EX-99.1 4 a04-10158_1ex99d1.htm EX-99.1

EXHIBIT 99.1

 

Unaudited Pro Forma Condensed Consolidated Financial Statements

 

The following unaudited pro forma condensed consolidated financial statements give effect to the divestiture of the Billing Business by ADC as described under Item 2.01 of this report.  The unaudited pro forma condensed consolidated financial statements make adjustments to our condensed consolidated balance sheet as of April 30, 2004 (unaudited), our condensed consolidated statement of continuing operations for the year ended October 31, 2003, and our condensed consolidated statement of continuing operations for the six months ended April 30, 2004 (unaudited) as if the transaction had been completed on April 30, 2004 for the purposes of the unaudited pro forma condensed consolidated balance sheet and on November 1, 2002 for purposes of the unaudited pro forma condensed consolidated statements of continuing operations.

 

The unaudited pro forma condensed consolidated financial statements presented are based on the assumptions and adjustments described in the accompanying notes.  The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and are not necessarily indicative of the financial position or results of operations that would actually have been reported had the sale occurred as assumed or which may be reported in the future.  The unaudited pro forma condensed consolidated financial statements and accompanying notes should be read in conjunction with the historical financial statements and related notes of ADC included in our annual report on Form 10-K and quarterly reports on Form 10-Q.

 

 

ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
April 30, 2004

(In millions)

 

 

 

Historical
ADC (b)

 

Discontinued Operations
ADC (c)

 

Billing
Business (d)

 

Pro Forma
Adjustments

 

Pro Forma

 

ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

730.2

 

$

—

 

$

(0.4

)

$

74.5

(e)

$

—

 

 

 

 

 

 

 

 

 

(4.0)

(f)

—

 

 

 

 

 

 

 

 

 

0.7

(g)

801.0

 

Available-for-sale securities

 

11.2

 

—

 

—

 

—

 

11.2

 

Accounts receivable, net

 

106.6

 

—

 

(4.9

)

—

 

101.7

 

Unbilled revenue

 

29.4

 

—

 

(3.5

)

—

 

25.9

 

Inventories, net

 

76.7

 

(7.4

)

—

 

—

 

69.3

 

Prepaid and other current assets

 

42.0

 

—

 

(4.0

)

4.0

(f)

42.0

 

Total current assets

 

996.1

 

(7.4

)

(12.8

)

75.2

 

1,051.1

 

 

 

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, NET

 

169.6

 

—

 

(5.8

)

—

 

163.8

 

ASSETS HELD FOR SALE

 

17.8

 

—

 

—

 

—

 

17.8

 

RESTRICTED CASH

 

18.0

 

—

 

—

 

—

 

18.0

 

AVAILABLE-FOR-SALE SECURITIES

 

16.6

 

—

 

—

 

—

 

16.6

 

OTHER ASSETS

 

32.5

 

—

 

(5.0

)

—

 

27.5

 

Total assets

 

$

1,250.6

 

$

(7.4

)

$

(23.6

)

$

75.2

 

$

1,294.8

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREOWNERS’ INVESTMENT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

51.8

 

$

—

 

$

(1.1

)

$

—

 

$

50.7

 

Accrued compensation and benefits

 

45.9

 

(1.1

)

(5.5

)

—

 

39.3

 

Other accrued liabilities

 

109.7

 

(6.3

)

(18.4

)

0.7

(g)

85.7

 

Restructuring accrual

 

32.5

 

—

 

—

 

—

 

32.5

 

Total current liabilities

 

239.9

 

(7.4

)

(25.0

)

0.7

 

208.2

 

 

 

 

 

 

 

 

 

 

 

 

 

LONG-TERM NOTES PAYABLE

 

400.0

 

—

 

—

 

—

 

400.0

 

OTHER LONG-TERM LIABILITIES

 

2.4

 

—

 

—

 

—

 

2.4

 

Total liabilities

 

642.3

 

(7.4

)

(25.0

)

0.7

 

610.6

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREOWNERS’ INVESTMENT (808.8 shares outstanding)

 

608.3

 

—

 

1.4

 

(1.4

)(h)

 

 

 

 

 

 

 

 

 

 

75.9

(i)

684.2

 

Total liabilities and shareowners’ investment

 

$

1,250.6

 

$

(7.4

)

$

(23.6

)

$

75.2

 

$

1,294.8

 

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF CONTINUING OPERATIONS

Year Ended October 31, 2003

(In millions, except per share amounts)

 

 

 

Historical
ADC (a)

 

Discontinued
Operations
ADC (c)

 

Billing
Business (d)

 

Pro Forma
Adjustments

 

Pro
Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES:

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

571.7

 

$

(62.0

)

$

(15.6

)

$

—

 

$

494.1

 

Service

 

201.5

 

—

 

(76.0

)

—

 

125.5

 

TOTAL NET SALES

 

773.2

 

(62.0

)

(91.6

)

—

 

619.6

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

 

 

Product

 

316.6

 

(33.1

)

(2.0

)

—

 

281.5

 

Service

 

165.2

 

—

 

(52.5

)

—

 

112.7

 

TOTAL COST OF SALES

 

481.8

 

(33.1

)

(54.5

)

—

 

394.2

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

291.4

 

(28.9

)

(37.1

)

—

 

225.4

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

108.6

 

(30.6

)

(10.1

)

—

 

67.9

 

Selling and administration

 

222.1

 

(29.3

)

(31.2

)

—

 

161.6

 

Impairment charges

 

15.6

 

—

 

—

 

—

 

15.6

 

Restructuring charges

 

41.8

 

—

 

(9.5

)

—

 

32.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

388.1

 

(59.9

)

(50.8

)

—

 

277.4

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

(96.7

)

31.0

 

13.7

 

—

 

(52.0

)

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME, NET

 

14.6

 

(5.4

)

(0.2

)

1.4

(g)

10.4

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

(82.1

)

25.6

 

13.5

 

1.4

 

$

(41.6

)

PROVISION (BENEFIT) FOR INCOME TAXES

 

(5.4

)

—

 

0.9

 

—

 

(4.5

)

LOSS FROM CONTINUING OPERATIONS

 

$

(76.7

)

$

25.6

 

$

12.6

 

$

1.4

 

$

(37.1

)

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING (BASIC AND DILUTED)

 

803.4

 

 

 

 

 

 

 

803.4

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS FROM CONTINUING OPERATIONS PER SHARE

 

$

(0.10

)

 

 

 

 

 

 

$

(0.05

)

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF CONTINUING OPERATIONS

Six Months Ended April 30, 2004

(In millions, except per share amounts)

 

 

 

Historical
ADC (b)

 

Discontinued
Operations
ADC (c)

 

Billing
Business (d)

 

Pro Forma
Adjustments

 

Pro
Forma

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES:

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

261.2

 

$

(11.9

)

$

(4.6

)

$

—

 

$

244.7

 

Service

 

89.5

 

—

 

(30.6

)

—

 

58.9

 

TOTAL NET SALES

 

350.7

 

(11.9

)

(35.2

)

—

 

303.6

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES:

 

 

 

 

 

 

 

 

 

 

 

Product

 

137.2

 

(9.9

)

(0.5

)

—

 

126.8

 

Service

 

74.7

 

—

 

(21.2

)

—

 

53.5

 

TOTAL COST OF SALES

 

211.9

 

(9.9

)

(21.7

)

—

 

180.3

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

138.8

 

(2.0

)

(13.5

)

—

 

123.3

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

45.8

 

(11.7

)

(4.1

)

—

 

30.0

 

Selling and administration

 

94.1

 

(5.6

)

(12.2

)

—

 

76.3

 

Impairment charges

 

9.2

 

(7.6

)

—

 

—

 

1.6

 

Restructuring charges

 

20.5

 

—

 

(8.6

)

—

 

11.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

169.6

 

(24.9

)

(24.9

)

—

 

119.8

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

(30.8

)

22.9

 

11.4

 

—

 

3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME, NET

 

8.7

 

—

 

0.2

 

—

 

8.9

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) INCOME BEFORE INCOME TAXES

 

(22.1

)

22.9

 

11.6

 

—

 

12.4

 

PROVISION (BENEFIT) FOR INCOME TAXES

 

—

 

—

 

0.4

 

—

 

0.4

 

(LOSS) INCOME FROM CONTINUING OPERATIONS

 

$

(22.1

)

$

22.9

 

$

11.2

 

$

—

 

$

12.0

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING (BASIC)

 

807.5

 

 

 

 

 

 

 

807.5

 

AVERAGE COMMON SHARES OUTSTANDING (DILUTED)

 

807.5

 

 

 

 

 

 

 

812.7

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED (LOSS) INCOME FROM CONTINUING OPERATIONS PER SHARE

 

$

(0.03

)

 

 

 

 

 

 

$

0.01

 

 

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Pro Forma Adjustments

 

(a)          Historical ADC from ADC’s Form 10-K for the year ended October 31, 2003.

 

(b)         Historical ADC from ADC’s Form 10-Q as of and for the six months ended April 30, 2004.

 

(c)          Represents operations discontinued subsequent to the respective period end.  Discontinued operations for the year ended October 31, 2003 includes the BroadAccess40 business, and the business related to our Cuda™ cable modem termination system product line and the operations related to our FastFlowÒ Broadband Provisioning Manager software.  Discontinued operations as of and for the six months ended April 30, 2004, includes the business related to our Cuda™ cable modem termination system product line and the operations related to our FastFlowÒ Broadband Provisioning Manager software.

 

(d)         Represents the balance sheet and the statement of operations for the periods presented for the Billing Business.  Excluded from the statement of operations are certain expenses allocated to the Billing Business such as research and development and selling and administration expenses, which will not be transferred to Intec.

 

(e)          Adjustment represents cash received from Intec for the purchase of the Billing Business.

 

(f)            Adjustment represents the $4.0 million drawn by Intec on the $6.0 million line of credit provided by ADC.

 

(g)         Adjustment represents the fee of $1.4 million ADC expects to receive under the transition services agreement with Intec.   At closing, Intec prepaid $0.7 million related to these services.

 

(h)         Adjustment represents elimination of equity on the stand-alone Billing Business financial statements.

 

(i)             Adjustment represents the estimated gain on the sale of the Billing Business.