Exhibit 99.1
FOR IMMEDIATE RELEASE
COMMSCOPE REPORTS FIRST QUARTER 2003 RESULTS
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HICKORY, NC -- (APRIL 29, 2003) CommScope, Inc. (NYSE: CTV) today announced
first quarter results for the period ended March 31, 2003. The Company
reported sales of $129.4 million and a net loss of $3.1 million or $0.05
per share for the first quarter. The net loss included after-tax equity in
losses of OFS BrightWave, LLC of $0.06 per share.
For the first quarter of 2002, the Company incurred a net loss of $1.6
million or $0.03 per share, which included after-tax equity in losses of
OFS BrightWave of $0.13 per share.
CommScope's sales for the first quarter of 2003 were $129.4 million
compared to $159.8 million in the year-ago quarter and $135.9 million in
the preceding quarter. The year-over-year sales decline was mainly due to
lower Broadband/Video sales, primarily to Adelphia Communications and
Charter Communications. Sales decreased sequentially primarily due to lower
sales to Comcast Corporation, which completed its merger with AT&T
Broadband in November 2002. Local Area Network (LAN) sales were $23.0
million, up 15% from last year's first quarter and up 63% sequentially
primarily due to strengthening project business as well as higher LAN fiber
optic cable sales. Worldwide sales of fiber optic cable rose more than 20%
from the first quarter of 2002 and over 5% sequentially. International
sales were $25.2 million, essentially stable year over year and
sequentially.
Orders booked in the first quarter of 2003 were $135.1 million, compared to
$132.8 million in the preceding quarter and $174.8 million in the first
quarter of 2002.
"We intend to continue positioning CommScope as the supplier of choice for
'last mile' cable applications," said Frank M. Drendel, CommScope Chairman
and CEO. "We significantly increased LAN sales and achieved sequential
growth in Wireless/Other Telecom products. We also moved closer to our goal
of becoming `The Cable Industry's Fiber Supplier (TM)' by building upon our
strategic relationship with OFS. While we expect sequential sales growth as
we move into the summer construction period, we still face persistent
uncertainty and difficult global business conditions."
OFS BRIGHTWAVE RESULTS
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In the midst of this difficult environment, OFS BrightWave increased
revenues and reduced costs in the first quarter. OFS BrightWave's first
quarter revenues were $28.3 million, up 5% year over year and up 4%
sequentially. However, OFS BrightWave reported a negative gross profit of
$20.6 million and a net loss of $32.8 million in the quarter.
CommScope recorded after-tax charges of $3.8 million or $0.06 per share in
the quarter for equity in losses of OFS BrightWave related to the Company's
minority investment in this venture.
"We believe that OFS BrightWave has taken significant steps to reduce its
cost structure," noted Drendel. "Despite that, CommScope expects ongoing
pricing pressure and weak global demand for fiber optic cable products at
least through 2003. As a result, we believe OFS BrightWave will incur
losses through 2003 and will continue to evaluate its business for cost
reduction opportunities."
OTHER FIRST QUARTER 2003 HIGHLIGHTS
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o Broadband/Video sales for the first quarter were $101.3 million, down
24% from last year's first quarter and 14% sequentially. Sales
declined year over year principally due to lower sales to Adelphia and
Charter, somewhat offset by higher sales to Comcast. However, sales to
Comcast decreased sequentially partly due to the impact of higher
fourth-quarter 2002 inventory levels, which we believe were built in
anticipation of the merger. Sales to Comcast represented approximately
23% of total Company sales for the quarter. Worldwide Broadband/Video
orders for the quarter were $105.6 million.
o Despite pricing pressure, CommScope achieved substantial fiber optic
cable sales growth. Worldwide fiber optic cable volume increased more
than 25% year over year and more than 10% sequentially. Fiber optic
cable sales, primarily for broadband applications, continue to
represent more than 10% of total Company sales.
o International sales were essentially stable with the preceding quarter
and last year's first quarter. For the first quarter of 2003,
international sales were $25.2 million and orders were $26.3 million.
o LAN sales rebounded to $23.0 million from depressed fourth quarter
2002 sales of $14.1 million. LAN sales benefited from strengthening
project business and increasing fiber optic cable and apparatus sales.
LAN orders for the quarter were $23.4 million.
o Wireless/Other Telecom sales rose sequentially to $5.1 million with
higher orders of $6.1 million for the quarter. CommScope has made
progress communicating the Cell Reach (R) value proposition to
customers and remains optimistic about long-term opportunities.
o Total Company gross margin for the first quarter was 18.6% compared to
19.4% in the preceding quarter and 22.2% in the first quarter of 2002.
The decreases in gross profit and margin were primarily due to lower
sales volumes and competitive pricing pressure for certain products.
o Selling, general and administrative expense was $20.1 million in the
quarter, down 8% sequentially and down 5% year over year.
o Net cash provided by operating activities in the quarter was $4.2
million. Capital spending for the quarter was $1.9 million.
OUTLOOK
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"Assuming seasonal increases, we expect second quarter sales to rise to the
$130-$145 million range," said Jearld L. Leonhardt, Executive Vice
President and Chief Financial Officer. "However, we are experiencing cost
pressures, primarily related to the rising cost of polyethylene and other
plastics. Depending upon sales volumes, we expect gross margin to be in the
17.5%-18.5% range for the second quarter. While forecasting remains
difficult in this environment, we continue to believe that we will generate
free cash flow (cash flow from operations less capital expenditures) during
2003."
CONFERENCE CALL INFORMATION
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CommScope will host a conference call to review first quarter 2003
financial 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 212-346-6473. 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/ajwz378185395gf12.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 21139704. The replay will be
available through Friday, May 2. 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 business conditions; financial
performance of OFS BrightWave; competitive pricing and acceptance of our
products; changes in cost and availability of key raw materials; ability to
recover higher material and transportation costs from our customers;
possible future impairment charges; industry competition and the ability to
retain customers; possible disruption due to customer or supplier
bankruptcy, reorganization or restructuring; our ability to obtain
financing and capital on commercially reasonable terms; covenant
restrictions and ability to comply with covenants imposed on us by our
revolving credit facility; successful operation of bimetals manufacturing
and other vertical integration activities; successful expansion and related
operation of our facilities; developments in technology; intellectual
property protection; regulatory changes affecting us or the industries we
serve; acquisition activities and the ability to integrate acquisitions;
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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED -- IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
March 31,
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2003 2002
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Net sales $ 129,368 $ 159,751
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Operating costs and expenses:
Cost of sales 105,251 124,326
Selling, general and administrative 20,070 21,233
Research and development 1,589 1,995
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Total operating costs and expenses 126,910 147,554
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Operating income 2,458 12,197
Other income (expense), net 209 (387)
Interest expense (2,158) (2,182)
Interest income 617 440
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Income before income taxes and equity
in losses of OFS BrightWave, LLC 1,126 10,068
Provision for income tax expense (417) (3,725)
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Income before equity in losses of
OFS BrightWave, LLC 709 6,343
Equity in losses of OFS BrightWave, LLC (3,782) (7,991)
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Net loss $ (3,073) $ (1,648)
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Net loss per share:
Basic $ (0.05) $ (0.03)
Assuming dilution $ (0.05) $ (0.03)
Weighted average shares outstanding:
Basic 59,220 61,714
Assuming dilution 59,220 61,714
COMMSCOPE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(Unaudited)
March 31, December 31,
2003 2002
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ASSETS
Cash and cash equivalents $ 121,698 $ 120,102
Accounts receivable, less allowance for doubtful
accounts of $13,185 and $11,811, respectively 78,852 64,787
Inventories 38,817 36,254
Prepaid expenses and other current assets 20,816 20,737
Deferred income taxes 15,354 16,579
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Total current assets 275,537 258,459
Property, plant and equipment, net 224,546 229,515
Goodwill, net of accumulated amortization of
$59,544 and $59,520, respectively 151,338 151,334
Other intangibles, net of accumulated amortization
of $40,556 and $39,930, respectively 8,209 8,835
Deferred income taxes 6,713 3,572
Investment in and advances to OFS BrightWave, LLC 105,467 111,528
Other assets 10,237 9,425
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Total Assets $ 782,047 $ 772,668
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 20,760 $ 18,483
Other accrued liabilities 32,364 26,005
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Total current liabilities 53,124 44,488
Long-term debt, less current portion 183,300 183,300
Other noncurrent liabilities 29,845 27,345
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Total Liabilities 266,269 255,133
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; Authorized
shares: 20,000,000; Issued and outstanding
shares: None at March 31, 2003 and
December 31, 2002 -- --
Common stock, $.01 par value; Authorized
shares: 300,000,000; Issued shares, including
treasury stock: 61,762,667 at March 31, 2003
and December 31, 2002; Issued and outstanding
shares: 59,219,567 at March 31, 2003 and
December 31, 2002 618 618
Additional paid-in capital 383,541 383,541
Retained earnings 158,442 161,515
Accumulated other comprehensive loss (13,599) (14,915)
Treasury stock, at cost: 2,543,100 shares at
March 31, 2003 and December 31, 2002 (13,224) (13,224)
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Total Stockholders' Equity 515,778 517,535
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Total Liabilities and Stockholders' Equity $ 782,047 $ 772,668
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COMMSCOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED -- IN THOUSANDS)
Three Months Ended
March 31,
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2003 2002
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Operating Activities:
Net loss $ (3,073) $ (1,648)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 8,636 9,071
Equity in losses of OFS BrightWave, LLC 6,046 12,734
Deferred income taxes (1,410) (2,336)
Tax benefit from stock option exercises -- 71
Changes in assets and liabilities: (6,007) (1,438)
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Net cash provided by operating activities 4,192 16,454
Investing Activities:
Additions to property, plant and equipment (1,849) (4,077)
Proceeds from repayment of advance to OFS
BrightWave, LLC -- 13,000
Proceeds from disposal of fixed assets 56 48
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Net cash provided by (used in) investing activities (1,793) 8,971
Financing Activities:
Principal payments on long-term debt -- (656)
Debt issuance costs (1,166) --
Proceeds from exercise of stock options -- 418
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Net cash used in financing activities (1,166) (238)
Effect of exchange rate changes on cash 363 (176)
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Change in cash and cash equivalents 1,596 25,011
Cash and cash equivalents, beginning of period 120,102 61,929
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Cash and cash equivalents, end of period $ 121,698 $ 86,940
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