonuses (1)
Benefits(2)
tion(3)
Joseph F. Alibrandi
President
$ 636,539
$ 14,103
$ 18,451
Harry S. Derbyshire
Executive Vice President
414,904
63,626
11,984
Paul B. Dinkel
Senior Vice President
220,289
20,228
4,918
Alan D. Jacobson
Senior Vice President
212,308
88,379
6,525
Philip C. Heeter
Vice President
151,058
101,627
-
All officers and
directors as a group
-
4,058,590
368,817
101,555
(38 persons)
(1) Includes bonuses awarded by the Compensation and Stock Option Committee of the Board of
Directors under the Management Incentive Compensation Plan which were accrued during fiscal 1981
but are paid during fiscal 1982. Bonuses paid during fiscal 1981 with respect to fiscal 1980 are not
included. Aggregate bonuses awarded under the Company's various management incentive
compensation plans with respect to the five fiscal years ended October 31, 1981, to Messrs. Alibrandi,
Derbyshire, Dinkel, Jacobson and Heeter, all present officers (including those named) as a group and
all employees (including present officers) were $935,000, $565,000, $350,000, $305,000, $40,000,
$4,107,375 and $15,677,416, respectively. Directors of the Company who are not also executive
officers or employees do not participate in any Company incentive compensation plan.
(2) Includes (i) the excess of the fair market value on the date of release over the acquisition price of
restricted stock released during fiscal 1981 and cash dividends paid on restricted stock prior to release;
(ii) that portion of the expense of providing automobiles to officers which is attributed by the
Company to the personal use of such automobiles; (iii) tax and financial counseling services; (iv)
calendar year premiums on life insurance policies providing coverage in excess of the coverage
provided generally to the Company's employees; and (v) dues for membership of certain officers in
clubs which may be utilized for personal, as well as business, purposes. Of the amounts reported with
respect to Messrs. Derbyshire, Dinkel, Jacobson and Heeter, and all present officers (including those
named) as a group, $58,825, $16,806, $81,931, $100,350, and $295,719, respectively, related to
restricted stock.
6
(3) Includes amounts contributed by the Company under its Savings and Stock Investment Plan and the
contribution made by a foreign subsidiary to its retirement plan for the benefit of an officer of the
Company who is also an officer of the subsidiary. The Savings and Stock Investment Plan is a
voluntary, contributory plan pursuant to which participating employees contribute to a trust a portion
of their cash compensation ranging between 2% and 12%. The Company makes matching
contributions on the basis of three-quarters of the first 2% of cash compensation contributed by the
employee, one-half of the second 2% contributed by the employee, one-quarter of the third 2%
contributed by the employee, but nothing with respect to that portion of employee contributions in
excess of 6% of cash compensation. Aggregate contributions by the Company under the Savings and
Stock Investment Plan with respect to the five fiscal years ended October 31, 1981, for the benefit of
Messrs. Alibrandi, Derbyshire, Dinkel and Jacobson, all present officers (including those named) as
a group and all employees (including present officers) were $62,868, $42,635, $23,695, $28,259,
$376,598 and $5,107,773, respectively. Directors of the Company who are not also executive officers
or employees do not participate in the Savings and Stock Investment Plan.
The Employees' Pension Plan was the only Company pension plan in which officers participated
during fiscal 1981, except for the participation of one officer in the plan of the foreign subsidiary
referred to above. Directors of the Company who are not also executive officers or employees do not
participate in any Company pension plan. The Employees' Pension Plan is a Company-funded plan.
Company contributions to the Employees' Pension Plan, which are actuarially determined, cannot be
separately calculated for each participant, and thus no amount is included in the table above with
respect thereto. Benefits under the Employees' Pension Plan are based upon years of service and
remuneration. The remuneration upon which annual benefits are based is the highest average cash
compensation (including cash bonus) paid during five consecutive years within the last ten years of
employment. Messrs. Alibrandi, Derbyshire, Dinkel and Jacobson have approximately 12, 14, 9 and
13 credited years of service under the Employees' Pension Plan, respectively, and their current base
salaries (not including bonuses) are $350,000, $250,000, $165,000 and $155,000, respectively. Mr.
Heeter, who does not yet have any credited years of service, has a base salary of $175,000.
The following table shows the estimated annual benefits payable upon retirement at age 65 to
participants in the Employees' Pension Plan.
Years of Service
Remuneration
10
15
20
25
30
$100,000
$ 18,781
$ 28,172
$ 37,563
$ 46,954
$ 56,344
200,000
38,781
58,172
77,563
96,954
116,344
300,000
58,781
88,172
117,563
146,954
176,344
400,000
78,781
118,172
157,563
196,954
236,344
500,000
98,781
148,172
197,563
246,954
296,344
600,000
118,781
178,172
237,563
296,954
356,344
700,000
138,781
208,172
277,563
346,954
416,344
The estimated annual benefits shown in the table above will be reduced by a percentage of the
recipient's Social Security benefit.
The Company has an employment agreement with one of its Vice Presidents which provides for
minimum annual remuneration of approximately $100,000 and terminates December 31, 1983.
7
Restricted Stock
The Company has issued shares of its Common Stock, generally without payment of monetary
consideration by the recipient, to key employees including officers under the 1969 Restricted Stock Plan
and the 1981 Restricted Stock Plan (collectively the "Stock Plans" and individually the "1969 Stock Plan"
and the "1981 Stock Plan"). Shares issued under the Stock Plans are subject to restrictions, released in
annual installments, which prevent transfer and hypothecation for specified periods of time. The
Company typically has the conditional right to reacquire shares subject to restriction should the holder
terminate employment with the Company or its subsidiaries for reasons other than death or disability.
The aggregate number of shares released under the Stock Plans during the period beginning
November 1, 1976 and ending January 26, 1982, to Messrs. Alibrandi, Derbyshire, Dinkel, Jacobson and
Heeter, all present officers (including those named) as a group and all employees (including present
officers) was 30,000 16,850, 4,500, 14,500, 4,000, 90,325 and 124,085, respectively. The aggregate market
value of such shares as of the dates of release was $548,430, $302,962, $100,375, $253,867, $156,760,
$2,314,296 and $2,677,814, respectively.
As of January 26, 1982, Messrs. Alibrandi, Derbyshire, Dinkel, Jacobson and Heeter, and all officers
(including those named) as a group held, respectively, 40,000, 27,000, 14,500, 4,000, 6,000 and 118,500
shares of Common Stock issued under the Stock Plans which remain subject to restrictions. All of such
shares were issued without payment of monetary consideration by the recipient. Directors of the Company
who are not also executive officers or employees do not participate in the Stock Plans.
As of January 26, 1982, 6,000 shares of Common Stock previously issued under the 1969 Stock Plan
remained subject to restrictions, and no additional shares were available for issuance under the 1969 Stock
Plan.
The 1981 Stock Plan was adopted by the Board of Directors in December 1980, and was approved
and ratified by the Company's shareholders in March 1981. As of January 26, 1982, 114,000 shares of
Common Stock previously issued under the 1981 Stock Plan remained subject to restrictions, and an
additional 162,000 shares were available for issuance.
The Stock Plans are administered by the Compensation and Stock Option Committee of the
Company's Board of Directors, which is composed of directors who are not executive officers or employees
of the Company and who are not eligible to receive shares under the Stock Plans.
Stock Options
The following table shows, for the period beginning November 1, 1976 and ending January 26, 1982,
as to each person named and all present officers (including those named) as a group: (i) the aggregate
number of shares of Common Stock subject to options granted during the period; (ii) the average per
share exercise price thereof; (iii) the net value (market value on date of exercise less exercise price)
realized during the period through the exercise of such options; (iv) the number of shares of Common
Stock however acquired which were sold during the period by officers who exercised options during the
period; (v) the aggregate number of shares of Common Stock subject to all options outstanding as of the
end of the period; and (vi) the potential (unrealized) value of such outstanding options (market value less
exercise price).
8
All
Present
Officers
Mr.
Mr.
Mr.
Mr.
Mr.
as a
Alibrandi
Derbyshire
Dinkel
Jacobson
Heeter
Group(2)
Granted:
Number of shares covered by
options
102,900
72,900
27,900
22,900
37,900
418,075
Average per share exercise
price
$38.57
$38.52
$42.06
$41.86
$38.93
$36.83
Exercised:
Net value realized through ex-
ercise (market value on date
of exercise less exercise
price)
$850,650
$600,000
$ 135,030
$386,775
— $3,404,853
Sales:
Number of shares
43,750
35,450
10,000
8,800
-
131,196
Outstanding at January 26, 1982:
Number of shares covered by
options
102,900
72,900
27,900
22,900
37,900
405,300
Potential (unrealized) value
(market value at January 26,
1982, less exercise price) (1)
-
-
-
-
-
$ 291,439
During the period, all employees (including present officers) were granted options covering a total of
1,495,407 shares of Common Stock at an average per share exercise price of $28.67.
(1) Based upon the mean price of the Company's Common Stock on the New York Stock Exchange on
January 26, 1982, which was $30.75. Of the potential (unrealized) value of the options held by all
present officers (including those named) as a group, 26% related to options which were exercisable as
of January 26, 1982.
(2) Directors who are not also executive officers or employees are not eligible to receive stock options.
(3) See "1981 Incentive Stock Option Plan" for more detailed information regarding options granted
under the 1981 Option Plan.
The options referred to in the table above are qualified stock options issued under the Company's
1967 Stock Option Plan ("1967 Option Plan"), nonqualified stock options issued under the Company's
1977 Nonqualified Stock Option Plan ("1977 Option Plan") and 1980 Nonqualified Stock Option Plan
("1980 Option Plan") and incentive stock options issued under the Company's 1981 Incentive Stock
Option Plan ("1981 Option Plan") (collectively the "Option Plans"). Options issued under the 1967
9
Option Plan which were exercised in calendar 1981 are being treated, pursuant to an election by the
Company, as incentive stock options. Certain aspects of Federal income tax law encourage the sale of
stock acquired through the exercise of stock options other than incentive stock options (which were created
by the Economic Recovery Tax Act of 1981) in the year of exercise. With respect to qualified stock
options, the aggregate tax liability resulting from the sale of the stock in a year subsequent to the year of
exercise may be significantly higher than the tax liability resulting from a sale in the year of exercise. The
exercise of a nonqualified option is itself a taxable event giving rise immediately to cash obligations for
"withholding" taxes.
The option price of each option granted under the Option Plans is not less than 100% of the market
value of the Common Stock on the date of grant. The term of each option issued under the 1967 Option
Plan is not greater than five years, and the term of each option issued under the other Option Plans is not
greater than ten years. The Option Plans are administered by the Compensation and Stock Option
Committee of the Company's Board of Directors, which is composed of directors who are not executive
officers or employees of the Company and who are not eligible to receive options under the Option Plans.
The 1967 Option Plan expired in November 1977, and no options granted thereunder remain
outstanding.
The 1977 Option Plan was adopted by the Board of Directors in December 1977, and was approved
and ratified by the Company's shareholders in March 1978. As of January 26, 1982, options granted under
the 1977 Option Plan covering 372,215 shares of Common Stock were outstanding, and options covering
an additional 70,710 shares were available for granting.
The 1980 Option Plan was adopted by the Board of Directors in October 1980, and was approved and
ratified by the Company's shareholders in March 1981. As of January 26, 1982, options granted under the
1980 Option Plan covering 484,265 shares of Common Stock were outstanding, and options covering an
additional 15,735 shares were available for granting.
The 1981 Option Plan was adopted by the Board of Directors in October 1981, subject to approval
and ratification by the Company's shareholders at the 1982 Annual Meeting of Shareholders. As of
January 26, 1982, options granted under the 1981 Option Plan covering 192,225 shares of Common Stock
were outstanding, and options covering an additional 307,775 shares were available for granting. See
"1981 Incentive Stock Option Plan".
In addition to the options outstanding under the Option Plans, as of January 26, 1982 there were
outstanding options covering 14,035 shares of Common Stock assumed by the Company in connection
with certain acquisitions, none of which were held by officers or directors of the Company.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
In recognition of the important role of the independent auditor, the Board of Directors has
determined that its selection of the independent auditor for the Company should be submitted to the
Company's shareholders for ratification on an annual basis. The Board of Directors, upon the
10
recommendation of its Audit Committee, has appointed Ernst & Whinney to serve as the Company's
independent auditor for the fiscal year ending October 31, 1982, subject to ratification by the holders of a
majority of the shares represented at the Annual Meeting of Shareholders. Ernst & Whinney conducted
the audit of the Company's financial statements for the fiscal year ended October 31, 1981. If the
appointment is not ratified, the Board of Directors will appoint another firm as the Company's
independent auditor for the fiscal year ending October 31, 1982. The Board of Directors also retains the
power to appoint another independent auditor for the Company to replace an auditor ratified by the
shareholders in the event the Board of Directors determines that the interests of the Company require such
a change.
With respect to fiscal 1981, Ernst & Whinney, in addition to auditing and reporting on the Company's
consolidated financial statements, reviewed the Company's filings with the Securities and Exchange
Commission, conducted timely reviews of quarterly reports to shareholders, and provided other profes-
sional services to the Company in the form of assistance in the preparation of tax returns for expatriate
employees. All professional services rendered by Ernst & Whinney during fiscal 1981 were furnished at
customary rates and terms. Fees for all non-audit services with respect to fiscal 1981 represented
approximately six percent of the aggregate fees for audit services.
The Audit Committee of the Company's Board of Directors has approved each professional service
provided by Ernst & Whinney during fiscal 1981. The Audit Committee has adopted a policy of either
giving its specific prior approval to the rendition of non-audit services by the Company's independent
auditor or granting approvals for categories or amounts of non-audit services which may be performed by
the Company's independent auditor and then reviewing the services actually performed to confirm that the
services were within the scope of its prior approval. As part of the approval process, the Committee
considers whether the performance of the professional services may impair the independence of the
Company's independent auditor with respect to the Company.
Representatives of Ernst & Whinney are expected to be present at the Annual Meeting of
Shareholders. Such representatives will have the opportunity to make statements if they so desire and will
be available to respond to appropriate questions.
The Board of Directors recommends that shareholders vote FOR the ratification of the appointment
of Ernst & Whinney as independent auditor of the Company for the fiscal year ending October 31, 1982.
1981 INCENTIVE STOCK OPTION PLAN
The Board of Directors has adopted the 1981 Incentive Stock Option Plan (the 1981 Option Plan"),
subject to approval and ratification at the Annual Meeting of Shareholders by the holders of a majority of
the outstanding shares of the voting stock of the Company. The text of the 1981 Option Plan is annexed to
this Proxy Statement as Exhibit A and should be carefully reviewed in connection with consideration of the
approval and ratification of the action of the Board of Directors adopting the 1981 Option Plan. The
summary of the 1981 Option Plan provisions that follows is not intended to be complete, and reference
should be made to Exhibit A for a complete statement of the terms and provisions of the 1981 Option Plan.
11
The 1981 Option Plan was adopted by the Company's Board of Directors in response to the
enactment of the Economic Recovery Tax Act of 1981 which created a new class of stock options
(denominated "incentive stock options") having tax consequences for the option holder more favorable
than those that obtain with respect to other available forms of stock options. The purpose of the 1981
Option Plan is to enhance the Company's ability to attract, retain and motivate skilled management and
other key personnel. The 1981 Option Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974.
The Company's Board of Directors or its shareholders may amend, suspend or terminate the 1981
Option Plan at any time, but the Board of Directors may not increase the number of shares covered by the
1981 Option Plan, permit options to be granted at less than fair market value on the date of grant, or
change the provisions regarding eligibility of participants. No amendment, suspension or termination of
the 1981 Option Plan shall, without the consent of the holder, alter or impair any rights or obligations
under any option then outstanding under the 1981 Option Plan.
An aggregate of 500,000 shares of the Company's Common Stock may be issued upon exercise of
options granted under the 1981 Option Plan, subject to adjustment for stock dividends, stock splits, reverse
stock splits and other like changes in the Company's capitalization. The 1981 Option Plan provides that
the aggregate fair market value (valued at the time of grant) of the stock for which any employee may be
granted options in any calendar year under the 1981 Option Plan and all other incentive stock option plans
maintained by the Company and its subsidiaries shall not exceed the sum of $100,000 and such additional
amounts, if any, as may be carried over to such calendar year as unused limits under Section 422A(c)(4)
of the Internal Revenue Code of 1954, as amended (the "Internal Revenue Code"), and any successor
provisions.
Key employees (including officers) of the Company and its subsidiaries, other than any employees
who own stock possessing more than 10% of the total combined voting power of all classes of stock of the
Company or any of its subsidiaries, are eligible to participate in the 1981 Option Plan. As of January 26,
1981, approximately 500 employees were eligible to participate in the 1981 Option Plan. Members of the
committee of the Company's Board of Directors (presently the Compensation and Stock Option
Committee) appointed to adminster the 1981 Option Plan are also ineligible to receive options under the
Plan.
Options granted under the 1981 Option Plan generally become exercisable in up to five cumulative
annual installments commencing at least one year after the date of grant and expire no more than ten years
after the date of grant. No option granted under the 1981 Option Plan is exercisable while there remains
outstanding (within the meaning of Section 422A(c)(7) of the Internal Revenue Code) any incentive
stock options previously granted to the same participant to purchase the stock of the Company or its
subsidiaries. The exercise price, which may not be less than fair market value of the optioned stock on the
date of grant, may be paid in cash and by surrender of shares of Common Stock, valued for that purpose at
market price.
Options granted under the 1981 Option Plan are not assignable or transferable, except by will or the
laws of descent and distribution. Options may not be pledged or hypothecated in any way and are
exercisable during a participant's lifetime only by such participant.
12
Through January 26, 1982, options have been granted under the 1981 Option Plan to Messrs.
Alibrandi, Derbyshire, Dinkel, Jacobson, Heeter, Kleiman, all officers (including those named) as a
group, and all employees (including officers) as a group, covering 2,900, 2,900, 2,900, 2,900, 2,900, 2,900,
38,525 and 194,475 shares of Common Stock, respectively. The exercise prices of the options range from
$34.44 to $36.13 per share, and the expiration dates range from October 2, 1991 to December 13, 1991.
Based upon the mean price of the Company's Common Stock on the New York Stock Exchange on
January 26, 1982, which was $30.75, the aggregate market value of the shares covered by such options was
$5,980,106. If the action of the Board of Directors adopting the 1981 Option Plan is not approved and
ratified by the Company's shareholders at the Annual Meeting of Shareholders, the 1981 Option Plan and
all options theretofore granted under the 1981 Option Plan shall terminate.
Federal Income Tax Consequences
A 1981 Option Plan participant will not recognize income as a result of the grant or exercise of an
incentive stock option. Any gain or loss realized as a result of the sale or other disposition of shares issued
upon exercise of an incentive stock option will be long-term capital gain or loss if the disposition occurs
more than one year following exercise and two years following grant of the option. If the disposition
occurs before the one and two year periods have elapsed (a "disqualifying disposition"), the participant
will recognize ordinary income to the extent the fair market value of the shares on date of exercise exceeds
the option price thereof (but normally not in excess of the gain on disposition), and the balance, if any,
will be a short-term or long-term capital gain, depending on how long the shares have been held following
exercise. Any loss sustained on the disposition of shares issued upon exercise of the option will be a capital
loss. Participants who surrender Common Stock in payment of all or part of the option price should not
recognize income upon such surrender.
A participant's tax basis in shares issued upon exercise of an incentive stock option for which the
option price is paid solely in cash will be equal to the cash paid. As to shares issued upon exercise of an
incentive stock option for which a participant surrenders shares of Common Stock in payment of all or part
of the aggregate option price, the participant's tax basis in the surrendered shares will be carried over to
the shares received upon exercise of the option, increased by the amount of cash, if any, paid upon exercise
of the option.
The Economic Recovery Tax Act of 1981 reduced the maximum marginal Federal income tax rate to
50% (from 70%) for taxable years after 1981. As a result, long-term capital gains realized upon sale of the
shares will be subject to a maximum Federal tax rate of 20%, after taking into account the capital gains
deduction of 60%. The maximum marginal Federal rate of 50% will apply to ordinary income realized as a
result of a disqualifying disposition.
Neither the amount by which the fair market value on the date of exercise of shares acquired through
the exercise of an incentive stock option exceeds the option price therefor nor the 60% capital gains
deduction is an item of tax preference for purposes of the 15% add-on minimum tax. However the 60%
capital gains deduction may in some cases be subject to an alternative minimum tax with graduated rates
ranging up to 20%.
13
The Company is only entitled to a deduction with respect to an incentive stock option if there is a
disqualifying disposition of shares issued upon exercise of the option, and the amount of the deduction will
be equal to the amount which the participant recognizes as ordinary income as a result of the disqualifying
disposition.
The Company is not required to withhold Federal income tax on the exercise of incentive stock
options or disqualifying disposition of shares so acquired.
The 1981 Option Plan is not qualified under Section (a) of the Internal Revenue Code.
Approval and ratification of the 1981 Incentive Stock Option Plan requires a favorable vote by the
holders of a majority of the outstanding shares of the voting stock of the Company. The Board of
Directors recommends that shareholders vote FOR the approval and ratification of the action of the
Board of Directors adopting the 1981 Incentive Stock Option Plan.
SHAREHOLDER PROPOSALS FOR THE
1983 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals to be presented at the 1983 Annual Meeting of Shareholders must be received
at the Company's executive offices at 10880 Wilshire Boulevard, Los Angeles, California 90024 by
November 10, 1982 in order to be included in the Company's proxy statement and form of proxy relating
to that meeting.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, the Company knows of no business other than that described
herein that will be presented for consideration at the meeting. If, however, any other business shall
properly come before the meeting, the proxy holders intend to vote the proxies in accordance with their
best judgment.
By Order of the Board of Directors
ALAN D. JACOBSON
Secretary
February 8, 1982
14
WHITTAKER CORPORATION
1981 INCENTIVE STOCK OPTION PLAN (AS AMENDED)
1. ESTABLISHMENT. Whittaker Corporation (the "Company") hereby establishes the Whittaker
Corporation 1981 Incentive Stock Option Plan (the "Plan"), under which options may be granted to
purchase shares of the Company's Common Stock ("Company Common Stock").
2. AMOUNT OF STOCK. An aggregate of Five Hundred Thousand (500,000) shares of Company
Common Stock may be issued upon exercise of options granted under the Plan. Such shares may be either
authorized but unissued shares or shares held in the Company's treasury. If the outstanding shares of
Company Common Stock are increased, decreased, changed into or exchanged for a different number or
kind of shares of the Company through reorganization, recapitalization, reclassification, stock dividend,
stock split or reverse stock split, an appropriate and proportionate adjustment shall be made in the number
or kind of shares with respect to which options may be granted under the Plan and which may be issued
upon exercise of options granted under the Plan. If any option granted under the Plan shall terminate for
any reason (including cancellation with the consent of the holder thereof) or expire before such option is
exercised in full, the shares which might otherwise have been issued upon exercise of such option shall
again become available for the purposes of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by a committee (the "Committee") appointed from time to time
by the Board of Directors of the Company. No member of the Committee shall be eligible to receive
options while serving on the Committee, and no person shall serve on the Committee who was eligible to
receive options at any time during the immediately preceding twelve months.
(b) The Committee shall have full power to construe the Plan, to prescribe, amend and rescind rules
and regulations relating to it and to make all other determinations with respect to its administration.
(c) Subject to the express terms and conditions of the Plan, the Committee shall determine which
persons eligible for selection as participants in the Plan shall be granted options under the Plan and the
terms and conditions of all such options granted, including the number of shares of Company Common
Stock which may be issued upon exercise of each such option, provided that the aggregate fair market
value of the stock for which any employee may be granted options in any calendar year under the Plan and
all other incentive stock option plans maintained by the Company and its parent and subsidiary
corporations shall not exceed the sum of One Hundred Thousand Dollars ($100,000) and such additional
amounts, if any, as may be carried over to such calendar year as unused limits under Section 422A(c)(4)
of the Internal Revenue Code of 1954, as amended, and any successor provisions.
(d) The Committee shall report to the Secretary of the Company the names of the persons selected as
participants in the Plan and the terms and conditions of the options granted to each of them, respectively.
Such report may be in the form of minutes of the meeting of the Committee in which the action was taken.
EXHIBIT A
4. ELIGIBILITY FOR PARTICIPATION. Key employees (who also may be Directors) of the
Company and its subsidiaries may be eligible for selection as participants in the Plan, provided no
employee who owns stock possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any of its parent or subsidiary corporations and no member of the
Committee shall be eligible to receive an option under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. The terms and conditions of each option granted
under the Plan shall be evidenced by an agreement executed by the Company and the participant which
shall contain the following provisions:
(a) The number of shares of Company Common Stock issuable upon exercise of the option.
(b) The purchase price or prices per share, which in no event shall be less than fair market value
thereof at the time the option is granted (but may be less than the purchase price or prices of
previously granted options, whether in effect, cancelled, or expired).
(c) The means of payment for the shares purchased upon exercise, which may include delivering
to the Company shares of Company Common Stock.
(d) Such terms and conditions of exercise as may be determined by the Committee, provided
that no option shall be exercisable more than ten (10) years from the date of grant and provided
further that no option granted under the Plan shall be exercisable while there remains outstanding
(within the meaning of Section 422A(c)(7) of the Internal Revenue Code of 1954, as amended, and
any successor provisions) any incentive stock option to purchase stock in the Company, any of its
parent or subsidiary corporations or any predecessor corporations thereof, which was granted to the
same participant prior to the grant of such Plan option.
(e) Such restrictions on transfer of the option, and such restrictions on transfer of the shares
purchased by exercise of the option, as may be determined by the Committee; provided, however, that
no option shall be transferable other than by will or the laws of descent and distribution, and options
shall be exercisable during a participant's lifetime only by such participant.
(f) Such other terms and conditions not inconsistent with the Plan as may be determined by the
Committee.
6. PROCEEDS FROM SALE OF SHARES. The cash proceeds from the sale of shares under the
Plan shall be added to the general funds of the Company. Any shares of Company Common Stock
received by the Company as consideration for the sale of shares upon exercise of options granted under the
Plan shall be cancelled and returned to the status of authorized but unissued shares.
7. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN. The Board of Directors or the
shareholders of the Company may, at any time, amend, suspend, or terminate the Plan, but no such action
by the Board of Directors may increase the aggregate number of shares of Company Common Stock which
may be issued upon exercise of options granted under the Plan (other than pursuant to Section 2 hereof),
permit any options to be granted at an exercise price less than the fair market value of the shares issuable
upon the exercise thereof at the time of grant, or change the provisions regarding eligibility for
A-2
participating in the Plan. No amendment, suspension or termination of the Plan shall, without the consent
of the participant, alter or impair any rights or obligations under any outstanding agreement relating to an
option issued under the Plan.
8. EXERCISE OF OPTIONS. Options may only be exercised with respect to whole shares, within the
time permitted for the exercise thereof, and by written notice of exercise to the Company accompanied by
full payment of the option price. In addition to the option price, the participant shall in connection with
the exercise of an option pay to the Company in cash the full amount of all Federal, state and other
withholding taxes, if any, applicable to the taxable income of the participant resulting from such exercise
that the Company or one of its subsidiaries is required to collect and remit. Following exercise of an
option, the Company shall promptly deliver to the participant a stock certificate, dated the date of exercise,
for the purchased shares. Unless and until the Company has complied with all applicable laws, regulations
and rules of all bodies having jurisdiction with respect to the issuance and sale of shares of Company
Common Stock pursuant to the Plan, no options granted under the Plan may be exercised, and no shares
shall be issued and delivered to participants upon purported exercise of options.
9. EFFECTIVE DATE AND TERMINATION OF PLAN.
(a) The Plan has been adopted by the Board of Directors of the Company and has become effective
on October 2, 1981. The Plan shall be submitted to the shareholders of the Company for their approval or
disapproval at the next annual meeting of shareholders. Prior to such annual meeting, options may be
granted under the Plan, but any option so granted by its terms shall not be exercisable prior to such
meeting. If the Plan is not approved at such annual meeting by vote of the holders of a majority of the
outstanding shares of the voting stock of the Company, the Plan shall terminate, and all options
theretofore granted under the Plan shall terminate and become null and void.
(b) Unless sooner terminated by the Company's shareholders or Board of Directors, the Plan shall
terminate on October 1, 1991, and no options shall be granted after said date. Such termination shall not,
however, affect any options granted hereunder prior to the date of such termination.
A-3
FINANCIAL HIGHLIGHTS
(Dollar amounts in thousands
except per share amounts)
1982
1981*
1980
Sales
$1,673,604
$1,671,837
$1,396,225
Net Income
$ 58,688
$ 69,328
$ 57,504
Primary Earnings per Share
$ 3.77
$ 4.40
$ 3.90
Dividends per Share
$ 1.60
$ 1.40
$ 1.00
Book Value per Share
$23.28
$22.23
$19.53
Return on Beginning Equity
17%
24%
25%
Working Capital
$ 190,392
$ 238,672
$ 197,546
Long-term Debt
$ 154,645
$ 134,032
$ 132,420
Shareholders' Equity
$ 335,120
$ 345,459
$ 289,912
Number of Employees
17,300
17,000
16,600
Shareholders of Record
18,000
18,000
20,000
*See Note 5 of Notes to Consolidated Financial Statements regarding the effect of the change in
accounting method for foreign currency translation.
CONTENTS
3 LETTER TO SHAREHOLDERS
7 LIFE SCIENCES
12 METALS
16 TECHNOLOGY
20 MARINE
23 CHEMICALS
26 OFFICERS AND DIRECTORS
28 FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
29 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
32 INFORMATION REGARDING WHITTAKER SECURITIES
33 CONSOLIDATED FINANCIAL STATEMENTS
38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
46 AUDITOR'S REPORT
47 DIRECTORY OF PRODUCTS AND SERVICES
W1
FIVE YEAR SUMMARY OF FINANCIAL DATA
108
Los
Tel
$550.2
$642.8
$784.5
$867.1
$919.7
$ 883.8
$1,073.6
$1,396.2
$1,671.8
$1,673.6
$31.6
$46.8
$57.5
$69.3
$58.7
$2.24
$3.28
$3.90
$4.40
$3.77
.88:1
.75:1
.55:1
.48:1
.51:1
78 79 80 81 82
78 79 80 81 82
78 79 80 81 82
78 79 80 81 82
78 79 80 81 82
Total Assets
Sales
Net Income
Primary
Debt: Equity
in Millions
in Millions
in Millions
Earnings
Ratio
of Dollars
of Dollars
of Dollars
per Share
Shareholders'
Total Debt
COMMON STOCK DATA
Equity
in Millions
in Millions
of Dollars
Dividends
Market Price
of Dollars
1981
Per Share
Per Share
78
$193.1
78
$170.4
1st Quarter
$.35
$353/8
$275/8
79
$234.6
79
$175.9
2nd Quarter
$.35
$49
$305/8
80
$289.9
80
$160.6
3rd Quarter
$.35
$507/8
$383/4
4th Quarter
$.35
$433/4
$281/4
81
$345.5
81
$166.2
82
$335.1
82
$171.9
1982
1st Quarter
$.40
$41
$293/8
2nd Quarter
$.40
$317/8
$211/2
3rd Quarter
$.40
$277/8
$187/8
#
$ 40
$263/
$18
TO WHITTAKER SHAREHOLDERS
Although not without its difficulties and disappointments, 1982
was a satisfactory year for Whittaker Corporation. Company
sales totaled $1,673,604,000 for the fiscal year, up slightly from
$1,671,837,000 in 1981. Net income amounted to $58,688,000,
the second highest in Whittaker's history, compared with a rec-
ord $69,328,000 in 1981. Primary earnings per share were $3.77
in 1982, compared with $4.40 in 1981.
As of the end of fiscal 1982, Whittaker Corporation was in ex-
cellent financial condition. During the year, we invested nearly
$60,000,000 in capital improvements, paid out over $25,000,000
in dividends-both all-time highs-and bought back 1,500,000
shares of Whittaker common stock in the open market at a cost
of $34,000,000. Even so, at year-end Whittaker had well over
$100,000,000 in cash and cash equivalent investments; our debt-
to-equity ratio stood at a conservative .5 to 1; and the company
had committed but undrawn lines of credit totaling in excess of
$200,000,000.
As the sales and profit figures on the next page suggest, several
segments of the company encountered extremely difficult mar-
ket conditions in 1982. The unexpectedly long and deep reces-
sion in the domestic economy exacted a heavy toll from our
Metals, Marine and Chemicals groups and probably will con-
tinue to do so well into 1983.
Particularly detrimental to the performance of our Metals and
Marine groups has been the slide in oil exploration activity
which began in earnest early in 1982. Suppliers serving this in-
dustry, including our Whittaker Metals and Fort Worth Pipe sub-
sidiaries, have seen orders dwindle and prices decline; and our
Survival Systems division, the world's largest builder of evacua-
tion systems for offshore oil rigs, has had many deliveries
postponed.
The 1982 results of our Chemicals group were adversely affect-
ed by losses at Great American Chemical, a subsidiary formulat-
ing vinyl resins and compounds, and provisions made for its
closing in the third quarter of the year.
Far less sensitive to conditions in the general economy, our
Technology group performed well in 1982. In terms of sales cal-
culated in French francs, Bennes Marrel, our large subsidiary
2
3
V]
SALES AND OPERATING PROFIT CONTRIBUTION
BY INDUSTRY SEGMENT ($ IN MILLIONS)
Fiscal Year 1982
Fiscal Year
Operating
Operat:
Sales
Profit
Sales
Pro
Life Sciences
$ 917.0
$ 87.4
$ 744.0
$ 65
Metals
267.3
9.0
394.7
51
Technology
268.1
22.3
270.2
19
Marine
131.5
6.3
147.1
16
Chemicals
89.7
5.6
115.8
11
TOTAL
$1,673.6
$130.6
$1,671.8
$164
See Note 11 of Notes to Consolidated Financial Statements regarding the effect of the change il
accounting method for foreign currency translation.
headquartered in France, had its best year in 1982. However, a
decline in the value of the franc reduced the Technology group's
comparative results as reported in dollars.
Life Sciences accounted for over half of Whittaker's sales and
profits in fiscal 1982; and the performance of this segment of the
company would have been even more impressive were it not for
the considerable expenditures we have been making in restruc-
turing our hospital supply subsidiary, Whittaker General Medical.
When we acquired it in mid-1980, our intention was to build
Whittaker General Medical into a nationwide distribution net-
work handling a significant percentage of self-manufactured
products. While that remains our ultimate goal, we have been
unable to achieve the large-scale vertical integration that we ori-
ginally sought as rapidly as we had planned.
In late January of 1982, Whittaker commenced a tender offer
for Brunswick Corporation securities as the first step in a pro-
posed business combination. To frustrate this transaction, Bruns-
wick's management entered into an agreement to sell its
Sherwood Medical subsidary, the acquisition of which had been
Whittaker's chief objective in pursuing Brunswick. After seeking
unsuccessfully to enjoin the Sherwood sale, Whittaker terminat-
ed its offer for Brunswick securities.
Internationally, Whittaker is viewed as one of the world's lead-
ing providers of health care services to developing nations, and
justifiably so. During 1982 alone, the hospitals we operate for
the governments of Saudi Arabia, Abu Dhabi, and North Yemen
treated approximately 1,000,000 patients, many of whom had
little or no access to modern health care a decade ago. During
1982, we were awarded a new two-year contract to staff and
manage Abu Dhabi's 534-bed Tawam hospital, which we have
been operating since its commissioning in 1979, and opened a
new 160-bed addition to the hospital we have operated in Jeddah,
Saudi Arabia, since 1974. Whittaker now operates five hospitals
as well as a number of clinics and dispensaries in Saudi Arabia.
We are extremely proud of the humanitarian role we play in
assisting the governments of developing nations to bring the
finest medical care possible to their people.
Right
Joseph F. Alibrandi
Between October 25 and
President and Chief
December 10, 1982, Whittaker
Executive Officer
acquired in the open market
Left
Harry S. Derbyshire
1,873,000 shares (8.3 percent)
Executive Vice President,
of the common stock of Smith
Chief Financial Officer
and Treasurer
International, Inc., a leader in
the oil field services industry.
After a comprehensive evalua-
tion of this industry, we have
concluded that it represents a
unique investment opportu-
nity, which we can pursue
without detracting from our
other strategic objectives. We had planned to make a larger in-
vestment in Smith International, but in deference to the wishes
of Smith's management, whose policies and programs we fully
support, we agreed to limit Whittaker to its current investment
position. Carl E. Hartnack, a Whittaker director, will be nomi-
nated for election to the Smith International Board of Directors
at the annual meeting of Smith shareholders this April, and we
look forward to a mutually beneficial relationship with that
fine company.
45
ife Sciences businesses accounted for
sales of $917.0 million in fiscal 1982, or 55
percent of Whittaker's total revenue for
the year. Whittaker is a leading interna-
tional health care contractor, and one of
America's largest distributors of medical/
surgical equipment and supplies. The company renders manage-
ment support services to health care institutions across the
United States, and provides data processing systems and soft-
ware for use in hospitals. Whittaker also produces a variety of
biological and diagnostic products, and performs a full range
of toxicological testing procedures.
Preceding page
W
INTERNATIONAL LIFE SCIENCES
Whittaker's internation-
10
al health care team totals
As of year-end 1982, Whittaker employed approximately 5,
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more than 5,000 experi-
enced medical and sup-
medical and support personnel in its overseas health care
Te
port personnel, including
specialists such as these
programs.
surgeons at Tawam hos-
Whittaker has been active in the international health care
pital in Al Ain, Abu
Dhabi.
field since the early 1970s. In July of 1974, the company was
awarded a health care management contract, the first of its l<
in Saudi Arabia, to open three hospitals located in the comm
ties of Jeddah, Khamis Mushayt and Tabuk. Within six mont
Whittaker Medicus helps
the hospitals were opened
hospitals achieve greater
efficiences through the
out-patient services, and a
application of modern
computer technology to
three were opened for full
the increasingly complex
patient services by early ]
and costly health care
environment. Over 400
This contract has since be
Whittaker Medicus pro-
fessionals currently pro-
extended and expanded se
vide data processing
al times.
products and services
to more than 300 U.S.
The Jeddah hospital wa
hospitals, as well as a
number of institutions
intitially built as a 58-bec
abroad.
facility, and was enlarged
78 beds to provide a broad
range of medical and surg
services. In addition to th
hospital, Whittaker opera
four dispensaries for out-
patient treatment, as well
as an 18-chair dental clini
The MediPac patient
accounting system is one
Jeddah. Twenty-two perce
of Whittaker Medicus'
most popular software
MediPac
of the medical staff are Sa
packages for hospitals.
Arabian physicians. Five 1
MediPac assimilates a
patient's daily charges
ago, there were only two
from various hospital
departments and auto-
Saudi doctors on staff.
matically produces a
complete, accurate final
Over 260,000 out-patie
statement, specifying
were seen at the Jeddah h
what amounts are pay-
able by the insurance
tal in 1982, and more thai
company, the govern-
MediPac
5,800 patients were admi
ment and the patient.
for a total of 36,300 patier
days.
A 160-bed addition to t.
Jeddah hospital was offici
opened in August, 1982. This addition will offer all standard
services, as well as numerous special services: a full burn un
kidney dialysis, a CAT scanner and nuclear medicine.
The King Abdul Aziz hospital in Tabuk has been operating
since 1975 as an acute care facility, and has recently been ex
panded to include a 100-bed hospital annex, the King Khaled
hospital, as well as three nearby dispensaries. Upon being
awarded authority to operate the King Khaled hospital, and a
similar facility in Khamis Mushayt, Whittaker worked closely
with government officials to assess the medical service needs of
the population and to formulate a comprehensive medical serv-
ice plan to best meet those needs.
A total of 236,000 out-patients were seen at Tabuk in 1982,
and 5,800 patients were admitted as in-patients for a total of
50,900 patient days.
Whittaker has operated the King Faisal hospital in Khamis
Mushayt since 1975 as a full service hospital. Similar in archi-
tecture to the Tabuk hospital, the facility has been expanded to
include the 100-bed Crown Prince Fahad hospital, two dispen-
saries and a recently completed dental clinic. Other specialized
Operated by Whittaker
for the government of
units at Khamis Mushayt
Saudi Arabia, the new
King Fahad hospital in
include a well equipped and
Jeddah is one of the most
staffed kidney dialysis center
modern facilities of its
kind in the world. The
and burn treatment center.
hospital incorporates 20
specialty clinics and six
At Khamis Mushayt
fully equipped operating
265,000 out-patients were
rooms to meet expanding
medical needs.
treated during 1982, and 8,000
patients were admitted for a
total of 58,800 patient days.
The recent dedication of
the Whittaker-operated Al
Salam (Peace) hospital in
North Yemen opened the door
to modern health care facilities to the people of a 20,000 square
mile area in the Yemen Arab Republic. The hospital is located in
the village of Sada'a, 60 miles from the Saudi Arabian border to
the north.
Although officially opened on February 16, 1982, the hospital
has been treating patients since the previous August, when the
first out-patient was seen. By mid-February, 1982, the Al Salam
hospital had already treated over 11,000 out-patients in its spe-
cialty clinics, which include internal medicine, Ob/Gyn, dental,
ophthalmology and surgery. To date, the daily out-patient aver-
age has exceeded expectations, surpassing 600 visits per day.
In mid-1979, Whittaker signed a multi-year contract, renewed
in 1982, to staff and manage the new, 534-bed Tawam hospital in
Al Ain, Abu Dhabi (UAE). An acute-care referral center, the
Tawam hospital offers all basic medical and surgical services and
a wide range of specialties. Serving an immediate population of
80,000, the hospital treated 118,000 out-patients and admitted
5,300 in-patients in 1982, for a total of 56,300 patient days.
8
9
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HEALTH CARE SERVICES
10
Domestically, Whittaker is a leading supplier of products a
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services to hospitals and other health care providers. In 1982
company's clients included nearly two-thirds of the nation's
7,500 hospitals and approximately 5,000 nursing homes, 30,0
physicians' offices, and 2,000 laboratories.
Representing most major
national manufacturers
With 54 full-service dist
of medical equipment
and supplies, Whittaker
bution centers located thr
General Medical carries
out the country, Whittake
some 60,000 line items
used in hospitals, nurs-
General Medical is one of
ing homes, physicians'
offices, laboratories, and
largest suppliers of such
home health care.
nationally known medica
brands as B-D, Bard, Ethic
Johnson & Johnson and 31
The company carries more
than 60,000 line items, inc
ing a variety of private lab
exclusive and self-manufa
tured products.
Whittaker General Med
cal's advanced automated
materials management
(ADAMM) system, intro-
duced early in 1982, is being adopted by a growing number of h
pitals. Installed in hospital purchasing departments, ADAM
interfaces with Whittaker General Medical's intracompany
distribution information system, enabling direct computer-to
computer order entry and on-line order confirmation and stoc
availability. In addition, ADAMM offers hospital materials m
agers a family of software modules designed to help reduce in
ventory processing costs.
Whittaker Medicus, headquartered in Evanston, Illinois, is
leading management engineering consultant to hospitals in t.
United States and Canada. Not only does the company provi
consulting services; it also manages hospital data processing
cilities on a contract basis, and develops turnkey data process
systems and proprietary software packages used in hospitals.
Examples of Whittaker Medicus software products include:
MediPac. Introduction of the MediPac patient accounting
system in 1982 was a major step in the development of a fully
integrated, proprietary software product line for the IBM 370 a
4300 series computers, which are in use in some 60 percent o
all U.S. hospitals of over 300 beds. Patient accounting, the pro
ess of keeping track of hospital bills, is extremely complex an
growing more so with every change in law governing health c
delivery and reimbursement. MediPac is designed to replace ex-
isting patient accounting software which is unable to cope with
regulatory and other complexities of the contemporary patient
accounting environment.
MediFlex. Already in use in more than 250 hospitals, Medi-
Flex is a financial modeling/budgeting system offered to hospi-
tals and health care agencies both on a stand-alone basis and via
time sharing from the Whittaker Medicus data center in Atlanta,
Georgia. Designed to construct "what if" projections from
budget variables, MediFlex can forecast the consequences of the
At Microbiological
slightest change in operating
Associates, Bethesda,
Maryland, viable tumors
costs, patient census, pricing
and cell cultures are pre-
served in liquid nitrogen
or reimbursement policy.
storage tanks at - 145
degrees Centigrade. Even
after a lengthy period of
BIOSCIENCES
storage, these frozen tis-
sues can be thawed,
Three Whittaker operating
made to grow again and
units-M.A. Bioproducts,
then used in malignancy,
pharmacological and
Microbiological Associates,
toxicological testing.
and Whittaker ToxiGenics-
together provide specialized
products and services ranging
from clinical diagnostic kits to
toxicological testing.
Hospital and clinical lab-
oratories use Cytome-
M.A. Bioproducts, Walkers-
gelisa and Rubelisa test
kits-developed by
ville, Maryland, is a leading
Whittaker's M.A. Bio-
manufacturer of diagnostic
products unit-in pre-
pregnancy screening to
ucts
enzyme immunoassays for
determine whether wom-
human and veterinary dis-
en are immune to cyto-
megalovirus and rubella,
eases such as rubella, rubeola,
diseases that can cause
oducts
congenital deformities.
herpes, cytomegalovirus, vari-
These enzyme-based
cella, and bursal disease. The
tests for teratological dis-
eases are simpler to use
company also manufactures
and yield results faster
than traditional assay
and distributes enzyme im-
techniques.
munoassays for therapeutic
drugs and haptens.
Few independent contract
laboratories offer a range of toxicological testing capabilities as
comprehensive as Whittaker's. Microbiological Associates, Be-
thesda, Maryland, and Whittaker ToxiGenics, Decatur, Illinois,
perform in vitro (test tube) and in vivo (animal) studies for the
detection of toxicity and cancer producing potential in chemical
products. Also, with the acquisition of E G & G Mason Research
Institute's Rockville, Maryland laboratory early in 1982, Micro-
biological Associates assumed a leading position in "genetic
toxicology" testing, which seeks to determine whether various
chemical substances cause harmful genetic alterations when
10|11
introduced into bacteria or mammalian cell cultures.
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10
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M
etals group sales were $267.3
million, or 16 percent of
company revenue, in 1982. Wh
taker is a leading builder of rail
road freight cars, and an important producer of oil country
tubular goods and aluminum components used in automotive
applications. The company also distributes general-line and S
cialty metal products, primarily to manufacturers of auto-
mobiles, oil tools, farm implements, aircraft, and electronic
equipment.
RAILCARS, PIPE AND CASTINGS
Whittaker's Berwick Forge & Fabricating Division, Berwick,
Pennsylvania, is a major builder of a broad line of freight cars and
freight car components for railroads, leasing companies and utili-
ties. The division's future plans center on production of coal
hoppers, lightweight coal cars, and "intermodal" cars (vehicles
designed to carry containers or trailers that are also transported
by truck or ship). Prototypes of such cars have been introduced,
Designed to carry four
40-foot cargo containers,
and are currently being tested
Berwick Division's ar-
ticulated intermodal car
in actual service:
can also be built to han-
Berwick's quick-release
dle longer or shorter
units or to incorporate
coal hopper is designed for
additional platforms.
Weighing 88,000 pounds,
"unit trains" used by utilities
this prototype car is sig-
to haul coal from mines to
nificantly lighter-and
thus less expensive to op-
power plants. The car's eight
erate-than intermodal
cars designed to carry
simultaneously activated
both containers and
discharge doors permit un-
trailers.
loading in 20 seconds, cutting
the unloading time for an en-
tire unit coal train from sever-
al hours to less than an hour.
Opposite
In cooperation with Inter-
Steel bar and tubing dis-
modal Concepts, Inc., Ber-
tributed by Whittaker
Metals' four Southwest
wick will manufacture and
service centers are used
in the manufacture of oil
market a new flexible-length
drilling and production
intermodal platform (FLIP) car
tools such as drill collars,
packers, gas lift valves
for short haul (up to 250-mile)
and fishing gear.
transport of truck trailers.
Consisting of short railcars linked together by the trailers loaded
upon them (each car carries the front end of one trailer and the
rear wheels of the trailer ahead of it), the FLIP system will ac-
commodate trailers of any length. The loaded cars are pulled by
a highway truck tractor fitted with retractable railroad wheels.
Whittaker's Fort Worth Pipe subsidiary in Texas produces such
oil country tubular goods as well casing, down-hole tubing, and
line pipe used to carry oil from wells to storage tanks and refin-
eries. Incorporating the latest technology, including computer
control, the company's Conroe, Texas mill complex is capable of
cold-forming and welding in excess of 10,000 tons of API (Ameri-
can Petroleum Institute) "prime" pipe per month in diameters
from 23/8 through 85/8 inches and lengths from 16 through 42 feet.
Recent additions to the facility include a state-of-the-art
quench-and-temper mill for producing alloy-grade tubulars re-
quired for heavy duty service, and modern automatic threading
equipment with capacity to handle full mill output.
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10
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At its Conroe, Texas mill,
Fort Worth Pipe serves more than 1,000 customers with a
Fort Worth Pipe Com-
pany produces welded
of tractor-trailers operating from 11 stocking points through
pipe in diameters from
the Southwest.
23/8 through 85/8 inches.
After being cut to length
Winters Industries, a Whittaker subsidiary located in Car
and pressure tested, the
pipe is threaded, fitted
Ohio, is an aluminum foundry serving automotive and auto
with couplings, painted
and then distributed
parts manufacturers. On its permanent-mold and new, autor
through the company's
sand casting lines, the company manufactures thousands of
11 Southwest stocking
points.
engine intake manifolds each day for GM models such as th
Chevrolet Camaro, Cavalier, Impala, and Caprice; the Pont
J-2000 and Firebird; and the Buick Skyhawk; and for the Fo
cort. Detroit relies on such lightweight parts to bring its fle
to Department of Transportation fuel efficiency standards.
Special 8-cylinder,
360-cubic-inch engines
Winters also produces :
running in the grueling,
number of high-performa
500-mile Grand National
Championship stock
manifolds and cylinder h
car races rely on high
for aftermarket sale throu
performance aluminum
cylinder heads manu-
Holley Carburetor and G.
factured by Whittaker's
Winters Industries
Parts Division. A special
unit under contract to
General Motors' Parts
Chevrolet Motors group 1
Division. An experienced
been working with Winte
producer of these "heavy
duty" castings, Winters
develop modified parts fo
is well qualified to be a
supplier of the large
racing engine application
quantities of aluminum
an aid to improving perfo
heads that Detroit plans
to use for production
ance in standard producti
cars in coming years.
vehicles.
METALS DISTRIBUTION
From warehouses in Houston, Dallas, Tulsa, and Lafayette
(Louisiana), Whittaker's Houston-based Whittaker Metals sub-
sidiary distributes metal products such as alloy, stainless steel
and copper bar; carbon mechanical tubing; and aluminum sheet,
plate and extrusions. Customers include major producers of oil
tools, aircraft, and electronic equipment as well as a variety of
smaller manufacturers of such products as winches, valves,
pumps, conveyer systems and hand tools. The recent opening of
new facilities in Houston and Dallas has increased Whittaker
After being slit, cut to
Metals' total warehouse space
length and leveled at
Juster Steel Division's
to more than 300,000 square
185,000-square-foot Min-
feet.
neapolis facility, this hot
rolled coil stock is dis-
The three divisions of
tributed to manufactur-
ers of farm implements
Whittar Industries Ltd., a
and other fabricated
metal products.
Whittaker-managed partner-
ship, market a variety of qual-
ity metal products. Steel Strip
Division, Detroit, processes
and distributes precision
width-and-gauge steel, pri-
marily to automotive indus-
try customers. Juster Steel
Technibilt Division
commands a significant
Division, Minneapolis, dis-
share of the U.S. market
tributes hot-rolled coil stock,
for shopping carts,
which is estimated to ap-
plate and bar to manufactur-
proximate 1.25 million
unit sales per year. In the
ers of farm machinery, oil and
West, Technibilt products
gas tanks, electronic equip-
are used by Ralphs,
Safeway, Hughes, Lucky
ment and many other end
and most of the other
major supermarket
products. Juster's recently ex-
chains.
panded 185,000-square-foot fa-
cility and extensive decoiling
operation-including slitting,
cut-to-length and leveling
lines-qualify the division as
one of the upper Midwest's
largest and best equipped steel suppliers.
Acquired early in fiscal 1982, Whittar's Technibilt Division is
one of the nation's leading fabricators of shopping carts for su-
permarket, drug and variety store chains. At its 300,000-square-
foot manufacturing facility in Burbank, California, Technibilt
produces more than 500,000 shopping carts per year-and also
fabricates metal racks, baskets, utility trucks, dollies and a vari-
ety of specialized industrial carts and carriers.
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10
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he Technology group reported sales of
$268.1 million, or 16 percent of compa
revenue, in 1982. This group is made i
a large overseas manufacturer of hydra
components and materials handling machinery, and a numb
of domestic operations specializing in products for aerospace
defense, and agriculture.
HYDRAULICS
Bennes Marrel, Whittaker's largest European subsidiary, is a
major manufacturer of hydraulic devices and equipment of four
basic types:
Rear- and side-dumping truck tipping bodies, and hydrau-
lically actuated materials handling equipment such as cranes,
Whittaker's Bennes Mar-
rel subsidiary manufac-
elevators and truck-mounted
tures airport services
equipment such as cater-
ing trucks, "cherry
argolux
container handling systems.
Marrel Pac, a waste man-
pickers" for airplane
maintenance, and self-
agement system that hydrau-
propelled loaders. The
company has furnished
lically compacts and contain-
more than 150 aircraft
erizes refuse for efficient
cargo loaders to airlines/
airports in Europe,
transportation to sanitary
Africa, the Mideast and
Far East.
landfills. This system is used
by heavy industry, shopping
centers, airports and by more
than 60 municipalities around
the world.
Airport services equip-
ment ranging from cherry
pickers for airplane mainte-
nance to freight loading sys-
Bennes Marrel is France's
tems for entire airports. For
largest builder of truck
tipping bodies. The com-
Paris' Roissy/Charles de
pany is also a major ex-
Gaulle Airport, Bennes Marrel
porter of these devices
to Germany's Mercedes
designed and built a com-
Benz and other European
truck manufacturers.
pletely computerized cargo
handling system-incorporat-
ing elevating transfer vehi-
cles, mechanized platforms
and bridges-that is capable
Opposite
Acrodyne Industries
of simultaneously loading
produces VHF and UHF
two Boeing 747s in just 45
television transmitters
in the 1 watt to 12.5 kilo-
minutes.
watt power range. The
division anticipates an
Self-advancing roof sup-
increase in domestic
ports for mechanized mining
transmitter sales as the
FCC makes headway in
operations. Bennes Marrel
reviewing more than
mining equipment has been
7,000 recently received
applications for new low
installed in coal, phosphate
power TV stations.
and potash mines in France,
Poland, Yugoslavia, Germany, Spain and Egypt.
Bennes Marrel also has won international renown for its engi-
neering assistance to developing nations. The company super-
vised the construction and start-up of Sonacome's million-
square-foot truck body plant in Algeria, and designed and built
major hydraulics manufacturing facilities in both Tunisia and
16|17
Nigeria.
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AEROSPACE/ELECTRONICS
10
Whittaker Controls, North Hollywood, California, prod
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fluid controls used in every class of American-built aircraf
Te
forming shut-off, check, relief and flow-control functions
riety of pneumatic, hydraulic and fuel systems, these prec
valves are built to tolerances closer than .0001-inch, and o
reliably under conditions of extreme temperature and vibra
Whittaker Controls currently manufactures fluid contro
vices for most U.S. and many foreign aircraft: commercial
ports (Boeing 757, 767), military jets (F-16, F-18), business j
Featuring a stainless
steel jacket, welded-on
(Citation 3, Mitsubishi
connectors, hermetic
MU-300), and commute
seals and a silicon-
dioxide dielectric, the
(Saab/Fairchild SF-340).
construction of ERI
Division's high perform-
company also supplies 0
ance coaxial cable is
valves for a host of aircr
superior to that of
competing products in
gines, including the nev
its resistance to caustic
substances, moisture,
& Whitney 2037 gas tur
extreme heat, high pres-
engine.
sure, radiation, shock
and vibration.
Bermite Division, Sau
California, is one of the
est non-government ord
producers in the U.S. Th
vision specializes in pyr
nic devices, solid propellant rocket motors, ammunition, fu
and warheads. Programs in which Bermite currently partici
include Chaparrel, Bushmaster, and McDonnell Douglas' S
Tasker Systems Division, Chatsworth, California, manuf
tures key components for an electronic countermeasures sy
that enables pilots to jam or deceive the fire control radar o
emy missiles. The division expects to produce hundreds of
units for B-52 and B-1B bomber programs over the next five
years. Another important Tasker electronic warfare product
the Modular Threat Emitter (MTE), a sophisticated pilot tra
system that simulates various types of enemy fire control r.
Whittaker Controls
builds several unique
Tasker also produces run
valves used in the avion-
ics cooling system of
visual range systems use
Boeing's new 767 air-
every major airport in th
liner. The valve shown
has as its main element a
U.S., as well as small air
"flapper" which is con-
toured to the fuselage
visibility systems that m
shape and, when closed,
tor distances of from ¼ n
forms an integral part of
the aircraft skin.
to four miles.
In nearby Burbank, Cal
nia, ERI Division manufa
tures high performance
coaxial electronic cables
in "severe environment"
plications-for instance,
Tasker Systems Division's
sophisticated Modular
Threat Emitter (MTE)
is designed to facilitate
Air Force and Navy
pilot training exercises
by simulating various
types of enemy fire con-
trol radar. Equipped
with transmitter modules
that can be easily inter-
changed, the advanced
MTE system is far more
versatile and economical
than conventional radar
simulation equipment.
fighter aircraft, missiles, communications satellites and the
Space Shuttle. ERI cables are also used in nuclear reactors to car-
ry temperature and other data from monitoring devices in the
pressure vessel out to operators in the control room.
Yardney Electric Corporation, a majority-owned Whittaker
subsidiary headquartered in Pawcatuck, Connecticut, is a lead-
ing producer of high-energy-density battery systems for military,
aerospace and commercial applications. On a special battery
control line opened in September under contracts awarded by the
U.S. Navy's Strategic Systems Project Office and Lockheed Mis-
sile and Space Company, Yardney builds silver-zinc batteries for
the Poseidon and Trident Fleet Ballistic Missile Systems. The
company also produces silver-zinc batteries for the guidance and
control systems of delivery vehicles used to launch satellites
from the Space Shuttle.
Other key Yardney products include remotely activated silver-
zinc batteries used in tactical missiles such as the Sparrow,
Hawk, Harpoon and Patriot; batteries for torpedo target vehi-
cles; nickel-hydrogen batteries for commercial communications
satellites; and a silver-zinc battery pack for RCA's new Hawkeye
portable videotape color camera. Yardney's Water Management
Products Division, Riverside, California, produces water filtra-
tion equipment for agricultural and industrial applications.
Acrodyne Industries, Blue Bell, Pennsylvania, is a producer of
VHF and UHF television transmitters in the 1-watt to 12.5-kilo-
watt power range. At present, sales to governments of develop-
ing nations in Central and South America, Africa and the
Mideast account for the bulk of this division's business.
18|19
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10
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M
arine sales totaled $131.5 mi
in fiscal 1982, or eight perce
Whittaker's revenue. Whitt
continues to rank as the world's largest producer of pleasu
boats over 25 feet in length, and also builds commercial fi
vessels and sophisticated marine survival craft.
Opposite
The Trojan International
PLEASURE BOATS
line is built on a revolu-
tionary new hull (the
Bertram Yacht Division, Miami, manufactures premier quality,
DeltaConic) that im-
high performance cruisers and sportfishing vessels ranging from
proves performance and
reduces operating costs.
26 through 58 feet in length. The boats are marketed through
dealerships in all parts of the U.S., and also exported into more
than 50 markets in Europe, South America and the Far East. The
division has received the coveted President's "E" and "E Star"
Awards for excellence in export promotion.
At its shipyard near Sarnico, Italy, Whittaker's Cantieri Riva
subsidiary manufactures 12 prestigious luxury boat models-
Bertram's recently
introduced 26-foot Sport
ranging from a 19-foot open
Convertible offers accom-
modations for two for
runabout to the sumptuous
weekend cruises or off-
66-foot Montecarlo yacht.
shore fishing trips. The
new boat features a for-
Renowned for rakish lines,
ward cabin area that
makes into a 77-inch
elegant interiors and state-of-
double berth, an optional
the-art technology, Riva boats
galley/dinette unit amid-
ships, and a 37-square-
are virtually handmade, from
foot cockpit aft. Twin
165-horsepower engines
their multi-layer fiberglass
deliver up to 33 mph and
hulls to their rich leather and
a cruising range of over
200 miles.
fabric upholstery. The com-
pany's cadre of 250 highly
skilled craftsmen put the
Riva's new 42-foot
most painstaking workman-
Malibu is a luxury, high-
ship into every boat, while su-
performance motor yacht
incorporating two dou-
pervisory personnel perform
ble cabins, salon, galley,
bath, bridge (and flying
scrupulous quality control
bridge), and a spacious
checks at every phase of the
stern deck. So functional
are the boat's internal
production process.
layout and facilities that
Malibu owners are able-
Traditionally a builder of
without the assistance
of a service crew-to
motorboats and family cruis-
maintain a standard
ers ranging from 20 through
of comfort typical of
more elaborate yachts.
47 feet in length, Trojan Yacht
Like all Riva models, the
Malibu radiates refined
Division, Lancaster, Pennsyl-
elegance in every detail.
vania, is now producing an
entirely new series of pleasure
boats-the International
line-featuring innovative engineering, high performance, and
avant-garde styling. Currently available in 9- and 10-meter
lengths (11 and 13-meter versions will be introduced in 1983),
the Trojan International line includes an express cruiser (with
open cockpit), a sport sedan (incorporating a deck house and
flying bridge), and a spacious aft-cabin model.
The International is built on a revolutionary new hull-called
the DeltaConic-that provides quick and efficient planing and
unusual transverse stability, thereby reducing operating costs
and improving performance. The boat's styling highlights grace-
20
21
ful, sweeping lines, elegantly decorated interiors, and bold hull
graphics that offer buyers an added means of personalizing
ownership.
COMMERCIAL CRAFT
Whittaker's Survival Systems Division, La Mesa, Califor
manufactures evacuation capsules for offshore oil rigs and
forms. Built in three sizes to accommodate 14, 36, and 50 pla
sons, Whittaker survival capsules are lowered to and lifted
the sea by means of a single cable, which permits rapid lauf
ing and recovery. Once deployed, the capsules protect their
pants from flames and heat, propel them away from the areas
immediate danger, and shield them from the elements untill
arrives.
Whittaker's new 50/54-
More than 1,600 of the
man capsule features the
same design advances
division's evacuation syst
that have been so well
received in its 36/38-man
designed to meet or excell
model: an aft helmsman's
safety requirements set be
tower which gives the
operator 360 degrees of
international regulatory and
visibility and also makes
the survival craft inher-
cies, are now being used the
ently self-righting; a
such major oil producing
slightly elongated hull
configuration which im-
as the North Sea, Alaska,
proves courseholding
and steering capabilities;
Gulf of Mexico and South
and an automatic cable
Asia.
release hook which
provides additional
Desco Marine Division
safety during launch.
Augustine, Florida, is a but
er of commercial fishing
trawlers in the 68- to 75-foot class. Desco's fiberglass hulls ol
fishermen such advantages as steel-like strength and econom
of maintenance and operation. Desco supplies most of its ves
to fishing companies and independent U.S. fishermen workin
the Gulf of Mexico and Pacific Northwest waters, as well as
to markets in South and Central America, Africa and the Far
East.
Kettenburg Marine Division in San Diego is a leading retail
wholesaler of marine supplies and equipment, and also perfor
maintenance and repair work on military, commercial and ple
ure craft.
hemical products accounted for
sales of $89.7 million, or five per-
cent of Whittaker's revenue, in
1982. The Chemicals group for-
mulates resins and coatings for a wide range of specialized indus-
trial applications, and is a leading developer of non-polluting,
energy-saving products for such purposes. In addition, the group
manufactures "liquid plastics" used as sealants and molding
compounds, as well as "chemical specialties" such as gel coats,
INDUSTRIAL COATINGS
One of the nation's leading suppliers of coatings for
aluminum coil, Whittaker's Chemicals group command
20 percent of the U.S. market for such products. Coil
are factory-applied to long strips of metal before these states
slit into sheets and formed into products. Thus, the finish
Since Whittaker coil
must have flow charac
coatings are applied to
metal before it is formed
tics suitable for high-s
into products, these fin-
ishes must be flexible
coating lines and mustin
enough to withstand
bends and stresses with-
flexible enough after
out cracking and peeling.
withstand bends and states
without cracking or person
Whittaker's Polycera
3200 coil coatings for
mercial and industrial
ing applications offer alamy
characteristics, plus theme
ty to resist climatic charge
Preceding page
At seven manufacturing
corrosion and abrasion form
facilities strategically
located around the U.S.,
many years. Plastisol XMI
Whittaker's Chemicals
mil-thick coating for stemp
group produces coatings
for a variety of coil, gen-
aluminum roofing and sign
eral industrial and spe-
cialty applications.
features superior toughn
combat aggressive weather, smog, and acid rain environment
The Chemicals group manufactures a number of finishes
spray-coating of fabricated metal products. Particularly import
tant are "high-solids" coatings used on desks, chairs, partition
and other office equipment-as well as on aluminum windo
and other extrusions for commercial buildings. Containing
smaller amounts of petroleum-based solvent and requiring loss
curing temperatures than conventional coatings, high-solids
ishes enable Whittaker's customers to comply with environn
tal regulations while cutting energy costs.
The Chemicals group is a major supplier of urethane and hi
Finishes for aluminum
solids finishes (Curathane
windows and building
panels constitute an im-
and Curalac) for recreation
portant part of Whit-
taker's chemical coatings
products such as tennis rac
business. For instance,
ets, baseball bats, basketbal
Whittaker corrosion-re-
sistant, polyester-based
skis and firearms.
coatings are used on
both extruded and roll-
Other Whittaker coatings
formed aluminum ex-
include: water-based Aqua-
terior components of
premier quality sun-
ceram finishes for business
rooms and skylights
manufactured by Rol-
machine housings; fast dry-
screen Company, Pella,
ing, durable Zone-Lac fin-
Iowa.
ishes for road striping and
curb painting; and coatings
for metal drums and pails.
PLASTICS AND SPECIALTIES
A number of the divisions constituting Whittaker's Chemicals
group are producers of plastics and chemical specialties. Provi-
dence Chemical Division in Rhode Island manufactures "liquid
plastics"-plastisol and urethane formulations called Chem-o-
sol and Chem-o-thane, respectively-that can be used as seal-
ants, coatings and molding compounds in or on food packaging,
automotive air cleaners, tool handles, play balls and hundreds. of
other products. The Providence unit also manufactures two-
component urethane "poured-in-place" sports flooring for gym-
Whittaker's Ram gel
coats are used as finishes
nasiums and field houses; and
on spas, spa molds and
a PVC "powder blend" formu-
many other fiberglass
reinforced plastics
lation used by extruders of pet
products. Ram gel coats'
flea collars.
reputation for superior
appearance, color fast-
The Wind and Duall Divi-
ness, durability, and
resistance to water and
sions, located in Brockton and
stains has won this prod-
uct a loyal customer base
Athol, Massachusetts, pro-
throughout North
duce custom extruded ther-
America.
moplastics, primarily for
&
customers in the automotive,
recreational, stationery prod-
ucts, marine and shoe
industries.
Whittaker markets two
kinds of synthetic sports
Among Whittaker's chemi-
surfaces: a two-compo-
nent urethane flooring
cal specialties units, Ram
(Chemothane) manufac-
Chemicals Division, Los An-
tured by its Chemicals
group, and PVC sheet-
geles, manufactures polyester
goods flooring (Uni-turf)
to which Whittaker has
gel coats used as decorative/
exclusive distribution
protective finishes for fiber-
rights. This 25,000-
square-foot Chemothane
glass reinforced plastics (FRP)
floor at the Berkshire
Preparatory School, Shef-
products. The division sup-
field, Massachusetts, ac-
plies these coatings, as well as
commodates three full-
sized basketball courts.
mold release agents and pig-
ment dispersions, to manufac-
turers of boats, recreational
vehicles, construction mod-
ules, spas, and many other FRP products.
Drawing on special expertise in large-scale alkali metal-liquid
ammonia reactions, Heico Division, Delaware Water Gap, Penn-
sylvania, makes high purity "intermediates" for pharmaceuticals,
flavorings, fragrances and agricultural chemicals. A third chemical
specialties unit, Dayton Chemicals Division in Ohio, manufac-
tures rubber-to-metal bonding agents for automotive and related
applications. Sealants for the food packaging industry are manu-
factured at a separate Whittaker facility in Dayton.
Whittaker Corporation & Consolidated Subsidiaries
OFFICERS
Joseph F. Alibrandi
Daniel Hofmann
President and Chief Executive Officer
Vice President and
Chief Accounting Officer
Harry S. Derbyshire
Executive Vice President, Chief
George H. Hunter, Jr.
Financial Officer and Treasurer
Vice President
Paul B. Dinkel
Thomas O. Maxfield
Senior Vice President
Vice President
Alan D. Jacobson
Ronald C. Moss
Senior Vice President and Secretary
Vice President and Controlle
Joseph Kleiman
Robert W. Murray
Senior Vice President
Vice President
Jean d'Aligny d'Assignies
Ernest L. Park, Jr.
Vice President
Vice President
Frank C. Buhlman
Gregory T. Parkos
Vice President
Vice President
William G. Christmas
Stanley K. Weissberg
Vice President
Vice President
Philip C. Heeter
Vice President
DIRECTORS
Edmund F. Ackell
Joseph Kleiman
President, Virginia Commonwealth
Senior Vice President, Corpora
University²,⁴
Development, Whittaker Corp
Joseph F. Alibrandi
Frank J. Rauscher, Jr.
President, Whittaker Corporation¹
Senior Vice President, Research
American Cancer Society4
J. Dewey Daane
The Frank K. Houston Professor of
Robert Reznick
Banking, Vanderbilt University3
Chairman and Chief Executive
Craig-Hallum Corporation, a h
Harry S. Derbyshire
company with interests in the
Executive Vice President, Chief
ties and food processing indust
Financial Officer and Treasurer,
Whittaker Corporation¹
John C. West
Attorney at Law⁴
Walter B. Gerken
Chairman of the Board, Pacific
Mutual Life Insurance Company2,3
¹.Member of Executive Commit
Carl E. Hartnack
².Member of Audit Committee
-
Chairman, International Board,
³.Member of Compensation and
Security Pacific Corporation
Option Committee
⁴.Member of Nominating Comm
Sanford Kaplan
Management Consultant1.2,3.
W
HITTAKER CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1982
Whittaker Corporation & Consolidated Subsidiaries
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
For the Years
Ended October 31
1982
1981*
1980*
1979* *
Summary of Operations
(Dollar amounts in thousands)
Sales
$1,673,604
$1,671,837
$1,396,225
$1,073,634
Net income
$ 58,688
$ 69,328
$ 57,504
$ 46,773
Earnings per share
Primary
$3.77
$4.40
$3.90
$3.28
Fully diluted
$3.73
$4.29
$3.70
$3.10
Average common and common
equivalent shares outstanding (in 000)
15,411
15,619
14,597
14,069
Dividends per common share
$1.60
$1.40
$1.00
$.42½
Other Data
Working capital
$ 190,392
$ 238,672
$ 197,546
$ 160,066
Total assets
$ 919,664
$ 867,095
$ 784,533
$ 642,819
Long-term debt
$ 154,645
$ 134,032
$ 132,420
$ 130,022
Shareholders' equity
$ 335,120
$ 345,459
$ 289,912
$ 234,625
Current ratio
1.45:1
1.63:1
1.55:1
1.58:1
Debt to equity ratio
.51:1
.48:1
.55:1
.75:1
Capital additions
$ 59,500
$ 39,200
$ 37,100
$ 30,300
Total employees
17,300
17,000
16,600
14,500
Shareholders of record
18,000
18,000
20,000
22,000
*During 1982 Whittaker adopted Financial Accounting Standards Board Statement No. 52, "Foreign Currency Translation." If this state
had been applied during the prior four years, net income would have been increased by $8,687,000 (56 cents per share) in 1981, reduce
$1,876,000 (13 cents per share) in 1980, reduced by $2,906,000 (21 cents per share) in 1979 and increased by $1,585,000 (11 cents per sha
1978. See Note 5 of Notes to Consolidated Financial Statements.
Whittaker Corporation & Consolidated Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
COMPARISON OF 1982 TO 1981
Sales for 1982 increased by $2,000,000 from 1981. Life
The increase in minority interest in 1982 was attrib-
Sciences sales increased by $173,000,000, of which
utable to the increased operating profits of a majority
$113,000,000 represented increased levels of operations
owned Saudi Arabian subsidiary which administers the
of the Company's overseas healthcare programs and
Company's healthcare program in that country and the
$38,000,000 represented increased sales of medical,
reduction during the fourth quarter of 1982 of the Com-
surgical and laboratory products to the domestic
pany's interest in that subsidiary from 70% to 51%.
healthcare industry. The Metals segment reported a
Pre-tax income in 1982 decreased by $31,000,000 from
$127,000,000 sales decrease from 1981 due primarily to
1981 due primarily to sharply reduced sales by Metals
a sharp sales decrease by Metals units serving the oil
units serving the oil and gas industry. The Life Sciences
and gas industry, caused principally by a decline in
segment reported higher pre-tax income in 1982, pri-
drilling activity, and a decrease in the sales of railroad
marily attributable to increased levels of activity in the
freight cars, attributable to a continuing industry slow-
Company's overseas healthcare operations. The 1982
down caused by a lack of demand. Technology sales de-
results of the medical, surgical and laboratory products
creased by $2,000,000. While sales, as stated in French
distribution operations compared unfavorably with the
francs, of hydraulic devices by operations headquartered
1981 results, reflecting losses attributable primarily to
in France were 14% higher in 1982 than 1981, those
high selling and general and administrative expenses in-
sales reported in dollars for the 1982 period were
cluding substantial amounts associated with the restruc-
$11,000,000 lower than for 1981 as a result of a 17% de-
turing program. This was largely offset by improved
cline in the average value of the French franc in relation
profitability of the medical information systems busi-
to the dollar from 1981 to 1982. Marine sales decreased
ness which had experienced losses in 1981. Profits from
by $15,000,000, primarily attributable to reduced de-
the sales of hydraulic devices decreased primarily as a
mand. The $26,000,000 decrease in Chemicals sales
result of the comparative weakness of the French franc
was also attributable to reduced demand, primarily
and a French national price freeze which prevented the
from customers in the construction and transportation
Company from passing on to customers increased labor
industries, and the closedown of resin operations in the
and material costs that it had experienced. Profits of
third quarter of 1982.
the Marine segment decreased primarily as a result of
Cost of sales as a percentage of sales was lower in
lower sales, and lower profits of the Chemicals segment
1982, primarily reflecting the increased proportion of
were primarily attributable to losses associated with its
sales attributable to the relatively higher margin over-
resin operation which was closed down during the third
seas healthcare operations within the Life Sciences seg-
quarter of 1982. The effect of foreign currency exchange
ment. Operating expenses were higher in the current
fluctuations in 1981, principally affecting the Technol-
year, due primarily to high selling and general and ad-
ogy and Marine segments, was to decrease pre-tax
ministrative expenses of the medical, surgical and labo-
income by $8,200,000. Foreign currency exchange
ratory products distribution operations, including
fluctuations during 1982 had no effect on income as a
substantial amounts associated with a major restructur-
result of new accounting rules relating to foreign cur-
ing program which was initiated in the fourth quarter
rency translation procedures.
of 1981 and is expected to continue in 1983.
COMPARISON OF 1981 TO 1980
Sales for 1981 increased by $276,000,000, or 20%, from
Cost of sales and operating expenses as a p
1980. Life Sciences sales increased by $266,000,000, of
of sales were slightly lower in 1981. The imp
which $184,000,000 was attributable to the March 1980
relatively lower margins contributed by the
acquisition of the assets of General Medical Corpora-
surgical and laboratory product distribution
tion, a domestic distributor of medical, surgical and
acquired in March 1980 was more than offset
laboratory products to the healthcare industry, and the
increased sales by the relatively higher marg
balance primarily reflected the increased operating
healthcare operations within the Life Science
levels of the Company's overseas healthcare programs.
and the Metals units serving primarily the 01
The Metals segment reported a $19,000,000 sales
gas industry.
increase in 1981. A $71,000,000 decrease in sales of rail-
The increase in minority interest in 1981 W
road freight cars and related equipment, attributable
able to the increased operating profits of a ma
to a continuing industry slowdown caused primarily
owned Saudi Arabian subsidiary which admi
by reduced rail shipments and high interest rates
Company's healthcare program in that count
which discouraged purchases, was largely offset by a
Pre-tax income in 1981 increased by $31,00
$69,000,000 increase in sales of Metals units serving
1980, due primarily to increased levels of acti
primarily the oil and gas industry, attributable to
favorable revision in a program profit-at-com
increased customer demand and the increased avail-
estimate and favorable contract closeouts, all
ability of tubular goods produced by the Company's pipe
to Life Sciences activities in the Middle East,
mill which commenced operations in February 1980.
increased sales by Metals units serving the oi
Sales of other Metals operations increased modestly.
industry. Profits of the Chemicals segment in
Technology sales decreased by $14,000,000 in relation
significantly over 1980, primarily attributable
to 1980. A 25% decline in the value of the French
elimination of low margin product lines and th
franc in relation to the dollar resulted in a $44,000,000
effect on 1980 profits caused by difficulties ex
reduction in the reported dollar value of 1981 sales of
in integrating prior acquisitions. Results of th
hydraulic devices by operations headquartered in
road car manufacturing operation within the
France, which was largely offset by increased volume at
segment were down sharply due to reduced VO
those operations.
and the losses of the medical information sys
Marine sales increased $10,000,000. Increased
business within the Life Sciences segment inc
demand for survival capsules (used primarily on offshore
substantially on lower volume and higher dev
drilling rigs and platforms) and pleasure boats was
ment costs. The effect of foreign currency exc.
largely offset by reduced demand for commercial fishing
fluctuations, principally affecting the Technol
vessels.
and Marine segments, was to decrease pre-tax
Chemical sales decreased by $5,000,000, primarily
by $8,200,000 in 1981 and to increase pre-tax i
attributable to the elimination of low margin product
by $1,900,000 in 1980.
lines.
CHANGING PRICES
For an explanation of the impact of changing p
inflation on operating results, refer to Note 13
to Consolidated Financial Statements.
FINANCIAL CONDITION
Working capital increased from $160 million at the
The Company's debt to equity ratio has decreased
beginning of 1980 to $190 million at end of 1982, re-
from .75 to 1 at the beginning of 1980 to .51 to 1 at the
flecting principally higher inventory and receivables
end of fiscal 1982. Total debt, both short and long term
resulting from the acquisition of the assets of General
decreased by $4 million over the last three years, while
Medical Corporation in March 1980 and from internal
stockholders' equity increased by $100 million, attrib-
growth. In 1982 working capital decreased by $48 mil-
utable primarily to earnings retained by the Company.
lion, reflecting principally the acquisition of 1,500,000
Capital expenditures for 1983 are estimated to be $40
shares of the Company's common stock at a cost of
million, a $19 million decrease from 1982. An increase
approximately $34 million. Subsequent to the end of
in working capital to support higher levels of business
fiscal 1982, the Company reduced working capital by
is anticipated.
approximately $50 million, which was invested in mar-
The Company anticipates that substantially all of its
ketable securities. The current ratio at the end of 1982
operating cash needs in 1983 will be covered by inter-
was 1.45 to 1 as compared to 1.63 to 1 at the end of 1981
nally generated funds. The Company has $206 million
and 1.55 to 1 at the end of 1980.
available under various bank loan agreements and lines
The Company's primary source of capital has been
of credit. No amounts were drawn under these lines at
funds provided from operations, with $81 million gener-
October 31, 1982. The Company has additional credit
ated in 1982, $89 million in 1981 and $77 million in
facilities for certain subsidiaries with various domestic
1980. These internally generated funds were sufficient
and foreign banks totaling $79 million, of which $11
to cover the Company's aggregate capital expenditures
million was borrowed at October 31, 1982.
of $135 million, working capital requirements of $30
million and dividends of $62 million during the past
three years.
Whittaker Corporation & Consolidated Subsidiaries
INFORMATION REGARDING WHITTAKER SECURITIES
Principal Markets
The Common Stock and 10% Subordinated Debentures due 1988 are listed on the New York Stock Exchange
Pacific Stock Exchange (Symbol: WKR). The 4½ Convertible Subordinated Debentures due 1988, 95/₈% Sub
nated Debentures due 1993 and 10% Subordinated Debentures due 1996 are listed on the New York Stock Exc.
The $1.25 Cumulative Convertible Preferred Stock and the 43/4% Convertible Subordinated Debentures due
are traded in the over-the-counter market. There is no established market for the $5.00 Cumulative Convertib
Preferred Stock.
Common Stock Holders
As of December 31, 1982, there were 17,556 registered holders of the Common Stock.
Common Stock Prices
The following table sets forth the high and low sales prices of the Common Stock during Whittaker's two mos
recent fiscal years.
Quarter Ending
January 31
April 30
July 31
Octob
High
Low
High
Low
High
Low
High
1981
353/8
275/8
49
305/8
507/8
383/4
433/4
1982
41
293/8
317/8
21½
277/8
187/8
263/8
Dividends
Dividends of $.31 ¹/4 and $1.25 were declared on each share of the $1.25 Preferred Stock and $5.00 Preferred Stock
spectively, during each quarter of Whittaker's two most recent fiscal years. Dividends of $.35 were declared on
share of Common Stock during each quarter of fiscal year 1981 and $.40 for each quarter of fiscal year 1982. A
terly Common Stock dividend of $.40 per share was declared for the first quarter of fiscal 1983.
Common Stock Transfer Agents
Security Pacific National Bank
Citibank, N.A.
333 South Hope Street
111 Wall Street
Los Angeles, California 90071
New York, New York 10043
Common Stock Registrars
Security Pacific National Bank
Chemical Bank
333 South Hope Street
20 Pine Street
Los Angeles, California 90071
New York, New York 10015
Preferred Stock Transfer Agent and Registrar
Security Pacific National Bank
333 South Hope Street
Los Angeles, California 90071
Trustees for Debentures
43/4% Convertible Subordinated Debentures due 1987
95/8% Subordinated Debentures due 1993
Bank of America
Bankers Trust Company
555 South Flower Street
One Bankers Trust Plaza
Los Angeles, California 90071
New York, New York 10006
4½ Convertible Subordinated Debentures due 1988
10% Subordinated Debentures due 1996
Security Pacific National Bank
Continental Illinois National Bank and
333 South Hope Street
Trust Company of Chicago
Los Angeles, California 90071
231 South LaSalle Street
Chicago, Illinois 60693
10% Subordinated Debentures due 1988
Citibank, N.A.
111 Wall Street
New York, New York 10043
32
Whittaker Corporation & Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Years
Ended October 31
1982
1981
1980
(In thousands)
Sales
$1,673,604
$1,671,837
$1,396,225
Costs and expenses
Cost of sales
1,298,200
1,305,704
1,109,227
Engineering, selling and general and administrative
230,554
197,586
153,990
Interest on long-term debt
14,570
16,112
14,835
Other interest, net
(3,882)
(3,165)
(1,075)
Minority interest in income of subsidiaries
28,117
18,586
13,609
1,567,559
1,534,823
1,290,586
Income before provision for taxes
106,045
137,014
105,639
Provision for taxes (Note 6)
47,357
67,686
48,135
Net income (Note 5)
$ 58,688
$ 69,328
$ 57,504
Earnings per share (Note 2)
Primary
$3.77
$4.40
$3.90
Fully diluted
$3.73
$4.29
$3.70
The accompanying notes are an integral part of these statements.
Whittaker Corporation & Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
October 31
ASSETS
1982
198
CURRENT ASSETS
(In thousands)
Cash
$ 38,516
$ 40,89
Short-term investments
69,450
25,51
Receivables:
Notes receivable
4,825
5,67
Trade accounts receivable
215,283
238,46
Other receivables.
8,200
9,72
Allowance for doubtful accounts
(6,304)
(6,53
Inventories (Note 1)
265,159
294,90
Prepaid expenses
3,479
3,25
Deferred income taxes (Note 6)
12,438
7,62
Total Current Assets
611,046
619,53
PROPERTY, PLANT AND EQUIPMENT, AT COST (Notes 3 and 8)
Land and land improvements
25,536
22,0
Buildings and improvements
107,742
107,9
Equipment
178,317
149,6
Construction in progress
12,093
8,4
323,688
288,0
Less accumulated depreciation and amortization
116,202
109,9
207,486
178,1
OTHER ASSETS
Goodwill, net of amortization
39,787
38,4
Notes receivable-noncurrent
23,264
17,0
Software, net of amortization
3,539
4,8
Miscellaneous
34,542
9,1
101,132
69,4
$919,664
$867,00
34
October 31
LIABILITIES AND STOCKHOLDERS' EQUITY
1982
1981
Liabilities
(In thousands)
CURRENT LIABILITIES
Notes payable (Note 3)
$ 10,534
$ 12,174
Current maturities of long-term debt (Note 3)
6,764
20,005
Accounts payable
129,126
121,164
Accrued liabilities
98,253
97,016
Customer advances
115,311
64,180
Income taxes payable (Note 6)
60,666
66,320
Total Current Liabilities
420,654
380,859
LONG-TERM DEBT (Note 3)
154,645
134,032
MINORITY INTEREST IN SUBSIDIARIES
9,245
6,745
COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)
Stockholders' Equity
Capital Stock (Note 4):
Preferred stock, stated value $1 per share, authorized 5,000,000 shares-
$1.25 cumulative convertible preferred stock, outstanding 21,977 shares
at October 31, 1982 and 24,995 shares at October 31, 1981
22
25
$5.00 cumulative convertible preferred stock, outstanding 122,662 shares
at October 31, 1982 and 123,882 shares at October 31, 1981
122
124
Common stock, stated value $1 per share, authorized 40,000,000 shares-
Outstanding 14,386,127 shares at October 31, 1982 and 15,534,181 shares
at October 31, 1981
21,382
22,530
Additional paid-in capital
124,807
120,290
203,280
202,490
Retained earnings
Cumulative translation adjustments (Note 5)
(14,493)
-
Total Stockholders' Equity
335,120
345,459
$919,664
$867,095
The accompanying notes are an integral part of these statements.
Whittaker Corporation & Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Cumulative
For the Three Years
Convertible
Additional
Ended October 31, 1982
Preferred
Common Stock
Translation
Paid-in
Retained
Adjustments
(In thousands)
Stock
Shares
Amount
Capital
Earnings
(Note 5)
BALANCE AT NOVEMBER 1, 1979
$265
13,559
$20,555
$ 92,372
$121,433
$
-
$234
Net income
—
—
—
—
57,504
|
57
Cash dividend on preferred stock
—
-
—
—
(700)
-
Cash dividend on common stock
—
-
...
—
—
(14,093)
—
(14
Conversion of preferred stock
(101)
207
207
(106)
—
—
Shares issued under stock plans
—
144
144
823
—
—
Exercise of warrants
-
975
975
13,575
—
—
14
Conversion of convertible debt
-
418
418
5,890
-
-
e
Shares reacquired
-
(469)
(469)
—
(8,780)
-
(S
BALANCE AT OCTOBER 31, 1980
164
14,834
21,830
112,554
155,364
-
289
Net income
—
-
-
—
69,328
-
69
Cash dividend on preferred stock
-
-
-
-
(659)
-
Cash dividend on common stock
—
-
-
—
(21,490)
|
(21
Conversion of preferred stock
(15)
30
30
(15)
—
-
Shares issued under stock plans
—
253
253
1,771
—
-
2
Conversion of convertible debt
—
418
418
5,980
—
—
6
Shares reacquired
—
(1)
(1)
—
(53)
-
BALANCE AT OCTOBER 31, 1981
149
15,534
22,530
120,290
202,490
-
345
Net income
-
-
-
—
58,688
-
58
Cash dividend on preferred stock
-
—
-
—
(644)
-
Cash dividend on common stock
—
-
-
—
(24,789)
-
(24
Conversion of preferred stock
(5)
8
8
(3)
—
—
Shares issued under stock plans
—
139
139
1,609
—
-
1
Conversion of convertible debt
-
207
207
2,911
—
-
3
Shares reacquired
-
(1,502)
(1,502)
-
(32,465)
-
(33
Translation adjustments:
As of November 1, 1981
—
-
|
—
-
(3,455)
(3
Current year
-
-
—
—
—
(11,038)
(11
BALANCE AT OCTOBER 31, 1982
$144
14,386
$21,382
$124,807
$203,280
$(14,493)
$335
The accompanying notes are an integral part of these statements.
36
Whittaker Corporation & Consolidated Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
For the Years Ended
October 31
1982
1981
1980
Working Capital Provided by
(In thousands)
Operations
Net income.
$ 58,688
$ 69,328
$ 57,504
Items not affecting working capital-
Depreciation and amortization
21,840
19,920
17,220
-
Deferred taxes
-
2,687
Working capital provided from operations
80,528
89,248
77,411
Disposals of property, plant and equipment
9,307
10,776
11,258
Decrease in noncurrent notes receivable
|
—
2,041
Issuance of long-term debt
38,909
31,251
1,487
Debt assumed in connection with purchased businesses
-
-
19,102
Issuance of common stock upon conversion of debt
3,118
6,398
6,308
Issuance of common stock upon exercise of warrants
-
—
14,550
-
-
Other items, net
2,299
131,862
137,673
134,456
Working Capital Applied to
Assets acquired in connection with purchased businesses-
-
Property, plant and equipment
5,893
17,540
Goodwill
2,213
-
70
Capital expenditures
59,475
39,240
37,133
Reduction of long-term debt
18,296
29,639
18,191
Cash dividends on preferred stock
644
659
700
Cash dividends on common stock
24,789
21,490
14,093
Cost of company stock reacquired
33,967
54
9,249
—
Increase in noncurrent notes receivable
6,234
3,365
Increase in noncurrent investments
19,708
-
-
Currency translation adjustments
7,426
-
—
Other items, net
1,497
2,100
-
180,142
96,547
96,976
Increase (Decrease) in Working Capital
$ (48,280)
$ 41,126
$ 37,480
Increase (Decrease) in Working Capital Accounted for by
Cash and short-term investments
$ 41,557
$
733
$ 24,563
Receivables
(25,334)
20,332
44,181
Inventories
(29,748)
43,552
47,902
Prepaid expenses
228
1,396
(1,894)
Notes payable
1,640
2,422
19,860
Current maturities of long-term debt
13,241
(6,422)
(2,172)
Accounts payable and accrued liabilities
(9,199)
(23,412)
(35,498)
Customer advances
(51,131)
17,589
(57,653)
Income taxes
10,466
(15,064)
(1,809)
Increase (Decrease) in Working Capital, as above
$ (48,280)
$ 41,126
$ 37,480
The accompanying notes are an integral part of these statements.
Whittaker Corporation & Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
(A) Principles of Consolidation: The consolidated fi-
(E) Property and Depreciation: Property, plant and
nancial statements include the accounts of Whittaker
equipment is depreciated using the straight-line
and its majority-owned subsidiaries.
method based upon the following useful lives:
(B) Short-term Investments: Short-term investments
Land improvements
5-20 years
are carried at cost, which approximates market, and
Buildings and improvements
5-45 years
consist primarily of certificates of deposit, time depos-
its, bankers' acceptances and other forms of short-term
Leasehold improvements
Lesser of economic life
money market investments.
or term of lease
Equipment
2-20 years
(C) Inventories: Inventories are stated at the lower of
cost or market. Cost has been determined under the
Whittaker has followed the policy of capitalizing ex-
last-in, first-out (LIFO) method with respect to approxi-
penditures for expansion of plant facilities and also ex-
mately 45 per cent of total inventories. The cost of all
penditures that materially increase the life of the asset.
other inventories has been determined principally on
Maintenance and repairs are charged to expense as in-
the first-in, first-out (FIFO) method. If all inventories
curred. The cost and related accumulated depreciation
valued on the LIFO basis were valued at FIFO, inven-
and amortization of property and equipment sold or re-
tories would be $17,580,000 and $12,421,000 higher
tired are removed from the accounts and resulting gains
than reported at October 31, 1982 and 1981, respectively.
or losses are included in income.
(D) Intangibles: Goodwill resulting from acquisitions
(F) Long-term Contracts: Whittaker generally accounts
made prior to November 1, 1970 is not amortized un-
for long-term contracts using a percentage-of-comple-
less, in the opinion of management, it has diminished
tion method.
in value. Goodwill arising from acquisitions subse-
quent to October 31, 1970 is amortized using the
straight-line method over 40 years.
Purchased software is related to the medical informa-
tion systems business and is amortized using the
straight-line method over seven years.
NOTE 2. Earnings per Share
Earnings per common and common equivalent share
ible preferred stock, the 43/4% convertible subordinated
have been computed based on the weighted average
debentures due 1987 and certain stock options and
number of common shares outstanding and those secu-
warrants.
rities, stock options and warrants which are common
Fully diluted earnings per share give effect to the
stock equivalents with a dilutive effect, after deducting
assumed conversion of certain convertible debentures
from net income the dividend requirements on the out-
and notes not considered as common stock equivalent
standing $5.00 cumulative convertible preferred stock.
which would have a dilutive effect and the assumed
Securities considered as common stock equivalents
conversion of the $5.00 cumulative convertible pre-
with a dilutive effect are the $1.25 cumulative convert-
ferred stock.
NOTE 3. Notes Payable and Long-Term Debt
At October 31, 1982, Whittaker had available lines of
Eurodollar borrowings and prime rate on domestic bo
credit of $206,000,000 under various bank loan agree-
rowings. Commitment fees under these agreements
ments. No amounts under these lines were drawn upon
between 1/4% and 3/8% on the unused portions of the
at October 31, 1982. Maturities of commitments under
lines. In addition, under certain of the agreements, tl
these agreements range from one to five years. Interest
company is expected to maintain unrestricted comp
rates range from 1/2% above the bank's federal funds rate
sating balances averaging 3% of amounts committed
to 1/2% above the London Interbank Offered Rate on
plus 5% of amounts borrowed.
3
Whittaker has additional credit facilities for cer-
The maximum amount of short-term borrowing out-
tain subsidiaries with various domestic and foreign
standing at any month-end during the year ended Octo-
banks totaling approximately $79,000,000, of which
ber 31, 1982 was approximately $19,000,000, the average
$10,534,000 was drawn upon at October 31, 1982. Inter-
amount outstanding during 1982 was approximately
est rates on these lines are keyed primarily to prime or
$9,000,000, and the average interest rate (after giving
other prevailing rates, and such interest rates on the
effect to fees but not compensating balances) during
borrowings outstanding at October 31, 1982 approxi-
1982 was approximately 16%.
mated 13%.
Long-term debt consisted of the following:
October 31,
1982
1981
COLLATERALIZED DEBT-
(In thousands)
Notes collateralized primarily by certain real property and equipment maturing at various
dates to 1999, with interest rates ranging to the higher of 15% or 70% of prime
$ 40,168
$ 35,727
CAPITALIZED LEASE OBLIGATIONS-
Obligations payable in varying monthly or quarterly installments through 1999, with interest rates
ranging to the higher of 11% or 65% of prime (Note 8)
18,868
18,429
UNCOLLATERALIZED DEBT-
Bank loan due 1982, with interest at 8½
-
10,000
Notes maturing at various dates to 1992, with interest rates ranging to 14%
22,710
21,437
Bank loan due 1985 through 1989 with interest at prime
18,000
-
SUBORDINATED DEBT-
5% subordinated notes due 1982
-
569
95/8% subordinated debentures due 1983 through 1993
12,261
14,964
10% subordinated debentures due 1983 through 1988
11,834
12,084
10% subordinated debentures due 1986 through 1996 (less unamortized discount of $1,564,000
at October 31, 1982 and $1,735,000 at October 31, 1981)
32,700
32,529
CONVERTIBLE SUBORDINATED DEBT-
4½ convertible subordinated debentures due 1983 through 1988, convertible into common stock
at $47 per share
4,425
4,744
Convertible subordinated note due 1981, convertible into common stock at $15 per share,
with variable interest keyed to the three-month Eurodollar rate plus 1%
-
3,000
43/4% convertible subordinated debentures due 1983 through 1987, convertible into common stock
at $17 per share
443
554
161,409
154,037
Less current maturities
6,764
20,005
$154,645
$134,032
At October 31, 1982, collateral for notes payable and
Covenants in connection with bank loan agreements,
for long-term debt, consisting primarily of real prop-
indentures, lines of credit and other long-term loan
erty and equipment, amounted to approximately
agreements impose restrictions with respect to, among
$45,000,000.
other things, the maintenance of financial ratios and
Maturities of long-term debt are as follows for the
the disposition of assets, and require payments to
periods stated:
sinking funds.
Year ending October 31,
(In thousands)
1983
$ 6,764
1984
8,781
1985
14,425
1986
17,219
1987
18,855
NOTE 4. Capital Stock
All shares of preferred stock outstanding are voting,
Whittaker had reserved 1,433,469 shares of comm
cumulative and convertible into common stock. Each
stock at October 31, 1982 for future issuances under
share of the $5.00 preferred stock is convertible into
stock option plans. Options to purchase common st
1.854 shares of common stock, and each share of $1.25
are conditioned upon continued employment, expire
preferred stock is convertible into 2.06 shares of com-
from five to ten years after the grant date, and gener
mon stock. The $5.00 preferred stock is redeemable, at
are exercisable on a cumulative basis at 20 or 25 per
the option of Whittaker, at $100 per share and is enti-
cent each year commencing with the second year. T
tled to preference of $100 per share upon voluntary
following information for the three years ended Oct
liquidation and $50 per share upon involuntary
ber 31, 1982 relates to options granted in 1974 throug
liquidation (aggregate of $6,133,000 at October 31,
1982 under the plans.
1982). There is no restriction on retained earnings re-
sulting from the fact that the preference of the $5.00
Options
preferred stock upon involuntary liquidation exceeds
Outstanding
its stated value. The $1.25 preferred stock is redeem-
in Thousands
Price Ra
able, at the option of Whittaker, at $35 per share and
has no preference in liquidation. The Board of Directors
Balance, October 31, 1979
592
$ 2.99 to $18.00
is authorized to issue preferred stock in series and to fix
Options granted
115
15.00 to 32
dividend rates, conversion rights, voting rights, rights
Options cancelled or expired
(58)
2.99 to 2
and terms of redemption and liquidation preferences
Options exercised.
(144)
2.99 to 19
and to increase or decrease the number of shares of
Options assumed in connection
any series.
with a purchased business
35
8.44 to 20
Common stock reserved for issuance at October 31,
Balance, October 31, 1980
540
2.99 to 32
1982 was as follows:
Options granted
698
29.06 to 49
Shares in
Options cancelled or expired
(79)
6.75 to 49
Thousands
Options exercised
(222)
2.99 to 24.
For conversion of-
$1.25 cumulative convertible preferred stock
45
Balance, October 31, 1981
937
8.45 to 49
$5.00 cumulative convertible preferred stock
228
Options granted
512
19.63 to 36.
Convertible debentures
121
Options cancelled or expired
(648)
13.06 to 49.
For shares issuable in connection with employment
Options exercised
(38)
11.50 to 24.
agreements.
85
For employee stock options
1,433
Balance, October 31, 1982
763
8.45 to 42.9
For employee restricted stock plan
242
For exercise of outstanding warrants
83
At October 31, 1982 options for 136,449 shares were
2,237
exercisable.
Outstanding warrants to purchase common stock at
October 31, 1982 are shown below:
Shares in
Exercise
Expiration
Thousands
Price
Date
50
$19.92
Apr., 1985
33
$29.89
Apr., 1985
83
NOTE 5. Foreign Exchange Translation
Effective with the first quarter of fiscal 1982, Whittaker
come. The adoption of Statement No. 52 resulted in a
adopted new accounting rules as set forth in Financial
reduction in stockholders' equity of $3,455,000 at No-
Accounting Standards Board Statement No. 52, "For-
vember 1, 1981 to reflect the accounting change and an
eign Currency Translation." Under Statement No. 52,
additional $11,038,000 reduction at October 31, 1982 re-
all balance sheet accounts of foreign subsidiaries are
sulting from exchange rate fluctuations during fiscal
translated at the current exchange rate and income
1982. Foreign currency exchange rate fluctuations re-
statement accounts are translated at the average ex-
duced net income in fiscal 1981 by $8,687,000 (56 cents
change rate for the period. Resulting translation adjust-
per share) and increased net income in fiscal 1980 by
ments are made directly to a separate component of
$1,876,000 (13 cents per share). Had these prior two
stockholders' equity. Under the previous accounting
years been restated to give effect to the new standard,
rules, certain balance sheet and income statement
net income would have been increased in 1981 and de-
items were translated at historical exchange rates and
creased in 1980 by such amounts.
all translation adjustments were made directly to in-
NOTE 6. Income Taxes
The following is a summary of the federal, foreign and
The provision for deferred income taxes resulting
state income tax provisions:
from timing differences is comprised of the following:
Year Ended October 31
1982
1981
1980
1982
1981
1980
(In thousands)
Depreciation
$4,230
$1,690
$ 1,583
(In thousands)
Accrued liabilities
598
(2,954)
(3,951)
Components of the provision-
$55,412
$35,595
Foreign earnings to be remitted
992
2,721
(493)
Federal
$39,885
Other items
(696)
2,806
(380)
Foreign
7,131
9,399
10,754
State
4,097
4,748
3,869
$5,124
$4,263
$(3,241)
Investment tax credit
(flow through method)
(3,756)
(1,873)
(2,083)
The tax provisions for 1982, 1981 and 1980 are differ-
$47,357
$67,686
$48,135
ent from amounts computed by applying the U.S. statu-
tory rate to income before provision for taxes. The
Classification of the provision-
reasons for these differences are as follows:
Currently payable
$42,233
$63,423
$51,376
1982
1981
1980
Deferred
5,124
4,263
(3,241)
(In thousands)
$47,357
$67,686
$48,135
Expected tax expense
$48,780
$63,026
$48,594
State taxes, net of Federal
The "Components of the provision-Foreign" repre-
income tax benefit
2,213
2,564
2,089
sents foreign income taxes on earnings of foreign sub-
Foreign exchange (gains) and
sidiaries. Whittaker accrues United States income taxes
losses
-
4,274
(844)
on all earnings of foreign subsidiaries where both the
Investment tax credit
(3,756)
(1,873)
(2,083)
Other items
120
(305)
379
foreign income tax rates are lower than United States
rates and such earnings are intended to be remitted to
$47,357
$67,686
$48,135
Whittaker. Whittaker has no present intention to repa-
The consolidated financial statements do not reflect
triate the accumulated earnings of certain foreign
subsidiaries. Should such accumulated earnings be
significant contingent tax benefits associated with cer-
repatriated, the resulting additional taxes (based upon
tain tax credits arising out of Whittaker's operations,
since realization of such benefits is uncertain. If and to
current tax rates and reduced by credits for foreign taxes
the extent such uncertainties are resolved in Whit-
paid) would approximate $1,750,000 at October 31,
taker's favor, the benefits will be reflected in the con-
1982.
solidated financial statements at the time of resolution.
Domestic income (including income from foreign
operations which is taxable in the United States) of
$89,437,000, $123,633,000 and $78,783,000 for 1982,
1981 and 1980, respectively, is included in Income
before provision for taxes.
NOTE 7. Pension and Retirement Plans
The majority of Whittaker's domestic employees are
Janu
covered by one or more of its several pension and retire-
ment plans. Whittaker bears a substantial portion of
1982
the costs of these various plans and funds the pension
(In thousand
costs accrued in accordance with the Employee Re-
Actuarial present value of accumulated
tirement Income Security Act of 1974 (ERISA). The
plan benefits:
Vested
costs under these plans amounted to approximately
$42,900
$3
Nonvested
$8,921,000 in 1982, $8,915,000 in 1981 and $8,450,000 in
4,500
1980. A comparison of accumulated plan benefits and
$47,400
$4
plan net assets for the Company's domestic defined
Net assets available for benefits
$45,900
$3
benefit plans as of the respective valuation dates is
presented below:
The weighted average assumed rate of return used il
determining the actuarial present value of accumula
plan benefits was 8 percent.
NOTE 8. Leased Assets and Lease Commitments
Whittaker has numerous leases covering real property
Capital
Ope
and equipment.
Leases
I
Property, Plant and Equipment includes the following
amounts for leases that have been capitalized:
(In thousands
Fiscal years ending October 31-
October 31
1983
$ 3,553
$
1982
1981
1984
3,636
1985
4,102
(In thousands)
1986
Land and land improvements
3,038
$ 499
$ 528
1987
Buildings and improvements.
2,335
10,759
11,202
1988 and subsequent
Equipment
11,588
7,057
7,898
Total
28,252
$3
18,315
19,628
Less accumulated amortization
7,021
6,359
Amounts representing interest
9,384
$11,294
$13,269
Present value of net minimum lease
payments
$18,868
The amortization of these assets is included in depreci-
ation expense.
Rental expense for operating leases, net of rental
Future minimum payments under capital leases and
income from subleases, was as follows (in thousand
under noncancellable operating leases, net of rentals to
Fiscal years ended October 31-
be received from existing noncancellable operating sub-
1982
$15
leases, as of October 31, 1982, were as follows:
1981
$13.00
1980
$10
NOTE 9. Commitments and Contingencies
There are various claims and suits pending against
effect on Whittaker's financial position.
Whittaker. Based on an evaluation which included con-
Whittaker has discounted certain receivables and
sultation with counsel concerning the legal and factual
guaranteed certain financing agreements. In connec-
issues involved, management is of the opinion that
tion therewith, Whittaker was contingently liable fo
such claims and suits will not have a material adverse
approximately $8,000,000 at October 31, 1982.
NOTE 10. Business Acquisition
On March 31, 1980, Whittaker purchased for approxi-
eral Medical are included in the consolidated results
mately $30 million in cash and assumption of lia-
operations since the date of acquisition. Had Genera
bilities the operating assets of General Medical
Medical been acquired by Whittaker prior to the beg
Corporation, a domestic distributor of medical, surgical
ning of fiscal 1980, the pro-forma combined sales for
and laboratory products to the healthcare industry. In
1980 would have been approximately $1,513 million.
addition, Whittaker advanced General Medical approxi-
Net income, after reflecting appropriate adjustments
mately $10 million, on a non-recourse basis, against its
would not have been materially different than as
claim for tax refunds. The results of operations of Gen-
reported.
42
NOTE 11. Business Segments
A summary of information about Whittaker's operations by business segment and geographic area at October 31,
1982, 1981 and 1980 and for the fiscal years then ended follows:
Financial Data by Business Segment (in millions of dollars)-
Depreciation
and
Operating
Identifiable
Amortization
Capital
1982
Sales
Profit
Assets
Expense
Expenditures
Life Sciences
$ 917.0
$ 87.4
$237.8
$ 5.5
$14.4
Metals
267.3
9.0
228.9
6.3
29.1
Technology
268.1
22.3
172.4
3.9
7.9
Marine
131.5
6.3
83.9
2.8
3.7
Chemicals
89.7
5.6
52.8
2.6
3.1
Corporate
-
-
143.9
.7
1.3
Consolidated
$1,673.6
$130.6
$919.7
$21.8
$59.5
1981
Life Sciences
$ 744.0
$ 65.5
$211.3
$ 4.4
$ 8.8
Metals
394.7
51.5
221.3
5.1
13.5
Technology
270.2
19.6
182.7
4.4
5.4
Marine
147.1
16.3
94.0
2.7
5.2
Chemicals
115.8
11.2
65.5
2.7
5.4
Corporate
-
-
92.3
.6
.9
Consolidated
$1,671.8
$164.1
$867.1
$19.9
$39.2
1980
Life Sciences
$ 478.0
$ 46.7
$165.4
$ 3.1
$ 9.4
Metals
376.0
35.6
177.5
4.5
12.2
Technology
284.7
34.9
202.0
4.1
5.6
Marine
136.7
12.6
74.6
2.1
4.7
Chemicals
120.8
2.3
75.4
2.8
5.1
Corporate
-
-
89.6
.6
.1
Consolidated
$1,396.2
$132.1
$784.5
$17.2
$37.1
Sales of medical, surgical and laboratory products to
Sales to agencies of the Government of Saudi Arabia,
the healthcare industry, included in the Life Sciences
made under various contracts and included in the Life
segment, were $410.9 million in 1982, $372.8 million in
Sciences segment, amounted to $378.8 million in 1982,
1981 and $189.0 in 1980. Sales of hydraulic devices, in-
$278.1 million in 1981 and $213.0 million in 1980. The
cluded in the Technology segment, were $162.2 million
Saudi Arabian health care program, which presently ex-
in 1982, $172.7 million in 1981 and $191.1 million in
tends through August 1983, represents a significant ele-
1980.
ment of Whittaker's life sciences business, and its loss
would have a material adverse effect on the Company.
Financial Data by Geographic Area
Approximately 40% of Whittaker's 1982 sales are to
(in millions of dollars)-
Operating
Identifiable
customers outside of the United States. Approximately
1982
Sales
Profit
Assets
90% of those sales are accounted for by foreign oper-
United States
$1,055.4
10.5
$605.9
ations. Such operations are subject to certain influences
Western Europe
171.6
14.4
117.2
not normally experienced in domestic operations, such
Middle East
446.6
105.7
52.7
as currency fluctuations, currency control regulations
Corporate
-
-
143.9
and the effect of international relations.
Consolidated
$1,673.6
$130.6
$919.7
Following is a reconciliation of operating profit to in-
1981
come before provision for taxes (in millions of dollars):
1982
1981
1980
United States
$1,154.2
$ 70.6
$607.8
Western Europe
183.9
13.0
131.1
Operating profit.
$130.6
$164.1
$132.1
Middle East
333.7
80.5
35.9
Unallocated corporate items
(13.9)
(14.2)
(12.7)
Corporate
-
92.3
Interest expense, net
(10.7)
-
(12.9)
(13.8)
Consolidated
$1,671.8
$164.1
$867.1
Income before provision for taxes
$106.0
$137.0
$105.6
1980
United States
Operating profit of an industry segment represents its
$ 941.9
56.9
$520.0
Western Europe
198.1
revenues minus all operating expenses. None of the fol-
26.1
152.0
Middle East
256.2
49.1
22.9
lowing, if present, is taken into account in computing
Corporate
-
-
89.6
the operating profit or loss of an industry segment: rev-
Consolidated
enue earned at the corporate level; general corporate
$1,396.2
$132.1
$784.5
taxes; equity in income or loss from unconsolidated
during 1981 by $6.6 million and $1.6 million, respec-
subsidiaries and other unconsolidated investees;
tively, and increased the Technology segment operating
gain or loss on discontinued operations; extraordinary
profits during 1980 by $1.9 million. Operating profits o
items; and the cumulative effect of a change in ac-
the Western Europe geographic area were reduced by
counting principles. In 1982, operating profits have
$8.2 million in 1981 and increased by $1.9 million in
been reduced by minority interests relating to seg-
1980. As a result of Whittaker's 1982 adoption of Finan
ments and geographic areas. Prior year operating profits
cial Accounting Standards Board Statement No. 52,
have been restated to conform to the current year
"Foreign Currency Translation," adjustments relating to
presentation.
foreign currency exchange rate fluctuations did not
Foreign currency exchange rate fluctuations reduced
impact operating profit in 1982. See Note 5.
the Technology and Marine segments operating profits
NOTE 12. Quarterly Financial Data (Unaudited)
Summarized quarterly financial data (in millions of dollars except for per share amounts) for 1982 Fourth and 1981 follows:
First
Second
Third
1982
Quarter
Quarter
Quarter
Quarter
Ye
$421.6
$419.7
$1,673
Sales
$404.4
$427.9
Cost of sales
308.6
324.5
327.6
337.5
1,298
Net income
18.2
18.0
14.5
8.0
58
Earnings per share
$ 1.14
$ 1.12
$ .93
$ .58
$ 3.
1981
Sales
$382.2
$443.0
$433.9
$412.7
$1,671
Cost of sales
300.5
348.0
341.5
315.7
1,305
69
Net income
14.7
18.6
16.9
19.1
Earnings per share
$ .95
$ 1.19
$ 1.05
$ 1.21
$ 4.
If the change in method of accounting for foreign cur-
lion ($.03 per share); second quarter, $3.2 million ($.21
rency translation adopted in 1982 (see Note 5) had been
per share); third quarter, $3.8 million ($.24 per share);
adopted in 1981, quarterly net income for that year
and fourth quarter, $1.2 million ($.08 per share).
would have increased as follows: first quarter, $.5 mil-
NOTE 13. Supplemental Information on the Effects of Changing Prices (Unaudited)
INTRODUCTION
ing prices, namely: (1) the effect of specific price
The following supplementary information is presented
changes on inventories and properties and related cost
in accordance with the requirements of the Financial
of sales and depreciation expense, and (2) the effect of
Accounting Standards Board Statement No. 33 "Finan-
general inflation on monetary assets and liabilities.
cial Reporting and Changing Prices" and its amend-
INCOME STATEMENT
ment Statement No. 70 "Financial Reporting and
The accompanying supplemental information present
Changing Prices: Foreign Currency Translation." The
income and expense data under the following two
disclosures are intended to provide information con-
measurement methods:
cerning the effects of inflation on certain elements of
a) As Reported in the Primary Financial Statements-
financial statements utilizing the current cost method
These amounts are those reported in the primary
of measurement. Information concerning the effects of
financial statements on the historical cost basis of
inflation utilizing the constant dollar method of meas-
accounting in accordance with generally accepted a
urement is not required (pursuant to Statement No. 70)
counting principles.
since a significant portion of Whittaker's operations are
b) Adjusted for Changes in Specific Prices (Current
measured in foreign currencies.
Costs)-The current cost method adjusts historical
Current cost data addresses the effect of specific price
financial data to reflect the changes in specific pric
changes related to the individual assets used by the
of resources used in the Company's operations. Cu
Company. This method involves assumptions, approxi-
rent costs of Property, Plant and Equipment were d
mations and estimates, and therefore the results ob-
termined by applying appropriate published indices
tained by applying this method should not be taken as
to historical costs. Current cost of depreciation wa
any precise measure of the effect of inflation.
calculated on a straight-line basis using the same e
The information presented does not reflect a compre-
timated useful lives as utilized in the primary
hensive application of inflation accounting. Statement
financial statements.
No. 33 focuses on those items most affected by chang-
44
The current costs of inventory and cost of sales
realized by replacing existing assets with technologi-
(exclusive of depreciation) were calculated utilizing
cally superior assets.
various methods, including the updating of standard
Adjustments to the current cost information to re-
costs to reflect current costs and the application to
flect the effects of general inflation for both domestic
historical costs of internally constructed indices
and foreign operations are based upon the United
based upon price movements of representative ele-
States Consumer Price Index-Urban (CPI-U).
ments of inventory and cost of sales.
All amounts related to inventories and property,
In compliance with Statement No. 33, net income, as
plant and equipment of foreign subsidiaries were
restated for the effect of inflation, does not reflect any
translated into dollars at exchange rates in effect at
adjustment for reduced income taxes resulting from the
year-end; amounts related to cost of sales and depre-
increase in cost of sales and depreciation expense.
ciation expense were translated into dollars using
annual average exchange rates.
PURCHASING POWER GAIN FROM HOLDING NET
The current cost amounts reported are the results
MONETARY LIABILITIES
of the estimating procedures described above, are by
their nature imprecise and are not necessarily indica-
During periods of inflation, the holding of monetary
assets such as cash and receivables results in a loss of
tive of either the amounts for which the assets could
be sold or management's intention to replace such
general purchasing power. Likewise, monetary liabili-
ties such as payables and debt generate a gain in general
assets. Current costs are not necessarily indicative of
purchasing power because the settlement of such
costs which would actually be incurred if existing as-
sets were in fact replaced, since total replacement in
liabilities will be with dollars of diminished purchasing
power. During the current year Whittaker was in a net
kind would be unlikely. Moreover, the calculations
do not reflect the economic benefit which would be
monetary liability position and, as a result, experienced
a purchasing power holding gain.
STATEMENT OF INCOME ADJUSTED FOR CHANGING PRICES
YEAR ENDED OCTOBER 31, 1982
(In millions of dollars, except per share data)
Net income, as reported in primary financial statements
$ 58.7
Adjustments to restate costs for the effect of changes in specific prices (current costs)-
Cost of sales
$8.1
Depreciation
7.5
15.6
Net income adjusted for changes in specific prices
$ 43.1
Net income per share-primary
As reported in primary financial statements
$ 3.77
Adjusted for changes in specific prices
$ 2.76
OTHER INFORMATION
Purchasing power gain from holding net monetary liabilities during the year
$ 3.3
Increase in specific prices (current cost) of inventory and property, plant
and equipment held during the year*
Effect of increase in general price level
$ 20.8
$ 28.0
Excess of increase in general price level over increase in specific prices
$ 7.2
Net assets at year-end
As reported in primary financial statements
$335.1
Adjusted for changes in specific prices
$416.9
Aggregate translation adjustment
17.5
Depreciation expense
As included in primary financial statements
19.9
Adjusted for changes in specific prices
27.4
*At October 31, 1982 current cost of inventory was $282.8 million and current cost of property, plant and equipment, net of accumulated
depreciation was $268.3 million.
FIVE YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR THE EFFECTS
OF CHANGING PRICES
All amounts in the five year comparison are stated in
prior to 1980 have been omitted pursuant to the provi-
terms of average (constant) 1982 dollars as measured by
sions of Statement No. 33. The aggregate translation
the CPI-U. Accordingly, the data reported for prior years
adjustment is not reported for years prior to 1982 pursu-
have been adjusted upward by a factor representing sub-
ant to the provisions of Statement No. 70.
sequent general inflation. Certain data relating to years
(In millions of dollars, except per share data)
1982
1981
1980
1979
197
Years Ended October 31,
$1,673.6
$1,788.3
$1,656.3
$1,447.1
$1,317.9
Sales
Current Cost Data
43.1
64.7
42.1
-
Net income
Net income per share
2.76
4.11
2.83
-
Excess of increase in general price level over increase in speci-
fic prices of inventory and property, plant and equipment
7.2
48.9
28.8
—
416.9
468.2
452.3
-
Net assets at year-end
Aggregate translation adjustment
17.5
-
-
—
Purchasing power gain from holding net monetary
3.3
7.5
11.1
I
-
liabilities during the year
Dividends per common share
1.60
1.50
1.19
.58
.3
Market price per common share at fiscal year-end
24.38
41.04
34.09
19.41
15.5
Average consumer price index
287.1
268.4
242.0
213.1
192.
Whittaker Corporation & Consolidated Subsidiaries
AUDITOR'S REPORT
To the Shareholders and Board of Directors
Whittaker Corporation
We have examined the consolidated balance sheets of
In our opinion, the 1982 and 1981 consolidated
Whittaker Corporation and consolidated subsidiaries
financial statements referred to above present fairly
as of October 31, 1982 and 1981, and the related consoli-
the consolidated financial position of Whittaker
dated statements of income, stockholders' equity and
Corporation and consolidated subsidiaries at October
changes in financial position for the years then ended.
31, 1982 and 1981, and the consolidated results of their
Our examinations were made in accordance with gen-
operations and changes in their financial position for
erally accepted auditing standards and, accordingly,
the years then ended, in conformity with generally
included such tests of the accounting records and such
accepted accounting principles applied on a consistent
other auditing procedures as we considered necessary
basis and on a basis consistent with that of the year
in the circumstances. The financial statements of
ended October 31, 1980 except for the change, with
Whittaker Corporation and consolidated subsidiaries
which we concur, in the method of accounting for for-
for the year ended October 31, 1980 were examined by
eign currency translation as described in Note 5 to the
other auditors whose report dated December 19, 1980,
consolidated financial statements.
expressed an unqualified opinion on those statements.
Ernst & Whinney
Los Angeles, California
46
December 17, 1982
Whittaker Corporation & Consolidated Subsidiaries
DIRECTORY OF PRODUCTS AND SERVICES
WORLD HEADQUARTERS
Whittaker Medical International
Winters Industries
Whittaker Corporation
5711 Staples Mill Road
4125 Mahoning Road, N.E.
10880 Wilshire Boulevard
Richmond, VA 23228
Canton, OH 44705
Los Angeles, CA 90024
Phone: (804) 264-2962
Phone: (216) 456-4321
Phone: (213) 475-9411
Telex: 827316 LIFE SCI RCH
Principal Products: Aluminum sand
Telex: 674891
Principal Services: Equipment and
and permanent mold castings; finish-
supplies procurement for healthcare
machining.
LIFE SCIENCES
facilities internationally.
TECHNOLOGY
M.A. BioProducts
Whittaker Medicus, Inc.
Acrodyne Industries
Building 100
990 Grove Street
516 Township Line Road
Biggs Ford Road
Evanston, IL 60201
Blue Bell, PA 19422
Walkersville, MD 21793
Phone: (312) 866-1500
Phone: (215) 542-7000
Phone: (301) 898-7025
Telex: 206068
Telex: 846358
Telex: 893446
Principal Products and Services:
Principal Products: Low-power televi-
Principal Products: Clinical diagnostic
Spectra computerized financial, hospi-
sion transmitters and translators.
test kits; nutrient media and sera;
tal, and medical information systems
tissue cultures; viral diagnostic
for healthcare institutions; manage-
Agri-Systems
reagents.
ment consulting, financial planning,
760 East Las Posas Road, Suite B1
materials management, and data proc-
Camarillo, CA 93010
Microbiological Associates
essing services for healthcare
Phone: (805) 484-7996
5221 River Road
Bethesda, MD 20816
institutions.
Principal Products: Hydroponic farming
systems.
Phone: (301) 654-3400
METALS
Principal Services: Contract
Bennes Marrel S.A.
biomedical research and testing.
Berwick Forge
Zone Industrielle
& Fabricating Division
42160-Andrézieux-Bouthéon, France
ToxiGenics
P.O. Box 188
Phone: (77) 36 55 50
1800 East Pershing Road
Berwick, PA 18603
In the U.S.: (201) 842-9346
Decatur, IL 62526
Phone: (717) 752-2784
Telex: 330657, 330806
Phone: (217) 875-3930
TWX: 510-655-6420
Principal Products: Truck tipping
Telex: 250139
Principal Products: Railroad freight
bodies and packing units; bulk
Principal Services: Toxicological
cars and forgings.
handling equipment; solid waste han-
testing; product efficacy studies.
Fort Worth Pipe Company
dling and compacting systems; airport
Whittaker General Medical
P.O. Box 2108
service and maintenance equipment;
P.O. Box 27452
Fort Worth, TX 76113
hydraulic power and control systems;
Richmond, VA 23261
Phone: (817) 921-6261
power steering and power transmission
Phone: (804) 264-7500
Telex: 758224
equipment.
TWX: 710-956-0117
Principal Products: Oil country tubular
Bermite
Principal Products and Services:
goods and oil field supplies; pipe and
22116 West Soledad Canyon Road
Comprehensive line of supplies and
fittings for industrial use.
Saugus, CA 91350
equipment for medical, surgical and
Juster Steel Division
Phone: (805) 259-2241
clinical laboratory use; hospital
625 Xenium Lane North
TWX: 910-336-1117
materials management systems and
services.
Minneapolis, MN 55441
Principal Products: Electrochemical
Phone: (612) 544-7100
devices and propulsion systems; flares;
International Life Sciences
Principal Products: Extensive line of
igniters; initiators; fuses; pyrotechnic
1777 North Kent Street
ferrous and non-ferrous metals.
devices.
Arlington, VA 22209
Technibilt Division
Electronic Resources
Phone: (703) 276-3500
One West Alameda Avenue
100 East Tujunga Street
Int'l Telex: 440134
Domestic Telex: 901918
Burbank, CA 91502
Burbank, CA 91502
Principal Services: Development and
Phone: (213) 849-3171
Phone: (213) 843-5770
Principal Products: Shopping carts; fab-
Principal Products: High temperature
implementation of comprehensive
healthcare programs; hospital
ricated wire products.
coaxial cables; electronic components
management services.
Whittaker Metals, Inc.
and subsystems; mechanical and elec-
tonic counters.
P.O. Box 40812
Houston, TX 77040
Falcon Research
Phone: (713) 869-8661
109 Inverness Drive East
TWX: 910-881-2730
Englewood, CO 80112
Principal Products: Steel rod, bar and
Phone: (303) 771-0818
tubing; stainless steel; oil tool steel.
Principal Products and Services: Re-
Whittaker Steel Strip Division
search and development; computer
20001 Sherwood Avenue
simulation studies; high-speed
Detroit, MI 48234
photography.
Phone: (313) 893-5000
Telex: 230409
Principal Products: Cold rolled strip
and spring steel; hot rolled and cold
rolled sheet coil; steel plate, bars and
shapes.
Whittaker Corporation & Consolidated Subsidiaries
DIRECTORY OF PRODUCTS AND SERVICES
Tasker Systems Division
Survival Systems Division
20131 Sunburst Street
Haynes Coatings Division
5159 Baltimore Drive
Massachusetts Industrial Park
Chatsworth, CA 91311
La Mesa, CA 92041
Chicopee, MA 01020
Phone: (213) 341-3010
Phone: (619) 469-0171
Phone: (413) 592-4191
Telex: 651329
Telex: 695440
Telex: 955340
Principal Products: Tactical radar jam-
TWX: 910-322-1341
Principal Products: General industrial
mers; electronic components and sub-
Principal Products: Marine survival sys-
and specialty coatings.
systems; air traffic control systems;
tems; reinforced and laminated plastic
antenna tracking devices; radar simula-
Heico Division
structures.
tors; radar tracking devices.
Delaware Water Gap, PA 18327
Trojan Yacht Division
Whittaker Controls
Phone: (717) 476-0353
P.O. Box 3571
Principal Products: High-purity chem
12838 Saticoy Street
Lancaster, PA 17603
North Hollywood, CA 91605
cal intermediates; photographic
Phone: (717) 397-2471
chemicals.
Phone: (213) 765-8160
Telex: 848427
TWX: 910-499-2659
Principal Products: Motor cruisers;
North Brunswick Coatings &
Principal Products: Valves, actuators
motor yachts; sport fishermen.
Chemicals Division
and pumps for aircraft hydraulic, pneu-
1430 Jersey Avenue
matic and fuel systems; electronic
CHEMICALS
New Brunswick, NJ 08902
proximity switches.
Batavia Coatings Division
Phone: (201) 545-9601
Yardney Electric Corporation
1500 Lathem Street
Principal Products: Coil coatings; bev
82 Mechanic Street
Batavia, IL 60510
erage can coatings; plastisols; indus-
Pawcatuck, CT 06379
Phone: (312) 879-6800
trial and custom coatings; container
Phone: (203) 599-1100
TWX: 910-236-0948
end-sealing compounds.
TWX: 710-470-0260
Principal Products: Coil coatings; bev-
Providence Chemicals
Principal Products: High-energy-density
erage can coatings; wood finishes; con-
King Philip Road
batteries; high-intensity portable lights;
tainer linings; automotive/appliance
East Providence, RI 02914
battery chargers and control systems;
finishes; plastisols; industrial and cus-
Phone: (401) 434-1770
marine emergency beacons; irrigation
tom coatings.
Telex: 927652
system filters.
Bauer Coatings Division
Principal Products: Industrial and
1021 North Mission Road
packaging plastisols; customer-formu-
MARINE
Los Angeles, CA 90033
lated urethane products; synthetic
Bertram Yacht Division
Phone: (213) 225-4154
flooring materials.
3663 N.W. 21st Street
Principal Products: Highway striping
Ram Chemicals Division
Miami, FL 33142
enamels.
P.O. Box 192
Phone: (305) 633-8011
Colton Coatings Division
Gardena, CA 90248
Telex: 519268
P.O. Box 825
Phone: (213) 321-0710
Principal Products: Motor yachts; sport
fishermen; patrol and crew boats.
Colton, CA 92324
Principal Products: Pigment disper-
Phone: (714) 825-6292
sions; mold release agents; polyester
Cantieri Riva, S.p.A.
Principal Products: Coil coatings; bev-
resins; specialty coatings; peroxide
24067 Sarnico (Bergamo)
erage can coatings; wood finishes; auto-
catalysts; fiberglass reinforcements;
Italy
motive/appliance finishes; container
RTV mold-making compounds.
Phone: (035) 910-202
linings; plastisols; industrial and cus-
Whittaker Coatings
Telex: Rivaboat 300183
tom coatings.
Research Center
Principal Products: Power boats; motor
yachts.
Dayton Chemicals Division
1231 South Lincoln Street
P.O. Box 27
Colton, CA 92324
Desco Marine Division
West Alexandria, OH 45381
Phone: (714) 825-6292
P.O. Box 1480
Phone: (513) 839-4612
Principal Products: Chemical coatings
St. Augustine, FL 32084
TWX: 810-450-2611
development.
Phone: (904) 824-4461
Principal Products: Rubber-to-metal
Wind Specialty Division
Telex: 568451
bonding agents; polyurethane molded
7 Sylvan Street
Principal Products: Commercial fishing
products; custom mixing and coating.
Brockton, MA 02402
trawlers.
Decatur Coatings Division
Phone: (617) 586-1281
Kettenburg Marine Division
Decatur Industrial Park
Principal Products: Plastic extrusions.
2810 Carleton Street
P.O. Box 2238
Wooster Coatings Division
San Diego, CA 92106
Decatur, AL 35602
P.O. Box 382
Phone: (619) 224-8211
Phone: (205) 355-5440
Wooster, OH 44691
Telex: 697989
Principal Products: Coil coatings; bev-
Phone: (216) 262-3075
Principal Products and Services: Marine
erage can coatings; automotive/appli-
Principal Products: Coil coatings.
and industrial supplies; custom boat-
ance finishes; plastisols; industrial and
building and repair; marine research
custom coatings.
and development.
Duall Plastics Division
764 South Athol Road
Athol, MA 01331
Phone: (617) 249-2371
Principal Products: Plastic extrusions.
4
ADOLPH COORS COMPANY
1873
GOLDEN, COLORADO,
fele
ROBERT C. WALKER
PLEASE REPLY TO:
Vice President, National Affairs
Adolph Coors Company
(202) 547-2050
214 Massachusetts Ave., N.E.
Suite 530
DETERMINED TO BEAN
Washington, D.C. 20002
ADMINISTRATIVE marking
E.O. 12958, Sec 1.3(a)
LODB
By NARA
Date 6/16/11
February 14, 1984
PERSONAL AND CONFIDENTIAL
Mr. Michael K. Deaver
Assistant to the President
and Deputy Chief of Staff
The White House
Washington, DC 20500
Dear Mike:
Please come to the realization that Joe and you would make an
excellent team because of your respective talents and alliances.
You are a true moderate while he is a philosophic and leadership
conservative; you are an expert at managing the President while
Joe is an expert at managing large enterprises and thousands of
people; you are relatively young with the special understanding
of your generation while Joe is a "senior" now with the wisdom
gained from a lifetime of involvement in business, social, and
political affairs; both of you love Ronald Reagan and Nancy and
have since the 60's. If put together in the same harness you
would pull together, I am certain, in their best interest. Con-
trary to some stories, you and Joe would get along. There would
not be in-fighting and contention, because you would respect
each other for his dedication to the President and Nancy and
their well being.
Michael, it is in your personal interest to have a well known
conservative as an ombudsman, among other functions. These
three years Joe has actively put down conservatives who have
disagreed publicly with the President. He is the one major
leader who has stuck with you on all issues. Joe is on the side
of the President; always has been, always will be. You need
someone like him; but there is no one who could fulfill the role
as well, vis a vis conservatives, than Joe.
Mr. Michael K. Deaver
-2-
February 14, 1984
Don't put Joe down too definitely, Mike. Open your mind enough
to at least initiate a meeting with him on the subject.
It is in no one's good interest for the whole conservative con-
stituency to be raising hell all year long about being shut out
of the White House.
Best personal regards,
Robert Very truly yours,
Robert C. Walker
RCW/nwc