e425
Filed by ADC Telecommunications, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
And Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Andrew Corporation
Commission File No. 001-14617
The following contains the transcript of a conference call for analysts on June 2, 2006, with
remarks by Gokul V. Hemmady, Vice President and Chief
Financial Officer of ADC Telecommunications, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Final Transcript
Jun. 02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th Annual Technology Conference
CORPORATE PARTICIPANTS
John Anthony
Cowen & Co. Analyst
Gokul Hemmady
ADC Telecommunications, Inc. CFO
PRESENTATION
John Anthony - Cowen & Co. Analyst
Good morning, everybody. Im John Anthony. I cover communications infrastructure for Cowen &
Co. With us today is ADC, which obviously this is could not have been more timely given the
announcement from a couple of days ago that ADC is going to be merging with Andrew. So, with us
today is Gokul; and I dont want to butcher your last name, but how do I pronounce your last name?
Hemmady. Gokul Hemmady, Chief Financial Officer of ADC. Thank you very much for making the journey,
especially on a Friday, and especially since you guys have, obviously, been very busy in the last
few weeks. Theyve agreed to do an interview format. And quite frankly, Im probably going to open
it up to the floor since I would imagine there are going to be a lot of questions regarding the
ADC/Andrew merger. Im also going to abandon my original line of questioning since we have some
other things to talk about. I guess one of the first things I want to ask you about the merger of
Andrew is why now?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
I think its fair to say, John, that we stated our strategy three years ago to become the
leader in global network infrastructure. And we took several steps in that direction, invested
organically, made acquisitions of KRONE, FONS, all in that direction. Getting to a lot of
(indiscernible) and having market leading positions in the (indiscernible) infrastructure space.
Its fair to say that weve been looking at the wireless infrastructure space for some time, so
its not a new (indiscernible); its not necessarily an opportunistic part; its been within our
strategy for some time. And so why now is only a question of some of these inorganic things are not
completely within our control, and so we felt that now was the right time, that it was not a
thought that came to us in the last 60 days. Its a strategic thought weve been having for some
time, and we looked at several assets in this case. And we made this decision at this point,
because it was the right time.
John Anthony - Cowen & Co. Analyst
Is there any opportunity for you to divest any of Andrews assets? Is there a thought process
behind doing that? Or are you effectively looking to take all of Andrews businesses and integrate
them into your own?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Thats a good question. I think that is, clearly, work in progress, so Im not we have had
some initial thoughts on where that might go as far as, you know, divesting any certain product
lines, business units, or even rejecting [revenue] that dont meet our criteria of gross margin
goals. Our initial (indiscernible) we believe that that can be done. We will look at that more
seriously as we get into the planning stages and in the (indiscernible) first few days of closing.
But I think its fair to say that just from a philosophical and cultural perspective, I think
Andrew was quite focused on top-line growth, as most companies are. But I think ADCs philosophy
over the last year, as you know, weve divested a lot of business units, weve divested product
lines, and weve been very aggressive in not taking on revenues that dont meet our gross margin
criteria or our operation margin criteria. And I think were going to look at that very, very
seriously, as far as the assets we will acquire from Andrew, and we believe that we can improve our
operating margin performance based on that.
John Anthony - Cowen & Co. Analyst
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Final
Transcript
Jun. 02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th Annual Technology Conference
Although I didnt have a tremendous amount of time to follow up after the announcement, one of
the initial comments and some of the feedback I got from some of your customers, your wireless
customers, is that this deal will allow you to really leverage Digivance in a lot of respects.
First of all, do you agree with that statement? Secondly, is this acquisition or merger in any way
going to allow you to bundle Digivance, and how do you view kind of Digivance now as it relates to
Andrews wireless business?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
I think we absolutely agree that we can that the potential for Digivance has just expanded
with this combination. I think we already view Digivance as a very good product. Weve got good
traction with both Verizon and Nextel, as youve seen in 2005. In the first half of 2006 we are off
to a little bit of a low start a slow start, but we expect that to gain momentum in the second
half.
We view the potential market for Digivance, which is our distributed antenna system product, as
being (indiscernible) $100 million. We did about 50 million in 05. We believe that customers will
say, ADC, youre not a very big player in wireless. You have a good solution that makes a lot of
sense. Youve been able to change our mindset on how traditional cellular architects are
architecture is built with the base station (indiscernible) concept, which is a big value
proposition in terms of lower OpEx, lower CapEx, but we would rather have a second layer coming to
the market before we deploy it on a much larger scale. And I think this combination really has
convinced our customers that we are very relevant in wireless, and therefore expands the potential
market size for us in (indiscernible) opportunity for us in Digivance. So I do agree that this
certainly makes (indiscernible) quite considerably.
John Anthony - Cowen & Co. Analyst
Along the same lines, I guess one of the things that Im curious here Andrew has a
different sales structure, obviously, than do you. Are there and not to put you in a precarious
position since you, obviously, have to respect the customers of Andrew but are there and the
relationships with Andrew but do you see any opportunities for you to take the ADC sales
strategy and the ADC sales channels and kind of apply it to some of the more traditional ways that
Andrew has been doing business as it relates to how you sold Digivance?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Im not sure exactly what you mean by Andrews sales structure is different from ADCs. Its
different in the sense that [30]% of Andrews revenues do come from OEMs. A very small portion of
ADCs revenues come from OEMs. So to that extent, there are different philosophies, as you said, to
OEMS or to carriers. So as we go into the combined company, we have to be very sensitive to those
two different philosophies. We do believe that over a longer period of time, youve seen that with
Project Lightspeed with AT&T, where somebody like Alcatel is playing a big role. And we have to
have great relationships with Alcatel even on the wireline side. So over the longer period of time,
I think, even on the wireline side, OEMs become a much bigger factor, sort of. And relationships
with our customers will continue to be very important. I think thats the case also with Andrew in
the relationships with the OEMs, as well as end customers. So we feel that over a longer period of
time, from a (indiscernible) market perspective, (indiscernible) structures and philosophies are
quite synergistic.
John Anthony - Cowen & Co. Analyst
And from the standpoint of looking at the Andrew customer base and looking at your customer
base, certainly while its there is some overlap, theres certainly a lot of opportunity for you
to expand into Andrews footprint, for example. Can you just point to, either from a geography
standpoint or a customer standpoint, where you think the biggest opportunities are for ADC to sell
its traditional connectivity products into the Andrew customer base?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Absolutely. Weve talked about Digivance being a big opportunity, the second thing I would say
is that our core connectivity solutions weve been really strong with our core connectivity
solutions in the wireline space. We have good market shares there. We believe that we can expand
our market share with Andrews customers in the wireless space with our core connectivity
solutions. That will be certainly one revenue synergy opportunity that we will capitalize on.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Final
Transcript
Jun. 02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th Annual Technology Conference
Second, from a geography perspective, I would say that weve done a decent job in places like India
and China, which are going to be very important for us going forward. In fact, in this years
strategic planning session, those two countries are going to play a very important role for ADC
standalone. Andrew has been in those countries much longer, has significant scale in each of those
countries. They do roughly about 100 million in revenues each. They have 3000 employees in China.
They have a manufacturing facility in India and a significant manufacturing facility in China. And
so we believe that taking that scale and that presence, we can expand into those markets quite
significantly.
John Anthony - Cowen & Co. Analyst
Do you have a sense for which is going to be first to I guess where you would see the
benefit first from either the geographical standpoint. Obviously, youre going to layer on the
revenues from the geographical sales first. But how quickly do you think you might be able to
actually take your connectivity and sell it into the Andrew customer base?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
I think it will be pretty immediate, because its not as if we have to modify any of our
product to sell into that base. We already do that. Its just a question of becoming much more
relevant in wireless, and therefore having the ability to expand our market share positions for our
connectivity solutions in the wireless space. So I think that is going to start happening pretty
rapidly.
John Anthony - Cowen & Co. Analyst
So, once the merger is complete and youve integrated Andrew into your operations, the thing
thats going to be kind of intriguing here is you already have the FTTX concentration with AT&T,
Deutsche Im sorry Verizon, Deutsche, and now AT&T coming online. It seems like youre going
to be also making this bigger push with the distributed antenna system and some of Andrews
products into the emerging wireless. Can you talk a little bit about how you see that playing out
and how you ultimately expect your revenue growth to really I guess, what the major drivers of
your revenue growth are going to be in, say, 2007, 2008 and 2009?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
If you think about ADCs business, i.e. some of our core connectivity solutions and the
position that we have in FTTX whether its fiber all the way to the home or to the node or core,
with AT&T, Verizon, BellSouth, Deutsche Telecom and also all the potential names that weve
talked about in the past, France Telecom, Telecom Italia, that are going to look at more and more
deep private initiatives, we continue to feel like in 2005, the deep fiber initiative story was
more Verizon based; its getting much more diversified in the U.S. and much more global with
Deutsche Telecom and the rest of the names. So we continue to feel that that business has
significant growth going forward.
In addition, as cellulars are transitioning to more of these deep fiber initiatives, we believe
that it creates demand even for our core copper connectivity, as well as our central office fiber
connectivity solutions. So [copper] connectivity will be probably be (indiscernible), because as
carriers transition to more fiber, the central office fiber connectivity also has some significant
growth ahead of it.
Over a longer period of time I think that was your question going to 07, 08, 09, we
strongly believe that there are two factors for the combined company. Weve talked about the third,
which is presence in India and China. But two factors that were very important to us as we talk
about this acquisition, which we talked about on the call, too, was scale, as well as wireless
wireline convergence.
As you heres an example for you. If you think about AT&T, BellSouth, Cingular after the deal
closes, we will have as a combined company the ability to provide a breadth of products in the
wireline infrastructure space. So weve already [indicated] we will be one of their big suppliers,
as we are in Project Lightspeed, which is very important to you. We provide some core connectivity
solutions, which weve been doing for a long period of time. That is also a great relationship.
In addition, we have the (indiscernible) wireless portfolio now that we will be providing to
Cingular. So we have a broad range of portfolio. We believe that that gives us significant
relevance and scale to a customer like AT&T, as against our competition that provides a few pieces
of their portfolio. We think that is going to be very important going forward.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Final Transcript
Jun. 02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th Annual Technology Conference
So, we believe wireless wireline convergence will [start] with the customer, our ability to
provide a broad range of products to a customer, because they will have both wireless and wireline
assets in one company. And thats the direction not only AT&T, but many companies are moving
towards going forward. We believe that thats the first phase of wireless wireline conversions.
We believe that the second phase and this is yet to be flushed out but the second phase is
more related to true convergence from a network and a technology perspective. So, examples would be
in the wireless space, all the backhaul in the wireless is driven by wireline kind of technologies.
So therell be other examples of where we will take our wireline products and Andrews wireless
products, create new organic solutions that (indiscernible) growth for us as this convergence on
networks and technology happens.
One more example would be in the enterprise space, within building coverage and (indiscernible)
solutions, along with 10 gigabit or copper to the desktop. Thats a combination of kind of wireline
products, as well as Andrews wireless products that can be bundled and combined to get more
traction. So there will be many more such examples that (indiscernible) talk about over the next
several months after we close the acquisition.
John Anthony - Cowen & Co. Analyst
Great. One last question before I open it to the floor, and I fully admit Im going to kind of
put you on the spot here. You have talked about a long-term operating margin goal of 14%. And you
reiterated that, if I remember correctly, with the combined entity. When do you think you could get
to a 12% operating margin? When would be the earliest do you think you could get there?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Weve talked about the 14% as two years. I would suspect that in order for me to get to and
the combined company, as I said on the call, is about 7 to 8% ending 06, given street estimates.
For me to get to 14% in three years, I have to be able to get to 12% in two years. If I cant get
to close to 12% in two years, I dont know that I will have anyone believe that we could get to 14
in three.
John Anthony - Cowen & Co. Analyst
Is it the kind of thing that you think the margin trajectory, however is it going to be
linear? Is going to be stair-step? Do you think youll see a big part of it after the initial
merger synergies have been extracted? And I guess where does that 12% number kind of fit, relative
to that?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
I think there are a few things that are going to drive that gap between the current 06 7 to
8% to the 14%. Ive talked a little bit about this on the call. But if you think about the
preliminary synergy estimates that weve given of 80 million, which are largely cost synergies, by
itself that drives 2 to 300 basis points in that gap from about 7, 8% to 14%. So almost half of
that gap is driven by our ability to get those synergies.
We feel very comfortable with those synergies. Its based on kind of eight weeks of work. As we get
into integration planning well get into more detail of it. Weve not included revenue synergies in
that number. That could close that gap even further. In addition, we do believe that every company
has a certain philosophy and a certain cultural aspect to how they manage business. Andrew has its
own. Weve had our own, which has changed over time. In the late 1990s we were very business
unit-oriented. Our business units had a lot of autonomy. They had their own manufacturing. They had
their own sourcing, supply chain, go-to-market.
On the one hand it may have been good; on the other hand it created a lot of inefficiencies. In
todays environment, where thought leadership is absolutely critical, we believe that a centralized
structure of managing a business works much better. Weve made that transition from the late 90s
to now. And weve gotten a lot of efficiencies having done that.
Andrews philosophy has been much more of a business unit autonomy structure. They have five
business units. Each of their business unit has their own manufacturing. We will, as a combined
company, have a different way of thinking about these things, and therefore we will create more
efficiencies.
You also talked in your first question on will we divest certain revenues, product lines, business
units? Will that create more margin? Yes. We will certainly look at that very aggressively, and
that will also help us close the gap.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Final Transcript
Jun. 02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th Annual Technology Conference
In addition, on the ADC side of the (indiscernible), weve talked about an aggressive project to
move much more to towards low-cost manufacturing. We will that project (indiscernible) one of
the combined company will be combined into one single project. But Andrew also was on track of
thinking about those things. And we believe that those ADC standalone margins also can improve. In
the past Ive talked about just on a low-cost manufacturing strategy over the next two to three
years we could get an additional 150 basis points in gross margins.
So, all those things combined, we believe, can take us where from where we are today to that 14%
margin goal.
John Anthony - Cowen & Co. Analyst
With that Ill open it up to the floor. Any questions please? One of the things that Im
mostly curious about, and Ive been getting a lot of questions in the last 24 hours given the
decline in ADCs share price and if I understand correctly, there is no collar on the deal. Is
there any thought from the Andrew side about how things are going to proceed here? The stock price
seems to be hovering around the the conversion now originally implied roughly a 30% premium, and
now its essentially at parity with Andrews stock price when the deal was announced. Can you at
least comment to us how is Andrews management feeling about that? Is this something that is of
importance to them since it seems like you, obviously, are the surviving entity here? How does the
Board feel about that?
Gokul Hemmady - ADC Telecommunications, Inc. CFO
I think its fair to say that this is a strategy that was not drawn in the last 60 days. As I
said, weve been thinking about it. I think both CEOs, Bob Switz and Ralph Faison, have had this
shared vision for some time; us coming from the wireline side, them coming from the wireless side.
Weve talked about all the strategic rationale for the deal, i.e., scale, wireless wireline
convergence, emerging market presence.
I think those things, we believe, are completely in place. And we have the conviction that that
strategy is very, very sound. And so I think at this stage its fair to say that both CEOs, both
senior management teams, as well as the Boards, are only thinking about some of the next steps in
integration planning and those kinds of things. We are, of course, on our side with global
(indiscernible) next week. We have a lot of meetings with the investment community. We are going to
go out on a roadshow for the next two, three weeks, as would be customary in any such transaction.
And it will be our opportunity to again tell our story very aggressively with more detail. So
thats the focus that we have over the next several weeks and months. Once again, we feel very good
about the deal, and we feel that strategic rationale is very sound.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
So, whether Im (indiscernible) or not its probably the same question. As a management team
at ADC, with our philosophy of managing the business, I think Andrew has done a pretty good job of
managing the (indiscernible) they have. Its a different philosophy which has business unit
autonomy and several other factors on accepting revenues at probably slightly lower margins than we
would take it to. So with all those kinds of changes, we believe that we could reach 10% in that
kind of timeframe.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Im not talking about synergies now; for standalone.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Final Transcript
Jun.
02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th
Annual Technology Conference
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Revenue enhancements as well as cost synergies, in addition to that. Thats only on a
stand-alone basis.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Im not going to quantify it in a great amount of detail right now, but we will look at that
very seriously over the next several months. But let me give you a sense of some of those
opportunities. In Digivance, we do about $[50] million a year. I have stated we have stated that
in the past; Ill state it again. We believe this is a multi $100 million opportunity that this
combined company can go after much more aggressively.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
As a standalone company, we felt that we had a good product, good technology. But for us to
make several a much bigger size, we either needed a serious second player, or we needed to
become much bigger in wireless, which we believe the combined company clearly gets us that
opportunity.
So, Digivance is certainly one opportunity, but our core connectivity solution sold into the
wireless space is a second opportunity. Thats a little more difficult to quantify for me at this
stage. But it can be pretty decent and pretty significant. Im not suggesting that one like
Digivance is multi 100 million; its probably sub-100 million. But it can be pretty significant for
us.
And then the third one, which is really wireless, wireline convergence, starting first with taking
market share. Because customers are coming together. AT&T will have both wireless and wireline in
one company. And therefore, our breadth of products as a combined company will get us more
relevance, and therefore the ability to take more market share in with that customer. That is part,
we believe, in more in the near term. And then as we go on with network conversions as well as
technology conversions, we will get more opportunities. The latter we have not tried to quantify as
of now.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
India and China, yes.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Final
Transcript
Jun.
02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th
Annual Technology Conference
I was just going to mention that.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Let me respond to that. I think weve said on the call that our synergy estimate for now,
which is $80 million, is something that we feel very comfortable with. Its a preliminary number
that weve come up with based on eight weeks of work. A lot more work will happen over the next
three to four months as we get into integration planning, and a lot more details will be much more
clearer to us. And youve known ADC in the past. In the last three years we have executed well.
Weve always done what we said say we will. And weve been a company that has focused on costs
and strong significant operating leverage in our cost structure. I think thats our philosophy. We
have always been relatively conservative as we go out to the street and give guidance and numbers.
So, with that in mind, we a lot more work needs to be done over the next three to four months?
And I dont disagree that when we are through with all those details, that has to be communicated
much more aggressively. So to your just [taking your] one point, Andrew (indiscernible) about
$900 million worth of materials. ADC buys about $500 million. So thats in cost of goods sold as
the material portion of cost of goods sold.
Our experience with KRONE suggests that as we went to integration planning before the acquisition
closed, we did the same kind of exercise. In the first few days after that position closed, we sent
out letters to suppliers asking for discounts based on combined purchasing volumes. Our experience
there suggest we get 3 to 5 percentage percent in discounts from that kind of combined
purchasing volumes.
Thats clearly year-one synergies for us. Im not trying to suggest that we will absolutely see the
same experience with Andrew, but we believe that thats not thats very much unlike shutting
down facilities or rationalizing other G&A functions. Its much more low-hanging fruit that can be
had in the first few days of the acquisition, or months of the acquisition. So were clearly
focused on those kinds of things. We have had the experience doing it with KRONE, its just well
do it on a much larger scale now.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Gokul Hemmady - ADC Telecommunications, Inc. CFO
How comfortable are we with AT&T? Everything suggests to us that theres a reason why AT&T has
combined all of these assets. Theres a reason why Verizon Wireless is thinking about buying back
buying the Vodafone stake. You have seen Vodafone, which is a much more global wireless player,
buy more fixed lines. I think the trend, clearly, is towards [each] service provider having both
wireline and wireless assets. And theres a reason we believe why that makes sense for them to go
in that direction.
And so that strategy, I believe, from a convergence standpoint, from a customer standpoint not
network and technology clearly in place; now the question becomes how do we replay that? ADC has
had a very strong relationship with AT&T. We are very involved in Project Lightspeed. We have sold
them services in the BellSouth territories. Weve sold them core connectivity solutions where we
have high market shares, core copper connectivity, core fiber connectivity. So, we have a range of
products that have great market share with AT&T. (indiscernible) on the other side, Andrew, was
Cingular is a big customer of Andrew. We believe that the combined company has a significant
relationship with Andrew that can be even expanded further with more newer solutions as we think
about true wireless wireline convergence. And in the initial stages, just the scale and relevance,
and the breadth of products, we believe, gets us more traction at that kind of customer.
John Anthony - Cowen & Co. Analyst
Goklul, I think, with that we have to conclude. Thank you very much for your time. I greatly
appreciate it.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
FinalTranscript
Jun.
02. 2006 / 9:55AM ET, ADCT ADC at Cowen and Company 34th Annual Technology Conference
Gokul Hemmady - ADC Telecommunications, Inc. CFO
Thank you, John.
DISCLAIMER
Thomson Financial reserves the right to make changes to documents, content,
or other information on this web site without obligation to notify any person
of such changes.
In the conference calls upon which Event Transcripts are based, companies may
make projections or other forward-looking statements regarding a variety of
items. Such forward-looking statements are based upon current expectations and
involve risks and uncertainties. Actual results may differ materially from
those stated in any forward-looking statement based on a number of important
factors and risks, which are more specifically identified in the companies
most recent SEC filings. Although the companies may indicate and believe that
the assumptions underlying the forward-looking statements are reasonable, any
of the assumptions could prove inaccurate or incorrect and, therefore, there
can be no assurance that the results contemplated in the forward-looking
statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF
THE APPLICABLE COMPANYS CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE
AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR
INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO
WAY DOES THOMSON FINANCIAL OR THE APPLICABLE COMPANY OR THE APPLICABLE COMPANY
ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON
THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS
ARE ADVISED TO REVIEW THE APPLICABLE COMPANYS CONFERENCE CALL ITSELF AND THE
APPLICABLE COMPANYS SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER
DECISIONS.
© 2005, Thomson StreetEvents All Rights Reserved.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomson StreetEvents
|
|
www.streetevents.com
|
|
|
|
|
|
Contact Us
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
© 2006 Thomson Financial. Republished with permission. No part of this publication may be
reproduced or transmitted in any form or by any means without the prior written consent of Thomson
Financial. |
|
Safe Harbor for Forward Looking Statements
This press release contains statements regarding the proposed transaction between ADC and Andrew,
the expected timetable for completing the transaction, future financial and operating results,
benefits and synergies of the proposed transaction and other statements about the future
expectations, beliefs, goals, plans or prospects of the management of each of ADC and Andrew.
These statements are based on current expectations, estimates, forecasts and projections and
management assumptions about the future performance of each of ADC and Andrew and the combined
company, as well as the businesses and markets in which they do and are expected to operate. These
statements constitute forward-looking statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Words such as expects, believes, estimates, anticipates,
targets, goals, projects, intends, plans, seeks, and variations of such words and
similar expressions are intended to identify such forward-looking statements which are not
statements of historical fact. These forward-looking statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are difficult to assess.
Actual outcomes and results may differ materially from what is expressed or forecasted in such
forward-looking statements. Factors that may cause actual outcomes to differ from what is expressed
or forecasted in these forward-looking statements, include, among other things: the ability to
consummate the proposed transaction; difficulties and delays in obtaining regulatory approvals for
the proposed transaction; difficulties and delays in achieving synergies and cost savings;
potential difficulties in meeting conditions set forth in the definitive merger agreement;
fluctuations in the telecommunications market; the pricing, cost and other risks inherent in
long-term sales agreements; exposure to the credit risk of customers; reliance on contract
manufacturers and other vendors to provide goods and services needed to operate the businesses of
ADC and Andrew; fluctuations in commodity prices; the social, political and economic risks of the
respective global operations of ADC and Andrew; the costs and risks associated with pension and
postretirement benefit obligations; the complexity of products sold; changes to existing
regulations or technical standards; existing and future litigation; difficulties and costs in
protecting intellectual property rights and exposure to infringement claims by others; and
compliance with environmental, health and safety laws. For a more complete list and description of
such risks and uncertainties, refer to ADCs Form 10-K for the year ended October 31, 2005 and
Andrews Form 10-K for the year ended September 30, 2005 as well as other filings made by ADC and
Andrew with the United States Securities and Exchange Commission (the SEC). Except as required
under the US federal securities laws and the rules and regulations of the SEC, ADC and Andrew
disclaim any intention or obligation to update any forward-looking statements after the
distribution of this press release, whether as a result of new information, future events,
developments, changes in assumptions or otherwise.
Additional Information and Where to Find It
In connection with the proposed transaction, a registration statement on Form S-4 will be filed
with the SEC. SHAREHOLDERS OF ADC AND STOCKHOLDERS OF ANDREW ARE ENCOURAGED TO READ THE
REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT
PROXY STATEMENT/ PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER. The final joint proxy statement/prospectus will be
mailed to shareholders of ADC and stockholders of Andrew. Investors and security holders will be
able to obtain the documents free of charge at the SECs web site, www.sec.gov. Investors and
security holders may also obtain the documents free of charge from Investor Relations at ADC by
writing Investor Relations, ADC Telecommunications, Inc., P.O. Box 1101, Minneapolis, Minnesota 55440-1101; or calling
952-917-0991; or at www.adc.com/investorrelations/financialinformation/secfilings/.
Investors and security holders may also obtain the documents free of charge from Investor Relations
at Andrew by writing Investor Relations, Andrew Corporation, Westchester, Illinois 60154; or
calling 800-232-6767; or at www.andrew.com/investors/sec
Participants in Solicitation
ADC, Andrew and their respective directors
and executive officers and other members of management
and employees may be deemed to be participants in the solicitation of proxies in respect of the
merger. Information concerning ADCs participants is set forth in the proxy statement dated,
January 24, 2006, for ADCs 2006 annual meeting of shareholders as filed with the SEC on Schedule
14A. Information concerning Andrews participants is set forth in the proxy statement, dated
December 30, 2005, for Andrews 2006 annual meeting of stockholders as filed with the SEC on
Schedule 14A. Additional information regarding the interests of participants of ADC and Andrew in
the solicitation of proxies in respect of the merger will be included in the registration statement
and joint proxy statement/prospectus to be filed with the SEC.