<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 1994
Commission file number 0-7438
DYNATECH CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2258582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3 New England Executive Park
Burlington, Massachusetts 01803-5087
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (617) 272-6100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.20 per share
(Title of class)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. {X}
At May 13, 1994 the aggregate market value of the Common Stock of the
registrant held by non-affiliates was $149,487,642.
At May 13, 1994 there were 9,297,009 shares of Common Stock of the
registrant outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1994 Annual Report to Shareholders are incorporated by
reference in Parts I and II.
Portions of the proxy statement for the 1994 Annual Meeting of
Shareholders are incorporated by reference in Part III.
<PAGE> 2
PART I
Item 1. BUSINESS
Incorporated in Massachusetts in 1959, Dynatech Corporation (the
"Company") has its principal offices at 3 New England Executive Park,
Burlington, Massachusetts 01803. Production facilities are located in
sixteen states and two Western European countries.
As part of an ongoing management process of reviewing the contribution
of our businesses to strategic Corporate plans, the Company adopted a formal
plan which included a series of streamlining and restructuring actions and
discontinuance of certain nonstrategic business units. These actions resulted
in pretax charges of approximately $50 million recorded in the fourth quarter
ended March 31, 1994. Specific reference is made to the information contained
on the Section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Notes to Consolidated Financial
Statements in the Company's 1994 Annual Report.
These actions take the form of separating businesses into two business
segments: Information Support Products and Diversified Instrumentation. These
areas are described below.
INFORMATION SUPPORT PRODUCTS
The Information Support Products segment is focused on the support of
voice, data and video communications, with related product categories of
Transmission products, Generation products, and Presentation products.
Transmission Products
Telecommunications Techniques Corporation supplies innovative test and
measurement instruments used in the development, installation, and maintenance
of sophisticated telecommunications networks. The Telecom Test Division
manufactures a wide range of portable instruments and permanently located
systems which include the T-BERD(TM), CENTEST(TM) and FIBERSCAN(TM) product
lines. The CEPT Telecom Division, manufactures the INTERCEPTOR product line
of test instruments used primarily to support transmission standards specific
to certain international telecommunications networks. The Network Services
Group manufactures portable multi-function instruments, including the FIREBERD
product line of multi-functional digital communications analyzers.
The T-BERD product line was developed for testing needs related to the
T-Carrier, or North American digital telecommunications standard. This line
of portable test instruments contains a wide range of products designated by
three numbering series: 100,200 and 300. The 100 series primarily consists
<PAGE> 3
of handheld, battery operated instruments utilized by local and long distance
telephone company personnel to isolate and locate problems in the field. The
newly introduced T-BERD 107A has captured significant market share by
incorporating many features useful to technicians in a light weight package.
The 200 series products are used by personnel in the central offices of
the network services provider, closest to the end customer, often referred to
as the "digital loop" and provide more sophistication and a broader scope of
measurements than the 100 series. This broadened feature set allows central
office personnel the flexibility as to the number and types of measurements
available, as well as the capability to automate these measurements over time.
The newly introduced, Distributed Test Manager software (DTM), allows T-BERD
poducts to be remotely controlled from a network management center thereby
enabling enhanced coverage of multiple points in the network.
The 300 series is designed for the highest speed testing requirements.
These products enable the central office or long distance carrier technician
to pinpoint problems with networks typically running at speeds between 45
Mb/sec and 622 Mb/sec. The new T-BERD 310 SONET options enable the monitoring
and testing of SONET (Synchronous Optical Network) technology now being widely
deployed by network service providers.
The CENTEST product line consists of a family of rack-mounted systems
for use in the central office environment to test high speed communication
circuits remotely. The new CENTEST 650 allows monitoring and testing of DS3
signals for ongoing maintenance, so that network trouble spots can be quickly
identified and maintenance resources efficiently directed from a centralized
location.
The FIBERSCAN product line consists of an innovative, modular, portable
fiber optic test instrument which allows both central office and field
technicians to isolate fiber optic cable breaks and measure degradation caused
by aging connectors and related components. The instrument is based on a
modular concept, consisting of a flexible hardware and software platform and
multiple "modules" that enable the user to customize the instrument to
individual needs. The instrument includes an Optical Time Domain Reflectometer
used to locate cable breaks and damage, an Optical Power Meter used to
determine the signal levels on optical fibers, and a stable optical source.
The INTERCEPTOR(TM) products serve the international telecommunications
industry by providing portable digital testing capability for transmission
systems that operate in accordance with the CCITT standards. The INTERCEPTOR
1402 operates within a wide range of data rates.
The FIREBERD series of multi-function communications analyzers
typically test at the physical and logical levels of network organization, and
operate at rates between 50 b/sec and 52 Mb/sec. FIREBERD instruments perform
<PAGE> 4
as many as 60 simultaneous performance and error measurements on a wide range
of network transmission media equipment. The FIREBERD 4000 and 6000 are
portable instruments, built around a modular architecture accomodating a wide
range of interfaces and speeds. The new FIREBERD 500 Internetwork Analyzer
bridges the gap between LANS (Local Area Networks) and WANS (Wide Area
Networks) by providing the capability to simultaneously monitor and test
network traffic as it passes from LAN to WAN and back to the LAN. Dramatic
growth in the LAN marketplace has placed increasing burdens on the WANs that
connect them, along with an associated increase in reliance on the reliability
of the overall network.
Data communications products provide users of information networks with
the management tools to ensure reliable network operation and products to
condition the data for transmission via private or public networks. The
Company's equipment is designed primarily to manage data transmission and
communication networks in a computer environment.
Packet switching, a communications protocol which breaks up data into
"packets" for efficient transmission over private or public data networks, has
become a cost-effective means for companies to transmit data over long
distances. Frame relay, a high-speed bandwidth on demand type of packet
switching, is being used to connect geographically dispersed local area
networks. Dynatech's CPX product family of high performance packet switching
equipment offer internetworking solutions that support frame relay and/or X.25
at T1 and E1 data rates and is being used to integrate multiple protocols by
large multinational companies building high speed global networks. These
products include the CPX 216FR, which provides multiprotocol (X.25,
asynchronous, and synchronous) access to Frame Relay or X.25 networks; the CPX
802x which allows dial in/out LAN access while concurrently supporting LAN
bridging/routing for the IP and IPX protocols; and the CPX FastBank which
integrates circuit switching (T1/E1) and packet switching and saves on
expenditures for recurring line charges and equipment costs.
Dynatech Communications products are designed to assist managers in
maintaining and optimizing diverse, heterogeneous data communications networks.
Historically, the functions include cable management, circuit performance
measurement, disaster recovery, and remote WAN diagnosis. These functions are
accomplished with a variety of tools which include basic digital patch panels to
electronic matrix switches.
Growth in local area networks has brought an increasingly complex task
of managing end-user system response times and overall network availability.
With distributed file servers and peer-to-peer networking requirements, the need
for cost effective management of remote servers from a centralized management
<PAGE> 5
point has skyrocketed. The Enterprise Access System (EAS) is a remotely
controlled switching product designed to manage the interconnection of remote
analyzers to various network interfaces. With EAS and the associated DN-190
control system, an organization can utilize the talents of highly trained
technicians at any communications site within reach of a telephone connection.
Fault testing, including very critical protocol-level monitoring, can be
performed without the need for dispatch of personnel to perform valid end-to-end
circuit analysis. Switching capabilities onboard EAS allow managers to spare
faulty ports or even substitute entire communication devices using simple point
and click commands from the DN-190 terminal. Networking options from DN-190 to
remote EAS sites include dial-up (async), X.25, and Frame Relay. The EAS
hardware platform is designed for management of very high speed data rates
across multiple vendor platforms and multiple interfaces including RS-449,
RS-530, Token Ring, Ethernet, RS-232, X.21, V.35, T1/E1 and ISDN, and can be
adapted to a mix of technology and vendor hardware.
Dynatech Tactical Communications is a manufacturer of audio accessories
for two-way handheld radios primarily for the government technical
surveillance/security market, as well as miniature audio/video and telemetry
transmitters for covert surveillance and intelligence operations.
Unex Corporation manufactures lightweight modular telephone headsets
under its PROTOCOL(TM), PROSET(TM) and ProBridge(TM) product lines.
Dynatech Wireless Technologies, Inc. manufactures electronic devices
used to enhance productivity in fast food restaurants. Its Integra wireless
communication system provides wireless communication between the menu board and
the order taken. Other applications include Voice Call, a two-way portable
radio system to improve communications between nurses and other healthcare
employees.
Trontech, Inc. specializes in the manufacture of RF and microwave
amplifiers used by military contractors and communications equipment suppliers.
Trontech has targeted its low-noise amplifier technology toward products used by
major manufacturers of cellular base stations and high power amplifiers used in
digital cellular radio base stations.
Dynatech Spectrum, Inc. manufactures wireless video transmitters
receivers sold primarily to the personal security market.
Industrial Computer Source, Inc. (ICS) is a worldwide supplier of
ruggedized personal computers and plug-in input and output boards for industrial
and scientific applications. ICS designs its products to operate in adverse
<PAGE> 6
environments and to withstand excessive vibration, noise, temperature, dust and
moisture.
Generation Products
Dynatech designs and sells products and systems worldwide through its
two business units, Distribution Products and Production Products and its two
product companies, Dynatech NewStar and DaVinci Systems, Inc., to television and
radio stations, video production facilities, cable television, and corporate and
industrial users of video equipment.
Distribution Products center on technologies used mainly by television
broadcast organizations and incorporate the product lines of Utah Scientific,
Alpha Image and Digistore. Utah Scientific manufactures routing switchers, and
machine control and master control systems for managing the flow of information
within a television station. Alpha Image Ltd. is a United Kingdom manufacturer
of digital routers, and protocol conversion video products. Digistore, an
electronically digital commercial playback system, is used to acquire, store and
play back commercials in a fully automated manner.
Production Products focus on post-production systems and technologies
which incorporates the product lines of ColorGraphics, Quanta, Cable Products,
Alpha Image's digital production switcher, and Editing Machines Corporation.
ColorGraphics Systems manufactures high end computer graphics systems used to
create images for broadcasting, production studios, and corporate users of
graphics and special effects systems. Products include D/P Animator, a digital
paint and animation system used to create electronic graphics and animations,
and D/P MAX(TM), a digital editing and layering system which takes multiple
video recordings and merges various segments to produce a new video. The D/P
MAX capabilities were used to help create the Diet Coke advertisements,
interacting with film of well known stars of the past. The DP/Mosiac digital
disk recorder permits storage and recall of digital images on a real-time basis.
Quanta Corporation manufactures video character and graphics generators
for displaying alphanumeric titles in a variety of fonts for broadcast and
nonbroadcast applications. Its high-end character generators, DELTA(TM) and
ORION(TM), combine the ability to create high-quality text on a video screen in
hundreds of different font styles with the ability to produce softly shaded,
intricate backgrounds and video painting. Quanta's systems also can be
configured to display many foreign languages, including Chinese, Japanese, and
Arabic. Quanta systems provided all of the host broadcaster on-air graphics at
the 1994 Winter Olympics.
<PAGE> 7
Dynatech Cable Products Group addresses specific opportunities in the
cable TV market. The "All Channel Message System", permits emergency alert
information to be broadcast over any combination of cable channels
automatically. Currently, Dynatech is shipping a local storage, switching and
control system for commercial and program insertion to StarNet, a unit of the
Lenfest Group. StarNet will enable cable operators to download and insert
national, regional, and local commercials and cross-channel promotion into cable
programming, and to automate the scheduling and billing of these insertions.
Editing Machines Corporation, acquired in January 1994, manufactures
non-linear editors for broadcast and post production based on standard computer
platforms.
DaVinci Systems, Inc. produces the Renaissance 8:8:8 digital color
correction system which is used to tint, enhance, and color-match television
commercials. It is sold to the postproduction and teleproduction market and to
commercial production facilities.
Dynatech NewStar produces a software-driven client/server PC networked
system used to computerize radio and television newsrooms, including the control
of robotic cameras. NEWSTAR allows writers to access newswire material, write
and edit late-breaking news on dedicated terminals and then transmit the stories
directly to the broadcast studio. NewStar's real-time election results system,
LEADER, automatically counts and displays votes to television viewers. This
instant-update product was used during the last presidential election at
stations throughout the country, and handled hundreds of local and national
races simultaneously.
Presentation Products
Presentation products aid the user in the display of video and graphic
images in a form that is useful and accessible.
Parallax Graphics offers products which combine full-color live video
using real-time digital video compression with computer graphics and text for
such applications as product training, display of financial market information,
geographic display, and information systems. Its primary product, XVideo, is a
live video windowing system for SUN Microsystems and Hewlett Packard Series 700
workstations.
V.I. Corporation supplies its DataViews software to developers to create
custom graphics for displaying real time data. Applications for this software
include manufacturing process control and communications network analysis. For
instance, V.I.'s products have been used to create interfaces to monitor
manufacturing robots in China.
<PAGE> 8
DIVERSIFIED INSTRUMENTATION
The Diversified Instrumentation segment consists of Dynatech's remaining
electronics and software businesses which include selected businesses in the
Diversified Products group offered for sale as they do not fit our long term
strategy.
Medical and Diagnostic Products
Medical and diagnostic products consist of laboratory, radiotherapy
planning and test and measurement products.
Dynatech Laboratories, Inc. (DLI) is a producer of Microtiter(R)
technology products for the diagnostic marketplace. DLI manufactures and sells
laboratory diagnostic equipment and supplies for research and clinical testing
in the fields of immunology, microbiology, serology, and cancer research. DLI's
instruments are designed around a microplate format and employ enzyme-linked
immunosorbent assay (ELISA) techniques for testing antigens and antibodies in
blood serum and other body fluids. These techniques use enzymes,
chemiluminescent or fluorescing reagents as labels that give off color or light
at the completion of tests. Results can be read and recorded by the Company's
sensitive reading instruments.
DIAS(TM) (Dynatech Immuno - Assay System) modular microplate "walk-away"
system, which was recently introduced, is a fully configured system that
combines several elements, including a reader, multi-reagent dispenser,
multi-reagent washer, diluter/dispenser, and random access plate incubators.
DIAS incorporates process quantitative analysis and is sold to the research lab
market (universities and pharmaceutical companies) and the clinical laboratory
market.
Additionally, DLI makes and sells disposable plastic laboratory ware for
handling and transporting test specimens, including items specifically treated
to absorb or covalently bind proteins.
Computerized Medical Systems (CMS) markets software products used in
conjunction with radiation therapy treatment of oncology patients. CMS's newest
product, FOCUS(TM), a three dimensional (3-D) radiation therapy treatment
planning system (RTP), allows oncologists and medical physicists to develop a
treatment plan which delivers the maximum radiation dose to the tumor while
minimizing radiation dose to surrounding healthy tissue. CMS continues to
offer its two dimensional (2-D) RTP product during the market transition to
the 3-D RTP.
Dynatech Nevada, Inc. supplies the hospital market with sophisticated
instruments for checking the electrical safety and performance of instruments
such as defibrillators. It also markets patient simulators. These instruments
produce simulated patient outputs which are fed into patient monitoring devices
<PAGE> 9
such as an electrocardiography (ECG) machine to determine whether or not the
equipment is functioning properly. A product to test non-invasive blood
pressure monitors, CuffLink, allows the selection of preprogrammed blood
pressures to simulate a human response to the monitor without using live
subjects. In addition to simulation capabilities, the CuffLink provides
diagnostic functions which can be used by a hospital biomedical technician or
product manufacturer as a test measurement and quality assurance device.
ComCoTec, Inc., a manufacturer of software solutions for the pharmacy
industry, has developed the RxCLAIM On-Line Transaction Processing System, an
on-line prescription claims adjudication system. The third-party prescription
claims industry is growing rapidly as prescription drug plans become an
increasingly important part of an employee benefit program. The driving force
behind the administration of all health benefits is cost containment, and with
the RxCLAIM System, ComCoTec can efficiently process millions of prescriptions
for third-party payors. Its newest product, RX SERVER(TM), offers central
control over pharmacies via point-of-service checks including eligibility
checking and drug utilization review.
Diversified Products
Asinc, Incorporated pioneered and leads the world market for passenger
cabin video information systems. Its flagship product, AIRSHOW(R), displays
position defining maps, airport terminal charts and in-flight information.
XKD Corporation, d.b.a. Display Solutions, manufactures monitors for
aircraft and other training simulators as well as high-resolution and high-speed
industrial applications.
Piiceon, Inc. is a leading supplier of after-market computer products
for SUN Microsystems, Compaq, Alpha Micro Systems and IBM computer users.
Dynatech Microwave Technology is an industry leader of electromechanical
coaxial switches used in microwave transmission.
Qualimetrics, Inc. of Sacramento, California is a leading supplier of
atmospheric monitoring instrumentation.
Lightning Location & Protection, Inc. (LLP) is a manufacturer of
thunderstorm sensors and lightning tracking systems and is the exclusive
operator of the National Lightning Detection Network (NLDN), which allow
electric utilities and other industries impacted by severe weather to track
<PAGE> 10
lightning strike activity. In October 1993 Atmospheric Research Systems Inc.
(ARSI), a competing technology manufacturer was acquired, to supplement product
offerings.
Dynatech Precision Sampling Corporation manufactures a comprehensive
line of state-of-the-art, fully automated systems for use in the analysis of
volatile organic contaminates in drinking water, wastewater and soils.
LEA Dynatech, Inc. produces surge protection and line conditioning
products for commercial applications. These products prevent damage to
electronic equipment due to electrical surge and RF noise problems.
Innovative Electronics, Inc. manufactures software that provides
protocol conversion between a point-of-sale terminal and the mainframe computer,
allowing the exchange of information such as in-store data processing, record
keeping, and automated credit card verification.
Digital Technology, Inc. (DTI) provides analysis and simulation
instruments which focuses on emulation tools which support the MIL-STD-1553 and
the ARINC 429 local area networks (LAN) used in today's military and commercial
aircraft, respectively.
DISCONTINUED OPERATIONS
The Corporation adopted a formal plan to discontinue certain
nonstrategic business units and to sell these operations during fiscal 1995.
These operations include Micro Processor Systems, Inc. which was sold in April
1994, and Whistler Corporation a manufacturer of police radar detectors and auto
security systems.
CUSTOMERS AND MARKETING
Dynatech markets its products to a diverse range of customers.
Transmission products are sold to telephone companies, cable television
operators, interexchange carriers, foreign telecommunications administrations
and Fortune 1000 private network users. The Company employs its own sales
engineering force for direct sale and has representative agreements with a
number of agents and distributors in the United States, Europe and Asia.
Customers for generation products and presentation products include
large industrial companies, computer manufacturers, government agencies, radio
and television stations, and other businesses which need to transmit and/or
process information in either digital or analog mode.
<PAGE> 11
Customers for the Company's medical diagnostic and treatment planning
products include pharmaceutical companies, research laboratories, hospitals and
clinical laboratories. The Company also has OEM agreements with several reagent
manufacturers to supply instruments tailored to their test systems for resale to
the clinical laboratory market, and has distribution arrangements with general
and specialized distributors and sales agents of laboratory equipment and
supplies. Automatic sampling systems are sold mainly to chromatograph
manufacturers for integration into their instruments.
COMPETITION
In the field of transmission products, the Company believes it is one of
the leading suppliers. In generation products, the Company believes it is one
of the largest suppliers of computerized graphics equipment to the television
industry, and is one of the leaders in newsroom automation and broadcast
switching products. The Company believes that the design and quality of its
products permit it to compete effectively in these markets. The Company has a
small share of the video character generator and specialty computer markets.
The Company has a number of competitors in the presentation products area.
Principal competitors are smaller specialized companies. Competitors in the
medical products markets include diagnostic instruments firms as well as
smaller, specialized manufacturers. The Company believes it holds a relatively
favorable position with respect to the relevant competitive factors in each of
these markets.
MAJOR CUSTOMER
The Company's sales of goods and services to various agencies of the
United States federal government were approximately $24,123,000, $25,273,000 and
$20,808,000 in fiscal years ended 1994, 1993 , and 1992, respectively. No
single customer accounted for more than 10% of sales in any of the three years.
DIVESTMENTS
In July 1993, the Company sold the business operations of Sensors, Inc.
and Dynatech Electro Optics Corp. In December 1993 the Company sold certain
assets of Threshold Corporation. In March 1994 the Company sold the Weather
Cental product line of Colorgraphics, Inc. These divestments did not have a
material effect on operating results or financial position of the Company.
<PAGE> 12
INTERNATIONAL
The Company maintains twenty four marketing subsidiaries or branches in
major countries in Western Europe and Asia and has distribution agreements in
many other countries where sales volume does not warrant a direct sales
organization. The Company's foreign sales from continuing operations (including
exports from the United States directly to foreign customers) were approximately
35%, 37%, and 36% of consolidated net sales in fiscal years 1994, 1993, and
1992, respectively. The Company maintains production facilities in England and
the Channel Islands which manufacture information support products and medical
instrumentation.
The Company's international business is subject to risks customarily
found in foreign operations, such as fluctuations in currency exchange rates,
import and export controls, and regulatory policies of foreign governments. A
summary of the Company's sales, earnings and identifiable assets by geographic
area is found in the 1994 Annual Report which is incorporated herein by
reference.
PRODUCT DEVELOPMENT
As the technologies in the Company's markets are continually changing,
the Company's success depends on its ability to develop new products and improve
existing ones. Each business entity within the Company maintains its own
product development group. On a segment basis, product development expense in
the years ended March 31, 1994, 1993, and 1992 were as follows: Information
Support Products $37,619,000, $33,623,000 and $30,441,000, respectively;
Diversified Instrumentation $16,169,000, $17,486,000, $17,489,000, respectively.
Major new products developed during the 1994 fiscal year include:
T-BERD 310 SONET testing option for our communications analyzer, T-BERD 107A and
CENTEST 650 test instruments for the telecommunications market; video boards for
Hewlett Packard Series 700 workstations; FOCUS, a 3-D radiation therapy planning
system for the oncological market; DIAS modular microplate system for the
clinical laboratory market and AIRSHOW 400, a passenger cabin video information
system.
BACKLOG
The Company's backlog of orders believed to be firm at March 31, 1994
and 1993 were $93,981,000 and $91,578,000, respectively. All but $11,905,000 of
backlog at March 31, 1994 is expected to be delivered within the fiscal year
ended March 1995. On a segment basis, backlog at March 31, 1994 and 1993 was as
follows: Information Support Products $51,894,000 and $49,023,000,
respectively; Diversified Instrumentation $42,087,000 and $42,555,000,
respectively.
<PAGE> 13
EMPLOYEES
The Company employs approximately 3,200 people of which approximately
350 employees are with businesses that are classified as discontinued
operations. Employees having requisite skills for the Company's purposes are
generally available in the areas where its facilities are located. The Company
considers its labor relations to be excellent.
PATENTS AND TRADEMARKS
The Company generally seeks patent protection for inventions and
improvements to its products. It holds numerous United States and foreign
patents and patent applications covering many products. While the Company
considers its patent position important, it believes its technical marketing and
manufacturing capabilities are of greater competitive significance.
Dyna-Test, Dyna-Net, Fireberd, T-Berd, Dynabus, NewStar, ArtStar,
Microtiter, Microelisa, Airshow, Whistler and Spectrum are among registered
trademarks which the Company considers valuable assets.
Dynatech is a registered service mark in the United States and a
registered trade or service mark (issued or applied for) in most other major
industrialized countries of the world.
SUPPLIERS
Materials and components used in the Company's products are normally
available stock items or can be obtained to Company specifications from more
than one potential supplier. The Company's plasticware is molded by
subcontractors using molds owned by the Company.
Many components and assemblies included in the Company's radar detectors
and components of other products are purchased in Asia under volume contracts.
ENVIRONMENTAL FACTORS
Federal, state and local laws or regulations which have been enacted or
adopted regulating the discharge of materials into the environment have not had,
and under present conditions the Company does not foresee that it will have, a
material adverse effect on capital expenditures, earnings or competitive
position of the Company.
<PAGE> 14
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
The executive officers of the Corporation are as follows:
<CAPTION>
Officer
Name Current Position Age Since
- - - ---- ---------------- --- -------
<S> <C> <C> <C>
Warren M. Rohsenow Honorary Chairman of the 73 1959
Board of Directors
J. P. Barger Chairman of the Board of Directors 67 1959
John F. Reno President, and Chief Executive Officer 55 1979
Robert H. Hertz Treasurer and Chief Financial Officer, 51 1980
Clerk
Jack Shirman Group Vice President 59 1991
Venture Group
John R. Peeler Division Vice President 39 1992
Communications Test
John R. South Division Vice President 53 1993
Medical and Diagnostics
Roger C. Cady Corporate Vice President 55 1993
Business Development
John A. Mixon Corporate Vice President 48 1989
Human Resources
James R. Turner Corporate Vice President 65 1960
John C. Maag Corporate Controller 44 1987
Nancy J. Jenkins Assistant Secretary 48 1990
Edward T. O'Dell Secretary, Assistant Clerk, 58 1975
attorney whose professional
corporation is a partner of Goodwin,
Procter & Hoar, general counsel to
the Company
</TABLE>
<PAGE> 15
Officers are elected annually by the Board of Directors at its meeting
following the Annual Meeting of Shareholders and serve until the next annual
election or until their successors have been elected at any other Director's
meeting. There are no arrangements or understandings between any of the
Directors or Officers and any other person regarding election as a Director or
Officer of the Company.
Each of the Company's officers has served in various capacities with the
Company for more than five years, except Messrs. South, Cady and Mixon.
Mr. South joined the Company in July 1990. From 1987 to 1990 he was a
Vice President for SmithKline Beecham Clinical Laboratories, a provider of
laboratory testing services.
Mr. Cady joined the Company in March 1993. From 1986 to 1993 he was
President and founder of Arcadia Consulting, a management consulting firm which
assisted high technology companies.
Mr. Mixon joined the Company in July 1989. From 1987 to 1989 he was
Vice President-Human Resources for Interturbine Corporation, which serves
industrial/aerospace markets.
<PAGE> 16
<TABLE>
Item 2. PROPERTIES The Company's policy is generally to lease real
property for its manufacturing and sales operations. It does however, own three
buildings used for manufacturing.
<CAPTION>
Segment Areas Square Lease
Location Utilizing Facilities Feet Termination
- - - -------- -------------------- ------ -----------
<S> <C> <C> <C>
Owned Facilities:
- - - -----------------
Carson City, Nevada Diversified Instrumentation 22,000
Sacramento, California Diversified Instrumentation 50,000
Baton Rouge, Louisiana Diversified Instrumentation 13,000
Leased Facilities:
- - - ------------------
Burlington, Massachusetts Headquarters 22,200 1998
Germantown, Maryland Information Support Products 136,000 1998
Germantown, Maryland Information Support Products 30,000 2003
Woodbridge, Virginia Information Support Products 60,000 1997
Newington, Virginia Information Support Products 60,000 1997
San Diego, California Information Support Products 43,500 1994
Salt Lake City, Utah Information Support Products 41,700 1998
Guernsey, Channel Islands Information Support Products 40,000 2002
and Diversified Instrumentation
Madison, Wisconsin Information Support Products 26,700 1995
Hudson, New Hampshire Information Support Products 25,400 1996
Northampton, Massachusetts Information Support Products 22,600 1994
Salt Lake City, Utah Information Support Products 19,800 1995
St. Quentin En Yvelines, France Information Support Products 19,100 1996
Los Gatos, California Information Support Products 18,000 1996
Chelmsford, Massachusetts Information Support Products 15,000 1994
Chantilly, Virginia Diversified Instrumentation 50,500 1996
Calabasas, California Diversified Instrumentation 25,000 1997
Tustin, California Diversified Instrumentation 24,900 1999
Maryland Heights, Missouri Diversified Instrumentation 21,000 1994
San Jose, California Diversified Instrumentation 19,200 1995
</TABLE>
<PAGE> 17
<TABLE>
LEASED FACILITIES (continued):
- - - ------------------------------
<CAPTION>
Segment Areas Square Lease
Location Utilizing Facilities Feet Termination
- - - -------- -------------------- ------ -----------
<S> <C> <C> <C>
Tampa, Florida Diversified Instrumentation 18,900 1995
Pomona, California Diversified Instrumentation 17,500 1996
Tucson, Arizona Diversified Instrumentation 18,200 1997
Dayton, Ohio Diversified Instrumentation 16,700 1994
Lombard, Illinois Diversified Instrumentation 16,100 1998
</TABLE>
The Company has other leases for manufacturing space, but in each case
the total footage is under 15,000 square feet.
The Company also leases several sales and service offices in the United
States, Western Europe, Japan, and Hong Kong. In addition the Company leases
77,400 square feet for a discontinued operation. It considers its facilities
adequate and suitable for its foreseeable needs and believes that similar
facilities will continue to be available at comparable prices after adjusting
for inflation. The Company owns a substantial portion of the machines, tools
and equipment required for its operations and considers this property to be in
good condition. The Company also leases equipment and machines on terms which
allow the Company the flexibility it desires related to such machinery and
equipment.
Item 3. LEGAL PROCEEDINGS
The Company is party to several pending legal proceedings and claims.
None of which, in the opinion of management or counsel primarily responsible for
such matters, is considered to be material.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE> 18
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
(a) The Company's common stock is traded in the over-the-counter
NASDAQ National Market System. The quarterly range of high and
low prices for the past two years as reported by the National
Association of Security Dealers National Market System and
published in The Wall Street Journal may be found in the Company's
1994 Annual Report which is incorporated herein by reference.
(b) There were approximately 1,130 common stockholders of record as of
May 13, 1994.
(c) The Company has never paid a cash dividend on its common stock and
does not intend to make such a payment in the foreseeable future.
Item 6. SELECTED FINANCIAL DATA
Reference is made to information contained in the section entitled
"Five-Year Summary" in the Company's 1994 Annual Report, copies of which have
been filed with the U.S. Securities and Exchange Commission pursuant to Rule
14a-3(c) under the Securities Exchange Act of 1934, as amended, which
information is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the information contained in the section in the
Company's 1994 Annual Report, copies of which have been filed with the U.S.
Securities and Exchange Commission pursuant to Rule 14a-3(c) under the
Securities Exchange Act of 1934, as amended, which information is incorporated
herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Company's consolidated financial statements and
notes thereto in the Company's 1994 Annual Report together with the Report of
Independent Accountants dated May 23, 1994, copies of which have been filed with
the U.S. Securities and Exchange Commission pursuant to Rule 14a-3(c) under the
Securities Exchange Act of 1934, as amended, which information is incorporated
herein by reference.
<PAGE> 19
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information responsive to Items 401 and 405 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1994 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
Company's fiscal year ended March 31, 1994 pursuant to Rule 14a-6(b) under the
Securities and Exchange Act of 1934, as amended; said information is
incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
Reference is made to the information responsive to Item 402 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1994 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
Company's fiscal year ended March 31, 1994 pursuant to Rule 14a-6(b) under the
Securities Exchange Act of 1934, as amended; said information is incorporated
herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to the information responsive to Item 403 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1994 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
Company's fiscal year ended March 31, 1994 pursuant to Rule 14a-6(b) under the
Securities Exchange Act of 1934, as amended; said information is incorporated
herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the information responsive to Item 404 of
Regulation S-K contained in the Company's definitive Proxy Statement relating to
its 1994 Annual Meeting of Shareholders which will be filed with the U.S.
Securities and Exchange Commission within 120 days after the close of the
<PAGE> 20
Company's fiscal year ended March 31, 1994 pursuant to Rule 14a-6(b) under the
Securities Exchange Act of 1934, as amended; said information is incorporated
herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial statements and financial statement schedules
The financial statements and financial statement schedules listed in the
accompanying Index to Financial Statements and Financial Statements Schedules
are filed as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31,
1994.
(c) Exhibits
Exhibit No.
- - - -----------
(3) Articles of Organization and By-Laws -
(1) The Registrant's Restated Articles of Organization, as
amended, and By-Laws, as amended, were filed as Exhibit 3 to
Form 10-K for the year ended March 31, 1992, and are
incorporated herein by reference.
(2) Shareholder Rights Agreement, dated as of February 16, 1989,
between Dynatech Corporation and The First National Bank of
Boston, as Rights Agent, was filed as an Exhibit to a Current
Report on Form 8-K filed on February 27, 1990, and is
incorporated herein by reference.
(3) Shareholder Rights Agreement, as amended and restated as of
March 12, 1990, was filed as an Exhibit to a Current Report
on Form 8-K filed on April 11, 1990, and is incorporated
herein by reference.
(4) Instruments defining the rights of security holders -
(1) Multicurrency Revolving Credit and Term Loan Agreement, as
amended, dated December 22, 1992 between Dynatech and The
First National Bank of Boston and others is incorporated by
reference to Exhibit 4(a) on Form 10-Q for the quarter ended
December 31, 1992.
<PAGE> 21
Exhibit No.
- - - -----------
(2) Note Agreement dated as of December 15, 1990 between Dynatech
and Nationwide Life Insurance Company is incorporated by
reference to Exhibit 4(b) on Form 10-Q for the quarter ended
December 31, 1990.
(10) Material Contracts -
(1) 1982 Incentive Stock Option Plan, as amended, incorporated
by reference to Exhibit 10(2) to Form 10-K for the year ended
March 31, 1990.
(2) Form of Special Termination Agreement between Dynatech
Corporation and each of Messrs. Barger, Reno and Hertz
incorporated by reference to Exhibit 10(5) to Form 10-K for
the year ended March 31, 1990.
(3) Form of Special Termination Agreement between Dynatech
Corporation and each of its other Executive Officers
incorporated by reference to Exhibit 10(6) to Form 10-K for
the year ended March 31, 1990.
(4) 1992 Stock Option Plan incorporated by reference to Exhibit 3
to Form 10-Q for the quarter ended June 30, 1992.
(5) Letter Agreement dated March 24, 1993 by and between JP
Barger and Dynatech Corporation incorporated by reference to
Exhibit 10(5) to Form 10-K of the year ended March 31, 1993.
(13) Dynatech Corporation 1994 Annual Report to Stockholders which, except
for those portions expressly incorporated herein by reference, is
furnished only for the information of the Securities Exchange
Commission and is not deemed to be filed.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Accountants.
(d) Schedules
The schedules listed in the accompanying Index to Financial Statements and
Financial Statement Schedules are filed as part of this Annual Report on Form
10-K.
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DYNATECH CORPORATION
-------------------------------------
June 16, 1994 By: /S/ ROBERT H. HERTZ
-------------------------------------
Robert H. Hertz
Treasurer and Chief Financial Officer
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<S> <C> <C>
/S/ WARREN M. ROHSENOW Honorary Chairman of the Board, June 16, 1994
- - - ------------------------- Director
Warren M. Rohsenow
/S/ J. P. BARGER Chairman of the Board, Director June 16, 1994
- - - -------------------------
J. P. Barger
/S/ JOHN F. RENO President, Director June 16, 1994
- - - -------------------------
John F. Reno
/S/ JOHN C. MAAG Controller June 16, 1994
- - - -------------------------
John C. Maag
/S/ THEODORE COHN Director June 16, 1994
- - - -------------------------
Theodore Cohn
/S/ O. GENE GABBARD Director June 16, 1994
- - - -------------------------
O. Gene Gabbard
/S/ JAMES B. HANGSTEFER Director June 16, 1994
- - - -------------------------
James B. Hangstefer
/S/ WARREN A. LAW Director June 16, 1994
- - - -------------------------
Warren A. Law
/S/ RICHARD K. LOCHRIDGE Director June 16, 1994
- - - -------------------------
Richard K. Lochridge
/S/ PAULA STERN Director June 16, 1994
- - - -------------------------
Paula Stern
</TABLE>
<PAGE> 1
EXHIBIT 13
DYNATECH CORPORATION
FORM 10-K
EXCERPTS OF 1994 ANNUAL REPORT TO STOCKHOLDERS
Five Year Summary
Management's Discussion and Analysis of Financial
Consolidation and Results of Operations
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Summary of Operations by Quarter (Unaudited)
<PAGE> 2
<TABLE>
Dynatech Corporation
Five-Year Summary
(Amounts in thousands except per share data)
<CAPTION>
Years ended March 31 1994 1993 1992 1991 1990
- - - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $ 458,449 $ 474,197 $ 429,570 $ 427,523 $ 376,696
Cost of sales 218,563 212,672 195,083 192,613 175,888
--------- --------- --------- --------- ---------
Gross profit 239,886 261,525 234,487 234,910 200,808
Selling, general and administrative expense 160,146 164,533 146,539 142,119 124,496
Product development expense 53,788 51,109 47,930 46,962 38,949
Streamlining and restructuring charges 37,582 --- --- --- 2,700
Amortization of intangibles 18,153 12,176 10,281 8,088 5,568
--------- --------- --------- --------- ---------
Operating income (loss) (29,783) 33,707 29,737 37,741 29,095
Interest expense (3,794) (2,229) (3,470) (5,768) (6,400)
Interest income 1,244 1,592 2,248 2,957 2,086
Other income (expense) (2) 837 (639) (711) 906
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before taxes (32,335) 33,907 27,876 34,219 25,687
Provision (benefit) for income taxes (6,115) 14,746 11,897 14,644 11,369
--------- --------- --------- --------- ---------
Income (loss) from continuing operations (26,220) 19,161 15,979 19,575 14,318
Discontinued operations, net of income taxes (3,763) (2,726) (2,556) (4,005) 417
--------- --------- --------- --------- ---------
Net income (loss) $ (29,983) $ 16,435 $ 13,423 $ 15,570 $ 14,735
========= ========= ========= ========= =========
Income (loss) per common share
Continuing operations $ (2.82) $ 2.09 $ 1.71 $ 2.06 $ 1.39
Discontinued operations (.41) (.30) (.28) (.42) .04
--------- --------- --------- --------- ---------
$ (3.23) $ 1.79 $ 1.43 $ 1.64 $ 1.43
========= ========= ========= ========= =========
Net working capital $ 91,010 $ 118,509 $ 126,278 $ 126,453 $ 127,696
Total assets $ 280,553 $ 303,023 $ 312,531 $ 291,774 $ 269,926
Long-term debt $ 33,006 $ 50,873 $ 80,845 $ 75,051 $ 75,874
Shareholders' equity $ 142,643 $ 171,904 $ 158,649 $ 150,102 $ 136,592
Shares of stock outstanding 9,297 9,253 9,211 9,390 9,704
Shareholders' equity per share $ 15.34 $ 18.58 $ 17.22 $ 15.99 $ 14.08
</TABLE>
<PAGE> 3
<TABLE>
Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following table reflects consolidated costs and expenses from
continuing operations as a percent of sales and indicates the
year-to-year percentage change in operating results of the Corporation.
This table should be read in conjunction with Consolidated Statements of
Operations and related Notes to Consolidated Financial Statements.
<CAPTION>
Percent of Sales Percent of Change
1994 1993 1992
vs. vs. vs.
Years ended March 31 1994 1993 1992 1993 1992 1991
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% (3.3)% 10.4% 0.5%
Gross profit 52.3 55.2 54.6 (8.3) 11.5 (0.2)
Selling, general and administrative expense 34.9 34.7 34.1 (2.7) 12.3 3.1
Product development expense 11.7 10.8 11.2 5.2 6.6 2.1
Streamlining and restructuring charges 8.2 --- --- --- --- ---
Amortization of intangibles 4.0 2.6 2.4 49.1 18.4 27.1
Operating income (loss) (6.5) 7.1 6.9 (188.4) 13.4 (21.2)
Interest expense (0.8) (0.5) (0.8) 70.2 (35.8) (39.8)
Interest income 0.3 0.3 0.5 (21.9) (29.2) (24.0)
Other income (expense) --- 0.2 (0.1) (100.2) 231.0 (10.1)
Income (loss) from continuing operations
before taxes (7.1) 7.2 6.5 (195.4) 21.6 (18.5)
Income taxes (1.3) 3.1 2.8 (141.5) 23.9 (18.8)
Income (loss) from continuing operations (5.7) 4.0 3.7 (236.8) 19.9 (18.4)
</TABLE>
Fiscal 1994 Compared to Fiscal 1993
As part of an ongoing management process of reviewing the contribution
of our businesses to strategic Corporate plans and the long term goal of
enhancing shareholder value, Management, with the approval of the Board
of Directors, announced a series of reorganization actions of
approximately $50 million designed to focus on supplying support
products to providers of the global information infrastructure. In
connection with these actions, the Corporation recorded a $37.6 million
streamlining and restructuring provision ($24.8 million after taxes or
$2.67 per share). These actions, which will result in reduction of 10%
of the work force, include the sale or closure of nonstrategic
businesses, and consolidation and centralization of various ongoing
production and sales facilities. The sale and closure activities are
projected to be completed within eighteen months and the consolidation
and centralization efforts are expected to be completed during fiscal
1995. Implementation of these actions is targeted to result in
annualized cost savings approximating $12 million, of which some portion
will be reinvested in order to remain at the forefront of emerging
technological trends. Revenues of underperforming nonstrategic
businesses to be disposed approximated $89 million in fiscal 1994. A
portion of the employee-related actions were implemented in the fourth
quarter of fiscal 1994. Although plans are in place to carry out the
remaining actions, some plans may be refined in order to identify the
best means of achieving reductions in cost structure.
In connection with the streamlining and restructuring actions, the
Corporation recognized additional pretax charges in the fourth quarter
of fiscal 1994 of approximately $8 million for nonrecurring operating
expenses. These costs include accelerated amortization of intangible
assets related to discontinued businesses and closedown costs of sales
and engineering facilities.
In addition, the Corporation adopted, and the Board of Directors
approved, a formal plan to discontinue its consumer automotive business
units. As part of such plan, the Corporation intends to sell or close
these operations during fiscal 1995. As a result, a fourth quarter
charge of $4.4 million ($2.5 million after taxes or $.27 per share) was
recorded to write down assets to estimated net realizable values. These
businesses employ approximately 10% of the work force and account for
approximately $51 million of fiscal 1994 sales.
<PAGE> 4
For the quarter ended March 31, 1994, consolidated sales decreased 7.2%
compared with record fourth quarter sales of the prior year.
Information Support Products segment sales declined 2.1% while sales in
the Diversified Instrumentation segment declined 16.6% with significant
decreases for medical and diagnostic products 20%, and aircraft video
information systems 35%. International sales continued to decline in
Europe and parts of Asia. Gross margin was down five points in the
fourth quarter compared to the same period of fiscal 1993 resulting from
higher production costs for new products, lower production levels at
certain operations, and competitive price pressures in certain
communications markets.
As a result, fourth quarter losses from continuing operations without
the effects of the streamlining and restructuring charges and fourth
quarter nonrecurring operating expenses were $1.8 million. With the
effects of the streamlining and restructuring charges, and fourth
quarter nonrecurring operating expenses, the net loss from continuing
operations was $34.4 million ($3.70 per share) as compared with net
income from continuing operations of $5.8 million, or $.63 per share, in
the fourth quarter of fiscal 1993.
Sales
Consolidated sales declined 3.3% in fiscal 1994 as a result of both
lower domestic and international sales. International sales were 35.2%
of consolidated sales in fiscal 1994 and 36.6% of consolidated sales in
fiscal 1993.
Information Support Products segment sales were flat in fiscal 1994.
Transmission products increased 1.6% to approximately $235 million,
while Generation products declined 5.9% and Presentation products
decreased 3%.
Sales in the Diversified Instrumentation segment declined 9.4% compared
to the prior year reflecting an 8.4% decline of medical and diagnostic
products and a 22.4% decline for aircraft video information systems.
Backlog stood at $94 million at March 31, 1994, compared with $91.6
million at March 31, 1993, a 2.6% increase.
Gross Profit
Consolidated gross profit was 52.3% for fiscal 1994 compared to 55.2%
for the prior year. The decrease in rate was a result of higher
production costs for new products, price sensitivity in Generation
products markets and lower production levels at various facilities.
Information Support Products gross margin declined to 55.8% compared to
58.1% in the prior year while Diversified Instrumentation margins
declined 4.6 percentage points to 45.2%.
Expenses
Selling, general and administrative expenses were 34.9% of sales in
fiscal 1994 compared to 34.7% in fiscal 1993. The slightly higher rate
was primarily driven by higher marketing investments for Generation
products. Product development expense increased compared to the prior
year resulting from costs related to recently introduced SONET and
fiber-optic communications test instruments in the Information Support
Products segment. Amortization of intangibles increased due to
accelerated amortization in the fourth quarter related to discontinued
product lines. Interest expense from continuing and discontinued
operations decreased compared to the prior year caused by repayment of
loan debt from favorable operating cash flow. Interest income,
primarily from short-term deposits in Europe, declined due to lower
investment rates.
Taxes
Excluding the effects of streamlining and restructuring charges and
fourth quarter nonrecurring expenses, the effective tax rate increased
in fiscal 1994 to 51.8% compared to 43.5% in the prior year. The high
level of nondeductible amortization charges and the inability to deduct
various foreign and state operating losses were contributing factors to
the higher effective tax rate. During fiscal 1994 the Corporation
adopted Statement of Financial Accounting Standards No. 109 which had no
impact on the consolidated financial statements.
Income (Loss) From Continuing Operations
The loss from continuing operations was $26,220,000, or $(2.82) per
share, in the current year compared to income of $19,161,000, or $2.09
per share, in the prior year. Excluding the impact of the provision for
streamlining and restructuring, and fourth quarter nonrecurring
expenses, current year's net income was $6,374,000, or $.69 per share.
Fiscal 1993 Compared to Fiscal 1992
Sales
Consolidated sales increased 10.4% in fiscal 1993 as a result of a 5%
base business growth and 5.4% of growth from business acquisitions in
fiscal 1992 and 1993 accounted for by the purchase method of accounting
<PAGE> 5
net of divested operations in these periods. International sales were
36.6% of consolidated sales in fiscal 1993 and 36% of consolidated sales
in fiscal 1992.
Information Support Products segment sales rose 18.6% in fiscal 1993
reflecting an 18.6% growth for Transmission products, a 19.3% increase
for Generation products and a 17.5% increase for Presentation products.
Sales in the Diversified Instrumentation segment declined 2.2% compared
to the prior year reflecting the divestment of three businesses during
fiscal 1992.
Backlog stood at $91.6 million at March 31, 1993, compared with $85.8
million at March 31, 1992, a 6.7% increase.
Gross Profit
Consolidated gross profit for fiscal 1993 was 55.2% compared to 54.6%
for the prior year. The increase in rate was primarily driven by
operating efficiencies utilizing plant cost containment measures.
Information Support Products margins were 58.1% compared to 58.7% in
fiscal 1992 while Diversified Instrumentation margins improved to 49.8%
compared to 48.4% for the prior year.
Expenses
As a percentage of consolidated sales, selling, general and
administrative expenses increased to 34.7% in fiscal 1993 compared to
34.1% in fiscal 1992. The higher rate resulted in part from costs to
litigate certain claims and increased selling costs from expanding
worldwide sales efforts in the Information Support Products segment.
Amortization of intangibles increased 18.4% resulting from the ICS
purchase acquisition in fiscal 1992. Product development expense was
10.8% of sales in fiscal 1993 compared to 11.2% in fiscal 1992.
Interest expense declined compared to the prior year as a result of
repayment of loan debt from favorable operating cash flow. Interest
income, primarily from short-term deposits in Europe, declined
reflecting lower investment rates.
Taxes
The effective tax rate increased in fiscal 1993 to 43.5% compared to
42.7% in the prior year as a result of the expiration of federal
research and development tax credits.
Income From Continuing Operations
Income from continuing operations increased 19.9% to $19,161,000 in
fiscal 1993 compared to $15,979,000 in the prior year. In addition to
the reasons indicated above, pretax gains (losses) on sales of assets of
divested operations were $112,000 in fiscal 1993 and $(1,923,000) in
fiscal 1992. Income per common share from continuing operations for
fiscal 1993 was $2.09, a 22.2% increase compared to fiscal 1992. Income
per share from continuing operations for fiscal 1992 was $1.71.
Capital Resources and Liquidity
Dynatech's funded debt was reduced to 20% of total capital at March 31,
1994, the lowest year end level in eight years. The working capital
ratio at March 31, 1994 was 1.9 to 1, a decline from 2.5 to 1 at March
31, 1993. The decrease in the ratio is primarily attributable to the
significant increase in accrued liabilities related to restructuring.
Net cash flows from operating activities decreased to $35.1 million in
fiscal 1994 from $40.9 million in fiscal 1993 and $37.5 million in
fiscal 1992. The decrease in fiscal 1994 over fiscal 1993 was due to
decreased gross margins and operating profits. Continued strong
effective working capital management resulted in net long-term debt
declining $17.9 million during the year. Combined accounts receivable
and inventories at year-end were 29% of fiscal 1994 sales compared to
30% in fiscal 1993 and 32% in fiscal 1992. Cash balances primarily
reflect short-term deposits in Europe.
Investment in property and equipment was $17,834,000 in fiscal 1994
compared to $14,347,000 and $16,269,000 in fiscal 1993 and 1992,
respectively. Average net fixed assets employed in continuing
operations were $38,771,000, or 8% of fiscal 1994 sales, compared to
$38,546,000 or 8% of sales in fiscal 1993. Dynatech anticipates that
its capital spending in property and equipment in fiscal 1995 will
decline from fiscal 1994 as a result of the streamlining actions.
Funding for capital expenditures generally will be provided from
internal sources.
The Corporation's financial performance, together with its reserve debt
capacity and working capital, leave it well positioned to finance its
current and future cash requirements including the necessary
streamlining and restructuring actions. Expected cash outlays for the
streamlining and restructuring actions are anticipated to be $18 million
during fiscal 1995.
Inflation rates were moderate during fiscal 1994 and did not have a
major impact on operations.
<PAGE> 6
<TABLE>
Consolidated Statements of Operations Dynatech Corporation
(Amounts in thousands except per share data)
<CAPTION>
Years ended March 31 1994 1993 1992
- - - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $458,449 $474,197 $429,570
Cost of sales 218,563 212,672 195,083
-------- -------- --------
Gross profit 239,886 261,525 234,487
Selling, general and administrative expense 160,146 164,533 146,539
Product development expense 53,788 51,109 47,930
Streamlining and restructuring charges 37,582 --- ---
Amortization of intangibles 18,153 12,176 10,281
-------- -------- --------
Operating income (loss) (29,783) 33,707 29,737
Interest expense (3,794) (2,229) (3,470)
Interest income 1,244 1,592 2,248
Other income (expense) (2) 837 (639)
-------- -------- --------
Income (loss) from continuing operations before
income taxes (32,335) 33,907 27,876
Provision (benefit) for income taxes (6,115) 14,746 11,897
-------- -------- --------
Income (loss) from continuing operations (26,220) 19,161 15,979
Discontinued operations
Operating losses, net of income tax benefit of
$766, $1,832, and $1,771, respectively (1,254) (2,726) (2,556)
Provision for dispositions, net of income tax
benefit of $1,890 (2,509) --- ---
-------- -------- --------
Net income (loss) $(29,983) $ 16,435 $ 13,423
======== ======== ========
Income (loss) per common share
Continuing operations $ (2.82) $ 2.09 $ 1.71
Discontinued operations (0.41) (.30) (.28)
-------- -------- --------
$ (3.23) $ 1.79 $ 1.43
======== ======== ========
Weighted average number of common shares 9,290 9,174 9,355
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 7
<TABLE>
Consolidated Balance Sheets Dynatech Corporation
(Amounts in thousands except share data)
<CAPTION>
March 31 1994 1993
- - - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,101 $ 24,350
Accounts receivable, less allowance of $3,905 and $3,634, respectively 73,090 85,229
Inventories:
Raw materials 26,923 28,671
Work in process 14,091 12,089
Finished goods 20,671 17,933
--------- ---------
61,685 58,693
Other current assets 26,683 12,697
Net current assets of discontinued operations 10,805 16,879
--------- ---------
Total current assets 195,364 197,848
--------- ---------
Property and equipment, at cost:
Land, buildings and improvements 4,847 4,779
Machinery and equipment 73,742 68,263
Furniture and fixtures 18,097 17,624
Leasehold improvements 7,051 7,375
--------- ---------
103,737 98,041
Less accumulated depreciation and amortization (64,484) (59,752)
--------- ---------
39,253 38,289
Other assets:
Intangible assets, net 37,238 52,236
Net assets of discontinued operations 2,643 6,590
Other 6,055 8,060
--------- ---------
$ 280,553 $ 303,023
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 8
<TABLE>
Consolidated Balance Sheets Dynatech Corporation
<CAPTION>
(Amounts in thousands except share data)
March 31 1994 1993
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 2,911 $ 4,420
Accounts payable 20,234 24,235
Accrued expenses:
Compensation and benefits 18,767 21,693
Interest 1,283 1,243
Insurance 2,883 2,068
Taxes, other than income taxes 2,533 2,655
Deferred revenue 5,875 5,147
Streamlining and restructuring 35,276 ---
Other 13,942 13,670
Accrued income taxes 650 4,208
-------- --------
Total current liabilities 104,354 79,339
-------- --------
Long-term debt 33,006 50,873
Deferred income taxes 550 907
Shareholders' equity:
Serial preference stock, par value $1 per share;
authorized 100,000 shares; none issued
Common stock, par value $.20 per share; authorized 24,000,000 shares;
issued 12,387,216 and 12,383,878 shares, respectively 2,477 2,477
Additional paid-in capital 9,414 9,160
Retained earnings 185,957 215,940
Cumulative translation adjustments (757) (347)
Treasury stock, at cost; 3,090,247 and 3,131,062 shares, respectively (54,448) (55,326)
-------- --------
Total shareholders' equity 142,643 171,904
-------- --------
$280,553 $303,023
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE> 9
<TABLE>
Consolidated Statements of Shareholders' Equity Dynatech Corporation
(Amounts in thousands)
<CAPTION>
Number of Shares Additional Cumulative Total
Common Treasury Common Paid-In Retained Translation Treasury Shareholders
Stock Stock Stock Capital Earnings Adjustments Stock Equity
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1991 12,373 (2,983) $2,475 $9,170 $186,082 $4,851 $(52,476) $150,102
Net income - 1992 13,423 13,423
Purchases of treasury stock (191) (3,764) (3,764)
Translation adjustments (1,232) (1,232)
Exercise of stock options 11 2 118 120
------- ------- ------- ------ -------- ------- -------- --------
Balance, March 31, 1992 12,384 (3,174) 2,477 9,288 199,505 3,619 (56,240) 158,649
Net income - 1993 16,435 16,435
Purchases of treasury stock (58) (1,079) (1,079)
Translation adjustments (3,966) (3,966)
Exercise of stock options 101 (128) 1,993 1,865
------- ------- ------- ------ -------- ------- -------- --------
Balance, March 31, 1993 12,384 (3,131) 2,477 9,160 215,940 (347) (55,326) 171,904
Net loss - 1994 (29,983) (29,983)
Translation adjustments (410) (410)
Exercise of stock options
and other issuances 3 41 (111) 878 767
Tax benefit from exercise
of stock options 365 365
------- ------- ------- ------ -------- ------- -------- --------
Balance, March 31, 1994 12,387 (3,090) $ 2,477 $9,414 $185,957 $ (757) $(54,448) $142,643
======= ======= ======= ====== ======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 10
<TABLE>
Consolidated Statements of Cash Flows Dynatech Corporation
<CAPTION>
(Amounts in thousands)
Years ended March 31 1994 1993 1992
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net income (loss) from continuing operations $(26,220) $ 19,161 $ 15,979
Adjustment for noncash items included in net income (loss):
Depreciation 13,754 12,950 12,440
Amortization of intangibles 18,153 12,176 10,281
Streamlining and restructuring charges 35,276 --- ---
Increase (decrease) in deferred income taxes (79) (1,686) (936)
Other 1,947 692 1,087
Changes in operating assets and liabilities, net of effects of
purchase acquisitions and divestitures (13,545) (5,776) 242
-------- -------- --------
Net cash provided by continuing operations 29,286 37,517 39,093
Net cash provided by (used in) discontinued operations 5,771 3,420 (1,581)
-------- -------- --------
Net cash flows from operating activities 35,057 40,937 37,512
-------- -------- --------
Investing activities:
Purchases of property and equipment (17,834) (14,347) (16,269)
Disposals of property and equipment 636 622 926
Proceeds from sales of businesses 3,262 384 2,650
Businesses acquired in purchase transactions,
net of cash acquired (2,757) (5,584) (22,582)
Other 2,629 536 341
-------- -------- --------
Net cash flows used in investing activities (14,064) (18,389) (34,934)
-------- -------- --------
Financing activities:
Debt borrowings --- 1,771 7,400
Repayment of debt (20,312) (33,777) (3,044)
Proceeds from exercise of stock options 767 1,865 120
Purchases of treasury stock --- (1,079) (3,764)
-------- -------- --------
Net cash flows from (used in) financing activities (19,545) (31,220) 712
-------- -------- --------
Effect of exchange rate on cash (2,697) (2,238) (1,445)
-------- -------- --------
Increase (decrease) in cash and cash equivalents (1,249) (10,910) 1,845
Cash and cash equivalents at beginning of year 24,350 35,260 33,415
-------- -------- --------
Cash and cash equivalents at end of year $ 23,101 $ 24,350 $ 35,260
======== ======== ========
Change in operating asset and liability components:
Decrease (increase) in trade accounts receivable $ 12,717 $(10,062) $ (3,723)
Decrease (increase) in inventories (4,876) 401 3,450
(Increase) in other current assets (15,629) (3,095) (565)
Increase (decrease) in accounts payable (3,232) 2,344 184
Increase (decrease) in accrued expenses and taxes (2,525) 4,636 896
-------- -------- --------
Change in operating assets and liabilities $(13,545) $ (5,776) $ 242
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 5,090 $ 7,442 $ 8,005
Income taxes $ 11,798 $ 18,121 $ 10,116
Tax benefit of disqualifying dispositions of stock options $ 365 --- ---
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE> 11
Notes to Consolidated Financial Statements Dynatech Corporation
Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the parent
company and its wholly owned domestic and international subsidiaries.
Intercompany accounts and transactions have been eliminated. As more
fully described in the notes, certain prior-year amounts have been
restated to reflect continuing operations. In addition, certain
prior-year amounts have been reclassified to conform with the current
year.
Revenue Recognition
Revenue from product sales is recognized at the time of shipment.
Research, Development and Warranty Costs
Costs relating to research, development and product warranty are
expensed as incurred. Such amounts are not material to the consolidated
financial statements.
Foreign Operations
Foreign currency denominated assets and liabilities are translated into
U.S. dollars at the exchange rates existing at the balance sheet dates.
Results of operations are translated at the average exchange rates
during the respective periods.
Cash Equivalents
Cash equivalents represent highly liquid debt instruments with a
maturity of three months or less at the time of purchase. Financial
instruments, which potentially subject the Corporation to concentrations
of credit risk, consist primarily of short-term deposits in Europe with
major banks located in various cities with levels and ratings set to
limit exposure with any one institution.
<TABLE>
Intangible Assets
Intangible assets acquired primarily from business acquisitions are
summarized as follows:
<CAPTION>
(Amounts in thousands) 1994 1993
--------------------------------------------------------------------------
<S> <C> <C>
Product technology $30,843 $39,855
Excess of cost over net assets acquired 20,474 22,206
Other intangible assets 15,413 25,293
------- -------
66,730 87,354
Less accumulated amortization 29,492 35,118
------- -------
Total $37,238 $52,236
======= =======
</TABLE>
Product technology and other intangible assets are amortized on a
straight-line basis primarily over 3 to 10 years, but in no event longer
than their expected useful lives. Amortization expense related to
product technology was $10,685,000 in fiscal 1994, $6,078,000 in fiscal
1993, and $5,909,000 in fiscal 1992, and was excluded from cost of
sales. Excess of cost over fair market value of net assets is being
amortized on a straight-line basis primarily over 15 years.
Depreciation and Amortization
Depreciation of machinery, equipment and fixtures is computed on the
straight-line method over estimated useful lives of 2 to 10 years.
Leasehold improvements are amortized over the lesser of the lives of the
leases or estimated useful lives of the improvements. Buildings are
depreciated on the straight-line method over the estimated useful lives.
The cost of improvements is charged to the property accounts, while
maintenance and repairs are charged to income as incurred. Upon
retirement or other disposition of property and equipment, the cost and
related depreciation are removed from the accounts, and any resulting
gain or loss is reflected in the Statement of Operations.
Inventories
Inventories are stated at the lower of cost (first-in, first-out or
average) or market.
<PAGE> 12
Profit-Sharing and 401(k) Savings Plan
The Corporation has a trusteed employee retirement profit-sharing and
401(k) savings plan for eligible U.S. employees. The Plan does not
provide for stated benefits upon retirement. Corporate contributions
($2,000,000 in 1994, $2,300,000 in 1993, and $1,600,000 in 1992) were
charged to expense.
Income Taxes
In fiscal 1994 the Corporation adopted Statement of Financial Accounting
Standards No. 109 entitled "Accounting for Income Taxes." Deferred
income tax assets and liabilities reflect income tax rates currently in
effect rather than historical rates. The adoption of Statement 109 did
not have a material impact on the operating results, components of
income tax expense, or financial position of the Corporation. The
Corporation's policy is not to provide for U.S. taxes on undistributed
earnings of foreign subsidiaries to the extent that such earnings are
determined to be permanently invested outside the United States.
Income Per Share
Income per share is based upon the weighted average number of common
shares outstanding each year. Common stock equivalents resulting from
the assumed exercise of outstanding stock options had no significant
effect on income per share in fiscal 1994, 1993, or 1992.
Streamlining and Restructuring
In the fourth quarter of fiscal 1994 the Corporation announced a series
of reorganization actions of approximately $50 million designed to focus
on supplying support products to providers of the global information
infrastructure. In connection with these actions the Corporation
recorded a streamlining and restructuring provision of $37.6 million
($24.8 million after taxes or $2.67 per share). These actions, which
will result in reduction of 10% of the work force, include the sale or
closure of nonstrategic businesses and consolidation and centralization
of various ongoing production and sales facilities. These actions
include employee severance, lease termination or restructuring, and
revaluation of various assets held for sale to estimated net realizable
value. The sale and closure activities are projected to be completed
within 18 months, and the consolidation and centralization efforts are
expected to be completed during fiscal 1995. Revenues of underperforming
nonstrategic businesses to be disposed approximated $89 million in
fiscal 1994. A portion of the employee-related actions were
implemented in the fourth quarter of fiscal 1994.
Net assets of continuing operations held for sale are stated at their
estimated net realizable value at March 31, 1994 and consist of working
capital of $7.8 million, property and equipment of $7.2 million, and
other assets of $4.3 million.
In connection with the streamlining and restructuring actions, the
Corporation recognized additional pretax charges in the fourth quarter
of fiscal 1994 approximating $8 million for nonrecurring operating
expenses. These costs include accelerated amortization of intangible
assets related to discontinued businesses and closedown costs of sales
and engineering facilities.
Discontinued Operations
Effective March 31, 1994 the Corporation adopted, and the Board of
Directors approved, a formal plan to discontinue its consumer automotive
businesses units and to sell or close these operations during fiscal
1995. As a result, a $4.4 million charge ($2.5 million after taxes or
$.27 per share) was recorded to write down assets to estimated net
realizable values.
The consolidated financial statements have been reclassified to report
separately the net assets and operating results of the discontinued
businesses. Prior-year operating results have been restated to reflect
continuing operations. Net current assets of the discontinued
operations consist primarily of accounts receivable and inventories less
accounts payable and accrued expenses.
<TABLE>
Summary operating results of the discontinued operations follow:
<CAPTION>
(Amounts in thousands) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $51,235 $53,773 $56,794
Gross margin 14,362 14,769 17,425
Operating income 494 372 223
Loss before taxes 2,020 4,558 4,327
Net loss 1,254 2,726 2,556
</TABLE>
<PAGE> 13
Notes Payable
Short-term notes payable, primarily in Europe, were $2,739,000 and
$3,853,000 at March 31, 1994 and 1993, respectively. The maximum amount
of short-term borrowings, domestic and foreign, at any month-end during
the year was $2,830,000 in fiscal 1994, $3,853,000 in 1993, and
$5,833,000 in 1992. The average amount of short-term borrowings during
the year was $2,733,000 in fiscal 1994, $3,292,000 in 1993, and
$5,209,000 in 1992. The approximate weighted average interest rate was
6.6% in fiscal 1994, 9% in 1993, and 10.5% in 1992 (calculated by
dividing interest expense for such borrowings by the weighted average
borrowings outstanding during the year). The weighted average interest
rate at year-end was 6.3% in fiscal 1994, 8.6% in 1993, and 8.7% in
1992.
At year-end, the Corporation had short-term unused lines of credit
aggregating $9,903,000 for foreign operations.
Long-Term Debt
<TABLE>
Long-term debt is summarized below:
<CAPTION>
(Amounts in thousands) 1994 1993
------------------------------------------------------------------------
<S> <C> <C>
Revolving credit and term bank loan $ 3,000 $19,400
Term notes 30,000 30,000
Other long-term debt 178 2,040
------- -------
Total debt 33,178 51,440
Less current portion 172 567
------- -------
Long-term debt $33,006 $50,873
======= =======
</TABLE>
The Corporation has an unsecured $100 million revolving credit and term
bank loan agreement with several commercial banks, which allows for
unsecured $30 million term notes with unrelated parties, and allows for
borrowings in various currencies and provides for interest to be payable
at one half of one percent per annum over the London Inter-Bank Offering
Rate, three eighths of one percent over the Certificate of Deposit rate,
or at the base or money market rate quoted by the lender, depending upon
the currencies borrowed and the form of borrowing. Principal borrowings
outstanding at December 31, 1996 under the revolving credit and term
bank loan will convert to a term loan payable in eight equal quarterly
installments beginning March 31, 1997. A commitment fee at a rate of
.25% is charged on the unused portion.
The $30 million of 10.15% term notes issued pursuant to a note agreement
are payable in four equal annual principal payments commencing on
December 15, 1997 and mature on December 15, 2000. Interest is payable
semiannually.
The approximate weighted average interest rate was 10.5% in fiscal 1994
and 8.4% in fiscal 1993. The composite rate at March 31, 1994 was 13.3%
and at March 31, 1993 was 9.8%.
The terms of the revolving credit agreement and note purchase agreement
require, among other things, specific levels of working capital, current
ratio, fixed charge coverage ratio and minimum tangible net worth. Due
to the streamlining and restructuring charges, the Corporation was not
in compliance with the current ratio or fixed charge coverage ratio
covenants under the existing revolving credit agreement. The revolving
credit agreement was amended by the lending institutions as of March 31,
1994 and as a result, the Corporation was in compliance with all
requirements.
Aggregate maturities of the above term debt for each of the years in the
five-year period ending March 31, 1999 are $172,000, $5,000, $376,000,
$9,000,000, and $8,625,000, respectively.
<PAGE> 14
<TABLE>
Income Taxes
Effective April 1, 1993 the Corporation adopted SFAS No. 109. The effect of the adoption of this statement had no impact on the
operating results, components of income tax expense, or financial position of the Company.
The components of the provision (benefit) for income taxes from continuing operations are as follows:
<CAPTION>
(Amounts in thousands) 1994 1993 1992
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for income taxes:
United States $ (5,997) $ 10,385 $ 7,507
Foreign (1,514) 1,743 2,016
State 1,396 2,618 2,374
-------- -------- --------
Total $ (6,115) $ 14,746 $ 11,897
======== ======== ========
Components of income tax provision:
Current:
Federal $ 5,961 $ 11,976 $ 8,156
Foreign (343) 1,809 2,028
State 1,903 2,941 2,434
-------- -------- --------
Total current 7,521 16,726 12,618
-------- -------- --------
Deferred:
Federal (11,958) (1,591) (649)
Foreign (1,171) (66) (12)
State (507) (323) (60)
-------- -------- --------
Total deferred (13,636) (1,980) (721)
-------- -------- --------
Total $ (6,115) $ 14,746 $ 11,897
======== ======== ========
</TABLE>
<TABLE>
Reconciliations between U.S. federal statutory rate and the effective tax rate (benefit) follow:
<CAPTION>
1994 1993 1992
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax at U.S. Federal statutory rate (35.0)% 34.0% 34.0%
Increases (reductions) to statutory tax rate resulting from:
Foreign income subject to tax at a rate different than U.S. rate 0.9 (1.1) ---
State income taxes, net of federal income tax benefit 6.7 5.1 5.6
Research and development tax credit (1.2) (0.3) (1.6)
Nondeductible amortization 10.5 5.2 5.2
Other (0.8) 0.6 (0.5)
----- ---- ----
Total (18.9)% 43.5% 42.7%
===== ==== ====
</TABLE>
The high level of nondeductible amortization charges, the inability to deduct
various state and foreign operating losses, and certain streamlining and
restructuring charges were contributing factors to the low tax benefit for
fiscal 1994. Excluding the effects of the streamlining and restructuring
charges and fourth quarter nonrecurring operating expenses, the effective tax
rate was 51.8%.
<PAGE> 15
<TABLE>
The tax effects of the principal temporary differences under Accounting
Principles Board Statement No. 11 resulting in deferred tax expense
(benefit) follow:
<CAPTION>
(Amounts in thousands) 1993 1992
------------------------------------------------------------------------------------
<S> <C> <C>
Depreciation and amortization $ (255) $(450)
Vacation (213) (69)
Inventory valuation, net 7 626
Bad debts 69 (249)
Repatriation of foreign earnings, net of foreign tax credit (500) ---
Liquidation of foreign subsidiaries --- (118)
Streamlining and restructuring charges --- ---
Accounting reserves (1,088) (461)
------- -----
$(1,980) $(721)
======= =====
</TABLE>
<TABLE>
The principal components of the deferred tax assets and liabilities
under SFAS No. 109 follow:
<CAPTION>
(Amounts in thousands) 1994 1993
-------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $11,327 $10,026
Streamlining and restructuring charges 17,792 ---
Vacation benefits 687 534
Bad debt allowance 504 509
Inventory capitalization 1,002 1,135
Depreciation and amortization 1,369 268
Other deferred assets 5,066 4,595
------- -------
37,747 17,067
Valuation allowance (13,656) (10,026)
------- -------
24,091 7,041
------- -------
Deferred tax liabilities:
Depreciation and amortization 550 1,175
Other deferred liabilities 1,257 805
------- -------
1,807 1,980
------- -------
Net deferred tax assets $22,284 $ 5,061
======= =======
Deferred income taxes are included in the following
balance sheet accounts:
Other current assets $19,802 $5,968
Other assets 3,032 ---
Deferred income taxes (550) (907)
------- -------
$22,284 $ 5,061
======= =======
</TABLE>
The net increase in the valuation allowance for fiscal 1994 resulted
from various state and foreign net operating loss carry forwards and
certain streamlining and restructuring charges.
<PAGE> 16
<TABLE>
Stock Options
Under Dynatech's Stock Option Plans, common stock is available to key
employees at prices not less than fair market value (110% of fair market
value for employees holding more than 10% of the outstanding common
stock) at the date of grant determined by the Board of Directors.
Incentive or nonqualified options may be issued under the Plans and are
exercisable from 1 to 10 years after grant. Options available for
future grants under the Plans were 249,573, 255,573, and 366,635 at
March 31, 1994, 1993, and 1992, respectively. A summary of changes in
the outstanding options is as follows:
<CAPTION>
1994 1993 1992
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares under option, beginning of year 410,492 429,282 399,460
Options granted (at an exercise price of $27.50 in 1994,
$22.25 in 1993, and $18.25 in 1992) 10,000 135,500 82,500
Options exercised (40,815) (100,620) (5,920)
Options canceled (26,774) (53,670) (46,758)
-------- -------- -------
Shares under option, end of year 352,903 410,492 429,282
======== ======== ========
Shares exercisable 145,603 158,002 199,788
Price of options exercised $17.25 to $17.25 to $17.25 to
$28.25 $28.25 $20.50
</TABLE>
In fiscal 1993 and 1994 the Corporation delivered treasury shares upon
the exercise of stock options and the difference between the cost of the
treasury shares, on a last-in, first-out basis, and the exercise price
of the options, is reflected in additional paid-in capital.
Shareholder Rights Plan
In February 1989, the Board of Directors adopted a Shareholder Rights
Plan and declared a dividend distribution of one Right for each
outstanding share of Dynatech's common stock. The Plan was amended in
March 1990. Each Right, when exercisable, entitles a qualifying
shareholder to buy shares of Dynatech junior participating cumulative
preferred stock. The Rights would only become exercisable (i) 10 days
after a person has become the beneficial owner of 15% or more of
Dynatech's common stock, or (ii) 10 business days after the commencement
of a tender offer that would result in the ownership of 15% or more of
the common stock, or (iii) upon determination by the Board of Directors
that a person who holds 10% or more of Dynatech's common stock intends
to, or is likely to, act in certain specified manners adverse to the
interests of Dynatech and its shareholders.
In the event Dynatech is acquired and is not the surviving corporation
in a merger, or in the event of the acquisition of 50% or more of the
assets or earning power of Dynatech, each Right would then entitle the
qualified holder to purchase, at the then-current exercise price, shares
of common stock of the acquiring company having a value of twice the
exercise price of the Right. Furthermore, if any party were to acquire
15% or more of Dynatech's common stock or were determined to be an
adverse person as described above, qualified holders of the Rights would
be entitled to acquire shares of Dynatech junior participating
cumulative preferred stock having a value of twice the then-current
exercise price. At the option of the Board of Directors, all of the
Rights could be exchanged into shares of common or preferred stock.
The Rights will expire February 16, 1999, but may be redeemed at the
option of the Board for $.02 per Right until one of the triggering
events described above has occurred. The Rights do not entitle holders
to any voting power or other shareholder benefits. Issuance of the
Rights does not dilute the shareholders' ownership of Dynatech, nor does
it affect reported earnings per share.
Commitments and Contingencies
The Corporation has operating leases covering plant and office
facilities and equipment which expire at various dates through 2014.
Future minimum annual fixed rentals required during the years ending in
fiscal 1995 through 1999 under noncancelable operating leases having an
original term of more than one year are $9,295,000, $7,212,000,
$5,355,000, $4,502,000, and $1,742,000, respectively. The aggregate
obligation subsequent to fiscal 1999 is $4,390,000. Rent expense from
continuing operations was approximately $12,267,000, $12,507,000, and
$11,342,000 in fiscal 1994, 1993, and 1992, respectively.
The Corporation is a party to several pending legal proceedings and
claims. Although the outcome of such proceedings and claims cannot be
determined with certainty, the corporation's counsel and management are
<PAGE> 17
of the opinion that the final outcome should not have a material adverse
effect on the Corporation's operations or financial position.
Segment Information and Geographic Areas
During fiscal 1994, the Corporation fundamentally changed its
organization and strategy and separated Dynatech into two business
segments: Information Support Products and Diversified Instrumentation.
Information Support Products consists of businesses which support
voice, video, and data communications. Diversified Instrumentation
represents a group of electronics and software businesses. Segment
information for the years ended March 31, 1994, 1993, and 1992 is
summarized below:
Assets identifiable to industry segments are those assets used in
Company operations and do not include general corporate assets.
Corporate assets consist primarily of cash and deferred income taxes.
<TABLE>
<CAPTION>
(Amounts in thousands) 1994 1993 1992
- - - ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales
Information Support Products $307,444 $307,599 $259,300
Diversified Instrumentation 151,005 166,598 170,270
-------- -------- --------
$458,449 $474,197 $429,570
======== ======== ========
Operating income from continuing operations
Information Support Products $ 16,410 $ 37,048 $ 33,087
Diversified Instrumentation 955 7,869 8,026
-------- -------- --------
17,365 44,917 41,113
Corporate expenses (9,566) (11,210) (11,376)
Interest expense, net (2,550) (637) (1,222)
Streamlining and restructuring* (37,582) --- ---
Other income (expense) (2) 837 (639)
-------- -------- --------
Pretax income (loss) from continuing operations $(32,335) $ 33,907 $ 27,876
======== ======== ========
Identifiable assets
Information Support Products $161,993 $175,536 $182,097
Diversified Instrumentation 67,963 81,810 90,349
General corporate 37,149 22,208 11,403
Discontinued operations 13,448 23,469 28,682
-------- -------- --------
$280,553 $303,023 $312,531
======== ======== ========
Capital expenditures
Information Support Products $ 12,046 $ 9,166 $ 8,598
Diversified Instrumentation 4,723 4,099 5,700
Corporate 103 165 125
Discontinued operations 962 917 1,846
-------- -------- --------
$ 17,834 $ 14,347 $ 16,269
======== ======== ========
Depreciation and amortization
Information Support Products $ 21,550 $ 16,232 $ 12,937
Diversified Instrumentation 10,143 8,674 9,568
Corporate 214 220 216
-------- -------- --------
$ 31,907 $ 25,126 $ 22,721
======== ======== ========
<FN>
* On a segment basis, the provision related to Information Support
Products $(24,136), Diversified Instrumentation $(12,446), and
Corporate $(1,000).
</TABLE>
Operations outside the United States consist of manufacturing
communications and medical diagnostic products in the Channel Islands
and England and sales of a majority of Dynatech's products through
wholly owned subsidiaries in Europe and Asia.
Net income (loss) in fiscal 1994, 1993, and 1992 included currency gains
(losses) of approximately $(364,100), $31,200, and $358,100,
respectively.
<PAGE> 18
The cumulative amount of undistributed earnings of consolidated foreign
subsidiaries for which federal income taxes have not been provided was
$35,723,000 at March 31, 1994. These earnings which reflect full
provision for non-U.S. income taxes, are indefinitely reinvested in
non-U.S. operations or will be remitted substantially free of additional
tax. Accordingly, no provision has been made for taxes that might be
payable upon remittance of such earnings nor is it practicable to
determine the amount of this liability.
<TABLE>
Information by geographic areas for the years ended March 31, 1994,
1993, and 1992 is summarized below:
<CAPTION>
Outside U.S.
(Amounts in thousands) United States (principally Europe) Combined
- - - -----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated
customers
1994 $370,771* $87,678 $458,449
1993 378,021* 96,176 474,197
1992 346,578* 82,992 429,570
Income (loss) before taxes
from continuing operations
1994 $(24,484) $(7,851) $(32,335)
1993 27,103 6,804 33,907
1992 23,773 4,103 27,876
Identifiable assets at
March 31, 1994 $200,620 $79,933 $280,553
March 31, 1993 215,134 87,889 303,023
March 31, 1992 225,101 87,430 312,531
<FN>
* Includes export sales of $73,745, $77,513, and $71,839 in 1994, 1993,
and 1992, respectively.
</TABLE>
<PAGE> 19
Acquisitions and Divestments
1994 Acquisitions
In January 1994, the Corporation acquired the assets of Editing Machines
Corporation (EMC) of Washington, DC for approximately $500,000 in cash.
EMC develops high-end digital nonlinear video and audio editing software
and markets this software to the post-production and corporate video
markets. Acquired intangible assets of $225,000 are being amortized
over five years. The investment in excess of fair market value of
assets purchased of $29,000 is being amortized over 15 years.
On October 10, 1993 the Corporation acquired all of the outstanding
shares of Atmospheric Research Systems Inc. (ARSI) of Palm Bay, Florida,
for approximately $2.3 million in cash. ARSI manufactures commercial
lightning detection and location systems that cover broad geographic
areas. Acquired intangible assets of $1 million are being amortized
over their estimated useful lives of seven years. The investment in
excess of fair market value of assets purchased of $1.9 million is being
amortized over fifteen years.
The Corporation assumed liabilities of $1.6 million in connection with
the above acquisitions. The acquisitions were accounted for under the
purchase method of accounting, and results of its operations have been
included from the date of acquisition. Since the effects of the
purchase acquisitions for the period April 1, 1993 through the date of
acquisition and for the twelve months ended March 31, 1994 are not
material to the consolidated financial statements, pro forma information
is not reflected herein.
1993 Acquisitions
In fiscal 1993, two acquisitions, recorded as purchases, were made for
$6.6 million in cash and assumed liabilities of $1.2 million. The
effects of the purchase acquisitions for the period April 1, 1992
through the dates of acquisition and for the twelve months ended March
31, 1993 are not material to the consolidated financial statements.
1992 Acquisitions
In fiscal 1992, five acquisitions, recorded as purchases, were made for
$23.2 million in cash and assumed liabilities of $7.7 million. The
effects of the purchase acquisitions for the period April 1, 1991
through the dates of acquisition and for the twelve months ended March
31, 1992 are not material to the consolidated financial statements.
Divestments
During fiscal 1994 the Corporation sold four businesses for $3.3
million. The effects of these transactions are not material to the
consolidated financial statements. In fiscal 1993 the Corporation sold
certain assets of two businesses on which a pretax gain of approximately
$112,000 was recognized. In fiscal 1992 the Corporation sold certain
assets of four businesses for $4.4 million, of which $1.8 million was
represented by promissory notes. The Company recognized a pretax loss,
which is included in other expense, of approximately $1,923,000 on the
sale of these assets.
Subsequent Events - Divestments
Subsequent to year-end the Corporation sold Micro Processor Systems,
Inc., which has been classified as a discontinued operation, and two
other businesses. The effects of these transactions are not material to
the consolidated financial statements.
<PAGE> 20
Report of Independent Accountants
To the Board of Directors and Shareholders of Dynatech Corporation:
We have audited the accompanying consolidated balance sheets of Dynatech
Corporation at March 31, 1994 and 1993, and the related consolidated
statements of operations, shareholders' equity and cash flows for each
of the three years in the period ended March 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Dynatech Corporation as of March 31, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the three years
in the period ended March 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
May 23, 1994
<PAGE> 21
<TABLE>
Summary of Operations by Quarter (Unaudited)
(Amounts in thousands except per share data)
<CAPTION>
1994 Quarter First(b) Second (b) Third(b) Fourth(b) Year
- - - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $117,749 $111,360 $113,381 $115,959 $458,449
Gross profit 63,176 58,899 59,629 58,182 239,886
Income from continuing operations 3,452 3,290 1,425 (34,387) (26,220)
Net income (loss) 3,553 3,267 1,274 (38,077)(c) (29,983)(c)
Income (loss) per common share
Continuing operations $ .37 $ .35 $ .15 $ (3.70) $ (2.82)
Net income (loss) $ .38 $ .35 $ .14 $ (4.10) $ (3.23)
Market Share Price (a) - High $ 33.25 $ 29.25 $ 24.75 $ 23.25
Low $ 25.75 $ 23.00 $ 20.50 $ 18.50
<CAPTION>
1994 Quarter First(b) Second (b) Third(b) Fourth(b) Year
- - - -----------------------------------------------------------------------------------------------------
Sales $110,383 $118,329 $120,525 $124,960 $474,197
Gross profit 60,039 65,432 67,045 69,009 261,525
Income from continuing operations 2,942 4,857 5,605 5,757 19,161
Net income 1,380 4,239 5,213 5,603 16,435
Income (loss) per common share
Continuing operations $ .32 $ .53 $ .61 $ .63 $ 2.09
Net income $ .15 $ .46 $ .57 $ .61 $ 1.79
Market Share Price (a) - High $ 20.00 $ 19.25 $ 23.50 $ 30.25
Low $ 17.00 $ 15.50 $ 15.50 $ 22.50
<FN>
(a) Dynatech common shares are traded on the NASDAQ - National Market System
No cash dividends have been paid on Dynatech common shares.
(b) Amounts restated as a result of treating certain operations as
discontinued operations
(c) Amounts reflect reorganization charges, net of tax, of $35,103.
</TABLE>
<PAGE> 22
<TABLE>
Index to Consolidated Financial Statements
and Financial Statement Schedules
<CAPTION>
Reference (page)
----------------------------------
Form 10-K Annual Report
to Shareholders
----------------------------------
<S> <C> <C>
Consolidated balance sheets at March 31, 1994 and
1993 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three
years in the period ended March 31, 1994 and related
notes to financial statements 16 - 27
Report of Independent Accountants 27
Data submitted herewith:
Report of Independent Accountants F-2
Schedules:
VIII. Valuation and Qualifying Accounts F-3
X. Supplementary Income Statement Information F-4
</TABLE>
Schedules other than those listed above have been omitted because they
are either not required or not applicable or because the required information
has been included elsewhere in the financial statements or notes thereto.
Individual financial statements of the Company have been omitted because
it is primarily an operating Company and no subsidiaries have material minority
equity interests, nor are any indebted to any person other than the parent or
consolidated subsidiaries, in amounts which are material in relation to total
consolidated assets at the date of the March 31, 1994 balance sheet, except
indebtedness incurred in the ordinary course of business which is not overdue.
<PAGE> 23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Dynatech Corporation:
Our report on the consolidated financial statements of Dynatech Corporation has
been incorporated by reference in this Form 10-K from the 1994 Annual Report to
Shareholders of Dynatech Corporation and appears on page 27 therein. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedules listed in the index on page F-1 of
this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Boston, Massachusetts COOPERS & LYBRAND
May 23, 1994
<PAGE> 24
<TABLE>
DYNATECH CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
RESERVE FOR DOUBTFUL ACCOUNTS (In thousands)
<S> <C>
BALANCE, March 31, 1991 $3,086
Additions charged to income 2,770
Write-off of uncollectible accounts, net (2,316)
------
BALANCE, March 31, 1992 3,540
Additions charged to income 1,985
Write-off of uncollectible accounts, net (1,891)
------
BALANCE, March 31, 1993 3,634
Additions charged to income 1,232
Write-off of uncollectible accounts, net (961)
------
BALANCE, March 31, 1994 $3,905
======
</TABLE>
<PAGE> 25
<TABLE>
DYNATECH CORPORATION
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
_______________
<CAPTION>
Classification Charged to Income in Fiscal Year Ended March 31
- - - -------------- -----------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Advertising $8,480,000 $7,888,000 $5,845,000
</TABLE>
<PAGE> 1
<TABLE>
DYNATECH CORPORATION
Subsidiaries of the Registrant
EXHIBIT 21
<CAPTION>
State or other jurisdiction
Name of Parent of Subsidiary of organization
- - - ------------------------------------------ ---------------------------
<S> <C>
Dynatech Corporation - Parent Massachusetts
Dynatech U.S.A., Inc. Massachusetts
Alpha Image, Inc. Delaware
Alta Group, Inc. California
Asinc, Incorporated California
Atmospheric Research Systems, Inc. Florida
Bradley Telcom Corporation (inactive) New Jersey
ColorGraphics Systems, Inc. Wisconsin
ComCoTec, Inc. Illinois
Computerized Medical Systems, Inc. Missouri
DaVinci Systems, Inc. Florida
Digital Technology, Inc. Ohio
Dolphin Networks, Inc. Georgia
Dyna FSC Corporation U.S. Virgin Islands
Dynatech Cable Products Group, Inc. Utah
Dynatech Communications, Inc. Delaware
Dynatech Laboratories, Inc. Delaware
Dynatech Leasing Corporation Nevada
Dynatech Microwave Technology, Inc. Nevada
Dynatech Nevada, Inc. Nevada
Dynatech NewStar, Inc. Wisconsin
Dynatech Precision Sampling Corporation Louisiana
Dynatech Tactical Communications, Inc. Massachusetts
Dynatech Video Group, Inc. Utah
Dynatech Video & Specialty Computers, Inc. Wisconsin
Geomet Data Services, Inc. Arizona
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Dynatech Spectrum, Inc. California
Industrial Computer Source, Inc. California
Innovative Electronics, Inc. Florida
Interface Technology, Inc. California
L.E.A. Dynatech, Incorporated Florida
Lightning Location and Protection, Inc. Arizona
LP Com (inactive) California
Micro Processor Systems, Inc. Michigan
Parallax Graphics, Inc. California
Piiceon, Inc. California
Qualimetrics, Inc. California
Quanta Corporation Utah
Quanta International Corporation Utah
Science Associates, Inc. (in liquidation) New Jersey
Telecommunications Techniques Corporation Maryland
Trigon Industries, Inc. California
Trontech, Inc. New Jersey
Unex Corporation Massachusetts
U.S. Computer Systems, Inc. Ohio
Utah Scientific Inc. Nevada
V.I. Corporation Massachusetts
Weathertronics International, Inc. (inactive) California
Whistler Corporation Massachusetts
XKD Corporation California
Alpha Image, Limited England
Cromemco, G.m.b.H. (inactive) Germany
Cromemco, Limited (inactive) England
Cybermation, Limited (inactive) England
Dynatech A.G. (in liquidation) Switzerland
Dynatech Video Group, Ltd. England
Dynatech Communications, Ltd. Canada
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Dynatech Communications, Ltd. England
Dynatech Scandinavia A/S Norway
Dynatech Communications SRL Italy
Dynatech Communications Svenska A.B. Sweden
Dynatech Data Communications, Ltd. Guernsey, Channel Islands
Dynatech Communications Espani (in liquidation) Spain
Dynatech Communications G.m.b.H. Germany
Dynatech Deutschland, G.m.b.H. Germany
Dynatech Gesellschaft Furdated Verarbeitung Germany
Dynatech Systems France, SA France
Dynatech Holdings Ltd. Guernsey, Channel Islands
Dynatech Holdings Ltd. England
Dynatech Holdings S.A.R.L. France
Dynatech Hong Kong, Ltd. Hong Kong
Dynatech Investments, Ltd. Guernsey, Channel Islands
Nihon Dynatech K.K. Japan
Dynatech Laboratories, Ltd. England
Dynatech Medical Products, Ltd. Guernsey, Channel Islands
Dynatech Produkte A.G. Switzerland
Dynatech Systems, Limited England
Industrial Computer Source France France
Laboratorie Dynatech SARL France
Piiceon, Ltd. England
Qualimetrics, Limited England
Telecommunications Techniques Company (UK), Ltd. England
Dynatech Laboratories s.r.o. Czech Republic
Telecommunications Techniques Company (Ireland) Ltd. Ireland
V.I. Corporation (Europe) Ltd. England
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF
INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Dynatech Corporation on Form S-3 (File Nos. 2-78465,
2-81026, 2-82260, 2-85387, 2-86457, 2-92391, 2-94757, 33-365, 33-2387,
33-5544, 33-17169, 33-24058 and 33-30610) and on Form S-8 (File Nos.
2-87779, 33-10465, 33-17243, 33-42427 and 33-50768) of our reports
dated May 23, 1994, on our audits of the consolidated financial
statements and financial statement schedules of Dynatech Corporation
as of March 31, 1994 and 1993 and for each of the years ended March
31, 1994, and 1993 and 1992, which reports have been incorporated by
reference or included in this Annual Report on Form 10-K.
Boston, Massachusetts COOPERS & LYBRAND
June 13, 1994
