<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------------
FORM 8-K/A
AMENDMENT NO. 1 TO
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 1, 1996
ADC TELECOMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-1424 41-0743912
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation or Identification No.)
organization)
12501 Whitewater Drive, Minnetonka, Minnesota 55343
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 938-8080
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
The undersigned registrant, ADC Telecommunications, Inc. ("ADC"), hereby amends
the following items, financial statements and exhibits of its Current Report on
Form 8-K, initially filed with the Commission on July 16, 1996 as set forth
herein. The July 16, 1996 original filing of the Form 8-K described the
registrant's acquisition of 80% of the outstanding common stock of Solitra Oy,
a Finnish corporation ("Solitra").
Item 7 of the registrant's Current Report on Form 8-K dated July 1, 1996 and
filed with the Commission on July 16, 1996, is hereby amended to include the
financial statements, the pro forma financial information and the exhibits
indicated in Item 7 below.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
Preliminary Note to Financial Statements
Report of Independent Accountants dated March 14, 1995
Financial Statements and accompanying footnotes of Solitra
as and for the period ended December 31, 1994
Report of Independent Accountants dated February 6, 1996
Financial Statements and accompanying notes of Solitra
as of and for the period ended December 31, 1995.
Income Statement of Solitra for the 7 month period ended
July 31, 1996 (unaudited)
Balance Sheet of Solitra as of July 31, 1996
(unaudited)
Reconciliation of financial statements of Solitra from Finnish
Accounting Standards to United States generally
accepted accounting principles
(b) Pro Forma Financial Information
ADC Unaudited Consolidated Balance Sheet as of July 31, 1996
Unaudited Combined Pro Forma Statement of Income of ADC for the
fiscal year ended October 31, 1995 and the interim period ended
July 31, 1996
Notes to Pro Forma Statements of Income
(c) Exhibits
23.1 Consent of Independent Accountants
2
<PAGE>
PRELIMINARY NOTE TO FINANCIAL STATEMENTS.
The audited financial statements of Solitra as of and for the years
ended December 31, 1995 and 1994 that are covered by the following reports of
KPMG WIDERI OY AB were originally prepared in the Finnish language under
Finnish Accounting Standards (FAS) and stated in Finnish Markkaa (FIM). Such
statements were subsequently translated into the English language. All
historical financial statements of Solitra are stated in FIM. The unaudited
pro forma financial statements following Solitra's historical financial
statements are stated in U.S. dollars. A reconciliation of such statements
from Finnish Accounting Standards to United States generally accepted
accounting principles follows the translated, audited financial statements.
3
<PAGE>
[LETTERHEAD]
(TRANSLATION)
AUDITORS' REPORT
To the shareholders of Solitra Oy
We have audited the accounting records, the financial statements and the
administration by the Board of Directors and the Managing Director of
Solitra Oy for the year ended 31 December 1994. The financial
statements, which include the report of the Board of Directors, income
statement, balance sheet and notes to the financial statements, have been
prepared by the Board of Directors and the Managing Director. On the
basis of our audit we express an opinion on these financial statements and
the company's administration.
We have conducted our audit in accordance with Finnish Generally
Accepted Auditing Standards. Those standards require that we plan and
perform the audit in order to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by the management, as well
as evaluating the overall financial statement presentation. The purpose
of our audit of the administration has been to examine that the Board of
Directors and the Managing Director have complied with the rules of the
Finnish Companies Act.
In our opinion, the financial statements have been prepared in accordance
with the Finnish Accounting Act and other rules and regulations governing
the preparation of financial statements in Finland. The financial
statements give a true and fair view, as defined in the Accounting Act, of
the result of operations, as well as of the financial position of the
company. The financial statements can be adopted and the members of the
Board of Directors and the Managing Director of the parent company can be
discharged from liability for the period audited by us. The proposal made
by the Board of Directors on how to deal with the retained earnings is in
compliance with the Finnish Companies Act.
Oulu, 14 March 1995
KPMG WIDERI OY AB
/s/ Pirkko Lauste
Pirkko Lauste
Authorized Public Accountant
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY
FINANCIAL STATEMENTS 31.12.1994
(TRANSLATED)
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY FINANCIAL STATEMENTS 31.12.1994
CONTENTS
Annual Report of the Board 3
Profit and Loss Account 5
Balance sheet 6
Funds statement 7
Notes of the account 8
Auditor's Report 14
<PAGE>
Translation of financial statements originally issued in Finnish
1(2)
ANNUAL REPORT OF THE BOARD OF DIRECTORS FOR THE FINANCIAL PERIOD from
January 1, 1994 to December 31, 1994
GENERAL
Solitra designs, manufactures and markets radio frequency components and
subsystems for the cellular industry. The business segment grew rapidly during
1994. The company's prior investments in R & D along with growth of the
business segment and favorable currency exchange rates resulted in the company
growing more strongly than anticipated.
MARKETING PRODUCTION AND R & D
During the year marketing efforts were concentrated in cellular base station
filters and subsystems. Also the largest growth took place in this area.
Filters for cellular terminals were manufactured for the 450 MHz mobile and
hand portable products.
R & D efforts were focused in integrated mini/ microcell base station
subsystems and 450 MHz hand portable phone filters.
The company received an ISO9001 certificate for the quality system in March
1994.
NET SALES AND OPERATING PROFIT
Net sales improved from the previous year's 24.831.788,52 FIM to 46.437.925,58
FIM. Operating profits improved from the previous year' s 21.37% to 30.15%.
These figures create a firm foundation for the continued development of the
company as well as helping us answer our clients increasing challenges.
PROFIT
Profit before taxes was 8.224.258,24 FIM or 17.71% of net sales. Profit after
taxes was 6.370.498,73 FIM or 13.71%.
The gearing ratio percentage improved from the previous year's 18.13% to
35.08%, (100x(equity + appropriations)/total assets).
<PAGE>
Translation of financial statements originally issued in Finnish
2(2)
OWNERSHIP AND ADMINISTRATION OF THE COMPANY
Rautaruukki Oy (86.8%) and Mr. Juha Sipila (13.2%) sold their shares of the
company in December 1994. The new owner of the company is the holding company
Solifil Oy, which owns all of Solitra Oy's shares. The owners intend to merge
Solitra Oy to the holding company during 1995.
The board of directors up to December 19, 1994:
Mr. Lauri Kuokkanen Ultracom Oy, chairman of the board
Mr. Martti Karppinen Rautaruukki Oy
Mr. Jorma Lukkari Rautatuukki Oy
Mr. Juha Sipila Solitra Oy
Starting December 19, 1994:
Mr. Lauri Kuokkanen Ultracom Oy, chairman of the board
Mr. Heikki Nieminen Rautaruukki Oy
Mr. Seppo Saynajakangas Polar Electro Oy
Mrs. Sisko Sammallahti-Skilander Solitra Oy
Mr. Juha Sipila Solitra Oy
The board convened 8 times.
THE OUTLOOK FOR THE FINANCIAL PERIOD
from January 1, 1995 to December 31, 1995.
Growth is forecasted for current year as well. The largest increase is budgeted
to take place during the fall, as has been the case in previous year.
Some of the most important decisions regarding the business segment will be
made in the United States during this year. We will monitor the ongoing
frequency auction closely, as the North American PCS1900 market is expected
to represent 50 % of world total cellular markets in the near future.
PERSONNEL AND SALARIES PAID
The average number of employees was 103. Total wages and salaries amounted to
10.918.646,90 FIM (7.715.060,34 FIM in 1993), the share of the board members
and the managing director being 341.490,00 FIM (429.050,00 FIM in 1993).
PROPOSAL FOR PROFIT DISTRIBUTION
The board proposes that 3.200.000 FIM be distributed as dividends, and that the
remaining 3.170.498,73 FIM be left in retained earnings.
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY
INCOME STATEMENT
<TABLE>
<CAPTION>
CURRENCY CURRENCY
FIM FIM
1.1.94-31.12.94 1.1.93-31.12.93
<S> <C> <C>
TURNOVER 46,437,915.58 24,831,788.52
Increase/decrease in finished goods inventories 324,096.00 (210,524.00)
Other operating income 29,688.52 0.00
VARIABLE COSTS
Materials and supplies (18,042,056.67) (6,830,343.78)
Change in inventories 2,049,767.80 (180,634.23)
Wages and salaries and other personnel costs (8,479,042.29) (5,588,787.37)
Rents (358,282.79) (216,430.62)
Other variable costs (1,343,196.63) (855,943.00)
VARIABLE COSTS IN TOTAL (26,172,810.58) (13,672,139.00)
OPERATING PROFIT BEFORE DEPRECIATION 20,618,889.52 10,949,125.52
FIXED COSTS
Wages and salaries and other personnel costs (5,602,708.20) (4,220,391.40)
Rents (97,886.82) (131,765.00)
Other fixed costs (914,520.22) (1,290,246.56)
FIXED COSTS IN TOTAL (6,615,115.24) (5,642,402.96)
OPERATING MARGIN 14,003,774.28 5,306,722.56
DEPRECIATION ACCORDING TO PLAN
Buildings and structures (147,909.26) (165,730.60)
Machinery and equipment (2,189,864.54) (2,121,426.35)
Other long-term expenses (1,046,304.65) (1,307,126.97)
DEPRECIATION ACCORDING TO PLAN IN TOTAL (3,384,078.45) (3,594,283.92)
TRADING PROFIT 10,619,695.83 1,712,438.64
FINANCIAL INCOME AND EXPENSES
Interest income 106,949.58 99,690.70
Interest expenses (793,940.31) (444,373.02)
Other financial income and expenses (228,653.34) (242,247.28)
FINANCIAL INCOME AND EXPENSES IN TOTAL (915,644.07) (586,929.60)
PROFIT BEFORE RESERVES AND INCOME TAXES 9,704,051.76 1,125,509.04
INCREASE/DECREASE IN RESERVES
Change in operating reserve 0.00 (318,202.55)
Depreciation above the plan (1,479,793.52) 0.00
PROFIT BEFORE TAXES 8,224,258.24 807,306.49
INCOME TAXES
For the financial period (2,057,045.55) (203,286.04)
For previous periods 203,286.04 (14,916.20)
INCOME TAXES IN TOTAL (1,853,759.51) (218,202.24)
PROFIT FOR THE PERIOD 6,370,498.73 589,104.25
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY
BALANCE SHEET
<TABLE>
<CAPTION>
CURRENCY CURRENCY
FIM FIM
12/31/94 12/31/93
<S> <C> <C>
ASSETS
FIXED ASSETS AND OTHER NON-CURRENT
INVESTMENTS
Land and water 308,180.00 125,900.00
Buildings and structures 6,179,372.42 2,201,849.35
Machinery and equipment 5,071,175.23 3,247,142.12
Advance payments 161,287.81
Shares and contributions 41,150.00 46,150.00
Intangible assets 601,309.06 251,033.88
Other long-term expenses 35,282.76 964,172.28
FIXED ASSETS IN TOTAL 12,397,757.28 6,836,247.63
INVENTORIES
Materials and supplies 3,407,422.40 1,291,065.00
Finished products 426,169.00 241,716.00
Work in progress 73,053.40
INVENTORIES IN TOTAL 3,906,644.80 1,532,781.00
FINANCIAL ASSETS
Cash in hand and at banks 1,093,852.63 21,408.28
Accounts receivable 8,513,538.06 2,410,267.24
Loan receivable 1,890,921.37 4,459,698.12
Prepaid expenses and accrued income 2,749,415.10 550,512.56
FINANCIAL ASSETS IN TOTAL 14,247,727.16 7,441,886.20
ASSETS IN TOTAL 30,552,129.24 15,810,914.83
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY
BALANCE SHEET
GROUP
<TABLE>
<CAPTION>
CURRENCY CURRENCY
FIM FIM
12/31/94 31.12.1993
<S> <C> <C>
LIABILITIES
SHAREHOLDERS' EQUITY
Restricted equity
Share capital 303,000.00 303,000.00
Reserve fund 2,894,300.00 2,894,300.00
Restricted equity in total 3,197,300.00 3,197,300.00
Unrestricted equity
Retained earnings (648,065.56) (1,237,169.81)
Profit for the period 6,370,498.73 589,104.25
Unrestricted equity in total 5,722,433.17 (648,065.56)
SHAREHOLDERS' EQUITY IN TOTAL 8,919,733.17 2,549,234.44
RESERVES
Transitional reserves 318,202.55 318,202.55
Accelerated depreciation 1,479,793.52 0.00
RESERVES IN TOTAL 1,797,996.07 318,202.55
LONG-TERM LIABILITIES
Loans from financial institutions 5,163,535.09 5,193,753.00
Loans from pension companies 874,193.00 939,992.00
Other long-term liabilities 4,003,660.82 3,593,000.00
Loan repayments due during the next period (1,659,198.51) (3,023,547.50)
LONG-TERM LIABILITIES IN TOTAL 8,382,190.40 6,703,197.50
SHORT-TERM LIABILITIES
Accounts payable 3,990,112.85 1,365,425.94
Accrued expense and deferred income 5,802,898.24 1,851,306.90
Other short-term liabilities
Loan repayments due during the next year 1,659,198.51 3,023,547.50
SHORT-TERM LIABILITIES IN TOTAL 11,452,209.60 6,240,280.34
LIABILITIES IN TOTAL 30,552,129.24 15,810,914.83
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY
FUNDS STATEMENT
<TABLE>
<CAPTION>
CURRENCY CURRENCY
FIM FIM
1994 1993
<S> <C> <C>
SOURCES OF FUNDS
Cash-flow financing:
Net profit 6,370,498.73 589,104.25
Depreciations 4,863,871.97 3,594,283.92
Change in reserves 0.00 318,202.55
Cash-flow financing total 11,234,370.70 4,501,590.72
Long-term liquid assets 0.00 0.00
Fixed assets sales 136,000.00 1,640,194.41
Increase of long-term loans 9,213,421.31 4,093,000.00
Changes in valuation items 0.00 0.00
Stock issue 0.00 0.00
SOURCES OF FUNDS TOTAL 20,583,792.01 10,234,785.13
USE OF FUNDS
Long-term receivables 0.00 0.00
Investments 9,081,588.10 2,536,240.02
Long-term loans 7,534,428.41 5,842,030.50
Dividends 0.00 0.00
Total 16,616,016.51 8,378,270.52
Change in net working capital 3,967,775.50 1,856,514.61
USE OF FUNDS TOTAL 20,583,792.01 10,234,785.13
CHANGE IN NET WORKING CAPITAL
Cash in hand and at banks 1,093,852.63 21,408.28
Other short-term receivables 13,153,874.53 7,420,477.92
Inventory 3,906,644.80 1,532,781.00
Short-term external liabilities (11,452,209.60) (6,240,280.34)
NET WORKING CAPITAL TOTAL 6,702,162.36 2,734,386.86
Change in net working capital 3,967,775.50 1,856,514.61
Net working capital 1.1. 2,734,386.86 877,882.25
Net working capital 31.12. 6,702,162.36 2,734,386.86
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY FINANCIAL STATEMENTS 31.12.1994
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
NOTES TO THE FINANCIAL STATEMENTS
1. NET SALES BY MARKET AREA (1000 FIM)
Finland 26,558.00 11,951.00
Other Nordic countries 299.00 2,800.00
Other European countries 19,192.00 9,598.00
U.S.A. and Canada 389.00 483.00
Total 46,438.00 24,832.00
2. SALARIES AND FRINGE BENEFITS
Wages and salaries 10,807,996.90 7,698,510.34
Fringe benefits 110,650.00 93,080.00
Pensions 1,640,715.34 1,591,751.65
Other personnel expenses 1,633,038.25 425,836.78
Total 14,192,400.49 9,809,178.77
3. INTEREST INCOME AND EXPENSES
Interest income from short-term investments 106,949.58 99,690.70
Translation differences (53,022.60) (215,632.78)
Interest expenses (793,940.31) (444,373.02)
Other financial expenses (175,630.74) (26,614.50)
Total (915,644.07) (586,929.60)
4. GROUP RECEIVABLES AND LIABILITIES
Debt to Solifil Oy 800,000.00
Rautaruukki Oy
Receivables 4,459,698.12
Liabilities
Short-term 718,600.00
Long-term 2,874,400.00
Total 3,593,000.00
5. TANGIBLE ASSETS AND DEPRECIATIONS
</TABLE>
The book value for taxation purposes at 31.12.1993 was equal to the book
value after
<PAGE>
Translation of financial statements originally issued in Finnish
depreciations according to plan. The depreciations according to plan 1994
have been accounted from this book value on the basis of the remaining
lifetime of the fixed assets. The depreciation plan for buildings and
structures is 30 years, for improvements of buildings 10 years and for
machinery and equipment 5 years. Years' 1991 and 1992 research and
development expenses have been fully depreciated as of December 31, 1994,
as they are not expected to generate any net sales during 1995.
The tax values for fixed assets are:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Land and water areas 213,824.00 31,544.00
Buildings and structures 4,331,601.00 1,620,135.00
Shares and contributions 41,150.00 46,150.00
Total 4,586,575.00 1,697,829.00
</TABLE>
The administration building and the new factory have the above
acquisition values. The tax values are not yet available.
FIXED ASSETS SPECIFICATIONS
INTANGIBLE ASSETS
<TABLE>
<S> <C> <C>
COMPUTER PROGRAMS
Accum.book value at 1st of January 252,102.17 210,517.28
Additions during the period 321,763.73 53,034.91
Reductions during the period 0.00 (11,450.00)
Accum. book value at 31st of December 573,865.90 252,102.19
Acc. depreciations according to plan (247,782.41) (196,198.95)
Book value at the end of the period 326,083.49 55,903.24
PATENTS AND OTHER INTANGIBLE ASSETS
Accum.book value at 1st of January 200,031.66 157,138.50
Additions during the period 216,100.00 69,170.00
Reductions during the period (109,000.00) (26,276.84)
Accum. book value at 31st of December 307,131.66 200,031.66
Acc. depreciations according to plan (31,906.09) (4,901.02)
Book value at the end of the period 275,225.57 195,130.64
INTANGIBLE ASSETS TOTAL
Accum. book value at 1st of January 452,133.83 367,655.78
Additions during the period 537,863.73 122,204.91
Reductions during the period (109,000.00) (37,726.84)
Accum. book value at 31st of December 880,997.56 452,133.85
Acc. depreciations according to plan (279,688.50) (201,099.97)
Book value at the end of the period 601,309.06 251,033.88
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
OTHER LONG-TERM EXPENSES
RESEARCH AND DEVELOPMENT EXPENSES
Accum.book value at 1st of January 4,472,249.29 4,472,249.29
Additions during the period 0.00 0.00
Reductions during the period 0.00 0.00
Accum. book value at 31st of December 4,472,249.29 4,472,249.29
Acc. depreciations according to plan (4,472,249.29) (3,508,077.01)
Book value at the end of the period 0.00 964,172.28
OTHER LONG-TERM EXPENSES
Accum.book value at 1st of January 141,997.10 141,997.06
Additions during the period 38,826.58 0.00
Reductions during the period 0.00 0.00
Accum. book value at 31st of December 180,823.68 141,997.06
Acc. depreciations according to plan (145,540.92) (141,997.06)
Book value at the end of the period 35,282.76 0.00
OTHER LONG-TERM EXPENSES TOTAL
Accum.book value at 1st of January 4,614,246.39 4,614,246.35
Additions during the period 38,826.58 0.00
Reductions during the period 0.00 0.00
Accum. book value at 31st of December 4,653,072.97 4,614,246.35
Acc. depreciations according to plan (4,617,790.21) (3,650,074.07)
Book value at the end of the period 35,282.76 964,172.28
TANGIBLE ASSETS
LAND AND WATER AREAS
Accum.book value at 1st of January 125,900.00 125,900.00
Additions during the period 182,280.00 0.00
Reductions during the period 0.00 0.00
Accum. book value at 31st of December 308,180.00 125,900.00
Acc. depreciations according to plan 0.00 0.00
Book value at the end of the period 308,180.00 125,900.00
BUILDINGS AND STRUCTURES
Accum.book value at 1st of January 2,424,356.23 2,354,177.26
Additions during the period 4,125,432.33 70,178.97
Reductions during the period 0.00 0.00
Accum. book value at 31st of December 6,549,788.56 2,424,356.23
Acc. depreciations according to plan (370,416.14) (222,506.88)
Book value at the end of the period 6,179,372.42 2,201,849.35
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
MACHINERY AND EQUIPMENT
Accum.book value at 1st of January 5,810,338.08 5,100,549.51
Additions during the period 4,016,897.65 2,433,756.14
Reductions during the period (3,000.00) (1,723,967.57)
Accum. book value at 31st of December 9,824,235.73 5,810,338.08
Acc. depreciations according to plan (4,753,060.50) (2,563,195.96)
Book value at the end of the period 5,071,175.23 3,247,142.12
ADVANCE PAYMENTS AND CONSTRUCTION IN PROGRESS
Accum.book value at 1st of January 0.00 0.00
Additions during the period 161,287.81 0.00
Reductions during the period 0.00 0.00
Accum. book value at 31st of December 161,287.81 0.00
Acc. depreciations according to plan 0.00 0.00
Book value at the end of the period 161,287.81 0.00
TANGIBLE ASSETS TOTAL
Accum.book value at 1st of January 8,360,594.31 7,580,626.77
Additions during the period 8,485,897.79 2,503,935.11
Reductions during the period (3,000.00) (1,723,967.57)
Accum. book value at 31st of December 16,843,492.10 8,360,594.31
Acc. depreciations according to plan (5,123,476.64) (2,785,702.84)
Book value at the end of the period 11,720,015.46 5,574,891.47
SHARES
SHARES AND CONTRIBUTIONS
Accum.book value at 1st of January 46,150.00 14,550.00
Additions during the period 19,000.00 31,600.00
Reductions during the period (24,000.00) 0.00
Accum. book value at 31st of December 41,150.00 46,150.00
Acc. depreciations according to plan 0.00 0.00
Book value at the end of the period 41,150.00 46,150.00
SHARES AND CONTRIBUTIONS TOTAL
Accum.book value at 1st of January 46,150.00 14,550.00
Additions during the period 19,000.00 31,600.00
Reductions during the period (24,000.00) 0.00
Accum. book value at 31st of December 41,150.00 46,150.00
Acc. depreciations according to plan 0.00 0.00
Book value at the end of the period 41,150.00 46,150.00
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
FIXED ASSETS AND LONG-TERM
INVESTMENTS TOTAL
Accum.book value at 1st of January 13,880,618.16 12,384,662.94
Additions during the period 9,081,588.10 2,657,740.02
Reductions during the period (136,000.00) (1,761,694.41)
Accum. book value at 31st of December 22,418,712.63 13,473,124.51
Acc. depreciations according to plan (10,020,955.35) (6,636,876.88)
Book value at the end of the period 12,397,757.28 6,836,247.63
Accumulated depreciation difference 1.1.1994 0.00
Additions during 1.1.-31.12.94 1,479,793.52
Accumulated depreciation difference Dec. 31 1995 1,479,793.52
Machinery and equipment of the total book value 4,682,408.33 3,016,129.00
6. CHANGES IN SHAREHOLDERS' EQUITY
Restricted equity
Share capital 303,000.00 303,000.00
New issue 2,894,300.00 2,894,300.00
Restricted equity total at Dec. 31 3,197,300.00 3,197,300.00
Non-restricted equity
Retained earnings from previous years (648,065.56) (1,237,169.81)
Profit for the period 6,370,498.73 589,104.25
Non-restricted equity Dec.31 5,722,433.17 (648,065.56)
Shareholders' equity total Dec. 31 8,919,733.17 2,549,234.44
7. PLEDGES, MORTGAGES AND CONTINGENT LIABILITIES
FOR OWN DEBTS:
Real estate pledged 4,400,000.00 4,500,000.00
Business mortgages 7,600,000.00
Mortgages for own debts total 12,000,000.00 4,500,000.00
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
8. SIGNATURES
Oulu 22.02.1995
Lauri Kuokkanen Seppo Saynajakangas Heikki Nieminen
Juha Sipila Sisko Sammallahti-Siklander
AUDITOR'S NOTATION
We have given today the auditor's report on the audit we have made on Solitra
Oy. The financial statements of Solitra Oy give a true and fair view of the
company's results as well as the financial position.
Oulu 14.3.1995
KPMG WIDERI OY AB
Pirkko Lauste
Certified Public Accountant
<PAGE>
[LETTERHEAD]
AUDITORS' REPORT (TRANSLATION)
To the shareholders of Solitra Oy
We have audited the accounting records, the financial statements and the
administration by the Board of Directors and the Managing Director of
Solitra Oy for the financial period of 23 October 1994 - 31 December
1995. The financial statements, which include the report of the Board of
Directors, consolidated and parent company income statements, balance
sheets and notes to the financial statements, have been prepared by the
Board of Directors and the Managing Director. On the basis of our audit
we express an opinion on these accounts and the company's administration.
We have conducted our audit in accordance with Finnish Generally
Accepted Auditing Standards. Those standards require that we plan and
perform the audit in order to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by the management, as well
as evaluating the overall financial statement presentation. The purpose
of our audit of the administration has been to examine that the Board of
Directors and the Managing Director have complied with the rules of the
Finnish Companies Act.
In our opinion, the financial statements have been prepared in accordance
with the Finnish Accounting Act and other rules and regulations governing
the preparation of financial statements in Finland. The financial
statements give a true and fair view, as defined in the Accounting Act, of
both the consolidated and parent company result of operations, as well as
of the financial position. The financial statements can be adopted and
the members of the Board of Directors and the Managing Director of the
Parent company can be discharged from liability for the period audited by
us. The proposal made by the Board of Directors on how to deal with the
retained earnings is in compliance with the Finnish Companies' Act.
Oulu, February 6, 1996
KPMG WIDERI OY AB
/s/ Pirkko Lauste
Pirkko Lauste
Authorized Public Accountant
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY
FINANCIAL STATEMENTS 31.12.1995
(TRANSLATION)
<PAGE>
Translation of financial statements originally issued in Finnish
1(2)
ANNUAL REPORT OF THE BOARD OF DIRECTORS FOR THE FINANCIAL PERIOD from
October 23, 1994 to December 31, 1995
GENERAL
Solitra designs, manufactures and markets radio frequency components and
subsystems for the cellular industry. The business segment grew rapidly
during 1995, even though the growth in handheld cellular phone sales in
America did not quite match the expectations. The company was founded in
October 23, 1994 and the name was Solifil Oy. December 14, 1994 the company
bought the total capital stock of Solitra Oy from Rautaruukki Oy and Juha
Sipila, at the same time the capital stock of the company was raised to
9.625.000,00 FIM. On November 8th, 1995, Solitra Oy merged with the (holding
co.) Solifil Oy, and at the same time Solifil Oy's name was changed to
Solitra Oy. The reason for changing name was to guarantee an undistributed
continuation of operation.
The company' s main site of business is in Kempele , a production unit in the
county of Ruukki, sales office in London and a subsidiary company, Solitra USA
Inc., in the USA in the State of Minnesota.
MARKETING, PRODUCTION AND R&D
During the year the company's primary operations were concentrated on the
time after the merger. All operations continued their functions
undisturbingly after the merger. Marketing efforts were concentrated in a
cellular base stations filters and subsystems.
Filters for cellular terminals were manufactured for the 450 MHz mobile and hand
portable products. In this segment our clientele increased and two new products
were introduced for production.
R&D continued focusing its efforts in integrated mini/microcell base station
subsystems and 450 MHz hand portable phone filters. As a new product group, the
production and marketing of Rf-measuring system was started.
NET SALES AND OPERATING PROFIT
Parent company's net sales were 12.283.469,85 FIM, the Groups' net sales were
74.870.350,38 FIM. Parent company's operating profit was 33.9 % and the Group's
operating profit was 29.1%.
PROFIT
The Parent company' s profit before reserves and income tax was 6.159.491,87 FIM
(the Group' s was 9.054.968,65). The parent company's net profit after taxes was
4.619.809,87 FIM (the Group's was 4.453.142,59 FIM).
<PAGE>
Translation of financial statements originally issued in Finnish
2(2)
OWNERSHIP AND ADMINISTRATION OF THE COMPANY
The board of directors during the financial period:
Mr. Lauri Kuokkanen Ultracom Oy, Chairman of the board
Mr. Heikki Nieminen Rautaruukki Oy
Mr. Seppo Saynajakangas Polar Electro Oy
Mrs. Sisko Sammallahti-Skilander Solitra Oy
Mr. Juha Sipila Solitra Oy
The board convened 8 times
THE OUTLOOK FOR THE PERIOD OF January 1, 1996 - December 31,1996
Growth is forecasted for current year as well. The uncertain and jumpy market
conditions in the US (especially decisions in technology) are obscuring the
predictability for the financial period.
PERSONNEL AND PAID SALARIES
After the merger the average number of employees was 157 for the Parent company
and the Group had an average of 148 employees during 1995. The Group's total
paid wages and salaries amounted to 17.019.798,88 FIM, the share of the board
members and the managing directors being 940.422,46 FIM. The total share of the
Parent company' s paid wages and salaries were 2.618.180,34 FIM, from where the
managing director and the members of the board received 76.683,00 FIM total.
PROPOSAL FOR PROFIT DISTRIBUTION
The board proposes to the shareholders' meeting that 1.097.250,00 FIM be
distributed as dividends (57 FIM per share) from the profit for the year, and
the remainder being left in retained earnings.
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY CURRENCY
INCOME STATEMENT FIM
GROUP 23.10.94-31.12.95
TURNOVER 74,870,350.38
Increase/decrease in finished goods inventories (127,649.16)
Other operating income 16,195.12
VARIABLE COSTS
Materials and supplies (27,654,408.27)
Increase/decrease in inventories 3,665,919.44
Wages and other personnel costs (12,437,434.86)
Rents (511,123.42)
Other variable costs (2,724,112.16)
VARIABLE COSTS IN TOTAL (39,661,159.27)
GROSS PROFIT 35,097,737.07
FIXED COSTS AND EXPENSES
Salaries and other personnel expenses (8,994,088.86)
Rents (147,873.28)
Other fixed costs (4,234,325.07)
FIXED COSTS AND EXPENSES IN TOTAL (13,376,287.21)
OPERATING PROFIT 21,721,449.86
DEPRECIATION ACCORDING TO PLAN
Buildings and structures (312,475.11)
Machinery and equipment (2,213,588.96)
Other long-term expenses
Intangible rights (3,810,768.99)
Capitalized expenditure (8,016.17)
DEPRECIATION ACCORDING TO PLAN IN TOTAL (6,344,849.23)
TRADING PROFIT 15,376,600.63
FINANCIAL INCOME AND EXPENSES
Interest income 334,409.34
Interest expenses (1,070,308.39)
Other financial income and expenses (816,188.56)
FINANCIAL INCOME AND EXPENSES IN TOTAL (1,552,087.61)
EXTRAORDINARY EXPENSES (4,769,544.37)
PROFIT BEFORE RESERVES AND INCOME TAXES 9,054,968.65
INCREASE/DECREASE IN RESERVES
Depreciation above the plan (1,580,368.20)
INCOME TAXES
For the financial period (3,021,457.86)
For previous periods 0.00
INCOME TAXES IN TOTAL (3,021,457.86)
PROFIT FOR THE PERIOD 4,453,142.59
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY CURRENCY
BALANCE SHEET FIM
GROUP 12/31/95
ASSETS
FIXED ASSETS AND OTHER NON-CURRENT
INVESTMENTS
Land and water 353,744.81
Buildings and structures 7,697,962.47
Advance payments 31,675.98
Machinery and equipment 10,843,850.47
Shares and contributions 41,150.00
Other tangible assets 97,004.19
Intangible assets 275,861.94
Other capitalized expenditures 33,971,434.05
FIXED ASSETS IN TOTAL 53,312,683.91
INVENTORIES
Materials and supplies 6,344,785.32
Finished products and work in progress 1,121,605.91
INVENTORIES IN TOTAL 7,466,391.23
FINANCIAL ASSETS
Cash in hand and at banks 10,972,343.25
Accounts receivable 11,103,391.67
Prepaid expenses and accrued income 3,186,809.08
FINANCIAL ASSETS IN TOTAL 25,262,544.00
ASSETS IN TOTAL 86,041,619.14
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY CURRENCY
BALANCE SHEET FIM
GROUP 31.12.1995
LIABILITIES
SHAREHOLDERS' EQUITY
Restricted equity
Share capital 9,625,000.00
Reserve fund 9,600,000.00
Translation difference 22,344.00
Restricted equity in total 19,247,344.00
Unrestricted equity
Retained earnings 0.00
Profit for the period 4,453,142.59
Unrestricted equity in total 4,453,142.59
SHAREHOLDERS' EQUITY IN TOTAL 23,700,486.59
CAPITAL LOANS 7,000,000.00
SHAREHOLDERS' EQUITY AND 30,700,486.59
SUBORDINATED LOAN
RESERVES
Transitional reserves 318,202.55
Accelerated depreciation 3,060,161.72
RESERVES IN TOTAL 3,378,364.27
LONG-TERM LIABILITIES
Loans from financial institutions 20,363,368.63
Loans from pension companies 2,777,842.00
Other long-term liabilities 14,536,482.72
Loan repayments due during the next period (6,744,020.49)
LONG-TERM LIABILITIES IN TOTAL 30,933,672.86
SHORT-TERM LIABILITIES
Accounts payable 5,130,780.01
Accrued expense and deferred income 8,919,735.23
Other short-term liabilities 6,978,580.18
SHORT-TERM LIABILITIES IN TOTAL 21,029,095.42
SHORT- AND LONG-TERM LIABILITIES IN TOTAL 51,962,768.28
LIABILITIES IN TOTAL 86,041,619.14
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY CURRENCY
INCOME STATEMENT FIM
PARENT COMPANY 23.10.94-31.12.95
TURNOVER 12,283,469.85
Increase/decrease in finished goods inventories 52,454.70
Other operating income 0.00
VARIABLE COSTS
Materials and supplies (5,342,386.59)
Increase/decrease in inventories 1,206,279.49
Wages and other personnel costs (1,931,132.57)
Rents (12,839.46)
Other variable costs (555,885.62)
VARIABLE COSTS IN TOTAL (6,635,964.75)
GROSS PROFIT 5,699,959.80
FIXED COSTS AND EXPENSES
Salaries and other personnel expenses (1,264,346.48)
Rents (18,506.79)
Other fixed costs (253,030.36)
FIXED COSTS AND EXPENSES IN TOTAL (1,535,883.63)
OPERATING PROFIT 4,164,076.17
DEPRECIATION ACCORDING TO PLAN
Buildings and structures (56,235.70)
Machinery and equipment (524,804.25)
Other long-term expenses (3,707,878.21)
Intangible rights
Capitalized expenditure
DEPRECIATION ACCORDING TO PLAN IN TOTAL (4,288,918.16)
TRADING PROFIT (124,841.99)
FINANCIAL INCOME AND EXPENSES
Dividends 6,933,333.34
Interest income 192,580.08
Interest expenses (217,300.00)
Other financial income and expenses (624,279.56)
FINANCIAL INCOME AND EXPENSES IN TOTAL 6,284,333.86
PROFIT BEFORE RESERVES AND INCOME TAXES 6,159,491.87
INCOME TAXES
For the financial period (1,539,682.00)
For previous periods 0.00
INCOME TAXES IN TOTAL (1,539,682.00)
PROFIT FOR THE PERIOD 4,619,809.87
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY CURRENCY
BALANCE SHEET FIM
PARENT COMPANY 12/31/95
ASSETS
FIXED ASSETS AND OTHER NON-CURRENT
INVESTMENTS
Land and water 308,180.00
Buildings and structures 6,441,329.19
Advance payments 31,675.98
Machinery and equipment 10,402,598.40
Shares and contributions 1,064,870.00
Other tangible assets 27,460.29
Intangible assets 0.00
Other capitalized expenditures 34,201,964.15
FIXED ASSETS IN TOTAL 52,478,078.01
INVENTORIES
Materials and supplies 6,337,591.19
Finished products and work in progress 1,121,605.91
INVENTORIES IN TOTAL 7,459,197.10
FINANCIAL ASSETS
Cash in hand and at banks 10,235,505.71
Accounts receivable 11,104,139.67
Prepaid expenses and accrued income 3,040,022.20
FINANCIAL ASSETS IN TOTAL 24,379,667.58
CURRENT ASSETS IN TOTAL 31,838,864.68
ASSETS IN TOTAL 84,316,942.69
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY CURRENCY
BALANCE SHEET FIM
PARENT COMPANY
LIABILITIES 12/31/95
SHAREHOLDERS' EQUITY
Restricted equity
Share capital 9,625,000.00
Reserve fund 9,600,000.00
Restricted equity in total 19,225,000.00
Unrestricted equity
Retained earnings 0.00
Profit for the period 4,619,809.87
Unrestricted equity in total 4,619,809.87
SHAREHOLDERS' EQUITY IN TOTAL 23,844,809.87
CAPITAL LOANS 7,000,000.00
SHAREHOLDERS' EQUITY AND 30,844,809.87
SUBORDINATED LOAN
RESERVES
Transitional reserves 318,202.55
Accelerated depreciation 3,060,161.72
RESERVES IN TOTAL 3,378,364.27
LONG-TERM LIABILITIES
Loans from financial institutions 20,363,368.63
Loans from pension companies 2,777,842.00
Other long-term liabilities 12,985,300.00
Loan repayments due during the next period (6,640,124.24)
LONG-TERM LIABILITIES IN TOTAL 29,486,386.39
SHORT-TERM LIABILITIES
Accounts payable 5,090,501.99
Accrued expense and deferred income 8,837,417.93
Other short-term liabilities 39,338.00
Loan repayments due during the next year 6,640,124.24
SHORT-TERM LIABILITIES IN TOTAL 20,607,382.16
SHORT- AND LONG-TERM LIABILITIES IN TOTAL 50,093,768.55
LIABILITIES IN TOTAL 84,316,942.69
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY
FUNDS STATEMENT
<TABLE>
<CAPTION>
CURRENCY CURRENCY
FIM FIM
GROUP PARENT CO
<S> <C> <C>
SOURCES OF FUNDS 31.12.1995
Cash-flow financing:
Net profit 4,453,142.59 4,619,809.87
Depreciations 7,925,217.43 4,288,918.16
Change in reserves 0.00 0.00
Cash-flow financing total 12,378,360.02 8,908,728.03
Long-term liquid assets 0.00 0.00
Fixed assets sales 0.00 0.00
Increase of long-term loans 37,933,672.86 36,486,386.39
Changes in valuation items 0.00 0.00
Stock issue 19,225,000.00 19,225,000.00
SOURCES OF FUNDS TOTAL 69,537,032.88 64,620,114.42
USE OF FUNDS
Long-term receivables 0.00 0.00
Investments 57,837,193.07 53,388,631.90
Long-term loans 0.00 0.00
Dividends 0.00 0.00
Total 57,837,193.07 53,388,631.90
Change in net working capital 11,699,839.81 11,231,482.52
USE OF FUNDS TOTAL 69,537,032.88 64,620,114.42
CHANGE IN NET WORKING CAPITAL
Cash in hand and at banks 10,972,343.25 10,235,505.71
Other short-term receivables 14,290,200.75 14,144,161.87
Inventory 7,466,391.23 7,459,197.10
Short-term external liabilities (21,029,095.42) (20,607,382.16)
NET WORKING CAPITAL TOTAL 11,699,839.81 11,231,482.52
Change in net working capital 11,699,839.81 11,231,482.52
Net working capital 1.1. 0.00 0.00
Net working capital 31.12. 11,699,839.81 11,231,482.52
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
SOLITRA OY FINANCIAL STATEMENTS 31.12.1995
NOTES TO THE FINANCIAL STATEMENTS
Into the consolidated annual accounts a self established subsidiary SOLITRA
USA has been added, which actual business activity will begin in spring 1996.
The merged company's statement for the period Jan 1. 1995 to Nov. 11. 1995 is
included in the group statement. In the group accounts, the profit of the
merged company has been entered in the books as a merger loss. As a result of
the merger the changes in the inventory do not correspond with the balance
sheet.
The acquisition cost method was used to compile the group accounts.
All internal transactions, receivables and debts have been eliminated.
There are no internal interest income nor expenses within the Group.
The numbers in the Solitra USA Inc.'s financial statements have been changed
to FIM (official average exchange-rate from the Bank of Finland) at the
closing date.
The foreign receivables and debts have been changed to FIM (official average
exchange-rate from the Bank of Finland) at the closing date.
<TABLE>
<CAPTION>
GROUP PARENT
COMPANY
<S> <C> <C>
1. NET SALES BY MARKET AREA (1000 FIM)
Finland 38,153.00 6,237.00
Other Nordic countries 1,659.00 413.00
Other European countries 34,966.00 5,597.00
Other countries 92.00 36.00
Total 74,870.00 12,283.00
2. SALARIES AND FRINGE BENEFITS
Wages and salaries 18,029,950.38 2,870,359.95
Pensions 2,695,198.12 204,060.99
Other personnel expenses 706,375.22 121,058.11
Total 21,431,523.72 3,195,479.05
Fringe benefits 132,720.00 14,956.00
3. INTEREST INCOME AND EXPENSES
Dividend yield 0.00 5,200,000.00
Corporate tax refund 0.00 1,733,333.34
Interest income from short-term investments 334,409.34 175,609.93
Translation differences (13,536.43) 16,970.15
Interest expenses (1,070,308.39) (217,300.00)
Other financial expenses (802,652.13) (624,279.56)
Total (1,552,087.61) 6,284,333.86
4. MISCELLANOUS EXPENSES
Merger loss write-off 4,769,544.37 0.00
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
5. TANGIBLE ASSETS AND DEPRECIATIONS
Fixed assets have been activated on direct acquisition cost. The depreciation
plan for buildings and structures is 30 years, for improvements of buildings
10 years, for machinery equipment and intangible rights 5 years. The
depreciation plan for merger loss is 10 years.
Tax values for fixed assets are:
For unconfirmed items the book value has been used.
<TABLE>
<CAPTION>
GROUP PARENT
COMPANY
<S> <C> <C>
Land and water areas 146,984.81 101,420.00
Buildings and structures 5,175,463.31 3,918,830.03
Shares and contributions 41,150.00 1,064,870.00
Total 5,363,598.12 5,085,120.03
</TABLE>
FIXED ASSETS SPECIFICATIONS
Accrued depreciations for the Group occurred after the merger, therefore they
do not reconcile directly with the Group's balance sheet.
INTANGIBLE ASSETS
PATENTS AND OTHER INTANGIBLE ASSETS
<TABLE>
<S> <C> <C>
Merger 268,392.21 268,392.21
Additions 9,223.20 9,223.20
Reductions 0.00 0.00
Accumulated book value Dec.31 277,615.41 277,615.41
Acc. depreciations according to plan Dec.31 (1,753.47) (1,753.47)
Book value 275,861.94 275,861.94
INTANGIBLE ASSETS TOTAL
Merger 268,392.21 268,392.21
Additions 9,223.20 9,223.20
Reductions 0.00 0.00
Accumulated book value Dec 31 277,615.41 277,615.41
Acc. depreciations according to plan Dec.31 (1,753.47) (1,753.47)
Book value Dec 31 275,861.94 275,861.94
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
<TABLE>
<CAPTION>
GROUP PARENT
COMPANY
<S> <C> <C>
OTHER LONG-TERM EXPENSES
COMPUTER PROGRAMS
Merger 489,355.21 489,355.21
Additions 77,035.05 30,646.47
Reductions 0.00 0.00
Accumulated book value Dec. 31 566,390.26 520,001.68
Acc. depreciations according to plan Dec.31 (26,426.69) (25,369.95)
Book value Dec. 31 539,963.57 494,631.73
MERGER LOSS
Merger loss 37,110,722.46 37,110,722.46
Acc. depreciations according to plan Dec.31 (3,679,251.98) (3,679,251.98)
Book value Dec. 31 33,431,470.48 33,431,470.48
OTHER LONG-TERM EXPENSES TOTAL
Merger 37,600,077.67 37,600,077.67
Additions 77,035.05 30,646.47
Reductions 0.00 0.00
Accumulated book value Dec. 31 37,677,112.72 37,630,724.14
Acc. depreciations according to plan Dec.31 (3,705,678.67) (3,704,621.93)
Book value Dec. 31 33,971,434.05 33,926,102.21
TANGIBLE ASSETS
LAND AND WATER AREAS
Merger 308,180.00 308,180.00
Additions 45,564.80 0.00
Reductions 0.00 0.00
Accumulated book value Dec. 31 353,744.80 308,180.00
Acc. depreciations according to plan Dec.31 0.00 0.00
Book value Dec. 31 353,744.80 308,180.00
BUILDINGS AND STRUCTURES
Merger 6,453,957.00 6,453,957.00
Additions 1,303,740.17 43,607.89
Reductions 0.00 0.00
Accumulated book value Dec. 31 7,757,697.17 6,497,564.89
Acc. depreciations according to plan Dec.31 (59,734.70) (56,235.70)
Book value Dec.31 7,697,962.47 6,441,329.19
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
<TABLE>
<CAPTION>
GROUP PARENT
COMPANY
<S> <C> <C>
MACHINERY AND EQUIPMENT
Merger 9,393,601.58 9,393,601.58
Additions 1,982,452.43 1,533,801.07
Reductions 0.00 0.00
Accumulated book value Dec.31 11,376,054.01 10,927,402.65
Acc. depreciations according to plan Dec.31 (532,203.54) (524,804.25)
Book value Dec. 31 10,843,850.47 10,402,598.40
ADVANCE PAYMENTS AND CONSTRUCTION IN PROGRESS
Merger 108,207.95 108,207.95
Additions 156,890.59 156,890.59
Reductions (233,422.56) (233,422.56)
Accumulated book value Dec.31 31,675.98 31,675.98
Acc. depreciations according to plan Dec.31 0.00 0.00
Book value Dec. 31 31,675.98 31,675.98
OTHER INTANGIBLE ASSETS
Merger 28,963.10 28,963.10
Additions 69,737.60 0.00
Reductions 0.00 0.00
Accumulated book value Dec.31 98,700.70 28,963.10
Acc. depreciations according to plan Dec.31 (1,696.51) (1,502.81)
Book value Dec. 31 97,004.19 27,460.29
TANGIBLE ASSETS TOTAL
Merger 16,292,909.63 16,292,909.63
Additions 3,558,385.59 1,734,299.55
Reductions (233,422.56) (233,422.56)
Accumulated book value Dec.31 19,617,872.66 17,793,786.62
Acc. depreciations according to plan Dec.31 (593,634.75) (582,542.76)
Book value Dec. 31 19,024,237.91 17,211,243.86
SHARES
SHARES AND CONTRIBUTIONS
Merger 41,150.00 41,150.00
Additions 0.00 1,023,720.00
Reductions 0.00
Accumulated book value Dec.31 41,150.00 1,064,870.00
Acc. depreciations according to plan Dec.31 0.00
Book value Dec. 31 41,150.00 1,064,870.00
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
<TABLE>
<CAPTION>
GROUP PARENT
COMPANY
<S> <C> <C>
HOLDINGS AND OTHER LONG-TERM INVESTMENTS
Merger 41,150.00 41,150.00
Additions 0.00 1,023,720.00
Reductions 0.00 0.00
Accumulated book value Dec.31 41,150.00 1,064,870.00
Acc. depreciations according to plan Dec.31 0.00 0.00
Book value Dec. 31 41,150.00 1,064,870.00
<CAPTION>
Companies Group Group Parent co. Nominal value Book value
Ownership Voice Ownership Parent Co. Parent co.
% % %
<S> <C> <C> <C> <C> <C>
Solitra USA Inc. 100 100 100 1,023,720.00 1,023,720.00
Oulun Puhelin Oy 41,150.00 41,150.00
Total 1,064,870.00 1,064,870.00
<CAPTION>
GROUP PARENT
COMPANY
<S> <C> <C>
FIXED ASSETS TOTAL
Merger 54,202,529.51 54,202,529.51
Additions 3,644,643.84 2,797,889.22
Reductions (233,422.56) (233,422.56)
Accumulated book value Dec.31 57,613,750.79 56,766,996.17
Acc. depreciations according to plan Dec.31 (4,301,066.89) (4,288,918.16)
Book value Dec. 31 53,312,683.90 52,478,078.01
Accumulated depreciation difference Dec. 31 1995
Buildings and structures 679,919.41 679,919.41
Machinery and equipment 2,341,121.42 2,341,121.42
Intangible assets 41,866.01 41,866.01
Long-term expenses (2,745.12) (2,745.12)
3,060,161.72 3,060,161.72
Accumulated depreciation difference Dec. 31 1995 3,060,161.72 3,060,161.72
Machinery and equipment of the total book value 10,285,561.76 9,872,261.39
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
6. CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Restricted equity
Share capital Jan. 1 0.00 0.00
New issue 9,625,000.00 9,625,000.00
Reserves fund
Emission of New issue 9,600,000.00 9,600,000.00
Commutation difference 22,344.00
Restricted equity total at Dec. 31 19,247,344.00 19,225,000.00
Non-restricted equity
Non-restricted equity Jan. 1 0.00 0.00
Profit for the period 4,453,142.59 4,619,809.87
Non-restricted equity Dec.31 4,453,142.59 4,619,809.87
Shareholders' equity total Dec. 31 23,700,486.59 23,844,809.87
</TABLE>
7.CAPITAL LOANS
MB Corporate Finance LTD 7.000.000,00 FIM
Transfer and terms:
The lender has a right to exchange the promissory note in full, or partially
into company-stock, the exchange rate being as follows: against the whole
7.000.000,00 FIM loan capital is given 1.750 shares of the company's stock.
The nominal value of one share is 500 FIM and therefore the computational
exchange price is 4.000 FIM. Right of exchange starts APRIL 2. annually, in
case the interest is paid off in full. The right of exchange begins APR. 2.
2003, if the confirmed financial statements for the fiscal year, ending DEC
31.2002 indicates that the loan cannot be paid off by the due date. The right
of exchange continues as long as the loan capital is either partially or
fully unpaid, however, at least until the due date. In case the company's
capital stock is going to be increased by a new issue or by stock dividend,
or if it's going to be increased by any other legitimate means, or if a new
convertible promissory note or a warrant bond with a subscription right is
released, the owner of the convertible bond has the same or equal right
(decided more precisely by the board) with the current shareholders.
The loan capital and interest have, in case of a bankruptcy or dissolution
of the company, less priority than the other promissory notes, however at
least the same preference as the possibility later to be released obligations
that can be considered company's own capital. The loan does not have a bank
guarantee nor any other security collateral. The receivables attached to the
loan cannot be used to write off any expenditures. The loan or any part of it
can be paid off only if the company can maintain a full restricted
shareholders' equity in accordance with the confirmed consolidated balance
sheet and the balance sheet prior to the payment during the previous
accounting period.
Interest can be paid as long as the interest does not exceed the group's or
the parent company's restricted shareholders' equity prior to the due date
during the previous accounting period in accordance with the confirmed
consolidated balance sheet.
<PAGE>
Translation of financial statements originally issued in Finnish
8. LIABILITIES
<TABLE>
<S> <C> <C>
Long-term, over 5 years
Loans from pension companies 1,805,602.00 1,805,602.00
Long-term in total 1,805,602.00 1,805,602.00
</TABLE>
Convertible bond
Polar Electro Oy 1.000.000,00 FIM
- - transfer time DEC 14. 1997 - DEC 31. 1997
- - terms: Polar Electro Oy may exchange their subscribed convertible bond into
Solifil Oy's stock in a way that every 2.500,00 FIM loan option entitles them
to subscribe one at 500 FIM per share. If during the loan period, the company
increases its capital stock by a subscription issue or releases a new
convertible bond or a bond with warrants, the holder of the convertible bond
has the same right to subscribe new shares or convertible bonds or bonds with
warrants as the share holder. The right of the possessor of the convertible bond
is determined by the amount of shares that the convertible bond entitles to
when exchanged.
In case the company decided to increase the capital stock by dividends, the
holder of the convertible bond has to be given a chance to exchange the
promissory note into stock prior to the decision at the shareholders'
meeting. If the holder of the convertible bond fails to execute his right to
exchange, the exchange rate will change in accordance with the ratio
determined by the dividends.
9. RESERVES
Optional provisions such as tax debts DEC 31. 1995 are 89.000 FIM.
10. PLEDGES, MORTGAGES AND CONTINGENT LIABILITIES
<TABLE>
<CAPTION>
GROUP PARENT
COMPANY
<S> <C> <C>
FOR OWN DEBTS:
Real estate pledged 5,400,000.00 5,400,000.00
Business mortgages 8,400,000.00 8,400,000.00
Mortgages for own debts total 13,800,000.00 13,800,000.00
</TABLE>
<PAGE>
Translation of financial statements originally issued in Finnish
11. SIGNATURES
Oulu FEB 1. 1996
Lauri Kuokkanen Seppo Saynajakangas Heikki Nieminen
Juha Sipila Sisko Sammallahti-Siklander
AUDITOR'S NOTATION
We have given today the auditor's report on the audit we have made in
Solitra Oy. The financial statements of Solitra Oy give a true and fair view
of the company's result as well as the financial position.
Oulu FEB 6. 1996
KPMG WIDERI OY AB
Pirkko Lauste
Certified Public Accountant
<PAGE>
SOLITRA OY
FINANCIAL STATEMENTS AS OF AND
FOR THE SEVEN MONTH PERIOD
ENDED JULY 31, 1996
UNAUDITED
<PAGE>
SOLITRA
INCOME STATEMENT
1000 FIM
Seven Months
ended July 31, 1996
(unaudited)
-------------------
Net Sales Turnover 86 372
Cost of Sales 56 545
Fixed Factory 5 026
Capital of overheads (103)
Obsolescence reserve 367
Warranty reserve 313
Gross Profit 24 224
-----------
Engineering 10 149
Marketing 1 053
Administration 1 721
IS Allocation 237
Depreciation merger loss 2 146
-----------
Total Operating Expenses 15 306
-----------
Operating Income (Loss) 8 918
-----------
Other Income/(Expense) (3 937)
Pre-tax Income (Loss) 4 981
-----------
Income Tax provision (1 277)
-----------
Net Income (Loss) 3 704
-----------
-----------
<PAGE>
Balance Sheet of Solitra
as of
July 31, 1996
(unaudited)
1000 FIM
ASSETS July 31, 1996
- ------ -------------
CURRENT ASSETS:
Cash & Cash Equivalents 6 388
Accounts Receivable, net 31 201
Other Receivable, net 2 757
Inventories 14 528
Prepaid Expenses 1 882
-------------
Total Current Assets 56 756
PROPERTY, PLANT & EQUIPMENT:
Property, Plant & Equipment 33 794
Accumulated Depreciation -4 864
Amortization -2 706
-------------
Total Property, Plant & Equipment 26 224
OTHER ASSETS:
Goodwill 37 111
Accumulated Depreciation -5 825
Net Goodwill 31 286
Intangibles 1 287
Other Assets 383
-------------
Total other assets 32 956
-------------
TOTAL ASSETS 115 936
-------------
-------------
LIABILITIES & STOCKHOLDERS' INVESTMENT
- --------------------------------------
CURRENT LIABILITIES:
Current Maturities of Long Term Debt 6 640
Accounts Payable 13 590
Accrued Liabilities 14 801
Warranty reserve 612
-------------
Total Current Liabilities 35 643
DEFERRED INCOME TAXES 702
LONG-TERM DEBT 30 933
ADC LOAN 17 436
-------------
Total Liabilities 84 713
STOCKHOLDERS' INVESTMENT:
Common Stock 10 225
Paid-in-Capital 11 722
Prior Period Retained Earnings 5 572
Current Year Earnings 3 704
-------------
Total Stockholders' Investment 31 223
UNTAXED RESERVES 0
-------------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT 115 936
-------------
-------------
<PAGE>
SOLITRA OY US GAAP RECONCILIATION
SUMMARY
RECONCILIATION OF EQUITY
<TABLE>
<CAPTION>
1000 FIM 1000 FIM 1000 FIM
31.12.1994 31.12.1995 31.7.1996
----------- ---------- ---------
<S> <C> <C> <C>
Net Equity according to Finnish Accounting Standards 8,920 23,700 29,417
Capitalization of overheads 35 110 208
Untaxed reserves 318 318 318
Depreciation difference 1,480 3,060 3,080
Obsolescence/excess reserve 0 (100) (487)
Warranty reserve (186) (299) (612)
Pensions 0 0 0
Deferred taxes (412) (865) (702)
----------- --------- --------
Estimated net equity according to US GAAP 10,155 25,924 31,222
----------- --------- --------
----------- --------- --------
RECONCILIATION OF PROFIT FOR THE PERIOD
KFim 1994 1995 1.1-31.7.1996
----------- --------- -------------
Profit for the period according to Finnish Accounting
Standards 6,370 4,453 4,120
Capitalization of overheads 35 75 103
Untaxed reserves 0 0 0
Depreciation difference 1,480 1,580 0
Obsolescence/excess reserve 0 (100) (367)
Warranty reserve (86) (114) (313)
Pensions 0 0 0
Deferred taxes (357) (453) 161
----------- --------- --------
Estimated profit for the period according to US GAAP 7,441 5,441 3,704
----------- --------- --------
----------- --------- --------
</TABLE>
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
UNAUDITED
On July 1, 1996, ADC Telecommunications, Inc. (ADC or the Company) acquired 80%
of the outstanding common stock of Solitra Oy (Solitra), a Finnish corporation
headquartered in Kempele, Finland. The transaction has been accounted for using
the purchase method of accounting. Solitra's balance sheet as of July 31, 1996
and results of operations for the one month ended July 31, 1996 were included in
the Company's consolidated financial statements as of and for the nine months
ended July 31, 1996.
The consolidated balance sheet as of July 31, 1996 included in the Company's
Form 10-Q for the quarterly period ended July 31, 1996 reflects the
acquisition of Solitra and is included herein. Accordingly, an unaudited pro
forma condensed consolidated balance sheet as of July 31, 1996 has not been
presented.
The following unaudited pro forma condensed consolidated statements of income
for the year ended October 31, 1995 and for the nine months ended July 31, 1996
give effect to the acquisition of 80% of the outstanding common stock of
Solitra. These unaudited pro forma condensed consolidated statements of
income have been prepared as if the transaction had occurred on November 1,
1994.
The unaudited pro forma condensed consolidated statements of income reflect
the conversion of the Solitra historical financial statements from Finnish
Accounting Standards to U.S. GAAP, as well as the appropriate preliminary
purchase accounting adjustments.
The unaudited pro forma statements of operations are not necessarily indicative
of the operating results to be expected in the future or as they might have been
for the periods presented had the acquisition been effective as of November 1,
1994. These unaudited pro forma financial statements and accompanying notes
should be read in conjunction with the Company's most recent Reports on Form 10-
K and Form 10-Q.
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1996 1995
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 159,719 $ 238,491
Accounts receivable 145,709 107,255
Inventories 126,559 86,559
Prepaid income taxes and other assets 16,288 15,442
---------- ----------
Total current assets 448,275 447,747
PROPERTY AND EQUIPMENT, net 118,246 78,686
OTHER ASSETS, principally goodwill 137,900 74,650
---------- ----------
$ 704,421 $ 601,083
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt $ 45 $ 410
Accounts payable 36,006 28,820
Accrued liabilities 76,424 59,731
---------- ----------
Total current liabilities 112,475 88,961
DEFERRED INCOME TAXES 1,190 1,256
LONG TERM DEBT, less current maturities above 8,777 --
---------- ----------
Total liabilities 122,442 90,217
STOCKHOLDERS' INVESTMENT
(64,891 and 62,737 shares outstanding) 581,979 510,866
---------- ----------
$ 704,421 $ 601,083
---------- ----------
---------- ----------
</TABLE>
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
FOR THE YEAR ENDED OCTOBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADC
----------------------- PRO FORMA CONSOLIDATED
ADC SOLITRA OY ADJUSTMENTS PRO FORMA
----------------------- ----------- ------------
<S> <C> <C> <C> <C>
NET SALES $586,222 $17,166 $603,388
COST OF PRODUCT SOLD 302,094 10,433 312,527
-------- -------- -------- --------
GROSS PROFIT 284,128 6,733 290,861
OPERATING EXPENSES 203,804 3,238 2,934 a 209,976
-------- -------- -------- --------
OPERATING INCOME 80,324 3,495 (2,934) 80,885
INTEREST AND OTHER INCOME (EXPENSE), NET 5,905 (1,449) (2,308) b 2,148
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES & MINORITY INTEREST 86,229 2,046 (5,242) 83,033
PROVISION FOR INCOME TAXES 31,042 797 (877) c 30,962
-------- -------- -------- --------
NET INCOME BEFORE MINORITY INTEREST 55,187 1,249 (4,365) 52,071
MINORITY INTEREST SHARE OF NET INCOME 250 d 250
-------- -------- -------- -------
NET INCOME $55,187 $1,249 ($4,615) $51,821
-------- -------- -------- --------
-------- -------- -------- --------
AVERAGE COMMON SHARES OUTSTANDING 58,547 58,547
-------- --------
-------- --------
EARNINGS PER SHARE $0.94 $0.89
-------- --------
-------- --------
</TABLE>
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
FOR THE NINE MONTHS ENDED JULY 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADC
----------------------- PRO FORMA CONSOLIDATED
ADC SOLITRA OY ADJUSTMENTS PRO FORMA
----------------------- ----------- ------------
<S> <C> <C> <C> <C>
NET SALES $572,957 $18,625 $591,582
COST OF PRODUCT SOLD 303,884 13,401 317,285
-------- -------- -------- --------
GROSS PROFIT 269,073 5,224 274,297
OPERATING EXPENSES 181,322 3,301 2,200 a 186,823
-------- -------- -------- --------
OPERATING INCOME 87,751 1,923 (2,200) 87,474
INTEREST AND OTHER INCOME (EXPENSE), NET 5,036 (849) (1,561) b 2,626
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES & MINORITY INTEREST 92,787 1,074 (3,761) 90,100
PROVISION FOR INCOME TAXES 33,403 293 (593) c 33,103
-------- -------- -------- --------
NET INCOME BEFORE MINORITY INTEREST 59,384 781 (3,168) 56,997
MINORITY INTEREST SHARE OF NET INCOME 157 d 157
-------- -------- -------- -------
NET INCOME $59,384 $781 ($3,325) $56,840
-------- -------- -------- --------
-------- -------- -------- --------
AVERAGE COMMON SHARES OUTSTANDING 63,866 63,866
-------- --------
-------- --------
EARNINGS PER SHARE $0.93 $0.89
-------- --------
-------- --------
</TABLE>
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
(1) The Company purchased 80% of the outstanding common stock of Solitra with a
commitment to acquire the remaining 20% of the common stock over a three
year period. The common stock was acquired for an initial cash payment of
approximately $41 million plus additional amounts which are payable subject
to the achievement of certain performance goals. The additional amounts
will be payable over a three year period beginning November 1, 1996. The
initial cash payment and related acquisition costs exceeded the preliminary
fair values assigned to the net assets acquired by approximately $44
million, which will be amortized over 15 years on a straight-line basis.
(2) The accompanying unaudited pro forma financial statements reflect the
following pro forma adjustments:
a) Amortize goodwill of approximately $44 million over an estimated life
of 15 years.
b) Recognize the effect of reduced interest income from cash paid and
reduced interest expense from the retirement of acquired debt.
c) Recognize the tax effect of the pro forma adjustments for
interest income/expense using the Company's marginal tax rate.
d) Recognize the 20% share of Solitra's net income for the minority
shareholders.
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Date: September 13, 1996 ADC TELECOMMUNICATIONS, INC.
By: /s/ Robert E. Switz
-------------------------------
Robert E. Switz
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
23.1 Consent of Independent Accountants
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we consent to the inclusion of our reports
dated March 14, 1995 and February 6, 1996 with respect to the financial
statements of Solitra Oy in the Form 8-K filed by ADC Telecommunications, Inc.
on or about September 14, 1996. We acknowledge that such financial statements
may be incorporated by reference into other filings made by ADC
Telecommunications, Inc.
Oulu, Finland
September 13, 1996
KPMG WIDERI OY AB
/s/ Pirkko Lauste
Pirkko Lauste
Authorized Public Accountant
