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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : : IN RE ACTERNA CORPORATION SECURITIES LITIGATION : Civil Action No. DKC 2003-1131 : : MEMORANDUM OPINION Presently pending and ready for resolution in this class action alleging violations of federal securities laws are

Defendants' separate motions to dismiss Plaintiffs' Consolidated Amended Class Action Complaint under Fed.R.Civ.P. 12(b)(6). Also pending is Plaintiffs' motion to strike certain exhibits filed by Defendant PricewaterhouseCoopers LLP ("PwC"). The

issues have been fully briefed and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the

following reasons, Plaintiffs' motion to strike will be granted in part and denied in part, and the motions to dismiss will be granted. I. Background A. Factual Background

The following facts are alleged in Plaintiffs' Consolidated Amended Class Action Complaint ("the complaint"), filed on

behalf of all persons who purchased or otherwise acquired shares

of Acterna Corporation ("Acterna" or "the company") common stock between August 14, 2001, and October 29, 2002 ("the Class

Period").1

The defendants in this action were five of Acterna's

most senior officers leading up to and during the Class Period ("the individual Defendants"), Clayton, Dubilier & Rice, Inc. ("CD&R"), Acterna's largest shareholder, outside and

PricewaterhouseCooper

("PwC"),

Acterna's

auditor.

Defendant Ned C. Lautenbach joined Acterna in 1998, and at all times during the Class Period was Acterna's Chairman and Chief Executive Officer ("CEO"). director of CD&R. President and Lautenbach was also a principal and

Defendant John D. Ratliff was the Senior Vice Financial and Officer ("CFO") from of June Acterna's 2000 to

Chief test

communications

management

unit

December 31, 2001.

On January 1, 2002, Ratliff became Acterna's Defendant Allan M. Kline

Corporate Vice President and CFO.

served as Acterna's Corporate Vice President, CFO, and Treasurer until December 31, 2001, when Ratliff took over. Thereafter,

Kline continued as a member of Acterna's Board of Directors ("the Board"). Defendant John R. Peeler had been a member of In July 2001, he was elected

the Board since May 21, 1998.

The complaint also contains common law claims of fraud and breach of fiduciary duties on behalf of all persons who purchased or otherwise acquired shares of Acterna common stock prior to August 14, 2001 and retained such shares through the end of the Class Period. 2

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President of the Board.

At all times during the Class Period,

he was President and CEO of Acterna's testing and management business. Defendant Robert W. Woodbury, Jr. was, at all

relevant times, Acterna's Corporate Vice President and Principal Accounting Officer. 1. Events Prior to Class Period

Acterna provides test and management services for optical transport, access, and cable networks to customers located

around the world. Corporation, paid

In May 2000, Acterna, then known as Dynatech $402 million to purchase Wavetek Wandel

Goltermann, Inc. ("WWG").

Approximately $274.8 million of the In August 2000,

purchase price was allocated to goodwill.2

Acterna paid $171.5 million to purchase Superior Electronics Group, Inc. d/b/a Cheetah Technologies ("Cheetah").

Approximately $87.7 million of the purchase price was allocated to goodwill. As a result of these acquisitions, Acterna

purportedly added approximately $362.5 million in goodwill to its balance sheet, and positioned Acterna to be, according to Lautenbach, "a new company with the size, the resources and the

According to the complaint, Acterna was founded in 1959 as Dynatech Corporation, but changed its name to Acterna in September 2000. For the sake of simplicity, it will be referred to as Acterna throughout. 3

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products to become a leader in the communications solutions industry." Paper 28,

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