The Company’s business continues to be characterized by a concentration of sales to a limited number of key customers. Net sales to the Company’s top five customers increased in the three months ended April 2, 2004 to $10,635,000 from $3,744,000 in the comparable period in the prior year and increased to $24,050,000 for the nine months ended April 2, 2004 from $16,546,000 for the nine months ended March 28, 2003. Net sales to all other customers increased by 77% in the three-month period ended April 2, 2004 and increased 120% in the nine month period ended April 2, 2004 from the comparable periods in the prior fiscal year. The Company’s top five customers did not remain the same over these periods. Sales to Nortel Networks and Verizon accounted for 24% and 43% of net sales in the three months ended April 2, 2004, respectively, and 36% and 22% for the nine months ended April 2, 2004, respectively.
related to the property held for lease, which totaled $406,000 for the nine months ended April 2, 2004 compared to $317,000 for the nine months ended March 28, 2003.
Interest Expense. Interest expense increased 252% to $148,000 for the three months ended April 2, 2004 from $42,000 in the same period in the prior fiscal year and increased 56% to $221,000 for the nine months ended April 2, 2004 from $142,000 in the same period in the prior fiscal year as a result of interest on the convertible notes issued in connection with the acquisition of XEL.
Provision for Income Taxes. No tax provision or tax benefits were provided in the three- or nine- months ended April 2, 2004 or March 28, 2003 due to the valuation allowance provided against the net change in deferred tax assets. During fiscal 2001, the Company established a full valuation allowance against its deferred tax assets due to the net operating loss carry forwards from prior years and the operating losses incurred in fiscal 2001. The Company had net operating loss carry forwards of approximately $31,600,000 as of June 27, 2003.
Cumulative effect of change in accounting principle, relating to goodwill. As of June 29, 2002, the Company adopted SFAS No. 142, ceased amortizing goodwill and completed its transitional impairment test of goodwill. As a result, the Company determined that its goodwill was impaired and recorded a charge of $1,232,900 in the quarter ended September 27, 2002. This charge is presented in the condensed consolidated statement of operations as a cumulative effect of change in accounting principle, relating to goodwill.
Net Income (Loss). Net loss for the three months ended April 2, 2004 was $1,388,000 compared to $252,000 for the three months ended March 28, 2003 as a result of the above factors, primarily due to acquisition related costs associated with the purchase of XEL. Net loss as a percentage of sales for the three months ended April 2, 2004 was 10.2%, compared to 4.6% for the three months ended March 28, 2003. Net income for the first nine months of fiscal 2004 was $512,000 compared to $603,000 for the first nine months of fiscal 2003, as a result of the above factors. Net income as a percentage of sales for the first nine months of fiscal 2004 was 1.6%, compared to 3.0% for the first nine months of fiscal 2003.
LIQUIDITY AND CAPITAL RESOURCES
On April 2, 2004, the Company’s principal sources of liquidity included $2,999,000 of unrestricted cash, cash equivalents and short-term investments.
During the nine months ended April 2, 2004, cash provided by operating activities was $3,010,000 compared to $2,342,000 for the nine months ended March 28, 2003. Net cash provided by operating activities in the current period was due to income before depreciation and amortization, deferred compensation and compensation expense related to stock awards, which totaled $3,066,000. The increase in accounts receivable used cash of $3,094,000 in the nine months ended April 2, 2004 compared to $463,000 provided in the comparable period in the prior fiscal year. The increase in inventories for the nine months ended April 2, 2004 was the result of inventory acquired in the XEL acquisition. Otherwise, inventory provided $318,000 of cash in the nine months ended April 2, 2004 compared to cash used in the same period last year of $1,235,000. Accounts payable and accrued expenses increased $2,977,000 in the nine-month period ended April 2, 2004 compared to an increase of $201,000 in the comparable period in the prior fiscal year. The changes in accounts payable and accrued expenses for the nine months ended April 2, 2004 and the comparable prior year period were due to the timing of inventory purchases and the resulting payments to vendors, the increased sales volume in the current year and the impact of the XEL acquisition. Additionally, the increase in inventories and accounts payable for the nine months ended April 2, 2004 include $1,242,000 for inventories that the Company is required to purchase from Terayon as disclosed in note 6 of notes to condensed consolidated financial statements.
Cash used in investing activities was $9,119,000 for the nine months ended April 2, 2004 compared to cash used in investing activities of $787,000 for the nine months ended March 28, 2003. The funds used in investing activities during the nine months ended April 2, 2004 are a result of current year payments related to the NetEngine and Miniplex product line acquisitions totaling $1,181,000, the XEL acquisition of $7,612,000, capital expenditures of $540,000 and the purchase of short-term investments of $26,000, offset by proceeds from the repayment of notes receivable of $240,000. For the nine months ended March 28, 2003, cash was used in a product line acquisition of $1,000,000 and capital expenditures of $544,000, offset by the maturity of short-term investments of $497,000 and proceeds from the repayment of notes receivable of $260,000.
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Cash provided by financing activities was $478,000 for the nine months ended April 2, 2004 as compared to $79,000 for the nine months ended March 28, 2003. Payments on long-term debt and capital lease obligations were $548,000 and $543,000 for the nine months ended April 2, 2004 and March 28, 2003, respectively. Proceeds from the issuance of common stock under the Company’s stock plans provided $1,031,000 and $3,000 of cash in the nine months ended April 2, 2004 and March 28, 2003, respectively. Proceeds from repayments of notes receivable from stockholders provided $675,000 of cash in the nine months ended March 28, 2003.
The Company’s former headquarters facility in Cummings Research Park West in Huntsville, Alabama, currently leased to The Boeing Company, provides a potential source of capital. The Company is seeking to sell this facility, and if the facility is not sold in the near term, the Company will seek to refinance the long-term debt to obtain additional cash to be used in its business.
In April 2004, the Company obtained a $5,000,000 revolving line of credit with RBC Centura Bank with borrowings subject to eligible accounts as defined in the loan and security agreement. The agreement is for one year and renewable at the bank’s option. The interest on outstanding borrowings is at a rate of 250 basis points over the 30 day London inter-bank offered rate. All the Company’s assets, other than the property subject to lease and restricted cash, are pledged as collateral securing amounts outstanding under this line. The loan and security agreement requires the Company to maintain, as of the last day of each fiscal quarter, (i) a ratio of unrestricted cash and cash equivalents plus net accounts receivables to all indebtedness owed by the Company to RBC Centura Bank of at least 2:1, and a (ii) a tangible net worth, as defined in the agreement, of at least $7,000,000. The Company may not take certain actions without the prior written consent of the bank, including (i) the sale or lease of any collateral, except in the ordinary course of business, (ii) the incurrence of certain indebtedness, (iii) the merger or consolidation with any other entity, (iii) the payment of dividends or distributions except in capital stock or other limited circumstances, or (iv) payments on the Company’s subordinated debt except in accordance with the terms thereof. For purposes of the loan and security agreement, “tangible net worth” refers to the Company’s stockholders’ equity, plus debt postponed and subordinated on terms satisfactory to the bank, plus the convertible promissory notes in the aggregate principal amount of $10,480,000 issued in connection with the acquisition of XEL, less intangibles. RBC Centura Bank has consented to the proposed merger with Larscom. The terms of the consent provide that the bank shall have the right to require the Company to enter into an amendment to the loan and security agreement whereby the tangible net worth requirement may be increased to an amount determined by Bank in its reasonable discretion, not to exceed the increased tangible net worth of the Company actually resulting from the merger. As of May 10, 2004, borrowings of $2,047,000 were outstanding under the Company’s revolving line of credit with RBC Centura Bank.
The Company believes that its cash and investment balances, along with anticipated cash flows from operations will be adequate to finance the Company’s operations, capital expenditures, and research and development programs. In the event that results of operations do not substantially meet the Company’s current operating forecast, the Company may evaluate cost containment measures, reduce investments or delay R&D, which could adversely affect the Company’s ability to bring new products to market. The Company from time to time investigates the possibility of generating financial resources through committed credit agreements, technology or manufacturing partnerships, joint ventures, equipment financing and offerings of debt and equity securities.
ACQUISITION OF XEL COMMUNICATIONS, INC.
On February 5, 2004, the company acquired all of the outstanding stock of XEL Communications, Inc. (“XEL”) for up to $17,650,000 in consideration consisting of $7,650,000 paid in cash at closing and $10,000,000 in the form of a note which may be converted into common stock of the Company at a conversion price of $5.324 per share. Acquisition costs related to the transaction totaled $760,000. XEL provides a total telecommunications business solution including equipment, project management, engineering and installation services to large domestic carriers for the delivery of integrated voice, data and Internet services for small and medium businesses.
The $10,000,000 convertible promissory note earns interest at a rate of 7% per annum and matures February 5, 2006. The holder may convert the note in whole or in increments of at least $1,000,000 into common stock of Verilink. Acquisition costs include $480,000 paid to a financial adviser of the Company, which was paid in the form of a convertible note with the same terms as the $10,000,000 note discussed above. The results of operations of XEL have been included in the condensed consolidated financial statements since February 5, 2004.
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PRODUCT LINE ACQUISITION
On July 22, 2003, the Company acquired the fixed assets and intellectual property rights relating to Terayon Communication System, Inc.’s Miniplex product line for telecom carriers for up to $868,000, plus the assumption of certain liabilities. This product line gives telephone companies the capability to provide multiple plain old telephone services (“POTS”) connections over a single copper pair – a more cost-effective alternative to resolving copper exhaust problems than the installation of new copper cable.
Per the acquisition agreement, the Company paid Terayon $443,000 at the closing of the agreement and will pay up to an additional $425,000 based on the sale of Miniplex products through December 31, 2004 (the “Earn-Out Period”). The Company will make quarterly payments to Terayon during the Earn-Out Period at the rate of 4.6% of net sales of Miniplex products, provided, however, that the maximum payments will not exceed $425,000 or be less than $300,000. In addition to the purchase consideration, the Company agreed to purchase Terayon’s Miniplex related inventories totaling approximately $2,100,000 on the earlier of the date used by the Company or December 31, 2004. The Company has purchased $858,000 of this Miniplex inventory from Terayon and the remaining purchase commitment of $1,242,000 is included in inventories and accounts payable on the condensed consolidated balance sheet as of April 2, 2004.
SUBSEQUENT EVENT -- MERGER AGREEMENT WITH LARSCOM
On April 29, 2004, the Company announced the execution of a definitive merger agreement with Larscom. Subject to the terms and conditions of the merger agreement, the Company will acquire Larscom for approximately 6 million shares of the Company’s common stock, with each Larscom share being converted into 1.166 Verilink shares, subject to reduction based on the net working capital of Larscom at closing. The acquisition will be recorded under the purchase method of accounting, and the purchase price will be allocated based on the fair value of the assets and liabilities acquired. The merger is subject to approval by the stockholders of Verilink and Larscom and other closing conditions.
CRITICAL ACCOUNTING POLICIES
The Company’s financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods might be based upon amounts that differ from those estimates. The following represent what the Company believes are among the critical accounting policies most affected by significant management estimates and judgments:
Impairment of Long-Lived Assets and Goodwill. The Company assesses the impairment of long-lived assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable under the guidance prescribed by SFAS No. 144 and 142, respectively. The Company’s long-lived assets include, but are not limited to, the property held for lease located at 950 Explorer Boulevard, related furniture and equipment, software licenses, goodwill and intangible assets related to acquisitions.
Inventories. The Company values inventory at the lower of cost or market. Cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess and obsolete inventory is recorded based primarily on our estimated forecast of product demand for the next twelve months. Management’s estimates of future product demand may prove to be inaccurate, in which case the Company may increase or decrease the provision required for excess and obsolete inventory in future periods. Inventory reserves totaled $3,181,000 and $2,708,000 as of April 2, 2004 and June 27, 2003, respectively.
Revenue Recognition. The Company recognizes a sale when the product has been shipped, no material vendor or post-contract support obligations remain outstanding, except as provided by a separate service agreement, and collection of the resulting receivable is probable. A reserve for future product returns is established at the time of the sale based on historical return rates and return policies, including stock rotation for sales to distributors that stock the Company’s products. The reserve for future product returns was $257,000 and $382,000 as of April 2, 2004 and June 27, 2003, respectively.
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Warranty Provision. The Company records a warranty provision at the time of the sale based on our best estimate of the amounts necessary to settle future claims on products sold. While we believe that our warranty reserve is adequate and that the judgment applied is appropriate, actual product failure rates, material usage or other rework costs could differ from our estimates, which could result in revisions to our warranty liability that totaled $1,394,000 and $1,374,000 as of April 2, 2004 and June 27, 2003, respectively.
Allowance for Doubtful Accounts. The Company estimates losses resulted from the inability of our customers to make payments for amounts billed. The collectability of outstanding invoices is continually assessed. Assumptions are made regarding the customer’s ability and intent to pay, and are based on historical trends, general economic conditions and current customer data. Should our actual experience with respect to collections differ from these assessments, there could be adjustments to our allowance for doubtful accounts, which totaled $536,000 and $532,000 as of April 2, 2004 and June 27, 2003, respectively.
Valuation of Notes Receivable. The Company continually assesses the collectability of assets classified as outstanding notes receivable. Assumptions are made regarding the counter party’s ability and intent to pay and are based on historical trends and general economic conditions, and current data. Should our actual experience with respect to collections differ from our initial assessment, adjustments in the reserves will be recorded. The allowance for notes receivable was $65,000 and $421,000 as of April 2, 2004 and June 27, 2003, respectively.
Deferred Tax Assets. The Company has provided a full valuation reserve related to its deferred tax assets. In the future, if sufficient evidence of the Company’s ability to generate sufficient future taxable income in certain tax jurisdictions becomes apparent, the Company may be required to reduce its valuation allowances, resulting in income tax benefits in the Company’s consolidated statement of operations. Management evaluates the realizability of the deferred tax assets and assesses the need for the valuation allowance each quarter. The valuation allowance related to the Company’s deferred tax assets was $16,491,000 as of June 27, 2003.
Factors Affecting Future Results
As described by the following factors, past financial performance should not be considered to be a reliable indicator of future performance.
This Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements using terminology such as “may”, “will”, “expects”, “plans”, “anticipates”, “estimates”, “potential”, or “continue”, or the negative thereof or other comparable terminology regarding beliefs, plans, expectations or intentions regarding the future. Forward-looking statements include statements regarding: reduced customer concentration in future periods; the requirement of a significant level of investment in product development; and the adequacy of the Company’s cash position for the near-term. These forward-looking statements involve risks and uncertainties, and it is important to note that the Company’s actual results could differ materially from those in such forward-looking statements. Among the factors that could cause actual results to differ materially are the factors described below and in the Company’s Annual Report on Form 10-K, as well as the other factors set forth in Item 2 hereof. All forward-looking statements and risk factors included in this document are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement or risk factor.
• | Dependence on Legacy and Recently Introduced Products and New Product Development. The majority of sales continue to be provided by the Company’s legacy products, or more specifically, the Access System 2000 products and PRISM product family. The Company’s future results of operations are dependent on market acceptance of existing and future applications for the Company’s existing products and new products in development. |
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• | Risks Associated With Acquisitions, Potential Acquisitions and Joint Ventures. An important element of the Company’s strategy is to consider acquisition prospects and joint venture opportunities. The acquisition of Larscom and other transactions of this nature by the Company could result in potentially dilutive issuance of equity securities, use of cash, the incurring of debt and the assumption of contingent liabilities, significant demands on management attention, and/or business risks associated with integrating other businesses into the Company. The integration of the operations of |
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| Larscom will be complex, time consuming and expensive, and may disrupt the businesses of the Company and Larscom. The combined company will need to overcome significant challenges in order to realize any benefits or synergies from the merger. The inability to successfully integrate the operations, technology and personnel, or any significant delay in achieving integration, could have a material adverse effect on the combined company after the merger and, as a result, on the market price of the Company’s common stock. |
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• | Customer Concentration. A small number of customers have historically accounted for a majority of the Company’s sales, with a single customer’s orders for legacy products accounting for a majority of sales in many fiscal quarters. There can be no assurance that the Company’s current customers will continue to place orders with the Company, that orders by existing customers will continue at the levels of previous periods, or that the Company will be able to obtain orders from new customers. |
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• | Dependence on Key Personnel. The Company’s future success will depend to a large extent on the continued contributions of its executive officers and key management, sales, marketing and technical personnel. |
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• | Dependence on Key Suppliers and Component Availability. The loss of a key supplier, loss of a contract manufacturer, an increase in required lead times, an increase in prices of component parts, interruptions in the supply of any components, or the inability of the Company or its third party sub-contractor to procure components from alternative sources at acceptable prices and within a reasonable time, could have a material adverse effect upon the Company’s business, financial condition and results of operations. |
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• | Potential Volatility of Stock Price. The trading price of the Company’s Common Stock has been and may continue to be subject to wide fluctuations in response to quarter-to-quarter variations in operating results, announcements of technological innovations or new products by the Company or its competitors, developments with respect to patents or proprietary rights, general conditions in the telecommunication network access and equipment industries, changes in earnings estimates by analysts, or other events or factors. |
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• | Competition. The market for telecommunications network access equipment addressed by the Company’s product families can be characterized as highly competitive, with intensive price pressure. Many of the Company’s current and potential competitors have substantially greater technical, financial, manufacturing and marketing resources than the Company, and many have long-established relationships with network service providers. |
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• | Rapid Technological Change. The network access and telecommunications equipment markets are characterized by rapidly changing technologies and frequent new product introductions. The Company’s business, financial condition and results of operations would be materially adversely affected if the Company were to be unsuccessful, or to incur significant delays in developing and introducing new products or enhancements. |
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• | Compliance with Regulations and Evolving Industry Standards. The market for the Company’s products is characterized by the need to meet a significant number of communications regulations and standards, some of which are evolving as new technologies are deployed. The failure of the Company’s products to comply, or delays in compliance, with the various existing and evolving industry standards could delay introduction of the Company’s products. |
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• | Risks Associated With Entry into International Markets. The Company has little experience in the International markets, but intends to expand sales of its products outside of North America and to enter certain international markets, which will require significant management attention and financial resources. Conducting business outside of North America is subject to certain risks, including longer payment cycles, unexpected changes in regulatory requirements and tariffs, difficulties in staffing and managing foreign operations, greater difficulty in receivables collection and potentially adverse tax consequences. |
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• | Risk of Third Party Claims of Infringement; Limited Protection of Intellectual Property. The network access and telecommunications equipment industries are characterized by the existence of a large number of patents and frequent litigation based on allegations of patent infringement. In the event of a successful claim against the Company and the failure of the Company to develop or license a substitute technology, the Company’s business, financial condition and results of operations could be materially adversely affected. The Company relies upon a combination of statutory and contractual restrictions to establish and protect proprietary rights in its products and technologies. There can be no |
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| assurance that these statutory and contractual arrangements will deter misappropriation of the Company’s technologies or discourage independent third-party development of similar technologies. |
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• | Assets Pledged to Secure Debt. Substantially all of Company’ assets (other than the property subject to lease and restricted cash), including the Company’s existing and future accounts receivable, cash, general intangibles (including intellectual property) and equipment, are pledged as collateral to secure amounts outstanding under the Company’s revolving line of credit. As a result, if the Company fails to meet its payment or other obligations under the credit facility, the lender under the credit facility would be entitled to foreclose on substantially all of the Company’s assets and liquidate these assets. Under those circumstances, the Company may not have sufficient funds to service its day-to-day operational needs. Any foreclosure by the lender under the credit facility would have a material adverse effect on the Company’s financial condition. The credit facility requires the Company, among other things, to meet certain financial covenant tests and limits the Company’s ability to incur additional indebtedness, incur liens, make investments, pay dividends or engage in acquisitions, assets sales, mergers or consolidations without the consent of the lender. The lender has consented to the merger with Larscom. |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
At April 2, 2004, the Company’s investment portfolio consisted of fixed income securities of $127,000. These securities, like all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 10% from levels as of April 2, 2004, the decline in the fair value of the portfolio would not be material. Additionally, the Company has the ability to hold its fixed income investments until maturity and therefore, the Company would not expect to recognize such an adverse impact in income or cash flows. The Company invests its cash balances in excess of operating requirements in short-term securities, generally with maturities of 90 days or less.
The Company is subject to interest rate risks on its long-term debt. If market interest rates were to increase immediately and uniformly by 10% from levels as of April 2, 2004, the additional interest expense would not be material. The Company believes that the effect, if any, of reasonably possible near-term changes in interest rates on the Company’s financial position, results of operations and cash flows would not be material.
Subsequent to the end of the period covered by this report, the Company obtained a $5,000,000 revolving line of credit with RBC Centura Bank. The interest on outstanding borrowings is at a rate of 250 basis points over the 30 day London inter-bank offered rate, or 3.60% as of May 3, 2004. See “Liquidity and Capital Resources” in Item 2 above. Borrowings of $2,047,000 were outstanding under this line of credit as of May 10, 2004. To the extent borrowings are outstanding, fluctuations in the London inter-Bank offered rate would have a greater impact on the Company than in the past.
Item 4. Controls and Procedures.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, (a) the Company’s Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report, and (b) no changes in the Company’s internal control over financial reporting were identified as having occurred during the quarter ended April 2, 2004 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
The Company issued two convertible notes totaling $10,480,000 during the quarter ended April 2, 2004 in connection with its acquisition of XEL Communications, Inc. The Company issued these convertible notes without registration under the
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Securities Act of 1933, as amended, in reliance on the private placement exemption provided by Section 4(2) thereof. For further information regarding the conversion and other terms of these convertible notes, see note 5, note 9 and note 14 of the notes to condensed consolidated financial statements contained in Item 1 above.
The Company’s $5,000,000 revolving line of credit with RBC Centura Bank provides that the Company may not pay dividends or make other distributions (other than dividends or distributions of capital stock) without the consent of the lender. The Company does not anticipate paying cash dividends or distributions on common stock in the foreseeable.
Item 6. Exhibits and Reports on Form 8-K
(a) | Exhibits Index: | | |
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| Exhibit Number | | Description of Exhibit |
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| 2.1 | | Agreement and Plan of Merger, dated as of April 28, 2004, by and among Verilink Corporation, SRI Acquisition Corp. and Larscom Incorporated (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed April 30, 2004) |
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| 4.1 | | Amendment No. 2 to the Rights Agreement dated as of April 28, 2004 by and between Verilink Corporation and American Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed April 30, 2004) |
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| 10.1 | | Loan and Security Agreement dated as of April 8, 2004, by and between RBC Centura Bank, and Verilink Corporation, V-X Acquisition Company and XEL Communications, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed April 28, 2004) |
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| 10.2 | | Promissory Note of Verilink Corporation, V-X Acquisition Company and XEL Communications, Inc., dated as of April 8, 2004, in favor of RBC Centura Bank (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed April 28, 2004) |
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| 10.3 | | Voting Agreement, dated as of April 28, 2004, by and between Verilink Corporation and the stockholders listed on the signature pages thereto (incorporated by reference to Exhibit 2.2 of the Company’s Form 8-K filed April 28, 2004) |
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| 31.1 | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934 |
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| 31.2 | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934 |
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| 32.1 | | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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(b) | The Company filed one report on Form 8-K with the Securities and Exchange Commission during the quarter ended April 2, 2004 as follows: |
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| Current Report on Form 8-K, filed February 20, 2004 reporting under Item 2, the Company announced that on February 5, 2004, it acquired privately held XEL Communications, Inc., a provider of telecommunications business solutions. |
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| On January 21, 2004, the Company furnished a Form 8-K, which attached a press release announcing the Company’s financial results for the quarter ended January 2, 2004. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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May 17, 2004 | By: | 
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| | C. W. Smith
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) |
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