DYNATECH CORP, 10-Q, 1999-11-04

DYNATECH CORP
10-Q, 1999-11-04
INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS

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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1999

Commission file number 1-12657

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DYNATECH CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
DELAWARE 04-2258582
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>

3 New England Executive Park Burlington, Massachusetts 01803-5087
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (781) 272-6100

----------------

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 [_]

At October 15, 1999 there were 122,040,377 shares of common stock of the
registrant outstanding.

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- -------------------------------------------------------------------------------
<PAGE>

PART I. Financial Information

Item 1. Financial Statements

DYNATECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30 September 30
-------------------- ------------------
1999 1998 1999 1998
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Sales............................... $ 156,148 $ 123,601 $316,919 $232,744
Cost of sales....................... 67,344 52,665 141,281 98,819
--------- --------- -------- --------
Gross profit........................ 88,804 70,936 175,638 133,925
Selling, general & administrative
expense............................ 42,477 35,996 82,371 71,185
Product development expense......... 16,405 13,565 31,692 27,066
Recapitalization and other related
costs.............................. -- -- 13,259 43,386
Amortization of intangibles......... 1,599 1,632 3,157 3,072
Amortization of unearned
compensation....................... 411 403 852 403
--------- --------- -------- --------
Total operating expenses........ 60,892 51,596 131,331 145,112
--------- --------- -------- --------
Operating income (loss)............. 27,912 19,340 44,307 (11,187)
Interest expense.................... (12,592) (13,900) (25,443) (19,981)
Interest income..................... 601 1,299 1,303 2,087
Gain on sale of subsidiary.......... -- -- -- 15,900
Other income (expense).............. 22 (99) 28 (67)
--------- --------- -------- --------
Income (loss) before income taxes... 15,943 6,640 20,195 (13,248)
Income tax provision (benefit)...... 6,377 2,979 8,078 (4,976)
--------- --------- -------- --------
Net income (loss)................... $ 9,566 $ 3,661 $ 12,117 $ (8,272)
========= ========= ======== ========
Income (loss) per common share:
Basic............................. $ 0.08 $ 0.03 $ 0.10 $ (0.09)
Diluted........................... $ 0.07 $ 0.03 $ 0.09 $ (0.09)
========= ========= ======== ========
Weighted average number of common
shares:
Basic............................. 121,181 120,251 120,928 92,013
Diluted........................... 129,961 129,465 129,768 92,013
========= ========= ======== ========
</TABLE>

See notes to condensed consolidated financial statements.

2
<PAGE>

DYNATECH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

<TABLE>
<CAPTION>
September 30 March 31
1999 1999
------------ ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 40,162 $ 70,362
Accounts receivable, net............................. 77,613 70,996
Inventories:
Raw materials...................................... 19,193 16,680
Work in process.................................... 15,086 13,644
Finished goods..................................... 9,675 16,947
--------- ---------
Total inventory.................................. 43,954 47,271
Other current assets................................. 24,167 22,150
--------- ---------
Total current assets............................. 185,896 210,779
Property and equipment, net............................ 28,467 25,619
Intangible assets, net................................. 58,568 56,768
Other assets........................................... 54,781 54,938
--------- ---------
$ 327,712 $ 348,104
========= =========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities:
Current portion of long-term debt.................... $ 5,178 $ 23,191
Accounts payable..................................... 27,642 34,317
Income taxes payable................................. 7,395 10,772
Accrued expenses:
Compensation and benefits.......................... 20,514 24,420
Deferred revenue................................... 33,149 27,141
Interest........................................... 10,209 10,129
Other accrued expenses............................. 19,674 25,311
--------- ---------
Total current liabilities........................ 123,761 155,281
Long-term debt......................................... 506,098 504,151
Deferred compensation.................................. 6,434 5,112
Stockholders' deficit:
Common stock, par value $0.01 and $0.00,
respectively........................................ 1,214 --
Additional paid-in capital........................... 318,941 322,746
Retained deficit..................................... (617,824) (629,941)
Unearned compensation................................ (9,484) (7,563)
Cumulative other comprehensive loss.................. (1,428) (1,682)
--------- ---------
Total stockholders' deficit...................... (308,581) (316,440)
--------- ---------
$ 327,712 $ 348,104
========= =========
</TABLE>

See notes to condensed consolidated financial statements.

3
<PAGE>

DYNATECH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended
September 30,
-------------------
1999 1998
-------- ---------
<S> <C> <C>
Operating activities:
Net income (loss)....................................... $ 12,117 $ (8,272)
Adjustments to net income:
Depreciation........................................... 5,737 6,064
Amortization of intangibles............................ 3,157 3,072
Amortization of deferred debt issuance costs........... 1,616 1,035
Gain on sale of subsidiary............................. -- (15,900)
Recapitalization-related costs......................... -- 14,640
Amortization of unearned compensation.................. 852 403
Other.................................................. 72 79
Change in deferred income tax asset..................... -- (5,500)
Change in operating assets and liabilities.............. (21,697) 5,985
-------- ---------
Net cash flows provided by continuing operations........ 1,854 1,606
Net cash flows provided by (used in) discontinued
operations............................................. (737) 532
-------- ---------
Net cash flows provided by operating activities........... 1,117 2,138

Investing activities:
Purchases of property and equipment..................... (8,333) (5,764)
Proceeds from disposals of property and equipment....... -- 230
Proceeds from sale of business.......................... -- 21,000
Business acquired in purchase transaction, net of cash
acquired............................................... (6,238) (19,615)
Other................................................... (1,424) (4,978)
-------- ---------
Net cash flows used in investing activities............... (15,995) (9,127)

Financing activities:
Net borrowings (repayments) of debt..................... (15,743) 551,000
Repayment of notes payable.............................. -- (2,124)
Repayment of capital lease obligations.................. (323) (64)
Financing fees.......................................... -- (40,289)
Proceeds from issuance of stock......................... 471 278,568
Purchases of treasury stock and stock outstanding....... -- (806,508)
-------- ---------
Net cash flows used in financing activities............... (15,595) (19,417)
Effect of exchange rate on cash........................... 273 (475)
-------- ---------
Decrease in cash and cash equivalents..................... (30,200) (26,881)
Cash and cash equivalents at beginning of year............ 70,362 64,904
-------- ---------
Cash and cash equivalents at end of period................ $ 40,162 $ 38,023
======== =========
</TABLE>

See notes to condensed consolidated financial statements.

4
<PAGE>

DYNATECH CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A. Basis of Presentation and Results of Operations

Dynatech Corporation (the "Company") was organized in 1959 and its
operations are conducted primarily by wholly owned subsidiaries located
principally in the United States with distribution and sales offices in
Germany, England, France, and the Pacific Rim.

The Company operates in three business segments: communications test,
industrial computing and communications, and visual communications. The
communications test segment provides communications test instruments to
communications service providers and long-distance companies, among others.
The industrial computing and communications segment provides computer
products to the ruggedized computer market. The visual communications
segment manufactures (1) airplane passenger cabin video information display
systems and information services, and (2) digital color enhancement systems
used in the process of transferring film images into electronic signals.

The Company operates on a fiscal year ended March 31 in the calendar year
indicated (e.g., references to fiscal 2000 are references to the Company's
fiscal year which began April 1, 1999 and will end March 31, 2000).

B. Condensed Consolidated Financial Statements

In the opinion of management, the unaudited condensed consolidated balance
sheet at September 30, 1999, and the unaudited consolidated statements of
operations and unaudited consolidated condensed statements of cash flows for
the interim periods ended September 30, 1999 and 1998 include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly these financial statements.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The year-end balance sheet data
was derived from audited financial statements, but does not include
disclosures required by generally accepted accounting principles. It is
suggested that these condensed statements be read in conjunction with the
Company's most recent Form 10-K as of March 31, 1999.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amount 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 reported period. Significant estimates in these financial
statements include allowances for accounts receivable, net realizable value
of inventories, and tax valuation reserves. Actual results could differ from
those estimates.

C. Acquisitions

Applied Digital Access, Inc.

On September 7, 1999, the Company and Applied Digital Access, Inc. ("ADA")
entered into an Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement, a subsidiary of the Company commenced a
cash tender offer to purchase all of the outstanding shares of ADA's common
stock at a price of $5.37 per share. On October 1, 1999, the Company was
served with a class action lawsuit filed by an alleged stockholder of ADA.
The lawsuit was filed in California state court and alleges that the Company
"aided and abetted" ADA and certain members of its board of directors in
breaching their fiduciary duties to ADA's stockholders in connection with
the tender offer. On October 29, 1999 the San Diego Superior Court denied a
motion for preliminary injunction, which was sought to enjoin the tender

5
<PAGE>

offer by the Company for all ADA's shares and the proposed merger of ADA
with the Company. In the Company's opinion, this lawsuit and four similar
lawsuits filed against ADA have no merit and the Company intends to
vigorously defend against them.

The offer expired on November 1, 1999, at which time in excess of 90% of
ADA's outstanding shares were validly tendered and not withdrawn, which the
Company accepted for purchase. The Company anticipates promptly filing a
short-form merger certificate under Delaware law pursuant to which (1) ADA
will become an indirect wholly owned subsidiary of the Company and (2) all
remaining public stockholders of ADA will be entitled to receive $5.37 in
cash per share.

Sierra Design Labs

On September 10, 1999 the Company, through one of its wholly owned
subsidiaries, purchased the outstanding stock of Sierra Design Labs
("Sierra"), a Nevada corporation. The purchase price was $6.3 million which
resulted in $4.9 million of goodwill. The acquisition was accounted for
using the purchase method of accounting and such goodwill will be amortized
over 10 years. Sierra designs, manufactures, and markets uncompressed,
real-time videodisk recorders and will be included in the Company's visual
communications segment.

D. Change of Jurisdiction of Incorporation

On September 8, 1999 the stockholders of the Company approved a proposal to
change the jurisdiction of incorporation of the Company from the
Commonwealth of Massachusetts to the State of Delaware and the jurisdiction
of incorporation changed effective such date.

The common stock of the Company issued when it was incorporated under the
laws of the Commonwealth of Massachusetts had no par value per share.
Therefore, the Company did not reflect a value for the common stock on the
balance sheet. The common stock issued under the laws of the State of
Delaware has a par value of $0.01 per share, and the balance sheet reflects
a reclass from additional paid-in capital of $1,214 (representing the par
value of 121,408,993 outstanding shares at September 30, 1999).

E. Recapitalization and Other Related Costs

During the first six months of fiscal 2000, the Company recorded a charge
of $13.3 million, most of which amount related to the retirement of John F.
Reno, former Chairman, President and Chief Executive Officer of the
Company.

In connection with the Merger in fiscal 1999, the Company incurred a charge
of $43.4 million principally for the cancellation payments of employee
stock options and compensation expense due to the acceleration of unvested
stock options. The Company incurred an additional $41.3 million in
expenses, of which $27.3 million was capitalized and will be amortized over
the life of the Senior Secured Credit Facilities and Senior Subordinated
Notes, and $14.0 million was charged directly to stockholders' equity.

F. Recapitalization and Merger

On May 21, 1998, CDRD Merger Corporation ("MergerCo"), a nonsubstantive
transitory merger vehicle, which was organized at the direction of Clayton,
Dubilier & Rice, Inc. ("CDR"), a private investment firm, was merged with
and into the Company (the "Merger") with the Company continuing as the
surviving corporation. In the Merger, (i) each then outstanding share of
common stock, par value $0.20 per share, of the Company was converted into
the right to receive $47.75 in cash and 0.5 shares of common stock, no par
value, of the Company (the "Common Stock") and (ii) each then outstanding
share of common stock of MergerCo was converted into one share of Common
Stock.

6
<PAGE>

G. New Pronouncements

On June 15, 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("FAS 133"), "Accounting for
Derivative Instruments and Hedging Activities." FAS 133 was amended by
Statement of Financial Accounting Standards No. 137 which modified the
effective date of FAS 133 to all fiscal quarters of all fiscal years
beginning after June 15, 2000. FAS 133, as amended, requires that all
derivative instruments be recorded on the balance sheet at their fair
value. Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the
type of hedge transaction. The Company is assessing the impact of the
adoption of FAS 133 on its results of operations and its financial
position.

H. Legal Proceedings

Litigation. The Company is involved from time to time in routine legal
matters incidental to its business. The Company believes that the
resolution of such matters will not have a material adverse effect on the
Company's financial condition or results of operations.

On June 27, 1996, Cincinnati Microwave, Inc. ("CMI") filed an action in the
United States District Court for the Southern District of Ohio against the
Company and Whistler Corporation of Massachusetts ("Whistler"), alleging
willful infringement of CMI's patent for a mute function in radar
detectors. In 1994, the Company sold its radar detector business to
Whistler. The Company and Whistler have asserted in response that they have
not infringed, and that the patent is invalid and unenforceable. The
Company obtained an opinion of counsel from Bromberg & Sunstein LLP in
connection with the manufacture and sale of the Company's Whistler series
radar detectors and will be offering the opinion, among other things, as
evidence that any alleged infringement was not willful. On March 24, 1998,
CMI, together with its co-plaintiff and patent assignee Escort, Inc., moved
for summary judgment. The Company and Whistler have opposed the motion for
summary judgment. Discovery in this matter closed on June 20, 1998. The
case is scheduled for trial in January 2000 and the Company intends to
defend the lawsuit vigorously. On May 27, 1999 Whistler filed a Chapter 11
bankruptcy case in the United States Bankruptcy Court for the District of
Massachusetts. The Company does not believe that the outcome of the
litigation is likely to have a material adverse effect on the Company's
financial condition, results of operations or liquidity.

On September 7, 1999, the Company and Applied Digital Access, Inc. ("ADA")
entered into an Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement, a subsidiary of the Company commenced a
cash tender offer to purchase all of the outstanding shares of ADA's common
stock at a price of $5.37 per share. On October 1, 1999, the Company was
served with a class action lawsuit filed by an alleged shareholder of ADA.
The lawsuit was filed in California state court and alleges that the
Company "aided and abetted" ADA and certain members of its board of
directors in breaching their fiduciary duties to ADA's stockholders in
connection with the tender offer. On October 29, 1999 the San Diego
Superior Court denied a motion for preliminary injunction, which was sought
to enjoin the tender offer by the Company for all ADA's shares and the
proposed merger of ADA with the Company. In the Company's opinion, this
lawsuit and four similar lawsuits filed against ADA have no merit and the
Company intends to vigorously defend against them.

7
<PAGE>

I. Income (Loss) Per Share

Income (loss) per share is calculated as follows:

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------- -----------------
1999 1998 1999 1998
--------- --------- -------- --------
(In thousands except per share data)
<S> <C> <C> <C> <C>
Net income (loss)................... $ 9,566 $ 3,661 $ 12,117 $ (8,272)
========= ========= ======== ========
BASIC:
Common stock outstanding, beginning
of period.......................... 120,673 120,251 120,665 16,871
Weighted average common stock
issued............................. 508 -- 263 87,731
Weighted average common stock
repurchased........................ -- -- (12,589)
--------- --------- -------- --------
Weighted average common stock
outstanding, end of period......... 121,181 120,251 120,928 92,013
========= ========= ======== ========
Income (loss) per common share...... $ 0.08 $ 0.03 $ 0.10 $ (0.09)
========= ========= ======== ========
DILUTIVE:
Common stock outstanding, beginning
of period.......................... 120,673 120,251 120,665 16,871
Weighted average common stock
issued............................. 508 -- 263 87,731
Weighted average of dilutive
potential common stock(a).......... 8,780 9,214 8,840 --
Weighted average common stock
repurchased........................ -- (12,589)
--------- --------- -------- --------
Weighted average common stock
outstanding, end of period......... 129,961 129,465 129,768 92,013
========= ========= ======== ========
Income (loss) per common share...... $ 0.07 $ 0.03 $ 0.09 $ (0.09)
========= ========= ======== ========
</TABLE>
- --------
(a) As of September 30, 1999, the Company had no options that were excluded
from the diluted earnings per share calculation, since all options had
a dilutive effect on earnings per share. As of September 30, 1999, the
Company had options outstanding to purchase 32.2 million shares of
common stock.

As of September 30, 1998, the Company had options outstanding to purchase
33.1 million shares of common stock that were excluded from the diluted
earnings per share computation as the effect of their inclusion would have
been antidilutive.

J. Intangible Assets

Intangible assets acquired primarily from business acquisitions are
summarized as follows:

<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------- ---------
<S> <C> <C>
Product technology................................... $17,077 $17,042
Excess of cost over net assets acquired.............. 60,800 55,878
Other intangible assets.............................. 13,307 13,307
------- -------
91,184 86,227
Less accumulated amortization........................ 32,616 29,459
------- -------
Total.............................................. $58,568 $56,768
======= =======
</TABLE>

On September 10, 1999 the Company, through one of its wholly owned
subsidiaries, purchased the outstanding stock of Sierra. The purchase price
was $6.3 million which resulted in $4.9 million of goodwill. The
acquisition was accounted for using the purchase method of accounting and
such goodwill will be amortized over 10 years.

8
<PAGE>

K. Debt

Long-term debt is summarized below:

<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------- ---------
<S> <C> <C>
Senior secured credit facilities..................... $236,174 $252,000
Senior subordinated notes............................ 275,000 275,000
Capitalized leases................................... 102 342
-------- --------
Total debt......................................... 511,276 527,342
Less current portion............................. 5,178 23,191
-------- --------
Long-term debt....................................... $506,098 $504,151
======== ========
</TABLE>

L. Stockholders' Deficit

The following is a summary of the change in stockholders' deficit for the
period ended September 30, 1999.

<TABLE>
<CAPTION>
Number
Of Shares Additional Other Total
Common Common Paid-In Retained Unearned Comprehensive Stockholders'
Stock Stock Capital Deficit Compensation Loss Deficit
--------- ------ ---------- --------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31,
1999................... 120,665 -- $322,746 $(629,941) $(7,563) $(1,682) $(316,440)
Net income current
year................... 12,117 12,117
Translation adjustment.. 254 254
---------
Total comprehensive
income................. 12,371
Adjust unearned
compensation........... (486) 481 (5)
Stock option expense.... (5,829) (5,829)
Amort of unearned comp.. 852 852
Exercise of stock
options and other
issuances.............. 744 470 470
Unearned compensation
from Stock option
grants................. 3,254 (3,254) --
Reclass of common stock
par value.............. 1,214 (1,214) --
------- ------ -------- --------- ------- ------- ---------
Balance, September 30,
1999................... 121,409 $1,214 $318,941 $(617,824) $(9,484) $(1,428) (308,581)
======= ====== ======== ========= ======= ======= =========
</TABLE>

During the first six months of fiscal 2000 the Company issued approximately
7.1 million options of which 1.9 million options were issued at an exercise
price lower than fair market value on the dates of grants. The Company,
therefore, incurred a charge of approximately $3.3 million for the
difference between the fair market value and the exercise price of the
options and recorded this unearned compensation within stockholders' equity
and will be amortized to expense over the options' vesting periods.

9
<PAGE>

M. Segment Information

Sales and earnings before interest and taxes ("EBIT") for the three and six
months ended September 30, 1999 and 1998 are shown below (in thousands):

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------- -----------------
1999 1998 1999 1998
SEGMENT --------- --------- -------- --------
<S> <C> <C> <C> <C>
Communications test:
Sales............................ $ 77,238 $ 62,051 $144,519 $115,852
EBIT............................. $ 13,911 $ 11,633 $ 24,036 $ 18,374
Industrial computing &
communications:
Sales............................ 52,360 39,172 122,336 73,123
EBIT............................. 5,289 1,324 18,331 1,490
Visual communications:
Sales............................ 26,550 22,378 50,064 43,769
EBIT............................. 8,843 6,911 15,744 13,449
Corporate:
EBIT............................. 303 (224) 335 (778)
Total:
Sales............................ $ 156,148 $ 123,601 $316,919 $232,744
EBIT............................. $ 28,346 $ 19,644 $ 58,446 $ 32,535
</TABLE>

The Company had no material change in total assets by segment since March
31, 1999 and is, therefore, not separately disclosed.

10
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

This Form 10-Q contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, product demand and market
acceptance risks, the effect of economic conditions, the impact of competitive
products and pricing, product development, commercialization and technological
difficulties, capacity and supply constraints or difficulties, availability of
capital resources, general business and economic conditions, the effect of the
Company's accounting policies, and other risks detailed in the Company's most
recent Form 10-K as of March 31, 1999.

Overview

During fiscal 1999 the Company's communications test and industrial
computing and communications segments had been experiencing certain order
delays due to the telecommunications equipment and service providers facing
capital market volatility, reduced financing availability, as well as an
overall economic slowdown in Asia. During the first and second quarters of
fiscal 2000, the Company shipped products at record levels. However, the
Company cannot predict whether this trend will continue due in part to the
volatility of the global economy, the unpredictability of the purchasing
patterns of the Regional Bell Operating Companies ("RBOCs"), and the timing
and size of such customers' orders, among other things.

During the first quarter of fiscal 2000, certain of the Company's key
executives, including Mr. John F. Reno, former Chairman, President and Chief
Executive Officer, terminated their employment with the Company. In accordance
with the terms of certain agreements, the Company recorded a charge of $13.3
million.

On September 7, 1999, the Company and Applied Digital Access, Inc. ("ADA")
entered into an Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement, a subsidiary of the Company commenced a cash
tender offer to purchase all of the outstanding shares of ADA's common stock
at a price of $5.37 per share. On October 1, 1999, the Company was served with
a class action lawsuit filed by an alleged stockholder of ADA. (See Item 1.
Financial Statements--Note H. Legal Proceedings) The offer expired on November
1, 1999, at which time in excess of 90% of ADA's outstanding shares were
validly tendered and not withdrawn, which the Company accepted for purchase.
The Company anticipates promptly filing a short-form merger certificate under
Delaware law pursuant to which (1) ADA will become an indirect wholly owned
subsidiary of the Company and (2) all remaining public stockholders of ADA
will be entitled to receive $5.37 in cash per share.

On September 10, 1999, Dynatech Corporation, through one of its wholly
owned subsidiaries, purchased the outstanding stock of Sierra Design Labs
("Sierra"), a Nevada corporation. The purchase price was $6.3 million which
resulted in $4.9 million of goodwill. The acquisition was accounted for on the
purchase method of accounting, and such goodwill will be amortized over 10
years. Sierra designs, manufactures, and markets uncompressed, real-time
videodisk recorders and will be included in the Company's visual
communications segment.

Results of Operations

For the Three Months Ended September 30, 1999 as Compared to Three Months
Ended September 30, 1998

Sales. For the three months ended September 30, 1999 consolidated sales
increased $32.5 million or 26.3% to $156.1 million as compared to $123.6
million for the three months ended September 30, 1998. The increase occurred
within all three operating segments yet was primarily attributable to
increased shipments of the Company's ruggedized laptop computers as a result
of the large backlog at March 31, 1999 as well as an increase in shipments of
the Company's communications test products.

International sales (defined as sales outside of North America) were $17.7
million or 11.4% of consolidated sales for the three months ended September
30, 1999, as compared to $14.5 million or 11.8% of consolidated sales for the
three months ended September 30, 1998. The slight dollar increase in
international sales is a result of additional sales primarily to Europe.

11
<PAGE>

Gross Profit. Consolidated gross profit increased $17.9 million to $88.8
million or 56.9% of consolidated sales for the three months ended September
30, 1999 as compared to $70.9 million or 57.4% of consolidated sales for the
three months ended September 30, 1998. The increase was attributable to the
higher sales volume.

Operating Expenses. Operating expenses consist of selling, general and
administrative expense; product development expense; amortization of
intangibles; and amortization of unearned compensation. Total operating
expenses were $60.9 million or 39.0% of consolidated sales for the three
months ended September 30, 1999, as compared to $51.6 million or 41.7% of
consolidated sales for the three months ended September 30, 1998. The
percentage decrease in total operating expenses is due primarily to operating
expenses increasing at a rate slower than sales growth, which is consistent
with the Company's continued focus on cost containment.

Selling, general and administrative expense was $42.5 million or 27.2% of
consolidated sales for the three months ended September 30, 1999, as compared
to $36.0 million or 29.1% of consolidated sales for the three months ended
September 30, 1998. The dollar increase is primarily due to the variable
compensation plans in which incentive compensation increases as sales
increase.

Product development expense was $16.4 million or 10.5% of consolidated
sales for the three months ended September 30, 1999 as compared to $13.6
million or 11.0% of consolidated sales for the same period a year ago. The
Company continues to invest in product development and enhancement within all
three segments. However, the percentage decrease is primarily a result of the
increased sales volume due to the backlog at Itronix Corporation ("Itronix")
at March 31, 1999.

Amortization of intangibles was $1.6 million for the three months ended
September 30, 1999, essentially at the same level as compared to the same
period a year ago.

Amortization of unearned compensation of $0.4 million for the three months
ended September 30, 1999 and for the same period a year ago relates to the
unearned compensation recorded within stockholders' deficit related to the
stock options that were issued at a grant price lower than fair market value.

Operating income. Operating income increased 44.3% to $27.9 million or
17.9% of consolidated sales for the three months ended September 30, 1999 as
compared to $19.3 million or 15.6% of consolidated sales for the same period a
year ago. The percentage increase was primarily the result of lower operating
expenses and increased sales described above.

Interest. Interest expense, net of interest income, was $12.0 million for
the three months ended September 30, 1999 as compared to $12.6 million for the
same period a year ago. The decrease was related to lower average borrowings
as the Company has repaid a portion of its term loan debt as well as its
revolving credit facility. In addition the Company has had overall higher cash
balances.

Taxes. The effective tax rate decreased for the three months ended
September 30, 1999 to 40.0% from 45% for the same period a year ago, primarily
due to the permanent book/tax differences that arose as a result of the
accounting for the Merger in the prior period.

Net income. Net income was $9.6 million or $0.07 per share on a diluted
basis for the three months ended September 30, 1999 as compared to $3.7
million or $0.09 per share on a diluted basis for the same period a year ago.
The increase was primarily attributable to the higher sales during fiscal 2000
as compared to the same period last year.

Six Months Ended September 30, 1999 as Compared to Six Months Ended September
30, 1998

Sales. For the six months ended September 30, 1999 consolidated sales
increased $84.2 million or 36.2% to $316.9 million as compared to $232.7
million for the six months ended September 30, 1998. The increase occurred
within all three operating segments yet was primarily attributable to
increased shipments of the

12
<PAGE>

Company's ruggedized laptop computers as a result of the large backlog of
orders at March 31, 1999 as well as additional shipments of the Company's
communications test products.

International sales (defined as sales outside of North America) were $32.1
million or 10.1% of consolidated sales for the six months ended September 30,
1999, as compared to $30.4 million or 13.1% of consolidated sales for the six
months ended September 30, 1998. The slight dollar increase in international
sales was a result of higher sales of the Company's communications test and
visual communications products in Europe. The percentage decrease was a result
of the increase in sales to a large domestic RBOC as a result of the large
backlog at March 31, 1999.

Gross Profit. Consolidated gross profit increased $41.7 million to $175.6
million or 55.4% of consolidated sales for the six months ended September 30,
1999 as compared to $133.9 million or 57.5% of consolidated sales for the six
months ended September 30, 1998. The dollar increase was directly related to
the increase in sales. The percentage decrease was attributable to a change in
the sales mix within the consolidated group along with lower gross margins
within the Company's industrial computing and communications segment.

Operating Expenses. Operating expenses consist of selling, general and
administrative expense; product development expense; recapitalization and
other related costs; amortization of intangibles; and amortization of unearned
compensation. Total operating expenses were $131.3 million or 41.4% of
consolidated sales for the six months ended September 30, 1999, as compared to
$145.1 million or 62.3% of consolidated sales for the six months ended
September 30, 1998. Excluding the impact of the recapitalization and other
related costs, total operating expenses were $118.1 million or 37.3% of
consolidated sales and $101.7 million or 43.7% of consolidated sales for the
six months ended September 30, 1999 and 1998, respectively. The percentage
decrease in total operating expenses excluding the recapitalization and other
related expenses is due primarily to operating expenses increasing at a rate
slower than sales growth, which is consistent with the Company's continued
focus on cost containment.

Selling, general and administrative expense was $82.4 million or 26.0% of
consolidated sales for the six months ended September 30, 1999 as compared to
$71.2 million or 30.6% of consolidated sales for the six months ended
September 30, 1998. The percentage decrease is in part a result of the
increase in sales. In addition, the Company's ICSAdvent Corporation
subsidiary, formerly Industrial Computer Source, reduced its expense on its
Industrial Computer Source-Book catalog as this subsidiary has implemented an
on-line ordering system via the internet.

Product development expense was $31.7 million or 10.0% of consolidated
sales for the six months ended September 30, 1999 as compared to $27.1 million
or 11.6% of consolidated sales for the same period a year ago. The Company
believes that, in order to provide innovative new product offerings,
significant investments must occur in research and development. However, the
percentage decrease is primarily a result of the increased sales volume due to
the backlog at Itronix at March 31, 1999.

Recapitalization and other related costs were $13.3 million and $43.4
million at September 30, 1999 and September 30, 1998, respectively. The fiscal
2000 expense relates to certain terminating employees' termination expenses.
Recapitalization costs totaling $43.4 million were incurred during the first
quarter of fiscal 1999 in connection with the Merger.

Amortization of intangibles was $3.2 million for the six months ended
September 30, 1999, essentially at the same level for the same period a year
ago. Amortization of unearned compensation was $0.9 million and $0.4 million
for the six months ended September 30, 1999 and 1998, respectively. This
charge is related to the amortization of the unearned compensation recorded
within stockholders' equity related to the stock options that were issued at a
grant price lower than fair market value.

13
<PAGE>

Operating income (loss). Operating income increased $55.5 million to $44.3
million or 14.0% of consolidated sales for the six months ended September 30,
1999 as compared to an operating loss of $11.2 million or (4.8%) of
consolidated sales for the same period a year ago. The increase was primarily
a result of the recapitalization and other related costs during fiscal 1999 as
well as the increase in sales. Excluding these expenses, the Company generated
operating income of $57.6 million or 18.2% of consolidated sales and $32.2
million or 13.8% of consolidated sales for the six months ended September 30,
1999 and 1998, respectively. The percentage increase was primarily the result
of the increase in sales described above offset slightly by the increase in
operating expenses.

Interest. Interest expense, net of interest income, was $24.1 million for
the six months ended September 30, 1999 as compared to $17.9 million for the
same period a year ago. The increase in net interest expense was attributable
to a full six months of interest expense in fiscal 2000 as compared to
approximately 4 1/2 months of interest expense for the same period last year,
as the debt was incurred in connection with the Merger on May 21, 1998.

Gain on sale. On June 30, 1998 the Company sold the assets of ComCoTec for
$21 million which resulted in a gain of $15.9 million. ComCoTec was a
subsidiary within the Company's visual communications segment.

Taxes. The effective tax rate for the six months ended September 30, 1999
increased to 40.0% from 37.5% for the same period last year. This was due to
the permanent differences arising as a result of the accounting for the
Merger, and a smaller amount of income (loss) before income taxes, which
magnified the effect of such permanent differences.

Net income. Net income increased $20.4 million to $12.1 million or $0.09
per share on a diluted basis for the six months ended September 30, 1999 as
compared to a net loss of $8.3 million or a $0.09 loss per share on a diluted
basis for the same period a year ago. The increase was primarily attributable
to the higher recapitalization and other related expenses offset by the gain
on the sale of ComCoTec during fiscal 1999 offset by higher sales during
fiscal 2000.

Adoption of Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information"("FAS 131").

During the fourth quarter of fiscal 1999, the Company adopted FAS 131 which
establishes standards for the reporting of operating segments in the financial
statements. The Company measures the performance of its subsidiaries by the
their respective new orders received ("bookings"), sales and earnings before
interest and taxes ("EBIT"), as well as backlog (defined as orders for goods
to be shipped and services to be performed). The discussion below includes
bookings, sales and EBIT (excluding recapitalization and other related costs
and the gain on sale of subsidiary) for the three segments in which the
Company participates: communications test, industrial computing and
communications, and visual communications (in thousands).

14
<PAGE>

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------- -----------------
1999 1998 1999 1998
SEGMENT: --------- --------- -------- --------
<S> <C> <C> <C> <C>
Communications Test:
Bookings............................... $ 80,042 $ 60,644 $156,400 $110,387
Sales.................................. 77,238 62,051 144,519 115,852
EBIT................................... 13,911 11,633 24,036 18,374
Industrial Computing & Communications:
Bookings............................... 29,468 40,312 85,666 79,822
Sales.................................. 52,360 39,172 122,337 73,123
EBIT................................... 5,289 1,324 18,331 1,490
Visual Communications:
Bookings............................... 26,769 23,266 51,590 49,333
Sales.................................. 26,550 22,378 50,064 43,769
EBIT................................... 8,843 6,911 15,744 13,449
</TABLE>

Three and Six Months Ended September 30, 1999 Compared to Three and Six Months
Ended September 30, 1998 -- Communications Test Products

Bookings for communications test products increased $19.4 million or 32.0%
to $80.0 million for the three months ended September 30, 1999 as compared to
$60.6 million for the same period a year ago. For the six months ended
September 30, 1999 bookings for communications test products increased $46.0
million or 41.7% to $156.4 million as compared to $110.4 million for the same
period a year ago. Orders for the Company's communications test instruments
products continue to recover from last year's slowdown which was a result of
the communications industry consolidation and the Asia economic crisis.

Sales of communications test products increased $15.2 million or 24.5% to
$77.2 million for the three months ended September 30, 1999 as compared to
$62.1 million for the same period a year ago. For the six months ended
September 30, 1999 sales of communications test products increased $28.7
million or 24.7% to $144.5 million as compared to $115.9 million for the six
months ended September 30, 1998. During fiscal 1999 the Company experienced a
decrease in demand for its core instruments in part due to the consolidation
of the RBOC's purchasing practices as well as the economic slowdown in Asia.

EBIT for the communications test products increased $2.3 million or 19.6%
to $13.9 million for the three months ended September 30, 1999 as compared to
$11.6 million for the same period a year ago. For the six months ended
September 30, 1999 EBIT increased $5.7 million or 30.8% to $24.0 million as
compared to $18.4 million for the same period a year ago. The increase in EBIT
is directly related to the increase in sales.

The backlog for the Company's communications test products was $72.5
million, an increase of 19.6% from the fiscal year ended March 31, 1999.

Three and Six Months Ended September 30, 1999 Compared to Three and Six Months
Ended September 30, 1998 -- Industrial Computing and Communications Products

Bookings for the industrial computing and communications products decreased
26.9% to $29.5 million for the three months ended September 30, 1999 as
compared to $40.3 million for the same period a year ago. For the six months
ended September 30, 1999 bookings for this segment increased $5.8 million or
7.3% to $85.7 million from $79.8 million for the same period a year ago. The
increase is primarily attributable to significant orders received during the
first quarter of fiscal 2000 from one of the large RBOCs for ruggedized
laptops.

Sales of industrial computing and communications products increased 33.7%
to $52.4 million for the three months ended September 30, 1999 as compared to
$39.2 million for the same period a year ago. For the six months ended
September 30, 1999 sales within this segment increased $49.2 million or 67.3%
to $122.3 million as compared to $73.1 million for the same period a year ago.
The increase was primarily due to increased shipments of the Company's
ruggedized laptop computers to one of the RBOCs due to the high backlog
position for products within this segment at March 31, 1999.

15
<PAGE>

EBIT for the industrial computing and communications products increased
$4.0 million to $5.3 million for the three months ended September 30, 1999 as
compared to $1.3 million for the same period a year ago. For the six months
ended September 30, 1999 EBIT increased $16.8 million to $18.3 million as
compared to $1.5 million for the same period a year ago. The increase was
primarily attributable to the additional shipments of the ruggedized laptop
computers.

The backlog for the Company's industrial computing and communications
products was $45.1 million, a decrease of 43.1% from the fiscal year ended
March 31, 1999. The decrease is a result of the one-time orders received from
certain RBOCs during the third and fourth quarters of fiscal 1999 for the
Company's' ruggedized laptops. These one-time orders were initiated by certain
RBOCs to replace their field workforce computing systems with more up-to-date
ruggedized computing solutions. Included in the backlog at September 30, 1999
is approximately $25 million relating to maintenance and service contracts
associated with the purchase of the ruggedized laptops by the RBOCs during the
last two quarters of fiscal 1999 and the first quarter of fiscal 2000.

The results of operations for Itronix are expected to continue to vary
widely because of the relatively small number of potential customers with
large field-service work forces and the irregularity of timing and size of
such customers' orders.

Three and Six Months Ended September 30, 1999 Compared to Three and Six Months
Ended September 30, 1998 -- Visual Communications Products

Bookings for the visual communications products increased $3.5 million or
15.1% to $26.8 million for the three months ended September 30, 1999 as
compared to $23.3 million for the same period a year ago. For the six months
ended September 30, 1999 bookings within this segment increased $2.3 million
or 4.6% to $51.6 million as compared to $49.3 million for the same period a
year ago.

Sales for the Company's visual communications products increased $4.2
million or 18.6% to $26.6 million for the three months ended September 30,
1999 as compared to $22.4 million for the same period a year ago. For the six
months ended September 30, 1999 sales for products within this segment
increased $6.3 million or 14.4% to $50.1 million as compared to $43.8 million
for the same period a year ago.

EBIT for the visual communications products increased $1.9 million or 28.0%
to $8.8 million as compared to $6.9 million for the same period a year ago.
For the six months ended September 30, 1999 EBIT for this segment increased
$2.3 million or 17.1% to $15.7 million as compared to $13.4 million for the
same period a year ago.

The increased in bookings, sales, and EBIT is a result of increased demand
for the Company's aircraft video entertainment systems.

The backlog for the Company's visual communications products was $31.9
million, an increase of 5.9% from the fiscal year ended March 31, 1999.

Capital Resources and Liquidity

The Company broadly defines liquidity as its ability to generate sufficient
cash flow from operating activities to meet its obligations and commitments.
In addition, liquidity includes the ability to obtain appropriate debt and
equity financing and to convert into cash those assets that are no longer
required to meet existing strategic and financial objectives. Therefore,
liquidity cannot be considered separately from capital resources that consist
of current or potentially available funds for use in achieving long-range
business objectives and meeting debt service commitments.

16
<PAGE>

The Company's liquidity needs arise primarily from debt service on the
substantial indebtedness incurred in connection with the Merger and from the
funding of working capital and capital expenditures. As of September 30, 1999,
the Company had $511.3 million of indebtedness, primarily consisting of $275.0
million principal amount of the Senior Subordinated Notes, $236.2 million in
borrowings under the Term Loan Facility and no borrowings under the Revolving
Credit Facility.

Cash Flows. The Company's cash and cash equivalents decreased $30.2 million
during the six months ended September 30, 1999.

Working Capital. For the six months ended September 30, 1999, the Company's
working capital decreased as its operating assets and liabilities used $21.7
million of cash. Accounts receivable increased, creating a use of cash of $6.1
million primarily due to the increased sales volume during the quarter.
Inventory levels decreased, creating a source of cash of $3.3 million, due
primarily to improved inventory management throughout the organization. Other
current assets increased, creating a use of cash of $1.5 million. Accounts
payable decreased, creating a use of cash of $7.0 million. Other current
liabilities decreased, creating a use of cash of $10.4 million. The decrease
is due in part to management incentive payments made during the first quarter
of fiscal year 2000.

Investing Activities. The Company's investing activities totaled $16.0
million for the six months ended September 30, 1999 in part for the purchase
and replacement of property and equipment. In addition, the Company purchased
the stock of Sierra for $6.3 million.

The Company's capital expenditures during the first six months of fiscal
2000 were $8.3 million as compared to $5.8 million for the same period last
year. The increase was primarily due to the timing of certain capital
expenditure commitments at the Company's communications test and industrial
computing and communications businesses. The Company anticipates that fiscal
2000 capital expenditures will increase from fiscal 1999 levels and return to
or exceed fiscal 1998 levels as the Company anticipates replacing certain of
its Enterprise Resource Planning (ERP) systems at the communications test and
industrial computing and communications businesses. The Company is, in
accordance with the terms of the Senior Secured Credit Agreement, subject to
maximum capital expenditure levels.

Debt and Equity. The Company's financing activities used $15.6 million in
cash during the first and second quarters of fiscal 2000, due mainly to the
repayment of debt.

Debt

Principal and interest payments under the new Senior Secured Credit
Agreement and interest payments on the Senior Subordinated Notes represent
significant liquidity requirements for the Company. With respect to the $260
million initially borrowed under the Term Loan Facility (which is divided into
four tranches, each of which has a different term and repayment schedule), the
Company is required to make scheduled principal payments of the $50 million of
tranche A term loan thereunder during its six-year term, with substantial
amortization of the $70 million tranche B term loan, $70 million tranche C
term loan and $70 million tranche D term loan thereunder occurring after six,
seven and eight years, respectively. The balances of the revolving credit
facility, and tranches A, B, C, and D at September 30, 1999 were zero, $34.7
million, $67.2 million, $67.2 million, and $67.2 million, respectively. The
$275 million of Senior Subordinated Notes will mature in 2008, and bear
interest at 9 3/4% per annum. Total interest expense including $1.6 million of
deferred debt issuance costs amortization was $25.4 million for the six months
of fiscal 2000.

The Company is required, under the terms of its Senior Secured Credit
Facilities, to make a mandatory prepayment and principal reduction in an
amount equal to 50% of the Company's excess cash flow (the "Recapture")
calculated at the end of the Company's fiscal year. The Company was required
to prepay $14.5 million on June 30, 1999 for its excess cash flow calculated
as of March 31, 1999 in accordance with the terms of the Senior Secured Credit
Facilities. The Company elected to use this recapture as a prepayment of the
mandatory $8 million amortization due in fiscal 2000 which subsequently
reduced the mandatory principal payments to approximately $2.6 million during
fiscal 2000.

17
<PAGE>

The loans under the Senior Secured Credit Agreement bear interest at
floating rates based upon the interest rate option elected by the Company. The
Company's weighted-average interest rate on the loans under the Senior Credit
Agreement was 8.18% per annum for the period April 1, 1999 through September
30, 1999. However, the Company has entered into interest rate swap contracts
which will be effective for periods ranging from two to three years beginning
September 30, 1998 to fix the interest charged on a portion of the total debt
outstanding under the Term Loan Facility. After giving effect to these
arrangements, approximately $220 million of the debt outstanding will be
subject to an effective average annual fixed rate of 5.66%. This average
annual interest rate does not include a margin payable to the lenders
participating in the Senior Secured Credit Facilities.

Future Financing Sources and Cash Flows. The amount under the Revolving
Credit Facility that remained undrawn at September 30, 1999, was $110 million.
The Company believes that cash generated from operations, together with
amounts available under the Revolving Credit Facility and any other available
sources of liquidity, will be adequate to permit the Company to meet its debt
service obligations, capital expenditure program requirements, ongoing
operating costs and working capital needs, although no assurance can be given
in this regard. The Company's future operating performance and ability to
service or refinance the Senior Subordinated Notes and to repay, extend or
refinance the Senior Secured Credit Facilities (including the Revolving Credit
Facility) will be, among other things, subject to future economic conditions
and to financial, business and other factors, many of which are beyond the
Company's control.

Covenant Restrictions. The Senior Secured Credit Agreement imposes
restrictions on the ability of the Company to make capital expenditures, and
both the Senior Secured Credit Facilities and the indenture governing the
Senior Subordinated Notes limit the Company's ability to incur additional
indebtedness. Such restrictions, together with the highly leveraged nature of
the Company, could limit the Company's ability to respond to market
conditions, to meet its capital-spending program, to provide for unanticipated
capital investments, or to take advantage of business opportunities.

Year 2000

Broadly speaking, Year 2000 issues may arise when certain computer programs
use only two digits to refer to a year or to recognize a year. As a result,
computers that are not Year 2000 compliant may read the date 2000 as 1900. The
Company is aware that Year 2000 issues could adversely impact its operations,
and as detailed below, previously commenced and continues with a process
intended to address Year 2000 issues that the Company has been able to
identify. The Company's program for addressing Year 2000 issues at each of its
businesses generally comprises the following phases: inventory, assessment,
testing and remediation. The scope of this program includes the review of the
Company's products, information technology ("IT") systems, non-IT and embedded
systems, and vendors/supply chain.

State of Readiness. Management at each of the Company's businesses is in
the final stages of a review of its computer systems and products to assess
exposure to Year 2000 issues. The review process has been conducted by
employees with expertise in information technology as well as engineers
familiar with non-IT systems, and focuses on both the Company's internal
systems and its existing and installed base of products. The Company
previously formed a Year 2000 committee which is responsible for coordinating
and facilitating activities across the Company. Progress of the Year 2000
committee is reported regularly to the Audit Committee of the Company's Board
of Directors. Although the Company has used the services of consultants in
connection with its assessment of some Year 2000 issues, it has not used
independent verification and validation processes in the testing of its
systems and products. As of September 30, 1999, the Company had conducted an
inventory and test of its existing significant internal systems with regard to
Year 2000 issues, and where necessary, has implemented solutions to non-
conforming systems. The Company anticipates that additional testing and
remediation of these systems will continue through calendar 1999.

As of September 30, 1999, the Company had conducted an inventory and an
assessment of its existing and installed base of products. In determining
state of readiness the Company has adopted the following definition:

18
<PAGE>

Year 2000 readiness means the intended functionality of a product, when
used in accordance with its associated documentation, will correctly process,
provide and/or receive date-data in and between the years 1999 and 2000,
including leap year calculations, provided that all other products and systems
(for example, hardware, software and firmware) used with the product properly
exchange accurate date-data with it.

Most of the Company's existing product lines, and the installed base of
products, already meet this definition of Year 2000 readiness (i.e., they are
"Year 2000 Ready"). These products do not have Year 2000 readiness issues
because they do not contain date-sensitive functions. Certain existing
products which are date-sensitive are being made Year 2000 Ready by making
upgrades (i.e., hardware modifications and/or new software versions, as
appropriate) available to customers. A few of the Company's older, installed
base of products, primarily at the Company's communications test business,
cannot reasonably be upgraded; customers using these products are being
offered trade-in packages for newer, Year 2000 Ready products. As part of its
assessment phase, the Company is in the process of communicating with its
significant suppliers and customers to determine the extent to which the
Company is vulnerable to any failure by those third parties to remediate their
own Year 2000 issues. In addition, the Company is evaluating the extent to
which Year 2000 issues may arise as a result of some combinations of certain
of its products with other companies' products. If any such suppliers to
customers or product combinations do not successfully and timely achieve Year
2000 compliance, the Company's business or operations could be materially
adversely affected. There can be no assurances that the Company's assessment
of its suppliers and customers will be accurate.

With minor exceptions, none of which is believed to be material, the
communications test business, the Company's largest, met its June, 1999
targeted completion date for the review and remediation process. As of March
31, 1999, the communications test business had completed the inventory,
assessment and testing of its existing products. Management does not consider
data time fields to be critical to the functionality of most of the Company's
communications test products. For the Company's other product categories,
which may employ data time fields in areas that are critical to product
functionality, testing and remediation has been completed. In those limited
product lines where Year 2000 readiness issues have been identified, the
remediation process (generally, the distribution and implementation of
software upgrades) continues, and will likely not be fully complete until
after January 1, 2000.

Costs. The Company's historical and estimated costs of remediation have not
been and are not anticipated to be material to the Company's financial
position or results of operations, and will be funded through operating cash
flows. Total costs associated with remediation of Year 2000 issues (including
systems, software, and non-IT systems replaced as a result of Year 2000
issues) are currently estimated at approximately $2 million to $3 million, of
which approximately $1.8 million has already been incurred. Estimated
remediation costs are based on management's best estimates. There can be no
guarantee that these estimates will be achieved, and actual results could
differ materially from those anticipated, particularly if unanticipated Year
2000 issues arise. The costs do not include estimates for potential
litigation. Many commentators believe that there will be a significant amount
of litigation arising out of Year 2000 readiness issues. Because of the
unprecedented nature of this litigation, it is not possible for the Company to
predict the impact of such litigation.

Year 2000 Risks and Related Plans. While the Company expects to make the
necessary modifications or changes to both its internal IT and non-IT systems
and existing product base in a timely fashion, there can be no assurance that
the Company's internal systems and existing or installed base of products will
not be materially adversely affected by the advent of Year 2000. Certain of
the Company's products are used, in conjunction with products of other
companies, in applications that may be critical to the operations of its
customers. Any product non-readiness, whether standing alone or used in
conjunction with the products of other companies, may expose the Company to
claims from its customers or others, and could impair market acceptance of the
Company's products and services, increase service and warranty costs, or
result in payment of damages, which in turn could materially adversely affect
the Company.

In the event of a failure as a result of Year 2000 issues, the Company
could lose or have trouble accessing accurate internal data, resulting in
incomplete or inaccurate accounting of Company financial results, the

19
<PAGE>

Company's manufacturing operating systems could be impaired, and the Company
could be required to expend significant resources to address such failures. In
an effort intended to minimize potential disruption to its internal systems,
the Company intends to perform additional hard-disk back-up of its rudimentary
systems and critical information in advance of the Year 2000.

Similarly, in the event of a failure as a result of Year 2000 issues in any
systems of third parties with whom the Company interacts, the Company could
lose or have trouble accessing or receive inaccurate third party data,
experience internal and external communications difficulties or have
difficulty obtaining components that are Year 2000 compliant from its vendors.
The Company could also experience a slowdown or reduction of sales if
customers such as telecommunications companies or commercial airlines are
adversely affected by Year 2000 issues.

New Pronouncements

On June 15, 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("FAS 133"), "Accounting for
Derivative Instruments and Hedging Activities." FAS 133 was amended by
Statement of Financial Accounting Standards No. 137 which modified the
effective date of FAS 133 to all fiscal quarters of all fiscal years beginning
after June 15, 2000. FAS 133, as amended, requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in
the fair value of derivatives are recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is designated as
part of a hedge transaction and, if it is, the type of hedge transaction. The
Company is assessing the impact of the adoption of FAS 133 on its results of
operations and its financial position.

Item 3. Quantitative And Qualitative Disclosures About Market Risk

The Company operates both manufacturing facilities and sales offices within
the United States and primarily sales offices outside the United States. The
Company is subject to business risks inherent in non-U.S. activities,
including political and economic uncertainty, import and export limitations,
and market risk related to changes in interest rates and foreign currency
exchange rates. The Company believes the political and economic risks related
to its foreign operations are mitigated due to the stability of the countries
in which its sales offices are located, as well as the low percentage of
overall sales outside the United States (approximately 14%, 16% and 20% in
fiscal 1999, 1998, and 1997, respectively of consolidated sales relate to
foreign sales including exports from the United States). The Company's
principal currency exposures against the U.S. dollar are in the major European
currencies and in Canadian currency. The Company does not use foreign currency
forward exchange contracts to mitigate fluctuations in currency. The Company's
market risk exposure to currency rate fluctuations is not material. The
Company does not hold derivatives for trading purposes.

The Company uses derivative financial instruments consisting solely of
interest rate swap contracts. The Company's objective in managing its exposure
to changes in interest rates (on its variable rate debt) is to limit the
impact of such changes on earnings and cash flow and to lower its overall
borrowing costs.

The Company currently has four interest rate swap contracts with notional
amounts totaling $220 million which fixed its variable rate debt to a fixed
interest rate for periods of two to three years in which the Company pays a
fixed interest rate on a portion of its outstanding debt and receives three-
month LIBOR. At September 30, 1999, three of the four interest rate swap
contracts had an interest rate higher than the three-month LIBOR quoted by its
financial institutions, as variable rate three-month LIBOR interest rates
declined after the swap contracts became effective. Therefore, the additional
interest expense (calculated as the difference between the interest rate in
the swap contracts and the three-month LIBOR rate) recognized by the Company
during the three and six months ended September 30, 1999 were $160.4 thousand
and $529.3 thousand, respectively. The Company has performed a sensitivity
analysis assuming a hypothetical 10% adverse movement in the floating interest
rate on the interest rate sensitive instruments described above. The Company
believes that such a movement is reasonably possible in the near term. As of
September 30, 1999, the analysis demonstrated that such movement would cause
the Company to recognize additional interest expense of approximately $1.2
million on an annual basis, and accordingly, would cause a hypothetical loss
in cash flows of approximately $1.2 million on an annual basis.

20
<PAGE>

PART II. Other Information

Item 1. Legal Proceedings

On June 27, 1996, Cincinnati Microwave, Inc. ("CMI") filed an action in the
United States District Court for the Southern District of Ohio against the
Company and Whistler Corporation of Massachusetts ("Whistler"), alleging
willful infringement of CMI's patent for a mute function in radar detectors.
In 1994, the Company sold its radar detector business to Whistler. The Company
and Whistler have asserted in response that they have not infringed, and that
the patent is invalid and unenforceable. The Company obtained an opinion of
counsel from Bromberg & Sunstein LLP in connection with the manufacture and
sale of the Company's Whistler series radar detectors and will be offering the
opinion, among other things, as evidence that any alleged infringement was not
willful. On March 24, 1998, CMI, together with its co-plaintiff and patent
assignee Escort, Inc., moved for summary judgment. The Company and Whistler
have opposed the motion for summary judgment. Discovery in this matter closed
on June 20, 1998. The case is scheduled for trial in January 2000 and the
Company intends to defend the lawsuit vigorously. On May 27, 1999 Whistler
filed a Chapter 11 bankruptcy case in the United States Bankruptcy Court for
the District of Massachusetts. The Company does not believe that the outcome
of the litigation is likely to have a material adverse effect on the Company's
financial condition, results of operations or liquidity.

On September 7, 1999, the Company and Applied Digital Access, Inc. ("ADA")
entered into an Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement, a subsidiary of the Company commenced a cash
tender offer to purchases all of the outstanding shares of ADA's common stock
at a price of $5.37 per share. On October 1, 1999, the Company was served with
a class action lawsuit filed by an alleged stockholder of ADA. The lawsuit was
filed in California state court and alleges that the Company "aided and
abetted" ADA and certain members of its board of directors in breaching their
fiduciary duties to ADA's stockholders in connection with the tender offer. On
October 29, 1999 the San Diego Superior Court denied a motion for preliminary
injunction, which was sought to enjoin the tender offer by the Company for all
ADA's shares and the proposed merger of ADA with the Company. In the Company's
opinion, this lawsuit and four similar lawsuits filed against ADA have no
merit and the Company intends to vigorously defend against them.

Item 2. Changes in Securities and Use of Proceeds

None

Item 4. Submission of Matters to a Vote

The Annual Meeting of Stockholders was held on September 8, 1999 in Boston,
Massachusetts. At such meeting, 120,673,028 shares were entitled to vote. The
table below discloses the vote with respect to each proposal:

PROPOSAL I

To fix the number of directors at nine (subject to enlargement or reduction
by the Board of Directors) and to elect the following Directors to serve for a
term ending upon the 2000 Annual Meeting of Stockholders or until their
successors are duly elected and qualified; except that if Proposal No. 2,
providing for a classified Board of Directors, is adopted each director will
serve for the term of the class into which such directors is elected:

21
<PAGE>

Nominees: Ned C. Lautenbach, Allan M. Kline, John R. Peeler, Joseph L.
Rice, III, Brian D. Finn, Charles P. Pieper, Marvin L. Mann, Brian H. Rowe and
William O. McCoy

<TABLE>
<S> <C>
For........................................................... 113,927,027
Against....................................................... 16,195
Abstain....................................................... 20,314
Non Vote...................................................... 4,670,902
</TABLE>

Proposal II

To approve a proposal providing for the classification of the Board of
Directors into three classes, with members of each class serving for staggered
terms.

<TABLE>
<S> <C>
For........................................................... 112,614,022
Against....................................................... 1,346,495
Abstain....................................................... 3,019
Non-vote...................................................... 4,670,902
</TABLE>

Proposal III

To approve the performance criteria upon which annual bonuses are payable
and the maximum amount payable to an executive officer under the Company's
annual incentive plan for its executive officers, as described in the Proxy
Statement.

<TABLE>
<S> <C>
For........................................................... 118,546,789
Against....................................................... 70,711
Abstain....................................................... 16,938
</TABLE>

Proposal IV

To approve the Non-Employee Directors Stock Incentive Plan, as described in
the Proxy Statement

<TABLE>
<S> <C>
For........................................................... 118,481,901
Against....................................................... 133,234
Abstain....................................................... 19,303
</TABLE>

Proposal V

To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent auditors for the current fiscal year.

<TABLE>
<S> <C>
For........................................................... 118,630,451
Against....................................................... 1,572
Abstain....................................................... 2,415
</TABLE>

Proposal VI

To approve a proposal to change the jurisdiction of incorporation of the
Company from the Commonwealth of Massachusetts to the State of Delaware
pursuant to a statutory merger of the Company into Dynatech Corporation, a
company to be incorporated in Delaware and a wholly owned subsidiary of the
Company, by approving an Agreement and Plan of Merger.

<TABLE>
<S> <C>
For........................................................... 113,937,499
Against....................................................... 7,997
Abstain....................................................... 5,132
Non-Vote...................................................... 4,683,810
</TABLE>

22
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

The exhibit numbers in the following list correspond to the numbers
assigned to such exhibits in the Exhibit Table of Item 601 of Regulation S-K:

<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<C> <S>
3.1 Articles of Incorporation of Dynatech Corporation.
3.2 Bylaws of Dynatech Corporation.
10.1 Agreement and Plan of Merger by and between Dynatech Corporation,
a Massachusetts corporation, and Dynatech Corporation, a Delaware
corporation, dated as of September 8, 1999
10.2 Agreement and Plan of Merger among Applied Digital Access, Inc.,
Dynatech Corporation and Dynatech Acquisition Corporation, dated
as of September 7, 1999*
10.3 Dynatech Corporation Directors Stock Purchase Plan
27 Financial Data Schedule
</TABLE>
- --------
* Incorporated by reference to Dynatech Corporation's Schedule 14D-1 (File
No.: 005-44783)

(b) Reports on Form 8-K

None

23
<PAGE>

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 thereunto duly authorized.

DYNATECH CORPORATION

November 3, 1999 /s/ ALLAN M. KLINE
_____________________________________ _____________________________________
Date Allan M. Kline
Vice President, Chief Financial
Officer and Treasurer

November 3, 1999 /s/ ROBERT W. WOODBURY, JR.
_____________________________________ _____________________________________
Date Robert W. Woodbury, Jr.
Vice President, Corporate
Controller and Principal Accounting
Officer

<PAGE>

EXHIBIT 3.1

CERTIFICATE OF INCORPORATION
OF
DYNATECH CORPORATION

FIRST: The name of the corporation is Dynatech Corporation (the
"Corporation").

SECOND: The Corporation's registered office in the State of Delaware is c/o
Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.

THIRD: The nature of the business of the Corporation and its purpose is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.

FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 200,100,000 shares, consisting of
200,000,000 shares of Common Stock, par value $.01 per share, and 100,000
shares of Preferred Stock, par value $1.00 per share.

The Preferred Stock may be issued at any time and from time to time in one
or more series. The Board of Directors is hereby authorized to provide for the
issuance of shares of Preferred Stock in series and, by filing a certificate
of designation pursuant to the applicable provisions of the General
Corporation Law of the State of Delaware (hereinafter referred to as a
"Preferred Stock Certificate of Designation"), to establish from time to time
the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of shares of each such series and
the qualifications, limitations and restrictions thereof.

The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but not be limited to, determination of the
following:

(a) the designation of the series, which may be by distinguishing
number, letter or title;

(b) the number of shares of the series, which number the Board of
Directors may thereafter (except where otherwise provided in the applicable
Preferred Stock Certificate of Designation) increase or decrease (but not
below the number of shares thereof then outstanding);

(d) the dates on which dividends, if any, shall be payable;

(e) the redemption rights and price or prices, if any, for shares of the
series;

(f) the terms and amount of any sinking fund provided for the purchase
or redemption of shares of the series;

(g) the amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;

(h) whether the shares of the series shall be convertible or
exchangeable into shares of any other class or series, or any other
security, of the Corporation or any other corporation, and, if so, the
specification of such other class or series or such other security, the
conversion or exchange price or prices or rate or rates, any adjustments
thereof, the date or dates as of which such shares shall be convertible or
exchangeable and all other terms and conditions upon which such conversion
or exchange may be made;

(i) restrictions on the issuance of shares of the same series or of any
other class or series;

(j) the voting rights, if any, of the holders of shares of the series;
and

(k) such other terms and provisions as the Board of Directors may
determine.

A-1
<PAGE>

FIFTH: The name and mailing address of the incorporator is as follows:

Andrew S. Borodach
c/o Debevoise & Plimpton
875 Third Avenue
New York, New York 10022

SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation and for the
purpose of creating, defining, limiting and regulating the powers of the
Corporation and its directors and stockholders:

(a) The number of Directors constituting the Board of Directors shall be
as set forth in, or determined by the Board of Directors in accordance
with, the By-Laws of the Corporation. The Board of Directors shall be
divided into three classes, designated Classes I, II and III, which shall
be as nearly equal in number as possible. Directors of Class I shall be
elected at any time on and after the date of filing of this Certificate of
Incorporation with the Secretary of State of the State of Delaware to hold
office for an initial term expiring at the annual meeting of stockholders
to be held in 2001. Directors of Class II shall be elected at any time on
and after the date of filing of this Certificate of Incorporation with the
Secretary of State of the State of Delaware to hold office for an initial
term expiring at the annual meeting of stockholders to be held in 2002.
Directors of Class III shall be elected at any time on and after the date
of filing of this Certificate of Incorporation with the Secretary of State
of the State of Delaware to hold office for an initial term expiring at the
annual meeting of stockholders to be held in 2000; provided that, prior to
the annual meeting of stockholders to be held in 2000, the Board of
Directors may, by resolution duly adopted, create and appoint one or more
persons to fill one or more Class III Directorships up to a number not to
exceed the number of Directors in Class I for an interim term expiring at
the annual meeting of stockholders to be held in 2000. At each annual
meeting of stockholders following the annual meeting of stockholders to be
held 2000, the respective successors of the Directors whose terms are
expiring shall be elected for terms expiring at the annual meeting of
stockholders held in the third succeeding year. Vacancies in the Board of
Directors and newly-created Directorships resulting from any increase in
the authorized number of Directors may be filled as provided in the By-
Laws. Directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of Directors.

(b) The election of directors may be conducted in any manner approved by
the stockholders at the time when the election is held and need not be by
ballot.

(c) All corporate powers and authority of the Corporation (except as at
the time otherwise provided by law, by this Certificate of Incorporation or
by the By-Laws) shall be vested in and exercised by the Board of Directors.

(d) The Board of Directors shall have the power without the assent or
vote of the stockholders to adopt, amend, alter or repeal the By-Laws of
the Corporation, except to the extent that the By-Laws or this Certificate
of Incorporation otherwise provide.

(e) No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his or her fiduciary
duty as a director, provided that nothing contained in this Certificate of
Incorporation shall eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or (iv)
for any transaction from which the director derived an improper personal
benefit.

SEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate in the manner now or
hereafter prescribed by statute; and all rights herein conferred upon the
stockholders are granted subject to this reservation.

A-2
<PAGE>

IN WITNESS WHEREOF, I, the undersigned, being the incorporator hereinabove
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make and file this Certificate of
Incorporation, hereby declaring and certifying that the facts herein stated
are true, and accordingly have hereunto set my hand this 8th day of September,
1999.

/s/ Andrew S. Borodach
_____________________________________
Andrew S. Borodach

A-3

<PAGE>

EXHIBIT 3.2

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

DYNATECH CORPORATION
(a Delaware corporation)

BY-LAWS

As adopted on September 8, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

DYNATECH CORPORATION
(a Delaware corporation)

BY-LAWS

As adopted on September 8, 1999
<PAGE>

DYNATECH CORPORATION
(a Delaware corporation)

BY-LAWS

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I STOCKHOLDERS..................................................... 1

Section 1.1 Annual Meetings.............................................. 1
Section 1.2 Special Meetings............................................. 1
Section 1.3 Notice of Meetings; Waiver................................... 1
Section 1.4 Quorum....................................................... 2
Section 1.5 Voting....................................................... 2
Section 1.6 Voting by Ballot............................................. 2
Section 1.7 Adjournment.................................................. 2
Section 1.8 Proxies...................................................... 3
Section 1.9 Organization; Procedure...................................... 3
Section 1.10 Consent of Stockholders in Lieu of Meeting.................. 4
Section 1.11 Notice of Stockholder Business and Nominations.............. 4

ARTICLE II BOARD OF DIRECTORS.............................................. 7

Section 2.1 General Powers............................................... 7
Section 2.2 Number....................................................... 7
Section 2.3 Election of Directors and Term of Office..................... 7
Section 2.4 Annual and Regular Meetings.................................. 8
Section 2.5 Special Meetings; Notice..................................... 8
Section 2.6 Quorum; Voting............................................... 8
Section 2.7 Adjournment.................................................. 8
Section 2.8 Action Without a Meeting..................................... 9
Section 2.9 Regulations; Manner of Acting................................ 9
Section 2.10 Action by Telephonic Communications......................... 9
Section 2.11 Resignations................................................ 9
Section 2.12 Removal of Directors........................................ 9
Section 2.13 Vacancies and Newly Created Directorships................... 10
Section 2.14 Compensation................................................ 10
Section 2.15 Reliance on Accounts and Reports, etc....................... 10

ARTICLE III EXECUTIVE COMMITTEE AND OTHER COMMITTEES....................... 10

Section 3.1 How Constituted.............................................. 10
Section 3.2 Powers....................................................... 11
Section 3.3 Proceedings.................................................. 11
Section 3.4 Quorum and Manner of Acting.................................. 11
Section 3.5 Action by Telephonic Communications.......................... 12
Section 3.6 Absent or Disqualified Members............................... 12
Section 3.7 Resignations................................................. 12
Section 3.8 Removal...................................................... 12
Section 3.9 Vacancies.................................................... 12

ARTICLE IV OFFICERS........................................................ 12

Section 4.1 Numbers...................................................... 12
Section 4.2 Election..................................................... 13
Section 4.3 Salaries..................................................... 13
</TABLE>

i
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 4.4 Removal and Resignation; Vacancies........................... 13
Section 4.5 Authority and Duties of Officers............................. 13
Section 4.6 The Chairman of the Board of Directors....................... 13
Section 4.7 The President and Chief Executive Officer.................... 13
Section 4.8 The Vice Presidents.......................................... 14
Section 4.9 The Secretary................................................ 14
Section 4.10 The Treasurer............................................... 15
Section 4.11 Additional Officers......................................... 16
Section 4.12 Security.................................................... 16

ARTICLE V CAPITAL STOCK.................................................... 16

Section 5.1 Certificates of Stock........................................ 16
Section 5.2 Signatures; Facsimile........................................ 17
Section 5.3 Lost, Stolen or Destroyed Certificates....................... 17
Section 5.4 Transfer of Stock............................................ 17
Section 5.5 Record Date.................................................. 17
Section 5.6 Registered Stockholders...................................... 18
Section 5.7 Transfer Agent and Registrar................................. 19

ARTICLE VI INDEMNIFICATION................................................. 19

Section 6.1 Nature of Indemnity.......................................... 19
Section 6.2 Successful Defense........................................... 20
Section 6.3 Determination That Indemnification Is Proper................. 20
Section 6.4 Advance Payment of Expenses.................................. 20
Section 6.5 Procedure for Indemnification of Directors and Officers...... 20
Section 6.6 Survival; Preservation of Other Rights....................... 21
Section 6.7 Insurance.................................................... 22
Section 6.8 Severability................................................. 22

ARTICLE VII OFFICES........................................................ 22

Section 7.1 Registered Office............................................ 22
Section 7.2 Other Offices................................................ 22

ARTICLE VIII GENERAL PROVISIONS............................................ 22

Section 8.1 Dividends.................................................... 22
Section 8.2 Reserves..................................................... 23
Section 8.3 Execution of Instruments..................................... 23
Section 8.4 Corporate Indebtedness....................................... 23
Section 8.5 Deposits..................................................... 24
Section 8.6 Checks....................................................... 24
Section 8.7 Sale, Transfer, etc. of Securities........................... 24
Section 8.8 Voting as Stockholder........................................ 24
Section 8.9 Fiscal Year.................................................. 24
Section 8.10 Seal........................................................ 24
Section 8.11 Books and Records; Inspection............................... 25

ARTICLE IX AMENDMENT OF BY-LAWS............................................ 25

Section 9.1 Amendment.................................................... 25

ARTICLE X CONSTRUCTION..................................................... 25

Section 10.1 Construction................................................ 25
</TABLE>

ii
<PAGE>

EXHIBIT 3.2

DYNATECH CORPORATION
(a Delaware corporation)

BY-LAWS

As adopted on September 8, 1999

ARTICLE I

STOCKHOLDERS

Section 1.1 Annual Meetings. The annual meeting of the stockholders of the
Corporation for the election of directors and for the transaction of such
other business as properly may come before such meeting shall be held at such
place, either within or without the State of Delaware, and at 10:00 a.m. local
time on the first Tuesday in July (or, if such day is a legal holiday, then on
the next succeeding business day), or at such other date and hour, as may be
fixed from time to time by resolution of the Board of Directors and set forth
in the notice or waiver of notice of the meeting. [Sections 211(a), (b).]

Section 1.2 Special Meetings. Special meetings of the stockholders may be
called at any time by the Chairman (or, in the event of the Chairman's absence
or disability, by the President or any Vice President) or the Board of
Directors. A special meeting shall be called by the Chairman (or, in the event
of the Chairman's absence or disability, by the President or any Vice
President), or by the Secretary, immediately upon receipt of a written request
therefor by stockholders holding in the aggregate not less than a majority of
the outstanding shares of the Corporation at the time entitled to vote at any
meeting of the stockholders. If such officers or the Board of Directors shall
fail to call such meeting within 20 days after receipt of such request, any
stockholder executing such request may call such meeting. Such special
meetings of the stockholders shall be held at such places, within or without
the State of Delaware, as shall be specified in the respective notices or
waivers of notice thereof. [Section 211(d).]/1/

Section 1.3 Notice of Meetings; Waiver. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each
meeting of the stockholders, and, in the case of a special meeting, the
purpose or purposes for which such meeting is called, to be given personally
or by mail, not less than ten nor more than sixty days prior to the meeting,
to each stockholder of record entitled to vote at such meeting. If such notice
is mailed, it shall be deemed to have been given to a stockholder when
deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the record of
stockholders of the Corporation, or, if such stockholder shall have filed with
the Secretary of the Corporation a written request that notices to such
stockholder be mailed to some other address, then directed to such stockholder
at such other address. Such further notice shall be given as may be required
by law.

No notice of any meeting of stockholders need be given to any stockholder
who submits a signed waiver of notice, whether before or after the meeting.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders need be specified in a written waiver of
notice. The attendance of any stockholder at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business on the ground that the meeting
is not lawfully called or convened. [Sections 222, 229.]

Section 1.4 Quorum. Except as otherwise required by law or by the
Certificate of Incorporation, the presence in person or by proxy of the
holders of record of a majority of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such
meeting. [Section 216.]
- --------
1 Citations are to the General Corporation Law of the State of Delaware as in
effect on April 15, 1999, and are inserted for reference only, and do not
constitute a part of the By-Laws.

B-1
<PAGE>

Section 1.5 Voting. If, pursuant to Section 5.5 of these By-Laws, a record
date has been fixed, every holder of record of shares entitled to vote at a
meeting of stockholders shall be entitled to one vote for each share
outstanding in such stockholder's name on the books of the Corporation at the
close of business on such record date. If no record date has been fixed, then
every holder of record of shares entitled to vote at a meeting of stockholders
shall be entitled to one vote for each share of stock standing in such
stockholder's name on the books of the Corporation at the close of business on
the day next preceding the day on which notice of the meeting is given, or, if
notice is waived, at the close of business on the day next preceding the day
on which the meeting is held. Except as otherwise required by law or by the
Certificate of Incorporation, the vote of a majority of the shares represented
in person or by proxy at any meeting at which a quorum is present shall be
sufficient for the transaction of any business at such meeting. [Sections
212(a), 216.]

Section 1.6 Voting by Ballot. No vote of the stockholders need be taken by
written ballot or conducted by Inspectors of Elections unless otherwise
required by law. Any vote which need not be taken by ballot may be conducted
in any manner approved by the meeting.

Section 1.7 Adjournment. If a quorum is not present at any meeting of the
stockholders, the stockholders present in person or by proxy shall have the
power to adjourn any such meeting from time to time until a quorum is present.
Notice of any adjourned meeting of the stockholders of the Corporation need
not be given if the place, date and hour thereof are announced at the meeting
at which the adjournment is taken, provided, however, that if the adjournment
is for more than thirty days, or if after the adjournment a new record date
for the adjourned meeting is fixed pursuant to Section 5.5 of these By-Laws, a
notice of the adjourned meeting, conforming to the requirements of Section 1.3
hereof, shall be given to each stockholder of record entitled to vote at such
meeting. At any adjourned meeting at which a quorum is present, any business
may be transacted that might have been transacted on the original date of the
meeting. [Section 222(c).]

Section 1.8 Proxies. Any stockholder entitled to vote at any meeting of the
stockholders or to express consent to or dissent from corporate action without
a meeting may authorize another person or persons to vote at any such meeting
and express such consent or dissent for such stockholder by proxy. A
stockholder may authorize a valid proxy by executing a written instrument
signed by such stockholder, or by causing his or her signature to be affixed
to such writing by any reasonable means including, but not limited to, by
facsimile signature, or by transmitting or authorizing the transmission of a
telegram, cablegram or other means of electronic transmission to the person
designated as the holder of the proxy, a proxy solicitation firm or a like
authorized agent. No such proxy shall be voted or acted upon after the
expiration of three years from the date of such proxy, unless such proxy
provides for a longer period. Every proxy shall be revocable at the pleasure
of the stockholder executing it, except in those cases where applicable law
provides that a proxy shall be irrevocable. A stockholder may revoke any proxy
which is not irrevocable by attending the meeting and voting in person or by
filing an instrument in writing revoking the proxy or by filing another duly
executed proxy bearing a later date with the Secretary. Proxies by telegram,
cablegram or other electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
Any copy, facsimile telecommunication or other reliable reproduction of a
writing or transmission created pursuant to this section may be substituted or
used in lieu of the original writing or transmission for any and all purposes
for which the original writing or transmission could be used, provided that
such copy, facsimile telecommunication or other reproduction shall be a
complete reproduction of the entire original writing or transmission.
[Sections 212(b), (c).]

Section 1.9 Organization; Procedure. At every meeting of stockholders the
presiding officer shall be the Chairman or, in the event of the Chairman's
absence or disability, a presiding officer chosen by a majority of the
stockholders present in person or by proxy. The Secretary, or in the event of
the Secretary's absence or disability, the Assistant Secretary, if any, or if
there be no Assistant Secretary, in the absence of the Secretary, an appointee
of the presiding officer, shall act as Secretary of the meeting. The order of
business and all other matters of procedure at every meeting of stockholders
may be determined by such presiding officer.

B-2
<PAGE>

Section 1.10 Consent of Stockholders in Lieu of Meeting. To the fullest
extent permitted by law, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken for or in connection with any
corporate action, such action may be taken without a meeting, without prior
notice and without a vote of stockholders, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered in the manner required by law to the Corporation,
written consents signed by a sufficient number of holders or members to take
action are delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. [Section 228.]

Section 1.11 Notice of Stockholder Business and Nominations. (a) Annual
Meetings of Stockholders. (i) Nominations of persons for election to the Board
of Directors of the Corporation and the proposal of business to be considered
by the stockholders may be made at an annual meeting of stockholders (A)
pursuant to the Corporation's notice of meeting, (B) by or at the direction of
the Board of Directors or (C) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of notice provided for in this
Section 1.11, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 1.11.

(ii) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (C) of paragraph (a)(i) of
this Section 1.11, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such other business must be a
proper matter for stockholder action. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 90th day nor earlier
than the close of business on the 120th day prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the event that
the date of the annual meeting is more than 30 days before or more than 60
days after such anniversary date, notice by the stockholder to be timely must
be so delivered not earlier than the close of business on the 120th day prior
to such annual meeting and not later than the close of business on the later
of the 90th day prior to such annual meeting or the 10th day following the day
on which public announcement of the date of such meeting is first made. In no
event shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a stockholder's notice as
described above. Such stockholder's notice shall set forth (A) as to each
person whom the stockholder proposes to nominate for election or reelection as
a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Rule 14a-11 thereunder (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected);
(B) as to any other business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (C) as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (1) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (2) the class and number of shares of the Corporation which are
owned beneficially and of record by such stockholder and such beneficial
owner.

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(iii) Notwithstanding anything in the second sentence of paragraph (a)(ii)
of this Section 1.11 to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by
the Corporation at least 100 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this
Section 1.11 shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the Corporation.

(b) Special Meetings of Stockholders. Only such business shall be conducted
at a special meeting of stockholders as shall have been brought before the
meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special
meeting of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (i) by or at the direction of the Board of
Directors or (ii) by any stockholder of the Corporation who is a stockholder
of record at the time of giving of notice provided for in this Section 1.11,
who shall be entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 1.11. In the event the Corporation calls
a special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder may nominate a
person or persons (as the case may be), for election to such position(s) as
specified in the Corporation's notice of meeting, if the stockholder's notice
required by paragraph (a)(ii) of this Section 1.11 shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier
than the close of business on the 120th day prior to such special meeting and
not later than the close of business on the later of the 90th day prior to
such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In
no event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as
described above.

(c) General. (i) Only such persons who are nominated in accordance with the
procedures set forth in this Section 1.11 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 1.11. Except as otherwise provided by
law, the Chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made, or proposed, as the case may be, in accordance with the procedures
set forth in this Section 1.11 and, if any proposed nomination or business is
not in compliance with this Section 1.11, to declare that such defective
proposal or nomination shall be disregarded.

(ii) For purposes of this Section 1.11, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant
to Section 13, 14 or 15(d) of the Exchange Act.

(iii) Notwithstanding the foregoing provisions of this Section 1.11, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 1.11. Nothing in this Section 1.11 shall be deemed to
affect any rights of (1) stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(2) the holders of any series of Preferred Stock to elect directors under
specified circumstances.

ARTICLE II

BOARD OF DIRECTORS

Section 2.1 General Powers. Except as may otherwise be provided by law, by
the Certificate of Incorporation or by these By-Laws, the property, affairs
and business of the Corporation shall be managed by or under the direction of
the Board of Directors and the Board of Directors may exercise all the powers
of the Corporation. [Section 141(a).]

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Section 2.2 Number. The number of Directors constituting the entire Board
of Directors initially shall be three (3). Following the merger of the
Corporation with Dynatech Corporation, a Massachusetts corporation, the number
of Directors constituting the entire Board of Directors shall be nine (9),
which number may be modified from time to time by resolution of the Board of
Directors, but in no event shall the number of Directors be less than three,
one for each Class of Directors, as described more fully in Section 2.3 of
these By-laws. [Section 141(b).]

Section 2.3 Election of Directors and Term of Office. Except as otherwise
provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be
elected at each annual meeting of the stockholders as provided for below. If
the annual meeting for the election of Directors is not held on the date
designated therefor, the Directors shall cause the meeting to be held as soon
thereafter as convenient. At each meeting of the stockholders for the election
of Directors, provided a quorum is present, the Directors shall be elected by
a plurality of the votes validly cast in such election. The Board of Directors
shall be divided into three classes, designated Classes I, II and III, which
shall be as nearly equal in number as possible. Directors of Class I shall be
elected at any time on and after the date of filing of the Certificate of
Incorporation with the Secretary of State of the State of Delaware to hold
office for an initial term expiring at the annual meeting of stockholders to
be held in 2001. Directors of Class II shall be elected at any time on and
after the date of filing the Certificate of Incorporation with the Secretary
of State of the State of Delaware to hold office for an initial term expiring
at the annual meeting of stockholders to be held in 2002. Directors of Class
III shall be elected at any time on and after the date of filing the
Certificate of Incorporation with the Secretary of State of the State of
Delaware to hold office for an initial term expiring at the annual meeting of
stockholders to be held in 2000; provided that, prior to the annual meeting of
stockholders to be held in 2000, the Board of Directors may, by resolution
duly adopted, create and appoint one or more persons to fill one or more Class
III Directorships up to a number not to exceed the number of Directors in
Class I for an interim term expiring at the annual meeting of stockholders to
be held in 2000. At each annual meeting of stockholders following the annual
meeting of stockholders to be held in 2000, the respective successors of the
Directors whose terms are expiring shall be elected for terms expiring at the
annual meeting of stockholders held in the third succeeding year. Each
Director (whenever elected) shall hold office until such Director's successor
has been duly elected and qualified, or until the Director's earlier death,
resignation or removal. [Sections 141 (b), 211(b), (c), 216.]

Section 2.4 Annual and Regular Meetings. The annual meeting of the Board of
Directors for the purpose of electing officers and for the transaction of such
other business as may come before the meeting shall be held as soon as
possible following adjournment of the annual meeting of the stockholders at
the place of such annual meeting of the stockholders. Notice of such annual
meeting of the Board of Directors need not be given. The Board of Directors
from time to time may by resolution provide for the holding of regular
meetings and fix the place (which may be within or without the State of
Delaware) and the date and hour of such meetings. Notice of regular meetings
need not be given, provided, however, that if the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action
shall be mailed promptly, or sent by telegram, radio or cable, to each
Director who shall not have been present at the meeting at which such action
was taken, addressed to such Directors at such Director's usual place of
business, or shall be delivered to such Director personally. Notice of such
action need not be given to any Director who attends the first regular meeting
after such action is taken without protesting the lack of notice to such
Director, prior to or at the commencement of such meeting, or to any Director
who submits a signed waiver of notice, whether before or after such meeting.
[Section 141(g).]

Section 2.5 Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman or, in the event of
the Chairman's absence or disability, by the President or any Vice President,
at such place (within or without the State of Delaware), date and hour as may
be specified in the respective notices or waivers of notice of such meetings.
Special meetings of the Board of Directors may be called on 24 hours' notice,
if notice is given to each Director personally or by telephone or telegram, or
on five days' notice, if notice is mailed to each Director, addressed to such
Director at such Director's usual place of business. Notice of any special
meeting need not be given to any Director who attends such meeting without

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protesting the lack of notice to such Director, prior to or at the
commencement of such meeting, or to any Director who submits a signed waiver
of notice, whether before or after such meeting, and any business may be
transacted thereat. [Sections 141(g), 229.]

Section 2.6 Quorum; Voting. At all meetings of the Board of Directors, the
presence of a majority of the total authorized number of Directors shall
constitute a quorum for the transaction of business. Except as otherwise
required by law, the vote of a majority of the Directors present at any
meeting at which a quorum is present shall be the act of the Board of
Directors. [Section 141(b).]

Section 2.7 Adjournment. A majority of the Directors present, whether or
not a quorum is present, may adjourn any meeting of the Board of Directors to
another time or place. No notice need be given of any adjourned meeting unless
the time and place of the adjourned meeting are not announced at the time of
adjournment, in which case notice conforming to the requirements of Section
2.5 shall be given to each Director.

Section 2.8 Action Without a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a
meeting if all members of the Board of Directors consent thereto in writing,
and such writing or writings are filed with the minutes of proceedings of the
Board of Directors. [Section 141(f).]

Section 2.9 Regulations; Manner of Acting. To the extent consistent with
applicable law, the Certificate of Incorporation and these By-Laws, the Board
of Directors may adopt such rules and regulations for the conduct of meetings
of the Board of Directors and for the management of the property, affairs and
business of the Corporation as the Board of Directors may deem appropriate.
The Directors shall act only as a Board, and the individual Directors shall
have no power as such.

Section 2.10 Action by Telephonic Communications. Members of the Board of
Directors may participate in a meeting of the Board of Directors by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting pursuant to this provision shall constitute presence in person at
such meeting. [Section 141(i).]

Section 2.11 Resignations. Any Director may resign at any time by
delivering a written notice of resignation, signed by such Director, to the
Chairman or the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery. [Section 141(b).]

Section 2.12 Removal of Directors. Any Director may be removed at any time,
either for or without cause, upon the affirmative vote of the holders of a
majority of the outstanding shares of stock of the Corporation entitled to
vote for the election of such Director, cast at a special meeting of
stockholders called for the purpose or by written consent of the stockholders
in lieu of such meeting. Any vacancy in the Board of Directors caused by any
such removal may be filled at such meeting (or in the written instrument
effecting such removal, if such removal was effected by consent without a
meeting), by the stockholders entitled to vote for the election of the
Director so removed. If such stockholders do not fill such vacancy at such
meeting (or in the written instrument effecting such removal, if such removal
was effected by consent without a meeting), such vacancy may be filled in the
manner provided in Section 2.13 of these By-Laws. [Sections 141(b), 228.]

Section 2.13 Vacancies and Newly Created Directorships. If any vacancies
shall occur in the Board of Directors, by reason of death, resignation,
removal or otherwise, or if the authorized number of Directors shall be
increased, the Directors then in office shall continue to act, and such
vacancies and newly created directorships may be filled by a majority of the
Directors then in office, although less than a quorum. A Director elected to
fill a vacancy or a newly created directorship shall hold office until such
Director's successor has been elected and qualified or until such Director's
earlier death, resignation or removal. Any such vacancy or newly created
directorship may also be filled at any time by vote of the stockholders.
[Section 223.]

Section 2.14 Compensation. The amount, if any, and form of consideration,
which each Director shall be entitled to receive as compensation for such
Director's services as such, shall be fixed from time to time by resolution of
the Board of Directors. [Section 141(h).]

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Section 2.15 Reliance on Accounts and Reports, etc. A Director, or a member
of any Committee designated by the Board of Directors shall, in the
performance of such member's duties, be fully protected in relying in good
faith upon the records of the Corporation and upon information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or Committees designated by the Board of Directors, or
by any other person as to the matters the member reasonably believes are
within such other person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Corporation. [Section
141(e).]

ARTICLE III

EXECUTIVE COMMITTEE AND OTHER COMMITTEES

Section 3.1 How Constituted. The Board of Directors may designate one or
more Committees, including an Executive Committee, each such Committee to
consist of such number of Directors as from time to time may be fixed by the
Board of Directors. The Board of Directors may designate one or more Directors
as alternate members of any such Committee, who may replace any absent or
disqualified member or members at any meeting of such Committee. Thereafter,
members (and alternate members, if any) of each such Committee may be
designated at the annual meeting of the Board of Directors. Any such Committee
may be abolished or re-designated from time to time by the Board of Directors.
Each member (and each alternate member) of any such Committee (whether
designated at an annual meeting of the Board of Directors or to fill a vacancy
or otherwise) shall hold office until such Director's successor shall have
been designated or until such Director shall cease to be a Director, or until
such Director's earlier death, resignation or removal. [Section 141(c).]

Section 3.2 Powers. During the intervals between the meetings of the Board
of Directors, the Executive Committee, except as otherwise provided in this
section, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the property, affairs and business of the
Corporation. Each such other Committee, except as otherwise provided in this
section, shall have and may exercise such powers of the Board of Directors as
may be provided by resolution or resolutions of the Board of Directors.
Neither the Executive Committee nor any such other Committee shall have the
power or authority:

(a) to approve or adopt, or to recommend to the stockholders, any action
or matter expressly required by the General Corporation Law of the State of
Delaware to be submitted to the stockholders for approval; or

(b) to adopt, amend or repeal any by-law of the Corporation;

(c) and unless a resolution of the Board of Directors so provides, no
such Committee shall have the power or authority to:

(i) declare a dividend;

(ii) authorize the issuance of stock; or

(iii) adopt a certificate of ownership and merger pursuant to (S)
253 of the General Corporation Law of the State of Delaware (Merger of
Parent Corporation and Subsidiary or Subsidiaries).

(d) The Executive Committee shall have, and any such other Committee may
be granted by the Board of Directors, power to authorize the seal of the
Corporation to be affixed to any or all papers which may require it.
[Section 141(c).]

Section 3.3 Proceedings. Each such Committee may fix its own rules of
procedure and may meet at such place (within or without the State of
Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each such Committee shall keep minutes of its proceedings
and shall report such proceedings to the Board of Directors at the meeting of
the Board of Directors next following any such proceedings.

Section 3.4 Quorum and Manner of Acting. Except as may be otherwise
provided in the resolution creating such Committee, at all meetings of any
Committee the presence of members (or alternate members)

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constituting a majority of the total authorized membership of such Committee
shall constitute a quorum for the transaction of business. The act of the
majority of the members present at any meeting at which a quorum is present
shall be the act of such Committee. Any action required or permitted to be
taken at any meeting of any such Committee may be taken without a meeting, if
all members of such Committee shall consent to such action in writing and such
writing or writings are filed with the minutes of the proceedings of the
Committee. The members of any such Committee shall act only as a Committee,
and the individual members of such Committee shall have no power as such.
[Section 141(c).]

Section 3.5 Action by Telephonic Communications. Members of any Committee
designated by the Board of Directors may participate in a meeting of such
Committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting. [Section 141(i).]

Section 3.6 Absent or Disqualified Members. In the absence or
disqualification of a member of any Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent
or disqualified member. [Section 141(c).]

Section 3.7 Resignations. Any member (and any alternate member) of any
Committee may resign at any time by delivering a written notice of
resignation, signed by such member, to the Chairman. Unless otherwise
specified therein, such resignation shall take effect upon delivery.

Section 3.8 Removal. Any member (and any alternate member) of any Committee
may be removed at any time, either for or without cause, by resolution adopted
by a majority of the whole Board of Directors.

Section 3.9 Vacancies. If any vacancy shall occur in any Committee, by
reason of disqualification, death, resignation, removal or otherwise, the
remaining members (and any alternate members) shall continue to act, and any
such vacancy may be filled by the Board of Directors.

ARTICLE IV

OFFICERS

Section 4.1 Numbers. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a Chairman, President and Chief Executive
Officer, one or more Vice Presidents, a Secretary and a Treasurer. The Board
of Directors also may elect one or more Assistant Secretaries and Assistant
Treasurers in such numbers as the Board of Directors may determine, and such
other officers as the Board of Directors deems desirable. Any number of
offices may be held by the same person. No officer need be a Director of the
Corporation. [Section 142(a), (b).]

Section 4.2 Election. Unless otherwise determined by the Board of
Directors, the officers of the Corporation shall be elected by the Board of
Directors at the annual meeting of the Board of Directors, and shall be
elected to hold office until the next succeeding annual meeting of the Board
of Directors. In the event of the failure to elect officers at such annual
meeting, officers may be elected at any regular or special meeting of the
Board of Directors. Each officer shall hold office until such officer's
successor has been elected and qualified, or until such officer's earlier
death, resignation or removal. [Section 142(b).]

Section 4.3 Salaries. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.

Section 4.4 Removal and Resignation; Vacancies. Any officer may be removed
for or without cause at any time by the Board of Directors. Any officer may
resign at any time by delivering a written notice of

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resignation, signed by such officer, to the Board of Directors, the Chairman
or the President. Unless otherwise specified therein, such resignation shall
take effect upon delivery. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise, shall be filled by
the Board of Directors. [Section 142(b), (e).]

Section 4.5 Authority and Duties of Officers. The officers of the
Corporation shall have such authority and shall exercise such powers and
perform such duties as may be specified in these By-Laws, except that in any
event each officer shall exercise such powers and perform such duties as may
be required by law. [Section 142(a).]

Section 4.6 The Chairman of the Board of Directors. The Chairman of the
Board of Directors shall preside at all meetings of the stockholders and
directors at which the Chairman is present and shall have such other duties as
may from time to time be delegated to him by the Board of Directors.

Section 4.7 The President and Chief Executive Officer. The President and
Chief Executive Officer (known herein as the "President") shall be the chief
executive officer and the chief operating officer of the Corporation, shall
have general control and supervision of the policies and operations of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall manage and administer
the Corporation's business and affairs and shall also perform all duties and
exercise all powers usually pertaining to the office of a chief executive
officer and a chief operating officer of a corporation. The President shall
have the authority to sign, in the name and on behalf of the Corporation,
checks, orders, contracts, leases, notes, drafts and other documents and
instruments in connection with the business of the Corporation, and together
with the Secretary or an Assistant Secretary, conveyances of real estate and
other documents and instruments to which the seal of the Corporation is
affixed. The President shall have the authority to cause the employment or
appointment of such employees and agents of the Corporation as the conduct of
the business of the Corporation may require, to fix their compensation, and to
remove or suspend any employee or agent elected or appointed by the President
or the Board of Directors. The President shall perform such other duties and
have such other powers as the Board of Directors or the Chairman may from time
to time prescribe.

Section 4.8 The Vice Presidents. Each Vice President shall perform such
duties and exercise such powers as may be assigned to such Vice President from
time to time by the President. In the absence of the President, the duties of
the President shall be performed and the President's powers may be exercised
by such Vice President as shall be designated by the President, or failing
such designation, such duties shall be performed and such powers may be
exercised by each Vice President in the order of their earliest election to
that office; subject in any case to review and superseding action by the
President.

Section 4.9 The Secretary. The Secretary shall have the following powers
and duties:

(a) Secretary shall keep or cause to be kept a record of all the
proceedings of the meetings of the stockholders and of the Board of
Directors in books provided for that purpose.

(b) The Secretary shall cause all notices to be duly given in accordance
with the provisions of these By-Laws and as required by law.

(c) Whenever any Committee shall be appointed pursuant to a resolution
of the Board of Directors, the Secretary shall furnish a copy of such
resolution to the members of such Committee.

(d) The Secretary shall be the custodian of the records and of the seal
of the Corporation and cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the Corporation prior to
the issuance thereof and to all instruments the execution of which on
behalf of the Corporation under its seal shall have been duly authorized in
accordance with these By-Laws, and when so affixed the Secretary may attest
the same.

(e) The Secretary shall properly maintain and file all books, reports,
statements, certificates and all other documents and records required by
law, the Certificate of Incorporation or these By-Laws.

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(f) The Secretary shall have charge of the stock books and ledgers of
the Corporation and shall cause the stock and transfer books to be kept in
such manner as to show at any time the number of shares of stock of the
Corporation of each class issued and outstanding, the names (alphabetically
arranged) and the addresses of the holders of record of such shares, the
number of shares held by each holder and the date as of which each became
such holder of record.

(g) The Secretary shall sign (unless the Treasurer, an Assistant
Treasurer or Assistant Secretary shall have signed) certificates
representing shares of the Corporation the issuance of which shall have
been authorized by the Board of Directors.

(h) The Secretary shall perform, in general, all duties incident to the
office of secretary and such other duties as may be specified in these By-
Laws or as may be assigned to such Vice President from time to time by the
Board of Directors, or the President.

Section 4.10 The Treasurer. The Treasurer shall be the chief financial
officer of the Corporation and shall have the following powers and duties:

(a) The Treasurer shall have charge and supervision over and be
responsible for the moneys, securities, receipts and disbursements of the
Corporation, and shall keep or cause to be kept full and accurate records
of all receipts of the Corporation.

(b) The Treasurer shall cause the moneys and other valuable effects of
the Corporation to be deposited in the name and to the credit of the
Corporation in such banks or trust companies or with such bankers or other
depositaries as shall be selected in accordance with Section 8.5 of these
By-Laws.

(c) The Treasurer shall cause the moneys of the Corporation to be
disbursed by checks or drafts (signed as provided in Section 8.6 of these
By-Laws) upon the authorized depositaries of the Corporation and cause to
be taken and preserved proper vouchers for all moneys disbursed.

(d) The Treasurer shall render to the Board of Directors or the
President, whenever requested, a statement of the financial condition of
the Corporation and of all the Treasurer's transactions as Treasurer, and
render a full financial report at the annual meeting of the stockholders,
if called upon to do so.

(e) The Treasurer shall be empowered from time to time to require from
all officers or agents of the Corporation reports or statements giving such
information as the Treasurer may desire with respect to any and all
financial transactions of the Corporation.

(f) The Treasurer may sign (unless an Assistant Treasurer or the
Secretary or an Assistant Secretary shall have signed) certificates
representing stock of the Corporation the issuance of which shall have been
authorized by the Board of Directors.

(g) The Treasurer shall perform, in general, all duties incident to the
office of treasurer and such other duties as may be specified in these By-
Laws or as may be assigned to such Treasurer from time to time by the Board
of Directors, or the President.

Section 4.11 Additional Officers. The Board of Directors may appoint such
other officers and agents as it may deem appropriate, and such other officers
and agents shall hold their offices for such terms and shall exercise such
powers and perform such duties as may be determined from time to time by the
Board of Directors. The Board of Directors from time to time may delegate to
any officer or agent the power to appoint subordinate officers or agents and
to prescribe their respective rights, terms of office, authorities and duties.
Any such officer or agent may remove any such subordinate officer or agent
appointed by such officer, for or without cause. [Section 142(a), (b).]

Section 4.12 Security. The Board of Directors may require any officer,
agent or employee of the Corporation to provide security for the faithful
performance of such person's duties, in such amount and of such character as
may be determined from time to time by the Board of Directors. [Section
142(c).]

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ARTICLE V

CAPITAL STOCK

Section 5.1 Certificates of Stock. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors may provide
by resolution or resolutions that some or all of any or all classes or series
of the stock of the Corporation shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until each
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock in the
Corporation represented by certificates and upon request every holder of
uncertificated shares shall be entitled to have a certificate signed by, or in
the name of the Corporation, by the President or a Vice President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, representing the number of shares registered in certificate form.
Such certificate shall be in such form as the Board of Directors may
determine, to the extent consistent with applicable law, the Certificate of
Incorporation and these By-Laws. [Section 158.]

Section 5.2 Signatures; Facsimile. All of such signatures on the
certificate may be a facsimile, engraved or printed, to the extent permitted
by law. In case any officer, transfer agent or registrar who has signed, or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
[Section 158.]

Section 5.3 Lost, Stolen or Destroyed Certificates. The Board of Directors
may direct that a new certificate be issued in place of any certificate
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon delivery to the Board of Directors of an affidavit of the
owner or owners of such certificate, setting forth such allegation. The Board
of Directors may require the owner of such lost, stolen or destroyed
certificate, or such owner's legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate
or the issuance of any such new certificate. [Section 167.]

Section 5.4 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares, duly endorsed
or accompanied by appropriate evidence of succession, assignment or authority
to transfer, the Corporation shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books. Within a reasonable time after the transfer of uncertificated
stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General
Corporation Law of the State of Delaware. Subject to the provisions of the
Certificate of Incorporation and these By-Laws, the Board of Directors may
prescribe such additional rules and regulations as it may deem appropriate
relating to the issue, transfer and registration of shares of the Corporation.
[Section 151.]

Section 5.5 Record Date. In order to determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix, in advance, a record date, which
record date shall not precede the date on which the resolution fixing the
record date is adopted by the Board of Directors, and which shall not be more
than sixty nor less than ten days before the date of such meeting. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting,
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the

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board of directors is required by law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action.

In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights of the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
[Section 213.]

Section 5.6 Registered Stockholders. Prior to due surrender of a
certificate for registration of transfer, the Corporation may treat the
registered owner as the person exclusively entitled to receive dividends and
other distributions, to vote, to receive notice and otherwise to exercise all
the rights and powers of the owner of the shares represented by such
certificate, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any other person,
whether or not the Corporation shall have notice of such claim or interests.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer if, when the
certificates are presented to the Corporation for transfer or uncertificated
shares are requested to be transferred, both the transferor and transferee
request the Corporation to do so. [Section 159.]

Section 5.7 Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents and one or more registrars, and may
require all certificates representing shares to bear the signature of any such
transfer agents or registrars.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Nature of Indemnity. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was or has agreed to become a director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director or officer, of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party
or is threatened to be made a party to such an action, suit or proceeding by
reason of the fact that such person is or was or has agreed to become an
employee or agent of the Corporation, or is or was serving or has agreed to
serve at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person or on such person's
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding had no
reasonable cause to believe such person's conduct was unlawful; except that in
the case of an action or suit by or in the right of the Corporation to procure
a judgment in its favor (1) such indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably incurred by such person in
the defense or settlement of such action or suit, and (2) no

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indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.

The termination of any action, suit or proceeding by judgment, order
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.

Section 6.2 Successful Defense. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
6.1 hereof or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.

Section 6.3 Determination That Indemnification Is Proper. Any
indemnification of a director or officer of the Corporation under Section 6.1
hereof (unless ordered by a court) shall be made by the Corporation unless a
determination is made that indemnification of the director or officer is not
proper in the circumstances because such person has not met the applicable
standard of conduct set forth in Section 6.1 hereof. Any indemnification of an
employee or agent of the Corporation under Section 6.1 hereof (unless ordered
by a court) may be made by the Corporation upon a determination that
indemnification of the employee or agent is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 6.1 hereof. Any such determination shall be made (1) by a majority
vote of the directors who are not parties to such action, suit or proceeding,
or (2) by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (4) by the stockholders.

Section 6.4 Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the Board of Directors deems appropriate. The Board of Directors may authorize
the Corporation's counsel to represent such director, officer, employee or
agent in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.

Section 6.5 Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Sections 6.1
and 6.2, or advance of costs, charges and expenses to a director or officer
under Section 6.4 of this Article, shall be made promptly, and in any event
within 30 days, upon the written request of the director or officer. If a
determination by the Corporation that the director or officer is entitled to
indemnification pursuant to this Article is required, and the Corporation
fails to respond within sixty days to a written request for indemnity, the
Corporation shall be deemed to have approved such request. If the Corporation
denies a written request for indemnity or advancement of expenses, in whole or
in part, or if payment in full pursuant to such request is not made within 30
days, the right to indemnification or advances as granted by this Article
shall be enforceable by the director or officer in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing such person's right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce
a claim for the advance of costs, charges and expenses under Section 6.4 of
this Article where the required undertaking, if any, has been received by the

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Corporation) that the claimant has not met the standard of conduct set forth
in Section 6.1 of this Article, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, its independent legal counsel, and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because such
person has met the applicable standard of conduct set forth in Section 6.1 of
this Article, nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal counsel,
and its stockholders) that the claimant has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

Section 6.6 Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a "contract right" may not
be modified retroactively without the consent of such director, officer,
employee or agent.

The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

Section 6.7 Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person or on such person's behalf in
any such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power to indemnify such person against such
liability under the provisions of this Article, provided that such insurance
is available on acceptable terms, which determination shall be made by a vote
of a majority of the entire Board of Directors.

Section 6.8 Severability. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the
fullest extent permitted by applicable law.

ARTICLE VII

OFFICES

Section 7.1 Registered Office. The registered office of the Corporation in
the State of Delaware shall be located at Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle.

Section 7.2 Other Offices. The Corporation may maintain offices or places
of business at such other locations within or without the State of Delaware as
the Board of Directors may from time to time determine or as the business of
the Corporation may require.

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ARTICLE VIII

GENERAL PROVISIONS

Section 8.1 Dividends. Subject to any applicable provisions of law and the
Certificate of Incorporation, dividends upon the shares of the Corporation may
be declared by the Board of Directors at any regular or special meeting of the
Board of Directors and any such dividend may be paid in cash, property, or
shares of the Corporation's capital stock.

A member of the Board of Directors, or a member of any Committee designated
by the Board of Directors shall be fully protected in relying in good faith
upon the records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of its officers or
employees, or Committees of the Board of Directors, or by any other person as
to matters the Director reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Corporation, as to the value and amount of the
assets, liabilities and/or net profits of the Corporation, or any other facts
pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared and paid. [Sections 172, 173.]

Section 8.2 Reserves. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, thinks proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Corporation or for such other purpose as
the Board of Directors shall think conducive to the interest of the
Corporation, and the Board of Directors may similarly modify or abolish any
such reserve. [Section 171.]

Section 8.3 Execution of Instruments. The President, any Vice President,
the Secretary or the Treasurer may enter into any contract or execute and
deliver any instrument in the name and on behalf of the Corporation. The Board
of Directors, the Chairman or the President may authorize any other officer or
agent to enter into any contract or execute and deliver any instrument in the
name and on behalf of the Corporation. Any such authorization may be general
or limited to specific contracts or instruments.

Section 8.4 Corporate Indebtedness. No loan shall be contracted on behalf
of the Corporation, and no evidence of indebtedness shall be issued in its
name, unless authorized by the Board of Directors, the Chairman or the
President. Such authorization may be general or confined to specific
instances. Loans so authorized may be effected at any time for the Corporation
from any bank, trust company or other institution, or from any firm,
corporation or individual. All bonds, debentures, notes and other obligations
or evidences of indebtedness of the Corporation issued for such loans shall be
made, executed and delivered as the Board of Directors, the Chairman or the
President shall authorize. When so authorized by the Board of Directors, the
Chairman or the President, any part of or all the properties, including
contract rights, assets, business or good will of the Corporation, whether
then owned or thereafter acquired, may be mortgaged, pledged, hypothecated or
conveyed or assigned in trust as security for the payment of such bonds,
debentures, notes and other obligations or evidences of indebtedness of the
Corporation, and of the interest thereon, by instruments executed and
delivered in the name of the Corporation.

Section 8.5 Deposits. Any funds of the Corporation may be deposited from
time to time in such banks, trust companies or other depositaries as may be
determined by the Board of Directors, the Chairman or the President, or by
such officers or agents as may be authorized by the Board of Directors, the
Chairman or the President to make such determination.

Section 8.6 Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such agent or
agents of the Corporation, and in such manner, as the Board of Directors, the
Chairman or the President from time to time may determine.

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Section 8.7 Sale, Transfer, etc. of Securities. To the extent authorized by
the Board of Directors, or by the Chairman, the President, any Vice President,
the Secretary or the Treasurer or any other officers designated by the Board
of Directors, the Chairman or the President may sell, transfer, endorse, and
assign any shares of stock, bonds or other securities owned by or held in the
name of the Corporation, and may make, execute and deliver in the name of the
Corporation, under its corporate seal, any instruments that may be appropriate
to effect any such sale, transfer, endorsement or assignment.

Section 8.8 Voting as Stockholder. Unless otherwise determined by
resolution of the Board of Directors, the Chairman, the President or any Vice
President shall have full power and authority on behalf of the Corporation to
attend any meeting of stockholders of any corporation in which the Corporation
may hold stock, and to act, vote (or execute proxies to vote) and exercise in
person or by proxy all other rights, powers and privileges incident to the
ownership of such stock. Such officers acting on behalf of the Corporation
shall have full power and authority to execute any instrument expressing
consent to or dissent from any action of any such corporation without a
meeting. The Board of Directors may by resolution from time to time confer
such power and authority upon any other person or persons.

Section 8.9 Fiscal Year. The fiscal year of the Corporation shall commence
on the first day of April of each year and shall terminate in each case on the
last day of March.

Section 8.10 Seal. The seal of the Corporation shall be circular in form
and shall contain the name of the Corporation, the year of its incorporation
and the words "Corporate Seal" and "Delaware". The form of such seal shall be
subject to alteration by the Board of Directors. The seal may be used by
causing it or a facsimile thereof to be impressed, affixed or reproduced, or
may be used in any other lawful manner.

Section 8.11 Books and Records; Inspection. Except to the extent otherwise
required by law, the books and records of the Corporation shall be kept at
such place or places within or without the State of Delaware as may be
determined from time to time by the Board of Directors.

ARTICLE IX

AMENDMENT OF BY-LAWS

Section 9.1 Amendment. These By-Laws may be amended, altered or repealed

(a) by resolution adopted by a majority of the Board of Directors at any
special or regular meeting of the Board if, in the case of such special
meeting only, notice of such amendment, alteration or repeal is contained
in the notice or waiver of notice of such meeting; or

(b) at any regular or special meeting of the stockholders if, in the
case of such special meeting only, notice of such amendment, alteration or
repeal is contained in the notice or waiver of notice of such meeting;
provided that any such amendment, alteration or repeal of the By-laws by
the stockholders may not be amended, altered or repealed by the Board of
Directors pursuant to clause (a) of this Section 9.1. [Section 109(a).]

ARTICLE X

CONSTRUCTION

Section 10.1 Construction. In the event of any conflict between the
provisions of these By-Laws as in effect from time to time and the provisions
of the certificate of incorporation of the Corporation as in effect from time
to time, the provisions of such Certificate of incorporation shall be
controlling.

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EXHIBIT 10.1

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER ("Merger Agreement"), dated as of September 8,
1999, by and between Dynatech Corporation, a Massachusetts corporation (the
"Company"), and Dynatech Corporation, a Delaware corporation ("New Dynatech").

WHEREAS, the Company is a corporation duly organized and existing under the
laws of the Commonwealth of Massachusetts;

WHEREAS, New Dynatech is a corporation duly organized and existing under
the laws of the State of Delaware;

WHEREAS, the Company has authority to issue 200,000,000 shares of Common
Stock, no par value per share (the "Company's Common Stock"), of which
120,681,048 shares are issued and outstanding and 100,000 shares of preferred
stock, par value $1.00 per share (the "Company's Preferred Stock"), none of
which has been issued;

WHEREAS, prior to the Effective Date of the Merger (as such terms are
hereinafter defined), additional shares of the Company's Common Stock may be
issued upon the exercise of options to purchase the Company's Common Stock and
pursuant to employee benefit plans of the Company and its subsidiaries;

WHEREAS, New Dynatech has authority to issue 200,000,000 shares of Common
Stock, par value $.01 per share (the "Delaware Common Stock") and 100,000
shares of preferred stock par value $1.00 per share, (the "Delaware Preferred
Stock");

WHEREAS, one hundred (100) shares of the Delaware Common Stock are issued
and outstanding, all of which are owned, beneficially and of record, by the
Company;

WHEREAS, the respective Board of Directors of the Company and New Dynatech
have determined that, for the purpose of effecting the reincorporation of the
Company in the State of Delaware, it is advisable and in the best interest of
both corporations that the Company merge with and into New Dynatech upon the
terms and conditions hereinafter provided and in accordance with the laws of
the State of Delaware and the Commonwealth of Massachusetts in a transaction
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and

WHEREAS, the respective Board of Directors of the Company and New Dynatech
have approved this Merger Agreement and directed that this Merger Agreement be
submitted to a vote of their respective stockholders for approval.

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and New Dynatech
hereby agree as follows:

1. Merger. Subject to the terms and conditions of this Merger Agreement,
the Company shall be merged with and into New Dynatech (the "Merger") in
accordance with Section 253 of the Delaware General Corporation Law ("DGCL")
and Section 79 of the Massachusetts Business Corporation Law ("MBCL") such
that New Dynatech shall be the surviving corporation (hereinafter referred to
as the "Surviving Corporation"). The Merger shall become effective upon the
date (the "Effective Date") on which a certified copy of this Merger Agreement
or a Certificate of Merger, executed and acknowledged on behalf of New
Dynatech and the Company, in accordance with the requirements of the DGCL and
the MBCL, has been filed with the Delaware Secretary of State and the
Massachusetts Secretary of State.

2. Certificate of Incorporation. The Certificate of Incorporation of New
Dynatech, as in effect on the Effective Date, shall be the Certificate of
Incorporation of the Surviving Corporation without change or amendment, until
thereafter amended in accordance with the provisions thereof and applicable
laws.

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3. Directors, Officers and By-Laws. The directors of the Company
immediately prior to the Effective Date shall be the directors of the
Surviving Corporation, each to hold office in accordance with the Certificate
of Incorporation and the By-Laws of the Surviving Corporation. The officers of
the Company immediately prior to the Effective Date shall be the officers of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and the By-Laws of the Surviving Corporation,
except that the person serving as Secretary of New Dynatech shall serve as
Secretary of the Surviving Corporation and the position of Clerk of the
Company shall no longer exist and any person serving in such position shall
not continue as an officer of the Surviving Corporation. The By-Laws of New
Dynatech, as in effect on the Effective Date, shall be the By-Laws of the
Surviving Corporation without change or amendment until thereafter amended in
accordance with the provisions thereof and applicable laws.

4. Succession. From and after the Effective Date, the Surviving Corporation
shall succeed, insofar as permitted by law, to all of the rights, assets,
liabilities and obligations of the Company; and the title to any real estate
vested by deed or otherwise, in either of the Company and/or the Surviving
Corporation, shall not revert or be in any way impaired by reason of the
Merger, but all rights of creditors and all liens on any property of either of
said corporation shall be reserved unimpaired, and all debts, liabilities and
duties of said corporations shall, as of the Effective Date, attach to the
Surviving Corporation, and may be enforced against the Surviving Corporation
to the same extent as if said debts, liabilities, and duties had been incurred
or contracted by it, and any claim existing or action or proceeding pending by
or against any of said corporations may be prosecuted as if the Merger had not
taken place, or the Surviving Corporation may be substituted in its place. The
employees and agents of the Company shall become the employees and agents of
the Surviving Corporation and continue to be entitled to the same rights and
benefits which they enjoyed as employees and agents of the Company.

5. Further Assurances. From time to time as and when requested by the
Surviving Corporation or by its successors and assigns, there shall be
executed and delivered on behalf of the Company and/or the Surviving
Corporation such deeds and other instruments, and there shall be taken or
caused to be taken by it such further and other action, as shall be
appropriate or necessary in order to vest, protect or confirm, of record or
otherwise, in the Surviving Corporation the title to and possession of all
property, interest, assets, right, privileges, immunities, powers, franchises,
and authority of the Company, and otherwise to carry out the purposes of this
Merger Agreement, and the officers and directors of the Surviving Corporation
are fully authorized, in the name and on behalf of the Company, or otherwise,
to take any and all such action and to execute and deliver any and all such
deeds and other instruments.

6. Conversion of Shares.

(a) Upon the Effective Date, each share of the Company's Common Stock
issued and outstanding or held in the treasury of the Company immediately
prior thereto (other than shares of the Company's Common Stock in respect of
which dissenters' rights shall properly have been exercised in accordance with
the MBCL) shall, by virtue of the Merger and without any action on the part of
any holder thereof, be changed and converted into one fully paid and non
assessable share of Delaware Common Stock.

(b) Upon the Effective Date, each share of the Company's Preferred Stock
issued and outstanding or held in the treasury of the Company immediately
prior thereto shall, by virtue of the Merger and without any action on the
part of any holder thereof, be changed and converted into one fully paid and
non assessable share of Delaware Preferred Stock.

(c) Upon the Effective Date, the one hundred (100) shares of Delaware
Common Stock currently issued and outstanding in the name of the Company shall
be canceled and retired without any consideration being issued or paid
therefor and shall resume the status of authorized and unissued shares of
Delaware Common Stock, and no shares of Delaware Common Stock or other
securities of the Surviving Corporation shall be issued in respect thereof.

(d) Each outstanding option to purchase shares of the Company's Common
Stock under any of the stock option or stock purchase plans of the Company (an
"Old Option") and outstanding immediately prior to the

C-2
<PAGE>

Effective Date shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become an option (the "New
Option") to purchase, upon the same terms and conditions, the number of shares
of Delaware Common Stock which is equal to the same number of shares of
Company's Common Stock which may be purchased under such Old Option. The
exercise price per share under each New Option shall be equal to the exercise
price per share immediately prior to the Effective Date with respect to each
Old Option. All of the Company's stock option plans and stock options granted
thereunder, outstanding immediately prior to the Effective Date are
automatically amended to permit plan continuance and stock option continuance
and conversion into those of the Surviving Corporation following the Merger
notwithstanding any provisions heretofore contained in such plans or
outstanding options providing for termination in the event of a merger in
which the Company is not the surviving corporation.

7. Stock Certificates. Upon the Effective Date, each certificate
representing issued and outstanding shares of the Company's Common Stock
(other than shares of the Company's Common Stock in respect of which
dissenters' rights shall properly have been exercised in accordance with the
MBCL) shall be deemed and treated for all purposes as representing the shares
of Delaware Common Stock into which such shares of the Company's Common Stock
have been converted. Each stockholder of the Company may, but is not required
to, exchange any existing stock certificates representing shares of the
Company's Common Stock for stock certificates representing the same number of
shares of Delaware Common Stock. All shares of Delaware Common Stock into
which shares of the Company's Common Stock shall have been converted pursuant
to this Merger Agreement shall be deemed to have been issued in full
satisfaction of all rights pertaining to such converted shares. When the
Merger becomes effective, the holders of certificates representing the
Company's Common Stock outstanding prior to the Effective Date (except for
shares of the Company's Common Stock in respect of which dissenters' rights
shall have been properly exercised in accordance with the MBCL) shall cease to
have any rights with respect to such stock, and their sole rights shall be
with respect to the Delaware Common Stock into which their shares of the
Company's Common Stock are to be converted by the Merger. Upon the Effective
Date, the stock transfer books of the Company shall be closed and no transfer
of shares of the Company's Common Stock outstanding immediately prior to the
Effective Date shall thereafter be made or consummated.

8. Employee Option and Benefit Plans and Other Stock Rights. As of the
Effective Date: (a) all employee option, benefit or compensation plans of the
Company (collectively, the "Plans") and all obligations of the Company under
the Plans, including the outstanding options granted pursuant to the Plans,
and (b) all obligations of the Company under all other benefit or compensation
plans and outstanding stock rights in effect as of the Effective Date with
respect to which employee rights or accrued benefits or other rights are
outstanding as of the Effective Date, shall be assumed by, and continue to be
the plan of, the Surviving Corporation. To the extent any employee option,
benefit or compensation plan of the Company provided for the issuance or
purchase of, or otherwise related to, the Company's Common Stock, after the
Effective Date such plan shall be deemed to provide for the issuance or
purchase of, or otherwise relate to, Delaware Common Stock.

9. Stockholder Approval. This Merger Agreement shall be submitted to a vote
of the stockholders of the Company and the sole stockholder of New Dynatech in
accordance with the laws of the Commonwealth of Massachusetts and the State of
Delaware, respectively. In the event that this Merger Agreement shall be not
approved by the requisite vote of holders of two-thirds of the Company's
Common Stock outstanding and entitled to vote at the Company's 1999 annual
meeting or any adjournment thereof, this Merger Agreement shall thereupon be
terminated without further action of the parties hereto.

10. Plan of Reorganization. This Agreement is intended to be a plan of
reorganization within the meaning of Section 368(a) of the Code and the
Treasury Regulations promulgated thereunder.

11. Amendment. Subject to applicable law, this Merger Agreement may be
amended, modified or supplemented by written agreement of the parties hereto
at any time prior to the Effective Date with respect to any of the items
contained herein.

C-3
<PAGE>

12. Abandonment. At any time before the Effective Date, this Merger
Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either New Dynatech or the Company or both, notwithstanding the
approval of this Merger Agreement by the stockholders of the Company or the
sole stockholder of New Dynatech.

13. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, except to the
extent the laws of the State of Delaware are required to apply to the Merger.

IN WITNESS WHEREOF, this Merger Agreement is hereby executed on behalf of
the Company and New Dynatech by their respective duly authorized officers as
of the date first written above.

DYNATECH CORPORATION,
a Massachusetts corporation

/s/ Mark V.B. Tremallo
_____________________________________
Mark V.B. Tremallo
Corporate Vice President and General
Counsel

DYNATECH CORPORATION,
a Delaware corporation

/s/ Mark V.B. Tremallo
_____________________________________
Mark V.B. Tremallo
Secretary

C-4

<PAGE>

EXHIBIT 10.3

DYNATECH CORPORATION

DIRECTORS STOCK PURCHASE PLAN

Section 1. General Purpose of the Plan; Definitions

The name of the plan is the Dynatech Corporation Directors Stock Purchase
Plan (the "Plan"). The purpose of the Plan is to encourage and enable Eligible
Directors to acquire a proprietary interest in the Company. It is anticipated
that providing such persons with a direct stake in the Company's welfare will
assure a closer identification of their interests with those of the Company
and shareholders, thereby stimulating their efforts on the Company's behalf
and strengthening their desire to remain with the Company.

The following terms shall be defined as set forth below:

"Board" means the Board of Directors of the Company.

"Company" means Dynatech Corporation, a Delaware corporation.

"Eligible Director" means any member of the Board other than any member who
is (i) compensated as an employee of the Company or any of its Subsidiaries or
(ii) a principal of Clayton Dubilier & Rice, Inc. who holds a direct or
indirect financial interest in the Company by virtue of having an interest in
Clayton Dubilier & Rice Fund V Limited Partnership or its general partner or
limited partners.

"Effective Date" means the date on which the Plan is adopted by the Board.

"Fair Market Value" means the fair market value of a share of Stock, as
determined in good faith by the Board, which determination shall be made on
the basis of an independent valuation of the Stock and such other factors as
the Board deems appropriate, including, without limitation, the earnings and
certain other financial and operating information of the Company and its
Subsidiaries in recent periods, the potential value of the Company and its
Subsidiaries as a whole, the future prospects of the Company and its
Subsidiaries and the industries in which they compete, the history and
management of the Company and its Subsidiaries, the general condition of the
securities markets, the fair market value of securities of companies engaged
in businesses similar to those of the Company and its Subsidiaries and the
trading price of the Stock. The determination of Fair Market Value will not
give effect to any restrictions on transfer of the Stock, the fact that the
Stock would represent a minority interest in the Company or the fact that the
Stock is not liquid. The Fair Market Value as determined in good faith by the
Board and in the absence of fraud shall be binding and conclusive upon all
parties. Notwithstanding the foregoing, after any Public Offering, Fair Market
Value on any date shall be the average of the high and low trading price of a
share of Stock on the principal national securities exchange on which the
Stock is admitted to trade or, if none, on the National Association of
Securities Dealers Automated Quotation System if the Stock is admitted for
quotation thereon; provided, however, that if any such exchange or quotation
system is closed on any day on which Fair Market Value is to be determined,
Fair Market Value shall be determined as of the first day immediately
preceding such day on which such exchange or quotation system was open for
trading.

"Public Offering" means an underwritten public offering of the Stock after
the Effective Date led by at least one underwriter of nationally recognized
standing.

"Stock" means the Common Stock of the Company, par value $.01 per share,
subject to adjustments pursuant to Section 3.

"Subsidiary" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities, beginning with the
Company if each of the corporations or entities (other than the

D-1
<PAGE>

last corporation or entity in the unbroken chain) owns stock or other
interests possessing 50% or more of the total combined voting power of all
classes of stock or other interests in one of the other corporations or
entities in the chain.

Section 2. Administration of Plan

The Plan shall be administered by the Board. The Board shall have the power
and authority to adopt, alter and repeal such rules, guidelines and practices
for administration of the Plan and for its own acts and proceedings (including
rules regarding whether and on what basis Eligible Directors may participate
in decisions regarding the Plan or the determination of Fair Market Value) as
it shall deem advisable; to interpret the terms and provisions of the Plan; to
make all determinations it deems advisable for the administration of the Plan;
to decide all disputes arising in connection with the Plan; and to otherwise
supervise the administration of the Plan. All decisions and interpretations of
the Board shall be binding on all persons, including the Company and Eligible
Directors.

Section 2. Shares Issuable under the Plan; Mergers; Substitution

(a) Shares Issuable. The aggregate maximum number of shares of Stock
reserved and available for issuance under the Plan shall be 1,500,000. Shares
of Stock issued under the Plan may be authorized but unissued shares or shares
reacquired by the Company.

(b) Stock Dividends, Mergers, etc. In the event of a stock dividend, stock
split or similar change in capitalization affecting the Stock, the Board shall
make appropriate adjustments to the number and kind of shares of stock or
securities which may be purchased pursuant to the terms of the Plan.

Section 3. Right to Purchase Stock.

Shares of Stock may be purchased under the Plan at such price as shall be
determined by the Board, but in no event shall such purchase price be less
than the Fair Market Value thereof on the date of purchase. Unless otherwise
determined by the Board, each Eligible Director shall be allowed to purchase
stock having a Fair Market Value of $250,000. In determining whether to permit
an Eligible Director to purchase a greater amount of stock (and in setting the
higher amount available to be purchased) the Board shall take into account
such factors, including, without limitation, the scope of the Eligible
Director's duties on behalf of the Company, the commitment of time required of
such Eligible Director, and the extent to which such Eligible Director's
actions are expected to effect the performance of the Company. Delivery of
certificates representing shares purchased pursuant to the Plan shall be
subject to payment by the Eligible Director of the full purchase price for
such shares and the fulfillment of any other requirements established by the
Board or necessary to comply with any applicable provisions of law. To the
extent deemed necessary or appropriate by the Company, such certificates shall
bear appropriate legends.

Section 5. Amendments and Termination

The Board may, at any time, amend or discontinue the Plan.

Section 6. General Provisions

(a) No Distribution; Compliance with Legal Requirements. The Board may
require each person acquiring shares of Stock pursuant to the Plan to
represent to and agree with the Company in writing that such person is
acquiring the shares without a view to distribution thereof. No shares of
Stock shall be issued until all applicable securities law and other legal and
stock exchange requirements have been satisfied. The Board may require the
placing of such stock-orders and restrictive legends on certificates for Stock
as it deems appropriate.

(b) Delivery of Stock Certificates. Delivery of stock certificates to
participants under this Plan shall be deemed effected for all purposes when
the Company or a share transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the Eligible Director, at
the Eligible Director's last known address on file with the Company.

D-2
<PAGE>

Other Compensation Arrangements; No Rights to Board Membership. Nothing
contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements for Eligible Directors; and such
arrangements may be either generally applicable or applicable only in specific
cases. The adoption of the Plan and the grant of the right to purchase shares
of Stock pursuant to the Plan do not confer upon any Eligible Director any
right to continued membership on the Board.

Section 7. Effective Date of Plan

The Plan shall become effective upon approval by the Board.

Section 8. Governing Law

This Plan shall be governed by the law of the State of Delaware.

D-3

<PAGE>

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<PERIOD-START> APR-01-1999
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