WHITTAKER CORP. TO BUY NETWORKING FIRM.

Byline: Terry Kanakri Daily News Staff Writer

Whittaker Corp. announced Monday that it has agreed to acquire a communications company that will make it one of the world's top producers of communications networking products.

The acquisition of Xyplex Inc. from Raytheon Co. of Lexington, Mass., is the second major communications acquisition of the Simi Valley-based company in less than a year, officials said.

"With Xyplex, we are gaining a combination of products, technology, quality distribution channels and a worldwide customer base that gives Whittaker added critical mass and a strong market position to compete on a global scale in this fast-growing industry," said Thomas A. Brancati, president and chief executive officer of Whittaker Corp.

"The business fit is ideal," Brancati added. "We now have the ingredients to make Whittaker a powerhouse in the communications networking industry. This move is in keeping with our strategy to create and grow as a well-balanced company operating in two principal business segments, aerospace and communications."

Under terms of the agreement, Whittaker will acquire from Raytheon all the capital stock of Xyplex for $117.5 million - $67.5 million in cash and $50 million in Whittaker stock, officials said.

Xyplex is the industry's second largest supplier of terminal servers, officials said. In 1994, the firm was recognized and honored by the industry consulting firm IDC as the fastest-growing provider of remote access products and systems.

Completion of the acquisition is subject to the satisfaction of certain conditions and approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Whittaker Corp. is a global company that provides products and services with a high technology or engineering content to the aerospace and communications markets. The company has about 450 employees in Simi Valley.

The Xyplex acquisition follows the April 1995 Whittaker purchase of Hughes LAN Systems, the high-speed networking and Asynchronous Transfer Mode (ATM), which is a high-speed technology that combines video, voice and data over fiberoptic cable, officials said.

The former Hughes unit was renamed Whittaker Communications. Whittaker Communications is the largest computer network integrator of hospitals in the United States with over 370 systems installed, officials said.

James B. Schultz, Whittaker Corp.'s director of business development, said the Xyplex acquisition enhances Whittaker's high-speed switching and communications networking market with the addition of new products, technology and distribution channels.

Schultz said the acquisition is the latest in Whittaker's strategy to become less dependent on government contracts for aerospace and defense projects, and continue its efforts to become more diversified.

"We wanted to reduce our dependence on government contracts, and this acquisition is another step in our strategy to balance and grow our company away from reliance on government contracts," Schultz said.

That strategy has worked. Three years ago, about 80 percent of Whittaker's business was derived from aerospace and defense government contracts. Today, the company only relies on government contracts for 25 percent of its business.

The Xyplex product line includes high-speed internetworking equipment that can link one computer network to another, officials said. Whittaker Communications makes switches and "hubs" that form the backbone of a computer network.

"Between Xyplex and Whittaker Communications, we now have a full complement of competitive, technology-packed products of the type our customers are demanding to maintain their competitive edge and serve their industries," said Whittaker President Brancati.

Schultz said the acquisition will enable Whittaker to offer its customers lower-end communications products with fewer features and functions for remote and small branch offices.

In the past, Whittaker had to buy such products from third parties before selling them to its customers, he said. The acquisition now will improve Whittaker's profit margin, and also will help the company to market its products since Xyplex is wired with more than 270 resellers, distributors and system integrators, thus improving the marketing channels.

"It will reduce the cost of doing business so that we become more competitive in business," Schultz said.

With the acquisition of Xyplex, Whittaker will derive nearly 60 percent of its revenues from communications over the next 12 months, compared with 23 percent a year ago, Schultz said.

Adding Xyplex to Whittaker will increase the company's total revenues substantially, officials said. Xyplex had sales of $107 million in 1995, while Whittaker had sales of $159.5 million in fiscal 1995 ending Oct. 31.

"We're very excited about what this (acquisition) means," Schultz said. "The company will grow in a very balanced way along our aerospace line business as well as our growing communications side of the company."