Exhibit 99.1
FOR IMMEDIATE RELEASE
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COMMSCOPE ANNOUNCES RECORD FOURTH QUARTER,
FULL-YEAR 1999 RESULTS;
FOURTH-QUARTER ORDERS OF $217 MILLION, REVENUE OF $212 MILLION
AND EARNINGS PER SHARE OF $0.39
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HICKORY, NC -- (FEBRUARY 1, 2000) CommScope, Inc. (NYSE: CTV) a world
leader in the manufacture of broadband and high-performance communication
cables, today announced record sales and earnings per share for the fourth
quarter ended December 31, 1999. Earnings per share rose 50% to an all-time
record $0.39 per diluted share in this year's fourth quarter from $0.26 per
diluted share, including one-time items, in the fourth quarter of 1998.
Sales for the fourth quarter increased 45% to a new all-time record of
$211.6 million, compared to $146.2 million in the fourth quarter of 1998.
This record performance was primarily driven by strong broadband cable
sales to domestic telecommunications companies. Domestic sales rose 52% to
$165.9 million, up from $109.2 million in the fourth quarter of 1998.
International sales rose to $45.7 million, up 24% year over year.
Orders booked in the fourth quarter rose to $216.9 million, up from $152.0
million in the same period last year. Orders reflect particular strength in
international markets. While domestic orders were also strong, they reflect
the typical seasonality expected during the winter months.
Net income for the fourth quarter rose 58% to an all-time record of $20.5
million, up from $13.0 million in the fourth quarter of 1998.
For 1999, CommScope reported net sales of $748.9 million, up 31% from
$571.7 million for 1998. Net income for 1999 was $68.1 million and earnings
were $1.31 per diluted share, compared to net income of $39.2 million and
earnings of $0.79 per diluted share for 1998. Results for 1998 included
one-time benefits related to the sale of a business and partial reversal of
charges associated with a closed joint venture. Excluding these benefits,
1998 net income was $35.9 million and earnings were $0.73 per share.
"1999 was a great year for CommScope," said Frank M. Drendel, Chairman and
Chief Executive Officer. "We experienced strong growth during the year due
to the rapidly expanding bandwidth needs of the telecommunications
industry.
"We continue to enhance our ability to benefit from this ongoing bandwidth
revolution and intend to expand our capabilities for providing enabling
cable technology to telecommunications companies around the world.
"We also continue to invest in research and development of new products so
that we can anticipate the bandwidth needs of our rapidly evolving
industry. For example, during 1999, we experienced tremendous growth in
wireless, telecom and fiber-optic sales," Drendel continued. "We believe
that CommScope's Cell Reach(R) products are now recognized as a new
standard for performance and value in the wireless industry. Sales of Cell
Reach products have more than quadrupled in 1999, ahead of our
expectations. Other telecom sales more than doubled and fiber-optic sales
rose by more than 50%."
OTHER FOURTH QUARTER HIGHLIGHTS
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o CATV/Video sales worldwide increased to $147.1 million, up 21% year
over year. Domestic CATV/Video sales also rose 21% year over year, due
primarily to strong sales to Multiple System Operators (MSOs).
o Local Area Network (LAN) sales rose to $26.9 million, up 79% year over
year and up 18% sequentially. While demand remains strong for
high-performance products, LAN orders have been affected by the normal
seasonal slowdown.
o Wireless and Other Telecom sales more than tripled to $37.6 million
compared to last year and increased 22% sequentially. During the
quarter, CommScope was selected by Metricom to supply wireless coaxial
cable and accessories for Metricom's national deployment of their
Ricochet 128 kbps, high-speed mobile data service.
o Due to the significant progress in the wireless market and strength in
other markets, CommScope announced the establishment of a new cable
technology center. The company purchased an existing facility in
Newton, N.C., which contains approximately 455,000 square feet of
manufacturing and office space. This CommScope Cable Technology Center
is expected to house the majority of the Company's wireless
manufacturing, research and engineering activities.
o CommScope completed a $172.5 million convertible subordinated note
offering. The 4% convertible subordinated notes are due in 2006. The
net proceeds from this offering were approximately $167.5 million and
were primarily used to repay outstanding indebtedness under the
Company's credit facility. Due to the repayment of amounts outstanding
under this facility, the Company terminated related interest-rate
hedges. The termination of these hedges, net of other related
expenses, generated a one-time, after-tax gain of approximately $480
thousand, or approximately $0.01 per share. The Company also expects
that this transaction will have an overall accretive impact to
calendar year 2000 earnings.
"Overall, the fourth quarter was another excellent quarter for CommScope,"
Drendel noted. "We delivered strong growth while continuing to focus on
cost reduction. Gross margins for the fourth quarter rose to approximately
27.8%, up more than 200 basis points from the fourth quarter of 1998 and up
approximately 80 basis points sequentially."
OUTLOOK AND OPERATING ISSUES
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In addition to previous capacity announcements, the Company today announced
its intent to expand its product capacity for wired Hybrid Fiber Coaxial
(HFC) networks. The Company believes the additional capacity is needed to
meet increasing global demand over the longer-term.
"Backed by a strong, longer-term capital structure and robust demand for
bandwidth, we believe that we have the opportunity to achieve sales growth
of 20% or better during calendar year 2000," Drendel added.
CommScope noted, however, that during January the Company experienced
delays in shipping certain products due to severe weather and in connection
with the implementation of a new integrated information system, which was
adopted on January 2, 2000. CommScope is working to correct these
transition issues and has increased shipping efforts to reduce the
weather-related and system-related backlogs. Production has run at
scheduled rates, with the exception of minor delays created by severe
winter weather.
The Company continues to believe that it will achieve consensus analyst
estimates of $1.53 per diluted share for the full year 2000. However,
CommScope believes that it may fall slightly below consensus analyst
estimates of $0.30 per diluted share for the first quarter of 2000 due to
the impact of severe weather and in connection with the implementation of
this new integrated information system.
CommScope also announced new global pricing for cable television products
due to escalating material costs. Prices for essentially all hybrid fiber
coaxial (HFC) related cable products will be increased approximately 6-8%,
with implementation beginning February 15, 2000. "While CommScope continues
to engage in aggressive cost management, many costs continue to rise,"
Drendel stated. "Prices have increased substantially over the past few
months for key materials such as aluminum, copper, polyethylene and PVC.
"CommScope remains committed to providing outstanding service and
technology leadership to our customers. We believe that, over the longer
term, our new integrated information system, additional capacity and
recovery of escalating material costs will support a level of service
excellence that our customers expect," Drendel added.
CommScope is the world's largest manufacturer of coaxial cable and is a
leading supplier of high-performance cables for LAN, wireless and other
communications applications.
Statements in this press release which are other than historical facts
are intended to be "forward-looking statements" within the meaning of the
Securities Exchange Act of 1934, the Private Securities Litigation Reform
Act of 1995 and other related laws, and include, but are not limited to,
those statements relating to CommScope's implementation of a new integrated
information system, relative market position, sales and growth goals,
outlook and earnings. While CommScope believes such statements are
reasonable, the actual results and effects could differ materially from
those currently anticipated. Factors and risks that could cause such
differences include, but are not limited to effective implementation of the
new integrated information system, developments in technology, pricing and
acceptance of CommScope's products, changes in material costs, industry
competition, regulatory changes affecting the cable industry, international
economic conditions, telecommunications industry capital spending,
successful expansion and related operation of the Newton and Claremont
facilities, successful implementation of the bi-metals operation and other
vertical integration activities, and other factors. The cautionary
statements contained in Exhibit 99 to CommScope's Form 10-Q for the quarter
ended September 30, 1999 are incorporated herein by reference.
Visit CommScope at our Web Site--www.commscope.com
CONTACTS:
PHIL ARMSTRONG
INVESTOR RELATIONS
(828) 323-4848
BETSY LAMBERT, APR
MEDIA RELATIONS
828-323-4873
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COMMSCOPE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT NET INCOME PER SHARE INFORMATION)
THREE MONTHS ENDED
DECEMBER 31,
1999 1998(A)
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Net sales $ 211,646 $ 146,188
Operating costs and expenses:
Cost of sales 152,768 109,141
Selling, general and administrative 20,140 14,120
Research and development 2,792 1,174
Amortization of goodwill 1,447 1,297
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Total operating costs and expenses 177,147 125,732
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Operating income 34,499 20,456
Other income, net 744 1,958
Interest expense (2,441) (3,346)
Interest income 297 122
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Income before income taxes 33,099 19,190
Provision for income taxes (12,612) (6,211)
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Net income $ 20,487 $ 12,979
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Net income per share:
Basic $ 0.40 $ 0.26
Assuming dilution $ 0.39 $ 0.26
Weighted-average shares outstanding:
Basic 50,841 49,374
Assuming dilution 53,085 49,568
(A) Results for the twelve months ended December 31, 1998 include a
one-time benefit of $1,973 included in other income, net for the partial
reversal of fourth quarter 1997 charges related to the Company's 49%
investment in an Australian joint venture. Excluding this benefit, income
before income taxes was $17,217, the provision for income taxes was $6,179,
and net income was $11,038 ($0.22 per share basic and assuming dilution).
COMMSCOPE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT NET INCOME PER SHARE INFORMATION)
YEAR ENDED
DECEMBER 31,
1999 1998(A)
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Net sales $ 748,914 $ 571,733
Operating costs and expenses:
Cost of sales 548,808 437,140
Selling, general and administrative 68,869 52,817
Research and development 8,332 5,612
Amortization of goodwill 5,388 5,194
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Total operating costs and expenses 631,397 500,763
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Operating income 117,517 70,970
Other income, net 736 4,134
Interest expense (10,230) (15,448)
Interest income 604 558
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Income before income taxes 108,627 60,214
Provision for income taxes (40,550) (20,983)
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Net income $ 68,077 $ 39,231
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Net income per share:
Basic $ 1.34 $ 0.80
Assuming dilution $ 1.31 $ 0.79
Weighted-average shares outstanding:
Basic 50,669 49,221
Assuming dilution 52,050 49,521
(A) Includes one-time benefits of $1,973 included in other income, net for
the partial reversal of fourth quarter 1997 charges related to the
Company's 49% investment in an Australian joint venture and a one-time gain
from the sale of the Company's high-temperature aerospace and industrial
cable business and related agreements of $2,123 also included in other
income, net. Excluding these amounts, income before income taxes was
$56,118, the provision for income taxes was $20,187 and net income was
$35,931 ($0.73 per share basic and assuming dilution).