ADC TELECOMMUNICATIONS 
By ADC (NASDAQ: ADCT) today announced unaudited results for its third quarter ended July 2, 2010.
?We are pleased to announce another quarter of solid results,? said Robert E. Switz, chairman, president and chief executive officer of ADC. ?These results were in line with our prior expectations and reflect good progress on previously announced efforts to drive improvements across our operations.?
?We continue executing on our strategy to align ADC's business with the next generation network trends where customers are investing,? said Switz. ?We remain focused on continuing to perform as a standalone business even as we begin planning for the process of bringing together ADC and Tyco Electronics to create a world leader in broadband connectivity.?
Third Quarter Fiscal 2010 Results
Due to a change in our
fiscal year to September 30, ADC is comparing third quarter 2010 results
announced today with the proforma results for the prior year's third
quarter ended June 26, 2009 and the reported results for the second
quarter of fiscal 2010 ended April 2, 2010.
- ADC's GAAP net earnings from continuing operations for the quarter were $75.9 million, or $0.68 per diluted share. This includes certain items totaling $55.2 million, which comprised, among others, a gain from our previously announced $56.5 million auction rate securities settlement. Excluding these items, non-GAAP (adjusted) net earnings for the quarter were $20.7 million, or $0.21 per share. A reconciliation of GAAP to non-GAAP financial measures and quarterly shares outstanding is provided later in this press release.
- In line with our expectations, net sales for the third quarter rose 4.9% to $304.4 million as compared to $290.3 million for the third quarter of fiscal 2009, and increased 11.1% compared to $274.0 million for the second quarter of 2010. The year-over-year and sequential increases reflect improving economic conditions as well as customer spending trends in many regions of the world.
- Third quarter gross margin was 37.1 percent compared to a gross margin of 35.2 percent during the same quarter of last year and 36.5 percent in the previous quarter. This margin improvement was driven primarily by the company's ongoing efforts to increase efficiency across its operating cost structure, as well as higher volume and a favorable product mix.
- Operating expenses were $86.8 million compared to $80.3 million during the 2009 third quarter and $91.7 million during the second quarter of 2010. Excluding impairment and restructuring charges, intangible amortization and certain other charges from each period, adjusted operating expenses were $83.0 million compared to $73.2 million during the same quarter of last year and $81.8 million during the previous quarter.
- ADC ended the third quarter with $704.1 million of liquidity, which includes cash and available-for-sale securities but excludes restricted cash, remaining auction rate securities and borrowing capacity under the company's credit facility. With approximately $650 million long term debt outstanding, ADC's net cash position became positive during the quarter. The company generated $106.3 million of cash from operating activities from continuing operations during the first three fiscal quarters. This includes $56.5 million of cash resulting from the settlement of our previously announced auction rate securities claim. Details of ADC's cash balance can be found in the data and statistics portion of this release.
- Days sales outstanding decreased 4.8 days from the previous quarter to approximately 56.9 days, while inventory turns were slightly better at 6.6 times.
Pending Acquisition by Tyco Electronics Ltd.
On July 12,
2010, ADC and Tyco Electronics entered into an Agreement and Plan of
Merger under which Tyco Electronics agreed to acquire ADC. The
transaction presently is expected to be completed during the first
quarter of fiscal 2011. The consummation of the proposed transaction is
subject to various closing conditions including the tender of a majority
of ADC's shares, the expiration of the applicable waiting period under
applicable antitrust laws and other customary conditions.
Fourth Quarter Fiscal 2010 Outlook
For its fourth quarter of
fiscal 2010 ending September 30, 2010, ADC announces the following
guidance:
- Net sales are expected to be within a range of $290-$310 million.
- GAAP diluted earnings per share are expected to be within a range of $0.08 to $0.18, which includes non-cash amortization expense of $0.04 per share and excludes potential non-cash charges or restructuring charges that the company cannot estimate at this time.
Conference Call and Webcast
ADC will discuss its third
quarter 2010 results on a conference call scheduled for today, August 4,
5:00 p.m. Eastern time. The conference call can be accessed by domestic
callers at (866) 503-0778 and by international callers at (973) 200-3388
(conference ID number 86061656) or on the Internet at www.adc.com/investor,
by clicking on events and presentations. Starting today at 7:45 p.m.
Eastern time, the replay of the call can be accessed for approximately 7
days by domestic callers at (800) 642–1687 and by international callers
at (706) 645-9291 or on the Internet at www.adc.com/investor,
by clicking on events and presentations.
A copy of this news release can be accessed at: www.adc.com/investorrelations/newsandcommunications/earningsreleases/
ADC uses its website as a means to disclose non-public information about the company and for complying with its disclosure obligations under SEC Regulation FD. These disclosures are made within the Investor Relations section of ADC's website. Investors should monitor the Investor Relations section of ADC's website, in addition to following ADC's press releases, SEC filings, and public conference calls and webcasts. Information on our website is not incorporated into our SEC filings.
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
This
press release contains forward-looking statements within the meaning of
The Private Securities Litigation Reform Act of 1995 that are based on
management's current expectations and assumptions. These forward-looking
statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from the forward-looking
statements. These statements may include, among others, statements
regarding the proposed merger transaction with Tyco Electronics; future
sales, earnings per share and other results of operations; statements
about shareholder value; expectations or beliefs about the industry in
which we operate and the macro economy generally; statements about our
cost cutting initiatives; and statements pertaining in any way to the
sufficiency of our cash balances and cash generated from operations.
These statements could be impacted by a variety of factors, such as:
uncertainties as to the timing of the merger transaction with Tyco
Electronics; the possibility that various closing conditions for the
merger transaction may not be satisfied or waived, including that a
governmental entity may prohibit, delay or refuse to grant approval for
the consummation of the transaction; the effects of the merger
transaction on our relationships with employees, customers, vendors and
other business partners; the risk that shareholder litigation in
connection with the merger transaction may result in significant costs
of defense, indemnification and liability; demand for equipment by
telecommunications service providers and large enterprises; variations
in demand for particular products in our portfolio and other factors
that can impact overall margins; our ability to operate our business to
achieve, maintain and grow operating profitability; our ability to
reduce costs without adversely affecting our ability to serve our
customers; changing regulatory conditions and macro-economic conditions,
both in our industry and in local and global markets that can influence
the demand for our products and services; fluctuations in the market
value of our common stock, which can be caused by many factors outside
of our control and could cause us to record impairment charges on our
goodwill or other intangible assets in the future if our market
capitalization drops below the book value of our assets for a continued
time period; consolidation among our customers, competitors or vendors
that can disrupt or displace customer relationships; our ability to keep
pace with rapid technological change in our industry; our ability to
make the proper strategic choices regarding acquisitions and
divestitures; our ability to integrate the operations of any acquired
business; 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 believe have the greatest potential; fluctuations
in our operating results from quarter-to-quarter that can be caused by
many factors beyond our control; financial problems, work interruptions
in operations or other difficulties faced by customers or vendors that
can impact our sales, sales collections and ability to procure necessary
materials, components and services to operate our business; our ability
to protect our intellectual property rights and defend against potential
infringement claims; possible limitations that can arise if any of our
products have design or manufacturing defects; our ability to obtain,
and the prices of, raw materials, components and services; our
dependence on contract manufacturers to make certain products as well as
our reliance on our operation of a limited number of significant
manufacturing facilities around the world; changes in interest rates,
foreign currency exchange rates and equity securities prices, all of
which will impact our operating results; political, economic and legal
uncertainties related to doing business in China and other developing
countries; our ability to settle satisfactorily any litigation; and
other risks and uncertainties including those identified in the section
captioned Risk Factors in Item 1A of our Annual Report on Form 10-K for
the year ended September 30, 2009 and as may be updated in Item 1A of
our subsequent Quarterly Reports on Form 10-Q or other filings we make
with the SEC. We disclaim any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Reconciliation of non-GAAP and GAAP Financial Measures
Actuals | |||||||||||||||||||||||||||||||||||||||
| ADC Telecommunications, Inc. | |||||||||||||||||||||||||||||||||||||||
| Consolidated Non-GAAP Income and EPS Calculation - UNAUDITED | |||||||||||||||||||||||||||||||||||||||
| (In millions except per share amounts) | |||||||||||||||||||||||||||||||||||||||
| FY2010 | FY2009 | ||||||||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | FY10 | Q1 | Q2 | Q3 | Q4 | FY09 | |||||||||||||||||||||||||||||||
| 1/1/2010 | 4/2/2010 | 7/2/2010 | 7/2/2010 | 12/26/2008 | 3/27/2009 | 6/26/2009 | 9/30/2009 | 9/30/2009 | |||||||||||||||||||||||||||||||
| GAAP Income (Loss) from Continuing Operations Available to ADC Common Shareowners | $ | 3.4 | $ | (13.0 | ) | $ | 75.9 | $ | 66.3 | $ | (47.7 | ) | $ | (433.4 | ) | $ | 15.1 | $ | (17.3 | ) | $ | (483.3 | ) | ||||||||||||||||
| Diluted GAAP Income (Loss) from Continuing Operations Available to ADC Common Shareowners per Share | $ | 0.04 | $ | (0.13 | ) | $ | 0.68 | $ | 0.68 | $ | (0.45 | ) | $ | (4.49 | ) | $ | 0.16 | $ | (0.18 | ) | $ | (4.89 | ) | ||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||
| Cost of goods sold adjustments: | |||||||||||||||||||||||||||||||||||||||
| Outdoor Wireless Inventory Charge | - | - | - | - | 10.8 | - | - | - | 10.8 | ||||||||||||||||||||||||||||||
| ACX Inventory Charge | - | - | - | - | 3.2 | - | - | - | 3.2 | ||||||||||||||||||||||||||||||
| Total cost of goods sold adjustments: | - | - | - | - | 14.0 | - | - | - | 14.0 | ||||||||||||||||||||||||||||||
| Operating expenses adjustments: | |||||||||||||||||||||||||||||||||||||||
| Amortization of Purchased Intangibles | 4.9 | 4.9 | 5.0 | 14.8 | 8.1 | 6.8 | 5.8 | 5.2 | 25.9 | ||||||||||||||||||||||||||||||
| Restructuring Charges | 9.2 | 4.4 | (1.1 | ) | 12.5 | 8.5 | 3.8 | 4.2 | 26.1 | 42.6 | |||||||||||||||||||||||||||||
| Other Impairment Charges | 0.1 | 0.6 | (0.1 | ) | 0.6 | 4.1 | 0.5 | (0.1 | ) | 0.6 | 5.1 | ||||||||||||||||||||||||||||
| Intangibles impairment | - | - | - | - | - | 41.4 | - | - | 41.4 | ||||||||||||||||||||||||||||||
| One-time opex adjustments | - | - | - | - | - | - | (3.2 | ) | - | (3.2 | ) | ||||||||||||||||||||||||||||
| Goodwill impairment | - | - | - | - | - | 366.2 | 0.4 | - | 366.6 | ||||||||||||||||||||||||||||||
| Total operating expenses adjustments: | 14.2 | 9.9 | 3.8 | 27.9 | 20.7 | 418.7 | 7.1 | 31.9 | 478.4 | ||||||||||||||||||||||||||||||
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© Business Wire - 2010
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