(Hickory, N.C.) CommScope Inc., a global leader in infrastructure solutions for communications networks, reported sales of $721.6 million and a net loss of $22.1 million, or a loss of $0.23 per share, for the quarter ended March 31, 2010. The reported net loss includes after-tax charges of $29.9 million in restructuring costs, $15.2 million for the amortization of purchased intangibles as well as a tax charge of $2.3 million resulting from the recently passed U.S. health care legislation. Excluding these special items, adjusted first quarter 2010 earnings were $25.3 million, or $0.26 of earnings per diluted share. (A reconciliation of reported GAAP results to adjusted results is attached).

For the quarter ended March 31, 2009, CommScope reported sales of $742.3 million and a net loss of $20.5 million, or a loss of $0.29 per share. The reported net loss included after-tax charges of $15.3 million for the amortization of purchased intangibles, $8.6 million for the loss on debt conversions and $7.6 million in restructuring and other special items. Excluding these special items, adjusted first quarter 2009 earnings were $11.0 million, or $0.14 of earnings per diluted share.

“Despite a slow start to the year, orders and sales strengthened considerably as we moved through the first quarter,” said CommScope Chairman and Chief Executive Officer Frank Drendel. “We recorded the strongest book-to-bill ratio we have seen in the last few years and believe we are well positioned to benefit from strengthening capital spending by North American wireless carriers.

“The rapid adoption of smart phones and other sophisticated wireless communications devices is helping to create a compelling mobile broadband experience. The ongoing need for bandwidth also continues to drive increased investment by business enterprises in data centers and ‘intelligent’ buildings as applications like high definition video and cloud computing are more commonly deployed.”

ACCG segment sales declined primarily due to lower capital spending by customers in the Asia Pacific (APAC) and Europe, Middle East and Africa (EMEA) regions. Lower APAC sales were driven by regulatory issues in India and reduced capital spending levels by wireless service providers in China. Sales of the company’s antenna and cable products were also negatively affected by conservative capital deployment by European wireless operators. The ACCG segment ended the first quarter with strong order input and generated an above corporate average book-to-bill ratio.

Enterprise segment sales increased significantly as many corporations and other large entities resumed investing in strategic information technology including data centers and other infrastructure. Sales increased across all regions and essentially all product groups. The company continues to see robust opportunities in the technology, U.S. federal government, healthcare and education markets.

Broadband segment sales declined slightly year over year, primarily as a result of a reduction in pricing on cable products in the North American market. This overall decline was partially offset by higher sales in the Central and Latin America region.

Wireless Network Solutions (WNS) segment sales declined slightly primarily due to the timing of various projects in the EMEA and North American regions. However, the company continues to see positive trends in the project-oriented WNS segment, particularly for capacity and coverage solutions for buildings, stadiums, trains and other challenging applications as well as location-based services.

In the first quarter of 2010, U.S. sales increased 6.5 percent year over year to $383.1 million, or 53 percent of total company sales.

Orders booked in the first quarter of 2010 were $791.9 million for a book-to-bill ratio of 1.10x, which is the strongest quarterly ratio reported in several years.

Operating Overview

The company reported an operating loss of $6.2 million in the first quarter of 2010 due to charges of $47.9 million on previously announced restructuring. The company reported operating income of $9.0 million in the year-ago quarter.

Adjusted operating income, which excludes special items such as restructuring and the amortization of purchased intangible assets, rose 45.9 percent from the year ago quarter to $66.1 million. Adjusted operating income increased primarily due to strengthening Enterprise segment profitability, benefits from cost reduction initiatives implemented in 2009 and improved factory utilization. (A reconciliation of GAAP to adjusted operating income follows.)

First Quarter 2010 Financial Highlights

•Gross margin for the first quarter of 2010 was 28.4 percent and includes $3.6 million of amortization of purchased intangibles in cost of sales. Gross margin for the year-ago period was 22.7 percent.
•SG&A expense for the first quarter of 2010 was $112.6 million, up $11.4 million or 11.2 percent year over year primarily due to the reinstatement of certain incentive based employee cash bonus programs in 2010 that had been suspended for 2009.
•Interest expense declined 19.9 percent year over year to $24.5 million primarily due to lower outstanding debt balances.
•The income tax benefit for the quarter includes a $2.3 million charge related to changes to the deductibility of prescription drug benefits to certain retirees (Medicare Part D) made as part of the U.S. health care reform legislation enacted in March 2010. Excluding this charge and other special items, the effective tax rate on adjusted pretax income was 42.8 percent.
•Total depreciation and amortization expense in the first quarter was $48.2 million, which included $24.4 million of amortization of purchased intangibles.
•Net operating cash flow in the quarter was $63.3 million.
•Total debt outstanding declined $136.6 million during the first quarter of 2010.
Other Highlights

•CommScope Enterprise Solutions introduced the Wired for Wireless™ Solution, which provides building owners and developers the necessary foundation to ensure exceptional wireless coverage throughout a building’s lifecycle. This cost-effective innovation builds upon CommScope’s enterprise structured cabling expertise and its Andrew® brand of wireless products. The Wired for Wireless Solution is part of the company’s total in-building wireless portfolio, which includes fiber distributed antenna systems, repeater platforms, radiating cables and other coverage solutions.

•ZTE Corporation recently honored CommScope’s Andrew Solutions with its 2009 Best Partner award, a distinction Andrew has now won for the fourth consecutive year. Andrew’s history of providing advanced wireless infrastructure solutions in China began in the early 1970s and has led to the establishment of solid, long-term cooperative relationships with the major Chinese carriers and OEMs.
•CommScope’s Enterprise Solutions introduced the SYSTIMAX® 360 Ultra-High Density (UHD) fiber optic solution for data center environments. This solution is designed to support enterprise data centers requiring high density, rapid deployment and modular growth. This solution provides the highest fiber-patching density currently available.
•CommScope’s Andrew Solutions is helping wireless operators evolve and optimize their networks with its SmartBeam base station antenna system. SmartBeam offers three levels of base station antenna pattern adjustments, which makes next generation network optimization capabilities possible.
Manufacturing Initiatives

During the first quarter, CommScope began restructuring initiatives designed to rationalize production capacity, lower costs and improve factory utilization. Significant actions to date are:

•Omaha, NE: Relocate operations and shift manufacturing to lower cost locations
•Newton, NC: Relocate wireless cable production to another CommScope facility in North America
•Westerville, OH: Relocate research and development operations to other CommScope facilities in North America
During the first quarter of 2010, CommScope recognized $48.0 million of costs related to these actions, including $32.8 million for severance, an $8.9 million charge for asset impairment and a $6.3 million net curtailment loss related to pension and other postretirement benefits. CommScope expects to recognize additional charges of $8 million to $13 million by the end of 2011 to complete these initiatives.

CommScope expects total annualized savings of $25 million to $30 million once the initiatives are completed in late 2011. Approximately half of these annualized savings are expected to be realized in 2011, primarily in the second half of the year.

Outlook

CommScope management provided the following guidance for the second quarter of 2010:

•Revenue of $800 million to $850 million
•Adjusted operating income of $90 million to $110 million, excluding amortization of purchased intangibles, restructuring and other special items
•Tax rate of 32 percent to 36 percent on adjusted pretax income

“We are pleased that our first quarter adjusted operating results showed year over year improvement despite a slow start in sales for the year,” said Executive Vice President and Chief Financial Officer Jearld Leonhardt. “Looking ahead, we are encouraged by prospects for continued economic growth and strengthening North American wireless capital spending. We expect strong improvement in second quarter sales and adjusted operating income, excluding restructuring and any other special items.

“Our second quarter 2010 guidance is based upon expectations of an improving global economy and increasing North American wireless capital spending. However, we also expect higher material costs and some supply-chain constraints. We are currently facing long lead times for certain components that could restrain our second quarter growth.

“While cost trends may make margin expansion more challenging, we continue to expect growth in calendar year 2010 sales and adjusted operating income, excluding special items. We believe our performance will be stronger in the second half of the year as we improve operational efficiency and enhance our competitive position in new and existing markets.”

Conference Call Information

CommScope plans to host a call today at 5:00 p.m. ET to discuss first quarter results. You are invited to download slides of the presentation from the Investor Relations page of CommScope’s website and listen to the conference call or live webcast with Frank Drendel, chairman and CEO; Eddie Edwards, president and COO; and Jearld Leonhardt, executive vice president and CFO.

To participate in the conference call, U.S. callers should dial +1 866-845-6585 and callers outside of the U.S. should dial +1 706-643-2944. The conference identification number is 69374075. Please plan to dial in 10 – 15 minutes before the start of the call to facilitate a timely connection. The live, listen-only audio of the call will be available through a link on the Investor Relations page of CommScope’s website at www.commscope.com.

If you are unable to participate in the call and would like to hear a replay, U.S. callers can dial +1 800-642-1687 and callers outside the U.S. can dial +1 706-645-9291 for the replay. The replay identification number is 69374075 and will be available through May 13, 2010. A webcast replay will also be archived on CommScope’s website for a limited period of time following the conference call.

CommScope, Inc. (NYSE: CTV – www.commscope.com) is a world leader in infrastructure solutions for communication networks. Through its Andrew Solutions™ brand, it is a global leader in radio frequency subsystem solutions for wireless networks. Through its SYSTIMAX® and Uniprise® brands, CommScope is a world leader in network infrastructure solutions, delivering a complete end-to-end physical layer solution, including cables and connectivity, enclosures, intelligent software and network design services, for business enterprise applications. CommScope also is the premier manufacturer of coaxial cable for broadband cable television networks and one of the leading North American providers of environmentally secure cabinets for DSL and FTTN applications. Backed by strong research and development, CommScope combines technical expertise and proprietary technology with global manufacturing capability to provide customers with infrastructure solutions for evolving global communications networks in more than 100 countries around the world.