True fact (humor in the financial press): A very large government contractor (VLGC) is involved in a proxy fight with a questionable outside investor (QOI). The QOI published the following in a large number of big city newspapers (BCNs). It quotes statements from the VLGC's annual statement and the QOI's translation... quote [VLGC] says Our translation We characterize 1989 as a transitional year which prepared us for strong 1989 was a bad year financial performance in 1990 and beyond. [VLGC]'s sales increased slightly when Sales are down $541 million. adjusted for completion of the <plane 1> But they're up if you count program. business we don't have anymore. A third initiative centers on our efforts to attract commercial aircraft sub- contracting work to our facilities in We still haven't found a Georgia. We are continuing discussions replacement business for the with potential customers and expect to <plane 1>. build this base significantly. The write-offs are expected to cover excess The write-offs will be even costs to completion after estimated pricing higher unless the govern- adjustments and contract changes. ment agrees to rewrite the contracts. Absent the write-off on the <plane 2> air- Profit margins are down. But craft modification program margins also they are up if you don't improved for the technology services group. count the business we lost money on. The stock buy-back program to recover from the market share equivalent to those issued We stopped buying back shares to the ESOP was suspended in 1989, pending because we were running out clarification of the timing of cash require- of money. ments related to the 1989 write-offs. There are hundreds of ongoing programs Our funded backlog keeps going throughout [VLGC] that form a solid business down: base. Many of the programs extend well into the future. Ordinarily, because of the method 1986 $9.7 billion of funding of government programs, they do 1987 $8.4 billion not appear in the backlog beyond the current 1988 $7.4 billion year. 1989 $7.1 billion Early this year, we agreed with the customer that work on future phases of this program We got fired. will be performed by another supplier. Regarding the <plane 3>, several factors have occasioned design and schedule difficulties in developing the aircraft. Significant among these factors was an expectation of a high We bid on the wrong plane. degree of commonality with the <plane 4> which turned out not to be attainable due to other performance characteristics required by the Navy. unquote.
(From the "Rest" of RHF)