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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January
31, 2000 Commission File No. 0-22724
CABLE DESIGN TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3601505
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Foster Plaza 7
661 Andersen Drive
Pittsburgh, PA 15220
(Address of principal executive offices)
(412) 937-2300
Registrant's telephone number, including area code
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at 3/8/00
----- ---------------------
Common Stock, $.01 Par Value 28,494,091
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CABLE DESIGN TECHNOLOGIES CORPORATION
-------------------------------------
TABLE OF CONTENTS
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<TABLE>
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Page
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements................................................................. 3
Review Report of Independent Public Accountants for
the Three Months and Six Months Ended January 31, 2000 and 1999...................... 4
Condensed Consolidated Statements of
Income - Unaudited for the Three Months and Six Months Ended
January 31, 2000 and 1999............................................................ 5
Condensed Consolidated Balance Sheets
as of January 31, 2000 (Unaudited) and July 31, 1999................................. 6
Condensed Consolidated Statements of
Cash Flows - Unaudited for the Six Months
Ended January 31, 2000 and 1999...................................................... 7
Notes to Condensed Consolidated
Financial Statements -Unaudited...................................................... 8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................. 11
PART II OTHER INFORMATION
Item 1 Legal Proceedings.................................................................... 16
Item 2 Changes in Securities................................................................ 16
Item 3 Defaults upon Senior Securities...................................................... 16
Item 4 Submission of Matters to a Vote of Security Holders.................................. 16
Item 5 Other Information.................................................................... 16
Item 6 Exhibits and Reports on Form 8-K..................................................... 16
Signatures ..................................................................................... 18
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of Cable Design Technologies Corporation's (the "Company")
management, the unaudited condensed consolidated financial statements included
in this filing on Form 10-Q reflect all adjustments which are considered
necessary for a fair presentation of financial information for the periods
presented.
REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has made a review, based upon procedures adopted by the
American Institute of Certified Public Accountants, of the unaudited condensed
consolidated financial statements as of and for the three month and six month
periods ended January 31, 2000 and 1999, contained in this report. As stated on
page 4, Arthur Andersen LLP did not audit and accordingly does not express an
opinion on the unaudited consolidated financial statements; however as a result
of such review, they are not aware of any material modifications that should be
made to the financial statements referred to above for them to be in conformity
with generally accepted accounting principles.
3
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Report of Independent Public Accountants
To the Board of Directors and Stockholders of Cable Design Technologies
Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of Cable
Design Technologies Corporation (a Delaware corporation) and Subsidiaries as of
January 31, 2000, and the related condensed consolidated statements of income
for the three month and six month periods ended January 31, 2000 and 1999, and
the condensed consolidated statements of cash flows for the six month periods
ended January 31, 2000 and 1999. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Cable Design
Technologies Corporation and Subsidiaries as of July 31, 1999, and, in our
report dated September 20, 1999, we expressed an unqualified opinion on that
statement. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of July 31, 1999, is fairly stated, in
all material respects, in relation to the balance sheet from which it has been
derived.
Pittsburgh, Pennsylvania, /s/Arthur Andersen LLP
February 23, 2000
4
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CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
-------------------------------------------------------
(In thousands, except share and per share data)
-----------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
--------------------------- ----------------------------
2000 1999 2000 1999
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 178,179 $ 160,896 $ 365,801 $ 334,520
Cost of sales 127,714 114,030 259,050 233,913
----------- ----------- ------------ -----------
Gross profit 50,465 46,866 106,751 100,607
Selling, general and administrative expenses 28,577 27,011 58,538 55,215
Research and development expenses 1,167 1,430 2,342 2,897
Nonrecurring charge - 6,307 - 6,307
----------- ----------- ------------ -----------
Income from operations 20,721 12,118 45,871 36,188
Interest expense, net 2,985 3,196 5,970 6,418
Other expense 507 351 1,371 603
----------- ----------- ------------ -----------
Income before income taxes 17,229 8,571 38,530 29,167
Income tax provision 6,806 3,765 15,123 11,997
----------- ----------- ------------ -----------
Net income $ 10,423 $ 4,806 $ 23,407 $ 17,170
=========== =========== ============ ===========
Basic earnings per common share $ 0.37 $ 0.17 $ 0.83 $ 0.58
=========== =========== ============ ===========
Diluted earnings per common share $ 0.36 $ 0.16 $ 0.81 $ 0.58
=========== =========== ============ ===========
Weighted average common shares 28,251,560 28,833,632 28,223,859 29,405,214
=========== =========== ============ ===========
Weighted average common and common equivalent shares 28,995,791 29,337,393 28,940,697 29,802,247
=========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
5
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CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(In thousands, except share and per share data)
----------------------------------------------
<TABLE>
<CAPTION>
As of As of
January 31, July 31,
2000 1999
--------------- ----------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 14,482 $ 11,424
Trade accounts receivable, net of allowance for uncollectible accounts of $4,672
and $4,926, respectively 120,686 130,936
Inventories 155,109 141,762
Other current assets 15,311 21,863
--------------- ----------------
Total current assets 305,588 305,985
Property, plant and equipment, net 202,451 201,586
Goodwill, net 72,413 76,584
Other assets 9,799 10,945
--------------- ----------------
Total assets $ 590,251 $ 595,100
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Current liabilities $ 97,803 $ 142,221
Long-term debt, excluding current maturities 185,741 171,727
Other non-current liabilities 30,294 29,050
--------------- ----------------
Total liabilities 313,838 342,998
--------------- ----------------
Stockholders' Equity:
Preferred stock, par value $.01 per share -
authorized 1,000,000 shares, no shares issued --- ---
Common stock, par value $.01 per share -
authorized 100,000,000 shares, 30,883,968
and 30,778,928 shares issued, respectively 309 308
Paid in capital 180,536 178,979
Common stock issuable, 21,647 and 22,679 shares, respectively 363 253
Retained earnings 151,653 128,246
Treasury stock, at cost, 2,623,452 shares (49,262) (49,262)
Accumulated other comprehensive deficit (7,186) (6,422)
--------------- ----------------
Total stockholders' equity 276,413 252,102
--------------- ----------------
Total liabilities and stockholders' equity $ 590,251 $ 595,100
=============== ================
</TABLE>
The accompanying notes are an integral part of these statements.
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CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
-----------------------------------------------------------
(In thousands)
--------------
<TABLE>
<CAPTION> Six Months Ended
January 31,
-----------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 26,018 $ $22,701
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (10,167) (15,604)
Acquisition of businesses, including transaction costs,
net of cash acquired --- (43,646)
-------------- --------------
Net cash used by investing activities (10,167) (59,250)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in revolving note borrowings (9,146) 65,633
Funds provided by long-term debt 133 11,237
Funds used to reduce long-term debt (5,174) (5,153)
Common stock issued or issuable 779 ---
Net proceeds from exercise of stock options and related tax benefits 894 6,416
Purchase of treasury stock --- (45,006)
-------------- --------------
Net cash (used) provided by financing activities (12,514) 33,127
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (279) 147
-------------- --------------
Net increase (decrease) in cash 3,058 (3,275)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,424 11,143
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,482 $ 7,868
============== ==============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net $ 5,213 $ 5,768
============== ==============
Income taxes $ 16,316 $ 8,954
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
7
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CABLE DESIGN TECHNOLOGIES CORPORATION AND SUBSIDIARIES
------------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
----------------------------------------------------------------
1. BASIS OF PRESENTATION
---------------------
The condensed consolidated financial statements presented herein are unaudited.
Certain information and footnote disclosures normally prepared in accordance
with generally accepted accounting principles have been either condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Although the registrant believes that all adjustments necessary for
a fair presentation have been made, interim period results are not necessarily
indicative of the results of operations for a full year. As such, these
financial statements should be read in conjunction with the financial statements
and notes thereto included in the registrant's most recent Form 10-K which was
filed for the fiscal year ended July 31, 1999.
2. INVENTORIES
-----------
Inventories of the Company consist of the following:
January 31, July 31,
2000 1999
-------------- ---------------
(In thousands)
Raw materials $ 40,679 $ 36,851
Work-in-process 37,884 32,297
Finished goods 76,546 72,614
-------------- ---------------
$ 155,109 $ 141,762
============== ===============
3. EARNINGS PER SHARE
------------------
Basic earnings per common share are computed based on the weighted average
common shares outstanding. Diluted earnings per common share are computed based
on the weighted average common shares outstanding plus additional shares assumed
to be outstanding to reflect the dilutive effect of common stock equivalents.
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
----------------------------------- ------------------------------------
2000 1999 2000 1999
--------------- -------------- --------------- ---------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Net income $ 10,423 $ 4,806 $ 23,407 $ 17,170
--------------- -------------- --------------- ---------------
Basic earnings per common share:
Weighted average common shares outstanding 28,251,560 28,833,632 28,223,859 29,405,214
Basic earnings per common share $ 0.37 $ 0.17 $ 0.83 $ 0.58
=============== ============== ============== ==============
Diluted earnings per common share:
Weighted average common shares outstanding 28,251,560 28,833,632 28,223,859 29,405,214
Shares issuable from assumed conversion of
dilutive stock options 744,231 503,761 716,838 397,033
--------------- -------------- --------------- ---------------
Weighted average common and common
equivalent shares 28,995,791 29,337,393 28,940,697 29,802,247
Diluted earnings per common share $ 0.36 $ 0.16 $ 0.81 $ 0.58
=============== ============== ============== ===============
</TABLE>
8
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Options to purchase 106,000 and 106,500 shares of common stock were outstanding
during the three month periods ended January 31, 2000 and 1999, respectively,
and options to purchase 106,000 and 899,850 shares of common stock were
outstanding during the six month periods ended January 31, 2000 and 1999,
respectively, but were not included in the computation of diluted earnings per
common share as the option's exercise price was greater than the average market
price of the common stock for the respective periods.
4. INDUSTRY SEGMENT INFORMATION
----------------------------
The Company's operations are organized into two business segments: the Network
Communication segment and the Specialty Electronic segment. Network
Communication encompasses connectivity products used within computer networks
and communication infrastructures for the electronic transmission of data,
voice, and multimedia. Products included in this segment are high performance
network cable, fiber optic cable and passive components, including connectors,
wiring racks and panels, and interconnecting hardware for end-to-end network
structured wiring systems, and communication cable products for local loop,
central office, wireless and other applications, including assembly of products
for the wireless marketplace. Effective with the first quarter of fiscal 2000,
the Company is reporting sales of computer interconnect and wireless
communication products in its Network Communication segment to more
appropriately reflect the markets to which these products are sold. Prior period
segment information has been restated to conform to the current year
presentation. The Specialty Electronic segment encompasses electronic data and
signal transmission cables for automation and process control applications as
well as specialized wire and cable products for niche markets, including
commercial aviation and automotive electronics.
The Company evaluates segment performance based on operating profit excluding
nonrecurring charges, after allocation of Corporate expenses.
The Company has no inter-segment revenues. Summarized financial information for
the Company's business segments is as follows:
<TABLE>
<CAPTION>
Network Specialty
Communication Electronic
Segment Segment Total
-------------------- -------------------- --------------------
Three Months Ended January 31, (In thousands)
<S> <C> <C> <C>
Sales:
2000 $120,288 $57,891 $178,179
1999 $105,558 $55,338 $160,896
Segment Operating Profit:
2000 $12,085 $8,636 $20,721
1999 $10,689 $7,736 $18,425
</TABLE>
<TABLE>
<CAPTION>
Network Specialty
Communication Electronic
Segment Segment Total
-------------------- -------------------- --------------------
Six Months Ended January 31, (In thousands)
<S> <C> <C> <C>
Sales:
2000 $246,302 $119,499 $365,801
1999 $216,334 $118,186 $334,520
Segment Operating Profit:
2000 $27,401 $18,470 $45,871
1999 $24,547 $17,948 $42,495
</TABLE>
9
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5. OTHER COMPREHENSIVE INCOME
--------------------------
Comprehensive income is defined as all changes in stockholders' equity during a
period except those resulting from investment by or distribution to
stockholders. The Company's comprehensive income differs from net income
primarily due to foreign currency translation adjustments. Total comprehensive
income was $8.3 million and $4.7 million for the three months and $22.6 million
and $18.1 million for the six months ended January 31, 2000 and 1999,
respectively.
6. SUBSEQUENT EVENTS
-----------------
On February 24, 2000, the Company purchased 85% of the outstanding stock of
Industria Tecnica Cavi ("ITC/CDT"), and entered into an agreement to purchase
the remaining 15% of the stock at a later date. ITC/CDT is an Italian
manufacturer of coaxial cable. The purchase of ITC/CDT was funded through
borrowings under the Company's primary credit facility.
10
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Cable Design Technologies is a leading manufacturer of technologically advanced
connectivity products for the Network Communication and Specialty Electronic
marketplaces. Network Communication encompasses connectivity products used
within computer networks and communication infrastructures for the electronic
transmission of data, voice and multimedia. Products included in this segment
are high bandwidth network cable, fiber optic cable and passive components,
including connectors, wiring racks and panels, and interconnecting hardware for
end-to-end network structured wiring systems, and communication cable products
for local loop, central office, wireless and other applications, including
assembly of products for the wireless marketplace. The Specialty Electronic
segment encompasses electronic data and signal transmission cables for
automation and process control applications as well as specialized wire and
cable products for niche markets, including commercial aviation and automotive
electronics.
This discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the Company's unaudited condensed
consolidated financial statements and the notes thereto.
Results of Operations
Overview
Sales for the three months ended January 31, 2000 ("second quarter 2000") were
$178.2 million, an increase of 11% compared to the three months ended January
31, 1999 ("second quarter 1999"). Sales for the Network Communication segment
increased 14% to $120.3 million, and represented 68% of total revenue. The
increase in sales for this segment was led by 59% growth in sales of enhanced
gigabit network cables (Category 5e and Category 6), 48% growth in sales of
wireless products and 38% growth in sales of central office telecommunication
and computer interconnect products. Sales for the Specialty Electronic segment
were $57.9 million, an increase of 5% compared to the second quarter 1999
primarily due to a 19% increase in sales of industrial control cable. The
operating margin, derived by dividing operating income by net sales, was 11.6%
for the second quarter 2000 versus 11.5% for the second quarter 1999, excluding
nonrecurring charges of $6.3 million ($4.2 million, net of tax) incurred in the
second quarter 1999. Net income for the second quarter 2000 increased $1.4
million, or 16%, to $10.4 million ($0.36 per diluted share) compared to net
income of $9.0 million ($0.31 per diluted share) for the second quarter 1999,
excluding nonrecurring charges.
Sales for the six months ended January 31, 2000 ("first half 2000") increased
$31.3 million, or 9%, to $365.8 million compared to $334.5 million for the six
months ended January 31, 1999 ("first half 1999"). Sales for the Network
Communication segment increased $30.0 million, or 14%, to $246.3 million for the
first half 2000, primarily as the result of growth in sales of enhanced gigabit
network cables, central office telecommunication and computer interconnect
products, fiber optic products, and wireless products. Specialty Electronic
segment sales increased 1% to $119.5 million for the first half 2000. Income
from operations increased $3.4 million, or 8%, to $45.9 million for the first
half 2000 compared to $42.5 million for the first half 1999, excluding
nonrecurring charges incurred in the second quarter 1999. Net income for the
first half 2000 increased 10% to $23.4 million ($0.81 per diluted share)
compared to net income of $21.4 million ($0.72 per diluted share) for the first
half 1999, excluding nonrecurring charges. Reported net income including
nonrecurring charges for the first half 1999 was $17.2 million ($0.58 per
diluted share).
Three Months Ended January 31, 2000 Compared to
Three Months Ended January 31, 1999
Sales for the second quarter 2000 increased $17.3 million, or 11%, to $178.2
million compared to $160.9 million for the second quarter 1999. Sales for the
Network Communication segment were $120.3 million for the second quarter 2000,
an increase of 14% compared to sales of $105.6 million for the second quarter
1999. The increase in sales for the Network Communication segment was primarily
due to an increase in sales of high performance Category 5e and 6 network
cables, central office telecommunication and computer interconnect products, and
wireless cable and assembly services. Increased sales of Category 5e and 6
network cables were driven by growth in demand for higher bandwidth within
premise network systems. The increase in demand for both central office and
computer interconnect cable products was driven by growth of competitive local
exchange carriers, internet service providers and application service providers
within the telecommunication industry. The growth in demand for cellular
communications resulted in increased sales of wireless cable and assembly
services to providers of wireless services and products. The increase in sales
from growth in these Network Communication product lines was partially offset
by a
11
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decline in sales of the lower performance rated Category 5 network cable as well
as approximately 6% lower average selling prices in the U.S. marketplace for
Category 5 and 5e network cables. Second quarter 2000 sales for the Specialty
Electronic segment increased 5% to $57.9 million compared to $55.3 million for
the second quarter 1999. The increase in sales for this segment was primarily
due to an increase in sales of industrial control cable, which was partially
offset by lower sales of specialty cable to the aviation marketplace. Sales
outside of North America were $41.7 million for the second quarter 2000, an
increase of 9% compared to sales of $38.1 million for the second quarter 1999.
This increase in international sales was primarily due to higher sales of
computer interconnect and central office cable products in Western Europe and
network products in the Pacific Rim.
Gross profit for the second quarter 2000 increased $3.6 million, or 8%, to $50.5
million compared to $46.9 million for the second quarter 1999, primarily due to
an increase in gross profit for the Network Communication segment as a result of
the increase in sales for this segment.
The gross margin for the second quarter 2000 was 28.3% compared to 29.1% for the
second quarter 1999. The decrease in the gross margin was the result of a lower
gross margin for the Network Communication segment. The gross margin for the
Specialty Electronic segment was unchanged from the second quarter 1999. The
lower Network Communication gross margin was primarily due to a decrease in the
gross margin for communication products which was partially offset by an
improved network products gross margin. The lower communication products margin
was primarily the result of a lower gross margin for outside plant communication
cable due to competitive pricing and a shift in mix resulting from an increase
in the percentage of outside plant communication cable sold in the U.S. versus
the Canadian marketplace. Factors contributing to the increase in the network
products gross margin were an improved margin for computer interconnect products
as a result of a better product mix and volume efficiencies and an improved
network cable mix due to increased sales of the relatively higher margin
Category 5e and 6 cables.
Selling, general and administrative expense ("SG&A") for the second quarter 2000
was $28.6 million compared to $27.0 million for the second quarter 1999. The
increase in SG&A was primarily due to higher volume related sales expenses. As a
percentage of sales, SG&A for the second quarter 2000 declined to 16.0% compared
to 16.8% for the second quarter 1999 due to a lower percentage growth in SG&A as
compared to the growth in sales. Second quarter 2000 research and development
expense decreased $0.2 million to $1.2 million compared to $1.4 million for the
second quarter 1999.
Last year, nonrecurring charges of $6.3 million ($4.2 million, net of tax) were
incurred during the second quarter 1999 in connection with the Company's
purchase of certain of it's common stock held by key employees, which resulted
in the Company obtaining a cash benefit of approximately $12.8 million realized
through the reduction of income taxes payable in fiscal 1999 and 2000. The
common stock was acquired by the employees upon the exercise of incentive stock
options granted primarily in 1988 and 1989 and expiring in 1998 and 1999. The
nonrecurring charges represented incentive payments which were made to partially
compensate the employees for the difference between the income tax rates for
ordinary income and long term capital gains.
Income from operations for the second quarter 2000 increased $2.3 million, or
13%, to $20.7 million compared to $18.4 million for the second quarter 1999,
excluding nonrecurring charges. The operating margin was 11.6% for the second
quarter 2000 compared to 11.5% for the second quarter 1999, excluding
nonrecurring charges.
Interest expense decreased $0.2 million to $3.0 million for the second quarter
2000 compared to $3.2 million for the second quarter 1999 and was primarily due
to the lower average balance of debt outstanding. The effective tax rate was
39.5% for the second quarter 2000 compared to 43.9% for the second quarter 1999.
The lower effective tax rate was primarily due to the fact that approximately
$0.9 million of the second quarter 1999 nonrecurring charge was non-deductible
for income tax purposes. Excluding the nonrecurring charge, the effective tax
rate for the second quarter 1999 was 39.5%.
Net income for the second quarter 2000 increased $1.4 million, or 16%, to $10.4
million ($0.36 per diluted share) compared to net income of $9.0 million ($0.31
per diluted share) for the second quarter 1999, excluding nonrecurring charges.
Reported net income after nonrecurring charges for the second quarter 1999 was
$4.8 million ($0.16 per diluted share).
Six Months Ended January 31, 2000 Compared to
Six Months Ended January 31, 1999
Sales for the first half 2000 increased $31.3 million, or 9%, to $365.8 million
compared to $334.5 million for the first half 1999. Network Communication
segment sales increased 14% to $246.3 million for the first half 2000. The
growth in sales for the Network Communication segment was primarily due to
increased sales of high performance Category 5e and 6 network cables, central
office telecommunication and computer interconnect products, wireless cable and
assembly services, and fiber optic
12
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products. Growth in demand for higher bandwidth premise network systems has
driven increased sales of Category 5e and 6 network cables, and growth of
competitive local exchange carriers, internet service providers and application
service providers within the telecommunication industry has driven an increase
in demand for central office and computer interconnect products. Sales of
wireless cable and assembly services to providers of wireless services and
products have increased as a result of strong demand for cellular
communications. The increase in sales from growth in these Network Communication
product lines was partially offset by a decline in sales of Category 5 network
cable and lower average selling prices for Category 5 and 5e network cables.
First half 2000 sales for the Specialty Electronic segment increased 1% to
$119.5 million compared to $118.2 million for the first half 1999. The increase
in sales for this segment was primarily due to an increase in sales of
automation and process control cables, which was partially offset by a decline
in sales to the aviation marketplace. Sales outside of North America were $82.7
million for the first half 2000, an increase of 4% compared to sales of $79.2
million for the first half 1999. This increase in international sales was
primarily due to higher sales of computer interconnect and central office cable
products in Western Europe and network products in the Pacific Rim.
Gross profit for the first half 2000 increased $6.2 million, or 6%, to $106.8
million compared to $100.6 million for the first half 1999, primarily due to an
increase in gross profit for the Network Communication segment as a result of
the increase in sales for this segment.
The gross margin for the first half 2000 was 29.2% compared to 30.1% for the
first half 1999. The decrease in the gross margin was the result of a lower
gross margin for the Network Communication segment, which was primarily due to a
decrease in the gross margin for communication products. The lower communication
products gross margin was primarily the result of a lower gross margin on
outside plant communication cable due to competitive pricing and a shift in mix
primarily due to an increase in the percentage of product sold in the U.S.
versus the Canadian marketplace. For network products, lower pricing for
Category 5 and 5e network cables was offset by an improved mix, primarily due to
increased sales of the relatively higher margin Category 5e and 6 cables. The
gross margin for Specialty Electronic segment was relatively unchanged from the
first half 1999.
SG&A for the first half 2000 increased $3.3 million to $58.5 million compared to
$55.2 million for the first half 1999. The increase in SG&A was primarily due to
higher volume related sales expenses. As a percentage of sales, SG&A for the
first half 2000 declined to 16.0% compared to 16.5% for the first half 1999, as
the percentage growth in sales exceeded the growth in SG&A. First half 2000
research and development expense decreased $0.6 million to $2.3 million compared
to $2.9 million for the first half 1999.
Income from operations for the first half 2000 increased $3.4 million, or 8%, to
$45.9 million compared to $42.5 million for the first half 1999, excluding
nonrecurring charges incurred in the second quarter 1999 as discussed above.
Excluding the nonrecurring charge, the operating margin was 12.5% for the first
half 2000 compared to 12.7% for the first half 1999.
Interest expense decreased $0.4 million to $6.0 million for the first half 2000
compared to $6.4 million for the first half 1999 and was due to both a lower
average balance of debt outstanding and a lower average interest rate. The
effective tax rate was 39.2% for the first half 2000 compared to 41.1% for the
first half 1999. The lower effective tax rate was primarily due to the fact that
approximately $0.9 million of the second quarter 1999 nonrecurring charge was
non-deductible for income tax purposes. Excluding the nonrecurring charge, the
effective tax rate for the first half 1999 was 39.8%. The remaining decrease in
the effective tax rate for the first half 2000 was primarily due to a lower
projected annual effective rate as well as changes in the income mix among
domestic and foreign statutory entities.
Net income for the first half 2000 increased $2.0 million, or 10%, to $23.4
million ($0.81 per diluted share) compared to net income of $21.4 million ($0.72
per diluted share) for the first half 1999, excluding nonrecurring charges.
Reported net income after nonrecurring charges for the first half 1999 was $17.2
million ($0.58 per diluted share).
Financial Condition
Liquidity and Capital Resources
- -------------------------------
The Company's primary credit agreement (the "Credit Agreement") consists of a
$121.3 million U.S. revolving facility and a CDN $115.0 million Canadian
revolving facility equivalent to approximately $79.5 million. The U.S. revolving
facility includes a $50.0 million Deutschmark sub-facility. The Company also
maintains a bank credit facility in the United Kingdom equivalent to
approximately $12.1 million (the "Foreign Facility"). As of January 31, 2000,
the Company had outstanding borrowings of $179.2 million and $8.1 million under
the Credit Agreement and Foreign Facility, respectively.
13
<PAGE>
The Company's 364-day, unsecured bank revolving credit agreement (the "364-day
Facility") was amended on December 13, 1999, at which time the Company repaid
the $18 million outstanding under the 364-day Facility through borrowings under
the Credit Agreement. Terms of the amended 364-day Facility include a reduction
of the maximum principal amount to $15 million and an extension of the
termination date to December 12, 2000. As of January 31, 2000, there were no
amounts outstanding under the 364-day Facility.
Based on an analysis of current expectations for its business, management
believes that the Company's cash flow from operations and funds available under
its credit agreements will provide it with sufficient liquidity to meet its
current liquidity needs.
During the first half 2000, operating working capital increased $9.9 million.
The change in operating working capital was primarily the result of an increase
in inventories of $11.9 million and a decrease in accounts payable and other
accrued liabilities of $7.7 million, which were partially offset by a decrease
in accounts receivable of $10.6 million. The change in operating working capital
excludes changes in cash and cash equivalents and current maturities of
long-term debt.
The Company generated $26.0 million of net cash from operating activities during
the first half 2000, after providing for the $9.9 million increase in operating
working capital. The net cash used by investing activities of $10.2 million was
for investments in capital projects, and the net cash used by financing
activities of $12.5 million included $14.2 million used to reduce outstanding
debt.
Fluctuation in Copper Price
The cost of copper in inventories (including finished goods) reflects purchases
over various periods of time ranging from one to several months for each of the
Company's operations. For communication cable products, profitability is
generally not significantly affected by volatility of copper prices as changes
in copper prices are generally passed along to customers, however, differences
in the timing of selling price adjustments do occur and may impact near term
results. For other products, although selling prices are not generally adjusted
to directly reflect changes in copper prices, the relief of copper costs from
inventory for those operations having longer inventory cycles may affect
profitability from one period to the next following periods of significant
movement in the cost of copper. The Company does not engage in activities to
hedge the underlying value of its copper inventory.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). This statement establishes accounting
and reporting standards for derivative instruments and requires recognition in
the balance sheet of all derivative instruments as either assets or liabilities,
measured at fair value. This statement has been amended by Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities-Deferral of the effective date of SFAS No. 133" ("SFAS
No. 137"). This statement is effective for the Company's fiscal year ending July
31, 2001. The Company does not believe the adoption of SFAS No. 133 will have a
material effect on the Company's results of operations, financial position or
cash flows.
Year 2000 Update
The Company completed all Year 2000 compliance remediation believed necessary
with respect to its internal information systems ("IT systems") and
non-information systems ("non-IT systems"), such as manufacturing equipment and
control devices, prior to January 1, 2000. The cost of remediation activities,
which included the replacement of certain IT systems to improve functionality
and provide additional system capabilities, totaled approximately $3.7 million.
Management of the Company believes that its Year 2000 plan and related
expenditures incurred have successfully eliminated potential problems associated
with the Year 2000 issue, as the Company has not experienced any significant IT
or non-IT systems interruptions as a result of the Year 2000 date change.
Additionally, the Company is not aware of any significant third parties on which
it relies that have experienced material Year 2000 related problems.
The Company does not anticipate any future disruptions related to Year 2000
issues, however it cannot guarantee that IT and non-IT systems will not undergo
disruptions or generate Year 2000 related errors in the future. Additionally, if
future third party disruptions occur there could be a material adverse effect on
the Company's business, results of operations or financial condition.
14
<PAGE>
Forward-Looking Statements -- Under the Private Securities Litigation Act of
1995
Certain statements in this quarterly report are forward-looking statements,
including, without limitation, statements regarding future financial results and
performance, and the Company's or management's beliefs, expectations or
opinions. These statements are subject to various risks and uncertainties, many
of which are outside the control of the Company, including the level of market
demand for the Company's products, competitive pressures, the ability to achieve
reductions in operating costs and to continue to integrate acquisitions, price
fluctuations of raw materials and the potential unavailability thereof, foreign
currency fluctuations, technological obsolescence, environmental matters and
other specific factors discussed in the Company's Annual Report on Form 10-K for
the year ended July 31, 1999, and other Securities and Exchange Commission
filings. The information contained herein represents management's best judgment
as of the date hereof based on information currently available; however, the
Company does not intend to update this information to reflect developments or
information obtained after the date hereof and disclaims any legal obligation to
the contrary.
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Cable Design Technologies Corporation annual meeting of stockholders
was held on December 7, 1999.
(b) Proxies were solicited by Cable Design Technologies Corporation and
there was no solicitation in opposition to the nominees as listed in
the proxy statement. All such nominees were elected pursuant to the
vote of the stockholders as follows:
VOTES
-----
For Withheld
--- --------
Bryan C. Cressey 24,710,778 870,829
Paul M. Olson 24,711,486 870,121
George C. Graeber 24,710,228 871,379
Michael F. O. Harris 24,711,128 870,479
Glenn Kalnasy 24,072,298 1,509,309
Richard C. Tuttle 25,089,143 492,464
The firm of Arthur Andersen LLP was re-elected to serve as auditors for
the fiscal year ending July 31, 2000, by a vote of:
For: 25,555,540
Against: 17,662
Abstain: 8,405
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
15.1 Letter of Arthur Andersen LLP regarding unaudited interim
financial statement information.
27.1 Financial data schedule.
16
<PAGE>
99.1 Modification to Revolving Line of Credit Letter Agreement and
Other Loan Documents, dated December 13, 1999, between CDT
and ABN AMRO Bank N.V..
(b) Reports on Form 8-K:
None.
17
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CABLE DESIGN TECHNOLOGIES CORPORATION
/s/ Paul M. Olson
-------------------------------------
March 15, 2000 Paul M. Olson
President and Chief Executive Officer
/s/ Kenneth O. Hale
-------------------------------------
March 15, 2000 Kenneth O. Hale
Vice President and Chief Financial Officer
18
<PAGE>
EXHIBIT 15.1
February 23, 2000
To the Stockholders and Board of Directors of
Cable Design Technologies Corporation:
We are aware that Cable Design Technologies Corporation has incorporated by
reference in its Registration Statements on Form S-3 (Registration No.
333-00554); Form S-8 (Registration No. 333-80229); Form S-8 (Registration No.
333-76351); Form S-8 (Registration No. 33-73272); Form S-8 (Registration No.
33-78418); Form S-8 (Registration No. 333-2450); Form S-8 (Registration No.
333-6743); and Form S-8 (Registration No. 333-17443) its Form 10-Q for the
quarter ended January 31, 2000, which includes our report dated February 23,
2000, covering the unaudited interim financial statement information contained
therein. Pursuant to Regulation C of the Securities Act of 1933 (the Act), that
report is not considered a part of the registration statements prepared or
certified by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
/s/ Arthur Andersen LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME AS OF
JANUARY 31, 2000 AND THE SIX MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> JUL-31-1999
<PERIOD-END> JAN-31-2000
<CASH> 14,482
<SECURITIES> 0
<RECEIVABLES> 125,358
<ALLOWANCES> 4,672
<INVENTORY> 155,109
<CURRENT-ASSETS> 305,588
<PP&E> 264,994
<DEPRECIATION> 62,543
<TOTAL-ASSETS> 590,251
<CURRENT-LIABILITIES> 97,803
<BONDS> 0
0
0
<COMMON> 309
<OTHER-SE> 276,104
<TOTAL-LIABILITY-AND-EQUITY> 590,251
<SALES> 365,801
<TOTAL-REVENUES> 365,801
<CGS> 259,050
<TOTAL-COSTS> 319,930
<OTHER-EXPENSES> 1,371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,970
<INCOME-PRETAX> 38,530
<INCOME-TAX> 15,123
<INCOME-CONTINUING> 23,407
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,407
<EPS-BASIC> 0.83
<EPS-DILUTED> 0.81
</TABLE>
<PAGE>
Exhibit 99.1
December 13, 1999
Cable Design Technologies Inc.
Foster Plaza 7
661 Andersen Dr.
Pittsburgh, Pennsylvania 15220
Re: Modification to Revolving Line of Credit Letter Agreement
and Other Loan Documents
Ladies and Gentlemen:
Reference is made to that revolving line of credit letter agreement, dated
as of December 14, 1998, between Cable Design Technologies Inc., a Washington
corporation (the "Borrower"), and ABN AMRO Bank N.V. ("ABN AMRO" or "Bank")
(such letter agreement is referred to herein as the "Loan Agreement").
Capitalized terms not otherwise defined herein shall have the respective
meanings ascribed to them by the Loan Agreement.
The purpose of this correspondence (this "Letter") is to modify the
Termination Date, the amount of the Facility, the interest rate, and certain
fees in each case referred to in the Loan Agreement or the Note, and make
additional changes thereto as set forth herein.
In consideration of the foregoing (and incorporating below the definitions
referred to or set forth above), Borrower and Bank each hereby agree as follows:
1. Modification of Loan Agreement and Note.
---------------------------------------
(a) Modification of Amount of the Facility.
--------------------------------------
(i) Section 1.a of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:
[1]a. The Facility. Subject to the terms and conditions of this
------------
Agreement, ABN AMRO hereby establishes a line of credit
facility in favor of the Borrower in the maximum principal
amount of FIFTEEN MILLION UNITED STATES DOLLARS
(US$15,000,000)(the "Facility").
--------
(ii) References in Section 1.b of the Loan Agreement to the amount of
US$35,000,000 are hereby deleted and replaced in each instance with the
amount of US$15,000,000.
<PAGE>
Cable Design Technologies Inc.
December 13, 1999
Page 2
(b) Modification of Termination Date. Subject to the terms hereof
--------------------------------
and of the Loan Agreement, the Facility, as modified by this Letter, is hereby
extended as of December 13, 1999, for 364 days. Accordingly and subject to the
same matters: (i) the reference in Section 1.b of the Loan Agreement to the date
of December 12, 1999, is hereby deleted and replaced with the date of December
10, 2000; and (ii) the "Termination Date" as such term is used in the Loan
----------------
Agreement shall hereby mean December 10, 2000.
(c) The Note. Borrower and Bank each hereby agree that (i) the
--------
reference in the Note to the "Termination Date" is a reference to the earlier of
such date as amended by Clause (b) directly above or as otherwise set forth in
the Agreement as amended hereby; (ii) references in the Note to the amount of
US$35,000,000 or THIRTY FIVE MILLION UNITED STATES DOLLARS are hereby
respectively replaced with the amount of US$15,000,000 or FIFTEEN MILLION UNITED
STATES DOLLARS; and (iii) the Pricing Grid set forth in the definition of
"Applicable Margin" and having additional relevance to the definition of
"Facility Fee Rate" is as of December 13, 1999, deleted in its entirety and
replaced with the following:
<TABLE>
<CAPTION>
PRICING GRID
(basis points per annum)
- --------------------------------------------------------------------------------------------------------------------
Leverage Ratio Facility Fee Applicable
Rate LIBOR Margin
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Greater than 2.75x & less than or equal to 30.0 220.0
3.5x
- --------------------------------------------------------------------------------------------------------------------
Greater than 0.75x & less than or equal to 30.0 170.0
2.75x
- --------------------------------------------------------------------------------------------------------------------
Less than or equal to 0.75x 30.0 120.0
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(d) Opinion of Counsel. The requirement of Section 5.b.iii of the Loan
------------------
Agreement is waived.
(e) Existing Credit Agreement. In the event that at any time the
-------------------------
Existing Credit Agreement is replaced or otherwise becomes ineffective (as
opposed to being amended, modified, or waived), then in such event the term
"Existing Credit Agreement" in the Agreement shall refer to the Existing Credit
Agreement that was in effect immediately prior to being replaced or becoming
otherwise ineffective; and, Borrower and Bank hereby agree, upon the occurrence
of such event, to endeavor to mutually agree upon the incorporation herein of
relevant provisions of any new or replacement credit agreement or to the direct
amendment of the Agreement by the addition of such terms as theretofore were
incorporated herein by reference.
2. Transaction Fee. Borrower agrees to pay Bank, as consideration for
---------------
Bank agreeing to the terms hereof, a nonrefundable fee in the amount of
US$44,000, payable at the time of Borrower's execution hereof.
3. Consent of Guarantors. Each of the Guarantors, jointly and severally,
---------------------
joins in this Letter to provide its consent to the amendments and modifications
made herein to the Loan Agreement and other Loan Documents, and each of the
Guarantors, jointly and severally, hereby
<PAGE>
Cable Design Technologies Inc.
December 13, 1999
Page 3
reaffirms its obligations to, and agreements with, Bank under each Guaranty
respectively given by each Guarantor and acknowledges and agrees that each such
Guaranty continues in full force and effect.
4. Representations and Warranties. Borrower hereby represents and
------------------------------
warrants to Bank as follows:
(a) On the date of Borrower's execution hereof, each of the
representations and warranties of Borrower contained or incorporated in this
Letter, the Loan Agreement, or any other Loan Documents are true and correct on
and as of the date hereof with the same force and effect as though made on this
date, except to the extent that any such representation or warranty expressly
relates solely to a previous date;
(b) On the date of Borrower's execution hereof, Borrower is in
compliance with all terms, conditions, provisions, and covenants contained or
incorporated in the Loan Agreement and the other Loan Documents;
(c) The execution, delivery, and performance hereof have been duly
authorized by all necessary corporate action, require no governmental approval,
and will neither contravene, conflict with, nor result in the breach of any law,
charter or articles or certificate of incorporation (or similar document),
bylaws (or similar document), or agreement governing or binding upon Borrower or
any Guarantor or any of its or their respective properties;
(d) All information furnished to Bank by Borrower or any Guarantor
since the date of the Loan Agreement is accurate, correct, and complete and
sufficient to provide Bank full and accurate knowledge of the subject matter
thereof;
(e) On the date of Borrower's execution hereof, there are no set-offs,
claims, defenses, counterclaims, causes of action, or deductions of any nature
against any obligations arising under the Loan Agreement or any other Loan
Document.
5. Amendment of Loan Agreement. The Loan Agreement is hereby amended in
---------------------------
accordance with the terms hereof, and this Letter and the Loan Agreement shall
hereafter be one agreement and any reference to the Loan Agreement in any
document, instrument, or agreement shall hereafter mean and include the Loan
Agreement as amended by this Letter. In the event of any irreconcilable
inconsistency between the terms or provisions of this Letter and the terms and
provisions of the Loan Agreement, the terms and provisions hereof shall prevail.
6. General Provisions.
------------------
(a) Borrower hereby reconfirms, restates, and ratifies the Loan
Agreement and all of the Loan Documents, as modified hereby, and Borrower
confirms that the Loan Agreement and all other Loan Documents have remained in
full force and effect since the date of their respective execution.
(b) Borrower shall pay all costs, expenses (including reasonable legal
fees of counsel to Bank), and disbursements of Bank relating to the preparation,
execution, and enforcement of and collection under this Letter.
<PAGE>
Cable Design Technologies Inc.
December 13, 1999
Page 4
(c) This Letter shall be binding upon and inure to the benefit of Bank
and Borrower, and each of their respective successors and assigns, except that
Borrower may not assign or delegate any of its rights or obligations hereunder
or any interest herein without the prior written consent of Bank.
(d) This Letter and any and all documents executed or delivered in
connection herewith shall be construed and enforced pursuant to the internal
laws of the Commonwealth of Pennsylvania without regard to conflict of laws
principles.
7. Further Assurances. Borrower and Bank shall execute and deliver or
------------------
cause to be executed and delivered such further instruments or documents and do
or cause to be done such further acts as may be reasonably necessary or proper
in the reasonable opinion of Bank or Borrower to carry out more effectively the
provisions and purposes of this Letter.
8. Counterparts; Telecopy Signatures. This Letter may be signed in any
---------------------------------
number of separate counterparts, no one of which need contain all of the
signatures of the parties, and as many of such counterparts as shall together
contain all of the signatures of the parties shall be deemed to constitute one
and the same instrument. Each of the parties hereto hereby agrees that a
telecopy transmission of a party's signature shall be sufficient to bind such
party to the terms hereof.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
Cable Design Technologies Inc.
December 13, 1999
Page 5
[SIGNATURE PAGE 1 OF 3 OF LETTER AMENDMENT]
Please evidence Borrower's and each Guarantor's acknowledgment, agreement,
and consent to the terms and provisions of this correspondence by executing in
the space provided below and, upon the execution hereof below by Bank, Borrower,
and each Guarantor, this Letter shall be effective as of the date hereof.
Very truly yours,
ABN AMRO BANK N.V.
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
CABLE DESIGN TECHNOLOGIES INC.
By: ____________________________(SEAL)
Name:
Title:
<PAGE>
Cable Design Technologies Inc.
December 13, 1999
Page 6
[SIGNATURE PAGE 2 OF 3 OF LETTER AMENDMENT]
WITH THE INTENT TO BE LEGALLY BOUND HEREBY, EACH OF THE UNDERSIGNED
-------------------------------------------------------------------
GUARANTORS, JOINTLY AND SEVERALLY, ACKNOWLEDGES, AGREES, AND CONSENTS TO THE
- ----------------------------------------------------------------------------
FOREGOING:
- ---------
CABLE DESIGN TECHNOLOGIES CORPORATION
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
THERMAX/CDT, INC.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
DEARBORN/CDT, INC.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
CDT INTERNATIONAL HOLDINGS, INC.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
X-MARK/CDT INC.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
<PAGE>
Cable Design Technologies Inc.
December 13, 1999
Page 7
[SIGNATURE PAGE 3 OF 3 OF LETTER AMENDMENT]
BARCEL/CDT, INC.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
NORDX/CDT-IP CORP.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
NORDX/CDT CORP.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
NETWORK ESSENTIALS, INC.
Date: ___________________________ By: ___________________________(SEAL)
Name:
Title:
