<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 31, 1996
-----------------
DYNATECH CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 0-7438 04-2258582
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
3 New England Executive Park, Burlington, MA 01803
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617)272-6100
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
Page 1 of 21 Pages
Exhibit Index is on Page 20
<PAGE> 2
The undersigned Registrant hereby amends Item 7 of its Current Report on Form
8-K dated December 31, 1996 to read in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired: See page 3 hereof.
-----------------------------------------
(b) Pro forma financial information: See page 16 hereof.
-------------------------------
(c) Exhibits:
--------
2.* Asset Purchase Agreement, dated as of December 28, 1996, among
Dynatech Corporation, IAQ Corporation, Telxon Corporation and
Itronix Corporation.
23.1 Consent of Independent Accountants.
- ---------------
* Previously Filed
-2-
<PAGE> 3
ITRONIX CORPORATION
REPORT ON AUDIT OF FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED MARCH 31, 1996
-3-
<PAGE> 4
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholder
Itronix Corporation
Spokane, Washington
We have audited the accompanying balance sheet of Itronix Corporation, a wholly
owned subsidiary of Telxon Corporation, as of March 31, 1996 and the related
statements of income and retained earnings and cash flows for the year then
ended. 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 audit.
We conducted our audit 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 that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Itronix Corporation as of March
31, 1996 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Spokane, Washington
March 12, 1997
-4-
<PAGE> 5
ITRONIX CORPORATION
<TABLE>
BALANCE SHEET
March 31, 1996
(Dollars in Thousands)
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $ 577
Accounts receivable, less allowance for doubtful accounts of $100 8,821
Inventories 13,648
Deferred income taxes 923
Other 139
-------
Total current assets 24,108
Property and equipment, net 3,805
Goodwill, intangibles and other assets, net 1,933
Deferred income taxes 316
-------
Total assets $30,162
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Payable to Telxon Corporation $ 2,613
Accounts payable 15,084
Accrued expenses 2,772
Wages and benefits payable 1,220
Deferred revenue 1,695
Obligations under capital leases, due within one year 192
Note payable 500
-------
Total current liabilities 24,076
Obligations under capital leases, due after one year 428
-------
Total liabilities 24,504
-------
Commitments and contingencies (Notes 3 and 9)
Stockholder's equity:
Common stock, no par value, 3,750,000 shares authorized; 3,333,333 shares issued 4,170
Retained earnings 1,488
-------
Total stockholder's equity 5,658
-------
Total liabilities and stockholder's equity $30,162
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 5 -
<PAGE> 6
ITRONIX CORPORATION
<TABLE>
STATEMENT OF INCOME AND RETAINED EARNINGS
for the year ended March 31, 1996
(Dollars in Thousands)
<CAPTION>
<S> <C>
Revenues:
Product sales $61,482
Service 1,362
-------
Total revenues 62,844
-------
Cost of sales and service:
Product sales 45,405
Service 1,761
-------
Total cost of sales and service 47,166
-------
Gross profit 15,678
-------
Operating expenses:
Sales and marketing 5,694
Product development 4,457
General and administrative 1,740
-------
Total operating expenses 11,891
-------
Operating income 3,787
Interest expense (474)
-------
Income before income taxes 3,313
Provision for income taxes (1,251)
-------
Net income 2,062
Accumulated deficit, beginning of year (574)
-------
Retained earnings, end of year $ 1,488
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 6 -
<PAGE> 7
ITRONIX CORPORATION
<TABLE>
STATEMENT OF CASH FLOWS
for the year ended March 31, 1996
(Dollars in Thousands)
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income $ 2,062
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 1,147
Amortization 624
Deferred income tax provision 65
Reduction in allowance for inventory obsolescence (944)
Gain on sale of property and equipment (2)
Changes in assets and liabilities:
Accounts receivable (5,590)
Inventories (8,173)
Other assets 239
Accounts payable 13,522
Accrued expenses 2,266
Wages and benefits payable 606
Deferred revenue 801
-------
Net cash provided by operating activities 6,623
-------
Cash flows from investing activities:
Proceeds from sale of property and equipment 52
Investment in intangible assets (302)
Purchase of property and equipment (2,539)
-------
Net cash used in investing activities (2,789)
-------
Cash flows from financing activities:
Reduction in payable to Telxon Corporation (3,109)
Payments on capital lease obligations (238)
-------
Net cash used in financing activities (3,347)
-------
Increase in cash 487
Cash, beginning of year 90
-------
Cash, end of year $ 577
=======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 469
Non-cash financing activity:
Acquisition of equipment under capital lease obligation $ 189
</TABLE>
The accompanying notes are an integral part of the financial statements.
-7-
<PAGE> 8
ITRONIX CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES:
BUSINESS
The Company develops and sells ruggedized computing systems for field
service activities. These systems are designed to communicate over a
variety of wide-area data, radio networks as well as by telephone line.
The Company's headquarters are located in Spokane, Washington and its
sales offices are located in Georgia, Illinois, Michigan, Minnesota,
Missouri, New Jersey, Texas, Washington and Wisconsin.
Since March 1, 1993, the Company has been a wholly owned subsidiary of
Telxon Corporation (Telxon). Originally a division of Itron, Inc.
(Itron), the Company spun off from Itron on July 1, 1992 and operated as
an independent company until the acquisition by Telxon. On December 28,
1996, the Company entered into an agreement with a subsidiary of Dynatech
Corporation (Dynatech), whereby Dynatech would acquire substantially all
of the Company's assets and certain of its liabilities in exchange for
approximately $65.8 million. Dynatech is a publicly held company that
engages in the manufacture and sale of electronic communications
equipment. This transaction was consummated on December 31, 1996.
CONCENTRATION OF CREDIT RISK
The Company is exposed to a concentration of credit risk associated with
its cash in banks. The Company places its cash with high credit quality
institutions. At times such investments may be in excess of the FDIC
insurance limit.
The Company generally sells to companies having at least 200 field
service technicians and order sizes tend to be large. Therefore, it is
not unusual to have one or more customers account for more than 10% of
revenues in any year. For the year ended March 31, 1996, one customer
accounted for 36% of revenues. Four customers each accounted for an
additional 5% to 14% of revenues.
Accounts receivable consists primarily of amounts due from telephone and
field service companies. The Company routinely assesses the financial
strength of its customers and, as a consequence, believes that its trade
accounts receivable credit risk exposure is limited.
INVENTORIES
Inventories are stated at the lower of cost (first in, first out) or net
realizable value. The Company periodically reviews its inventories to
identify slow-moving and obsolete inventories to record such inventories
at net realizable values. It is reasonably possible that the Company's
estimates regarding net realizable values could change in the near term
due to technological changes.
-8-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES, CONTINUED:
PROPERTY AND EQUIPMENT
Property and equipment, other than leasehold improvements, are stated at
cost and are depreciated over their estimated useful lives of three to
five years using the straight-line method. Leasehold improvements are
amortized over the lesser of their estimated useful lives or the lease
term.
GOODWILL, INTANGIBLES AND OTHER ASSETS
Goodwill represents the excess of the purchase price paid by Telxon for
the Company over the identifiable fair value of the net assets acquired
and is being amortized on a straight-line basis over ten years. The
Company periodically reviews goodwill to assess recoverability and
impairments, if any, which would be recognized in results of operations
if a permanent reduction in value were to occur. Other intangible assets
consist of certain payments made by Telxon to Company officers in
connection with the acquisition and are amortized on a straight-line
basis over the lives of the related employment contracts (three to six
years). Software costs are capitalized after technological and economic
feasibility has been established and are amortized on a straight-line
basis over three years.
WARRANTY
The Company offers warranties on all sales of computing systems.
Provision for estimated warranty costs is provided at the time of sale
and is periodically adjusted to reflect actual experience. Due to
uncertainties in estimating the Company's warranty obligation, the
ultimate amount incurred for all warranty costs could change in the near
term from the Company's estimate. Warranty expense was $813 for the year
ended March 31, 1996.
REVENUE RECOGNITION
Revenue from hardware sales and software licenses are recognized upon
shipment. Software customization and implementation revenues are
recognized on a percentage-of-completion basis as the related costs are
incurred. Service revenues are recognized ratably over the periods
covered by service contracts, or as the services are performed.
During fiscal 1996, the Company entered into an exclusive sales and
marketing agreement for one of its products with a third party. The
Company recognized approximately $1.0 million in revenue associated with
the licensing of these rights as there were no significant Company
obligations remaining under the agreement.
PRODUCT DEVELOPMENT
Effective March 24, 1995, the Company entered into an agreement with a
major customer to develop a new generation of its product. Under the
terms of this agreement, the Company was reimbursed a total of $3 million
for development costs incurred related to the project. During the year
ended March 31, 1996, the Company was reimbursed $720 for product
development and engineering costs incurred. The reimbursement has been
recorded as a reduction to the Company's product development expenses.
-9-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES, CONTINUED:
INCOME TAXES
The results of the Company's operations are included in Telxon's
consolidated tax return. Although no formal tax sharing agreement exists
between the Company and Telxon, the Company's financial statements
generally reflect its tax attributes on a stand-alone basis.
Deferred tax assets or liabilities are recorded for the expected future
income tax consequences of events that have been recognized in the
financial statements and are determined based on the temporary
differences between the financial statement carrying amounts and tax
bases of assets and liabilities using enacted tax rates in effect in the
years in which the temporary differences are expected to reverse.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. TRANSACTIONS WITH ITRON, INC.:
Under the terms of a non-competition clause included in the spin-off
agreement, Itron agreed to sell only to gas, water and electric utilities
worldwide and the Company agreed not to sell to gas, water and electric
utilities worldwide. In March 1995, the noncompetition agreement was
revised to allow the Company to sell its product to utilities as long as
the Company's products were used for field service operations rather than
for meter reading activities. Any such sales to utilities are subject to a
royalty payable to Itron. The noncompetition agreement expires on June 30,
1997.
At March 31, 1996, the Company had a $500 subordinated note payable to
Itron. Interest payments were due quarterly and the interest rate was equal
to the prime interest rate plus 0.5% (9.50% at March 31, 1996). Interest
incurred for 1996 totaled $46. The principal balance was paid in full in
June of 1996.
3. TRANSACTIONS WITH TELXON CORPORATION:
In connection with the acquisition, Telxon awarded restricted Telxon common
stock grants valued at $500 to certain Company officers. The unamortized
portion of the restricted stock grants, which vest in three equal annual
increments, are recorded as an offset to the payable to Telxon. The
compensation expense associated with the grant of restricted stock was
fully recognized as of March 31, 1996.
-10-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. TRANSACTIONS WITH TELXON CORPORATION, CONTINUED:
The Company sells products to Telxon and Telxon's subsidiaries. The total
amount of these sales for the year ended March 31, 1996 was $12,872 of
which $349 was included in accounts receivable as of March 31, 1996.
The Company is a subsidiary guarantor of Telxon's unsecured credit
agreement with a group of eight banks. The credit agreement, which expires
on March 8, 2001, provides Telxon with a maximum credit facility of
$100,000 and permits Telxon to borrow funds as domestic or Eurodollar
advances. Telxon had no borrowings outstanding under the $100,000 credit
agreement and was in compliance with all restrictive covenants contained in
the agreement at March 31, 1996.
4. INVENTORIES:
<TABLE>
Inventories consist of the following (in thousands):
<CAPTION>
<S> <C>
Raw materials $10,627
Work-in-process 1,323
Finished goods 1,698
-------
$13,648
=======
</TABLE>
5. PROPERTY AND EQUIPMENT:
<TABLE>
Property and equipment consists of the following (in thousands):
<CAPTION>
<S> <C>
Tooling $ 3,024
Computers and purchased software 1,370
Machinery and equipment 893
Furniture and leasehold improvements 393
Equipment under capital lease 807
-------
6,487
Less accumulated depreciation (2,440)
Less accumulated amortization, capital leases (242)
-------
$ 3,805
=======
</TABLE>
- 11 -
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. GOODWILL, INTANGIBLES AND OTHER ASSETS:
<TABLE>
Goodwill, intangibles and other assets consist of the following (in
thousands):
<CAPTION>
<S> <C>
Goodwill, net of accumulated amortization of $872 $1,475
Other acquisition costs, net of accumulated amortization of $668 48
Capitalized software, net of accumulated amortization of $300 380
Patents, net of accumulated amortization of $4 30
------
$1,933
======
</TABLE>
7. SHORT-TERM FINANCING:
Telxon provides the funds necessary for the Company's operations and
charges interest at the minimum rate allowed by the Internal Revenue
Service. Borrowings from Telxon earned interest at the average rate of
4.27% during the year ended March 31, 1996. Interest expense on borrowings
from Telxon approximated $361 for the year ended March 31, 1996. Accrued
interest of $820 is included in the payable to Telxon at March 31, 1996.
The Company repays these borrowings as excess cash becomes available. No
formal agreement concerning the rate of interest or repayment terms
associated with these borrowings exists.
8. INCOME TAXES:
<TABLE>
The provision for income taxes for the year ended March 31, 1996 consisted
of the following (in thousands):
<CAPTION>
<S> <C>
Current $1,186
Deferred 65
------
$1,251
======
</TABLE>
<TABLE>
Components of the net deferred tax asset are as follows (in thousands):
<CAPTION>
<S> <C>
Deferred tax assets:
Accounts receivable, allowance for doubtful accounts $ 34
Inventory allowance for obsolescence 302
Allowance for warranty costs 367
Restricted stock compensation 57
Net operating loss carryforwards 234
Deferred revenue 142
Other 103
------
$1,239
======
</TABLE>
- 12 -
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS, CONTINUED
8. INCOME TAXES, CONTINUED:
The Company does not believe a valuation allowance is necessary to reduce
its deferred tax asset as this asset will more likely than not be realized
through the generation of future taxable income. Should management's
estimates of future taxable income change in the future, an adjustment to
its deferred tax asset may be necessary.
<TABLE>
The income tax provision for the year ended March 31, 1996 differs from
that computed using the federal statutory rate applied to income before
income taxes as follows (in thousands):
<CAPTION>
AMOUNT %
------ ----
<S> <C> <C>
Provision at the federal statutory rate $1,126 34.0
Amortization of certain intangibles 96 2.9
Nondeductible meals and entertainment expense 29 0.8
------ ----
$1,251 37.7
====== ====
</TABLE>
At March 31, 1996, the Company has federal net operating loss carryforwards
of approximately $688, which can be used to offset future regular taxable
income. These carryforwards expire in 2008. The Company's utilization of
tax basis net operating loss carryforwards is currently limited to
approximately $236 annually.
9. OPERATING LEASES:
The Company has noncancelable operating leases for office space and
equipment expiring at various dates through 1999. Rent expense for
noncancelable operating leases was $569 for the year ended March 31, 1996.
<TABLE>
Future minimum lease payments due under noncancelable operating leases are
as follows (in thousands):
<CAPTION>
FISCAL
YEAR ENDING
MARCH 31,
-----------
<S> <C>
1997 $ 585
1998 684
1999 627
2000 288
------
$2,184
======
</TABLE>
- 13 -
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS, CONTINUED
10. CAPITAL LEASE OBLIGATIONS:
<TABLE>
The Company has capital lease obligations for computer and office equipment
with future minimum lease payments at March 31, 1996 as follows (in
thousands):
<CAPTION>
FISCAL YEAR
ENDING
MARCH 31,
-----------
<S> <C>
1997 $ 245
1998 220
1999 169
2000 115
------
749
Less amounts representing interest (129)
------
Present value of net minimum obligations 620
Less current portion (192)
------
$ 428
======
</TABLE>
11. EMPLOYEE BENEFITS:
The Company has an employee incentive savings plan in which substantially
all employees are eligible to participate. Employees may contribute on a
tax deferred basis up to 15% of their salary, subject to certain
restrictions, and the Company matches 25% of the first 6% of cash
contributions. Effective January 1, 1996, the Company match was increased
to 50% of the first 10% of employee cash contributions. The expense for the
Company's matching contribution for the year ended March 31, 1996 was $98.
On April 1, 1995, the Company adopted the 1995 Stock Option Plan (Plan)
that provided for the grant of up to 345,000 common shares of the Company
to eligible employees. Options granted under the Plan vest ratably over a
three-year period and have a term of ten years from the date of grant.
Vesting accelerates upon the change of control of the Company. The options
are not exercisable until the earlier of such time as the Company completes
an initial public offering and its common stock becomes publicly traded or
April 1, 1998. No options were granted under the Plan in fiscal 1996.
- 14 -
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS, CONTINUED
12. NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In June 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." SFAS No. 121 requires long-lived assets and identifiable
intangible assets that are held and used by an entity to be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable. The Company is
required to adopt the provisions of SFAS No. 121 on April 1, 1996.
Management believes that the adoption of this pronouncement will not have a
material effect on the Company's financial position, results of operations
or cash flows.
- 15 -
<PAGE> 16
PRO FORMA FINANCIAL INFORMATION
-------------------------------
On December 31, 1996, Dynatech acquired substantially all of the
business and assets and assumed certain liabilities of Itronix Corporation
("Itronix") of Spokane, Washington for approximately $65.8 million in cash, of
which approximately $40 million of debt was borrowed under the Company's line of
credit. Itronix designs and manufactures ruggedized integrated computing and
communications devices which help make inside service technicians more
efficient. The products are used by organizations with large mobile service
fleets, such as telephone companies, communication service providers and
insurance companies. Incident to this acquisition, the Company purchased the
incomplete technology activities of Itronix, resulting in a one-time pretax
charge in the quarter ended December 31, 1996 of approximately $20.6 million.
Acquired complete technology and other intangible assets of approximately $26.5
million are being amortized over two to fifteen years. Net working capital and
net fixed assets were approximately $14.7 million and $4.0 million,
respectively.
For purposes of this presentation, pro forma adjustments have been made
to the historical results of operations to provide information as to how the
acquisition of Itronix Corporation might have affected the results of operations
of Dynatech Corporation.
The unaudited pro forma consolidated statements of operations assume
the acquisition had taken place at the beginning of the corresponding fiscal
year. This unaudited pro forma information does not purport to be indicative of
the results of operations that would have been obtained if the acquisition had
occurred at the beginning of the fiscal year presented, and is not intended to
be a projection of future results.
The following unaudited pro forma financial information is provided:
1. Pro Forma Consolidated Statement of Operations for the nine-month
period ended December 31, 1996.
2. Pro Forma Consolidated Statement of Operations for the fiscal year
ended March 31, 1996.
- 16 -
<PAGE> 17
DYNATECH CORPORATION
<TABLE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1996
(IN (000'S) EXCEPT PER SHARE DATA)
<CAPTION>
DYNATECH ITRONIX PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS RESULTS
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Sales $258,854 $ 63,822 $ $322,676
Cost of Sales 95,032 45,822 140,854
-------- -------- -------- --------
Gross Profit 163,822 18,000 0 181,822
Selling, general and administrative expense 84,031 7,977 (224)(1) 91,784
Product development expense 30,065 5,248 35,313
Purchased incomplete technology 20,627 0 (20,627)(2) 0
Amortization of intangibles 4,683 0 2,060 (3) 6,743
-------- -------- -------- --------
Operating income 24,416 4,775 18,791 47,982
Interest income (expense) 1,801 (564) (1,892)(4) (655)
Other income 552 (1) 0 551
-------- -------- -------- --------
Income from continuing operations before 26,769 4,210 16,899 47,878
income taxes
Provision for income taxes 11,976 1,474 5,915 (5) 19,365
-------- -------- -------- --------
Income from continuing operations $ 14,793 $ 2,736 $ 10,984 $ 28,513
======== ======== ======== ========
Income per common share
- -----------------------
Continuing operations $ 0.82 $ 1.57
Weighted average number of common shares 18,124 18,124
======== ========
<FN>
EXPLANATORY NOTES TO THE PROFORMA FINANCIAL STATEMENTS
1 Amounts represent the elimination of amortization of certain historical Itronix
intangibles, principally goodwill.
2 Represents the elimination of the non-recurring purchased incomplete technology directly related
to the acquisition.
3 Amortization of intangibles reflects the amortized portion of excess purchase price due to the
acquisition.
4 Represents the loss of interest income and any additional interest expense that would have been
incurred had the transaction been completed at the beginning of the reporting period.
5 Represents the income tax effect of the proforma adjustments.
</TABLE>
- 17 -
<PAGE> 18
DYNATECH CORPORATION
<TABLE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 1996
(IN (000'S) EXCEPT PER SHARE DATA)
<CAPTION>
DYNATECH ITRONIX PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS RESULTS
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Sales $293,042 $62,844 $ $355,886
Cost of Sales 111,436 47,166 158,602
-------- ------- ------- --------
Gross Profit 181,606 15,678 0 197,284
Selling, general and administrative expense 98,487 7,434 (538)(1) 105,383
Product development expense 36,456 4,457 40,913
Purchased incomplete technology 16,852 0 16,852
Amortization of intangibles 5,136 0 2,750 (2) 7,886
-------- ------- ------- --------
Operating income (loss) 24,675 3,787 (2,212) 26,250
Interest income (expense) 458 (474) (2,801)(3) (2,817)
Other income 975 0 975
-------- ------- ------- --------
Income (loss) from continuing operations before 26,108 3,313 (5,013) 24,408
income taxes
Provision (benefit) for income taxes 10,394 1,251 (1,846)(4) 9,799
-------- ------- ------- --------
Income from continuing operations $ 15,714 $ 2,062 $(3,167) $ 14,609
======== ======= ======= ========
Income per common share
- -----------------------
Continuing operations $ 0.86 $ 0.80
Weighted average number of common shares 18,315 18,315
======== ========
<FN>
EXPLANATORY NOTES TO THE PROFORMA FINANCIAL STATEMENTS
1 Amounts represent the elimination of amortization of certain historical Itronix
intangibles, principally goodwill.
2 Amortization of intangibles reflects the amortized portion of excess purchase price due to the
acquisition.
3 Represents the loss of interest income and any additional interest expense that would have been
incurred had the transaction been completed at the beginning of the reporting period.
4 Represents the income tax effect of the proforma adjustments.
</TABLE>
- 18 -
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 17, 1997 DYNATECH CORPORATION
By: /s/ Allan M. Kline
------------------------------------
Allan M. Kline
Vice President, Chief Financial
Officer and Treasurer
- 19 -
<PAGE> 20
EXHIBIT INDEX
2.* Asset Purchase Agreement, dated as of December 28, 1996, among Dynatech
Corporation, IAQ Corporation, Telxon Corporation and Itronix Corporation.
23.1 Consent of Independent Accountants.
- ---------------
* Previously Filed
- 20 -
<PAGE> 1
Exhibit 23.1
------------
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,
33-30610 and 33-62551) and on Form S-8 (File Nos. 2-87779, 33-10465, 33-17243,
33-42427, 33-50768, 33-57491, 33-57495, 333-01639 and 33-16461) of our report
dated March 12, 1997 on our audit of the financial statements of Itronix
Corporation.
COOPERS & LYBRAND L.L.P.
Spokane, Washington
March 12, 1997
