ADC Provides Updated Guidance on Financial Results and Completes Sales of Business Unit and Product Lines.Business Editors/High Tech Writers MINNEAPOLIS--(BUSINESS WIRE)--Nov. 1, 2001 Sales Further Strengthen ADC's Financial Position ADC (1) See A/D converter. (2) (Apple Display Connector) A peripheral connector from Apple that combines digital video display, USB and power in one cable. (Nasdaq:ADCT ADCT Adaptive Discrete Cosine Transform , www.adc.com) today announced updated financial guidance for both the fourth quarter of 2001 and the fiscal year of 2002, and announced the completion of additional divestitures that serve to strengthen the company's financial position and further solidify ADC's strategic product focus. The announced divestitures support ADC's goal to refocus its product portfolio on its most strategic growth opportunities, including DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary , IP cable, software and optics backed by ADC's core connectivity and systems integration businesses. Guidance on Financial Results ADC is updating its guidance as a result of continued capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. declines among communications service providers. As previously announced, there is a high degree of forecast variability in the telecommunications industry related to the unknown direction and duration of depressed economic and market conditions. ADC expects fourth quarter sales for the period ended October 31, 2001 to be in the range of $380 - $400 million, versus previous estimates of $400 - $450 million, and pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to be in the range of a $0.07 to $0.08 loss, versus previous estimates of a $0.03 to $0.05 loss. ADC, however, expects to be free cash flow positive in the fourth quarter and sequentially improved from the third quarter of 2001. With communications service providers forecasting continued capital expenditure budget reductions for 2002, ADC now expects to achieve only modest sequential quarterly growth in fiscal year 2002, following a seasonal sequential quarterly decline in the first quarter of 2002, based on historical trends. However, based on current visibility into the year 2002 and ADC's aggressive cost reduction actions to date, ADC does expect that it will return to profitability in the latter part of fiscal year 2002. Pro forma results in 2001 exclude non-cash stock compensation expenses, non-recurring charges/credits and restructuring charges. As result of previously announced actions in the fourth quarter related to workforce reductions, management delayering Delayering is a process for principles-based corporate restructuring and cost cutting trademarked by the Boston Consulting Group. It is a cascading organization redesign that proceeds from the CEO (Layer 1) to the CEO's direct reports (Layer 2), and so on through all employees. and streamlining, fixed asset dispositions and nonstrategic product lines divestitures, ADC expects to take non-recurring and restructuring charges in amounts that have not yet been determined. "Though the telecom environment continues to be extremely challenging as our communications service provider customers further reduce their capital spending, we believe that ADC will be cash flow positive in 2002 and achieve profitability in the latter part of 2002," said Rick Roscitt, chairman, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of ADC. "We are aggressively working to achieve this goal by taking market share and growing our strategic businesses, while managing a lower cost structure." "We have transformed ADC from top to bottom to be a stronger, more agile and trusted partner for our customers, ensuring their success in delivering broadband communications," added Roscitt. "We are seeing encouraging signs as we capture new market share with strategic products like our Cuda 12000 IP Access Switch, Avidia Multiservice DSLAM (DSL Access Multiplexor) A central office (CO) device for ADSL service that intermixes voice traffic and DSL traffic onto a customer's DSL line. It also separates incoming phone and data signals and directs them onto the appropriate carrier's network. See DSL. , Singl.eView Convergent Billing system and the FastFlow Broadband Provisioning Manager, in addition to increasing market share in our established broadband connectivity and systems integration businesses. Our goal moving forward will be to continue these market share gains while maintaining our strong focus on cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. and reduction." "We are pleased with the results that our cost reduction actions have produced thus far and believe that our path to profitability and increased cash flow in 2002 is well on track," said Bob Switz, executive vice president and chief financial officer. "We have taken many important steps in 2001 to adjust to market conditions, including reducing our workforce by 40%, streamlining our management structure, reducing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by 40%, cutting capital expenditures by 60%, deactivating excess square footage by 36%, disposing fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → and divesting nonstrategic product lines. As a result, ADC has eliminated nearly all its debt, built a strong liquidity position and has fine-tuned its product offerings to better focus on those growth opportunities that best serve our customers and the deployment of broadband services." "Since ADC is on a fiscal year ending October 31, we realize we tend to lead the market with our timing," added Roscitt. "I want to be clear that we have the utmost confidence that the actions we have taken and are now completing to streamline ADC are working and will produce a stronger ADC as we move into 2002. Our strong liquidity position and positive cash flow expectations enable us to make sound decisions today to strengthen our future." ADC also announced the completed sales of one business unit and two product lines, the proceeds of which will be used to further strengthen ADC's financial position. ADC Sells Enhanced Services Business Unit ADC announced the completed sale of its Enhanced Services Business Unit to SS8 Networks, a San Jose-based manufacturer of next-generation IP signaling and service solutions for communications service providers. ADC's enhanced services products include SS7 signaling gateways, wireless messaging platforms, unified messaging Having access to e-mail, voice mail and faxes via a common computer application or by telephone. For example, unified messaging may send faxes and digitized voice mail to a mail server that turns them into e-mail attachments. portals, and CALEA CALEA Commission on Accreditation for Law Enforcement Agencies, Inc. (Fairfax, Virginia) CALEA Communications Assistance for Law Enforcement Act of 1994 CALEA Communication Assistance to Low Enforcement Act (Communications Assistance to Law Enforcement Act) compliance software. The deal includes approximately 385 people and facilities located in San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif. and Shelton, Conn. ADC Completes Sales of Additional Product Lines Also, ADC announced that it has completed the sale of its radio frequency (RF) filtration equipment product line to REMEC, Inc., a designer and manufacturer of high frequency subsystems used in the transmission of integrated voice, video and data traffic over wireless communications networks. The sale included approximately 600 employees in Finland. ADC will retain its holdings in tower top amplifiers and continues to sell a full line of connectivity, wireless coverage and extension systems, software and systems integration services into the wireless market. Finally, ADC completed the sale of its Denmark photonics operation, which manufactures Phase masks. Phase masks are used in the manufacture of optical components and subsystems. The sale includes ADC facilities in Denmark and approximately 70 people. ADC will continue its strategic photonics business, focusing on the manufacture of tunable lasers, pump lasers and other active and passive optical components. ADC will discuss its fourth quarter financial performance in its quarterly earnings conference call on Wednesday, November 28, 2001 at 5:00 p.m. EST. The conference call can be accessed by dialing 800.399.7506 for domestic callers and 706.634.2489 for international callers. About ADC ADC is The Broadband Company(TM). ADC tailors high-quality, custom solutions of network equipment, fiber optics fiber optics, transmission of digitized messages or information by light pulses along hair-thin glass fibers. Each fiber is surrounded by a cladding having a high index of refractance so that the light is internally reflected and travels the length of the fiber , software and systems integration services that enable communications service providers to deliver high-speed Internet, data, video and voice services to consumers and businesses worldwide. ADC (Nasdaq:ADCT; www.adc.com) has sales into nearly 100 countries and is included in the Standard & Poor's 500 Index and the Nasdaq 100 Index Nasdaq 100 Index A market-capitalization-weighted index of the largest and most active nonfinancial domestic and international issues listed on the Nasdaq Stock Market. . Learn more about ADC Telecommunications, Inc. at www.adc.com. Cautionary Statement Under the Private Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995 All forward looking statements contained herein, particularly those pertaining to ADC's expectations or future operating results, reflect management's current expectations or beliefs and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. ADC Telecommunications cautions readers that future actual results could differ materially from those in forward-looking statements depending on the outcome of certain factors. All such forward-looking statements are subject to certain risks and uncertainties, including, but not limited to, overall demand for ADC's products or services; the demand for particular products or services within the overall mix of products sold as our products and services have varying profit margins; the availability of materials to make products; changing market conditions and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. either within ADC's industry or generally within the economy; volatility in the stock market; new competition and technologies; increased costs associated with protecting intellectual property rights; the impact of customer financing activities; ADC's ability to successfully integrate the operations of acquired companies with ADC's historic operations; retention of key employees; fluctuations in ADC's operating results; pressures on the pricing of the products or services ADC offers; and other risks and uncertainties, including those identified in Exhibit 99-a to ADC's Report on Form 10-Q/A for the fiscal quarter ended April 30, 2001. ADC disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. |
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