Sunday, February 1, 2009

ADC Cuts Financial Outlook, Plans Layoffs

ADC cut its first quarter fiscal 2009 guidance and announced plans to lower its cost structure. The new guidance calls for:

  • Net sales of $240-255 million

  • Gross margins of around 29%

  • GAAP diluted loss per share of $(0.17) - $(0.23), which includes non-cash amortization expense of $(0.09) per share

ADC's previous guidance provided on Dec. 9, 2008 estimated net sales of $255-290 million and GAAP diluted loss per share of $(0.05) - $(0.17), including non-cash amortization expense of $(0.09) per share. The updated estimate does not include the potential impairment charge discussed later in this announcement.

ADC said its is further reducing discretionary spending and capital expenditures and introducing new general and administrative process improvements. In addition, the company is implementing a general hiring freeze and planning additional workforce reductions. Details on the job cuts were not disclosed.

Also, as of January 30, 2009, ADC has terminated its $200 million bank line of credit. This facility had no outstanding balances and, as a result of the current economic environment, had become increasingly costly to maintain.
"In response to the ongoing difficult macroeconomic conditions and slower market demand, we are taking further cost reduction actions both to solidify our competitive position as a leading provider of high-quality equipment to fiber-based and wireless communications networks worldwide and improve our overall financial performance," said Robert E. Switz, chairman, president and CEO of ADC.