ADC Reports Fourth Quarter 2003 Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Dec. 2, 2003 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 ): -- Net Sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $193 Million (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). 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 ) of Which 34% Were International Sales -- Broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). Infrastructure and Access Sales Increased 8% Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from 3Q03 -- EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.01 GAAP and $0.02 Pro Forma (Both Include Net $0.02 Benefit of Tax and Other Accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. ) -- Total Cash Provided by Operating Activities of $8 Million -- Total Cash and Marketable Securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has (Short- and Long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. ) Increased to $786 Million ADC (Nasdaq:ADCT, www.adc.com) today announced results for the fourth quarter ended October October: see month. 31, 2003 prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP) as summarized below for ADC and its operating segments, Broadband Infrastructure and Access (BIA BIA abbr. Bureau of Indian Affairs ) and Integrated Solutions (IS). "We are pleased to finish fiscal 2003 with fourth quarter sales above our expectations and positive fourth quarter results for both EPS and total cash provided by operating activities," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. E. Switz, 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. "As we enter fiscal 2004, we are focused on building long-term value by meeting and exceeding the needs and expectations of our global customers and aggressively executing our sales and profitability growth strategy." Both GAAP and pro forma results for the fourth quarter of fiscal 2003 include a net $0.02 per share benefit resulting from reduced income tax, legal and other operating accruals due to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. resolution of certain outstanding matters. These items were partially offset by increased expenses for warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. and receivable reserves.
GAAP Basis (dollars in millions, except per share amounts)
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2003 2003 2002
Fourth Third Fourth
ADC Results Quarter Quarter Quarter
----------- -------- -------- --------
Net sales $ 192.9 188.5 220.7
Percent outside U.S. 34.0% 35.9% 24.6%
Gross margin 38.8% 39.2% 20.3%
Operating loss $ (6.6) (14.7) (358.7)
Income (loss) before income taxes $ 3.9 (15.1) (381.8)
Net income (loss) $ 9.3 (15.1) (381.8)
Earnings (loss) per share $ 0.01 (0.02) (0.48)
Segment Results
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Net sales:
BIA $ 121.5 112.6 156.0
IS $ 71.4 75.9 64.7
Operating income (loss):
BIA $ (2.6) (5.4) (37.0)
IS $ 3.6 3.7 (6.0)
In addition to GAAP income statement results, ADC also presents pro forma income statement results prepared with certain adjustments as noted in this release. Due to the significance of ADC's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities from fiscal 2000 to 2003, management believes that a more meaningful comparison of fiscal 2003 results would exclude impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and certain non-operating gains/losses, as well as the results of product lines discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: or divested in fiscal 2002 in deriving de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. pro forma income statements for fiscal 2003 and historical periods. For an explanation of pro forma items excluded from GAAP income statement results, please refer to the "Pro Forma Items Excluded from GAAP Results" section of this release and review the attached supplementary schedules that reconcile GAAP results to pro forma results for the three- and 12-month periods ended October 31, 2003 and 2002 and the three-month period ended July July: see month. 31, 2003. Pro forma basis results, which reflect adjustments to all quarters related to the exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of impairment and restructuring charges and certain non-operating gains/losses, as well as the results of product lines that have been discontinued or divested in fiscal 2002, are summarized below for ADC and its operating segments.
Pro Forma Basis (dollars in millions, except per share amounts)
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2003 2003 2002
Fourth Third Fourth
ADC Results Quarter Quarter Quarter
----------- -------- -------- --------
Net sales $ 192.9 188.5 217.8
Gross margin 39.7% 39.2% 24.6%
Operating income (loss) $ 5.4 (1.2) (40.2)
Income (loss) before income taxes $ 10.7 (1.6) (51.8)
Net income (loss) $ 16.1 (1.6) (51.8)
Earnings (loss) per share $ 0.02 0.00 (0.06)
Segment Results
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Net sales:
BIA $ 121.5 112.6 153.1
IS $ 71.4 75.9 64.7
Operating income (loss):
BIA $ (0.9) (5.4) (27.4)
IS $ 3.6 3.7 (6.1)
Strong Financial Condition "With our cost-reduced business, we generated positive total cash provided by operating activities and increased our total cash and securities to $786 million," said Gokul Coordinates:
Certain ADC balance sheet and cash flow information on a GAAP basis and related statistics are summarized below.
Other GAAP Data & Related Statistics (dollars in millions)
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October July October
31, 31, 31,
Balance Sheet Data and Related Statistics 2003 2003 2002
----------------------------------------- ------- ------ -------
Cash and cash equivalents - unrestricted $ 720.0 651.6 278.9
Short-term marketable securities $ 26.7 64.0 0.5
Long-term marketable securities $ 19.5 31.6 -
Restricted cash $ 20.0 21.0 177.0
------- ------ -------
Total cash and securities $ 786.2 768.2 456.4
======= ====== =======
Restructuring accrual $ 33.4 40.0 124.2
Current ratio 3.8 3.7 1.7
Long-term notes payable $ 400.0 400.0 10.8
2003 2003 2002
Fourth Third Fourth
Cash Flow Data and Related Statistics Quarter Quarter Quarter
------------------------------------- -------- -------- --------
Total cash provided by (used in) operating
activities $ 8.4 16.6 (104.4)
Days sales outstanding 51.6 47.9 46.7
Inventory turns - annualized 6.8 6.0 7.4
Depreciation and amortization $ 12.8 12.9 21.6
Property and equipment additions, net of
disposals $ 2.0 49.4 (4.5)
In the fourth quarter of 2003, total cash provided by operating activities was $8 million primarily from net income. In the third quarter of 2003, total cash provided by operating activities was $17 million primarily from working capital reductions. In the fourth quarter of 2002, the $104 million of total cash used in operating activities was primarily from net losses. Total employees were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5,700 as of October 31, 2003 compared to approximately 5,800 as of July 31, 2003 and approximately 7,600 as of October 31, 2002. Recent Wins and Achievements ADC's wins and achievements in recent months are summarized below. Connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. ADC, Sumitomo Electric and Preformed Line Products (PLP (Presentation Level Protocol) A North American standard protocol for videotex. ) teamed together to develop and engineer a fiber-to-the-premise (FTTX (Fiber To The X) Refers to all the "fiber-to-the-wherever" technologies. See FTTC and FTTP. See also FTX. ) connectivity solution for use within major telecommunications service provider A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. networks. The alliance offers the collective products - augmented by the engineering, field, and manufacturing expertise - of the three market leaders to bring a customizable and flexible connectivity solution to telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. service providers. In the fiber solution developed specifically for FTTX applications, ADC delivers proven, market leading fiber connectivity equipment including hardened outdoor cabinets, fiber termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. storage and splicing splicing /splic·ing/ (spli´sing) 1. the attachment of individual DNA molecules to each other, as in the production of chimeric genes. 2. RNA s. , and fiber connectorization. Sumitomo Electric provides fiber cable including feeder feeder abbreviation for self-feeders. Used in feeding groups of animals at intervals of several days. Feed has to be dry and comminuted so that it will run down the spouts from the hopper into the troughs. , distribution and drop cable along with passive optical components all connectorized with ADC products. PLP provides the access terminals and splice closures needed in any FTTX deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. . Software ADC is the world's best known "retail billing" brand, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a new survey released by Heavy Reading, an independent market-research firm. The survey found that among all companies included in the category, ADC has the highest name recognition with 59.4 percent, and was the only billing supplier recognized by more than half of the respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. . ADC also scored high in terms of performance, quality and reliability. ADC's billing software is Singl.eView(TM), which is a single application framework for real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. revenue, transaction, billing and service management, regardless of business model or service type. It measures and monetizes any combination of service, asset or resource, and has a proven performance, scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it and reliability record from its origins in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market. Telecom New Zealand Telecom New Zealand (NZX: TEL ASX: TEL NYSE: NZT) is a Wellington, New Zealand-based telephone company and, through its subdivision Xtra, an internet service provider. It has been run as a publicly-traded private company since 1990. selected ADC's Singl.eView(TM) convergent con·ver·gence n. 1. The act, condition, quality, or fact of converging. 2. Mathematics The property or manner of approaching a limit, such as a point, line, function, or value. 3. billing platform for their next-generation billing solutions. Singl.eView provides real-time authorization The right or permission to use a system resource; the process of granting access. See access control. of voice, data, content and commerce services, creating a common, flexible, transactional framework across any network or service platform. Singl.eView eliminates the need for two separate billing systems for pre- pre- word element [L.], before (in time or space). pre- pref. 1. Earlier; before; prior to: prenatal. 2. and postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. accounts, and supports instantaneous in·stan·ta·ne·ous adj. 1. Occurring or completed without perceptible delay: Relief was instantaneous. 2. "pay now" transactions. It is the only commercially available platform that offers these various payment methods from one system. This allows end users to control these options through all available customer service channels, such as the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and directly through a mobile device. In addition to supporting various payment options, Singl.eView simplifies the financial and transactional support needed to provide consumers with next-generation wireless (including 2.5G/3G), wireline and cable broadband services See broadband and broadband service provider. . Using Singl.eView, service providers can seamlessly manage the complex relationships with content providers that result from the convergence convergence Mathematical property of infinite series, integrals on unbounded regions, and certain sequences of numbers. An infinite series is convergent if the sum of its terms is finite. of voice, video, data and content services. It gives the service provider a single view of a customer regardless of services used or payment method. Singl.eView dynamic transaction management software is now in live operation at Philippine Long Distance Telephone Company The Philippine Long Distance Telephone Company (PSE: TEL, NYSE: PHI), commonly known as PLDT, is the largest telecommunications company in the Philippines. History (PLDT PLDT Philippine Long Distance Telephone Company ). PLDT procured ADC's Singl.eView to manage convergent billing and rating for its corporate fixed line and data services accounts. PLDT is the Philippines' largest supplier of domestic and international telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. . Its network includes approximately 80 percent of all telecommunications lines in the country. Iowa Telecom Iowa Telecommunications Services, Inc., commonly known as Iowa Telecom, provides local telephone service to former GTE customers in Iowa. Iowa Telecom was founded in 1999 as a partnership between Iowa Network Services and ING Barings. is installing ADC's Singl.eView as the billing application for its local telephone, long distance, Internet and other advanced telecommunications services. Iowa Telecom serves 500,000 people in more than 400 communities in Iowa and is the state's second largest telephone company. Iowa Telecom selected Singl.eView as a replacement to a legacy billing system following a competitive review. Inmarsat Inmarsat: see Communications Satellite Corporation; communications satellite. (Inmarsat plc, London, www.inmarsat.com) A satellite communications company that provides voice and data services to the maritime, transportation and aeronautics markets as well Limited selected ADC's Singl.eView(TM) dynamic transaction management software for its new Broadband Global Area Network A Broadband Global Area Network or BGAN for short, is a form of Satellite internet and telephony provided by INMARSAT. The system uses two geostationary satellites with additional satellites planned to be launched in 2007/2008 to increase coverage to global. (BGAN (Broadband Global Area Network) A mobile satellite network service launched in 2005 from Inmarsat plc that allows users around the world to connect to the Internet or a corporate network. ) service, which follows the successful Singl.eView installation for Inmarsat's current Regional BGAN service. Based in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , Inmarsat provides voice and multimedia mobile communications services through its nine geostationary Aligned with the earth. Refers to satellites (GEOs) that travel at the same rotational speed as the earth (they are geosynchronous) and are always the same distance from the earth. See GEO. satellites to users involved in ground, air and sea transportation; communications; health care; local and national government; and international peacekeeping peace·keep·ing adj. Of or relating to the preservation of peace, especially the supervision by international forces of a truce between hostile nations. peace . Inmarsat is currently using Singl.eView for rating and billing for its Regional BGAN service, which offers high speed data connectivity in 99 countries via a secure, shared 144kbit/s channel. In addition to rating and billing, Inmarsat is using Singl.eView to manage customer hierarchies. T-Mobile Austria Austria (ô`strēə), Ger. Österreich [eastern march], officially Republic of Austria, federal republic (2005 est. pop. 8,185,000), 32,374 sq mi (83,849 sq km), central Europe. selected ADC's Metrica(R) performance management software for its Universal Mobile Telecommunications Service (UMTS (Universal Mobile Telecommunications System) The GSM implementation of the 3G wireless phone system. Part of IMT-2000, UMTS provides service in the 2 GHz band and offers global roaming and personalized features. ). T-Mobile Austria will standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. Metrica across all its wireless networks as the company launches new advanced third-generation (3G) services, and currently uses Metrica for its GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. and General Packet Radio Service (GPRS (General Packet Radio Service) The first high-speed digital data service provided by cellular carriers that used the GSM technology. GPRS added a packet-switched channel to GSM, which uses dedicated, circuit-switched channels for voice conversations. ) networks. T-Mobile Austria serves more than two million wireless customers. Metrica provides T-Mobile Austria with a consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: view of key performance indicators Key Performance Indicators (KPI) are financial and non-financial metrics used to quantify objectives to reflect strategic performance of an organization. KPIs are used in Business Intelligence to assess the present state of the business and to prescribe a course of action. , giving the service provider comprehensive visibility of network quality and utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be . With this information, T-Mobile can run its networks at maximum efficiency, maintaining its highly competitive service quality while dynamically deploying UMTS capacity to match the growth in demand. It also provides the tools needed to help detect both long-term and immediate problems and distinguish between service-affecting and non-service-affecting network-quality issues. IP Cable Belgian Belgian having some relationship to Belgium. Belgian barge dog see schipperke. Belgian black pied cattle black, Belgian dairy cattle. Belgian blue dual-purpose cattle; blue, white or blue roan. cable operator IDEATEL selected ADC's Cuda(TM) Cable Modem Termination Systems A cable modem termination system or CMTS is equipment typically found in a cable company's headend, or at cable company hubsite and is used to provide high speed data services, such as cable internet or Voice over IP, to cable subscribers. (CMTS (Cable Modem Termination System) A computerized device that enables cable modems to send and receive packets over the Internet. It inserts IP packets from the Internet into MPEG frames and transmits them to the cable modems via an RF signal. ) for its network in the regions of Mons Mons (môNs), Du. Bergen, commune (1991 pop. 91,726), capital of Hainaut prov., SW Belgium, near the French border. Located at the junction of the Canal du Centre and the Condé-Mons Canal, it is the processing and shipping center of and the Center. IDEATEL has also selected ADC's FastFlow(R) Broadband Provisioning Manager (BPM (Business Process Management) A structured approach that models an enterprise's human and machine tasks and the interactions between them as processes. BPM software provides users with a dashboard interface that offers a high-level view of the operation that typically ) for the service activation activation /ac·ti·va·tion/ (ak?ti-va´shun) 1. the act or process of rendering active. 2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme. 3. and configuration of the Cuda systems in the network. ADC's Cuda is the world's most widely deployed Next-Generation CMTS platform and provides multiple system operators (MSOs) with a carrier-class foundation for advanced services such as tiered tier 1 n. 1. One of a series of rows placed one above another: a stadium with four tiers of seats. 2. A rank or class. tr. & intr.v. data and IP voice. PacketCable PacketCable is a project started by CableLabs. The purpose of the organization is to define standards for the Cable TV industry. CableLabs leads this initiative for interoperable interface specifications in order to deliver real-time multimedia services over two-way cable (TM) and DOCSIS (Data Over Cable Service Interface Specification) A cable modem standard from the CableLabs research consortium (www.cablelabs.com), which provides equipment certification for interoperability. (R)/EuroDOCSIS(R) 1.0, 1.1 qualified and DOCSIS/EuroDOCSIS 2.0 compliant
a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. Quality of Service (QoS (Quality Of Service) A defined measure of performance in a data communications system. For example, to ensure that real time voice and video are delivered without annoying blips, a traffic contract is negotiated between the customer and network provider that ), robust routing capabilities and extremely high availability Also called "RAS" (reliability, availability, serviceability) or "fault resilient," it refers to a multiprocessing system that can quickly recover from a failure. There may be a minute or two of downtime while one system switches over to another, but processing will continue. and comprehensive system redundancy Having a secondary peripheral, computer system or network device that takes over when the primary unit fails. See fault tolerant, mirroring, RAID, hot standby and backup types. 1. . FastFlow BPM is a carrier-class provisioning solution that automates the configuration and activation of cable modems cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. and media terminal adapters See ISDN terminal adapter. terminal adapter - Terminal Adaptor (MTAs). FastFlow BPM has provisioned approximately 2.6 million cable modems in the U.S. - more than 20% of the cable modems currently in use. Millennium Digital Media Millennium Digital Media, based in St. Louis, Missouri, is a cable company. Founded in 1997, it provides service to parts of Maryland, Michigan, Washington, and Oregon. Based on pending industry acquisitions, Millennium is currently ranked among the twenty-five largest cable has purchased a Cuda 12000 Next-Generation CMTS for the expansion of its CableSpeed(SM) high-speed Internet See broadband. service to subscribers in its Northwest region
The Northwest Region . Millennium Digital Media provides services to more than 150,000 residential and business customers in Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. , Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). and Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). , and is ranked among the top 25 MSOs (multiple system operators) in the U.S. In addition to the Cuda 12000, Millennium Digital Media has also deployed ADC's FastFlow BPM software in its Washington region. Wireless ADC announced its role in a successful field trial involving the world's first all-software GSM base station system in a commercial cellular network. ADC's Digivance(R) Long-Range long-range adj. 1. Of, suitable for, or reaching long distances: long-range missiles. 2. Requiring or involving an extended span of time: long-range planning. Coverage Solution (LRCS LRCS Long-Range Coverage Solution LRCS League of Red Cross Societies LRCS Licentiate of the Royal College of Surgeons (UK) ) is paired with Vanu, Inc.'s software to provide a software radio base station that serves Mid-Tex Cellular's network. ADC utilizes an all digital card to optically interface the software platform to the Digivance RF head, allowing Mid-Tex to enhance its network by cost-effectively extending coverage and distributing capacity where it is needed. Wi-Fi (WIreless-FIdelity) A logo from the Wi-Fi Alliance that certifies network devices comply with the IEEE 802.11 wireless Ethernet standards. In the early 2000s, Wi-Fi/802.11 became widely used (initially 802.11b, then 802. ADC and Colubris Networks signed an original equipment manufacturer (OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and ) agreement that enables ADC to offer a complete span-powered Wi-Fi hotspot (1) The geographic boundary covered by a Wi-Fi (802.11) wireless access point. Typically set up for Internet access, anyone entering the hotspot with a Wi-Fi-based laptop can connect to the Internet, providing the access point is configured to advertise its presence and solution for wireline telecommunications carriers. By supporting Wi-Fi and 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 in a single device, carriers can fully leverage the value of their copper infrastructure and network assets to extend wireline broadband into the wireless world. This industry-first solution integrates Colubris Networks' intelligent Wi-Fi access point technology into ADC's LoopStar(TM) span-powered DSL equipment. The LoopStar's span-powering feature allows the access point to draw power from the DSL connection DSL connection n (Comput) → DSL-Anschluss m , enabling carriers to install the solution where it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have needed. ILECs are able to reduce costs and installation time since there is no need to negotiate power access, and Wi-Fi equipment location can be optimized for maximum RF coverage. Two Regional Bell Operating Companies The Regional Bell Operating Companies (RBOC) are the result of the U.S. Department of Justice antitrust suit against American Telephone & Telegraph. History expect to begin lab trials of the span-powered Wi-Fi solution later this year. Outlook ADC currently anticipates that sales in the first quarter of 2004, subject to any product portfolio changes, will be around $170-$180 million and related pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share will be around a $0.01 loss to breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations . ADC is not able to provide an outlook for GAAP earnings per share at this time for the reasons explained below. ADC's first quarter is historically lower than its previous fourth quarter as a result of many of its customers being on calendar-year budget cycles, a lower number of working days due to the large number of holidays in this quarter and a general slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in activity among its customers during this period. ADC cautions investors that forecasting in these soft and changing industry conditions combined with economic, geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. and other uncertainties remains extremely difficult and subject to change, especially with respect to the timing of closing and deploying contracts that can delay the start of new sales sources. Sales by operating segment as a percent of total ADC sales are expected to be in the ranges of 60%-65% for BIA and 35%-40% for IS. As previously announced, ADC is currently considering strategic choices to add and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. subtract A relational DBMS operation that generates a third file from all the records in one file that are not in a second file. product lines in its portfolio with the goal of growing profitably in more focused areas and being a leader in each market we serve. As previously announced, ADC will no longer provide tax benefits for pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta losses since it has fully utilized its carryback carryback n. in taxation accounting, using a current tax year's deductions, business losses or credits to refigure and amend a previously filed tax return to reduce the tax liability. (See: carryover) benefits with its fiscal 2002 tax loss. Starting in the fourth quarter of 2002, the tax benefits of ADC's pre-tax losses have been added to its deferred tax assets with an offsetting valuation reserve. As of October 31, 2003, ADC had a total of $751 million in deferred tax assets that have been offset by a full valuation reserve and as a result have been shown on the balance sheet at zero. As it generates pre-tax income in future periods, ADC does not currently expect to record significant income tax expense until either its deferred tax assets are fully utilized to reduce future income tax liabilities or the value of its deferred tax assets are restored on the balance sheet. Most of the deferred tax assets are not expected to expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. until 2022. In the fourth quarter of 2003, ADC had an income tax benefit of $5 million primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. income tax liabilities resulting from the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of Federal, state and foreign income tax audits. Pro forma results in this outlook exclude impairment and restructuring charges and certain non-operating gains/losses that may be incurred if ADC takes actions designed to further lower its breakeven point or restructure its operations. ADC is unable to provide an outlook for earnings per share on a GAAP basis at this time as ADC may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. such additional impairment and restructuring charges and certain non-operating gains/losses in future fiscal quarters. The amount of any such additional charges is uncertain and will depend on many factors including the evolving outlook for industry conditions and ADC's businesses. If such charges are incurred they could result in a significant difference between GAAP and pro forma earnings per share. Review of Operating Segments The GAAP and pro forma sales results of ADC's operating segments are summarized above. Commentary on the changes in these results follows. Broadband Infrastructure and Access On a quarterly sequential One after the other in some consecutive order such as by name or number. basis from the third quarter of 2003, BIA sales were 8% higher primarily as result of higher sales of connectivity, wireless and wireline systems partially offset by lower sales of cable telephony/data systems. On a sequential quarter basis, fiber connectivity system sales System sales is a business term used in the franchising industry. Franchisors provide supplies, marketing and administration services to franchisees in return for a part of the franchisees' revenues. Some franchisors also operate some outlets directly. have increased for four quarters in a row and wireless systems sales have increased for three quarters in a row. Comparing fourth quarters on a year-over-year basis, lower BIA sales were primarily a result of lower sales of wireline and cable telephony/data systems partially offset by higher sales in the connectivity and wireless systems. Sales of both connectivity and wireless systems were higher on a year-over-year basis. Integrated Solutions On a quarterly sequential basis from the third quarter of 2003, IS sales decreased on lower software sales partially offset by higher sales for the systems integration services. On a sequential quarter basis, systems integration sales have increased for three quarters in a row. Comparing fourth quarters on a year-over-year basis, 2003 sales were higher for both software systems and systems integration services. Pro Forma Items Excluded from GAAP Results Pro forma income statement results in both fiscal 2003 and 2002 exclude impairment and restructuring charges and certain non-operating gains/losses. To provide a comparable basis for measuring the results of ADC in fiscal 2003, pro forma results in fiscal 2002 also exclude from all quarters the financial results of product lines discontinued or divested in fiscal 2002. In deriving pro forma results for the fourth quarter of 2003, ADC excluded charges of $7 million ($0.01 per share). These charges were primarily related to facilities consolidations as a result of restructuring partially offset by gains from sales of divested assets and investments. In deriving pro forma results for the third quarter of 2003, ADC excluded restructuring charges of $14 million ($0.02 per share). These charges were primarily related to employee reductions and facilities consolidations. In deriving pro forma results for the fourth quarter of 2002, ADC excluded sales of $3 million and a net loss of $9 million ($0.01 loss per share) related to product lines that were discontinued or divested prior to the fourth quarter of 2002. ADC also excluded charges of $321 million ($0.40 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) of which $264 million were for non-cash items. These charges were comprised of: -- Restructuring charges of $309 million ($0.38 per share) primarily related to employee reductions, fixed-asset and goodwill impairments, and facilities consolidation; and -- Nonoperating net loss of $12 million ($0.02 per share) primarily related to sales and impairments of assets and investments. Today's Earnings Conference Call And Webcast at 5:00 p.m. Eastern ADC will discuss its fourth quarter 2003 results and current outlook on a conference call scheduled today, December December: see month. 2, at 5:00 p.m. Eastern time. The conference call can be accessed by domestic callers at (800) 399-7506 and by international callers at (706) 634-2489 or on the Internet at www.adc.com/investor, by clicking on News & Communications, then clicking on Webcasts. Starting today at 6:30 p.m. Eastern time, the replay of the call can be accessed until 11:00 p.m. Eastern time on December 9 by domestic callers at (800) 642-1687 and by international callers at (706) 645-9291 (conference ID number is 3705948) or on the Internet at www.adc.com/investor, by clicking on News & Communications, then clicking on Webcasts. About ADC ADC is The Broadband Company(TM). ADC offers high-quality, value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: solutions of network equipment, software and systems integration services that enable communications service providers A Communications Service Provider or CSP is a company that transports information electronically. The term encompasses public and private companies in the wireline, wireless, Internet, cable, satellite, and managed services businesses. to deliver high-speed Internet, data, video and voice services to consumers and businesses worldwide. ADC (Nasdaq:ADCT) has sales into more than 100 countries. Learn more about ADC Telecommunications ADC Telecommunications (NASDAQ: ADCT) is a communications company located in Eden Prairie, Minnesota, a southwest suburb of Minneapolis. History In 1935, Ralph Allison founded ADC Telecommunications in the basement of his south Minneapolis home, inventing ADC's very , Inc. at www.adc.com. Cautionary Statement under 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 All forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. contained herein, particularly those pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to ADC's expectations or future operating results, reflect management's current expectations or beliefs as of the date of such statements 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 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, significant difficulties in forecasting sales and market trends; uncertainties regarding the level of 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. by telecommunications service providers, as the majority of ADC's sales are derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from these companies; the 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; 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; ADC's ability to complete our restructuring initiative and streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. our operations successfully; the impact of actions we may take as a result of our current portfolio review cycle, which may include business acquisitions or divestitures; ADC's ability to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose excess assets on a timely and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. basis; new competition and technologies; increased costs associated with protecting intellectual property rights; the retention of key employees; pressures on the pricing of the products or services ADC offers; performance of contract manufacturers used by ADC to make certain products; possible consolidation among communications service providers; the availability of materials to make products; variations in the value of assets held or used by ADC in the operation of its business and other risks and uncertainties, including those identified in Exhibit 99-a to ADC's Report on Form 10-Q Form 10-Q See 10-Q. for the fiscal quarter ended April 30, 2003. 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.
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS--UNAUDITED
(In millions)
October October
2003 2002
--------- ---------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 720.0 $ 278.9
Available-for-sale securities 26.7 0.5
Accounts receivable, net 110.6 114.6
Unbilled revenue 30.6 25.8
Inventories, net 69.5 94.9
Prepaid income tax -- 126.6
Prepaid and other current assets 48.6 44.5
--------- ---------
Total current assets 1,006.0 685.8
PROPERTY AND EQUIPMENT, net 192.3 206.8
ASSETS HELD FOR SALE 25.1 20.0
RESTRICTED CASH 20.0 177.0
LONG-TERM MARKETABLE SECURITIES 19.5 --
OTHER ASSETS 34.0 54.6
--------- ---------
TOTAL ASSETS $1,296.9 $1,144.2
========= =========
LIABILITIES AND SHAREOWNERS' INVESTMENT
---------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 49.3 $ 73.0
Accrued compensation and benefits 54.9 74.1
Other accrued liabilities 119.6 110.8
Restructuring accrual 33.4 124.2
Notes payable 8.3 15.7
--------- ---------
Total current liabilities 265.5 397.8
LONG-TERM NOTES PAYABLE 400.0 10.8
OTHER LONG-TERM LIABILITIES 3.7 3.4
--------- ---------
Total liabilities 669.2 412.0
SHAREOWNERS' INVESTMENT
(806.6 and 799.6 shares outstanding,
respectively) 627.7 732.2
--------- ---------
TOTAL LIABILITIES AND SHAREOWNERS' INVESTMENT $1,296.9 $1,144.2
========= =========
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS--UNAUDITED
GAAP RESULTS
(In millions, except per share amounts)
Three Months Ended The Year Ended
October 31, October 31,
------------------- ---------------------
2003 2002 2003 2002
------- -------- ------- ----------
NET SALES $192.9 $220.7 $773.2 $1,047.7
COST OF PRODUCT SOLD 118.1 175.8 481.8 801.2
------- -------- ------- ----------
GROSS PROFIT 74.8 44.9 291.4 246.5
------- -------- ------- ----------
GROSS MARGIN 38.8% 20.3% 37.7% 23.5%
EXPENSES:
Research and
development 23.5 35.4 108.6 182.8
Selling and
administration 47.6 59.3 222.1 374.0
Impairment charges 0.8 169.5 15.6 348.3
Special charges 9.5 139.4 41.8 209.1
In process research
and development -- -- -- 10.5
------- -------- ------- ----------
Total expenses 81.4 403.6 388.1 1,124.7
------- -------- ------- ----------
As a Percentage
of Net Sales 42.2% 182.9% 50.2% 107.3%
OPERATING LOSS (6.6) (358.7) (96.7) (878.2)
OPERATING MARGIN (3.4%) (162.5%) (12.5%) (83.8%)
OTHER INCOME
(EXPENSE), NET:
Interest 2.8 3.1 6.3 8.4
Other 7.7 (26.2) 8.3 (12.4)
------- -------- ------- ----------
LOSS BEFORE INCOME
TAXES 3.9 (381.8) (82.1) (882.2)
BENEFIT FOR INCOME
TAXES (5.4) -- (5.4) 262.8
------- -------- ------- ----------
NET LOSS $9.3 (a) $(381.8)(b) $(76.7)(a) $(1,145.0)(b)
======= ======== ======= ==========
NET MARGIN 4.8% (173.0%) (9.9%) (109.3%)
AVERAGE COMMON SHARES
OUTSTANDING - BASIC 805.4 797.6 803.4 795.6
======= ======== ======= ==========
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 808.5 797.6 803.4 795.6
======= ======== ======= ==========
EARNINGS (LOSS) PER
SHARE - BASIC $0.01 (a) $(0.48)(b) $(0.10)(a) $(1.44)(b)
======= ======== ======= ==========
EARNINGS (LOSS) PER
SHARE - DILUTED $0.01 (a) $(0.48)(b) $(0.10)(a) $(1.44)(b)
======= ======== ======= ==========
(a) Excluding $9.5 million and $41.8 million restructuring charges;
$0.8 million and $15.6 million impairment charges; $(1.7) million and
$(4.7) million loss for inventory restructuring; $0.0 million and $1.5
million loss related to net sales restructuring; $0.0 million and $0.2
million loss for miscellaneous operating activities; $1.7 million and
$3.8 million non-operating gain on sale of investments; $1.4 million
and $(1.4) million non-operating net gain (loss) related to the sale
of divested product lines; $2.3 million and $2.3 million non-operating
gain related to other divested activities; $0.0 and $0.3 million
non-operating loss for sale-leaseback transaction; $0.0 and $2.0
million non-operating loss for investment write-down; and $(0.2)
million and $2.0 million non-operating (loss) gain for miscellaneous
activities; net income (loss) would have been $16.1 million and
$(20.3) million for the three and twelve months ended October 31,
2003, respectively. On the same basis, basic and diluted EPS would
have been $0.02 and $(0.03) for the three and twelve months ended
October 31, 2003, respectively.
(b) Excluding $9.7 million and $102.6 million net loss for product
lines divested or discontinued prior to 2003; $139.4 million and
$219.6 million restructuring and in-process research and development
charges; $169.5 million and $348.3 million impairment charges; $4.5
million and $5.7 million reversal of selling and administrative costs;
$4.4 million and $18.9 million related to restructuring of inventory;
non-operating gain of $0.0 million and $17.0 million, net-of-tax,
related to a patent infringement settlement; $1.3 million and $42.6
million, net-of-tax, non-operating gain on investment sale; $7.0
million and $34.2 million non-operating loss write-down of
investments; and $0.6 million and $(1.2) million non-operating gain
(loss) adjustment for product lines divested in fiscal 2001; $5.2
million and $7.2 million, net-of-tax, for loss on sale-leaseback
transactions; $(1.2) million loss and $10 million gain for
miscellaneous non-operating activities and $0.0 million and $328.8
million charges related to deferred tax assets and tax benefit
adjustments due to tax law changes, net loss would have been $(51.8)
million and $(159.5) million and accordingly, basic and diluted EPS
would have been $(0.06) and $(0.20) for the three months and full year
ended October 31, 2002.
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW - UNAUDITED
($ in Millions)
Three Months Twelve Months
Ended Ended
October 31, October 31,
2003 2002 2003 2002
------- -------- ------- ----------
Cash Flows from Operating
Activities:
Net income (loss) $9.3 $(381.8) $(76.7) $(1,145.0)
Adjustments:
Write-off purchased IPR&D -- -- -- 10.5
Inventory and fixed asset
write-offs 5.4 174.0 22.8 330.6
Depreciation and amortization 12.8 21.6 59.2 104.7
Change in bad debt reserves 2.0 3.1 3.7 26.4
Change in inventory reserves 3.1 20.7 2.9 49.7
Non-cash stock compensation (1.1) 3.5 4.4 14.3
Change in deferred income
taxes -- 24.0 -- 498.1
Goodwill write-downs 0.8 -- 0.8 36.6
Investment impairments -- 11.0 -- 50.9
Gain on sale of investments (1.7) (1.3) (3.8) (67.8)
Loss on sale of
business/product lines (1.4) 1.9 1.4 6.7
Loss (Gain) on sale of fixed
assets and sale leasebacks (0.5) 6.6 1.0 14.8
Other -- (0.1) (1.0) (0.1)
Changes in assets &
liabilities, net of
acquisitions
Accounts receivable (9.2) 33.9 6.2 160.8
Inventories 3.6 43.4 19.5 104.3
Prepaid income taxes and
other assets (4.4) 4.8 149.9 73.9
Accounts payable 2.5 (7.9) (31.3) (88.1)
Accrued liabilities (12.8) (61.8) (120.1) (120.8)
------- -------- ------- ----------
Total cash provided (used)
by operating activities 8.4 (104.4) 38.9 60.5
Cash Flows from Investing
Activities:
Acquisitions, net of cash
acquired -- 0.1 -- (4.2)
Divestitures, net of cash
disposed 1.4 1.2 1.9 2.3
Property and equipment
additions, net of disposals (2.0) 4.5 (67.6) (25.6)
Decrease (Increase) in
restricted cash 1.0 99.5 157.0 (177.0)
Short-term investments (22.1) (0.1) (22.0) 68.6
Long-term investments (16.8) 5.3 (13.1) 2.3
------- -------- ------- ----------
Total cash provided (used)
by investing activities (38.5) 110.5 56.2 (133.6)
Cash Flows from Financing
Activities:
Decrease in debt -- (1.8) 371.5 (5.9)
Purchase of call spread option -- -- (34.5) --
Common stock issued 5.4 2.6 8.2 9.1
------- -------- ------- ----------
Total cash provided (used)
by financing activities 5.4 0.8 345.2 3.2
Effect of exchange rate on cash 1.0 0.3 0.8 0.2
------- -------- ------- ----------
Increase (Decrease) in cash and
cash equivalents (23.7) 7.2 441.1 (69.7)
Cash and cash equivalents,
beginning of period 743.7 271.7 278.9 348.6
------- -------- ------- ----------
Cash and cash equivalents, end of
period $720.0 $278.9 $720.0 $278.9
======= ======== ======= ==========
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
RECONCILIATION OF GAAP RESULTS TO PRO FORMA RESULTS
(In millions, except per share amounts)
For the Three Months Ended
October 31, 2003
Pro
Restructuring forma
GAAP and Other Results
Results Charges (a) (a)
NET SALES $192.9 $-- $192.9
COST OF PRODUCT SOLD 118.1 (1.7) 116.4
-------- ------------- --------
GROSS PROFIT 74.8 1.7 76.5
-------- ------------- --------
GROSS MARGIN 38.8% -- 39.7%
EXPENSES:
Research and development 23.5 -- 23.5
Selling and administration 47.6 -- 47.6
Impairment charges 0.8 (0.8) 0.0
Special charges 9.5 (9.5) (0.0)
-------- ------------- --------
Total expenses 81.4 (10.3) 71.1
-------- ------------- --------
As a Percentage of Net Sales 42.2% -- 36.9%
OPERATING INCOME (LOSS) (6.6) 12.0 5.4
OPERATING MARGIN (3.4%) -- 2.8%
OTHER INCOME (EXPENSE), NET:
Interest 2.8 -- 2.8
Other 7.7 (5.2) 2.5
-------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES 3.9 6.8 10.7
PROVISION (BENEFIT) FOR INCOME TAXES (5.4) -- (5.4)
-------- ------------- --------
NET INCOME $9.3 $6.8 $16.1
======== ============= ========
NET MARGIN 4.8% -- 8.3%
AVERAGE COMMON SHARES OUTSTANDING -
BASIC 805.4 805.4 805.4
======== ============= ========
EARNINGS (LOSS) PER SHARE - BASIC $0.01 $0.01 $0.02
======== ============= ========
AVERAGE COMMON SHARES OUTSTANDING -
DILUTED 808.5 808.5 808.5
======== ============= ========
EARNINGS (LOSS) PER SHARE - DILUTED $0.01 $0.01 $0.02
======== ============= ========
For the Three Months Ended
October 31, 2002
Pro
Restructuring Results from forma
GAAP and Other Divestitures Results
Results Charges (b) (b) (b)
NET SALES $220.7 $-- $(2.9) $217.8
COST OF PRODUCT SOLD 175.8 (4.4) (7.2) 164.2
-------- ------------- ------------- --------
GROSS PROFIT 44.9 4.4 4.3 53.6
-------- ------------- ------------- --------
GROSS MARGIN 20.3% -- -- 24.6%
EXPENSES:
Research and
development 35.4 -- (3.5) 31.9
Selling and
administration 59.3 4.5 (1.9) 61.9
Impairment charges 169.5 (169.5) -- --
Special charges 139.4 (139.4) -- --
-------- ------------- ------------- --------
Total expenses 403.6 (304.4) (5.4) 93.8
-------- ------------- ------------- --------
As a Percentage of
Net Sales 182.9% -- -- 43.1%
OPERATING INCOME (LOSS) (358.7) 308.8 9.7 (40.2)
OPERATING MARGIN (162.5%) -- -- (18.5%)
OTHER INCOME (EXPENSE),
NET:
Interest 3.1 -- -- 3.1
Other (26.2) 12.1 (0.6) (14.7)
-------- ------------- ----------------------
INCOME (LOSS) BEFORE
INCOME TAXES (381.8) 320.9 9.1 (51.8)
PROVISION (BENEFIT) FOR
INCOME TAXES -- -- -- --
-------- ------------- ------------- --------
NET INCOME $(381.8) $320.9 $9.1 $(51.8)
======== ============= ============= ========
NET MARGIN (173.0%) -- -- (23.8%)
AVERAGE COMMON SHARES
OUTSTANDING - BASIC 797.6 797.6 797.6 797.6
======== ============= ============= ========
EARNINGS (LOSS) PER
SHARE - BASIC $(0.48) $0.40 $0.01 $(0.06)
======== ============= ============= ========
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 797.6 797.6 797.6 797.6
======== ============= ============= ========
EARNINGS (LOSS) PER
SHARE - DILUTED $(0.48) $0.40 $0.01 $(0.06)
======== ============= ============= ========
(a) Excluding $9.5 million restructuring charges; $0.8 million
impairment charges; $1.7 million loss for inventory restructuring;
$1.7 million non-operating gain on sale of investments; $1.4 million
non-operating net gain related to sale of divested product lines; $2.3
million non-operating gain related to other divested activities; and
$0.2 million loss for non-operating miscellaneous activities; net
income would have been $16.1 million for the three months ended
October 31, 2003, respectively. On the same basis, basic and diluted
EPS would have been $0.02 for the three months ended October 31, 2003.
(b) Excluding $9.7 million, net loss for product lines divested or
discontinued prior to 2003; $139.4 million restructuring and
in-process research and development charges; $169.5 million impairment
charges; $4.5 million reversal of selling and administrative
restructuring costs; $4.4 million related to restructuring of
inventory; $1.3 million, net-of-tax, non-operating gain on investment
sale; $7.0 million non-operating loss on write-down of investments;
$0.6 million, net-of-tax, non-operating gain adjustment for product
lines divested in fiscal 2001; $5.3 million, net-of-tax, for loss on
sale-leaseback transactions; and $1.1 million loss for miscellaneous
non-operating activities, net loss would have been $(51.8) million and
accordingly, basic and diluted EPS would have been $(0.06) for the
three months ended October 31, 2002.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
RECONCILIATION OF GAAP RESULTS TO PRO FORMA RESULTS
(In millions, except per share amounts)
For the Three Months Ended
October 31, 2003
Pro
Restructuring forma
GAAP and Other Results
Results Charges (a) (a)
NET SALES $192.9 $-- $192.9
COST OF PRODUCT SOLD 118.1 (1.7) 116.4
-------- ------------- --------
GROSS PROFIT 74.8 1.7 76.5
-------- ------------- --------
GROSS MARGIN 38.8% -- 39.7%
EXPENSES:
Research and development 23.5 -- 23.5
Selling and administration 47.6 -- 47.6
Impairment charges 0.8 (0.8) --
Special charges 9.5 (9.5) --
-------- ------------- --------
Total Expenses 81.4 (10.3) 71.1
-------- ------------- --------
As a Percentage of Net Sales 42.2% -- 36.9%
OPERATING INCOME (LOSS) (6.6) 12.0 5.4
OPERATING MARGIN (3.4%) -- 2.8%
OTHER INCOME (EXPENSE), NET:
Interest 2.8 -- 2.8
Other 7.7 (5.2) 2.5
-------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES 3.9 6.8 10.7
PROVISION (BENEFIT) FOR INCOME TAXES (5.4) -- (5.4)
-------- ------------- --------
NET INCOME $9.3 $6.8 $16.1
======== ============= ========
NET MARGIN 4.8% -- 8.3%
AVERAGE COMMON SHARES OUTSTANDING -
BASIC 805.4 805.4 805.4
======== ============= ========
EARNINGS (LOSS) PER SHARE - BASIC $0.01 $0.01 $0.02
======== ============= ========
AVERAGE COMMON SHARES OUTSTANDING -
DILUTED 808.5 808.5 808.5
======== ============= ========
EARNINGS (LOSS) PER SHARE - DILUTED $0.01 $0.01 $0.02
======== ============= ========
For the Three Months Ended
July 31, 2003
Pro
Restructuring forma
GAAP and Other Results
Results Charges (b) (b)
NET SALES $188.5 $-- $188.5
COST OF PRODUCT SOLD 114.7 -- 114.7
-------- ------------- --------
GROSS PROFIT 73.8 -- 73.8
-------- ------------- --------
GROSS MARGIN 39.2% -- 39.2%
EXPENSES:
Research and development 25.4 -- 25.4
Selling and administration 49.6 -- 49.6
Impairment charges 0.2 (0.2) --
Special charges 13.3 (13.3) --
-------- ------------- --------
Total Expenses 88.5 (13.5) 75.0
-------- ------------- --------
As a Percentage of Net Sales 46.9% -- 39.8%
OPERATING INCOME (LOSS) (14.7) 13.5 (1.2)
OPERATING MARGIN (7.8%) -- (0.6%)
OTHER INCOME (EXPENSE), NET:
Interest 0.8 -- 0.8
Other (1.2) -- (1.2)
-------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES (15.1) 13.5 (1.6)
PROVISION (BENEFIT) FOR INCOME TAXES -- -- --
-------- ------------- --------
NET INCOME $(15.1) $13.5 $(1.6)
======== ============= ========
NET MARGIN (8.0%) -- (0.8%)
AVERAGE COMMON SHARES OUTSTANDING -
BASIC 804.1 804.1 804.1
======== ============= ========
EARNINGS (LOSS) PER SHARE - BASIC $(0.02) $0.02 $(0.00)
======== ============= ========
AVERAGE COMMON SHARES OUTSTANDING -
DILUTED 804.1 804.1 804.1
======== ============= ========
EARNINGS (LOSS) PER SHARE - DILUTED $(0.02) $0.02 $(0.00)
======== ============= ========
(a) Excluding $9.5 million restructuring charges; $0.8 million
impairment charges; $1.7 million loss for inventory restructuring;
$1.7 million non-operating gain on sale of investments; $1.4 million
non-operating net gain related to sale of divested product lines; $2.3
million non-operating gain related to other divested activities; and
$0.2 million loss for non-operating miscellaneous activities; net
income would have been $16.1 million for the three months ended
October 31, 2003, respectively. On the same basis, basic and diluted
EPS would have been $0.02 for the three months ended October 31, 2003.
(b) Excluding $13.3 million restructuring charges; $0.2 million
impairment charges; net loss would have been $(1.6) million for the
three months ended July 31, 2003. On the same basis, basic and diluted
EPS would have been $0.00 for the three months ended July 31, 2003.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
RECONCILIATION OF GAAP RESULTS TO PRO FORMA RESULTS
(In millions, except per share amounts)
For the Year Ended
October 31, 2003
Pro
Restructuring forma
GAAP and Other Results
Results Charges (a) (a)
NET SALES $773.2 $(1.5) $771.7
COST OF PRODUCT SOLD 481.8 (4.7) 477.1
-------- ------------- --------
GROSS PROFIT 291.4 3.2 294.6
-------- ------------- --------
GROSS MARGIN 37.7% -- 38.2%
EXPENSES:
Research and development 108.6 (0.1) 108.5
Selling and administration 222.1 (0.1) 222.0
Impairment charges 15.6 (15.6) --
Special charges 41.8 (41.8) --
-------- ------------- --------
Total expenses 388.1 (57.6) 330.5
-------- ------------- --------
As a Percentage of Net Sales 50.2% -- 42.8%
OPERATING INCOME (LOSS) (96.7) 60.8 (35.9)
OPERATING MARGIN (12.5%) -- (4.7%)
OTHER INCOME (EXPENSE), NET:
Interest 6.3 -- 6.3
Other 8.3 (4.4) 3.9
-------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES (82.1) 56.4 (25.7)
PROVISION (BENEFIT) FOR INCOME TAXES (5.4) -- (5.4)
-------- ------------- --------
NET INCOME $(76.7) 56.4 $(20.3)
====================== ========
NET MARGIN (9.9%) -- (2.6%)
AVERAGE COMMON SHARES OUTSTANDING -
BASIC 803.4 803.4 803.4
======== ============= ========
EARNINGS (LOSS) PER SHARE - BASIC $(0.10) $0.07 $(0.03)
======== ============= ========
AVERAGE COMMON SHARES OUTSTANDING -
DILUTED 803.4 803.4 803.4
======== ============= ========
EARNINGS (LOSS) PER SHARE - DILUTED $(0.10) $0.07 $(0.03)
======== ============= ========
For the Year Ended
October 31, 2002
Restructuring Results from Pro forma
GAAP and Other Divestitures Results
Results Charges (b) (b) (b)
NET SALES $1,047.7 $-- $(18.1) $1.029.6
COST OF PRODUCT SOLD 801.2 (18.9) (51.8) 730.5
---------- ------------- ------------- ---------
GROSS PROFIT 246.5 18.9 33.7 299.1
---------- ------------- ------------- ---------
GROSS MARGIN 23.5% -- -- 29.1%
EXPENSES:
Research and
development 182.8 -- (32.7) 150.1
Selling and
administration 374.0 5.7 (36.2) 343.5
Impairment charges 348.3 (348.3) -- --
Special charges 219.6 (219.6) -- --
---------- ------------- ------------- ---------
Total expenses 1.124.7 (562.2) (68.9) 493.6
---------- ------------- ------------- ---------
As a Percentage
of Net Sales 107.3% -- -- 47.9%
OPERATING INCOME
(LOSS) (878.2) 581.1 102.6 (194.5)
OPERATING MARGIN (83.8%) -- -- (18.9%)
OTHER INCOME
(EXPENSE), NET:
Interest 8.4 -- (0.1) 8.3
Other (12.4) (28.2) 1.3 (39.3)
---------- ------------- ------------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES (882.2) 552.9 103.8 (225.5)
PROVISION (BENEFIT)
FOR INCOME TAXES 262.8 (368.2) 39.4 (66.0)
---------- ------------- ------------- ---------
NET INCOME $(1,145.0) $921.1 $64.4 $(159.5)
========== ============= ============= =========
NET MARGIN (109.3%) -- -- (15.5%)
AVERAGE COMMON SHARES
OUTSTANDING - BASIC 795.6 795.6 795.6 795.6
========== ============= ============= =========
EARNINGS (LOSS) PER
SHARE - BASIC $(1.44) $1.16 $0.08 $(0.20)
========== ============= ============= =========
AVERAGE COMMON SHARES
OUTSTANDING -
DILUTED 795.6 795.6 795.6 795.6
========== ============= ============= =========
EARNINGS (LOSS) PER
SHARE - DILUTED $(1.44) $1.16 $0.08 $(0.20)
========== ============= ============= =========
(a) Excluding $41.8 million restructuring charges; $15.6 million
impairment charges; $1.5 million loss related to net sales
restructuring; $0.2 million loss for miscellaneous operating
activities; $4.7 million loss for inventory restructuring; $3.8
million non-operating gain on sale of investments; $1.4 million
non-operating net loss related to sale of divested product lines; $2.3
million non-operating gain related to other divested activities; $0.3
million non-operating loss for sale-leaseback transaction; $2.0
million non-operating loss for investment write-down; and $2.0 million
non-operating gain for miscellaneous activities; net loss would have
been $20.3 million for the twelve months ended October 31, 2003. On
the same basis, basic and diluted EPS would have been $(0.03) for the
twelve months ended October 31, 2003.
(b) Excluding $102.6 million net loss for product lines divested or
discontinued prior to 2003; $219.6 million restructuring and
in-process research and development charges; $348.3 million impairment
charges; $18.9 million related to restructuring of inventory; $5.7
million reversal of selling and administrative costs; non-operating
gain of $17.0 million, net-of-tax, related to a patent infringement
settlement; $42.6 million, net-of-tax, non-operating gain on
investment sale; $34.2 million non-operating loss on write-down of
investments; $1.2 million non-operating loss adjustment for product
lines divested in fiscal 2001; $7.2 million, net-of-tax, for loss on
sale-leaseback transactions; $10 million gain for miscellaneous
non-operating activities and $328.8 million charges related to
deferred tax assets and tax benefit adjustments due to tax law
changes, net loss would have been $(159.5) million and accordingly,
basic and diluted EPS would have been $(0.20) for the twelve months
ended October 31, 2002.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
OPERATING SEGMENT GAAP TO PRO FORMA RECONCILIATION - UNAUDITED
(In Millions)
NET SALES GAAP TO PRO FORMA RECONCILIATION
2003 2003 2002
Fourth Third Fourth
Quarter Quarter Quarter
GAAP Net Sales
BIA $ 121.5 $ 112.6 $ 156.0
IS 71.4 75.9 64.7
-------- -------- --------
192.9 188.5 220.7
-------- -------- --------
Less:
BIA - Divested Product Lines (a) -- -- 2.9
IS - Divested Product Lines (a) -- -- --
-------- -------- --------
-- -- 2.9
-------- -------- --------
Pro Forma Net Sales
BIA 121.5 112.6 153.1
IS 71.4 75.9 64.7
-------- -------- --------
$ 192.9 $ 188.5 $ 217.8
======== ======== ========
(a) Excluding $0.0 million, $0.0 million and $2.9 million net sales
from product lines divested prior to fiscal 2003; net sales would have
been $192.9 million, $188.5 million, and $217.8 million for the three
months ended October 31, 2003, July 31, 2003 and October 31, 2002,
respectively.
OPERATING INCOME GAAP TO PRO FORMA RECONCILIATION
2003 2003 2002
Fourth Third Fourth
Quarter Quarter Quarter
GAAP Operating Income
BIA $ (2.6) $ (5.4) $ (37.0)
IS 3.6 3.7 (6.0)
Other (7.6) (13.0) (315.7)
-------- -------- --------
(6.6) (14.7) (358.7)
-------- -------- --------
Less:
BIA - Divested Product Lines (b) (1.7) -- (9.6)
IS - Divested Product Lines (b) -- -- 0.1
Other (b) (10.3) (13.5) (309.0)
-------- -------- --------
(12.0) (13.5) (318.5)
-------- -------- --------
Pro Forma Operating Income
BIA (0.9) (5.4) (27.4)
IS 3.6 3.7 (6.1)
Other 2.7 0.5 (6.7)
-------- -------- --------
$ 5.4 $ (1.2) $ (40.2)
======== ======== ========
(b) Excluding $1.7 million, $0.0 million, and $(9.6) million operating
loss from product lines divested prior to fiscal 2003; $9.5 million,
$13.3 million, and $139.4 million restructuring charges; and $0.8
million, $0.2 million, and $169.7 million impairment charges;
operating income (loss) would have been $5.4 million, $(1.2) million,
and $(40.2) million for the three months ended October 31, 2003, July
31, 2003 and October 31, 2002, respectively.
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