SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2000 Commission File number 1-8086
GENERAL DATACOMM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-0853856
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Park Road Extension, Middlebury, Connecticut, 06762-1299
(Address of principal executive offices)
(203) 758-1811
(Registrant's telephone number, including area code)
--------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which registered
Common Stock, $.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES { X } NO { }
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. { X }
The aggregate market value of the voting stock of the Registrant held by
non-affiliates as of December 31, 2000:
$28,654,809.
Number of shares of Common Stock and Class B Stock outstanding as of December
31, 2000:
27,516,096 Shares of Common Stock
2,057,103 Shares of Class B Stock
DOCUMENTS INCORPORATED BY REFERENCE:
-----------------------------------
Annual Report to Stockholders for the fiscal year ended September 30, 2000 for
Part II, Items 5, 6, 7 and 8. Company's Proxy Statement for the 2001 Annual
Meeting of Stockholders for Part III, Items 10, 11, 12 and 13.
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GENERAL DATACOMM INDUSTRIES, INC.
TABLE OF CONTENTS
PART I Page
Item 1. Business 3
Item 2. Properties 18
Item 3. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Security Holders 18
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 19
Item 6. Selected Financial Data 19
Item 7. Management's Discussion and Analysis of
Results of Operations
and Financial Condition 19
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 19
PART III
Item 10. Directors and Executive Officers of the Registrant 20
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial
Owners and Management 22
Item 13. Certain Relationships and Related Transactions 22
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 23
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PART I
ITEM 1. BUSINESS
General DataComm Industries, Inc. was incorporated in 1969 under the laws of the
State of Delaware. Unless the context otherwise requires, the terms "Company"
and "GDC" as used here and in the following pages mean General DataComm
Industries, Inc. and its subsidiaries. In addition, in the following business
discussion "ATM" refers to Asynchronous Transfer Mode cell switching technology,
"LAN" refers to Local Area Network and "WAN" refers to Wide Area Network.
Business Conditions and Financial Plans
The Company's independent auditors have expressed uncertainty about the
Company's ability to continue as a going concern in their opinion on the
Company's financial statements. On January 5, 2001, the Company's primary
lenders served the Company with a notice of default under the Company's loan and
security agreement ("Loan Agreement") as a result of the Company's inability to
provide such lenders with Company financial statements supported by an
unqualified opinion issued by independent auditors. While such lenders have not
terminated the revolving line of credit portion of the Loan Agreement, pursuant
to which advances are still continuing, the lenders have reserved their right to
declare such advances due and payable and/or limit the amount of such future
advances, and have increased the interest rates on such advances and the
outstanding term loans. There can be no assurance that the lenders will continue
to make such advances or that they will not accelerate the maturity of amounts
due under the Loan Agreement. Acceleration of such amounts may in turn result in
the acceleration of maturity of debt owed to other creditors.
Since the Company does not currently have any alternative sources of operating
funds, these matters raise substantial doubt about the Company's ability to
continue as a going concern. Reference is made to Note 1, "Business Conditions
and Financial Plans," to the consolidated financial statements presented in Item
8, "Financial Statements and Supplementary Data," for more detailed discussions,
including risks and Company plans.
Overview
General DataComm Industries, Inc., based in Middlebury, Connecticut, is a
worldwide provider of wide area networking and telecommunications products and
services. The Company is focused on providing multiservice provisioning
solutions using ATM switching and multiservice access products. The Company
designs, assembles, markets, installs and maintains products and services that
enable telecommunications common carriers, corporations, and governments to
build, improve and more cost effectively manage their global telecommunications
networks. In fiscal 1999, the Company completed a major reorganization of
business operations that created three independent operating divisions in the
form of the Broadband Systems Division, the Network Access Division and VITAL
Network Services, L.L.C. (VITAL was established as a business unit in 1997).
During fiscal 2000, the Company established the Mulitmedia Division ("MMD") as a
fourth operating division (the Company plans to present separate financial
performance information for MMD in fiscal 2001). Each of these groups have
dedicated marketing, sales, engineering and finance components and are separated
as distinct operating business units with separate general managers. Refer to
"Company Strategy" below for further discussion.
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The Company's products and services are marketed throughout the world. The
Company sells and leases its products primarily to corporations, governments and
common carriers (telephone and cable companies) through its own worldwide sales
and service organizations as well as original equipment manufacturers (OEMs),
system integrators, local distributor networks and value-added resellers.
Internationally, GDC maintains subsidiary operations in Canada, the United
Kingdom, Mexico, France, Singapore and Brazil. Sales and technical support
offices are maintained in Japan, Hong Kong, China and Argentina. In total, the
Company manages a worldwide distribution network with representatives in more
than 60 countries. International operations represented approximately 46% of the
Company's revenues in fiscal 2000 as compared to 48% in fiscal 1999. GDC's
foreign operations are subject to all the risks inherent in international
operations.
The Company's customer base includes: local exchange carriers, including all of
the Regional Bell Operating Companies, Bell Canada and Verizon; alternative
service providers including Cignal Global Communications; interexchange carriers
including MCI Worldcom; corporate end users; government entities including the
United States Air Force, New York City Transit Authority, Commonwealth of
Kentucky and the U.K. Ministry of Defense; international communications carriers
such as France Telecom and Telecom New Zealand; and suppliers of central office
switching equipment such as Lucent Technologies and LM Ericsson.
No individual customer accounts for 10 percent or more of the Company's
consolidated revenue.
The Company's executive offices are located at Park Road Extension, Middlebury,
Connecticut, 06762-1299, and its telephone number is (203) 758-1811.
Company Strategy
Prior to December 1998, the Company operated with a horizontal structure with
such functional organizations as marketing, sales and engineering operating
across all product lines.
In December 1998, the Company restructured its operations into three distinct
business units with increased operating autonomy and business focus. The
Broadband Systems Division ("BSD") has responsibility for the development,
marketing and sale of broadband telecommunication products, including ATM
products; the Network Access Division ("NAD") has responsibility for the
development, marketing and sale of access telecommunication products, including
frame relay and DSL products; and VITAL Network Services, L.L.C. ("VITAL") which
continues to offer a broad range of network services, including an expansion
into professional network design and consulting services. Furthermore, during
fiscal 2000 the Company established the Mulitmedia Division ("MMD") as a fourth
operating division. MMD is responsible for the development, marketing and sale
of broadband video product solutions for, among other things, distance learning,
telemedicine and video conferencing, over broadband wide area ATM and
next-generation Internet networks.
Each business unit is comprised of a general manager and dedicated marketing,
sales, product development and finance functions ("Strategic Business Unit [SBU]
management teams"). As a result, the business units are more focused on
products, sales channels and technologies unique to each unit and are
streamlined to maximize time-to-market, product performance and customer
satisfaction. The SBU management teams have responsibility for their respective
operating results.
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To minimize the cost of certain support functions, including, among others,
marketing services, information technology, specific finance functions, human
resource management and facilities maintenance, such support operations are
centralized and provide their respective services to all business units.
Refer to Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," for detailed discussion of the Company's (and each
division's) performance.
Detailed discussion of each division's operations follows below. In addition,
financial performance by reportable operating segment and other geographical
information presented on a consolidated basis is included in Note 12 of the
Notes to Consolidated Financial Statements. See "Index to Financial Statements
and Schedules" on page F-1 in this report.
As part of the Company's new business strategy, it has sold, is holding for sale
and/or closed operations not considered strategic to the four business units
discussed above. Refer to the "Partnering/Divestiture Strategy" discussion below
for additional discussion.
In November 2000, the Company reduced its workforce by approximately 100
persons. Furthermore, in January 2001, the Company restructured its operations
to consolidate its BSD and NAD operating units, eliminate all duplicate and
non-critical positions within the Company and improve cash flows. The January
2001 restructuring is expected to result in an incremental workforce reduction
of approximately 200 persons. VITAL Network Services and the Multimedia Division
remained in place as separate business units.
Broadband Systems Division
The Broadband Systems Division ("BSD" or "the Division") has concentrated its
efforts on providing integrated networks utilizing ATM multiplexing and
switching products to construct global networks offering converged data, voice
and video communications. BSD's broadband networking products provide an
advanced, multiservice architecture for wide area networking solutions to public
network operators, governments and enterprises worldwide.
In the early 1990s, the Company identified ATM technology as the preferred
solution for addressing the need for support of next-generation data and
multimedia applications requiring higher bandwidth and differentiated Qualities
of Service (QoS). Such applications include Internet-related access and
services, high-speed intranets, remote interactive education, content
distribution and broadcast TV transmission. ATM, as a broadband technology,
enables the simultaneous transmission of voice, video and high-speed data
traffic on a single communications line. By offering ATM solutions to its
customers, the Company believes it has enhanced its position as a leading
supplier of wide area networking and telecommunications products.
BSD's strategy of providing integrated solutions to its customers rests upon:
Providing Cost-Effective Flexible Product Solutions. The Division's
trademark product families (GDC APEX(R), NexEra(TM) and ProSphere(R)) are
designed with architectures that scale to meet the differing size,
performance and cost demands encountered in its potential customer base.
Customers select products which are most appropriate to their current needs
and may easily migrate to higher capacity products over time.
Standardization of the network management suite across all product
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families allows the end-user to utilize a single network management system
providing value-added capabilities such as configuration, alarm
reporting, route planning, provisioning and advanced service restoral
options.
Improving Performance of Customer Networks. The Division's system products
are designed to improve network efficiency by increasing data transmission
speed, compressing and consolidating voice and video signals and providing
dynamic bandwidth allocation as individual applications demand it. The
ability to migrate isolated company voice and data intranets to a single,
converged broadband network may provide significant cost savings within a
relatively low payback period.
Broadband Division Product Suite
ATM Products: To address the needs of its target customers, the Division offers
several product solutions designed to provide a flexible and cost-effective
on-ramp into the broadband environment. The GDC APEX(R) range of systems enables
companies to address network requirements for data, compressed video and
compressed voice in a multi-service environment with switching and multiplexing
speeds from 1.6Gbps to 6.4Gbps. Existing APEX(R) product family deployment
applications are diverse and include, among others, broadband distance learning,
packet voice telephony, the provisioning of ATM, frame relay and private line
circuits, and telemetry for defense and space applications. The ProSphere(R)
family of network management products offers a unique and innovative
programmable environment such as an all-JAVA client/server interface and a CORBA
inter-process communications agent. Both of these features are designed to
promote standards-based open interfaces for third parties to utilize, and to
enable easier integration into a network operator's provisioning, monitoring and
alarm systems.
Multimedia Products: The BSD also offers its customers a comprehensive line of
multimedia products developed by the Company's Multimedia Division ("MMD"). The
multimedia product family consists of the MAC 500 and VIP IV MPEG-2 module for
GDC APEX ATM-access platforms and the MMS multimedia server, which provides
scheduling and service provisioning capabilities.
The MAC 500 is an innovative award-winning video-centric access concentrator
that provides high-quality MPEG-2 video and audio as well as IP connectivity
over ATM networks. It enables full-motion, low-latency video and CD-quality
audio. Refer to the "Multimedia Division" section below for further discussion
regarding specific award-winning video product offerings of the MMD, all of
which the BSD offers for sale to its customers.
With the establishment of the new Multimedia Division in fiscal 2000, primary
responsibility for these multimedia products was transitioned from the Broadband
Systems Division to the Multimedia Division in late fiscal 2000. As noted above,
however, the BSD will continue to be one of various sales channels for the MMD.
Refer to the "Multimedia Division" section below for further discussion
regarding the MMD multimedia products which the BSD offers for sale to its
customers.
Multiplexers/Internetworking Products: GDC's multiplexer and Internetworking
product family includes systems for both branch office and corporate backbone
locations which integrate voice, traditional data, video and LAN traffic over
narrowband (56/64 Kbps) or wideband (fractional T1/E1 and T1/E1) digital
services. By consolidating multiple forms of traffic over a single transmission
line, these products significantly decrease an end user's network costs. For
corporate backbone locations, GDC offers the TMS 3000, which supports a wide
range of voice, facsimile, LAN, traditional data and video applications.
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The Office Communications Manager ("OCM"), a cost-effective networking solution
for the branch office location, operates with the TMS 3000 as part of a network
and offers the integration of voice, LAN routing, frame relay and traditional
data at speeds ranging from 9.6 Kbps to T1/E1.
Broadband Division Sales and Marketing
BSD's products are sold throughout the world using various channels to market,
including: a dedicated U.S. sales force; international subsidiary operations in
Canada, Mexico, the United Kingdom, France, and Brazil; and indirect sales
through an international distributor network, original equipment manufacturers
("OEMs"), value-added resellers, system integrators and alternate service
providers.
The Division focuses on providing systems solutions for public voice and data
network provisioning, remote interactive education (distance learning) and the
migration of TDM and frame relay facilities to higher capacity broadband
networks. In addressing these solutions, the Division focuses its selling and
marketing efforts on emerging competitive service providers, incumbent
telecommunications carriers, educational and medical establishments, federal and
state governments and utilities. The Division has a worldwide customer base of
operators, corporate and government entities. The Division has global
distribution capabilities, and its ability to provide international customer
service and support is critical to customers that run mission-critical
applications over their networks.
The Company believes it has a leading position in the multi-service voice, data
and video switch market, including the respective technology. The following
organizations have deployed GDC's broadband products extensively in their
wide-area networks: Telekom Austria, France Telecom, KPN Netherlands PTT,
Slovakia Telecom, Telefonica Spain, Telia Sweden, Energis Carrier Services,
NASA, U.S. Air Force, Mayo Clinic, Burlington Northern Santa Fe Railroad, Telus
(Canada), and Cignal Global Communications. Several of these entities have
deployed almost 300 GDC APEX(R) switches into their networks, creating some of
the largest public switched ATM networks in existence. The Division's products
were sold to some of the referenced customers through Lucent Technologies and LM
Ericsson.
The Division had three customers which individually accounted for more than 10
percent of its revenue in fiscal 2000; in total such customers accounted for
approximately 48 percent of the Division's fiscal 2000 revenue.
Value of the Broadband Division's Solutions
Numerous operators have deployed GDC broadband switches as their platform for
provisioning new, differentiated data communications services. As a leading
proponent and early provider of standards based AAL2 voice over ATM packet
solutions, the Company's BSD division has established a presence in several of
the largest voice-over-packet networks in the world, including a number of U.S.
government agencies which have deployed the Division's products for
mission-critical applications in military, security and space applications.
During fiscal 2000, the division initiated product development programs on a new
range of broadband packet telephony systems to operate as media gateway
platforms between the circuit switched and packet environments in
next-generation packet telephony and data networks.
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These products are expected to become available during the second half of 2001.
The Company believes its family of broadband switches have the following
competitive advantages:
|X| Scalability, allowing a customer to construct a multi-tiered switch
network that scales in price and
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performance and offers multiple services over one platform;
|X| Flexibility, providing the customer with comprehensive interfaces and
adaptation capabilities;
|X| Traffic management architecture, providing networks with traffic
policing, traffic shaping, traffic prioritization and buffer management
capabilities second to none;
|X| Switched virtual circuits, dynamically establishing voice, data and
video connections on an end-to-end basis;
|X| Standards-based compressed voice and MPEG2 video.
Selling prices vary directly with the size and complexity of the systems being
ordered.
In addition to the pursuit on brand new customer opportunities, the Division
continues to pursue TDM to ATM migration strategy with existing customers. This
allows BSD to address its existing TDM customer base with an appropriate
forward-looking technical evolution. In corporate backbone environments
requiring broadband speeds and services, GDC APEX(R) switches can be used. The
TMS 3000 and OCM can feed into the APEX switch enabling the Division to offer an
integrated networking solution which scales from small remote or branch
locations into regional wideband backbones and ultimately into ATM-based
broadband backbones.
BSD Research and Development
The Division has significant ongoing engineering programs for product
improvement and new product development. Gross expenditures for research and
development activities amounted to $24.9, $29.9 and $32.2 million for fiscal
2000, 1999, and 1998, respectively.
BSD Competition
All segments of the telecommunications and networking industries are intensely
competitive. Many of the participants in the networking industry including,
among others, Nortel Networks, Cisco Systems, Siemens, Marconi Communications
and Alcatel, have targeted the WAN ATM market segment. Other companies are
expected to follow. In addition, traditional suppliers of central office
switching equipment such as Lucent Technologies, Fujitsu and LM Ericsson are
offering ATM-based switches for central offices. Refer to the caption
"Competition" below for further discussion.
BSD Manufacturing and Product Support
The Company's manufacturing operation assembles and tests customized network
solutions for the Division's customers. All components of such customer network
systems are manufactured by the Company's outsourcing partners. Product support
services are available to BSD customers through VITAL Network Services, L.L.C.
BSD Employees
At September 30, 2000 the Division had 248 dedicated employees. In addition, the
Division utilized Company support personnel as necessary (see "Company Employee
Relations" below). In January 2001, the Company restructured its operations to
combine its BSD and NAD operating units. See "Company Employee Relations" for
further discussion.
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Multimedia Division
GDC's Multimedia Division offers integrated, scalable and service provider class
solutions for Distance Learning, Telemedicine and Videoconferencing over
broadband wide area ATM and next-generation Internet networks.
The Multimedia Division ("MMD") was formed during fiscal 2000 to focus
designated employee sales, marketing and product development efforts on the
division's video-related products and maximize revenue opportunities therefrom.
MMD's initial fiscal year 2000 efforts focused on the organization of its
research and development operation, with expansion into its sales and marketing
operations thereafter. During most of fiscal 2000, MMD relied heavily on the
Broadband Systems Division for sales and marketing support. MMD is operating as
an independent operation effective October 1, 2000 (fiscal 2001), with revenue
growth being the Division's primary objective for fiscal 2001. BSD will become a
customer of MMD and one of various sales channels for MMD's product line. The
Company plans to present separate financial performance information for MMD in
fiscal 2001.
Headquartered in Montreal, Quebec, Canada, MMD offers a full set of
comprehensive solutions composed of multimedia access concentrators and
interfaces, multimedia servers, service provisioning tools, and network
management applications to address interactive multimedia needs. The principal
applications of the Division's products are in distance learning for schools and
universities as well as telemedicine for hospitals and health organizations.
Some of the world's largest service providers who offer their customers video
services represent significant revenue opportunities for MMD. A number of the
Division's products have won official awards for significant technological
achievement during the past year.
MMD's strategy of providing high-quality cost-effective video solutions to its
customers rests upon its ability to continue to offer leading-edge technology
which provides its customers with effective return on investment. When
developing videoconferencing and multimedia communications solutions, the
Division's primary objective is to increase an organization's productivity by
allowing for the creative interaction of people across the world to occur in a
very cost-effective manner.
Multimedia Division Product Suite:
The multimedia product family consists of the MAC 500 and VIP IV MPEG-2 module
for GDC APEX ATM-access platforms and the MMS multimedia server, which provides
scheduling and service provisioning capabilities.
The MAC 500 is an innovative award-winning video-centric access concentrator
that provides high-quality MPEG-2 video and audio as well as IP connectivity
over ATM networks. It enables full-motion, low-latency video and CD-quality
audio.
The MMS multipoint server completes the solution by providing a comprehensive
suite of service provisioning capabilities including network-wide class
scheduling, bridging of video, audio and data (T.120), as well as gateway
functions to enable interworking between ATM and ISDN-based sites.
In addition, in November 2000, MMD announced the introduction of an integral,
standards-based Inverse Multiplexing ATM (IMA) network interface to its MAC 500
Multimedia Access Concentrator, providing
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users with access to DVD-quality broadband video using T1/E1 wideband services.
Since the recurring costs to support transmission of MPEG-2 video using
T1/E1circuits are much less when compared to high-bandwidth T3/E3 circuits, the
MAC 500 IMA module offers a more economical implementation for all interactive
video applications, including videoconferencing, distance learning, and
telemedicine.
GDC's total solution for broadband interactive video is one of the most
comprehensive in the industry with regard to user/operator benefits. MMD's broad
range of products enable both enterprise users and service providers to deliver
a full range of broadband multimedia interactive applications and value-added
video services.
Multimedia Division Sales and Marketing:
As noted above, most of the MMD's sales and marketing efforts were executed
through BSD during fiscal 2000. Effective in fiscal 2001, MMD will assume
responsibility for an independent sales and marketing operation. BSD will become
a MMD customer and one of various sales channels for the MMD's product line in
fiscal 2001.
During fiscal 2000, MMD signed a contract with Verizon whereby Verizon selected
GDC to be their MPEG-2 video supplier for distance learning applications. In
addition to Verizon, the following organizations have deployed MMD video
products: Sprint, University of Quebec, State of Wisconsin, University of
Wisconsin, Metropolitan Community College (Nebraska), Jefferson County Public
Schools (Kentucky), Montgomery County (Maryland), East Texas Learning
Interactive Network Consortium, and TELUS Advanced Communications, a world
leader in multi-campus physician-led clinical medicine.
MMD Research and Development
The Division has ongoing engineering programs to address emerging broadband
multimedia applications. These R&D programs are conducted in collaboration with
major educational and scientific research establishments, as well as with
strategic industry partners. MMD's gross expenditures for research and
development activities amounted to $3.1 million and $2.3 million for fiscal 2000
and 1999, respectively.
MMD Competition:
All segments of the telecommunications and networking industries are intensely
competitive. Many of the participants in the multimedia industry, including,
among others, First Virtual (FVC.com), Optivision, and Tektronix, have targeted
the distance learning, telemedicine and videoconferencing market segments. Other
companies are expected to follow. Refer to the caption "Competition" for further
discussion.
MMD Employees:
At September 30, 2000, MMD had 34 dedicated employees. In addition, the Division
utilized Company support personnel as necessary (see "Company Employee
Relations" below).
Network Access Division
The objective of the Network Access Division ("NAD" or "the Division") is to
improve sales, marketing, and engineering productivity relative to the Company's
access product line. The business unit leverages
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the sales resources of distributors, value-added resellers, integrators and
telecommunication provider channels in an effort to achieve greater sales
coverage both domestically and internationally. The reorganization has also
served to intensify the selling of access products, which have an inherently
short selling cycle.
GDC has adjusted to shifting priorities in the overall access market. These
priorities are governed by the accelerated growth of the Internet, frame relay
and cell-based services, all of which require increased attention to network
management and performance quality. NAD accordingly is focused on the
development and sale of products targeted towards market growth areas. More
specifically, NAD's digital data sets, DSLware(TM) equipment and service
monitoring probes constitute the Division's major product elements serving to
meet emerging market requirements.
Network Access Division Product Suite
Digital Data Sets: Digital data sets are used to convert and interpret signals
from computers and communications equipment into a form that is acceptable for
transmission over telecommunications facilities. GDC offers a broad set of
narrowband digital data sets which operate at various speeds up to 64 Kbps and
wideband digital data sets which operate at fractional T1 and full T1 speeds. In
fiscal 1999 a broadband data set operating at T-3 speeds was also introduced.
NAD supplies its digital data sets to the major North American telephone
companies and various end users. NAD continues to enhance its digital
transmission product line by combining higher transmission speeds with
value-added capabilities including data compression, concentration, protocol
adaptation/conversion and network management. This enables GDC to offer
differentiated and in some cases unique transmission solutions. The SpectraComm
family of network managed CSU/DSU products is the latest generation of digital
products which are targeted at large managed digital networks and local exchange
carriers.
DSLware(TM): The Universal Access System 7000 is a service provisioning system
which allows service providers to deliver digital services over copper loop
systems, reducing both cost and service provisioning time. It is particularly
applicable in international markets. In China, Russia and developing countries
in Latin America and the Pacific Rim, there is insufficient copper wire
installed to support the growing demand for communications services. NAD
believes it is responding to these needs by offering the Universal Access System
7000, which utilizes transmission technologies like 2B1Q (Two Binary One
Quaternary) and HDSL (High-speed Digital Subscriber Line). These products offer
much higher transmission speeds while using half of the copper wire pairs
normally required to provision private line services.
Intelligent Voice Data Access Multiplexer: The Metroplex(R) 6000 is an
intelligent access multiplexer designed for cost-effective access to a variety
of data and voice services available in wide area networks. It is applicable to
the branch office/small office market where it provides connectivity from the
office to an enterprise network or to public network services.
Analog Modems: Analog modems convert digital computer signals to a format that
can be transmitted over telephone lines. The market for private line modems has
been shrinking as telephone networks move from an analog to a digital format.
However, with the growth of telecommuting and Internet access, the need for
analog dial-up modems continues to grow. NAD offers a broad range of private
line and dial-up modems operating at all speeds up to 56 Kbps.
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Network Access Division Sales and Marketing
The Division's products are sold throughout the world using: a dedicated
domestic sales force; a Canadian subsidiary; and indirect sales through a
(domestic and international) distributor network, original equipment
manufacturers (OEM's), value-added resellers, system integrators and alternate
service providers.
The Division's customer base includes: Local Exchange Carriers, including
incumbents such as Verizon, SBC and Bell South, and Bell Canada; Interexchange
Carriers, including MCI Worldcomm and Sprint; Alternate Service Providers such
as Northpoint Communications and DSL Net; government entities, including state
and local governments; and international communications carriers such as
Telecomm New Zealand.
The Division had two customers which individually accounted for more than 10
percent of its revenue in fiscal 2000. In total, such customers accounted for
approximately 23 percent of the Division's fiscal 2000 revenue.
NAD Research and Development
NAD's gross expenditures for research and development activities amounted to
$8.1 million, $8.6 million and $9.0 million for fiscal 2000, 1999, and 1998,
respectively.
NAD Competition
All segments of the telecommunications and networking industries are intensely
competitive. Many of the participants in the networking industry, including,
among others, ADC, Adtran, Paradyne and Alcatel (formerly Newbridge Networks),
have targeted the Access/Transmission market segment. Other companies are
expected to follow. Refer to the caption "Competition" for further discussion.
NAD Manufacturing and Product Support
The Division's products are manufactured by the Company's manufacturing
outsourcing partners. Product support services are available to NAD customers
through VITAL Network Services, L.L.C.
NAD Employees
At September 30, 2000 the Division had 130 dedicated employees. In addition, the
Division utilized Company support personnel as necessary (see "Company Employee
Relations" below). In January 2001, the Company restructured its operations to
combine its BSD and NAD operating units. See "Company Employee Relations" for
further discussion.
VITAL Network Services, L.L.C.
VITAL Network Services, L.L.C. ("VITAL"), a wholly-owned subsidiary of General
DataComm, Inc. which was formed in September 1997, is an integrated worldwide
service organization providing comprehensive global professional and traditional
network services to customers who run critical applications over their networks.
A critical element of the newly formed organization was the strategic
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decision to convert VITAL from a single manufacturer support (i.e., GDC)
organization to one capable of servicing multiple manufacturers' equipment and
technologies.
VITAL Services Offered
VITAL offers its worldwide clients an array of traditional and professional
services. VITAL's traditional support services, which comprise the majority of
its fiscal 2000 business, include installation, on-site maintenance, technical
support, logistics management and product repair. In addition, VITAL's
professional services portfolio includes network audits, performance consulting,
design, staging, rollout and integration services, project management, remote
network monitoring/management and educational services.
Worldwide services are provided primarily by VITAL personnel and are augmented
by third-party service partners when necessary. Customer relationships and
services are managed from VITAL's global headquarters in the United States and
four area offices in North America, Mexico, the United Kingdom and Singapore.
High level VITAL technical support engineers using centralized simulation labs
provide VITAL field engineers and customers remote assistance from the VITAL
Technical Operations and Assistance Centers ("TOACs") located in each area
office; the North America TOAC contains an additional global Internetworking
center.
VITAL Sales and Marketing
VITAL's customer base includes telecommunications carriers, corporate and
government network customers, distributors, value-added resellers, system
integrators, competitive local exchange carriers, Internet service providers and
equipment manufacturers.
As noted above, VITAL has converted from a single manufacturer (i.e., GDC)
support organization to one capable of servicing multiple manufacturers'
equipment and technologies. Capable of working in integrated networks, VITAL has
received designations as a Cisco Professional Services Partner and Authorized
Support Provider, a Nortel Certified Support Expert and a 3Com Authorized
Service Provider. In addition, VITAL is the exclusive authorized (outside)
service provider for General DataComm Industries, Inc., AccessLan, ADC, Sync
Research, Ennovate Networks, Larscom, MCK Communications, Madge, LuxN, and
Carrier Access Corporation. VITAL has also established working relationships
with numerous other manufacturers. No individual customer accounted for 10
percent or more of VITAL's fiscal 2000 revenue.
In April 2000, VITAL entered into an agreement with Madge.connect. Under terms
of the agreement, VITAL will support Madge.connect's entire enterprise network
product line, which includes adapters, hubs, workgroup and backbone switches,
for customers who procured such product from Madge.connect. In addition, in an
effort to achieve additional revenue growth, VITAL will enhance and expand the
support services previously offered by Madge.connect to include installation,
onsite support, remote monitoring/management, and professional services, such as
network audits and consultancy. As part of the new strategic alliance, the
majority of Madge.connect's support organization, along with its existing
systems and processes, were integrated into VITAL's global LAN support
organization.
In October 1998, VITAL purchased all of Olicom Inc.'s (router manufacturer)
Canadian and United States network service business and their support center
located in Marlborough, Massachusetts. VITAL also
13
<PAGE>
hired approximately 30 of their highly skilled Internetworking technical
personnel. Additionally, effective November 1999, VITAL assumed the
responsibility for Olicom's technical and warranty product support worldwide.
In an effort to sustain revenue growth trends, VITAL has expanded its direct
sales force with personnel dedicated to selling VITAL services only. The
acquisition of synergistic service businesses would also offer growth
opportunity; no such acquisitions are in progress at this time.
VITAL Competition
The network support service industry is intensely competitive, and there can be
no assurance that VITAL will successfully achieve its growth objectives.
VITAL Employees
At September 30, 2000, the Division had 330 dedicated employees. In addition,
the Division utilized Company support personnel as necessary (see "Company
Employee Relations" below).
DataComm Leasing Corporation ("DLC")
While the majority of the Company's products are sold on an outright basis, the
Company also leases its equipment through a wholly owned consolidated subsidiary
under a versatile selection of leasing programs designed to meet the specific
needs and objectives of its customers.
Manufacturing
The Company's manufacturing operation and its outsourcing partners service the
needs of the BSD, MMD and NAD business units.
In early fiscal 2000, the manufacturing operation completed its objective of
outsourcing all manufacturing activity.
Prior to fiscal 1999, all power and packaging product, as well as high-volume
through-hole printed circuit board ("PCB") assembly and test, was outsourced. In
early fiscal 1999, the manufacturing operation outsourced all residual
through-hole PCB assembly and test. Furthermore, on September 30, 1999, the
Company entered into an agreement with Matco Electronics Group, Inc. ("Matco")
to outsource the remainder of its principal manufacturing operations (including
surface mount printed circuit board assembly and test). Transition of all
surface mount PCB assembly and test to Matco's manufacturing operations was
completed in January 2000. As a result, GDC's manufacturing operation is
responsible for higher level assembly and test on a build-to-order basis.
Warehousing, distribution and other miscellaneous services are also be provided
by the manufacturing operation.
Because of various material breaches of the manufacturing agreement by Matco
during fiscal 2000, the Company advised Matco of its defaults, reserved its
rights to terminate the agreement and withheld funds that Matco has claimed are
due. The Company has been advised that Matco may elect to terminate the
agreement and, as a result, the Company is in the process of contracting with
other manufacturers to supply its product needs.
14
<PAGE>
The manufacturing operation occupies approximately 80,000 square feet, or 25% of
the 360,000 square foot facility located in Naugatuck, Connecticut; 25% of the
facility is being utilized for other GDC operations and 50% is vacant (as
compared to 25% vacancy during fiscal 1999).
GDC's Connecticut facilities continued to be ISO 9001 certified during fiscal
2000.
Reliance on Key Components and Subcontractors: The Company's products use
certain components, such as microprocessors, memory chips and pre-formed
enclosures that are acquired or available from one or a limited number of
sources. The Company has generally been able to procure adequate supplies of
these components in a timely manner from existing sources. While most components
are standard items, certain application-specific integrated circuit chips used
in many of the Company's products are customized to the Company's
specifications. All suppliers of components do not operate under contract.
Additionally, availability of some standard components may be affected by market
shortages and allocations. The Company's inability to obtain a sufficient
quantity of components when required or to develop alternative sources at
acceptable prices and within a reasonable time, could result in delays or
reductions in product shipments which could materially affect the Company's
operating results in any given period. In addition, as referenced above the
Company relies heavily on subcontractors for production. The inability of such
subcontractors to deliver products in a timely fashion or in accordance with the
Company's quality standards could materially affect the Company's operating
results.
Backlog
The Company's order backlog, while one of several useful financial statistics.
is, however, a limited indicator of the Company's future revenues. Because of
normally short delivery requirements, the Company's sales in each quarter
primarily depend upon orders received and shipped in that same quarter. In
addition, since product shipments are historically heavier in the last month of
each quarter, quarterly revenues can be adversely or beneficially impacted by
several events including: unforeseen delays in product shipments; large sales
that close at the end of the quarter; sales order changes or cancellations;
changes in product mix; new product announcements by the Company or its
competitors; and the capital spending trends of customers.
Acquisition Strategy
As part of its business strategy, the Company has in the past reviewed
acquisition opportunities including those which may complement its product
lines, provide access to emerging technologies or enhance market penetration.
GDC's VITAL Network Services subsidiary acquired Olicom Inc.'s service business
in October 1998. The Company at this time has no understandings or commitments
to make any acquisitions, and there can be no assurances that any acquisitions
will be made.
Partnering/Divestiture Strategy
The Company's business objectives as it commenced fiscal 2000 was to focus its
resources on the three business units (Broadband Systems Division, Network
Access Division and VITAL Network Services), to launch the new Multimedia
Division and to secure the funding necessary to effectively support operational
requirements.
15
<PAGE>
During fiscal 2000, the Company concluded that the sale of one or more strategic
business units would be the most effective means of generating working capital,
reducing outstanding indebtedness and enhancing shareholder value. More
important, such actions would allow the Company to more effectively focus its
sales, marketing and product development efforts on the remaining business
units, with such focus increasing the likelihood of financial success.
As a result, on June 26, 2000 the Company announced the retention of CIBC World
Markets Corp. to advise the Company in evaluating its strategic and financial
alternatives, in defining its strategic and financial objectives and to assist
the Company with the implementation of such strategic initiatives to maximize
shareholder value.
The Company now has a defined set of strategies which are in the process of
being executed. However, there can be no assurance that the Company will realize
any proceeds from any such activities. The potential sale of one or more
business units, or the entire Company, and returning the Company to
profitability are the Company's highest priorities.
Separately, the Company has offered for sale its previous and now vacant
corporate headquarters facility in Middlebury, Connecticut.
Regarding partnering strategy, the Company would consider partnering strategy
opportunities which it believes would result in enhanced financial performance
and/or shareholder value. At this time, the Company at this time has no
understandings or commitments to enter into any partnering agreement, and there
can be no assurances that any such partnering agreements will be made.
With regard to prior year activities, during fiscal 1999, the Company sold its
Technology Alliance Group division ("TAG"), which was identified as
non-strategic to the reorganized business units mentioned above. The sale
resulted in a pre-tax gain of approximately $9.0 million and generated cash
proceeds, net of expenses, of approximately $12.0 million. Separately, in July
1999, the Company closed a non-strategic remote technology center in England and
transferred any development activities considered critical into its Connecticut
research and development facility.
Competition
The telecommunications and networking industry is intensely competitive. Many of
the Company's current and prospective competitors have greater name recognition,
a larger installed base of networking products, more extensive engineering,
manufacturing, marketing, distribution and support capabilities and greater
financial, technological and personnel resources.
Specific competitors for the Company's individual business units were referenced
earlier in the discussion. Each competitor offers a unique solution and all are
formidable competitors. There can be no assurance that the Company will be able
to maintain or grow its market share of broadband (BSD), access (NAD) and/or
video (MMD) products.
Patents and Related Rights
The Company presently owns approximately 60 domestic patents and has
approximately 15 additional applications pending. All of these patents and
applications have been filed in Canada; most also have been
16
<PAGE>
filed in other various foreign countries. Many of those filed outside the United
States have been allowed while the remainder are pending. The Company believes
that certain features relating to its equipment for which it has obtained
patents, or for which patent applications have been filed, are important to its
business, but does not believe that its success is dependent upon its ability to
obtain and defend such patents. Because of the extensive patent coverage in the
data communications industry and the rapid issuance of new patents, certain
equipment of the Company may involve infringement of existing patents not known
to the Company.
Company Employee Relations
At September 30, 2000, the Company employed 1,019 persons, of whom 248 were BSD
positions, 130 were NAD positions, 330 were VITAL positions, 34 were MMD
positions, 153 were manufacturing positions, 4 were DataComm Leasing Corporation
positions, 11 were general corporate management positions and 109 were shared
support-service positions. The shared support functions included information
technology, corporate finance, human resource management, marketing support
groups, facilities maintenance and other miscellaneous functions.
In November 2000, the Company reduced its workforce by approximately 100
persons. Furthermore, in January 2001, the Company restructured its operations
to combine its BSD and NAD operating units, eliminate all duplicate and
non-critical positions within the Company and improve cash flows. The January
2001 restructuring is expected to result in an incremental workforce reduction
of approximately 200 persons. VITAL Network Services and the Multimedia Division
remained in place as separate business units.
No Company employees are covered by collective bargaining agreements. The
Company has never experienced a work stoppage.
17
<PAGE>
ITEM 2. PROPERTIES
The principal facilities of the Company are as follows:
Middlebury, Connecticut -- former executive offices of the Company (vacant
as of September 30, 1999); a 120,000 square-foot
facility owned by the Company; the facility is
listed for sale or lease at September 30, 2000
Naugatuck, Connecticut -- product assembly and test operations, and
worldwide headquarters for VITAL Network
Services, L.L.C.; a 360,000 square-foot facility
owned by the Company (approximately half is
vacant)
Middlebury, Connecticut -- executive offices of the Company and DataComm
Leasing Corporation; also houses the management
teams, marketing and engineering operations of
the Broadband Systems and Network Access
divisions; a 275,000 square-foot facility
leased through 2003 by the Company;
approximately 72,000 square feet are subleased
to a third party through June 30, 2001
Wokingham, England-- sales, service, and administrative offices
(including a parking garage) located in a
36,000 square-foot facility owned by General
DataComm Limited
Toronto, Canada -- sales and administrative officeslocated in a
3,600 sq.-foot facility leased through
November 30, 2004 by General DataComm Ltd.
Montreal, Canada -- a 20,000 square-foot research, sales and service
facility leased through February 28, 2005 by
General DataComm Ltd. (for the Multimedia
Division)
Paris, France -- sales, service and administrative offices
located in an 5,500 square-foot facility leased
through April 2006 by General DataComm France
SARL
Mexico City, Mexico -- sales, service and administrative offices
located in a 3,230 square-foot facility leased
through June 14, 2001 by General DataComm de
Mexico S.A. de C.V.
In addition, the Company leases sales, service and engineering offices
throughout the United States and in international locations.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
18
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information required by this item is incorporated by reference from the
section entitled "Common Stock Prices" on page 9 of the Company's 2000 Annual
Report to Stockholders.1
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated by reference from the
section entitled "Five-Year Selected Financial Data" on page 1 of the Company's
2000 Annual Report to Stockholders.1
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The information required by this item is incorporated by reference from the
section entitled "Management's Discussion and Analysis of Results of Operations
and Financial Condition" on pages 2 through 9 of the Company's 2000 Annual
Report to Stockholders.1
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference from pages 10
through 30 of the Company's 2000 Annual Report to Stockholders or is included
elsewhere in this annual report on Form 10-K.1
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
---------------------
1 Such information is also included in Exhibit 13 of this Form 10-K report as
filed with the Securities and Exchange Commission.
19
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to directors will either be filed by amendment or
incorporated by reference from the section "ELECTION OF DIRECTORS" in the
Company's Proxy Statement for the 2001 Annual Meeting of Stockholders, which
Proxy Statement will be filed within 120 days after the end of the Company's
fiscal year ended September 30, 2000.
Name Position Age
Charles P. Johnson Chairman of the Board of Directors 73
and Chief Executive Officer
Ross A. Belson President and Chief Operating Officer 64
William G. Henry Vice President, Finance and 51
Chief Financial Officer
Frederick R. Cronin Vice President, Corporate Technology
and a Director 69
Robert S. Smith Vice President, Business Development 67
James R. Arcara Vice President, Corporate Operations 65
Dennis J. Nesler Vice President and Treasurer 57
P. John Woods President, VITAL Network Services, L.L.C. 52
Howard S. Modlin Secretary and a Director 69
----------------------------
Mr. Charles P. Johnson, Chairman of the Board and Chief Executive
Officer, founded the Company in 1969.
Mr. Ross A. Belson, President and Chief Operating Officer, has
served in his present capacity since joining the Company in August of 1987.
Mr. William G. Henry, Vice President, Finance and Chief Financial
Officer, joined the Company as Corporate Controller in January 1984, was
appointed an officer of the Company in June 1989, was elected Vice President in
February 1996 and was promoted to his current position in February 1999.
Mr. Frederick R. Cronin, Vice President, Corporate Technology, has
served in executive capacities since the founding of the Company.
20
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (cont'd)
Mr. Robert S. Smith, Vice President, Business Development, has held
positions of major responsibility within the Company since its formation and has
served in executive capacities since February 1973.
Mr. James R. Arcara, Vice President, Corporate Operations, has held
positions of major responsibility within the Company since its formation and has
served in executive capacities since September 1978.
Mr. Dennis J. Nesler, Vice President and Treasurer since May 1987 and
Treasurer since July 1981, joined the Company in 1979 as Vice President of the
Company's wholly owned leasing subsidiary, a capacity in which he still serves.
Mr. P. John Woods, President, VITAL Network Services, L.L.C.,
has been with the Company since February 1993, and was appointed to his current
position effective October 1996. Before joining the Company, Mr. Woods held
positions with Digital Equipment Corporation and Philips.
Mr. Howard S. Modlin, Secretary, an attorney and member of the
firm of Weisman Celler Spett & Modlin P.C., has been Secretary and counsel to
the Company since its formation.
21
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 will either be filed by amendment or
incorporated by reference from the section entitled "Executive Compensation and
other Transactions with Management" in the Company's Proxy Statement for its
2001 Annual Meeting.1
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 will either be filed by amendment or
incorporated by reference from the section entitled "Security Ownership of
Directors and Officers" in the Company's Proxy Statement for its 2001 Annual
Meeting.1
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 will either be filed by amendment or
incorporated by reference from the section entitled "Executive Compensation and
other Transactions with Management" in the Company's Proxy Statement for
its 2001 Annual Meeting.1
------------------------------
1 The Company's Proxy Statement or an amendment to this 10-K will be filed with
the Commission within 120 days after the end of the Company's fiscal year ended
September 30, 2000.
22
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements - see "Index to Financial Statements and
Schedules" on page F-1 of this report.
(2) Financial Statement Schedule - See "Index to Financial Statements
and Schedules" on page F-1 of this report.
(3) Exhibits - See Exhibit Index on page 24 of this report.
(b) Reports on Form 8-K.
A Form 8-K, dated October 27, 2000, was filed on November 9, 2000 to
announce the settlement of a lawsuit which called for the immediate
payment of $5.5 million to the Company and the dismissal of the lawsuit.
23
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
EXHIBIT INDEX
Exhibit No. Description
3.1 Restated Certificate of Incorporation of the Corporation 1
3.2 Amended By-Laws of the Corporation
4.1 Certificate of the Powers, Designation, Preferences, Rights and
Limitations of 9% Cumulative Convertible Exchangeable Preferred
Stock 2
4.2 Indenture dated May 1, 1997 covering presently unissued 9%
Convertible Subordinated Debentures due 2006 3
4.3 Supplemental indenture, dated September 26, 1997, which amends
the May 1, 1997 Indenture covering presently unissued 9%
Convertible Subordinated Debentures due 2006 4
4.4 Indenture dated September 26, 1997 covering issued 7-3/4%
Convertible Senior Subordinated Debentures due 2002 5
4.5 Certificate of the Powers, Designation, Preferences, Rights and
Limitations of 5% Cumulative Convertible Exchangeable Preferred
Stock 6
4.6 Form of Warrant issued with 5% Cumulative Convertible Preferred
Stock7
10.1 1979 Employee Stock Purchase Plan 8
10.2 1983 Stock Option Plan 9
10.3 1984 Incentive Stock Option Plan, and related amendments 10
10.4 1985 Stock Option Plan 11
10.5 1991 Stock Option Plan 12
10.6 1998 Stock Option Plan 13
10.7 Non-Statutory Stock Option Agreement Form - employee13
10.8 Non-Statutory Stock Option Agreement Form - non-employee13
10.9 Retirement Savings and Deferred Profit Sharing Plan, and related
amendments 14
10.10 Credit Agreement between General DataComm Industries, Inc. and
The Chase Manhattan Bank 15
10.11 Loan Agreement between General DataComm Industries, Inc., et al.,
and Foothill Capital Corporation, including First and Second
Amendments 16
10.12 Outsource Manufacturing and Purchase Agreement between General
DataComm, Inc. and the Matco Electronics Group, Inc. 17
10.13 Securities Purchase Agreement with respect to 5% Cumulative
Convertible Preferred Stock18
10.14 Registration Rights Agreement for 5% Preferred Stock19
10.15 Share Purchase Agreement with the State of Wisconsin
Investment Board20
10.16 Transfer of Receivables Agreement between DataComm Leasing
Corporation and Sanwa Business Credit Corporation 21
13. Annual Report to Stockholders for the year ended September 30,
2000. Portions of the Annual Report to Stockholders for the year
ended September 30, 2000 which have been incorporated by
reference are deemed to be "filed" (and are included as Exhibit
13 in our electronic filing with the Commission). All remaining
portions of the Annual Report to Stockholders will be furnished
for the information of the Commission and are not deemed "filed"
24
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K(cont'd)
EXHIBIT INDEX (cont'd)
21. Subsidiaries of the Registrant
23. Consent of Independent Accountants
-----------------------
1 Incorporated by reference from Exhibit 3.1 to Form 10-Q for quarter ended
June 30, 1999.
2 Incorporated by reference from Exhibit 4 to Form 8-K dated October 8,1996.
3 Incorporated by reference from Exhibit 4.1 to Form 10-Q for quarter ended
June 30, 1997.
4 Incorporated by reference from Exhibit 4.3 to Form 10-K for the year ended
September 30, 1997.
5 Incorporated by reference from Exhibit 4 to Form 8-K dated October 8, 1997
6 Incorporated by reference to Exhibit 4.1 to Form 8-K dated July 31, 2000
7 Incorporated by reference to Exhibit 4.2 to Form 8-K dated July 31, 2000
8 Incorporated by reference from Part II of prospectus dated August 31,
1999, contained in Form S-8, Registration Statement No. 333-86229.
9 Incorporated by reference from Exhibit 1(c) to Form S-8, Registration
Statement No. 2-92929. Amendments thereto are incorporated by reference
and filed as Exhibit 10.3 to Form 10-Q for quarter ended December 31, 1987
and as Exhibit 10.3.1 to Form 10-Q for quarter ended June 30, 1991.
10 Incorporated by reference from Exhibit 1(a), Form S-8, Registration
Statement No.2-92929. Amendments thereto are incorporated by reference and
filed as Exhibit 10.2 to Form 10-Q for quarter ended June 30, 1991,
Exhibit 10.19 to Form 10-K for year ended September 30, 1987 and Exhibit
10.2 to Form 10-Q for quarter ended December 31, 1987.
11 Incorporated by reference from Exhibit 10a, Form S-8, Registration
Statement No. 33-21027. Amendments thereto are incorporated by reference
from Part II of prospectus dated August 21, 1990, contained in Form S-8,
Registration Statement No. 33-36351 and as Exhibit 10.3.2 to Form 10-Q for
quarter ended June 30, 1991.
12 Incorporated by reference from Form S-8, Registration Statement No.
333-35299.
13 Incorporated by reference from Form S-8, Registration Statement No.
333-52302.
14 Incorporated by reference from Form S-8, Registration Statement No.
33-37266. Amendments thereto are incorporated by reference to Exhibit
10.16 to Form 10-Q for the quarter ended December 31, 1996.
15 Incorporated by reference from Exhibit 10.21 to Form 10-K for the year
ended September 30, 1993.
16 Incorporated by reference from Exhibit 10.1 to Form 8-K dated May 14, 1999
and Exhibit 10.11 to Form 10-K for the year ended September 30, 1999.
17 Incorporated by reference to Exhibit 10.12 to Form 10-K for the year
ended September 30, 1999
18 Incorporated by reference to Exhibit 10.1 to Form 8-K dated July 31, 2000
19 Incorporated by reference to Exhibit 10.2 to Form 8-K dated July 31, 2000
20 Incorporated by reference from Form S-3, Registration Statement No.
333-46478
21 Incorporated by reference from Exhibit 10.1 to Form 10-Q for quarter
ended June 30, 1989
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GENERAL DATACOMM INDUSTRIES, INC.
By: /S/ WILLIAM G. HENRY
--------------------
William G. Henry
Vice President, Finance and
Principal Financial Officer
Dated: January 15, 2001
26
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/S/ CHARLES P. JOHNSON Chairman of the Board January 15, 2001
------------------------- and Chief Executive Officer
CHARLES P. JOHNSON
/S/ WILLIAM G. HENRY Vice President, Finance January 15, 2001
------------------------ Chief Financial Officer
WILLIAM G. HENRY
/S/ HOWARD S. MODLIN Director and Secretary January 15, 2001
-----------------------
HOWARD S. MODLIN
/S/ FREDERICK R. CRONIN Director and January 15, 2001
-------------------------- Vice President, Corporate
FREDERICK R. CRONIN Technology
/S/ LEE M. PASCHALL Director January 15, 2001
--------------------------
LEE M. PASCHALL
/S/ JOHN L. SEGALL Director January 15, 2001
--------------------------
JOHN L. SEGALL
27
<PAGE>
General DataComm Industries, Inc.
and Subsidiaries
Index to Financial Statements and Schedules
Financial Statements Incorporated by Reference
The consolidated financial statements of General DataComm Industries, Inc. and
Subsidiaries and the Report of Independent Accountants related thereto are
incorporated herein by reference from pages 10 through 30 of the Company's
Annual Report to Stockholders for the year ended September 30, 2000. Such
information is also included in Exhibit 13 of this Form 10-K report (as filed
with the Securities and Exchange Commission). The Company's 2000 Annual Report
to Stockholders is not deemed to be "filed" as part of this Form 10-K report
except for those portions thereof specifically incorporated by reference.
Financial Statements and Schedule Included Page
Report of Independent Accountants F-2
Consolidated Financial Statement Schedule:
II. Valuation and qualifying accounts for the years
ended September 30, 2000, 1999, and 1998. F-3
Financial Statements and Schedules Omitted
Financial statements and schedules other than those incorporated by reference
above or included herein are omitted because they are not required or because
the required information is presented elsewhere in the financial statements or
notes thereto.
F-I
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors of General DataComm Industries, Inc.
Our report on the consolidated financial statements of General DataComm
Industries, Inc. and its subsidiaries, which includes an explanatory paragrah
related to the Company's ability to continue as a going concern, has been
incorporated by reference in this Form 10-K from page 30 of the fiscal 2000
Annual Report to Shareholders of General DataComm Industries, Inc. In connection
with our audits of such financial statements, we have also audited the related
financial statement schedule listed in the index on page F-1 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/S/ PricewaterhouseCoopers LLP
Stamford, Connecticut
November 9, 2000, except for Notes 1, 8 and 17,
as to which the date is January 9, 2001
F-2
<PAGE>
Schedule II - Valuation and Qualifying
Accounts For the Years Ended September 30,
2000, 1999 and 1998
(In Thousands)
Additions
Balance at Charged to Balance
Beginning Costs and at End
of Period Expenses Deductions of Period
--------- ---------- ---------- --------
(b)
2000
Allowance for doubtful
receivables (a) $1,375 $1,910 $1,248 $2,037
====== ====== ====== ======
1999
Allowance for doubtful
receivables (a) $1,442 $183 $25 $1,375
====== ==== ====== ======
1998
Allowance for doubtful
receivables (a) $1,703 $22 $283 $1,442
====== ==== ====== ======
----------------
(a) Deducted from asset accounts.
(b) Uncollectible accounts written off, net of recoveries.
F-3
