-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U9fcQXG0hwAr97ag8RLf4GmBGYooQ0yEByLTt71l1Skgo4x/iIM/QZN7UpiLz5+X rCfLVhhV5+IFIFwwCTldsQ== 0000912057-96-020312.txt : 19960916 0000912057-96-020312.hdr.sgml : 19960916 ACCESSION NUMBER: 0000912057-96-020312 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960701 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960913 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADC TELECOMMUNICATIONS INC CENTRAL INDEX KEY: 0000061478 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 410743912 STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-01424 FILM NUMBER: 96630092 BUSINESS ADDRESS: STREET 1: 4900 W 78TH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55343 BUSINESS PHONE: 6129388080 MAIL ADDRESS: STREET 1: 4900 W 78TH ST CITY: MINNEAPOLIS STATE: MN ZIP: 55435 FORMER COMPANY: FORMER CONFORMED NAME: MAGNETIC CONTROLS CO DATE OF NAME CHANGE: 19850605 8-K/A 1 FORM 8-K/A 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) 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 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 [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 Translation of financial statements originally issued in Finnish SOLITRA OY FINANCIAL STATEMENTS 31.12.1994 (TRANSLATED) 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 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). 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. Translation of financial statements originally issued in Finnish SOLITRA OY INCOME STATEMENT
CURRENCY CURRENCY FIM FIM 1.1.94-31.12.94 1.1.93-31.12.93 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
Translation of financial statements originally issued in Finnish SOLITRA OY BALANCE SHEET
CURRENCY CURRENCY FIM FIM 12/31/94 12/31/93 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
Translation of financial statements originally issued in Finnish SOLITRA OY BALANCE SHEET GROUP
CURRENCY CURRENCY FIM FIM 12/31/94 31.12.1993 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
Translation of financial statements originally issued in Finnish SOLITRA OY FUNDS STATEMENT
CURRENCY CURRENCY FIM FIM 1994 1993 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
Translation of financial statements originally issued in Finnish SOLITRA OY FINANCIAL STATEMENTS 31.12.1994
1994 1993 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
The book value for taxation purposes at 31.12.1993 was equal to the book value after 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:
1994 1993 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
The administration building and the new factory have the above acquisition values. The tax values are not yet available. FIXED ASSETS SPECIFICATIONS INTANGIBLE ASSETS 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
Translation of financial statements originally issued in Finnish
1994 1993 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
Translation of financial statements originally issued in Finnish
1994 1993 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
Translation of financial statements originally issued in Finnish
1994 1993 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
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 [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 Translation of financial statements originally issued in Finnish SOLITRA OY FINANCIAL STATEMENTS 31.12.1995 (TRANSLATION) 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). 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. 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 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 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 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 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 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 Translation of financial statements originally issued in Finnish SOLITRA OY FUNDS STATEMENT
CURRENCY CURRENCY FIM FIM GROUP PARENT CO 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
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.
GROUP PARENT COMPANY 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
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.
GROUP PARENT COMPANY 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
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 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
Translation of financial statements originally issued in Finnish
GROUP PARENT COMPANY 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
Translation of financial statements originally issued in Finnish
GROUP PARENT COMPANY 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
Translation of financial statements originally issued in Finnish
GROUP PARENT COMPANY 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 Companies Group Group Parent co. Nominal value Book value Ownership Voice Ownership Parent Co. Parent co. % % % 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 GROUP PARENT COMPANY 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
Translation of financial statements originally issued in Finnish 6. CHANGES IN SHAREHOLDERS' EQUITY 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
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. Translation of financial statements originally issued in Finnish 8. LIABILITIES 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
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
GROUP PARENT COMPANY 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
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 SOLITRA OY FINANCIAL STATEMENTS AS OF AND FOR THE SEVEN MONTH PERIOD ENDED JULY 31, 1996 UNAUDITED 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 ----------- ----------- 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 ------------- ------------- SOLITRA OY US GAAP RECONCILIATION SUMMARY RECONCILIATION OF EQUITY
1000 FIM 1000 FIM 1000 FIM 31.12.1994 31.12.1995 31.7.1996 ----------- ---------- --------- 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 ----------- --------- -------- ----------- --------- --------
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. ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED (IN THOUSANDS) ASSETS
JULY 31, OCTOBER 31, 1996 1995 ---------- ---------- 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 ---------- ---------- ---------- ----------
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)
HISTORICAL ADC ----------------------- PRO FORMA CONSOLIDATED ADC SOLITRA OY ADJUSTMENTS PRO FORMA ----------------------- ----------- ------------ 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 -------- -------- -------- --------
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)
HISTORICAL ADC ----------------------- PRO FORMA CONSOLIDATED ADC SOLITRA OY ADJUSTMENTS PRO FORMA ----------------------- ----------- ------------ 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 -------- -------- -------- --------
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. 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 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 23.1 Consent of Independent Accountants EX-23.1 2 CONSENT OF IND. PUBLIC ACCOUNTANTS 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 -----END PRIVACY-ENHANCED MESSAGE-----