-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NRxShTuvO19VYsUnMnLi6xEqeFk7Kbb3Mgi+wrRh8+qZG9/o9aFQKBbmT5OtHgU4 5bY2AxNT0ypNLZ033DCX/g== 0000030841-95-000003.txt : 19950109 0000030841-95-000003.hdr.sgml : 19950109 ACCESSION NUMBER: 0000030841-95-000003 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19950105 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 042258582 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-07438 FILM NUMBER: 95500363 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 10-Q/A 1 9/30/94 10Q AMMENDMENT NUMBER 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1994 Commission file number 0-7438 DYNATECH CORPORATION (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2258582 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 3 New England Executive Park Burlington, Massachusetts 01803-5087 (Address of principal executive offices)(Zip code) Registrant's telephone number, including area code: (617) 272-6100 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No. At October 14, 1994 there were 8,728,278 shares of common stock of the registrant outstanding. PART I. Financial Information Item I. Financial Statements DYNATECH CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (Unaudited) Three Months Ended Six Months Ended September 30 September 30 1994 1993 1994 1993 Sales $121,377 $111,359 $239,149 $229,109 Cost of sales 57,574 52,460 114,298 107,034 Gross profit 63,803 58,899 124,851 122,075 Selling, general and administrative expense 39,294 37,381 78,428 77,924 Product development expense 12,647 13,100 25,443 26,564 Amortization of intangibles 2,316 2,571 4,364 5,317 Operating income 9,546 5,847 16,616 12,270 Interest expense (1,249) (830) (2,406) (1,398) Interest income 358 173 594 430 Other income 242 93 521 120 Income from continuing operations before income taxes 8,897 5,283 15,325 11,422 Provision for income taxes 3,813 1,993 6,581 4,680 Income from continuing operations 5,084 3,290 8,744 6,742 Income (loss) from dis- continued operations, net of income taxes --- (23) --- 78 Net income $5,084 $3,267 $8,744 $6,820 Income per common share Continuing operations $.57 $.35 $.96 $.73 Discontinued operations --- --- --- .01 $.57 $.35 $.96 $.73 Weighted average number of common shares 8,889 9,289 9,092 9,279 See notes to condensed consolidated financial statements. DYNATECH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) September 30 March 31 1994 1994 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 29,905 $ 23,101 Accounts receivable, net 75,661 73,090 Inventories: Raw materials 26,464 26,923 Work in process 14,623 14,091 Finished goods 20,175 20,671 61,262 61,685 Other current assets 25,830 26,683 Net current assets of discontinued operations --- 10,805 Total current assets 192,658 195,364 Property and equipment, net 37,825 39,253 Intangible assets, net 32,674 37,238 Other assets 8,708 8,698 $271,865 $280,553 LIABILITIES Current liabilities: Notes payable and current portion of long-term debt $ 3,036 $ 2,911 Accounts payable 18,705 20,234 Streamlining and restructuring accrual 28,116 35,276 Other accrued expenses 44,646 45,283 Accrued income taxes 3,666 650 Total current liabilities 98,169 104,354 Long-term debt 32,002 33,006 Deferred income taxes 346 550 SHAREHOLDERS' EQUITY Common stock 2,477 2,477 Additional paid-in capital 9,388 9,414 Retained earnings 194,701 185,957 Cumulative foreign currency adjustments 1,568 (757) Treasury stock (66,786) (54,448) Total shareholders' equity 141,348 142,643 $271,865 $280,553 See notes to condensed consolidated financial statements. DYNATECH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended September 30 1994 1993 Operating activities: Net income from continuing operations $8,744 $6,742 Adjustments for noncash items included in net income: Depreciation 7,124 6,612 Amortization of intangibles 4,364 5,318 Increase in deferred taxes 3,010 133 Other 83 1,455 Change in operating assets and liabilities, net of effects of purchase acquisitions and divestitures (10,544) (13,022) Net cash flows provided by continuing operations 12,781 7,238 Net cash flows provided by (used in) discontinued operations (3,250) 4,195 9,531 11,433 Investing activities: Purchases of property and equipment (7,123) (8,377) Disposals of property and equipment 246 197 Proceeds from sale of businesses 14,271 2,476 Other 1,315 2,264 Net cash flows from (used in) investing activities 8,709 (3,440) Financing activities: Debt borrowings 116 --- Repayment of debt (1,161) (12,927) Proceeds from exercise of stock options 169 741 Purchases of treasury stock (12,533) --- Net cash flows used in financing activities (13,409) (12,186) Effect of exchange rate on cash 1,973 (2,155) Increase (decrease) in cash and cash equivalents 6,804 (6,348) Cash and cash equivalents at beginning of year 23,101 24,350 Cash and cash equivalents at end of period $29,905 $18,002 Supplemental data: Cash paid during the period for interest $2,507 $ 2,956 Cash paid during the period for income taxes $2,020 $ 8,013 Tax benefit of disqualifying dispositions of stock options $ --- $ 348 See notes to condensed consolidated financial statements. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. Condensed Consolidated Financial Statements In the opinion of management, the unaudited condensed consolidated balance sheet at September 30, 1994, and the unaudited consolidated statements of income and unaudited consolidated condensed statements of cash flows for the interim periods ended September 30, 1994 and 1993 include all adjustments (including normal recurring adjustments) necessary to present fairly these financial statements. The aforementioned financial statements have been subject to a review by the Company's independent accountants, whose report is included as page 9 to this filing The accountants did not propose any adjustments or additional disclosures as a result of their review. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The year-end balance sheet data was derived from audited financial statements, but does not include disclosures required by generally accepted accounting principles. It is suggested that these condensed statements be read in conjunction with the Company's most recent Form 10-K and Annual Report as of March 31, 1994. B. Divestments During the first half of fiscal 1995, the Corporation sold Whistler Corporation and Micro Processor Systems, Inc., which have been classified as discontinued operations, for approximately $14 million in cash and long-term promissory notes approximating $3.1 million. Five other businesses were sold in the second quarter for approximately $0.3 million in cash and long-term promissory notes approximating $0.7 million. The effects of these transactions are not material to the consolidated financial statements. C. Treasury Stock In June 1994 the Board of Directors authorized a repurchase of up to $30 million of Dynatech common stock on the open market and in private transactions. At September 30, 1994 the Corporation had repurchased 594,522 shares at a cost of $12.5 million. All of the acquired shares are held as common stock in treasury. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Consolidated sales for the six months ended September 30, 1994 increased 4.4% to $239,149,000 from $229,109,000 for the comparable period in the prior year. Information Support Products segment sales rose 8.6% for the six months ended in fiscal 1995 reflecting a 10.3% growth for Transmission products. Sales in the Diversified Instrumentation segment increased 7.6% from ongoing businesses for the comparable period in the prior year which excludes nonstrategic businesses sold or to be divested. This increase was a reslt of a 22.8% increase for aircraft video information systems and a 17.4% increase of sales of medical and diagnostic products offset partially by a 50.3% decline for commercial and military avionics data bus applications. The sale of six businesses in this segment during fiscal 1994 and 1995 coupled with sales declines in businesses held for sale resulted in an overall decrease of 4%. Consolidated gross profit for the current quarter and six months was 52.6% and 52.2% of sales, respectively, compared to 52.9% and 53.3% for each of the respective prior year periods. Information Support Products gross margin declined to 55.1% compared to 57.5% in the first half of the prior year due primarily to higher production costs for new product introductions and price sensitivity in video graphics generation markets. Diversified Instrumentation gross margin improved to 45.6% compared to 44.9% in the first half of the prior year resulting from greater sales of software products. Selling, general and administrative expenses were lower as a percent of sales for the second quarter and first half periods from the comparative prior year periods resulting in part from the streamlining actions announced in the fourth quarter of fiscal 1994. Product development expense was 10.6% of sales for the current half year compared to 11.6% in the first half of the prior year. The reduction was attributed primarily to the nonstrategic businesses in the Diversified Instrumentation segment. Amortization of intangibles, of which $2.3 million in the first half of fiscal 1995 and $2.6 million in the first half of the prior year related to product technology and was excluded from cost of sales, declined due to business divestments and discontinuance of product lines. Interest expense from continuing and discontinued operations declined for the current half year to $2,739,000 as compared with $2,974,000 in the prior year as a result of repayment of loan debt from operating cash flow. Interest income increased due to higher investment rates and earnings on notes acquired in divestment activities. The effective tax rate was 42.9% for the current first half compared to 41.0% in the prior year. The lower tax rate in the prior year reflects the cumulative effect of $315,000 on the net deferred tax assets resulting from the Budget Reconciliation Act of August 1993. Income from continuing operations for the second quarter increased 55% to $5,084,000, or $.57 per share, from $3,290,000, or $.35 per share, for the second quarter of the prior year, reflecting a 14.1% increase in sales of Information Support Products, a 10.5% rise in Diversified Instrumentation sales excluding nonstrategic businesses sold or to be divested, along with lower product development expenses and amortization costs. Backlog from ongoing operations was $82.9 million at September 30, 1994 compared with $80.2 million at March 31, 1994. Estimated savings from implementing the streamlining and restructuring actions were $5.1 million in the first half of fiscal 1995 which included $1.4 million in reduced amortization charges resulting from intangible asset revaluations. Employee headcount from continuing operations has declined 7% since the implementation of the streamlining plan and is on schedule toward a 10% reduction in work force upon completion of announced restructurings and divestitures. In addition, the consumer automotive business units which employed approximately 10% of the work force have been sold. Sales and operating income of nonstrategic businesses divested or held for sale included in continuing operations were $30,077,000 and $11,000, respectively, for the first half of fiscal 1995. While the Company believes that the outlook for the third quarter of fiscal 1995 is good, no assurance can be given that operating results for the quarter will meet those of the recently successful second quarter, however, third quarter earnings levels should easily exceed the disappointing third quarter results of $.14 of the prior year. Operating results for the third quarter of fiscal 1995 will depend upon, among other things, the incoming order rate during the quarter for the Company's various businesses, product mix, and the continued successful implementation of the Company's reorganization plan. Capital Resources and Liquidity The Company's funded debt was reduced to 19.9% of total capital at September 30, 1994, an improvement from the year-end level of 20.1% at March 31, 1994, the lowest level in eight years. In addition, working capital improved $3.5 million from March 31, 1994 levels. Cash outlays for the streamlining and restructuring actions approximated $3.8 million in the first half of fiscal 1995. Dynatech believes it has sufficient resources to finance its cash requirements over the next year including the necessary streamlining and restructuring actions and treasury stock repurchases. PART I. OTHER INFORMATION Item 6. (a) Exhibits Exhibit 15(1) Report of Independent Accountants Exhibit 15(2) SEC Awareness Letter PART II. OTHER INFORMATION Item 4. Results of votes of security holders The Annual Meeting of Stockholders was held on July 26, 1994 in Burlington, Massachusetts. A class of three Directors as nominated by management to serve for a three-year term were elected at the meeting. At such meeting 7,364,560 shares were entitled to vote and a plurality of the votes cast were needed for election. The table below discloses the vote with respect to each nominee for office. Management Nominees In Favor John F. Reno 4,705,981 Theodore Cohn 4,448,829 Warren A. Law 4,448,829 Dissident Shareholder Nominees Gary Seigler 2,781,508 Peter Collery 2,781,508 Curtis MacNguyen 2,522,718 The terms of O. Gene Gabbard, Richard K. Lochridge and Paula Stern expire at the annual meeting in 1995 and the terms of Warren M. Rohsenow and James B. Hangstefer expire in 1996. In August 1994 J.P. Barger resigned from the Board of Directors. The results of the voting of the following additional items were as follows: A. To approve the 1994 Stock Option and Incentive Plan (as forth in the Board's Proxy Statement). B. To approve the SC Fundamental Proposal to retain an investment banking firm to conduct a sale or to implement a major restructuring (as set forth in the SC Fundamental Proxy Statement). Broker For Against Abstain Non Vote Stock Option and Incentive Plan 3,882,557 3,409,019 72,984 SC Fundamental Proposal 2,528,149 4,630,344 66,091 139,976 Item 6. Reports on Form 8-K (b) No current reports on Form 8-K were filed by the Registrant during the quarter ended September 30, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DYNATECH CORPORATION Date November 3, 1994 /S/Robert H. Hertz Robert H. Hertz Chief Financial Officer and Treasurer Date November 3, 1994 /S/John C. Maag John C. Maag Corporate Controller EX-15 2 EXHIBIT 15 (1) EXHIBIT 15(1) REPORT OF INDEPENDENT ACCOUNTANTS The Board of Directors and Shareholders of Dynatech Corporation: We have reviewed the unaudited condensed consolidated balance sheet of Dynatech Corporation as of September 30, 1994, and the related condensed consolidated statements of income and cash flows for the six-month periods ended September 30, 1994 and 1993. 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 inqu iries of persons responsible for financial accounting matters. It is substantially less ins cope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statem ents 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 condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of March 31, 1994, ad the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended ( not presented herein), and in our report, dated May 23, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 3 1, 1994, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. COOPERS & LYBRAND Boston, Massachusetts October 20, 1994 EX-15 3 EXHIBIT 15 (2) EXHIBIT 15(2) October 20, 1994 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 RE: Dynatech Corporation We are aware that our report dated October 20, 1994 on our review of interim financial information of Dynatech Corporation for the interim periods ended September 30, 1994 and 1993, and included in the Corporation's quarterly report on Form 10-Q for the quarter ended September 30, 1994 is incorporated by reference in various registration statements on Form S-3 (File Nos. 2-78465, 2-81026, 2-82260, 2-85387, 2-86467, 2-92391, 2-94757, 33-365, 33-2387, 33-5544, 33-17169, 33-24058, and 33-30610) and on Form S-8 (File Nos. 2-87779, 33-10465, 33-17243, and 33-42427). Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the registration statements prepared or certified by us within the meaning of Sections 7 and 11 of that Act. Coopers & Lybrand EX-27 4
5 1,000 QTR-2 MAR-31-1995 SEP-30-1994 29905 0 75661 0 61262 192658 37825 0 271865 98169 32002 2477 0 0 141348 271865 239149 239149 114298 114298 108235 0 2406 15325 6581 8744 0 0 0 8744 .96 .96
-----END PRIVACY-ENHANCED MESSAGE-----