-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S3Badz533FGD8L0k5rqE3dYil2oBrQx0emz6QVUkNgN1em42ranukl5+/DtdJ61n hiAH8+dHZB4PUEGlM6jGgA== /in/edgar/work/20000531/0000950130-00-003224/0000950130-00-003224.txt : 20000919 0000950130-00-003224.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950130-00-003224 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20000531 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: [3825 ] IRS NUMBER: 042258582 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-35476 FILM NUMBER: 646972 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 S-3/A 1 0001.txt AMENDMENT NO. 1 TO FORM S-3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- Amendment No. 1 to FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- DYNATECH CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 04-02258582 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 3 NEW ENGLAND EXECUTIVE PARK BURLINGTON, MASSACHUSETTS 01803-5087 1 (781) 272-6100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------- MARK V.B. TREMALLO Corporate Vice President, General Counsel Dynatech Corporation 3 New England Executive Park Burlington, Massachusetts 01803-5087 1 (781) 272-6100 (Name, address, including zip code, and telephone number, including area code, of agents for service) --------------- Copy to: FRANCI J. BLASSBERG Debevoise & Plimpton 875 Third Avenue New York, New York 10022 1 (212) 909-6000 --------------- Approximate date of commencement of proposed sale to the public: As soon as practicable 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. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] --------------- 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 this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Prospectus Dynatech Corporation Rights Offering of 4,983,048 Shares of Common Stock at $4.00 per Share . If you held our common stock at the close of business on April 20, 2000, Dynatech has granted you rights to purchase additional shares of common stock for a subscription price of $4.00 per share. You have been granted 0.389 rights for every share of common stock you held on that date. Each whole right entitles you to purchase one share of common stock for $4.00. This is your "basic subscription privilege." . If you fully exercise your rights and other shareholders do not fully exercise their rights, you may elect to purchase additional shares on a pro rata basis. This is your "oversubscription privilege." . We will not issue fractional rights or fractional shares. If the number of shares of common stock you held on the record date would result in your receipt of fractional rights, the number of rights issued to you is being rounded down to the nearest whole right. As a result, our shareholders of record that held fewer than three shares as of April 20, 2000 are not receiving rights. . Our common stock is traded in the over-the-counter market under the symbol "DYNA". On May 30, 2000, the last reported sale price for the common stock was $11.875 per share. . The rights expire on June 19, 2000, at 5 p.m., New York City time. We have the option of extending the expiration date. . The rights are non-transferable. . We will use all net cash proceeds from this offering for potential acquisitions and other general corporate purposes. . To finance the merger of one of our subsidiaries with Wavetek Wandel Goltermann, Inc. ("WWG"), a leading developer, manufacturer and marketer of communications test instruments, systems, software and services, we were required to raise substantial debt and equity financing in a short amount of time. As a result, we entered into a new credit facility with a syndicate of lenders and sold newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership for $4.00 per share. Our sale of unregistered common stock to the Clayton, Dubilier & Rice funds allowed us to raise the cash equity we needed within the time frame required to consummate the WWG merger. However, as a result of our sale of common stock to the Clayton, Dubilier & Rice funds, the percentage equity ownership interest in Dynatech of our other shareholders was diminished. Now that the WWG merger is complete, we are conducting this offering so that such shareholders may, at their option, reverse the diminution of their percentage equity ownership interest of Dynatech by purchasing shares of newly-issued shares of our common stock for the same price as was paid by the Clayton, Dubilier & Rice funds. . Clayton, Dubilier & Rice Fund VI Limited Partnership, which purchased approximately 17% of our outstanding common stock in connection with the WWG merger, has agreed to purchase all shares of our common stock that are offered in this rights offering but not purchased by our other shareholders. If none of the rights distributed in this offering are exercised, the percentage equity ownership of Dynatech by Clayton, Dubilier & Rice Fund VI Limited Partnership would increase to approximately 19%, and the Clayton, Dubilier & Rice funds together would own approximately 85% of our outstanding common stock. . Investing in our common stock involves certain risks. See "Risk Factors" beginning on page 16. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Subscription Discounts and Proceeds to the Price Commissions Company - -------------------------------------------------------------------------------- Per Share Total...................... $4.00 None $4.00 - -------------------------------------------------------------------------------- Total................................ $4.00 None $19,932,193
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Subscription Agent: Equiserve Trust Company, N.A. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The rights offering is not being made, nor will Dynatech accept subscriptions for common shares from any person, in any jurisdiction in which the rights offering or the acceptance thereof would not be in compliance with the securities or "Blue Sky" laws of such jurisdiction. The date of this Prospectus is June 1, 2000. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly, special reports and other information with the Securities and Exchange Commission. These filings are available to the public from commercial document retrieval services and at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549, and in New York, New York and Chicago, Illinois. Please call the SEC at 1(800)SEC-0330 for further information on the public reference rooms and copy charges. The SEC allows us to "incorporate by reference" the information we file with it. This permits us to disclose important information to you by referencing these filed documents. We incorporate by reference in this prospectus the following documents which have been filed with the SEC: . Our Annual Report on Form 10-K for the fiscal year ended March 31, 1999, filed with the SEC on June 14, 1999; . Our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999, filed with the SEC on August 5, 1999; . Our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999, filed with the SEC on November 4, 1999; . Our Quarterly Report on Form 10-Q for the quarterly period ended December 31, 1999, filed with the SEC on February 14, 2000; . Our Current Report on Form 8-K concerning our acquisition of Applied Digital Access, Inc., filed with the SEC on November 9, 1999, and supplemented by our Current Report on Form 8-K/A, filed with the SEC on January 14, 2000; . Our Current Report on Form 8-K concerning our acquisition of Wavetek Wandel Goltermann, Inc., and our planned divestiture of our Industrial Computing and Communications business segment, filed with the SEC on May 31, 2000. . Our Information Statement on Schedule 14C concerning the proposed adoption of a Certificate of Amendment to our Certificate of Incorporation, filed with the SEC on March 20, 2000 and amended on April 18, 2000 and April 28, 2000. . The description of our common stock found under the heading "Description of Registrant's Securities to be Registered" in the Company's Registration Statement on Form 8-A, as amended (file no. 000-07438), filed with the SEC on June 29, 1998. We incorporate by reference all documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and prior to the termination of this offering. We will provide promptly without charge to you, upon written or oral request, a copy of any document incorporated by reference in this prospectus, other than exhibits to such documents unless such exhibits are specifically incorporated by reference in such documents. Requests should be directed as follows: Dynatech Corporation 3 New England Executive Park Burlington, Massachusetts 01803-5087 Telephone: 1 (781) 272-6100 Attention: Investor Relations You should request any such information at least five business days in advance of the date on which you expect to make your decision with respect to this offer. In any event, you must request such information prior to June 9, 2000. PROSPECTUS SUMMARY This summary highlights some of the information in this prospectus. The summary is not complete and may not provide all information you should consider before deciding whether or not to exercise the rights. Therefore, we urge you to read the entire prospectus carefully. We also encourage you to review the financial statements and other information provided in the reports and other documents that we file with the SEC, as described under "Where You Can Find More Information" on the inside front cover of this prospectus. The market share and competitive position data contained in this prospectus are approximations derived from our estimates, which we believe are reasonable but which have not been independently verified, and from industry sources. We have not independently verified market share and competitive position data provided by third parties or industry or general publications. Although such market and competitive position data are inherently imprecise, based on our understanding of the markets in which we compete, we believe that such data are generally indicative of our relative market share and competitive position. Questions and Answers About the Rights Offering What is a right? Rights give our shareholders the privilege to purchase additional shares of our common stock for $4.00 per share. On May 30, 2000, the last reported sales price for our common stock on the over-the-counter market was $11.875 per share. We have granted our shareholders as of 5:00 p.m. on April 20, 2000, 0.389 rights for every share of common stock owned at that time. Each whole right entitles you to purchase one share of common stock for $4.00. For example, if you owned 100 shares on the record date, you have the right to purchase 38 shares of common for $4.00 per share. Will I receive fractional rights or shares? We are not issuing fractional rights or shares. If the number of shares of common stock you held on the record date would result in your receipt of fractional rights, the number of rights issued to you is being rounded down to the nearest whole right. As a result, our shareholders of record that held fewer than three shares of common stock as of April 20, 2000 are not receiving rights. Why is Dynatech offering the rights? To finance the merger of one of our subsidiaries with Wavetek Wandel Goltermann, Inc. ("WWG"), a leading developer, manufacturer and marketer of communications test instruments, systems, software and services, we were required to raise substantial debt and equity financing in a short amount of time. As a result, we entered into a new credit facility with a syndicate of lenders. Our new credit facility provides for borrowings of up to $860 million, as opposed to the $370 million provided for by our previous credit facility. In addition, in order to obtain such debt financing, concurrently with the merger we sold 12.5 million and 30.625 million newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, respectively, for $4.00 per share. Our sale of unregistered common stock to the Clayton, Dubilier & Rice funds allowed us to raise the cash equity we needed within the time frame required to consummate the WWG merger and to obtain our new credit facility. However, as a result of our sale of common stock to the Clayton, Dubilier & Rice funds, the percentage equity ownership interest in Dynatech of our other shareholders was diminished. Now that the WWG merger is complete, we are conducting this offering so that such shareholders may, at their option, reverse the diminution of their percentage equity ownership interest of Dynatech by purchasing newly-issued shares of our common stock at the same price per share that was paid by the Clayton, Dubilier & Rice funds. 1 We will use the net proceeds of this offering for potential acquisitions and other general corporate purposes. What is the basic subscription privilege? By exercising the rights, you may purchase one newly-issued share of common stock for every whole right held by you, at the subscription price of $4.00 per share. This is your "basic subscription privilege." What is the oversubscription privilege? If you fully exercise your basic subscription privilege, the oversubscription privilege entitles you to subscribe to additional shares of our common stock at the same subscription price of $4.00 per share that applies to your basic subscription privilege. What are the limitations on the oversubscription privilege? We will be able to satisfy your exercise of the oversubscription privilege only if our other shareholders receiving rights do not elect to purchase all of the shares offered under their basic subscription privilege. We will honor oversubscription requests in full to the extent sufficient shares are available following the exercise of rights under the basic subscription privilege. If oversubscription requests exceed shares available, we will allocate the available shares pro rata among our shareholders that oversubscribed. What is the role of the standby purchasers in this offering? As standby purchaser, Clayton, Dubilier & Rice Fund VI Limited Partnership will purchase all of the shares of our common stock offered in this offering but not purchased by our other shareholders under their basic subscription and oversubscription privileges. Has the Board of Directors made a recommendation regarding this offering? Our Board of Directors makes no recommendation to you about whether you should exercise any rights. How soon must shareholders act? The rights expire on June 19, 2000, at 5:00 p.m., New York City time. The subscription agent must actually receive all required documents and payments before that date and time. Although we have the option of extending the expiration date, we currently do not intend to do so. May I transfer my rights? No. The rights may be exercised only by the person to whom they are granted. Am I required to subscribe in the rights offering? No. You are not required to exercise any rights, purchase any new shares, or otherwise take any action in response to this rights offering. 2 What will happen if I do not exercise my rights? If you do not exercise any rights, the number of shares you own will not change, but your percentage ownership of Dynatech will decline following the rights offering. May I change or cancel my exercise of rights after I send in the required forms? No. All exercises of rights are irrevocable. Will my money be returned if the rights offering is cancelled? We may cancel or terminate the rights offering at any time prior to the expiration date. If we terminate or cancel this offering, we will return your subscription price, but without any payment of interest. What should I do if I want to participate in the rights offering, but my shares are held in the name of my broker, dealer or other nominee? If you hold your shares of our common stock through a broker, dealer or other nominee (for example, through a custodian bank), then your broker, dealer or other nominee is the record holder of the shares you own. This record holder must exercise the rights on your behalf for shares you wish to purchase. Therefore, you will need to have your record holder act for you. If you wish to participate in the rights offering and purchase shares, please promptly contact the record holder of your shares. To indicate your decision with respect to your rights, you should complete and return to your record holder the form entitled "Beneficial Owner Election Form." You should receive this form from your record holder with the other rights offering materials. What fees or charges apply if I purchase shares? We are not charging any fee or sales commission to issue rights to you or to issue shares to you if you exercise rights. If you exercise rights through a record holder of your shares, you are responsible for paying any fees that person may charge. How do I exercise my rights? What forms and payment are required to purchase shares? As a record holder of our common stock on April 20, 2000, you are receiving this prospectus, a subscription warrant evidencing your subscription rights and instructions on how to purchase shares. If you wish to participate in this rights offering, then before your rights expire, you must: . deliver the subscription price by wire transfer of immediately available funds, certified or cashier's check drawn on a U.S. bank, or personal check that clears before expiration of the rights; and . deliver a properly completed subscription warrant. The instructions also describe an alternate procedure called "Notice of Guaranteed Delivery," which allows an extra three days to deliver the subscription warrant if full payment is received before the expiration date and a securities broker or qualified financial institution signs the "Notice of Guaranteed Delivery" form to guaranty that your properly completed subscription warrant will be timely delivered. 3 To whom should I send forms and payment? You should send your subscription documents and payment by mail or courier service to: By Hand: By First Class Mail: By Overnight Courier: Securities Transfer & Equiserve Trust Company, N.A. Equiserve Trust Company, N.A. Reporting Services, Inc. Attn: Corporate Actions Attn: Corporate Actions c/o Equiserve Trust Company, N.A. PO Box 9573 40 Campanelli Drive 100 William Street, Galleria Boston, MA 02205-9573 Braintree, MA 02184 New York, NY 10038
For instructions on how your subscription payment should be sent to Equiserve Trust Company, N.A., see "The Rights Offering--Required Forms of Payment of Subscription Price" on page 27. Securities brokers and other qualified financial institutions can use an alternate procedure called "Notice of Guaranteed Delivery." See "The Rights Offering--Special Procedure under "Notice of Guaranteed Delivery' Form" on page 28. What should I do if I have other questions? If you have questions, need additional copies of offering documents or otherwise need assistance, please contact the information agent for the offering: Mackenzie Partners Inc. 156 Fifth Avenue New York, NY 10010 Telephone: 1 (800) 322-2885 (toll-free) To ask other questions or to receive copies of our recent SEC filings, you can also contact us by mail or telephone, or refer to the other sources described under "Where You Can Find More Information" on the inside front cover of this prospectus. 4 Our Company We were founded in 1959 by two Massachusetts Institute of Technology professors. We became a publicly held company in 1968 as a result of a merger with a publicly held laboratory equipment manufacturer. On May 21, 1998, we merged with an entity formed by Clayton, Dubilier & Rice Fund V Limited Partnership. As a result of this merger, Clayton, Dubilier & Rice Fund V Limited Partnership became our controlling shareholder, and only approximately 7% of our outstanding common stock remained in the hands of our public shareholders. On May 23, 2000, we merged with Wavetek Wandel Goltermann, Inc. ("WWG"), a leading developer, manufacturer and marketer of communications test instruments, systems, software and services in Europe and Latin America, and combined WWG with our TTC (formerly Telecommunications Techniques Co., LLC) ("TTC") subsidiary. Our management believes that the combined TTC-WWG division is the world's second largest (by sales) provider of communications test solutions. For more information regarding our merger with WWG, see "Recent Developments" below. We conduct business in three business segments: . Communications test. This segment accounted for 51% of our sales on an historical basis (or approximately $241.4 million) for the nine months ended December 31, 1999. Adjusted for the WWG merger and other acquisitions and divestitures, including the planned divestiture of our industrial computing and communications segment, sales of our communications test products represented 89% of our total sales (or approximately $612 million) for the nine months ended December 31, 1999, on a pro forma basis; . Visual communications. This segment accounted for 16% of our sales on an historical basis (or approximately $75.4 million) for the nine months ended December 31, 1999. Adjusted for the WWG merger and other acquisitions and divestitures, including the planned divestiture of our industrial computing and communications segment, sales of our visual communications products represented 11% of our total sales (or approximately $73 million) for the nine months ended December 31, 1999, on a pro forma basis; and . Industrial computing and communications. This segment accounted for 34% of our sales on an historical basis (or approximately $160.3 million) for the nine months ended December 31, 1999. In May 2000, our board of directors approved a formal plan to divest our industrial computing and communications segment. The divestiture will be treated as discontinued operations for accounting purposes and, accordingly, has been reflected as such in the Unaudited Pro Forma Condensed Consolidated Financial Statements presented herein. For a discussion of this formal plan, see "Material Changes--Planned Divestitures" on page 51. Communications Test Our communications test business develops, manufactures and markets instruments, systems, software and services that test, deploy, manage and optimize communications networks and equipment. These products and services are designed to increase the productivity of our customers and allow them to deliver higher quality products and services to their customers. We offer a broad range of products that test and manage the performance of a wide array of equipment found in modern, converged networks, including optical transmission systems for data communications, voice services, wireless voice and data services, cable services and video delivery. Among the factors we believe are driving growth in the communications test market are deregulation in the telecommunications industry, global deployment of communications products and services, new high-speed technologies and a shift toward automated network testing and monitoring. Growth of data traffic, in part due to increasing numbers of Internet users, is changing how communications networks are managed and maintained. 5 In order to meet the demand for Internet, wireless and CATV services, companies and governments in North America and Europe, as well as in developing countries, are making significant investments to build the necessary network infrastructure. The growth of Internet and wireless communications is also fueling the development of new high-speed communications services, and with it the need for error-free transmission. We believe this increasing need for error-free transmission has increased demand for communications test equipment. In this market environment, our management believes that our merger with WWG will enhance our competitive position by providing us with the following benefits: . The number two position in the $6.7 billion worldwide communications test market; . Broader product offerings to cover existing and emerging technologies; . A global sales and distribution network, with a presence in over 80 countries spanning North America, Europe, Asia and Latin America; . The aggregate research and development funding and engineering talent to stay on pace with rapidly changing technologies; and . The opportunity to cross-sell products in complementary channels and other efficiencies in sales and marketing. A key factor in the success of our communications test business is our long- standing and close relationships with our customers. These relationships are facilitated by our highly-trained, experienced sales force. We sell our communications test products and services to three types of customers: . Communications service providers, which include regional Bell operating companies, long-distance companies, competitive access providers, global service providers, cable network operators, wireless communications providers and public telephone and telegraph companies outside the United States; . Service users, such as large corporate and government network operators; and . Manufacturers of communications equipment and systems. Our goal is to be the global leader in helping companies test, deploy, manage, and optimize communications networks and equipment. To achieve this goal, we aim to: . Target high-growth market opportunities; . Deliver customer-focused products that satisfy specific needs; . Capitalize on our installed customer base to market new products for emerging technologies; . Invest in sales, marketing, professional services and customer support; and . Pursue strategic acquisitions. Visual Communications Our visual communications business consists principally of two market- leading, niche-focused subsidiaries: AIRSHOW and da Vinci. AIRSHOW is the leading provider of systems that deliver real-time news, information and flight data to aircraft passengers. AIRSHOW's systems are marketed to commercial airlines and private aircraft owners. da Vinci manufactures systems that correct or enhance the accuracy of color during the process of transferring film-based images to videotape. da Vinci's products are sold to post-production and video production professionals and producers of content for the high- definition television market. 6 Industrial Computing and Communications This business consists of two subsidiaries addressing different areas of the ruggedized computer market. Our ICS-Advent subsidiary designs, configures and sells a broad range of industrial computers, input/output devices, communications and accessory products to the industrial, commercial, scientific, and Internet telephony computing market. Our Itronix Corporation subsidiary sells rugged, portable communications and computing devices used by the field-service employees of telephone companies, utilities, insurance companies and other organizations with large field-service workforces. In May 2000, our board of directors approved a formal plan to divest our industrial computing and communications business segment. For a discussion of this formal plan, see "Material Changes--Planned Divestitures" on page 51. Recent Developments Merger with WWG and Related Financing On May 23, 2000, we merged with WWG, a leading developer, manufacturer and marketer of communications test instruments, systems, software and services in Europe and Latin America. We acquired WWG to grow our communications test business, which, prior to the merger, was conducted solely by our TTC subsidiary. The transaction value of the merger, including approximately $200 million of assumed debt, totaled approximately $600 million. To finance the WWG merger, we were required to raise substantial debt and equity financing in a short amount of time. As a result, we entered into a new credit facility with a syndicate of lenders. Our new credit facility provides for borrowings of up to $860 million, as opposed to the $370 million provided for by our previous credit facility. In addition, in order to obtain such debt financing, concurrently with the merger we sold 12.5 million and 30.625 million newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, respectively, for $4.00 per share. Our sale of unregistered common stock to the Clayton, Dubilier & Rice funds allowed us to raise the shareholder equity we needed within the time frame required to consummate the WWG merger and to facilitate the establishment of our new credit facility. In connection with the WWG merger and the concurrent establishment of our new credit facility, we incurred approximately $40 million of transaction related fees and expenses, including $6 million payable to Clayton, Dubilier & Rice, Inc., an investment firm that manages Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, our controlling shareholders. Strategic Acquisitions Applied Digital Access, Inc. On November 1, 1999, we acquired, through one of our subsidiaries, all of the outstanding capital stock of Applied Digital Access, Inc. ("ADA") for approximately $81 million. ADA, which is headquartered in San Diego, California, is a provider of network performance management products that include systems, software and services used to manage the quality, performance, availability and reliability of telecommunications service providers' networks. The results of operations of this business from the date of acquisition are reflected within our Communications Test segment. Sierra Design Labs. On September 10, 1999, through one of our subsidiaries we purchased Sierra Design Labs ("Sierra") for approximately $6 million. Sierra designs, manufactures and markets uncompressed, real-time videodisk recorders and is included in our visual communications business. The results of operations of this business from the date of acquisition are reflected within our Visual Communications segment. 7 Planned Divestitures In May 2000, our board of directors approved a formal plan to divest our industrial computing and communications business segment, which segment consists of our ICS-Advent and Itronix Corporation subsidiaries. In connection with its decision, the board authorized management to retain one or more investment banks to assist us with respect to the divestiture. We expect to divest these two subsidiaries, either separately or together, no later than the first quarter of our 2002 fiscal year. The divestiture will be treated as discontinued operations for accounting purposes. Stock Option Program In connection with the WWG merger, we plan to issue our new employees up to 10 million new options to purchase shares of our common stock. We expect that the exercise price of approximately 40% of such options will be $4.00 per share. The remaining options will be granted in subsequent years, with exercise prices equal to the fair market value of our common stock on the date they are granted. State and Date of Incorporation and Address Prior to 1999, we were incorporated in Massachusetts. Since 1999 we have been incorporated in Delaware. Our principal executive offices are at 3 New England Executive Park, Burlington, Massachusetts 01803-5087. Our telephone number is 1 (781) 272-6100. 8 Summary of the Terms of the Rights Offering Further details concerning this part of the summary are set forth under "The Rights Offering" beginning on page 24. Only holders of record of common stock at the close of business on the record date stated below may exercise rights. Securities Offered....... We are offering 4,983,048 shares of common stock to be issued upon exercise of the rights. Subscription Ratio; Basic Subscription 0.389 rights for every share of common stock owned Privilege................ as of the record date. Each whole right entitles you to purchase one share of common stock for the subscription price. We are not issuing any fractional rights or fractional shares. If the number of shares of common stock you held of record on the record date would result in your receipt of fractional rights, the number of rights issued to you is being rounded down to the nearest whole right. So, for example, if you were the record holder of fewer than three shares of common stock on the record date, you are not receiving rights. If, however, you were the record holder of 100 shares of common stock on the record date, you are receiving rights to subscribe to 38 shares instead of 38.9 shares. You may not purchase fractional shares. You may, however, subscribe for any whole number of shares by exercising less than all of your rights. Subscription Price....... $4.00 per share, payable in cash. All payments must be cleared on or before the expiration date. Oversubscription If you fully exercise your basic subscription Privilege................ privilege, you may also purchase additional shares of common stock that are not purchased by other shareholders. The same subscription price of $4.00 per share applies to this purchase. If there are not enough shares available to fill all subscriptions for additional shares, the available shares will be allocated pro rata based on the number of shares each subscriber for additional shares has purchased under the basic subscription privilege. Record Date.............. April 20, 2000 at 5:00 p.m. (New York City time). Only our shareholders of record as of the record date will receive rights to subscribe for new shares of common stock. Expiration Date.......... The rights expire on June 19, 2000 at 5:00 p.m. (New York City time). Rights not exercised by the expiration date will be null and void. We have the option of extending the expiration date for any reason. We will use the net proceeds of this offering for Use of Proceeds.......... potential acquisitions and other general corporate purposes. 9 No Transferability of The rights may be exercised only by the persons to Rights................... whom they are granted. No Board Our Board of Directors does not make any Recommendation........... recommendation to shareholders regarding the exercise of rights in this offering. Shareholders who do exercise rights risk investment loss on new money invested. We cannot assure you that the subscription price will remain below any trading price for our common stock or that its trading price will not decline to below the subscription price during or after the rights offering. For more information regarding some of the risks inherent in this rights offering, please see "Risk Factors" beginning on page 16. Commitment of Clayton, Dubilier & Rice Fund V Limited Partnership to Refrain from Purchasing Shares in this Offering................. To finance our merger with WWG, we were required to raise substantial debt and equity financing in a short amount of time. As a result, we entered into a new credit facility with a syndicate of lenders. Our new credit facility provides for borrowing of up to $860 million, as opposed to the $370 million provided for by our previous credit facility. In addition, in order to obtain such debt financing, concurrently with the WWG merger, we sold 12.5 million and 30.625 million newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, respectively, for $4.00 per share. Our sale of unregistered common stock to the Clayton, Dubilier & Rice funds allowed us to raise the shareholder equity we needed within the time frame required to consummate the WWG merger and to obtain our new credit facility. However, as a result of our sale of common stock to the Clayton, Dubilier & Rice funds, the percentage equity ownership interest in Dynatech of our other shareholders was diminished. Now that the WWG merger is complete, we are conducting this offering so that such shareholders may, at their option, reverse the diminution of their percentage equity ownership interest of Dynatech by purchasing newly-issued shares of our common stock at the same price per share that was paid by the Clayton, Dubilier & Rice funds. Accordingly, Clayton, Dubilier & Rice Fund V Limited Partnership has agreed to refrain from exercising any rights to purchase common stock received by it in this offering, and Clayton, Dubilier & Rice Fund VI Limited Partnership, which was not one of our shareholders prior to the WWG merger, will not receive rights to purchase common stock in this rights offering, except as set forth under the Standby Purchaser arrangement. Standby Purchaser... Clayton, Dubilier & Rice Fund VI Limited Partnership, which purchased approximately 17% of our outstanding common stock in connection with the WWG merger, has agreed to purchase all of the shares of our common stock that are offered in this rights offering but not purchased by our other shareholders. If no other shareholders 10 exercise their rights under this offering, the percentage equity ownership of Dynatech of Clayton, Dubilier & Rice Fund VI Limited Partnership would increase to approximately 19%, and the Clayton, Dubilier & Rice funds together would own approximately 85% of the outstanding common stock of Dynatech. No Revocation............ If you exercise any rights, you are not allowed to revoke or change your exercise or request a refund of monies paid. Certain Federal Income Tax Consequences......... For United States federal income tax purposes, we believe that a shareholder will not recognize taxable income upon the receipt or exercise of rights. See "Certain Federal Income Tax Consequences" beginning on page 44. Each shareholder should consult the holder's own tax adviser concerning the tax consequences of this offering under the holder's own tax situation. This prospectus does not summarize tax consequences arising under state tax laws, non-U.S. tax laws, or any tax laws relating to special tax circumstances or particular types of taxpayers. Extension, Withdrawal and Amendment............ We have the option of extending this rights offering and the subscription period, although we presently do not intend to do so. We also reserve the right to withdraw, terminate or amend this rights offering at any time for any reason. If this offering is withdrawn or terminated, or any submitted subscriptions no longer comply with the amended terms of the offering, we will return all funds received from such subscriptions (without interest). Procedure for Exercising To exercise rights, you must complete the Rights................... subscription warrant and deliver it to the subscription agent, Equiserve Trust Company, N.A., with full payment for all the rights you elect to exercise. Equiserve Trust Company, N.A. must receive the proper forms and payments on or before the expiration date. You may deliver your subscription documents and payments by mail or commercial courier. If regular mail is used for this purpose, we recommend using insured, registered mail. You may use an alternative "Notice of Guaranteed Delivery" procedure if you are unable to deliver the subscription warrant before the expiration date, subject to the requirements of this procedure described under "The Rights Offering--Special Procedure under "Notice of Guaranteed Delivery' Form" on page 28. Shares of Common Stock Outstanding Before the Rights Offering.......... 181,769,303. Shares of Common Stock Outstanding Upon Completion of Rights Offering................. 186,752,351. 11 Risk Factors Exercising your rights and purchasing our common stock involves a high degree of risk. You should carefully read and consider the information set forth under "Risk Factors" beginning on page 16 and the other information contained in this prospectus. 12 SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA The summary statement of operations data set forth below for the nine months ended December 31, 1998 and 1999 and the summary balance sheet data as of December 31, 1999 are derived from the unaudited consolidated financial statements and notes incorporated by reference herein and, in the opinion of our management, include all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation. The summary historical financial data set forth below for each of the years in the three- year period ended March 31, 1999 are derived from the consolidated financial statements and notes incorporated by reference herein, which have been audited by PricewaterhouseCoopers LLP, independent accountants. The pro forma data set forth in this summary give effect to the following: . Our merger with WWG (after giving effect to the divestitures of the Precision Measurement and Test Tools Divisions, which took place in January 2000); . Our sale, in connection with the WWG merger, of 43,125,000 newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership and the concurrent establishment of our new credit facility; . This rights offering; . The inclusion of the results of operations for the full periods presented relating to our acquisitions of Pacific Systems Corporation, Sierra Design Labs, Applied Digital Access, Inc., and to reflect within the balance sheet our acquisition of certain assets and liabilities of the WPI Business; . The exclusion of the results of operations for the full periods presented relating to our divestitures of ComCoTec, Inc. and Parallax, Inc., and our probable divestiture of DataViews Corporation, and the exclusion from the balance sheet of certain assets and liabilities of DataViews Corporation; and . Our planned divestiture of our ICS-Advent and Itronix Corporation subsidiaries, which together comprise our industrial computing and communications business segment, which will be treated as discontinued operations for accounting purposes. The unaudited pro forma balance sheet data set forth in this summary were prepared assuming that the above-listed transactions took place on December 31, 1999. The unaudited pro forma statement of operations data for the nine months ended December 31, 1999 and the fiscal year ended March 31, 1999 set forth in this summary were prepared assuming that the above-listed transactions occurred as of the first day of each of the periods presented. The pro forma adjustments are based on currently available information and certain adjustments that management believes are reasonable. The data presented in this summary are for informational purposes only and do not necessarily represent what our financial position or results of operations would have been if the above-listed transactions had in fact occurred on the dates indicated and are not necessarily indicative of our financial position or results of operations for any future period. 13 Summary Financial Data
Nine Months Ended Year Ended March 31, December 31, --------------------------------------- ----------------------------- Pro Forma Pro Forma 1997 1998 1999 1999 1998 1999 1999 -------- -------- -------- --------- -------- -------- --------- (dollars in thousands, except per share data) Statement of Operations Data: Net revenues............ $362,412 $472,948 $522,854 $ 803,816 $369,525 $477,125 $708,795 Gross profit............ 225,158 267,426 294,282 499,409 210,657 271,225 450,144 Operating profit (loss)................. 32,843 68,286 40,120 (96,227) 13,774 66,230 15,483 Interest expense........ (828) (1,221) (46,198) (89,798) (33,106) (38,433) (70,586) Income (loss) from continuing operations before income taxes.... 35,434 70,807 13,279 (186,112) (837) 29,682 (54,719) Income (loss) from continuing operations.. 17,849 41,776 6,445 (151,419) (1,323) 16,870 (56,979) Income from discontinued operations............. 12,000 -- -- 11,897 -- -- 13,691 Net income.............. $ 29,849 $ 41,776 $ 6,445 $(139,522) $ (1,323) $ 16,870 $(43,288) Net income per share (basic)................ $ 1.74 $ 2.49 $ 0.06 $ (0.82) $ (0.01) $ 0.14 $ (0.23) Net income per share (diluted).............. $ 1.66 $ 2.40 $ 0.06 $ (0.82) $ (0.01) $ 0.13 $ (0.23) Other Data: Capital expenditures.... 10,176 15,879 11,323 23,953 7,425 12,960 21,839 Depreciation and amortization........... 16,073 17,901 17,969 117,970 13,571 16,156 79,496
As of As of March 31, As of December 31, --------------------------- December 31, Pro Forma 1997 1998 1999 1999 1999 -------- -------- --------- ------------ ------------ (dollars in thousands) Balance Sheet Data (at end of period): Cash and cash equivalents............ $ 39,782 $ 64,904 $ 70,362 $ 39,016 $ 106,074 Total assets............ 249,010 288,130 348,104 406,997 1,193,097 Total debt.............. 5,427 233 527,342 566,596 993,581 Total equity (deficit).. 160,686 202,119 (316,440) (300,331) (86,503)
14 FORWARD-LOOKING STATEMENTS This prospectus includes forward-looking statements. All statements other than statements of historical facts included in this prospectus may constitute forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that our assumptions and expectations will prove to have been correct. Important factors that could cause our actual results to differ from our expectations are disclosed in this prospectus, including factors disclosed under "Risk Factors" beginning on page 16. These forward-looking statements are subject to various risks, uncertainties and assumptions including, among other things: . Our outstanding indebtedness and our leverage, and the restrictions imposed by our indebtedness; . The cyclical nature of certain of our businesses, and domestic and international economic conditions; . The high degree of competition in certain of our businesses, and the potential for new competitors to enter into those businesses; . The integration of recent and future acquired businesses with our existing operations in a timely and efficient manner; . Our ability to divest our ICS-Advent and Itronix Corporation subsidiaries, which together comprise our industrial computing and communications business segment; . The extent to which we undertake new acquisitions or enter into strategic joint ventures or partnerships; . Future modifications to existing laws and regulations; . Discovery of unknown contingent liabilities, including environmental contamination at our facilities; . Fluctuations in interest rates and in foreign currency exchange rates; and . Increases in the cost of raw materials and other inputs used to make our products. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur. 15 RISK FACTORS You should carefully consider the risks described below and the other information in this prospectus before deciding to purchase shares in the rights offering. Our shares are subject to significant investment risks. Many factors, including the risks described below and other risks we have not recognized, could cause our operating results to differ from our expectations and plans. There are risks related to this offering that could result in substantial losses for investors who exercise their rights. Stock Market Risks. . Decline in Our Stock Price. The subscription price in this rights offering represents a discount to the market price of our common stock on the date it was determined. The trading price of our common stock may decline to below the subscription price. We cannot assure you that the subscription price will remain below any trading price for our common stock or that the trading price of our common stock will not decline to below the subscription price during or after this rights offering. . Future Market Price of Our Stock. Future prices of our stock may be affected positively or negatively by our future revenues and earnings, changes in estimates by analysts and our ability to meet such estimates, speculation in the trade or business press about our company, and overall conditions affecting our businesses, economic trends and the securities markets. Procedural Risks. No Revocation. You are not allowed to revoke or change your exercise of rights after you send in your subscription forms and payment. If we cancel this rights offering, we are obligated only to refund payments actually received, without interest. Need to Act Promptly and Follow Subscription Instructions. Shareholders who desire to purchase shares in this rights offering must act promptly to ensure that all required forms and payments are actually received by the subscription agent, Equiserve Trust Company, N.A., prior to the expiration date. If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your desired transaction, Equiserve Trust Company, N.A. may, depending on the circumstances, reject your subscription or accept it to the extent of the payment received. Neither Dynatech nor Equiserve Trust Company, N.A. undertakes to contact you concerning, or attempt to correct, an incomplete or incorrect subscription form or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures. Risk of Personal Checks. Any personal check used to pay for shares must clear prior to the expiration date, and the clearing process may require five or more business days. If you do not exercise your rights, your relative ownership interest in Dynatech will be diluted. If you choose not to exercise your subscription rights in full, your relative ownership interest in Dynatech will be diluted. In addition, because the subscription price represents a discount from the prevailing market price of our common stock, shareholders who choose not to exercise their subscription rights could experience dilution of their economic interest in Dynatech. We only recently began the process of integrating the operations of WWG with ours and may encounter unanticipated difficulties or costs during the integration process. The merger with WWG presents us with significant challenges; among other things, it reflects a major commitment to geographic markets outside North America where we have had relatively little experience. Therefore, we cannot assure you that difficulties in integrating the operations of WWG with ours will not arise 16 or that the strategic and commercial benefits expected from the merger will actually be realized. The successful integration of WWG and implementation of our operating strategy after the merger could require substantial resources and attention from our management team. If currently unanticipated costs or difficulties arise, the merger could have a materially adverse effect on our results of operations or financial condition. The length and unpredictability of the sales and implementation cycles for our product makes it difficult to forecast quarterly revenues. Sales of our products, particularly our systems, often entail an extended decision-making process on the part of prospective customers. We may experience delays following initial contact with a prospective customer and expend substantial funds and management effort pursuing these sales. Our ability to forecast the timing and amount of specific sales is therefore limited. As a result, the uneven buying patterns of our customers may cause fluctuations in our quarterly operating results, which could cause our stock price to decline. There are other sources of delays that could lead to long sales cycles, or even a sales loss. These include potential customers' internal approval and contracting procedures, procurement practices, and test and acceptance processes. As a result, the sales cycle for larger deployment of selected products typically ranges from six to 24 months for new deployment of selected product sales, and up to six months for occasional large selected product sales. The deferral or loss of one or more significant sales could significantly affect operating results in a particular quarter, especially if there are significant sales and marketing expenses associated with the deferred or lost sales. We are controlled by our principal shareholders, whose interests may not be aligned with those of other shareholders. Assuming this rights offering is fully subscribed and Clayton, Dubilier and Rice Fund VI Limited Partnership does not purchase any shares as standby purchaser, Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, our controlling shareholders, will hold approximately 66% and 16%, respectively, of the outstanding shares of our common stock. The Clayton, Dubilier & Rice funds have the power to elect our directors, no matter how our other shareholders may vote, to appoint new management and approve any action requiring the approval of our stockholders, including adopting certain amendments to our certificate of incorporation and approving our merger or the sale of all or substantially all of our assets. We cannot assure you that the interests of the Clayton, Dubilier & Rice funds will not conflict with the interests of our other shareholders. Clayton, Dubilier & Rice Fund V Limited Partnership has agreed, pursuant to certain employment agreements with Messrs. Allan M. Kline, our Corporate Vice President, Chief Financial Officer and Treasurer, and John R. Peeler, our Corporate Vice President, to vote its shares to elect both men as directors so long as they are employed by us. Although our common stock is available on the over-the-counter-market, it is not listed on a national or regional securities exchange and is thinly traded. Our stock price may fluctuate more than the stock market as a whole. As a result of the thin trading market for our common stock, its market price may fluctuate significantly more than the stock market as a whole or the stock prices of our publicly traded peer companies. Of the 181,769,303 shares of our outstanding common stock after our sale of newly-issued but unregistered shares to Clayton, Dubilier & Rice Find V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership and our issuance of newly-issued shares of our common stock to certain WWG stockholders in connection with the WWG merger, only approximately 7% of our outstanding common stock is owned by persons or entities other than the Clayton, Dubilier & Rice funds or former WWG stockholders. Without a larger float and a listing on a national or regional exchange, our common stock will be less liquid than the stock of companies with broader public ownership and, as a result, the trading prices for our common stock may be more volatile. Among other things, trading of a relatively small volume of our common stock may have a greater impact on the trading price for our stock than would be the case if our public float were larger. 17 In addition, sales of a substantial amount of our outstanding common stock in the public market, or the perception that these sales may occur, could adversely affect the market price of our common stock prevailing from time to time. Possible or actual sale of any of these shares, particularly by our controlling shareholders or former WWG stockholders, may decrease the market price of shares of our common stock. The risks associated with the thin trading market for our common stock may be mitigated in the future, however, should we offer and sell newly-issued shares of our common stock in a registered public offering. Our substantial indebtedness could adversely affect our financial condition. We are highly leveraged, with indebtedness that is very substantial in relation to our stockholders' equity. As of March 31, 2000, we had a total of approximately $580 million of debt outstanding. This outstanding debt consisted primarily of $275 million of our 9 3/4% Senior Subordinated Notes due 2008, $70 million under our revolving credit facility and $235 million under our term loan facility. As a result of the WWG merger, however, our outstanding debt is now approximately $994 million consisting of $275 million of our 9 3/4% Senior Subordinated Notes due 2008, $685 million of term loans outstanding under our new credit facility and approximately $34 million of other debt. Our revolving credit facility, which permits borrowings of up to $175 million, matures in 2006. Approximately $175 million of our indebtedness under our term loan facility matures in 2006. The remaining $510 million matures in 2007. Our high debt levels may have important consequences for us, including, but not limited to, the following: . Our ability to obtain additional financing to fund future acquisitions, meet our working capital needs, fund future capital expenditures or use for other purposes may be impaired, or any such financing may not be on terms favorable to us; . A substantial amount of our operating cash flow is dedicated to the payment of principal and interest on our indebtedness, thereby diminishing funds that would otherwise be available for our operations and for other purposes, including investments in new products, research and development, capital spending and acquisitions; . A substantial decrease in net operating cash flows or an increase in our expenses could make it difficult for us to meet our debt service requirements, force us to modify our operations or sell certain of our assets; and . Our highly leveraged capital structure may place us at a competitive disadvantage by hindering our ability to adjust rapidly to changing market conditions or by making us vulnerable to a downturn in our business or the economy in general. Our ability to repay or refinance our indebtedness will depend on our future financial and operating performance. Our performance, in turn, will be subject to prevailing economic and competitive conditions, as well as to financial, business, legislative, regulatory, industry and other factors, many of which are beyond our control. These factors could include: . General economic conditions; . Operating difficulties or increased operating costs; . Product pricing pressures; . Revenue instability arising from cost savings initiatives or otherwise; . Labor difficulties; . The response of competitors or customers to our business strategy or projects; and . Telecommunications provider consolidation or strategy changes. Our ability to meet our debt service and other obligations may depend in significant part on the extent to which we can implement successfully our business and growth strategy. We cannot assure you that we will be able to implement our strategy fully or that the anticipated results of our strategy will be realized. If our cash 18 flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital or other expenditures, sell assets, seek to obtain additional equity capital or refinance or restructure our debt. We cannot assure you that our cash flow and capital resources will be sufficient for payment of principal of, premium, if any, and interest on, our indebtedness in the future, or that any such alternative measures would be successful or would permit us to meet our scheduled debt service obligations. In addition, because certain of our obligations bear interest at floating rates, an increase in interest rates could materially adversely affect our ability to meet our debt service obligations. See "Material Changes--Debt Financing in connection with the WWG Merger". Our debt agreements impose significant operating and financial restrictions, which may prevent us from capitalizing on business opportunities. Our debt agreements impose significant restrictions on our operations, thereby limiting the discretion of management with respect to certain business matters. These agreements restrict, among other things, our ability to: . Incur additional indebtedness, guarantee obligations and create liens; . Pay dividends and make other distributions; . Prepay or modify the terms of other indebtedness; . Make certain capital expenditures, investments or acquisitions, or enter into mergers or consolidations or sales of assets; and . Engage in certain transactions with affiliates. Our ability to comply with the restrictions contained in our debt agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions, and there can be no assurance that we will be able to comply with such restrictions in the future. See "Material Changes-- Debt Financing in connection with the WWG Merger". The markets in which we operate are highly competitive. We cannot assure you that we will adapt as quickly as our competitors to changes in these markets, or be able to raise our prices at the same pace as our costs increase. The markets for our products are highly competitive. We compete directly or indirectly with Agilent Technologies, Inc. and Tektronix, Inc., among others. We also compete with a number of other vendors that offer products that address discrete portions of our markets, including Digital Lightwave, Inc., Turnstone Systems, Inc., and Tollgrade Communications, Inc. Due to the rapidly evolving markets in which we compete, additional competitors with significant market presence and financial resources, including large telecommunications equipment manufacturers and computer hardware and software companies, may enter our markets, thereby further intensifying competition. Increased competition could result in price reductions and loss of market share that would materially adversely affect our business, financial condition and results of operations. Certain of our current and potential competitors have greater name recognition and greater financial, selling and marketing, technical, manufacturing and other resources than we do. Although we believe that we have certain technological and other competitive advantages over our competitors, realizing and maintaining such advantages will require a continued high level of investment on our part in research and product development, marketing and customer service and support. Our substantial indebtedness could limit our ability to continue to make such investments or other necessary or desirable capital expenditures, to compete effectively and respond to market conditions. We can not assure you that we will be able to compete effectively with our existing competitors or with new competitors, or that such competitors will not succeed in adapting more rapidly and effectively to changes in technology or in the market or in developing or marketing products that will be more widely accepted. 19 The markets we serve are characterized by rapid change and innovation. We cannot assure you that we will be able to develop and successfully market products that account for such changes and innovations. The market for our products and services is characterized by rapidly changing technologies, new and evolving industry standards and protocols and product and service introductions and enhancements that may render our existing offerings obsolete or unmarketable. Automation in our addressed markets for communications test equipment or a shift in customer emphasis from employee- operated communications test to automated test and monitoring systems could likewise render our existing product offerings obsolete or unmarketable, or reduce the size of one or more of our addressed markets. In particular, incorporation of self-testing functions in the equipment currently addressed by our communications test instruments could render our offerings redundant and unmarketable. Failure to anticipate or respond rapidly to advances in technology and to adapt our products appropriately could have a material adverse effect on our business, financial condition and results of operations. The development of new, technologically advanced products is a complex and uncertain process requiring the accurate anticipation of technological and market trends and the incurrence of substantial research and development costs. From the beginning of fiscal 1995 through December 31, 1999, we have expended an average of 11% of our sales revenue (or approximately $271 million) on product development and, although we expect to maintain similar levels of product development spending in the future, there can be no assurance that we will have sufficient free cash flow to do so. Moreover, we cannot assure you that errors will not be found in our new products or upgrades after commencement of commercial shipments, resulting in delays in or loss of market acceptance and sales, diversion of development resources, injury to our reputation, increased service and warranty costs or payment of compensatory or other damages, any of which could have a material adverse effect on our business, financial condition and results of operations. We serve many customers in the communications industry. As a result, our operations could be adversely affected by industry consolidation, governmental regulation and other factors that affect the communications industry in general. A substantial portion of our customers are regional telephone service operating companies, competitive access providers, wireless service providers, competitive local exchange carriers and other communications service providers and industrial engineers and other users of communications test equipment. Their industries are characterized by intense competition and consolidation. Fewer customers as a result of such consolidation could create pressure on us to lower our prices. In addition, governmental regulation of the communications industry could materially adversely affect our customers and, as a result, materially limit or restrict our business. We cannot assure you that the current trend toward deregulation of the telecommunications market, which has resulted in increased competition among our customers as well as escalating demand on the part of such customers for our technologies and services, will continue. If service providers reduce their use of field technicians and successfully implement a self-service installation model, demand for our products could decrease. To ensure quality service, our major service provider customers typically send a technician who uses our product into the field to verify service for installations. However, some providers have recently announced plans to encourage their customers to install their own service and, by doing so, hope to reduce their expenses and expedite installation for their customers. To encourage self-installation, these companies offer financial incentives. If service providers successfully implement these plans or choose to send technicians into the field only after a problem has been reported, or if alternative methods of verification become available, such as remote verification, the need for field technicians and, consequently, the need for certain of our products could decrease. Several of our products must comply with significant governmental and industry- based regulations, certifications, standards and protocols. Such compliance is costly and time consuming, and there can be no assurance that our products will continue to meet these standards in the future. Several of our products must comply with significant governmental and industry-based regulations, certifications, standards and protocols, some of which evolve as new technologies are deployed. These 20 regulations, certifications, standards and protocols include those promulgated by the U.S. Federal Communications Commission, the Underwriters Laboratories and various foreign jurisdictions. Compliance with such regulations, certifications, standards and protocols may prove costly and time-consuming for us by, among other things, presenting barriers to entry in particular markets or reducing the profitability of our product offerings. Such regulations, certifications, standards and protocols may also adversely affect the communications industry, limit the number of potential customers for our products and services or otherwise have a material adverse effect on our business, financial condition and results of operations. Failure to comply, or delays in compliance, with such regulations, standards and protocols could delay the introduction of new products or cause our existing products to become obsolete. Some of our products are dependent on inputs and technologies we purchase or license from limited source vendors and licensors. If we are unable to obtain these inputs and technologies from such suppliers and licensors in the future, we may be unable to continue to offer the affected products. We purchase key inputs and license key technologies from limited source vendors. There can be no assurance that such inputs will continue to be produced or that such licensed technology will continue to be made available to us, or that the price for such inputs and licensed technology will not significantly increase. If we are unable to obtain sufficient quantities of these inputs or license these technologies in the future, and, as is likely to be the case, are unable to rapidly develop alternative sources for these inputs and technologies, we are likely to face increased costs and delays or reductions in product shipments which could materially adversely affect our business, financial condition and results of operations. The manufacture of the limited source inputs we use in our products is a technologically complex process, and our reliance on the suppliers of these inputs exposes us to potential production difficulties and quality variations which could negatively impact the cost and the timeliness of delivery of our products. If our supply of these inputs, including, but not limited to, application-specific integrated circuits, power supplies, display devices and operating system software, should be significantly interrupted or cease entirely, we may be required to redesign certain of our products. We cannot assure you that such supply problems will not occur or, if such problems do occur, that satisfactory solutions will be available. Third parties may claim we are infringing their intellectual property and, as a result of such claims, we could suffer significant litigation or licensing expenses or be prevented from selling our products. Third parties may claim that we are infringing their intellectual property rights and we may be found to infringe those intellectual property rights. While we do not believe that any of our products infringe the valid intellectual property rights of third parties, we may be unaware of intellectual property rights of others that may cover some of our technology, products and services. Any litigation regarding patents or other intellectual property could be costly and time-consuming, and divert the attentions of our management and key personnel from our business operations. The complexity of the technology involved and the uncertainty of intellectual property litigation increase these risks. Claims of intellectual property infringement might also require us to enter into costly royalty or license agreements. However, we may not be able to obtain royalty or license agreements on terms acceptable to us, or at all. We also may be subject to significant damages or injunctions against development and sale of certain of our products. Third parties may infringe on our intellectual property and, as a result, we may expend significant resources enforcing our rights or suffer competitive injury. Our success depends in large part on our proprietary intellectual property. We rely on a combination of patents, copyrights, trademarks and trade secrets, confidentiality provisions and licensing arrangements to establish and protect our proprietary intellectual property. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could have a material adverse effect on our business, financial condition and results of operations. 21 Our pending patent and trademark registration applications may not be allowed or competitors may challenge the validity or scope of these patent applications or trademarks registrations. In addition, competitors may design around our technology or develop competing technologies. Intellectual property rights may also be unavailable or limited in some foreign countries, which could make it easier for our competitors to capture market share. Our success is dependent upon the quality of our key personnel. If we are unable to retain our key personnel or if we are unable to continue to hire highly-skilled personnel, our business may suffer. Our success depends in large part upon our senior management, as well as our ability to attract and retain highly-skilled technical, managerial, sales and marketing personnel, particularly engineers skilled and experienced with communications equipment. Competition for such personnel is intense and there can be no assurance that we will be successful in retaining our existing key personnel or attracting equally skilled people in their stead. Such failure to retain our personnel, including our senior management, could have a material adverse effect on our business, financial condition and results of operations. In addition, continued labor market shortages of technically-skilled personnel may lead to significant wage increases, which could reduce our overall profitability. Our products are complex, and our failure to detect errors and defects may subject us to costly repairs, product returns under warranty and product liability litigation. Our products are complex and may contain undetected defects or errors when first introduced or as enhancements are released. These errors may occur despite our testing and may not be discovered until after a product has been shipped and used by our customers. This risk is compounded by the fact that we offer many products, with multiple hardware and software modifications, which makes it more difficult to ensure high standards of quality control in our manufacturing process. The existence of these errors or defects could result in costly repairs and/or returns of products under warranty, diversion of development resources and, more generally, in delayed market acceptance of the product or damage to our reputation and business, any of which could have a material adverse effect on our business, financial condition and results of operations. In addition, the terms of our customer agreements and purchase orders may not protect us adequately from unwarranted claims against us, unfair verdicts if a claim were to go to trial, settlement of these kinds of claims or future regulation or laws regarding our products. Our defense against these claims in the future, regardless of their merit, could result in substantial expense to us, diversion of management time and attention, damage to our business reputation and hurt our ability to retain existing customers or attract new customers. Our growth strategy contemplates acquisitions. Such activities could adversely affect our operating results or result in increased costs or other problems, such as increased demands on our management and other personnel and our administrative facilities. Our growth strategy contemplates, among other things, acquisitions of complementary businesses. Management cannot predict the availability of appropriate acquisition candidates or the likelihood of an acquisition being completed should any appropriate targets be identified or any negotiations commence. We could, for example, have difficulty obtaining financing to pursue a potential acquisition. If we do complete one or more acquisitions, we could have difficulty integrating acquired technology and operations into our business, or retaining and integrating the key employees of the businesses we acquire. In any event, integrating one or more acquired businesses with our business could divert substantial management attention from other business concerns. Our planned growth, if achieved, may place significant demands on our management, administrative and operational resources. In addition, our planned growth will require us to continue to develop and improve our operational, financial and other internal systems, as well as our sales capabilities, and to attract, manage and retain highly-skilled personnel. We cannot assure you that we will effectively manage our planned growth. 22 Economic, political and other risks associated with international sales and operations could adversely affect our sales. Because we sell our products worldwide, our business is subject to risks associated with doing business internationally. Our net revenue originating outside the United States, as a percentage of our total net revenue was approximately 4% for the twelve months ended March 31, 1999. For the twelve months ended September 30, 1999, WWG's net revenue originating outside the United States, as a percentage of total net revenue, was approximately 76%. We anticipate that revenue from international operations will become a substantial portion of our total revenue as a result of the WWG merger. In addition, many of our manufacturing facilities and suppliers are located outside the United States. Accordingly, our future results could be harmed by a variety of factors, including: . Changes in foreign currency exchange rates; . Changes in a specific country's or region's political or economic conditions, particularly in emerging markets; . Trade protection measures and import or export licensing requirements; . Potentially negative consequences from changes in tax laws; . Difficulties in staffing and managing widespread operations; . Differing protection of intellectual property in disparate jurisdictions; and . Unexpected changes in regulatory requirements. 23 THE RIGHTS OFFERING The Rights As soon as practicable after the date of this prospectus, we are distributing, at no charge, to holders of our common stock as of 5:00 p.m. (New York City time) on the record date of April 20, 2000, 0.389 subscription rights for every share of common stock owned at that time to purchase additional shares of common stock. Each whole right entitles you to purchase one share of our common stock for the subscription price. On May 30, 2000, the last reported sales price for our common stock on the over-the-counter market was $11.875 per share. We will not issue fractional rights. If the number of shares of common stock you held on the record date would have resulted in your receipt of fractional rights, the number of rights issued to you will be rounded down to the nearest whole right. As a result, our shareholders that held of record fewer than three shares as of April 20, 2000 are not receiving rights. Subscription Price The subscription price is $4.00 per share, payable in cash. All payments must be cleared on or before the expiration date. Basic and Oversubscription Privileges Basic Subscription Privilege. You are entitled to purchase one share of common stock at the subscription price for every whole right exercised. Oversubscription Privilege. If you exercise your basic subscription privilege in full, you may also subscribe for additional shares that other shareholders have not purchased under their basic subscription privilege. If there are not enough shares available to fill all such subscriptions for additional shares, the available shares will be allocated pro rata based on the number of shares each subscriber for additional shares has purchased under the basic subscription privilege. We will not allocate to you more than the number of shares you have actually subscribed and paid for. You are not entitled to exercise the oversubscription privilege unless you have fully exercised your basic subscription privilege. For this purpose, you would only count the shares you own in your own name, and not other shares that might, for example, be jointly held with a spouse, held as a custodian for someone else, or held in an individual retirement account. You can elect to exercise the oversubscription privilege only at the same time you exercise your basic subscription privilege in full. In exercising the oversubscription privilege, you must pay the full subscription price for all the shares you are electing to purchase. If we do not allocate to you all of the shares you have subscribed for under the oversubscription privilege, we will refund by mail to you any payment you have made for shares which are not available to issue to you, as soon as practicable after completion of the rights offering. Interest will not be payable on amounts refunded. Banks, brokers and other nominees who exercise the oversubscription privilege on behalf of beneficial owners of shares must report certain information to Equiserve Trust Company, N.A. and Dynatech and record certain other information received from each beneficial owner exercising rights. Generally, banks, brokers and other nominees must report (1) the number of shares held on the record date on behalf of each beneficial owner, (2) the number of rights as to which the basic subscription privilege has been exercised on behalf of each beneficial owner, (3) that each beneficial owner's basic subscription privilege held in the same capacity has been exercised in full, and (4) the number of shares subscribed for under the oversubscription privilege by each beneficial owner. 24 If you complete the portion of the subscription warrant to exercise the oversubscription privilege, you will be representing and certifying that you have fully exercised your basic subscription privilege as described above. You must exercise your oversubscription privilege at the same time you exercise your basic subscription privilege. Reason for the Rights Offering To finance the merger of one of our subsidiaries with WWG, we were required to raise substantial debt and equity financing in a short amount of time. As a result, we entered into a new credit facility with a syndicate of lenders. Our new credit facility provides for borrowings of up to $860 million, as opposed to the $370 million provided for by our previous credit facility. In addition, in order to obtain such debt financing, concurrently with the merger we sold 12.5 million and 30.625 million newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, respectively, for $4.00 per share. Our sale of unregistered common stock to the Clayton, Dubilier & Rice funds allowed us to raise the shareholder equity we needed within the time frame required to consummate the WWG merger and to obtain our new credit facility. However, as a result of our sale of common stock to the Clayton, Dubilier & Rice funds, the percentage equity ownership interest in Dynatech of our other shareholders was diminished. Now that the Merger is complete, we are conducting this offering so that such shareholders may, at their option, reverse the diminution of their percentage equity ownership interest of Dynatech by purchasing newly-issued shares of our common stock at the same price per share that was paid by the Clayton, Dubilier & Rice funds. Accordingly, Clayton, Dubilier & Rice Fund V Limited Partnership has agreed to refrain from exercising any rights to purchase common stock received by it in this offering, and Clayton, Dubilier & Rice Fund VI Limited Partnership, which was not one of our shareholders prior to the WWG merger, will not receive rights to purchase common stock in this rights offering. We will use the net proceeds of this offering for potential acquisitions and other general corporate purposes. See "Use of Proceeds." No Board Investment Recommendation to Shareholders Our Board of Directors does not make any recommendation to you about whether you should exercise any rights. In making the decision to exercise or not exercise your rights, you must consider your own best interests. If you choose not to exercise your subscription rights in full, your relative ownership interest of Dynatech will be diluted. If you exercise rights, you risk investment loss on new money invested. The trading price of our common stock may decline below the subscription price. We cannot assure you that the subscription price will remain below any trading price for our common stock or that its trading price will not decline to below the subscription price during or after the rights offering. For a summary of some of the risks a new investment would entail, see "Risk Factors" beginning on page 16. Expiration Time and Date The rights expire on June 19, 2000, at 5:00 p.m., New York City time. We have the option of extending the expiration date for any reason, although presently we do not intend to do so. Rights not exercised by the expiration date will be null and void. In order to exercise rights in a timely manner, you must assure that Equiserve Trust Company, N.A. actually receives, prior to expiration of the rights, the properly executed and completed subscription warrant (or "Form of Notice of Guaranteed Delivery"), together with full payment for all shares you wish to purchase. No Revocation You are not allowed to revoke or change your exercise of rights after you send in your subscription forms and payment. 25 Transferability of Rights The rights are not transferable and may be exercised only by the persons to whom they are issued. Extension, Withdrawal and Amendment We have the option of extending the period for exercising your rights, although we presently do not intend to do so. We also reserve the right to withdraw or terminate this rights offering at any time for any reason. In the event that the offering is withdrawn or terminated, all funds received from subscriptions by rights holders will be returned. Interest will not be payable on any returned funds. We reserve the right to amend the terms of this rights offering. If we make an amendment that we consider significant, we will (1) mail notice of the amendment to all shareholders of record as of the record date, (2) extend the expiration date by at least ten days and (3) offer all subscribers no less than ten days to revoke any subscription already submitted. The extension of the expiration date will not, in and of itself, be treated as a significant amendment for these purposes. Commitment of Clayton, Dubilier & Rice Fund VI Limited Partnership to Act as Standby Purchaser Clayton, Dubilier & Rice Fund VI Limited Partnership, which purchased approximately 17% of our outstanding common stock in connection with the WWG merger, has agreed to purchase all newly-issued shares of our common stock that are offered in this rights offering but not purchased by our other shareholders. If no other shareholders exercise their rights under this offering, the percentage equity ownership of Dynatech of Clayton, Dubilier & Rice Fund VI Limited Partnership would increase to approximately 19%, and the Clayton, Dubilier & Rice funds together would own approximately 85% of the outstanding common stock of Dynatech. Mailing of Warrants and Record Holders We are sending a subscription warrant to each record holder along with this prospectus and related instructions to evidence the rights. In order to exercise rights, you must fill out and sign the subscription warrant and timely deliver it with full payment for the shares to be purchased. Only the holders of record of our common stock as of the close of business as of the record date may exercise rights. You are a record holder for this purpose only if your name is registered as a shareholder with our transfer agent, Equiserve Trust Company, N.A., as of the record date. A depository bank, trust company or securities broker or dealer which is a record holder for more than one beneficial owner of shares may divide or consolidate subscription warrants to represent shares held as of the record date by their beneficial owners, upon proper showing to Equiserve Trust Company, N.A. If you own shares held in a brokerage, bank or other custodial or nominee account, in order to exercise your rights you must promptly send the proper instruction form to the person holding your shares. Your broker, dealer, depository or custodian bank or other person holding your shares is the record holder of your shares and will have to act on your behalf in order for you to exercise your rights. We have asked your broker, dealer or other nominee holders of our stock to contact the beneficial owners to obtain instructions concerning rights the beneficial owners it represents are entitled to exercise. Foreign and Unknown Addresses We are not mailing subscription warrants to shareholders whose addresses are outside the United States or who have an APO or FPO address. In those cases, the subscription warrants will be held by Equiserve Trust Company, N.A. for those shareholders. To exercise their rights, these shareholders must notify Equiserve Trust Company, N.A. prior to 11:00 a.m., New York City time, on the third business day prior to the expiration date. 26 Right to Block Exercise Due to Regulatory Issues We reserve the right to refuse the exercise of rights by any holder of rights who would, in our opinion, be required to obtain prior clearance or approval from any state, federal or foreign regulatory authorities for the exercise of rights or ownership of additional shares if, at the expiration date, this clearance or approval has not been obtained. We are not undertaking to pay any expenses incurred in seeking such clearance or approval. We are not offering or selling, or soliciting any purchase of, shares in any state or other jurisdiction in which this rights offering is not permitted. We reserve the right to delay the commencement of the rights offering in certain states or other jurisdictions if necessary to comply with local laws. However, we may elect not to offer rights to residents of any state or other jurisdiction whose law would require a change in the rights offering in order to carry out the rights offering in such state or jurisdiction. Procedures to Exercise Rights Please do not send subscription warrants or related forms to us. Please send the properly completed and executed form of subscription warrant with full payment to the subscription agent for this rights offering, Equiserve Trust Company, N.A. You should read carefully the subscription warrant and related instructions and forms which accompany this prospectus. You should call Mackenzie Partners, Inc., the information agent for this rights offering, at the address and telephone number listed below under the caption "The Rights Offering--Questions and Assistance Concerning the Rights" promptly with any questions you may have. You may exercise your rights by delivering to Equiserve Trust Company, N.A., at the address specified below and in the instructions accompanying this prospectus, on or prior to the expiration date: . Properly completed and executed subscription warrant(s) which evidence your rights. See "The Rights Offering--Delivery of Subscription Warrant" below for instructions on where to send these. . Payment in full of the subscription price for each newly issued share of our common stock you wish to purchase under the basic subscription privilege and the oversubscription privilege. See "The Rights Offering-- Required Forms of Payment of Subscription Price" below for payment instructions. Required Forms of Payment of Subscription Price The subscription price is $4.00 per share subscribed for, payable in cash. All payments must be cleared on or before the expiration date. If you exercise any rights, you must deliver to Equiserve Trust Company, N.A. full payment in the form of: . a personal check, certified or cashier's check or bank draft drawn upon a U.S. bank, or a U.S. postal money order, payable to Equiserve Trust Company, N.A., subscription agent, or . a wire transfer of immediately available funds to the account maintained by the Equiserve Trust Company, N.A. for this rights offering. If you desire to make payment by wire transfer, you must contact Equiserve Trust Company, N.A., at 1 (781) 575-3120 to receive a Wire Authorization Form. In order for you to timely exercise your rights, Equiserve Trust Company, N.A. must actually receive the subscription price before the expiration date. 27 Funds paid by uncertified personal check may take at least five business days to clear. Accordingly, if you pay the subscription price by means of uncertified personal check, you should make payment sufficiently in advance of the expiration date to ensure that your check actually clears and the payment is received before such date. We are not responsible for any delay in payment by you and suggest that you consider payment by means of certified or cashier's check, money order or wire transfer of funds. Delivery of Subscription Warrant All subscription warrants, payments of the subscription price, nominee holder certifications, notices of guaranteed delivery and DTC participant oversubscription exercise forms, to the extent applicable to your exercise of rights, must be delivered to Equiserve Trust Company, N.A. as follows: By Hand: By First Class Mail: By Overnight Securities Transfer & Equiserve Courier: Reporting Services, Inc. Attn: Corporate Actions Equiserve C/O Equiserve PO Box 9573 Attn: Corporate 100 William Street, Galleria Boston, MA 02205-9573 Actions New York, NY 10038 40 Campanelli Drive Braintree, MA 02184 Eligible institutions may deliver "Notice of Guaranteed Delivery" forms by facsimile transmission. Equiserve Trust Company, N.A.'s facsimile number is 1 (781) 575-4826. You should confirm receipt of all facsimiles by calling 1 (781) 575-4816. Special Procedure under "Notice of Guaranteed Delivery" Form If you wish to exercise rights but cannot ensure that Equiserve Trust Company, N.A. will actually receive the executed subscription warrant before the expiration date, you may alternatively exercise rights by causing all of the following to occur within the time prescribed: . Full payment must be received by Equiserve Trust Company, N.A. prior to the expiration date for all of the newly-issued shares of our common stock you desire to purchase pursuant to the basic subscription privilege and the oversubscription privilege. . A properly executed "Notice of Guaranteed Delivery" substantially in the form distributed by us with your subscription warrant and accompanied by a Medallion Guaranty must be received by Equiserve Trust Company, N.A. at or prior to the expiration date. . The "Notice of Guaranteed Delivery" form must be executed by both you and one of the following: (1) a member firm of a registered national securities exchange, (2) a member of the National Association of Securities Dealers, Inc. (NASD), (3) a commercial bank or trust company having an office or correspondent in the United States, or (4) other eligible guarantor institution qualified under a guarantee program acceptable to Equiserve Trust Company, N.A. The co-signing institution must provide a Medallion Guaranty on the Notice of Guaranteed Delivery guaranteeing that the subscription warrant will be delivered to Equiserve Trust Company, N.A. within three business days after the date of the form. Your Notice of Guaranteed Delivery form must also provide other relevant details concerning the intended exercise of your rights. . The properly completed subscription warrant(s) with any required signature guarantee must be received by Equiserve Trust Company, N.A. within three business days following the date of the related Notice of Guaranteed Delivery. . If you are a nominee holder of rights, the "Nominee Holder Certification" must also accompany the Notice of Guaranteed Delivery. A Notice of Guaranteed Delivery may be delivered to Equiserve Trust Company, N.A. in the same manner as subscription warrants at the addresses set forth above under the caption "The Rights Offering--Delivery of Subscription Warrant" or by telegram or facsimile transmission. 28 Equiserve Trust Company, N.A.'s facsimile number is 1 (781) 575-4826. You should confirm facsimile deliveries by calling 1 (781) 575-4816. Additional copies of the form of Notice of Guaranteed Delivery are available upon request from Mackenzie Partners, Inc., whose address and telephone number are set forth below under the caption "Questions and Assistance Concerning the Rights." Incomplete Forms; Insufficient Payment If you do not indicate on your subscription warrant the number of rights being exercised, or do not forward sufficient payment for the number of rights that you indicate are being exercised, then we will accept the subscription forms and payment only for the maximum number of rights that may be exercised based on the actual payment delivered. We will make this determination as follows: (1) you will be deemed to have exercised your basic subscription privilege to the full extent of the payment received, and (2) if any funds remain, you will be deemed to have exercised your oversubscription privilege to the extent of the remaining funds. We will return any payment not applied to the purchase of shares under this rights offering as soon as practicable by mail. Interest will not be payable on amounts refunded. Prohibition on Fractional Shares Each whole right entitles you to purchase one share of common stock at the subscription price per share. We will accept any inadvertent subscription indicating a purchase of fractional shares by rounding down to the nearest whole share and, as soon as practicable, refunding without interest any payment received for a fractional share. Instructions to Nominee Holders If you are a broker, trustee or depository for securities or other nominee holder for beneficial owners of our common stock, we are requesting that you contact such beneficial owners as soon as possible to obtain instructions and related certifications concerning their rights. Our request to you is further explained in the suggested form of letter of instructions from nominee holders to beneficial owners accompanying this prospectus. To the extent so instructed, nominee holders should complete appropriate subscription warrants on behalf of beneficial owners and, in the case of any exercise of the oversubscription privilege, the related form of "Nominee Holder Certification," and submit them on a timely basis to Equiserve Trust Company, N.A. with the proper payment. Risk of Loss on Delivery of Subscription Warrant Forms and Payments Each holder of rights bears all risk of the method of delivery to Equiserve Trust Company, N.A. of subscription warrants and payments of the subscription price. If subscription warrants and payments are sent by mail, you are urged to send these by registered mail, properly insured, with return receipt requested, and to allow a sufficient number of days to ensure delivery to Equiserve Trust Company, N.A. and clearance of payment prior to the expiration date. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified or cashier's check, money order or wire transfer of funds. Procedures for DTC Participants We expect that your exercise of your basic subscription privilege (but not your oversubscription privilege) may be made through the facilities of The Depository Trust Company (commonly known as DTC). If your 29 rights are exercised as part of the basic subscription privilege through DTC, we refer to them as "DTC Exercised Rights." If you hold DTC Exercised Rights, you may exercise your oversubscription privilege by properly executing and delivering to Equiserve Trust Company, N.A., at or prior to the time the rights expire, a DTC participant oversubscription exercise form and a nominee holder certification and making payment of the appropriate subscription price for the number of shares of common stock for which your oversubscription privilege is to be exercised. Please call Mackenzie Partners, Inc. at 1 (800) 322-2885 (toll free) to obtain copies of the DTC oversubscription exercise form and the nominee holder certification. How Procedural and Other Questions Are Resolved We are entitled to resolve all questions concerning the timeliness, validity, form and eligibility of any exercise of rights. Our determination of such questions will be final and binding. We, in our sole discretion, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any right because of any defect or irregularity. Subscription warrants will not be considered received or accepted until all irregularities have been waived or cured within such time as we determine in our sole discretion. Neither we nor Equiserve Trust Company, N.A. have any duty to give notification of any defect or irregularity in connection with the submission of subscription warrants or any other required document. Neither we nor Equiserve Trust Company, N.A. will incur any liability for failure to give such notification. We reserve the right to reject any exercise of rights if the exercise does not comply with the terms of this rights offering or is not in proper form or if the exercise of rights would be unlawful or materially burdensome. Issuance of Stock Certificates Stock certificates for shares purchased in the rights offering will be issued as soon as practicable after the expiration date. Equiserve Trust Company, N.A. will deliver subscription payments to us only after consummation of the rights offering and the issuance of stock certificates to our shareholders that exercised rights. Unless you instruct otherwise in your subscription warrant form, shares purchased by the exercise of rights will be registered in the name of the person exercising the rights. Questions and Assistance Concerning the Rights You should direct any questions, requests for assistance concerning the rights or requests for additional copies of this prospectus, forms of instructions or the Notice of Guaranteed Delivery to: Mackenzie Partners, Inc. 156 Fifth Avenue New York, NY 10010 Telephone: 1 (800) 322-2885 (toll free) 30 USE OF PROCEEDS We estimate that the net proceeds of this offering will be approximately $20 million. We will use these proceeds for potential acquisitions and other general corporate purposes. DETERMINATION OF SUBSCRIPTION PRICE As a result of our sale of newly-issued but unregistered shares of common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership in connection with the WWG merger, the percentage equity ownership interest of Dynatech of our shareholders other than the Clayton, Dubilier & Rice funds was diminished. Now that the WWG merger is complete, we are conducting this offering so that such shareholders may, at their option, reverse the diminution of their percentage equity ownership interest of Dynatech by purchasing newly-issued shares of our common stock for the same $4.00 price per share as was paid by the Clayton, Dubilier & Rice funds. The subscription price is not necessarily related to the assets, book value or net worth of Dynatech or any other established criteria of value and may not be indicative of the fair value of the securities offered. PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY Our common stock is traded in the over-the-counter market under the symbol "DYNA" On May 30, 2000, there were 941 registered holders of the common stock and the price of our common stock on the over-the-counter market was $11.875. The following table sets forth the high and low sales prices of our common stock on the over-the-counter market for each quarterly period within our two most recent fiscal years. Since April 1, 1995, we have not declared or paid cash dividends to the holders of our common stock. We intend to retain earnings for use in the operation and expansion of our business. In addition, certain restrictions in our credit agreements limit our ability to pay cash dividends.
High Low ------- ------ Fiscal Year Ended March 31, 1999 First Quarter (1).......................................... $ 4.312 $3.125 Second Quarter............................................. $ 3.438 $2.687 Third Quarter.............................................. $ 3.000 $2.375 Fourth Quarter............................................. $ 3.500 $2.718 High Low ------- ------ Fiscal Year Ended March 31, 2000 First Quarter.............................................. $ 4.062 $3.125 Second Quarter............................................. $ 5.031 $3.437 Third Quarter.............................................. $ 8.000 $4.875 Fourth Quarter............................................. $15.937 $6.875
- -------- (1) From April 1, 1998 to May 21, 1998, our common stock was traded on the New York Stock Exchange ("NYSE"). After our merger on May 21, 1998 with an entity formed by Clayton, Dubilier & Rice Fund V Limited Partnership, however, our common stock ceased to be listed on the NYSE and became available only in the over-the-counter market. The high and low sales prices of our common stock set forth herein are for the periods following May 21, 1998. 31 CAPITALIZATION The following table shows our cash and cash equivalents and actual capitalization at December 31, 1999. The column captioned "Pro Forma As Adjusted" gives effect to the pro forma adjustments described in the Unaudited Pro Forma Condensed Consolidated Financial Statements herein and the receipt and application of the net proceeds of this rights offering, assuming the rights offering is fully subscribed. You should read the information set forth below together with the Summary Financial Data and Unaudited Pro Forma Condensed Consolidated Financial Statements herein, as well as our historical consolidated financial statements and the notes thereto.
As of December 31, 1999 -------------------------- Pro Forma Actual As Adjusted --------- ----------- (in thousands) Cash and cash equivalents........................ $ 39,016 $106,074 ========= ======== Long-term debt, including current portion: Bank Borrowings: Revolving credit facility.................... $ 56,000 $ -- Term Loans................................... 235,596 685,000 Notes.......................................... 275,000 275,000 Other debt..................................... -- 33,581 --------- -------- Total debt................................... 566,596 993,581 Shareholders' deficit............................ (300,331) (86,503) --------- -------- Total capitalization......................... $ 266,265 $907,078 ========= ========
32 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The Unaudited Pro Forma Condensed Consolidated Financial Statements give effect to the following: . Our merger with WWG (after giving effect to the divestitures of the Precision Measurement and Test Tools divisions, which occurred in January 2000); . Our sale, in connection with the WWG merger, of 43,125,000 newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, and the concurrent establishment of our new credit facility; . This rights offering; . The inclusion of the results of operations for the full periods presented relating to our acquisitions of Pacific Systems Corporation, Sierra Design Labs, Applied Digital Access, Inc. and to reflect within the balance sheet our acquisition of certain assets and liabilities of WPI, Inc. (WPI's results of operations have been excluded from the pro forma statements because this business is reported within discontinued operations); . The exclusion of the results of operations for the full periods presented relating to our divestitures of ComCoTec, Inc. and Parallax, Inc., and our probable divestiture of DataViews Corporation, and the exclusion from the balance sheet of certain assets and liabilities of DataViews Corporation; and . Our plan to discontinue the Company's Industrial Computing and Communications business segment. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1999 set forth herein was prepared assuming that the above-listed transactions took place on that date. The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended December 31, 1999 and Unaudited Pro Forma Condensed Consolidated Statement of Operations for the fiscal year ended March 31, 1999 set forth herein were prepared assuming that the above-listed transactions occurred as of the first day of each of the periods presented. The Unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with the Dynatech and WWG historical Consolidated Financial Statements, which are incorporated by reference in this prospectus, as well as Dynatech's "Management Discussion and Analysis of Financial Condition and Results of Operations", also incorporated by reference in this prospectus. The pro forma adjustments, as described in the Notes to Unaudited Pro Forma Statements herein, are based on currently available information and certain adjustments that management believes are reasonable. This pro forma financial information is presented for informational purposes only and does not necessarily represent what our financial position or results of operations would have been if these transactions had in fact occurred on the dates indicated and is not necessarily indicative of our financial position or results of operations for any future period. 33 DYNATECH CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET December 31, 1999 (in thousands)
Adjusted Other WWG Purchase Debt Related Equity Related Dynatech Acquisitions/ Pro Forma Accounting Pro Forma Pro Forma Corporation (a) Divestitures (b) WWG (c) Adjustments (d) Adjustments (f) Adjustments (h) Total --------------- ---------------- --------- --------------- --------------- --------------- ---------- ASSETS Current asset: Cash and cash equivalents...... $ 39,016 $(30,804) $ 38,830 $(258,000) $ 170,000 $147,032 $ 106,074 Accounts receivable, net.............. 71,962 (970) 99,083 -- -- -- 170,075 Inventories....... 33,033 -- 61,863 45,000 -- -- 139,896 Other current assets........... 26,206 (57) 15,104 -- -- -- 41,253 Net assets from discontinued operations....... 31,490 34,761 -- -- -- -- 66,251 --------- -------- -------- --------- --------- -------- ---------- Total current assets......... 201,707 2,930 214,880 (213,000) 170,000 147,032 523,549 Property and equipment, net.... 23,483 (387) 57,670 10,000 -- -- 90,766 Intangible assets, net............... 63,388 -- 141,204 284,788 -- -- 489,380 Other assets....... 74,084 (20) 6,138 -- 9,200 -- 89,402 --------- -------- -------- --------- --------- -------- ---------- Total assets.... $ 362,662 $ 2,523 $419,892 $ 81,788 $ 179,200 $147,032 $1,193,097 ========= ======== ======== ========= ========= ======== ========== LIABILITIES & STOCKHOLDERS' DEFICIT Current liabilities: Notes payable and current portion of long-term debt............. $ 6,398 $ -- $ 32,752 $ -- $ (28,000) $ -- $ 11,150 Other current liabilities...... 89,252 (753) 94,502 20,000 15,680 (40,000) 178,681 --------- -------- -------- --------- --------- -------- ---------- Total current liabilities.... 95,650 (753) 127,254 20,000 (12,320) (40,000) 189,831 Long-term debt..... 560,198 -- 224,233 -- 198,000 -- 982,431 Pension liabilities....... -- -- 34,552 -- -- -- 34,552 Deferred compensation...... 7,145 -- -- -- -- -- 7,145 Other long term liabilities....... -- -- 11,641 54,000 -- -- 65,641 Common stock and APIC.............. -- -- -- 130,000 -- 192,432 322,432 Stockholders' deficit........... (300,331) 3,276 22,212 (122,212) (6,480) (5,400) (408,935) --------- -------- -------- --------- --------- -------- ---------- Total liabilities and stockholders' deficit........ $ 362,662 $ 2,523 $419,892 $ 81,788 $ 179,200 $147,032 $1,193,097 ========= ======== ======== ========= ========= ======== ==========
See accompanying notes to the unaudited pro forma statements. 34 DYNATECH CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS Nine Months Ended December 31, 1999 (in thousands, except per share data)
Adjusted Other Other Dynatech Acquisitions/ Pro Forma Amortization Pro Forma Corporation (a) Divestitures (b) WWG (c) of Intangibles (e) Adjustments Total --------------- ---------------- --------- ------------------ ----------- -------- Sales................... $316,808 $21,791 $370,196 $ -- $ -- $708,795 Cost of sales........... 105,499 9,758 143,394 -- -- 258,651 -------- ------- -------- -------- ------- -------- Gross profit............ 211,309 12,033 226,802 -- -- 450,144 -------- ------- -------- -------- ------- -------- Selling, general and administrative expense................ 106,212 8,975 134,119 1,250 -- 250,556 Product development expense................ 41,643 5,717 51,286 -- -- 98,646 Recapitalization-related costs.................. 13,259 -- -- -- -- 13,259 Restructuring and other non-recurring charges.. -- -- 2,748 -- -- 2,748 Acquired In-Process R&D.................... -- -- -- -- -- -- Amortization of intangibles............ 4,538 389 14,716 48,762 -- 68,405 Amortization of unearned compensation........... 1,102 (55) -- -- -- 1,047 -------- ------- -------- -------- ------- -------- Total operating expenses............... 166,754 15,026 202,869 50,012 -- 434,661 -------- ------- -------- -------- ------- -------- Operating income....... 44,555 (2,993) 23,933 (50,012) -- 15,483 Interest expense........ (38,429) (4) (15,891) -- (16,262)(f) (70,586) Interest income......... 1,872 346 462 -- -- 2,680 Other income, net....... (48) 2 (2,250) -- -- (2,296) -------- ------- -------- -------- ------- -------- Income (Loss) from continuing operations before income taxes.... 7,950 (2,649) 6,254 (50,012) (16,262) (54,719) Provision for income taxes.................. 4,771 198 7,046 (3,250) (6,505)(g) 2,260 Minority interest....... -- -- -- -- -- -- -------- ------- -------- -------- ------- -------- Income (Loss) from continuing operations.. $ 3,179 $(2,847) $ (792) $(46,762) $(9,757) $(56,979) ======== ======= ======== ======== ======= ======== Income (Loss) per share for continuing operations: Basic.................. $ 0.03 $ (0.31) ======== ======== Diluted................ $ 0.02 $ (0.31) ======== ======== Weighted average number of shares: Basic.................. 121,310 184,405 Diluted................ 131,366 184,405
See accompanying notes to the unaudited pro forma statements. 35 DYNATECH CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS For the Fiscal Year Ended March 31, 1999 (in thousands, except per share data)
Adjusted Other Pro Other Dynatech Acquisitions Forma Amortization Pro Forma Corporation (a) Divestitures (b) WWG (c) of Intangibles (e) Adjustments Total --------------- ---------------- -------- ------------------ ----------- --------- Sales................... $329,532 $ 27,223 $447,061 $ -- $ -- $ 803,816 Cost of sales........... 108,568 12,028 183,811 -- -- 304,407 -------- -------- -------- -------- -------- --------- Gross profit............ 220,964 15,195 263,250 -- -- 499,409 -------- -------- -------- -------- -------- --------- Selling, general and administrative expense................ 112,581 10,604 175,636 1,667 -- 300,488 Product development expense................ 42,181 13,529 69,011 -- -- 124,721 Recapitalization-related costs.................. 40,767 -- -- -- -- 40,767 Restructuring and other non-recurring charges.. -- 1,666 8,896 -- -- (i) 10,562 Acquired In-Process R&D.................... -- -- 27,732 -- -- 27,732 Amortization of intangibles............ 2,726 1,073 10,405 75,934 -- 90,138 Amortization of unearned compensation........... 1,228 -- -- -- -- 1,228 -------- -------- -------- -------- -------- --------- Total operating expenses............... 199,483 26,872 291,680 77,601 -- 595,636 -------- -------- -------- -------- -------- --------- Operating income...... 21,481 (11,677) (28,430) (77,601) -- (96,227) Interest expense........ (46,178) -- (19,856) -- (23,764) (f) (89,798) Interest income......... 3,391 620 847 -- -- 4,858 Other income, net....... 15,702 (15,912) (4,735) -- -- (4,945) -------- -------- -------- -------- -------- --------- Income (Loss) from continuing operations before income taxes.... (5,604) (26,969) (52,174) (77,601) (23,764) (186,112) Provision (benefit) for income taxes........... (152) (5,912) (12,475) (4,334) (9,506)(g) (32,379) Minority interest....... -- -- (2,314) -- -- (2,314) -------- -------- -------- -------- -------- --------- Income (Loss) from continuing operations.. $ (5,452) $(21,057) $(37,385) $(73,267) $(14,258) $(151,419) ======== ======== ======== ======== ======== ========= Income (Loss) per share from continuing operations: Basic................. $ 0.05 $ (0.89) ======== ========= Diluted............... $ 0.05 $ (0.89) ======== ========= Weighted average number of shares: Basic................. 106,212 169,307 Diluted............... 106,212 169,307
See accompanying notes to the unaudited pro forma statements. 36 NOTES TO UNAUDITED PRO FORMA STATEMENTS a. Discontinued Operations In May 2000, the Board of Directors approved a plan to discontinue the Company's Industrial Computing and Communications business segment. The Company expects to dispose of these businesses in this segment through a sale transaction no later than the first quarter of fiscal year 2002. Set forth below is the unaudited balance sheet for Dynatech as of December 31, 1999, which has been adjusted to reflect the discontinued operations. Pro Forma Balance Sheet at December 31, 1999 (In thousands)
Adjusted Dynatech Discontinued Dynatech Corporation Operations Corporation ----------- ------------ ----------- ASSETS Current assets: Cash and cash equivalents............... $ 39,016 $ -- $ 39,016 Accounts receivable, net................ 88,813 (16,851) 71,962 Inventories............................. 51,244 (18,211) 33,033 Other current assets.................... 27,670 (1,464) 26,206 Net assets from discontinued operations............................. -- 31,490 31,490 --------- -------- --------- Total current assets.................. 206,743 (5,036) 201,707 Property and equipment, net............... 32,781 (9,298) 23,483 Intangible assets, net.................... 92,769 (29,381) 63,388 Other assets.............................. 74,704 (620) 74,084 --------- -------- --------- Total assets.......................... $ 406,997 $(44,335) $ 362,662 ========= ======== ========= LIABILITIES & STOCKHOLDERS' DEFICIT Current liabilities: Notes payable and current portion of long-term debt......................... $ 6,398 $ -- $ 6,398 Other current liabilities............... 133,587 (44,335) 89,252 --------- -------- --------- Total current liabilities............. 139,985 (44,335) 95,650 Long-term debt............................ 560,198 -- 560,198 Pension liability......................... -- -- -- Deferred compensation..................... 7,145 -- 7,145 Other long term liabilities............... -- -- -- Common stock.............................. -- -- -- Stockholders' deficit..................... (300,331) -- (300,331) --------- -------- --------- Total liabilities and stockholders' deficit.............................. $ 406,997 $(44,335) $ 362,662 ========= ======== =========
37 NOTES TO UNAUDITED PRO FORMA STATEMENTS--(Continued) a. Discontinued Operations--(continued) Set forth below are the unaudited results of operations adjusted for discontinued operations for Dynatech for the nine month period ended December 31, 1999.
For the Nine Month Period Ended December 31, 1999 ------------------------------------------ (In thousands) Dynatech Discontinued Adjusted Dynatech Corporation Operations Corporation ----------- ------------ ----------------- Sales............................... $477,125 $(160,317) $316,808 Cost of sales....................... 205,900 (100,401) 105,499 -------- --------- -------- Gross profit........................ 271,225 (59,916) 211,309 -------- --------- -------- Selling, general and administrative expense............................ 131,604 (25,392) 106,212 Product development expense......... 51,628 (9,985) 41,643 Recapitalization-related costs...... 13,259 -- 13,259 Restructuring and other non- recurring charges.................. -- -- -- Acquired In-Process R&D............. -- -- -- Amortization of intangibles......... 7,053 (2,515) 4,538 Amortization of unearned compensation....................... 1,451 (349) 1,102 -------- --------- -------- Total operating expenses............ 204,995 (38,241) 166,754 -------- --------- -------- Operating income.................. 66,230 (21,675) 44,555 Interest expense.................... (38,433) 4 (38,429) Interest income..................... 1,874 (2) 1,872 Other income, net................... 11 (59) (48) -------- --------- -------- Income from continuing operations before income taxes................ 29,682 (21,732) 7,950 Provision for income taxes.......... 12,812 (8,041) 4,771 -------- --------- -------- Income from continuing operations... 16,870 (13,691) 3,179 Discontinued Operations: Income from discontinued operations, net of income tax provision of 8,041............... -- 13,691 13,691 -------- --------- -------- Net Income.......................... $ 16,870 $ -- $ 16,870 ======== ========= ========
38 NOTES TO UNAUDITED PRO FORMA STATEMENTS--(Continued) a. Discontinued Operations--(continued) Set forth below are the unaudited results of operations adjusted for discontinued operations for the fiscal year ended March 31, 1999.
For the Fiscal Year Ended March 31, 1999 ------------------------------------------ (In thousands) Dynatech Discontinued Adjusted Dynatech Corporation Operations Corporation ----------- ------------ ----------------- Sales............................... $522,854 $(193,322) $329,532 Cost of sales....................... 228,572 (120,004) 108,568 -------- --------- -------- Gross profit........................ 294,282 (73,318) 220,964 -------- --------- -------- Selling, general and administrative expense............................ 149,006 (36,425) 112,581 Product development expense......... 54,023 (11,842) 42,181 Recapitalization-related costs...... 43,386 (2,619) 40,767 Restructuring and other non- recurring charges.................. -- -- -- Acquired In-Process R&D............. -- -- -- Amortization of intangibles......... 6,228 (3,502) 2,726 Amortization of unearned compensation....................... 1,519 (291) 1,228 -------- --------- -------- Total operating expenses............ 254,162 (54,679) 199,483 -------- --------- -------- Operating income................ 40,120 (18,639) 21,481 Interest expense.................... (46,198) 20 (46,178) Interest income..................... 3,398 (7) 3,391 Other income, net................... 15,959 (257) 15,702 -------- --------- -------- Income (Loss) from continuing operations before income taxes..... 13,279 (18,883) (5,604) Provision (Benefit) for income taxes.............................. 6,834 (6,986) (152) -------- --------- -------- Income (Loss) from continuing operations......................... 6,445 (11,897) (5,452) Discontinued Operations: Income from discontinued operations, net of income tax provision of 6,986............... -- 11,897 11,897 -------- --------- -------- Net Income.......................... $ 6,445 $ -- $ 6,445 ======== ========= ========
39 NOTES TO UNAUDITED PRO FORMA STATEMENTS--(Continued) b. Dynatech Acquisitions and Divestitures Acquisitions related to Continuing Operations Pacific Systems Corporation On June 19, 1998, Dynatech, through one of its indirectly wholly owned subsidiaries, acquired all of the outstanding capital stock of Pacific Systems Corporation of Kirkland, Washington ("Pacific") for a total purchase price of approximately $20 million, including an incentive earnout. The acquisition was accounted for using the purchase method of accounting and resulted in $18.0 million of goodwill which is being amortized over 30 years. The operating results of Pacific have been included in Dynatech's consolidated financial statements since June 19, 1998. Sierra Design Labs On September 10, 1999, Dynatech, through one of its wholly owned subsidiaries, purchased the outstanding stock of Sierra Design Labs ("Sierra"), a Nevada Corporation for a total purchase price of $6.3 million. The acquisition was accounted for using the purchase method of accounting and resulted in $4.9 million of goodwill which is being amortized over 10 years. The operating results of Sierra have been included in Dynatech's consolidated financial statements since September 10, 1999. Applied Digital Access, Inc. On November 1, 1999, Dynatech, through one of its wholly owned subsidiaries, acquired all the outstanding stock of Applied Digital Access, Inc. ("ADA") for a total purchase price of approximately $81 million. The acquisition was accounted for using the purchase method of accounting and resulted in $36 million of goodwill which is being amortized over 3 years. The operating results of ADA have been included in Dynatech's consolidated financial statements since November 1, 1999. Divestitures related to Continuing Operations ComCoTec, Inc. On June 30, 1998, Dynatech sold the assets of ComCoTec, Inc. ("ComCoTec") located in Lombard, Illinois to The Potomac Group, Inc. for $21 million. Dynatech recorded a pre-tax gain on $15.9 million on the sale of the assets, which was included in other income. Parallax, Inc. During fiscal year 1999, Dynatech liquidated the assets and liabilities of Parallax, Inc. ("Parallax"). Any gain or loss from the liquidation activities was immaterial. DataViews Corporation During the fourth quarter of fiscal year 2000, Dynatech initiated activities to dispose of DataViews Corporation ("DataViews"), located in Northampton, Massachusetts. During March 2000, the Company received a signed letter of intent to sell the stock of DataViews for a sale price of approximately $4 million. The gain on sale of the business is expected to be approximately $3.3 million. Acquisitions related to Discontinued Operations WPI Husky Computer, Inc., WPI Husky Computers Limited, WPI Oyster Termiflex Limited On February 24, 2000, Dynatech, through one of its wholly owned subsidiaries, purchased with cash certain assets and liabilities of WPI Husky Computer, Inc., WPI Husky Computers Limited and WPI Oyster Termiflex Limited (collectively "Husky"), all which were subsidiaries of WPI, Inc. The total purchase price for Husky totalled approximately $34.8 million. The acquisition was accounted for using the purchase method of accounting and resulted in approximately $30.0 million of goodwill which is being amortized over 5 years. 40 NOTES TO UNAUDITED PRO FORMA STATEMENTS--CONTINUED c. Pro Forma WWG On May 23, 2000, Dynatech consummated the merger of one of its subsidiaries with Wavetek Wandel Goltermann, Inc. ("WWG") pursuant to which WWG became a Dynatech subsidiary. Set forth below is the unaudited pro forma balance sheet of WWG as of December 31, 1999, which assumes that the divestitures of the Precision Measurement and Test Tools divisions, which occurred in January 2000, were consummated on December 31, 1999. The proceeds related to these divestitures totalled approximately $25.3 million in cash.
WWG pro forma balance sheet at December 31, 1999 ------------------------------ (In thousands) WWG Pro Forma WWG Divestiture WWG -------- ----------- --------- ASSETS Current assets: Cash and cash equivalents................. $ 13,530 $25,300 $ 38,830 Accounts receivable, net.................. 103,831 (4,748) 99,083 Inventories............................... 66,308 (4,445) 61,863 Other current assets...................... 15,104 -- 15,104 -------- ------- -------- Total current assets.................... 198,773 16,107 214,880 Property and equipment, net................. 58,075 (405) 57,670 Intangible assets, net...................... 157,405 (16,201) 141,204 Other assets................................ 6,146 (8) 6,138 -------- ------- -------- Total assets............................ $420,399 $ (507) $419,892 ======== ======= ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long- term debt................................ $ 32,752 $ -- $ 32,752 Other current liabilities................. 95,221 (719) 94,502 -------- ------- -------- Total current liabilities............... 127,973 (719) 127,254 Long-term debt.............................. 224,233 -- 224,233 Pension liabilities......................... 34,552 -- 34,552 Deferred compensation....................... -- -- -- Other long term liabilities................. 11,641 -- 11,641 Common stock................................ -- -- -- Stockholders' equity (deficit).............. 22,000 212 22,212 -------- ------- -------- Total liabilities and stockholders' equity (deficit)....................... $420,399 $ (507) $419,892 ======== ======= ========
41 NOTES TO UNAUDITED PRO FORMA STATEMENTS--CONTINUED c. Pro Forma WWG--(continued) Set forth below are the unaudited pro forma results of operations for WWG for the nine month period ended December 31, 1999 and for the twelve months ended March 31, 1999. The WWG results have been adjusted to exclude the results of operations for the divestitures of the Precision Measurement and Test Tools divisions, which occurred during January 2000. WWG's fiscal year ends on September 30. The WWG historical information for the nine month period ended December 31, 1999 has been derived from the Statement of Operations for the year ended September 30, 1999 included in WWG's Form 10-K for the year ended September 30, 1999, then adding the Statement of Operations for the three months ended December 31, 1999, included in WWG's Form 10-Q for the period ended December 31, 1999, and then subtracting the Statement of Operations for the six month period ended March 31, 1999, included in WWG's Form 10-Q for the period ended March 31, 1999. Wandel Goltermann, Inc. acquired Wavetek Corporation in September 1998. The WWG historical information for the twelve month period ended March 31, 1999 has been derived from the historical Statements of Operations information of Wandel Goltermann, Inc. and Wavetek Corporation.
For the Nine Month Period Ended December 31, 1999 -------------------------------- (In thousands) WWG WWG Pro Forma Historical Divestiture WWG ---------- ----------- --------- Sales........................................ $391,904 $(21,708) $370,196 Cost of sales................................ 155,164 (11,770) 143,394 -------- -------- -------- Gross profit................................. 236,740 (9,938) 226,802 -------- -------- -------- Selling, general and administrative expense.. 142,103 (7,984) 134,119 Product development expense.................. 52,601 (1,315) 51,286 Restructuring and other non-recurring charges..................................... 2,748 -- 2,748 Amortization of intangibles.................. 14,716 -- 14,716 -------- -------- -------- Total operating expenses..................... 212,168 (9,299) 202,869 -------- -------- -------- Operating income........................... 24,572 (639) 23,933 Interest expense............................. (15,891) -- (15,891) Interest income.............................. 462 -- 462 Other income, net............................ (2,250) -- (2,250) -------- -------- -------- Income from continuing operations before income taxes................................ 6,893 (639) 6,254 Provision (Benefit) for income taxes......... 7,302 (256) 7,046 -------- -------- -------- Income from continuing operations............ $ (409) $ (383) $ (792) ======== ======== ========
42 NOTES TO UNAUDITED PRO FORMA STATEMENTS--CONTINUED c. Pro Forma WWG--(continued)
For the Twelve Month Period Ended March 31, 1999 ---------------------------------------- (In thousands) WWG WWG Pro Forma Historical Divestiture WWG ----------- ------------ ----------- Sales............................... $ 477,807 $ (30,746) $ 447,061 Cost of sales....................... 199,380 (15,569) 183,811 ----------- ----------- ----------- Gross profit........................ 278,427 (15,177) 263,250 ----------- ----------- ----------- Selling, general and administrative expense............................ 186,980 (11,344) 175,636 Product development expense......... 70,728 (1,717) 69,011 Restructuring and other non- recurring charges.................. 8,896 -- 8,896 Acquired In-Process R&D............. 27,732 -- 27,732 Amortization of intangibles......... 10,405 -- 10,405 ----------- ----------- ----------- Total operating expenses............ 304,741 (13,061) 291,680 ----------- ----------- ----------- Operating income (loss)........... (26,314) (2,116) (28,430) Interest expense.................... (19,856) -- (19,856) Interest income..................... 847 -- 847 Other income (loss), net............ (4,735) -- (4,735) ----------- ----------- ----------- Income (Loss) from continuing operations before income taxes..... (50,058) (2,116) (52,174) Provision (benefit) for income taxes.............................. (11,629) (846) (12,475) Minority interest................... (2,314) -- (2,314) ----------- ----------- ----------- Income (Loss) from continuing operations......................... $ (36,115) $ (1,270) $ (37,385) =========== =========== ===========
d. Purchase Accounting related to WWG Acquisition Aggregate purchase price: Cash in exchange for WWG stock..................................... $ 250,000 Cash in exchange for WWG options................................... 8,000 Dynatech Common Stock (approximately 14,987,000 shares)............ 130,000 --------- 388,000 Add: Estimated acquisition costs................................... 20,000 --------- Total purchase price............................................. 408,000 Less: Pro Forma WWG net assets acquired (see Note C )................ (22,212) --------- Total purchase price in excess of net assets acquired............ 385,788 Estimated purchase accounting allocations: Less: Inventory step-up to fair value.............................. (45,000) Less: Fixed assets step-up to fair value........................... (10,000) Less: Incremental completed technology acquired.................... (22,000) Less: Incremental assembled workforce acquired..................... (33,000) Less: In-process research and development acquired................. (100,000) Add: Deferred tax liabilities...................................... 54,000 Add: WWG historical debt issuance costs not acquired............... 5,415 --------- Estimated incremental goodwill from acquisition.................. $ 235,203 =========
43 NOTES TO UNAUDITED PRO FORMA STATEMENTS--CONTINUED d. Purchase Accounting related to WWG Acquisition--(continued) The final allocation of the purchase price is dependent upon certain valuations and other studies that are still in progress. The estimated purchase price allocations are therefore preliminary, and have been presented solely for the purpose of developing these pro forma statements. The final allocation of the purchase price to be ultimately recorded in the Company's historical financial statements may or may not be materially different than what has been presented in these pro forma statements. The estimated in-process research and development charge of $100,000 has been included as an adjustment within the Unaudited Pro Forma Condensed Consolidated Balance Sheet, but has not been included as an adjustment within the Unaudited Pro Forma Consolidated Statements of Operations, as this charge is non-recurring in nature. For purposes of these pro forma statements, the estimated life of the WWG related pro forma intangible assets is a blended life of six years. WWG historical and pro forma intangible assets (adjusted as a result of the acquisition) at December 31, 1999 are as follows:
Pro Forma WWG Purchase Adjusted for WWG Accounting Purchase Historical Adjustments Accounting ---------- ----------- ------------ Goodwill............................... $ 62,211 $235,203 $297,414 Completed technology................... 77,544 22,000 99,544 Assembled work force................... 6,845 33,000 39,845 Deferred issuance costs................ 5,415 (5,415) -- Other.................................. 5,390 -- 5,390 -------- -------- -------- $157,405 $284,788 $442,193 ======== ======== ======== Pro forma annual amortization expense............................. $ 73,699 ========
To the extent that the blended life of the intangibles changed from six years to five years, total pro forma annual amortization expense would be $88,439. The estimated incremental increase related to the amortization of intangible assets is as follows:
Nine months Twelve months ended ended December 31, March 31, 1999 1999 ------------ ------------- Pro forma amortization expense................... $ 55,274 $ 73,699 Less: WWG historical amortization of intangible assets.......................................... (14,716) (10,405) -------- -------- Incremental pro forma amortization of intangible assets............................. $ 40,558 $ 63,294 ======== ========
44 NOTES TO UNAUDITED PRO FORMA STATEMENTS--CONTINUED e. Amortization of Intangibles and Depreciation
Nine months Twelve months ended ended December 31, March 31, 1999 1999 ------------ ------------- Incremental pro forma amortization of intangible assets from WWG acquisition....................... $40,558 $63,294 Adjustments to reflect full year amortization of goodwill to acquisitions consummated during the respective periods, as discussed in Note (b) (excludes amortization related to Husky acquisition, which is reflected in discontinued operations segment) .............................. 8,204 12,640 ------- ------- 48,762 75,934 Tax benefit related to incremental amortization of intangible assets other than goodwill............. (2,750) (3,667) ------- ------- Net impact to continuing operations............ $46,012 $72,267 ======= ======= Incremental depreciation for fixed assets step-up.. $ 1,250 $ 1,667 Tax benefit related to incremental depreciation.... (500) (667) ------- ------- Net impact to continuing operations............ $ 750 $ 1,000 ======= =======
f. Restructuring of debt Upon consummation of the WWG merger, Dynatech refinanced the existing debt of both Dynatech and WWG, as follows:
Deferred Debt Issuance Debt Costs Interest Expense ------------ ------------- ------------------------- For the For the As of As of 9 Months Ended Year Ended December 31, December 31, December 31, March 31, 1999 1999 1999 1999 ------------ ------------- -------------- ---------- Existing debt to be paid: Dynatech bank debt...... $(290,000) $ -- $ 15,267 $ 19,874 Dynatech debt issuance costs for bank debt.... -- (10,800) 1,409 1,566 WWG senior subordinated debt, bank debt and other debt, current and long-term ......... (225,000) -- 15,892 19,903 WWG debt issuance costs for bank and other debt......... -- 677 902 --------- -------- -------- -------- (515,000) (10,800) 33,245 42,245 --------- -------- -------- -------- New debt: $860,000 Senior Credit Facility: 6 year amortizing term loan at an assumed interest rate of 2.75% plus LIBOR (8.85%)..... 175,000 -- (11,616) (15,488) Debt issuance costs (6 year amortization)..... -- 5,109 (639) (852) 7.5 year term loan at an assumed interest rate of 3.25% plus LIBOR (9.35%).......... 510,000 -- (35,763) (47,684) Debt issuance costs (7.5 year amortization)..... -- 14,891 (1,489) (1,985) --------- -------- -------- -------- 685,000 20,000 (49,507) (66,009) --------- -------- -------- -------- Net addition to debt, current and long-term.... $ 170,000 ========= Net addition to debt issuance costs........... $ 9,200 ======== Net addition to interest expense.................. $(16,262) $(23,764) ======== ========
45 NOTES TO UNAUDITED PRO FORMA STATEMENTS--CONTINUED f. Restructuring of debt--(continued) Upon the consummation of the merger, Dynatech borrowed approximately $685,000 of the facility, leaving $175,000 available to be drawn under a 6 year revolving credit facility, with an assumed interest rate of LIBOR plus 2.5% (8.7%). In accordance with the terms of the WWG subordinated debt agreement, the Company will be obligated to pay a penalty of approximately $9,000 due to the early termination of the WWG debt. Such amount has been excluded from the pro forma statements of operations as it is non-recurring in nature. For historical financial statement purposes, this $9,000 ($5,400 on an after tax basis) penalty will be presented as an extraordinary item on the Company's statement of operations (see Note (h) for impact to cash). For historical financial statement purposes, the $10,800 ($6,480 on an after tax basis) of debt issuance costs of Dynatech at December 31, 1999 will be written off and presented as an extraordinary item on the Company's statement of operations. For pro forma purposes, this charge has been excluded from the pro forma statement of operations, as it is non-recurring in nature. g. Tax benefit on interest expense
For the For the 9 Months Ended Year Ended December 31, March 31, 1999 1999 --- --- -------------- ---------- Tax benefit on interest expense at effective statutory rate of 40% (see Note (f))............................. $(6,505) $(9,506) ======= =======
h. Proceeds from sale of stock Sale of 12,500 shares of Dynatech common stock to CD&R Fund V at $4.00 per share............................... $ 50,000 Sale of 30,625 shares of Dynatech common stock to CD&R Fund VI at $4.00 per share.............................. 122,500 Sale of 4,983 shares of Dynatech common stock in Rights Offering to stockholders of record on April 20, 2000 (other than CD&R Fund V) at $4.00 per share (assumes the Rights Offering is fully subscribed)(i)................................ 19,932 -------- Gross cash proceeds.............................................. 192,432 Transaction fees and expenses(ii)................................ 40,000 Payment, net of tax, for early retirement of WWG senior subordinated debt (see Note f).................................. 5,400 -------- Net cash proceeds................................................ $147,032 ========
- -------- (i) The record date for the Rights Offering is April 20, 2000. As the WWG Merger was consummated after the record date, neither CD&R Fund VI nor the WWG stockholders will be entitled to receive any Rights by virtue of the shares of Dynatech common stock acquired in connection with the consummation of the WWG merger. (ii) In connection with the WWG merger and the concurrent establishment of Dynatech's new credit facility, the company incurred approximately $40 million of transaction related fees and expenses (as discussed in Notes (d) and (f)), including $6 million payable to Clayton, Dubilier & Rice, Inc., an investment firm that manages Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, Dynatech's controlling shareholders. 46 CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a summary of the material United States federal income tax consequences of the offering to the holders of our common stock upon the distribution of rights and to the holders of the rights upon their exercise. This summary is based on provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis. This summary is limited to our shareholders who have held our common stock, and will hold the rights and any shares acquired upon the exercise of rights, as "capital assets" within the meaning of section 1221 of the Code. This summary does not address all of the tax consequences that may be relevant to particular holders in light of their personal circumstances, or to holders who are subject to special rules (such as banks and other financial institutions, broker-dealers, real estate investment trusts, regulated investment companies, insurance companies, tax-exempt organizations and non-U.S. individuals or entities). In addition, this summary does not include any description of the tax laws of any state, local or non-U.S. government that may be applicable to a particular holder. Holders are urged to consult their own tax advisors with respect to the particular U.S. federal income and estate tax consequences to them of this offering, as well as the tax consequences under state, local, non-U.S. and other tax laws and the possible effects of changes in tax laws. Distribution of Rights. A holder of our common stock will not recognize taxable income upon distribution of the rights. Lapse of the Rights. A holder of the rights that allows the rights to lapse will not recognize any gain or loss upon such lapse, and no adjustment will be made to the basis of the common stock with respect to which the rights are distributed. Shareholder Tax Basis of the Rights. Except as provided in the following sentence, the tax basis of the rights received by a holder of our common stock will be zero. If, however, either: (i) the fair market value of the rights on the date the rights are distributed is 15% or more of the fair market value (on the date of distribution) of the shares of the common stock with respect to which the rights are distributed or (ii) the holder properly elects, in the holder's federal income tax return for the taxable year in which the holder receives the rights, to allocate part of the tax basis of such common stock to the rights, then, upon the exercise of the rights, the holder's tax basis in such common stock will be allocated between such common stock and the rights in proportion to the fair market values of each on the date of distribution. Exercise of the Rights; Basis and Holding Period of the Common Stock. Holders of the rights will not recognize any gain or loss upon the exercise of the rights. The tax basis of the shares of our common stock acquired through the exercise of the rights will be equal to the sum of the subscription price for the rights and the holder's tax basis in the rights, if any. The holding period for the shares acquired through the exercise of the rights will begin on the date the rights are exercised. 47 PLAN OF DISTRIBUTION We are offering shares of our common stock directly to you pursuant to this rights offering. We have not employed any brokers, dealers or underwriters in connection with the solicitation or exercise of subscription privileges in this rights offering and no commissions, fees or discounts will be paid in connection with it. Certain of our officers and other employees may solicit responses from you, but such officers and other employees will not receive any commissions or compensation for such services other than their normal employment compensation. We will pay the fees and expenses of Equiserve Trust Company, N.A., as subscription agent, and Mackenzie Partners, Inc., as information agent, and also have agreed to indemnify the subscription agent and the information agent from any liability they may incur in connection with this rights offering. On or about June 1, 2000, we will distribute the rights and copies of this prospectus to the holder of record of our common stock on the record date. If you wish to exercise your rights and subscribe for newly-issued shares of our common stock, you should follow the procedures described under "The Rights Offering--Procedures to Exercise Rights." The subscription rights are non- transferable. Shares of Dynatech common stock received through the exercise of subscription rights will be traded on the over-the-counter market under the symbol "DYNA" as our currently outstanding shares of common stock now trade. LEGAL MATTERS The validity of the issuance of the securities offered hereby will be passed upon for us by Debevoise & Plimpton, New York, New York. Debevoise & Plimpton also acts and may hereafter act as counsel to Clayton, Dubilier & Rice, Inc. and its affiliates and to Dynatech and its affiliates. Franci J. Blassberg, Esq., a member of Debevoise & Plimpton, is married to Joseph L. Rice, III, who is a director of Dynatech and a shareholder of the managing general partners of the general partners of Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, our controlling shareholders. EXPERTS The consolidated financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K of Dynatech for the fiscal year ended March 31, 1999 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. The audited consolidated financial statements of Wavetek Wandel Goltermann, Inc. and subsidiaries for the fiscal year ended September 30, 1999 incorporated by reference in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in giving said reports. 48 MATERIAL CHANGES Merger with WWG On May 23, 2000, we merged with WWG, a leading developer, manufacturer and marketer of communications test instruments, systems, software and services in Europe and Latin America. We acquired WWG to grow our communications test equipment and services business, which, prior to the merger, was conducted solely by our TTC subsidiary. The transaction value of the merger, including approximately $200 million of assumed debt, totaled approximately $600 million. Management believes that our combined TTC-WWG business is the world's second largest (by sales) provider of communications test equipment and systems and related services. In connection with the WWG merger and the concurrent establishment of our new credit facility (discussed below), we incurred approximately $40 million of transaction related fees and expenses, including $6 million payable to Clayton, Dubilier & Rice, Inc., an investment firm that manages Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, our controlling shareholders. Equity Financing in connection with the WWG Merger To finance the WWG merger, we were required to raise substantial debt and equity financing in a short amount of time. As a result, we entered into a new credit facility with a syndicate of lenders. Our new credit facility provides for borrowings of up to $860 million, as opposed to the $370 million provided for by our previous credit facility. In addition, in order to obtain such debt financing, concurrently with the merger we sold 12.5 million and 30.625 million newly-issued but unregistered shares of our common stock to Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, respectively, for $4.00 per share. Our sale of unregistered common stock to the Clayton, Dubilier & Rice funds allowed us to raise the cash equity we needed within the time frame required to consummate the WWG merger and to obtain our new credit facility. Debt Financing in connection with the WWG Merger In connection with the WWG merger, Dynatech LLC, our wholly owned subsidiary, and certain of our German subsidiaries established a new senior secured credit facility with a syndicate of financial institutions. Morgan Guaranty Trust Company of New York is the administrative agent of the new facility, Credit Suisse First Boston is the syndication agent, and The Chase Manhattan Bank and Bankers Trust Company are co-documentation agents. Our new senior credit agreement, which established our new credit facility, provides for senior secured credit facilities in an aggregate principal amount of up to approximately $860 million, consisting of (1) a revolving credit facility available to Dynatech LLC in U.S. dollars or euros, in an aggregate principal amount of up to $175 million, (2) a Tranche A term loan of $75 million to Dynatech LLC with a six year amortization, (3) a Tranche B term loan of $510 million to Dynatech LLC with a seven and one-half year amortization and (4) German term loans from certain German banks in an aggregate amount equal to (Euro)108.375 million to our German subsidiaries with six year amortizations. The new credit facility also provides for the issuance of a letter of credit that the German banks may draw upon in the event of the failure of our German subsidiaries to make payments on the (Euro)108.375 million loans, and our German subsidiaries are required to reimburse the letter of credit issuer for any such issuances. The amount of the letter of credit also may be fully drawn under certain circumstances, and in such event the amount of the draw shall convert into term loans to our German subsidiaries with similar amortization to the German term loans. Amortization. The Tranche A term loan will be amortized in four quarterly installments of $750,000 commencing on June 30, 2000, four quarterly installments of $2.0 million commencing on June 30, 2001, four quarterly installments of $3.75 million commencing on June 30, 2002, four quarterly installments of $7.5 million commencing on June 30, 2003, four quarterly installments of $2.5 million commencing on June 30, 2004 and four quarterly installments of $2.25 million commencing on June 30, 2005. The Tranche B term loan will be amortized in 24 quarterly installments of $2.0 million, commencing on June 30, 2000, four quarterly 49 installments of $77.5 million commencing on June 30, 2006, and two quarterly installments of $76.0 million commencing on June 30, 2007. The German term loans will be amortized in four quarterly installments of (Euro)530,000 commencing on June 30, 2000, twelve quarterly installments of (Euro)790,000 million commencing on June 30, 2001, four quarterly installments of (Euro)7.625 million commencing on June 30, 2004, three quarterly installments of (Euro)15.780 million commencing on June 30, 2005 and one quarterly installment of (Euro)18.935 million on March 31, 2006. Use of Facility. We used the term loans to refinance certain existing indebtedness and as part of the financing for the WWG merger. Our revolving credit facility is available to us from time to time for potential acquisitions and other general corporate purposes. Guarantee; Security. The obligations of Dynatech LLC under our revolving credit facility and the Tranche A and Tranche B term loans and the reimbursement obligations of our German subsidiaries under the letter of credit relating to the German term loan are guaranteed by each active direct or indirect U.S. subsidiary of Dynatech LLC and by Dynatech Corporation. The obligations under our new credit facility are secured by a pledge of our equity interest in Dynatech LLC, by substantially all of the assets of Dynatech LLC and each active direct or indirect U.S. subsidiary of Dynatech LLC, and by a pledge of the capital stock of each such direct or indirect U.S. subsidiary, and 65% of the capital stock of each subsidiary of Dynatech LLC that acts as a holding company for Dynatech LLC's foreign subsidiaries. Interest. The term loans and loans under our revolving credit facility bear interest at floating rates based upon the interest rate option we elect. Prepayments. Our new credit facility generally permits voluntary prepayment of loans thereunder without premium or penalty, subject to certain limitations. Mandatory prepayments are required to be made from (a) 100% of net proceeds from certain asset sales, casualty insurance and condemnation awards or other similar recoveries; (b) 100% of the net proceeds from the issuance of indebtedness by us, other than as permitted by our new credit facility; and (c) 50% of annual excess cash flow for each fiscal year in which the ratio of our debt on the last day of such fiscal year to our EBITDA for such fiscal year is greater than or equal to 4.0 to 1.0. Covenants and Events of Default. Our new credit facility contains covenants that, among other things, restrict our ability to dispose of assets, incur additional debt, guarantee obligations or contingent liabilities, repay our 9 3/4% Senior Subordinated Notes due 2008, pay dividends, create liens on assets, make investments, loans or advances, engage in mergers or consolidations, make capital expenditures or engage in certain transactions with affiliates. Our new credit facility contains customary events of default. As a result of the WWG merger and the concurrent establishment of our new credit facility, our outstanding indebtedness is approximately $994 million, consisting of $275 million of our 9 3/4% Senior Subordinated Notes due 2008, $685 million of term loans outstanding under our new credit facility and approximately $34 million of other debt. Going forward, our principal sources of liquidity are expected to be cash flow from our operations and borrowings under our revolving credit facility. The amount under our revolving credit facility that remained available as of May 23, 2000 was $175 million. We anticipate that the principal uses of our liquidity will be to provide working capital, meet debt service requirements and to finance capital expenditures and our business and growth strategy. Our revolving credit facility will also be available for the issuance of letters of credit. Strategic Acquisitions Applied Digital Access, Inc. On November 1, 1999, through one of our subsidiaries, we acquired all of the outstanding capital stock of Applied Digital Access, Inc. ("ADA") for approximately $81 million. ADA, which is headquartered in San Diego, California, is a provider of network performance management products that include systems, software and services used to manage the quality, performance, availability and reliability of telecommunications service providers' networks. 50 Sierra Design Labs. On September 10, 1999, through one of our subsidiaries we purchased Sierra Design Labs ("Sierra") for approximately $6 million. Sierra designs, manufactures and markets uncompressed, real-time videodisk recorders and is included in our visual communications business. Planned Divestitures In May, 2000, our board of directors approved a formal plan to divest our industrial computing and communications business segment, which segment consists of our ICS-Advent and Itronix Corporation subsidiaries. For the nine months ended December 31, 1999, our industrial computing and communications business accounted for 34% of our sales (or approximately $160.3 million). In connection with its decision, the board authorized management to retain one or more investment banks to assist us with respect to the divestiture. We expect to divest these two subsidiaries, either separately or together, no later than the first quarter of our 2002 fiscal year. The divestiture will be treated as discontinued operations for accounting purposes. Stock Option Program In connection with the WWG merger, we plan to issue our new employees up to 10 million new options to purchase shares of our common stock. We expect that the exercise price of approximately 40% of such options will be $4.00 per share. The remaining options will be granted in subsequent years, with exercise prices equal to the fair market value of our common stock on the date they are granted. Whistler Litigation On June 27, 1996, Cincinnati Microwave, Inc. ("CMI") filed an action in the United States District Court for the Southern District of Ohio against us and Whistler Corporation of Massachusetts ("Whistler"), alleging willful infringement of CMI's patent for a mute function in radar detectors. In 1994, we sold our radar detector business to Whistler. We, along with Whistler, have asserted in response that we have not infringed CMI's patent, and that, in any event, the patent is invalid and unenforceable. We obtained an opinion of counsel from Bromberg & Sunstein LLP in connection with the manufacture and sale of our Whistler series radar detectors and will be offering the opinion, among other things, as evidence that any alleged infringement was not willful. On March 24, 1998, CMI, together with its co-plaintiff and patent assignee Escort, Inc., moved for summary judgment. We, along with Whistler, opposed the motion for summary judgment and filed our own motions for summary judgment. Discovery in this matter closed on June 20, 1998. On May 27, 1999 Whistler filed a Chapter 11 bankruptcy case in the United States Bankruptcy Court for the District of Massachusetts. Pursuant to that filing, CMI sold its mute feature patent (and other assets) to Escort Acquisition Corp. However, CMI retained the right to pursue past damages from us. On February 18, 2000, the United States Magistrate issued a Report and Recommendation recommending that half of the claims asserted by CMI be resolved in our favor, and that the remaining claims proceed to trial. The parties filed various objections to the Report and Recommendation and the district court judge has not yet ruled on those objections. A hearing on the parties' dispositive motions was held in May 1999. The trial of CMI's claims is currently scheduled to be held in August 2000, and we intend to defend the lawsuit vigorously. We do not believe that the outcome of this litigation is likely to have a material adverse effect on our financial condition, results of operations or liquidity. 51 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- You should rely only on the information contained in this prospectus and the information to which we have referred you. We have not authorized anyone else to provide you with information different from the information contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front page of this prospectus. Also, you should not assume that there has been no change in the affairs of Dynatech Corporation since the date of this prospectus. TABLE OF CONTENTS
Page ---- PROSPECTUS SUMMARY......................................................... 1 FORWARD-LOOKING STATEMENTS................................................. 15 RISK FACTORS............................................................... 16 THE RIGHTS OFFERING........................................................ 24 USE OF PROCEEDS............................................................ 31 DETERMINATION OF SUBSCRIPTION PRICE........................................ 31 PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY............................ 31 CAPITALIZATION............................................................. 32 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS............ 33 CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 47 PLAN OF DISTRIBUTION....................................................... 48 LEGAL MATTERS.............................................................. 48 EXPERTS.................................................................... 48 MATERIAL CHANGES........................................................... 49
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Rights to Subscribe to 4,983,048 Shares ---------------- [LOGO] DYNATECH CORPORATION Common Stock ---------------- PROSPECTUS ---------------- June 1, 2000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 securities offered hereby. SEC Registration Fee............................................... $ 5,280 Subscription Agent and Information Agent Fees...................... 50,000 Printing and Engraving Costs....................................... 125,000 Legal Fees and Expenses............................................ 150,000 Accounting Fees and Expenses....................................... 100,000 Miscellaneous...................................................... 25,000 -------- Total............................................................ $455,280 ========
Item 15. Indemnification of Directors and Officers Dynatech Corporation ("Dynatech") is incorporated under the laws of the State of Delaware. Section 145 of the Delaware Corporation Law, as amended, and Subsection (e) of Article Sixth of Dynatech's Certificate of Incorporation provides for the indemnification, except in certain circumstances set forth below, of officers, directors, employees and agents of Dynatech for certain expenses incurred in connection with any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, and for the purchase and maintenance of insurance by Dynatech on behalf of officers, directors, employees and agents of Dynatech and its subsidiaries against any liability asserted against, and incurred by, any such officer, director, employee or agent in such capacity. Set forth below is the text of Section 145 and the text of Subsection (e) of Article Sixth of Dynatech's Certificate of Incorporation. Section 145 of the Delaware Corporation Law, as amended, provides as follows: "145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE.--(a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if this person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which this person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. (b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a II-1 manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the shareholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section. (h) For purposes of this section, references to the "corporation' shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. II-2 (i) For purposes of this section, references to "other enterprises' shall include employee benefit plans; references to "fines' shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation' shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation' as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorney's fees)." Subsection (e) of Article Sixth of the Amended and Restated Certificate of Incorporation of Dynatech provides as follows: "(e) No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director, provided that nothing contained in this Certificate of Incorporation shall eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) under Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction from which the director derived an improper personal benefit." As permitted by Section 145 of the General Corporation Law of the State of Delaware, as amended, Dynatech has purchased and maintains insurance providing for reimbursement to elected directors and officers of Dynatech and its subsidiaries, subject to certain exceptions, of amounts they may be legally obligated to pay, including but not limited to damages, judgments, settlements, costs and attorneys' fees (but not including fines, penalties or matters not insurable under the law), as a result of claims and legal actions instituted against them to recover for their acts while serving as directors or officers. Item 16. List of Exhibits 3.1 Amended and Restated Certificate of Incorporation of Dynatech Corporation, as amended on May 18, 2000. Incorporated by reference to the relevant exhibit to Dynatech's Proxy Statement for the Annual Meeting of Stockholders (File No. 001-12657) filed with the Securities and Exchange Commission (the "SEC") on July 27, 1999 (the "Dynatech Proxy Statement") and to the relevant exhibit to Dynatech's Information Statement on Schedule 14C, filed with the SEC on March 20, 2000 and amended on April 18, 2000 and April 28, 2000. 3.2 Amended and Restated By-Laws of Dynatech Corporation. Incorporated by reference to the relevant exhibit to the Dynatech Proxy Statement. 4.1 Form of Subscription Warrant to Subscribe for Shares of Dynatech Corporation Common Stock. 5.1 Opinion of Debevoise & Plimpton. 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Arthur Andersen LLP.
II-3 23.3 Consent of Debevoise & Plimpton. Included in Exhibit 5.1 hereto. 24.1 Powers of Attorney.* 99.1 Form of Subscription Agent Agreement between Dynatech Corporation and Equiserve Trust Company, N.A. 99.2 Form of Information Agent Agreement between Dynatech Corporation and Mackenzie Partners Inc. 99.3 Form of Instructions as to Use of Subscription Warrant. 99.4 Form of Notice of Guaranteed Delivery. 99.5 Form of Letter to Stockholders of Record. 99.6 Form of Letter from Brokers or Other Nominees to Beneficial Owners of Common Stock. 99.7 Form of Instructions by Beneficial Owners to Brokers or Other Nominees. 99.8 Form of Letter to Dealers and Other Nominees.
- -------- * Previously filed. Undertakings The undersigned registrant hereby undertakes: (a) 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; (b) to supplement the prospectus and, after the expiration of the subscription period, to set forth the results of the subscription offer; (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 Securities Act of 1933 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 Securities Act of 1933 and will be governed by the final adjudication of such issue; (d) for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective; and (e) for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus 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. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Dynatech Corporation 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 Amendment No. 1 to Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, on the 1st day of June, 2000. Dynatech Corporation * By: _________________________________ Name: Ned C. Lautenbach Title: Chairman, President and Chief Executive Officer Pursuant to the requirements of this Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- * Chairman, President and June 1, 2000 ____________________________________ Chief Executive Officer Ned C. Lautenbach * Director, Corporate Vice June 1, 2000 ____________________________________ President, Chief Financial Allan M. Kline Officer and Treasurer * Director, Corporate Vice June 1, 2000 ____________________________________ President John R. Peeler * Director June 1, 2000 ____________________________________ Joseph L. Rice, III * Director June 1, 2000 ____________________________________ Brian D. Finn * Director June 1, 2000 ____________________________________ Marvin L. Mann
II-5
Signature Title Date --------- ----- ---- * Director June 1, 2000 ____________________________________ Brian H. Rowe * Director June 1, 2000 ____________________________________ William O. McCoy * Director June 1, 2000 ____________________________________ Peter M. Wagner * Director June 1, 2000 ____________________________________ Victor A. Pelson * Director June 1, 2000 ____________________________________ Richard J. Schnall
/s/ Mark V.B. Tremallo By: ___________________________ Mark V.B. Tremallo Attorney-in-fact II-6 EX-4.1 2 0002.txt FORM OF SUBSCRIPTION WARRANT TO SUBSCRIBE FOR SHAR EXHIBIT 4.1 DYNATECH CORPORATION SUBSCRIPTION WARRANT FOR RIGHTS OFFERING FOR HOLDERS OF RECORD AS OF APRIL 20, 2000 Dynatech Corporation ("Dynatech") is conducting a rights offering (the "Rights Offering"), which entitles the holders of shares of Dynatech's common stock (the "Common Stock"), as of the close of business on April 20, 2000 (the "Record Date") to receive 0.389 rights (each, a "Right") for each share of Common Stock held of record on the Record Date. Holders of Rights are entitled to subscribe for and purchase one share of Common Stock for each one whole Right (the "Basic Subscription Privilege") at a subscription price of $4.00 per share (the "Subscription Price"). If any shares of Common Stock are not purchased by holders of Rights pursuant to the Basic Subscription Privilege, any holder exercising its Basic Subscription Privilege in full may purchase an additional number of available Shares, if so specified in such holder's subscription documents, subject to proration (the "Oversubscription Privilege"). No fractional Rights or cash in lieu thereof will be issued or paid. If the number of shares of Common Stock held on the Record Date would result in the receipt of fractional Rights, the number of Rights issued to such holder is being rounded down to the nearest whole number. As a result, Dynatech shareholders that held of record fewer than three shares on the Record Date are not eligible to purchase shares in this Rights Offering. Set forth above is the number of shares of Common Stock held by the holder of Rights as of the Record Date, and the number of whole shares to which such holder is entitled to subscribe pursuant to the Basic Subscription Privilege (rounded down, if applicable, to the nearest whole share). For a more complete description of the terms and conditions of the Rights Offering, please refer to the Prospectus dated June 1, 2000 (the "Prospectus"), which is incorporated herein by reference. Copies of the Prospectus are available upon request from Mackenzie Partners, Inc. (toll free 1 (800) 322- 2885). This Subscription Warrant (or a Notice of Guaranteed Delivery) must be received by Equiserve Trust Company, N.A. together with payment in full of the subscription price by 5:00 p.m. New York City time, on or before June 19, 2000, unless the subscription period for this Rights Offering is extended in the sole discretion of the Company (the "Expiration Date"). Any Rights not exercised prior to the Expiration Date will be null and void. Any subscription for shares of Common Stock in this Rights Offering made hereby is irrevocable. The Rights represented by this Subscription Warrant may be exercised by duly completing Form 1 and, if you are exercising Rights through your bank or broker, Form 2 on the rear of this Subscription Warrant. Rights holders are advised to review the Prospectus and instructions, copies of which are available from Mackenzie Partners, Inc., before exercising their Rights. Rights holders should be aware that if they choose to exercise only part of their Rights, they may not receive a new Subscription Warrant in sufficient time to exercise the Rights evidenced thereby. SUBSCRIPTION PRICE: $4.00 PER SHARE Warrant No.: _______________ Record Date Shares: ________ No. of Rights issued: ______ Shares Eligible to Subsidiaries: _________________ FORM 1 (on reverse of Subscription Warrant) EXERCISE AND SUBSCRIPTION: The undersigned hereby irrevocably exercises one or more Rights to subscribe for shares of Common Stock as indicated below, on the terms and subject to the conditions specified in the Prospectus, receipt of which is hereby acknowledged. (a) Number of whole shares subscribed for pursuant to the Basic Subscription Privilege: ______________ Rights x $4.00 = $______________. (One whole Right is required to subscribe for each share.) (b) Number of whole shares subscribed for pursuant to the Oversubscription Privilege: ______________ x $4.00 = $______________. (c) Total subscription payment (sum of payment amounts on lines (a) and (b)) = $______________ total payment.* METHOD OF PAYMENT (CHECK AND COMPLETE APPROPRIATE BOXES): [ ] Check, bank draft, or U.S. postal money order payable to "Equiserve Trust Company, N.A., as Subscription Agent" [ ] Wire transfer. If you desire to make payment by wire transfer, you must contact Equiserve Trust Company, N.A. at (781) 575-3120 to receive a Wire Authorization Form. (d) If the Rights being exercised pursuant to the Basic Subscription Privilege do not constitute all of the Rights represented by the Subscription Warrants (check only one). [_] Deliver to the undersigned a new Subscription Warrant evidencing the remaining Rights to which the undersigned is entitled. [_] Do not deliver any new Subscription Warrants to me. (e)[_] Check here if Rights are being exercised pursuant to the Notice of Guaranteed Delivery delivered to the Subscription Agent prior to the date hereof and complete the following: Name(s) of Registered Holder(s) ________________________________________ Window Ticket Number (if any) __________________________________________ Date of Execution of Notice of Guaranteed Delivery _____________________ Name of Institution Which Guaranteed Delivery __________________________ * If the aggregate subscription payment enclosed or transmitted is insufficient to purchase the total number of shares included in lines (a) and (b), or if the number of shares being subscribed for is not specified, the Rights holder exercising this Subscription Warrant shall be deemed to have subscribed for the maximum amount of shares that could be subscribed for upon payment of such amount. If the number of shares to be subscribed for pursuant to the Oversubscription Privilege is not specified and the amount enclosed or transmitted exceeds the aggregate Subscription Price for all shares represented by this Subscription Warrant (the "Subscription Excess"), the Rights holder exercising this Subscription Warrant shall be deemed to have exercised the Oversubscription Privilege to purchase, to the extent available, that number of whole shares of Common Stock equal to the quotient obtained by dividing the Subscription Excess by the Subscription Price, subject to proration as described in the Prospectus. To the extent any portion of the aggregate Subscription Price enclosed or transmitted remains after the foregoing procedures, such funds shall be mailed to the subscriber without interest or deduction as soon as practicable. Subscriber's Signature _______________ Telephone No. ( ) ___________ FORM 2 (on reverse of Subscription Warrant) TO EXERCISE RIGHTS THROUGH YOUR BANK OR BROKER: Rights represented by this Subscription Warrant are hereby assigned to (please print in full name and address and Taxpayer Identification Number or Social Security Number of transferee): Number of Rights being exercised: ______________________________________ Name of beneficial owner and Taxpayer Identification Number or Social Security Number: ________________________________________________________________________ Address: _______________________________________________________________ Signature(s) of Transferor(s) __________________________________________ Signatures Guaranteed by: ______________________________________________ 2 EX-5.1 3 0003.txt OPINION OF DEBEVOISE & PLIMPTON EXHIBIT 5.1 June 1, 2000 Dynatech Corporation 3 New England Executive Park Burlington, Massachusetts 01803-5087 Registration Statement on Form S-3 Ladies and Gentlemen: We have acted as special counsel to Dynatech Corporation (the "Company") in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), of a Registration Statement on Form S-3 (File No. 333-35476) (as amended, the "Registration Statement") relating to (i) the issuance by the Company to the holders of its Common Stock (the "Common Stock") of rights to purchase newly issued shares of Common Stock (the "Rights"), and (ii) the offer and sale of such shares of Common Stock upon the exercise of the Rights. The Rights will be issued to the holders of record of Common Stock as of 5 p.m. Eastern Standard Time on April 20, 2000. In so acting, we have examined and relied upon the originals, or copies certified or otherwise identified to our satisfaction, of such records, documents, certificates and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. We are of the opinion that, when the Registration Statement has become effective under the Securities Act and the Common Stock has been duly issued upon the exercise of the Rights and the payment to the Company of the subscription price therefor, in the manner described in the Registration Statement, the Common Stock will be validly issued, fully paid and non- assessable. We express no opinion as to the laws of any jurisdiction other than the Federal laws of the United States, the laws of the State of New York and the corporate laws of the State of Delaware. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the headings "Legal Matters" in the Prospectus. In giving such consent, we do not hereby concede that we are within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/ Debevoise & Plimpton EX-23.1 4 0004.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP. EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 of Dynatech Corporation of our report dated April 26, 1999 relating to the financial statements, which appears in the Annual Report on Form 10-K. We also consent to the references to us under the headings "Experts" and "Summary Historical and Pro Forma Financial Data" in such Registration Statement. PricewaterhouseCoopers LLP Boston, Massachusetts May 30, 2000 EX-23.2 5 0005.txt CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated December 2, 1999 included in Form 8-K of Dynatech Corporation filed on May 31, 2000 and to all references to our Firm included in this Registration Statement. Arthur Andersen LLP Raleigh, North Carolina May 26, 2000 EX-99.1 6 0006.txt FORM OF SUBSCRIPTION AGENT AGREEMENT EXHIBIT 99.1 SUBSCRIPTION AGENT AGREEMENT (Company) This Subscription Agent Agreement (the "Agreement") is made as of April 12, 2000 between Dynatech Corporation (the "Company") and EquiServe Trust Company, N.A. as subscription agent (the "Agent"). All terms not defined herein shall have the meaning given in the prospectus (the "Prospectus") included in the Registration Statement on Form S-3 to be filed by the Company with the Securities and Exchange Commission, as amended by any amendment filed with respect thereto (the "Registration Statement"). WHEREAS, the Company proposes to make a subscription offer (the "Offering") by issuing certificates or other evidences of subscription rights, in the form designated by the Company (the "Subscription Certificates") to shareholders of record (the "Shareholders") of its Common Stock, par value $0.01 per share ("Common Stock"), as of April 20, 2000, the record date specified by the Company (the "Record Date"), pursuant to which each Shareholder will have certain rights (the "Rights") to subscribe for newly issued shares of Common Stock, as described in and upon such terms as are set forth in the Prospectus, a final copy of which has been or, upon availability will promptly be, delivered to the Agent; and WHEREAS, the Company wishes the Agent to perform certain acts on behalf of the Company, and the Agent is willing to so act, in connection with the Offering, all upon the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements set forth herein, the parties agree as follows: 1. Appointment. The Company hereby appoints the Agent to act as subscription agent in connection with the Offering in accordance with the terms set forth in this Agreement and the Agent hereby accepts such appointment. 2. Form and Execution of Subscription Certificates. (a) Each Subscription Certificate shall be irrevocable and non-transferable. The Agent shall, in its capacity as Transfer Agent of the Company, maintain a register of Subscription Certificates and the holders of record thereof (each of whom shall be deemed a "Shareholder" hereunder for purposes of determining the rights of holders of Subscription Certificates). Each Subscription Certificate shall, subject to the provisions thereof, entitle the Shareholder in whose name it is recorded to the following: (1) With respect to Record Date Shareholders only, the right to acquire during the Subscription Period, as defined in the Prospectus, at the Subscription Price, as defined in the Prospectus, a number of shares of Common Stock equal to one share of Common Stock for every one Right (the "Basic Subscription Privilege"); and (2) The right to subscribe for additional shares of Common Stock, subject to the availability of such shares and to the allotment of such shares as may be available on the basis specified in the Prospectus; provided, however, that such Shareholder has exercised its Basic Subscription Privilege in full (the "Oversubscription Privilege"). 3. Rights and Issuance of Subscription Certificates. (a) Each Subscription Certificate shall evidence the Rights of the Shareholder therein named to purchase Common Stock upon the terms and conditions therein and herein set forth. (b) Upon the written advice of the Company, signed by any of its duly authorized officers, as to the Record Date, the Agent shall, from a list of the Company Shareholders as of the Record Date to be prepared by the Agent in its capacity as Transfer Agent of the Company, prepare and record Subscription Certificates in the names of the Shareholders, setting forth the number of Rights to subscribe for the Company's Common Stock calculated on the basis of a ratio to be set forth in the Prospectus and provided to the Agent by the Company for such purpose. The number of Rights that are issued to Shareholders will be rounded up, by the Agent, to the nearest number of whole Rights as fractional Rights will not be issued. Each Subscription Certificate shall be dated as of the Record Date and shall be executed manually or by facsimile signature of a duly authorized officer of the Agent. Upon the written advice, signed as aforesaid, as to the effective date of the Registration Statement, the Agent shall promptly countersign and deliver the Subscription Certificates, together with a copy of the Prospectus, instruction letter and any other document as the Company deems necessary or appropriate, to all Shareholders with record addresses in the United States (including its territories and possessions and the District of Columbia). Delivery shall be by first class mail (without registration or insurance), except for those Shareholders having a registered address outside the United States (who will only receive copies of the Prospectus, instruction letter and other documents as the Company deems necessary or appropriate, if any), delivery shall be by air mail (without registration or insurance) and by first class mail (without registration or insurance) to those Shareholders having APO or FPO addresses. No Subscription Certificate shall be valid for any purpose unless so executed. (c) The Agent will mail a copy of the Prospectus, instruction letter, a special notice and other documents as the Company deems necessary or appropriate, if any, but not Subscription Certificates to Shareholders whose record addresses are outside the United States (including its territories and possessions and the District of Columbia ) ("Foreign Shareholders"). The Rights to which such Subscription Certificates relate will be held by the Agent for such Foreign Record Date Shareholders' accounts until instructions are received to exercise, sell or transfer the Rights. 4. Exercise. (a) Shareholders may acquire shares of Common Stock under their Basic Subscription and Oversubscription Privileges by delivering to the Agent as specified in the Prospectus (i) the Subscription Certificate with respect thereto, duly executed by such Shareholder in accordance with and as provided by the terms and conditions of the Subscription Certificate, together with (ii) the purchase price as disclosed in the Prospectus for each share of Common Stock subscribed for by exercise of such Basic Subscription and Oversubscription Privileges, in U.S. dollars by wire transfer of immediately available funds, or by money order or check drawn on a bank in the United States, in each case payable to the order of the Agent. (b) Rights may be exercised at any time after the date of issuance of the Subscription Certificates with respect thereto but no later than 5:00 P.M. New York time on such date as the Company shall designate to the Agent in writing (the "Expiration Date"). For the purpose of determining the time of the exercise of any Rights, delivery of any material to the Agent shall be deemed to occur when such materials are received at the Shareholder Services Division of the Agent specified in the Prospectus. (c) Notwithstanding the provisions of Section 4 (a) and 4 (b) regarding delivery of an executed Subscription Certificate to the Agent prior to 5:00 P.M. New York time on the Expiration Date, if prior to such time the Agent receives a Notice of Guaranteed Delivery by facsimile (telecopy) or otherwise from a bank, a trust company or a New York Stock Exchange member guaranteeing delivery of (i) payment of the full Subscription Price for the shares of Common Stock subscribed for shares subscribed for under the Basic Subscription and Oversubscription Privileges, and (ii) a properly completed and executed Subscription Certificate, then such exercise of Basic Subscription and Oversubscription Privileges shall be regarded as timely, subject, however, to receipt of the duly executed Subscription Certificate and full payment for the Common Stock by the Agent within three Business Days (as defined below) after the Expiration Date (the "Protect Period"). For the purposes of the Prospectus and this Agreement, "Business Day" shall mean any day on which trading is conducted on the New York Stock Exchange. (d) Any excess payment to be refunded by the Company to a Shareholder will be mailed by the Agent as soon as practicable after the Expiration Date. The Agent will not issue or deliver certificates for shares subscribed for until payment in full therefore has been received, including collection of checks and payment pursuant to notices of guaranteed delivery. 2 5. Validity of Subscriptions. Irregular subscriptions not otherwise covered by specific instructions herein shall be submitted to an appropriate officer of the Company and handled in accordance with his or her instructions. Such instructions will be documented by the Agent indicating the instructing officer and the date thereof. 6. Oversubscription. If, after allocation of shares of Common Stock to Shareholders, there remain unexercised Rights, then the Agent shall allot the shares issuable upon exercise of such unexercised Rights (the "Remaining Shares") to shareholders who have exercised all the Rights initially issued to them and who wish to acquire more than the number of shares for which the Rights issued to them are exercisable. Shares subscribed for pursuant to the Oversubscription Privilege will be allocated in the amounts of such oversubscriptions if remaining sufficient shares are available. If the number of shares for which the Oversubscription Privilege has been exercised is greater than the Remaining Shares, the Agent shall allocate the Remaining Shares to Shareholders exercising Oversubscription Privileges based on the number of shares of Common Stock owned by them on the Record Date. Any remaining shares to be issued shall be allocated to Clayton, Dubilier & Rice Fund VI Limited Partnership (the "Standby Purchaser"). The percentage of Remaining Shares each over-subscribing Shareholder may acquire will be rounded up or down to result in delivery of whole shares of Common Stock. The Agent shall advise the Company immediately upon the completion of the allocation set forth above as to the total number of shares subscribed and distributable. 7. Delivery of Certificates. The Agent will deliver (i) certificates representing those shares of Common Stock validly purchased pursuant to exercise of Basic Subscription Privileges as soon as practicable after the Expiration Date and (ii) certificates representing those shares purchased pursuant to the exercise of the Oversubscription Privilege as soon as practicable after the Expiration Date and after all allocations under the Basic Subscription Privileges have been effected. 8. Holding Proceeds of Rights Offering in Escrow. (a) All proceeds received by the Agent from Shareholders in respect of the exercise of Rights shall be held by the Agent, on behalf of the Company, in a segregated account (the "Account"). No interest shall accrue to the Company or Shareholders on funds held in the Account pending disbursement in the manner described in Section 4(d) above. (b) The Agent shall deliver all proceeds received in respect of the exercise of Rights to the Company as promptly as practicable, but in no event later than ten business days after the Expiration Date. 9. Reports. (a) Daily, during the period commencing on a date to be provided by the Company, until termination of the Subscription Period, the Agent will report by telephone or telecopier, confirmed by letter, to an Officer of the Company, data regarding Rights exercised, the total number of shares of Common Stock subscribed for, and payments received therefor, bringing forward the figures from the previous day's report in each case so as to show the cumulative totals and any such other information as may be mutually determined by the Company and the Agent. 10. Loss or Mutilation. If any Subscription Certificate is lost, stolen, mutilated or destroyed, the Agent may, on such terms which will indemnify and protect the Company and the Agent as the Agent may in its discretion impose (which shall, in the case of a mutilated Subscription Certificate include the surrender and cancellation thereof), issue a new Subscription Certificate of like denomination in substitution for the Subscription Certificate so lost, stolen, mutilated or destroyed. 11. Compensation for Services. The Company agrees to pay to the Agent compensation for its services as such in accordance with its Fee Schedule to act as Agent, dated and set forth hereto as Exhibit A. The Company further agrees that it will reimburse the Agent for its reasonable out- of-pocket expenses incurred in the performance of its duties as such. 3 12. Instructions and Indemnification. The Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions: (a) The Agent shall be entitled to rely upon any instructions or directions furnished to it by an appropriate officer of the Company, whether in conformity with the provisions of this Agreement or constituting a modification hereof or a supplement hereto. Without limiting the generality of the foregoing or any other provision of this Agreement, the Agent, in connection with its duties hereunder, shall not be under any duty or obligation to inquire into the validity or invalidity or authority or lack thereof of any instruction or direction from an officer of the Company which conforms to the applicable requirements of this Agreement and which the Agent reasonably believes to be genuine and shall not be liable for any delays, errors or loss of data occurring by reason of circumstances beyond the Agent's control. (b) The Company will indemnify the Agent and its nominees against, and hold it harmless from, all liability and expense which may arise out of or in connection with the services described in this Agreement or the instructions or directions furnished to the Agent relating to this Agreement by an appropriate officer of the Company, except for any liability or expense which shall arise out of the negligence, bad faith or willful misconduct of the Agent or such nominees. 13. Changes in Subscription Certificate. The Agent may, without the consent or concurrence of the Shareholders in whose names Subscription Certificates are registered, by supplemental agreement or otherwise, concur with the Company in making any changes or corrections in a Subscription Certificate that it shall have been advised by counsel (who may be counsel for the Company) is appropriate to cure any ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or manifest error therein or herein contained, and which shall not be inconsistent with the provision of the Subscription Certificate except insofar as any such change may confer additional rights upon the Shareholders. 14. Assignment, Delegation. (a) Neither this Agreement nor any rights or obligations hereunder may be assigned or delegated by either party without the written consent of the other party. (b) This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. Nothing in this Agreement is intended or shall be construed to confer upon any other person any right, remedy or claim or to impose upon any other person any duty, liability or obligation. (c) The Agent may, without further consent on the part of the Company, (i) subcontract for the performance hereof with EquiServe Limited Partnership or (ii) subcontract with other subcontractors for systems, processing, and telephone and mailing services as may be required from time to time; provided, however, that the Agent shall be as fully responsible to the Company for the acts and omissions of any subcontractor as it is for its own acts and omissions. 15. Governing Law. The validity, interpretation and performance of this Agreement shall be governed by the law of the Commonwealth of Massachusetts. 16. Third Party Beneficiaries. This Agreement does not constitute an agreement for a partnership or joint venture between the Agent and the Company. Neither Party shall make any commitments with third parties that are binding on the other party without the other party's prior written consent. 17. Force Majeure. In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other cause reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. Performance under this Agreement shall resume when the affected party or parties are able to perform substantially that party's duties. 4 18. Consequential Damages. Neither party to this Agreement shall be liable to the other party for any consequential, indirect, special or incidental damages under any provisions of this Agreement or for any consequential, indirect, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages. 19. Severability. If any provision of this Agreement shall be held invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired. 20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. 21. Captions. The captions and descriptive headings herein are for the convenience of the parties only. They do not in any way modify, amplify, alter or give full notice of the provisions hereof. 22. Facsimile Signatures. Any facsimile signature of any party hereto shall constitute a legal, valid and binding execution hereof by such party. 23. Confidentiality. The Agent and the Company agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement including the fees for services set forth in the attached schedule shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 24. Term. This agreement shall remain in effect until termination upon the date of completion of the Offering (the "Termination Date") or, prior to the Termination Date, upon 30 days' written notice by either party to the other. Upon termination of the Agreement, the Agent shall retain all canceled Certificates and related documentation as required by applicable law. 25. Merger of Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. 5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the day and year first above written. EquiServe Trust Company, N.A. Dynatech Corporation - ------------------------------------- ------------------------------------- Signature Signature - ------------------------------------- ------------------------------------- Title Title - ------------------------------------- ------------------------------------- Date Date 6 EX-99.2 7 0007.txt FORM OF INFORMATION AGENT AGREEMENT EXHIBIT 99.2 [MacKenzie Partners, Inc. Letterhead] April 12, 2000 Dynatech Corporation 3 New England Executive Park Burlington, MA 01803 Dear Sir or Madam: This is to confirm our agreement that effective the date hereof MacKenzie Partners, Inc. ("MacKenzie Partners") has been engaged by Dynatech Corporation (the "Company") as Information Agent for its proposed Rights Offering (the "Offer"). As Information Agent, MacKenzie Partners will perform customary services (the "Services") to the Company, including: distribution of the Offer materials to securityholders, providing information to security holders, including through the provision of a toll-free telephone line, and providing such other advisory services as may be requested from time to time by the Company. The Services shall continue until the expiration, termination or cancellation of the Offer. In consideration of the Services you agree to pay MacKenzie Partners the following: 1. A retainer fee of $2,500 payable upon execution of this agreement applicable toward the final fee of $6,500. In the event you request us to provide additional services not contemplated by this agreement, you agree to pay us an additional amount, if any, to be mutually agreed upon based on such additional services provided, payable upon expiration, termination or cancellation of the Offer. 2. MacKenzie Partners' reasonable out-of-pocket expenses which shall include but not be limited to: telephone and telecopier charges; copying costs; messenger services; financial advertising; electronic news distribution; news wire service charges; transportation, meals and lodging; data processing; and mailing, postage and courier costs. You agree to indemnify and hold us and our employees harmless against any losses, claims, damages, liabilities or expenses (including, without limitation, legal and other related fees and expenses) to which we may become subject arising from or in connection with the Services or matters which are the subject of this Agreement; provided, however, that you shall not be liable under this sentence in respect of any loss, claim, damage, liability or expense which was the result of our willful misfeasance or bad faith. The Company will not be liable under this indemnity unless we give you prompt written notice of any related claim or action brought against us. At your election, you may assume the defense of any such claim or action. The provisions of this paragraph shall survive the period of this Agreement. We will hold in confidence and will not use nor disclose to third parties information we receive from you or your agents or information developed by MacKenzie Partners based upon such information we receive, except for information which was public at the time of disclosure or becomes part of the public domain without disclosure by us or information which we learn from a third party which does not have an obligation of confidentiality to you. This Agreement shall be interpreted according to and governed by the laws of the State of New York and each of us consents to the exclusive jurisdiction of the courts of such State. Please confirm that the foregoing is in accordance with your understanding by signing and returning to us the enclosed duplicate of this letter. Sincerely yours, Agreed to as of the date first written above. Agreed to as of the date first written above. MacKenzie Partners, Inc. Dynatech Corporation By: By: _________________________________ Stanley J. Kay, Jr. Senior Vice President Name: _______________________________ Title: ______________________________ EX-99.3 8 0008.txt FORM OF INSTRUCTIONS FOR SUBSCRIPTION WARRANT Exhibit 99.3 DYNATECH CORPORATION INSTRUCTIONS AS TO USE OF DYNATECH CORPORATION SUBSCRIPTION WARRANTS (CONSULT MACKENZIE PARTNERS, INC. OR YOUR BANK OR BROKER WITH ANY QUESTIONS) The following instructions relate to a rights offering (the "Rights Offering") by Dynatech Corporation ("Dynatech") of newly-issued shares (the "Shares") of common stock (the "Common Stock") to the holders of record of its Common Stock, as described in Dynatech's Prospectus dated June 1, 2000 (the "Prospectus"). Holders of record of shares of Common Stock as of the close of business on April 20, 2000 (the "Record Date") are receiving 0.389 subscription rights (collectively, the "Rights") for each share of Common Stock they held on the Record Date. No fractional Rights will be granted; if a fractional Right would have been calculated for a holder as a result of the ratio described above, the number of Rights to be granted to such holder has been rounded down to the nearest whole Right. Holders of Rights are entitled to purchase one share of Common Stock for each whole Right (the "Basic Subscription Privilege"), upon payment of $4.00 in cash per share (the "Subscription Price"). In this Rights Offering, Dynatech is distributing 4,983,048 Rights exercisable to purchase 4,983,048 shares of Common Stock. In addition, subject to the proration described below, each holder of Rights who fully exercises its Basic Subscription Privilege also has the right to subscribe for additional Shares at the Subscription Price (the "Oversubscription Privilege"). Shares will be available for purchase pursuant to the Oversubscription Privilege only to the extent that all the Shares are not subscribed for by Dynatech's shareholders through the exercise of the Basic Subscription Privilege. If the Shares available are not sufficient to satisfy all subscriptions pursuant to the Oversubscription Privilege, such available Shares will be allocated pro rata among holders of the Rights exercising the Oversubscription Privilege in proportion to the number of Shares each such holder has purchased pursuant to its Basic Subscription Privilege. See the discussion set forth under "The Rights Offering" in the Prospectus. The Rights will expire on June 19, 2000, at 5:00 p.m., New York City time, unless extended by Dynatech (the "Expiration Date"). The number of Rights to which you are entitled is printed on the face of your Subscription Warrant. You should indicate your wishes with regard to the exercise of your Rights by completing the appropriate form or forms on the back of your Subscription Warrant and returning the certificate to Equiserve Trust Company, N.A. (sometimes referred to herein as the "Subscription Agent") in the envelope provided. In order to exercise Rights, Equiserve Trust Company, N.A. must receive from you prior to 5:00 p.m. New York City time on the Expiration Date, (i) your Subscription Warrant properly executed and delivered by you, or you must have timely complied with the Notice of Guaranteed Delivery requirements for your Subscription Warrants, and (ii) payment of the full Subscription Price for each share you wish to purchase under the Basic Subscription Privilege and the Oversubscription Privilege, including final clearance of any checks. You may not revoke any exercise of a Right. For a more complete description of the Rights Offering, as well as Dynatech's reasons for making the offering, please refer to the Prospectus. Copies of the Prospectus are available upon request from Mackenzie Partners, Inc., the information agent for the Rights Offering (toll free 1 (800) 322- 2885). 1. Subscription Privilege To exercise your Rights, complete Form 1 on the rear of your Subscription Warrant and send your properly completed and executed Subscription Warrant, together with payment in full of the Subscription Price for each Share subscribed for under your Basic Subscription Privilege and Oversubscription Privilege, to the Subscription Agent. Payment of the Subscription Price must be made in U.S. dollars for the full number of Shares being subscribed for by (i) check or bank draft drawn upon a U.S. bank or U.S. postal money order payable to Equiserve Trust Company, N.A., as Subscription Agent, or (ii) wire transfer. If you desire to make payment by wire transfer, you must contact Equiserve Trust Company, N.A. at 1 (781) 575-3120 to receive a Wire Authorization Form. The Subscription Price will be deemed to have been received by Equiserve Trust Company, N.A. only upon (i) the clearance of any uncertified check, (ii) the receipt by Equiserve Trust Company, N.A. of any certified or cashier's check or bank draft drawn upon a U.S. bank or any U.S. postal money order or (iii) wire transfer in accordance with the authorization procedure discussed above. If you are paying by uncertified personal check, please note that the funds paid thereby may take up to five business days to clear. Accordingly, holders of the Rights who wish to pay the Subscription Price by means of uncertified personal check are urged to make payment sufficiently in advance of the Expiration Date to ensure that such payment is received and clears by such date and are urged to consider payment by means of certified or cashier's check, U.S. postal money order or wire transfer of funds. Alternatively, you may cause a written guarantee of delivery (a "Notice of Guaranteed Delivery"), accompanied by a Medallion Guaranty, to be received by the Subscription Agent at or prior to the Expiration Date, together with payment in full of the Subscription Price. You may use the Notice of Guaranteed Delivery form enclosed in this package of subscription materials or any substantially equivalent form. In any event, your Notice of Guaranteed Delivery must be properly signed and completed by (i) you, as holder of the Subscription Warrant and (ii) a commercial bank, trust company, securities broker or dealer, credit union, savings association or other eligible guarantor institution which is a member of or a participant in a signature guarantee program acceptable to the Subscription Agent (each of the foregoing being an "Eligible Institution"). Such Notice of Guaranteed Delivery must state your name, the number of Rights represented by your Subscription Warrant, the number of Rights being exercised pursuant to the Basic Subscription Privilege, and the number of Shares of Common Stock, if any, being subscribed for pursuant to the Oversubscription Privilege, and must be accompanied by a Medallion Guaranty guaranteeing the delivery to Equiserve Trust Company, N.A. of your properly completed and executed Subscription Warrant within three New York Stock Exchange trading days following the date of the Notice of Guaranteed Delivery. Additional copies of the Notice of Guaranteed Delivery may be obtained upon request from Mackenzie Partners, Inc. at the address, or by calling the toll free telephone number, set forth below. Banks, brokers or other nominee holders of the Rights who exercise the Rights and the Oversubscription Privilege on behalf of beneficial owners of Rights will be required to certify to the Subscription Agent and Dynatech, in connection with the exercise of the Oversubscription Privilege, as to the aggregate number of Rights that have been exercised, and the number of Shares that are being subscribed for pursuant to the Oversubscription Privilege, by each beneficial owner of Rights on whose behalf such nominee holder is acting. If more Shares of Common Stock are subscribed for pursuant to the Oversubscription Privilege than are available for sale, such Shares will be allocated, as described above, among persons exercising the Oversubscription Privilege in proportion to such persons' exercise of Rights pursuant to the Basic Subscription Privilege. The address and facsimile numbers of Equiserve Trust Company, N.A. are as follows: By Hand: By First Class Mail: By Overnight Courier: ecuritiesSTransfer & Reporting Services, Inc. Equiserve Trust Company, Equiserve Trust Company, N.A. N.A. C/O Equiserve Trust Company,Attn: Corporate Actions Attn: Corporate Actions N.A. PO Box 9573 40 Campanelli Drive 100 William Street, Galleria Boston, MA 02205-9573 Braintree, MA 02184 New York, NY 10038 By facsimile transmission: 1 (781) 575-4826 You should confirm receipt of facsimile transmissions by calling: 1 (781) 575-4816 The address, telephone and facsimile numbers of Mackenzie Partners, Inc., for inquiries, information or requests for additional documentation is as follows: 156 Fifth Avenue CALL TOLL-FREE New York, NY 10010 1 (800) 322-2885
If you exercise less than all of the Rights evidenced by your Subscription Warrant by so indicating in Form 1 on the rear of your Subscription Warrant, at your election Equiserve Trust Company, N.A., will issue to you a new Subscription Warrant evidencing the unexercised Rights. However, if you choose to have a New Subscription Warrant sent to you, you may not receive it in sufficient time to permit you to exercise the Rights evidenced thereby. If you have not indicated the number of Rights being exercised, or if you have not forwarded full payment of the Subscription Price for the number of Shares to be purchased according to the number of Rights that you have indicated are being exercised, you will be deemed to have exercised the maximum number of Rights that may be exercised for the Subscription Price payment delivered by you. If the Subscription Price payment you deliver exceeds the amount required to exercise your Basic Subscription Privilege, you will be deemed to have exercised your Oversubscription Privilege to the extent both such funds and Shares are available. Payments for Shares exceeding the number available pursuant to your Oversubscription Privilege will be refunded to you (without interest) as soon as practicable following the Expiration Date. 2. Deliveries. You will receive the following deliveries and payments to the address shown on the face of your Subscription Warrant. (a) Basic Subscription Privilege. As soon as practicable after the Expiration Date, Equiserve Trust Company, N.A. will mail to each Rights holder who validly exercises the Basic Subscription Privilege certificates representing Shares purchased pursuant to such exercise. (b) Oversubscription Privilege. As soon as practicable after the Expiration Date, Equiserve Trust Company, N.A. will mail to each Rights holder who validly exercises the Oversubscription Privilege certificates representing the number of Shares allocated to such Rights holder pursuant to such exercise. (c) Cash Payments. As soon as practicable after the Expiration Date, Equiserve Trust Company, N.A. will mail to each Rights holder any excess funds, without interest, received that cannot be used to purchase whole Shares. 3. To Exercise Rights through a Bank or Broker. To exercise your Rights through your bank or broker, complete Form 2 on the reverse of your subscription warrant and deliver your properly completed and executed Subscription Warrant to your bank or broker. Your Subscription Warrant should be delivered to your bank or broker in ample time for it to be exercised. 4. Execution. The signature on the Subscription Warrant must correspond with the name of the registered holder exactly as it appears on the face of the Subscription Warrant without any alteration or change whatsoever. Persons who sign the Subscription Warrant in a representative or other fiduciary capacity must indicate their capacity when signing and, unless waived by Equiserve Trust Company, N.A. in its sole and absolute discretion, must present to Equiserve Trust Company, N.A. satisfactory evidence of their authority to so act. 5. Method of Delivery. The method of delivery of Subscription Warrants and payment of the Subscription Price to Equiserve Trust Company, N.A. will be at the election and risk of the Rights holder. If subscription warrants and payments are sent by mail, you are urged to send these by registered mail, properly insured, with return receipt requested, and to allow a sufficient number of days to ensure delivery to Equiserve Trust Company, N.A. and clearance of payment prior to the Expiration Date. Because uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified or cashier's check, money order or wire transfer of funds. 6. Special Provisions Relating to the Delivery of Rights Through the Depository Trust Company. In the case of holders of Rights that are held of record through The Depository Trust Company ("DTC"), exercises of the Basic Subscription Privilege (but not the Oversubscription Privilege) may be effected by instructing DTC to transfer Rights (such Rights being "DTC Exercised Rights") from the DTC account of such holder to the DTC account of Equiserve Trust Company, N.A., together with payment of the Subscription Price for each Share subscribed for pursuant to the Basic Subscription Privilege. The Oversubscription Privilege in respect of DTC Exercised Rights may not be exercised through DTC. The holder of a DTC Exercised Right may exercise the Oversubscription Privilege in respect of such DTC Exercised Right by properly executing and delivering to Equiserve Trust Company, N.A. at or prior to 5:00 p.m., New York City time on the Expiration Date, a DTC Participant Oversubscription Exercise Form, in the form available from Mackenzie Partners, Inc. at the address and telephone number listed above, together with payment of the appropriate Subscription Price for the number of Shares for which the Oversubscription Privilege is to be exercised. If a Notice of Guaranteed Delivery relates to Rights with respect to which exercise of the Basic Subscription Privilege will be made through DTC and such Notice of Guaranteed Delivery also relates to the exercise of the Oversubscription Privilege, a DTC Participant Oversubscription Exercise Form must also be received by Equiserve Trust Company, N.A. in respect of such exercise of the Oversubscription Privilege on or prior to the Expiration Date. 7. Substitute Form W-9. Each Rights holder who elects to exercise the Rights should provide Equiserve Trust Company, N.A. with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is included in this package of subscription materials. Additional copies of the Substitute Form W-9 may be obtained upon request from Mackenzie Partners, Inc. at the address, or by calling the telephone number, indicated above. Failure to provide the information on the form may subject such holder to 31% federal income tax withholding with respect to any dividends paid by Dynatech on Shares purchased upon the exercise of Rights. EX-99.4 9 0009.txt FORM OF NOTICE OF GUARANTEED DELIVERY Exhibit 99.4 NOTICE OF GUARANTEED DELIVERY FOR SUBSCRIPTION WARRANTS ISSUED BY DYNATECH CORPORATION This form, or one substantially equivalent hereto, must be used to exercise Rights pursuant to the Rights Offering described in the Prospectus dated June 1, 2000 (the "Prospectus") of Dynatech Corporation ("Dynatech"), if a holder of Rights cannot deliver the Subscription Warrant(s) evidencing the Rights to Equiserve Trust Company, N.A. on or prior to June 19, 2000, at 5:00 p.m. New York City time (the "Expiration Date"). Such form must be accompanied by a Medallion Guaranty and delivered by hand or sent by facsimile transmission or mail to Equiserve Trust Company, N.A., and must be received by Equiserve Trust Company, N.A. on or prior to the Expiration Date. See the discussion set forth under "The Rights Offering--Procedures to Exercise Rights" in the Prospectus. Regardless of the manner of delivery of the Subscription Warrant, payment of the Subscription Price of $4.00 per share for each share of Dynatech common stock subscribed for upon exercise of such Rights must be received by Equiserve Trust Company, N.A. in the manner specified in the Prospectus at or prior to 5:00 p.m. New York City time on the Expiration Date. You may deliver this form to Equiserve Trust Company, N.A. by hand, U.S. mail, overnight courier or facsimile: By Hand: By First Class Mail: By Overnight Courier: Securities Transfer & Equiserve, Trust Equiserve Attn: Reporting Services, Inc. Company, N.A. Attn: Corporate Actions 40 c/o Equiserve Trust Corporate Actions PO Box Campanelli Drive Company, N.A. 100 9573 Boston, MA 02205- Braintree, MA 02184 William Street, Galleria 9573 New York, NY 10038 By facsimile transmission: 1 (781) 575-4826. You should confirm receipt of all facsimile transmissions by calling 1 (781) 575-4816. DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. Gentlemen: The undersigned hereby represents that he or she is the holder of Subscription Warrant(s) representing Rights and that such Subscription Warrant(s) cannot be delivered to Equiserve Trust Company, N.A., the subscription agent for this offering, at or before 5:00 p.m., New York City time on the Expiration Date. Upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, the undersigned hereby elects to exercise (i) the Basic Subscription Privilege to subscribe for one share of Common Stock per each whole Right represented by such Subscription Warrant (as rounded down for fractional Rights, as described in the Prospectus) and (ii) the Oversubscription Privilege relating to each such Right to subscribe, to the extent that Shares are available, for an aggregate of up to Shares. The undersigned understands that payment of the Subscription Price of $4.00 per Share for each Share of the Common Stock subscribed for pursuant to the Basic Subscription Privilege and Oversubscription Privilege must be received by the Subscription Agent at or before 5:00 p.m. New York City time on the Expiration Date. The undersigned represents that such payment, in the aggregate amount of $ , either (check appropriate box): [_] is being delivered to Equiserve Trust Company, N.A. herewith or [_] has been delivered separately to Equiserve Trust Company, N.A. and is or was delivered in the manner set forth below (check appropriate box and complete information relating thereto): [_] wire transfer of funds (pursuant to a completed Wire Authorization Form) name of transferor institution ________________________________ date of transfer ______________________________________________ confirmation number (if available) ____________________________ [_] uncertified check (payment by uncertified check will not be deemed to have been received by the Subscription Agent until such check has cleared. Holders paying by such means are urged to make payment sufficiently in advance of the Expiration Date to ensure that such payment clears in a timely fashion.) [_] certified check [_] bank draft (cashier's check) [_] U.S. postal money order--name of maker _______________________ date of check, draft or money order number ____________________ bank on which check is drawn or issuer of money order _________ Signature ________________________________________________________ Name _____________________________________________________________ (Please Type or Print) Address __________________________________________________________ (Zip Code) Area Code and Tel. No. ___________________________________________ Subscription Warrant No(s). (if available) _______________________ 2 GUARANTY OF DELIVERY (NOT TO BE USED FOR SUBSCRIPTION WARRANT SIGNATURE GUARANTEE) The undersigned, a member firm of a registered national securities exchange or member of the National Association of Securities Dealers, Inc., commercial bank or trust company having an office or correspondent in the United States, or other eligible guarantor institution which is a member of or a participant in a signature guarantee program acceptable to Equiserve Trust Company, N.A., guarantees that the undersigned will deliver to Equiserve Trust Company, N.A. the certificates representing the Rights being exercised hereby, with any required signature guarantees and any other required documents, all within three New York Stock Exchange trading days after the date hereof. ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Address) ________________________________________________________________________________ (Area Code and Telephone Number) Dated: ___________________________________________________________________, 2000 ________________________________________________________________________________ (Name of Firm) ________________________________________________________________________________ (Authorized Signature) The institution which completes this form must communicate the guarantee to Equiserve Trust Company, N.A. and must deliver the Subscription Warrant(s) to Equiserve Trust Company, N.A. within the time period shown herein. Failure to do so could result in a financial loss to such institution. 3 EX-99.5 10 0010.txt FORM OF LETTER TO STOCKHOLDERS OF RECORD Exhibit 99.5 DYNATECH CORPORATION 4,983,048 COMMON SHARES INITIALLY OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO STOCKHOLDERS OF DYNATECH CORPORATION Dear Stockholders: This letter is being distributed to all holders of record of the common stock (the "Common Stock") of Dynatech Corporation ("Dynatech") as of the close of business on April 20, 2000 (the "Record Date") in connection with a distribution of rights (the "Rights") to acquire additional shares of Common Stock, at a subscription price of $4.00 per share as described in the Prospectus dated June 1, 2000. Each record holder of shares of the Common Stock is entitled to receive 0.389 Rights for each share of Common Stock held of record as of the close of business on the Record Date, and to purchase one share of Common Stock for each whole Right received. No fractional Rights have been granted; if a fractional Right would have been calculated for a record holder of our Common Stock as a result of the ratio described above, the number of Rights granted to such holder has been rounded down to the nearest whole Right. The following documents are enclosed: 1. A Prospectus for this offering; 2. A Subscription Warrant evidencing your Rights; 3. Instructions regarding the use of your Dynatech Corporation Subscription Warrant (including guidelines for certification of your Taxpayer Identification Number on Substitute Form W-9); 4. A Notice of Guaranteed Delivery for Subscription Warrants issued by Dynatech Corporation; and 5. A return envelope addressed to Equiserve Trust Company, N.A., the Subscription Agent for this offering. Your prompt action is requested. Your Rights will expire at 5:00 P.M., New York City time, on June 19, 2000, unless the subscription period for this offering is extended by Dynatech (the "Expiration Date"). To exercise your Rights, a properly completed and executed Subscription Warrant (or Notice of Guaranteed Delivery) and payment in full for all of the Rights exercised must be delivered to Equiserve Trust Company, N.A. as indicated in the Prospectus prior to 5:00 P.M., New York City time, on the Expiration Date. Additional copies of the enclosed materials may be obtained from Mackenzie Partners, Inc., the Information Agent for this offering, at 156 Fifth Avenue, New York, NY 10010. You may call Mackenzie Partners, Inc. toll free at 1 (800) 322-2885. Very truly yours, Dynatech Corporation EX-99.6 11 0011.txt FORM OF LETTER FROM BROKERS OR OTHER NOMINEES Exhibit 99.6 DYNATECH CORPORATION 4,983,048 SHARES OF COMMON STOCK INITIALLY OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO STOCKHOLDERS OF DYNATECH CORPORATION To Our Clients: Enclosed for your consideration are a Prospectus, dated June 1, 2000 and the Instructions as to Use of Dynatech Corporation Subscription Warrants relating to an offer by Dynatech Corporation ("Dynatech") to issue additional shares (the "Shares") of its common stock (the "Common Stock") at a subscription price of $4.00 per Share, in cash (the "Subscription Price"), pursuant to subscription rights (the "Rights") initially distributed to holders of record ("Record Owners") of shares of Common Stock as of the close of business on April 20, 2000 (the "Record Date"). As described in the Prospectus, you have received 0.389 Rights for each share of Common Stock carried by us in your account as of the Record Date. The Rights are nontransferable and no fractional Rights will be granted; if a fractional Right would be calculated for you as a result of the ratio described above, the number of Rights granted to you has been rounded down to the nearest whole Right. You are entitled to subscribe for one Share for each whole Right granted to you (the "Basic Subscription Privilege") at the Subscription Price. You will also have the right (the "Oversubscription Privilege"), subject to proration, to subscribe for Shares available after satisfaction of all subscriptions pursuant to the Basic Subscription Privilege at the Subscription Price. If there are insufficient additional Shares to satisfy all exercised Oversubscription Privileges, such additional Shares will be allocated pro rata among all the holders of the Rights exercising Oversubscription Privileges, in proportion to the number of Shares each such holder has purchased pursuant to his or her respective Basic Subscription Privilege. You must elect to exercise your Oversubscription Privilege (or not) at the time you exercise your Basic Subscription Privilege, and you must exercise your Basic Subscription Privilege in full in order to exercise your Oversubscription Privilege. The materials enclosed are being forwarded to you as the beneficial owner of the shares of Common Stock held by us in your account. Exercises of the Rights may be made only by us as the record owner of your Common Stock and pursuant to your instructions. Accordingly, we request instructions as to whether you wish us to elect to subscribe for any Shares to which you are entitled pursuant to the terms and subject to the conditions set forth in the enclosed Prospectus and "Instructions as to Use of Dynatech Corporation Subscription Warrants." However, we urge you to read the enclosed documents carefully before instructing us to exercise your Rights. Your instructions to us should be forwarded as promptly as possible in order to permit us to exercise Rights on your behalf in accordance with the provisions of the offering described in the Prospectus. The offering will expire on June 19, 2000, at 5:00 P.M., New York City time, unless the offering is extended by Dynatech. Once you have exercised your Rights, such exercise may not be revoked. If you wish to have us, on your behalf, exercise your Rights for any Shares for which you are entitled to subscribe, please so instruct us by completing, executing and returning to us the instruction form on the reverse side of this letter. Any questions or requests for assistance concerning the offering should be directed to Mackenzie Partners, Inc., the information agent for this offering, at 156 Fifth Avenue, New York, NY 10010. You may call Mackenzie Partners, Inc. toll free at 1 (800) 322-2855. EX-99.7 12 0012.txt FORM OF INSTRUCTIONS BY BENEFICIAL OWNERS Exhibit 99.7 INSTRUCTIONS BY BENEFICIAL OWNERS TO BROKERS OR OTHER NOMINEES (accompanying letter from brokers or other nominees to beneficial owners) The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to the offering of newly-issued shares of Common Stock (the "Shares") of Dynatech Corporation ("Dynatech"). This will instruct you whether to exercise Rights to purchase the Shares distributed with respect to Dynatech's Common Stock held by you for the account of the undersigned, pursuant to the terms and subject to the conditions set forth in the Prospectus and the related "Instructions as to Use of Dynatech Corporation Subscription Warrants". Box 1. [_] Please do not exercise Rights for Shares. Box 2. [_] Please exercise Rights for Shares as set forth below: Number of Shares to be Subscribed For Price Payment Basic Subscription Right* X $ 4.00 = $ Oversubscription Right X $ 4.00 = $
Total Payment Required = $ (Sum of Lines 1 and 2; must equal total of amounts in boxes 3 and 4 below) * you may purchase one Share for each whole Right you hold. Box 3. [_] Payment in the following amount is enclosed: $ Box 4. [_] Please deduct payment from the following account maintained by you as follows: Type of Account: ------------------------------------------------------ Account No.: ------------------------------------------------------ Amount to be deducted: $ ____________________________________________________ Date: ------------------------------------------------------ Signature(s) ------------------------------------------------------ Please type or print name(s) below ------------------------------------------------------ ------------------------------------------------------ EX-99.8 13 0013.txt FORM OF LETTER TO DEALERS AND OTHER NOMINEES Exhibit 99.8 DYNATECH CORPORATION 4,983,048 SHARES OF COMMON STOCK INITIALLY OFFERED PURSUANT TO RIGHTS DISTRIBUTED TO STOCKHOLDERS OF DYNATECH CORPORATION To Securities Dealers, Commercial Banks, Trust Companies and Other Nominees: This letter is being distributed to securities dealers, commercial banks, trust companies and other nominees in connection with the offering by Dynatech Corporation ("Dynatech") of 4,983,048 newly-issued shares of its common stock (the "Common Stock"), at a subscription price of $4.00 per share, pursuant to subscription rights (the "Rights") initially distributed to holders of record of Common Stock as of the close of business on April 20, 2000 (the "Record Date"). The Rights are described in the Prospectus and evidenced by a Subscription Warrant registered in your name or the name of your nominee. Each beneficial owner of shares of Common Stock registered in your name or the name of your nominee is entitled to 0.389 Rights for each share of Common Stock owned by such beneficial owner. Each whole Right entitles its holder to subscribe for and purchase one share of Common Stock for $4.00. No fractional Rights have been granted; if a fractional Right would have been calculated for a record holder as a result of the ratio described above, the number of Rights granted to such owner has been rounded down to the nearest whole Right. As a result, any beneficial owner of fewer than three shares of Common Stock registered in your name or the name of your nominee is not eligible to receive Rights. We are asking you to contact your clients for whom you hold Common Stock registered in your name or in the name of your nominee to obtain instructions with respect to the Rights. Enclosed are copies of the following documents: 1. The Prospectus for this offering; 2. The "Instructions as to Use of Dynatech Corporation Subscription Warrant" (including Guidelines For Certification of Taxpayer Identification Number on Substitute Form W-9); 3. A form of letter which may be sent by you to your clients on whose account you hold Common Stock registered in your name or the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Rights; and 4. A Notice of Guaranteed Delivery for Subscription Warrants issued by Dynatech Corporation. Your prompt action is requested. The Rights will expire on June 19, 2000, at 5:00 P.M., New York City time, unless the subscription period is extended by Dynatech (the "Expiration Date"). To exercise the Rights, a properly completed and executed Subscription Warrant (unless the guaranteed delivery procedures are complied with) and payment in full for all Rights exercised must be delivered to Equiserve Trust Company, N.A., the subscription agent for this offering, as indicated in the Prospectus prior to 5:00 P.M., New York City time, on the Expiration Date. Additional copies of the enclosed materials may be obtained from Mackenzie Partners, Inc., the information agent for this offering, at 156 Fifth Avenue, New York, NY 10010. You may call Mackenzie Partners, Inc. toll free at 1 (800) 322-2885. Very truly yours, DYNATECH CORPORATION Nothing herein or in the enclosed documents shall render or appoint you or any person as an agent of Dynatech Corporation, the subscription agent or any other person making or deemed to be making offers of the Common Stock issuable upon valid exercise of the Rights, or authorize you or any other person to make any statements on behalf of any of them with respect to this offering. -----END PRIVACY-ENHANCED MESSAGE-----