On Dec. 12, telecommunications equipment maker ADC Telecommunications (NASDAQ:ADCT) released fourth-quarter 2006 earnings for the period ending Oct. 31, 2006.

  • The straight-up earnings results sure look great, but remember that they include a one-time tax benefit of $44.7 million. The more objective free cash flow metric is down from last year.
  • By pushing its own bill payments into the future faster than it lets its customers do the same, ADC overcomes rising inventory.
  • The CAPS community doesn't have much love for ADC, giving the stock a one-star rating. Agree? Disagree? Let us know and make us all smarter.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2006

Q4 2005

Change

Sales

$307.4

$294.0

4.6%

Net Profit from continuing ops.

$47.2

$10.3

358.3%

EPS from continuing ops.

$0.38

$0.09

322.2%

Diluted Shares

131.5

117.7

11.7%



Get back to basics with a look at the income statement.

Margin Checkup

Q4 2006

Q4 2005

Change*

Gross Margin

30.22%

37.24%

(7.02)

Operating Margin

(0.23%)

4.29%

(4.52)

Net Margin

15.35%

3.50%

11.85

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q4 2006

Q4 2005

Change

Cash + ST Invest.

$537.7

$443.7

21.2%

Accounts Rec.

$171.0

$180.6

(5.3%)

Inventory

$165.5

$140.4

17.9%



Liabilities

Q4 2006

Q4 2005

Change

Accounts Payable

$88.4

$69.6

27.0%

Long-Term Debt

$400.0

$400.0

0.0%

Learn the ways of the balance sheet.

Cash Flow Highlights

Q4 2006

Q4 2005

Change

Cash From Continuing Ops.

$35.5

$50.4

(29.6%)

Capital Expenditures

$10.2

$10.7

(4.7%)

Free Cash Flow

$25.73

$39.7

(35.3%)



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Related Companies:

  • Corning (NYSE:GLW)
  • Arris Group (NASDAQ:ARRS)
  • Inter-Tel (NASDAQ:INTL)

Related Foolishness:

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund had no position in any company mentioned. Fool rules are here.