| HICKORY, N.C., Jan 24, 2005 /PRNewswire-FirstCall via COMTEX/ --
CommScope, Inc. (NYSE: CTV), a world leader in cable and
connectivity solutions, today provided updated financial guidance
for the fourth quarter of 2004. CommScope will host a conference
call at 5:00 p.m. EST today to discuss the fourth quarter guidance,
which is based on preliminary and unaudited information.
CommScope expects fourth quarter 2004 orders of roughly $300
million and revenues of approximately $295 million. Fourth quarter
gross margin is expected to be approximately 21.7%. The Company
expects SG&A to be approximately $54 million and R&D to be
approximately $9 million (or approximately 3% of sales) for the
fourth quarter.
CommScope's previous guidance for the fourth quarter, provided
on November 1, 2004, was revenues of $270-$285 million, gross
margin of 23.5%-24.5% of sales, SG&A of $52-$54 million and R&D of
approximately 2.5%-3.0% of sales.
CommScope Executive Vice President and Chief Financial Officer
Jearld Leonhardt stated, "While our overall fourth quarter revenue
performance was stronger than expected, we are disappointed with
our margin performance. Our results were negatively affected by a
number of items including higher than expected material and freight
costs, an unfavorable product mix, and higher period spending,
among others. As a result, we expect our financial results to be
roughly breakeven for the fourth quarter, excluding costs
associated with the previously announced cost reduction and
organizational initiatives at Connectivity Solutions Manufacturing,
Inc. (CSMI).
"We have already taken actions to improve profitability as we
move into 2005. We have recently implemented increased prices for
selected broadband and enterprise products and CSMI is in the
process of restructuring its operations," Leonhardt noted.
Connectivity Solutions Manufacturing Inc. (CSMI)
Restructuring
As previously announced, CSMI, an indirect manufacturing
subsidiary of CommScope, has begun implementing long-term
manufacturing initiatives designed to improve operations and reduce
cost. These initiatives are expected to be substantially in place
by mid-year 2005. The CSMI restructuring plan includes: a) a
reorganized management structure, b) simplified business practices
and manufacturing processes, c) reduction in represented and
management employees, and d) development of a plan for
under-utilized or excess real estate.
CommScope estimated pretax costs of $17-$24 million to implement
the restructuring plan with the majority of the costs expected to
be incurred during the fourth quarter of 2004. The Company also
stated that it could incur incremental impairment charges for
possible disposal of real estate, depending upon future plans.
Consistent with this guidance, CommScope expects to incur
approximately $15 million in pretax restructuring costs during the
fourth quarter, which includes approximately $7 million of noncash
equipment impairment costs. The remaining costs related to the
restructuring plan are expected to be incurred in 2005.
Annualized savings resulting from the restructuring plan are
projected to be $20 to $25 million once the initiatives are in
place. The actual costs and benefits may differ from the projected
estimates as a result of a number of uncertainties including
business conditions, sales volumes, pricing and seasonality as well
as others.
The 2.4 million square foot Omaha site is the largest production
facility for SYSTIMAX(R), ExchangeMAX(R) and Integrated Cabinet
Solutions products. The facility was purchased from Avaya in
conjunction with the acquisition of the Connectivity Solutions
business on January 31, 2004.
Fourth Quarter Earnings Release and Outlook Planned for February
24
CommScope has not updated its November 16, 2004, guidance for
calendar year 2005. The Company intends to release fourth quarter
2004 results on Thursday, February 24, 2005. A conference call will
be scheduled for 5:00 p.m. on February 24 to discuss fourth quarter
results and CommScope's 2005 outlook.
Conference Call Information
CommScope plans to host a conference call today at 5:00 p.m. EST
to discuss fourth 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 and
international callers should dial 212-676-4903. 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 Presentations page on
CommScope's website at:
http://phx.corporate-ir.net/phoenix.zhtml?c=101146&p=irol-presentations
.
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 +1-402-977-9140 for the replay. The replay ID is
21230409. The replay will be available through January 31. 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.
About CommScope
CommScope (NYSE: CTV) ( http://www.commscope.com ) is a world
leader in the design and manufacture of 'last mile' cable and
connectivity solutions for communication networks. Through our
SYSTIMAX(R) Solutions(TM) and Uniprise Solutions(TM) brands we are
the global leader in structured cabling systems for business
enterprise applications. We are also the world's largest
manufacturer of coaxial cable for Hybrid Fiber Coaxial (HFC)
applications. Backed by strong research and development, CommScope
combines technical expertise and proprietary technology with global
manufacturing capability to provide customers with high-performance
wired or wireless cabling solutions.
Forward-Looking Statements
This press release contains forward-looking statements
regarding, among other things, the business position, plans,
transition, outlook, margins, revenues, earnings, synergies and
other financial items relating to CommScope, and integration and
restructuring plans related to CommScope's acquisition of
substantially all of the assets and certain liabilities of
Connectivity Solutions ("the acquisition") that are based on
information currently available to management, management's beliefs
and a number of assumptions concerning future events. These
forward-looking statements are identified, including, without
limitation, by their use of such terms and phrases as "intends,"
"intend," "intended," "goal," "estimate," "estimates," "expects,"
"expect," "expected," "project," "projects," "projected,"
"projections," "plans," "anticipates," "anticipated," "should,"
"designed to," "foreseeable future," "believe," "believes,"
"think," "thinks" and "scheduled" and similar expressions.
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 of CommScope to differ materially
include, but are not limited to, the ability to recover higher
material and transportation costs from our customers through price
increases; the ongoing transition, integration and restructuring
associated with the acquisition, including cost reduction plans at
the Omaha, Nebraska site of Connectivity Solutions Manufacturing,
Inc; the impact of purchase accounting adjustments; the challenges
of achieving anticipated synergies; variability in the effective
tax rate; the ability to retain qualified employees and existing
business alliances; maintaining satisfactory relationships with
employees; customer demand for our products, applications and
services; post-closing adjustments in connection with acquisitions;
expected demand from major domestic MSOs; telecommunications
industry capital spending; ability to maintain successful
relationships with our major distributors; 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; 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; 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 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; ability to
timely comply with Section 404 of the Sarbanes-Oxley Act and
related regulations; successful operation of our 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; any adjustments required by the Securities and Exchange
Commission in connection with its review of our public filings;
acquisition activities and the ability to integrate acquisitions;
the accounting and financial reporting impact of our stock options
and convertible debt; environmental issues; terrorist activity or
armed conflict; political instability; major health concerns and
other factors; and any statements of belief and any statements of
assumptions underlying any of the foregoing. 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.
SOURCE CommScope, Inc.
Phil Armstrong, Investor Relations, +1-828-323-4848, or Betsy
Lambert, APR, Media
Relations, +1-828-323-4873, both of CommScope, Inc.
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