PRC Emerges Stronger With Parent Litton

Despite two leadership changes in the last six months, PRC's prospects look good

Len Pomata's tenure as president of PRC Inc. started with a bang - literally. On his first day, Pomata purposefully strode into his office at 6 a.m. and unintentionally tripped the security alarm. Moments later a security guard appeared ready to fend off a would-be burglar.

The issue was resolved without incident. While it may have been hard for some people to settle down and get to work, it wasn't for Pomata. He is following a friend's philosophy - stay calm and move forward; don't look back - to cope with change.

And there have been a lot of changes recently at PRC. In December, Litton Industries Inc., Woodland Hills, Calif., announced its intent to purchase the firm from Black and Decker for $425 million. Once the sale was complete in February, former PRC CEO Jim Leto stepped down to make room for Bill Hoover, then PRC president. After the sale there was no longer a need for an independent PRC chief executive officer, so Hoover continued in his role as president.

"I literally sold myself out of job," Leto said.

But the turnover at PRC didn't stop. In late May, Hoover announced plans to join BDM International Inc., McLean, Va. Phil Odeen, BDM president and CEO, had been trying to persuade his friend to join the company for some time. The changes at PRC gave Odeen the opportunity to lure Hoover as executive vice president and president and CEO of BDM Federal.

The stage was then set for 14-year PRC veteran Pomata to become head of the firm. He most recently served as senior vice president and general manager of PRC's systems integration unit.

The top management changes in the past six months have not dampened the business outlook for PRC. "My guess is that five years from now PRC will be a $2 billion corporation within Litton," said Leto. PRC's 1995 sales totaled approximately $712 million.

The two companies could emerge very strong because of their complementary hardware and software capabilities, said Moshi Katri, a senior equity analyst with New York-based Oppenheimer & Co. Many industry professionals were puzzled by Litton's acquisition because the company does not have a strong professional services division. But Litton will be using PRC to increase its government presence - and that will mean PRC will have to bid for more high-margin contracts, Katri said.

Most of Litton's revenues are from command, control and communication applications for defense systems. Litton plans to showcase its acquisition of PRC by renaming its command, control and communication division the Information Technology Group, effective Aug. 1.

PRC officials are excited about the support coming from Litton, said Pomata. There is a synergy that did not exist with its previous parent Black & Decker, Pomata said. "I like to say that we put the IT in Litton," he said.

Acquisitions are one route Litton is encouraging PRC to explore. PRC is eyeing companies that complement its technology development and those that can help it develop a channels network to sell to the government, said Pomata.

Such acquisitions may offer strategic value that will help develop long-term revenue growth. "It's a situation where one plus one equals three," said Pomata. He hinted that some acquisitions would be announced shortly, but declined to offer specifics.

Black and Decker did not allow PRC to pursue acquisitions - it viewed PRC as an investment designed to grow the parent company's core business, said Pomata.

"Any money that I earned they took," said Leto. "If Black and Decker had a nickel to invest, they would build the production capacity for snake lights. They certainly weren't going to allow PRC to buy software companies. Their whole fiscal policy was confiscatory," he said.

Litton's strategy, which is markedly different, is "a tremendous opportunity for PRC employees," said Leto.

Right now, officials from the two companies are defining limits and exploring areas where they can develop synergies. Litton is open to letting PRC do business the way it always has - there is no attempt to change the company's culture, said Pomata. In fact, Litton may try to absorb some PRC policies. For example, PRC uses a 360-degree process for employee evaluations in which a representative circle of employees surrounding a person participates in the evaluation process. This means that not only does a supervisor comment on a person's performance, so do their peers and the people they supervise.

While the adjustment period with Litton will continue, Pomata does not see the recent executive level turnaround as a problem. PRC has had a stable senior management team in place for several years. That team helped arrange the sale and understands PRC's goals, he said.

At a personal level, Pomata says he has to stop being a team player and start being a team captain that looks at the big picture. He also must get used to his new office's alarm system.

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