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ADC Reports Results for Third Quarter 2007MINNEAPOLIS --(Business Wire)-- ADC (NASDAQ:ADCT) (www.adc.com) today announced unaudited results for its third quarter ended August 3, 2007. 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. "We continued to outperform expectations in 2007 with strong third quarter results. Even though several key customers have not yet returned to normal spending following their mergers, we had better than expected strength in our connectivity, wireless and services businesses, and have seen resumed sales growth outside the United States," said Robert E. Switz, president and CEO of ADC. "We are particularly pleased with the continued progress we've made in improving profitability, excluding inventory charges from the previously announced ACX product-line exit, and restructuring and impairment. We remain focused on building ADC's long-term value as a leading global network infrastructure company. We will drive growth by bringing our customers worldwide cost-effective and reliable solutions that help them deliver high bandwidth and valued content to their residential, business and mobile subscribers." Progress on Profits and Cash Flow Generation "In the third quarter of 2007, our gross margin was 32.8%. Excluding an $8.9 million inventory charge for the ACX product-line exit, gross margin was 35.4% in the quarter. This compares favorably to 34.5% in the second quarter of 2007 and 32.7% in the third quarter of 2006," said James G. Mathews, ADC's chief financial officer. "We also generated $30 million of cash provided by operating activities from continuing operations. In the past 9 and 12 months, cash provided by operating activities from continuing operations was $106 million and $144 million, respectively."
GAAP Results (dollars in millions, except per share amounts),
Continuing Operations
2007 2007 2006
ADC Results Third Quarter Second Quarter Third Quarter
-------------------------- ------------- -------------- -------------
Net sales $ 346.1 349.4 343.6
Percent outside U.S. 37.8% 35.4% 39.2%
Gross margin 32.8% 34.5% 32.7%
Operating income $ 14.0 34.1 24.0
Income before income taxes $ 19.0 95.8 26.3
Income from continuing
operations $ 17.0 93.1 23.2
Earnings per share from
continuing operations -
diluted $ 0.14 0.73 0.20
Weighted average common
shares outstanding -
diluted (millions) 117.8 131.8 117.4
The table below shows certain expenses (benefits) included in GAAP results (dollars in millions).
2007 2007 2006
(dollars in millions) Third Quarter Second Quarter Third Quarter
-------------------------- ------------- -------------- -------------
Amortization of purchased
intangibles $ 6.0 6.0 6.6
Restructuring and
impairment charges $ 12.0 (0.9) 3.5
Stock-option compensation
expense in selling and
administration $ 2.0 2.0 1.9
ACX product-line inventory
charge $ 8.9 -
FONS employee retention
expense in selling and
administration $ - - 1.3
Nonoperating gain on sale
of BigBand Networks stock $ - (57.1) -
The table below reconciles GAAP gross profit to adjusted gross profit from which adjusted gross margin was determined to enable analysis of the impact of the ACX product-line inventory charge.
2007 2007 2006
(dollars in millions) Third Quarter Second Quarter Third Quarter
-------------------------- ------------- -------------- -------------
GAAP gross profit $ 113.6 120.5 112.2
Add back ACX product-line
inventory charge $ 8.9 - -
------------- -------------- -------------
Adjusted gross profit $ 122.5 120.5 112.2
============= ============== =============
Adjusted gross margin % 35.4 34.5 32.7
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 5.784% for the six-month period ending December 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) Third Quarter Second Quarter Third Quarter
-------------------------- ------------- -------------- -------------
Weighted average common
shares - diluted 117.8 117.6 117.4
Weighted average common
shares - diluted
(if-converted) 132.0 131.8 131.6
If-converted convertible
note interest add back $ 3.4 3.4 3.2
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 Third Second Third
(dollars in millions) Quarter Quarter Quarter
Global Connectivity Solutions $ 268.7 272.1 267.6
Wireless Solutions $ 12.6 12.8 9.6
Wireline Solutions $ 11.9 13.7 16.0
Professional Services $ 52.9 50.8 50.4
------- --------- ---------
Total ADC $ 346.1 349.4 343.6
======= ========= =========
2007 2007 2006
Products By Segment Third Second Third
Percent of Total ADC Sales Quarter Quarter Quarter
Global Connectivity Solutions:
Global Copper Connectivity 32 % 33 % 33 %
Global Fiber Connectivity 30 30 29
Global Enterprise Connectivity 16 15 16
------- ------- -------
Total GCS 78 78 78
Wireless Solutions 4 4 3
Wireline Solutions 3 4 4
Professional Services 15 14 15
------- ------- -------
Total ADC 100 % 100 % 100 %
======= = ======= = ======= =
2007 2007 2006
Operating Income (Loss) By Segment Third Second Third
(dollars in millions) Quarter Quarter Quarter
-------------------------------------- ------- --------- ---------
Global Connectivity Solutions $ 28.7 38.3 29.9
Wireless Solutions $ (2.7) (3.2) (3.6)
Wireline Solutions $ 1.3 (0.3) 1.0
Professional Services $ (1.3) (1.6) 0.2
Restructuring and impairments $ (12.0) 0.9 (3.5)
------- --------- ---------
Total ADC $ 14.0 34.1 24.0
======= ========= =========
Global Connectivity Solutions GCS sales of $269 million in the third quarter of 2007 compared to $268 million in the same quarter in 2006. From the same period in fiscal 2006, GCS experienced a 6% increase in sales of global fiber connectivity solutions. This increase was primarily offset by lower sales of global copper connectivity solutions. Global fiber connectivity sales were driven by strong growth in central-office fiber sales worldwide partially offset by a decrease in fiber-to-the-x (FTTX) sales, which was expected as a result of a more level spending pattern by a key customer in 2007 compared to 2006. Global copper connectivity shipments were affected by a decrease in sales of outside cabinets in Europe partially offset by a small increase in central-office copper sales. Sales of global enterprise connectivity products were approximately unchanged. GCS sales in the third quarter of 2007 declined $3 million compared to $272 million in the second quarter of 2007. Sales of global fiber connectivity products decreased 2%, due largely to an expected decrease in FTTX sales, and sales of global copper connectivity products decreased 5%. This was partially offset by higher Enterprise connectivity product sales, which increased 8%. Global copper connectivity sales decreased for both central-office and outside-plant solutions. Global enterprise connectivity sales increased as a result of favorable business infrastructure spending for both new buildings and increased footprint with global accounts. Wireless Solutions Wireless Solutions sales of $13 million increased 31% in the third quarter of 2007 compared to the same quarter in 2006 and were flat versus the second quarter of 2007. This year-over-year increase was generated primarily as a result of increased spending by existing customers on Digivance(R) coverage and capacity systems. Wireline Solutions Wireline Solutions sales of $12 million decreased 26% in the third quarter of 2007 compared to the same quarter in 2006 and were 13% below the second 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' third quarter 2007 sales of $53 million increased 5% from the same quarter in 2006 and increased 4% from the second quarter of 2007. This growth was predominately in the United States market, with 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 August 3, May 4, July 28,
(dollars in millions) 2007 2007 2006
---------------------------------------
Cash and cash equivalents -
unrestricted $ 149.0 118.9 127.4
Short-term available for sale
securities $ 528.7 537.2 378.0
Long-term available for sale securities $ 4.0 7.2 4.9
Restricted cash $ 12.9 13.1 16.2
--------- --------- ---------
Total cash and securities $ 694.6 676.4 526.5
========= ========= =========
Current portion of long-term notes
payable $ 200.7 - -
Long-term notes payable $ 200.6 400.0 400.0
ADC's total cash, cash equivalents and available-for-sale securities (short- and long-term) were $695 million as of August 3, 2007. The increase from May 4, 2007 was primarily a result of total cash provided by operating activities partially offset by minority cost-based investments and capital expenditures. The increase from July 28, 2006 was primarily a result of total cash provided by operating activities, supplemented by $60 million in proceeds from the sale of investments and partially offset by minority cost-based investments and capital expenditures. 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) Third Quarter Second Quarter Third Quarter -------------------------- ------------- -------------- ------------- Total cash provided by operating activities from continuing operations $ 29.7 44.6 24.6 Days sales outstanding 45.9 45.2 49.4 Inventory turns - annualized 5.3 5.3 5.5 Depreciation and amortization $ 17.2 17.1 16.5 Property, equipment and patent additions, net of disposals $ 6.3 9.3 9.1 Employees Total employees were approximately 9,100 as of August 3, 2007, 9,750 as of May 4, 2007 and 9,150 as of July 28, 2006. The decrease from May 4, 2007 was primarily due to the reduction 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 "At this time, we are raising our 2007 annual sales and earnings guidance ranges. While our results in the fourth fiscal quarter of 2007 are likely to be less than the preceding second and third quarters due to seasonality, we do not expect the results in the fourth quarter of fiscal 2007 to fluctuate as sharply as last year due to a more level spending pattern by a key customer in 2007 compared to 2006," said Switz. "We also believe that there are significant 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 key 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 the quarterly timing of some sales opportunities in the fourth quarter 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 $1.308-$1.313 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 $1.11 to $1.15, which includes estimated charges (benefits), net of tax, listed in the below table.
2007
Estimate
------------
Estimated GAAP EPS from continuing operations - diluted $1.11-1.15(1)
Amortization of purchased intangibles $ 0.18
Restructuring and impairment charges $ 0.09
ACX product-line inventory charge $ 0.07
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 and
enterprise networks.
-- Competitive Cost Transformation. Coupled with the need for
sales growth, ADC must also become more cost efficient in
order to increase profitability. We therefore are focusing
aggressively on ways to conduct our operations more
efficiently. We remain committed to being a low-cost industry
leader and are implementing the following initiatives as part
of an overall project we call "competitive cost
transformation:"
-- Migrating sales volume to customer-preferred, leading
technology products and sunsetting end of life products;
-- Improving our customers' ordering experience through a
faster, simpler, more efficient inquiry-to-invoice
process;
-- Redesigning product lines to improve customization and
gain efficiencies from the use of more common components;
-- Increasing direct material savings from strategic global
sourcing;
-- Improving cash flow from supplier-managed inventory and
lead-time reduction programs;
-- Relocating certain manufacturing, engineering and other
operations from higher-cost geographic areas to lower-cost
areas; and
-- Focusing our resources on core operations, and, where
appropriate, using third parties to perform non-core
processes.
-- 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 August 3, 2007, ADC had a total of $980 million in deferred tax assets (primarily for U.S. income taxes) that have been offset by a valuation allowance of $936 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 third quarter 2007 results and current outlook on a conference call scheduled today, September 5, 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 11:55 p.m. Eastern time on September 11 by domestic callers at (800) 642-1687 and by international callers at (706) 645-9291 (conference ID number is 12359782) 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 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; 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
August 3, October 31,
2007 2006
---------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 149.0 $ 142.3
Available-for-sale securities 528.7 395.4
Accounts receivable, net of reserves of $8.0
and $10.2 176.7 169.3
Unbilled revenues 32.6 23.8
Inventories, net of reserves of $41.0 and
$35.1 175.1 165.5
Prepaid and other current assets 29.8 31.5
Assets of discontinued operations 0.7 14.9
---------- -----------
Total current assets 1,092.6 942.7
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $391.4 and $370.3 201.9 206.5
RESTRICTED CASH 12.9 14.0
GOODWILL 239.0 238.5
INTANGIBLES, net of accumulated amortization
of $83.1 and $66.5 126.2 142.0
AVAILABLE-FOR-SALE SECURITIES 4.0 10.7
OTHER ASSETS 60.8 56.7
LONG-TERM ASSETS OF DISCONTINUED OPERATIONS - 0.3
---------- -----------
Total Assets $1,737.4 $1,611.4
========== ===========
LIABILITIES & SHAREOWNERS' INVESTMENT
CURRENT LIABILITIES:
Current portion of long-term notes payable $ 200.7 $ -
Accounts payable 92.0 88.4
Accrued compensation and benefits 59.7 43.6
Other accrued liabilities 53.9 61.2
Income taxes payable 13.4 17.7
Restructuring accrual 22.8 27.8
Liabilities of discontinued operations 5.3 21.4
---------- -----------
Total current liabilities 447.8 260.1
PENSION OBLIGATIONS & OTHER LT OBLIGATIONS 87.4 77.8
LONG-TERM NOTES PAYABLE 200.6 400.0
---------- -----------
Total liabilities 735.8 737.9
SHAREOWNERS' INVESTMENT
(117.5 and 117.2 shares outstanding) 1,001.6 873.5
---------- -----------
Total liabilities and shareowners' investment $1,737.4 $1,611.4
========== ===========
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
GAAP BASIS
(In Millions, Except Earnings Per Share)
For the For the
Three Months Ended Nine Months Ended
--------------------------- -------------------
August 3, May 4, July 28, August 3, July 28,
2007 2007 2006 2007 2006
--------- -------- -------- --------- ---------
Products $ 306.0 $ 312.0 $ 307.5 $ 879.8 $ 870.3
Services 40.1 37.4 36.1 112.9 104.2
--------- -------- -------- --------- ---------
NET SALES 346.1 349.4 343.6 992.7 974.5
Products 196.8 195.9 201.3 561.5 568.6
Services 35.7 33.0 30.1 102.1 85.8
--------- -------- -------- --------- ---------
COST OF SALES 232.5 228.9 231.4 663.6 654.4
--------- -------- -------- --------- ---------
GROSS PROFIT 113.6 120.5 112.2 329.1 320.1
--------- -------- -------- --------- ---------
GROSS MARGIN 32.8% 34.5% 32.7% 33.2% 32.8%
OPERATING EXPENSES:
Research and
development 18.0 18.1 17.3 53.3 55.3
Selling and
administration 63.6 63.2 60.8 191.1 191.7
Amortization of
purchased
intangibles 6.0 6.0 6.6 18.0 19.6
Impairment charges 2.7 0.1 - 2.8 0.6
Restructuring
charges 9.3 (1.0) 3.5 8.9 6.1
--------- -------- -------- --------- ---------
Total Operating
Expenses 99.6 86.4 88.2 274.1 273.3
--------- -------- -------- --------- ---------
As a Percentage
of Net Sales 28.8% 24.7% 25.7% 27.7% 28.0%
OPERATING INCOME 14.0 34.1 24.0 55.0 46.8
OPERATING MARGIN 4.0% 9.8% 7.0% 5.5% 4.8%
OTHER INCOME
(EXPENSE), NET:
Interest, net 4.7 4.0 (0.1) 11.8 2.5
Other, net 0.3 57.7 2.4 58.5 4.7
--------- -------- -------- --------- ---------
INCOME BEFORE INCOME
TAXES 19.0 95.8 26.3 125.3 54.0
PROVISION FOR INCOME
TAXES 2.0 2.7 3.1 5.8 7.0
--------- -------- -------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS 17.0 93.1 23.2 119.5 47.0
DISCONTINUED
OPERATIONS, NET OF
TAX:
Loss from
discontinued
operations (0.6) (1.2) (1.3) (2.5) (4.7)
Gain (loss) on sale
of discontinued
operations, net 0.2 0.2 (17.3) (4.7) (17.3)
--------- -------- -------- --------- ---------
Total Discontinued
Operations (0.4) (1.0) (18.6) (7.2) (22.0)
--------- -------- -------- --------- ---------
Earnings before the
cumulative effect of
a change in
accounting principle 16.6 92.1 4.6 112.3 25.0
Cumulative effect of a
change in accounting
principle - - - - 0.6
--------- -------- -------- --------- ---------
NET INCOME $ 16.6 $ 92.1 $ 4.6 $ 112.3 $ 25.6
========= ======== ======== ========= =========
NET MARGIN 4.8% 26.4% 1.3% 11.3% 2.6%
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING - BASIC 117.4 117.3 117.2 117.3 117.0
========= ======== ======== ========= =========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING - DILUTED 117.8 131.8 117.4 131.8 117.5
========= ======== ======== ========= =========
EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS - BASIC $ 0.14 $ 0.79 $ 0.20 $ 1.02 $ 0.40
========= ======== ======== ========= =========
EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS - DILUTED $ 0.14 $ 0.73 $ 0.20 $ 0.98 $ 0.40
========= ======== ======== ========= =========
LOSS PER SHARE FROM
DISCONTINUED
OPERATIONS - BASIC $ - $ (0.01) $ (0.16) $ (0.06) $ (0.19)
========= ======== ======== ========= =========
LOSS PER SHARE FROM
DISCONTINUED
OPERATIONS - DILUTED $ - $ (0.01) $ (0.16) $ (0.05) $ (0.19)
========= ======== ======== ========= =========
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 $ 0.14 $ 0.78 $ 0.04 $ 0.96 $ 0.22
========= ======== ======== ========= =========
NET EARNINGS PER SHARE
- DILUTED $ 0.14 $ 0.72 $ 0.04 $ 0.93 $ 0.22
========= ======== ======== ========= =========
SUPPLEMENTARY SCHEDULE
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATION - UNAUDITED
GAAP BASIS
(In Millions, Except Per Share Amounts)
For the For the
Numerator: Three Months Ended Nine Months Ended
--------------------------------------------
August 3, May 4, July 28, August 3, July 28,
2007 2007 2006 2007 2006
------------------------- ------------------
Net income from
continuing operations $ 17.0 $ 93.1 $ 23.2 $ 119.5 $ 47.0
Convertible note interest - 3.4 - 10.2 -
------------------------- ------------------
Net income from
continuing operations -
diluted $ 17.0 $ 96.5 $ 23.2 $ 129.7 $ 47.0
========================= ==================
Denominator:
Weighted average common
shares outstanding -
basic 117.4 117.3 117.2 117.3 117.0
Convertible bonds
converted to common
stock - 14.2 - 14.2 -
Employee options and
other 0.4 0.3 0.2 0.3 0.5
------------------------- ------------------
Weighted average common
shares outstanding -
diluted $ 117.8 $131.8 $ 117.4 $ 131.8 $ 117.5
========================= ==================
Basic income per share
from continuing
operations $ 0.14 $ 0.79 $ 0.20 $ 1.02 $ 0.40
========================= ==================
Diluted income per share
from continuing
operations $ 0.14 $ 0.73 $ 0.20 $ 0.98 $ 0.40
========================= ==================
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In millions)
SUBJECT TO RECLASSIFICATION
For the
Three Months Ended Nine Months Ended
--------------------------- ------------------
August 3, May 4, July 28, August 3, July 28,
2007 2007 2006 2007 2006
--------- -------- -------- --------- --------
Operating Activities:
Income from
continuing
operations $ 17.0 $ 93.1 $ 23.2 $ 119.5 $ 47.0
Adjustments to
reconcile income
from continuing
operations to net
cash provided by
(used for) operating
activities from
continuing
operations:
Inventory Write-
offs 8.9 - - 8.9 -
Impairments 2.7 0.1 - 2.8 0.6
Depreciation and
amortization 17.2 17.1 16.5 51.4 50.3
Change in bad debt
reserves 0.6 (0.7) (0.1) (0.3) 0.1
Non-cash stock
compensation 2.6 2.7 2.7 7.2 9.2
Change in deferred
income taxes 0.2 0.5 - 0.7 1.4
Loss/(Gain) on sale
of property and
equipment - 0.2 (0.7) 0.5 0.1
Gain on sale of
investments - (57.5) - (57.5) -
Other, net (1.3) (1.8) 0.9 (3.8) 0.1
Changes in
operating assets &
liabilities, net
of divestitures:
Accounts
receivable and
unbilled
revenues (4.4) (26.3) 7.3 (12.2) (10.1)
Inventories (9.3) (3.3) (20.7) (14.2) (25.0)
Prepaid and other
assets 2.1 5.4 8.3 6.2 1.3
Accounts payable (4.8) 13.1 6.7 2.1 33.8
Accrued
liabilities (1.8) 2.0 (19.5) (5.6) (53.9)
--------- -------- -------- --------- --------
Total cash provided
by operating
activities from
continuing
operations 29.7 44.6 24.6 105.7 54.9
Total cash used for
operating
activities from
discontinued
operations (0.9) (3.5) (1.4) (10.0) (3.3)
--------- -------- -------- --------- --------
Total cash provided
by operating
activities 28.8 41.1 23.2 95.7 51.6
Investing Activities:
Acquisitions, net of
cash acquired 0.4 (2.0) (3.2) (1.6) (3.2)
Purchases of
interests in
affiliates (8.1) - - (8.1) -
Divestitures, net of
cash disposed 0.2 0.2 - 0.5 -
Property, equipment
and patent additions (6.8) (9.6) (9.6) (25.1) (23.1)
Proceeds from
disposal of property
and equipment 0.5 0.3 0.5 1.0 0.8
Proceeds from sale of
investments - 59.8 - 59.8 -
Exercise of warrants - (1.8) - (1.8) -
Proceeds from
collection of note
receivable - - 4.5 - 6.8
Decrease in
restricted cash 0.4 - 5.9 1.6 7.5
Purchases of
available-for-sale
securities (208.8) (406.9) (136.6) (883.1) (377.0)
Sale of available-
for-sale securities 220.4 290.6 112.3 756.4 341.9
Other - - - - 0.1
--------- -------- -------- --------- --------
Total cash used for
investing
activities from
continuing
operations (1.8) (69.4) (26.2) (100.4) (46.2)
Total cash provided
by investing
activities from
discontinued
operations - 0.4 - 1.1 0.4
--------- -------- -------- --------- --------
Total cash used for
investing
activities (1.8) (69.0) (26.2) (99.3) (45.8)
Financing Activities:
Common stock issued 1.6 1.9 0.1 3.6 9.7
--------- -------- -------- --------- --------
Total cash provided
by financing
activities from
continuing
operations 1.6 1.9 0.1 3.6 9.7
Total cash provided
by financing
activities from
discontinued
operations - - - - -
--------- -------- -------- --------- --------
Total cash provided
by financing
activities 1.6 1.9 0.1 3.6 9.7
Effect of Exchange Rate
Changes on Cash 1.5 3.7 1.7 6.7 3.5
--------- -------- -------- --------- --------
Increase (decrease) in
cash and cash
equivalents 30.1 (22.3) (1.2) 6.7 19.0
Cash and cash
equivalents, beginning
of period 118.9 141.2 128.6 142.3 108.4
--------- -------- -------- --------- --------
Cash and cash
equivalents, end of
period $ 149.0 $ 118.9 $ 127.4 $ 149.0 $ 127.4
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