CommScope, Inc. (NYSE: CTV), a global leader in infrastructure solutions for
communications networks, reported revenue of $1.06 billion and net income of
$84.7 million, or $1.05 of diluted earnings per share, for the quarter ended
September 30, 2008.
The reported net income includes after-tax charges of approximately $17.5
million for the amortization of purchased intangibles and $3.4 million for
restructuring, one-time costs and purchase accounting adjustments. These special
charges were somewhat offset by approximately $6.2 million of after-tax benefits
related to aligning certain CommScope and Andrew employee benefit policies. In
addition, the consolidation of CommScope and Andrew entities in Brazil allowed
the company to recognize a $5.0 million tax benefit related to the expected use
of net operating losses. Excluding these items, adjusted third quarter 2008
earnings were $94.4 million, or $1.17 of diluted earnings per share. (A
reconciliation of reported GAAP earnings and diluted earnings per share to
adjusted results for the quarter is attached.)
In comparison, for the third quarter of 2007, CommScope reported sales of
$513.6 million and net income of $60.3 million, or $0.81 of diluted earnings per
share.
"CommScope delivered a solid quarter despite increasingly difficult global
economic conditions," said CommScope Chairman and Chief Executive Officer Frank
Drendel. "Among our accomplishments, we continued to successfully integrate the
Andrew acquisition, generated significant cash flow from operations and exceeded
synergy targets.
"We have a fundamentally positive long-term view for our industry despite the
current financial turmoil. The ongoing need for bandwidth is expected to
continue driving network infrastructure investment. Items such as global network
traffic growth, next generation mobile devices, IP video and video conferencing
as well as security and public safety issues all drive ongoing network
requirements. Through our industry leadership, evolving product portfolio and
global reach, we are at the forefront of delivering vital connectivity solutions
for customers' network infrastructure needs."
Sales & Operating Income Overview
Sales more than doubled year over year primarily as a result of the Andrew
acquisition. Sales decreased 6.7 percent on a combined basis that includes
Andrew's actual sales for the third calendar quarter of 2007. The company's
ongoing efforts to eliminate unprofitable product lines affected the
year-over-year, combined-basis sales comparison primarily in the Wireless
Network Solutions (WNS) segment.
Excluding the favorable impact of changes in foreign exchange rates of $21.5
million and adjusting for the divestiture of the Satellite Communications
(SatCom) product line, sales declined approximately 6.5 percent year over year
on a combined basis. Sales by Segment
----------------------------------------------------------------------
($ in millions) Combined
---------
Third Second Third
Quarter Quarter Quarter % Change
2008 2008 2007 YOY Sequential
--------- -------- --------- --------- ----------
ACCG $495.0 $500.2 $504.3 -1.8% -1.0%
Enterprise 236.5 243.1 240.4 -1.6% -2.7%
Broadband 159.0 163.7 161.2 -1.4% -2.9%
WNS 174.7 185.4 232.4 -24.8% -5.8%
Inter-segment
eliminations (2.9) (5.0) (0.3) n/a n/a
--------- --------- ---------
Total CommScope Net
Sales $1,062.3 $1,087.4 $1,138.0 -6.7% -2.3%
========= ========= =========
Sales by Region
----------------------------------------------------------------------
($ in millions) Combined
---------
Third Second Third
Quarter Quarter Quarter % Change
2008 2008 2007 YOY Sequential
--------- --------- --------- --------- ----------
United States $497.0 $507.3 $558.7 -11.0% -2.0%
Europe, Middle East
& Africa 292.0 314.2 312.3 -6.5% -7.1%
Asia Pacific 165.7 173.6 174.0 -4.8% -4.6%
Other Americas 110.5 97.3 93.3 18.4% 13.6%
--------- --------- ---------
Subtotal
International $568.2 $585.1 $579.6 -2.0% -2.9%
Inter-segment
eliminations (2.9) (5.0) (0.3) n/a n/a
--------- --------- ---------
Total CommScope Net
Sales $1,062.3 $1,087.4 $1,138.0 -6.7% -2.3%
========= ========= =========
Antenna, Cable and Cabinet Group (ACCG) segment sales decreased 1.8 percent
year over year to $495.0 million. Significantly lower wireline sales were
substantially offset by higher wireless sales. Wireline sales declined primarily
due to weaker demand for cabinet and apparatus products by major U.S.
telecommunications providers. The company expects continued weakness in the
fourth quarter as carriers manage capital spending and inventory levels;
however, wireline sales are expected to recover in the first quarter of 2009.
Despite the slowdown, CommScope expanded its leadership position in engineering
environmentally secure enclosures, and initiated field trials with major OEMs
outside of North America for potential wireline, wireless and fuel cell
applications.
The wireline weakness was substantially offset by strength in ACCG wireless
products, which increased 7.4 percent year over year. ACCG wireless sales
continued to be robust in emerging markets with Asia Pacific and Other Americas
up double digits year over year, including the positive effect of changes in
foreign exchange rates. Sales of microwave products for backhaul applications
were also strong in the quarter. On a combined basis, in spite of lower overall
sales volume, ACCG segment adjusted operating income rose year over year
primarily due to ongoing integration and cost management efforts along with a
favorable sales mix.
Enterprise segment sales decreased 1.6 percent year over year to $236.5
million, primarily as a result of a slowdown in the North American enterprise
market. Moderate growth continued on a year-over-year basis in all major regions
outside of North America and these sales represented essentially half of total
Enterprise sales in the quarter. The company continues to see a positive shift
in mix toward higher bandwidth applications, which are typically less sensitive
to changes in commodity prices. This favorable sales mix in addition to ongoing
cost management created year-over-year adjusted operating income growth in the
Enterprise segment.
Broadband segment sales declined 1.4 percent to $159.0 million on a
year-over-year basis. International growth was more than offset by weakness in
the North American market, which was primarily attributable to the slowdown in
residential construction. The lower sales volume and an unfavorable product mix
negatively affected the Broadband segment adjusted operating income.
WNS segment sales decreased 24.8 percent year over year to $174.7 million in
the third quarter of 2008. The WNS year-over-year sales decline was primarily
due to the divestiture of the SatCom business, which was sold in the first
quarter of 2008. The SatCom business had sales of $27.2 million in the year-ago
quarter. The WNS sales comparison was also affected by the restructuring of a
relationship with a major OEM. As a result of these changes, WNS segment
operating income improved significantly despite lower sales volumes.
Customer orders booked in the third quarter of 2008 were $1.02 billion, down
6.2 percent from the year-ago quarter, on a combined basis, and down 6.1 percent
sequentially.
Consolidated Operating Income
Operating income in the third quarter of 2008 was $127.5 million. Excluding
intangible amortization, purchase accounting adjustments, acquisition related
expenses, restructuring costs and benefit adjustments, third quarter adjusted
operating income was $150.1 million. Adjusted operating income, on a comparative
basis, rose approximately 19.0 percent year over year, primarily due to improved
performance from the WNS and ACCG segments. Third Quarter 2008 Adjusted Operating Income by Segment
----------------------------------------------------------------------
($ in millions)
ACCG Enterprise WNS Broadband Total
------ ---------- ------- --------- -------
Operating income as
reported $62.7 $46.1 $4.8 $13.9 $127.5
Intangible amortization 17.8 1.6 8.1 0.5 28.0
Restructuring costs - 1.0 - 1.4 2.4
Purchase accounting
adjustments - - 1.8 - 1.8
Acquisition and one-time
costs 0.3 - 0.1 - 0.4
Alignment of certain
employee benefit policies (3.3) (2.5) - (4.2) (10.0)
------ ---------- ------- --------- -------
Adjusted operating income $77.5 $46.2 $14.8 $11.6 $150.1
====== ========== ======= ========= =======
Third Quarter 2007 Adjusted Combined Operating Income (Loss) by
Segment (1)
----------------------------------------------------------------------
($ in millions)
ACCG Enterprise WNS Broadband Total
------ ---------- ------- --------- -------
Operating income (loss) as
reported $64.0 $42.5 $(96.7) $17.0 $26.8
Intangible amortization 1.0 1.6 1.5 0.5 4.6
Restructuring costs 0.5 0.1 0.4 0.1 1.1
Acquisition and one-time
costs 0.7 - 0.3 - 1.0
Orland park relocation &
Joliet start-up costs 2.3 - - - 2.3
Litigation charges - - 47.8 - 47.8
Asset impairments 0.3 - 41.3 - 41.6
Loss on sale of assets 0.5 - 0.4 - 0.9
------ ---------- ------- --------- -------
Adjusted operating income
(loss) $69.3 $44.2 $(5.0) $17.6 $126.1
====== ========== ======= ========= =======
(1) Reflects the GAAP operating income and special items, as
separately reported by CommScope and Andrew, combined to
reflect the segment reporting for 2008.
Other Third Quarter 2008 Highlights
-- Non-U.S. sales represented 53.5 percent of total company sales
during the third quarter of 2008.
-- The company estimates that it achieved $16 million of
synergies in the third quarter of 2008 and $42 million
year-to-date.
-- Gross margin for the third quarter of 2008 was 27.9 percent
and includes $3.8 million of intangible amortization and $1.8
million of purchase accounting adjustments related to
inventory reflected in Cost of Sales. Excluding these items,
gross margin would have been 28.4 percent.
-- SG&A expense for the third quarter of 2008 was $108.8 million,
or 10.2 percent of sales, and includes approximately $10.0
million related to the alignment of certain employee benefit
policies between CommScope and Andrew. Excluding this benefit,
SG&A would have been 11.2 percent of sales.
-- The company incurred $2.4 million of restructuring expenses
during the third quarter of 2008 related to the previously
announced manufacturing rationalization.
-- The consolidation of CommScope and Andrew entities in Brazil
resulted in a $5.0 million tax benefit in the quarter related
to the partial release of tax valuation allowances on net
operating losses from prior years. In addition, the company's
effective tax rate reflects the benefits derived from
significant operations outside the U.S., which are generally
taxed at rates lower than the U.S. statutory rate. The
geographic mix of taxable earnings (lower U.S. and higher
non-U.S.) had a significantly positive impact on the effective
tax rate.
-- Total depreciation and amortization expense was $55.6 million
in the quarter.
-- Total amortization of purchased intangible assets for the
quarter was $28.0 million, which is primarily related to the
Andrew acquisition.
-- Capital spending in the quarter was $12.9 million.
Capital Structure and Cash Flow
In the third quarter of 2008, CommScope generated $131.6 million of cash flow
from operations and expects to achieve approximately $450 million of cash flow
from operations in calendar year 2008. The weighted-average effective interest
rate on outstanding borrowings as of September 30, 2008, was 6.25 percent.
During the quarter, CommScope repaid $104.7 million of its outstanding debt as a
further step in its plan to reduce leverage.
Andrew Integration and Cost Reduction Activities
CommScope integration and synergy activities are ahead of schedule and the
company now expects total merger savings to be approximately $115 million by
2009. Nearly $60 million of these savings are expected to be achieved in 2008.
The increased synergy expectations include the recently announced plans to
consolidate certain antenna and cable production within the Antenna, Cable and
Cabinet Group and Enterprise segments into other existing facilities. The total
cost savings are expected to come from a combination of procurement savings,
rationalization of duplicate locations, streamlining overhead and integration of
infrastructure, and building upon best practices in technology and
manufacturing.
Outlook
CommScope management provided the following guidance for the fourth quarter
of 2008 and calendar year 2008: Fourth Quarter 2008 Outlook:
-- Revenue of $875 million to $925 million
-- Adjusted operating income of $80 million to $100 million,
excluding special items
-- Tax rate of 24 percent to 26 percent on adjusted pretax income
-- More than $200 million in cash flow from operations
-- Capital expenditures of $20 million - $30 million
Calendar Year 2008 Outlook:
-- Revenue of $4.03 billion to $4.08 billion
-- Adjusted operating income of $495 million to $515 million,
excluding special items
-- Tax rate of 26 percent to 28 percent on adjusted pretax income
-- More than $450 million of cash flow from operations
-- Capital expenditures of $55 million to $65 million
"Our seasonally slow fourth-quarter outlook reflects significantly lower
sales volume expectations for wireline cabinets, reduced seasonal sales volume
for other product areas and a stronger dollar, somewhat offset by lower expected
commodity costs," said Executive Vice President and Chief Financial Officer
Jearld Leonhardt. "Clearly, the current global financial crisis has created
unprecedented volatility and made our customers more cautious. However, we
continue to expect our strongest cash flow generation of the year during the
fourth quarter. We are proceeding with our deleveraging strategy and our
liquidity remains strong. We have nearly $500 million of cash and cash
equivalents and our revolving credit facility remains fully in place and
undrawn--all this after reducing debt by more than $100 million in the
quarter.
"The ongoing global economic uncertainty and commodity cost volatility have
made forecasting much more difficult - particularly in the near term. As a
result, CommScope does not intend to provide specific financial guidance for
calendar year 2009 at this time. Despite these challenges, we firmly believe in
the strength and diversity of our business model and expect to create value for
customers and stakeholders over the long term."
Financial Analyst Conference
CommScope plans to host a financial analyst conference on Thursday, November
6 in Richardson, Texas. Management will conduct a formal presentation from 8:30
a.m. to 11:30 a.m. CT, followed by afternoon tours of selected research and
development facilities located in Richardson.
CommScope executives plan to provide an overview of the company's strategy
and will discuss how each business segment advances innovation, quality and
performance for its global communications customers. While the company intends
to highlight business drivers, it does not plan to provide specific financial
guidance for calendar year 2009 at the conference. Institutional investors
interested in attending the event should contact Mark Huegerich at +1
828-431-2540 or mhuegerich@commscope.com for registration details. Investors can
also listen to a live Internet webcast and view the corresponding slides from a
link on the Investor Relations Presentations page of CommScope's website at
www.commscope.com. A webcast replay will also be available on CommScope's
web-site for a limited period of time following the conference.
Conference Call Information
CommScope plans to host a call today at 5:00 p.m. ET to discuss third quarter
results. 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 callers should dial +1
866-845-6585 and international callers should dial +1 706-643-2944. The
conference identification number is 68950532. Please plan to dial in 15-20
minutes before the start of the call to facilitate a timely connection. The
live, listen-only audio of the call will be available through a link on the
Investor Relations Presentations page of CommScope's web-site at
www.commscope.com
If you are unable to participate and would like to hear a replay, domestic
callers may dial +1 800-642-1687 and international callers should dial +1
706-645-9291. The replay identification number is 68950532 and will be available
through November 13, 2008. A webcast replay will also be archived on CommScope's
website for a limited period of time following the conference call.
About CommScope
CommScope (NYSE: CTV - www.commscope.com) is a world leader in infrastructure
solutions for communication networks. Through its Andrew(R) brand, it is a
global leader in radio frequency subsystem solutions for wireless networks.
Through its SYSTIMAX(R) and Uniprise(R) brands, CommScope is the global leader
in structured cabling systems for business enterprise applications. It is also
the premier manufacturer of coaxial cable for broadband cable television
networks and one of the leading North American providers of environmentally
secure cabinets for DSL and FTTN applications. Backed by strong research and
development, CommScope combines technical expertise and proprietary technology
with global manufacturing capability to provide customers with infrastructure
solutions for evolving global communications networks in more than 130 countries
around the world.
Forward Looking Statement
This press release contains forward-looking statements regarding, among other
things, the announced global manufacturing changes, business position, plans,
outlook, integration, synergies and other financial items relating to CommScope
that are based on information currently available to management, management's
beliefs and a number of assumptions concerning future events. Statements made in
the future tense, and statements using words such as "intend," "goal,"
"estimate," "expect," "project," "projections," "plans," "anticipate," "should,"
"designed to," "long term view," "believe," "confident," "think," "scheduled,"
"outlook," "guidance" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are not a guarantee of
performance and are subject to a number of risks and uncertainties, many of
which are difficult to predict and are beyond the control of CommScope, and
therefore should be carefully considered. Factors that could cause actual
results of CommScope to differ materially include, but are not limited to,
continued global economic weakness and uncertainties; changes in cost and
availability of key raw materials and the potential effect on customer pricing;
the challenges of achieving anticipated cost-reduction synergies expected from
the acquisition of Andrew; delays or challenges related to removing,
transporting or reinstalling equipment; the ability to retain qualified
employees and existing business alliances; customer demand for our products and
the ability to maintain existing business alliances with key customers or
distributors; competitive pricing and acceptance of products; industry
competition and the ability to retain customers through product innovation;
concentration of sales among a limited number of customers or distributors; the
risk that internal production capacity and that of contract manufacturers may be
insufficient to meet customer demand or quality standards for our products; the
outcome of negotiations with represented employees; the risk that customers
might cancel orders placed or that orders currently placed may affect order
levels in the future; continuing consolidation among customers; possible
production disruption due to supplier or contract manufacturer bankruptcy,
reorganization or restructuring; significant international operations and the
impact of variability in foreign exchange rates; ability to integrate the
CommScope and Andrew businesses; ability to fully realize anticipated benefits
from prior or future acquisitions or equity investments; substantial
indebtedness as a result of the acquisition of Andrew and compliance with the
senior secured credit facilities; capital structure changes; tax rate
variability; dependence upon key personnel; ability to integrate Andrew's
systems of internal control over financial reporting with ours; realignment of
global manufacturing capacity; purchase accounting costs; protecting or
defending intellectual property; ability to obtain capital on commercially
reasonable terms; fluctuations in interest rates; the ability to achieve
expected sales growth and earnings goals; the outcome of the TruePosition, Inc.
litigations and regulatory changes affecting us or the industries we serve. For
a more complete description of factors that could cause such a difference,
please see CommScope's filings with the Securities and Exchange Commission
(SEC), which are available on CommScope's website or at www.sec.gov. In
providing forward-looking statements, CommScope does not intend, and does not
undertake any duty or obligation, to update these statements as a result of new
information, future events or otherwise. CommScope, Inc.
Condensed Consolidated Statements of Operations
(Unaudited -- In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2008 2007 2008 2007
----------- ---------- ----------- -----------
Net sales $1,062,297 $513,608 $3,154,768 $1,468,204
----------- ---------- ----------- -----------
Operating costs and
expenses:
Cost of sales 765,824 354,324 2,331,209 1,014,382
Selling, general and
administrative 108,768 68,082 368,401 193,036
Research and
development 33,551 8,288 103,785 24,610
Amortization of
purchased intangible
assets 24,294 1,334 73,398 3,623
Restructuring costs 2,356 215 25,124 1,113
----------- ---------- ----------- -----------
Total operating
costs and expenses 934,793 432,243 2,901,917 1,236,764
----------- ---------- ----------- -----------
Operating income 127,504 81,365 252,851 231,440
Other income (expense),
net (23) 2,824 (16,017) 2,542
Interest expense (37,007) (1,665) (112,215) (5,339)
Interest income 5,958 5,962 15,543 16,248
----------- ---------- ----------- -----------
Income before income
taxes 96,432 88,486 140,162 244,891
Income tax expense (11,745) (28,213) (26,308) (77,634)
----------- ---------- ----------- -----------
Net income $84,687 $60,273 $113,854 $167,257
=========== ========== =========== ===========
Earnings per share:
Basic $1.20 $0.98 $1.64 $2.74
Diluted (a) $1.05 $0.81 $1.43 $2.27
Weighted average shares
outstanding:
Basic 70,287 61,661 69,230 61,105
Diluted (a) 81,175 74,978 80,843 74,500
(a) Calculation of
diluted earnings per
share:
Net income (basic) $84,687 $60,273 $113,854 $167,257
Convertible debt
add-back 499 629 1,644 1,887
----------- ---------- ----------- -----------
Numerator
(assuming
dilution) $85,186 $60,902 $115,498 $169,144
=========== ========== =========== ===========
Weighted average
shares (basic) 70,287 61,661 69,230 61,105
Dilutive effect of:
Stock options (b) 862 1,294 931 1,436
Restricted stock
units and
performance share
units 851 529 745 465
Convertible debt 9,175 11,494 9,937 11,494
----------- ---------- ----------- -----------
Denominator
(assuming
dilution) 81,175 74,978 80,843 74,500
=========== ========== =========== ===========
(b) Options to purchase approximately 0.7 million and 0.8 million
common shares were excluded from the computation of diluted earnings
per share for the three and nine months ended September 30, 2008,
respectively, because they would have been antidilutive. No options
to purchase common shares were excluded from the computation of
diluted earnings per share for the three and nine months ended
September 30, 2007.
See notes to unaudited condensed consolidated financial statements
included in our Form 10-Q.
CommScope, Inc.
Condensed Consolidated Balance Sheets
(Unaudited -- In thousands, except share amounts)
September December
30, 31,
2008 2007
----------- -----------
Assets
Cash and cash equivalents $496,251 $649,451
Accounts receivable, less allowance for
doubtful accounts of
$18,847 and $22,154, respectively 825,374 793,366
Inventories, net 475,981 548,360
Prepaid expenses and other current assets 67,538 133,737
Deferred income taxes 80,551 106,476
----------- -----------
Total current assets 1,945,695 2,231,390
Property, plant and equipment, net 499,145 525,305
Goodwill 1,278,468 1,211,214
Other intangibles, net 946,074 1,042,765
Other noncurrent assets 65,549 95,897
----------- -----------
Total Assets $4,734,931 $5,106,571
=========== ===========
Liabilities
and
Stockholders'
Equity
Accounts payable $325,752 $350,615
Other accrued liabilities 304,186 399,944
Current portion of long-term debt 217,575 247,662
----------- -----------
Total current liabilities 847,513 998,221
Long-term debt 1,978,741 2,348,157
Deferred income taxes 253,444 268,647
Pension and postretirement benefit liabilities 103,891 108,275
Other noncurrent liabilities 95,513 103,263
----------- -----------
Total Liabilities 3,279,102 3,826,563
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; Authorized
shares: 20,000,000;
Issued and outstanding shares: None at
September 30, 2008 and
December 31, 2007 -- --
Common stock, $.01 par value; Authorized
shares: 300,000,000;
Issued shares, including treasury stock:
80,567,100 at
September 30, 2008 and 77,070,029 at
December 31, 2007;
Issued and outstanding shares: 70,367,100 at
September 30, 2008
and 66,870,029 at December 31, 2007 805 770
Additional paid-in capital 967,464 856,452
Retained earnings 659,461 545,607
Accumulated other comprehensive income (loss) (26,366) 22,714
Treasury stock, at cost: 10,200,000 shares at
September 30, 2008
and December 31, 2007 (145,535) (145,535)
----------- -----------
Total Stockholders' Equity 1,455,829 1,280,008
----------- -----------
Total Liabilities and Stockholders' Equity $4,734,931 $5,106,571
=========== ===========
See notes to unaudited condensed consolidated financial statements
included in our Form 10-Q.
CommScope, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited -- In thousands)
Nine Months Ended
September 30,
-------------------
2008 2007
--------- ---------
Operating Activities:
Net income $113,854 $167,257
Adjustments to reconcile net income to net cash
provided by
operating activities:
Depreciation and amortization 164,921 37,285
Equity-based compensation 15,361 7,747
Changes in assets and liabilities (40,641) (73,776)
--------- ---------
Net cash provided by operating activities 253,495 138,513
Investing Activities:
Additions to property, plant and equipment (35,920) (18,284)
Proceeds from sale of product lines 9,009 --
Net purchases of short-term investments -- (86,707)
Proceeds from disposal of fixed assets 6,873 10,957
Cash paid for acquisitions (60,976) (16,976)
Other (5,012) --
--------- ---------
Net cash used in investing activities (86,026) (111,010)
Financing Activities:
Principal payments on long-term debt (329,603) (22,550)
Proceeds from the issuance of shares under
equity-based
compensation plans 12,852 34,667
Tax benefit from the issuance of shares under
equity-based compensation plans 6,227 16,305
Other 343 --
--------- ---------
Net cash (used in) provided by financing
activities (310,181) 28,422
Effect of exchange rate changes on cash and cash
equivalents (10,488) 1,349
--------- ---------
Change in cash and cash equivalents (153,200) 57,274
Cash and cash equivalents, beginning of period 649,451 276,042
--------- ---------
Cash and cash equivalents, end of period $496,251 $333,316
========= =========
See notes to unaudited condensed consolidated financial statements
included in our Form 10-Q.
CommScope, Inc.
Sales and Operating Income by Reportable Segment
(Unaudited -- In millions)
Actual Combined (1)
------------------------ -------------
Three Months
Three Months Ended Ended
September 30, September 30,
------------------------ -------------
2008 2007 2007
----------- ------------ -------------
Net Sales:
ACCG $ 495.0 $ 112.3 $ 504.3
Enterprise 236.5 240.4 240.4
Broadband 159.0 161.2 161.2
WNS 174.7 - 232.4
Inter-segment eliminations (2.9) (0.3) (0.3)
----------- ------------ -------------
Consolidated Net Sales $ 1,062.3 $ 513.6 $ 1,138.0
=========== ============ =============
Operating Income (Loss):
ACCG $ 62.7 $ 21.9 $ 64.0
Enterprise 46.1 42.5 42.5
Broadband 13.9 17.0 17.0
WNS 4.8 - (96.7)
----------- ------------ -------------
Consolidated Operating Income $ 127.5 $ 81.4 $ 26.8
=========== ============ =============
Actual Combined (1)
------------------------ -------------
Three Months
Nine Months Ended Ended
September 30, September 30,
------------------------ -------------
2008 2007 2007
----------- ------------ -------------
Net Sales:
ACCG $ 1,474.2 $ 316.2 $ 1,372.3
Enterprise 691.0 680.6 680.6
Broadband 458.3 472.7 472.7
WNS 540.7 - 616.7
Inter-segment eliminations (9.4) (1.3) (1.3)
----------- ------------ -------------
Consolidated Net Sales $ 3,154.8 $ 1,468.2 $ 3,141.0
=========== ============ =============
Operating Income (Loss):
ACCG $ 149.2 $ 52.8 $ 151.3
Enterprise 123.0 119.8 119.8
Broadband 8.5 58.8 58.8
WNS (27.8) - (229.9)
----------- ------------ -------------
Consolidated Operating Income $ 252.9 $ 231.4 $ 100.0
=========== ============ =============
(1) Reflects the GAAP net sales and operating income, as separately
reported by CommScope and Andrew, combined to reflect the segment
reporting for 2008.
CommScope, Inc.
Reconciliation to Adjusted (non-GAAP) Operating Income
(Unaudited -- In millions)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
2008 2007 2008 2007
------------ --------- ------------ --------
Consolidated Combined Consolidated Combined
(1) (1)
Operating Income $ 127.5 $ 26.8 $ 252.9 $ 100.0
Special items:
Amortization of
purchased
intangible assets
(2) 28.0 4.6 85.0 18.8
Purchase accounting
adjustments
related to
inventory 1.8 - 59.3 -
Restructuring costs 2.4 1.1 25.1 4.7
Acquisition and
one-time costs 0.4 1.0 4.2 1.7
Alignment of
certain employee
benefit policies (10.0) - (10.0) -
Orland Park
relocation &
Joliet start-up
costs - 2.3 - 15.4
Quality and
litigation costs - 47.8 - 48.7
Asset impairments - 41.6 - 149.5
Other - 0.9 - (5.4)
------------- ---------- ------------- ---------
Adjusted (non-GAAP)
Operating Income $ 150.1 $ 126.1 $ 416.5 $ 333.4
============= ========== ============= =========
CommScope, Inc.
Reconciliation of GAAP Measures to Adjusted Measures
(Unaudited -- In millions, except per share amounts)
Three Months Ended
September 30, 2008
-----------------------------------
Operating Net Income Diluted
Income (3) EPS
--------- ------------- --------
As reported $ 127.5 $ 84.7 $ 1.05
Special items:
Amortization of purchased
intangible assets (2) 28.0 17.5 0.22
Purchase accounting adjustments
related to inventory 1.8 1.1 0.01
Restructuring costs 2.4 2.1 0.03
Acquisition and one-time costs 0.4 0.2 -
Alignment of certain employee
benefit policies (10.0) (6.2) (0.08)
Release of income tax valuation
allowance - (5.0) (0.06)
---------- ------------- ---------
As adjusted for special items $ 150.1 $ 94.4 $ 1.17
========== ============= =========
(1) Reflects the GAAP operating income and special items, as
separately reported by CommScope and Andrew, combined to reflect the
segment reporting for 2008.
(2) Includes amortization included in Cost of Sales.
(3) The tax rates applied to special items reflect the tax expense or
benefit expected to be realized based on the tax jurisdiction of the
entity generating the special item. There are certain special items
for which we expect to receive no tax benefit.
CommScope management believes that presenting operating income,
earnings and diluted EPS information excluding the special items
noted above provides meaningful information to investors in
understanding operating results and may enhance investors' ability to
analyze financial and business trends, when considered together with
the GAAP financial measures. In addition, CommScope management
believes that these non-GAAP financial measures allow investors to
compare period to period more easily by excluding items that could
have a disproportionately negative or positive impact on results in
any particular period.
CONTACT: CommScope, Inc.
Investor Contact:
Philip Armstrong, +1 828-323-4848
or
News Media Contact:
Rick Aspan, +1 708-236-6568
publicrelations@commscope.com
SOURCE: CommScope, Inc.
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