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ADC Reports Results for Second Quarter 2007MINNEAPOLIS --(Business Wire)-- ADC (NASDAQ:ADCT)(www.adc.com) today announced results for its second quarter ended May 4, 2007 prepared in accordance with generally accepted accounting principles (GAAP). The results from continuing operations are summarized below for ADC's four reportable business segments: Global Connectivity Solutions, Wireless Solutions, Wireline Solutions and Professional Services. "Our second quarter sales and earnings in 2007 were stronger than expected and built on our outperformance in the first quarter of 2007. This strength occurred even though several customers have not yet returned to normal spending post-merger and others have moved more slowly on new network builds and subscriber services," said Robert E. Switz, president and CEO of ADC. "We are particularly pleased with the progress we've made in improving profitability through driving manufacturing efficiencies and gaining operating expense leverage. While we acknowledge that timing variables create quarter-to-quarter fluctuations in our results, we are encouraged by a growing number of worldwide opportunities to sell our broad range of communications network infrastructure solutions over a longer-term horizon. As a result, we remain focused on our work to build ADC's long-term value as a leading global network infrastructure company." Progress on Profits and Cash Flow Generation "In the second quarter of 2007, our gross margin improved to 34.5% from 32.0% in the first quarter of 2007 and $45 million of cash was provided by operating activities from continuing operations," said James G. Mathews, ADC's chief financial officer. "In the past 6 and 12 months, cash provided by operating activities from continuing operations was $76 million and $140 million, respectively." GAAP Results (dollars in millions, except per share amounts), Continuing Operations
2007 2007 2006
ADC's GAAP Results Second Quarter First Quarter Second Quarter
------------------------ -------------- ------------- --------------
Net sales $ 349.4 297.2 358.1
Percent outside U.S. 35.4% 41.8% 38.7%
Operating income $ 34.1 6.9 25.2
Income before income
taxes $ 95.8 10.5 27.7
Income from continuing
operations $ 93.1 9.4 25.1
Earnings per share from
continuing operations -
diluted $ 0.73 0.08 0.21
Weighted average common
shares outstanding -
diluted (millions) 131.8 117.3 117.9
The table below shows certain expenses (benefits) included in GAAP results (dollars in millions). Expenses (Benefits) In 2007 2007 2006 GAAP Results Second Quarter First Quarter Second Quarter ----------------------- -------------- ------------- -------------- Amortization of purchased intangibles $ 6.0 6.0 6.5 Restructuring and impairment charges $ (0.9) 0.6 1.8 Stock-option compensation expense in selling and administration $ 2.0 1.4 2.3 FONS employee retention expense in selling and administration $ - - 2.1 Nonoperating gain on sale of BigBand Networks stock $ (57.1) - - Diluted EPS Calculation The calculation of GAAP diluted EPS from continuing operations includes the if-converted method, which assumes that ADC's convertible notes are converted to common stock, if such treatment is dilutive. This method results in the fully diluted EPS calculation for continuing operations using a: -- Numerator equal to the sum of income from continuing operations plus the addback of after-tax interest expense from the convertible notes. The convertible notes consist of $200 million in 1.0% fixed rate notes maturing on June 15, 2008 and $200 million in variable rate notes maturing on June 15, 2013, with an interest rate equal to 6-month LIBOR plus 0.375%. The interest rate for the variable rate notes will be reset on each June 15 and December 15. The interest rate on the variable rate notes is 5.729% for the six-month period ending June 15, 2007. -- Denominator equal to weighted average common shares outstanding for basic EPS plus employee stock options (where dilutive) plus 14.2 million shares assuming the convertible notes are converted to common stock. If adjusting GAAP earnings for the certain expenses (benefits) in the above table, the variables below may be used in determining adjusted diluted EPS from continuing operations, with and without the if-converted method to determine which is the most dilutive treatment to use.
2007 2007 2006
(millions) Second Quarter First Quarter Second Quarter
------------------------- -------------- ------------- --------------
Weighted average common
shares - diluted 117.6 117.3 117.9
Weighted average common
shares - diluted (if-
converted) 131.8 131.5 132.1
If-converted convertible
note interest add back $ 3.4 3.4 3.1
GAAP Segment Results (dollars in millions), Continuing Operations During the first quarter of 2007, our reportable segments changed to conform to our current management reporting presentation by business unit. The Broadband Infrastructure and Access business segment has been separated into three new reportable segments - Global Connectivity Solutions (GCS), Wireless Solutions and Wireline Solutions. Prior-year segment disclosures have also been reclassified to conform to this new segment presentation.
2007 2007 2006
Sales by Segment Second First Second
(dollars in millions) Quarter Quarter Quarter
--------------------------------------------- ------- ------- -------
Global Connectivity Solutions $ 272.1 227.8 279.6
Wireless Solutions $ 12.8 7.4 9.4
Wireline Solutions $ 13.7 15.2 16.8
Professional Services $ 50.8 46.8 52.3
------- ------- -------
Total ADC $ 349.4 297.2 358.1
======= ======= =======
2007 2007 2006
Products By Segment Second First Second
Percent of Total ADC Sales Quarter Quarter Quarter
----------------------------------------- ------- ------- -------
Global Connectivity Solutions:
Global Copper Connectivity 33 % 34 % 36 %
Global Fiber Connectivity 30 27 29
Global Enterprise Connectivity 15 16 13
------- ------- -------
Total GCS 78 77 78
------- ------- -------
Wireless Solutions 4 2 2
Wireline Solutions 4 5 5
Professional Services 14 16 15
------- ------- -------
Total ADC 100 % 100 % 100 %
======= ======= =======
2007 2007 2006
Operating Income (Loss) By Segment Second First Second
(dollars in millions) Quarter Quarter Quarter
--------------------------------------------- ------- ------- -------
Global Connectivity Solutions $ 38.3 14.5 32.2
Wireless Solutions $ (3.2) (4.3) (6.4)
Wireline Solutions $ (0.3) 1.9 1.1
Professional Services $ (1.6) (4.6) 0.1
Restructuring and impairments $ 0.9 (0.6) (1.8)
------- ------- -------
Total ADC $ 34.1 6.9 25.2
======= ======= =======
Global Connectivity Solutions GCS sales of $272 million decreased 3% in the second quarter of 2007 compared to the same quarter in 2006 primarily from lower sales of global copper connectivity solutions by 9% partially offset by a 2% increase in sales of global fiber connectivity solutions and a 6% increase in global enterprise connectivity products. Global copper connectivity shipments were affected by decreased sales of outside cabinets in Europe partially offset by a small increase in central-office copper sales. Global fiber connectivity sales were driven by a small increase of central-office fiber sales partially offset by a small decease in fiber-to-the-x (FTTX) sales. Global enterprise connectivity sales increased as a result of favorable business infrastructure spending for both new buildings and upgrading existing facilities. GCS sales in the second quarter of 2007 increased 19% from the first quarter of 2007. Sales of global fiber connectivity products increased 31%, global copper connectivity products increased 16% and enterprise connectivity products increased 7%. Global fiber connectivity sales increased primarily from strong demand for central office and FTTX products. Global copper connectivity sales increased primarily due to strong demand for central office solutions. Global enterprise connectivity sales increased, as expected, because of construction seasonality. Wireless Solutions Wireless Solutions sales of $13 million increased 36% in the second quarter of 2007 compared to the same quarter in 2006 and increased 73% compared to the first quarter of 2007. This increase was generated as a result of increased spending by existing customers on Digivance(R) coverage and capacity systems. Wireline Solutions Wireline Solutions sales of $14 million decreased 18% in the second quarter of 2007 compared to the same quarter in 2006 and decreased 10% compared to the first quarter of 2007. The decrease in wireline product sales was the result of a long-term, industry-wide product substitution trend. This decline in market demand for high-bit-rate digital subscriber line products is expected to continue as carriers are delivering fiber and Internet Protocol services closer to end-user premises. Professional Services Professional Services' second quarter 2007 sales of $51 million decreased 3% from the same quarter in 2006 and increased 9% from the first quarter of 2007. Both changes were predominately in the United States market, with lower year-over-year sales primarily due to merger integration activity among customers and higher sequential sales mainly due to a major customer continuing to expand its network build programs. Other GAAP Data & Related Statistics Below are summarized certain ADC balance sheet and cash flow information on a GAAP basis and related statistics:
Balance Sheet Data May 4, February 2, April 28,
(dollars in millions) 2007 2007 2006
----------------------------------- ---------- ----------- ---------
Cash and cash equivalents -
unrestricted $ 118.9 141.2 128.6
Short-term available for sale
securities $ 537.2 420.8 356.9
Long-term available for sale
securities $ 7.2 7.2 2.0
Restricted cash $ 13.1 12.9 20.1
---------- ----------- ---------
Total cash and securities $ 676.4 582.1 507.6
========== =========== =========
Long-term notes payable $ 400.0 400.0 400.0
ADC's total cash, cash equivalents and available-for-sale securities (short- and long-term) were $676 million as of May 4, 2007. The increase from both February 2, 2007 and April 28, 2006 was primarily a result of total cash provided by operating activities supplemented by $60 million in proceeds from the sale of investments. ADC believes that its cash and securities balance is sufficient to meet anticipated needs for executing our near-term business plan. ADC's $200 million of fixed rate convertible notes outstanding mature on June 15, 2008, and the $200 million of variable rate convertible notes mature on June 15, 2013. All convertible notes have a conversion price of $28.091 per share. In addition, ADC's deferred tax assets, which are substantially reserved at this time, should reduce its income tax payable on U.S. taxable earnings in future years. Cash Flow Data and Related Statistics 2007 2007 2006 (dollars in millions) Second Quarter First Quarter Second Quarter ------------------------- -------------- ------------- -------------- Total cash provided by operating activities from continuing operations $ 44.6 31.4 42.0 Days sales outstanding 45.2 46.4 47.3 Inventory turns - annualized 5.3 4.8 6.5 Depreciation and amortization $ 17.1 17.1 17.1 Property, equipment and patent additions, net of disposals $ 9.3 8.5 7.0 Employees Total employees were approximately 9,750 as of May 4, 2007, 8,600 as of February 2, 2007 and 9,300 as of April 28, 2006. The increases are primarily the addition of temporary manufacturing personnel in Mexico. As demand for products increases or decreases, we vary the number of manufacturing employees we utilize in our Mexico facilities to accommodate our manufacturing needs. Outlook for 2007 Annual Guidance and Information on Long-term Business Direction "As in fiscal year 2006, our results in the second fiscal quarter of 2007 are likely to represent the peak quarter for the year due to our first-half outperformance. We currently expect the results in the second half of fiscal 2007 will be relatively flat to down modestly from the first half of fiscal 2007 (net of the one-time nonoperating gain from the sale of Big Band stock), but do not expect that the quarterly pattern of results in fiscal 2007 will fluctuate as sharply as in fiscal 2006. Our outperformance in the first half of 2007 was primarily due to stronger than expected demand for FTTX deployments and central office fiber and copper connectivity solutions to enable higher bandwidth applications for new video, data and voice services. Strength in Digivance wireless sales also contributed favorably to the outperformance," said Switz. "We also believe that there are significant long-term growth opportunities ahead of us; however, forecasting the timing of these opportunities remains difficult due to the uncertainty of (1) how long and to what degree spending by some of our substantial customers will be deferred during the integration period following their mergers, (2) rates at which new networks are built and related subscribers adopt the new service deployments, (3) when regulatory reviews of our customers' new networks are resolved, and (4) when capital allocation to new network/service initiatives is decided. These factors could shift some sales opportunities from 2007 to 2008. At this time, we are raising the low end of our 2007 sales and earnings guidance ranges (net of the one-time nonoperating gain from the sale of Big Band stock), while holding unchanged the top end of these ranges at the prevailing guidance levels until the uncertainties of the timing and extent of our remaining 2007 growth opportunities are resolved. If the current timing uncertainties of our growth opportunities are resolved favorably, we would expect to see a positive impact on our business in the second half of fiscal 2007 and fiscal year 2008. Gross profit margins are expected to rise and decline with sales volume levels from quarter to quarter." On a continuing operations basis, ADC currently expects its 2007 sales to be in the range of $1.275-$1.290 billion. Based on this annual sales estimate and subject to sales mix and other factors, GAAP diluted EPS from continuing operations in 2007 is estimated to be in the range of $1.06 to $1.11, which includes estimated charges (benefits) listed in the below table.
2007
Estimate
------------
Estimated GAAP EPS from continuing operations - diluted $1.06-1.11(1)
Estimated EPS charges (benefits), net of tax, included
in estimated GAAP:
Amortization of purchased intangibles $ 0.18
Stock-option compensation expense in selling and
administration $ 0.05
Nonoperating gain on sale of BigBand Networks stock $ (0.43)
(1) Excludes potential future restructuring, impairment and acquisition-related charges, and certain non-operating gains/losses, as well as benefits from any reduction of the deferred tax asset valuation reserve, of which the amounts are uncertain at this time. The calculation of GAAP diluted EPS from continuing operations includes the if-converted method, which assumes that ADC's convertible notes are converted to common stock, if such treatment is dilutive. ADC Priorities ADC is working to execute a multi-faceted, multi-year approach to growing value for our shareowners in a market with ever increasing competitive pressures. We intend to continue building ADC into the leading global network infrastructure company. We have established balanced sales growth, competitive cost transformation and business execution excellence as the main priorities in our plan to grow sales, profitability and value. -- Balanced Sales Growth. We are targeting certain market and product segments, as well as certain geographies as core to future growth plans. Key product segments include next-generation core networks, FTTX, wireless capacity/coverage, network automation, and enterprise network upgrades. -- Competitive Cost Transformation. ADC is executing many initiatives designed to improve the speed, quality and simplicity of our customers' experience, while improving our cost position and profit margins. Core processes are being redesigned based on our customers' changing demands. ADC is migrating to a modular design approach to enable a more efficient configure-to-order business model. We plan to reduce the overall amount of part numbers, thereby allowing ADC to reduce customer delivery intervals, while improving operations efficiencies. ADC continues to move more of its manufacturing and support processes from the United States, Germany and Australia to lower-cost operations in China, the Czech Republic, India and Mexico. We also will continue to focus on optimizing operating expenses by utilizing shared services, simplifying our business structure and consolidating facilities. These transformational and on-going changes are designed to enable ADC to serve its customers more rapidly and cost-effectively. -- Business Execution Excellence. We believe the quality of our customer service, products and services have long differentiated ADC in the marketplace. We will continue to work on better understanding the market and the needs of our customers. At ADC, we define our products and services based on our belief that ADC will continue to succeed if we can consistently deliver value to our customers. We will focus on ensuring that our current and future customers can depend on ADC to meet schedule, product, quality and service commitments. Income Tax Expense As of May 4, 2007, ADC had a total of $986 million in deferred tax assets (primarily for U.S. income taxes) that have been offset by a valuation allowance of $941 million. Approximately $213 million of these deferred tax assets relate to capital loss carryovers that can be utilized only against realized capital gains through October 31, 2009. Excluding the deferred tax assets related to capital loss carryovers, most of the remaining deferred tax assets are not expected to expire until after 2021. During the fourth quarter of 2006, the valuation allowance was reduced by $49 million attributable to deferred tax assets that are expected to be utilized over the subsequent two-year period. As it generates pre-tax income in future periods, ADC currently expects to record reduced income tax expense until either its deferred tax assets are fully utilized to offset future income tax liabilities or the value of its deferred tax assets are fully restored on the balance sheet. A copy of this news release, including the financial guidance it contains, can be accessed at www.adc.com/investorrelations/newsandcommunications/earningsreleases/. Today's 5:00 p.m. Eastern Earnings Conference Call and Webcast ADC will discuss its second quarter 2007 results and current outlook on a conference call scheduled today, June 6, 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 Webcasts. Starting today at 7:30 p.m. Eastern time, the replay of the call can be accessed until 11:59 p.m. Eastern time on June 12 by domestic callers at (800) 642-1687 and by international callers at (706) 645-9291 (conference ID number is 8434145) or on the Internet at www.adc.com/investor, by clicking on Webcasts. About ADC 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 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 provisions of the Private Securities Litigation Reform Act of 1995. ADC cautions that any forward-looking statements made by us in this report or in other announcements made by us 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: any statements regarding future sales; profit percentages; earnings per share and other results of operations; expectations or beliefs regarding the marketplace in which we operate; 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 is increasingly 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 even displacement of us 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; our ability to integrate the operations of any acquired businesses with our own operations and to realize planned synergies from such transactions; 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/A for the year ended October 31, 2006 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.
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In millions)
ASSETS
May 04, October 31,
2007 2006
--------------------
CURRENT ASSETS:
Cash and cash equivalents $118.9 $142.3
Available-for-sale securities 537.2 395.4
Accounts receivable, net of reserves of $8.8 and
$10.2 175.3 169.3
Unbilled revenue 30.2 23.8
Inventories, net of reserves of $34.2 and $35.1 172.8 165.5
Assets of discontinued operations 2.6 14.9
Prepaid and other current assets 29.7 31.5
--------------------
Total current assets 1,066.7 942.7
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $384.0 and $370.3 204.3 206.5
RESTRICTED CASH 13.1 14.0
GOODWILL 239.0 238.5
INTANGIBLES, net of accumulated amortization of
$75.8 and $66.5 131.2 142.0
AVAILABLE-FOR-SALE SECURITIES 7.2 10.7
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS 0.4 0.3
OTHER ASSETS 54.6 56.7
--------------------
Total Assets $1,716.5 $1,611.4
====================
LIABILITIES & SHAREOWNERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $96.6 $88.4
Accrued compensation and benefits 53.8 43.6
Other accrued liabilities 55.8 60.6
Income taxes payable 18.1 17.7
Restructuring accrual 20.5 28.4
Liabilities of discontinued operations 8.2 21.4
--------------------
Total current liabilities 253.0 260.1
PENSION OBLIGATIONS & OTHER LT OBLIGATIONS 83.5 77.8
LONG-TERM NOTES PAYABLE 400.0 400.0
--------------------
Total liabilities 736.5 737.9
SHAREOWNERS' INVESTMENT
(117.3 and 117.2 shares outstanding) 980.0 873.5
--------------------
Total liabilities and shareowners' investment $1,716.5 $1,611.4
====================
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
GAAP BASIS
(In Millions, Except Earnings Per Share)
For the Three Months For the Six Months
Ended Ended
------------------------------ ------------------
May 04, February 02, April 28, May 04, April 28,
2007 2007 2006 2007 2006
------- ------------ --------- -------- ---------
Products $312.0 $261.8 $320.7 $573.8 $562.8
Services 37.4 35.4 37.4 72.8 68.1
------- ------------ --------- -------- ---------
NET SALES 349.4 297.2 358.1 646.6 630.9
Products 195.9 168.8 207.5 364.7 367.3
Services 33.0 33.4 28.9 66.4 55.7
------- ------------ --------- -------- ---------
COST OF SALES 228.9 202.2 236.4 431.1 423.0
------- ------------ --------- -------- ---------
GROSS PROFIT 120.5 95.0 121.7 215.5 207.9
------- ------------ --------- -------- ---------
GROSS MARGIN 34.5% 32.0% 34.0% 33.3% 33.0%
OPERATING
EXPENSES:
Research and
development 18.1 17.2 19.0 35.3 38.0
Selling and
administration 63.2 64.3 69.2 127.5 130.9
Amortization of
purchased
intangibles 6.0 6.0 6.5 12.0 13.0
Impairment
charges 0.1 - 0.6 0.1 0.6
Restructuring
charges (1.0) 0.6 1.2 (0.4) 2.6
------- ------------ --------- -------- ---------
Total Operating
Expenses 86.4 88.1 96.5 174.5 185.1
------- ------------ --------- -------- ---------
As a Percentage
of Net Sales 24.7% 29.7% 27.0% 27.0% 29.4%
OPERATING INCOME 34.1 6.9 25.2 41.0 22.8
OPERATING MARGIN 9.8% 2.3% 7.0% 6.3% 3.6%
OTHER INCOME, NET:
Interest, net 4.0 3.1 1.3 7.1 2.6
Other, net 57.7 0.5 1.2 58.2 2.3
------- ------------ --------- -------- ---------
INCOME BEFORE
INCOME TAXES 95.8 10.5 27.7 106.3 27.7
PROVISION FOR
INCOME TAXES 2.7 1.1 2.6 3.8 3.9
------- ------------ --------- -------- ---------
INCOME FROM
CONTINUING
OPERATIONS 93.1 9.4 25.1 102.5 23.8
DISCONTINUED
OPERATIONS, NET OF
TAX:
Loss from
discontinued
operations (1.2) (0.7) (2.3) (1.9) (3.4)
Gain (loss) on
sale of
discontinued
operations, net 0.2 (5.1) - (4.9) -
------- ------------ --------- -------- ---------
Total
Discontinued
Operations (1.0) (5.8) (2.3) (6.8) (3.4)
------- ------------ --------- -------- ---------
Earnings before the
cumulative effect
of a change in
accounting
principle 92.1 3.6 22.8 95.7 20.4
Cumulative effect
of a change in
accounting
principle - - - - 0.6
------- ------------ --------- -------- ---------
NET INCOME $92.1 $3.6 $22.8 $95.7 $21.0
======= ============ ========= ======== =========
NET MARGIN 26.4% 1.2% 6.4% 14.8% 3.3%
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING -
BASIC 117.3 117.2 117.1 117.3 116.9
======= ============ ========= ======== =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING -
DILUTED 131.8 117.3 117.9 131.6 117.6
======= ============ ========= ======== =========
EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS - BASIC $0.79 $0.08 $0.21 $0.87 $0.20
======= ============ ========= ======== =========
EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS -
DILUTED $0.73 $0.08 $0.21 $0.83 $0.20
======= ============ ========= ======== =========
LOSS PER SHARE FROM
DISCONTINUING
OPERATIONS - BASIC $(0.01) $(0.05) $(0.02) $(0.05) $(0.03)
======= ============ ========= ======== =========
LOSS PER SHARE FROM
DISCONTINUING
OPERATIONS -
DILUTED $(0.01) $(0.05) $(0.02) $(0.05) $(0.03)
======= ============ ========= ======== =========
EARNINGS PER SHARE
FROM CHANGE IN
ACCOUNTING
PRINCIPLE - BASIC $- $- $- $- $0.01
======= ============ ========= ======== =========
EARNINGS PER SHARE
FROM CHANGE IN
ACCOUNTING
PRINCIPLE -
DILUTED $- $- $- $- $0.01
======= ============ ========= ======== =========
NET EARNINGS PER
SHARE - BASIC $0.78 $0.03 $0.19 $0.82 $0.18
======= ============ ========= ======== =========
NET EARNINGS PER
SHARE - DILUTED $0.72 $0.03 $0.19 $0.78 $0.18
======= ============ ========= ======== =========
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATION - UNAUDITED
GAAP BASIS
(In Millions, Except Per Share Amounts)
Numerator: For the Three Months Ended For the Six Months Ended
------------------------------- ------------------------
May 04, February 02, April 28, May 04, April 28,
2007 2007 2006 2007 2006
------------------------------- ------------------------
Net income
from
continuing
operations $93.1 $9.4 $25.1 $102.5 $23.8
Convertible
note
interest 3.4 - - 6.8 -
Net income
from
continuing
operations -
diluted $96.5 $9.4 $25.1 $109.3 $23.8
=============================== ========================
Denominator:
Weighted
ave
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In millions)
SUBJECT TO RECLASSIFICATION
Three Months For the Six Months
Ended Ended
----------------------------- -------------------
May 04, Feb. 02, April 28, May 04, April 28,
2007 2007 2006 2007 2006
-------- --------- ---------- -------- ----------
Operating
Activities:
Income from
continuing
operations $93.1 $9.4 $25.1 $102.5 $23.8
Adjustments to
reconcile income
from continuing
operations to
net cash
provided by
operating
activities from
continuing
operations:
Impairments 0.1 - 0.6 0.1 0.6
Writedown of
Investments - - - - -
Depreciation and
amortization 17.1 17.1 17.1 34.2 33.6
Change in bad
debt reserves (0.7) (0.2) (0.8) (0.9) 0.2
Non-cash stock
compensation 2.7 1.9 3.1 4.6 6.5
Change in
deferred income
taxes 0.5 - - 0.5 1.4
Loss on sale of
property and
equipment 0.2 0.3 0.1 0.5 0.7
Gain on sale of
investments (57.5) - - (57.5) -
Other, net (1.8) (0.7) 0.5 (2.5) (0.5)
Changes in
operating
assets &
liabilities,
net of
divestitures:
Accounts
receivable
and
unbilled
revenues (26.3) 18.5 (23.4) (7.8) (17.4)
Inventories (3.3) (1.6) (2.8) (4.9) (4.3)
Prepaid and
other
assets 5.4 (1.3) (1.7) 4.1 (7.0)
Accounts
payable 13.1 (6.2) 23.3 6.9 27.1
Accrued
liabilities 2.0 (5.8) 0.9 (3.8) (34.4)
Pension
liabilities - - - - -
-------- --------- ---------- -------- ----------
Total cash
provided by
operating
activities from
continuing
operations 44.6 31.4 42.0 76.0 30.3
Total cash used
for operating
activities from
discontinued
operations (3.5) (5.6) (2.5) (9.1) (1.9)
-------- --------- ---------- -------- ----------
Total cash
provided by
operating
activities 41.1 25.8 39.5 66.9 28.4
Investing
Activities:
Acquisitions, net
of cash acquired (2.0) - - (2.0) -
Divestitures, net
of cash disposed 0.2 0.1 - 0.3 -
Property,
equipment and
patent additions (9.6) (8.7) (7.3) (18.3) (13.5)
Proceeds from
disposal of
property and
equipment 0.3 0.2 0.3 0.5 0.3
Proceeds from
sale of
investments 59.8 - - 59.8 -
Exercise of
warrants (1.8) - - (1.8) -
Proceeds from
collection of
note receivable - - 2.3 - 2.3
Decrease in
restricted cash - 1.2 0.1 1.2 1.6
Purchases of
available-for-
sale securities (406.9) (267.4) (104.9) (674.3) (240.4)
Sale of
available-for-
sale securities 290.6 245.4 96.2 536.0 229.6
Other - - - - 0.1
-------- --------- ---------- -------- ----------
Total cash used
for investing
activities from
continuing
operations (69.4) (29.2) (13.3) (98.6) (20.0)
Total cash
provided by
investing
activities from
discontinued
operations 0.4 0.7 0.2 1.1 0.4
-------- --------- ---------- -------- ----------
Total cash used
for investing
activities (69.0) (28.5) (13.1) (97.5) (19.6)
Financing
Activities:
Common stock
issued 1.9 0.1 3.7 2.0 9.6
-------- --------- ---------- -------- ----------
Total cash
provided by
financing
activities from
continuing
operations 1.9 0.1 3.7 2.0 9.6
Total cash
provided by
financing
activities from
discontinued
operations - - - - -
-------- --------- ---------- -------- ----------
Total cash
provided by
financing
activities 1.9 0.1 3.7 2.0 9.6
Effect of Exchange
Rate Changes on
Cash 3.7 1.5 0.8 5.2 1.8
-------- --------- ---------- -------- ----------
(Decrease)
increase in cash
and cash
equivalents (22.3) (1.1) 30.9 (23.4) 20.2
Cash and cash
equivalents,
beginning of
period 141.2 142.3 97.7 142.3 108.4
-------- --------- ---------- -------- ----------
Cash and cash
equivalents, end
of period $118.9 $141.2 $128.6 $118.9 $128.6
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