FOR IMMEDIATE RELEASE
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COMMSCOPE REPORTS FIRST QUARTER 2002 RESULTS
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HICKORY, NC -- (APRIL 29, 2002) CommScope, Inc. (NYSE: CTV), a world leader
in the manufacture of broadband and high-performance communication cables,
today reported first quarter results for the period ended March 31, 2002,
that are in line with previous Company guidance.
CommScope incurred a net loss of $1.6 million or $0.03 per diluted share in
the first quarter of 2002, which includes $8.0 million of after tax equity
in losses of OFS BrightWave, LLC. ($0.13 per diluted share). These results
compare to net income of $16.6 million and earnings of $0.32 per diluted
share in the first quarter of 2001. CommScope acquired an 18.4% ownership
interest in OFS BrightWave, an optical fiber and fiber cable venture
between CommScope and Furukawa Electric Co., Ltd. (Tokyo: 5801), during the
fourth quarter of 2001 and CommScope is reporting results using the equity
method of accounting for this investment.
CommScope's income before equity in losses of OFS BrightWave for the first
quarter of 2002 was $6.3 million ($0.10 per diluted share), which is in
line with the Company's prior guidance.
CommScope's sales for the first quarter rose 11% sequentially to $159.8
million due primarily to stronger than expected domestic broadband sales.
This compares to total sales of $217.4 million in the first quarter of
2001. Domestic sales were $134.8 million in the quarter, down 13% compared
to $155.7 million in the prior year, but up 22% sequentially. International
sales of $25.0 million continue to reflect the challenging global
environment and were down 59% year-over-year and down 25% sequentially.
Orders booked in the first quarter rose 32% sequentially to $174.8 million.
Orders in the first quarter of 2001 were $186.4 million. Domestic orders
rose 26% sequentially to $140.7 million, while international orders rose
61% sequentially to $34.1 million.
Effective January 1, 2002, the Company adopted the goodwill nonamortization
provision of the Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets." Adopting this provision had the
effect of eliminating goodwill amortization. Had this provision been in
effect in the first quarter of 2001, earnings would have been $0.34 per
diluted share.
"CommScope's sequential growth during the first quarter in orders and sales
supports our belief that we have passed the low point in sales for the
current downturn," said Frank M. Drendel, CommScope Chairman and Chief
Executive Officer. "While we cannot precisely estimate the pace of recovery
due to the turbulent economic environment, we are cautiously optimistic. We
expect modest sequential improvement in CommScope's sales and operating
performance for the second quarter, excluding expected losses from OFS
BrightWave.
"The market for fiber optic cable products continues to be affected by weak
demand and significant pricing pressure. We believe that OFS BrightWave is
taking appropriate steps to reduce its cost structure to adjust to the
challenging market environment. Despite the losses expected from OFS
BrightWave during 2002, we remain confident about the long-term strategic
benefit of our relationship with OFS."
OTHER FIRST QUARTER 2002 HIGHLIGHTS
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o Broadband/Video sales worldwide decreased 22% year over year to $133.1
million for the first quarter, but rose 12% from the fourth quarter of
2001. International sales were $25.0 million for the quarter, down 59%
year over year and down 25% sequentially. Despite pricing pressure,
sales of fiber optic cable for broadband applications increased
modestly from the fourth quarter of 2001.
o Local Area Network (LAN) sales increased 33% sequentially to $20.0
million for the first quarter. This compares to $24.1 million for the
first quarter of 2001.
o Wireless and Other Telecom sales were $6.7 million in the first
quarter, down 71% year-over-year and down 26% sequentially.
o Total Company gross margin for the first quarter was approximately
22.2% compared to 24.3% in the year-ago period and 24.1% in the fourth
quarter of 2001. Gross margin for the quarter was affected by a number
of items including changes in sales volumes, ongoing pricing pressure
for certain products, and higher overhead costs related to employee
benefits and a new international facility.
o Sales, general and administrative ("SG&A") expenses were $21.2 million
for the first quarter or approximately 13.3% of sales. This compares
to SG&A expense of $22.0 million for the first quarter of 2001. SG&A
increased as a percentage of sales compared to the first quarter of
2001 due primarily to the lower sales volumes.
o Net cash provided by operating activities for the first quarter was
$16 million. CommScope's capital expenditures for the quarter were $4
million.
"We believe CommScope remains in strong financial condition," said Jearld
L. Leonhardt, CommScope Executive Vice President and Chief Financial
Officer. "We maintained a solid balance sheet, continued to generate free
cash flow (total cash from operations less capital expenditures) and ended
the quarter with $87 million of cash on our balance sheet, which includes
the repayment to CommScope of $13 million under a $30 million revolving
credit arrangement with OFS BrightWave. We expect OFS BrightWave to re-draw
these funds in the coming months."
CONFERENCE CALL INFORMATION
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CommScopewill host a conference call to review first quarter 2002 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 212-896-6111. 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.videonewswire.com/event.asp?id=4313.
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
858-812-6440 for the replay. The replay ID is 20523104. The replay will be
available through Wednesday, May 1st. 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.
(Minimum requirements to listen to the broadcast and replay on the
Internet: The RealPlayer software, downloadable free from
www.real.com/products/player/index.html, and at least a 14.4kpbs connection
to the Internet. If you experience problems listening to the webcast, send
an email to webmaster@vdat.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, financial performance of OFS BrightWave, product
demand and industry excess capacity, competitive products and pricing,
changes or fluctuations in global economic conditions, telecommunications
industry capital spending, expected demand from AT&T, Adelphia and major
domestic MSOs, changes in cost and availability of key raw materials,
successful operation of bimetals manufacturing and other vertical
integration activities, pricing and acceptance of products, successful
expansion and related operation of our facilities, developments in
technology, industry competition, ability to obtain financing and capital
on commercially reasonable terms, ability of our customers to secure
adequate financing or to pay, regulatory changes affecting our industries,
acquisition activities, possible disruption due to 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
######
COMMSCOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED--IN THOUSANDS, EXCEPT NET INCOME PER SHARE AMOUNTS)
Three Months Ended
March 31,
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2002 2001
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Net sales $ 159,751 $ 217,360
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Operating costs and expenses:
Cost of sales 124,326 164,566
Selling, general and administrative 21,233 21,966
Research and development 1,995 1,480
Amortization of goodwill - 1,342
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Total operating costs and expenses 147,554 189,354
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Operating income 12,197 28,006
Other income (expense), net (387) 175
Interest expense (2,182) (2,022)
Interest income 440 158
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Income before income taxes and equity in losses
of OFS BrightWave, LLC 10,068 26,317
Provision for income taxes (3,725) (9,738)
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Income before equity in losses of OFS BrightWave, LLC 6,343 16,579
Equity in losses of OFS BrightWave, LLC (7,991) -
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Net income (loss) $ (1,648) $ 16,579
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Net income (loss) per share:
Basic $ (0.03) $ 0.32
Assuming dilution (a) $ (0.03) $ 0.32
Weighted average shares outstanding:
Basic 61,714 51,315
Assuming dilution (a) 61,714 52,028
(a) Calculation of net income (loss) per share, assuming dilution:
Net income (loss) (basic) $ (1,648) $ 16,579
Convertible debt add-back (b) - -
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Numerator (assuming dilution) $ (1,648) $ 16,579
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Weighted average shares (basic) 61,714 51,315
Dilutive effect of:
Stock options (c) - 713
Convertible debt (b) - -
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Denominator (assuming dilution) 61,714 52,028
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(b) On December 15, 1999, the Company issued $172.5 million in convertible notes, which are
convertible into shares of common stock at a conversion rate of 20.7512 shares per $1,000
principal amount. The effect of the assumed conversion of these notes was excluded from
the calculation of net income (loss) per share, assuming dilution, for the three months
ended March 31, 2002 and 2001 because it would have been antidilutive in both periods.
(c) For the three months ended March 31, 2002, stock options were antidilutive as a result
of the net loss during the period, and were therefore excluded from the calculation of net
income (loss) per share, assuming dilution.
COMMSCOPE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(Unaudited)
March 31, December 31,
2002 2001
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ASSETS
Cash and cash equivalents $ 86,940 $ 61,929
Accounts receivable, less allowance for doubtful accounts of
$14,259 and $12,599, respectively 116,068 105,402
Inventories 54,099 47,670
Prepaid expenses and other current assets 10,798 12,724
Deferred income taxes 18,214 18,143
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Total current assets 286,119 245,868
Property, plant and equipment, net 268,381 277,169
Goodwill, net of accumulated amortization of $59,493 151,304 151,307
Other intangibles, net of accumulated amortization of
$38,048 and $37,421, respectively 10,717 11,344
Investment in and advances to OFS BrightWave, LLC 171,318 196,860
Other assets 10,082 6,457
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Total Assets $ 897,921 $ 889,005
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 23,040 $ 16,339
Other accrued liabilities 33,039 27,753
Current portion of long-term debt 2,615 2,651
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Total current liabilities 58,694 46,743
Long-term debt, less current portion 191,144 191,918
Deferred income taxes 20,672 22,899
Other noncurrent liabilities 22,073 20,931
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Total Liabilities 292,583 282,491
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; Authorized shares: 20,000,000;
Issued and outstanding shares: None at March 31, 2002 and
December 31, 2001 -- --
Common stock, $.01 par value; Authorized shares: 300,000,000;
Issued and outstanding shares: 61,717,159 at March 31, 2002;
61,688,256 at December 31, 2001 617 617
Additional paid-in capital 382,328 381,823
Retained earnings 227,019 228,667
Accumulated other comprehensive loss (4,626) (4,593)
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Total Stockholders' Equity 605,338 606,514
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Total Liabilities and Stockholders' Equity $ 897,921 $ 889,005
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