ADC Reports Third Quarter 2001 Results In-Line With Current Wall Street Estimates.Business Editors & Technology Writers MINNEAPOLIS--(BUSINESS WIRE)--Aug. 23, 2001 2001 Third Quarter Highlights: -- Sales of $548 Million and Pro Forma Loss Per Share of $0.05 -- Cash Flow From Operating Activities of $72 Million Increases 156% -- Cost Reductions Total Up to $450 Million in Future Annual Savings -- Free Cash Flow Positive As Capital Expenditures Are Cut By 60% -- Strong Liquidity Position of $608 Million, Net of $5 Million of Total Debt 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 third quarter sales of $548 million for the quarter ended July July: see month. 31, 2001, a decrease of 39% compared to $892 million in the comparable quarter of 2000 and a decrease of 16% from second quarter 2001 sales of $652 million. In the quarter, Broadband Infrastructure and Access (BIA BIA abbr. Bureau of Indian Affairs ) sales of $405 million declined 47% from the third quarter of 2000 partially offset by 16% growth in Integrated Solutions (IS) sales of $144 million. International sales decreased 18% to $156 million or 28% of total sales in this year's third quarter compared to 21% of total sales in the third 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.
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 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 $51 million in the third 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 $179 million in the prior-year third quarter, while pro forma net loss in this year's third quarter was $40 million ($0.05 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 $121 million ($0.16 earnings per diluted share) in the third quarter of 2000. On a financial reporting basis, which includes the impact of all expenses, charges and credits, net loss was $58 million ($0.07 loss per diluted share) in the third quarter of 2001 compared to net income of $10 million ($0.01 earnings per diluted share) in the third quarter of 2000. On August 1, 2001, ADC announced its intention to further reduce its operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. by an additional $50 million per quarter ($200 million annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. ) through actions being implemented in its fiscal fourth quarter ending October October: see month. 31, 2001. This announcement followed previous cost reduction actions totaling $250 million in future annualized savings. The announced cost reduction actions include further workforce reductions of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 2,500 positions (in addition to the approximately 7,000 positions previously eliminated), the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of additional non-strategic product lines, deeper spending cuts Noun 1. spending cut - the act of reducing spending cut - the act of reducing the amount or number; "the mayor proposed extensive cuts in the city budget" and the further consolidation and closure of certain facilities. On an annualized run-rate basis, ADC's completed and planned actions are expected to result in a cumulative reduction of future annual operating expenses by up to $450 million. "We are encouraged by the slowing decline in quarterly revenue and the enormous progress we have made to-date in our cost reduction efforts to improve profitability and cash flow going forward," 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. "When revenues begin to settle after the 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. , we believe these aggressive cost reduction actions combined with our sharp strategic focus on opportunities where ADC has sustainable advantages and attractive growth potential will make ADC a stronger competitor positioned to accelerate its earnings when telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. 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. rebounds." "ADC is also executing well on our goals for a more focused broadband access See broadband and wireless broadband. portfolio based on growth, profitability and market leadership criteria criteria (krītēr´ē  ),n. , and a more strategic sales organization to deliver tailored customer solutions leveraging the full power of ADC's broadband products and services," added Roscitt. "We believe our new go-to-market strategy will yield stronger customer relationships and improved financial performance long term. As the industry reshapes itself, our customers are placing a greater emphasis on strategic suppliers who possess the right mix of technologies, services, agility and commitment to ensure their success. We believe our actions to focus ADC's broadband access portfolio and solutions-oriented sales force combined with ADC's long-standing long-stand·ing adj. Of long duration or existence: a long-standing friendship. long-standing Adjective existing for a long time reputation for delivering on its commitments strongly positions ADC to become a strategic partner of choice for broadband communications providers." AGGRESSIVE AND SWIFT COST REDUCTION ACTIONS ADC's aggressive and swift cost reduction actions are aimed to achieve its fiscal year 2002 goal to be profitable and cash flow positive, after capital expenditures, and enhance its already strong balance sheet. Consequently, ADC's completed and current undertaking of these cost reduction actions in fiscal year 2001 are expected to generate $450 million in future annualized operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. savings and further enhance its balance sheet as follows: -- Reducing the workforce by approximately 40% from 22,452 employees on October 31, 2000. -- Cutting operating expenses by approximately 40%. -- Decreasing capital expenditures by more than 60%, as well as deactivating excess facilities square footage by approximately 36%. -- Divesting nonstrategic product lines in legacy cable TV transmission, broadcast TV transmission, broadband wireless See wireless broadband. and enterprise access products, which have been previously announced. Additional nonstrategic product lines targeted for divestiture are being discussed with interested parties. Divestiture proceeds will be used to strengthen ADC's financial position. -- Reducing total debt to $5 million as of July 31, 2001 resulting in a total-debt-to-equity ratio of 0.3%. "We achieved extraordinary progress in increasing ADC's cash flow from operating activities to a positive $72 million in the third quarter of 2001, an increase of 156% compared to the third quarter of 2000 and an increase of 110% compared to the second quarter of 2001. We also cut capital expenditures by 60% to generate positive free cash flow of $27 million in the quarter," 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, senior vice president and CFO See Chief Financial Officer. of ADC. "Through the significant expense savings from our cost reduction actions and the cash obtained through the sale of nonstrategic product lines, we expect to further increase our cash flows and enhance ADC's already strong liquidity position, net of minimal debt, of approximately $608 million in cash, 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 and unused lines of credit as of July 31, 2001." 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. . 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 results for the third quarter of 2001, ADC excluded net charges of $26 million ($18 million after tax or $0.02 per diluted share) of which $33 million 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 $42 million ($27 million after tax or $0.03 per diluted share) related to streamlining and refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus the business for profitable growth in the future. -- Non-recurring credits in non-operating other income of $21 million ($13 million after tax or $0.02 per diluted share) primarily for net gains on investments and a divestiture. In deriving pro forma results for the third quarter of 2000, ADC excluded non-cash stock compensation expenses and non-recurring charges of $118 million ($110 million after tax or $0.15 per diluted share) for acquisition-related expenses and for purchased in-process research and development expenses in connection with acquisitions completed in that quarter of which $27 million before tax were for non-cash items. OUTLOOK Fiscal year 2001 has been and remains difficult to forecast at this time as a result of the unknown direction and duration of depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. 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 divesting nonstrategic product lines. 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 divesting certain nonstrategic product lines to improve 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) in the quarter as the outcomes of divested nonstrategic product lines become finalized See finalization. . "Until we get a fuller understanding of the telecommunications capital spending trends for the remainder of 2001 and next year, we will be unable to forecast the results of our business with the degree of accuracy experienced prior to 2001," emphasized em·pha·size tr.v. em·pha·sized, em·pha·siz·ing, em·pha·siz·es To give emphasis to; stress. [From emphasis.] Adj. 1. Roscitt. "However, we continue to maintain, and in some cases increase, market share and remain confident in the 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. outlook that low penetration The successful unauthorized breach of a security perimeter. See penetration test. rates of broadband access combined with strong demand for broadband services See broadband and broadband service provider. by consumers and businesses will drive our customers eventually to return to higher levels of investment in deploying broadband networks  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. ." Subject to the continuation continuation - continuation passing style of the high degree of forecasting variability in fiscal year 2001, ADC currently expects fourth quarter revenues to be in the range of $400-$450 million, which excludes approximately $50 million of revenues from the announced divestitures of the legacy cable TV transmission, broadcast TV transmission, broadband wireless and enterprise access product lines. Depending on when the additional nonstrategic product lines are divested, revenues from these to-be-divested product lines of approximately $0-$50 million could also be eliminated from ADC's 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: sales in the fourth quarter of 2001. 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 the fiscal year of 2001. Subject to a high degree of forecasting variability and the final resolution of the remaining divestitures, ADC currently expects diluted pro forma loss per share to be in the range of a $0.03-$0.05 loss in the fourth quarter. Due to the extreme difficulty in forecasting during 2001 combined with the unknown direction and duration of depressed economic and market conditions, and because the outcome of divesting the additional nonstrategic product lines is still pending, ADC will not provide guidance for fiscal year 2002 at this time. "We remain strongly committed to helping our customers deliver broadband communications to consumers and businesses in the last mile/kilometer of the network," said Roscitt. "We believe the continued demand by consumers and businesses for broadband communications, coupled with the enormous productivity and cost savings that can be achieved by deploying broadband applications and services, will eventually return this industry and ADC to growth. Through this entire industry downturn these long-term fundamental drivers have not changed and neither has ADC's commitment to being a integral partner to our customers in increasing broadband penetration worldwide." REVIEW OF BUSINESS SEGMENTS 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 $405 million in the third quarter of 2001 decreased 47% from $767 million in the comparable prior-year quarter. The decrease in the third quarter of 2001 was substantially a result of lower sales for copper- and fiber- 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. systems. Sales of fiber-connectivity systems and optical components totaled $78 million in the quarter compared to $150 million in the third quarter of 2000. Sales of most other products declined by smaller dollar amounts and percentages. Pro forma operating loss, before goodwill amortization, was $33 million in the third quarter of 2001 compared to pro forma operating income, before goodwill amortization, of $197 million in the same quarter of 2000. Integrated Solutions Integrated Solutions sales grew 16% to a record third quarter level of $144 million over $124 million in the comparable 2000 quarter. Sales increased from the prior-year third quarter as a result of 24% sales growth of systems integration services to a record third quarter level combined with 7% 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 2000 and CommTech completed in February February: see month. 2001. Pro forma operating loss, before goodwill amortization, was $10 million in the third quarter of 2001 compared to pro forma operating income, before goodwill amortization, of $4 million in the third quarter in 2000. Sales of ADC's systems integration services grew from broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad 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 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 Autumn Autumnus personification; portrayed as mature and manly. [Rom. Myth.: LLEI, I: 322] Bacchus god of this season. [Rom. Myth.: Hall, 130] Carpo goddess of autumn and corn season. [Gk. Myth. of 2000. ADC's Unity(TM) suite of systems integration services spans 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 In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. their 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. CONFERENCE CALL AND WEBCAST ADC will discuss its third quarter 2001 results and current outlook on a conference call scheduled today, August 23, 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 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 at www.adc.com/investor. Starting today at 8 p.m. Eastern, the replay of the call can be accessed until August 30 by domestic callers at (800) 642-1687 and by international callers at (706) 645-9291 (conference ID number is 1421314) 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 nearly 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 An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995 All forward looking statements contained herein, particularly those pertaining 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. ADC Telecommunications cautions readers that future actual results could differ materially from those in forward-looking statements 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 Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the stock market; new competition and technologies; increased costs associated with protecting intellectual property rights; the impact of customer financing activities; ADC's ability to successfully integrate the operations of acquired companies with ADC's historic operations; retention of key employees; fluctuations in ADC's operating results; pressures on the pricing of the products or services ADC offers; and other risks and uncertainties, including those identified in Exhibit 99-a to ADC's Report on Form 10-Q/A for the fiscal quarter ended April 30, 2001. ADC disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS--UNAUDITED
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
July 31, July 31,
---------------------- -----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
NET SALES $547.5 $891.4 $ 2,011.2 $ 2,255.9
COST OF PRODUCT SOLD 369.8 442.9 1,400.4 1,165.6
---------- ---------- ---------- ----------
GROSS PROFIT 177.7 448.5 610.8 1,090.3
---------- ---------- ---------- ----------
EXPENSES:
Research and
development 66.1 84.1 229.0 242.0
Selling and
administration 152.3 177.2 567.5 463.2
Goodwill
amortization 11.3 7.9 46.0 19.8
Impairment charges 6.5 -- 408.0 --
Non-recurring
charges 35.5 115.0 144.2 123.8
Non-cash stock
compensation 4.5 2.5 14.3 4.3
---------- ---------- ---------- ----------
Total expenses 276.2 386.7 1,409.0 853.1
---------- ---------- ---------- ----------
OPERATING INCOME
(LOSS) (98.5) 61.8 (798.2) 237.2
OTHER INCOME
(EXPENSE), NET:
Interest (3.9) 4.2 (4.0) 14.4
Gain (loss) on
write-down or
sale of
investments,
net 15.6 -- (746.0) --
Gain on sale of
a business 5.9 -- 5.9 328.6
Gain on
conversion of
investment -- -- -- 722.6
Other (5.9) (0.9) (14.3) (6.2)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
INCOME TAXES (86.8) 65.1 (1,556.6) 1,296.6
PROVISION (BENEFIT)
FOR INCOME TAXES (28.7) 55.5 (445.8) 515.7
---------- ---------- ---------- ----------
NET INCOME (LOSS) $(58.1)(a) $ 9.6(b)$(1,110.8)(a)$ 780.9(b)
========== ========== ========== ==========
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) 787.8 715.1 785.5 710.4
========== ========== ========== ==========
EARNINGS (LOSS) PER
SHARE (BASIC) $(0.07) $ 0.01 $ (1.41) $ 1.10
========== ========== ========== ==========
AVERAGE COMMON SHARES
OUTSTANDING
(DILUTED) 787.8 758.8 785.5 750.0
========== ========== ========== ==========
EARNINGS (LOSS) PER
SHARE (DILUTED) $(0.07) $ 0.01 $ (1.41) $ 1.04
========== ========== ========== ==========
(a) Excluding $5.2 million and $19.2 million net-of-tax, non-cash
stock compensation and non-recurring charges related to recent
acquisitions; $21.9 million and $148.4 million net-of-tax,
restructuring charges; $4.1 million and $372.9 million net-of-tax
impairment charges; non-recurring non-operating loss of $16.8
million and $518.2 million net-of-tax related to the write-down of
investment portfolio; $26.7 million and $48.1 million net-of-tax
gain on investment related activities and $3.7 million net-of-tax
gain on the divestiture of the legacy cable TV transmission
product line, net loss would have been $40.5 million and $103.9
million for the quarter and nine months ended July 31, 2001,
respectively. Diluted EPS would have been $(0.05) and $(0.13) for
the quarter and nine months ended July 31, 2001, respectively.
(b) Excluding $110.8 million and $117.9 million net-of-tax, non-cash
stock compensation and non-recurring charges primarily related to
the acquisitions of PairGain, Altitun, IBSEN and Centigram and 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 $120.4
million and $246.4 million for the quarter and nine months ended
July 31, 2000, respectively. Diluted EPS would have been $0.16 and
$0.33 for the quarter and nine months ended July 31, 2000,
respectively.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(In millions, except per share amounts)
Three Months Ended
------------------
July 31, 2001
-----------------------------------------
Restructuring
As and Other Pro forma
Reported Charges (a) Results (a)
------------ -------------- -------------
NET SALES $ 547.5 $ - $ 547.5
COST OF PRODUCT SOLD 369.8 (0.4) 369.4
------------ -------------- -------------
GROSS PROFIT 177.7 0.4 178.1
------------ -------------- -------------
EXPENSES:
Research and development 66.1 - 66.1
Selling and administration 152.3 (0.1) 152.2
Goodwill amortization 11.3 - 11.3
Impairment charges 6.5 (6.5) -
Non-recurring charges 35.5 (35.5) -
Non-cash stock compensation 4.5 (4.5) -
------------ -------------- -------------
Total expenses 276.2 (46.6) 229.6
------------ -------------- -------------
OPERATING INCOME (LOSS) (98.5) 47.0 (51.5)
OTHER INCOME (EXPENSE), NET:
Interest (3.9) - (3.9)
Gain (loss) on write-down or
sale of investments, net 15.6 (15.6) -
Gain on sale of business 5.9 (5.9) -
Other (5.9) - (5.9)
------------ -------------- -------------
INCOME (LOSS) BEFORE INCOME
TAXES (86.8) 25.5 (61.3)
PROVISION (BENEFIT) FOR
INCOME TAXES (28.7) 7.9 (20.8)
------------ -------------- -------------
NET INCOME (LOSS) $ (58.1) $ 17.6 $ (40.5)
============ ============== =============
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) 787.8 787.8 787.8
============ ============== =============
EARNINGS (LOSS) PER SHARE
(BASIC) $ (0.07) $ 0.02 $ (0.05)
============ ============== =============
AVERAGE COMMON SHARES
OUTSTANDING (DILUTED) 787.8 787.8 787.8
============ ============== =============
EARNINGS (LOSS) PER SHARE
(DILUTED) $ (0.07) $ 0.02 $ (0.05)
============ ============== =============
Nine Months Ended
-----------------
July 31, 2001
-----------------------------------------
Restructuring
As and Other Pro forma
Reported Charges (a) Results (a)
------------ -------------- -------------
NET SALES $ 2,011.2 $ - $ 2,011.2
COST OF PRODUCT SOLD 1,400.4 (64.9) 1,335.5
------------ -------------- -------------
GROSS PROFIT 610.8 64.9 675.7
------------ -------------- -------------
EXPENSES:
Research and development 229.0 - 229.0
Selling and administration 567.5 (27.7) 539.8
Goodwill amortization 46.0 - 46.0
Impairment charges 408.0 (408.0) -
Non-recurring charges 144.2 (144.2) -
Non-cash stock compensation 14.3 (14.3) -
------------ -------------- -------------
Total expenses 1,409.0 (594.2) 814.8
------------ -------------- -------------
OPERATING INCOME (LOSS) (798.2) 659.1 (139.1)
OTHER INCOME (EXPENSE), NET:
Interest (4.0) - (4.0)
Gain (loss) on write-down or
sale of investments, net (746.0) 746.0 -
Gain on sale of business 5.9 (5.9) -
Other (14.3) - (14.3)
------------ -------------- -------------
INCOME (LOSS) BEFORE INCOME
TAXES (1,556.6) 1,399.2 (157.4)
PROVISION (BENEFIT) FOR
INCOME TAXES (445.8) 392.3 (53.5)
------------ -------------- -------------
NET INCOME (LOSS) $ (1,110.8) $ 1,006.9 $ (103.9)
============ ============== =============
AVERAGE COMMON SHARES
OUTSTANDING (BASIC) 785.5 785.5 785.5
============ ============== =============
EARNINGS (LOSS) PER SHARE
(BASIC) $ (1.41) $ 1.28 $ (0.13)
============ ============== =============
AVERAGE COMMON SHARES
OUTSTANDING (DILUTED) 785.5 785.5 785.5
============ ============== =============
EARNINGS (LOSS) PER SHARE
(DILUTED) $ (1.41) $ 1.28 $ (0.13)
============ ============== =============
(a) Excluding $5.2 million and $19.2 million net-of-tax, non-cash
stock compensation and non-recurring charges related to recent
acquisitions; $21.9 million and $148.4 million net-of-tax,
restructuring charges; $4.1 million and $372.9 million net-of-tax
impairment charges; non-recurring non-operating loss of $16.8
million and $518.2 million net-of-tax related to the write-down of
investment portfolio; $26.7 million and $48.1 million net-of-tax
gain on investment related activities and $3.7 million net-of-tax
gain on the divestiture of the legacy cable TV transmission
product line, net loss would have been $40.5 million and $103.9
million for the quarter and nine months ended July 31, 2001,
respectively. Diluted EPS would have been $(0.05) and $(0.13) for
the quarter and nine months ended July 31, 2001, respectively.
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS--UNAUDITED
(In millions)
July 31, October 31,
2001 2000
------------ ------------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 145.0 $ 217.3
Available-for-sale securities 128.1 1,136.9
Accounts receivable, net 422.8 702.7
Inventories, net 401.0 486.1
Prepaid and other current assets 281.0 107.9
------------ ------------
Total current assets 1,377.9 2,650.9
PROPERTY AND EQUIPMENT, net 734.1 608.6
OTHER ASSETS:
Deferred tax assets 284.2 52.4
Other, principally goodwill 300.8 658.6
------------ ------------
$ 2,697.0 $ 3,970.5
============ ============
LIABILITIES AND SHAREOWNERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 179.2 $ 211.3
Accrued compensation and benefits 112.3 233.4
Other accrued liabilities 361.0 202.3
Accrued income taxes -- 365.8
Notes payable and current maturities
of long-term debt 1.7 28.5
------------ ------------
Total current liabilities 654.2 1,041.3
LONG-TERM DEBT, less current maturities 3.7 16.5
Other long-term liabilities 6.1 --
------------ ------------
Total liabilities 664.0 1,057.8
------------ ------------
SHAREOWNERS' INVESTMENT
(789.3 and 770.3 shares outstanding,
respectively) 2,033.0 2,912.7
------------ ------------
$ 2,697.0 $ 3,970.5
============ ============
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