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This excerpt taken from the ADCT 10-K filed Dec 18, 2007. Operating
Expenses
Fiscal
2007 vs. Fiscal 2006
Total operating expenses for fiscal 2007 and fiscal 2006
represented 28.4% and 28.5% of net sales, respectively. As
discussed below, operating expenses include research and
development, selling and administration expenses and
restructuring and impairment charges.
Research and development: Research and
development expenses for fiscal 2007 and fiscal 2006 represented
5.3% and 5.5% of net sales, respectively. Research and
development expense has decreased slightly as we fully realize
the impact of facility consolidation activities completed in
fiscal 2006. Given the rapidly changing technological and
competitive environment in the communications equipment
industry, continued commitment to product development efforts is
required for us to remain competitive. Accordingly, we intend to
continue to allocate substantial resources, as a percentage of
our net sales, to product development. Most of our research will
be directed towards projects that we believe directly advance
our strategic goals in segments of the marketplace that we
believe are most likely to grow and have a higher probability of
return on investment.
Selling and administration: Selling and
administrative expenses for fiscal 2007 and fiscal 2006
represented 22.0% and 21.4% of net sales, respectively. The
increase in selling and administration expenses was primarily
due to an increase in incentive compensation expenses and a
$10.0 million contribution to the ADC Foundation. The
contribution was made from the proceeds of a cash gain from the
sale of stock of BigBand Networks, Inc. (“BigBand”)
earlier in fiscal 2007. This grant is intended to help fund the
foundation’s future operations for several years. The
increases to selling and administrative expense were offset
partially by a $5.7 million decrease in employee retention
expenses related to the FONS acquisition. There was no FONS
related retention expense in fiscal 2007. As of October 31,
2007, we had approximately $20.9 million of total
compensation costs not yet recognized related to nonvested
share-based payment awards.
Restructuring and impairment
charges: Restructuring charges relate principally
to employee severance and facility consolidation costs resulting
from the closure of leased facilities and other workforce
reductions attributable to our competitive transformation
initiative. During fiscal 2007 and 2006, we terminated the
employment of approximately 200 and 400 employees,
respectively, through reductions in force. The costs of these
reductions have been and will be funded through cash from
operations. These reductions have impacted each of our
reportable segments.
Facility consolidation and lease termination costs represent
costs associated with our decision to consolidate and close
duplicative or excess manufacturing and office facilities.
During fiscal 2007 and 2006, we incurred charges of
$1.0 million and $5.0 million, respectively, due to
our decision to close unproductive and excess facilities and the
continued softening of real estate markets, which resulted in
lower sublease income.
In fiscal 2007, we recorded impairment charges of
$3.5 million related primarily to internally developed
capitalized software costs, the exiting of the ACX product line
and a commercial property in Germany formerly used by our
services business. For fiscal 2006, we recorded impairment
charges related to facility consolidation of $1.2 million
based on estimated market prices.
Fiscal
2006 vs. Fiscal 2005
Total operating expenses for fiscal 2006 and fiscal 2005
represented 28.5% and 30.2% of net sales, respectively.
Research and development: Research and
development expenses for fiscal 2006 and fiscal 2005 represented
5.5% and 6.2% of net sales, respectively. This decrease was due
to higher revenues in fiscal 2006 as expense levels were
consistent between years.
Selling and administration: Selling and
administrative expenses for fiscal 2007 and fiscal 2006
represented 21.4% and 23.0% of net sales, respectively. Selling
and administration expenses rose $14.1 million primarily due to
the following factors. Beginning in fiscal 2006, we adopted the
Financial Accounting Standards Board (“FASB”)
SFAS No. 123(R) “Share-Based Payment: An
amendment of FASB Statements No. 123 and 95”
(“SFAS 123(R)”), which requires the
measurement and recognition of compensation expense for all
share-based payment awards made to employees and directors,
including employee stock options, based on estimated fair
values. Adopting SFAS 123(R) increased our compensation
expense by approximately $8.0 million for fiscal 2006. As
of October 31, 2006, we had approximately
$18.6 million of total compensation costs not yet
recognized related to nonvested awards. In addition, in fiscal
2006, we incurred $26.0 million in amortization expense
related to intangibles purchased with our KRONE, FONS and
OpenCell acquisitions. This amortization expense will continue
for the next several years. Finally, in fiscal 2006, we incurred
approximately $5.7 million of employee retention expense
related to the FONS acquisition. The last retention payment
associated with this acquisition was made in May 2006. These
increases were partially offset by lower incentive compensation.
Restructuring and impairment charges: During
fiscal 2006, we continued our plan to improve operating
performance by restructuring and streamlining our operations. As
a result, approximately 400 employees were impacted by
reductions in force from continuing operations, which were
comprised of sales, manufacturing and back-office support
positions. The reductions in force have impacted each of our
business segments. In fiscal 2005, approximately
400 employees were impacted by reductions in force from
continuing operations, which were comprised primarily of
manufacturing positions. Despite the fact that similar numbers
of employees were impacted by restructuring in each of fiscal
2006 and 2005, the costs in fiscal 2006 were significantly
higher primarily because a greater number of employees entitled
to higher severance benefits were impacted by the fiscal 2006
restructurings.
Impairment charges relate to property and equipment as a result
of our continued consolidation of excess facilities. During
fiscal 2006 and fiscal 2005, we recorded impairment charges
based on estimated market prices for certain manufacturing
equipment, facilities and leasehold improvements.
This excerpt taken from the ADCT 10-K filed Mar 13, 2007. Operating
Expenses
Fiscal
2006 vs. Fiscal 2005
Total operating expenses for fiscal 2006 and fiscal 2005
represented 28.6% and 30.2% of net sales, respectively. As
discussed below, operating expenses include research and
development, selling and administration expenses and
restructuring and impairment charges.
Research and development: Research and
development expenses for fiscal 2006 and fiscal 2005 represented
5.6% and 6.3% of net sales, respectively. Given the rapidly
changing technological and competitive environment in the
communications equipment industry, continued commitment to
product development efforts is required for us to remain
competitive. Accordingly, we intend to continue to allocate
substantial resources, as a percentage of our net sales, to
product development. Most of our research will be directed
towards projects that we believe directly advance our strategic
goals in segments of the marketplace that we believe are most
likely to grow and have a higher probability of return on
investment.
Selling and administration: The increase in
selling and administration was due primarily to the following
factors. Beginning in fiscal 2006, we adopted SFAS 123(R)
“Share-Based Payment: An amendment of FASB Statements
No. 123 and 95” (“SFAS 123(R)”),
which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees and
directors, including employee stock options, based on estimated
fair values. Adopting SFAS 123(R) increased our
compensation expense by approximately $8.0 million for
fiscal 2006. As of October 31, 2006, we have approximately
$18.6 million of total compensation costs not yet
recognized related to nonvested awards. We expect to recognize
these costs over a weighted average period of 2.5 years. In
addition, in fiscal 2006, we incurred $26.0 million in
amortization expense related to intangibles purchased with our
KRONE, FONS and OpenCell acquisitions. This amortization expense
will continue for the next several years. Finally, in fiscal
2006, we incurred approximately $5.7 million of employee
retention expense related to the FONS acquisition. The last
retention payment associated with this acquisition was made in
May 2006. These increases were partially offset by lower
incentive compensation.
Restructuring and impairment
charges: Restructuring charges include employee
severance and facility consolidation costs associated with our
decisions to consolidate and close duplicative or excess
manufacturing and office facilities. During fiscal 2006 we
continued our plan to improve operating performance by
restructuring and streamlining our operations. As a result,
approximately 400 employees were impacted by reductions in force
from continuing operations, which were comprised of sales,
manufacturing and back-office support positions. The reductions
in force have impacted both of our business segments. In fiscal
2005, approximately 400 employees were impacted by reductions in
force from continuing operations, which were comprised primarily
of manufacturing positions. The reductions were principally in
our Broadband Infrastructure and Access segment. Despite the
fact that similar numbers of employees were impacted by
restructuring in each of fiscal 2006 and 2005, the costs in
fiscal 2006 were significantly higher primarily because a
greater number of employees with higher severance costs were
impacted by the fiscal 2006 restructurings.
Impairment charges relate to property and equipment as a result
of our continued consolidation of excess facilities. During
fiscal 2006 and fiscal 2005, we recorded impairment charges
based on estimated market prices for certain manufacturing
equipment, facilities and leasehold improvements.
Table of Contents
Fiscal
2005 vs. Fiscal 2004
Total operating expenses for fiscal 2005 and fiscal 2004
represented 30.2% and 37.7% of net sales, respectively. KRONE
operating expenses were $96.4 million and
$44.8 million for fiscal 2005 and fiscal 2004,
respectively. The acquisitions of FONS and OpenCell did not
constitute a significant portion of fiscal 2005 operating
expenses. Excluding the effect of the KRONE operating expenses,
operating expenses increased 5.8% compared to fiscal 2004,
mainly due to the below discussed change in selling and
administration expenses.
Research and development: Research and
development expenses increased in fiscal 2005 as compared to
fiscal 2004, and represented 6.3% and 8.1% of net sales for
fiscal 2005 and fiscal 2004, respectively. The increased
spending in fiscal 2005 was almost entirely attributable to
spending on projects related to KRONE products.
Selling and administration: The increase in
selling and administration expenses for fiscal 2005 as compared
to fiscal 2004 was due primarily to incentive payments made to
employees in fiscal 2005, partially offset by a decline in lease
expense due to a decrease in the number of leased facilities. In
addition, in fiscal 2004, there were $6.0 million of
one-time benefits, primarily due to bad debt recoveries for
which we previously had established reserves.
In fiscal 2005, we incurred added administrative expense,
including external advisory fees of $4.0 million associated
with the requirements to comply with Section 404 of the
Sarbanes-Oxley Act of 2002. Compliance with Section 404
requires us to conduct a thorough evaluation of our internal
control over financial reporting.
Restructuring and impairment
charges: Restructuring charges include employee
severance and facility consolidation costs resulting from the
closure of facilities and other workforce reductions
attributable to our efforts to reduce expenses. During fiscal
2005, approximately 400 employees were impacted by reductions in
force from continuing operations, principally in our Broadband
Infrastructure and Access segment. During fiscal 2004,
approximately 200 employees were impacted by reductions in force
from continuing operations, principally in corporate functions.
Despite the lower number of employees impacted by the
restructurings in fiscal 2004 versus fiscal 2005, the
restructuring costs in fiscal 2004 were significantly higher
than those in fiscal 2005. This primarily was because a greater
number of employees with higher severance costs were impacted by
the fiscal 2004 restructurings.
Impairment charges relate to property and equipment as a result
of our continued consolidation of excess facilities. During
fiscal 2005 and fiscal 2004 we recorded impairment charges based
on estimated market prices for certain manufacturing equipment
and leasehold improvements.
Table of Contents
This excerpt taken from the ADCT 10-K filed Jan 9, 2007. Operating
Expenses
Fiscal
2006 vs. Fiscal 2005
Total operating expenses for fiscal 2006 and fiscal 2005
represented 28.6% and 30.2% of net sales, respectively. As
discussed below, operating expenses include research and
development, selling and administration expenses and
restructuring and impairment charges.
Research and development: Research and
development expenses for fiscal 2006 and fiscal 2005 represented
5.6% and 6.3% of net sales, respectively. Given the rapidly
changing technological and competitive environment in the
communications equipment industry, continued commitment to
product development efforts is required for us to remain
competitive. Accordingly, we intend to continue to allocate
substantial resources, as a percentage of our net sales, to
product development. Most of our research will be directed
towards projects that we believe directly advance our strategic
goals in segments of the marketplace that we believe are most
likely to grow and have a higher probability of return on
investment.
Selling and administration: The increase in
selling and administration was due primarily to the following
factors. Beginning in fiscal 2006, we adopted SFAS 123(R)
“Share-Based Payment: An amendment of FASB Statements
No. 123 and 95” (“SFAS 123(R)”),
which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees and
directors, including employee stock options, based on estimated
fair values. Adopting SFAS 123(R) increased our
compensation expense by approximately $8.0 million for
fiscal 2006. As of October 31, 2006, we have approximately
$18.6 million of total compensation costs not yet
recognized related to nonvested awards. We expect to recognize
these costs over a weighted average period of 2.5 years. In
addition, in fiscal 2006, we incurred $26.0 million in
amortization expense related to intangibles purchased with our
KRONE, FONS and OpenCell acquisitions. This amortization expense
will continue for the next several years. Finally, in fiscal
2006, we incurred approximately $5.7 million of employee
retention expense related to the FONS acquisition. The last
retention payment associated with this acquisition was made in
May 2006. These increases were partially offset by lower
incentive compensation.
Restructuring and impairment
charges: Restructuring charges include employee
severance and facility consolidation costs associated with our
decisions to consolidate and close duplicative or excess
manufacturing and office facilities. During fiscal 2006 we
continued our plan to improve operating performance by
restructuring and streamlining our operations. As a result,
approximately 400 employees were impacted by reductions in force
from continuing operations, which were comprised of sales,
manufacturing and back-office support positions. The reductions
in force have impacted both of our business segments. In fiscal
2005, approximately 400 employees were impacted by reductions in
force from continuing operations, which were comprised primarily
of manufacturing positions. The reductions were principally in
our Broadband Infrastructure and Access segment. Despite the
fact that similar numbers of employees were impacted by
restructuring in each of fiscal 2006 and 2005, the costs in
fiscal 2006 were significantly higher primarily because a
greater number of employees with higher severance costs were
impacted by the fiscal 2006 restructurings.
Impairment charges relate to property and equipment as a result
of our continued consolidation of excess facilities. During
fiscal 2006 and fiscal 2005, we recorded impairment charges
based on estimated market prices for certain manufacturing
equipment, facilities and leasehold improvements.
Table of Contents
Fiscal
2005 vs. Fiscal 2004
Total operating expenses for fiscal 2005 and fiscal 2004
represented 30.2% and 37.7% of net sales, respectively. KRONE
operating expenses were $96.4 million and
$44.8 million for fiscal 2005 and fiscal 2004,
respectively. The acquisitions of FONS and OpenCell did not
constitute a significant portion of fiscal 2005 operating
expenses. Excluding the effect of the KRONE operating expenses,
operating expenses increased 5.8% compared to fiscal 2004,
mainly due to the below discussed change in selling and
administration expenses.
Research and development: Research and
development expenses increased in fiscal 2005 as compared to
fiscal 2004, and represented 6.3% and 8.1% of net sales for
fiscal 2005 and fiscal 2004, respectively. The increased
spending in fiscal 2005 was almost entirely attributable to
spending on projects related to KRONE products.
Selling and administration: The increase in
selling and administration expenses for fiscal 2005 as compared
to fiscal 2004 was due primarily to incentive payments made to
employees in fiscal 2005, partially offset by a decline in lease
expense due to a decrease in the number of leased facilities. In
addition, in fiscal 2004, there were $6.0 million of
one-time benefits, primarily due to bad debt recoveries for
which we previously had established reserves.
In fiscal 2005, we incurred added administrative expense,
including external advisory fees of $4.0 million associated
with the requirements to comply with Section 404 of the
Sarbanes-Oxley Act of 2002. Compliance with Section 404
requires us to conduct a thorough evaluation of our internal
control over financial reporting.
Restructuring and impairment
charges: Restructuring charges include employee
severance and facility consolidation costs resulting from the
closure of facilities and other workforce reductions
attributable to our efforts to reduce expenses. During fiscal
2005, approximately 400 employees were impacted by reductions in
force from continuing operations, principally in our Broadband
Infrastructure and Access segment. During fiscal 2004,
approximately 200 employees were impacted by reductions in force
from continuing operations, principally in corporate functions.
Despite the lower number of employees impacted by the
restructurings in fiscal 2004 versus fiscal 2005, the
restructuring costs in fiscal 2004 were significantly higher
than those in fiscal 2005. This primarily was because a greater
number of employees with higher severance costs were impacted by
the fiscal 2004 restructurings.
Impairment charges relate to property and equipment as a result
of our continued consolidation of excess facilities. During
fiscal 2005 and fiscal 2004 we recorded impairment charges based
on estimated market prices for certain manufacturing equipment
and leasehold improvements.
Table of Contents
This excerpt taken from the ADCT 10-Q filed Jun 8, 2005. Operating Expenses Total operating expenses for the three and six
months ended April 29, 2005, were $85.6 million and $165.0 million, respectively, representing 27.1% and 29.5% of net sales, respectively. Total
operating expenses for the comparable 2004 periods, were $65.8 million and $111.3 million, respectively. KRONE operating expenses were $25.7 million
and $51.1 million for the three and six months ended April 29, 2005, respectively. Excluding the effect of the KRONE operating expenses, operating
expenses (decreased) increased (9.0)% and 2.3%, respectively, compared to 2004 periods due mainly to the change in selling and administration expenses
discussed below.
Research and development expenses were $18.2 million
and $33.4 million for the three and six months ended April 29, 2005, respectively, or an increase of 27.3% and 25.1% over comparable 2004 periods. The
increases were almost entirely attributable to spending on projects related to KRONE based products as we did not close on our acquisition of KRONE
until the third quarter of our fiscal 2004. We believe that, given the rapidly changing technological and competitive environment in the communications
equipment industry, continued commitment to product development efforts will be required for us to remain competitive. Accordingly, we intend to
continue to allocate substantial resources, as a percentage of our net sales, to product development in each of our segments while directing most of
our research and development towards projects that we believe directly advance our strategic aims and have a higher probability to return our
investment because of our beliefs about segments in the marketplace that are most likely to grow.
Selling and administration expenses were $63.6
million and $124.6 million for the three and six months ended April 29, 2005, or an increase of 59.4% (or 3.3% exclusive of the KRONE acquisition) and
75.0% (or 10.3% exclusive of the KRONE acquisition) over comparable 2004 periods. The increase in selling and administrative expenses is primarily due
to incentives that have been partially offset by a decrease in the number of facilities. In addition, in fiscal 2004, there were $6.0 million of
one-time benefits primarily due to bad debt recoveries.
21 In fiscal 2005, we expect to incur added
administrative expense, including external fees that we expect to be approximately $3.0 million, associated with the requirements to comply with
Section 404 of the Sarbanes-Oxley Act of 2002. Compliance with Section 404 will require us to conduct a thorough evaluation of our internal control
over financial reporting, and we are and will be working with independent advisors in this process.
Restructuring charges were $3.2 million and $6.4
million for the three and six months ended April 29, 2005, respectively, compared to $10.1 million and $11.9 million for the three and six months ended
April 30, 2004. Restructuring charges relate principally to employee severance costs and facility consolidation costs resulting from the closure of
facilities and other workforce reductions attributable to our efforts to reduce costs. During the three and six months ended April 29, 2005,
approximately 36 and 75 employees were impacted by reductions in force, principally in our Broadband Infrastructure and Access segment. During the
three and six months ended April 30, 2004, approximately seven and 38 employees were impacted by reductions in force, principally in corporate
functions.
This excerpt taken from the ADCT 10-Q filed Mar 9, 2005. Operating Expenses Total operating expenses for the three months ended January 28, 2005 and January 31, 2004, were $79.4 million and $45.5 million, respectively, representing 32.6% and 33.3% of net sales, respectively. Included in these operating expenses were restructuring charges of $3.2 million and $1.8 million for the three months ended January 28, 2005 and January 31, 2004, respectively. KRONE operating expenses were $25.4 million for the three months ended January 28, 2005. Excluding the effect of the KRONE acquisition, operating expenses increased 18.7% due mainly to the change in selling and administration expenses discussed below. Research and development expenses were $15.2 million and $12.4 million for the three months ended January 28, 2005 and January 31, 2004, respectively, or an increase of 22.6%. KRONE represented 11.2% of research and development expenses for the quarter ended January 28, 2005. We believe that, given the rapidly changing technological and competitive environment in the communications equipment industry, continued commitment to product development efforts will be required for us to remain competitive. Accordingly, we intend to continue to allocate substantial resources, as a percentage of our net sales, to product development in each of our segments while directing most of our research and towards projects that we believe directly advance our strategic aims and have a higher probability to return our investment because of our beliefs about segments in the marketplace that are most likely to grow. Selling and administration expenses were $61.0 million and $31.3 million for the three months ended January 28, 2005 and January 31, 2004, respectively, or an increase of 94.9%. The KRONE acquisition represents 75.4% of the increase in expenses over the comparable 2004 period. The remaining increase was due to the fact that expenses for the three months ended January 31, 2004 were unusually low due almost entirely to bad debt recoveries of $4.5 million. In fiscal 2005, we expect to incur added administrative expense, including external fees that we expect to be approximately $3.0 million, associated with the requirements to comply with Section 404 of the Sarbanes-Oxley Act. This section of the Act will require us to conduct a thorough evaluation of our internal controls and we are and will be working with independent advisors in this process. Restructuring charges were $3.2 million and $1.8 million for the three months ended January 28, 2005 and January 31, 2004, respectively. Restructuring charges relate principally to employee severance costs and facility consolidation costs resulting from the closure of facilities and other workforce reductions attributable to our efforts to reduce costs. Of the $3.2 million charge for the three months ended January 28, 2005, $1.3 million relates to our KRONE business acquired in fiscal 2004. During the three months ended January 28, 2005, approximately 39 employees were impacted by reductions in force, principally in our Broadband Infrastructure and Access segment. During the three months ended January 31, 2004, approximately 31 employees were impacted by reductions in force. 16 | EXCERPTS ON THIS PAGE:
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