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ADC reports Q12010 financial results |
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ADC has announced its unaudited results for its first quarter ended January 1, 2010. The company clarified at the outset that on account of a change in its fiscal year to September 30, it compared its first quarter 2010 results with the proforma results for the prior year's first quarter ended December 26, 2008 and the proforma results for the fourth quarter of fiscal 2009 ended September 30, 2009.  GAAP earnings from continuing operations were $3.6 million, or $0.04 per share. Net sales for the quarter totaled $265.6 million, as compared to $299.7 million for the first quarter of fiscal 2009 and $291.2 million for the fourth quarter of 2009. ADC said the year-over-year decline reflects principally the impact of the global economic downturn, and the sequential decrease is due primarily to expected seasonality and a decline in major carrier spending that the company referenced in its guidance at the end of the fourth quarter. First quarter gross margin was 34.7 percent as compared to adjusted gross margins of 29.5 percent during the same quarter of last year and 34.4 percent in the previous quarter. The year-over-year margin increase was driven by the company's successful actions to increase efficiency across its operating cost structure, which offset the negative impact of lower revenue. Operating expenses were $96.2 million as compared to $98.8 million during the first quarter of 2009 and $110.5 million during the fourth quarter of 2009. Excluding impairment and restructuring charges, intangible amortization and certain other charges from each period, adjusted operating expenses were $82.0 million compared to $78.1 million during the same quarter of last year and $78.6 million during the fourth quarter of the last fiscal year. ADC said the operating expense increases were primarily on account of higher stock-based compensation expense, including a $4 million charge to reflect a change in assumptions. It said that as a result of continuing cost actions and a return to normalized stock-based compensation levels, it expects to see lower adjusted operating expenses during the remainder of fiscal 2010. ADC's GAAP earnings from continuing operations included $14.2 million of expenses, or $0.14 per share, related to purchased intangible amortization, restructuring and impairment and certain other charges. In addition to these expenses, ADC recorded a one-time gain of $15.9 million or $0.16 per share related to the sale of certain assets. Excluding these items, adjusted earnings per diluted share were $0.02. A reconciliation of GAAP to non-GAAP financial measures is provided later in this press release. ADC ended the first quarter with $609.5 million of liquidity, which excludes auction rate securities and restricted cash. The company generated cash from operating activities from continuing operations of $16 million and free cash flow of $9.3 million in the first quarter. Days sales outstanding improved from the previous quarter to approximately 58.1 days and inventory turns were slightly lower at 5.6 times. During the first quarter, ADC divested its GSM base station and switching business from the Network Solutions business unit and its RF Worx Signal Management product line from the Global Connectivity business unit. ADC said these transactions presented opportunities to divest non-core portfolios without impacting ADC's growth strategies. Financial performance of the Network Solutions business unit improved as revenue increased 17.2% from the previous quarter and 9.1% from last year's first quarter. ADC is seeing a modest return to project spending related to in-building and outdoor microcellular wireless solutions by operators and enterprises worldwide. Robert E. Switz, ADC's chairman, president and CEO said the strong first quarter results were evidence of the positive impact of the company's ongoing efforts to streamline operations. Switz said the company was making strategic gains in the marketplace with its focus on fiber and wireless networks that presented the greatest opportunity. For its second quarter of fiscal 2010 ending April 2, 2010, ADC expects net sales to be within the range of $260-280 million. GAAP diluted earnings per share are expected to be within the range of a loss of $.04 to earnings of $.06, which includes non-cash amortization expense of $0.05 per share. |
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