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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended July 31, 2001
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ________ to _________
Commission File No. 0-22724
CABLE DESIGN TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3601505
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Foster Plaza 7
661 Andersen Drive
Pittsburgh, PA 15220
(Address of Principal Executive Offices and Zip Code)
(412) 937-2300
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock, $.01 par value New York Stock Exchange
Preferred Stock Purchase Rights, with respect to Common
Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. Yes [x] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and need not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
================================================================================
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant at October 17, 2001 is $590,023,002.
The number of shares outstanding of the registrant's Common Stock at October 17,
2001, is 44,066,412.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Cable Design Technologies Corporation Proxy Statement for the
Annual Meeting of Stockholders to be held on December 10, 2001, (the "Proxy
Statement") are incorporated by reference into Part III.
Portions of the 2001 Cable Design Technologies Corporation Annual Report to
Stockholders (the "2001 Annual Report") are incorporated by reference into Parts
I, II and IV.
CABLE DESIGN TECHNOLOGIES CORPORATION
Table of Contents
PART I Page
Item 1. Business ...........................................................................................2
Item 2. Properties ........................................................................................10
Item 3. Legal Proceedings .................................................................................11
Item 4. Submission of Matters to a Vote of Security Holders ...............................................11
Item 4.1. Executive Officers of the Registrant ..............................................................11
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters ...................................................................13
Item 6. Selected Financial Data ...........................................................................13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations .....................................................13
Item 7a. Quantitative and Qualitative Disclosures
About Market Risk .................................................................................13
Item 8. Financial Statements and Supplementary Data .......................................................13
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ............................................................13
PART III
Item 10. Directors and Executive Officers of
the Registrant ....................................................................................14
Item 11. Executive Compensation ............................................................................14
Item 12. Security Ownership of Certain Beneficial
Owners and Management .............................................................................14
Item 13. Certain Relationships and Related Transactions ....................................................14
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K ...........................................................................15
Signatures ........................................................................................19
PART I.
ITEM 1. BUSINESS
General
Cable Design Technologies Corporation ("CDT" or "the Company") is a leading
worldwide designer and manufacturer of high bandwidth network connectivity
products, including gigabit and fiber optic network cables and connectors,
network structured wiring components, assemblies, electronic and fiber optic
passive and active components, and interconnect cables for computer and
communication switching applications, and communication cable products used in
local loop, central office, wireless and other applications. We also manufacture
electronic cable products that are used in automation, process control and
specialty applications.
Our sales for the fiscal year ended July 31, 2001 ("fiscal 2001") were
$763.2 million as compared to $797.8 million for the same period in fiscal 2000
("fiscal 2000"), representing a decrease of 4%, and our net income, excluding
nonrecurring items, was $37.8 million for fiscal 2001 as compared to $54.8
million for fiscal 2000, representing a decrease of 31%. Nonrecurring charges of
$14.3 million, net of tax, were incurred in fiscal 2001 related to
restructuring, goodwill impairment, and a loss on the sale of a business.
Reported net income after nonrecurring charges was $23.5 million. Fiscal 2001
results were negatively impacted by the slowdown in the network and
telecommunication marketplaces, particularly in the United States, which began
in the second half of the Company's fiscal year.
Business Strategy
We have achieved our current market position and success by emphasizing
five primary strategies: (i) be the leading worldwide designer and manufacturer
of electronic wire and cable and connectivity products; (ii) achieve growth both
internally and through acquisition; (iii) grow internationally through
acquisition; (iv) be a low cost producer; and (v) differentiate ourselves from
our competition through outstanding service.
Products. We focus on designing, developing and marketing technologically
advanced network connectivity products, communication cable products used in
local loop, central office and wireless applications, and specialty electronic
cable products that are used in automation, process control and specialty
applications. Examples of advanced network connectivity products include gigabit
and fiber optic network cable and connectors, network structured wiring
components, assemblies, electronic and fiber optic passive and active
components, and interconnect cables for computer and communication switching
applications. This strategy has enabled us to attain a leading position in the
network and specialty electronic cable industries and avoid many
price-sensitive, low technology sectors. This leading position has enabled us to
establish strategic relationships with many customers.
2
Internal and Acquisition Growth. We continue to focus on internal growth by
broadening our product offerings, investing in additional manufacturing
capabilities and developing new customer relationships. In addition, we
continually evaluate strategic acquisition opportunities. Since 1984, we have
made 20 acquisitions. These acquisitions have contributed to our significant
growth in revenues and operating profit. We intend to continue to seek
acquisitions that will broaden our product mix and international presence,
including acquisitions in the fiber optic, passive network component and
connector marketplaces.
International Expansion. In fiscal 2001, 40% of our sales were in markets
outside of the United States and 24% were outside of North America. We believe
that the international markets represent a significant opportunity because many
systems within these markets need to be upgraded in order to participate in
high-speed worldwide communications. We intend to continue to capitalize on the
size and potential of the international markets by increasing sales of existing
operations and establishing or acquiring additional manufacturing and sales
capabilities in these markets.
Manufacturing Infrastructure. We focus on consistently expanding and
upgrading our manufacturing infrastructure in order to improve efficiencies to
maintain a low cost structure as well as to meet current and future product
needs. During the last three fiscal years, we have invested over $85 million for
plant and machinery. Capital projects included in such spending were: (i)
purchase of two buildings which were previously leased; (ii) purchase and
expansion of a facility in Sweden for communications and specialty cable
production; (iii) expansion of our optical fiber capacity; (iv) upgrade of our
network cable facilities worldwide to equip them to manufacture high bandwidth
network cables; and (v) expansion of the facility where we manufacture our high
performance connectors.
Customer Service. We place a great emphasis on providing technical
resources to solve customer problems and on R&D efforts to create solutions for
our markets and customers. We seek highly qualified employees with significant
industry experience and continually invest in R&D and testing resources. In
addition, we maintain a synergistic network of internal communications that
allows each of our business units to share ideas and innovations company-wide.
Customer sales support is a very important part of our business strategy. Each
operating unit maintains a highly trained sales support staff and, for certain
of our products, we maintain multiple warehouse locations to service customers
with same-day or second-day delivery.
Network Communication Segment
Network Communication segment sales were $512.7 million, $545.0 million and
$446.6 million for fiscal 2001, 2000 and 1999, respectively, and represented
67%, 68% and 65% of total revenues for fiscal 2001, 2000 and 1999, respectively.
This segment encompasses connectivity products for the electronic transmission
of data, voice, and multimedia over local and wide area networks and local loop
communication infrastructures. The products include high performance fiber optic
and twisted pair and coaxial copper cables and connectors, wiring racks and
panels, outlets and interconnecting hardware for end-to-end network structured
wiring systems, fiber optic assemblies and patch cords and communication cable
products for outside communication and central office switchboard and equipment
applications. In addition, through the acquisition of BoseLAN/CDT in fiscal
2000, we added high performance passive and active fiber optic and electronic
components to our product portfolio, including multiplexers, switches, media
converters and Ethernet test equipment used in a wide array of voice, video and
data connectivity applications. Bose LAN/CDT, a relatively small operation, adds
diversity to our network product lines and a basis to grow our participation in
the network component marketplace.
3
Local Area Network (LAN) Systems. LANs typically consist of one or more
computers, peripheral devices, software and interconnecting cables, connectors
and accessories. The interconnecting cables can be copper, fiber or a composite
cable including both copper and fiber. Due to the expense and increased
difficulty of installing fiber cable as compared to copper cables and the cost
of transmitters, repeaters and other electronics required for a fiber optic
system, fiber cables have generally been limited to riser applications and
backbone parts of the local area network. Copper cables, while still used in
riser and backbone applications, are predominate in premise wiring and
horizontal portions of network systems. In addition, each network system,
whether fiber or copper, includes a large number of other structured wiring
components, such as connectors, patch panels, outlets and racks.
We manufacture and sell fiber optic, copper and composite cables,
connectors, rack enclosures and cabinets, fiber optic splitters and couplers and
other passive components used in LAN systems. Our connectors include our
patented Optimax(TM) and Quick Connect(TM) fiber optic connectors and our
industry leading high performance GigaFlex(TM) copper connector series. In
addition, we offer "plug & play" fiber optic cabling systems. We are also one of
a few companies that offer a fully integrated end-to-end warranted network
structured wiring system. The ability to offer a fully warranted end-to-end
system is an important marketing feature that differentiates us from many of our
competitors.
We have invested heavily over the past few years to increase our gigabit
network cable manufacturing capacity. Such investment has resulted in our
ability to increase our percentage of gigabit network cables to 71% of category
5 and above network cable sales during fiscal 2001 from 30% of category 5 and
above network cable sales during fiscal 1999.
Interconnect and Central Office Products. Interconnect products refers to
transmission cables used inside computers and other electronic equipment, as
well as to connect large and small computers to a variety of peripheral devices.
Central office products refers to cable used to connect switching and related
telecommunications equipment, as well as switchboard cable. We produce both
fiber optic and copper cables for such uses and believe that we are one of the
leaders in this market. The market is generally defined by the computer OEM
specifications and often requires our engineers to work closely with component
engineers during the product design and development process. We believe that our
strengths in engineering and design, together with our historical relationships
and reputation with OEM's, gives us an advantage in this market.
Cellular Communication. We believe that the rapid growth of cellular or
"wireless" applications presents a significant opportunity. Wireless
communications rely on antenna towers, base station transmission and central
office switching, with each application requiring high performance cable and
other connectivity products. Greater traffic over cellular networks also
requires greater switching capabilities and other electronic equipment, which
drives demand for our interconnect products. We produce specialized cables used
in these applications.
Communications. We produce communication distribution cables that are used
in the telecommunications industry to service business and residential customers
in the local loop. Demands for new services and phone lines due to increased
Internet, fax, telecommuting, DSL and other uses, growth of home offices and
overdue maintenance of the existing copper local loop infrastructures drive this
market.
4
Specialty Electronic Segment
Specialty Electronic segment sales were $250.5 million, $252.8 million and
$237.4 million for fiscal 2001, 2000 and 1999, respectively, and represented
33%, 32% and 35% of total revenues in fiscal 2001, 2000 and 1999, respectively.
The Specialty Electronic segment includes highly engineered wire and cable
products covering a broad range of specialized applications and niche markets,
including commercial aviation and marine, automotive electronics, medical
electronics, electronic testing equipment, robotics and electronically
controlled factory equipment. Also included are cables for automation
applications, such as climate control, premise video distribution and
sophisticated security and signal systems involving motion detection, electronic
card and video surveillance technologies, process control applications, such as
remote signaling and electronic monitoring systems, sound applications, such as
voice activation, evacuation and other similar systems, and safety applications,
such as data transmission cable for advanced fire alarm and safety systems,
including cable having improved safety and performance attributes under
hazardous conditions. Included in the Specialty Electronic segment are non-cable
related manufacturing activities encompassing precision tire casting and sheet
metal fabrication which are not material to our business.
Raw Materials
The principal raw materials we use are copper and insulating compounds. Raw
materials are purchased on a consolidated basis whenever possible to reduce
costs and improve supplier service levels. Copper is purchased from several
suppliers. Price terms are generally producers' prices at time of shipment. We
do not generally engage in hedging transactions for the purchase of copper.
Currently, world stocks of and capacity for copper are adequate to meet our
requirements. We purchase insulating compounds, including Teflon(R), from
various suppliers and, while from time to time there have been shortages of such
material, supplies are currently adequate to meet our needs. Certain of our
products also require bulk uncabled optical fiber singles, which are currently
purchased primarily from one supplier. While supplies are currently adequate to
meet our need, there have, in the past, been periods when the worldwide supply
of bulk optical fiber and certain other fiber optic components, such as
ferrules, has been limited. Other materials used include reels, tapes, textiles,
chemicals and other materials. Currently, supplies of these other materials are
adequate to meet our needs.
Customers
We sell our products directly or through established distributors to a
variety of customers, including original equipment manufacturers, regional Bell
operating companies, competitive local exchange carriers, and certified system
vendors. We support over 10,000 customers. No single customer accounted for more
than 10% of sales in fiscal 2001, 2000 or 1999.
Competition
The markets served by our products are competitive. Although some of our
competitors are substantially larger and have greater resources than we do, we
believe that we compete successfully in our markets due to our experienced
management team, manufacturing expertise, breadth of product offerings and
leading edge technology, large number of customer approved specifications,
emphasis on quality and established reputation. In all of our markets we compete
with a large number of competitors, some of which are significantly larger than
us.
5
Backlog
Backlog orders believed to be firm were $68.8 million at July 31, 2001,
compared to $126.8 million at July 31, 2000. We believe that substantially all
of the backlog is shippable within the next twelve months. Generally, customers
may cancel orders for standard products without penalty upon thirty days notice.
Research and Development
We engage in research and development activities including new and existing
product development. Research and development costs were $5.2 million, $4.6
million and $5.5 million in fiscal 2001, 2000 and 1999, respectively.
Foreign Operations
Information regarding the Company's foreign and domestic operations is set
forth in Note 14, "Industry and Geographic Segment Information" as presented in
the Company's Notes to Consolidated Financial Statements, and is incorporated
herein by reference.
Environmental Matters
We are subject to numerous federal, state, provincial, local and foreign
laws and regulations relating to the storage, handling, emission and discharge
of materials into the environment, including the United States Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water Act, the
Clean Air Act, the Emergency Planning and Community Right-To-Know Act and the
Resource Conservation and Recovery Act. Regulations of particular significance
to us include those pertaining to handling and disposal of solid and hazardous
waste, discharge of process wastewater and storm water and release of hazardous
chemicals. Although we believe that we are in substantial compliance with such
laws and regulations, we may from time to time not be in full compliance and may
be subject to fines or other penalties for noncompliance.
We do not currently anticipate any material adverse effect on our business
as a result of compliance with federal, state, provincial, local or foreign
environmental laws or regulations. However, some risk of environmental liability
and other costs is inherent in the nature of our business, and there can be no
assurance that material environmental costs will not arise in the future.
The Company was named as a third party defendant in People of the State of
----------------------
California v. M&P Investments and various other parties (CIV-S-00-24411 Eastern
-----------------------------
District, CA). The complaint, brought under Federal, State and local statutory
provisions, alleges that property previously owned by a predecessor to the
Company contributed to ground water pollution in the City of Lodi, California.
The Company believes that initial reports prepared on behalf of the City of Lodi
show that the property alleged to have been owned by a predecessor to the
Company is not one of the potential pollution sources. The Company does not
believe that the resolution of this matter will have a material adverse effect
on the Company.
6
Employees
As of July 31, 2001, we had approximately 3,300 full-time employees and 550
workers under contract manufacturing arrangements in Mexico, excluding employees
under notice periods associated with the Company's restructuring plan announced
in the fourth fiscal quarter. Approximately 1,100 of the full-time employees are
represented by labor unions. We have not experienced any material work stoppages
at our plants and we believe that, in general, our current relations with our
employees are good. Union contracts covering approximately 500 employees at
various operating units have expired and are currently being negotiated or
expire within the next twelve months, including contracts relating to our
Nordx/CDT operations in Montreal, Canada. There can be no assurance that
conflicts will not arise with unions (whether in the context of contract
negotiations or otherwise) or other employee groups or that such conflicts would
not have a material adverse effect on our business.
Risk Factors
We may not be able to successfully identify, finance or integrate
acquisitions. Growth through acquisitions is an important part of our strategy.
We cannot assure that we will be successful in identifying, financing and
closing acquisitions at favorable prices and terms. Many of the areas in which
we are looking to expand through acquisition have been characterized by high
valuations. These acquisition opportunities may only be feasible if we obtain
additional financing, and such financing may not be available on terms
acceptable to us, or at all. Further, we cannot assure that we will be
successful in integrating any such acquisitions that are completed. Also,
integration of any such acquisitions may require substantial management,
financial and other resources and may pose risks with respect to production,
customer service and market share of existing operations.
Because we operate in markets that experience rapid technological change,
certain of our products could become obsolete or marketplaces in which we sell
could become more competitive. Many of the markets that we serve are
characterized by rapid technological change. We believe that our future success
will depend in part upon our ability to enhance existing products and to develop
or acquire new products that meet or anticipate such changes. The failure to
successfully introduce new or enhanced products on a timely and cost-competitive
basis could have a material adverse effect on our business. At the same time,
however, the introduction of new or enhanced products tends to have the effect
of reducing the prices at which we can sell some of our existing product lines,
which may harm our net sales and profitability.
Many of our network cable products are subject to various industry
standards. Many of such standards, particularly for newer high bandwidth cable
products, are still being developed. In the event we are unable to meet such
standards when adopted, or if the implementation of such standards was delayed,
our business could be adversely affected.
7
Fiber optic technology represents a substitute for copper based cable
products. A significant decrease in the cost and complexity of installation of
fiber optic systems, or increase in the cost of copper based systems, could make
fiber optic systems superior on a price performance basis to copper systems and
may have a material adverse effect on our business. Also, wireless technology,
as it relates to premise network and communication systems, may represent a
threat to both copper and fiber optic cable based systems by reducing the need
for premise wiring. While we sell fiber optic cable and components and cable
that is used in various wireless applications, if fiber optic systems or
wireless technology were to significantly erode the markets for copper based
systems or, in the case of wireless technology, fiber optic based systems, our
sales of fiber optic and wireless products may not be sufficient to offset any
decrease in sales or profitability of other products that may occur.
Technological advances could require significant capital or other
expenditures to manufacture new products or maintain market positions. Our
failure to make such capital expenditures on a timely basis or our making
capital expenditures in markets that fail to adequately develop could have an
adverse effect on us. Further, as other manufacturers make capital expenditures
to enable them to manufacture products similar to those manufactured by us,
markets for such products may become more competitive resulting in decreases in
sales and profits.
Price fluctuations or shortages of raw materials could adversely affect our
operations. Copper is a principal raw material purchased by us, and our sales
may be affected by the market price of copper. Significant fluctuations in the
price of copper or other raw materials could have a negative effect on our
business. We generally do not engage in hedging transactions for copper or other
raw materials and we may not be able to pass on increases in the price of copper
and other raw materials to our customers. We also purchase compounds, such as
Teflon(R), from various suppliers. From time to time, the supply of such
materials has been limited. The inability of suppliers to supply such raw
materials could have a material adverse effect on our business until a
replacement supplier is found or substitute materials are approved for use. In
addition, we purchase bulk uncabled optical fiber singles which we further
process and sell. While supplies are currently adequate to meet our need, there
have, in the past, been periods when the worldwide supply of bulk optical fiber
and certain other fiber optic components, such as ferrules, has been limited. If
adequate supplies of such fiber and other components were unavailable and/or
additional suppliers could not be obtained, our growth in the fiber optic cable
marketplace could be limited.
Our business is subject to the economic and political risks of maintaining
facilities and selling products in foreign countries. During fiscal 2001, 40% of
our sales were in markets outside the United States. Our operations may be
adversely affected by significant fluctuations in the value of the U.S. dollar
against foreign currencies or by the enactment of exchange controls or foreign
governmental or regulatory restrictions on the transfer of funds. Furthermore,
our foreign operations are subject to risks inherent in maintaining operations
abroad such as economic and political destabilization, international conflicts,
restrictive actions by foreign governments, nationalizations and adverse foreign
tax laws.
Our markets are competitive. We are subject to competition from a
substantial number of international and regional competitors, some of which have
greater financial, engineering, manufacturing and other resources than we do.
Our competitors can be expected to continue to improve the design and
performance of their products and to introduce new products with competitive
price and performance characteristics. Furthermore, maintaining our current
technological advantages will require continued investment by us in engineering,
research and development, marketing and customer service and support. There can
be no assurance that we will have sufficient resources to continue to make such
investments or that we will be successful in maintaining such advantages.
8
Potential environmental, product, warranty or other liabilities could
adversely impact our financial position. Risk of environmental, product and
warranty liabilities, and other costs associated therewith, are inherent in the
nature of our business. We cannot assure you that material environmental,
product or warranty costs will not arise in the future.
Losing the services of key personnel or adverse relations with employees
could harm our business. Our continued success depends on the efforts and
abilities of our executive officers and other key employees. The loss of any of
our executive officers or other key employees could adversely affect our
operations. We generally do not have employment contracts with our executive
officers or other key employees. Our ability to attract and retain quality
employees in all disciplines is important to our future success. See also
"Business-Employees".
The Company's main credit facility expires in April 2002. The Company is
working on refinancing such facility and believes that its cash flow, asset base
and business plan are sufficient to accomplish such refinancing in the current
lending markets. There are risks, however, that due to the current industry
conditions, economic slowdown and tight credit markets that the cost, conditions
and covenants of such new credit facility could be substantially more onerous
than those in the Company's current facility. There is also risk that prior to
completing such new facility, events occur with respect to the Company, the
economy or the credit markets that close the bank market to the Company.
Anti-takeover provisions could delay or prevent a change in control or
adversely impact the price of our common stock. Provisions of our Rights Plan
and our certificate of incorporation, and provisions of the Delaware General
Corporation Law could each have the effect of deterring hostile takeovers or
delaying, deterring or preventing a change in control of our company, including
transactions in which stockholders might otherwise receive a premium for their
shares over current market prices.
Disclosure Regarding Forward-Looking Statements
This report includes and incorporates by reference "Forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements other than statements of historical fact included
or incorporated in this report may constitute forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors, including those
described under "Risk Factors", could cause actual results to differ materially
from the Company's expectations. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements.
9
ITEM 2. PROPERTIES
The Company uses various owned or leased properties as manufacturing
facilities, warehouses, and sales and administration offices. The Company
believes that current facilities, together with planned expenditures for normal
maintenance, capacity and technological improvements, will provide adequate
production capacity to meet expected demand for its products.
Listed below are the principal manufacturing, warehouse and sales
facilities operated by the Company. Additionally, the Company also owns or
leases approximately 196,000 square feet of other warehouse and sales
facilities. Manufacturing facilities of approximately 127,000 and 60,000 square
feet are operated on behalf of the Company in Nogales, Mexico and Tijuana,
Mexico, respectively, by third parties pursuant to contract manufacturing
arrangements.
Owned or Approx.
Location Use Leased Sq. Feet
Auburn, MA Manufacturing, Sales and Administration Owned 146,000
Auburn, MA Manufacturing and Warehousing Leased 71,000
Bagnacavallo, Italy Manufacturing, Sales and Administration Owned 126,000
Barberton, OH Manufacturing, Sales and Administration Owned 52,000
Chicago, IL Manufacturing Owned 18,000
Ft. Lauderdale, FL Manufacturing, Sales and Administration Owned 46,000
Gjern, Denmark Manufacturing, Sales and Administration Owned 22,000
Irvine, CA Manufacturing, Sales and Administration Leased 77,000
Kingston, Ontario Manufacturing Owned 500,000
Kinna, Sweden Manufacturing, Sales and Administration Owned 108,000
Las Vegas, NV Warehousing Leased 44,000
Leominster, MA Manufacturing, Sales and Administration Owned 202,000
Leominster, MA Manufacturing Leased 101,000
Leominster, MA Warehouse Leased 38,000
Littleborough, United Kingdom Manufacturing Owned 42,000
Longueuil, Quebec Manufacturing, Sales and Administration Leased 50,000
Lugo, Italy Manufacturing and Warehousing Leased 58,000
Manchester, CT Manufacturing Leased 55,000
Manchester, CT Manufacturing, Sales and Administration Leased 150,000
Memphis, TN Warehousing Owned 147,000
Montreal, Quebec Manufacturing, Sales and Administration Owned 300,000
Orebro, Sweden Manufacturing, Sales and Administration Owned 47,000
Skelmersdale, United Kingdom Manufacturing, Sales and Administration Owned 122,000
Wadsworth, OH Manufacturing, Sales and Administration Owned 45,000
Waynesburg, PA Manufacturing Owned 42,000
Washington, PA Manufacturing Leased 82,000
Washington, PA Manufacturing Owned 123,000
Washington, PA Manufacturing, Sales and Administration Owned 85,000
Washington, PA Warehousing Owned 79,000
Wheeling, IL Manufacturing, Sales and Administration Owned 110,000
Wheeling, IL Manufacturing, Sales and Administration Owned 80,000
Wipperfurth, Germany Manufacturing, Sales and Administration Owned 351,000
Wipperfurth, Germany Manufacturing Leased 69,000
10
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings and administrative
actions incidental to the operations of the Company. In the opinion of the
Company's management, such proceedings and actions should not, individually or
in the aggregate, have a material adverse effect on the Company's results of
operations or financial condition. See also Item I., Business--Environmental
Matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report no
matter was submitted to a vote of security holders.
ITEM 4.1. EXECUTIVE OFFICERS OF THE REGISTRANT
Age Present Office and Experience
--- -----------------------------
67 Paul M. Olson has been President and a director of the Company since
1985, and Chief Executive Officer of the Company since 1993. From 1972
to 1984 Mr. Olson was the President of Phalo Corporation, a wire and
cable manufacturer, and directed sales and marketing at Phalo
Corporation from 1967 to 1972. From 1963 to 1967, Mr. Olson was
employed at General Electric and from 1960 to 1963, at General Cable,
in wire and cable related sales and marketing positions. Mr. Olson has
a Bachelor's Degree in Economics from Hobart College.
59 George C. Graeber has been Chief Operating Officer and a director of
the Company since 1998. From 1992 to 1998, Mr. Graeber served in
various other positions with the Company, including Executive Vice
President of the Company and President of Montrose/CDT. From 1990 to
1992 Mr. Graeber was a Vice President and General Manager of the Energy
division of Anixter International, Inc., a distributor of cable and
communication equipment. Mr. Graeber also was the President of the
Industrial Electronic division of Brintec Corp. and a Vice President of
Brand Rex Cable. Mr. Graeber has a Master's Degree in Electrical
Engineering from the University of Connecticut.
59 Michael A. Dudley has been an Executive Vice President of the Company
and President of CDT International since 1991. From 1988 to 1991 he was
the President of Superior Optics, a division of Superior Teletec, Inc.,
a manufacturer of communication cable. Mr. Dudley has a Doctorate
Degree in Material Science from The National College of Rubber
Technology in London, England.
51 Normand R. Bourque has been an Executive Vice President of the Company
since 1996 and President and Chief Executive Officer of NORDX/CDT since
its acquisition. Prior to the acquisition, Mr. Bourque was Vice
President-Cable Group at Nortel from 1991 to 1995 and Vice President,
Operations-Cable Group from 1989 to 1991. From 1985 to 1988, Mr.
Bourque was Vice President and General Manager-Transmission Networks at
Nortel, and prior to that, held a number of positions in general
management and finance at Nortel. Mr. Bourque has a Bachelor's Degree
in Business Administration from the Ecole des Hautes Etudes
Commerciales in Montreal, Canada.
11
62 David R. Harden has been a Senior Vice President of CDT and President
of West Penn/CDT since 1988. He founded West Penn Wire in 1971, and
operated that company until 1984 when it was acquired by the Company.
From 1984 until 1988 Mr. Harden was an Executive Vice President of West
Penn/CDT.
40 Peter Sheehan has been an Executive Vice President of the Company since
1998. Mr. Sheehan joined the Company in 1995 in the area of
international sales and marketing. Prior to joining the company Mr.
Sheehan was Senior Vice President of Sales and Marketing of Berk-tek, a
wire and cable company. Mr. Sheehan has a Bachelor's Degree from Boston
College.
51 Kenneth O. Hale has been Vice President and Chief Financial Officer of
the Company since 1987. Mr. Hale holds a Certified Public Accountant's
certificate and an MBA in finance from the University of Missouri.
40 Charles B. Fromm was appointed Vice President and General Counsel of
the Company in October 1997, and Secretary of the Company in 1999.
Prior to joining the Company, Mr. Fromm was a Partner at Kirkland &
Ellis, New York. Mr. Fromm has a Bachelor's Degree in Business
Administration and a Juris Doctor Degree from the University of
Michigan.
54 Ian Mack was appointed President of European Operations in August 2000.
Prior thereto, Mr. Mack was managing director of Brand Rex Limited, a
division of BICC plc, a company based in the United Kingdom.
12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
As of October 17, 2001, there were 178 holders of record of the Company's
Common Stock.
Additional information required by this item is set forth under the heading
"Directors, Officers, and Corporate Information" on page 38 of the 2001 Annual
Report and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item is set forth under the heading "Selected
Historical Consolidated Financial Data" on page 37 of the 2001 Annual Report and
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations appears on pages 9 through 15 of the 2001 Annual Report and is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item appears under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
page 14 of the 2001 Annual Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is set forth on pages 16 through 36 of
the 2001 Annual Report and is incorporated herein by reference and filed
electronically herewith as Exhibit 13.1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. Information concerning the Registrant's directors is set forth in the
Registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission on or before November 16, 2001. Such information
is incorporated herein by reference.
b. Information concerning executive officers of the Registrant is set forth
in Item 4.1 of Part I at page 11 of this Report under the heading
"Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive officers of the Registrant is set forth in
the Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission on or before November 16, 2001. Such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is set forth in the Registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission on or before November 16,
2001. Such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is set
forth in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission on or before November 16, 2001. Such
information is incorporated herein by reference.
14
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The following documents are included in the 2001 Annual Report, pages
16 through 36, and are incorporated herein by reference:
a. Report of Independent Public Accountants.
b. Consolidated Statements of Income for the years ended July
31, 2001, 2000 and 1999.
c. Consolidated Balance Sheets as of July 31, 2001 and 2000.
d. Consolidated Statements of Cash Flow for the years ended
July 31, 2001, 2000 and 1999.
e. Consolidated Statements of Stockholders' Equity for the
years ended July 31, 2001, 2000 and 1999.
f. Notes to Consolidated Financial Statements.
2. The following documents are filed as part of this report:
a. Report of Independent Public Accountants on Supplemental
Schedule.
b. Schedule II: Valuation and Qualifying Accounts for the
three years ended July 31, 2001.
c. List of Exhibits
3. List of Exhibits
3.1 Amended and Restated Certificate of Incorporation of CDT as
filed with the Secretary of State of Delaware on November
10, 1993, incorporated by reference to Exhibit 3.1 to CDT's
Registration Statement on Form S-1 (File No. 33-69992),
Certificate of Amendment of the Restated Certificate of
Incorporation of CDT and Certificate of Designation,
Preferences and Rights of Junior Participating Preferred
Stock, Series A of CDT, as filed with the Secretary of State
of Delaware on December 11, 1996 and incorporated by
reference to CDT's Registration Statement on Form 8-A/A, as
filed on December 23, 1996.
3.2- By-Laws of CDT, as amended to date, incorporated by
reference to Exhibit 3.2 to the Post-Effective Amendment No.
1 to CDT's Registration Statement on Form S-3 (File No.
333-00554), as filed on February 28, 1996.
4.1 Form of certificate representing shares of the Common Stock
of CDT. Incorporated by reference to Exhibit 4.1 to CDT's
Registration Statement on Form S-1 (File No. 33-69992).
4.2- Rights Agreement dated as of December 11, 1996, between
Cable Design Technologies Corporation and The First National
Bank of Boston, as Rights Agent, including the form of
Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A attached thereto as
Exhibit A, the form of Rights Certificate attached thereto
as Exhibit B and the Summary of Rights attached thereto as
Exhibit C. Incorporated herein by reference to CDT's
Registration Statement on Form 8-A, as filed on December 11,
1996.
15
10.1 - CDT Long-Term Performance Incentive Plan (adopted on
September 23, 1993). Incorporated by reference to Exhibit
10.18 to CDT's Registration Statement on Form S-1 (File No.
33-69992).
10.2 - CDT Stock Option Plan. Incorporated by reference to Exhibit
4.3 to CDT's Registration Statement on Form S-8 as filed on
December 22, 1993.
10.3 - Cable Design Technologies Corporation Management Stock Award
Plan (adopted on September 23, 1993). Incorporated by
reference to Exhibit 4.3 to CDT's Registration Statement on
Form S-8, as filed on May 2, 1994.
10.4 - Description of CDT Bonus Plan. Incorporated by reference to
Exhibit 10.20 to CDT's Registration Statement on Form S-1
(File No. 33-69992).
10.5 - Lease Agreement between Phalo and First Hartford Realty
Corp., dated as of November 9, 1992. Incorporated by
reference to Exhibit 10.23 to CDT's Registration Statement
on Form S-1 (File No. 33-69992).
10.6 - Employment Agreement dated February 2, 1996, among CDT,
NORDX/CDT and Normand Bourque. Incorporated by reference to
Exhibit 10.17 to CDT's Report on Form 8-K as filed on
February 20, 1996.
10.7 - Collective Labour Agreement dated June 10, 1996, between
NORDX/CDT and Canadian Union of Communications Workers Unit
4. Incorporated by reference to Exhibit 10.19 to CDT's
Annual Report on Form 10-K, as filed on October 29, 1996.
10.8 - Form of Change in Control Agreement between CDT and each of
George C. Graeber, Kenneth O. Hale, Charles B. Fromm, Peter
Sheehan, Michael A. Dudley and Ian Mack. Incorporated by
reference to Exhibit 10.14 to CDT's Annual Report on Form
10-K, as filed on October 27, 1999.
10.9 - Change in Control Agreement dated June 11, 1999, between CDT
and Paul M. Olson. Incorporated by reference to Exhibit
10.15 to CDT's Annual Report on Form 10-K, as filed on
October 27, 1999.
10.10 - Cable Design Technologies Corporation 1999 Long-Term
Performance Incentive Plan adopted April 19, 1999 and
amended June 11, 1999. Incorporated by reference to Exhibit
10.16 to CDT's Annual Report on Form 10-K, as filed on
October 27, 1999.
10.11 - Cable Design Technologies Corporation Employee Stock
Purchase Plan. Incorporated by reference to Exhibit 4.3 to
CDT's Registration Statement on Form S-8 (File No.
333-76351).
10.12 - Form of June 11, 1999 Stock Option Grant under the 1999
Long-Term Performance Incentive Plan. Incorporated by
reference to Exhibit 10.18 to CDT's Annual Report on Form
10-K, as filed on October 27, 1999.
16
10.13 - Form of April 23, 1999 Stock Option Grant. Incorporated by
reference to Exhibit 10.19 to CDT's Annual Report on Form
10-K, as filed on October 27, 1999.
10.14 Amendment No. 1, dated March 7, 2000, to Cable Design
Technologies Corporation Non-Employee Director Stock Plan.
Incorporated by reference to Exhibit 10.14 to CDT's Annual
Report on Form 10-K, as filed on October 27,2000.
10.15 Amendment No. 2, dated July 13, 2000, to Cable Design
Technologies Corporation 1999 Long-Term Performance
Incentive Plan. Incorporated by reference to Exhibit 10.15
to CDT's Annual Report on Form 10-K, as filed on October
27,2000.
10.16 Employment agreement dated August 1, 2000, among CDT, Noslo
Ltd. and Ian Mack. Incorporated by reference to Exhibit
10.16 to CDT's Annual Report on Form 10-K, as filed on
October 27,2000.
10.17 Cable Design Technologies Corporation 2001 Long-Term
Performance Incentive Plan adopted December 6, 2000.
Incorporated by reference to Exhibit 99.1 to CDT's Report on
Form 10-Q as filed March 15, 2001.
10.18 Form of Stock Option Grant under CDT Non-Employee Director
Stock Plan. Incorporated by reference to Exhibit 99.2 to
CDT's Report on Form 10-Q as filed March 15, 2001.
13.1 - CDT 2001 Annual Report to Stockholders (to the extent
incorporated herein by reference).**
21.1 - List of Subsidiaries of CDT.**
23.1 - Consent of Arthur Andersen LLP.**
99.4 - Credit Agreement dated April 10, 1997, among the Company,
The First National Bank of Boston, Banque Paribas, Chicago
Branch, Paribas Bank of Canada, Bank of America Illinois,
Bank of America Canada and other lenders party thereto.
Incorporated by reference to CDT's Report on Form 10-Q, as
filed on June 16, 1997.
99.5 - First Amendment to Credit Agreement dated July 31, 1998
(effective August 3, 1998) among CDT, BankBoston N.A.,
Paribas, Paribas Bank of Canada, Bank of America NT & SA,
Bank of America Canada and other Lenders party thereto.
Incorporated by reference to CDT's Report on Form 10-K as
filed on October 29, 1998.
99.6 - Second Amendment to Credit Agreement dated July 31, 1998
(effective August 3, 1998) among CDT, BankBoston N.A.,
Paribas, Paribas Bank of Canada, Bank of America NT & SA,
Bank of America Canada and other Lenders party thereto.
Incorporated by reference to CDT's Report on Form 10-K as
filed on October 29, 1998.
17
99.7 - Revolving Line of Credit Letter Agreement dated March 9,
2001, between CDT and Fifth Third Bank. Incorporated by
reference to Exhibit 99.1 to CDT's Report on Form 10-Q as
filed on June 13, 2001.
99.8 - Master Revolving Line of Credit Promissory Note issued by
CDT in favor of Fifth Third Bank. Incorporated by reference
to Exhibit 99.2 to CDT's Report on Form 10-Q as filed on
June 13, 2001.
** Filed Herein
(b) Reports on Form 8-K
None
18
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
Cable Design Technologies Corporation
By:/s/ Paul M. Olson October 29, 2001
-------------------------------------
Paul M. Olson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Bryan C. Cressey Chairman of the Board October 29, 2001
--------------------------------------- Director
Bryan C. Cressey
/s/ Paul M. Olson Director, President, Chief October 29, 2001
--------------------------------------- Executive Officer (Principal
Paul M. Olson Executive Officer)
/s/ George C. Graeber Director, Chief Operating October 29, 2001
---------------------------------------
George C. Graeber Officer
/s/ Kenneth O. Hale Vice President, Chief Financial October 29, 2001
--------------------------------------- Officer (Principal Financial
Kenneth O. Hale and Accounting Officer)
/s/ Ferdinand Kuznik Director October 29, 2001
---------------------------------------
Ferdinand Kuznik
/s/ Michael F.O. Harris Director October 29, 2001
---------------------------------------
Michael F. O. Harris
/s/ Glenn Kalnasy Director October 29, 2001
---------------------------------------
Glenn Kalnasy
/s/ Richard C. Tuttle Director October 29, 2001
---------------------------------------
Richard C. Tuttle
/s/ Lance Balk Director October 29, 2001
---------------------------------------
Lance Balk
19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in Cable Design
Technologies Corporation and Subsidiaries' annual report to stockholders
incorporated by reference in this Form 10-K, and have issued our report thereon
dated September 26, 2001. Our audits were made for the purpose of forming an
opinion on those financial statements taken as a whole. The schedule listed in
the accompanying index is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Pittsburgh, Pennsylvania
September 26, 2001
20
CABLE DESIGN TECHNOLOGIES CORPORATION
SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JULY 31, 2001, 2000 and 1999
Additions to
Reserve from Additions
Balance at Acquisitions Charged to Balance at
Beginning of & Other Costs and Reduction End of
Period Adjustments Expenses from Reserve Period
------ ----------- -------- ------------ ------
(Dollars in thousands)
Allowance for uncollectible
accounts/sales returns:
Year Ended July 31, 1999 $3,995 $ 172 $1,479 $ (720) $4,926
Year Ended July 31, 2000 $4,926 $ 13 $3,071 $(1,830) $6,180
Year Ended July 31, 2001 $6,180 $ (94) $8,413 $(8,138) $6,361
Restructuring reserve:
Year Ended July 31, 1999 $1,759 $----- $ (264) $(1,247) $ 248
Year Ended July 31, 2000 $ 248 $----- $ (248) $------- $-----
Year Ended July 31, 2001 $----- $ 6 $6,128 $ (543) $5,591
21
CABLE DESIGN TECHNOLOGIES CORPORATION
INDEX TO EXHIBITS FILED HEREIN
JULY 31, 2001
EXHIBIT
NUMBER EXHIBIT
13.1 - CDT 2001 Annual Report to Stockholders (to the extent
incorporated herein by reference).
21.1 - List of Subsidiaries of CDT.
23.1 - Consent of Arthur Andersen LLP.
22