ADC Reports Q1 624163

ADC announced results for its first fiscal quarter ended January 27, 2006

March 1, 2006

2 Min Read

MINNEAPOLIS -- ADC (NASDAQ:ADCT, today announced results for its first fiscal quarter ended January 27, 2006 prepared in accordance with generally accepted accounting principles (GAAP). The results are summarized below for ADC and its operating segments, Broadband Infrastructure and Access, and Professional Services, on a continuing operations basis.

"Our mission for fiscal 2006 is global growth and following significant sales growth in key areas during our first quarter we are raising our annual sales estimate to $1.325-$1.375 billion. In our first fiscal quarter of 2006, our global fiber and copper connectivity solutions grew significantly to support FTTX network deployments in the United States and Europe," said Robert E. Switz, president and CEO of ADC. "In 2006, we remain focused on four key global growth initiatives. First, we are uniquely positioned in helping our customers evolve the core of their networks to deliver next-generation video, data and voice services. Second, we are providing OmniReach(TM) fiber and copper connectivity solutions that telephone companies worldwide require to build advanced FTTX networks that deliver these video, data and voice services to consumers. Third, we are serving wireless operators worldwide with our Digivance(R) capacity and coverage systems, along with our connectivity solutions, to support their broadband wireless services in traditional wireless service areas as well as with in-building solutions. Fourth, we are offering our comprehensive TrueNet(R) structured cabling solutions to enterprises around the world for the deployment of copper, fiber and wireless infrastructure used to cost effectively deliver key business applications. We believe these global initiatives will enable ADC to again grow at rates faster than the overall growth rate of our industry in fiscal 2006."

Continued Progress Toward Increasing Future Profitability

"In our first quarter, we advanced several projects to transform our cost structure and position ADC for growth-driven operating leverage. We believe the benefits of these projects should begin to be visible in our financial results in the second half of 2006. We are working on reducing cost of sales as well as operating expense and expect the benefits of these and other cost savings measures to improve further in fiscal 2007 and beyond as we progress toward our three-year goal of 14% or better operating margins," said Gokul Hemmady, ADC's chief financial officer. "In the first quarter, we increased our manufacturing workforce in Mexico. We also began consolidating certain labor-intensive European operations, formerly conducted in several locations, to a lower-cost production facility in the Czech Republic. Third, we began working to move additional product lines to manufacturing operations in China. Finally, we brought most of our European operations onto ADC's worldwide enterprise resource planning system and expect most of our Asia-Pacific operations to be on this system later this fiscal year."

ADC (Nasdaq: ADCT)

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