SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 241.14a-11(c) or Section
240.14a-12
DYNATECH CORPORATION
(Name of Registrant as Specified In Its Charter)
SC FUNDAMENTAL INC., THE SC FUNDAMENTAL VALUE FUND, L.P.,
SC FUNDAMENTAL VALUE BVI, INC., SC-BVI PARTNERS,
SC FUNDAMENTAL VALUE BVI, LTD.,
GARY N. SIEGLER AND PETER M. COLLERY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
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applies:
______________________________________________________________
2) Aggregate number of securities to which transaction
applies:
______________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:<F1>
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[FN]
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and state how it was determined.
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<PAGE>
DYNATECH STOCKHOLDERS COMMITTEE
712 Fifth Avenue
New York, NY 10019
PROXY STATEMENT OF THE
DYNATECH STOCKHOLDERS COMMITTEE
IN OPPOSITION TO THE BOARD OF DIRECTORS
Dynatech Corporation
1994 Annual Meeting of Stockholders
Scheduled for July 26, 1994
_______________________
TO ALL STOCKHOLDERS OF DYNATECH CORPORATION:
This Proxy Statement is being furnished to holders (the
"Stockholders") of the Common Stock, par value $.20 per share
(the "Common Stock"), of Dynatech Corporation ("Dynatech" or the
"Company") in connection with the solicitation of proxies by the
Dynatech Stockholders Committee (the "Committee") for use in
connection with the Company's 1994 Annual Meeting which is
scheduled to be held on July 26, 1994, at 10:00 A.M. at the
Goodwin, Proctor & Hoar Conference Center, 2nd Floor, Exchange
Place, Boston, MA or at any adjournments or postponements thereof
(the "Annual Meeting").
The Committee, which contains two substantial holders
of the Company's Common Stock, is seeking your support (a) to
elect their nominees (constituting a minority of the Board of
Directors) to the Board of Directors, (b) for their proposal to
recommend to the Board of Directors that it retain a nationally
recognized investment banking firm to value the Company and its
businesses and conduct a sale of the Company in a fair process,
at the highest price obtainable, or a substantial restructuring
with a view towards maximizing Stockholder value (Proposal No. 2)
and (c) against the 1994 Stock Option and Incentive Plan proposed
by the Board of Directors (Proposal No. 3).
IF YOU HAVE ANY QUESTIONS OR HAVE ANY DIFFICULTY
GRANTING PROXIES, YOU ARE INVITED TO CONTACT GEORGESON & COMPANY
INC. TOLL-FREE AT (800) 223-2064. BANKS AND BROKERS CALL (212)
440-9800 (COLLECT).
<PAGE>
SHARES REPRESENTED BY A VALID UNREVOKED BLUE PROXY CARD
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, SHARES
REPRESENTED BY A BLUE PROXY CARD WILL BE VOTED FOR THE ELECTION
OF THE COMMITTEE'S NOMINEES AS DIRECTORS OF THE COMPANY; FOR THE
PROPOSAL TO BE OFFERED BY THE COMMITTEE (THE "COMMITTEE
PROPOSAL"), AS SET FORTH HEREIN UNDER THE CAPTION "COMMITTEE
PROPOSAL"; AGAINST THE BOARD'S 1994 STOCK OPTION AND INCENTIVE
PLAN PROPOSAL, AS DESCRIBED IN THE COMPANY'S BOARD OF DIRECTORS'
PROXY STATEMENT (THE "BOARD'S PROXY STATEMENT"); AND WILL BE
VOTED IN THE DISCRETION OF THE PERSONS NAMED THEREIN ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. PROXIES MAY
BE REVOKED AT ANY TIME PROVIDED THAT A WRITTEN REVOCATION WHICH
CLEARLY IDENTIFIES THE PROXY BEING REVOKED IS EXECUTED AND
DELIVERED TO THE COMMITTEE, C/O GEORGESON & COMPANY INC. AT WALL
STREET PLAZA, NEW YORK, NEW YORK 10005 OR TO THE SECRETARY OF THE
COMPANY AT DYNATECH CORPORATION, 3 NEW ENGLAND EXECUTIVE PARK,
BURLINGTON, MASSACHUSETTS 01803-5087. A LATER DATED PROXY
AUTOMATICALLY REVOKES AN EARLIER DATED ONE. YOU MAY ALSO REVOKE
ANY PROXY GIVEN BY ATTENDING THE ANNUAL MEETING AND VOTING YOUR
SHARES OF COMMON STOCK.
This Proxy Statement and BLUE Proxy Card are first
being sent to Stockholders on or about July 7, 1994.
According to the Board's Proxy Statement, as of the
close of business on June 13, 1994 (the "Record Date"), there
were 9,297,009 shares of Common Stock outstanding. Each share of
Common Stock is entitled to one vote. Only Stockholders of
record at the close of business on the Record Date are entitled
to vote at the Annual Meeting.
July 7, 1994
IMPORTANT
Carefully review this Proxy Statement and the enclosed
materials. YOUR PROXY IS IMPORTANT. No matter how many or how
few shares you own, please vote FOR the Committee's nominees, FOR
Proposal No. 2 and AGAINST Proposal No. 3, all as set forth
herein, by so indicating and by signing, dating and mailing the
enclosed BLUE Proxy Card promptly. You CANNOT use the Company's
WHITE Proxy Card to vote for the Committee's nominees.
IF YOU HAVE ALREADY MAILED THE WHITE PROXY CARD
SUPPLIED TO YOU BY THE COMPANY'S BOARD OF DIRECTORS, YOU HAVE
EVERY RIGHT TO CHANGE YOUR VOTE BY SIGNING, DATING AND RETURNING
THE ENCLOSED BLUE PROXY CARD IN THE ENCLOSED ENVELOPE. Remember,
your latest dated proxy determines your vote at the Annual
Meeting.
<PAGE>
If you own your shares in the name of a brokerage firm,
bank nominee or other institution, only they can vote your shares
of Common Stock. Accordingly, you should contact the person
responsible for your account and give instructions with respect
to the granting of proxies. Your broker cannot vote your shares
unless he or she receives your specific instructions.
IF YOU HAVE ANY QUESTIONS OR HAVE ANY DIFFICULTY
GRANTING PROXIES, YOU ARE INVITED TO CONTACT GEORGESON & COMPANY
INC. TOLL-FREE AT (800) 223-2064. BANKS AND BROKERS CALL (212)
440-9800 (COLLECT).
<PAGE>
BACKGROUND OF AND REASONS FOR THE PROXY SOLICITATION
Two members of the Committee own an aggregate of 9.5%
of the 9,297,009 shares of Common Stock which were outstanding on
the Record Date according to the Board's Proxy Statement. In
opposition to the Board of Directors, the Committee is seeking to
solicit the proxies of Stockholders to be used: (i) to vote FOR
the election of Gary N. Siegler, Peter M. Collery and Curtis
Macnguyen (the "Committee's Slate") as directors of the Company
to serve until their successors are duly elected and qualified;
(ii) to vote FOR Proposal No. 2 (the "Committee Proposal") urging
the retention by the Company of a nationally recognized
investment banking firm to value the Company and its businesses
and conduct a sale of the Company or a substantial restructuring
with a view towards maximizing Stockholder value in the near term
(the "Committee Proposal"); (iii) to vote AGAINST Proposal No.
3 -- the 1994 Stock Option and Incentive Plan proposed by the
Board of Directors; and (iv) to vote in their discretion on such
other matters as may properly come before the meeting or any
adjournments or postponements thereof.
According to the Board's Proxy Statement, only two of
the nine members of the Company's Board of Directors currently
own more than 0.2% of the shares of Common Stock, not including
options to purchase Common Stock, and each of the two has been
selling shares. According to the Board's Proxy Statement, over
the past two years, J.P. Barger has sold 127,835 shares of Common
Stock and Warren M. Rohsenow has sold 48,600 shares of Common
Stock. The last of J.P. Barger's sales took place on June 15,
1994 and the last of Warren M. Rohsenow's sales took place on May
27, 1994. More importantly, the Committee believes management's
performance over the last five years has failed to provide
adequate returns to Stockholders.
DYNATECH'S STOCK HAS SIGNIFICANTLY UNDERPERFORMED BOTH THE S&P
HIGH TECH COMPOSITE INDEX AND THE S&P 500 COMPOSITE INDEX.
The following graph, which is reproduced from page 11
of the Board's Proxy Statement, shows the five year cumulative
total return for Dynatech from March 31, 1989 to March 31, 1994
and should be studied carefully.
<PAGE>
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED MARCH 31, 1994
[A five-year performance bar graph, as presented in the
Board's proxy statement and as represented by the table below,
has been omitted from this electronic format document.]
<CAPTION>
3/1989 3/1990 3/1991 3/1992 3/1993 3/1994
<S> <C> <C> <C> <C> <C> <C>
Dynatech Corp. 100.00 86.11 112.50 109.72 148.61 102.78
S&P 500 Index 100.00 119.27 136.46 151.53 174.60 177.17
High-Tech Composite 100.00 107.95 117.85 120.60 132.52 155.86
</TABLE>
The following compounded annual rate of return has been
computed by the Committee based upon the information contained in
the graph above.
Dynatech S&P 500 High-Tech
Corp. Index Composite
Compounded Annual Rate of
Return from March 31, 1989
through March 31, 1994 0.55% 12.12% 9.28%
The graph shows that a hypothetical investment on March
31, 1989 of $100 in each of the Common Stock of Dynatech, the S&P
500 Index and the S&P High Tech Composite Index would have
returned to the investor on March 31, 1994, $102.78 for the
Dynatech investment, versus $177.17 for the S&P 500 Index and
$155.86 for the S&P High Tech Composite Index. The comparative
compounded annual rate of return for the period from March 31,
1989 through March 31, 1994 also shows how dramatically Dynatech
has underperformed these indices.
<PAGE>
Set forth below are some of the reasons the Committee
believes that management's performance has been inadequate and
why the Committee is seeking your votes in support of the
Committee's Slate and the Committee Proposal.
THE COMMITTEE BELIEVES MANAGEMENT'S DEPLOYMENT OF CASH HAS FAILED
TO GENERATE SATISFACTORY RETURNS.
The Committee believes that Dynatech's performance is
woefully inadequate given the degree of reinvestment of cash into
the Company's businesses. According to information contained in
the Company's Annual Reports to Stockholders during its 1992
through 1994 fiscal years, rather than pay dividends to
Stockholders, Dynatech reinvested the substantial majority of its
Gross Discretionary Cash From Operations<F1> in its businesses in
the form of research and development expenses ("R&D"), capital
expenditures and cash paid for acquisitions. Notwithstanding
this massive reinvestment, the Company's Gross Discretionary Cash
From Operations in 1994 was below the 1992 level, and its Net
Discretionary Cash From Operations<F2> was above the 1992 level
merely as a result of the Company spending significantly less on
acquisitions in 1994 than it did in 1992.
[FN]
<F1> The Committee uses the term "Gross Discretionary Cash From
Operations" to mean earnings before interest, R&D, income taxes,
depreciation, amortization and unusual items.
<F2> The Committee uses the term "Net Discretionary Cash From
Operations" to mean Gross Discretionary Cash From Operations
minus the sum of R&D expenditures, capital expenditures and
acquisition expenditures.
<PAGE>
<TABLE>
GROSS DISCRETIONARY CASH FROM OPERATIONS;
EXPENDITURES FOR R&D, CAPITAL ITEMS AND ACQUISITIONS;
NET DISCRETIONARY CASH FROM OPERATIONS
(millions of dollars)
<CAPTION>
Fiscal Years Ending March 31
1994 1993 1992
<S> <C> <C> <C>
Gross Discretionary
Cash From Operations $93.5 $109.9 $100.4
Less:
R&D 53.8 51.1 47.9
Capital expenditures 17.8 14.3 16.3
Acquisitions 2.8 5.6 22.6
Net Discretionary
Cash From Operations $19.1 $ 38.9 $ 13.6
</TABLE>
<PAGE>
DYNATECH'S SG&A AND R&D EXPENSES ARE MUCH HIGHER THAN THOSE OF
OTHER COMPANIES IN THE ELECTRONICS INDUSTRY.
Dynatech's selling, general and administrative expenses
("SG&A") and R&D in fiscal year 1994 as a percentage of total
sales were considerably above those of the other companies in the
electronics industry with which Dynatech was grouped by the Value
Line Investment Survey (the "Value Line Group"). The companies
in the Value Line Group were selected by Value Line, not the
Committee, and may contain some or many companies which are
substantially dissimilar to Dynatech. According to data
contained in the Compusat information service database, the
average percentage of total sales spent by companies in the Value
Line Group for SG&A and R&D combined was 29% in their most
recently completed fiscal year, as compared to 47% for Dynatech.
With respect to R&D, while the Committee recognizes that a strong
R&D budget is crucial, the Committee believes that Dynatech has
failed to generate a sufficient return commensurate with the sums
it has spent on R&D. With respect to SG&A, the Committee was not
satisfied, with the explanations of the Board's nominees for
directors regarding the current level of SG&A expenses. When
confronted with the Committee's observations that SG&A expenses
as a percentage of sales for Dynatech appeared to be
substantially higher than that for the Value Line Group, the
nominees disputed that Dynatech could be compared to any other
company in view of the diversity of its constituent businesses or
that Dynatech's expenses could be reduced. They further stated
that the only method by which the SG&A percentage of total sales
could be reduced was to increase sales.
UNDER THE CURRENT MANAGEMENT, THE COMPANY'S PROFITS HAVE
DETERIORATED SIGNIFICANTLY OVER THE PAST THREE QUARTERS.
In the last three fiscal quarters, the Company's
profits have decreased dramatically, as set forth in the table
below. Under the stewardship of John F. Reno, who became
President and Chief Executive Officer of Dynatech in January of
1993, the Company, in the 4th quarter of fiscal year 1994,
reported its first quarterly loss in 23 years.
<PAGE>
Reported Earnings Per Share
Quarter From Continuing Operations
1994 1993
Second $0.35 $0.53
Third 0.15 0.61
Fourth (3.70)<F1> 0.63
_____________________
[FN]
<F1> Includes a $3.51 per share restructuring charge for
continuing operations. Excluding the restructuring charge, the
Company would have reported a loss of $.19 per share from
continuing operations.
THE COMPANY HAS FAILED TO MEET ANALYSTS' EARNINGS EXPECTATIONS
FOR THE LAST THREE QUARTERS.
In each of the last three quarters, the Company has
announced earnings that were significantly below the consensus
expectation of the Wall Street analysts who follow Dynatech. Set
forth below are the Institutional Brokers Estimate System
(I/B/E/S Inc.) consensus earnings estimates for Dynatech for the
fiscal quarters ending September 1993, December 1993, and March
1994, as reported in the last month of each such quarter and the
earnings actually reported for these quarters.
<TABLE>
ACTUAL REPORTED PER SHARE EARNINGS COMPARED TO
ANALYSTS' ESTIMATES
<CAPTION>
Actual
Reported
Earnings
Mean from
Analysts' Continuing
Date Estimates Operations Difference
<S> <C> <C> <C>
3/94 $0.31 (0.19) <F1> ($0.50)
12/93 0.50 0.15 (0.35)
9/93 0.47 0.35 (0.12)
<FN>
<F1> Excludes a $3.51 per share restructuring charge for
continuing operations.
</TABLE>
<PAGE>
THE COMPANY HAS FAILED TO TAKE CERTAIN SIGNIFICANT CORPORATE
ACTIONS WHICH COULD RESULT IN SUBSTANTIAL INCREASES IN
STOCKHOLDER VALUE.
Dynatech is an agglomeration of some 42 different
businesses, each of which operates with a large degree of
autonomy. The Committee believes that Dynatech could sell or,
for example, spin off as an independent publicly-traded entity
certain operations at prices which exceed their value to the
Company. By way of example, the Committee believes that the
Company's telecommunications testing equipment businesses
(together, "TTC") could be worth in excess of $190 million. This
belief is based upon statements made by Dynatech management at a
meeting between Dynatech management and representatives of the
Committee that TTC's sales for fiscal year 1994 approximated $130
million, its operating profit margin (i.e. earnings before
interest, taxes and amortization of intangibles divided by sales)
is in the "good teens" and that the business is expected to grow
at approximately 10% per year. Applying 16%, a conservative
estimate of a "good teens" operating profit margin, to a sales
base of $130 million results in operating profits for TTC in
excess of $20 million for fiscal year 1994. To value TTC's
business, the Committee multiplied the estimated $20 million or
more of operating profits by a valuation multiple of 10 chosen by
the Committee, based upon its view of TTC's current industry
dynamics, competitive position and solid growth prospects. This
results in a Committee estimated valuation for the TTC business
in excess of $190 million, or $20.44 per share, after the
assumption that the costs of disposition would be about 5% of the
value, or $10 million, or $1.08 per share. This per share value
of TTC alone approximates the closing price of a share of
Dynatech Common Stock as reported by NASDAQ on June 20, 1994.
TTC represents less than one-third of Dynatech's total business
as measured by sales for fiscal year 1994. This valuation does
not assume any tax liability to Dynatech upon the disposition of
TTC. The Committee believes it may be possible to accomplish a
disposition which would be tax free to Dynatech. However,
certain dispositions, such as a sale of assets constituting TTC,
would likely be taxable to Dynatech, although the amount of the
tax is not computable from information available to the
Committee.
In estimating the value of TTC, the Committee did not
seek to obtain an opinion of an independent investment banking
firm.
THE COMMITTEE AND THE BOARD'S NOMINEES DISAGREE ON THE NEED FOR
EXTRAORDINARY ACTION.
Representatives of the Committee made inquiries on June
10, 1994, of the Board's nominees for election as directors
regarding a variety of subjects designed to elicit the Board's
nominees' views regarding maximization of Stockholder value. In
<PAGE>
the Committee's view, the Board's nominees' responses reflect an
unwillingness to take actions other than those which comprise the
restructuring plan. The Committee considers this unacceptable.
Business as usual is not good enough. The Committee
believes the proper course of action for the Company is as set
forth in the Committee Proposal below.
Accordingly, after considering various alternatives,
the Committee decided to propose a slate of three directors and
to solicit proxies in support of such slate and in support of the
Committee Proposal.
THE COMMITTEE BELIEVES THE COMPANY'S PROPOSED "RESTRUCTURING" IS
WHOLLY INADEQUATE.
In the Committee's view, the Company's proposed
restructuring is largely cosmetic and does not address what the
Committee believes are the serious problems described herein,
such as the low rate of return on the Company's shares when
compared to indices which appear in the graph on page 5 of this
Proxy Statement, deteriorating profits over the last three fiscal
quarters and in the Committee's opinion, management's failure to
generate satisfactory returns on its reinvestment of Gross
Discretionary Cash From Operations (as such term is used by the
Committee in footnote 1 on page 6 of this Proxy Statement). The
Company's restructuring has three essential elements: (i)
writing off a substantial amount of intangible assets; (ii) the
sale of certain businesses designated for sale; and (iii)
incurring certain severance and related out-of-pocket costs.
The Company's 10-K for the fiscal year ended March 31,
1994 provides that a "high level" of the Company's amortization
charges are non-deductible for income tax purposes. Accordingly,
the first of these actions should have little positive impact on
the Company's cash flow and merely represents an acknowledgment
that previous acquisitions are not worth the amount paid for
them.
The second of these actions consists of selling certain
of the Company's businesses which have been reclassified as "Held
for Sale." Until actual completion of such sales, the
reclassification to "Held for Sale" is simply an accounting
change which has the impact of increasing reported earnings from
continuing operations by segregating losses incurred by the
businesses "Held for Sale." Even if management succeeds in
selling these businesses, the Committee believes that these sales
are far too limited in scope.
The final action, the incurring of severance and other
costs, will, according to statements made by management at an
investors' meeting in New York City on May 6, 1994, result in a
<PAGE>
$20 million cash outflow which will subsequently produce $9
million in annual cash savings. At that meeting, Mr. Reno,
President and Chief Executive Officer of the Company, or Mr.
Hertz, Treasurer and Chief Financial Officer of the Company,
indicated that R&D and SG&A expenses as a percentage of sales
would increase on a pro forma basis after the sale of the
businesses "Held for Sale." In the Committee's opinion, further
increases in R&D and in SG&A ratios further exacerbates the
Company's problems, as discussed under the captions above
entitled "DYNATECH'S STOCK HAS SIGNIFICANTLY UNDERPERFORMED BOTH
THE S&P HIGH TECH COMPOSITE INDEX AND THE S&P 500 COMPOSITE
INDEX," "THE COMMITTEE BELIEVES MANAGEMENT'S DEPLOYMENT OF CASH
HAS FAILED TO GENERATE SATISFACTORY RETURNS," "UNDER THE CURRENT
MANAGEMENT, THE COMPANY'S PROFITS HAVE DETERIORATED SIGNIFICANTLY
OVER THE PAST THREE QUARTERS" and "THE COMPANY HAS FAILED TO MEET
ANALYSTS' EARNINGS EXPECTATIONS FOR THE LAST THREE QUARTERS."
THE COMMITTEE IS NOT CONFIDENT THAT MANAGEMENT CAN BE COUNTED ON
TO MAXIMIZE STOCKHOLDER VALUE.
The Committee does not have confidence that Dynatech's
present management can be relied upon to maximize the value of
the Company's shares.
The members of the Committee's Slate are committed, if
elected, to take such action as they deem advisable and in the
best interest of Stockholders and which they believe will
maximize Stockholder value. Specifically, the Committee believes
that, given all of the matters discussed above, a sale of the
Company would most likely be the best means to maximize
Stockholder value. In the Committee's opinion, the Stockholders
would be best served by having a nationally recognized investment
banking firm retained to value the Company and its businesses and
(i) to conduct a sale of the Company, in a fair process, at the
highest price obtainable, or (ii) to implement a major
restructuring of the Company which might include the spin-off of
TTC to Stockholders. The Committee further believes that the
restructuring alternative should be pursued only if it is
determined that such a restructuring will result in higher value
to Stockholders than a sale of the entire Company.
In attempting to determine the potential value of
Dynatech in a sale, the Committee has disaggregated the Company
into three components. The first of these, TTC, is, as described
above, thought to be worth in excess of $190 million (after
estimated expenses of disposition of $10 million but assuming no
taxes are payable), or $20.44 per share. The second component,
businesses held for sale, are expected, according to statements
by Dynatech Management at the May 6 investors' meeting, to
generate approximately $40 million, or $4.30 per share in net
proceeds. The balance of the continuing businesses have revenues
of approximately $260 million. Of the 36 companies grouped with
<PAGE>
Dynatech by Value Line, and on the basis of information contained
in the Value Line Investment Survey dated April 29, 1994, the
LOWEST multiple of aggregate company value (defined as market
value of equity plus (or minus) net debt or (cash)) to total
revenues in the most recent fiscal year is 0.29 times. Applying
this multiple to the $260 million of sales for the non-TTC
Dynatech continuing businesses results in a value of $75.4
million, or $8.11 per share. The foregoing discussion is based
on the assumption that no taxes would be payable by the Company.
To the extent that the sale(s) or other dispositions are taxable
to the Company, the Committee is not able to estimate the amount
of taxes which would be payable based on information available to
the Committee. Subtracting from these values the Company's net
debt of $12.8 million or $1.38 per share and additional estimated
costs of sale of $5.5 million indicates a potential value for
Dynatech of $287.1 million, or $30.88 per share as illustrated
below:
<TABLE>
<CAPTION>
Total Company
(Millions of Dollars) Per Share
<S> <C> <C>
TTC $190.0 $20.44
Businesses to be sold 40.0 4.30
Remaining businesses 75.4 8.11
Additional Estimated
Expenses of Sale (5.5) (0.59)
Debt, net of cash<F1> (12.8) (1.38)
Total $287.1 $30.88
<FN>
<F1> Source: Company 1994 Annual Report
If elected, Messrs. Siegler, Collery and Macnguyen are
committed to attempting to persuade the Board of Directors to
accept the Committee Proposal. As directors, they would work to
provide maximum values for you -- the owners of the Company.
If the Committee's nominees are elected, none of the
members of the Committee intends to sell any shares of Common
Stock owned by them back to the Company unless a similar
opportunity (including sales in the open market or sales pursuant
to an issuer tender offer) is available to all Stockholders.
<PAGE>
THE COMMITTEE PROPOSAL
At the Annual Meeting, members of the Committee will
propose that the Stockholders vote for the following resolution:
"RESOLVED, that the Stockholders of the Company, assem-
bled in person or by proxy at the annual meeting of
Stockholders, request and recommend that the Board of
Directors retain a nationally recognized investment
banking firm to value the Company and its businesses
and (i) to conduct a sale of the Company in a fair
process, at the highest price obtainable, or (ii) to
implement a major restructuring of the Company which
might include the spin-off of TTC to Stockholders. The
Stockholders of the Company further request and
recommend that the restructuring alternative be pursued
only if it is determined that such a restructuring
would result in higher value to Stockholders than a
sale of the entire Company."
While there is no assurance that the Company will
permit a vote on the Committee Proposal and while adoption of the
Proposal at the Annual Meeting would not legally bind the Board
of Directors, the Committee expects that given the fiduciary
responsibility of the directors, the directors will honor the
Stockholders' request. If elected, the Committee's nominees will
strongly urge the Board to adopt actions set forth in the
Committee Proposal. The Committee urges you to consider the
Committee Proposal seriously and to vote for the Committee
Proposal, which is Proposal 2 on the Blue Proxy Card.
THE BOARD'S PROPOSED
STOCK OPTION AND INCENTIVE PLAN
The Board's Proxy Statement contains a proposal for the
Approval of the Dynatech Corporation 1994 Stock Option and
Incentive Plan. The Committee recommends a vote AGAINST with
respect to this matter and will vote any proxies on this matter
AGAINST if no preference is indicated as to Item 3 of the BLUE
Proxy Card.
The Committee opposes the Board's proposed 1994 Stock
Option and Incentive Plan because, in light of the Committee's
view that a sale of the Company or other extraordinary corporate
action is likely to be the most prudent course to maximize
Stockholder value, the Committee believes that this is not the
appropriate time to implement such a plan.
THE COMMITTEE AND ITS SLATE
The members of the Committee are SC Fundamental Inc., a
Delaware corporation ("SC"), The SC Fundamental Value Fund, L.P.,
<PAGE>
a Delaware limited partnership ("Fund"), SC Fundamental Value
BVI, Inc., a Delaware corporation ("BVI Inc."), SC-BVI Partners,
a Delaware partnership ("Partners"), SC Fundamental Value BVI,
Ltd., a British Virgin Islands corporation ("BVI Ltd."), Gary N.
Siegler ("Siegler") and Peter M. Collery ("Collery").
Information concerning the Committee's members and other
participants, including their relationships to one another and
beneficial ownership of securities of the Company, is set forth
herein and on Appendix A hereto. Other than the foregoing,
neither the members of the Committee, the members of the
Committee's Slate, nor any other person listed in Appendix A has
any interest in the matters to be voted upon at the Annual
Meeting, other than their interest as Stockholders. The offices
of the members of the Committee, with the exception of BVI Ltd.,
are located at 712 Fifth Avenue, 19th Floor, New York, New York
10019. The office of BVI Ltd. is located at Kaya Flambayon 9,
P.O. Box 812, Curacao, Netherlands Antilles.
The Board of Directors of the Company is divided into
three classes of directors. At each annual meeting of
Stockholders, members of one of the classes, on a rotating basis,
are elected for a three-year term. According to the Board's
Proxy Statement, the total number of directors is 9. The
Committee's Slate, if elected, would serve for the term expiring
in 1997 and until the due election and qualification of their
successors. The Committee has no reason to believe any of its
nominees will be disqualified or unable or unwilling to serve if
elected. However, in the event that any of the Committee's
nominees should become unavailable for any reason, proxies may be
voted for another person nominated by the Committee to fill the
vacancy.
The Committee's nominees for membership on the
Company's Board of Directors are Gary N. Siegler, Peter M.
Collery and Curtis Macnguyen. Each of these nominees has
consented to serve as a director if elected and intends to
discharge his duties as director of the Company in compliance
with all applicable legal requirements, including the general
fiduciary obligations imposed upon directors of a corporation.
Except as described herein, there are no arrangements or under-
standings between any nominee and any other person pursuant to
which he was selected as a nominee. The information below
concerning age, principal occupation, directorships and
beneficial ownership of Common Stock has been furnished by the
respective nominees.
<PAGE>
Present Principal Number of
Occupation and Shares of Percent
Principal Occupations Common of
Name, Business During Last Five (5) Stock Common
Address & Age Years; Directorships Owned Stock
Gary N. Siegler Director and President 887,300(1) 9.5%(1)
712 Fifth Avenue of SC Fundamental
New York, NY Value BVI, Inc. since
10019 December 1992;
(Age 32) Chairman of the Board
of Directors of
Medical Resources Inc.
since September 1992;
Director and President
of SC Fundamental Inc.
since June 1990;
Chairman of the Board
of Directors of
National R.V.
Holdings, Inc. since
April 1989 and Vice
President and
Secretary of National
R.V. Holdings, Inc.
from April 1989 to
August 1993; Director
and President of
Siegler, Collery & Co.
since January 1989;
Director and President
of Arena Capital Corp.
since August 1988.
(1) By virtue of his indirect control of Fund and
BVI Ltd., Mr. Siegler may be deemed to
beneficially own the 887,300 shares of Common
Stock directly beneficially owned by Fund and
BVI Ltd. Nothing contained in this Proxy
Statement shall be construed as an admission
of beneficial ownership of such shares by Mr.
Siegler.
<PAGE>
Present Principal Number of
Occupation and Shares of Percent
Principal Occupations Common of
Name, Business During Last Five (5) Stock Common
Address & Age Years; Directorships Owned Stock
Peter M. Collery Director of 887,300(2) 9.5(2)
712 Fifth Avenue Providential
New York, NY Corporation since July
10019 1993; Director and
(Age 35) Vice President of SC
Fundamental Value BVI,
Inc. since December
1992; Director of
Medical Resources Inc.
since September 1992;
Director and Vice
President of SC
Fundamental Inc. since
June 1990; Director of
National R.V.
Holdings, Inc. since
April 1989 and
President and
Treasurer of National
R.V. Holdings, Inc.
from April 1989 to
August 1993; Director
and Vice President of
Siegler, Collery & Co.
since January 1989;
Director and Vice
President of Arena
Capital Corp. since
January 1989.
Curtis Macnguyen Associate of Siegler, 0 0%
712 Fifth Avenue Collery & Co. since
New York, NY January 1993;
10019 Financial Analyst of
(Age 25) Gleacher & Co. from
March 1991 to December
1992; Financial
Analyst of Morgan
Stanley & Co. from
June 1990 to March
1991.
(2) By virtue of his indirect control of Fund and
BVI Ltd., Mr. Collery may be deemed to
beneficially own the 887,300 shares of common
stock directly beneficially owned by Fund and
BVI Ltd. Nothing contained in this Proxy
Statement shall be construed as an admission
of beneficial ownership of such shares by Mr.
Collery.
<PAGE>
All transactions in securities of the Company engaged
in by any member of the Committee, the Committee's Slate or any
other persons listed on Appendix A during the past two years are
summarized on Appendix A. No member of the Committee, the
Committee's Slate or any other persons listed on Appendix A owns
any securities of the Company of record but not beneficially. No
member of the Committee or of the Committee's Slate is, or was
within the past year, a party to any contract, arrangement or
understanding with any person with respect to any securities of
the Company. No member of the Committee, the Committee's Slate,
or, to the knowledge of the Committee, any other persons listed
on Appendix A or any associates of the foregoing has any arrange-
ment or understanding with respect to any future employment by
the Company or its affiliates, and no such person has any
arrangement or understanding with respect to any future transac-
tions to which the Company or any of its affiliates will or may
be a party.
Certain shares of Common Stock owned by Fund and BVI
Ltd. were purchased on margin. As of June 16, 1994, such Common
Stock, among other securities of issuers other than the Company,
was subject to margin indebtedness to Neuberger & Berman of
$27,252,000 and $8,250,000, respectively.
Except as described herein or in Appendix A, no member
of the Committee, member of the Committee's Slate, nor, to the
knowledge of the Committee, any other persons listed on Appendix
A or any associates of the foregoing (i) has engaged in or has a
direct or indirect interest in any transaction or series of
transactions since the beginning of the Company's last fiscal
year, or in any currently proposed transaction, to which the
Company or any of its subsidiaries is a party where the amount
involved was in excess of $60,000, (ii) owns beneficially any
securities of the Company, (iii) borrowed any funds for the
purpose of acquiring or holding any securities of the Company, or
is presently, or has been within the past year, a party to any
contract, arrangement or understanding with any person with
respect to any securities of the Company, (iv) is the beneficial
or record owner of any securities of the Company or any parent or
subsidiary thereof, or (v) has, during the past ten years, been
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors).
EXPENSES OF SOLICITATION
The entire expense of preparing and mailing this Proxy
Statement and any other soliciting materials and the total
expenditures relating to the solicitation of proxies will be
borne by the Committee. The members of the Committee's Slate
will be indemnified by Fund and BVI Ltd. for losses, claims and
liabilities arising out of the Committee's activities. In
addition to the use of the mails, proxies may be solicited by
members of the Committee and/or their employees or their
affiliates' employees by telephone, telegram and personal
<PAGE>
solicitation. No additional compensation will be paid to those
persons engaged in such solicitation.
The Committee has entered into an agreement with
Georgeson & Company Inc. ("Georgeson") pursuant to which
Georgeson has agreed to assist the Committee with its
solicitation of proxies, strategy, press and investor relations
in connection with Dynatech's 1994 Annual Meeting. The agreement
with Georgeson provides for the payment of fees to Georgeson in
an amount not to exceed $60,000. Georgeson will receive
reimbursement from Fund and BVI Ltd. for their expenses incurred
in their engagement and will be indemnified by Fund and BVI Ltd.
against liabilities arising out of such engagement.
Georgeson expects to engage approximately 40 persons in
connection with its efforts on behalf of the Committee. Such
persons will, among other activities, solicit proxies from
Stockholders by telephone, telegram and personal solicitation.
In addition, banks, brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward proxy
solicitation materials to the beneficial owners of the Common
Stock that such institutions hold of record, and the Committee
will reimburse such institutions for their reasonable out-of-
pocket expenses.
The Committee estimates that its total expenditures
relating to the solicitation of proxies will be approximately
$250,000, plus the fees payable to Georgeson and additional
expenditures if there is litigation. There have been no cash
expenditures to date relating to this solicitation.
The costs of the solicitation will be borne by Fund and
BVI Ltd. in proportion to the number of shares of Common Stock
owned by each of them. The members of the Committee's Slate will
not directly bear any portion of the cost of the solicitation.
The Committee presently intends to seek reimbursement from the
Company for reasonable expenses in connection with this
solicitation. If the matter is so submitted by the Company's
Board of Directors, the Committee will accept the results of such
vote.
VOTE REQUIRED
A majority of the shares of Common Stock represented in
person or by proxy and entitled to vote is required for approval
of matters to be presented at the Annual Meeting, except for the
election of directors, which requires a plurality of the votes
cast of Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting. Each share of Common
Stock is entitled to one vote. According to the Board's Proxy
Statement, shares of Common Stock whose holders either are
present in person at the Annual Meeting but not voting, or have
submitted proxies with respect to which authority has been
withheld, will be treated as present at the Annual Meeting only
for the presence or absence of a quorum for the transaction of
<PAGE>
business and will be disregarded in determining the votes cast
for purposes of the election of directors. Unmarked proxies
submitted by intermediaries that are record holders of Common
Stock beneficially owned by others will be treated in a similar
manner.
ADDITIONAL INFORMATION
Reference is made to the Board's Proxy Statement for
information concerning the Common Stock, beneficial ownership of
Common Stock by, and other information concerning the Company's
management, the Company's directors, the Company's independent
public accountants, the principal holders of Common Stock and
procedures for submitting proposals for consideration at the 1995
Annual Meeting.
<PAGE>
APPENDIX A
The members of the Dynatech Stockholders Committee (the
"Committee") that are not members of the Committee's Slate are SC
Fundamental Inc., a Delaware corporation ("SC"), The SC
Fundamental Value Fund, L.P., a Delaware limited partnership
("Fund"), SC Fundamental Value BVI, Inc., a Delaware corporation
("BVI Inc."), SC-BVI Partners, a Delaware partnership
("Partners") and SC Fundamental Value BVI, Ltd., a British Virgin
Islands corporation ("BVI Ltd.").
Set forth below is the name and principal business of
each member of the Committee which is not a member of the
Committee's Slate.
NAME PRINCIPAL BUSINESS
SC Fundamental Inc. Primarily engaged in acting as general
partner of Fund.
The SC Fundamental
Value Fund, L.P. Primarily engaged in investing in
securities.
SC Fundamental
Value BVI, Inc. Primarily engaged in acting as managing
general partner of Partners, the
investment manager of BVI Ltd.
SC-BVI Partners Primarily engaged in acting as the
investment manager of BVI Ltd.
SC Fundamental
Value BVI, Ltd. Primarily engaged in investing in
securities.
The business address of each member of the Committee
which is not a member of the Committee's Slate, with the
exception of BVI Ltd., is 712 Fifth Avenue, 19th Floor, New York,
New York 10019. The business address of BVI Ltd. is Kaya
Flambayon 9, P.O. Box 812, Curacao, Netherlands Antilles.
<PAGE>
TRANSACTIONS IN COMMON STOCK
DURING PAST TWO YEARS
The SC Fundamental Value Fund, L.P.
Date Purchases (Number of Shares)
October 27, 1993 42,750
November 2, 1993 35,200
November 9, 1993 49,500
November 9, 1993 7,000
November 10, 1993 5,200
November 10, 1993 7,000
November 11, 1993 7,000
November 11, 1993 1,350
November 17, 1993 8,750
November 18, 1993 4,800
November 19, 1993 2,800
November 30, 1993 104,450
November 30, 1993 3,100
December 1, 1993 35,000
December 15, 1993 1,750
December 27, 1993 5,300
December 27, 1993 2,400
December 29, 1993 1,400
December 30, 1993 1,400
January 4, 1994 2,900
May 16, 1994 51,700
May 18, 1994 22,800
May 20, 1994 13,800
May 27, 1994 199,600
May 31, 1994 20,200
June 1, 1994 13,000
June 1, 1994 1,700
June 2, 1994 17,200
June 2, 1994 5,200
June 2, 1994 13,800
June 3, 1994 37,400
<PAGE>
Date Sales (Number of Shares)
February 2, 1994 3,500
March 7, 1994 35,200
March 9, 1994 2,300
March 17, 1994 15,900
April 13, 1994 3,500
April 14, 1994 2,900
April 14, 1994 17,600
April 14, 1994 3,900
April 15, 1994 10,300
April 19, 1994 4,250
April 20, 1994 4,500
April 21, 1994 5,500
May 1, 1994 5,000
<PAGE>
SC Fundamental Value BVI, Ltd.
Date Purchases (Number of Shares)
October 27, 1993 17,250
November 2, 1993 14,800
November 9, 1993 20,700
November 9, 1993 3,000
November 10, 1993 2,300
November 10, 1993 3,000
November 11, 1993 3,000
November 11, 1993 550
November 17, 1993 3,650
November 18, 1993 2,000
November 19, 1993 1,200
November 30, 1993 43,550
November 30, 1993 1,300
December 1, 1993 15,000
December 15, 1993 750
December 27, 1993 2,300
December 27, 1993 1,100
December 29, 1993 600
December 30, 1993 600
January 4, 1994 1,300
January 31, 1994 100
May 1, 1994 5,000
May 16, 1994 23,300
May 18, 1994 10,200
May 20, 1994 6,200
May 27, 1994 90,100
May 31, 1994 9,100
June 1, 1994 5,900
June 1, 1994 800
June 2, 1994 7,800
June 2, 1994 2,400
June 2, 1994 6,200
June 3, 1994 16,900
<PAGE>
Date Sales (Number of Shares)
February 2, 1994 1,500
March 7, 1994 14,800
March 9, 1994 1,100
March 17, 1994 6,600
April 13, 1994 1,500
April 14, 1994 1,100
April 14, 1994 7,400
April 14, 1994 1,600
April 15, 1994 4,300
April 19, 1994 1,750
April 20, 1994 1,800
April 21, 1994 2,300
<PAGE>
Fund directly beneficially owns 611,100 shares of
Common Stock. SC, being the general partner of Fund, may be
deemed to beneficially own the Common Stock which Fund owns. BVI
Ltd. directly beneficially owns 276,200 shares of Common Stock.
Partners, being the investment manager of BVI Ltd., and BVI Inc.,
being the managing general partner of Partners, may be deemed to
indirectly beneficially own the Common Stock that BVI Ltd.
directly beneficially owns. Siegler and Collery, by virtue of
their status as controlling stockholders of SC and BVI Inc., may
be deemed to beneficially own the Common Stock which SC and BVI
Inc. may be deemed to beneficially own. Nothing contained in
this Proxy Statement or in this Appendix A shall be constituted
as an admission of beneficial ownership by any such person.
There are no material proceedings in which any member
of the Committee's Slate is a party adverse to the Company or any
of its subsidiaries or has a material interest adverse to the
Company or any of its subsidiaries.
Set forth below is information relating to employees of
Siegler, Collery & Co., an affiliate of members of the Committee,
who may solicit proxies by telephone, telegram or personal
solicitation, for which no additional compensation will be paid.
The business address of all such persons is 712 Fifth Avenue,
19th Floor, New York, New York 10019.
Name Principal Occupation or Employment
Neil Koffler Financial Analyst, Siegler, Collery & Co.
David Einhorn Financial Analyst, Siegler, Collery & Co.
Jeffrey Keswin Financial Analyst, Siegler, Collery & Co.
<PAGE>
PROXY SOLICITED BY
DYNATECH STOCKHOLDERS COMMITTEE
IN OPPOSITION TO THE BOARD OF DIRECTORS
The undersigned hereby appoints GARY N. SIEGLER, PETER
M. COLLERY and NEIL KOFFLER, and each of them, as proxies, with
full power of substitution, to vote as set forth below and in
their discretion upon such other matters as may properly come
before the meeting, for and on behalf of the undersigned, all the
shares of common stock of DYNATECH CORPORATION held of record by
the undersigned, at the close of business on June 13, 1994, at
the Annual Meeting of Stockholders to be held in the Goodwin,
Proctor & Hoar Conference Center, 2nd Floor, Exchange Place,
Boston, Massachusetts, on Tuesday, July 26, 1994 at 10:00 a.m.
and at any adjournments or postponements thereof, hereby granting
full power and authority to act on behalf of the undersigned at
said meeting or any adjournments or postponements thereof.
PROXY
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1, FOR PROPOSAL 2, AGAINST PROPOSAL 3 AND WILL BE
VOTED IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT(S) OR
POSTPONEMENT(S) THEREOF.
COMMITTEE RECOMMENDS VOTE FOR PROPOSAL 1 AND FOR PROPOSAL 2
1. Election of Directors for a term expiring in 1997 (as set
forth in the Board's Proxy Statement)
Nominees are: Gary N. Siegler, Peter M. Collery and
Curtis Macnguyen
FOR WITHHOLD
ALL NOMINEES FROM ALL NOMINEES
__ __
|__| |__|
INSTRUCTION: To withhold authority for any individual
nominee(s), check the "FOR" box above and write that nominee(s)
name on the space provided below.
_________________________________________________________
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE)
<PAGE>
2. To retain an investment banking firm to conduct a sale or
to implement a major restructuring (as set forth in the
Committee's Proxy Statement).
FOR AGAINST ABSTAIN
__ __ __
|__| |__| |__|
COMMITTEE RECOMMENDS VOTE AGAINST PROPOSAL 3
3. To approve the 1994 Stock Option and Incentive Plan (as
set forth in the Board's Proxy Statement).
FOR AGAINST ABSTAIN
__ __ __
|__| |__| |__|
Please sign exactly as name appears,
indicating title or representative
capacity, where applicable.
PLEASE SIGN, DATE AND RETURN
Signature:_________________________________
_________________________________
Title or Authority:________________________
Date:_______________________, 1994
PLEASE SIGN, DATE AND MAIL
YOUR BLUE PROXY TODAY
<PAGE>
APPENDIX
A five-year performance bar graph, as presented in the
Board's proxy statement, will be inserted above the table
depicted on page 5. The bar graph conveys the same information
provided in the table.
</TABLE>
