EXHIBIT 99.3
FOR IMMEDIATE RELEASE
- -------------------------
COMMSCOPE REPORTS THIRD QUARTER 2003 RESULTS
EARNINGS OF $0.02 PER SHARE ON SALES OF $149 MILLION
- -------------------------------------------------------------------------------
HICKORY, NC -- (OCTOBER 27, 2003) CommScope, Inc. (NYSE: CTV) today
announced third quarter results for the period ended September 30, 2003.
The Company reported sales of $148.7 million and earnings of $1.1 million,
or $0.02 per share, for the third quarter. The earnings included after-tax
equity in losses of OFS BrightWave, LLC of $0.05 per share related to
CommScope's minority ownership interest in this venture.
For the third quarter of 2002, CommScope reported sales of $147.8 million
and a net loss of $19.6 million or $0.32 per share. The 2002 loss included
noncash impairment charges of $0.26 per share primarily related to
underutilized and idle production equipment, and after-tax equity in losses
of OFS BrightWave of $0.10 per share.
CommScope's sales for the third quarter rose to $148.7 million, up from
$141.4 million in the second quarter of 2003 and $147.8 million in the
year-ago quarter. The 5% sequential rise in sales was due to stronger
domestic Broadband/Video sales. The year-over-year sales increase was due
to higher Wireless/Other Telecom sales. Local Area Network (LAN) sales were
down slightly year over year and sequentially.
Orders booked in the third quarter of 2003 were $152.2 million compared to
$145.5 million in the third quarter of 2002 and $138.4 million in the
preceding quarter.
"We are pleased with the improved sales, profitability and cash flow during
the third quarter and remain excited regarding the long-term opportunities
in the 'last mile' of telecommunications," said Chairman and Chief
Executive Officer Frank M. Drendel. "We believe that the planned
acquisition of the Avaya Inc. (NYSE: AV) Connectivity Solutions (ACS)
business, which we announced this morning, will further position CommScope
for long-term success."
OFS Brightwave Results
- ----------------------
For the third quarter of 2003, OFS BrightWave had revenues of $25.3
million, a negative gross profit of $14.3 million and a net loss of $27.2
million.
CommScope recorded after-tax charges of $3.1 million, or $0.05 per share,
in the third quarter of 2003 for equity in losses of OFS BrightWave related
to the Company's minority investment in this venture.
CommScope Third Quarter 2003 Highlights
- ---------------------------------------
o Broadband/Video sales rose 9% sequentially to $117.9 million for the
third quarter, but were down 2% from the year-ago period, primarily due
to lower sales of fiber optic cable. Domestic sales increased
sequentially to essentially all major broadband service providers,
including Comcast. Sales to Comcast represented about 17% of total
Company sales for the third quarter. Broadband/Video orders for the
quarter were $121.6 million.
o International sales were down slightly year over year and sequentially
at $26.5 million. International orders for the third quarter were $26.0
million.
o LAN sales for the quarter were $24.0 million, compared to $24.6 million
for the second quarter and $24.2 million for the year ago period. LAN
orders for the quarter were $23.7 million.
o Wireless/Other Telecom sales were $6.8 million, more than double the
third-quarter 2002 level of $3.3 million, but down 18% from the
preceding quarter. CommScope continues to make progress communicating
the Cell Reach(R) value proposition to customers and remains optimistic
about long-term wireless opportunities. Wireless/Other Telecom orders
were $6.9 million for the quarter.
o Selling, general and administrative (SG&A) expense was $20.9 million in
the third quarter of 2003, compared to $21.8 million in the preceding
quarter and $20.5 million in the third quarter of 2002.
o Gross margin for the third quarter of 2003 rose to 20.6%, compared to
20.4% in the preceding quarter and 18.3% in the year-ago quarter. Gross
margin improved year over year primarily due to lower costs and higher
wireless sales.
o Cash provided by operating activities in the quarter was $32.4 million.
This included a $13.5 million tax refund primarily related to the
carryback of 2002 deductible losses from OFS BrightWave and the
write-off of Adelphia receivables. Capital spending for the quarter was
$1.6 million. The Company expects capital spending to be less than $10
million for calendar year 2003.
o CommScope ended the third quarter of 2003 with $171.3 million in cash
and cash equivalents, up substantially from $140.3 million at the end
of the second quarter.
CommScope Fourth Quarter 2003 Outlook
- -------------------------------------
Looking ahead to the fourth quarter of 2003, CommScope Executive Vice
President and Chief Financial Officer Jearld Leonhardt said, "We expect
fourth quarter sales to decline 5-10% from the seasonally strong third
quarter 2003 level. Gross margin may be down as much as 100 basis points
sequentially, depending upon sales volume. This outlook does not take into
account the effects of the pending transaction on the fourth quarter."
2
Conference Call Information
- ---------------------------
CommScope will hold a conference call/webcast today at 10:00 a.m. EST to
discuss the planned acquisition of Avaya Connectivity Solutions (ACS) and
third quarter 2003 results. A replay will be available for two weeks after
the call/webcast (please see information below).
DATE: October 27, 2003
TIME: 10:00 a.m. EST
DOMESTIC DIAL-IN NUMBER: 800.299.7635
INTERNATIONAL DIAL-IN-NUMBER: 617.786.2901
WEBCAST: www.commscope.com
REPLAY AVAILABLE UNTIL 12:00 a.m. EST November 10, 2003
DOMESTIC REPLAY: 888-286-8010, Pin 53366531
INTERNATIONAL REPLAY: 617-801-6888, Pin 53366531
WEBCAST REPLAY: 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,
gross margin, cash flows, outlook and expectations for CommScope and
CommScope's planned acquisition of substantially all of the assets and
certain liabilities of ACS 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
that 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, the
ability of the company to complete the acquisition; the challenges of
integration and restructuring associated with the acquisition; the
challenges of achieving anticipated synergies; the ability to retain
qualified employees and existing business alliances; maintaining
satisfactory relationships with represented employees; customer demand for
ACS products, applications and service; any statements of belief and any
statements of assumptions underlying any of the foregoing; 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; product demand and industry excess capacity; changes or
fluctuations in global business conditions; financial performance and
limited control of OFS BrightWave; competitive pricing and acceptance of
our products; changes in cost and availability of key raw materials,
especially those that are available only from limited sources; ability to
recover higher material and transportation costs from our customers through
price increases; possible future impairment charges for goodwill and other
long-lived assets; industry competition and the ability to retain
customers; possible disruption due to customer or supplier
3
bankruptcy, reorganization or restructuring; our ability to obtain
financing and capital on commercially reasonable terms; covenant
restrictions and our ability to comply with covenants in our debt
agreements; successful operation of bimetals manufacturing and other
vertical integration activities; successful expansion and related operation
of our facilities; achievement of sales, growth and earnings goals; ability
to achieve reductions in costs; ability to retain and attract key
personnel; developments in technology; intellectual property protection;
product performance issues and associated warranties; regulatory changes
affecting us or the industries we serve; acquisition activities and the
ability to integrate acquisitions; environmental issues; terrorist activity
or armed conflict; political instability; major health concerns and other
factors. For a more complete 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
4
COMMSCOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED -- IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
Net sales $ 148,723 $ 147,819 $ 419,513 $ 462,584
------------- ------------- ------------- -------------
Operating costs and expenses:
Cost of sales 118,082 120,743 335,956 368,360
Selling, general and administrative 20,851 20,508 62,732 82,801
Research and development 1,486 1,069 4,530 4,847
Impairment charges for fixed assets - 25,096 31,728 25,096
------------- ------------- ------------- -------------
Total operating costs and expenses 140,419 167,416 434,946 481,104
------------- ------------- ------------- -------------
Operating income (loss) 8,304 (19,597) (15,433) (18,520)
Other income, net 4 392 209 751
Interest expense (2,207) (2,419) (6,548) (6,860)
Interest income 649 696 1,981 1,702
------------- ------------- ------------- -------------
Income (loss) before income taxes and equity
in losses of OFS BrightWave, LLC 6,750 (20,928) (19,791) (22,927)
Provision for income tax (expense) benefit (2,498) 7,725 7,322 8,465
------------- ------------- ------------- -------------
Income (loss) before equity in losses of
OFS BrightWave, LLC 4,252 (13,203) (12,469) (14,462)
Equity in losses of OFS BrightWave, LLC (3,130) (6,359) (40,857) (49,239)
------------- ------------- ------------- -------------
Net income (loss) $ 1,122 $ (19,562) $ (53,326) $ (63,701)
============= ============= ============= =============
Net income (loss) per share:
Basic $ 0.02 $ (0.32) $ (0.90) $ (1.03)
Assuming dilution $ 0.02 $ (0.32) $ (0.90) $ (1.03)
Weighted average shares outstanding:
Basic 59,220 61,763 59,220 61,745
Assuming dilution 59,610 61,763 59,220 61,745
5
COMMSCOPE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(Unaudited)
September 30, December 31,
2003 2002
-------------- --------------
ASSETS
Cash and cash equivalents $ 171,293 $ 120,102
Accounts receivable, less allowance for doubtful accounts of
$15,293 and $11,811, respectively 76,096 64,787
Inventories 34,880 36,254
Prepaid expenses and other current assets 12,535 20,737
Deferred income taxes 15,955 16,579
------------- --------------
Total current assets 310,759 258,459
Property, plant and equipment, net 183,674 229,515
Goodwill, net of accumulated amortization of
$59,562 and $59,520, respectively 151,350 151,334
Other intangibles, net of accumulated amortization of
$41,809 and $39,930, respectively 6,956 8,835
Deferred income taxes 33,281 3,572
Investment in and advances to OFS BrightWave, LLC 46,556 111,528
Other assets 8,989 9,425
------------- --------------
Total Assets $ 741,565 $ 772,668
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 19,572 $ 18,483
Other accrued liabilities 33,854 26,005
-------------- --------------
Total current liabilities 53,426 44,488
Long-term debt 183,300 183,300
Other noncurrent liabilities 34,638 27,345
-------------- --------------
Total Liabilities 271,364 255,133
Commitments and contingencies
Stockholders' Equity
Preferred stock, $.01 par value; Authorized shares: 20,000,000;
Issued and outstanding shares: None at September 30, 2003
and December 31, 2002 -- --
Common stock, $.01 par value; Authorized shares: 300,000,000;
Issued shares, including treasury stock: 61,762,667 at
September 30, 2003 and December 31, 2002; Issued and
outstanding shares: 59,219,567 at September 30, 2003 and
December 31, 2002 618 618
Additional paid-in capital 383,541 383,541
Retained earnings 108,189 161,515
Accumulated other comprehensive loss (8,923) (14,915)
Treasury stock, at cost: 2,543,100 shares at
September 30, 2003 and December 31, 2002 (13,224) (13,224)
-------------- --------------
Total Stockholders' Equity 470,201 517,535
-------------- --------------
Total Liabilities and Stockholders' Equity $ 741,565 $ 772,668
============== ==============
6
COMMSCOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED -- IN THOUSANDS)
Nine Months Ended
September 30,
----------------------------
2003 2002
------------- ------------
OPERATING ACTIVITIES:
Net loss $ (53,326) $ (63,701)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 25,523 27,906
Equity in losses of OFS BrightWave, LLC, pretax 64,978 78,280
Impairment charges for fixed assets 31,728 25,096
Deferred income taxes (27,820) (26,421)
Tax benefit from stock option exercises -- 128
Changes in assets and liabilities: 13,910 30,835
------------- --------------
Net cash provided by operating activities 54,993 72,123
INVESTING ACTIVITIES:
Additions to property, plant and equipment (4,088) (8,335)
Proceeds from repayment of advance to OFS BrightWave, LLC -- 6,146
Proceeds from disposal of fixed assets 211 333
-------------- --------------
Net cash used in investing activities (3,877) (1,856)
FINANCING ACTIVITIES:
Principal payments on long-term debt -- (2,107)
Long-term financing costs (1,215) (345)
Proceeds from exercise of stock options -- 1,029
------------- --------------
Net cash used in financing activities (1,215) (1,423)
Effect of exchange rate changes on cash 1,290 802
------------- --------------
Change in cash and cash equivalents 51,191 69,646
Cash and cash equivalents, beginning of period 120,102 61,929
------------- --------------
Cash and cash equivalents, end of period $ 171,293 $ 131,575
============= ==============
7