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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: FEBRUARY 20, 2003
DATE OF EARLIEST EVENT REPORTED: FEBRUARY 20, 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
incorporation or Number)
organization)
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 9. Regulation FD Disclosure.
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On February 20, 2003, the registrant issued a press release relating
to its financial results for the fourth quarter of 2002.
The full text of the press release is set forth below:
COMMSCOPE REPORTS FOURTH QUARTER 2002 RESULTS
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HICKORY, NC -- (FEBRUARY 20, 2003) CommScope, Inc. (NYSE: CTV) today
announced fourth quarter results for the period ended December 31, 2002.
The company reported sales of $135.9 million and a net loss of $3.5 million
or $0.06 per share for the fourth quarter. The loss included after-tax
equity in losses of OFS BrightWave, LLC of $0.08 per share.
For the fourth quarter of 2001, the company incurred a net loss of $1.0
million or $0.02 per share, which included after-tax equity in losses of
OFS BrightWave of $0.12 per share.
CommScope's sales for the fourth quarter of 2002 were $135.9 million
compared to $143.5 million in the year-ago quarter and $147.8 million in
the preceding quarter. Fourth quarter domestic sales were stable
year-over-year at $110.4 million primarily due to strong sales to Comcast
Corporation, which merged with AT&T Broadband in November 2002. However,
domestic sales declined sequentially from $120.8 million principally
because of lower sales to Local Area Network (LAN) customers. International
sales for the quarter were $25.5 million, compared to $27.0 million in the
third quarter of 2002 and $33.4 million in the fourth quarter of 2001.
Orders booked in the fourth quarter of 2002 were equal with year-ago levels
at $132.8 million.
FULL YEAR RESULTS
-----------------
CommScope reported sales of $598.5 million for 2002, compared to sales of
$738.5 million in 2001. Total international sales were $111.5 million,
compared to $173.3 million in the prior year. For 2002, the company
incurred a net loss of $67.2 million or $1.10 per share. CommScope's 2002
results include: a) equity in losses of OFS BrightWave of $53.7 million
after tax 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.
For 2001, CommScope reported net income of $27.9 million or $0.52 per
diluted share. CommScope's 2001 results include: a) impairment charges for
fixed assets and investments of $9.5 million after tax or $0.18 per diluted
share; b) equity in losses of OFS BrightWave of $6.9 million after tax or
$0.13 per diluted share; and c) terminated acquisition charges related to
the financing and formation of the original joint venture arrangement with
The Furukawa Electric Company Ltd. of $5.0 million after tax or $0.09 per
diluted share.
"Amid one of the toughest business environments in our history, we believe
that we made solid progress positioning CommScope for a market recovery and
long-term opportunity," said Frank M. Drendel, CommScope Chairman and Chief
Executive Officer. "During 2002, we lowered our cost structure, generated
more than $100 million in cash flow from operations and strengthened our
market position in fiber optic cable for HFC applications. We also believe
we enhanced our strategic relationship with OFS and Furukawa.
"Despite these challenging times, we believe in the power of broadband,"
noted Drendel. "Our customers have made significant strides delivering
digital video, voice and high-speed data services to consumers around the
globe. We are also confident in our ability to provide cutting-edge cable
technology, which enables broadband service."
OFS BRIGHTWAVE RESULTS
----------------------
OFS BrightWave's performance improved but continues to reflect the
extremely difficult global business conditions for optical fiber and fiber
optic cable. During 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 full year 2002, OFS BrightWave had revenues of $97.1 million, a
negative gross profit of $170.9 million and a net loss of $431.5 million.
OFS BrightWave's full year results included significant charges related to
the write off of goodwill, impairment of fixed assets, restructuring and
cost reduction.
CommScope recorded after-tax charges of $4.5 million or $0.08 per share in
the quarter and $53.7 million or $0.88 per share in 2002 for equity in
losses of OFS BrightWave related to the company's minority investment in
this venture. The company acquired an 18.4% ownership interest in OFS
BrightWave, an optical fiber and fiber cable venture between CommScope and
Furukawa, during the fourth quarter of 2001 and CommScope is reporting
results using the equity method of accounting for this investment.
CASH FLOW AND LIQUIDITY
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Net cash provided by operating activities was $31.7 million for the fourth
quarter and $103.8 million for calendar year 2002. Capital expenditures
were $14.3 million in the quarter and included $12.8 million for the
purchase of a previously-leased corporate office building. Capital
expenditures for calendar year 2002 were $22.6 million.
CommScope ended the year with $120.1 million in cash and cash equivalents,
up from $61.9 million at the end of 2001. Other important transactions that
affected cash during the fourth quarter were:
o A $13.2 million repurchase of 2,543,100 shares of CommScope stock at
$5.20 per share from Lucent Technologies Inc. Lucent had acquired
CommScope common stock in connection with CommScope's investment in
OFS BrightWave in November 2001.
o A $10.4 million repayment of a eurodollar loan.
o A $6.1 million advance to OFS BrightWave under an existing $30 million
revolving credit facility. As of December 31, 2002, OFS BrightWave
owed CommScope $30 million under this facility.
The company also recently announced that it entered into a new $100 million
senior secured revolving credit facility for future liquidity, working
capital needs and other general corporate purposes. CommScope has not
borrowed under this facility.
OTHER FOURTH QUARTER 2002 HIGHLIGHTS
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o Domestic Broadband/Video sales for the fourth quarter rose 8% year
over year primarily because of a substantial increase in sales to
Comcast as well as an increase in sales of fiber optic cable products.
These increases were somewhat offset by lower sales to Adelphia
Communications and Charter Communications. Comcast, on a combined
basis with AT&T Broadband, represented roughly 30% of total company
sales for the quarter and about 20% of total company sales for
calendar year 2002.
o During 2002, CommScope believes it enhanced its fiber optic cable
market position for HFC applications despite lower overall sales and
ongoing pricing pressure. The company believes its progress resulted
from its strong service model and its new LightScope ZWP (TM) fiber optic
cables, which are based upon technologically advanced optical fibers
from OFS. Sales of fiber optic cable, primarily for broadband
applications, represented more than 10% of CommScope's total sales for
the quarter and the year.
o International sales continue to reflect the difficult global business
environment. Worldwide Broadband/Video sales decreased 2% sequentially
and 1% year over year to $117.9 million for the fourth quarter. For
calendar year 2002, worldwide Broadband/Video sales were $496.5
million and total international sales were $111.5 million.
o LAN sales decreased 7% year over year to approximately $14.1 million
for the fourth quarter. Consistent with the previous year, LAN sales
declined sequentially primarily because of year-end inventory
reductions by distributors and difficult market conditions. For
calendar year 2002, LAN sales were $81.2 million.
o Wireless and Other Telecom sales rose slightly sequentially to $3.9
million. For calendar year 2002, Wireless and Other Telecom sales were
$20.8 million.
o Total company gross margin for the fourth quarter was 19.4% compared
to 18.3% in the third quarter of 2002. Despite lower sales volume,
gross margin rose sequentially primarily because of the positive
impact of previously announced cost reduction actions. For calendar
year 2002, gross margin was 20.1%, compared to 24.3% for 2001.
OUTLOOK
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"Looking ahead to the seasonally slow first quarter, the company expects
sales to be in the $120-$130 million range and gross margin in the 18-19%
range," said Jearld L. Leonhardt, Executive Vice President and Chief
Financial Officer.
"Despite GAAP losses that included significant non-cash charges during
2002, CommScope achieved strong free cash flow (cash from operations less
capital expenditures) due in part to working capital improvements and lower
capital spending," noted Leonhardt. "While forecasting remains difficult
due to business conditions, we expect another year of restrained capital
expenditures and believe we can generate modest free cash flow during
2003."
CONFERENCE CALL INFORMATION
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CommScope, Inc. (NYSE: CTV) will host a conference call to review fourth
quarter results at 5:00 p.m. Eastern Time 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 212-896-6017. 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/ajwz373633737gf12.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 21117162. The replay will be
available through Saturday, February 22. 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
ZWP (TM) 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,
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, which 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; industry excess capacity;
changes or fluctuations in global economic conditions; financial
performance of OFS BrightWave; competitive pricing and acceptance of our
products; our ability to obtain financing and capital on commercially
reasonable terms; covenant restrictions imposed on us by our revolving
credit facility; possible future impairment charges; changes in cost and
availability of key raw materials; successful operation of bimetals
manufacturing and other vertical integration activities; successful
expansion and related operation of our facilities; developments in
technology; intellectual property protection; industry competition and the
ability to retain customers; regulatory changes affecting our industries;
acquisition activities; possible disruption due to customer or supplier
bankruptcy reorganization or restructuring; terrorist activity or armed
conflict and other factors. For a more detailed 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
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COMMSCOPE, INC.
Consolidated Statements of Operations
(Unaudited -- In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
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2002 2001 2002 2001
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Net sales $ 135,883 $ 143,537 $ 598,467 $ 738,498
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Operating costs and expenses:
Cost of sales 109,552 108,945 477,912 558,854
Selling, general and administrative 21,915 21,959 104,716 83,523
Research and development 1,306 1,658 6,153 7,117
Amortization of goodwill - 1,341 - 5,365
Terminated acquisition costs - (1,331) - 7,963
Impairment charges for fixed assets
and investments - 187 25,096 12,802
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Total operating costs and expenses 132,773 132,759 613,877 675,624
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Operating income (loss) 3,110 10,778 (15,410) 62,874
Other income (expense), net 110 412 861 (191)
Interest expense (2,354) (2,212) (9,214) (8,497)
Interest income 773 358 2,475 1,027
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Income (loss) before income taxes and equity
in losses of OFS BrightWave, LLC 1,639 9,336 (21,288) 55,213
Provision for income tax benefit (expense) (607) (3,451) 7,858 (20,426)
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Income (loss) before equity in losses of
OFS BrightWave, LLC 1,032 5,885 (13,430) 34,787
Equity in losses of OFS BrightWave, LLC (4,483) (6,922) (53,722) (6,922)
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Net income (loss) $ (3,451) $ (1,037) $ (67,152) $ 27,865
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Net income (loss) per share:
Basic $ (0.06) $ (0.02) $ (1.10) $ 0.53
Assuming dilution $ (0.06) $ (0.02) $ (1.10) $ 0.52
Weighted average shares outstanding:
Basic 59,468 56,573 61,171 52,692
Assuming dilution (a) 59,468 56,573 61,171 53,500
(a) Calculation of weighted average shares
outstanding, assuming dilution:
Weighted average shares, basic 59,468 56,573 61,171 52,692
Dilutive effect of stock options* - - - 808
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Weighted average shares, assuming
dilution 59,468 56,573 61,171 53,500
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* For the three months and twelve months ended December 31, 2002 and the
three months ended December 31, 2001, stock options were antidilutive
as a result of the net losses during the respective periods, and were
therefore excluded from the calculation of net loss per share,
assuming dilution.
COMMSCOPE, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(Unaudited)
December 31, December 31,
2002 2001
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ASSETS
Cash and cash equivalents $ 120,102 $ 61,929
Accounts receivable, less allowance for doubtful
accounts of $11,811 and $12,599, respectively 64,787 105,402
Inventories 36,254 47,670
Prepaid expenses and other current assets 20,737 12,724
Deferred income taxes 16,579 18,143
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Total current assets 258,459 245,868
Property, plant and equipment, net 229,515 277,169
Goodwill, net of accumulated amortization of
$59,536 and $59,493, respectively 151,334 151,307
Other intangibles, net of accumulated amortization of
$39,930 and $37,421, respectively 8,835 11,344
Deferred income taxes 3,572 --
Investment in and advances to OFS BrightWave, LLC 111,528 196,860
Other assets 9,425 6,457
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Total Assets $ 772,668 $ 889,005
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 18,483 $ 16,339
Other accrued liabilities 26,005 27,753
Current portion of long-term debt -- 2,651
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Total current liabilities 44,488 46,743
Long-term debt, less current portion 183,300 191,918
Deferred income taxes -- 22,899
Other noncurrent liabilities 27,345 20,931
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Total Liabilities 255,133 282,491
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; Authorized shares:
20,000,000; Issued and outstanding shares:
None at December 31, 2002 and 2001 -- --
Common stock, $.01 par value; Authorized shares:
300,000,000; Issued and outstanding shares,
including treasury stock: 61,762,667 at
December 31, 2002; 61,688,256 at December 31, 2001 618 617
Additional paid-in capital 383,541 381,823
Retained earnings 161,515 228,667
Accumulated other comprehensive loss (14,915) (4,593)
Treasury stock, at cost: 2,543,100 shares at
December 31, 2002 (13,224) --
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Total Stockholders' Equity 517,535 606,514
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Total Liabilities and Stockholders' Equity $ 772,668 $ 889,005
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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: February 20, 2003
COMMSCOPE, INC.
By: /s/ Frank B. Wyatt, II
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Frank B. Wyatt, II
Senior Vice President, General Counsel
and Secretary