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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 BrightWave investment.
"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
Betsy Lambert, APR