ADC Reports Second Quarter 2001 Results; Taking Aggressive Actions to Return to Profitable Growth; Sales of $652 Million and Loss Per Share In-line With March 28 Guidance.Business Editors & Technology Writers MINNEAPOLIS--(BUSINESS WIRE)--May 24, 2001 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 Loss Per Share of $0.15 (Includes Preannounced Operating Charges); Targeting an Additional $50 Million of Expense Reductions 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), a leading global supplier of 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 , network equipment, software and integration services for 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). , multiservice networks, today announced second quarter sales of $652 million for the quarter ended April 30, 2001, in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with its guidance announced on March 28 and a decrease of 15% compared to $771 million in the comparable quarter of 2000. In the quarter, Broadband Infrastructure and Access (BIA BIA abbr. Bureau of Indian Affairs ) sales of $497 million declined 24% from the second quarter of 2000 partially offset by 39% growth in Integrated Solutions (IS) sales of $155 million. International sales increased 3% to $165 million or 25% of total sales in this year's second quarter compared to 21% of total sales in the second quarter of 2000. North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). remained ADC's largest sales regions in the
quarter.
Consistent with ADC's March 28 guidance, pro forma operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. was $164 million in the second quarter of 2001 compared to pro forma operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $118 million in the prior-year second quarter, while pro forma net loss in this year's second quarter was $115 million ($0.15 loss 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) compared to pro forma net income of $72 million ($0.10 earnings per diluted share) in the second quarter of 2000. On a financial reporting basis, which includes the impact of all expenses, charges and credits, net loss was $1.0 billion ($1.33 loss per diluted share) in the second quarter of 2001 compared to net income of $718 million ($0.96 earnings per diluted share) in the second quarter of 2000. "We are taking advantage of this economic and industry downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. to restructure, streamline and prepare the new ADC for profitable growth in a stronger 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. environment," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a R. Roscitt, chairman and chief executive officer of ADC. "The new ADC is being formed into a stronger global broadband company focused on strategic, 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. growth areas in optics, 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 and software supported by successful core businesses in broadband connectivity products and systems integration services. Additionally, we are taking aggressive actions to achieve more cost-efficient Adj. 1. cost-efficient - productive relative to the cost cost-effective efficient - being effective without wasting time or effort or expense; "an efficient production manager"; "efficient engines save gas" operations. Once our aggressive cost reductions and product-line rationalizations in 2001 are behind us, we expect the new ADC to be well positioned to regain higher rates of growth and profitability when our worldwide service provider customers increase their capital spending in the future." Roscitt added, "I am particularly pleased to see demand beginning to stabilize stabilize See peg. in our core products. We are also receiving strong interest in our strategic growth offerings. Additionally, our systems integration business continues to grow market share." On April 13, 2001, ADC announced the alignment of its product organizations with the company's key strategic technologies. As a result, ADC formed the BIA organization, which represents the merging of the former Broadband Connectivity and Broadband Access See broadband and wireless broadband. and Transport groups. The BIA organization is primarily focused on ADC's optics, DSL, IP cable and broadband connectivity businesses. IS remains focused on software and systems integration. INCREASED OPERATING CHARGES As announced on March 28, 2001, ADC recorded charges for higher operating reserves In power systems, the operating reserve is the generating capacity available to the system operator within a short interval of time to meet demand in case a generator is lost or there is another disruption to the supply. in the second quarter of 2001 for certain asset and business conditions as a result of the rapid downturn in telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. capital spending and the challenging economic environment. These increased operating charges of $164 million ($108 million after tax or $0.14 per diluted share) are the primary factors for ADC's pro forma loss per share in the second quarter of 2001. The non-cash portion of these charges was $119 million before tax. The increased operating reserves relate primarily to additional inventory, bad debt and warranty reserves. CHARGES AND CREDITS EXCLUDED FROM PRO FORMA RESULTS Pro forma results in 2001 and 2000 exclude non-cash stock compensation expenses, non-recurring charges/credits 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. ; however, pro forma results do include increased charges for the higher operating reserves. In deriving pro forma results for the second quarter of 2001, ADC excluded net charges of $1.3 billion ($930 million after tax or $1.18 per diluted share) of which $1.2 billion before tax were for non-cash items. These net charges were comprised of: -- Non-cash stock compensation expenses of $5 million ($4 million after tax or $0.01 per diluted share) resulting from previous acquisitions. -- Non-recurring and restructuring charges of $526 million ($451 million after tax or $0.57 per diluted share) related to streamlining and refocusing the business for profitable growth in the future. The non-cash portion of these charges was $438 million before tax. -- Non-recurring, non-cash charges in non-operating other income of $788 million ($496 million after tax or $0.63 per diluted share) consisting primarily of the write down of the book basis of various equity investments in its portfolio of marketable securities to lower-of-cost-or-market. -- Non-recurring, cash credit in non-operating other income of $34 million ($21 million after tax or $0.03 per diluted share) primarily for a gain on the liquidation of ADC's investment in Efficient Networks, which was recently acquired by another company. In deriving pro forma results for the second quarter of 2000, ADC excluded net credits of $1.0 billion ($646 million after tax or $0.86 per diluted share) of which the entire amount was for non-cash items. These net credits were comprised of: -- Non-cash stock compensation expenses resulting from previous acquisitions and non-recurring charges related to the sale of a microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. business totaling $10 million ($6 million after tax or $0.01 per diluted share). -- Non-recurring credits in nonoperating other income of $1.1 billion ($652 million after tax or $0.87 per diluted share) primarily resulting from the sale of a microelectronics business for a non-cash gain of $329 million and conversion of ADC's investment in a private company into shares of a publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. , as a result of a merger, for a non-cash gain of $723 million. OUTLOOK ADC, like many of its peers, continues to remain cautious regarding its future growth assumptions until economic and market conditions improve. Based on previously stated intentions of selling, harvesting or exiting certain nonstrategic businesses to improve the new ADC's future profitability and strategic focus, ADC expects to make corresponding adjustments to its outlook and record non-recurring and restructuring charges (in amounts that have not yet been determined) when the final outcome of these nonstrategic businesses is decided. Fiscal year 2001 has been and remains difficult to forecast at this time as a result of many factors, such as the rapidly changing and unknown duration of current economic and market conditions and 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 selling, harvesting or exiting nonstrategic businesses. Consequently, ADC currently expects to achieve in the third quarter of 2001 a range of 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 from break-even to a $0.05 loss from sales of approximately $600-$650 million, before disposition of nonstrategic businesses. ADC currently expects fourth quarter revenues in 2001, before disposition of nonstrategic businesses, to be flat with the third quarter of 2001. Depending on when and which combination of these nonstrategic businesses is sold, harvested or exited in the second half of the year, revenues from these businesses of approximately $50-$110 million could be eliminated from ADC's consolidated sales in the fourth quarter of 2001. To obtain sequential improvement in fourth quarter bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. results compared to the third quarter of 2001, ADC is targeting an additional expense reduction of approximately $50 million in the second half of the year allowing the company to return to profitability. Because of the difficulty in forecasting during 2001 as a result of rapidly changing conditions and until the outcome of selling, harvesting or exiting nonstrategic businesses is finalized See finalization. , ADC will not provide guidance for fiscal year 2002 at this time. Roscitt emphasized, "Despite the current difficulty in near-term near-term adj. Of, for, or involving a short period of time in the near future. forecasting, we remain very confident about ADC's long-term prospects. Sales by business segment as a percent of total ADC sales are expected to be in the ranges of 75-80% for Broadband Infrastructure and Access and 20-25% for Integrated Solutions for fiscal year of 2001. RECOGNITION OF ADC's PERFORMANCE AND POSITION ADC's historical performance and position was recognized numerous times during the second quarter of 2001: -- ADC was listed for the first time in the Fortune 500 and named among the BusinessWeek BusinessWeek is a business magazine published by McGraw-Hill. It was first published in 1929 (as The Business Week) under the direction of Malcolm Muir, who was serving as president of the McGraw-Hill Publishing company at the time. 50 best-performing companies in the Standard & Poor's 500 stock index during 2000. -- Better Investing magazine featured ADC as an undervalued stock An undervalued stock is defined as a stock that is selling at a price significantly below its intrinsic value (finance). For example, if a stock is selling for $50, but can be determined to be worth $100 based on future cash flows, then it is an undervalued stock. in its June June: see month. 2001 issue and reported in its April 2001 issue that ADC's stock was the 22nd most popular and widely held stock by investment clubs in 2000, up from a rank of 27th in 1999, 48th in 1998 and 106th in 1997. REVIEW OF BUSINESS SEGMENTS As mentioned above, ADC consolidated into two business segments during the quarter. A review of ADC's performance by these two business segments - Broadband Infrastructure and Access, and Integrated Solutions - follows. Broadband Infrastructure and Access Broadband Infrastructure and Access sales of $497 million in the second quarter of 2001 decreased 24% from $658 million in the comparable prior-year quarter. The decrease in the second quarter of 2001 was primarily a result of lower sales for copper-connectivity systems, DSL systems, cable transmission systems and enterprise-located access systems. This weakness was partially offset by sales growth for the Cuda(TM) 12000 IP Access Switch and the BroadAccess(TM) Multiservice Access Platform. Sales of fiber-optic See fiber optics. systems/components totaled $101 million in the quarter compared to $100 million in the second quarter of 2000. Pro forma operating loss, before goodwill amortization, was $120 million in the second quarter of 2001 compared to pro forma operating income of $135 million in the same quarter of 2000. Recent highlights in BIA include: -- Continued to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale shipments of the Cuda 12000 system to domestic and international cable operators in the quarter expanding the cumulative customer base to over 30 cable operators who have purchased the system. -- Announced that ADC's Digivance(TM) Indoor Coverage Solution (ICS (1) (Internet Connection Sharing) A Windows feature that enables two or more computers to share one Internet connection. First introduced in Windows 98 Second Edition, sharing is accomplished with network address translation (NAT), which is the common method. ), the industry's first all-digital wireless indoor coverage solution, was tested and approved by the Federal Communications Commission Since 2001 the Chairman has been ex officio the Minister for Home Affairs. External links
completed a trial with one of the largest U.S. wireless service providers. -- Launched ADC's comprehensive, end-to-end end-to-end 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. DSL solution of Avidia(R) and Soneplex(TM) DSL equipment, Singularit.e(TM) operations support system (OSS Oss (ôs), city (1994 pop. 62,141), North Brabant prov., S Netherlands; chartered 1399. It is a significant industrial center. Manufactures include meat products, chemicals, pharmaceuticals, electrical equipment, and metalware. ) software and Unity(TM) integration services to automate To turn a set of manual steps into an operation that goes by itself. See automation. and simplify the profitable deployment of broadband services See broadband and broadband service provider. . -- Developed the first product platform from ADC's Advanced Photonics Integration Center. The platform consists of a family of compact optical modules, which integrate the functionality of several discrete optical components into a single, compact design making them highly suitable for optical network amplifier applications. Modules for both the 980 and 1480 nm pumped erbium erbium (ûr`bēəm) [from Ytterby, a town in Sweden], metallic chemical element; symbol Er; at. no. 68; at. wt. 167.26; m.p. 1,529°C;; b.p. 2,863°C;; sp. gr. 9.05 at 25°C;; valence +3. doped dope n. 1. Informal a. A narcotic, especially an addictive narcotic. b. Narcotics considered as a group. c. An illicit drug, especially marijuana. 2. fiber amplifiers are expected to be in production later this year. -- Introduced PG-FlexPlus(TM) Field Shelf, a broadband micro-digital loop carrier that enables carriers to add incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. voice and data capacity on existing copper plant infrastructure. The PG-FlexPlus Field Shelf, with its environmental hardening hardening, in metallurgy, treatment of metals to increase their resistance to penetration. A metal is harder when it has small grains, which result when the metal is cooled rapidly. , is ideal for carriers looking to profitably satisfy the demand for voice and ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line services in areas where there is a shortage of copper-pairs without incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. the major time and capital expense of new copper deployment in the distribution plant. -- Won the ComNet 2001 Editor's Choice Award from Communications News magazine for ADC's ServicePoint(TM) Manager Software System as the most innovative product in the network management category. Integrated Solutions Integrated Solutions sales grew 39% to a record second quarter level of $155 million over $112 million in the comparable 2000 quarter. Sales increased from the prior-year second quarter as a result of 51% sales growth of systems integration services to a record second quarter level combined with 26% sales growth of software systems resulting from the acquisitions of Centigram cen·ti·gram n. A metric unit of mass equal to one hundredth (10-2) of a gram. centigram one-hundredth of a gram; abbreviated cg. Communications completed in July July: see month. 2000 and CommTech completed in February February: see month. 2001. Pro forma operating loss, before goodwill amortization, was $30 million in the second quarter of 2001 compared to a loss of $2 million in the second quarter in 2000. Sales of ADC's systems integration services grew from broadening its U.S. and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. carrier and 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 customer base resulting in market share gains in the quarter. ADC experienced record second quarter sales in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and benefited from the expansion of its presence into Europe with the acquisitions of systems integration businesses in the United Kingdom and France during the autumn of 2000. ADC's Unity(TM) suite of systems integration services span all aspects of the telecom business and network, helping 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 maximize both their operations support systems Operations Support Systems (also called Operational Support Systems or OSS) are computer systems used by telecommunications service providers. The term OSS most frequently describes "network systems" dealing with the telecom network itself, supporting processes such (OSS) and network infrastructure investments. ADC's Unity services tie together multi-vendor hardware and software environments to help communications service providers gain a competitive advantage by allowing for quicker time-to-market with new service offerings, improved customer care and lower costs of operations. Recent highlights in IS include: -- Selected by Hutchison Telecoms' Limited (Australia) for deployment of ADC's Singl.eView(TM) billing solution to bill for future 3G and existing services. The state-of-the-art billing system will support all voice, data, mobile and fixed communications products and services provided under Hutchison's Orange business. This solution will also allow Hutchison to provide future product and service innovation over its 3G network. Singl.eView is a key component of Singularit.e(TM), ADC's comprehensive operations support system (OSS) suite 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. customer management, service management and service fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. for broadband networks  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. . -- Joined Cisco Systems' Professional Services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. Partner Program providing customers with the significant benefit of the combination of Cisco product solutions with ADC's nationwide capabilities in systems integration. -- Selected by Tensing Communications, Inc. to use ADC's Singl.eView Convergent Billing Platform to bill air travelers in real-time for Web services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term. . -- Introduced Singl.eView Web, the first fully integrated Web-based convergent billing and customer care platform for communications service providers to enable their subscribers to pay bills, access account information and order new products and services in a secure online environment. -- Formed a strategic software alliance with Hughes Software Systems (HSS HSS Humanities and Social Sciences HSS High Speed Steel HSS Home Subscriber Server (3GPP) HSS Hospital for Special Surgery (New York, NY, USA) HSS Hospital for Special Surgery HSS History of Science Society ), India's number one communications software (communications, software) communications software - Application programs, operating system components, and probably firmware, forming part of a communication system. These different software components might be classified according to the functions within the Open Systems company, and Kshema Technologies, one of India's fastest growing solutions companies. Since last year, HSS and Kshema Technologies have been working with ADC's product and service organizations to support various development projects. The planned development activity covers technology areas, such as broadband access, network management and enhanced services Enhanced service is service offered over commercial carrier transmission facilities used in interstate communications, that employs computer processing applications that act on the format, content, code, protocol, or similar aspects of the subscriber's transmitted information; . -- Formed an alliance with Tata Consulting Services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , one of Asia's largest global software and services companies, to build OSS systems with ADC's Singl.eView customer management and convergent billing solution. -- Launched the Broadband Service Platform (BSP BSP Bromsulphalein, a dye used in the study of liver function. See also sulfobromophthalein clearance test. ), a standards-based technology enabling adaptive communications Adaptive communications can mean any communications system, or portion thereof, that automatically uses feedback information obtained from the system itself or from the signals carried by the system to modify dynamically one or more of the system operational parameters to improve in wireless, wireline and ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. markets. ADC's BSP is fully scalable to accommodate a wide range of subscribers with applications including 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. over the Web or touchtone phone, 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 call manager, voice mail over the Internet, short message services, among many others. CONFERENCE CALL AND WEBCAST ADC will discuss its second quarter 2001 results and current outlook on a conference call scheduled today, May 24, at 5 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. Starting today at 8 p.m. Eastern, the replay of the call can be accessed until May 31 by domestic callers at (800) 642-1687 and by international callers at (706) 645-9291 (conference ID number is 778166) or on the Internet at www.adc.com/investor. About ADC ADC is The Broadband Company(TM). ADC's fiber optics, network equipment, software and integration services make broadband communications a reality worldwide by enabling communications service providers to deliver high-speed Internet See broadband. , data, video and voice services to consumers and businesses. ADC (Nasdaq:ADCT) is a Fortune 500 company with sales into more than 130 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 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 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 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. 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-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended October 31, 2000. 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
CONSOLIDATED STATEMENTS OF OPERATIONS-UNAUDITED
(In millions, except per share amounts)
For the 3 Months Ended
April 30,
-------------------------
2001 2000
------------- ---------
NET SALES $ 652.4 $ 770.6
COST OF PRODUCT SOLD 530.1 407.3
------------- ---------
GROSS PROFIT 122.3 363.3
------------- ---------
EXPENSES:
Research and development 82.6 82.7
Selling and administration 235.1 156.0
Goodwill amortization 17.0 6.4
Impairment charges 401.5 -
Non-recurring charges 75.4 8.8
Non-cash stock compensation 4.9 1.2
------------- ---------
Total expenses 816.5 255.1
------------- ---------
OPERATING INCOME (LOSS) (694.2) 108.2
OTHER INCOME (EXPENSE), NET:
Interest (0.7) 5.6
Loss on write-down or sale of investments,
net (754.1) -
Gain on sale of a business - 328.6
Gain on conversion of investment - 722.6
Other (10.2) (1.8)
------------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (1,459.2) 1,163.2
PROVISION (BENEFIT) FOR INCOME TAXES (414.0) 444.9
------------- ---------
NET INCOME (LOSS) (a)$(1,045.2) (b) $718.3
============= =========
AVERAGE COMMON SHARES OUTSTANDING (BASIC) 786.0 708.0
============= =========
EARNINGS (LOSS) PER SHARE (BASIC) $ (1.33) $ 1.01
============= =========
AVERAGE COMMON SHARES OUTSTANDING (DILUTED) 786.0 746.1
============= =========
EARNINGS (LOSS) PER SHARE (DILUTED) (a) $(1.33) (b) $0.96
============= =========
For the 6 Months Ended
April 30,
----------------------
2001 2000
---------- ---------
NET SALES $ 1,463.7 $1,364.5
COST OF PRODUCT SOLD 1,030.6 722.7
---------- ---------
GROSS PROFIT 433.1 641.8
---------- ---------
EXPENSES:
Research and development 162.9 157.9
Selling and administration 415.2 286.0
Goodwill amortization 34.7 11.9
Impairment charges 401.5 -
Non-recurring charges 108.7 8.8
Non-cash stock compensation 9.8 1.8
---------- ---------
Total expenses 1,132.8 466.4
---------- ---------
OPERATING INCOME (LOSS) (699.7) 175.4
OTHER INCOME (EXPENSE), NET:
Interest (0.1) 10.2
Loss on write-down or sale of investments,
net (761.6) -
Gain on sale of a business - 328.6
Gain on conversion of investment - 722.6
Other (8.4) (5.3)
---------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (1,469.8) 1,231.5
PROVISION (BENEFIT) FOR INCOME TAXES (417.0) 460.2
---------- ---------
NET INCOME (LOSS) (a)$(1,052.8) (b) $771.3
========== =========
AVERAGE COMMON SHARES OUTSTANDING (BASIC) 783.9 704.7
========== =========
EARNINGS (LOSS) PER SHARE (BASIC) $ (1.34) $ 1.09
========== =========
AVERAGE COMMON SHARES OUTSTANDING (DILUTED) 783.9 740.2
========== =========
EARNINGS (LOSS) PER SHARE (DILUTED) (a)$ (1.34) (b) $1.04
========== =========
(a) Excluding $9.5 million and $14.0 million net-of-tax, non-cash
stock compensation and non-recurring charges related to the
CommTech acquisition; $76.7 million and $126.6 million net-of-tax,
restructuring charges; $368.8 million net-of-tax impairment
charges; non-recurring non-operating loss of $496.5 million and
$501.3 million net-of-tax, related to the write-down of investment
portfolio and $21.4 million net-of-tax gain on the sale if
Efficient Networks, net loss would have been $115.1 million and
$63.5 million, respectively. Diluted EPS would have been $(0.15)
and $(0.08), respectively.
(b) Excluding $6.6 million net-of-tax, non-cash stock compensation and
non-recurring charges related to the sale of microelectronics
business and non-recurring, non-operating income of $652.4 million
net-of-tax, related to the sale of microelectronics business and a
non-cash gain on an investment in Siara Systems, net income would
have been $72.5 million and $125.5 million, respectively. Diluted
EPS would have been $0.10 and $0.17, respectively.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(In millions, except per share amounts)
For the Three Months Ended
April 30, 2001
----------------------------------
Restructuring
As and Other Pro forma
Reported Charges(a) Results(a)
--------- ------------- ----------
NET SALES $652.4 $ -- $652.4
COST OF PRODUCT SOLD 530.1 (28.2) 501.9
--------- --------- -------
122.3 28.2 150.5
--------- --------- -------
EXPENSES:
Research and development 82.6 -- 82.6
Selling and administration 235.1 (20.7) 214.4
Goodwill amortization 17.0 -- 17.0
Impairment charges 401.5 (401.5) --
Non-recurring charges 75.4 (75.4) --
Non-cash stock compensation 4.9 (4.9) --
--------- --------- -------
Total Expenses 816.5 (502.5) 314.0
--------- --------- -------
OPERATING INCOME (LOSS) (694.2) 530.7 (163.5)
OTHER INCOME (EXPENSE), NET:
Interest (0.7) -- (0.7)
Loss on write-down or sale of
Investments, net (754.1) 754.1 --
Other (10.2) -- (10.2)
--------- --------- -------
INCOME (LOSS) BEFORE INCOME TAXES (1,459.2) 1,284.8 (174.4)
PROVISION (BENEFIT) FOR INCOME TAXES (414.0) 354.7 (59.3)
--------- --------- -------
NET INCOME (LOSS) $(1,045.2) $930.1 $(115.1)
========= ========= =======
AVERAGE COMMON SHARES OUTSTANDING
(BASIC) 786.0 786.0 786.0
========= ========= =======
EARNINGS (LOSS) PER SHARE (BASIC) $(1.33) $1.18 $(0.15)
========= ========= =======
AVERAGE COMMON SHARES OUTSTANDING
(DILUTED) 786.0 786.0 786.0
========= ========= =======
EARNINGS (LOSS) PER SHARE (DILUTED) $(1.33) $1.18 $(0.15)
========= ========= =======
For the Six Months Ended
April 30, 2001
----------------------------------
Restructuring
As and Other Pro forma
Reported Charges(a) Results(a)
--------- ------------- ----------
NET SALES $1,463.7 $ -- $1,463.7
COST OF PRODUCT SOLD 1,030.6 (64.5) 966.1
--------- --------- ---------
433.1 64.5 497.6
--------- --------- ---------
EXPENSES:
Research and development 162.9 -- 162.9
Selling and administration 415.2 (27.6) 387.6
Goodwill amortization 34.7 -- 34.7
Impairment charges 401.5 (401.5) --
Non-recurring charges 108.7 (108.7) --
Non-cash stock compensation 9.8 (9.8) --
--------- --------- ---------
Total Expenses 1,132.8 (547.6) 585.2
--------- --------- ---------
OPERATING INCOME (LOSS) (699.7) 612.1 (87.6)
OTHER INCOME (EXPENSE), NET:
Interest (0.1) -- (0.1)
Loss on write-down or sale of
Investments, net (761.6) 761.6 --
Other (8.4) -- (8.4)
--------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (1,469.8) 1,373.7 (96.1)
PROVISION (BENEFIT) FOR INCOME TAXES (417.0) 384.4 (32.6)
--------- --------- ---------
NET INCOME (LOSS) $(1,052.8) $989.3 $(63.5)
========= ========= =========
AVERAGE COMMON SHARES OUTSTANDING
(BASIC) 783.9 783.9 783.9
========= ========= =========
EARNINGS (LOSS) PER SHARE (BASIC) $(1.34) $1.26 $(0.08)
========= ========= =========
AVERAGE COMMON SHARES OUTSTANDING
(DILUTED) 783.9 783.9 783.9
========= ========= =========
EARNINGS (LOSS) PER SHARE (DILUTED) $(1.34) $1.26 $(0.08)
========= ========= =========
(a) Excluding $9.5 million and $14.0 million net-of-tax, non-cash
stock compensation and non-recurring charges related to the
CommTech acquisition; $76.7 million and $126.6 million net-of-tax,
restructuring charges; $368.8 million net-of-tax impairment
charges; non-recurring non-operating loss of $496.5 million and
$501.3 million net-of-tax, related to the write-down of investment
portfolio and $21.4 million net-of-tax gain on the sale if
Efficient Networks, net loss would have been $115.1 million and
$63.5 million, respectively. Diluted EPS would have been $(0.15)
and $(0.08), respectively.
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In millions)
ASSETS
April 30, October 31,
2001 2000
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 117.1 $ 217.3
Short-term investments 315.2 1,136.9
Accounts receivable, net 494.2 702.7
Inventories, net 477.4 486.1
Prepaid and other current assets 279.5 107.9
----------- -----------
Total current assets 1,683.4 2,650.9
PROPERTY AND EQUIPMENT, net 724.9 608.6
OTHER ASSETS:
Deferred tax asset 280.8 52.4
Other, principally goodwill 283.2 658.6
----------- -----------
$ 2,972.3 $ 3,970.5
=========== ===========
LIABILITIES AND SHAREOWNERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 211.7 $ 211.3
Accrued compensation and benefits 128.7 233.4
Other accrued liabilities 353.7 202.3
Accrued income taxes - 365.8
Note payable and current maturities of
long-term debt 124.4 28.5
------------ -----------
Total current liabilities 818.5 1,041.3
LONG-TERM DEBT, less current maturities 10.3 16.5
------------ -----------
Total liabilities 828.8 1,057.8
------------ -----------
SHAREOWNERS' INVESTMENT
(789.0 and 770.3 shares outstanding) 2,143.5 2,912.7
------------ -----------
$ 2,972.3 $ 3,970.5
============ ===========
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