ADC Completes Century Man Communication Acquisition.
MINNEAPOLIS -- ADC (NASDAQ:ADCT)(www.adc.com) today announced the completion of its acquisition of Century Man Communication (http://www.centuryman.com.cn), a leading provider of communication distribution frame solutions in China.
The acquisition accelerates ADC's growth potential in China and expands the company's product offerings, along with adding additional low-cost manufacturing facilities in China and providing a price and feature competitive product offering for effectively competing in high-growth, developing markets. Century Man Communication is estimated to hold a number two position within the growing domestic Chinese distribution frame connectivity infrastructure market, supporting most of the major telecommunications operators and original equipment manufacturers in China.
"We are very pleased to integrate Century Man Communication's operations into ADC as this acquisition strategically positions us to increase our growth in the China connectivity market and in other faster growing markets outside of the United States, including developing markets elsewhere in Asia, Eastern Europe, Africa and Latin America," said Robert E. Switz, president and CEO of ADC. "With the acceleration of 3G and fiber-to-the x (FTTX) deployments in China, the addition of Century Man positions ADC to capitalize on the expected increase in capital spending by OEM and carrier customers on connectivity solutions. Furthermore, this acquisition provides us with more resources, distribution and products to grow our connectivity value to ADC customers worldwide, supporting our long term goal of being the leading global provider of network infrastructure solutions."
Summary of Transaction
ADC has acquired Century Man Communication for $55 million in cash, plus contingent cash payments of up to $15 million during the next 36 months, based on meeting agreed upon financial performance metrics. Century Man Communication had sales of approximately US $40 million in the 12 months ending September 30, 2007. Prior to this acquisition, ADC had about 1 percent of its sales and 4 percent of its employees in China. After this acquisition, ADC will have about 4 percent of its sales and 13 percent of its employees in China.
The company expects to take a charge for various acquisition-related expenses, the amount of which has not been determined. Inclusive of potential intangible amortization and non-recurring and/or non-operating acquisition-related charges, the transaction is expected to be dilutive to GAAP earnings per share in the first year or two of operations following the close of the transaction. Excluding these charges, ADC expects the acquisition to be non-dilutive to diluted earnings per share from continuing operations in fiscal 2008 and 2009, and accretive to diluted earnings per share from continuing operations thereafter. As discussed below, actual results will be subject to many risks and uncertainties.
Meeting Broadband Connectivity Demand in China and Across the Globe
The combination of ADC and Century Man Communication's connectivity portfolios is designed to provide global customers with enhanced product offerings from the central office, through the outside plant, and to the customer premises.
Century Man Communication's products portfolio includes communication distribution frames (i.e., Optical Distribution Frames (ODF), Main Distribution Frames (MDF), Building Distribution Frames (BDF), Power Distribution Frames (PDF) and other Hybrid Distribution Frames), related accessories (e.g., fiber connectors and cabinets), wireless network products and other network products. Century Man Communication's customers include many of the Chinese telecom service providers and operators, including China Mobile, China Telecom, China Netcom, China Unicom and China Railway are major Century Man Communication customers, as well as original equipment manufacturers, such as ZTE and UT STARCOM. Century Man Communication has a strong domestic market position, established manufacturing base and customer relationships, and dedicated team of professionals who we believe will be instrumental in the growth of our Broadband Connectivity Infrastructure business within the Chinese market.
ADC provides the connections for wireline, wireless, cable, broadcast, and enterprise networks around the world. ADC's innovative network infrastructure equipment and professional services enable high-speed Internet, data, video, and voice services to residential, business and mobile subscribers. ADC (NASDAQ:ADCT) has sales into more than 130 countries. Learn more about ADC at www.adc.com.
Cautionary Statement Regarding Forward Looking Information
All forward-looking statements contained herein, particularly those pertaining to ADC's expectations for the performance of the acquisition as well as 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 provisions of the Private Securities Litigation Reform Act of 1995. ADC cautions that any forward-looking statements made by us about the acquisition are qualified by important factors that could cause actual results to differ materially from those in the forward-looking-statements. These factors include, without limitation: differences between the expected and the actual future performance of the business being acquired; marketplace conditions and market growth rates for the acquired business and our business generally; the acceptance of the acquisition by customers of the acquired business; the acceptance of the acquisition by employees and agents of the acquired business; potential operating changes necessitated in the acquired business by the integration of the two companies as their operating processes and systems are distinct and prone to significant differences; our ability to realize expected synergies from the transaction; and the realization of any liabilities related to the business being acquired. In addition, the acquisition and operation of a business in China is subject to a number of risks and uncertainties arising out of business conditions and other factors specific to conducting business in China. ADC further cautions that any forward-looking statements made by us in this report or in other announcements made by us are qualified by numerous other important factors that could cause actual results to differ materially from those in the forward-looking statements. These statements and factors include, without limitation: potential volatility in future sales; changes in profit percentages; statements regarding and actually realized earnings per share and other results of operations; expectations or beliefs regarding the marketplace in which we operate and market growth rates; the sufficiency of our cash balances and cash generated from operating and financing activities for our future liquidity; the demand for equipment by telecommunication service providers, from which a majority of our sales are derived; the fact our business increasingly is dependent on project-based capital deployment initiatives by our customers for which sales are more prone to significant fluctuations; our ability to operate our business to achieve, maintain and grow operating profitability; macroeconomic factors that influence the demand for telecommunications services and the consequent demand for communications equipment; consolidation among our customers, competitors or vendors which could cause disruption in our customer relationships or our displacement as an equipment vendor to the surviving entity in a customer consolidation; our ability to keep pace with rapid technological change in our industry; our ability to make the proper strategic choices with respect to acquisitions or divestitures; increased competition within our industry and increased pricing pressure from our customers; our dependence on relatively few customers for a majority of our sales as well as potential sales growth in market segments we presently feel have the greatest growth potential; fluctuations in our operating results from quarter-to-quarter, which are influenced by many factors outside of our control, such as variations in demand for particular products in our portfolio that have varying profit margins; the impact of regulatory changes on our customers' willingness to make capital expenditures for our equipment and services; financial problems, work interruptions in operations or other difficulties faced by our customers or vendors, which can influence future sales to customers as well as our ability to either collect amounts due us or obtain necessary materials and components; economic and regulatory conditions both in the United States and outside of the United States, as a significant portion of our sales come from non-U.S. jurisdictions; our ability to protect our intellectual property rights and defend against infringement claims made by other parties; possible limitations on our ability to raise additional capital if required, either due to unfavorable market conditions or lack of investor demand; our ability to attract and retain qualified employees in a competitive environment; potential liabilities that could arise if there are design or manufacturing defects with respect to any of our products; our ability to obtain raw materials and components and the prices of those materials and components, which can be subject to volatility; our dependence on contract manufacturers to make certain of our products; changes in interest rates, foreign currency exchange rates and equity securities prices, all of which will impact our results; our ability to successfully defend or satisfactorily settle any pending litigation or litigation that may arise; fluctuations in the telecommunications market, and other risks and uncertainties, including those identified in the section captioned Risk Factors in Item 1A of ADC's Annual Report on Form 10-K for the year ended October 31, 2007 and as may be updated in Item 1A of ADC's subsequent Quarterly Reports on Form 10-Q or other filings we make with the SEC. ADC disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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|Date:||Jan 10, 2008|
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