CommScope Announces Third Quarter 2009 Results
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-- Third quarter net sales of $750 million
-- Net income of $46 million, or $0.45 per diluted share
-- Operating income of $91 million and adjusted operating income, excluding
special items, of $119 million or 15.8 percent of sales
-- Adjusted net income, excluding special items, of $63 million, or $0.61
per diluted share
-- Quarterly net cash flow from operations of $138 million
HICKORY, N.C.--(BUSINESS WIRE)-- CommScope, Inc. (NYSE: CTV), a global leader in infrastructure solutions for communications networks, reported sales of $750.4 million and net income of $45.8 million, or $0.45 per diluted share, for the quarter ended September 30, 2009.
The reported quarterly net income includes after-tax charges of approximately $15.3 million for the amortization of purchased intangibles and $2.2 million in restructuring costs. Excluding these special items, adjusted third quarter 2009 earnings were $63.3 million, or $0.61 per diluted share. (A reconciliation of reported GAAP results to adjusted results for the quarter is attached.)
For the third quarter of 2008, CommScope reported net sales of $1.06 billion and net income of $84.7 million, or $1.05 per diluted share. The reported net income included approximately $9.7 million of net after-tax charges primarily related to the amortization of purchased intangibles somewhat offset by the benefit of aligning certain CommScope and Andrew employee benefit policies and a tax item.
"We are pleased to deliver solid operating performance and near record cash flow in the quarter as the business environment begins to stabilize," said Chairman and Chief Executive Officer Frank Drendel. "During this tough economic period, we have reduced working capital and lowered costs while continuing to fund key research and development projects. Because of our proprietary technology, global leadership and consistent quality, we think CommScope is uniquely positioned to help service providers, large enterprises and OEMs deliver next generation communication networks. As the economy begins to slowly recover, we believe trends such as the global adoption of smart phones, new 4G services and the streaming of high definition video create meaningful opportunities for CommScope."
Sales Overview
Sales declined 29.4 percent year over year due primarily to declines in volume across all segments and geographic regions as a result of the global recession. Specifically, the difficult business environment has negatively affected capital spending by telecommunication providers and created a slowdown in commercial and residential construction.
Sequentially, sales declined 4.2 percent primarily due to a significant decline in the project-oriented WNS segment sales, somewhat offset by higher Broadband and Enterprise segment sales.
Net Sales by Segment
($ in millions)
Third Third Second
Quarter Quarter Quarter % Change
2009 2008 2009 YOY Sequential
ACCG $ 316.4 $ 495.0 $ 322.2 -36.1 % -1.8 %
Enterprise 177.6 236.5 164.3 -24.9 % 8.1 %
Broadband 136.7 159.0 118.2 -14.0 % 15.7 %
WNS 120.3 174.7 179.7 -31.1 % -33.1 %
Inter-segment (0.6 ) (2.9 ) (0.7 ) n/a n/a
eliminations
Total CommScope Net $ 750.4 $ 1,062.3 $ 783.7 -29.4 % -4.2 %
Sales
Net Sales by Region
($ in millions)
Third Third Second
Quarter Quarter Quarter % Change
2009 2008 2009 YOY Sequential
United States $ 401.8 $ 497.0 $ 419.3 -19.2 % -4.2 %
Europe, Middle East & 169.7 288.1 171.5 -41.1 % -1.0 %
Africa
Asia Pacific 122.9 169.6 143.5 -27.5 % -14.4 %
Other Americas 56.6 110.5 50.1 -48.8 % 13.0 %
Subtotal International $ 349.2 $ 568.2 $ 365.1 -38.5 % -4.4 %
Inter-segment (0.6 ) (2.9 ) (0.7 ) n/a n/a
eliminations
Total CommScope Net $ 750.4 $ 1,062.3 $ 783.7 -29.4 % -4.2 %
Sales
Antenna, Cable and Cabinet Group (ACCG) segment sales declined 1.8 percent sequentially to $316.4 million as lower base station antenna sales in the Asia Pacific and North American regions offset increases in sales of cable and microwave products.
Enterprise segment sales rose 8.1 percent sequentially to $177.6 million in the seasonally strong third quarter. The company saw modest improvement in global corporate information technology spending in the third quarter and believes the Enterprise market has begun to stabilize.
Broadband segment sales rose 15.7 percent sequentially in the seasonally strong third quarter to $136.7 million. Sales rose in all major product groups and across all geographic regions as cable operators both maintain and upgrade their networks as they compete with satellite and wireline carriers.
WNS segment sales declined 33.1 percent sequentially to $120.3 million due primarily to lower sales in China for select 3G projects as well as short-term volatility associated with large wireless projects in the North American and Europe, Middle East and Africa (EMEA) regions.
In the third quarter, U.S. sales declined 4.2 percent sequentially to $401.8 million or 53.5 percent of total company sales.
Customer orders booked in the third quarter 2009 were $719 million.
Operating Income Overview
Operating income in the third quarter of 2009 was $91.2 million compared to $127.5 million for the comparable 2008 period. The year-over-year decline in operating income resulted primarily from lower sales volumes. Adjusted operating income, which excludes amortization of purchased intangibles and restructuring costs, declined 20.8 percent year over year to $118.9 million.
Third Quarter 2009 Adjusted (non-GAAP) Operating Income by Segment
($ in millions)
ACCG Enterprise Broadband WNS Total
Operating income, as $ 23.0 $ 36.9 $ 32.3 $ (1.0 ) $ 91.2
reported
Amortization of purchased 17.2 1.6 0.5 5.2 24.5
intangible assets
Restructuring costs 0.8 0.6 0.5 1.3 3.2
Adjusted (non-GAAP) $ 41.0 $ 39.1 $ 33.3 $ 5.5 $ 118.9
operating income
Adjusted (non-GAAP) 13.0 % 22.0 % 24.4 % 4.6 % 15.8 %
operating margin
Second Quarter 2009 Adjusted (non-GAAP) Operating Income by Segment
($ in millions)
ACCG Enterprise Broadband WNS Total
Operating income, as $ 14.6 $ 27.8 $ 27.9 $ 3.8 $ 74.1
reported
Amortization of purchased 17.2 1.6 0.5 5.2 24.5
intangible assets
Restructuring costs 4.9 1.3 0.3 1.6 8.1
Litigation charge - - - 18.1 18.1
Adjusted (non-GAAP) $ 36.7 $ 30.7 $ 28.7 $ 28.7 $ 124.8
operating income
Adjusted (non-GAAP) 11.4 % 18.7 % 24.3 % 16.0 % 15.9 %
operating margin
Third Quarter 2008 Adjusted (non-GAAP) Operating Income by Segment
($ in millions)
ACCG Enterprise Broadband WNS Total
Operating income, as $ 62.7 $ 46.1 $ 13.9 $ 4.8 $ 127.5
reported
Amortization of purchased 17.8 1.6 0.5 8.1 28.0
intangible assets
Purchase accounting
adjustments related to - - - 1.8 1.8
inventory
Restructuring costs - 1.0 1.4 - 2.4
Acquisition and one-time (3.0 ) (2.5 ) (4.2 ) 0.1 (9.6 )
transition costs
Adjusted (non-GAAP) $ 77.5 $ 46.2 $ 11.6 $ 14.8 $ 150.1
operating income
Adjusted (non-GAAP) 15.7 % 19.5 % 7.3 % 8.5 % 14.1 %
operating margin
CommScope management believes that presenting operating income 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.
Third Quarter 2009 Financial Highlights
-- Gross margin for the third quarter of 2009 was 32.6 percent and includes
$3.6 million of amortization of purchased intangibles in Cost of Sales.
Excluding this item, adjusted gross margin would have been 33.1 percent.
-- SG&A expense for the third quarter of 2009 was $103.2 million, down
$10.9 million or 9.5 percent year over year, due primarily to lower
sales volumes and the suspension of incentive-based cash bonus programs
for employees.
-- Interest expense was $25.7 million, down $11.4 million year over year,
primarily due to lower outstanding debt balances.
-- Total depreciation and amortization expense in the third quarter was
$48.9 million with purchased intangibles amortization in the quarter
totaling $24.5 million.
-- Net operating cash flow in the third quarter of $137.6 million. Over the
last twelve months, CommScope has generated record free cash flow of
$416.2 million (record cash flow from operations of $469.8 million less
$53.6 million of additions to property, plant and equipment).
-- The company's effective income tax rate for the quarter was 28.8
percent, which reflects benefits resulting from the filing of certain US
and foreign income tax returns and resolution of various tax
uncertainties.
Commercial Highlights
-- CommScope Enterprise Solutions introduced the InstaPATCH(R) 360 System,
the newest installment to its next generation SYSTIMAX 360(TM) SOLUTION
platform. Developed by CommScope Labs, InstaPATCH 360 is a modular fiber
connectivity solution that enables installers to simply and quickly
connect system components together, ultimately resulting in improved
density, performance and reliability.
-- CommScope's Andrew Solutions(TM) also recently introduced SmartBeam(R),
its next generation base station antenna technology. SmartBeam antenna
systems can increase efficiency of existing sites and improve network
quality by optimizing the antenna beam based on predictable customer
traffic loads.
-- Andrew has been chosen by Vodacom, South Africa's largest cellular
operator, to furnish its indoor wireless coverage and capacity solution,
the ION(TM) (Intelligent Optical Network) fiber distributed antenna
system, in five of the ten South African stadiums to be used for the
2010 World Cup. Other similar Andrew projects have supported wireless
communications at major sporting events, including the 2008 European
Football Championship in Switzerland, the 2008 Summer Olympics in
Beijing, the 2006 World Cup in Germany, the 2006 Winter Olympics in
Turin, Italy, and the 2000 Summer Olympics in Sydney, Australia. Earlier
this year the company also provided network infrastructure and cellular
coverage and capacity solutions for the new Dallas Cowboys' stadium.
Outlook
CommScope management provided the following guidance for the fourth quarter of 2009:
-- Revenue of $740 million to $790 million
-- Adjusted operating income of $95 million to $115 million, excluding
amortization of purchased intangibles and other special items
-- Tax rate of 34 percent to 36 percent on adjusted pretax income
"Despite a difficult global economy, we delivered solid margins at both the gross and operating levels and generated near record cash flow from operations, which further strengthened our balance sheet," said Executive Vice President and Chief Financial Officer Jearld Leonhardt. "Looking ahead to the fourth quarter, we expect stronger sequential wireless sales to be somewhat offset by normal seasonal declines in the Enterprise and Broadband markets. We expect fourth quarter wireless sales to increase as upgrade activity accelerates in certain markets."
Conference Call Information
CommScope plans to host a call today at 8:30 a.m. EDT 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, U.S. callers should dial +1 866-845-6585 and callers outside of the U.S. should dial +1 706-643-2944. The conference identification number is 35038450. 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 call will be available through a link on the Investor Relations Presentations page of CommScope's website at www.commscope.com.
If you are unable to participate and would like to hear a replay, U.S. callers can dial +1 800-642-1687 and callers outside the U.S. can dial +1 706-645-9291 for the replay. The replay identification number is 35038450 and will be available through November 10, 2009. A webcast replay will also be archived on CommScope's website for a limited period of time following the conference call.
About CommScope
CommScope, Inc. (NYSE: CTV - www.commscope.com) is a world leader in infrastructure solutions for communication networks. Through its Andrew SolutionsTM brand, it is a global leader in radio frequency subsystem solutions for wireless networks. Through its SYSTIMAX(R) and Uniprise(R) brands, CommScope is a world leader in network infrastructure solutions, delivering a complete end-to-end physical layer solution, including cables and connectivity, enclosures, intelligent software and network design services, for business enterprise applications. CommScope also is 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 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 "expect," "believe," "intend," "goal," "estimate," "project," "plans," "anticipate," "designed to," "long term view," "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 and disruption in the credit and financial markets; changes in cost and availability of key raw materials and the potential effect on customer pricing; the challenges of achieving anticipated cost-reduction synergies; delays or challenges related to removing, transporting or reinstalling equipment; the ability to retain qualified employees; 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; customer bankruptcy; 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 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; successful ongoing operation of our vertical integration activities; the possibility of further restructuring actions; possible future impairment charges for fixed or intangible assets, including goodwill; increased obligations under employee benefit plans; significant international operations and the impact of variability in foreign exchange rates; ability to fully realize anticipated benefits from prior or future acquisitions or equity investments; substantial indebtedness and maintaining compliance with debt covenants; capital structure changes; tax rate variability and ability to recover amounts recorded as value added tax receivables; changes in tax laws or regulations; product performance issues and associated warranty claims; ability to successfully implement major systems initiatives; realignment of global manufacturing capacity; cost of protecting or defending intellectual property; ability to obtain capital on commercially reasonable terms; adequacy and availability of insurance; costs and challenges of compliance with domestic and foreign environmental laws; fluctuations in interest rates; the ability to achieve expected sales growth and earnings goals; the outcome of pending litigations and proceedings; authoritative changes in generally accepted accounting principles by standard-setting bodies; political instability; 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
2009 2008 2009 2008
Net sales $ 750,433 $ 1,062,297 $ 2,276,392 $ 3,154,768
Operating costs and
expenses:
Cost of sales 505,647 760,510 1,633,748 2,314,730
Selling, general and 103,197 114,082 303,353 384,880
administrative
Research and 26,390 33,551 82,457 103,785
development
Amortization of
purchased intangible 20,824 24,294 62,473 73,398
assets
Restructuring costs 3,207 2,356 20,027 25,124
Total operating costs 659,265 934,793 2,102,058 2,901,917
and expenses
Operating income 91,168 127,504 174,334 252,851
Other expense, net (2,037 ) (23 ) (12,570 ) (16,017 )
Interest expense (25,655 ) (37,007 ) (99,465 ) (112,215 )
Interest income 843 5,958 3,350 15,543
Income before income 64,319 96,432 65,649 140,162
taxes
Income tax expense (18,492 ) (11,745 ) (24,917 ) (26,308 )
Net income $ 45,827 $ 84,687 $ 40,732 $ 113,854
Earnings per share:
Basic $ 0.49 $ 1.20 $ 0.50 $ 1.64
Diluted (a) $ 0.45 $ 1.05 $ 0.47 $ 1.43
Weighted average
shares outstanding:
Basic 93,661 70,287 82,117 69,230
Diluted (a) 105,675 81,175 93,400 80,843
(a) Calculation of
diluted earnings per
share:
Net income (basic) $ 45,827 $ 84,687 $ 40,732 $ 113,854
Convertible debt 1,742 499 3,391 1,644
add-back (b)
Numerator (assuming $ 47,569 $ 85,186 $ 44,123 $ 115,498
dilution)
Weighted average 93,661 70,287 82,117 69,230
shares (basic)
Dilutive effect of:
Stock options (c) 629 862 381 931
Restricted stock units
and performance share 930 851 683 745
units
Convertible debt (b) 10,455 9,175 10,219 9,937
Denominator (assuming 105,675 81,175 93,400 80,843
dilution)
(b) Incremental interest expense and shares associated with convertible senior
subordinated debt.
Options to purchase approximately 1.1 million common shares were excluded
from the computation of diluted earnings per share for both the three and
six months ended September 30, 2009 because they would have been
(c) antidilutive. 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 six months ended September 30, 2008, respectively,
because they would have been antidilutive.
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 30, December 31,
2009 2008
Assets
Cash and cash equivalents $ 592,906 $ 412,111
Accounts receivable, less allowance for doubtful 617,163 695,820
accounts of $18,157 and $19,307, respectively
Inventories, net 332,605 450,310
Prepaid expenses and other current assets 77,614 70,778
Deferred income taxes 70,243 81,024
Total Current Assets 1,690,531 1,710,043
Property, plant and equipment, net 427,721 468,140
Goodwill 994,692 997,257
Other intangibles, net 747,765 821,128
Other noncurrent assets 70,341 66,192
Total Assets $ 3,931,050 $ 4,062,760
Liabilities and Stockholders' Equity
Accounts payable $ 212,399 $ 244,273
Other accrued liabilities 259,691 306,537
Current portion of long-term debt 9,723 374,498
Total Current Liabilities 481,813 925,308
Long-term debt 1,535,945 1,667,286
Deferred income taxes 142,736 150,357
Pension and postretirement benefit liabilities 161,251 164,075
Other noncurrent liabilities 127,568 147,376
Total Liabilities 2,449,313 3,054,402
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value; Authorized
shares: 20,000,000; Issued and outstanding shares: -- --
None at September 30, 2009 or December 31, 2008
Common stock, $.01 par value; Authorized shares:
300,000,000; Issued and outstanding shares: 1,040 811
93,763,464 at September 30, 2009 and 70,798,864 at
December 31, 2008
Additional paid-in capital 1,353,841 969,976
Retained earnings 357,817 317,085
Accumulated other comprehensive income (84,266 ) (132,411 )
Treasury stock, at cost: 10,232,336 shares at
September 30, 2009 and 10,312,088 at December 31, (146,695 ) (147,103 )
2008
Total Stockholders' Equity 1,481,737 1,008,358
Total Liabilities and Stockholders' Equity $ 3,931,050 $ 4,062,760
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,
2009 2008
Operating Activities:
Net income $ 40,732 $ 113,854
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 153,554 164,921
Equity-based compensation 19,747 15,361
Non-cash interest expense on 3.50% convertible 12,004 --
debentures
Loss on conversion of debt securities 8,649 2,761
Changes in assets and liabilities 126,742 (43,402 )
Net cash provided by operating activities 361,428 253,495
Investing Activities:
Additions to property, plant and equipment (31,738 ) (35,920 )
Proceeds from sale of product line -- 9,009
Proceeds from disposal of fixed assets 3,724 6,873
Cash paid for acquisitions (694 ) (60,976 )
Other 4,062 (5,012 )
Net cash used in investing activities (24,646 ) (86,026 )
Financing Activities:
Principal payments on long-term debt (760,858 ) (329,603 )
Proceeds from the issuance of long-term debt 388,125 --
Proceeds from the issuance of common stock 220,128 --
Proceeds from the issuance of shares under 612 12,852
equity-based compensation plans
Tax benefit from the issuance of shares under 240 6,227
equity-based compensation plans
Long-term financing costs (12,590 ) (246 )
Other (8 ) 589
Net cash used in financing activities (164,351 ) (310,181 )
Effect of exchange rate changes on cash 8,364 (10,488 )
Change in cash and cash equivalents 180,795 (153,200 )
Cash and cash equivalents, beginning of period 412,111 649,451
Cash and cash equivalents, end of period $ 592,906 $ 496,251
See notes to unaudited condensed consolidated financial statements included
in our Form 10-Q.
CommScope, Inc.
Net Sales and Operating Income by Reportable Segment
(Unaudited -- In millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net Sales:
ACCG $ 316.4 $ 495.0 $ 964.5 $ 1,474.2
Enterprise 177.6 236.5 485.9 691.0
Broadband 136.7 159.0 369.1 458.3
WNS 120.3 174.7 459.0 540.7
Inter-segment eliminations (0.6 ) (2.9 ) (2.1 ) (9.4 )
Consolidated Net Sales $ 750.4 $ 1,062.3 $ 2,276.4 $ 3,154.8
Operating Income (Loss):
ACCG $ 23.0 $ 62.7 $ 24.2 $ 149.2
Enterprise 36.9 46.1 72.2 123.0
Broadband 32.3 13.9 68.7 8.5
WNS (1.0 ) 4.8 9.2 (27.8 )
Consolidated Operating Income $ 91.2 $ 127.5 $ 174.3 $ 252.9
CommScope, Inc.
Reconciliation to Adjusted (non-GAAP) Operating Income
(Unaudited -- In millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Operating Income $ 91.2 $ 127.5 $ 174.3 $ 252.9
Special items:
Amortization of purchased intangible 24.5 28.0 73.4 85.0
assets (1)
Purchase accounting adjustments related - 1.8 - 59.3
to inventory
Restructuring costs 3.2 2.4 20.0 25.1
Litigation charge - - 21.2 -
Acquisition and one-time transition - (9.6 ) - (5.7 )
costs
Adjusted (non-GAAP) Operating Income $ 118.9 $ 150.1 $ 288.9 $ 416.6
(1) Includes amortization included in Cost of Sales.
CommScope management believes that presenting operating income 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.
CommScope, Inc.
Reconciliation of GAAP Measures to Adjusted Measures
(Unaudited -- In millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, 2009 September 30, 2009
Operating Net Diluted Operating Net Diluted
Income Income(1) EPS Income Income(1) EPS
As reported $ 91.2 $ 45.8 $ 0.45 $ 174.3 $ 40.7 $ 0.47
Special items:
Amortization of
purchased 24.5 15.3 0.14 73.4 45.8 0.49
intangible assets
(2)
Restructuring 3.2 2.2 0.02 20.0 13.4 0.15
costs
Litigation charge - - - 21.2 12.3 0.13
Loss on debt
conversions and - - - - 23.4 0.25
prepayments
As adjusted for $ 118.9 $ 63.3 $ 0.61 $ 288.9 $ 135.6 $ 1.49
special items
Three Months Ended
June 30, 2009
Operating Net Diluted
Income Income(1) EPS
As reported $ 74.1 $ 15.4 $ 0.18
Special items:
Amortization of
purchased 24.5 15.3 0.16
intangible assets
(2)
Restructuring 8.1 5.6 0.06
costs
Litigation charge 18.1 10.3 0.11
Loss on debt
conversions and - 14.7 0.16
prepayments
As adjusted for $ 124.8 $ 61.3 $ 0.67
special items
(1) 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 little or no tax benefit. (2) Includes amortization included in Cost of Sales. CommScope management believes that presenting earnings 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.
CommScope, Inc.
Reconciliation of GAAP Measures to Adjusted Measures
(Unaudited -- In millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, 2008 September 30, 2008
Operating Net Diluted Operating Income Diluted
Income Income(1) EPS Income (Loss)(1) EPS
As reported $ 127.5 $ 84.7 $ 1.05 $ 252.9 $ 113.9 $ 1.43
Special items:
Amortization
of purchased 28.0 17.5 0.22 85.0 53.8 0.67
intangible
assets (2)
Purchase
accounting
adjustments 1.8 1.1 0.01 59.3 38.3 0.47
related to
inventory
Restructuring 2.4 2.1 0.03 25.1 24.8 0.31
costs
Acquisition
and one-time (9.6 ) (6.0 ) (0.07 ) (5.7 ) (3.5 ) (0.04 )
transition
costs
Release of
income tax - (5.0 ) (0.06 ) - (5.0 ) (0.06 )
valuation
allowance
Settlement of (3.9 ) (0.05 )
tax audits
Cost related
to conversion 2.8 0.03
of 1%
debentures
As adjusted
for special $ 150.1 $ 94.4 $ 1.18 $ 416.6 $ 221.2 $ 2.76
items
Three Months Ended
June 30, 2008
Operating Net Diluted
Income Income(1) EPS
As reported $ 97.6 $ 40.2 $ 0.50
Special items:
Amortization
of purchased 28.5 17.8 0.22
intangible
assets (2)
Purchase
accounting
adjustments 4.7 2.9 0.04
related to
inventory
Restructuring 22.6 22.5 0.28
costs
Acquisition
and one-time 0.9 0.6 0.01
transition
costs
Settlement of - (3.9 ) (0.05 )
tax audits
Cost related
to conversion - - -
of 1%
debentures
As adjusted
for special $ 154.3 $ 80.1 $ 1.00
items
(1) 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 little or no tax benefit. (2) Includes amortization included in Cost of Sales. CommScope management believes that presenting earnings 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.
Source: CommScope, Inc.
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