-----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, JK0N31/B1E6/os0QOWuNTyBFZJEwWjytVcXBgD1FTj4C+H/EzitJvcM+bfsApyXd pRdD4F3nEZ7VTC/+TOCpcw== 0000895345-05-000903.txt : 20050901 0000895345-05-000903.hdr.sgml : 20050901 20050901161540 ACCESSION NUMBER: 0000895345-05-000903 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050831 ITEM INFORMATION: Cost Associated with Exit or Disposal Activities ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050901 DATE AS OF CHANGE: 20050901 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: 051064978 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 lh8k2.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: SEPTEMBER 1, 2005 DATE OF EARLIEST EVENT REPORTED: AUGUST 31, 2005 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 incorporation) Number) 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 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ============================================================================== This Current Report on Form 8-K includes forward-looking statements that are based on information currently available to management and management's beliefs, as well as on a number of assumptions concerning future events. These forward-looking statements are identified, including without limitation, by their use of such terms and phrases as "intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projects," "projected," "projections," "plans," "anticipates," "anticipated," "should," "think," "thinks," "designed to," "foreseeable future," "believe," "believes" and "scheduled" and similar expressions. Forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, which could cause the actual results to differ materially from those currently expected. For a more detailed description of the factors that could cause such a difference, please see CommScope, Inc.'s ("CommScope's") filings with the Securities and Exchange Commission. In providing forward-looking statements, CommScope does not intend, and is not undertaking any obligation or duty, to update these statements as a result of new information, future events or otherwise. Item 2.05. Costs Associated with Exit or Disposal Activities. ------------------------------------------------- On August 31, 2005, the Board of Directors of CommScope adopted global manufacturing initiatives (the "Initiatives"). The purpose of the Initiatives is to reduce costs by improving manufacturing efficiency and to enhance CommScope's long-term competitive position. Implementation of the Initiatives includes improving the efficiency of certain manufacturing processes, shifting production among CommScope's global facilities and the expected closing of a manufacturing facility in Scottsboro, Alabama in late 2006. Implementation of the Initiatives is expected to be completed by early 2007. The principal restructuring costs expected to be incurred in connection with the implementation of the Initiatives are for equipment relocation, employee-related expenses and impairment charges related to equipment that will no longer be needed. The pretax cost of the equipment relocation is expected to be $6 to $8 million. The pretax cost of the employee-related costs (including severance pay and related fringe benefits) is expected to be $10 to $12 million. The pretax cost of the impairment charges related to equipment that may no longer be needed is expected to be $22 to $25 million. The total pretax restructuring charges expected as a result of the Initiatives are projected to be $38 to $45 million. CommScope expects that most of the equipment impairment charges will be recognized in the third quarter of 2005 and that most of the other expenses will be recognized between October 2005 and June 2006. The incremental pretax cash cost of the Initiatives is projected to be approximately $16 to $20 million, with the cash outlays expected to continue through the middle of 2007. CommScope does not expect a significant overall increase in capital spending, but does anticipate additional capital spending of approximately $10 to $12 million during the next 18 months to support the implementation of the Initiatives. Annualized pretax savings resulting from the Initiatives are projected to be $35 to $40 million once the Initiatives are fully in place. Approximately $15 to $20 million of these pretax savings are expected during 2006, primarily in the second half of the year. The timing of implementation of the Initiatives will be dependent on issues encountered during implementation and future business conditions, including sales volumes and seasonality. The actual costs and benefits may differ from the projected estimates as a result of a number of uncertainties including business conditions, sales volumes, pricing, seasonality and the disposition of excess real estate assets, among others. Item 7.01. Regulation FD Disclosure. ------------------------ On September 1, 2005, CommScope issued a press release announcing the adoption of the Initiatives. A copy of this press release is attached hereto as Exhibit 99.1 pursuant to Item 7.01 of this Current Report on Form 8-K. Item 9.01. Financial Statements and Exhibits. --------------------------------- (c) Exhibit Description ------- ----------- 99.1 CommScope, Inc. press release announcing the adoption of global manufacturing initiatives, dated September 1, 2005. SIGNATURES 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. Dated: September 1, 2005 COMMSCOPE, INC. By: /s/ Jearld L. Leonhardt ---------------------------- Jearld L. Leonhardt Executive Vice President and Chief Financial Officer Index of Exhibits Exhibit No. Description - ----------- ----------- 99.1 CommScope, Inc. press release announcing the adoption of global manufacturing initiatives, dated September 1, 2005. EX-99.1 2 exhibit99_1.txt Exhibit 99.1 FOR IMMEDIATE RELEASE - --------------------- COMMSCOPE ANNOUNCES MANUFACTURING CHANGES o GLOBAL INITIATIVES EXPECTED TO REDUCE COSTS AND IMPROVE FACTORY UTILIZATION o EXPECT ANNUALIZED PRETAX SAVINGS OF $35-$40 MILLION IN 2007 - ------------------------------------------------------------------------------- Hickory, NC -- (September 1, 2005) CommScope, Inc. (NYSE: CTV), a world leader in cable and connectivity solutions, today announced that it intends to implement manufacturing initiatives over the next 18 months to reduce costs and enhance the Company's long-term competitive position. The Company plans to redistribute production among its global facilities and improve the efficiency of certain manufacturing processes. As a part of these initiatives, the Company plans to close its Scottsboro, Alabama plant in late 2006. CommScope expects annualized pretax savings of approximately $35-$40 million once the initiatives are completed in early 2007. Approximately $15-$20 million of these pretax savings are expected during 2006, primarily in the second half of the year. CommScope also announced that it is considering strategic options for its telephone central office business. "These global initiatives are the latest step in our ongoing drive to improve our competitive position and enhance our long-term financial performance," said CommScope Chairman and Chief Executive Officer Frank M. Drendel. "We believe these initiatives will help us better utilize our facilities and significantly reduce costs. However, we deeply regret the need to close our Scottsboro plant and appreciate the contributions made by the employees at that facility during the past 10 years. "As we execute this manufacturing strategy we intend to make sure that our customers continue to receive the outstanding service that they have come to expect from CommScope," Drendel added. The Company expects to incur total pretax restructuring costs of $38-$45 million to implement the strategy. Of this amount, cash costs are estimated to be $16-$20 million. The principal estimated costs related to these initiatives are: o Impairment charges for equipment of $22-$25 million. CommScope does not expect significant impairment charges related to the potential sale of real estate. o Employee-related expenses of $10-$12 million o Equipment relocation expenses of $6-$8 million The Company expects that most of the equipment impairment charges will be recognized in the third quarter of 2005 and that most of the other restructuring expenses will be recognized between October 2005 and June 2006. The Company does not expect a significant overall increase in capital spending, but does anticipate additional capital spending of approximately $10-$12 million during the next 18 months to support the implementation of these initiatives. The actual costs and benefits, as well as the timing of implementation of these initiatives, will be dependent on issues encountered during implementation, future business conditions, sales volumes and seasonality, among other factors. SCOTTSBORO, ALABAMA FACILITY - ---------------------------- Broadband cable production in Scottsboro, AL will be consolidated into CommScope's one million-sq. ft. Catawba, NC, facility and into international facilities. The 150,000 sq. ft. Scottsboro facility, which employs approximately 185 people, will close in late 2006. "The decision to close the broadband facility in Scottsboro is a difficult one for CommScope and we understand how it affects employees and the community of Scottsboro, Alabama." Drendel stated, "It will bring to an end more than a decade of solid operations performance. This action is unfortunate, but necessary to improve overall factory efficiency and reduce cost." CSMI OMAHA INITIATIVES - ---------------------- Other manufacturing initiatives will involve CommScope's wholly owned subsidiary, Connectivity Solutions Manufacturing, Inc. (CSMI), located in Omaha, NE. Acquired in January 2004 when CommScope purchased the Connectivity Solutions business of Avaya Inc., the two million-sq. ft. Omaha facility currently manufactures SYSTIMAX(R) Solutions structured cabling and components for enterprise applications; ExchangeMAX(R) cable and apparatus primarily for telephone central office applications; and Integrated Cabinet Solutions (ICS), which are secure environmental enclosures for telecommunications carriers. In the future, SYSTIMAX enterprise cable production will be sourced from lower-cost CommScope facilities, including the Claremont, NC plant and international facilities. The remaining production of SYSTIMAX, ExchangeMAX and ICS will be consolidated into one existing building at the Omaha facility. "There are approximately 185 jobs related to the production of enterprise cable at CSMI Omaha," said Richard Dall'Asen, President of CSMI. "Although certain employees will be able to utilize their seniority rights to transfer to other areas within CSMI, the total number of available jobs will depend upon expected demand for ICS and apparatus products, overall business conditions, as well as our ability to reduce costs. "We have already made significant progress over the last 12 months during an initial restructuring, especially in support of the ICS business," noted Dall'Asen. "We have substantially completed the original October 2004 initiatives and intend to build upon these changes to continue improving our cost structure. These additional actions are necessary for us to become more globally competitive." Additional real estate at the Omaha site will become unoccupied as a result of the consolidation and is available for sale or lease. As announced in June 2005 as part of the previous initiatives, CSMI entered into an agreement to sell a vacant 410,000-sq. ft. warehouse and approximately 42 acres at the CSMI manufacturing facility in Omaha. The sales price for the building and land is $10,500,000. Closing is expected in 2006 and is subject to customary closing conditions. TELEPHONE CENTRAL OFFICE BUSINESS - --------------------------------- The Company has engaged CIBC World Markets Corp. to advise on strategic options for its telephone central office business. Telephone central office products represent most of the sales of the ExchangeMAX business, which was acquired as part of the purchase of ACS in January 2004. Total ExchangeMAX sales, which are part of the Company's Carrier segment, were approximately $47 million for calendar year 2004. CONFERENCE CALL INFORMATION - --------------------------- The Company will host a conference call at 9:00 a.m. ET on September 2, 2005 to discuss the global manufacturing initiatives. 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 +1-212-896-6009. Please plan to dial in 10-15 minutes before the start of the call to facilitate a timely connection. Presentation slides and a listen-only audio of the conference call will also be available via the Presentations page on CommScope's website at http://phx.corporate-ir.net/phoenix.zhtml?c=101146&p=irol-presentations. - ----------------------------------------------------------------------- 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 +1-402-977-9140 for the replay. The replay ID is 21259666. The replay will be available through Monday, September 12. 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. 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. Through our SYSTIMAX(R) SolutionsTM and Uniprise SolutionsTM brands we are the global leader in structured cabling systems for business enterprise applications. We are also the world's largest manufacturer of coaxial cable for Hybrid Fiber Coaxial 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. Forward-Looking Statements - -------------------------- This press release contains forward-looking statements regarding, among other things, the announced global manufacturing initiatives, expected costs and savings related to the initiatives, the business position, plans, outlook, margins, revenues, earnings, synergies and other financial items relating to CommScope, and integration and restructuring plans related to CommScope's acquisition of substantially all of the assets and certain liabilities of Connectivity Solutions ("the acquisition") that are based on information currently available to management, management's beliefs and a number of assumptions concerning future events. These forward-looking statements are identified, including, without limitation, by their use of such terms and phrases as "intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projects," "projected," "projections," "plans," "anticipates," "anticipated," "should," "designed to," "foreseeable future," "believe," "believes," "think," "thinks" and "scheduled" and similar expressions. 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 challenges of achieving anticipated synergies related to the global manufacturing initiatives; delays or challenges related to removing, transporting or reinstalling equipment; the challenges of integration and restructuring associated with the acquisition of Connectivity Solutions or any future acquisition or restructuring, including cost reduction plans at CSMI's Omaha, Nebraska facility or other CommScope facilities; the ability to retain qualified employees and existing business alliances; maintaining satisfactory relationships with represented employees; customer demand for our products, applications and services; expected demand from major domestic MSOs; telecommunications industry capital spending; ability to maintain successful relationships with our major distributors; industry consolidation; ability of our customers to secure adequate financing to fund their infrastructure projects or to pay us; changes or fluctuations in global business conditions; 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 production disruption due to supplier bankruptcy, reorganization or restructuring; variability in our effective tax rate; 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 our 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; any changes required by the Securities and Exchange Commission in connection with its review of our public filings; authoritative changes in generally accepted accounting principles by standard-setting bodies; environmental remediation issues; terrorist activity or armed conflict; political instability; major health concerns and other factors; and any statements of belief and any statements of assumptions underlying any of the foregoing. 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 -----END PRIVACY-ENHANCED MESSAGE-----