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CommScope Reports Fourth Quarter 2003 Results

  HICKORY, N.C., Feb. 19 /PRNewswire-FirstCall/ -- CommScope, Inc.
(NYSE: CTV) today announced fourth quarter results for the period ended
December 31, 2003, which was prior to the acquisition of the Connectivity
Solutions business of Avaya Inc. The Company reported sales of $153.8 million
and a net loss of  $1.0 million, or $0.02 per share, for the fourth quarter.
The net loss included after-tax equity in losses of OFS BrightWave, LLC of
$0.08 per share related to CommScope's minority ownership interest in this
venture. 
For the fourth quarter of 2002, CommScope reported sales of $135.9 million
and a net loss of $3.5 million or $0.06 per share. This net loss reflected
after-tax equity in losses of OFS BrightWave of $0.08 per share. 
CommScope's sales for the fourth quarter rose 13% to $153.8 million,
compared to $135.9 million in the year-ago quarter and rose 3% sequentially
compared to $148.7 million in the third quarter of 2003.  Sales rose year-over-year in all major product groups.  Enterprise LAN sales increased more
than 50% from the depressed year-ago sales levels.  Wireless/Other Telecom
sales more than doubled year-over-year. 
Orders booked in the fourth quarter of 2003 were $149.4 million compared
to $132.8 million in the fourth quarter of 2002 and $152.2 million in the
preceding quarter. 
"We are pleased to have ended 2003 with stronger sales as we begin a new
chapter in the history of CommScope," said Chairman and Chief Executive
Officer Frank M. Drendel.  "We believe that we are strategically positioned
for exciting opportunities through SYSTIMAX(R) Solutions, our new enterprise
connectivity business, and through CommScope Carrier Solutions(TM), our new
business that provides cabinets, cables and apparatus to telecom service
providers." 
  Full Year Results 
CommScope reported sales of $573.3 million for 2003, compared to sales of
$598.5 million in 2002.  Total international sales remained relatively stable
year-over-year at $110.8 million.  For 2003, the Company incurred a net loss
of $54.3 million or $0.92 per share.  CommScope's 2003 results include: a)
after tax equity in losses of OFS BrightWave of $45.5 million or $0.77 per
share; and b) impairment charges primarily related to uninstalled,
underutilized and idle broadband cable manufacturing equipment of
$20.0 million after tax or $0.34 per share. 
For 2002, the company incurred a net loss of  $67.2 million or $1.10 per
share.  CommScope's 2002 results include: a) after tax equity in losses of OFS
BrightWave of $53.7 million or $0.88 per share; b) impairment charges
primarily related to underutilized and idle production equipment of $15.8
million after tax or $0.26 per share; and c) Adelphia bad debt charges of
$13.5 million after tax or $0.22 per share. 
  OFS BrightWave Results 
For the fourth quarter of 2003, OFS BrightWave had revenues of
$26.6 million, a negative gross profit of $30.8 million and a net loss of
$40.0 million. The net loss included charges of approximately $15.7 million
primarily related to ongoing restructuring activities, which was mainly
recorded in cost of sales.  For the fourth quarter of 2002, OFS BrightWave had
revenues of $27.2 million, a negative gross profit of $23.4 million and a net
loss of $38.9 million for the fourth quarter of 2002. 
CommScope recorded after-tax charges of $4.6 million, or $0.08 per share,
in the fourth quarter of 2003 for equity in losses of OFS BrightWave related
to the Company's minority investment in this venture. 
The Furukawa Electric Co. Ltd. (Tokyo: 5801) recently stated that it
believes it is in the last stages of restructuring the OFS business.  Among
other actions, OFS plans to move certain cable production from the Norcross
facility to the Carrollton facility in the next few months. While CommScope
believes that the OFS restructuring actions are appropriate, they could reduce
CommScope's overall ownership interest in the OFS BrightWave venture.
However, such restructuring activity does not affect CommScope's contractual
right to sell its ownership interest in OFS BrightWave to Furukawa in 2006 for
a cash payment equal to CommScope's original investment. 
  Cash Flow and Liquidity 
Net cash provided by operating activities was $36.5 million for the fourth
quarter, including receipt of $12.5 million related to the assignment of
CommScope's trade claims against Adelphia Communications Corporation and its
affiliates to a third party.  Capital expenditures were $1.2 million in the
quarter. 
For calendar year 2003, cash provided by operating activities was
$91.4 million and capital expenditures were $5.3 million.  CommScope ended the
year with $206.0 million in cash and cash equivalents, up 72% from
$120.1 million at the end of 2002. 
The Company currently expects capital expenditures to be approximately $30
million for calendar year 2004, including capital spending for our new
businesses. 


      CommScope Fourth Quarter 2003 Highlights
     * Broadband/Video sales rose 3% year-over-year and sequentially to
       $121.8 million for the fourth quarter primarily due to stronger
       international sales. International sales increased to $31.9 million in
       the quarter, up 20% sequentially and up 25% year-over-year. Total
       Broadband/Video orders were $116.8 million and international orders
       were $30.7 million in the quarter.
       * For calendar year 2003, worldwide Broadband/Video sales decreased 10%
       to $449.5 million, primarily due to lower sales to certain domestic
       broadband service providers and lower sales of fiber optic cable.
       Total international sales for the year were $110.8 million.
       * Sales to Comcast Corporation represented about 17% of total Company
       sales for the fourth quarter and approximately 18% for calendar year
       2003.
       * LAN sales rose 57% year-over-year to $22.2 million in the fourth
       quarter of 2003, compared to depressed levels in the year-ago quarter,
       but were down 8% sequentially from third quarter sales of $24.0
       million.  LAN orders for the quarter were $23.0 million.   For calendar
       year 2003, LAN sales rose 16% to $93.8 million, primarily due to higher
       sales of fiber optic cable.
       * Wireless/Other Telecom sales were $9.8 million, up 151% compared to the
       year-ago quarter and up 44% sequentially.  CommScope continues to make
       progress communicating the Cell Reach(R) value proposition to customers
       and remains optimistic about long-term wireless opportunities.
       Wireless/Other Telecom orders were $9.6 million for the quarter.  For
       calendar year 2003, Wireless/Other Telecom sales rose 44% to $30.0
       million.
       * Selling, general and administrative (SG&A) expense was $23.0 million in
       the fourth quarter of 2003, compared to $21.9 million in year-ago
       quarter.  SG&A expense in the fourth quarter of 2003 included
       approximately $0.6 million related to the then pending acquisition of
       the Connectivity Solutions business.
       * Gross margin for the fourth quarter of 2003 was 20.2%, compared to
       20.6% in the preceding quarter and 19.4% in the year-ago quarter.
       Gross margin improved year-over-year primarily due to higher sales
       volume somewhat offset by lower sales prices and increased raw material
       costs.
      Acquisition of Connectivity Solutions business (ACS)


Effective January 31, 2004, CommScope completed the acquisition of
substantially all of the assets of the Connectivity Solutions business from
Avaya, Inc., except for certain international operations that are expected to
be completed later this year.  The total purchase price consisted of $250
million in cash, subject to post-closing adjustments, and approximately 1.8
million shares of CommScope common stock.  CommScope assumed certain current
liabilities of the Connectivity Solutions business and up to $65 million of
other specified liabilities, primarily related to employee benefits. 
The cash portion of the purchase price consisted of $150 million from
CommScope's existing cash balances and $100 million from borrowing under a new
5-year $185 million senior secured credit facility.  The new credit facility,
which replaces CommScope's previous credit facility, is comprised of a
$75 million term loan and a $110 million revolving credit facility. 
Based on unaudited data and prior to any expected pro forma adjustments to
reflect the acquisition, Connectivity Solutions operating results under Avaya
for the twelve months ended September 30, 2003, included: 


     * Sales of $542 million,
     * Gross margin of approximately 26.4% of sales,
     * Selling, general and administrative expense of approximately 19.5% of
       sales,
     * Research and development expense of approximately 5.4% of sales, and
     * Depreciation and amortization expense of $30 million.


  These results include approximately $48 million of corporate overhead
allocated by Avaya to the Connectivity Solutions business, primarily in SG&A;
they do not reflect CommScope's expected corporate overhead allocations,
incremental one-time start-up and transition costs, and other potential pro
forma adjustments.  The Company also expects significant purchase accounting
adjustments and increased financing costs.  CommScope intends to file an
amended Form 8-K by April 15, 2004, containing pro forma financial information
reflecting the effect of the acquisition. 
  CommScope First Quarter 2004 Outlook 
For the first quarter of 2004, CommScope expects total sales in the $225-$240 million range. "Our first-quarter forecast reflects modest year-over-year
growth for our historical business and two months of revenue, or approximately
$95-$100 million, from our recent acquisition of the Connectivity Solutions
business," said CommScope Executive Vice President and Chief Financial Officer
Jearld Leonhardt. 
"Although we expect sales growth in the first quarter, we anticipate lower
gross margins as a result of higher material costs and increasing pricing
pressure for certain broadband products," Leonhardt added.  "In addition,
prices for copper and polymers have increased substantially over the past 12
months.  As a result, CommScope and SYSTIMAX Solutions increased prices for
certain enterprise products by 3 percent to 8 percent during the first quarter
of 2004.  CommScope's enterprise price increase was effective February 10th
while the SYSTIMAX Solutions price increase will be effective March 1st.  An
additional price increase of up to 10% for fluoropolymer-based products will
be effective mid March due to the significant increase in the cost of
fluoropolymers. 
"With regards to transition and other costs related to our recent
acquisition, we expect first-year costs of approximately $25 million primarily
for information technology, transition services and other acquisition-related
costs.  We expect to incur most of the transition costs during the first and
second quarters of 2004," Leonhardt stated.  "At the same time, we believe
that we can provide corporate services at a lower cost than the historical
Avaya corporate allocation, which is expected to improve operating results by
approximately $20 million per year." 
  Conference Call Information 
CommScope will hold a conference call/webcast today at 5:00 p.m. ET to
discuss its fourth quarter 2003 financial results.  You are invited to listen
to the conference call or live webcast with Frank Drendel, Chairman and CEO;
Brian Garrett, President and COO; and Jearld Leonhardt, Executive Vice
President and CFO. 
To participate in the conference call, domestic and international callers
should dial 706-679-4510.  Please plan to dial in 10-15 minutes before the
start of the call to facilitate a timely connection.  The live, listen-only
audio of the conference call will also be available via the Internet
at: http://www.firstcallevents.com/service/ajwz398191823gf12.html 
If you are unable to participate on the call and would like to hear a
replay, you may dial 800-633-8284.  International callers should dial
402-977-9140 for the replay.  The replay ID is 21183524. The replay will be
available through Tuesday, February 24.  A webcast replay will also be
archived for a limited period of time following the conference call via the
Internet on CommScope's web site ( http://www.commscope.com ). 
  About CommScope 
CommScope (NYSE: CTV - http://www.commscope.com) is a world leader in the
design and manufacture of 'last mile' cable and connectivity solutions for
communication networks.  We are the global leader in structured cabling
systems for business enterprise applications and the world's largest
manufacturer of coaxial cable for Hybrid Fiber Coaxial (HFC) applications.
Backed by strong research and development, CommScope combines technical
expertise and proprietary technology with global manufacturing capability to
provide customers with high-performance wired or wireless cabling solutions
from the central office to the home. 
  (Minimum requirements to listen to the broadcast and replay on the
Internet: The Windows Media Player software, downloadable free
from http://www.microsoft.com/windows/windowsmedia/EN/default.asp , and at
least a 28.8Kbps connection to the Internet. If you experience problems
listening to the broadcast, send an email to webcastsupport@tfprn.com.) 
  Forward-Looking Statements 
This press release contains forward-looking statements regarding among
other things, the business position, plans, transition, outlook, margins,
revenues, earnings, accretion, synergies and other financial items, and
integration and restructuring plans related to CommScope's acquisition of
substantially all of the assets and certain liabilities of ACS that are based
on information currently available to management, management's beliefs and a
number of assumptions concerning future events.  Forward-looking statements
are not a guarantee of performance and are subject to a number of
uncertainties and other factors that could cause the actual results to differ
materially from those currently expected.  The potential risks and
uncertainties that could cause actual results of CommScope to differ
materially include, but are not limited to, the ability of the company to
complete the acquisition of certain international operations; the challenges
of transition, integration and restructuring associated with the acquisition;
purchase accounting adjustments; the challenges of achieving anticipated
synergies; the ability to retain qualified employees and existing business
alliances; maintaining satisfactory relationships with represented employees;
customer demand for ACS products, applications and service; any statements of
belief and any statements of assumptions underlying any of the foregoing;
expected demand from Comcast Corporation and other major domestic MSOs;
telecommunications industry capital spending; ability to maintain successful
relationships with distributors; industry consolidation; ability of our
customers to secure adequate financing to fund their infrastructure projects
or to pay us; product demand and industry excess capacity; changes or
fluctuations in global business conditions; financial performance and limited
control of OFS BrightWave; competitive pricing and acceptance of our products;
changes in cost and availability of key raw materials, especially those that
are available only from limited sources; ability to recover higher material
and transportation costs from our customers through price increases; possible
future impairment charges for goodwill and other long-lived assets; industry
competition and the ability to retain customers; possible disruption due to
customer or supplier bankruptcy, reorganization or restructuring; our ability
to obtain financing and capital on commercially reasonable terms; covenant
restrictions and our ability to comply with covenants in our debt agreements;
successful operation of bimetals manufacturing and other vertical integration
activities; successful expansion and related operation of our facilities;
achievement of sales, growth and earnings goals; ability to achieve reductions
in costs; ability to retain and attract key personnel; developments in
technology; intellectual property protection; product performance issues and
associated warranties; adequacy and availability of insurance; regulatory
changes affecting us or the industries we serve; acquisition activities and
the ability to integrate acquisitions; environmental issues; terrorist
activity or armed conflict; political instability; major health concerns and
other factors. For a more complete description of factors that could cause
such a difference, please see CommScope's filings with the Securities and
Exchange Commission.  In providing forward-looking statements, the Company
does not intend, and is not undertaking any duty or obligation, to update
these statements as a result of new information, future events or otherwise. 


                                   CommScope, Inc.
               Condensed Consolidated Statements of Operations
            (Unaudited -- In thousands, except per share amounts)
                                       Three Months Ended   Twelve Months Ended
                                         December 31,         December 31,
                                       2003       2002      2003       2002
      Net sales                        $153,747   $135,883  $573,260   $598,467
      Operating costs and expenses:
      Cost of sales                   122,664    109,552   458,620    477,912
      Selling, general and
       administrative                  22,970     21,915    85,702    104,716
      Research and development          1,634      1,306     6,164      6,153
      Impairment charges for fixed
       assets                             -          -      31,728     25,096
          Total operating costs and
           expenses                   147,268    132,773   582,214    613,877
      Operating income (loss)             6,479      3,110    (8,954)   (15,410)
    Other income, net                     590        110       799        861
    Interest expense                   (2,048)    (2,354)   (8,596)    (9,214)
    Interest income                       781        773     2,762      2,475
      Income (loss) before income
     taxes and equity in losses of
     OFS BrightWave, LLC                5,802      1,639   (13,989)   (21,288)
    Provision for income tax
     (expense) benefit                 (2,148)      (607)    5,174      7,858
      Income (loss) before equity in
     losses of OFS BrightWave, LLC      3,654      1,032    (8,815)   (13,430)
    Equity in losses of OFS
     BrightWave, LLC                   (4,616)    (4,483)  (45,473)   (53,722)
      Net income (loss)                   $(962)   $(3,451) $(54,288)  $(67,152)
      Net income (loss) per share:
      Basic                            $(0.02)    $(0.06)   $(0.92)    $(1.10)
      Assuming dilution                $(0.02)    $(0.06)   $(0.92)    $(1.10)
      Weighted average shares
     outstanding:
      Basic                            59,265     59,468    59,231     61,171
      Assuming dilution                59,265     59,468    59,231     61,171
                                   CommScope, Inc.
                    Condensed Consolidated Balance Sheets
                     (In thousands, except share amounts)
                                               December 31,        December 31,
                                                2003                  2002
                             Assets
      Cash and cash equivalents                 $206,038              $120,102
    Accounts receivable, less allowance
     for doubtful accounts of
     $12,145 and $11,811, respectively          69,461                64,787
    Inventories                                 32,723                36,254
    Prepaid expenses and other current
     assets                                      8,389                20,737
    Deferred income taxes                       14,061                16,579
          Total current assets                 330,672               258,459
      Property, plant and equipment, net         176,290               229,515
    Goodwill, net of accumulated
     amortization of $59,591
     and $59,520, respectively                 151,368               151,334
    Other intangibles, net of accumulated
     amortization of $42,435 and
     $39,930, respectively                       6,330                 8,835
    Deferred income taxes                       35,200                 3,572
    Investment in and advances to OFS
     BrightWave, LLC                            39,189               111,528
    Other assets                                17,004                 9,425
            Total Assets                        $756,053              $772,668
               Liabilities and Stockholders' Equity
      Accounts payable                           $14,659               $18,483
    Other accrued liabilities                   35,377                26,005
          Total current liabilities             50,036                44,488
      Long-term debt                             183,300               183,300
    Other noncurrent liabilities                50,739                27,345
          Total Liabilities                    284,075               255,133
      Commitments and contingencies
      Stockholders' Equity:
      Preferred stock, $.01 par value;
       Authorized shares:  20,000,000;
       Issued and outstanding shares:
       None at December 31, 2003
       and 2002                                      -                     -
      Common stock, $.01 par value;
       Authorized shares:  300,000,000;
       Issued shares, including treasury
       stock: 61,861,376 at December 31,
       2003 and 61,762,667 at December 31,
       2002; Issued and outstanding shares:
       59,318,276 at December 31, 2003 and
       59,219,567 at December 31, 2002             619                   618
      Additional paid-in capital               384,889               383,541
      Retained earnings                        107,227               161,515
      Accumulated other comprehensive loss      (7,533)              (14,915)
      Treasury stock, at cost: 2,543,100
       shares at December 31, 2003 and 2002    (13,224)              (13,224)
          Total Stockholders' Equity           471,978               517,535
            Total Liabilities and
           Stockholders' Equity               $756,053              $772,668
                                     CommScope, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                  (In thousands)
                                                             Year Ended
                                                           December 31,
                                                     2003               2002
      Operating Activities:
    Net loss                                      $(54,288)          $(67,152)
    Adjustments to reconcile net loss to
     net cash provided by operating activities:
      Depreciation and amortization                 34,162             36,916
      Equity in losses of OFS
       BrightWave, LLC, pretax                      72,346             85,445
      Impairment charges for fixed
       assets                                       31,728             25,096
      Proceeds from assignment of
       receivables                                  12,524                  -
      Deferred income taxes                        (27,063)           (23,973)
      Tax benefit from stock option
       exercises                                       180                128
      Changes in assets and liabilities:            21,855             47,365
    Net cash provided by operating
     activities                                     91,444            103,825
      Investing Activities:
      Additions to property, plant and
       equipment                                    (5,322)           (22,616)
      Acquisition costs related to
       pending investment                           (2,141)                 -
      Proceeds from disposal of fixed
       assets                                          763                413
    Net cash used in investing
     activities                                     (6,700)           (22,203)
      Financing Activities:
      Principal payments on long-term
       debt                                              -            (12,476)
      Cost of treasury stock repurchase                  -            (13,224)
      Long-term financing costs                     (1,901)              (416)
      Proceeds from exercise of stock
       options                                       1,169              1,029
    Net cash used in financing
     activities                                       (732)           (25,087)
      Effect of exchange rate changes on
     cash                                            1,924              1,638
      Change in cash and cash equivalents             85,936             58,173
    Cash and cash equivalents, beginning
     of year                                       120,102             61,929


Cash and cash equivalents, end of year        $206,038           $120,102
  

SOURCE  CommScope, Inc. 
-0-                             02/19/2004 
/CONTACT:  Investor Relations, Phil Armstrong, +1-828-323-4848, or Media
Relations, Betsy Lambert, APR, +1-828-323-4873, both of CommScope, Inc./ 


    /Audio:  http://www.firstcallevents.com/service/ajwz398191823gf12.html/
    /Web site:  http://www.commscope.com/


(CTV AV) 
CO:  CommScope, Inc.
ST:  North Carolina
IN:  TLS CPR
SU:  ERN CCA MAV
-0- Feb/19/2004 21:01 GMT