CALCULATION
OF REGISTRATION FEE
|
Title
of Each Class of Securities to be
Registered
|
|
Amount to be
Registered
|
|
Proposed
Maximum
Offering Price
Per
Share(1)
|
|
Proposed
Maximum
Aggregate
Offering
Price(1)
|
|
Amount
of
Registration Fee(2)
|
|||
|
Common
Stock, $.01 par value
|
|
490,000
|
|
$
|
47.94
|
|
$
|
23,490,600
|
|
$
|
923.18
|
(1)
Estimated solely for purposes of determining the registration fee, based on
the
average of the high and low prices for the Common Stock as reported on the
New
York Stock Exchange on January 2, 2008, in accordance with Rule 457(c) under
the
Securities Act of 1933, as amended.
(2)
The
filing fee of $923.18 is calculated in accordance with Rule 457(r) of the
Securities Act of 1933, as amended.
Filed
Pursuant to Rule 424(b)5
Registration
No. 333-134815
PROSPECTUS
SUPPLEMENT
(To
prospectus dated June 7, 2006)
CommScope,
Inc.
490,000
Shares
of
Common
Stock
____________________
On
December 27, 2007, Andrew Corporation (“Andrew”) became our indirect
wholly-owned subsidiary as a result of a merger of our indirect wholly-owned
subsidiary, DJRoss, Inc., into Andrew. In the merger, each
outstanding share of Andrew common stock, par value $0.01 per share, was
converted into the right to receive $13.50 in cash and 0.031543 shares of our
common stock, par value $0.01 per share.
As
of the
date of this prospectus, Andrew has outstanding $210,500,000 aggregate principal
amount of its 3¼% Convertible Subordinated Notes due August 15, 2013, which we
refer to as the Andrew convertible notes or the notes. As a result of
the merger, the Andrew convertible notes will be convertible, upon the terms
and
conditions specified in the related indenture, initially at the conversion
rate
of $986.15 in cash and 2.304159 shares of our common stock per $1,000 principal
amount of notes (subject to adjustment from time to time and payments in lieu
of
fractional shares, as provided in the indenture).
This
prospectus relates to the offering by us of up to 490,000 shares of our common
stock from time to time upon conversion of the Andrew convertible notes. These
shares are being offered on a continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, during the period of time that the
registration statement of which this prospectus is a part remains
effective.
We
will
not receive any proceeds from the offering of our common stock under this
prospectus.
Our
common stock trades on the New York Stock Exchange under the symbol
“CTV.” On January 2, 2008, the closing price of our common stock on the New York
Stock Exchange was $47.34 per share.
Investing
in our common stock involves risks. See “Risk Factors” on page S-4 of
this prospectus supplement.
____________________
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
____________________
The
date
of this prospectus supplement is January 3, 2008
TABLE
OF CONTENTS
Prospectus
Supplement
|
Page
|
Page
|
|||
|
About
This Prospectus Supplement
|
S-ii
|
Plan
Of
Distribution
|
S-20
|
|
|
Forward-Looking
Statements
|
S-ii
|
Description
Of Our Capital
Stock
|
S-21
|
|
|
Summary
|
S-1
|
Experts
|
S-22
|
|
|
Risk
Factors
|
S-4
|
Where
You Can Find Additional Information
|
S-22
|
|
|
Use
Of
Proceeds
|
S-19
|
Documents
Incorporated By Reference
|
S-22
|
|
Prospectus
|
Page
|
Page
|
|||
|
The
Company
|
1
|
Description
Of The
Securities
|
3
|
|
|
About
This
Prospectus
|
1
|
Ratio
Of Earnings To Fixed Charges And Deficiency In The Coverage Of
Earnings To
Fixed Charges
|
3
|
|
|
Where
You Can Find More Information
|
2
|
Selling
Security
Holders
|
4
|
|
|
Incorporation
By
Reference
|
2
|
Legal
Matters
|
4
|
|
|
Risk
Factors
|
3
|
Experts
|
4
|
|
|
Use
Of
Proceeds
|
3
|
Forward-Looking
Statements
|
4
|
________________________
You
should rely only on the information contained in or incorporated by reference
in
this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with information that is
different. If anyone provides you with different or inconsistent
information you should not rely on it. This document may only be used
where it is legal to sell our common stock. The information in this
document may only be accurate on the date of this
document.
————————————
S-i
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement is a supplement to the accompanying prospectus, dated
June
7, 2006, that is also a part of this document. This prospectus
supplement and the accompanying prospectus are part of a registration statement
that we filed with the Securities and Exchange Commission (“SEC”) using the
SEC’s shelf registration rules. In this prospectus supplement, we
provide you with specific information about the terms of this offering of our
common stock. Both this prospectus supplement and the accompanying
prospectus include important information about us, our common stock and other
information you should know before investing in our common
stock. This prospectus supplement also adds to, updates and changes
some of the information contained in the accompanying prospectus. To
the extent that any statement that we make in this prospectus supplement is
inconsistent with the statements made in the accompanying prospectus, the
statements made in the accompanying prospectus are deemed modified or superseded
by the statements made in this prospectus supplement. You should
assume that the information appearing in this prospectus supplement and the
accompanying prospectus, as well as the information contained in any document
incorporated by reference, is accurate as of the date of each such document
only, unless the information specifically indicates that another date
applies. See “Documents Incorporated by Reference.”
In
this
prospectus supplement we use the terms “CommScope,” “we,” “us,” and “our” to
refer to CommScope, Inc., a Delaware corporation.
FORWARD-LOOKING
STATEMENTS
Certain
statements in this prospectus and the documents that we incorporate by reference
that are other than historical facts are intended to be “forward-looking
statements” within the meaning of the Securities Exchange Act of 1934, the
Private Securities Litigation Reform Act of 1995 and other related laws and
include but are not limited to those statements relating to our business
position, plans, outlook, revenues, earnings, margins, synergies and other
financial items, restructuring plans, our acquisition of Andrew, sales and
earnings expectations, expected demand, cost and availability of key raw
materials, internal and external production capacity and expansion, competitive
pricing and relative market position. While we believe such statements are
reasonable, the actual results and effects could differ materially from those
currently anticipated. These forward-looking statements are identified by the
use of certain terms and phrases including but not limited to “intend,” “goal,”
“estimate,” “expect,” “project,” “projections,” “plan,” “anticipate,”
“should,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,”
“outlook,” “guidance” and similar expressions.
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
our control. These risks and uncertainties could cause actual results to differ
materially from those expressed in or implied by the forward-looking statements,
and therefore should be carefully considered. Relevant risks and uncertainties
relating to our acquisition of Andrew include, but are not limited to: the
anticipated benefits and synergies of the transaction may not be realized;
the
integration of Andrew’s operations with CommScope could be materially delayed or
may be more costly or difficult than expected; and legal proceedings may be
commenced by or against CommScope. Relevant risks and uncertainties generally
applicable to CommScope include, but are not limited to: changes in cost and
availability of key raw materials and the ability to recover these costs from
customers through pricing actions; concentration of sales among a limited number
of key customers or distributors; customer demand for our products and the
ability to maintain existing business alliances with key customers or
distributors; the risk that internal production capacity and that of contract
manufacturers may be insufficient to meet customer demand for products; the
risk
that customers might cancel orders placed or that orders currently placed may
reduce orders in the future; continuing consolidation among customers;
competitive pricing and acceptance of products; industry competition and the
ability to retain customers through product innovation; possible production
disruption due to supplier or contract manufacturer bankruptcy, reorganization
or restructuring; successful ongoing operation of our vertical integration
activities; ability to achieve expected sales, growth and earnings goals; costs
of protecting or defending our intellectual property; ability to obtain capital
on commercially reasonable terms; 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 our filings with the SEC. The information
contained in this prospectus and the documents incorporated by reference
represent our best judgment at the respective dates thereof based on information
available as of such dates. In providing forward-looking statements, we do
not
intend and do not undertake any duty or obligation to update these statements
as
a result of new information, future events or otherwise.
S-ii
SUMMARY
This
summary highlights selected information about us and this
offering. This summary may not contain all of the information that
may be important to you. You should read carefully all of the information
contained in or incorporated by reference into this prospectus supplement and
the accompanying prospectus, including the information set forth under the
caption “Risk Factors” in this prospectus supplement and our consolidated
financial statements and the related notes thereto incorporated by reference
herein before making a decision to invest in our common stock.
The
Merger
On
June
26, 2007, CommScope, Andrew and DJRoss, Inc. entered into an Agreement and
Plan
of Merger, dated as of June 26, 2007, pursuant to which DJRoss would merge
with
and into Andrew, with Andrew surviving as a wholly-owned subsidiary of
Commscope. The merger closed on December 27, 2007. In the
merger, each outstanding share of Andrew common stock was converted into the
right to receive $13.50 in cash and 0.031543 shares of our common
stock.
Andrew’s
Convertible Notes
The
Andrew convertible notes were
issued under an indenture, dated as of August 8, 2003, between Andrew and The
Bank of New York Trust Company, N.A. (formerly known as BNY Midwest Trust
Company), as trustee, as amended by the first supplemental indenture thereto,
dated as of December 27, 2007. The indenture, as it may be amended or
supplemented from time to time, is referred to in this prospectus as the
“indenture.” This prospectus relates to shares of our common stock
which form a part of the consideration that may be used to satisfy the
conversion obligations of Andrew under the Andrew convertible
notes. The Andrew convertible notes are convertible under the
circumstances, for the amounts, and pursuant to the procedures set forth in
the
indenture.
Our
Company
The
CommScope Business
We
are a
world leader in infrastructure solutions for communications networks. Our
highly-engineered cable and connectivity solutions enable a host of
information-rich and interactive services that are delivered to the home, office
and mobile devices. We focus on the “last mile” in communications networks,
which is the distribution access, or final link to the customer. We believe
we
are a global leader in structured cabling solutions for business enterprise
applications and a global leader in broadband coaxial cables for the cable
television industry. We also design, manufacture and market a broad line of
high-performance electronic, coaxial, and fiber optic cables and related
products for data networking, Internet access, wireless communication, telephony
and other broadband applications. In addition, we are an industry leader in
the
design and manufacture of environmentally secure enclosures to integrate complex
equipment for digital subscriber line (DSL) and Fiber-to-the-Node (FTTN)
deployments by telecommunication service providers in the United States. We
believe that business enterprises, wired and wireless broadband service
providers, carriers and consumers are faced with a growing need for higher
bandwidth infrastructure solutions as new applications are developed and network
traffic increases.
We
are a
global manufacturer, employing state-of-the-art processes in 11 manufacturing
facilities on five continents, and sells its products directly to customers
and
through a global network of distributors, system integrators and value-added
resellers. We sell our products in more than 130 countries. We have organized
and managed our business based on the following three reportable business
segments, which are based on major product categories:
|
●
|
Enterprise
|
|
●
|
Broadband
|
|
●
|
Carrier
|
S-1
Through
our Enterprise segment, we are a leading global provider of structured cabling
systems for business applications. Such cabling systems are transmission
networks inside a building or campus of buildings that connect voice and data
communication devices, video and building automation devices, switching
equipment and other information-management systems. Structured cabling systems
consist of various components, including transmission media (cable), circuit
administration hardware, connectors, jacks, plugs, adapters, transmission
electronics, electrical protection devices, support hardware and software.
The
products in this segment are primarily sold through independent distributors,
system integrators, and value-added resellers.
Through
our Broadband segment, we design, manufacture and market coaxial and fiber
optic
cables and supporting apparatus. The coaxial and fiber optic cables are
primarily used in Hybrid Fiber Coaxial (HFC) networks being deployed throughout
the world. HFC networks utilize a combination of fiber optic and coaxial cable
and are widely recognized as one of the most cost-effective ways to offer
multi-channel video, voice and data services. These products are primarily
sold
directly to cable television system operators.
Through
our Carrier segment, we sell a variety of products including secure
environmental enclosures, cables and other components used by wireless
providers, and structured cabling systems for telephone central offices. These
products are sold to telecommunication service providers (carriers) or OEMs
that
sell equipment to carriers. Our sturdy environmental enclosures are used to
protect electronic devices and equipment being deployed in the outside plant
or
inside buildings. Our wireless products include innovative, high-frequency
cables and components for connecting wireless antennae to their
transmitters.
The
Andrew Business
Andrew,
together with its subsidiaries, is engaged in the design, manufacture, and
supply of communications equipment, services, and systems for global
communications infrastructure markets. Andrew’s products are primarily based on
Andrew’s core competency, the radio frequency (RF) path. Andrew has unique
technical skills and marketing strengths in developing products for RF systems.
Andrew’s products are used in the infrastructure for traditional wireless
networks, third generation (3G) technologies, voice, data, video and Internet
services, as well as applications for microwave and satellite communications,
and other specialized applications.
Effective
October 1, 2006, Andrew restructured its five product businesses into two
operating groups, Wireless Network Solutions and Antenna and Cable Products,
in
order to reflect the customer segments these groups serve and to leverage the
many opportunities for collaboration and efficiencies in supporting global
customers. Andrew’s five product businesses are: Antenna and Cable Products,
Base Station Subsystems, Network Solutions, Wireless Innovations and Satellite
Communications. Antenna and Cable Products includes a diverse product offering
for the wireless infrastructure segment including base station antennas, coaxial
cable and connectors and microwave antennas. Base Station Subsystems products
are integral components of wireless base stations and include products such
as
power amplifiers, filters, duplexers and combiners that are sold individually
or
as parts of integrated subsystems. Network Solutions includes geolocation
products, network optimization analysis systems, and engineering and consulting
services. Wireless Innovations products are used to extend and enhance the
coverage of wireless networks in areas where signals are difficult to send
or
receive, such as tunnels, subways and airports, and include both complete
systems and individual components. Satellite Communications is comprised of
the
following product lines: direct-to-home (DTH) satellite antennas, earth station
antennas and systems (ESA) and high frequency (HF) / radar products. The
creation of the new operating segments was accompanied by changes to the
executive management team that aligned with this new structure and streamlined
the leadership of Andrew.
Andrew has a significant international manufacturing and distribution presence.
Sales of products exported from the United States or manufactured abroad
accounted for approximately 67% of Andrew’s sales in its fiscal year ended
September 30, 2007. Over the last decade, Andrew has significantly increased
its
international manufacturing and distribution capabilities in some of the fastest
developing wireless infrastructure areas. Developing countries represent some
of
the greatest growth opportunities for wireless communication, as wireless is
the
most cost efficient way to provide communications infrastructure to these
regions. Andrew believes that developing markets such as China and India have
significant long-term growth potential for the company. Andrew built new
manufacturing facilities in China and India in fiscal 1998 and has continued
to
expand operations in these regions.
S-2
These facilities have allowed Andrew to more effectively
reach
customers and increase sales in Asia. In fiscal 2005 Andrew began relocating
a
significant portion of the manufacturing of its filter product line to
China.
On
November 5, 2007, Andrew entered into an agreement to sell its Satellite
Communications business, which sale is expected to close in the first quarter
of
2008.
The
Offering
|
Issuer
|
CommScope,
Inc.
|
|
Common
stock offered by CommScope, Inc.
|
Up
to 490,000 shares of common stock from time to time upon conversion
of the
Andrew convertible notes.
|
|
Common
stock outstanding as of December 31, 2007
|
61,722,426
shares (excluding approximately 4,992,130 shares to be issued to
former
Andrew shareholders in connection with the merger), which does not
include
any of the shares offered hereby.
|
|
Use
of proceeds
|
We
will not receive any cash proceeds from the offering of our common
stock
under this prospectus. The shares of our common stock offered hereby
will
be available solely to satisfy the conversion right of the holders
of the
Andrew convertible notes.
|
|
NYSE
symbol
|
CTV
|
Risk
Factors
You
should
carefully consider all of the information set forth or incorporated by reference
in this prospectus and, in particular, the specific factors in the section
of
this prospectus entitled “Risk Factors.”
Principal
Executive Offices
Our
principal executive offices are located at 1100 CommScope Place SE, Hickory,
North Carolina 28602. Our phone number is (828) 324-2200.
S-3
RISK
FACTORS
In
addition to the risks discussed under “Forward-Looking Statements”, you should
carefully consider the following risk factors, as well as the other information
in this prospectus and the documents incorporated by reference herein, before
investing in our common stock. These risks and uncertainties have the
potential to have a material adverse impact on our business, financial condition
and results of operation.
RISK
FACTORS RELATING TO THE MERGER
The
anticipated benefits of the acquisition may not be
realized.
We
entered into the merger agreement with Andrew with the expectation that the
merger will result in various benefits including, among other things, benefits
relating to enhanced revenues, a broader array of infrastructure solutions,
the
expansion of our global distribution and manufacturing capabilities, operational
improvements and a diversification of our customer base. The merger will present
challenges to management, including the integration of operations, properties
and personnel of Andrew and CommScope. Achieving the anticipated benefits of
the
merger is subject to a number of uncertainties, including, but not limited
to,
whether we can integrate our business and Andrew’s business in an efficient and
effective manner, whether there will be increased spending by wireless carriers,
our ability to manage potential volatility in commodities prices, the reaction
of existing or potential competitors to the transaction, and general competitive
factors in the marketplace. Failure to achieve these anticipated benefits could
result in increased costs, decreases in the amount of expected revenues and
diversion of management’s time and energy and could materially impact our
business, financial condition and operating results.
We
may fail to realize the anticipated synergies and cost savings expected from
the
merger.
Our
success after the merger will depend, in part, on our ability to realize the
anticipated growth opportunities and cost savings from combining our business
with Andrew. We expect to generate annual pretax cost savings (excluding
transition cash costs expected to total approximately $70 million to $80 million
in the first two years after completion) of approximately $90 million to $100
million in the second full year after completion of the transaction. We expect
to achieve approximately $50 million to $60 million in the first full year
after
completion of the merger. We expect the cost savings 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. We cannot provide any assurance that these cost
savings can be achieved in the amounts or during the periods predicted. To
realize these anticipated benefits, we must successfully combine our business
with Andrew in a manner that permits these synergies to be realized. In
addition, our success after the merger will depend, in part, on these synergies
being achieved without adversely affecting revenues. If we are not able to
successfully achieve these objectives, such anticipated benefits may not be
realized fully, or at all, or may take longer to realize than
expected.
We
may have difficulty integrating our business with Andrew’s business and may
incur substantial costs in connection with the
integration.
Achieving
the anticipated benefits of the merger will depend on the successful integration
of our products, services, operations, personnel, technology and facilities
with
those of Andrew in a timely and efficient manner.
Although
we do not anticipate material difficulties in connection with such integration,
the possibility exists that such difficulties could be experienced in connection
with the merger, especially given the relatively large size of the merger.
The
time and expense associated with converting the businesses of CommScope and
Andrew to a common platform may exceed our expectations and limit or delay
the
intended benefits of the transaction. Similarly, the process of combining sales
and marketing forces, consolidating administrative functions, and coordinating
product and service offerings can take longer, cost more, and provide fewer
benefits than initially projected. To the extent any of these events occurs,
the
benefits of the transaction may be reduced.
S-4
Integrating
our business with Andrew will be a complex, time-consuming and expensive
process. Before the merger, CommScope and Andrew operated independently, each
with its own business, products, customers, employees, culture and systems.
We
may face substantial difficulties, costs and delays in integrating the two
businesses. These difficulties, costs and delays may include:
|
●
|
Potential
difficulty in combining the separate product technologies of CommScope
and
Andrew;
|
|
|
●
|
Perceived
adverse changes in product offerings available to customers or
in customer
service standards, whether or not these changes do, in fact,
occur;
|
|
|
●
|
Costs
and delays in implementing common systems and
procedures;
|
|
|
●
|
Difficulties
in combining research and development teams and
processes;
|
|
|
●
|
Potential
charges to earnings resulting from the application of purchase
accounting
to the transaction;
|
|
|
●
|
Difficulty
comparing financial reports due to differing financial and/or internal
reporting systems;
|
|
|
●
|
Diversion
of management resources from the business;
|
|
|
●
|
The
inability to retain existing customers of each company;
|
|
|
●
|
Reduction
or loss of customer orders due to the potential for market confusion,
hesitation and delay;
|
|
|
●
|
Challenges
in retaining and integrating management and other key employees
of
CommScope and Andrew;
|
|
|
●
|
Difficulties
in coordinating infrastructure operations in an effective and efficient
manner; and
|
|
|
●
|
The
inability to achieve the synergies anticipated to be realized from
the
merger on the timeline presently anticipated, or at
all.
|
After
the
merger, we may seek to combine certain operations and functions using common
information and communication systems, operating procedures, financial controls
and human resource practices, including training, professional development
and
benefit programs. We may be unsuccessful in implementing the integration of
these systems and processes in a timely and efficient manner. Any one or all
of
these factors may cause increased operating costs, worse than anticipated
financial performance and/or the loss of customers and employees. Many of these
factors are also outside of our control.
We
may have difficulty integrating our system of internal control over financial
reporting with that of Andrew.
The
failure to integrate our system of internal control over financial reporting
with that of Andrew following the merger could affect adversely our ability
to
exercise effective internal control over financial reporting. A failure to
exercise effective internal control over financial reporting could result in
a
material misstatement in our annual or interim consolidated financial
statements.
We
depend on key personnel and the loss of any of these key personnel because
of
uncertainty regarding the merger could hurt our
business.
We
depend
on the services of our key personnel. Our employees may experience uncertainty
about their future roles with CommScope after the merger, which may affect
the
performance of such personnel adversely and our ability to retain and attract
key personnel. The loss of the services of one or more of these key employees
or
our
S-5
inability
to attract, train, and retain qualified
employees could result in the loss of customers or otherwise inhibit our
ability
to integrate and grow our business effectively.
The
merger may result in a loss of customers.
Some
customers may seek alternative sources of product and/or service after the
merger due to, among other reasons, a desire not to do business with CommScope
after the merger or perceived concerns that CommScope may not continue to
support and develop certain product lines. Difficulties in combining operations
could also result in the loss of, or potential disputes or litigation with,
customers. Any steps by management to counter such potential increased customer
attrition may not be effective. Failure by management to retain customers could
result in worse than anticipated financial performance.
As
a result of the merger, including the financing necessary to consummate the
merger, we have substantial indebtedness.
As
a
result of the merger, we incurred substantial indebtedness, including the
financing necessary to pay the cash portion of the merger consideration and
transaction-related costs, in addition to debt assumed from Andrew. Our
substantial indebtedness could have the following consequences:
| ● |
Our
ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes
may be impaired in the future;
|
|
| ● |
A
substantial portion of our cash flow must be dedicated to the payment
of
principal and interest on our indebtedness;
|
|
| ● | We are substantially more leveraged than certain of our competitors, which might place us at a competitive disadvantage; | |
| ● |
We
are subject to restrictive covenants that may negatively affect our
operational or financial flexibility or our ability to pursue additional
acquisitions;
|
|
| ● |
We
may be hindered in our ability to adjust rapidly to changing market
conditions; and
|
|
| ● |
Our
high degree of leverage could make us more vulnerable in the event
of a
downturn in general economic conditions or our
business.
|
Our
ability to obtain additional capital on commercially reasonable terms may
be
limited.
Although
we believe our current cash, cash equivalents and short-term investments as
well
as future cash from operations and availability under our new credit facility
will provide adequate resources to fund ongoing operating requirements, we
may
need to seek additional financing to compete effectively. Our public debt
ratings affect our ability to raise capital and the cost of that capital. On
June 27, 2007, Standard & Poor’s Rating Services (S&P) lowered its
credit rating on CommScope to “BB-” from “BB” and placed the ratings on
CreditWatch with negative implications. In addition, on October 12, 2007,
Moody’s Investor Service lowered CommScope’s “Ba2” corporate family rating to
“Ba3” with a stable outlook. On October 17, 2007, S&P removed CommScope from
CreditWatch and affirmed our “BB-” rating with a stable outlook. Future
downgrades of our debt ratings may increase our borrowing costs and affect
our
ability to access the debt or equity capital markets on terms and in amounts
that would be satisfactory to us.
If
we are
unable to obtain capital on commercially reasonable terms, we could experience
the following consequences:
| ● | A reduction in funds available to us for purposes such as working capital, capital expenditures, research and development, strategic acquisitions and other general corporate purposes; |
S-6
| ● | A restriction of our ability to introduce new products or exploit business opportunities; | |
| ● | An increase in our vulnerability to economic downturns and competitive pressures in the market in which we operate; | |
| ● | A limit on our financial flexibility to finance a full or partial redemption of the $250 million aggregate principal amount of our 1% convertible senior subordinated debentures; and | |
| ● | A loss of competitive advantage. |
We
may incur additional indebtedness in the future
under our new credit facility, through future debt issuance, through assumption
of liabilities in connection with future acquisitions or otherwise.
RISK
FACTORS RELATING TO OUR COMMON STOCK
Our
common stock price is subject to fluctuation and may be affected by factors
different from those that affected Andrew’s common stock
price.
The
market price of our common stock has experienced and may continue to experience
high volatility. The stock market in general has experienced extreme price
and
volume fluctuations in recent years. Often, these changes may have been
unrelated to the operating performance of the affected companies. The factors
that could cause fluctuation in our common stock price may include, among other
factors discussed in this section, the following:
| ● |
actual
or anticipated variations in quarterly operating
results;
|
|
| ● |
changes
in financial estimates by securities analysts;
|
|
| ● |
our
inability to meet or exceed securities analysts’ estimates or
expectations;
|
|
| ● |
conditions
or trends in our industry;
|
|
| ● | announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives and the success of such acquisitions, including the acquisition of Andrew; | |
| ● |
changes
in capital commitments;
|
|
| ● |
additions
or departures of key personnel;
|
|
| ● |
actual
or anticipated changes in the United States economy;
|
|
| ● |
armed
conflict, war or terrorism;
|
|
| ● | a prolonged downturn in the telecommunications industry; and | |
| ● |
actual
or anticipated sales of common stock by existing stockholders,
whether in
the market or in subsequent public
offerings.
|
Many
of
these factors are beyond our control. These factors may cause the market price
of our common stock to decline, regardless of its operating
performance.
S-7
We
have not in the past and do not intend in the foreseeable future to pay cash
dividends on our common stock.
We
have
never declared or paid any cash dividends on our capital stock. We do not
currently intend to pay cash dividends in the foreseeable future but intend
to
reinvest earnings in our business. Our existing debt instruments contain, and
future debt instruments may contain, limits on our ability to declare and pay
cash dividends on our common stock.
Shares
of CommScope common stock have different rights than shares of Andrew common
stock.
Even
though both Andrew and CommScope are Delaware corporations, there are important
differences in the rights of stockholders of Andrew and the rights of
stockholders of CommScope. For example, provisions in our certificate of
incorporation and by-laws could have the effect of deterring hostile takeovers
or delaying, deterring, or preventing a change of control of our company,
including transactions in which stockholders might otherwise receive a premium
for their shares over current market prices.
RISK
FACTORS RELATING TO COMMSCOPE’S HISTORICAL BUSINESS
We
are dependent on a limited number of key customers or distributors for a
substantial portion of the net sales in each of our business
segments.
Within
each of our business segments, a limited number of key customers or distributors
account for a substantial portion of our net sales.
Enterprise.
We distribute enterprise and certain other products to customers primarily
through a large, worldwide network of independent distributors, system
integrators and value-added resellers. For the year ended December 31, 2006,
sales of such products to the top three distributors, system integrators and
value-added resellers represented approximately 38% of our consolidated net
sales. In particular, Anixter International Inc. and affiliates accounted for
approximately 29% of our consolidated net sales during such period.
Broadband.
Although the domestic cable television industry is comprised of thousands of
cable systems, a small number of cable television system operators own a
majority of cable television systems and account for a majority of the capital
expenditures made by cable television system operators. Although we sell to
a
wide variety of customers dispersed across many different geographic areas,
sales to our five largest Broadband segment customers represented approximately
17% of our consolidated net sales for the year ended December 31,
2006.
Carrier.
Sales of carrier products are concentrated among a limited number of large
telecommunication service providers and original equipment manufacturers (OEMs)
that supply such telecommunication service providers. Net sales to one OEM,
our
largest Carrier segment customer, accounted for approximately 7% of our
consolidated net sales for the year ended December 31, 2006.
The
concentration of our net sales among these key customers or distributors
subjects us to a variety of risks that could have a material adverse impact
on
our net sales and profitability, including, without limitation:
| ● |
loss
of one or more of our key customers or distributors, including
failure to
renegotiate new distributor agreements;
|
|
| ● |
financial
difficulties experienced by one or more of our key customers
or
distributors resulting in reduced purchases of our products
and/or
uncollectible accounts receivable balances;
|
|
| ● |
reductions
in inventory levels held by distributors, which may be unrelated
to
purchasing trends by the ultimate customer;
|
|
| ● |
consolidations
in the cable television and/or telecommunications industry could
result in
delays in purchasing decisions, or reduced purchases, by the
merged
businesses;
|
S-8
| ● |
the
cable television and telecommunications industry are each subject
to
significant government regulation and implementation of new or
existing
laws or regulations could impact capital spending plans and,
therefore,
adversely impact our business;
|
|
| ● |
increases
in the cost of capital and/or reductions in the amount of capital
available to the cable television and telecommunications industry
could
reduce the level of their capital spending and, therefore, adversely
impact our business;
|
|
| ● |
reductions
in the level of capital spending in the corporate information
technology
sector could have an adverse impact on sales of our enterprise
products;
|
|
| ● |
changes
in the technology deployed by cable television or telecommunication
customers could have an adverse impact on our business;
|
|
| ● |
reductions
in the level of spending on network maintenance and/or capital
improvements by cable television and/or telecommunications customers
could
have an adverse impact on our sales of broadband and/or carrier
products;
and
|
|
| ● |
competition
for cable television operators from satellite and wireless television
providers, telephone companies or others could result in lower
capital
spending and have an adverse impact on our sale of broadband
products.
|
We
face competitive pressures with respect to all of our major
products.
In
each
of our major product groups, we compete with a substantial number of foreign
and
domestic companies, some of which have greater resources (financial or
otherwise) or lower operating costs than us. The rapid technological changes
occurring in the telecommunications industry could lead to the entry of new
competitors. Existing competitors’ actions, such as price reductions or
introduction of new innovative products, use of internet auctions by customers
or competitors, and new entrants may have a material adverse impact on our
sales
and profitability. We cannot provide assurance that we will continue to compete
successfully with our existing competitors or that we will be able to compete
successfully with new competitors.
Fiber
optic technology presents a potential substitute for some of the communications
cable products that we sell. A significant decrease in the cost of fiber optic
systems could make these systems superior on a price/performance basis to copper
systems. A significant decrease in the cost of fiber optic systems would
reasonably be expected to have a materially adverse effect on our coaxial and
twisted pair cable sales.
There
are
various complementary and competitive wireless technologies that could be a
potential substitute for some of the communications cable products that we
sell.
A significant technological breakthrough or significant decrease in the cost
of
deploying these wireless technologies could have a material adverse effect
on
our cable sales.
Successful
implementation and roll-out of product innovations is necessary to preserve
our
customer relationships.
Many
of our markets are characterized by advances in information processing and
communications capabilities that require increased transmission speeds and
greater capacity, or “bandwidth,” for carrying information. These advances
require ongoing improvements in the capabilities of cable and connectivity
products. We believe that our future success will depend in part upon our
ability to enhance existing products and to develop and manufacture new products
that meet or anticipate these changes. The failure to introduce successful
new
or enhanced products on a timely and cost-competitive basis or the inability
to
continue to market existing products on a cost-competitive basis could
materially adversely affect our results of operations and financial
condition.
S-9
Orders
received from customers may be cancelled or may result in lower levels of orders
in future periods.
The
quarterly volume of orders received from customers may be volatile. Orders
received from customers may not ultimately result in sales as customers may
cancel or modify orders prior to shipment of the goods. In addition, the volume
of orders received from one or more customers in one quarter may result in
a
lower volume of orders from those customers in subsequent quarters.
Our
dependence on commodities subjects us to price fluctuations and potential
availability constraints which could materially adversely affect our
profitability.
Our
profitability may be materially affected by changes in the market price and
availability of certain raw materials, most of which are linked to the commodity
markets. The principal raw materials that we purchase are rods, tapes, tubes
and
wires made of copper, steel or aluminum, plastics and other polymers, and
optical fiber. Fabricated aluminum, copper and steel are used in the production
of coaxial and twisted pair cables and polymers are used to insulate and protect
cables. Prices for copper, aluminum, steel, fluoropolymers and certain other
polymers, derived from oil and natural gas, have increased and experienced
greater volatility as a result of increased global demand and supply
disruptions. As a result, we have significantly increased our prices for certain
products and may have to increase prices again in the future. Delays in
implementing price increases or a failure to achieve market acceptance of future
price increases could have a material adverse impact on our results of
operations. In an environment of falling commodities prices, we may be unable
to
sell higher-cost inventory before implementing price decreases, which could
have
a material adverse impact on our results of operations.
We
are dependent on a limited number of key suppliers for certain raw
materials.
For
certain of our raw material purchases, including fluorinated ethylene propylene
(which we refer to as FEP), copper rod, fine aluminum wire, steel wire and
optical fiber, we are dependent on key suppliers. FEP is the primary raw
material used throughout the industry for producing flame-retarding cables
for
LAN applications in North America. There are few worldwide producers of FEP
and
market supplies have been periodically limited over the past several years.
Availability of adequate supplies of FEP will be critical to future LAN cable
sales growth in North America. If FEP is not available in adequate quantities
on
acceptable terms, our results of operations and financial condition could be
materially adversely affected.
We
internally produce a significant portion of our requirements for fine aluminum
wire, which is available externally from only a limited number of suppliers.
Our
failure to manufacture or adequately expand our internal production of fine
aluminum wire, and/or our inability to obtain these materials from other sources
in adequate quantities on acceptable terms, could have a material adverse effect
on our results of operations and financial condition.
Optical
fiber is a primary material used for making fiber optic cables. There are few
worldwide suppliers of the premium optical fibers that we use in our products.
Availability of adequate supplies of premium optical fibers will be critical
to
future fiber optic cable sales growth. We believe that our optical fiber supply
arrangements with two suppliers address concerns about the continuing
availability of these materials to us, although there can be no assurance of
this.
Our
key
suppliers could experience financial difficulties, or there may be global
shortages of the raw materials we use, and our inability to find sources of
supply on reasonable terms could materially adversely affect our ability to
manufacture products in a cost-effective way.
If
our products, or components or completed products purchased from our suppliers,
experience performance issues, our business will
suffer.
Our
business depends on delivering products of consistently high quality. To this
end, our products, including components and raw materials purchased from our
suppliers and completed goods purchased for resale, are rigorously tested for
quality both by us and our customers. Nevertheless, our products are highly
complex and our customers’ testing procedures are limited to evaluating our
products under likely and foreseeable failure scenarios. For various reasons
(including, among others, the occurrence of performance problems unforeseeable
in
S-10
testing), our products and components and raw materials purchased from our suppliers may fail to perform as expected. Performance issues could result from faulty design or problems in manufacturing. We have experienced such performance issues in the past and remain exposed to such performance issues. In some cases, recall of some or all affected products, product redesigns or additional capital equipment may be required to correct a defect. In addition, we generally warrant certain products for periods ranging from one to twenty-five years from the date of sale, depending upon the product subject to the warranty. In particular, we warrant the operation of our SYSTIMAX products for a period of 20 years from installation. In some cases, we indemnify our customers against damages or losses that might arise from certain claims relating to our products. Although historical warranty and indemnity claims have not been significant, we cannot assure you that future claims will not have a material adverse effect on our results of operations and financial position. Any significant or systemic product failure could also result in lost future sales of the affected product and other products, as well as customer relations problems.
If
our integrated global manufacturing operations suffer production or shipping
delays, we may experience difficulty in meeting customer
demands.
We
internally produce a significant portion of certain components used in our
finished products, including bimetallic center conductors, braided core and
fine
aluminum wire, at certain of our domestic and international manufacturing
facilities. Disruption of our ability to produce at or distribute from these
facilities due to failure of our technology, fire, electrical outage, natural
disaster, acts of terrorism, shipping interruptions or some other catastrophic
event could materially adversely affect our ability to manufacture products
at
our other manufacturing facilities in a cost-effective and timely
manner.
We
periodically realign manufacturing capacity among our global facilities in
order
to reduce costs by improving manufacturing efficiency and to improve our
long-term competitive position. The implementation of these initiatives may
include significant shifts of production capacity among facilities.
There
are
significant risks inherent in the implementation of these initiatives,
including, but not limited to, ensuring that: there is adequate production
capacity to meet customer demand while capacity is being shifted among
facilities; there is no decrease in product quality as a result of shifting
capacity; adequate raw material and other service providers are available to
meet the needs at the new production locations; equipment can be successfully
removed, transported and re-installed; and adequate supervisory, production
and
support personnel are available to accommodate the shifted
production.
In
the
event that manufacturing realignment initiatives are not successfully
implemented, we could experience lost future sales and increased operating
costs
as well as customer relations problems, which could have a material adverse
effect on our results of operations.
If
we encounter capacity constraints with respect to our internal facilities and/or
existing or new contract manufacturers, this could have an adverse impact on
our
business.
We
may
not have sufficient production capacity, either through our internal facilities
and/or through independent contract manufacturers, to meet customer demand
for
our products. We may experience lost sales opportunities and customer relations
problems, which could have a material adverse effect on our
business.
If
contract manufacturers that we rely on to produce products or key components
of
products encounter production, quality, financial or other difficulties, we
may
experience difficulty in meeting customer demands.
We
rely
on unaffiliated contract manufacturers, both domestically and internationally,
to produce certain products or key components of products. If we are unable
to
arrange for sufficient production capacity among our contract manufacturers
or
if our contract manufacturers encounter production, quality, financial or other
difficulties, we may encounter difficulty in meeting customer demands. Any
such
difficulties could have an adverse effect on our business and financial results,
which could be material.
S-11
Our
significant international operations present economic, political and other
risks.
We
have a
significant level of international manufacturing operations and international
sales. We have manufacturing facilities in Belgium, China, Brazil, Ireland
and
Australia. For the year ended December 31, 2006, international sales
represented approximately 32% of our net sales. Our international sales,
manufacturing and distribution operations are subject to the risks inherent
in
operating abroad, including, but not limited to, risks with respect to currency
exchange rates, economic and political destabilization, restrictive actions
by
foreign governments, nationalizations, the laws and policies of the United
States affecting trade, foreign investment and loans, foreign tax laws,
including the ability to recover amounts paid as value added taxes, compliance
with local laws and regulations, armed conflict, terrorism, shipping
interruptions, and major health concerns (such as infectious
diseases).
We
may not fully realize the anticipated savings from prior restructuring actions
and may need to undertake further restructuring actions in the
future.
We
recognized pretax restructuring charges of $12.6 million during the year
ended December 31, 2006. These charges were related to the global
manufacturing initiative that commenced in the third quarter of 2005.
Implementation of this initiative and the calculation of anticipated benefits
was complex and the anticipated benefits may not be fully realized. In response
to general business conditions, the then current level of business and the
outlook for future business, we may again need to initiate restructuring actions
that could result in workforce reductions and restructuring charges, which
could
be material.
We
may need to recognize impairment charges related to fixed assets, amortizable
intangible assets or goodwill or other intangible assets with indefinite
lives.
We
have
recognized impairment charges in the past as a result of adverse changes in
business conditions or in conjunction with restructuring activities. As a result
of an event or a change in circumstances or through our periodic testing, we
may, in the future, determine that one or more of our long-lived assets is
impaired and that an impairment charge is required. Any such impairment charge
could have a material effect on our results of operations and financial
position.
We
have significant obligations under our employee benefit
plans.
Significant
changes to the assets and/or the liabilities related to our employee benefit
obligations as a result of changes in actuarial estimates, asset performance
or
benefit changes, among others, could have a material impact on our financial
position and/or results of operations.
In
addition, legislative or regulatory changes could require us to fund a material
portion of our significant unfunded obligations, which could have a material
adverse impact on our financial flexibility.
We
may incur costs and may not be successful in protecting our intellectual
property and in defending claims that we are infringing on the intellectual
property of others.
We
may
encounter difficulties, costs or risks in protecting our intellectual property
rights or obtaining rights to additional intellectual property to permit us
to
continue or expand our business. Other companies, including some of our largest
competitors, hold intellectual property rights in our industry, and the
intellectual property rights of others could inhibit our ability to introduce
new products unless we secure licenses on commercially reasonable terms, as
such
are needed.
In
addition, we have been required and may be required in the future to initiate
litigation in order to enforce any patents issued or licensed to us or to
determine the scope and/or validity of a third party’s patent or other
proprietary rights. We also have been and may in the future be subject to
lawsuits by third parties seeking to enforce their own intellectual property
rights. Any such litigation, regardless of outcome, could subject us to
significant liabilities or require us to cease using proprietary third party
technology and, consequently, could have a material adverse effect on our
results of operations and financial condition.
S-12
In
certain markets, we may be required to address counterfeit versions of our
products. We may incur significant costs in pursuing the originators of such
counterfeit products and, if we are unsuccessful in eliminating them from the
market, we may experience a diminution in the value of our
products.
Our
business depends on effective information management
systems.
We
rely
on our enterprise resource planning systems to support such critical business
operations as processing sales orders and invoicing, inventory control,
purchasing and supply chain management, payroll and human resources, and
financial reporting. We periodically implement upgrades to such systems or
migrate one or more of our affiliates, facilities or operations from one system
to another. If we are unable to adequately maintain such systems to support
our
developing business requirements or effectively manage any upgrade or migration,
we could encounter difficulties that could have an adverse impact on our
business, internal controls over financial reporting, financial results, or
our
ability to timely and accurately report such results, which could be
material.
A
significant uninsured loss or a loss in excess of our insurance coverage could
materially adversely affect our financial condition.
We
maintain insurance covering our normal business operations, including fire,
property and casualty protection that we believe are adequate. We do not
generally carry insurance covering wars, acts of terrorism, earthquakes or
other
similar catastrophic events. Because insurance has generally become more
expensive, we may not be able to obtain adequate insurance coverage on
financially reasonable terms in the future. A significant uninsured loss or
a
loss in excess of our insurance coverage could materially adversely affect
our
financial condition.
Compliance
with domestic and foreign environmental laws and potential environmental
liabilities may have a material adverse impact.
We
are
subject to various federal, state, local and foreign environmental laws and
regulations governing, among other things, discharges to air and water,
management of hazardous substances, handling and disposal of solid and hazardous
waste, and investigation and remediation of hazardous substance contamination.
Because of the nature of our business, we have incurred and will continue to
incur costs relating to compliance with these environmental laws and
regulations. Compliance with current laws and regulations has not had and is
not
expected to have a material adverse effect on our financial condition. However,
new laws and regulations, including those regulating the types of substances
allowable in certain of our products, stricter enforcement of existing laws
and
regulations, the discovery of previously unknown contamination or the imposition
of new remediation or discharge requirements could require us to incur costs
or
become the basis for new or increased liabilities that could have a material
adverse effect on our financial condition and results of operations. For
example, the European Union has issued directives relating to hazardous
substances contained in electrical and electronic equipment and the disposal
of
waste electrical and electronic equipment. If we are unable to comply with
these
and similar laws in other jurisdictions, this could have a material adverse
effect on our financial condition and results of operations.
Pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act
and
similar state statutes, current or former owners or operators of a contaminated
property, as well as companies that generated, disposed of, or arranged for
the
disposal of hazardous substances at a contaminated property can be held jointly
and severally liable for the costs of investigation and remediation of the
contaminated property, regardless of fault. Our present and past facilities
have
been in operation for many years and over that time, in the course of those
operations, these facilities have used substances or generated and disposed
of
wastes which are or might be considered hazardous. We have been indemnified
by
prior owners and operators of certain of these facilities for costs of
investigation and/or remediation, but there can be no assurance that we will
not
ultimately be liable for some or all of these costs. Therefore, it is possible
that environmental liabilities may arise in the future which we cannot now
predict.
We
may experience significant variability in our quarterly and annual effective
tax
rate.
For
the
years ended December 31, 2006, 2005 and 2004, our effective tax rate has
ranged from 29.7% to 32.8%. Variability in the mix and profitability of domestic
and international activities, identification and resolution
S-13
of various tax uncertainties and the failure to realize tax benefits related to equity-based compensation, among other matters, may significantly impact our effective income tax rate in the future. A significant increase in our effective income tax rate could have a material impact on our results of operations.
RISK
FACTORS RELATED TO ANDREW’S BUSINESS
Deterioration
of the wireless infrastructure industry could lead to reductions in capital
spending budgets by wireless operators and original equipment manufacturers,
which could adversely affect Andrew’s revenues, gross margins and
income.
Andrew’s
revenues and gross margins will depend significantly on the overall demand
for
wireless infrastructure subsystems products. A reduction in capital spending
budgets by wireless operators and original equipment manufacturers caused by
an
economic downturn could lead to a softening in demand for Andrew’s products and
services, which could result in a decrease in revenues and
earnings.
The
telecommunications industry has experienced significant consolidation and this
trend is expected to continue. Recent examples of this consolidation are
Lucent’s merger with Alcatel and AT&T Wireless’ merger with
Cingular. It is possible that Andrew and one or more of Andrew’s
competitors each supply products to the companies that have merged or will
merge.
This
consolidation has and could continue to result in delays in purchasing decisions
by merged companies or in Andrew playing a decreased role in the supply of
products to the merged companies. Delays or reductions in wireless
infrastructure spending could have a material adverse effect on demand for
Andrew’s products. Andrew depends on several large original equipment
manufacturers and wireless service providers for a significant portion of its
business. In Andrew's fiscal 2007, the top 25 customers accounted for 71% of
Andrew’s sales. Any disruption in Andrew’s relationships with its major
customers could adversely affect Andrew’s sales, operating margins, and net
income.
A
substantial portion of Andrew’s manufacturing capacity and business activity is
outside the United States. Conducting business in international markets involves
risks and uncertainties such as foreign exchange rate exposure and political
and
economic instability that could lead to reduced international sales and reduced
profitability associated with such sales, which would reduce Andrew’s sales and
income.
Approximately
67% of Andrew’s sales are outside the United States. Andrew anticipates that
international sales will continue to represent a substantial portion of Andrew’s
total sales and that continued growth and profitability will require further
international expansion. Identifiable foreign exchange rate exposures result
primarily from currency fluctuations, accounts receivable from customer sales,
the anticipated purchase of products from affiliates and third-party suppliers
and the repayment of inter-company loans denominated in foreign currencies
with
Andrew’s foreign subsidiaries. International business risks also include
political and economic instability, tariffs and other trade barriers, longer
customer payment cycles, burdensome taxes, restrictions on the repatriation
of
earnings, expropriation or requirements of local or shared ownership, compliance
with local laws and regulations, terrorist attacks, developing legal systems,
reduced protection of intellectual property rights in some countries, cultural
and language differences, difficulties in managing and staffing operations
and
difficulties maintaining good employee relations. Andrew believes that
international risks and uncertainties could lead to reduced international sales
and reduced profitability associated with such sales, which would reduce our
sales and income.
The
competitive pressures Andrew faces could lead to reduced demand or lower prices
for its products and services in favor of its competitors’ products and
services, which could harm Andrew’s sales, gross margins and
prospects.
Andrew
faces intense competition from a variety of competitors in all areas of its
business, and competes primarily on the basis of technology, performance, price,
quality, reliability, brand, distribution, customer service and support. If
Andrew fails to develop new products and services, periodically enhance its
existing products and
S-14
services, or otherwise compete successfully, it would reduce its sales and prospects. Further, Andrew may have to lower the prices of many of its products and services to stay competitive. If Andrew cannot reduce its costs in response to competitive price pressures, its gross margins would decline.
Andrew’s
failure to meet the challenges involved in successfully integrating acquisitions
or to otherwise realize the anticipated benefits of acquisitions could adversely
affect its results of operations.
Over
the
last several years Andrew has completed numerous acquisitions. While Andrew
believes that these acquisitions provide strategic growth opportunities for
Andrew, Andrew’s inability to successfully integrate operations in a timely
manner may result in Andrew not realizing the anticipated benefits or synergies
of these acquisitions. The integration of companies is a complex, time-consuming
and expensive process that could significantly disrupt Andrew’s business. The
anticipated benefits and synergies of acquisitions are based on projections
and
assumptions, not actual experience, and assume a successful integration. In
addition, Andrew’s ability to realize these benefits and synergies could be
adversely impacted by practical or legal constraints on its ability to combine
operations or implement workforce reductions and by risks relating to potential
unknown liabilities. The challenges involved in successfully
integrating acquisitions include: consolidating and rationalizing information
systems and manufacturing operations, combining product offerings, coordinating
and rationalizing research and development activities, preserving distribution,
marketing and other important relationships, maintaining employee morale and
retaining key employees, and coordinating and combining overseas operations,
relationships and facilities, which may be subject to additional constraints
imposed by local laws and regulations.
If
Andrew cannot continue to rapidly develop, manufacture and market innovative
products and services that meet customer requirements for performance and
reliability, Andrew may lose market share and its revenues may
suffer.
The
process of developing new wireless technology products and services is complex
and uncertain, and failure to anticipate customers’ changing needs and emerging
technological trends accurately and to develop or obtain appropriate
intellectual property could significantly harm Andrew’s results of operations.
Andrew must make long-term investments and commit significant resources before
knowing whether its investments will eventually result in products that the
market will accept. After a product is developed, Andrew must be able to
manufacture sufficient volumes quickly and at low costs. To accomplish this,
Andrew must accurately forecast volumes, product mix and configurations that
meet customer requirements, which Andrew may not be able to do
successfully.
Among
the
factors that make a smooth transition from current products to new products
difficult are delays in product development or manufacturing, variations in
product costs, delays in customer purchases of existing products in anticipation
of new product introductions and customer demand for the new product. Andrew’s
revenues and gross margins may suffer if Andrew cannot make such a transition
effectively and also may suffer due to the timing of product or service
introductions by its suppliers and competitors. This is especially challenging
when a product has a short life cycle or a competitor introduces a new product
just before Andrew’s own product introduction. Furthermore, sales of Andrew’s
new products may replace sales of some of its current products, offsetting
the
benefit of even a successful product introduction. If Andrew incurs delays
in
new product introductions, or does not accurately estimate the market effects
of
new product introductions, given the competitive nature of Andrew’s industry,
future demand for Andrew’s products and Andrew’s revenues may be seriously
harmed.
Andrew
cannot assure you that the sale of its Satellite Communications business will
be
completed on terms acceptable to it, or at all.
On
May 3,
2007, Andrew announced its intention to sell its Satellite Communications
business. On November 6, 2007, Andrew announced that it had entered into a
definitive agreement for the sale of its Satellite Communications business
to
Resilience Capital Partners ("Resilience"). Andrew expects the transaction
to
close in the first quarter of 2008. Although Andrew has signed a definitive
sale
agreement, there can be no assurance that all of the conditions to the closing
of the sale will be satisfied and, therefore, there can be no assurance that
Andrew will complete this divestiture. If Andrew does not complete the intended
divestiture, it will have incurred significant transaction
S-15
expenses and may continue to realize ongoing operating losses in connection with the Satellite Communications business.
As
of
September 30, 2007, Andrew determined that, as a result of continuing operating
losses, lower short-term business prospects as compared to previous forecasts,
and, despite significant numbers of initial indications of interest, the low
number of remaining substantive bids resulting from its efforts to sell the
Satellite Communications business, an indicator of impairment existed in
accordance with SFAS 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. As such, Andrew performed a test of the recoverability of
the
carrying value of the long-lived assets and incurred a non-cash impairment
charge in its year ended September 30, 2007 of approximately $32 million to
reduce the carrying value of long-lived assets to their estimated fair value.
As
a result of its agreement to sell its Satellite Communications business to
Resilience, Andrew expects to record a non-cash charge to earnings of
approximately $20 million in the period ended December 27,
2007.
Andrew’s
revenues and selling, general and administrative expenses may suffer if Andrew
cannot continue to enforce the intellectual property rights on which its
business depends or if third parties assert that Andrew violates their
intellectual property rights.
Andrew
generally relies upon patent, copyright, trademark and trade secret laws in
the
United States and similar laws in other countries, and agreements with Andrew’s
employees, customers, partners and other parties, to establish and maintain
its
intellectual property rights in technology and products used in its operations.
However, any of Andrew’s intellectual property rights could be challenged,
invalidated or circumvented, or Andrew’s intellectual property rights may not
provide competitive advantages, which could significantly harm its business.
Also, because of the rapid pace of technological change in the wireless
industry, a portion of Andrew’s business and Andrew’s products may rely on key
technologies developed by third parties, and Andrew may not be able to obtain
licenses and technologies from these third parties on reasonable terms or at
all. Third parties also may claim that Andrew is infringing upon their
intellectual property rights. Even if Andrew does not believe that its products
or business are infringing upon third parties’ intellectual property rights, the
claims can be time-consuming and costly to defend and may divert management’s
attention and resources away from Andrew’s business. Claims of intellectual
property infringement also might require Andrew to enter into costly settlement
or license agreements. If Andrew cannot or does not license the infringed
technology at all or on reasonable terms or substitute similar technology from
another source, Andrew’s sales, operating margins and income could
suffer.
Andrew
may be liable for enhancement of the damages awarded at trial (up to trebling)
plus other costs and lost opportunities in connection with its intellectual
property litigation with TruePosition.
On
September 14, 2007, a jury ruled in favor of TruePosition, finding that Andrew
had willfully infringed a single TruePosition patent in providing a mobile
location system to a customer, and the jury awarded $45 million in damages
to
TruePosition. As a result of the jury verdict in the case, Andrew recorded
a $45
million pre-tax charge to its earnings in the fourth quarter of fiscal 2007,
which is its reasonable estimate of the probable loss if it is not successful
with its post-verdict motions and, if necessary, appeal and the jury verdict
is
not reduced, set aside or overturned. On October 1, 2007, TruePosition filed
a
motion seeking a permanent injunction and a motion seeking to increase the
damages awarded up to trebling the amount as well as the fees and expenses
of
its counsel. TruePosition may also seek to recover interest on the judgment.
The
litigation with TruePosition may result in the loss of future revenue
opportunities, including opportunities to manufacture and sell products using
uplink time difference of arrival (U-TDOA) technology; however, Andrew is not
currently able to assess the likelihood or magnitude of such potential
losses.
Andrew
is subject to risks related to product defects which could result in product
recalls and could subject it to warranty claims which are greater than
anticipated.
If
Andrew
were to experience a product recall or an increase in warranty claims compared
with its historical experience, Andrew’s sales and operating results could be
adversely affected. Andrew tests its products through a variety of means.
However, there can be no assurance that testing will reveal latent defects
in
Andrew’s products, which may not become apparent until after the products have
been sold into the market. Accordingly, there
S-16
is a risk that product defects will occur, which could require a product recall. Product recalls can be expensive to implement and, if a product recall occurs during the product’s warranty period, Andrew may be required to replace the defective product. In addition, a product recall may damage Andrew’s relationship with its customers, and Andrew may lose market share with its customers. Andrew offers warranties on most products. The specific terms and conditions of the warranties offered vary depending upon the products sold. Andrew accrues for warranty costs based on the number of units sold, the type of products sold, historical and anticipated rates of warranty claims and cost per claim. Andrew regularly reviews these forecasts and makes adjustments as needed. If Andrew were to experience a product recall or an increase in warranty claims compared with its historical experience, its sales and operating results could be adversely affected.
If
Andrew cannot continue to attract and retain highly-qualified people, Andrew’s
revenues, gross margin and income may suffer.
Andrew
believes that its future success significantly depends on its ability to
attract, motivate and retain highly qualified management, technical and
marketing personnel. The competition for these individuals is intense. From
time
to time, there may be a shortage of skilled labor, which may make it more
difficult and expensive for Andrew to attract, motivate and retain qualified
employees. Andrew believes its inability to do so could negatively impact the
demand for Andrew’s products and services and consequently Andrew’s financial
condition and operating results.
Andrew’s
costs and business prospects may be affected by increased government regulation,
a factor which is largely beyond its control.
Andrew
is
not directly regulated in the United States, but many of its U.S. customers
and
the telecommunications industry generally are subject to Federal Communications
Commission regulations. In international markets, there are generally
similar governmental agencies that regulate Andrew’s customers. Andrew believes
that regulatory changes could have a significant negative effect on its business
and operating results by restricting its customers’ development efforts, making
current products obsolete or increasing competition. Andrew’s customers must
obtain regulatory approvals to operate certain of its products. Any failure
or
delay by any of Andrew’s customers to obtain these approvals would adversely
impact its ability to sell Andrew’s products. The enactment by governments of
new laws or regulations or a change in the interpretation of existing
regulations could adversely affect the market for Andrew’s products. The
increasing demand for wireless communications has exerted pressure on regulatory
bodies worldwide to adopt new standards for such products, generally following
extensive investigation and deliberation over competing technologies. In the
past, the delays inherent in this governmental approval process have caused,
and
may in the future cause, the cancellation or postponement of the deployment
of
new technologies. These delays could have a material adverse effect on Andrew’s
revenues, gross margins and income.
The
Chinese government could delay issuance of anticipated new wireless network
licenses.
The
Chinese government is planning to issue licenses for its next generation
wireless network. The new Chinese network will become the technical standard
with which wireless infrastructure will be designed, manufactured and deployed
in China. It is anticipated that these licenses will be issued in the next
twelve to eighteen months. Additionally, Andrew anticipates an increase in
wireless infrastructure spending associated with the build-out of the
anticipated new network. Significant delays of license issuance could adversely
affect Andrew’s financial results.
Compliance
with European Union environmental directives could be difficult and costly
for
Andrew.
The
European Union has issued directives governing the design of energy-using
products, the restriction of the use of certain hazardous substances and the
waste (disposal) of electrical and electronic equipment. These directives
require companies to change the way they design, manufacture, track and bring
new products into the market. Certain products Andrew manufactures and
distributes throughout the European Union will need to comply
S-17
with these directives. If Andrew is not able to comply with these directives, customer shipments and financial results may be adversely affected.
The
goodwill balance on Andrew’s balance sheet is tested annually for possible
valuation impairment and any non-cash impairment charges could adversely affect
its financial results.
Andrew
tests its goodwill balance for possible impairment as of July 1 each year,
or on
an interim basis if circumstances dictate, based on the five reporting units
of
Andrew’s business. As a result of the losses generated by Base Station
Subsystems in the first six months of Andrew's fiscal 2007, Andrew determined
that an interim test of the goodwill for Base Station Subsystems was required.
Andrew completed its assessment of Base Station Subsystems in its third quarter
of fiscal 2007 and, as a result, recorded a non-cash impairment loss of $108
million. Andrew completed its annual assessment of Satellite Communications
in
its fourth quarter of fiscal 2007 and, as a result, recorded a non-cash
impairment loss of $13 million related to goodwill. The process of evaluating
the potential impairment of goodwill is subjective and requires significant
judgment. In estimating the fair value of the business for the purpose of its
annual or periodic analyses, Andrew makes estimates and judgments about the
future cash flows of these businesses. Although Andrew’s cash flow forecasts are
based on assumptions that are consistent with plans and estimates it is using
to
manage the underlying business, there is significant judgment in determining
the
cash flows attributable to these businesses. If actual results are different
from its forecasts, future tests may indicate additional impairments of
goodwill, and additional non-cash charges, that may adversely affect Andrew’s
results of operations. If, in the course of its annual or interim valuation
testing procedures Andrew determines that a portion of the consolidated goodwill
balance is impaired, any non-cash charge would adversely affect its financial
results.
The
manufacture of Andrew’s power amplifiers and certain of Andrew’s filter products
have been outsourced to companies that specialize in electronics contract
manufacturing.
The
manufacturing of Andrew’s power amplifier products has been performed by a
leading electronics contract manufacturer for the past several years.
Additionally, in September 2006, Andrew announced that it is outsourcing the
manufacture of its European and North American-made filters to another leading
electronics contract manufacturer. Andrew will continue to manufacture certain
filter products at its Shenzhen, China facility. The use of contract electronics
manufacturers by Andrew increases the risk of product supply disruption and
intellectual property misappropriation. Disruption of product supplies could
affect customer relationships, sales and profits. Intellectual property
misappropriation could affect Andrew’s competitiveness in power amplifier and
certain filter product lines which would depress long-term sales and
profits.
Allegations
of health risks from wireless equipment may negatively affect Andrew’s results
of operations.
Allegations
of health risks from the electromagnetic fields generated by base stations
and
mobile handsets, and the lawsuits and publicity relating to them, regardless
of
merit, could affect Andrew’s operations negatively by leading consumers to
reduce their use of mobile phones or by causing Andrew to allocate resources
to
these issues.
S-18
USE
OF PROCEEDS
We
will
not receive any cash proceeds from the offering of our common stock under this
prospectus. The shares of our common stock offered hereby will be available
solely to satisfy the conversion rights of the holders of the Andrew convertible
notes.
S-19
PLAN
OF DISTRIBUTION
The
Andrew convertible notes were issued under an indenture, dated as of August
8,
2003, between Andrew and The Bank of New York Trust Company, N.A. (formerly
known as BNY Midwest Trust Company), as trustee, as amended by the first
supplemental indenture thereto, dated as of December 27, 2007. The indenture,
as
it may be amended or supplemented from time to time, is referred to in this
prospectus as the “indenture.” You may obtain a copy of the indenture from the
Corporate Secretary of CommScope, 1100 CommScope Place, SE, P.O. Box 339,
Hickory, North Carolina, Attention: Corporate Secretary, from the trustee,
or
from the internet website maintained by the SEC at www.sec.gov.
As
a
result of the merger, and in accordance with the terms of the indenture, each
Andrew convertible note ceased to be convertible into shares of Andrew common
stock and became convertible, upon the terms and conditions specified in the
indenture, into a combination of cash and shares of our common stock. Under
the
terms of the indenture, prior to maturity or earlier redemption, a holder of
Andrew convertible notes has the right to request conversion of its Andrew
convertible notes under the circumstances and pursuant to the procedures set
forth in the indenture.
As
of the
date of this prospectus, the Andrew convertible notes are convertible into
$986.15 in cash and 2.304159 shares of our common stock per $1,000 principal
amount of notes (subject to adjustment from time to time and payments in lieu
of
fractional shares, as provided in the indenture).
Our
common stock is traded on the New York Stock Exchange under the symbol “CTV.” On
January 2, 2008, the closing price of our common stock on the New York Stock
Exchange was $47.34 per share.
S-20
DESCRIPTION
OF OUR CAPITAL STOCK
Pursuant
to the Amended and Restated Certificate of Incorporation, the authorized capital
stock of the Company consists of (i) 300,000,000 shares of common stock, of
which 61,722,426 shares (excluding approximately 4,992,130 shares to be
issued to former Andrew shareholders in connection with the merger) were issued
and outstanding as of December 31, 2007 and (ii)
20,000,000 shares of preferred stock, $.01 par value per share, none of which
were issued and outstanding as of such date. All outstanding shares of common
stock are, and the shares to be issued by the Company, will be, validly issued,
fully paid and nonassessable.
Common
Stock
Each
holder of common stock is entitled to one vote for each share owned of record
on
all matters submitted to a vote of stockholders. There are no cumulative voting
rights. Accordingly, the holders of a majority of the shares voting for the
election of directors can elect all the directors if they choose to do so,
subject to any voting rights of holders of preferred stock to elect directors.
Subject to the preferential rights of any outstanding series of preferred stock,
and to any restrictions on payment of dividends imposed by our credit agreement,
the holders of common stock will be entitled to such dividends as may be
declared from time to time by the Board from funds legally available therefor,
and will be entitled, after payment of all prior claims, to receive pro
rata all assets of our Company upon the liquidation, dissolution or winding
up of our Company. Holders of common stock have no redemption or conversion
rights or preemptive rights to purchase or subscribe for securities of our
Company. Certain provisions of the certificate of incorporation and by-laws
of
our Company have the effect of making more difficult an acquisition of control
of our Company in a transaction not approved by our board of
directors.
Preferred
Stock
Our
authorized capital stock includes 20,000,000 shares of preferred stock, none
of
which are currently issued or outstanding. Our board of directors is authorized
to divide the preferred stock into series and, with respect to each series,
to
determine the preferences and rights and the qualifications, limitations or
restrictions thereof, including the dividend rights, conversion rights, voting
rights, redemption rights and terms, liquidation preferences, sinking fund
provisions, the number of shares constituting the series and the designation
of
such series. Our board of directors could, without stockholder approval, issue
preferred stock with voting and other rights that could adversely affect the
voting power of the holders of common stock and which could have certain
anti-takeover effects.
Transfer
Agent
The
transfer agent for our common stock is Mellon Investor Services,
L.L.C.
S-21
EXPERTS
The
financial statements, the related financial statement schedule, and management’s
report on the effectiveness of internal control over financial reporting
incorporated in this prospectus by reference from our Annual Report on Form
10-K
for the year ended December 31, 2006 have been audited by Deloitte & Touche
LLP, an independent registered public accounting firm, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
file
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on
Form 8-K, proxy statements and other information with the SEC. You may read
and
copy any reports, statements or other information we file with the SEC at its
Public Reference Room, 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference room. Our filings are also available to the
public on the Internet, through a database maintained by the SEC at
http://www.sec.gov. In addition, you can inspect and copy our
reports, proxy statements and other information at the offices of the New York
Stock Exchange at 20 Broad Street, New York, New York 10005.
We
filed
a registration statement on Form S-3 to register with the SEC the securities
described in this prospectus supplement. This prospectus supplement
and the accompanying prospectus are part of that registration
statement. As permitted by SEC rules, this prospectus supplement and
the accompanying prospectus do not contain all the information contained in
the
registration statement or the exhibits to the registration statement. You may
refer to the registration statement and accompanying exhibits for more
information about us and our securities.
You
should rely only on the information contained or incorporated by reference
in
this prospectus supplement and the accompanying prospectus. We have
not authorized any other person to provide you with different information.
If
anyone provides you with different or inconsistent information you should not
rely on it. We are not making an offer to sell these securities in
any jurisdiction where the offer and sale is not permitted. You
should assume that the information appearing in this prospectus supplement,
the
accompanying prospectus and the information incorporated by reference is
accurate only as of the date of the documents containing the
information. Our business, financial condition, results of operations
and prospects may have changed since that date.
DOCUMENTS
INCORPORATED BY REFERENCE
We
incorporate by reference into this prospectus the documents listed below and
any
future filings we make with the SEC under sections 13(a), 13(c), 14 or 15(d)
of
the Securities Exchange Act of 1934 on or after the date of this prospectus
supplement and prior to the termination of the offering made
hereby. These additional documents include periodic reports, such as
annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K (other than information furnished under Items
2.02 and 7.01, which is deemed not to be incorporated by reference in this
prospectus), as well as proxy statements. You should review these
filings as they may disclose a change in our business, prospects, financial
condition or other affairs after the date of this prospectus. All
information incorporated by reference is part of this document, and later
information that we file with the SEC will automatically update and supersede
this information.
This
prospectus supplement and the accompanying prospectus incorporate by reference
the documents listed below that we have filed with the SEC but have not been
included in or delivered with this document:
| ● |
Annual
Report on Form 10-K for the fiscal year ended December 31,
2006.
|
|
| ● |
Quarterly
Reports on Form 10-Q for the fiscal quarter ended March 31,
2007, for the fiscal quarter ended June 30, 2007 and for the fiscal
quarter ended September 30, 2007.
|
|
| ● |
Current
Reports on Form 8-K filed with the SEC on February 23, 2007
(relating to Item 5.02), February 28, 2007, March 19, 2007,
March 22, 2007, May 1, 2007, June 27, 2007, August 16,
2007,
|
S-22
| October 31, 2007, December 4, 2007, December 4, 2007, December 6, 2007, December 26, 2007 and December 28, 2007. | ||
| ● |
The
description of our common stock included in our Registration Statement
on
Form 8-A, dated April 24, 1997, filed with the SEC, including
any amendment or reports filed for the purpose of updating such
description.
|
You
may
request a copy of these incorporated documents at no cost by writing or
telephoning us at the following address:
CommScope, Inc.
Attn:
Investor Relations
1100
CommScope Place, S.E.
P.O. Box
339
Hickory,
North Carolina 28602
Telephone:
(828) 324-2200
E-mail:
investor.relations@CommScope.com
S-23
|
PROSPECTUS
|
June
7, 2006
|
CommScope, Inc.
Common
Stock
Preferred
Stock
Senior
or Subordinated Debt Securities
Convertible
Debt Securities
Warrants
We
may, from time to time, offer to sell common stock, preferred stock, senior
or
subordinated debt securities, convertible debt securities and warrants. We
refer
to our common stock, preferred stock, senior or subordinated debt securities,
convertible debt securities and warrants collectively as the "securities."
The
securities we may offer may be convertible into or exercisable or exchangeable
for our other securities. We may offer the securities separately or together,
in
separate series or classes and in amounts, at prices and on terms described
in
one or more supplements to this prospectus. In addition, this prospectus
may be
used to offer securities for the account of persons other than us.
This
prospectus describes some of the general terms that may apply to these
securities. The specific terms of any securities to be offered, and any other
information relating to a specific offering, will be set forth in a
post-effective amendment to the registration statement of which this prospectus
is a part or in a supplement to this prospectus or may be set forth in one
or
more documents incorporated by reference in this prospectus.
We
or any selling security holder may offer and sell these securities to or
through
one or more underwriters, dealers and agents, or directly to purchasers,
on a
continuous or delayed basis. The supplements to this prospectus will provide
the
specific terms of the plan of distribution. This prospectus may not be used
to
offer and sell securities unless accompanied by a prospectus
supplement.
Our
common stock trades on the New York Stock Exchange under the symbol
"CTV."
Investing
in our securities involves
risks. You should consider the risk factors described in any accompanying
prospectus supplement and in the documents we incorporate by
reference.
Neither
the Securities and Exchange
Commission nor any state securities commission or other regulatory body has
approved or disapproved of these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
Table
of Contents
|
Page
|
||
|
The
Company
|
1
|
|
|
About
this prospectus
|
1
|
|
|
Where
you can find more information
|
2
|
|
|
Incorporation
by reference
|
2
|
|
|
Risk
factors
|
3
|
|
|
Use
of proceeds
|
3
|
|
|
Description
of the securities
|
3
|
|
|
Ratio
of earnings to fixed charges and deficiency in the coverage of
earnings to
fixed charges
|
3
|
|
|
Selling
security holders
|
4
|
|
|
Legal
matters
|
4
|
|
|
Experts
|
4
|
|
|
Forward-looking
statements
|
4
|
The
Company
CommScope, Inc.
is a world leader in the design and manufacture of cable and connectivity
solutions for communications networks. We focus on the "last mile" in
communications networks, which is the distribution access, or final link
to the
customer.
Our
business is organized into three segments: Enterprise, Broadband and
Carrier.
Our
Enterprise segment consists mainly of structured cabling systems for business
enterprise applications and connectivity solutions for wired and wireless
networks within organizations. The Enterprise segment also includes coaxial
cable for various video and data applications. Through our acquisition of
the
Connectivity Solutions business of Avaya Inc. on January 31, 2004, we
became a global leader in structured cabling for business enterprise
applications.
Our
Broadband segment primarily consists of coaxial cable, fiber optic cable
and
conduit for cable television system operators. These products support
multi-channel video, voice and high-speed data services for residential and
commercial customers using Hybrid Fiber Coaxial architecture. We are a global
leader in broadband coaxial cables for the cable television
industry.
Our
Carrier segment primarily consists of secure environmental enclosures for
electronic devices and equipment, cables and components used by wireless
providers to connect antennae to transmitters and apparatus for telephone
central offices. These products are primarily used by telecommunications
service
providers or "carriers." We are a leading provider of environmentally secure
enclosures and cables and components for wireless transmission systems in
the
United States.
About
this prospectus
This
prospectus is part of a registration statement on Form S-3 that we filed
with the U.S. Securities and Exchange Commission ("SEC") using the "shelf"
registration process. By using a shelf registration statement, we and/or
certain
selling security holders may offer and sell, from time to time, in one or
more
offerings, the securities described in this prospectus. No limit exists on
the
aggregate amount of the securities we may sell pursuant to the registration
statement.
You
should rely only on the information contained in or incorporated by reference
into this prospectus or any applicable prospectus supplement. We have not
authorized anyone to provide you with different information. This document
may
only be used where it is legal to sell these securities. You should not assume
that the information contained in this prospectus, or in any prospectus
supplement, is accurate as of any date other than its date regardless of
the
time of delivery of the prospectus or prospectus supplement or any sale of
the
securities.
This
prospectus includes trademarks, service marks and trade names owned by us
or
other companies. All trademarks, service marks and trade names included in
this
prospectus are the property of their respective owners.
We
urge you to read carefully both this prospectus and any prospectus supplement
accompanying this prospectus, together with the information described under
the
headings "Where you can find more information" and "Incorporation by reference,"
before deciding whether to invest in any of the securities being
offered.
References
in this prospectus to "CommScope," "we," "us," and "our" are to
CommScope, Inc. and its subsidiaries. The term "you" refers to a
prospective investor. Our principal executive offices are located at 1100
CommScope Place SE, Hickory, North Carolina 28602. Our phone number is
(828) 324-2200.
1
Where
you can find more information
We
file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy materials that we have filed
with the SEC at the SEC public reference room located at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet web site that contains reports, proxy and information
statements, and the information regarding issuers, including us, that file
electronically with the SEC. Our SEC filings are available to the public
from
the SEC's website at www.sec.gov and on our
website at www.commscope.com.
Incorporation
by reference
The
SEC allows us to "incorporate by reference" the information we file with
them,
which means that we can disclose important information to you by referring
you
to those documents that we have previously filed with the SEC or documents
that
we will file with the SEC in the future. The information incorporated by
reference is considered to be part of this prospectus, except for any
information that is superseded by other information that is included or
incorporated by reference into this document.
This
prospectus incorporates by reference the documents listed below that we have
previously filed with the SEC, which contain important information about
us:
• Our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2006 filed on May 5, 2006;
• Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2005
filed on March 1, 2006;
• Our
Current Reports on Form 8-K filed on February 13, 2006, March 1,
2006, March 23, 2006, and May 9, 2006;
• The
description of our common stock set forth in our Registration Statement on
Form 8-A, dated April 24, 1997, as amended; and
• The
description of our preferred stock purchase rights set forth in our Registration
Statement on Form 8-A, dated June 30, 1997, as amended.
We
incorporate by reference any additional documents that we may file with the
SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 (other than those "furnished" pursuant to Item 2.02 or Item 7.01 in
any
Current Report on Form 8-K or other information deemed to have been
"furnished" rather than filed in accordance with SEC rules) from the date
of the
registration statement of which this prospectus is part until the termination
of
the offering of the securities. These documents may include annual, quarterly
and current reports, as well as proxy statements. Any material that we later
file with the SEC will automatically update and replace the information
previously filed with the SEC.
For
purposes of this prospectus, any statement contained in a document incorporated
or deemed to be incorporated herein by reference shall be deemed to be modified
or superseded to the extent that a statement contained in any subsequently
filed
document which also is or is deemed to be incorporated herein by reference
modifies or supersedes such statement contained in the previous
document.
You
may request a copy of these filings at no cost by writing or calling us at
the
following address or telephone number: CommScope, Inc., Attention: Investor
Relations, 1100 CommScope Place SE, Hickory, NC 28602; telephone
(828) 324-2200. The filings are also available on our website at www.commscope.com.
2
Risk
factors
Please
carefully consider the risk factors described in our periodic reports filed
with
the SEC, which are incorporated by reference in this prospectus. Before making
an investment decision, you should carefully consider these risks as well
as
other information we include or incorporate by reference in this prospectus
or
include in any applicable prospectus supplement. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial
may
also impair our business operations.
Use
of proceeds
We
will set forth in the applicable prospectus supplement our intended use for
the
net proceeds received by us from our sale of securities under this prospectus.
We will not receive the net proceeds of any sales by selling security
holders.
Description
of the securities
We
may issue from time to time, in one or more offerings, the following
securities:
• shares
of common stock;
• shares
of preferred stock;
• debt
securities, which may be senior or subordinated;
• convertible
debt securities; or
• warrants
exercisable for common stock, preferred stock or debt securities.
We
will set forth in the applicable prospectus supplement a description of the
common stock, preferred stock, senior or subordinated debt securities,
convertible debt securities or warrants that may be offered under this
prospectus. The terms of the offering of securities, the initial offering
price
and the net proceeds to us will be contained in the prospectus supplement
and
other offering material relating to such offering.
Ratio
of earnings to fixed charges and deficiency in the
coverage
of earnings to fixed charges
The
following table sets forth the ratio of earnings to fixed charges and deficiency
in the coverage of earnings to fixed charges for each of the years ended
December 31, 2001, 2002, 2003, 2004 and 2005 and for the three months ended
March 31, 2005 and 2006.
|
Year
Ended December
31,
|
Three
Months
Ended
March
31,
|
||||||||||||||||
|
2001
|
2002
|
2003
|
2004
|
2005
|
2005
|
2006
|
|||||||||||
|
(in
thousands, except ratios)
|
|||||||||||||||||
|
Ratio
of earnings to fixed charges(1)
|
5.79
|
—
|
—
|
—
|
6.85
|
3.42
|
7.82
|
||||||||||
|
Deficiency
in the coverage of earnings to fixed charges(1)
|
—
|
$
|
(21,252
|
)
|
$
|
(13,953
|
)
|
$
|
(6,272
|
)
|
—
|
—
|
—
|
||||
| (1) | In computing the ratio of earnings to fixed charges and deficiency in the coverage of earnings to fixed charges, earnings consist of income (loss) before income taxes, equity in losses of OFS BrightWave, and net gain on OFS BrightWave transaction, plus fixed charges and amortization of capitalized interest, less capitalized interest. Fixed charges consist of interest expense, capitalized interest, amortization of capitalized expense related to indebtedness, and an estimate of the |
3
interest component of rent expense under operating leases. Where earnings
are
inadequate to cover fixed charges, the deficiency is reported.
Selling
security holders
Information
about selling security holders, where applicable, will be set forth in a
prospectus supplement, in a post-effective amendment, or in filings we make
with
the SEC under the Exchange Act which are incorporated by reference.
Legal
matters
The
validity of any securities issued under this prospectus will be passed upon
by
Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York. Any
underwriters will be represented by their own legal counsel, which will be
named
in the applicable prospectus supplement.
Experts
The
consolidated financial statements, the related financial statement schedule,
and
management's report on the effectiveness of internal control over financial
reporting incorporated in this prospectus by reference from CommScope's Annual
Report on Form 10-K for the year ended December 31, 2005 have been
audited by Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their reports, which are incorporated herein
by
reference, and have been so incorporated in reliance upon the reports of
such
firm given upon their authority as experts in accounting and
auditing.
Forward-looking
statements
Certain
statements in this prospectus and in the documents that we incorporate by
reference that are other than historical facts are intended to be
"forward-looking statements" within the meaning of the Securities Exchange
Act
of 1934, the Private Securities Litigation Reform Act of 1995 and other related
laws and include but are not limited to those statements relating to our
business position, plans, transition, outlook, revenues, earnings, margins,
accretion, synergies and other financial items, restructuring plans, sales
and
earnings expectations, expected demand, cost and availability of key raw
materials, internal production capacity and expansion, competitive pricing,
relative market position and outlook. While we believe such statements are
reasonable, the actual results and effects could differ materially from those
currently anticipated. These forward-looking statements are identified, in
some
cases, by the use of certain terms and phrases including but not limited
to
"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.
These
statements are subject to various risks and uncertainties, many of which
are
outside our control, including, without limitation, changes in cost and
availability of key raw materials and our ability to recover these costs
from
our customers through price increases; the challenges of executing our
previously announced global manufacturing initiatives; the integration and
expected synergies related to recent and any future acquisitions; customer
demand for our products and the ability to maintain existing business alliances
with our key customers or distributors; competitive pricing and acceptance
of
our products; industry competition and the ability to retain customers through
product innovation; possible production disruption due to supplier 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; increased
obligations under employee benefit plans; ability to achieve expected sales,
growth and earnings goals; ability to achieve expected benefits from future
acquisitions; costs of protecting or defending our intellectual property;
ability to obtain capital on commercially reasonable terms; adequacy and
availability of insurance; costs
4
and
challenges of compliance with domestic and foreign environmental laws;
variability in expected tax rate; product performance issues and associated
warranty claims; regulatory changes affecting us or the industries we serve;
any
changes required by the SEC in connection with its review of our public filings;
authoritative changes in generally accepted accounting principles by
standard-setting bodies; environmental remediation issues; terrorist activity
or
armed conflict; political instability; major health concerns; and any statements
of belief and any statements of assumptions underlying any of the foregoing.
These and other factors are discussed in greater detail in our periodic filings
with the SEC. The information contained in this prospectus and in the documents
incorporated by reference represents our best judgment at the date of this
prospectus based on information currently available. However, we do not intend,
and are not undertaking any duty or obligation, to update this information
to
reflect developments or information obtained after the date of this
prospectus.
5
