ADC Reports Q4

Sales of $221M is 9% better than consensus, but GAAP losses still totaled $382M, or $0.48 per share

December 4, 2002

4 Min Read

MINNEAPOLIS -- ADC (Nasdaq:ADCT, www.adc.com) today announced results for the fourth quarter ended October 31, 2002 prepared in accordance with generally accepted accounting principles (GAAP), as well as pro forma results prepared with certain adjustments as noted below. On a GAAP basis in the fourth quarter of 2002, sales were $221 million and net loss was $382 million ($0.48 loss per diluted share). These results compare to sales of $235 million and net loss of $629 million ($0.79 loss per diluted share) in the third quarter of 2002 and sales of $392 million and net loss of $177 million ($0.22 loss per diluted share) in the fourth quarter of 2001 on a GAAP basis. The largest portion of the GAAP net loss in the fourth quarter of 2002 was $324 million ($0.41 per diluted share) for charges, credits and expenses largely related to restructuring and other non-recurring items that were excluded in determining pro forma results. For an explanation of items excluded from pro forma income statement results, please refer to the "Sales, Charges, Credits and Expenses Excluded from Pro Forma Results" section of this release and review the attached supplementary schedules that reconcile GAAP results to pro forma results for the three- and twelve-month periods ended October 31, 2002 and 2001. On a pro forma basis, which reflects adjustments to all quarters related to the exclusion of product lines that have been discontinued or divested prior to the fourth quarter of 2002, sales were $220 million in the fourth quarter of 2002 compared to sales of $233 million in the third quarter of 2002 and sales of $339 million in the fourth quarter of 2001. In the quarter, Broadband Infrastructure and Access (BIA) sales were a pro forma $155 million compared to a pro forma $155 million in the third quarter of 2002 and a pro forma $235 million in the fourth quarter of 2001. Integrated Solutions (IS) sales were $65 million in the quarter compared to $79 million in the third quarter of 2002 and a pro forma $105 million in the prior-year fourth quarter. International sales were $54 million or 25% of total pro forma sales in this year's fourth quarter compared to 29% of total pro forma sales in both the third quarter of 2002 and fourth quarter of 2001. North America and Europe remained ADC's largest sales regions in the quarter. Pro forma operating loss was $46 million in the fourth quarter of 2002 compared to a pro forma operating loss of $93 million in the third quarter of 2002 and a pro forma operating loss of $77 million in the prior-year fourth quarter. ADC's pro forma operating loss in the fourth quarter of 2002 includes $24 million ($24 million after tax or $0.03 loss per diluted share) of charges for operating reserves on inventories and accounts receivables. This operating reserve included in pro forma results compares to $26 million ($16 million after tax or $0.02 loss per diluted share) in the third quarter of 2002 and $48 million ($30 million after tax or $0.04 loss per diluted share) in the fourth quarter of 2001. "We are pleased to see ADC's fourth quarter sales come in better than our fourth quarter operating plan and Wall Street consensus. We are also particularly excited by the better than expected results in our broadband connectivity business, the 12% sequential quarterly sales increase for our HDSL-related product lines and the 28% sequential quarterly sales growth of our cable telephony/data systems," said Rick Roscitt, chairman and CEO of ADC. "We made remarkable progress during the quarter in reducing our fixed costs and operating expenses to achieve a lower breakeven point of around $225 million in quarterly sales for 2003. Consequently, our pro forma operating loss improved significantly compared to both our previous pro forma guidance assumptions for the fourth quarter of 2002 and sequentially from our pro forma results in third quarter of 2002. Lastly, we were very encouraged during the quarter by the market leadership of our Cuda(TM) 12000 DOCSIS 1.1-qualified IP access switch and the broadening customer interest in using our Singl.eView(TM) customer management and billing software in a wide variety of communication, content and commerce applications." ADC Telecommunications Inc.

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