ADC Reports Third Quarter 2004 Results; New ADC Focused On Connecting Communications Everywhere.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- 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 From Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the Were $235 Million --Includes KRONE Sales and Strong Year-over-Year Growth in ADC's Historic 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. & Wireless Sales --International Sales Were 47% of Total Sales --$0.00 GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). And Adjusted Earnings Per Share From Continuing Operations --Total Cash and Securities (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. ) Were $464 Million at Quarter End ADC (Nasdaq:ADCT) (www.adc.com) today announced results for its third fiscal quarter ended July July: see month. 31, 2004 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 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 (BIA BIA abbr. Bureau of Indian Affairs ) and Integrated Solutions (IS), on a continuing operations basis. "This is an important point in time as we launch the new ADC -- a leading global network infrastructure company -- and prepare for expected profitable growth in fiscal 2005," 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. "We are now focused on our core business of connecting communications everywhere - from the communications providers' operations centers The facility or location on an installation, base, or facility used by the commander to command, control, and coordinate all crisis activities. See also base defense operations center; command center. to residential, mobile and enterprise subscribers. This is a business we know how to do profitably around the globe with great product and service solutions and strong customer relationships." Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and KRONE Acquisition On May 18, 2004, ADC completed the acquisition of the KRONE Group and in the third fiscal quarter of 2004 accounted for this acquisition under the purchase accounting method. Beginning in the third fiscal quarter of 2004, ADC classified as discontinued operations the business related to the Cuda(TM) cable modem termination system 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. product line and the operations related to the FastFlow(R) Broadband Provisioning Manager software, which were both divested on June June: see month. 29, 2004, and the business related to the Singl.eView(R) customer care and billing software. ADC expects to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... the Singl.eView 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). during its fourth fiscal quarter. These new discontinued operations are in addition to the BroadAccess40 business that was classified as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. beginning in the first fiscal quarter of 2004.
GAAP Results (dollars in millions, except per share amounts),
Continuing Operations
2004 2004 2003
Third Second Third
ADC Results Quarter Quarter Quarter
----------- ------- ------- -------
Net sales $ 235.2 160.7 152.2
Percent outside U.S. 47.3% 32.7% 31.2%
Gross margin 37.9% 41.1% 37.5%
Operating income (loss) $ 3.2 (3.6) (0.9)
Income (loss) from continuing operations $ 3.2 (3.3) (2.6)
Earnings (loss) per share from continuing
operations - basic and diluted $ 0.00 0.00 0.00
Segment Results
---------------
Net sales:
BIA $ 182.9 119.2 106.9
IS $ 58.2 45.4 51.4
Eliminations and corporate $ (5.9) (3.9) (6.1)
Operating income (loss):
BIA $ 20.0 20.3 7.1
IS $ (2.5) (2.6) 2.5
Eliminations and corporate $ (14.3) (21.3) (10.5)
Adjusted Results (dollars in millions, except per share amounts), Continuing Operations In addition to GAAP income statement results from continuing operations, ADC also presents adjusted income statement results from continuing operations 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 2004, management believes that a more meaningful comparison of fiscal 2004 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 nonoperating gains/losses in deriving de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. adjusted income statements from continuing operations for fiscal 2004 and historical periods. For an explanation of adjusted items excluded from GAAP income statement results, please refer to the "Adjustment Items Excluded from GAAP Results" section of this release and review the attached supplementary schedules that reconcile GAAP results to adjusted results for the three-month periods ended July 31, 2004 and 2003 and the three-month period ended April 30, 2004. Adjusted results from continuing operations, 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 are summarized below for ADC and its operating segments.
2004 2004 2003
Third Second Third
ADC Results, As Adjusted Quarter Quarter Quarter
------------------------ ------- ------- -------
Net sales $ 235.2 160.7 152.2
Gross margin 37.9% 41.1% 38.3%
Operating income (loss) $ 3.9 8.1 6.2
Income (loss) from continuing operations $ 3.7 8.7 4.0
Earnings (loss) per share from continuing
operations - basic and diluted $ 0.00 0.01 0.00
Segment Results, As Adjusted
----------------------------
Net sales:
BIA $ 182.9 119.2 106.9
IS $ 58.2 45.4 51.4
Eliminations and corporate $ (5.9) (3.9) (6.1)
Operating income (loss):
BIA $ 20.2 19.5 10.3
IS $ (2.4) (2.6) 4.9
Eliminations and corporate $ (13.9) (8.8) (9.0)
Acquisition Expenses ADC's GAAP and adjusted results in the third quarter of 2004 include intangible amortization expense of $2 million and integration expense of $4 million, both as a result of the KRONE acquisition. ADC Strategy Based On Growing Sales, Achieving Acquisition Synergies And Reducing Costs "Our growth strategy is built on solid fundamentals to be a leader in our market by defending our core business, selling more products and services globally, taking market share, creating innovative products, entering new markets, and acquiring core-related businesses, while staying focused on operating efficiently and cost effectively," 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)
July 31, April 30, July 31,
Balance Sheet Data and Related Statistics 2004 2004 2003
----------------------------------------- ---- ---- ----
Cash and cash equivalents - unrestricted $ 413.9 730.2 743.7
Short-term available for sale securities $ 7.4 11.2 3.5
Long-term available for sale securities $ 23.2 16.6 -
Restricted cash $ 19.8 18.0 16.3
-------- --------- ---------
Total cash and securities $ 464.3 776.0 763.5
======== ========= =========
Restructuring accrual $ 34.0 32.5 36.0
Current ratio 2.7 4.2 3.7
Long-term notes payable $ 400.4 400.0 400.0
ADC's total cash and securities (short- and long-term) of $464 million on July 31, 2004 decreased from the previous quarter primarily as a result of the $294 million cash purchase of KRONE and cash used by operating activities of discontinued operations. The resulting cash and securities balance is sufficient for organic growth plans for ADC's core business as $200 million of convertible notes do not mature until June 15, 2008, and the other $200 million of convertible notes does not mature until June 15, 2013. All convertible notes have a conversion price of $4.013 per share. In addition, ADC has a nearly full reserve against deferred tax assets of $863 million, which will reduce its income tax payable on future earnings for numerous years.
Nine Months Nine Months
Cash Flow Data and Related Ended Ended
Statistics July 30, 2004 July 30, 2003
---------- ------------- -------------
Total cash provided by (used in)
operating activities of
continuing operations $ 16.2 47.9
Total cash provided by (used in)
operating activities of
discontinued operations $ (37.3) (15.8)
2004 2004 2003
Third Second Third
Quarter Quarter Quarter
------- ------- -------
Days sales outstanding 58.5 54.6 49.3
Inventory turns - annualized 5.2 5.4 6.3
Depreciation and amortization $ 12.8 8.5 10.4
Property and equipment additions,
net $ 3.8 3.7 49.4
In the nine months ended July 31, 2004, total cash provided by operating activities of continuing operations was primarily from positive cash earnings partially offset by an increase in working capital to support sales growth. In the nine months ended July 31, 2003, total cash provided by operating activities of continuing operations was primarily from positive cash earnings and a reduction in working capital during the 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. . Total employees were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8,150 as of July 31, 2004 compared to approximately 5,900 as of April 30, 2004 and approximately 5,800 as of July 31, 2003. The increase in employees from April 30, 2004 was primarily a result of the KRONE acquisition. Review of Operating Segments Sales from ADC's operating segments from continuing operations are summarized above. Commentary on the changes in the sales 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 second quarter of 2004, BIA sales of $183 million in the third quarter of 2004 were $64 million higher primarily as a result of the KRONE acquisition that was finalized See finalization. on May 18, 2004. Comparing third quarters on a year-over-year basis, BIA sales were $76 million higher as a result of the addition of KRONE sales as well as 20% growth in ADC's historic connectivity sales and 73% growth in wireless sales being partially offset by lower sales of wireline systems. Sales of ADC's historic connectivity and wireless systems have each increased year-over-year for four quarters in a row. Integrated Solutions On a quarterly sequential basis from the second quarter of 2004, IS sales of $58 million in the third quarter of 2004 increased by $13 million primarily as a result of the addition of KRONE services sales and growth in sales of ADC's historic systems integration services. Comparing third quarters on a year-over-year basis, 2004 sales for IS increased by $7 million as a result of the addition of KRONE services sales partially offset by lower sales for both ADC's historic systems integration services and software systems. Recent Wins and Achievements ADC's wins and achievements in recent months are summarized below. Connectivity Worldwide, ADC is targeting sophisticated, high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" networks and data centers with a portfolio of IP Infrastructure solutions including: --10-Gigabit per second Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer Solutions -- ADC's new CopperTen(TM) system is the world's first augmented Category 6 structured cabling Structured Cabling is defined as building or campus telecommunications cabling infrastructure that consists of a number of standardized smaller elements (hence structured) called subsystems. system with the necessary characteristics to enable 10-Gigabit per second Ethernet transmission over a full 100 meters. Typical Category 6 cabling systems are hindered by the technical combination of insertion loss The amount of loss attributed to a particular device being used in (inserted into) the system. For example, a circuit added to filter out unwanted frequencies may reduce the output current by some amount. See injection loss. and alien crosstalk See crosstalk. that greatly disrupts transmission and high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. . The CopperTen system incorporates patent-pending design and manufacturing processes that enable the products to overcome these challenges using unshielded twisted pair See twisted pair. (hardware) unshielded twisted pair - (UTP) Normal telephone wire (in the USA). It may be used for computer to computer communications, e.g. using a version of Ethernet or localtalk. It is much cheaper than standard "full-spec" Ethernet cable. cable, the most prolific type of enterprise network cabling in the world. --Power-over-Ethernet (PoE) Infrastructure Solutions -- The new ADC Midspan Power-over-Ethernet Controller eliminates the need for installation of local power to devices such as VoIP phones See IP phone and softphone. and 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. access points, saving time and money. With the ADC Midspan PoE Controller, power for the network device is generated in a large corporation's telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. room, which is usually backed up by an uninterrupted power supply, and delivered over standard Category 5, 5e or 6 Ethernet LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. cabling, increasing reliability even further. --Media Conversion and Optical Extension Solutions -- The carrier-class, intelligent, and scalable ADC OptEnet(TM) media converter A device that converts from one type of media to another. It typically refers to a hardware device that connects different transmission media; for example, from twisted pair to coax or from twisted pair to optical fiber. platform manages any network's Ethernet or SONET media transitions. Integrated intelligence allows the user to remotely monitor system performance and transmit To send data over a communications line. See transfer. alarm conditions to upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger operational support systems. Incorporating a patent-pending system architecture and leveraging ADC's leadership in connectivity solutions, the OptEnet platform provides the ideal solution for Ethernet extensions in support of transparent LAN services A service from a carrier that links remote Ethernets together. It is called "transparent" because the connected Ethernets are viewed as one Ethernet by the customer, regardless of the technology employed by the carrier in between. or switch router See layer 3 switch. interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. requirements. A variety of solutions are supported ranging from 10Mb to OC-12 to Gigabit Ethernet An Ethernet standard that transmits at 1 Gbps. Used mostly to connect high-end workstations and servers as well as for network backbones, Gigabit Ethernet transmits full duplex from point to point using switches and half duplex in a shared environment (CSMA/CD) using a hub. . --Ethernet Infrastructure Solutions -- The ADC Ethernet Distribution Frame (EDF (algorithm) EDF - earliest deadline first. ) provides a cross-connect field that ties together all Ethernet network elements from multiple floors of the central office or point-of-presence, providing a common craft interface for performing adds, upgrades, and rearrangements on Ethernet services. The EDF typically consists of NEBS NEBS Network Equipment Building System (Bell Telephone Labs) NEBS Network Equipment Building Standards NEBS New England Business Services NEBS New England Barbecue Society NEBS Neue Europäische Bewegung Schweiz Level 3 Certified See certification. equipment such as ADC's patented Glide See Glide Effortless and Glide PhotoShare. Cable Management, Category 5e and 6 Ethernet patch panels A group of sockets used to connect incoming and outgoing lines in communications and electronic systems. Patch panels allow for manually wiring the connections with small cables (patch cords), rather than automatic switching. , and Fiber Management Trays n. pl. 1. See Trais. . With the EDF installed, technicians can isolate isolate /iso·late/ (i´sah-lat) 1. to separate from others. 2. a group of individuals prevented by geographic, genetic, ecologic, social, or artificial barriers from interbreeding with others of their kind. elements, connect new elements, route around problems, and perform maintenance functions. The frame design supports network growth and flexibility in the Ethernet distribution system. ADC also has an Ethernet Test Access Panel to provide carriers and enterprises a non-invasive Non-invasive A procedure that does not penetrate the body. Mentioned in: Multiple-Gated Acquisition Scan non-invasive 1. not penetrating the skin, e.g. a non-invasive test. 2. method to test and monitor the delivery of critical data services over Ethernet cabling, up to and including Gigabit Ethernet. --Optical Infrastructure Solutions -- ADC's optical infrastructure products and systems provide access, termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. , and connectivity for fiber-based networks, including its family of high-density high-den·si·ty adj. Having a high concentration: high-density urban areas. Next-Generation Frame products, FL1000 and FL2000 fiber patch panels, and the FiberGuide(R) raceway system. Syncroness Inc. has successfully deployed ADC's CopperTen cabling system. The Denver-based engineering firm will use CopperTen to facilitate the company's intensive data requirements, including the use of high-powered high-pow·ered also high-pow·er adj. Having great power or energy; dynamic: She's on a high-powered career track. high-powered Adjective 1. 3D CAD CAD: see computer-aided design. (Computer-Aided Design) Using computers to design products. CAD systems are high-speed workstations or desktop computers with CAD software. software and collaboration Working together on a project. See collaborative software. with global offices and clients. NTS NTS National Technical Systems NTS National Trust for Scotland NTS Nevada Test Site NTS NT Server (Microsoft Windows) nts Not the Same NTS National Traffic System (amateur radio) Communications successfully deployed the ADC OmniReach(TM) Fiber-to-the-Premises Infrastructure Solutions. The Texas-based competitive local exchange carrier provides voice, video and 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 services to residential and business customers in Lubbock Lubbock, city (1990 pop. 186,206), seat of Lubbock co., NW Tex.; inc. 1909. In the Llano Estacado region on a branch of the Brazos River, it was settled in 1879 by Quakers. and Wollforth using its highly reliable advanced fiber network. Telekomunikacja Polska Telekomunikacja Polska S.A. (also known as TPSA or just TP) is a Polish national telecommunications provider established in December of 1991. Public company traded on Warsaw Stock Exchange, controlling stake is owned by France Télécom and Kulczyk Holding, with the (TPSA An earlier rating from the now obsolete TPC-A benchmark, which measures overall transaction processing performance. See TPC. ), the leading telecommunications operator in Poland Poland, Pol. Polska, officially Republic of Poland, republic (2005 est. pop. 38,635,000), 120,725 sq mi (312,677 sq km), central Europe. It borders on Germany in the west, on the Baltic Sea and the Kaliningrad region of Russia in the north, on Lithuania, , has selected KRONE copper connectivity solutions to complete the digitalization digitalization /dig·i·tal·iza·tion/ (dij?i-tal-i-za´shun) the administration of digitalis or one of its glycosides in a dosage schedule designed to produce and then maintain optimal therapeutic concentrations of its cardiotonic of the operator's high-speed network. Under the terms of the agreement, ADC will provide KRONE main distribution frames, digital distribution frames, cable heads, associated LSA LSA - Link State Advertisement PLUS(R) modules and accessories to optimize optimize - optimisation TPSA's network infrastructure and enhance delivery of new and advanced telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. . KRONE will work with its local partner, C&C Partners Telecom to deploy the equipment throughout Poland. GHD GHD Growth Hormone Deficiency GHD Good Humanitarian Donorship GHD Good Hair Day GHD Gutteridge Haskins and Davey GHD Graduate Hall Director (university housing) GHD Global Help Desk GHD Growth Hormone Disorder Pty Ltd PTY LTD Propriety Limited (company structure in Australia) , has installed the KRONE(R) HIGHBAND(R) 25 Patch A fix to a program. In the past, a patch used to mean changing actual executable, machine instructions, but today more often than not, it means replacing an executable module in its entirety such as an .EXE or .DLL file. By Exception solution. The solution enables GHD to increase productivity by providing a reliable high performance network that is easy to maintain. GHD, one of Australia's largest and longest established companies, ranks in the world's top 50 engineering firms with a network of more than 2,300 employees around the globe. BHP Billiton BHP Billiton is the world's largest mining company.[1] Its origin is in the 2001 merger of Australia's Broken Hill Proprietary Company (BHP) and the UK's Billiton, which has a South African background. The result is a dual-listed company. Mitsubishi Mitsubishi: see zaibatsu. Alliance (BMA BMA British Medical Association. ), Australia's largest coking coal producer, has chosen KRONE HIGHBAND 25 for a major network infrastructure upgrade. Once complete, the installation will encompass some 4,000 to 5,000 outlets in approximately 70 BMA locations. KRONE Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. received a record four awards from the Central Coast Manufacturers' Association including Large Manufacturer of the Year, Innovation in Marketing, Innovation in Training and Innovation in Product Design, recognizing KRONE's combined expertise in the successful design, development and marketing of innovative connectivity products. Bell Telecom Systems of Amman Amman (ämän`), city (1997 est. pop. 1,415,000), capital of Jordan, N central Jordan, on the Jabbok (Wadi Zerka) River. Jordan's largest city and industrial and commercial heart, it is also a transportation hub, especially for pilgrims en route , Jordan Jordan, country, Asia Jordan, officially Hashemite Kingdom of Jordan, kingdom (2005 est. pop. 5,760,000), 35,637 sq mi (92,300 sq km), SW Asia. It borders on Israel and the West Bank in the west, on Syria in the north, on Iraq in the northeast, and on Saudi became a new ADC distributor to market ADC's broad range of connectivity solutions throughout the Middle East. ADC signed a new reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. agreement with EG FiberOptics fiberoptics /fi·ber·op·tics/ (fi?ber-op´tiks) the transmission of an image along flexible bundles of glass or plastic fibers, each of which carries an element of the image. AB to market and sell ADC's fiber connectivity products throughout Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. . EG FiberOptics is one of the leading suppliers of high-technology components to the telecommunications industry in Scandinavia Scandinavia (skăn'dĭnā`vēə), region of N Europe. It consists of the kingdoms of Sweden, Norway, and Denmark; Finland and Iceland are usually considered part of Scandinavia. . Wireless Triton PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. is using ADC's Digivance(TM) Indoor indoor strictly in a human dwelling; more widely includes an animal dwelling. indoor environment the physical, social and psychological environment within a human dwelling that can influence the health of a companion animal. Coverage Solution to provide in-building wireless service at two luxury resorts in the Southeast Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: 1 City (1990 pop. 26,866), Dade co., SE Fla.; inc. 1913. A large Miami suburb with a growing Hispanic population, Homestead is a trade center for the redland district, known for its many varieties of citrus and other fruits and vegetables. in Hot Springs, Virginia Hot Springs is an unincorporated community in Bath County, Virginia. It is located about 5 miles (8 km) southwest of Warm Springs on U.S. Highway 220. Hot Springs is the site of a number of resorts that make use of the springs. , and The Sanctuary sanctuary, sacred place, especially the most sacred part of a sacred place. In ancient times and in the Middle Ages, a sanctuary served as asylum, a place of refuge for persons fleeing from violence or from the penalties of the law. at Kiawah Island, South Carolina Kiawah Island is a town and an island in Charleston County, South Carolina, in the United States. As of the 2000 census, the town population was 1,163. It is a major U.S. tourist site which offers expensive spacious villas, large highly acclaimed golf courses, beaches, and other . ADC has joined The Wireless Networking See wireless network. and Communications Group (WNCG WNCG Wireless Networking and Communications Group (University of Texas at Austin) ) at the University of Texas at Austin “University of Texas” redirects here. For other system schools, see University of Texas System. The University of Texas at Austin (often referred to as The University of Texas, UT Austin, UT, or Texas as an Industrial Affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. sponsor. WNCG is a leading academic research center with more than 12 engineering professors and 70 graduate and undergraduate students who are pursuing cutting edge research in next-generation wireless technologies for both licensed and unlicensed services. Wireline ADC introduced its new LoopStar(TM) 800 next-generation SONET access system that allows service providers to cost-effectively deploy and manage TDM (Time Division Multiplexing) A technology that transmits multiple signals simultaneously over a single transmission path. Each lower-speed signal is time sliced into one high-speed transmission. and Ethernet services to end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. customers from a single platform. Systems Integration ADC expanded its Systems Integration capabilities with the addition of a new DC power engineering, furnishing and installation offering. The new service capabilities are a direct result of customer requests as North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. carriers look for more cost effective ways to maintain their networks. The new ADC Network Integration Center in Marietta Marietta (mârēĕt`ə). 1 City (1990 pop. 44,129), seat of Cobb co., NW Ga.; inc. 1834. The principal manufactures of this suburb of Atlanta are related to aircraft production. At the foot of Kennesaw Mt. , Ga. was opened to perform proof-of-concept testing for ADC's customers and to test the performance of network elements being installed by ADC prior shipment to a customer location. This facility allows ADC to work closely with network equipment manufacturers and its customers to ensure that new network technologies can be implemented smoothly and efficiently. ADC also opened a new operations and test facility in Papworth Everard Papworth Everard is the name of a village in Cambridgeshire, England. It lies ten miles west of Cambridge and six miles south of Huntingdon, having along its centre Ermine Street, the old North Road, the Roman highway that for centuries served as a major artery from London to near Cambridge Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. , England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. , and includes controlled environments for the preconfiguration and testing of network equipment, a warehouse facility, and sales and administration offices. ADC's Systems Integration provides a broad range of services for operators of fixed wire, wireless, cable, and alternative networks. The new UK facility will serve as the focal point focal point n. See focus. for ADC's services throughout 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). .Software BOCO Inter-Telecom has selected ADC's Metrica(R) solution as an enhancement to its network management system. BOCO Inter-Telecom is integrating ADC's Metrica software into its own network management system to provide a total solution to China Mobile including professional performance management and analysis of China Mobile's 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 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. network. BOCO Inter-Telecom is China Mobile's largest network management system vendor in mainland Mainland. 1 Island (1991 pop. 14,150), 178 sq mi (461 sq km), N Scotland. The largest of the Orkney Islands, it is also called Pomona. Kirkwall, the seat of the Orkney Islands council area, is on the island. China. China Mobile serves more than 150 million subscribers in total and has 31 provincial Provincial has several meanings and may refer to:
Telkomsel Telkomsel is an Indonesian cellular telecommunication company. It is a subsidiary of PT TELKOM. Telkomsel claims itself as the biggest GSM provider in Indonesia and the first company in Asia that offered GSM prepaid service. has installed ADC's market-leading Metrica software for its GPRS and SMS (1) (Storage Management System) Software used to routinely back up and archive files. See HSM. (2) (Systems Management Server) Systems management software from Microsoft that runs on Windows NT Server. networks. Telkomsel is Indonesia's largest cellular operator, providing network coverage to more than 80% of the country's population. The wireless operator will use ADC's Metrica software to monitor the network performance and the quality of services delivered to all of Telkomsel's mobile subscribers in the region. ADC's Metrica Group has been awarded Multimedia Super Corridor (MSC (1) (MSC.Software Corporation, Santa Ana, CA, www.mscsoftware.com) Founded in 1963 by Richard H. MacNeal and Robert G. Schwendler, MSC is the world's largest provider of mechanical computer aided engineering (MCAE) strategies, simulation software and services. ) status by the Multimedia Development Corporation (MDC (1) (Mobile Daughter Card) See riser card. (2) See Meta Data Coalition. ). MDC was established in 1996 by the Government of Malaysia Malaysia (məlā`zhə), independent federation (2005 est. pop. 23,953,000), 128,430 sq mi (332,633 sq km), Southeast Asia. The official capital and by far the largest city is Kuala Lumpur; Putrajaya is the adminstrative capital. to harness harness, comprehensive term for the gear of a draft animal, excluding the yoke, by which it is attached to the load that it pulls. Although harnesses are used on dogs (for drawing travois and dogsleds), on goats, and sometimes on oxen, the typical harness is for the full potential of information and communication technology and multimedia technology in the region. MSC accreditation accreditation, n a process of formal recognition of a school or institution attesting to the required ability and performance in an area of education, training, or practice. represents the full acknowledgement by the Government of Malaysia that ADC is committed to the country in terms of a well-established employee base and strong research and development capability. Furthermore, the award of MSC status underlines ADC's enhanced support to customers in the Asia Pacific region. This follows the establishment in Malaysia earlier this year of an ADC global support center. Swisscom Swisscom AG is the leading telephone company in Switzerland. Swisscom is present nationwide, delivering all services and products for mobile, fixed and IP-based voice and data communications. Mobile, Switzerland's leading wireless operator, has selected ADC's Metrica Performance Manager 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. ) network, which is scheduled to be launched later this year. Swisscom Mobile has more than 3.7 million customers, covers 99.7% of the Swiss population and offers access to more than 370 mobile telephone networks around the world. Austrian communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. , ONE, has selected Metrica to monitor their network performance and quality of services delivered over its multi-vendor UMTS network. ONE has mobile network coverage of 98% and has around 1.5 million mobile subscribers. Qtel Qtel Qatar Telecommunications Company (also seen as Q-TEL) will deploy ADC's Metrica Performance Manager to monitor their network performance and the quality of services delivered to all of Qtel's mobile subscribers throughout Qatar Qatar or Katar (both: kŭ`tər, gŭ–, kətär`), officially State of Qatar, independent emirate (2005 est. pop. 863,000), c. . Outlook As previously announced, ADC has indicated that it has been conducting a product portfolio review, including a review of potential acquisitions and divestitures of certain product lines. With the KRONE acquisition and the divestitures announced through the third quarter of 2004, ADC has significantly altered its overall product portfolio. ADC's product portfolio review will be an ongoing process however. Without giving effect to any potential additional portfolio changes, ADC currently estimates that sales in the fourth quarter of 2004 will be around $250-$260 million and adjusted earnings per share will be around $0.01-$0.02. ADC is not able to provide an outlook for GAAP earnings per share at this time for the reasons explained below. ADC cautions investors that forecasting remains extremely difficult and subject to change because of many factors, including soft and changing industry conditions, acquisition integration activities, as well as 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, especially with respect to cost reduction activities and the timing of closing and deploying contracts that can delay the start of new sales sources. With the KRONE acquisition, internal growth initiatives and potential future product line additions, ADC remains focused on its goal of growing profitably in its core network infrastructure business and being a leader in each market served by the company. Starting in the third quarter of 2002, the tax benefits of ADC's pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta losses have been added to its deferred tax assets with an offsetting valuation reserve. As of July 31, 2004, ADC had a total of $863 million in deferred tax assets that have been offset by a nearly full valuation reserve and as a result have been shown on the balance sheet at an insignificant amount. 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 2022-2024. Adjusted 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 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 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 adjusted earnings per share. Adjustment Items Excluded from GAAP Results Adjusted income statement results from continuing operations in both fiscal 2004 and 2003 exclude impairment and restructuring charges, and certain non-operating gains/losses. In deriving adjusted results from continuing operations for the third quarter of 2004, ADC excluded net charges of $0.5 million ($0.00 per share) primarily related to restructuring charges for employee reductions partially offset by a non-operating investment gain. In deriving adjusted results from continuing operations for the second quarter of 2004, ADC excluded net charges of $12 million ($0.01 per share) primarily related to restructuring charges on facilities consolidations. In deriving adjusted results from continuing operations for the third quarter of 2003, ADC excluded restructuring charges of $7 million ($0.01 per share) primarily related to employee reductions and facilities consolidations. Today's Earnings Conference Call And Webcast at 5:00 p.m. Eastern ADC will discuss its third quarter 2004 results and current outlook on a conference call scheduled today, August 25, 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 11:59 p.m. Eastern time on September September: see month. 1 by domestic callers at (800) 642-1687 and by international callers at (706) 645-9291 (conference ID number is 9016778) or on the Internet at www.adc.com/investor, by clicking on News & Communications, then clicking on Webcasts. About ADC ADC is a world leader in providing global network infrastructure products, services and software that enable the profitable delivery of high-speed Internet See broadband. , data, video, and voice services over our customers' unique networks. ADC (NASDAQ: ADCT) has sales into more than 90 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 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. , 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; the impact of actions we may take as a result of our ongoing portfolio review, which may include business acquisitions or divestitures; ADC's ability to effectively integrate the KRONE acquisition with ADC's historic operations; 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 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. ; and other risks and uncertainties, including those identified in the section captioned Risk Factors in Item 1 of ADC's Annual 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 October: see month. 31, 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
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In millions)
ASSETS
July October
2004 2003
--------- ---------
CURRENT ASSETS:
Cash and cash equivalents $413.9 $718.7
Short-term marketable securities 7.4 26.7
Accounts receivable 152.4 91.3
Unbilled revenue 31.4 28.0
Inventories 112.2 57.6
Assets of discontinued operations 21.7 60.1
Prepaid and other current assets 39.8 44.2
--------- ---------
Total current assets 778.8 1,026.6
PROPERTY AND EQUIPMENT, net 240.5 176.6
ASSETS HELD FOR SALE 6.9 25.1
RESTRICTED CASH 19.8 15.6
GOODWILL 175.7 -
INTANGIBLES 73.9 3.4
LONG-TERM MARKETABLE SECURITIES 23.2 19.5
OTHER ASSETS 35.8 30.1
--------- ---------
TOTAL ASSETS $1,354.6 $1,296.9
========= =========
LIABILITIES & SHAREOWNERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $68.8 $44.9
Accrued compensation and benefits 57.0 45.1
Other accrued liabilities 89.3 62.5
Income taxes payable 23.8 18.9
Restructuring accrual 34.0 29.6
Liabilities of discontinued operations 20.2 57.9
Notes payable 0.6 8.0
--------- ---------
Total current liabilities 293.7 266.9
PENSION OBLIGATIONS 60.6 -
LONG-TERM NOTES PAYABLE 400.4 399.9
OTHER LONG-TERM LIABILITIES 4.4 2.4
--------- ---------
Total liabilities 759.1 669.2
SHAREOWNERS' INVESTMENT
(809.0 and 806.6 shares outstanding) 595.5 627.7
--------- ---------
TOTAL LIABILITIES AND SHAREOWNERS' INVESTMENT $1,354.6 $1,296.9
========= =========
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
GAAP BASIS
(In Millions, Except Per Share Amounts)
For the Three For the Nine
Months Ended Months Ended
July 31, July 31,
------------------- -------------------
2004 2003 2004 2003
------- ------- ------- -------
NET SALES $235.2 $152.2 $538.7 $457.3
COST OF PRODUCT SOLD 146.0 95.2 326.3 294.6
------- ------- ------- -------
GROSS PROFIT 89.2 57.0 212.4 162.7
------- ------- ------- -------
GROSS MARGIN 37.9% 37.5% 39.4% 35.6%
EXPENSES:
Research and
development 18.0 15.5 48.0 51.4
Selling and
administration 65.7 36.6 141.9 133.1
Amortization of
acquired intangibles 1.6 - 1.6 -
Impairment charges - 0.2 1.5 14.8
Restructuring charges 0.7 5.6 12.8 22.8
------- ------- ------- -------
Total Expenses 86.0 57.9 205.8 222.1
------- ------- ------- -------
As a Percentage
of Net Sales 36.6% 38.0% 38.2% 48.6%
OPERATING INCOME (LOSS) 3.2 (0.9) 6.6 (59.4)
OPERATING MARGIN 1.4% (0.6%) 1.2% (13.0%)
OTHER INCOME (EXPENSE),
NET:
Interest 0.6 0.9 2.9 3.5
Other (0.3) (2.6) 6.2 (5.0)
------- ------- ------- -------
INCOME (LOSS) BEFORE
INCOME TAXES 3.5 (2.6) 15.7 (60.9)
PROVISION FOR INCOME
TAXES 0.3 - 0.7 -
------- ------- ------- -------
INCOME (LOSS) FROM
CONTINUING OPERATIONS 3.2 (2.6) 15.0 (60.9)
DISCONTINUED OPERATIONS,
NET OF TAX:
Loss from discontinued
operations (10.7) (12.5) (49.0) (25.1)
Loss on sale (6.8) - (9.3) -
------- ------- ------- -------
(17.5) (12.5) (58.3) (25.1)
NET LOSS $(14.3) (a) $(15.1)(b) $(43.3) (a) $(86.0)(b)
======= ======= ======= =======
NET MARGIN (6.1%) (9.9%) (8.0%) (18.8%)
AVERAGE COMMON SHARES
OUTSTANDING - BASIC 808.9 804.1 807.9 802.7
======= ======= ======= =======
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 811.7 804.1 813.3 802.7
======= ======= ======= =======
EARNINGS (LOSS) PER
SHARE FROM CONTINUING
OPERATIONS - BASIC AND
DILUTED $0.00 (a) $(0.00)(b) $0.02 (a) $(0.08)(b)
======= ======= ======= =======
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS
- BASIC AND DILUTED $(0.02) (a) $(0.02)(b) $(0.07) (a) $(0.03)(b)
======= ======= ======= =======
NET LOSS PER SHARE -
BASIC AND DILUTED $(0.02) (a) $(0.02)(b) $(0.05) (a) $(0.11)(b)
======= ======= ======= =======
(a) Excluding $0.7 million and $12.8 million restructuring charges;
$0.0 and $1.5 million impairment; $0.4 million and $4.8 million
nonoperating investment gain; $0.0 and $3.7 million nonoperating gain
related to divested product lines; $0.2 million and $0.2 million other
nonoperating loss; and $17.5 million and $58.3 million net loss on
discontinued operations; net income and diluted EPS would have been
$3.7 million and $21.0 million and $0.00 and $0.03 for the three and
nine months ended July 31, 2004, respectively.
(b) Excluding $5.6 million and $22.8 million restructuring charges;
$0.2 million and $14.8 million impairment charges; $1.3 million and
$2.7 million of inventory restructuring; $0.0 and $2.2 million
nonoperating loss related to the write-down of the investment
portfolio; $0.0 and $1.2 million nonoperating gain on sale of
investments; $0.8 million and $(2.7) million net nonoperating gain
(loss) for divested product lines; $0.3 million and $0.3 million
nonoperating loss related to a sale leaseback transaction; $0.0 and
$0.1 million gain related to misc. nonoperating activity; $12.5
million and $25.1 million net loss on discontinued operations; net
income (loss) and diluted EPS would have been $4.0 million and $(16.7)
million and $0.0 and $(0.02) for the three and nine months ended July
31, 2003, respectively.
ADC Telecommunications, Inc.
Consolidated Statement of Cash Flows
(in millions)
SUBJECT TO RECLASSIFICATION
Nine months ended
July 31, July 31,
2004 2003
-------- --------
Cash Flows from Operating Activities:
Net Income (43.3) (86.0)
Adjustments:
Loss from discontinued operations 49.0 25.1
Inventory and fixed asset write-offs 1.4 8.0
Depreciation and amortization 30.7 43.1
Change in bad debt reserves (3.3) 0.9
Change in inventory reserves 0.6 (1.7)
Non-cash stock compensation 2.1 5.5
Loss (Gain) on sale of investments (4.8) (2.0)
Loss (Gain) on sale of business 6.5 2.8
Loss (Gain) on sale of fixed assets (0.3) 1.5
Other (1.3) (0.5)
Changes in assets & liabilities, net of
acquisitions
Accounts receivable and unbilled revenues 5.7 33.5
Inventories (22.2) 20.5
Prepaid income taxes and other assets (0.1) 160.2
Accounts payable (2.3) (37.3)
Accrued liabilities (2.2) (125.7)
-------- --------
Total cash provided (used) by operating
activities from continuing operations 16.2 47.9
Total cash provided (used) by operating
activities from discontinued operations (37.3) (15.8)
-------- --------
Total cash provided (used) by operating
activities (21.1) 32.1
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (291.7) -
Divestitures, net of cash disposed 3.7 0.5
Property and equipment additions, net of disposals (10.4) (65.5)
Proceeds from sale of a building 10.8 0.0
Decrease (Increase) in restricted cash (4.2) 154.5
Short-term investments 19.6 0.0
Long-term investments (3.7) 3.7
-------- --------
Total cash provided (used) by investing
activities (275.9) 93.2
Cash Flows from Financing Activities:
Increase (Decrease) in debt (11.9) 371.5
Purchase of a call spread option 0.0 (34.5)
Common stock issued 3.3 2.8
-------- --------
Total cash provided (used) by financing
activities (8.6) 339.8
Effect of exchange rate on cash 0.8 (0.3)
-------- --------
Increase (Decrease) in cash and cash equivalents (304.8) 464.8
Cash and cash equivalents, beginning of period 718.7 278.9
-------- --------
Cash and cash equivalents, end of period 413.9 743.7
-------- --------
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
RECONCILIATION OF GAAP RESULTS TO ADJUSTED RESULTS
(In Millions, Except Per Share Amounts)
For the Three Months Ended
July 31, 2004
Restructuring
GAAP and Other Adjusted
Results Charges (a) Results (a)
-------- ------------- --------
NET SALES $235.2 - $235.2
COST OF PRODUCT SOLD 146.0 - 146.0
-------- ------------- --------
GROSS PROFIT 89.2 - 89.2
-------- ------------- --------
GROSS MARGIN 37.9% 37.9%
EXPENSES:
Research and development 18.0 - 18.0
Selling and administration 65.7 - 65.7
Amortization of acquired
intangibles 1.6 - 1.6
Impairment charges - - -
Restructuring charges 0.7 (0.7) -
-------- ------------- --------
Total Expenses 86.0 (0.7) 85.3
-------- ------------- --------
As a Percentage of Net
Sales 36.6% 36.3%
OPERATING INCOME (LOSS) 3.2 0.7 3.9
OPERATING MARGIN 1.4% 1.7%
OTHER INCOME (EXPENSE), NET:
Interest 0.6 - 0.6
Other (0.3) (0.2) (0.5)
-------- ------------- --------
INCOME (LOSS) BEFORE INCOME
TAXES 3.5 0.5 4.0
PROVISION FOR INCOME TAXES 0.3 - 0.3
-------- ------------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 3.2 0.5 3.7
DISCONTINUED OPERATIONS, NET OF
TAX:
Loss from discontinued
operations (10.7) 10.7 -
Loss on sale of subsidiary (6.8) 6.8 -
-------- ------------- --------
(17.5) 17.5 -
NET (LOSS) INCOME $(14.3) $18.0 $3.7
======== ============= ========
NET MARGIN (6.1%) 1.6%
AVERAGE COMMON SHARES
OUTSTANDING - BASIC 808.9 808.9 808.9
======== ============= ========
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 811.7 811.7 811.7
======== ============= ========
EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS - BASIC
AND DILUTED $0.00 $0.00 $0.00
======== ============= ========
EARNINGS (LOSS) PER SHARE FROM
DISCONTINUED OPERATIONS - BASIC
AND DILUTED $(0.02) $0.02 $0.00
======== ============= ========
NET LOSS PER SHARE - BASIC AND
DILUTED $(0.02) $0.02 $0.00
======== ============= ========
For the Three Months Ended
July 31, 2003
Restructuring
GAAP and Other Adjusted
Results Charges (b) Results (b)
-------- ------------- --------
NET SALES $152.2 - $152.2
COST OF PRODUCT SOLD 95.2 (1.3) 93.9
-------- ------------- --------
GROSS PROFIT 57.0 1.3 58.3
-------- ------------- --------
GROSS MARGIN 37.5% 38.3%
EXPENSES:
Research and development 15.5 - 15.5
Selling and administration 36.6 - 36.6
Amortization of acquired
intangibles
Impairment charges 0.2 (0.2) -
Restructuring charges 5.6 (5.6) -
-------- ------------- --------
Total Expenses 57.9 (5.8) 52.1
-------- ------------- --------
As a Percentage of Net
Sales 38.0% 34.2%
OPERATING INCOME (LOSS) (0.9) 7.1 6.2
OPERATING MARGIN (0.6%) 4.1%
OTHER INCOME (EXPENSE), NET:
Interest 0.9 - 0.9
Other (2.6) (0.5) (3.1)
-------- ------------- --------
INCOME (LOSS) BEFORE INCOME
TAXES (2.6) 6.6 4.0
PROVISION FOR INCOME TAXES - - -
------------------------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (2.6) 6.6 $4.0
DISCONTINUED OPERATIONS, NET OF
TAX:
Loss from discontinued
operations (12.5) 12.5 -
Loss on sale of subsidiary - - -
-------- ------------- --------
(12.5) 12.5 -
NET (LOSS) INCOME $(15.1) $19.1 $4.0
======== ============= ========
NET MARGIN (9.9%) 2.6%
AVERAGE COMMON SHARES
OUTSTANDING - BASIC 804.1 804.1 804.1
======== ============= ========
AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 804.1 808.3 808.3
======== ============= ========
EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS - BASIC
AND DILUTED $(0.00) $0.01 $0.00
======== ============= ========
EARNINGS (LOSS) PER SHARE FROM
DISCONTINUED OPERATIONS - BASIC
AND DILUTED $(0.02) $0.02 $0.00
======== ============= ========
NET LOSS PER SHARE - BASIC AND
DILUTED $(0.02) $0.02 $0.00
======== ============= ========
(a) Excluding $0.7 million restructuring charges; $0.4 million
nonoperating investment gain; $0.2 million other nonoperating loss;
and $17.5 million net loss on discontinued operations; net income and
diluted EPS would have been $3.7 million and $0.00 for the quarter
ended July 31, 2004.
(b) Excluding $5.6 million restructuring charges; $1.3 million
inventory restructuring; $0.2 million impairment; $0.8 million
nonoperating gain related to divested product lines; $0.3 million
nonoperating loss related to a sale leaseback transaction; and $12.5
million net loss from discontinued operations; net income and diluted
EPS would have been $4.0 million and $0.00 for the quarter ended July
31, 2003.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
RECONCILIATION OF GAAP RESULTS TO ADJUSTED RESULTS
(In Millions, Except Per Share Amounts)
For the Three Months Ended
July 31, 2004
Restructuring
and
GAAP Other Adjusted
Results Charges (a) Results (a)
------- ------------- --------
NET SALES $235.2 $- $235.2
COST OF PRODUCT SOLD 146.0 - 146.0
------- ------------- --------
GROSS PROFIT 89.2 - 89.2
------- ------------- --------
GROSS MARGIN 37.9% 37.9%
EXPENSES:
Research and development 18.0 - 18.0
Selling and administration 65.7 - 65.7
Amortization of acquired
intangibles 1.6 - 1.6
Impairment charges - - -
Restructuring charges 0.7 (0.7) -
------- ------------- --------
Total Expenses 86.0 (0.7) 85.3
------- ------------- --------
As a Percentage of Net
Sales 36.6% 36.3%
OPERATING INCOME (LOSS) 3.2 0.7 3.9
OPERATING MARGIN 1.4% 1.7%
OTHER INCOME (EXPENSE), NET:
Interest 0.6 - 0.6
Other (0.3) (0.2) (0.5)
------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES 3.5 0.5 4.0
PROVISION FOR INCOME TAXES 0.3 - 0.3
------- ------------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 3.2 0.5 3.7
DISCONTINUED OPERATIONS, NET OF
TAX:
Loss from discontinued
operations (10.7) 10.7 -
Loss on sale of subsidiary (6.8) 6.8 -
------- ------------- --------
(17.5) 17.5 -
NET LOSS $(14.3) $18.0 $3.7
======= ============= ========
NET MARGIN (6.1%) 1.6%
AVERAGE COMMON SHARES OUTSTANDING
- BASIC 808.9 808.9 808.9
======= ============= ========
AVERAGE COMMON SHARES OUTSTANDING
- DILUTED 811.7 811.7 811.7
======= ============= ========
EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS - BASIC
AND DILUTED $0.00 $0.00 $0.00
======= ============= ========
LOSS PER SHARE FROM DISCONTINUED
OPERATIONS - BASIC AND DILUTED $(0.02) $0.02 $0.00
======= ============= ========
NET LOSS PER SHARE - BASIC AND
DILUTED $(0.02) $0.02 $0.00
======= ============= ========
For the Three Months Ended
April 30, 2004
Restructuring
GAAP and Other Adjusted
Results Charges (b) Results (b)
------- ------------- --------
NET SALES $160.7 $- $160.7
COST OF PRODUCT SOLD 94.6 - 94.6
------- ------------- --------
GROSS PROFIT 66.1 - 66.1
------- ------------- --------
GROSS MARGIN 41.1% 41.1%
EXPENSES:
Research and development 15.9 - 15.9
Selling and administration 42.1 - 42.1
Amortization of acquired
intangibles
Impairment charges - - -
Restructuring charges 11.7 (11.7) -
------- ------------- --------
Total Expenses 69.7 (11.7) 58.0
------- ------------- --------
As a Percentage of Net
Sales 43.4% 36.1%
OPERATING INCOME (LOSS) (3.6) 11.7 8.1
OPERATING MARGIN (2.2%) 5.0%
OTHER INCOME (EXPENSE), NET:
Interest 1.5 - 1.5
Other (0.7) 0.3 (0.4)
------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES (2.8) 12.0 9.2
PROVISION FOR INCOME TAXES 0.5 - 0.5
------- ------------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (3.3) 12.0 8.7
DISCONTINUED OPERATIONS, NET OF
TAX:
Loss from discontinued
operations (24.5) 24.5 -
Loss on sale of subsidiary 1.2 (1.2) -
------- ------------- --------
(23.3) 23.3 -
NET LOSS $(26.6) $35.3 $8.7
======= ============= ========
NET MARGIN (16.6%) 5.4%
AVERAGE COMMON SHARES OUTSTANDING
- BASIC 808.1 808.1 808.1
======= ============= ========
AVERAGE COMMON SHARES OUTSTANDING
- DILUTED 808.1 813.3 813.3
======= ============= ========
EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS - BASIC
AND DILUTED $(0.00) $0.01 $0.01
======= ============= ========
LOSS PER SHARE FROM DISCONTINUED
OPERATIONS - BASIC AND DILUTED $(0.03) $0.03 $0.00
======= ============= ========
NET LOSS PER SHARE - BASIC AND
DILUTED $(0.03) $0.04 $0.01
======= ============= ========
(a) Excluding $0.7 million restructuring charges; $0.2 million other
nonoperating loss; $0.4 million nonoperating investment gain; and
$17.5 million net loss on discontinued operations; net income and
diluted EPS would have been $3.7 million and $0.00 for the quarter
ended July 31, 2004.
(b) Excluding $11.7 million restructuring charges; $0.3 million
nonoperating loss on divested entities; and $23.3 million net loss on
discontinued operations; net income and diluted EPS would have been
$8.7 million and $0.01 for the quarter ended April 30, 2004.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
RECONCILIATION OF GAAP RESULTS TO ADJUSTED RESULTS
(In Millions, Except Per Share Amounts)
For the Nine Months Ended
July 31, 2004
Restructuring
GAAP and Other Adjusted
Results Charges (a) Results (a)
------- ------------- --------
NET SALES $538.7 - $538.7
COST OF PRODUCT SOLD 326.3 - 326.3
------- ------------- --------
GROSS PROFIT 212.4 - 212.4
------- ------------- --------
GROSS MARGIN 39.4% 39.4%
EXPENSES:
Research and development 48.0 - 48.0
Selling and administration 141.9 - 141.9
Amortization of acquired
intangibles 1.6 - 1.6
Impairment charges 1.5 (1.5) -
Restructuring charges 12.8 (12.8) -
------- ------------- --------
Total Expenses 205.8 (14.3) 191.5
------- ------------- --------
As a Percentage of Net
Sales 38.2% 35.5%
OPERATING INCOME (LOSS) 6.6 14.3 20.9
OPERATING MARGIN 1.2% 3.9%
OTHER INCOME (EXPENSE), NET:
Interest 2.9 - 2.9
Other 6.2 (8.3) (2.1)
------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES 15.7 6.0 21.7
PROVISION FOR INCOME TAXES 0.7 - 0.7
------- ------------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 15.0 6.0 21.0
DISCONTINUED OPERATIONS, NET OF
TAX:
Loss from discontinued
operations (49.0) 49.0 -
Loss on sale of subsidiary (9.3) 9.3 -
------- ------------- --------
(58.3) 58.3 -
NET (LOSS) INCOME $(43.3) $64.3 $21.0
======= ============= ========
NET MARGIN (8.0%) 3.9%
AVERAGE COMMON SHARES OUTSTANDING
- BASIC 807.9 807.9 807.9
======= ============= ========
AVERAGE COMMON SHARES OUTSTANDING
- DILUTED 813.3 813.3 813.3
======= ============= ========
EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS - BASIC
AND DILUTED $0.02 $0.01 $0.03
======= ============= ========
LOSS PER SHARE FROM DISCONTINUED
OPERATIONS - BASIC AND DILUTED $(0.07) $0.07 $0.00
======= ============= ========
NET LOSS PER SHARE - BASIC AND
DILUTED $(0.05) $0.08 $0.03
======= ============= ========
For the Nine Months Ended
July 31, 2003
Restructuring
and
GAAP Other Adjusted
Results Charges (b) Results (b)
------- ------------- --------
NET SALES $457.3 - $457.3
COST OF PRODUCT SOLD 294.6 (2.7) 291.9
------- ------------- --------
GROSS PROFIT 162.7 2.7 165.4
------- ------------- --------
GROSS MARGIN 35.6% 36.2%
EXPENSES:
Research and development 51.4 - 51.4
Selling and administration 133.1 - 133.1
Amortization of acquired
intangibles
Impairment charges 14.8 (14.8) -
Restructuring charges 22.8 (22.8) -
------- ------------- --------
Total Expenses 222.1 (37.6) 184.5
------- ------------- --------
As a Percentage of Net
Sales 48.6% 40.3%
OPERATING INCOME (LOSS) (59.4) 40.3 (19.1)
OPERATING MARGIN (13.0%) (4.2%)
OTHER INCOME (EXPENSE), NET:
Interest 3.5 - 3.5
Other (5.0) 3.9 (1.1)
------- ------------- --------
INCOME (LOSS) BEFORE INCOME TAXES (60.9) 44.2 (16.7)
PROVISION FOR INCOME TAXES - - -
------------------------ --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (60.9) 44.2 (16.7)
DISCONTINUED OPERATIONS, NET OF
TAX:
Loss from discontinued
operations (25.1) 25.1 -
Loss on sale of subsidiary - - -
------- ------------- --------
(25.1) 25.1 -
NET (LOSS) INCOME $(86.0) $69.3 $(16.7)
======= ============= ========
NET MARGIN (18.8%) (3.7%)
AVERAGE COMMON SHARES OUTSTANDING
- BASIC 802.7 802.7 802.7
======= ============= ========
AVERAGE COMMON SHARES OUTSTANDING
- DILUTED 802.7 805.3 802.7
======= ============= ========
EARNINGS (LOSS) PER SHARE FROM
CONTINUING OPERATIONS - BASIC
AND DILUTED $(0.08) $0.06 $(0.02)
======= ============= ========
LOSS PER SHARE FROM DISCONTINUED
OPERATIONS - BASIC AND DILUTED $(0.03) $0.03 $0.00
======= ============= ========
NET LOSS PER SHARE - BASIC AND
DILUTED $(0.11) $0.09 $(0.02)
======= ============= ========
(a) Excluding $12.8 million restructuring charges; $1.5 million
impairment charges; $4.8 million nonoperating gain on sale of
investments; $3.7 million net nonoperating gain for divested product
lines; $0.2 million other nonoperating loss; and $58.3 million net
loss on discontinued operations; net income and diluted EPS would have
been $21.0 million and $0.03 for the nine months ended July 31, 2004.
(b) Excluding $22.8 million restructuring charges; $14.8 million
impairment charges; $2.7 million of inventory restructuring; $2.2
million nonoperating loss related to the write-down of the investment
portfolio; $1.2 million nonoperating gain on the sale of investments;
$2.7 million nonoperating loss related to the sale of divested product
lines; $0.3 million nonoperating loss related to a sale leaseback
transaction; $0.1 million gain related to miscellaneous nonoperating
activity; and $25.1 million net loss from discontinued operations; net
loss and diluted EPS would have been $(16.7) million and $(0.02) for
the nine months ended July 31, 2003.
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
OPERATING SEGMENT GAAP TO ADJUSTED RECONCILIATION
(In Millions)
CONTINUING OPERATIONS
NET SALES
2004 2004 2003
Third Second Third
Quarter Quarter Quarter
------------------------------
GAAP and Adjusted Net Sales
BIA $182.9 $119.2 $106.9
IS 58.2 45.4 51.4
Eliminations and corporate (5.9) (3.9) (6.1)
------------------------------
$235.2 $160.7 $152.2
==============================
CONTINUING OPERATIONS
OPERATING INCOME GAAP TO ADJUSTED RECONCILIATION
2004 2004 2003
Third Second Third
Quarter Quarter Quarter
------------------------------
GAAP Operating Loss
BIA $20.0 $20.3 $7.1
IS (2.5) (2.6) 2.5
Eliminations and corporate (14.3) (21.3) (10.5)
------------------------------
3.2 (3.6) (0.9)
------------------------------
IS - Divested Product Lines (b)
BIA (0.2) 0.8 (3.2)
IS (0.1) - (2.4)
Corporate (b) (0.4) (12.5) (1.5)
------------------------------
(0.7) (11.7) (7.1)
------------------------------
Adjusted Operating Income (Loss)
BIA $20.2 $19.5 $10.3
IS (2.4) (2.6) 4.9
Eliminations and corporate (13.9) (8.8) (9.0)
------------------------------
$3.9 $8.1 $6.2
==============================
(b) Excluding $0.0, $0.0 and $0.0 operating income from product lines
divested prior to fiscal 2003; $0.0, $0.0, and $1.3 million inventory
restructuring; $0.7 million, $11.7 million, and $5.6 million
restructuring charges; $0.0, $0.0 and $0.2 million impairment charges;
operating income (loss) from continuing operations would have been
$3.9 million, $8.1 million, and $6.2 million for the three months
ended July 31, 2004, April 30, 2004 and July 31, 2003, respectively.
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