UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 001-12929
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
COMMSCOPE, INC. OF NORTH CAROLINA EMPLOYEES RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
COMMSCOPE, INC.
---------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-4135495
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 COMMSCOPE PLACE SE, P.O. BOX 339
HICKORY, NORTH CAROLINA 28602
(Address of principal executive offices)
(Zip Code)
(828) 324-2200
(Registrant's telephone number, including area code)
COMMSCOPE, INC. OF NORTH CAROLINA EMPLOYEES RETIREMENT SAVINGS PLAN
Financial Statements as of and for the Years Ended December 31, 2002 and 2001,
Supplemental Schedules as of and for the Year Ended December 31, 2002, and
Independent Auditors' Report
COMMSCOPE, INC. OF NORTH CAROLINA
EMPLOYEES RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December
31, 2002 and 2001 2
Statements of Changes in Net Assets Available for Benefits for
the Years Ended December 31, 2002 and 2001 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULES:
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets
(Held at End of Year) as of December 31, 2002 9
Form 5500, Schedule H, Part IV, Line 4j - Schedule of
Reportable Transactions for the Year Ended December 31, 2002 10
NOTE: All other schedules required by 29 CFR 2520.130-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are not
applicable.
INDEPENDENT AUDITORS' REPORT
To the Participants and Plan Administrator
of CommScope, Inc. of North Carolina
Employees Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of CommScope, Inc. of North Carolina Employees Retirement Savings Plan (the
"Plan") as of December 31, 2002 and 2001, and the related statements of changes
in net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2002
and 2001, and the changes in net assets available for benefits for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/ DELOITTE & TOUCHE LLP
June 6, 2003
1
COMMSCOPE, INC. OF NORTH CAROLINA
EMPLOYEES RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
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2002 2001
ASSETS:
Investments:
Participant-directed investments $ 88,597,973 $ 98,050,447
Nonparticipant-directed investments 11,241,070 24,259,226
------------ -------------
Total investments 99,839,043 122,309,673
------------ -------------
Receivables:
Employer's contribution - 70,363
Participants' contributions - 222,472
------------ -------------
Total receivables - 292,835
------------ -------------
Total assets 99,839,043 122,602,508
LIABILITIES - Excess contributions refundable 26,872 6,235
------------ -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 99,812,171 $ 122,596,273
============ =============
See notes to financial statements.
2
COMMSCOPE, INC. OF NORTH CAROLINA
EMPLOYEES RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
2002 2001
ADDITIONS:
Investment income - interest and dividend income $ 2,796,549 $ 4,286,306
------------ ------------
Contributions:
Employer's 5,808,566 9,232,136
Participants' 5,347,277 5,754,442
Participants' rollovers 345,026 936,198
------------ ------------
Total contributions 11,500,869 15,922,776
------------ ------------
Total additions 14,297,418 20,209,082
------------ ------------
DEDUCTIONS:
Investment loss - net depreciation in fair value
of investments 27,207,681 1,608,662
Benefits paid to participants 9,873,839 8,596,442
------------ ------------
Total deductions 37,081,520 10,205,104
------------ ------------
NET (DECREASE) INCREASE (22,784,102) 10,003,978
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 122,596,273 112,592,295
------------ ------------
End of year $ 99,812,171 $122,596,273
============ ============
See notes to financial statements.
3
COMMSCOPE, INC. OF NORTH CAROLINA
EMPLOYEES RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
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1. DESCRIPTION OF THE PLAN
The following description of the CommScope, Inc. of North Carolina
Employees Retirement Savings Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the plan document
for more complete information.
General - The Plan is a defined contribution plan covering all eligible
domestic employees of CommScope, Inc. of North Carolina and subsidiaries
(the "Company"). Eligibility for participation in the salary deferral
savings and Company-matching portions of the Plan occurs on the first day
of the calendar month following the completion of one hour of service.
Eligibility for participation in the employer discretionary profit-sharing
portion of the Plan occurs on the first day of the calendar month following
the completion of 1,000 hours of service in a 12-month period. The
Administrative Committee is responsible for the general administration and
interpretation of the Plan and for carrying out its provisions. The
Investment Committee is responsible for the investment of the assets of the
Plan. Vanguard Fiduciary Trust Company ("Vanguard") serves as the trustee
of the Plan. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
The Plan was amended effective January 1, 1995 to allow a participant to
elect a cash-option distribution for a portion of the employer
discretionary profit-sharing portion of the Plan. Under this amendment, a
participant could elect to receive up to 30% of the employer discretionary
profit-sharing contribution in cash. If this election was not made, the
cash-option deferral was allocated to the participant's account based on
the participant's investment elections.
Effective January 1, 2002, the Plan was amended to eliminate the cash
option and cash option deferral elements of the discretionary
profit-sharing contribution. The Board of Directors of CommScope, Inc. now
designates the portion of the discretionary profit-sharing contribution
that is paid out in cash, if any, and the portion that is deferred to the
participant's account. Participants no longer have an option to defer all
or a portion of the cash option of the discretionary profit-sharing
contribution. During 2002, the discretionary profit-sharing contribution
was $4,417,843. During 2001, the discretionary profit-sharing contribution
was $7,493,966, including $721,027 in cash-option deferrals.
Contributions - Prior to 2002, participants could elect to contribute any
whole percentage up to 10% of their pretax annual base compensation, as
defined by the Plan. Effective January 1, 2002, in order to incorporate
certain provisions of the Economic Growth and Tax Relief Reconciliation Act
of 2001, participants may contribute any whole percentage from 1% up to
100% of their pretax annual base compensation, as defined in the Plan,
subject to certain Internal Revenue Code limitations. Also effective
January 1, 2002, participants who attain age 50 by the end of the plan year
may contribute an additional $1,000 to the Plan.
4
For each plan year, the Company may make a matching contribution equal to
50% of the first 4% of base compensation that a participant contributes to
the Plan through salary-reduction contributions. The Company may increase
its matching contribution for any plan year in a consistent and
nondiscriminatory manner. As discussed above, for each plan year, the
Company may make a discretionary profit-sharing cash contribution to the
Plan in such amount as approved by the Board of Directors of CommScope,
Inc. Participants may also contribute amounts representing distributions
from other qualified defined benefit or defined contribution plans.
Participant Accounts - Individual accounts are maintained for each plan
participant. Each participant's account is credited with the participant's
contributions, the Company's matching contributions, and allocations of the
Company's discretionary profit-sharing contributions, if any, as well as
related plan earnings. Participant's accounts are also charged with any
benefit payments and an allocation of plan losses. Allocations are based on
participant earnings or account balances, as defined. The benefit to which
a participant is entitled is the benefit that can be provided from the
participant's vested account.
Investments - Participants direct the investment of their contributions in
increments of 10% into various investment options offered by the Plan.
Company-matching contributions are nonparticipant-directed in that they are
automatically invested in the CommScope Stock Fund. The Company's
discretionary profit-sharing contributions are allocated to any of the ten
investment options, as directed by the participants. The Plan currently
offers eight mutual funds, a common trust fund and a company stock fund as
investment options for participants.
Vesting - Participants are immediately vested in their salary-reduction
contributions, Company-matching contributions, cash-option deferrals and
related earnings. Participants become fully vested in the Company's
discretionary profit-sharing contributions and related earnings over a
period of five years of continuous employment with the Company, involuntary
termination related to a permanent layoff, reaching age 65, permanent
disability, death or termination of the Plan. If a participant terminates
employment before he has a fully vested interest in his account for reasons
other than those listed above, the amount of the Company's discretionary
profit-sharing contribution which is not fully vested is forfeited by the
participant and is used to reduce future Company-matching and discretionary
profit-sharing contributions.
Participant Loans - Participants may borrow from their fund accounts up to
a maximum of $50,000 or 50% of their vested account balances, whichever is
less. The loans are secured by the balance in the participant's account and
bear interest at prime rate plus 1%. The participant is required to repay
the loan in equal installments to be made not less frequently than
quarterly and can elect a 1- to 5-year repayment plan or up to 15 years for
the purchase of a primary residence.
Payment of Benefits - Withdrawals from a participant's account are
permitted upon reaching age 59 1/2, termination, retirement, death,
disability or financial hardship, as defined by the Plan. Distributions are
generally paid in a single lump sum in cash or in cash plus that number of
whole shares allocated to the participant's account in the CommScope Stock
Fund. However, distributions may also be made on an installment basis, as
allowed by the Plan. In addition, vested participants who are eligible for
distributions may elect to defer their distribution and continue investment
in the Plan up to age 70 1/2. The Plan allows participants who attain age
70 1/2 the election to have life expectancies recalculated.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America.
5
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires plan management to make estimates and assumptions that
affect the reported amounts of net assets available for benefits and
changes therein. Actual results could differ from those estimates. The Plan
utilizes various investment instruments. Investment securities, in general,
are exposed to various risks, such as interest rate, credit, and overall
market volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect the amounts reported in the financial statements.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value. Shares of mutual funds are valued at quoted market
prices, which represent the fair value of shares held by the Plan at
year-end. Investments in the common trust fund are stated at estimated fair
values, which have been determined based on the unit values of the fund.
Unit values are determined by the organization sponsoring such common trust
fund by dividing the fund's net assets at fair value by the units
outstanding at each valuation date. The CommScope Stock Fund is valued at
year-end unit closing price (comprised of year-end market price for shares
held by the funds plus the value of money-market reserves). The loans to
participants are valued at cost plus accrued interest, which approximates
fair value.
Purchases and sales of fund investments are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date. Capital gain distributions are included
in dividend income.
Management fees and operating expenses charged to the Plan for investment
in the mutual funds are deducted from income earned on a daily basis and
are not separately reflected. Consequently, management fees and operating
expenses are reflected as an increase in net depreciation in fair value of
investments for such investments.
Administrative Expenses - All administrative expenses of the Plan are paid
by the Company.
Payments of Benefits - Benefit payments are recorded when paid.
Reclassifications - Certain prior year amounts have been reclassified to
conform to the 2002 presentation.
6
3. INVESTMENTS
The Plan's investments that represent 5% or more of the Plan's net assets
available for benefits as of December 31, 2002 and 2001 are as follows:
2002 2001
Vanguard Wellington Fund, 895,212 and 895,741
shares, respectively $ 21,986,411 $ 24,417,912
Vanguard Federal Money Market Fund, 17,680,604
and 20,508,185 shares, respectively 17,680,604 20,508,185
Vanguard GNMA Fund Investor Shares, 685,027
and 510,473 shares, respectively 7,364,043 5,298,707
Vanguard 500 Index Fund, 238,179 and 231,540
shares, respectively 19,328,206 24,517,820
Vanguard Retirement Savings Trust, 8,313,853
and 7,541,548 units, respectively 8,313,853 7,541,548
CommScope Stock Fund, 1,422,920 and 1,140,537
shares, respectively 11,241,070* 24,259,226*
Loans to participants 6,934,532 7,462,966
* Nonparticipant-directed.
During 2002 and 2001, the Plan's mutual fund investments and the CommScope
Stock Fund (including gains and losses on investments bought and sold, as
well as held during the year) depreciated in value by $27,207,681 and
$1,608,662, respectively, as follows:
2002 2001
Vanguard mutual funds:
Wellington Fund $ (2,573,756) $ (795,381)
500 Index Fund (6,185,904) (3,534,487)
Extended Market Index Fund (56,607) (18,127)
GNMA Fund 217,252 58,932
International Growth Fund (262,962) (291,974)
STAR Fund (223,364) (114,219)
U.S. Growth Fund (2,174,032) (2,244,747)
CommScope Stock Fund (15,948,308) 5,331,341
------------ -----------
Net depreciation in fair value of investments $(27,207,681) $(1,608,662)
============ ===========
7
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments is
as follows as of December 31, 2002 and 2001, and for the years then ended:
2002 2001
Net assets - CommScope Stock Fund $ 11,241,070 $24,259,226
============ ===========
Change in net assets:
Investment (loss) income $(15,934,844) $ 5,354,027
Employer's contributions 2,622,238 2,804,891
Participants' contributions 747,718 941,419
Participants' rollovers 93,749 550,576
Benefits paid to participants (1,170,031) (1,432,189)
Transfers from (to) participant-directed
investments 623,014 (1,806,341)
------------ -----------
Net change (13,018,156) 6,412,383
CommScope Stock Fund:
Beginning of year 24,259,226 17,846,843
------------ -----------
End of year $ 11,241,070 $24,259,226
============ ===========
5. RELATED-PARTY TRANSACTIONS
Certain plan investments are shares of mutual funds and units of
participation in a common trust fund managed by an affiliate of Vanguard.
Vanguard is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Fees paid by the
Plan for investment management services were included as a reduction of the
return earned on each fund.
At December 31, 2002 and 2001, the Plan held common stock of CommScope,
Inc., with a cost basis of $28,808,179 and $28,085,621, respectively. During
the years ended December 31, 2002 and 2001, the Plan recorded no dividend
income related to CommScope common stock.
6. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of plan
termination, participants would become 100% vested in their accounts.
7. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated August 9, 1996, that the Plan and related trust were designed
in accordance with applicable regulations of the Internal Revenue Code. The
Plan has been amended since receiving the determination letter. However, the
Company and the plan administrator believe that the Plan is currently
designed and operated in compliance with the applicable requirements of the
Internal Revenue Code and the Plan and related trust continue to be
tax-exempt. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
8
COMMSCOPE, INC. OF NORTH CAROLINA
EMPLOYEES RETIREMENT SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i - SCHEDULE OF ASSETS
(HELD AT END OF YEAR)
DECEMBER 31, 2002
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Description of Investment,
Identity of Issue, Including Maturity Date,
Borrower, Lessor Rate of Interest, Collateral, Current
or Similar Party Par or Maturity Value Cost Value
* Vanguard Vanguard Wellington Fund ** $21,986,411
* Vanguard Vanguard Federal Money Market Fund ** 17,680,604
* Vanguard Vanguard GNMA Fund ** 7,364,043
* Vanguard Vanguard 500 Index Fund ** 19,328,206
* Vanguard Vanguard STAR Fund ** 1,571,340
* Vanguard Vanguard U.S. Growth Fund ** 3,947,296
* Vanguard Vanguard International Growth Fund ** 1,186,536
* Vanguard Vanguard Extended Market Index Fund ** 285,152
* Vanguard Vanguard Retirement Savings Trust ** 8,313,853
* CommScope, Inc. CommScope Stock Fund $28,808,179 11,241,070
* Various participants Participant loans (maturing 2003
to 2018 at interest rates ranging
from 5.25% to 10.5%) ** 6,934,532
-----------
TOTAL $99,839,043
===========
* Permitted party-in-interest.
** Cost information is not required for participant-directed investments and,
therefore, is not included.
9
COMMSCOPE, INC. OF NORTH CAROLINA
EMPLOYEES RETIREMENT SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4j - SCHEDULE OF REPORTABLE
TRANSACTIONS
YEAR ENDED DECEMBER 31, 2002
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Current
Value of
Asset on
Identity of Purchase Selling Cost of Transaction
Party Involved Description of Asset Price Price Asset Date Net Loss
CommScope, Inc. CommScope Stock Fund $ 6,720,363 $ - $ 6,720,363 $ 6,720,363 $ -
CommScope, Inc. CommScope Stock Fund - 3,790,211 5,979,870 3,790,211 (2,189,659)
10
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
CommScope, Inc. of North Carolina
Employees Retirement Savings Plan
June 24, 2003 /s/ Jearld L. Leonhardt
------------- ---------------------------------
Date Jearld L. Leonhardt
Executive Vice President and Chief
Financial Officer signing in his
capacity as Executive Vice President
on behalf of the Registrant and as
Chief Financial Officer of the
Registrant
INDEX OF EXHIBITS
Exhibit No. Description
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23.1 Consent of Deloitte & Touche LLP.
99.1 Certification by members of the Administrative Committee
of the Plan pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.