-----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, Be/wcpwgUNtkLVrIIecg+C4KcpznXHF5l9/+dr+dcKlNftyUYm1K7JpzFdptvlF2 fmWaUekaPoS9nqqLZHsBOw== 0000895345-03-000531.txt : 20030811 0000895345-03-000531.hdr.sgml : 20030811 20030811073451 ACCESSION NUMBER: 0000895345-03-000531 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030811 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMSCOPE INC CENTRAL INDEX KEY: 0001035884 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 364135495 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12929 FILM NUMBER: 03833154 BUSINESS ADDRESS: STREET 1: 1100 COMMSCOPE PLACE SE CITY: HICKORY STATE: NC ZIP: 28602 BUSINESS PHONE: 8283242200 MAIL ADDRESS: STREET 1: 1100 COMMSCOPE PLACE SE CITY: HICKORY STATE: NC ZIP: 28602 8-K 1 lh8k.txt =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------------------------------------- DATE OF REPORT: AUGUST 11, 2003 DATE OF EARLIEST EVENT REPORTED: AUGUST 11, 2003 COMMSCOPE, INC. (Exact name of registrant as specified in its charter) DELAWARE 1-12929 36-4135495 (State or other (Commission File Number) (I.R.S. Employer jurisdiction of Identification Number) incorporation) 1100 COMMSCOPE PLACE, SE P.O. BOX 339 HICKORY, NORTH CAROLINA 28602 (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (828) 324-2200 =============================================================================== Item 7. Financial Statements and Exhibits. ---------------------------------- (c) Exhibit Description ------- ----------- 99.1 CommScope, Inc. Press Release, dated August 11, 2003. Item 12. Results of Operations and Financial Condition. ---------------------------------------------- On August 11, 2003, CommScope, Inc. issued a press release relating to its financial results for the second quarter of 2003. The full text of the press release is attached hereto as Exhibit 99.1. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned hereunto duly authorized. Dated: August 11, 2003 COMMSCOPE, INC. By: /s/ Frank B. Wyatt, II ---------------------------------------- Frank B. Wyatt, II Senior Vice President, General Counsel and Secretary INDEX OF EXHIBITS Exhibit No. Description 99.1 CommScope, Inc. Press Release, dated August 11, 2003 EX-99 3 lhex-99.txt Exhibit 99 FOR IMMEDIATE RELEASE - --------------------- COMMSCOPE REPORTS SECOND QUARTER 2003 RESULTS - ------------------------------------------------------------------------------- HICKORY, NC -- (AUGUST 11, 2003) CommScope, Inc. (NYSE: CTV) today announced second quarter results for the period ended June 30, 2003. The Company reported sales of $141.4 million and a net loss of $51.4 million, or $0.87 per share, for the second quarter. The net loss included CommScope's after-tax impairment charges of $0.34 per share and after-tax equity in losses of OFS BrightWave, LLC of $0.57 per share related to CommScope's minority ownership interest in this venture. For the second quarter of 2002, the Company incurred a net loss of $42.5 million, or $0.69 per share, which included: a) after-tax charges of $12.9 million, or $0.21 per share, related to CommScope's write off of Adelphia Communications Corp. receivables; and b) after-tax charges of $34.9 million, or $0.56 per share, of equity in losses of OFS BrightWave. CommScope's sales for the second quarter of 2003 were $141.4 million, compared to $155.0 million in the year-ago quarter and $129.4 million in the first quarter of 2003. The sequential increase in sales was primarily due to increased sales to broadband service providers other than Comcast Corporation, stronger Wireless sales and improved LAN sales. The year-over-year sales decline was due to lower global Broadband/Video sales. Orders booked in the second quarter of 2003 were $138.4 million, compared to $157.2 million in the second quarter of 2002 and $135.1 million in the preceding quarter. Despite rising material costs, total Company gross margin for the quarter rose about 170 basis points sequentially to 20.4% primarily due to increased sales volumes. Gross margin in the second quarter of 2002 was 20.5%. Chairman and Chief Executive Officer Frank M. Drendel said, "In the midst of a challenging business environment with limited visibility, we are pleased to have increased sales and gross margin sequentially. Despite significant charges during the quarter, we generated $18.4 million in cash from operations." IMPAIRMENT CHARGES - ------------------ During the second quarter of 2003, the Company concluded that certain of its manufacturing assets had no future use in operations as a result of ongoing weak global business conditions. These assets, primarily used for broadband cable manufacturing, included uninstalled, underutilized and idle fixed assets in the United States and in CommScope's Brazilian facility. CommScope recognized pretax impairment charges for fixed assets of $31.7 million, or $0.34 per share, during the second quarter. These charges included: o $21.4 million for domestic broadband cable manufacturing assets o $ 8.7 million for Brazilian manufacturing assets o $ 1.6 million for other domestic manufacturing assets OFS BRIGHTWAVE RESULTS - ---------------------- For the second quarter of 2003, OFS BrightWave had revenues of $21.8 million, a negative gross profit of $41.8 million and a net loss of $292.6 million. The net loss included charges of $257.9 million primarily related to fixed asset impairment, restructuring and cost reduction efforts. CommScope recorded after-tax charges of $33.9 million, or $0.57 per share, in the second 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) previously announced a major global review of its optical fiber and fiber optic cable operations, which include OFS BrightWave. Furukawa also indicated that restructuring, special charges and job cuts might be necessary at certain manufacturing facilities during 2003 in order to reduce its cost structure. As part of the restructuring process, Furukawa reported that it plans to close the OFS BrightWave manufacturing facility in Brazil. "We believe that OFS BrightWave has lowered its cost structure as a result of the restructuring during the second quarter," said Drendel. "However, CommScope expects ongoing pricing pressure and weak demand industry wide for fiber optic cable products at least through 2003. As a result, we continue to expect OFS BrightWave to incur losses at least through 2003." OTHER SECOND QUARTER 2003 HIGHLIGHTS - ------------------------------------ o Broadband/Video sales of $108.5 million were down 13% from the second quarter of last year, but rose 7% sequentially. Sales to Comcast represented approximately 17% of total Company sales for the quarter and were down $6 million sequentially. The year-over-year decline primarily resulted from lower sales to Charter Communications, Inc., as well as lower international and fiber optic cable sales. Worldwide Broadband/Video orders for the quarter were $106.7 million. o International sales grew 8% sequentially to $27.2 million, but remained below year-ago levels of $33.9 million. International orders for the second quarter were $26.6 million. o LAN sales increased 7% year-over-year and sequentially to $24.6 million. LAN sales benefited from improved project business and increasing fiber optic cable and apparatus sales. LAN orders for the quarter were $23.0 million. o Wireless/Other Telecom sales were $8.3 million, up 63% sequentially and up 20% from the second quarter of 2002. CommScope has made steady progress communicating the Cell Reach(R) value proposition to customers and remains optimistic about long-term wireless opportunities. Wireless/Other Telecom orders were $8.7 million for the quarter. o Selling, general and administrative (SG&A) expense was $21.8 million in the second quarter of 2003, compared to $20.1 million in the preceding quarter. SG&A was $41.1 million in the second quarter of 2002 and included pretax charges of $20.5 million for the write off of Adelphia receivables. o Net cash provided by operating activities in the quarter was $18.4 million. Capital spending for the quarter was $0.7 million. The Company expects capital spending to be about $10 million for calendar year 2003. o CommScope ended the second quarter of 2003 with $140.3 million in cash and cash equivalents, up from $121.7 million at the end of the first quarter. OUTLOOK - ------- "While we see some signs of market stabilization, we remain cautious in our sales outlook and expect ongoing cost pressures, primarily related to the cost of polyethylene and other plastics," said Jearld L. Leonhardt, Executive Vice President and Chief Financial Officer. "As a result, we expect that CommScope's third quarter 2003 sales and gross margin will be slightly lower than to consistent with second quarter 2003 levels. "Regarding cash flow, we expect to continue generating free cash flow (cash flow from operations less capital expenditures) during the second half of 2003. During July we received a $13.5 million tax refund primarily related to the carryback of 2002 deductible losses from OFS BrightWave and the write off of Adelphia receivables." CONFERENCE CALL INFORMATION - --------------------------- CommScope will host a conference call to review second quarter results at 8:30 a.m. EDT today. 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 212-346-7488. 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/ajwz386030158gf12.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 21155711. The replay will be available through Friday, August 15. 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). CommScope is the world's largest manufacturer of broadband coaxial cable for Hybrid Fiber Coaxial (HFC) applications and a leading supplier of high-performance fiber optic and twisted pair cables for LAN, wireless and other communications applications. Through its relationship with OFS, CommScope has an ownership interest in one of the world's largest producers of optical fiber and cable and has access to a broad array of connectivity components as well as technologically advanced optical fibers, including the zero water peak optical fibers used in the production of the LightScope ZWPTM family of products. (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.) This press release contains forward-looking statements regarding sales, gross margin, cash flows, outlook and expectations for CommScope and OFS BrightWave 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 to differ materially include, but are not limited to, expected demand from Comcast Corporation and other major domestic MSOs; telecommunications industry capital spending; 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; 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. CONTACTS: PHIL ARMSTRONG BETSY LAMBERT, APR INVESTOR RELATIONS MEDIA RELATIONS (828) 323-4848 (828) 323-4873
COMMSCOPE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED -- IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 2003 2002 2003 2002 ------------- ------------- ------------- ------------- Net sales $ 141,422 $ 155,014 $ 270,790 $ 314,765 ------------- ------------- ------------- ------------- Operating costs and expenses: Cost of sales 112,623 123,291 217,874 247,617 Selling, general and administrative 21,811 41,060 41,881 62,293 Research and development 1,455 1,783 3,044 3,778 Impairment charges for fixed assets 31,728 - 31,728 - ------------- ------------- ------------- ------------- Total operating costs and expenses 167,617 166,134 294,527 313,688 ------------- ------------- ------------- ------------- Operating income (loss) (26,195) (11,120) (23,737) 1,077 Other income (expense), net (4) 746 205 359 Interest expense (2,183) (2,259) (4,341) (4,441) Interest income 715 566 1,332 1,006 ------------- ------------- ------------- ------------- Loss before income taxes and equity in losses of OFS BrightWave, LLC (27,667) (12,067) (26,541) (1,999) Provision for income tax benefit 10,237 4,465 9,820 740 ------------- ------------- ------------- ------------- Loss before equity in losses of OFS BrightWave, LLC (17,430) (7,602) (16,721) (1,259) Equity in losses of OFS BrightWave, LLC (33,945) (34,889) (37,727) (42,880) ------------- ------------- ------------- ------------- Net loss $ (51,375) $ (42,491) $ (54,448) $ (44,139) ============= ============= ============= ============= Net loss per share: Basic $ (0.87) $ (0.69) $ (0.92) $ (0.71) Assuming dilution $ (0.87) $ (0.69) $ (0.92) $ (0.71) Weighted average shares outstanding: Basic 59,220 61,758 59,220 61,737 Assuming dilution 59,220 61,758 59,220 61,737
COMMSCOPE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (Unaudited) June 30, December 31, 2003 2002 --------------- -------------- ASSETS Cash and cash equivalents $ 140,281 $ 120,102 Accounts receivable, less allowance for doubtful accounts of $14,605 and $11,811, respectively 71,471 64,787 Inventories 37,437 36,254 Prepaid expenses and other current assets 25,979 20,737 Deferred income taxes 15,464 16,579 --------------- -------------- Total current assets 290,632 258,459 Property, plant and equipment, net 189,690 229,515 Goodwill, net of accumulated amortization of $59,561 and $59,520, respectively 151,349 151,334 Other intangibles, net of accumulated amortization of $41,182 and $39,930, respectively 7,583 8,835 Deferred income taxes 33,282 3,572 Investment in and advances to OFS BrightWave, LLC 51,574 111,528 Other assets 8,860 9,425 --------------- -------------- Total Assets $ 732,970 $ 772,668 =============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 18,122 $ 18,483 Other accrued liabilities 29,088 26,005 --------------- ------------- Total current liabilities 47,210 44,488 Long-term debt 183,300 183,300 Other noncurrent liabilities 32,506 27,345 --------------- -------------- Total Liabilities 263,016 255,133 Commitments and contingencies Stockholders' Equity: Preferred stock, $.01 par value; Authorized shares: 20,000,000; Issued and outstanding shares: None at June 30, 2003 and December 31, 2002 -- -- Common stock, $.01 par value; Authorized shares: 300,000,000; Issued shares, including treasury stock: 61,762,667 at June 30, 2003 and December 31, 2002; Issued and outstanding shares: 59,219,567 at June 30, 2003 and December 31, 2002 618 618 Additional paid-in capital 383,541 383,541 Retained earnings 107,067 161,515 Accumulated other comprehensive loss (8,048) (14,915) Treasury stock, at cost: 2,543,100 shares at June 30, 2003 and December 31, 2002 (13,224) (13,224) --------------- -------------- Total Stockholders' Equity 469,954 517,535 --------------- -------------- Total Liabilities and Stockholders' Equity $ 732,970 $ 772,668 =============== ==============
COMMSCOPE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED -- IN THOUSANDS) Six Months Ended June 30, ---------------------------- 2003 2002 ------------- ------------ OPERATING ACTIVITIES: Net loss $ (54,448) $ (44,139) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 17,433 18,279 Equity in losses of OFS BrightWave, LLC, pretax 59,970 68,146 Impairment charges for fixed assets 31,728 -- Deferred income taxes (27,463) (20,688) Tax benefit from stock option exercises -- 128 Changes in assets and liabilities: (4,620) 23,566 -------------- ------------ Net cash provided by operating activities 22,600 45,292 INVESTING ACTIVITIES: Additions to property, plant and equipment (2,512) (5,439) Proceeds from repayment of advance to OFS BrightWave, LLC -- 12,646 Proceeds from disposal of fixed assets 75 164 -------------- ------------ Net cash (used in) provided by investing activities (2,437) 7,371 FINANCING ACTIVITIES: Principal payments on long-term debt -- (1,371) Long-term financing costs (1,195) (336) Proceeds from exercise of stock options -- 1,029 -------------- ------------ Net cash used in financing activities (1,195) (678) Effect of exchange rate changes on cash 1,211 1,058 -------------- ------------ Change in cash and cash equivalents 20,179 53,043 Cash and cash equivalents, beginning of period 120,102 61,929 -------------- ------------- Cash and cash equivalents, end of period $ 140,281 $ 114,972 ============= ============
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