---



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-Q



Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934



For the quarterly period ended:  June 30, 2001
        Commission File Number:  0-19589



ARGUSS COMMUNICATIONS, INC.(formerly "Arguss Holdings, Inc.")
(Exact name of Registrant as specified in its Charter)




Delaware

02-0413153(State or other jurisdiction of incorporation of organization)

(I.R.S. Employer Identification Number)




One Church Street, Suite 302, Rockville, Maryland

20850(Address of Principal Executive Offices)


(Zip Code)






Registrant's Telephone Number, including Area Code:
301-315-0027




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 requirements for the past 90 days.



| | Yes:X |  | No:
| | ----- |  | ---



As of August 3, 2001, there were 14,519,944 shares of Common Stock, $ .01 par value per share, outstanding.



---



ARGUSS COMMUNICATIONS, INC.



INDEX



PagePart I -
Financial Information:Item 1 -
Financial StatementsConsolidated Balance Sheets (Unaudited) - June 30, 2001 and December 31, 2000
3Consolidated Statements of Operations (Unaudited) - Three Months and Six Months Ended June 30, 2001 and June 30, 2000
4Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2001 and June 30, 2000
5Notes to Consolidated Financial Statements (Unaudited)
7Item 2 -
Management's Discussion and Analysis of Financial Condition and Results of Operations
13Item 3 -
Quantitative and Qualitative Disclosure about Market Risk
16Part II -
Other Information
17Items 1 through 6SignaturesExhibits




---



ARGUSS COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)



|                                                                                                                          |  | June 30, 2001    |  | Dec. 31, 2000   
|------------------------------------------------------------------------------------------------------------------------- |  | ---------------- |  | ----------------
|Assets                                                                                                                    |  |                  |  |                 
|                                                                                                                          |  |                  |  |                 
|Current assets:                                                                                                           |  |                  |  |                 
|Cash                                                                                                                      |  | $        331,000 |  | $        474,000
|Restricted cash from customer advances                                                                                    |  | 25,000           |  | 303,000         
|Accounts receivable trade, net of allowance for doubtful accounts of $392,000 and $343,000 in 2001 and 2000, respectively |  | 43,599,000       |  | 57,133,000      
|Costs and earnings in excess of billings                                                                                  |  | 12,380,000       |  | 18,156,000      
|Inventories                                                                                                               |  | 4,586,000        |  | 4,610,000       
|Other current assets                                                                                                      |  | 1,987,000        |  | 2,690,000       
|                                                                                                                          |  |                  |  |                 
|Total current assets                                                                                                      |  | 62,908,000       |  | 83,366,000      
|                                                                                                                          |  |                  |  |                 
|                                                                                                                          |  |                  |  |                 
|Property, plant and equipment, net                                                                                        |  | 44,461,000       |  | 47,851,000      
|Goodwill, net                                                                                                             |  | 123,797,000      |  | 127,393,000     
|                                                                                                                          |  |                  |  |                 
|                                                                                                                          |  | $ 231,166,000    |  | $ 258,610,000   
|                                                                                                                          |  |                  |  |                 
|                                                                                                                          |  |                  |  |                 
|Liabilities and Stockholders' Equity                                                                                      |  |                  |  |                 
|                                                                                                                          |  |                  |  |                 
|Current liabilities:                                                                                                      |  |                  |  |                 
|                                                                                                                          |  |                  |  |                 
|Current portion of long-term debt                                                                                         |  | $    7,214,000   |  | $    7,322,000  
|Short-term borrowings                                                                                                     |  | 58,209,000       |  | 70,246,000      
|Accounts payable                                                                                                          |  | 12,028,000       |  | 19,731,000      
|Billings in excess of costs and earnings                                                                                  |  | 69,000           |  | 470,000         
|Customer advances                                                                                                         |  | -                |  | 4,000           
|Accrued expenses and other liabilities                                                                                    |  | 10,752,000       |  | 10,223,000      
|Deferred income taxes                                                                                                     |  | 229,000          |  | 261,000         
|                                                                                                                          |  |                  |  |                 
|Total current liabilities                                                                                                 |  | 88,501,000       |  | 108,257,000     
|                                                                                                                          |  |                  |  |                 
|                                                                                                                          |  |                  |  |                 
|Other liabilities                                                                                                         |  | 74,000           |  | -               
|Long-term debt, excluding current portion                                                                                 |  | 9,128,000        |  | 12,688,000      
|Deferred income taxes                                                                                                     |  | 4,377,000        |  | 4,377,000       
|                                                                                                                          |  |                  |  |                 
|Total liabilities                                                                                                         |  | 102,080,000      |  | 125,322,000     
|                                                                                                                          |  |                  |  |                 
|                                                                                                                          |  |                  |  |                 
|Stockholders' equity:                                                                                                     |  |                  |  |                 
|Common stock $.01 par value                                                                                               |  | 145,000          |  | 144,000         
|Additional paid-in capital                                                                                                |  | 114,535,000      |  | 113,860,000     
|Retained earnings                                                                                                         |  | 14,545,000       |  | 19,284,000      
|Accumulated comprehensive loss                                                                                            |  | <139,000>        |  | -               
|                                                                                                                          |  |                  |  |                 
|Total stockholders' equity                                                                                                |  | 129,086,000      |  | 133,288,000     
|                                                                                                                          |  |                  |  |                 
|                                                                                                                          |  | $ 231,166,000    |  | $ 258,610,000   
|                                                                                                                          |  |                  |  |                 

The accompanying notes are an integral part of these financial statements.



---



ARGUSS COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)



|                                             |  | Three Months Ended |  | Six Months Ended
|-------------------------------------------- |  | ------------------ |  | ----------------
|                                             |  | June 30, 2001      |  | June 30, 2000   
|                                             |  |                    |  |                 
|Net sales                                    |  | $ 48,463,000       |  | $ 67,109,000    
|Cost of sales, excluding depreciation        |  | 36,922,000         |  | 48,364,000      
|                                             |  |                    |  |                 
|Gross profit, excluding depreciation         |  | 11,541,000         |  | 18,745,000      
|                                             |  |                    |  |                 
|Selling, general and administrative expenses |  | 6,277,000          |  | 5,371,000       
|Depreciation                                 |  | 3,209,000          |  | 2,744,000       
|Goodwill amortization                        |  | 1,798,000          |  | 1,661,000       
|Non-cash stock compensation                  |  | 5,000              |  | 136,000         
|Engineering and development expenses         |  | 154,000            |  | 264,000         
|                                             |  |                    |  |                 
|Operating income <loss>                      |  | 98,000             |  | 8,569,000       
|                                             |  |                    |  |                 
|                                             |  |                    |  |                 
|Other income <expense>:                      |  |                    |  |                 
|Interest and other income                    |  | 78,000             |  | 64,000          
|Interest expense                             |  | <1,473,000>        |  | <1,719,000>     
|                                             |  |                    |  |                 
|                                             |  |                    |  |                 
|Income <loss> before income taxes            |  | <1,297,000>        |  | 6,914,000       
|Income tax <expense>
benefit                 |  | <1,575,000>        |  | <3,138,000>     
|                                             |  |                    |  |                 
|Net Income <loss>                            |  | <$2,872,000>       |  | $3,776,000      
|                                             |  |                    |  |                 
|                                             |  |                    |  |                 
|Earnings <loss> per common share:            |  |                    |  |                 
|-- basic                                     |  | <$.20>             |  | $.27            
|                                             |  |                    |  |                 
|-- diluted                                   |  | <$.20>             |  | $.26            
|                                             |  |                    |  |                 
|                                             |  |                    |  |                 
|                                             |  |                    |  |                 
|Weighted average shares outstanding:         |  |                    |  |                 
|-- basic                                     |  | 14,489,000         |  | 13,881,000      
|                                             |  |                    |  |                 
|-- diluted                                   |  | 14,489,000         |  | 14,553,000      
|                                             |  |                    |  |                 

The accompanying notes are an integral part of these financial statements.





---



ARGUSS COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)



|                                                                                                   |  | Six Months Ended June 30,
|-------------------------------------------------------------------------------------------------- |  | -------------------------
|                                                                                                   |  | 2001                     
|Cash flows from operating activities:                                                              |  |                          
|Net income <loss>                                                                                  |  | <$4,740,000>             
|                                                                                                   |  |                          
|Adjustments to reconcile net income <loss> to net
cash provided by <used in> operating activities: |  |                          
|Depreciation                                                                                       |  | 6,432,000                
|Goodwill amortization                                                                              |  | 3,597,000                
|Non-cash stock compensation                                                                        |  | 176,000                  
|                                                                                                   |  |                          
|Changes in assets and liabilities:                                                                 |  |                          
|Accounts receivable                                                                                |  | 13,534,000               
|Costs and earnings in excess of billings                                                           |  | 6,050,000                
|Inventories                                                                                        |  | 24,000                   
|Other current assets                                                                               |  | 982,000                  
|Accounts payable                                                                                   |  | <7,702,000>              
|Billings in excess of costs and earnings                                                           |  | <401,000>                
|Accrued expenses and other liabilities                                                             |  | 584,000                  
|                                                                                                   |  |                          
|Net cash provided by (used in) operating activities                                                |  | 18,536,000               
|                                                                                                   |  |                          
|                                                                                                   |  |                          
|Cash flows from investing activities:                                                              |  |                          
|Additions to property, plant and equipment                                                         |  | <3,588,000>              
|Disposal of property, plant and equipment                                                          |  | 546,000                  
|Additional payment to former shareholders of acquired companies                                    |  | -                        
|Purchase of telecom services companies, net                                                        |  | -                        
|                                                                                                   |  |                          
|Net cash used in investing activities                                                              |  | <3,042,000>              
|                                                                                                   |  |                          
|                                                                                                   |  |                          
|Cash flows from financing activities:                                                              |  |                          
|Proceeds from <repayments of> lines of credit                                                      |  | <12,037,000>             
|Net repayments of long-term debt                                                                   |  | <3,668,000>              
|Issuance of common stock                                                                           |  | 68,000                   
|                                                                                                   |  |                          
|Net cash provided by <used in> financing activities                                                |  | <15,637,000>             
|                                                                                                   |  |                          
|                                                                                                   |  |                          
|Net decrease in cash                                                                               |  | <143,000>                
|                                                                                                   |  |                          
|                                                                                                   |  |                          
|Cash at beginning of period                                                                        |  | 474,000                  
|                                                                                                   |  |                          
|                                                                                                   |  |                          
|Cash at end of period                                                                              |  | $   331,000              
|                                                                                                   |  |                          
|                                                                                                   |  |                          

(continued)





---



ARGUSS COMMUNICATIONS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (continued)
(Unaudited)



|                                                               |  | Six Months Ended June 30,
|-------------------------------------------------------------- |  | -------------------------
|                                                               |  | 2001                     
|                                                               |  |                          
|Supplemental disclosures of cash paid <received> for:          |  |                          
|Interest                                                       |  | $3,041,000               
|Corporate income taxes                                         |  | <1,410,000>              
|                                                               |  |                          
|Supplemental disclosure of investing and financing activities: |  |                          
|                                                               |  |                          
|Fair value of assets acquired:                                 |  |                          
|                                                               |  |                          
|Accounts receivable                                            |  |                          
|Other current assets                                           |  |                          
|Inventory                                                      |  |                          
|Property and equipment                                         |  |                          
|                                                               |  |                          
|Total non-cash assets                                          |  |                          
|                                                               |  |                          
|Liabilities                                                    |  |                          
|Long-term debt                                                 |  |                          
|                                                               |  |                          
|Net non-cash assets acquired                                   |  |                          
|                                                               |  |                          
|Cash acquired                                                  |  |                          
|                                                               |  |                          
|Fair value of net assets acquired                              |  |                          
|Excess of costs over fair value of net assets acquired         |  |                          
|                                                               |  |                          
|Purchase price                                                 |  |                          
|                                                               |  |                          
|                                                               |  |                          
|Common stock issued                                            |  |                          
|Cash paid                                                      |  |                          
|Cash acquired                                                  |  |                          
|                                                               |  |                          
|Purchase price                                                 |  |                          
|                                                               |  |                          

The accompanying notes are an integral part of these consolidated financial statements.



---



ARGUSS COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)

A)     Organization

The Company conducts its operations through its wholly owned subsidiaries, Arguss Communications Group, Inc. ("ACG") and Conceptronic, Inc. ("Conceptronic"). ACG is a leading provider of telecommunications infrastructure services including project management, design, engineering, construction and maintenance for Internet, telecommunications and broadband service providers. Conceptronic manufactures and sells highly advanced, computer-controlled equipment used in the surface mount electronics circuit assembly industry ("SMT").



B)     Basis for Presentation

As permitted by the rules of the Securities and Exchange Commission (the "Commission") applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. Reference should be made to the financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Commission on March 7, 2001.

In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments considered necessary to present fairly the financial position of the Company as of June 30, 2001 and the results of operations and cash flows for the periods presented. The Company prepares its interim financial information using the same accounting principles as it does for its annual financial statements.

The Company's telecom services operations are expected to have seasonally weaker results in the first and fourth quarters of the year, and may produce stronger results in the second and third quarters. This seasonality is primarily due to the effect of winter weather on outside plant activities in the northern areas served by ACG, as well as reduced daylight hours and customer budgetary constraints. Certain customers tend to complete budgeted capital expenditures before the end of the year, and postpone additional expenditures until the subsequent fiscal period.

Certain amounts in the 2000 financial statements have been reclassified for comparability with the 2001 presentation.



C)     Goodwill

Goodwill is amortized using a twenty-year amortization period. The Company continually evaluates whether events or circumstances have occurred that indicate that the remaining useful life of goodwill may warrant revision or that the remaining balance may not be recoverable. When factors indicate that goodwill should be evaluated for possible impairment, the Company uses the estimated undiscounted cash flow of the business enterprise over the remaining life of the asset in determining whether the asset is recoverable.

In July 2001, the FASB issued Statement No. 141, "Business Combinations", and Statement No. 142, "Goodwill and Other Intangible Assets". Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations completed after June 30, 2001. Statement 141 also specifies criteria which intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. Statement 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residential values, and reviewed for impairment in accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.

The Company is required to adopt the provisions of Statement 141 immediately, and Statement 142 effective January 1, 2002. Furthermore, any goodwill and any intangible asset determined to have an indefinite useful life that are acquired in a purchase business combination completed after June 30, 2001 will not be amortized, but will continue to be evaluated for impairment in accordance with the appropriate pre-Statement 142 accounting literature. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized prior to the adoption of Statement 142.

Statement 141 will require upon adoption of Statement 142, that the Company evaluate its existing intangible assets and goodwill that were acquired in a prior purchase business combination, and to make any necessary reclassifications in order to conform with the new criteria in Statement 141 for recognition apart from goodwill. Upon adoption of Statement 142, the Company will be required to reassess the useful lives and residual values of all intangible assets acquired in purchase business combinations, and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset is identified as having an indefinite useful life, the Company will be required to test the intangible asset for impairment in accordance with the provisions of Statement 142 within the first interim period. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period.

In connection with the transitional goodwill impairment evaluation, Statement 142 will require the Company to perform an assessment of whether there is an indication that goodwill (and equity-method goodwill) is impaired as of the date of adoption. To accomplish this the Company must identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company will then have up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit's carrying amount. To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired and the Company must perform the second step of the transitional impairment test. In the second step, the Company must compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of its assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with Statement 141, to its carrying amount, both of which would be measured as of the date of adoption. This second step is required to be completed as soon as possible, but no later than the end of the year of adoption. Any transitional impairment loss will be recognized as the cumulative effect of a change in accounting principle in the Company's statement of earnings.

And finally, any unamortized negative goodwill (and negative equity-method goodwill) existing at the date Statement 142 is adopted must be written off as the cumulative effect of a change in accounting principle.

As of the date of adoption of July 1, 2001, the Company has unamortized goodwill in the amount of $123,797,000, which will be subject to the transition provisions of Statements 141 and 142. Amortization expense related to goodwill was $6,668,000 and $3,597,000 for the year ended December 31, 2000 and the six months ended June 30, 2001, respectively. Because of the extensive effort needed to comply with adopting Statements 141 and 142, it is not practicable to reasonably estimate the impact of adopting these Statements on the Company's financial statements at the date of this report, including whether any transitional impairment losses will be required to be recognized as the cumulative effect of a change in accounting principle.



D)     Earnings per Share

Basic earnings <loss> per common share are computed by dividing net income <loss> available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings <loss> per common share reflect the maximum dilution that would have resulted from the exercise of stock options and warrants and other contingently issuable shares. Diluted earnings <loss> per common share are computed by dividing net income <loss> by the weighted average number of common shares and all dilutive securities. During the three and six months ended June 30, 2001, the Company reported a loss. Consequently, the Company did not give effect to potentially dilutive securities in the calculation of loss per share, as the result would have been anti-dilutive.



For the Three Months Ended June 30:2001
  
  2000Lossper Share

Shares

NetLoss

Incomeper Share

Shares

NetIncomeBasic
  
<$.20>

14,489,000

<$2,872,000>

$.27

13,881,000

$3,776,000Effect of stock options and warrants

-

-

-

<.01>

672,000

-Diluted
  
<$.20>

14,489,000

<$2,872,000>

$.26

14,553,000

$3,776,000






|                                     |  | For the Six Months Ended June 30:
|------------------------------------ |  | ---------------------------------
|                                     |  |                                  
|                                     |  | 2001                             
|                                     |  | Lossper Share                    
|                                     |  |                                  
|Basic                                |  | <$.33>                           
|Effect of stock options and warrants |  | -                                
|                                     |  |                                  
|Diluted                              |  | <$.33>                           
|                                     |  |                                  



The following securities that could potentially dilute future earnings per common share were not included in the above computations of diluted earnings per share because to do so would have been anti-dilutive:



Three Months EndedJune 30:
Six Months EndedJune 30:2000
1,837,000
1,592,0002001
3,079,000
3,079,000




E)     Contract Accounting

The retainage included in accounts receivable, representing amounts withheld by contract with respect to ACG accounts receivable, was $3,131,000 and $7,227,000 at June 30, 2001 and December 31, 2000, respectively. The Company expects to collect substantially all the retainage within one year.

June 30, 2001
December 31, 2000Costs incurred on uncompleted contracts

$ 93,346,000

$129,847,000Estimated earnings

16,365,000

29,880,000109,711,000

159,727,000Less: Billings to date

97,400,000

142,041,000$ 12,311,000

$ 17,686,000Included in accompanying balance sheets under the following caption:Costs and earnings in excess of billings

$ 12,380,000

$ 18,156,000Billings in excess of costs and earnings

<69,000>

<470,000>Net

$ 12,311,000

$ 17,686,000




F)     Segment Information

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" establishes standards for reporting information about operating segments in interim financial reports issued to stockholders. It also establishes standards for related disclosures about products and services and geographic areas. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and assessing performance.

The Company's two reportable segments are telecom services and manufacturing. The Company conducts its operations through its wholly owned subsidiaries, Arguss Communications Group, Inc. ("ACG") and Conceptronic, Inc. ("Conceptronic"). ACG is a leading provider of telecommunications infrastructure services including project management, design, engineering, construction and maintenance for Internet, telecommunications and broadband service providers. Conceptronic manufactures and sells highly advanced, computer-controlled equipment used in the surface mount electronics circuit assembly industry
("SMT").

Because the telecom system projects are fully integrated undertakings, the Company does not capture individually each component of the service functions performed for revenue reporting purposes. The manufacturing segment manufactures and sells highly advanced, computer-controlled equipment used in the SMT circuit assembly industry. The "All Other" column includes the Company's corporate and unallocated expenses.

The Company's reportable segments are organized in separate business units with different management, technology and services. The respective segments account for their respective businesses using the same accounting policies used in the consolidated financial statements. Summarized financial information concerning the Company's reportable segments net of inter-company transactions is shown in the following table.



|                                           |  | Three Months EndedJune 30, 2001
|------------------------------------------ |  | -------------------------------
|                                           |  | Telecom  Services              
|                                           |  |                                
|External sales                             |  | $  46,505,000                  
|Cost of sales, excluding depreciation      |  | 34,978,000                     
|                                           |  |                                
|Gross profit, excluding depreciation       |  | 11,527,000                     
|Operating expenses, excluding depreciation |  | 5,259,000                      
|Depreciation                               |  | 3,177,000                      
|Goodwill amortization                      |  | 1,798,000                      
|Non-cash compensation expense              |  | 5,000                          
|Engineering and development                |  | -                              
|Interest and other income                  |  | <56,000>                       
|Interest expense                           |  | 1,397,000                      
|                                           |  |                                
|Pretax <loss>                              |  | <$53,000>                      
|                                           |  |                                
|                                           |  |                                
|Capital expenditures                       |  | $    1,574,000                 
|                                           |  |                                
|Property, plant and equipment, net         |  | $  43,354,000                  
|                                           |  |                                
|                                           |  |                                
|Total assets                               |  | $221,554,000                   
|                                           |  |                                
|                                           |  |                                
|Total liabilities                          |  | $  80,887,000                  
|                                           |  |                                



|                                           |  | Three Months EndedJune 30, 2000
|------------------------------------------ |  | -------------------------------
|                                           |  | Telecom  Services              
|                                           |  |                                
|External sales                             |  | $  61,257,000                  
|Cost of sales, excluding depreciation      |  | 43,966,000                     
|                                           |  |                                
|Gross profit, excluding depreciation       |  | 17,291,000                     
|Operating expenses, excluding depreciation |  | 4,139,000                      
|Depreciation                               |  | 2,702,000                      
|Goodwill amortization                      |  | 1,661,000                      
|Non-cash compensation expense              |  | 59,000                         
|Engineering and development                |  | -                              
|Interest and other income                  |  | <60,000>                       
|Interest expense                           |  | 1,663,000                      
|                                           |  |                                
|Pretax income <loss>                       |  | $    7,127,000                 
|                                           |  |                                
|                                           |  |                                
|Capital expenditures                       |  | $    6,451,000                 
|                                           |  |                                
|Property, plant and equipment, net         |  | $  43,803,000                  
|                                           |  |                                
|                                           |  |                                
|Total assets                               |  | $246,383,000                   
|                                           |  |                                
|                                           |  |                                
|Total liabilities                          |  | $113,705,000                   
|                                           |  |                                



|                                           |  | Six Months EndedJune 30, 2001
|------------------------------------------ |  | -----------------------------
|                                           |  | Telecom  Services            
|                                           |  |                              
|External sales                             |  | $  91,800,000                
|Cost of sales, excluding depreciation      |  | 72,168,000                   
|                                           |  |                              
|Gross profit, excluding depreciation       |  | 19,632,000                   
|Operating expenses, excluding depreciation |  | 9,977,000                    
|Depreciation                               |  | 6,369,000                    
|Goodwill amortization                      |  | 3,597,000                    
|Non-cash compensation expense              |  | 100,000                      
|Engineering and development                |  | -                            
|Interest and other income                  |  | <208,000>                    
|Interest expense                           |  | 3,000,000                    
|                                           |  |                              
|Pretax <loss>                              |  | <$3,203,000>                 
|                                           |  |                              
|                                           |  |                              
|Capital expenditures                       |  | $    3,573,000               
|                                           |  |                              
|Property, plant and equipment, net         |  | $  43,354,000                
|                                           |  |                              
|                                           |  |                              
|Total assets                               |  | $221,554,000                 
|                                           |  |                              
|                                           |  |                              
|Total liabilities                          |  | $  80,887,000                
|                                           |  |                              



|                                           |  | Six Months EndedJune 30, 2000
|------------------------------------------ |  | -----------------------------
|                                           |  | Telecom  Services            
|                                           |  |                              
|External sales                             |  | $110,828,000                 
|Cost of sales, excluding depreciation      |  | 82,668,000                   
|                                           |  |                              
|Gross profit, excluding depreciation       |  | 28,160,000                   
|Operating expenses, excluding depreciation |  | 7,908,000                    
|Depreciation                               |  | 5,026,000                    
|Goodwill amortization                      |  | 3,087,000                    
|Non-cash compensation expense              |  | 62,000                       
|Engineering and development                |  | -                            
|Interest and other income                  |  | <259,000>                    
|Interest expense                           |  | 2,823,000                    
|                                           |  |                              
|Pretax income <loss>                       |  | $    9,513,000               
|                                           |  |                              
|                                           |  |                              
|Capital expenditures                       |  | $    9,132,000               
|                                           |  |                              
|Property, plant and equipment, net         |  | $  43,803,000                
|                                           |  |                              
|                                           |  |                              
|Total assets                               |  | $246,383,000                 
|                                           |  |                              
|                                           |  |                              
|Total liabilities                          |  | $113,705,000                 
|                                           |  |                              



G)     Bank Financing

The Company has a $120 million revolving credit facility, for which it pledges, as security, the capital stock of its wholly owned subsidiaries and the majority of the Company's assets. The Company uses the credit facility to provide working capital to finance acquisitions, the purchase of capital assets and for other corporate purposes. The Company also has a $30 million, in original notional amount, amortizing five-year term facility with $14,250,000 outstanding at June 30, 2001. Under the provisions of the credit agreement, borrowings are limited to a multiple of the Company's adjusted EBITDA. Amounts borrowed under the line bear interest either as a relationship to the London Interbank Offered Rate ("LIBOR"), plus 1.25% to 2.25%, or to the Prime Rate plus up to 1.00%, as determined by the ratio of the Company's total funded debt to EBITDA. The Company also incurs a commitment fee on the unused portion of the loan at a rate of up to 0.50%, as determined by the ratio of the Company's total funded debt to EBITDA. The revolving line of credit has an initial term maturing on March 19, 2003, and is renewable for up to one additional year. The term facility has an expiration of March 1, 2004.



H)     Income Taxes

Goodwill amortization, which is nondeductible for income tax purposes, is added back to pretax income or loss creating an unusual relationship of the expected effective tax rate to pretax income or loss. In the quarter ended June 30, 2001, the Company determined that it could not make a reliable estimate of its annual effective income tax rate. Accordingly, the effective tax rate used is based on the year to date results of operations. A relatively small change in the Company's ordinary pre-tax income could produce a relatively large change in the Company's effective income tax rate. To calculate the income tax provision for the period ending June 30, 2001, the Company applied its 38.25% marginal tax rate to its year-to-date pretax loss plus nondeductible goodwill amortization, calculating a year-to-date tax benefit of $707,000. In 2000, the Company's marginal tax rate was applied to year-to-date pretax income plus nondeductible goodwill amortization calculating an expense of $4,423,000.





---



ARGUSS COMMUNICATIONS, INC.



Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations

The Company conducts its operations through its wholly owned subsidiaries, Arguss Communications Group, Inc. ("ACG") and Conceptronic, Inc. ("Conceptronic"). ACG is a leading provider of telecommunications infrastructure services including project management, design, engineering, construction and maintenance for Internet, telecommunications and broadband service providers. Conceptronic manufactures and sells highly advanced, computer-controlled equipment used in the surface mount electronics circuit assembly industry ("SMT").

Three Months Ended June 30, 2001, Compared to Three Months Ended June 30, 2000

The Company had consolidated earnings before interest expense, taxes, depreciation, amortization and non-cash stock compensation (EBITDA) of $5,188,000 for the three months ended June 30, 2001, compared to $13,174,000 for the same period one year ago. For the three months ended June 30, 2001, EBITDA, as a percentage of consolidated net sales (EBITDA margin), was 10.7%, compared to 19.6% for the comparable period in 2000. ACG had EBITDA of $6,325,000 for the three months ended June 30, 2001, compared to $13,212,000 for the same period in 2000. ACG achieved an EBITDA margin of 13.6% for the three months ended June 30, 2001 and 21.6% for the three months ended June 30, 2000. ACG's reduced EBITDA margin was combined with reduced volumes as discussed below.

The Company had a consolidated net loss of $2,872,000 for the three months ended June 30, 2001, compared to net income of $3,776,000 for the three months ended June 30, 2000. The Company's results were negatively impacted by lower revenues at both ACG and Conceptronic. ACG has experienced reduced project activity as telecommunications customers have slowed their system buildouts. Several of Conceptronic's customers cancelled and delayed orders as the manufacturing sector and electronics industries have slowed.

Consolidated net sales for the three months ended June 30, 2001 were approximately $48,463,000, compared to approximately $67,109,000 for the three months ended June 30, 2000, a decrease of 28%. Acquisitions contributed $5,640,000 to revenue for the three months ended June 30, 2001. Operations owned for at least one year had a net sales decrease of $24,826,000 or 36% for the three months ended June 30, 2001.

Consolidated gross profit margin, excluding depreciation, was 24% of sales for the three months ended June 30, 2001, compared to 28% for the three months ended June 30, 2000. Gross profit margins, excluding depreciation, declined from 28% to 25% at ACG, and from 25% to 1% at Conceptronic from the three months ended June 30, 2000 to the three month period ended June 30, 2001. Reduced volumes have had a negative impact on margins.

Consolidated selling, general and administrative expenses for the three months ended June 30, 2001 were $6,277,000 or 13% of net sales, compared to $5,371,000 or 8% of net sales for the three months ended June 30, 2000. Acquisitions contributed $404,000 of increased and selling general and administrative expenses in 2001. Conceptronic reduced selling, general and administrative expenses by $425,000 through cost controls introduced in response to the decrease in revenues. Excluding reserves for doubtful accounts of $583,000 during the three months ended June 30, 2001, compared to none in the three months ended June 30, 2000, selling general and administrative expenses increased $344,000 or 8% in ACG and all other operations owned one year.

Depreciation expense increased to $3,209,000 for the three months ended June 30, 2001, compared to $2,744,000 for the three months ended June 30, 2000 due primarily to ACG which made significant equipment acquisitions during calendar year 2000. Equipment is depreciated over sixty months. Depreciation expense from companies acquired after June 30, 2000 was $179,000 during the three months ended June 30, 2001.

Goodwill amortization, which is calculated using a twenty-year amortization period, increased to $1,798,000 from $1,661,000 from the comparable period one year ago due primarily to acquisitions made in 2000. Amortization expense on the goodwill related to these acquisitions was $119,000 for the three months ended June 30, 2001.

Interest expense for the three months ended June 30, 2001 was $1,473,000, compared to $1,719,000 for the comparable period in 2000. ACG interest expense decreased for the three months ended June 30, 2001. Lower overall borrowings and lower prevailing interest rates, which were approximately 200 basis points lower during 2001 than in 2000, contributed to Arguss achieving $426,000 in interest expense savings. Interest expense on acquisitions contributed $180,000 primarily offsetting this savings.

Income tax expense was $1,575,000 for the three months ended June 30, 2001, compared to $3,138,000 in income tax expense for the three months ended June 30, 2000. Goodwill amortization, which is nondeductible for income tax purposes, is added back to pretax income or loss creating an unusual relationship of the expected effective tax rate to pretax income or loss. In the quarter ended June 30, 2001, the Company determined that it could not make a reliable estimate of its annual effective income tax rate. Accordingly, the effective tax rate used is based on the year to date results of operations. A relatively small change in the Company's ordinary pre-tax income could produce a relatively large change in the Company's effective income tax rate. To calculate an income tax provision for the period ending June 30, 2001 the Company applied its 38.25% marginal tax rate to its year-to-date pretax loss plus nondeductible goodwill amortization, deriving a year-to-date income tax benefit at June 30, 2001 of $707,000. In 2000, the marginal tax rate was applied to year-to-date pretax income plus nondeductible goodwill amortization. For the three months ended June 30, the company had an effective tax rate of <121%> in 2001 and 45% in 2000.

Six Months Ended June 30, 2001, Compared to Six Months Ended June 30, 2000

The Company had consolidated earnings before interest expense, taxes, depreciation, amortization and non-cash stock compensation (EBITDA) of $7,917,000 for the six months ended June 30, 2001, compared to $20,130,000 for the same period one year ago. For the six months ended June 30, 2001, EBITDA, as a percentage of consolidated net sales (EBITDA margin), was 8%, compared to 16% for the comparable period in 2000. ACG had EBITDA of $9,863,000 for the six months ended June 30, 2001, compared to $20,511,000 for the same period in 2000. ACG achieved an EBITDA margin of 11% for the six months ended June 30, 2001 and 19% for the six months ended June 30, 2000. ACG's weaker EBITDA margin performance was due primarily to reduced volumes as discussed below.

The Company had a consolidated net loss of $4,740,000 for the six months ended June 30, 2001, compared to a net income of $4,423,000 for the six months ended June 30, 2000. The Company's results were negatively impacted by lower revenue volume at both ACG and Conceptronic. ACG has experienced reduced project activity as telecommunications customers have slowed their system buildouts. Several of Conceptronic's customers cancelled and delayed orders as the manufacturing sector and electronics industries have slowed.

Consolidated net sales for the six months ended June 30, 2001 were approximately $97,437,000, compared to approximately $122,153,000 for the six months ended June 30, 2000, a decrease of 20%. Acquisitions contributed $15,532,000 of revenue during the six months ended June 30, 2001. Operations owned for at least one year had a net sales decrease of $40,068,000 or 33% for the six months ended June 30, 2001.

Consolidated gross profit margin, excluding depreciation, was 21% of sales for the six months ended June 30, 2001, compared to 25% for the six months ended June 30, 2000. Gross profit margins, excluding depreciation, declined from 25% to 21% at ACG, and from 24% to 8% at Conceptronic from the six months ended June 30, 2000 to the six month period ended June 30, 2001. Reduced volumes have had a negative impact on margins.

Consolidated selling, general and administrative expenses for the six months ended June 30, 2001 were $12,023,000 or 12% of net sales, compared to $10,476,000 or 9% of net sales for the six months ended June 30, 2000. Acquisitions contributed $1,257,000 of increased and selling general and administrative expenses in 2001. Conceptronic reduced selling, general and administrative expenses by $739,000 through cost controls introduced in response to the decrease in revenues. Excluding reserves for doubtful accounts of $726,000 during the six months ended June 30, 2001, compared to none in the six months ended June 30, 2000, selling general and administrative expenses increased $303,000 or 4% in ACG and all other operations owned one year.

Depreciation expense increased to $6,432,000 for the six months ended June 30, 2001, compared to $5,110,000 for the six months ended June 30, 2000 due primarily to ACG which made significant equipment acquisitions during calendar year 2000. The equipment is depreciated over sixty months. Depreciation expense from companies acquired after June 30, 2000 was $603,000 during the six months ended June 30, 2001.

Goodwill amortization, which is calculated using a twenty-year amortization period, increased to $3,597,000 from $3,087,000 from the comparable period one year ago due primarily to acquisitions made subsequently to June 30, 2000. Amortization expense of the goodwill related to these acquisitions was $442,000 for the six months ended June 30, 2001.

Interest expense for the six months ended June 30, 2001 was $3,159,000, compared to $2,948,000 for the comparable period in 2000. Lower overall borrowings and lower prevailing weighted average interest rates, which were approximately 200 basis points lower during the six months ended June 30, 2001 than in the six months ended June 30, 2000, contributed to Arguss achieving $371,000 in interest savings. Interest expense on acquisitions contributed $582,000, offsetting this savings.

Arguss had an income tax benefit of $707,000 for the six months ended June 30, 2001 compared to $4,423,000 of income tax expense in 2000. Goodwill amortization, which is nondeductible for income tax purposes, is added back to pretax income or loss creating an unusual relationship of the expected effective tax rate to pretax income or loss. In the quarter ended June 30, 2001, the Company determined that it could not make a reliable estimate of its annual effective income tax rate. Accordingly, the effective tax rate used is based on the year to date results of operations. A relatively small change in the Company's ordinary pre-tax income could produce a relatively large change in the Company's effective income tax rate. To calculate an income tax provision for the period ending June 30, 2001 the Company applied its 38.25% marginal tax rate to its year-to-date pretax loss plus nondeductible goodwill amortization, deriving a year-to-date income tax benefit at June 30, 2001 of $707,000. In 2000, the marginal tax rate was applied to year-to-date pretax income plus nondeductible goodwill amortization. For the six months ended June 30, the company had an effective tax rate of 13% in 2001 and 50% in 2000.

Liquidity and Capital Resources

Net cash provided by operations for the six months ended June 30, 2001 was $18,536,000 compared with $9,657,000 of cash used by operations for the six months ended June 30, 2000. The increase in cash provided by operating activities was due primarily to strong cash receipts on accounts receivable and also improved billing that reduced costs and earnings in excess of billings. Reduced revenues during the six months ended June 30, 2001 compared to 2000 also contributed to lower working capital needs. The net loss during the six months ended June 30, 2001 offset, in part, the strong cash collections.

Net cash used for investing activities for the six months ended June 30, 2001 was $3,042,000, compared to $25,561,000 the comparable period of 2000. Of the 2000 investing activities, $16,055,000 was used to make acquisitions compared to none in 2001 when no acquisitions were made. In 2000, pursuant to the provisions of the purchase agreements, $799,000 was paid to former shareholders of acquired companies, compared to none in 2001. In 2001, $3,588,000 was spent on capital equipment acquisitions compared to $9,142,000 in 2000. The decrease in capital expenditures is due to management reducing capital budgets in light of decreased customer activity. The Company has budgeted approximately $5,000,000 in capital expenditures in 2001 compared to $17,849,000 spent during the entire year of 2000.

Net cash used in financing activities was $15,637,000 for the six months ended June 30, 2001, compared to net cash provided by financing activities of $29,950,000 for the comparable period in 2000. In 2001, the Company used its strong cash flow from operating activities to paydown amounts borrowed on lines of credit. In 2000, the Company used its credit lines to finance acquisitions and capital expenditures.

The Company has a $120 million revolving credit facility, for which it pledges the capital stock of its wholly owned subsidiaries and the majority of the Company's assets. The Company uses the credit facility to provide working capital to finance acquisitions and the purchase of capital assets and for other corporate purposes. The Company also has a $30 million, in original notional amount, amortizing five-year term facility with $14,250,000 remaining at June 30, 2001. Under the provisions of the credit agreement, borrowings are limited to a multiple of the Company's adjusted EBITDA. Amounts borrowed under the line bear interest either as a relationship to the London Interbank Offered Rate ("LIBOR"), plus 1.25% to 2.25%, or to the Prime Rate plus up to 1.00%, as determined by the ratio of the Company's total funded debt to EBITDA. The Company also incurs a commitment fee on the unused portion of the loan at a rate of up to 0.50%, as determined by the ratio of the Company's total funded debt to EBITDA. The revolving line of credit has an initial term, maturing on March 19, 2003, and is renewable for up to one additional year. The term facility has an expiration of March 1, 2004.

To hedge the variable-term loan interest rate risk for $30 million in original notional amount, five-year, term financing facility, the Company has entered into an interest rate swap pursuant to which it pays fixed interest at a rate of 5.78% and receives variable interest on the same notional amount. The purpose of the hedge is to provide a measure of stability in the volatile environment of interest rates. The Company's interest rate swap agreement in place is designated as a cash flow hedge. During the six months ended June 30, 2001, the company's receipts under the interest rate swap aggregated $70,000. At June 30, 2001, the fair value of the swap, which expires with a maturity of the term debt on March 1, 2004, was <$227,000>.

On January 1, 2001, the Company adopted SFAS No. 133 "Accounting For Derivative Instruments and Hedging Activities." Adoption of SFAS No. 133 was not material to the Company's financial statements. During the six months ended June 30, 2001, the Company had an unrealized loss on the hedge of $139,000 net of tax.

The Company's borrowings are limited to a multiple of EBITDA. At June 30, 2001, the Company has $62,000,000 remaining in its credit facility. Of that at June 30, 2001, $4,000,000 was available to borrow for operations, with the remainder available for acquisitions.

Forward Looking Statements

Statements made in the quarterly report that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that actual results may differ substantially from such forward-looking statements. Forward looking statements may be subject to certain risks and uncertainties, including -- but not limited to -- continued acceptance of the Company's products and services in the marketplace, uncertainties surrounding new acquisitions, floating rate debt, risks of the construction industry, including weather and an inability to plan and schedule activity levels, doing business overseas and risks inherent in concentration of business in certain customers. All of these risks are detailed from time to time in the Company's filings with the Securities and Exchange Commission. Accordingly, the actual results of the Company could differ materially from such forward-looking statements.

|Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

In the ordinary course of business, the Company is exposed to interest rate risk. To reduce variable-term loan interest rate risk, the Company has entered into an interest rate swap in the same notional amount, term and interest rate relationship to LIBOR as the Company's $14,250,000 variable-rate term loan. Arguss pays a fixed interest rate of 5.78% pursuant to the interest rate swap. The Company continues to incur interest expense for the bank's applicable margins ranging from 1.25% to 2.25% above LIBOR as determined by the ratio of the Company's total funded debt to
EBITDA.

Interest rate swaps are entered into as a hedge of underlying debt instruments to effectively change the characteristics of the interest rate without actually changing the debt instrument. For fixed-rate debt, interest rate changes affect the fair value, but do not impact earnings or cash flow. Conversely, for floating-rate debt, interest rate changes generally do not affect the fair market value, but do impact future earnings and cash flow. A one percentage point decrease in interest rates would decrease the fair value of interest rate swaps by approximately $143,000. The earnings and cash flow impact for the next year resulting from a one percentage point increase interest rates would be neutral because of the cash flow received from the swaps. All of the principal of the variable rate debt subject to the interest rate swap would be repaid over the next four years thereby diminishing the impact of market valuations on hedges.



---



ARGUSS COMMUNICATIONS, INC.

PART II
Other Information

Items 1, 2, and 5:  Not Applicable.

Item 3.
Exhibits


The following exhibits required to be filed herewith are attached or incorporated by reference to the filings previously made by the Company as noted below:



Exhibit No.

|3(a)    | Certificate of Incorporation, as amended, incorporated by reference as an Exhibit to the Company's Registration Statement on Form S-18 (No. 33-36142-B).                                                                                                                                                         
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                  
|3(a)(I) | Certificate of Designation establishing Class A common stock incorporated by reference to Exhibit 4(a) to the Company's Registration Statement Form S-8 (No. 333-19277).                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                  
|3(b)    | Bylaws, as amended, incorporated by reference as an Exhibit to the Company's Registration Statement Form S-18 (No. 33-36142-B).                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                  
|10(a)   | Equipment Lease between the Company and Eaton Financial Corporation incorporated by reference as an Exhibit to the Company's Registration Statement on Form S-18 (No. 33-36142-B).                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                                  
|10(b)   | Line of Credit Agreement dated May 1, 1995 between the Company and the First National Bank of Boston incorporated by reference as an Exhibit to the Company's Form 10-KSB for 1995.                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                  
|10(c)   | Guarantee Agreement dated March 5, 1997 by Conceptronic in favor of Citizens Bank New Hampshire incorporated by reference in the Company's Current Report on Form 8-K, dated March 5, 1997.                                                                                                                      
|        |                                                                                                                                                                                                                                                                                                                  
|10(d)   | Agreement and Plan of Merger dated January 2, 1998 by and between Can-Am Construction, Inc. Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's Current Report on Form 8-K, dated January 2, 1998.                                        
|        |                                                                                                                                                                                                                                                                                                                  
|10(e)   | Agreement and Plan of Merger dated January 2, 1998 by and between Schenck Communications, Inc., Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's Current Report on Form 8-K, dated January 2, 1998.                                    
|        |                                                                                                                                                                                                                                                                                                                  
|10(f)   | Agreement and Plan of Merger dated October 6, 1997 by and between Rite Cable Construction, Inc., Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's Current Report on Form 8-K, dated January 2, 1998.                                   
|        |                                                                                                                                                                                                                                                                                                                  
|10(g)   | Financing and Security Agreement dated September 11, 1997 by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic and Bank of America and related promissory notes incorporated by reference to Exhibit 10 as an Exhibit to the Company's Form 10-KSB for 1997.                
|        |                                                                                                                                                                                                                                                                                                                  
|10(h)   | First Amendment to Financing and Security Agreements dated October 6, 1997 by Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic and Bank of America and related promissory notes incorporated by reference to Exhibit 10 in the Company's Form 10-KSB for 1997.                       
|        |                                                                                                                                                                                                                                                                                                                  
|10(i)   | Second Amendment to Financing and Security Agreement, dated January 2, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America incorporated by reference to Exhibit 10 to the Company's Form 10-QSB for the quarter ended March 31, 1998.      
|        |                                                                                                                                                                                                                                                                                                                  
|10(j)   | Third Amendment to Financing and Security Agreement dated May 11, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form-10-10-QSB for the quarter ended March 31, 1998.       
|        |                                                                                                                                                                                                                                                                                                                  
|10(k)   | Fourth Amendment to Financing and Security Agreement dated May 26, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America incorporated by reference to Exhibit 10 to the Company's Form-10-K, dated March 16, 1999.                           
|        |                                                                                                                                                                                                                                                                                                                  
|10(l)   | Fifth Amendment to Financing and Security Agreement dated May 31, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form-10-K, dated March 16, 1999.                           
|        |                                                                                                                                                                                                                                                                                                                  
|10(m)   | Sixth Amendment to Financing and Security Agreement dated June 26, 1998, by and among Arguss Holdings, Inc., White Mountain Cable Construction Corp., Conceptronic, Inc. and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form 10-QSB for the quarter ended June 30, 1998.          
|        |                                                                                                                                                                                                                                                                                                                  
|10(n)   | Credit Agreement dated March 19, 1999 by and among Arguss Holdings, Inc., and Bank of America, incorporated by reference to Exhibit 10 to the Company's Form 10-Q for the quarter ended March 31, 1999.                                                                                                          
|        |                                                                                                                                                                                                                                                                                                                  
|10(o)   | Agreement and Plan of Merger dated September 4, 1998 by and between Underground Specialties, Inc., Arguss Holdings, Inc. and White Mountain Cable Construction Corp. incorporated by reference to Exhibit 10 to the Company's current report on Form 8-K dated September 4, 1998 and filed on September 18, 1998.
|        |                                                                                                                                                                                                                                                                                                                  
|10(p)   | First Amendment to Credit Agreement dated March 22, 2000 by and among Arguss Holdings, Inc. and Bank of America, incorporated by reference to exhibit 10 to the Company's Form 10-Q for the quarter ended March 31, 2000.                                                                                        
|        |                                                                                                                                                                                                                                                                                                                  
|10(q)   | Agreement and Plan of Merger dated May 26, 2000 by and between U.S. Communications and Arguss Communications, Inc., incorporated by reference to Exhibit 10 to the Company's form 8-K, dated June 9, 2000.                                                                                                       



Item 4.
Submission of Matters to a Vote of Security
Holders


The Company held its annual meeting of stockholders in Washington, D.C. on May 16, 2001. The following sets forth matters submitted to a vote of the stockholders at the annual meeting:

(a)     Seven members were elected to the Board of Directors, each to serve until the next annual meeting of the Company and until their respective successors have been elected and qualified. The following seven individuals were elected to the Board of Directors by the holders of common stock of the Company: Rainer H. Bosselmann, DeSoto S. Jordan, Jr., Daniel A. Levinson, Richard S. Perkins, Jr., Garry A. Prime, James W. Quinn and Peter L. Winslow.

Mr. Bosselmann was elected by a vote of 9,432,027 shares, with 2,396,751 votes withheld. Messrs. Jordan, Levinson, Perkins and Quinn were elected by a vote of 9,444,077 shares, with 2,384,701 votes withheld. Mr. Prime was elected by a vote of 9,434,327 shares, with 2,394,451 votes withheld. Mr. Winslow was elected by a vote of 9,189.081 shares, with 2,639,697 votes withheld.

(b)     The stockholders ratified the appointment of KPMG to audit the financial statements of the Company and its subsidiaries for the year ending December 31, 2001, by a vote of 11,809,350 shares of common stock, with 6,472 shares of common stock voting against and 12,956 shares of common stock abstaining.



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SIGNATURES



| |                |     | Arguss Communications, Inc.                                                                          
| | -------------- | --- | -----------------------------------------------------------------------------------------------------
| |                |     |                                                                                                      
| |                |     |                                                                                                      
| | August 3, 2001 | By: | \s\ Rainer H. BosselmannRainer H. Bosselmann
  Chief Executive Officer                               
| |                |    
| |                |    
| |                |     |                                                                                                      
| |                |     |                                                                                                      
| |                |     |                                                                                                      
| | August 3, 2001 | By: | \s\ Arthur F. TrudelArthur F. Trudel
  Principal Financial Officer and Principal
  Accounting Officer
| |                |    
| |                |    
| |                |     |                                                                                                      
| |                |     |                                                                                                      



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