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As filed with the Securities and Exchange Commission on April 8, 1997
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
MICRODYNE CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 52-0856493
(State or other jurisdiction (I.R.S Employer
of incorporation or organization) Identification No.)
3601 Eisenhower Avenue
Alexandria, Virginia 22304
(703) 739-0500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
-------------------------
Neal H. Sanders
Senior Vice President and Secretary
Microdyne Corporation
3601 Eisenhower Avenue
Alexandria, Virginia 22304
(703) 739-0500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------
Copies to:
Curtis M. Coward, Esquire
McGuire, Woods, Battle & Boothe L.L.P.
8280 Greensboro Drive
McLean, Virginia 22102-3892
(703) 712-5000
-------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Proposed maximum
Title of each class of Amount to be offering price per Proposed maximum Amount of
securities to be registered registered(1) share(1) aggregate offering registration fee
price
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, $0.10 par value 100,000 $4.375 $437,500 $132.58
================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the Registration fee
pursuant to Rule 457(c) and based on the average high and low prices of
the common stock as reported on April 4, 1997 on the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation System.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
MICRODYNE CORPORATION
100,000 Shares
Common Stock
---------------
This Prospectus relates to the offer and sale of 100,000 shares of
Microdyne Corporation, a Maryland corporation (the "Company"), par value $0.10
per share (the "Common Stock") by Galerie Nissl of Furstentum, Liechtenstein
(the "Selling Stockholder") which recently acquired such shares from Philip T.
Cunningham, the largest stockholder of the Company, in consideration for the
sale of certain artwork (the "Transaction"). The 100,000 shares of Common
Stock to which this prospectus relates may be sold by the Selling Stockholder
at any time.
The Selling Stockholder directly, through agents designated from time to
time or through brokers, dealers or underwriters also to be designated, may
sell the Common Stock from time to time on terms to be determined at the time
of sale. To the extent required, the specific Common Stock to be sold, the
purchase price, the public offering price, the names of any such agent, dealer
or underwriter, and any applicable commission or discount with respect to a
particular offer will be set forth in an accompanying Prospectus Supplement.
See "Plan of Distribution." The Common Stock may be sold from time to time by
the Selling Stockholder either directly in private transactions, or through one
or more brokers or dealers on the NASDAQ/NMS at such prices and upon such terms
as may be obtainable.
Upon any sale of the Common Stock offered hereby, the Selling
Stockholder and participating agents, brokers or dealers may be deemed to be
underwriters as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act") with respect to such shares of Common Stock, and
commission or discounts or any profit realized on the resale of such securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. The Company, however, understands that the Selling
Stockholder does not admit that it is an underwriter within the meaning of the
Securities Act.
The Common Stock is listed for trading on the National Market System of
the National Association of Securities Dealers Automated Quotation System (the
"NASDAQ/NMS") under the symbol "MCDY." The last reported sale price of the
Common Stock as reported on April 8, 1997, was $4.25 per share.
The Company will not receive any of the proceeds from the sale of the
securities offered hereby. No underwriter is being utilized by the Company in
connection with this offering. All expenses incurred in connection with this
offering are being borne by the Company.
---------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is ________________
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 ("Exchange Act"), and, in accordance therewith,
files periodic reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports and other information concerning the
Company may be inspected and copied at the public reference facilities of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, DC
20549. Copies of such material also can be obtained by mail from the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, NW, Washington, DC 20549, at prescribed rates. The Company's Common
Stock is listed on the NASDAQ National Market. Reports and other information
concerning the Company can be inspected at the offices of the NASDAQ Stock
Market, 1735 K Street, NW, Washington, DC 20006-1506. The Commission also
maintains a world wide web site that contains reports, proxy and information
statements and other information regarding the Company. The world wide web
site address is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement
(which term shall include all amendments, exhibits and schedules thereto) on
Form S-3 under the Securities Act of 1933, as amended, with respect to the
Common Stock offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved and each such statement shall be deemed qualified in its entirety by
such reference. The Registration Statement may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 or obtained from the Commission at the same
address at prescribed rates.
INCORPORATION BY REFERENCE
The following documents of the Company, which have been filed with the
Commission, are hereby incorporated by reference in this Prospectus and made a
part hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended September 29, 1996;
(b) the Company's Quarterly Report on Form 10-Q for the quarter
ended December 29, 1996;
(c) the Company's Current Report on Form 8-K filed March 27, 1997;
(d) all other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by
the Annual Report referred to in (a) above; and
(e) the response to Item 1 in the Form 8-A Registration Statement
which the Company filed with the Commission in 1970 pursuant to Section 12(b)
of the Exchange Act (File No. 0-4384); and the information set forth under
"Description of Microdyne's Securities" in the Company's Registration Statement
on Form S-4 filed on May 31, 1991, under the Securities Act of 1933.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the date of this Prospectus and
prior to the termination of the offering of Common Stock to be made hereunder,
shall be deemed to be incorporated herein by reference and to be part hereof
from the date of filing of such documents. Any statement contained herein or
in a document incorporated herein by reference shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in any subsequently filed document incorporated herein by reference
which statement is
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also incorporated herein by reference is inconsistent with such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon oral or written request, a copy of any or all of
the foregoing documents incorporated herein by reference other than exhibits to
such documents (unless the exhibits are specifically incorporated by reference
into such documents). Requests should be directed to Neal H. Sanders,
Microdyne Corporation, 3601 Eisenhower Avenue, Alexandria, Virginia 22304,
telephone number (703) 739-0500.
No person has been authorized in connection with this offering to give
any information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company, the Selling Stockholder, or any
other person. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, any securities other than those to which
it relates, nor does it constitute an offer to sell, or a solicitation of an
offer to purchase by any person in any jurisdiction in which it is unlawful for
such person to make such an offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall under any circumstances
create any implication that the information contained herein is correct as of
any time subsequent to the date hereof.
THE COMPANY
Microdyne Corporation ("Microdyne" or "The Company") is engaged in three
businesses within its industry segment of data communications products and
services:
- - Through its Networking Products Division ("NPD"), the Company designs,
manufactures, markets and supports a broad line of data communications
hardware products that facilitate inter-computer communications via
local area networks (LANs).
- - Through its Aerospace Telemetry Division, Microdyne designs,
manufactures, and markets aerospace telemetry receivers, combiners, and
signal simulators for use in data gathering and analysis.
- - Through its Microdyne Support Services Division, Microdyne provides
contract-based, outsourced and value-added technical services.
NETWORKING PRODUCTS DIVISION
Networks have become an essential element of organizational
productivity. Initially, local area networks ("LANs') performed simple file
and print sharing tasks among a group of personal computer ("PC") users. As a
result of faster processing capabilities of PCS, inexpensive, more powerful
mass storage file and application servers, generally falling hardware prices
and faster network speeds, LANs are now used to also deliver critical
applications among network users. These new applications include fax
origination and delivery, e-mail access, document imaging, storage and
manipulation, desktop video conferencing, real-time workgroup use of common
images and other CPU-intensive networking activities. As user requirements for
the network have increased -- including the need for greater throughput speeds
and bandwidth -- new bus architectures, network topologies and transmission
media have been developed. The resulting upgrade and sale of new PCS, adapter
cards and ancillary networking hardware to the installed base have further
stimulated market growth.
The Company believes that as LANs have evolved, many segments of local
area networking have become non-proprietary, price sensitivity has increased
and buyers have come to favor multi-product vendors. In addition, buyers have
become more cautious about embracing new technology if adopting it renders a
large part of an existing networking investment obsolete. As a result, the
Company believes that an ability to differentiate products through enhancements
and added features, the timing of product introductions, effective
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distribution and marketing, efficient manufacturing and a low-cost
infrastructure are critical elements for success.
The Company has established itself as a leading supplier of LAN adapter
cards which provide the essential connection between computers (including
personal computers, file servers, minicomputers and mainframe computers) and
the network. The Company's products support all established computer bus
structures, wiring systems and network topologies, including Ethernet, Fast
Ethernet and Token Ring. The Company believes that its products provide a
combination of reliable, high performance, fully featured solutions at
attractive prices.
The networking products market is very competitive. The Company
believes its ability to compete successfully depends on a number of factors,
including: price; product features; product quality; performance and
reliability; name recognition and reputation; international certification;
retention of experienced sales, marketing and service personnel; development of
new products and enhancements; and adherence to rapidly changing industry
standards.
Microdyne competes with a number of vendors including 3Com Corporation,
Standard Microsystems Corporation and Intel Corporation. Each has
significantly greater financial, marketing, technical and other resources as
well as the capacity to obtain components at lower cost either by purchasing
large quantities of such components or by fabricating such components in-house.
These competitors have the financial resources to lower prices in order to
increase market share, and may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, devote greater
resources to the development, promotion and sale of their products or control
the timing of, or respond more effectively to, new product introductions.
FISCAL 1996 EVENTS AT NETWORKING PRODUCTS DIVISION
In fiscal 1996, the Networking Products Division ("NPD") found itself
faced with an excess of distribution channel inventory resulting from an
over-estimation of end-user demand for Microdyne's networking products during
1995. In addition, changes in distribution policies by Novell, Inc.
("Novell"), with whom NPD had a major marketing and distribution relationship,
had a significant adverse effect on NPD's operations.
In January 1996, the Company announced a program to lower the amount of
NPD inventory held by distributors in order to bring such inventories in line
with point of sale (POS) data available at that time. That program continued
through the first quarter of fiscal 1997. Also, sales of NPD hardware bundled
with Novell software ("Bundled Products") were significantly lower due to the
continued impact from changes in Novell's distribution policies and practices.
These changes included a decision by Novell to reduce the amount of its
inventory in its distribution channel by de-emphasizing sales of its products
as traditional, stand-alone software and by lowering discounts on Novell
software purchases. The collective result of the Company's program and
Novell's changes was a significant decrease in NPD sales.
In reaction to these decreased sales levels, the Company moved
aggressively to cut corporate and operating expenses through a combination of
personnel downsizing and expense constraints.
RECENT EVENTS AFFECTING THE NETWORKING PRODUCTS DIVISION
NPD has a number of product lines that sell well and customers that
generate continuing orders. For example, NPD is well positioned in government
business, and in the past year has developed a healthy OEM activity. NPD's
traditional products, such as its minicomputer connectivity product line, have
little competition and generate excellent margins. The Company believes the
long-term prospects for acceptable profitability in these product lines are
good.
However, in the mainstream adapter card market, NPD competes against
companies that have substantially larger marketing and other resources.
Moreover, reported POS data from the first quarter of fiscal
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1997 provided clear indication that total sales to end-user customers declined
significantly in that quarter; concurrently, data reported by other companies,
including the industry's largest adapter card manufacturer, indicated a general
softening in the market for such products in December.
In February, 1997, the two largest adapter card manufacturers cut prices
of Fast Ethernet adapter cards by as much as 40%. Also in February, Novell
announced weaker than expected sales, indicating further loss of market share
for network operating systems. Accordingly, the Company determined that the
program previously undertaken to match distribution levels with sales of
networking products would not be adequate to produce consistent profitability
in the NPD in the future and that substantial additional steps would be
necessary.
On March 17, 1997, the Company announced that because of declining sales
out of distribution, dramatically falling prices, deteriorating fundamentals in
the adapter card industry, and a declining presence for Novell, NPD could not
go forward on a business-as-usual basis. The Company disclosed a strategy
designed to preserve its presence in networking while limiting its downside
risk for the future. The strategy included these elements:
- - The Company will restructure NPD, writing down goodwill and inventory
previously valued at $22 million.
- - NPD will have a "shipping holiday" in the quarter ending March 31, 1997
to draw inventories down to a target level of 30 days, as a result of
which NPD revenues are expected to fall below $1 million for the
quarter.
- - As a result, Microdyne expects to report an operating loss of
approximately 40 cents per share on revenues of approximately $12
million for the company's quarter ending March 30, 1997; and a net loss,
inclusive of an estimated one-time, $1.60 per share restructuring
charge, of approximately $2.00 per share, in that quarter.
- - In the wake of the restructuring, the Company expects NPD to be
profitable.
The Company believes there is still opportunity and profit in the
Networking Products business. The Company believes the new NPD structure
provides the best means to capitalize on that opportunity.
AEROSPACE TELEMETRY DIVISION
Telemetry is the technology of measuring various equipment performance
parameters at a distance, and is required when the object under test is moving
too quickly or is at too great a distance to use wires. Information may consist
of readings from hundreds of sensors recording such things as heat, vibration,
stress and operational performance. Each sensor will produce its own data
stream which must be transmitted and captured.
In telemetry, data is gathered, multiplexed, and transmitted at
microwave frequencies, usually in a rapid burst form, toward a ground station.
There, a highly selective radio receiver gathers the information. In other
applications such as weather satellites or space vehicles, the information will
consist of data and video transmissions. The U.S. Government operates several
hundred ground stations, each of which may have racks of telemetry receivers.
Other governments also operate numerous sites.
Since 1968, Microdyne has manufactured telemetry receivers,
sophisticated radio receivers that can accurately tune in and hold the
telemetry signals from aircraft and space vehicles. During the past several
years, Microdyne has expanded and updated its telemetry product line, including
the addition of card-level products that perform essentially the same functions
as the Company's traditional rack-mounted devices. While there is and will
continue to be a substantial market for stand-alone rack-mounted products, two
trends are pushing telemetry receivers toward becoming board-level systems with
computer control. First, very powerful personal computers can process
telemetry data at rates previously unattainable. Second, telemetry
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receivers are increasingly being used in mobile environments such as aircraft
and on board ships where the receivers' light weight and compactness are an
advantage over larger rack mounted devices.
Telemetry systems are used in a variety of applications involving
missiles, aircraft, satellites and other space vehicles. The four major user
groups include Government testing ranges, aerospace companies engaged in the
development and manufacture of missiles and satellites, companies that design
and manufacture antennae used in tracking and receiving signals being sent from
missiles and satellites and meteorological systems used to gather weather data.
Microdyne markets its products directly to these user groups through a sales
and marketing department located at the Company's Ocala, Florida facility.
Because most telemetry products are purchased directly or indirectly with
Government funding, much of Microdyne's marketing effort is channeled into
establishing and maintaining name and product recognition for the Company with
Government agencies and aerospace and defense contractors. Microdyne also
undertakes projects combining the Company's telemetry components and subsystems
with those of other manufacturers for customers worldwide. To service these
customers, Microdyne maintains customer support operations in countries around
the world.
The aerospace telemetry market in which Microdyne competes is in the
midst of a growth cycle. This growth is due to the launching or planned
launch of a new generation of satellites, a desire for more data from vehicles
being tested via telemetry coupled with increased ability to process and
evaluate such data, and an expansion of educational and international
opportunities. Microdyne has developed and is marketing products to serve
these audiences.
The Company believes demand for its Aerospace Telemetry products is
strong and that such demand should continue. In December 1996, the Aerospace
Telemetry Division received an $11 million systems integration contract from
the Italian Ministry of Defense. The Company expects to recognize
approximately $8 million of this revenue during fiscal 1997.
MICRODYNE SUPPORT SERVICES DIVISION
There has been a growing trend in recent years toward the providing of
value-added services from third-party organizations - "outsourcing" - of both
technical and non-technical positions in industry. Outsourcing enables an
organization to cope with changes in growth, seasonality, and constraints on
the number of full-time workers counted as employees. Outsourcing allows an
organization to focus its internal and human resources on activities expected
to create the highest rate of return. Outsourcing may also lower an
organization's cost of doing business. Examples of outsourcing include
staffing and operating telephone technical support centers, warranty repair and
after-warranty service centers.
Since 1989, the Company has provided outsourced services to one large
electronics manufacturer. The activities performed on behalf of this customer
include telephone technical support, component and board repair, warranty
administration, and the operation of a large transit warehouse. Microdyne
provides its customer with trained personnel, including, as of September 29,
1996, a staff of 271 full-time and 160 part-time employees in the customer's
facilities near Los Angeles, California and in Indianapolis, Indiana. The
Company's revenue is based on the number of units repaired or refurbished, or,
alternately, the number of employees assigned to each aspect of the customer's
business, the number of hours worked by those employees and the rate at which
Microdyne is paid for such services.
The Company maintains a contract with its customer which was renewed for
a period of five years in March 1996.
Microdyne believes it has the skills and depth of management to expand
its Microdyne Support Services business. While the Company's primary focus is
maintaining and expanding its relationship with its current customer, Microdyne
believes it has the resources and qualifications to serve other customers, and
is currently exploring ways to capitalize on its expertise. There can be no
assurances that the Company will gain new customers through such efforts.
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The competition for Microdyne Support Services is both in-house sourcing
and other organizations that specialize in outsourcing. The Company believes
its relationship with its customer is excellent, as evidenced by the fact that
the level of work performed for the customer has expanded significantly during
the past two years. Also, for the past three years, the Company's customer has
been ranked number one in customer service in its product area by a respected
periodical.
The outsourcing industry, of which the Company's Microdyne Support
Services division is a part, is experiencing rapid growth. Such growth is a
result of organizations' desire to control costs, constrain headcount, and
generally focus human and financial resources on activities that will produce
higher rates of return. Microdyne believes its core competency in this field
can serve as a template for becoming a provider of high-quality outsourced
services to other customers, though it can provide no assurances of success.
Microdyne Support Services revenue continues to meet the Company's
revenue and profit contribution expectations. In January 1997, the Company
signed an additional contract to handle certain additional telephone technical
support calls.
The Company's corporate headquarters are located at 3601 Eisenhower
Avenue, Alexandria, Virginia 22304, telephone number (703) 739-0500.
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. In
evaluating an investment in the Common Stock, prospective investors should
consider carefully the following risk factors in addition to the other
information presented in the Prospectus.
Evolution of the Networking Products Market. The networking products
industry is one of continuing evolution. While the LAN adapter card segment is
comparatively technologically stable, network speeds are increasing. In 1996,
LAN adapter card manufacturers agreed on a standard for 100 megabit per second,
or "Fast" Ethernet. By mid-year, industry reports showed that Fast Ethernet
sales accounted for more than 15% of total LAN adapter card demand. Fast
Ethernet adapter card prices, which began the year at a 50% premium to the
traditional 10Mbps Ethernet cards, closed to within a 20% premium by year-end.
While Microdyne believes it has a defensible market share of the 10Mbps adapter
card market, there can be no assurances that the Company's Fast Ethernet
products will be adopted by users, or that Microdyne will be accorded a similar
share of the market.
Falling Prices for Networking Products. For Microdyne to effectively
compete in the LAN adapter card industry, it must match both the price and the
features of cards offered by its competitors. Microdyne believes that, at
present, its product prices and features compare favorably to those of the
industry leader. However, Microdyne believes the up to 40% price decreases
announced in February 1997 by the industry's largest adapter card companies do
not represent the full extent of expected price erosion in the industry.
Should prices decline faster than Microdyne's ability to reduce manufacturing
costs, the Company's gross margins will be adversely affected.
Available resources in Networking Products. Microdyne competes against
companies far larger than itself, which offer broader families of networking
products, have substantially greater marketing resources, and can call directly
on the resellers and end users. The Company believes the cumulative effect of
such competition has the potential to erode Microdyne's sales over time.
Reliance Upon Third Parties for Sales Data. Microdyne's Networking
Products revenue does not always accurately reflect underlying end-user demand
for its products. Determining the appropriate stocking level for products
requires that the Company rely on periodic Point of Sale reports from
distributors to assess end-user demand. The reliability and timeliness of POS
information from distributors is not uniform. The Company
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endeavors to pro-actively obtain the most reliable reports of sales out of
distribution but, even so, results may be unreliable for reasons beyond the
control of the Company. POS data can only reflect past demand for current
products; not future demand for new or existing products. Ultimately, the
Company must use its best judgement as to what represents adequate distributor
stocks.
Brand Name Recognition. In April 1996, Microdyne acquired the
perpetual, exclusive, non-royalty-bearing rights to market more than 30
products in Novell trade dress, for which Microdyne paid $6.8 million.
Microdyne believed the use of Novell trade dress (including the Novell name) on
certain of its networking products would benefit the Company and accord it a
certain level of continuing demand. Recent significant erosion in the
marketplace's perception of Novell's product quality and longevity directly and
adversely affects the value of the Novell name on Microdyne's products. In
March 1997, the Company announced it would abandon the Novell name on its
products and would henceforth sell products under the Microdyne brand name.
There can be no assurance that customers will purchase Microdyne-brand
products.
Limited Backlog. Microdyne's has historically operated with limited
backlog because its products are shipped shortly after orders are received, and
frequently realizes a substantial portion of its net revenues in the last month
of the quarter. As a result, revenue in any quarterly period is substantially
dependent on orders booked and shipped in the last month of that period.
Delays in receipt of end-of-quarter orders in a given quarter may adversely
affect the Company's results of operations for that quarter, as the Company's
expense levels are based primarily on full-quarter revenue estimates and only a
small portion of the Company's operating expenses vary with its revenue.
Accordingly, the Company may be subject to significant and unanticipated
quarter-to-quarter fluctuations.
Aerospace Telemetry Competition. The market for defense electronics is
very competitive and marked by a shift toward fewer, but much larger vendors.
Microdyne believes that the relative maturity of the overall defense
electronics market could attract competition from vendors in related fields of
defense electronics that are seeking to expand total corporate sales by
leveraging relationships with existing customers to include additional product
lines in ancillary fields, including the manufacture and sale of telemetry
receivers and related products.
Reliance Upon a Single Customer at Microdyne Support Services.
Microdyne currently performs support services for only one customer.
Microdyne's customer may, upon notice, terminate its contract with the Company
and elect to perform these tasks either using its own employees or a
third-party support vendor.
Earnings Visibility. Any shortfall in revenue or earnings from the
levels expected by securities analysts could have an immediate and significant
effect on the trading price of the Company's common stock in any given period.
Moreover, in view of historical selling patterns, the Company may not learn of
such shortfalls until late in the fiscal quarter, which could result in an even
more immediate and adverse effect on the trading price of the Company's stock.
Finally, the Company participates in an intensely competitive industry marked
by rapidly changing technology, which may result in significant volatility of
the Company's common stock price.
Limited Product Line. Microdyne's Networking Products product line is
focused on hardware products that facilitate local area networking. During the
past few years, several companies, including 3Com Corporation, Cisco Systems,
Inc., Bay Networks, Inc. and Cabletron Corporation have positioned themselves
as providers of complete solutions for the LAN, wide-area network, remote
access, and internetwork (the "enterprise-wide" network). These companies
market their product families as being optimized to work together, and
encourage customers to purchase a single brand of products, including local
area networking hardware. Because Microdyne products address only local and
remote network functions, an acceleration in the trend toward "enterprise-wide"
product purchases may have a material adverse effect on Microdyne.
Acquisition Risk. The Company's future success may depend in part on
its ability to acquire technology or products that expand its product lines or
that can be used in future product developments or enhancements. No assurance
can be given that past or future acquisitions will produce the anticipated
technological enhancements, products or results. In addition, there can be no
assurance that acquisition opportunities will be available at prices that are
acceptable to the Company.
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Lack of Proprietary Technology. The Company's ability to compete in
Networking Products is dependent in part upon its ability to differentiate its
products from those of its competitors. The Company does not possess any
meaningful combination of patent, copyright or trade secrets that would allow
Microdyne to distinguish its products as materially superior to competing
products. While the Company does not believe its competitors possess such
intellectual property rights, there can be no assurance that the Company's
competitors will not independently develop technologies that are substantially
superior to the ones used by Microdyne. The Company is also subject to the
risk of adverse claims and litigation alleging infringement of the proprietary
rights of others. From time to time, the Company has received claims of
infringement of other parties' proprietary rights. While the Company is not
aware that any of its products infringe any patents, there can be no assurance
that third parties will not assert infringement claims in the future with
respect to the Company's current or future products or that any pending or
future claims will not require the Company to enter into license arrangements
or result in protracted and costly litigation, regardless of the merits of such
claims. No assurance can be given that any necessary licenses will be
available or that, if available, such licenses can be obtained on commercially
reasonable terms. The failure to obtain such royalty or licensing agreements
on a timely basis, or the Company's involvement in patent or related
litigation, could have a material adverse effect on the Company.
Risks Associated with International Operations. The Company expects
that revenue outside the United States, will represent a significant portion
of its total revenue. In addition, the Company purchases components
manufactured in China, Malaysia, Singapore and Hong Kong. Sales to customers
outside the United States and reliance on foreign suppliers involve a number of
risks, including unexpected changes in regulatory requirements and tariffs,
possible difficulties in enforcing agreements and intellectual property rights,
longer payment cycles, exchange rate fluctuations, difficulties obtaining
export licenses, the imposition of withholding or other taxes, embargoes or
exchange controls or the adoption of other restrictions on foreign trade. One
or more of the foregoing factors could have a material adverse effect on the
Company.
Dependence on Personnel. Microdyne believes that its future success
will depend in large part upon its ability to attract and retain highly skilled
engineering, managerial, sales, marketing and operations personnel. Except
with regard to the Chief Executive Officer, who entered into an initial two
year employment agreement as of March 10, 1997, the Company does not have
employment contracts with its key personnel. Competition for such personnel is
intense, especially in the areas of engineering, sales and marketing. The loss
of key management or technical personnel would have a material adverse effect
on the Company.
Management of Growth. Microdyne has recently experienced rapid growth
followed by significant decline in its networking products operations which has
placed, and could continue to place, a significant strain on the Company's
management, operations and internal systems. The failure of management to
effectively manage future growth or significant changes in the level of
operations could have a material adverse effect on the Company.
Potential Volatility of Stock Price. The market price of the Company's
Common Stock has been, and could be, subject to wide fluctuations in response
to, among other things, quarterly fluctuations in operating results, adverse
circumstances affecting the introduction or market acceptance of new products
or enhancements offered by the Company, failure to meet published estimates of,
or changes in earnings estimates by, securities analysts, announcements of new
products or enhancements by competitors, sales of Common Stock by existing
holders, loss of key personnel, market conditions in the industry, shortages of
key components and general economic conditions. In addition, stock prices for
many technology companies, including the Company, have experienced significant
volatility for reasons unrelated to operating results. These fluctuations
could adversely affect the market price of the Company's Common Stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sales of the
Common Stock offered hereby.
9
<PAGE> 11
SELLING STOCKHOLDER
This Prospectus covers the offer and sale of 100,000 shares of the
Company's Common Stock recently acquired by the Selling Stockholder, Galerie
Nissl of Furstentum, Liechtenstein, pursuant to the Transaction. The Selling
Stockholder is not now and has never been affiliated with the Company. All of
these shares may be offered for the Selling Stockholder's account.
At the time of the Transaction, the Selling Stockholder owned none of
the Company's shares.
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time to purchasers directly by
the Selling Stockholder. Alternatively, the Selling Stockholder may from time
to time offer the Common Stock through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholder and/or the purchasers of the Common
Stock for whom they may act as agent. The Selling Stockholder and any
underwriters, dealers or agents that participate in the distribution of the
Common Stock may be deemed to be underwriters under the Securities Act, and any
profit on the sale of the Common Stock by them and any discounts, commissions
or concessions received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
At the time a particular offer of the Common Stock is made, to the
extent required, a Prospectus Supplement will be distributed that will set
forth the number of shares of Common Stock being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents,
any discounts, commissions and other items constituting compensation from the
Selling Stockholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers.
The Common Stock may be sold from time to time in one or more
transactions at a fixed offering price which may be changed at varying prices
determined at the time of sale or at negotiated prices.
LEGAL MATTERS
The legality of the Common Stock offered hereby is being passed upon for
the Company by McGuire, Woods, Battle & Boothe L.L.P., 8280 Greensboro Drive,
McLean, Virginia 22102-3892.
EXPERTS
The consolidated financial statements and schedules included in the
Company's Annual Report on Form 10-K for the year ended September 29, 1996 are
incorporated herein by reference in reliance on the report of Grant Thornton
L.L.P., independent accountants, given on the authority of said firm as experts
in auditing and accounting.
10
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the shares of Common Stock registered hereby,
all of which will be borne by the Company.
<TABLE>
<S> <C>
SEC Registration fee $ 133
Accounting fees and expenses 1,000
Legal fees and expenses 5,000
Other 367
----------
Total $ 6,500
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 2-418 of the Maryland General Corporation Law empowers a
corporation to indemnify its directors and officers or former directors or
officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers. Such law provides further
that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under a
corporation's certificate of incorporation, bylaws, any agreement or otherwise.
Article NINTH of the Company's Articles of Amendment and Restatement
states that it is intended to limit the liability of directors and officers to
the fullest extent permissible by Maryland law, as amended from time to time.
Article VIII of the Company's Bylaws provides for indemnification of
directors and officers.
The Company has entered into Indemnification Agreements with certain
past directors. Each Agreement generally requires the Company to indemnify the
director to the full extent authorized or permitted under Maryland law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
5.1 Opinion of McGuire, Woods, Battle & Boothe
L.L.P. as to legality of securities being
registered.
23.1 Consent of McGuire, Woods, Battle & Boothe
L.L.P. is contained within the opinion of
counsel attached as Exhibit 5.1.
23.2 Consent of Grant Thornton L.L.P.
1
<PAGE> 13
24 Power of attorney.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or 15(d) of the Securities Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement, shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
2
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Alexandria, Commonwealth of Virginia, on this
8th day of April 1997.
MICRODYNE CORPORATION
By: /s/ MICHAEL E. JALBERT
-------------------------
Michael E. Jalbert
President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Philip T. Cunningham and Christopher M.
Maginniss, or any one or more of them, his attorneys-in-fact and agents, each
with full power of substitution and resubstitution for him in any and all
capacities, to sign any and all amendments or post-effective amendments to this
Registration Statement and to file the same with exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission
granting unto each of such attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary in connection with such matters and hereby ratifying and confirming
all that each of such attorneys-in-fact and agents or his substitute or
substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/S/ PHILIP T. CUNNINGHAM Chairman April 8, 1997
- ----------------------------------------
Philip T. Cunningham
/s/ MICHAEL E. JALBERT President and Chief Executive April 8, 1997
- ---------------------------------------- Officer
Michael E. Jalbert
/s/ CHRISTOPHER M. MAGINNISS Director April 8, 1997
- ----------------------------------------
Christopher M. Maginniss
/s/ CHRISTIAN J. SPITZ Senior Vice President and Chief April 8, 1997
- ---------------------------------------- Financial Officer (Principal
Christian J. Spitz Financial and Accounting Officer)
Director April 8, 1997
- ----------------------------------------
Curtis M. Coward
</TABLE>
3
<PAGE> 15
<TABLE>
<S> <C> <C>
/s/ GREGORY W. FAZAKERLEY Director April 8, 1997
- ----------------------------------------
Gregory W. Fazakerley
Director April 8, 1997
- ----------------------------------------
H. Brian Thompson
</TABLE>
4
<PAGE> 16
Index to Exhibits
Exhibit
- -------
5.1 Opinion of McGuire, Woods, Battle & Boothe L.L.P. as to legality of
securities being registered.
23.1 Consent of McGuire, Woods, Battle & Boothe L.L.P. is contained within
the opinion of counsel attached as Exhibit 5.1.
23.2 Consent of Grant Thornton L.L.P.
<PAGE> 1
Exhibit 5.1
McGuire Woods
Battle & Boothe LLP
The Army and Navy Club Building
1627 Eye Street, N.W.
Washington, D.C. 20006-4007
Telephone/TTD (202) 857-1700 Fax (202) 857-1737
April 8, 1997
Microdyne Corporation
3601 Eisenhower Avenue
Alexandria, Virginia 22304
Re: Microdyne Corporation
Form S-3 Registration Statement
Gentlemen:
We have examined the Registration Statement on Form S-3 (the
"Registration Statement") to be filed by Microdyne Corporation, a Maryland
corporation (the "Company"), with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, regarding 100,000 shares of the
Company's common stock, $0.10 par value per share (the "Shares"). The Shares
are being registered with the Securities and Exchange Commission on Form S-3
for the benefit of Galerie Nissl as selling stockholder with respect to
previously issued and outstanding shares of the Company's common stock to be
received on or shortly after the date hereof by Galerie Nissl pursuant to its
private transaction with Philip T. Cunningham.
Based upon our review of the Company's Articles of Incorporation and
Bylaws and such other documents and records as we have deemed necessary, it is
our opinion that the Shares are legally issued, fully paid and nonassessable
shares of common stock of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ MCGUIRE WOODS BATTLE & BOOTHE LLP
<PAGE> 1
Exhibit 23.2
Consent of Independent Accountants
We have issued our reports dated October 30, 1996, accompanying the
consolidated financial statements of Microdyne Corporation appearing in the
1996 Annual Report of the Company to its shareholders and accompanying the
schedules included in the Annual Report on Form 10-K for the year ended
September 29, 1996, which are incorporated by reference in this Registration
Statement. We consent to the incorporation by reference in the Registration
Statement of the aforementioned reports and to the use of our name as it
appears under the caption "Experts."
/s/ Grant Thornton, LLP
Vienna, Virginia
April 7, 1997
