CommScope, Inc. (NYSE: CTV), a world leader in the manufacture of
broadband and high- performance communication cables, today reported
preliminary fourth quarter results. These results do not include a total
for net income according to generally accepted accounting principles
("GAAP"), as CommScope's portion of the financial results of OFS
BrightWave, LLC ("OFS BrightWave") are not yet included. CommScope
acquired an 18.4% ownership interest in OFS BrightWave, an optical fiber
and fiber cable venture between CommScope and Furukawa Electric Co.,
Ltd. of Japan (Tokyo: 5801), during the fourth quarter of 2001 and will
report results using the equity method of accounting for this
investment. As previously announced on January 17, 2002, CommScope
expects to release complete fourth quarter and full-year 2001 financial
results in March, including GAAP net income, after OFS BrightWave
concludes its 2001 year-end financial review and external audit.
CommScope does not expect sales or other operating costs and expenses as
reported herein to change when final results are reported in March.
CommScope's fourth quarter 2001 sales were $143.5 million, down 42% from
the fourth quarter of 2000. Domestic sales were $110.1 million in the
current quarter, compared to $186.1 million in the fourth quarter of
2000. International sales were $33.4 million in the current quarter,
compared to $61.9 million in the same period last year. Orders were
$132.8 million in the current quarter, down 35% from the $203.9 million
booked in the fourth quarter of 2000. CommScope results reflect ongoing
weak global economic and industry conditions.
CommScope's fourth quarter 2001 pro forma earnings, which exclude its
portion of expected losses of OFS BrightWave, were $5.9 million, or
approximately $0.10 per diluted share compared to $22.9 million or $0.43
per diluted share in the fourth quarter of 2000. These pro forma results
include a benefit of approximately $1.3 million before tax or $0.01 per
diluted share, net of tax, from an expected reimbursement of previously
expensed costs related to formation of the OFS business with Furukawa.
Based on preliminary CommScope analysis, the Company believes that its
final fourth quarter 2001 GAAP earnings may be a net loss after the
inclusion of its portion of the expected losses of OFS BrightWave using
the equity method.
For full year 2001, CommScope reported sales of $738.5 million, compared
to sales of $950.0 million in 2000. Total international sales were
$173.3 million in 2001, compared to $232.4 million in the prior year.
CommScope's 2001 pro forma earnings, which exclude its portion of
expected losses of OFS BrightWave, were $34.8 million or approximately
$0.65 per diluted share, compared to $84.9 million or $1.60 per diluted
share in 2000. CommScope's final 2001 GAAP earnings will reflect the
expected fourth quarter 2001 equity method losses from its OFS
"The fourth quarter concluded a difficult year for CommScope and the
telecommunications industry. However, we believe that the long-term
outlook for broadband communications remains bright and we continue to
position CommScope for future growth," said Frank M. Drendel, CommScope
Chairman and Chief Executive Officer. "In 2001, we launched our first
manufacturing facility in Brazil, established strategic vertical
integration projects, expanded our worldwide wireless capability, and
strengthened our balance sheet. Further, through our recent investment
in OFS BrightWave, we have created a strategic partner in optical fiber
and fiber optic cable. While we expect challenging fiber market
conditions during 2002, we believe that our investment in OFS BrightWave
will create value over the longer term."
Broadband/Video sales worldwide decreased 41% year over year to $119.3
million for the current quarter. International sales were $33.4
million for the current quarter, down 46% year over year.
For calendar year 2001, Broadband/Video sales decreased 19% to $588.3
million. Sales of fiber optic cable were approximately 15% of total
Company sales during 2001, primarily for broadband applications.
Local Area Network (LAN) sales increased 3% to $15.1 million for the
current quarter compared to $14.7 million for the same period last
year. For calendar year 2001, LAN sales were $88.3 million, up 4% from
the previous year.
Wireless and Other Telecom sales were $9.1 million in the
current quarter and $61.9 million for 2001, down 70% and 56%
respectively from prior periods.
Total Company gross margin for the current quarter was approximately
24.1%, down significantly from the fourth quarter of 2000 due
primarily to lower sales volume and product mix.
Sales, General and Administrative ("SG&A") expenses were $22.0
million for the current quarter or approximately 15.3% of sales. SG&A
increased as a percentage of sales due primarily to the low sales
volumes and increased charges for doubtful accounts.
Net cash provided by operating activities for the quarter was
$35 million. CommScope's capital expenditures for the current quarter
were $11 million.
"Fourth quarter sales came in at the low end of our expectations due
primarily to deteriorating global economic conditions," said CommScope
Executive Vice President and Chief Financial Officer Jearld Leonhardt.
"Despite challenging conditions throughout 2001, CommScope generated
$157 million of cash from operating activities, paid down $32 million of
long-term debt and ended the year with $62 million in cash on our
balance sheet. Long- term debt was approximately 24% of book capital
structure as of December 31, 2001.
"Looking ahead to the first quarter, which is typically the period with
our smallest sales volume, we expect CommScope's operating performance
to be modestly lower than the fourth quarter of 2001, before the impact
of OFS BrightWave. Based on industry conditions, we also expect
extremely weak demand industry wide for fiber cable products during the
first quarter of 2002," stated Leonhardt. "However, we believe that the
March quarter will represent the low point in CommScope's sales for the
current downturn and anticipate improving business conditions as we move
through the year."
Conference Call Information
CommScope will host a conference call to review preliminary fourth
quarter 2001 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 212-896-6066. 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=2813
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 20253126. The replay will
be available through Friday, February 8th. 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.
This press release contains forward-looking statements regarding sales,
outlook, financial position 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 and others, 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.
Web site: http://www.commscope.com