new bank loan agreement (Bank Agreement), described below, were used to repay $439.5 million outstanding under the Company’s previous bank agreement, redeem all outstanding senior subordinated notes totaling $148.7 million (including the call premium of $4.7 million) and to pay other fees and expenses associated with the refinancing of $8.9 million. A prepayment of the new bank loan of $37.0 million was made in June with excess borrowing proceeds and cash flow from operations and additional prepayments of $89.0 million were made in the second half of 2003. The 2003 refinancing had the effect of extending the maturity of the Company’s debt coming due in 2003 through 2007. In November 2004, the Company amended the credit agreement. The primary effects of the amendment were to lower interest cost, and reduce limitations relative to additional indebtedness and restricted payments including repurchase of the Company’s common stock and dividends. 

The Company’s new Bank Agreement includes a Term Loan, consisting of a Tranche A and B, and a $125.0 million revolving credit facility. At December 31, 2004, the Tranche A had a balance of $13.0 million and matures in 2008, and the Tranche B had a balance of $400.0 million and matures over the period 2005 to 2010 with annual payments of $4 million and a balloon payment due at maturity. The revolving credit facility expires in 2008; availability under the facility at December 31, 2004 was $116.2 million, after a reduction of $8.8 million for outstanding letters of credit. The Company’s interest rate on loans under the new Bank Agreement is LIBOR plus 150 basis points. The Bank Agreement is secured by a first priority pledge of 100% of the capital stock of the Company’s direct domestic subsidiaries and 65% of the capital stock of direct material foreign subsidiaries, as defined in the Bank Agreement. In addition, if the Company’s credit rating as assigned by Standard & Poor’s or Moody’s were to decline to BB- or Ba3, respectively, 

the Company would be required to perfect liens in favor of participants in the Bank Agreement in substantially all of the Company’s U.S.-based assets. At December 31, 2004, the Company’s credit rating from Standard and Poor’s was BB+ and from Moody’s was Ba1. The Bank Agreement requires that the Company satisfy certain financial covenants including an interest coverage ratio of higher than 3x (EBITDA divided by interest expense) and a leverage test (Debt divided by EBITDA) lower than 3.75x and 3.50x based on total debt and senior debt, respectively. At December 31, 2004, such ratios as defined in the Bank Agreement, were 12.91x, 1.65x and 1.65x, respectively. The Bank Agreement also includes limitations with respect to, among other things, indebtedness in excess of $50 million for capital leases, $450 million for general indebtedness and $200 million for acquisition indebtedness, of which approximately $6.9 million, $0 and $4.2, respectively, were outstanding at December 31, 2004, and restricted payments, including dividends on the Company’s common stock, in excess of 50% of consolidated cumulative net income plus $50 million, or approximately $170.6 million at December 31, 2004. In conjunction with entering into the new Bank Agreement the Company entered into interest rate swap agreements that fixed the Company’s LIBOR interest rate on $250.0 million and $50.0 million of floating rate bank debt at 2.44% and 3.01%, expiring in May 2006 and June 2006, respectively. 

The Company's primary ongoing cash requirements will be for operating and capital expenditures, product development activities, repurchase of its common stock, dividends and debt service. The Company's debt service requirements consist primarily of principal and interest on bank borrowings. The Company's primary sources of liquidity are internally generated cash flow, the Company's revolving credit facility and the sale of receivables under the Company's accounts receivable securitization 

agreement. The Company expects that ongoing requirements for operating and capital expenditures, product development activities, repurchase of its common stock, dividends and debt service requirements will be funded from these sources; however, the Company's sources of liquidity could be adversely affected by, among other things, a decrease in demand for the Company's products, a deterioration in certain of the Company's financial ratios or a deterioration in the quality of the Company's accounts receivable. 

The Company expects that capital expenditures in 2005 will be approximately $50 million. The Company's required debt and capital lease amortization in 2005 is $16.9 million; the Company's required cash interest payments for 2005, at current interest rates, are estimated at approximately $19 million. The Company may also use cash to fund part or all of the cost of future acquisitions. Since its initial public offering in 1991, the Company has not paid any dividends. However, on January 19, 2005, the Company announced that it will commence payment of a quarterly dividend on its common stock of $.03 per share. The Company expects the first dividend payment to be made on or about April 6, 2005 to shareholders of record as of March 15, 2005. The Company intends to retain the remainder of its earnings to provide funds for the operation and expansion of the Company's business, repurchase of its common stock and to repay outstanding indebtedness. Management believes that the Company's working capital position, ability to generate strong cash flow from operations and access to credit markets will allow it to meet its obligations for the next twelve months and the foreseeable future. 

## Off-Balance Sheet Arrangement - Accounts Receivable Securitization 

A subsidiary of the Company has an agreement with a financial institution whereby the subsidiary can sell an undivided interest of up to $85.0 million in a designated pool of qualified accounts 

