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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, 1999
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. [X]
================================================================================
Exhibit Index on Page 14 Page 1 of 22
------
The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant at October 1, 1999, is $555,815,153.
The number of shares outstanding of the registrant's Common Stock at October 1,
1999, is 28,197,340.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Cable Design Technologies Corporation Proxy Statement for the
Annual Meeting of Stockholders to be held on December 7, 1999, (the "Proxy
Statement") are incorporated by reference into Part III.
Portions of the 1999 Cable Design Technologies Corporation Annual Report to
Stockholders (the "1999 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....................................... 9
Item 3. Legal Proceedings................................ 9
Item 4. Submission of Matters to a Vote of Security
Holders.......................................... 10
Item 4.1. Executive Officers of the Registrant............. 10
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters...................... 12
Item 6. Selected Financial Data.......................... 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 12
Item 7a. Quantitative and Qualitative Disclosures About
Market Risk...................................... 12
Item 8. Financial Statements and Supplementary Data...... 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............. 12
PART III
Item 10. Directors and Executive Officers of the
Registrant....................................... 13
Item 11. Executive Compensation........................... 13
Item 12. Security Ownership of Certain Beneficial
Owners and Management............................ 13
Item 13. Certain Relationships and Related Transactions... 13
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K........................... 14
Signatures........................................ 19
PART I.
ITEM 1. BUSINESS
General Description of Business
Cable Design Technologies Corporation (the "Company", the "Registrant" or
"CDT") was incorporated on May 18, 1988 under the laws of the State of Delaware
with its principal office located at 661 Andersen Drive, Pittsburgh,
Pennsylvania 15220 (Telephone: 412-937-2300).
CDT is a designer and manufacturer of specialty electronic data
transmission cables and network structured wiring systems. CDT products include
high performance copper, fiber optic, and composite cable constructions,
connectors and component assemblies that are used in network, communication,
computer interconnect, wireless, commercial aviation, automotive, automation &
process control, and other applications.
The Company, as it exists today, was incorporated on May 18, 1988, but was
conceived in 1985 by its current President and Chief Executive Officer, Paul
Olson, together with other members of current management, shortly after its
predecessor company, Intercole, Inc., acquired the West Penn Wire Corporation
("West Penn/CDT"). In 1985 Intercole Inc., a Company traded on the American
Stock Exchange, was acquired by the Northern Group which subsequently took it
private. In 1988, the Company underwent a recapitalization pursuant to which
Golder, Thoma, Cressey Fund II purchased a controlling interest in the Company,
with the Northern Group retaining a smaller interest in the Company.
Acquisitions have been an important part of CDT's growth strategy. In March
1986, the Company acquired Mohawk Wire & Cable Corporation ("Mohawk/CDT") , a
cable manufacturer which had established relationships with companies involved
in the early stages of computer network development. In December 1988, the
Company purchased Montrose Products Company ("Montrose/CDT"), a specialty
electronics cable company with established relationships with IBM and other
major purchasers of computer interconnect products. In August 1990, the Company
established CDT International to respond to increasing demand for data
transmission cable products in international markets. In May 1991, the Company
expanded its international presence by purchasing Anglo-American Cables Ltd.
("Anglo/CDT"), a European cable distributor. In March 1993, the Company
established Phalo/CDT to further increase its production capabilities and
broaden its product line. In May 1994, the Company acquired all the outstanding
stock of Nya NEK Kabel AB ("NEK/CDT"), located near Gothenburg, Sweden, to enter
the sophisticated broadcast, CATV and antenna cable markets and to expand
network systems cable manufacturing capacity into Europe. In June 1995, the
Company purchased all of the operating assets of Manhattan Electric Cable
Corporation ("Manhattan/CDT") based in Rye, New York to enhance sales of
specialty electronic cable for industrial automation and robotic applications.
In August 1995, the Company purchased Cole-Flex Corporation of West Babylon, New
York to combine its sleeving and tubing capabilities with Manhattan/CDT. In
September 1995, the Company purchased the operating assets of the Raydex
Division of Volex Group, p.l.c. ("Raydex/CDT") (United Kingdom) to provide
additional international manufacturing capabilities of specialty and high
performance electronic cable for computer network systems, telecommunication,
aerospace, CATV, and industrial applications. On February 2, 1996, the Company
acquired the assets of Northern Telecom Limited's ("Nortel") communication cable
and IBDN network structured wiring products businesses ("NORDX/CDT")
2
(Canada). On June 4, 1996, the Company acquired the stock of Cekan A/S
("Cekan/CDT") (Denmark), a manufacturer of high performance, telecommunication
connectors. On July 25, 1996, the Company acquired, in exchange for shares of
its common stock, X-Mark Industries ("X-Mark/CDT") (Washington, PA), a
manufacturer of specialized metal enclosures for network systems. On March 14,
1997 the Company acquired 51% of the outstanding stock of Stronglink, Pty. Ltd.
("Stronglink/CDT") (Australia), to enhance international distribution of network
and specialty cable in the Australian marketplace. The Company subsequently
increased its ownership of Stronglink/CDT to 75%. On April 7, 1997, the Company
acquired the assets of Dearborn Wire & Cable, L.P. and its affiliates, Dearborn
West, L.P. and Thermax Wire, L.P. (collectively, "Dearborn/CDT"), a manufacturer
of specialty electronic cable for instrumentation and control, commercial
aviation, automotive and marine applications, and component assemblies for
wireless applications. In September 1997, the Company acquired all the
outstanding stock of Barcel Acquisition Corporation ("Barcel/CDT") of Irvine,
California, a manufacturer of high performance specialty cable for commercial
and military aviation applications. In March 1998, the Company acquired all the
outstanding stock of (Orebro/CDT) of Orebro, Sweden, a manufacturer of custom
designed wire and cable for wireless communication, robotics and other
industries. On August 3, 1998, the Company acquired 80% of HEW-Kabel Heinz
Eilentropp GmbH & Co. KG and related entities ("HEW-Kabel/CDT") located in
Wipperfurth, Germany, a manufacturer of specialty cable for process control,
robotics, transportation, medical and other specialty applications. On September
25, 1998, the Company purchased the assets of Network Essentials, Inc. ("Red
Hawk/CDT") of Milpitas, California. Red Hawk/CDT is a provider of fiber optic
products for voice, video and data networks. In March 1999, the company acquired
the Tennecast Company ("Tennecast/CDT") of Barberton, Ohio, a manufacturer of
precision aluminum tire castings and computer designed and machined mold models
utilized for tire castings.
Products
The Company's products are generally comprised of electronic copper and
fiber optic cable and network structured wiring components which are categorized
into two reportable segments, Network Communication and Specialty Electronic.
The markets served by the Company's products include computer local area
networks ("LANS") and wide area networks ("WANS"), communication, computer
interconnect, wireless, commercial aviation, automotive, automation & process
control, and other applications.
Network Communication Segment:
- ------------------------------
The Company's Network Communication business 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 included in this segment are high performance
cable and passive components, including connectors, wiring racks and panels,
outlets and interconnecting hardware, for end-to-end network structured wiring
systems and communication cable products for outside communication and central
office switchboard and equipment applications. The Company entered the market
for communication cable products in fiscal 1996 with the acquisition of
NORDX/CDT. The Company's NORCOM/CDT facility in Kingston, Ontario, is the
largest communication cable operation in Canada. Additional capital expenditures
over the last three years have significantly increased the Company's production
capacity for network communication connectivity products.
3
Network Communication segment sales were $373.0 million, $393.3 million and
$347.5 million for fiscal 1999, 1998 and 1997, respectively, and represented
approximately 55%, 60% and 67% of the Company's total sales for fiscal 1999,
1998 and 1997, respectively.
Specialty Electronic Segment:
- -----------------------------
The Specialty Electronic business segment encompasses primarily electronic
data and signal transmission cables for automation and process control
applications and specialized wire and cable products for niche markets,
including computer interconnect, commercial aviation, automotive electronics,
broadcast and wireless communication.
Automation & process control products encompass four distinct applications
for data and signal transmission cables. Automation applications include climate
control, premise video distribution and sophisticated security and signal
systems involving motion detection, electronic card and video surveillance
technologies. Process control applications include remote signaling and
electronic monitoring systems. Sound applications include voice activation,
evacuation and other similar systems. Safety applications refer to data
transmission cable for advanced fire alarm and safety systems, including cable
having improved safety and performance attributes under hazardous conditions.
Specialty products refers to a variety of highly engineered wire and cable
products covering a broad range of specialized applications and niche markets,
including commercial aviation and marine, automotive electronics, broadcast,
wireless component assemblies, communication switching equipment, CATV,
microwave antenna, medical electronics, electronic testing equipment, robotics
and electronically controlled factory equipment. Included in the Specialty
Electronic segment are non-cable manufacturing activities encompassing precision
tire casting and sheet metal fabrication which are not material to the Company's
business.
Specialty Electronic segment sales were $311.0 million, $258.4 million and
$169.5 million for fiscal 1999, 1998 and 1997, respectively, and represented
approximately 45%, 40% and 33% of the Company's total sales for fiscal 1999,
1998 and 1997, respectively.
Raw Materials
The principal raw materials used by CDT 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. The Company does not generally engage in hedging transactions for the
purchase of copper. Currently, world stocks of and capacity for copper are
adequate to meet the Company's requirements. CDT purchases insulating compounds,
including Teflon(R), from various suppliers. Other raw materials used by CDT
include LEXAN(R), optical fiber, reels, tapes, textiles, chemicals and other
materials. Currently, supplies of these other raw materials are adequate to meet
the Company's needs and are expected to remain so for the foreseeable future.
Customers
The Company sells its products directly to original equipment manufacturers
(OEMs), regional Bell operating companies, certified system vendors, and
established distributors. The Company supports over
4
10,000 customers. No single customer accounted for more than 10% of sales in
fiscal 1999, 1998 or 1997, except that sales to business units of Bell Canada
Enterprises represented approximately 11% of fiscal 1997 sales.
Competition
The markets served by the Company's products are highly competitive. Although
some of the Company's competitors are substantially larger and have greater
resources than the Company, management believes that it competes successfully in
its markets due to its 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.
The principal competitive factors in all the markets for Network
Communication and Specialty Electronic products are availability, customer
support, price and product features. The relative importance of each of these
factors varies depending on the specific product category.
In the market for network structured wiring system products, the Company
competes with a large number of competitors, a few of which are significantly
larger than the Company. The Company competes in the network structured wiring
systems market by adapting to shifting customer demand for new products, and in
the case of NORDX/CDT, by offering complete, end-to-end certified network
structured wiring systems. In the markets for communication, switchboard and
equipment cable, price, reputation, production quality and availability are
principal competitive factors. In the automation & process control market, the
Company competes against a relatively large number of companies, most of which
are smaller in size than the Company. Product prices, company reputation and
product integrity are principal factors which affect competition in the
automation & process control market. In the specialty products market,
production quality, engineering capabilities and price are principal competitive
factors.
Backlog
Backlog orders believed to be firm were $90.4 million at July 31, 1999,
compared to $75.3 million at July 31, 1998. The Company believes 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.
Environmental Matters
The Company is 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 (CERCLA),
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 the Company 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 the Company believes it is in
substantial compliance with such laws and regulations, the Company may from time
to time not be in full compliance and may be subject to fines or other penalties
for noncompliance.
5
The Company does not currently anticipate any material adverse effect on
its 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 the Company's business,
and there can be no assurance that material environmental costs will not arise
in the future.
Employees
As of July 31, 1999, the Company had approximately 3,700 full-time
employees and 617 workers under contract manufacturing arrangements in Mexico.
Approximately 1,400 of the full-time employees are represented by labor unions.
The Company has not experienced any material work stoppages at its plants and
believes its current relations with its employees are good, however, there can
be no assurance that conflicts will not arise with unions or other employee
groups or that such conflicts would not have a material adverse effect on the
Company's business.
Foreign Operations
For information regarding the Company's foreign and domestic operations,
see Note 14, "Industry and Geographic Segment Information" as presented in the
Company's Notes to Consolidated Financial Statements.
Research and Development
The Company engages in research and development activities including new and
existing product development. Research and development costs were $5.5 million,
$7.9 million and $7.2 million in fiscal 1999, 1998 and 1997, respectively. The
lower research and development expenses in fiscal 1999 were primarily the result
of the discontinuance in July 1998 of the DynaTraX (TM) product line and related
product development activities.
Risk Factors
Ability to Successfully Integrate Acquisitions. Growth through acquisitions
is an important part of the Company's strategy. Although the Company has been
successful in integrating previous acquisitions, no assurance can be given that
it will continue to be successful in integrating future acquisitions. The
integration and consolidation of acquired businesses will require substantial
management, financial and other resources and may pose risks with respect to
production, customer service and market share. While the Company believes that
it has sufficient financial and management resources to accomplish such
integration, there can be no assurance in this regard or that the Company will
not experience difficulties with customers, personnel or others. In addition,
although the Company believes that its acquisitions will enhance the competitive
position and business prospects of the Company, there can be no assurance that
such benefits will be realized or that any combination will be successful.
Technological Obsolescence. Many of the markets that the Company serves are
characterized by rapid technological change. The Company believes that its
future success will depend in part upon its ability to enhance existing products
and to develop and manufacture new products that meet or anticipate such
changes. The failure to successfully introduce new or enhanced products on a
timely and cost-
6
competitive basis could have a material adverse effect on the Company's
business.
Fiber optic technology represents a potential substitute for copper-based
cable products. A significant decrease in the cost 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 the Company's business. To date, fiber optic cables have not
significantly penetrated the markets served by the Company due to the high
relative cost required to interface electronic and light signals and the high
cost of fiber termination and connection. Although the Company currently
supplies fiber optic cable in niche specialty markets and has excess capacity as
well as the technological expertise to expand capacity, there can be no
assurance that the Company will have sufficient production capacity for fiber
optic cable products in order to adapt to a potential significant increase in
demand for fiber optic cable products.
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. The Company believes that the
limited signal security and the relatively slow transmission speeds of current
premise wireless systems restrict the use of such systems in many data
communication markets. However, there can be no assurance that future advances
in wireless technology will not have a material adverse effect on the Company's
business.
Products have recently been introduced by other companies that
electronically expand cable bandwidth. By enhancing cable performance, these
products allow expanded data services without upgrading existing cable. These
devices are being sold primarily to telephone companies to enhance local loop
and central office cable performance, eliminating costly replacement of aerial
and/or direct burial telephone cable. The Company believes that the complexity
these systems add to the maintenance and repair of a communication network
limits their attractiveness to users and consequently limits their effect on the
Company's business. There can be no assurance, however, that potential advances
in electronic cable enhancement will not have a material adverse effect on the
Company's business.
Price Fluctuations and Availability of Raw Materials. Copper is the
principal raw material purchased by the Company, and the Company's sales may be
affected by the market price of copper. The Company does not generally engage in
hedging transactions for copper.
The Company also purchases 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 the Company's business until a replacement supplier is found
or substitute materials are approved for use. Although the Company has generally
been able to pass on increases in the price of copper and other raw materials to
its customers, there can be no assurance that the company will be able to do so
in the future. Additionally, significant increases in the price of copper or
other raw materials could have a negative effect on demand for the Company's
products. Similarly, significant decreases in the price of copper, or excess
supplies of such other raw materials, over time could have a material adverse
effect on the Company's business.
Foreign Currency Fluctuations. The Company's operations may be adversely
affected by significant fluctuations in the value of the U.S. dollar against
certain foreign currencies or by the enactment of exchange controls or foreign
governmental or regulatory restrictions on the transfer of funds. The most
significant foreign currencies for the Company, in order of dollar equivalent
net sales, during fiscal 1999 were the Canadian Dollar, German Deutschmark and
the British Pound.
7
Competition. The Company is subject to competition from a substantial
number of international and regional competitors, some of which have greater
financial, engineering, manufacturing and other resources than the Company. The
Company's 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. Although the Company believes that it has
certain technological and other advantages over its competitors, realizing and
maintaining such advantages will require continued investment by the Company in
engineering, research and development, marketing and customer service and
support. There can be no assurance that the Company will have sufficient
resources to continue to make such investments or that the Company will be
successful in maintaining such advantages. See "Business -- Competition."
Environmental Matters. The Company does not currently anticipate any
material adverse effect on its business as a result of compliance with federal,
state, provincial, local or foreign environmental laws or regulations or cleanup
costs. However, some risk of environmental liability and other costs is inherent
in the nature of the Company's business, and there can be no assurance that
material environmental costs will not arise in the future. Moreover, it is
possible that future developments, such as increasingly strict requirements of
air emission control and other environmental laws and enforcement policies
thereunder, could lead to material costs for environmental compliance and
cleanup by the Company.
Year 2000 Compliance. The Company has a program in place to address the
Year 2000 date processing issue and its effect on the Company's information
technology ("IT") systems, non-IT systems, such as equipment and machinery
controlled by microcontrollers with embedded technology, and key suppliers and
customers. As of October 20, 1999 operating units representing approximately 99%
of the Company's consolidated revenues have completed any Year 2000 remediation
believed necessary with respect to their IT and non-IT systems. The remaining
units are expected to complete their remediation activities by November 30,
1999. The Company is assessing third party Year 2000 compliance, however as many
of the Company's suppliers and customers are still engaged in executing their
Year 2000 programs, the Company cannot fully evaluate such compliance. If,
however, the Company, its key suppliers and customers or other entities upon
which the Company relies (such as utility providers) fail to make necessary
modifications, conversions and contingency plans on a timely basis, the year
2000 issue could have a material adverse effect on the Company's business,
operations, cash flow and financial condition.
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 that could cause
actual results to differ materially from the company's expectations ("cautionary
statements") are disclosed in this report and the documents incorporated by
reference herein, including without limitation in conjunction with the forward-
looking statements included in this report and under "risk factors." 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.
8
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 275,000 square feet of other warehouse and sales facilities
and facilities of approximately 96,000 and 40,000 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
Barberton, OH Manufacturing, Sales and Administration Owned 52,000
Chicago, IL Manufacturing Owned 18,000
Gjern, Denmark Manufacturing, Sales and Administration Owned 22,000
Gothenburg, Sweden Manufacturing, Sales and Administration Owned 108,000
Irvine, CA Manufacturing, Sales and Administration Leased 77,000
Kingston, Ontario Manufacturing Owned 500,000
Las Vegas, NV Warehouse Leased 44,000
Leominster, MA Manufacturing, Sales and Administration Leased 202,000
Littleborough, United Kingdom Manufacturing Owned 42,000
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 Leased 42,000
Skelmersdale, United Kingdom Manufacturing, Sales and Administration Owned 121,000
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 349,000
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. In the opinion of the
9
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.
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
- --- -----------------------------
65 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.
57 George C. Graeber has been Chief Operating Officer and a director of the
Company since 1998. Mr. Graeber served as President of Montrose/CDT from
1994 to 1998. From 1992 to 1994, Mr. Graeber was Executive Vice President
of the Company and President of Phalo/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.
From 1989 to 1990 Mr. Graeber was a consultant for Manhattan Electric
Cable, a wire and cable company. From 1983 to 1989 he was the President of
the Industrial Electronic division of Brintec Corp. and from 1979 to 1983
he was a Vice President of Brand Rex Cable, a wire and cable company. Mr.
Graeber has a Master's Degree in Electrical Engineering from the University
of Connecticut.
57 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.
49 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.
10
60 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.
38 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.
49 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.
38 Charles B. Fromm was appointed Vice President and General Counsel of the
Company in October 1997, and Secretary of the Company in 1999. Prior
thereto, 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.
11
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
As of September 30, 1999, there were 167 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 45 of the 1999 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 44 of the 1999 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 14 through 22 of the 1999 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 20 of the 1999 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 23 through 43 of the
1999 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
12
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 17, 1999. 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 10 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 17, 1999. 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 17,
1999. 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 17, 1999. Such
information is incorporated herein by reference.
13
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. The following documents are included in the 1999 Annual Report, pages 23
through 43, and are incorporated herein by reference:
a. Report of Independent Public Accountants.
b. Consolidated Statements of Income for the years ended July 31, 1999,
1998 and 1997.
c Consolidated Balance Sheets as of July 31, 1999 and 1998.
d. Consolidated Statements of Cash Flow for the years ended July 31, 1999,
1998 and 1997.
e. Consolidated Statements of Stockholders' Equity for the years ended
July 31, 1999, 1998 and 1997.
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 Schedules.
b. Schedule II Valuation and Qualifying Accounts for the three years ended
July 31, 1999.
c. List of Exhibits
3. List of Exhibits
2.2 - Asset Purchase Agreement by and among Cable Design Technologies
(CDT) Canada Inc., Cable Design Technologies Corporation and
Northern Telecom Limited, dated as of December 19, 1995.
Incorporated by reference to Exhibit 10.16 to CDT's Registration
Statement on Form S-3 (File No. 333-00554).
2.3 - Asset Purchase Agreement, dated March 31, 1997, between Cable Design
Technologies Inc., Dearborn/CDT, Inc., Dearborn West/CDT, Inc., and
Thermax/CDT, Inc. and Dearborn Wire and Cable L.P., Dearborn West
L.P. and Thermax Wire L.P. Incorporated by reference to Exhibit 10.1
to CDT's Report on Form 8-K, as filed on April 22, 1997.
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
14
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.
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 - Lease Agreement between Mohawk and 9 Mohawk Drive Realty Trust,
dated as of March 24, 1986. Incorporated by reference to Exhibit
10.24 to CDT's Registration Statement on Form S-1 (File No.
33-69992).
10.7 - Consulting Agreement, dated as of July 14, 1988, and amendment
thereto, dated as of July 14, 1994, between Golder, Thoma, Cressey &
Rauner and CDT. Incorporated by reference to Exhibit 10.13 to CDT's
Annual Report on Form 10-K, as filed on October 31, 1994.
15
10.8 - Consulting Agreement, dated as of July 14, 1988, and amendment
thereto, dated as of July 14, 1994, between Northern Investment
Ltd. Partnership II and CDT. Incorporated by reference to Exhibit
10.14 to CDT's Annual Report on Form 10-K, as filed on October 31,
1994.
10.9 - 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.
10.10 - 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.
10.12 - 1996 Amendment of Lease between Mohawk and 9 Mohawk Drive Realty,
dated as of September 3, 1996. Incorporated by reference to Exhibit
10.23 to CDT's Annual Report on Form 10-K, as filed on October 29,
1996.
10.13 - Registration Agreement among CDT, GTC Fund II, The Prudential
Insurance Company of America and Pruco Life Insurance Company,
dated as of July 14, 1988, as amended. Incorporated by reference to
Exhibit 10.21 to CDT's Registration Statement on Form S-1 (File No.
33-69992).
10.14 - Form of Change in Control Agreement dated June 11, 1999, between
CDT and each of George C. Graeber, Kenneth O. Hale, Charles B.
Fromm, Peter Sheehan, and Michael A. Dudley.**
10.15 - Change in Control Agreement dated June 11, 1999, between CDT and
Paul M. Olson.**
10.16 - Cable Design Technologies Corporation 1999 Long-Term Performance
Incentive Plan adopted April 19, 1999 and amended June 11, 1999.**
10.17 - 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).
10.18 - Form of June 11, 1999 Stock Option Grant under the 1999 Long-Term
Performance Incentive Plan.**
10.19 - Form of April 23, 1999 Stock Option Grant.**
13.1 - CDT 1999 Annual Report to Stockholders (to the extent incorporated
herein by
16
reference).**
21.1 - List of Subsidiaries of CDT.**
23.1 - Consent of Arthur Andersen LLP.**
27.1 - Financial Data Schedule.**
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.
99.7 - Revolving Line of Credit Letter Agreement dated December 14, 1998,
between CDT and ABN AMRO Bank N.V.. Incorporated by reference to
CDT's Report on Form 10-Q as filed on March 16, 1999.
99.8 - Master Revolving Line of Credit Promissory Note issued by CDT in
favor of ABN AMRO Bank N.V.. Incorporated by reference to CDT's
Report on Form 10-Q as filed on March 16, 1999.
17
** 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 27, 1999
--------------------------------
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 27, 1999
- -----------------------------------
Bryan C. Cressey Director
/s/ Paul M. Olson Director, President, Chief October 27, 1999
- -----------------------------------
Paul M. Olson Executive Officer (Principal
Executive Officer)
/s/ George C. Graeber Director, Chief Operating October 27, 1999
- -----------------------------------
George C. Graeber Officer
/s/ Kenneth O. Hale Vice President, Chief Financial October 27, 1999
- -----------------------------------
Kenneth O. Hale Officer (Principal Financial
and Accounting Officer)
/s/ Myron S. Gelbach, Jr. Director October 27, 1999
- -----------------------------------
Myron S. Gelbach, Jr.
/s/ Michael F. O. Harris Director October 27, 1999
- -----------------------------------
Michael F. O. Harris
Director October 27, 1999
- -----------------------------------
Glenn Kalnasy
/s/ Richard C. Tuttle Director October 27, 1999
- -----------------------------------
Richard C. Tuttle
19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
We have audited in accordance with generally accepted auditing standards, 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
20, 1999. 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.
Arthur Andersen LLP
Pittsburgh, Pennsylvania
September 20, 1999
20
CABLE DESIGN TECHNOLOGIES CORPORATION
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JULY 31, 1999, 1998, 1997
Additions To
Balance Reserve from Additions Balance
at Acquisitions Charged to at
Beginning & Other Costs and Reduction End of
of Period Adjustments Expenses from Reserve Period
---------- ------------ ---------- ------------ ----------
(Dollars in thousands)
Allowance for uncollectible
accounts/sales returns:
Year Ended July 31, 1997 $2,660 $891 $1,644 $( 837) $4,358
Year Ended July 31, 1998 $4,358 $(93) $1,367 $(1,637) $3,995
Year Ended July 31, 1999 $3,995 $172 $1,479 $ (720) $4,926
Reserve for discontinuance of
DynaTraX(TM) product line and
other restructuring activities:
Year Ended July 31, 1999 $1,759 $--- $ (264) $(1,247) $ 248
21
CABLE DESIGN TECHNOLOGIES CORPORATION
INDEX TO EXHIBITS FILED HEREIN
JULY 31, 1999
EXHIBIT
NUMBER EXHIBIT
10.14 - Form of Change in Control Agreement dated June 11, 1999, between
CDT and each of George C. Graeber, Kenneth O. Hale, Charles B.
Fromm, Peter Sheehan, and Michael A. Dudley.
10.15 - Change in Control Agreement dated June 11, 1999, between CDT and
Paul M. Olson.
10.16 - Cable Design Technologies Corporation 1999 Long-Term Performance
Incentive Plan adopted April 19, 1999 and amended June 11, 1999.
10.18 - Form of June 11, 1999 Stock Option Grant under 1999 Long-Term
Performance Incentive Plan.
10.19 - Form of April 23, 1999 Stock Option Grant.
13.1 - CDT 1999 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.
27.1 - Financial Data Schedule.
22