UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
Commission file number 001-12929
COMMSCOPE, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-4135495
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
1375 Lenoir Rhyne Boulevard, Hickory, North Carolina 28601
(Address of principal executive offices)
(Zip Code)
(828) 324-2200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x(*) No
(*) Registrant became subject to the filing requirements on June 13, 1997.
As of May 6, 1998 there were 49,170,783 shares of Common Stock outstanding.
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CommScope, Inc.
Form 10-Q
March 31, 1998
Table of Contents
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Page No.
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Part I - Financial Information (Unaudited):
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Income 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Condensed Consolidated Statements of Stockholders' Equity 6
Notes to Condensed Consolidated Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Position 11 - 14
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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2
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CommScope, Inc.
Condensed Consolidated Statements of Income
(Unaudited--in thousands, except per share amounts)
Three Months Ended
March 31,
------------------------------------
1998 1997
----------------- -----------------
Net Sales $ 133,602 $ 147,874
----------------- -----------------
Operating Costs and Expenses:
Cost of sales 106,034 108,634
Selling, general and administrative 12,533 11,311
Research and development 1,753 1,270
Amortization of goodwill 1,303 1,306
----------------- -----------------
Total operating costs & expenses 121,623 122,521
----------------- -----------------
Operating Income 11,979 25,353
Other income, net 2,127 210
Interest expense (4,197) (2,758)
Interest income 158 25
----------------- -----------------
Income before Income Taxes 10,067 22,830
Provision for income taxes (3,735) (8,675)
----------------- -----------------
Net Income $ 6,332 $ 14,155
================= =================
Net income per common share $ 0.13 (1)
(1) Historical per share data is not considered relevant for the reasons
discussed in Note 1. Pro forma per share data is presented in Note 3.
See notes to condensed consolidated financial statements.
3
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CommScope, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
March 31, December 31,
1998 1997
-------------- ---------------
Assets
Cash and cash equivalents $ 14,254 $ 3,330
Accounts receivable, less allowance for doubtful
accounts of $4,297 and $3,985, respectively 98,977 95,741
Inventories 35,305 42,223
Prepaid expenses and other current assets 1,054 2,439
Deferred income taxes 13,324 12,102
-------------- ---------------
Total current assets 162,914 155,835
Property, plant and equipment, net 128,449 133,235
Goodwill, net of accumulated amortization of
$39,505 and $38,263, respectively 167,915 170,345
Intangibles, net of accumulated amortization of
$27,259 and $26,573, respectively 21,506 22,192
Investments and other assets 1,837 1,932
-------------- ---------------
Total Assets $ 482,621 $ 483,539
============== ===============
Liabilities and Stockholders' Equity
Accounts payable $ 18,220 $ 18,533
Other accrued liabilities 32,148 24,516
-------------- ---------------
Total current liabilities 50,368 43,049
Long-term debt 250,800 265,800
Deferred income taxes 14,640 14,932
Other non-current liabilities 10,056 9,726
-------------- ---------------
Total Liabilities 325,864 333,507
Commitments and contingencies
Stockholders' Equity
Preferred stock, $.01 par value; Authorized
shares: 20,000,000; Issued and outstanding
shares: None at March 31, 1998 and
December 31, 1997 -- --
Common Stock, $.01 par value; Authorized
shares: 300,000,000; Issued and outstanding
shares: 49,168,868 at March 31, 1998;
49,108,874 at December 31, 1997 492 491
Additional paid-in capital 141,326 140,934
Retained earnings 14,939 8,607
-------------- ---------------
Total Stockholders' Equity 156,757 150,032
-------------- ---------------
Total Liabilities and Stockholder's Equity $ 482,621 $ 483,539
============== ===============
See notes to condensed consolidated financial statements.
4
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CommScope, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - in thousands)
Three Months Ended
March 31,
-------------------------
1998 1997
----------- -----------
Operating Activities:
Net income $ 6,332 $ 14,155
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,025 5,771
Gain on sale of assets of the high-temperature
aerospace and industrial cable business (1,873) --
Changes in assets and liabilities:
Accounts receivable 553 (7,762)
Inventories 999 (7,864)
Prepaid expenses and other current assets 1,145 136
Deferred income taxes (1,514) 3,052
Accounts payable and other accrued liabilities 7,585 4,444
Other non-current liabilities 330 129
Other 195 36
----------- -----------
Net cash provided by operating activities 19,777 12,097
Investing Activities:
Additions to property, plant and equipment (3,144) (5,344)
Sale of assets of the high-temperature
aerospace and industrial cable business 8,885 --
Other 13 --
----------- -----------
Net cash provided by (used in) investing activities 5,754 (5,344)
Financing Activities:
Net repayments under revolving credit facility (15,000) --
Exercise of stock options 393 --
Transfers to former sole stockholder -- (6,753)
----------- -----------
Net cash used in financing activities (14,607) (6,753)
Change in cash and cash equivalents 10,924 --
Cash and cash equivalents, beginning of period 3,330 --
----------- -----------
Cash and cash equivalents, end of period $ 14,254 $--
=========== ===========
See notes to condensed consolidated financial statements.
5
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CommScope, Inc.
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited - in thousands, except share amounts)
Three Months Ended March 31, 1998
<S> <C> <C> <C> <C> <C>
Number of Additional Total
Common Shares Common Paid-In Retained Stockholders'
Outstanding Stock Capital Earnings Equity
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Balance December 31, 1997 49,108,874 $ 491 $ 140,934 $ 8,607 $ 150,032
Issuance of shares for stock option exercises 59,994 1 392 -- 393
Net income -- -- -- 6,332 6,332
----------------------------------------------------------------
Balance March 31, 1998 49,168,868 $ 492 $ 141,326 $ 14,939 $ 156,757
================================================================
CommScope, Inc. has 20 million authorized shares of preferred stock at $0.01 par value.
No preferred stock is currently issued or outstanding.
See notes to condensed consolidated financial statements.
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6
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CommScope, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In Thousands, Unless Otherwise Noted)
1. BACKGROUND AND BASIS OF PRESENTATION
BACKGROUND
CommScope, Inc. ("CommScope" or the "Company") was incorporated in Delaware in
January 1997 and, through its wholly owned subsidiary CommScope, Inc. of North
Carolina ("CommScope NC"), operates in the cable manufacturing business. The
Company designs, manufactures, markets and sells coaxial, fiber optic and high
performance electronic cables primarily used in communications, local area
network and industrial applications. CommScope is a leading manufacturer and
supplier of coaxial cable for cable television applications and other
communications applications in the United States. CommScope is also a leading
supplier of coaxial cable to international communications markets, primarily the
cable television market.
CommScope NC formerly was a wholly owned indirect subsidiary of General
Instrument Corporation ("General Instrument"). Through a series of transactions
related to a spin-off of companies from General Instrument (the "Distribution")
that was consummated on July 28, 1997 (the "Distribution Date"), CommScope NC
became a wholly owned subsidiary of the Company. At the Distribution Date,
CommScope began operating as an independent entity with publicly traded common
stock.
BASIS OF PRESENTATION
The condensed consolidated balance sheet as of March 31, 1998, the condensed
consolidated statements of income for the three months ended March 31, 1998 and
1997, the condensed consolidated statements of cash flows for the three months
ended March 31, 1998 and 1997, and the condensed consolidated statement of
stockholders' equity for the three months ended March 31, 1998 are unaudited and
reflect all adjustments of a normal recurring nature which are, in the opinion
of management, necessary for a fair presentation of the interim period financial
statements. There were no adjustments of a non-recurring nature recorded during
the three months ended March 31, 1998 and 1997. The results of operations for
the interim period are not necessarily indicative of the results of operations
to be expected for the full year. The condensed consolidated statements of
income and condensed consolidated statements of cash flows for the three months
ended March 31, 1997 reflect the results of operations and cash flows of
CommScope that were transferred from General Instrument to the Company in
connection with the Distribution.
The unaudited interim condensed consolidated financial statements of CommScope
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The condensed consolidated financial statements for 1997 include an allocation
of certain assets, liabilities and general corporate administrative expenses
from General Instrument prior to the Distribution, and accordingly reflect the
results of operations and changes in cash flows of the Company as if it were a
separate entity prior to the Distribution. In the opinion of management, general
corporate administrative expenses were allocated to CommScope on a reasonable
and consistent basis using management's estimate of services provided to
CommScope by General Instrument. However, such allocations are not necessarily
indicative of the level of expenses which might have been incurred had CommScope
been operating as a separate, stand-alone entity during the period presented
during 1997.
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CommScope, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In Thousands, Unless Otherwise Noted)
1. BACKGROUND AND BASIS OF PRESENTATION (Continued)
Prior to the Distribution, CommScope participated in General Instrument's cash
management program, and the accompanying condensed consolidated statement of
income for 1997 includes an allocation of net interest expense from General
Instrument. Net interest expense was allocated based upon CommScope's net assets
as a percentage of the total net assets of General Instrument. The allocations
were made consistently in each period, and management believes the allocations
are reasonable. However, these interest costs would not necessarily be
indicative of what the actual costs would have been had CommScope operated as a
separate, stand-alone entity during the periods presented. At the Distribution
Date, CommScope implemented a separate cash management program and assumed
responsibility for the costs associated with operating a public company.
CommScope's financial results include the costs incurred by General Instrument
related to the postretirement benefit plan for employees and retirees of
CommScope prior to the Distribution. Also, the provision for income taxes for
the three months ended March 31, 1997 is based on CommScope's expected annual
effective tax rate, calculated assuming CommScope had filed separate tax returns
under its previously existing structure as a wholly owned indirect subsidiary of
General Instrument.
CommScope's earnings were part of General Instrument's results of operations for
the three months ended March 31, 1997. Additionally, the capital structure of
the Company changed significantly as a result of borrowings under the Company's
credit facility on the Distribution Date, which were utilized primarily to make
a dividend payment to General Instrument in accordance with the terms of the
Distribution (see Note 4). Accordingly, no historical earnings per share data
has been presented for the three months ended March 31, 1997. Alternatively, pro
forma earnings per share data is presented as described in Note 3.
The financial information included herein does not necessarily reflect the
consolidated results of operations, financial position, and cash flows of
CommScope in the future or on a historical basis had CommScope been a separate,
stand-alone entity for the periods presented. These interim condensed
consolidated financial statements should be read in conjunction with the
Company's December 31, 1997 audited consolidated financial statements and notes
thereto included in the Company's 1997 Annual Report on Form 10-K.
2. SUPPLEMENTAL BALANCE SHEET INFORMATION
Inventories consist of:
March 31, 1998 December 31, 1997
----------------- -----------------
Raw materials $ 10,247 $ 16,376
Work in process 8,836 8,860
Finished goods 16,222 16,987
----------------- -----------------
$ 35,305 $ 42,223
================= =================
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CommScope, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In Thousands, Unless Otherwise Noted)
3. PRO FORMA FINANCIAL INFORMATION AND EARNINGS PER SHARE
The accompanying unaudited pro forma financial information was prepared to
present the 1997 consolidated statements of income of CommScope as if the
Distribution had occurred on January 1, 1997. The unaudited pro forma statements
of income set forth below do not purport to represent what CommScope's
operations actually would have been or to project CommScope's operating results
for any future period.
The unaudited pro forma information has been prepared utilizing the historical
consolidated statements of income of CommScope which were adjusted to reflect a
net debt level of $275 million at the beginning of each period presented at an
assumed weighted average borrowing rate of 6.35% plus the amortization of debt
issuance costs associated with the new borrowings (see Note 4). Pro forma
earnings per share was calculated by dividing the pro forma net income for each
period presented by the pro forma common and common equivalent shares
outstanding for each period, and assumes that a total of 49.1 million common
shares outstanding for basic earnings per share and 49.2 million common and
common equivalent shares outstanding for diluted earnings per share at the
Distribution Date were outstanding since January 1, 1997.
Giving effect to the Distribution as of January 1, 1997, pro forma net income
for the Company for the first quarter 1997 would have been $12,997 ($0.26 per
share).
For purposes of basic earnings per share computations, total weighted average
common shares outstanding were 49,120 for the first quarter 1998 and 49,105 (pro
forma) for the first quarter 1997. For purposes of diluted earnings per share
computations, total weighted average common and common equivalent shares
outstanding were 49,301 for the first quarter 1998 and 49,200 (pro forma) for
the first quarter 1997. The difference between weighted average common shares
outstanding and weighted average common and common equivalent shares outstanding
is attributable to the dilutive effect of employee stock options.
4. LONG-TERM DEBT
Long-term debt consisted of the following:
March 31, December 31,
1998 1997
------------------ -----------------
Credit Agreement (as defined below) $ 240,000 $ 255,000
Alabama State Industrial Development
Authority Notes 10,800 10,800
------------------ -----------------
250,800 265,800
Less current portion -- --
------------------ -----------------
$ 250,800 $ 265,800
================== =================
On July 23, 1997 the Company entered into a $350 million revolving credit
agreement with a group of banks (the "Credit Agreement"). On the Distribution
Date, the Company initially borrowed $266 million under the Credit Agreement
which was utilized to make a dividend payment to General Instrument in
accordance with the terms of the Distribution and to fund fees and expenses in
connection with the Credit Agreement. The Company intends to utilize the Credit
Agreement in the future for, among other things, general working capital needs,
financing strategic acquisitions, and other general corporate purposes.
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CommScope, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(In Thousands, Unless Otherwise Noted)
5. BUSINESS DIVESTITURES
In February 1998, the Company sold certain real and personal property and
inventories of its high-temperature aerospace and industrial cables business for
an adjusted price of $13 million. The Company recognized a pre-tax gain from the
sale of $2 million ($0.03 per share, net of tax effect).
6. NEWLY ISSUED ACCOUNTING STANDARDS
In June 1997, Statement of Financial Accounting Standard ("SFAS") No. 130,
"Reporting Comprehensive Income", was issued. SFAS No. 130 will require
disclosure of comprehensive income (which is defined as "the change in equity
during a period excluding changes resulting from investments by shareholders and
distributions to shareholders") and its components. SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997, with reclassification of
comparative years required. The Company plans to provide appropriate financial
statement disclosures under SFAS No. 130 in Form 10-K for the fiscal year ended
December 31, 1998. Had the new standard been applied in the quarter ended March
31, 1998, comprehensive income would not differ from net income for all periods
presented in the condensed consolidated statements of income.
Also in June 1997, SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information", was issued. SFAS No. 131 is effective for fiscal years
beginning after December 15, 1997. The Company plans to provide appropriate
financial statement disclosures under SFAS No. 131 in Form 10-K for the fiscal
year ended December 31, 1998. SFAS No. 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. Management is currently
evaluating the effect of SFAS No. 131 on the Company's current disclosures.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Position
The following discussion and analysis is provided to increase the understanding
of, and should be read in conjunction with, the unaudited condensed consolidated
financial statements and accompanying notes included in this document as well as
the audited consolidated financial statements, related notes thereto and
management's discussion and analysis of financial condition and results of
operations for the year ended December 31, 1997 included in the Company's Annual
Report on Form 10-K. Unless otherwise specified, capitalized terms used herein
are used as defined in the audited consolidated financial statements of
CommScope for the year ended December 31, 1997 or in the unaudited condensed
consolidated financial statements included in this document.
HIGHLIGHTS
CommScope reported net income of $6 million ($0.13 per share) for the quarter
ended March 31, 1998, a decrease of $8 million (55%) from the quarter ended
March 31, 1997 net income of $14 million. On a pro forma basis, net income for
the quarter ended March 31, 1997 was $13 million ($0.26 per pro forma share).
Pro forma net income and earnings per share for 1997 reflect the impact of
CommScope's new capital structure immediately following the Distribution from
General Instrument which was consummated on the Distribution Date, assuming that
all common stock issued and long term debt borrowings as of the Distribution
Date were outstanding since January 1, 1997.
Net income for the quarter ended March 31, 1998 includes a one-time pre-tax gain
of $2 million related to the sale of the Company's high-temperature aerospace
and industrial cables business. Excluding the gain, first quarter 1998 net
income was $5 million ($0.10 per share).
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1998 WITH THE THREE MONTHS
ENDED MARCH 31, 1997
NET SALES
Net sales for the first quarter 1998 were $134 million compared to $148 million
for the first quarter 1997, a decrease of $14 million or 10%. The decrease in
net sales is due primarily to a 44% reduction in international sales for the
first quarter 1998 as compared to the first quarter 1997, driven by reduced
sales in the Asian markets and in Australia. International sales for the first
quarter 1998 represented 23% of the Company's net sales compared to 36% in 1997.
Net sales to cable television and other video distribution markets ("CATV
Products") for the first quarter 1998 decreased $17 million (14%) from the first
quarter 1997 to $104 million. This decrease primarily reflects the lower
international sales in 1998 as compared to 1997. Domestic sales of CATV Products
increased 8% due to improved sales to the Company's largest customer, somewhat
offset by a reduction in sales to telephone companies.
Net sales for LAN and other data applications ("LAN Products") for the first
quarter 1998 increased $3 million (18%) from the first quarter 1997 to $23
million. Demand continues to be robust with 6-month backlogs on certain types of
unshielded-twisted-pair (UTP) products. The sales increases for LAN Products is
due to sales of Category 5 premise wiring and continued development and
marketing of high-performance cable, such as the UltraMedia (TM) cable, which
supports gigabit transmission and exceeds the toughest industry standards.
Decreases in the average selling prices of both CATV Products and LAN Products
during the first quarter 1998 as compared to the first quarter 1997 also
contributed to lower consolidated net sales.
Sales of other cable products for the first quarter 1998 and 1997 were $7
million, respectively.
GROSS PROFIT (NET SALES LESS COST OF SALES)
Gross profit for the first quarter 1998 was $28 million compared to $39 million
for the first quarter 1997, a decrease of approximately $12 million or 30%. The
lower gross profit is the result of several ongoing factors, including lower
selling prices due to a competitive pricing environment, shifting product mix
due to lower international sales and manufacturing costs related to new product
introduction. Lower overhead costs in the first quarter 1997, driven primarily
by reduced warranty-related provisions due to lower expectations of claims,
contributed partially to the higher 1997 gross profit. As a percentage of sales,
gross profit declined from 27% in the first quarter 1997 to 21% in the first
quarter 1998. However, the Company expects modest gross margin improvement from
the first quarter 1998 levels for the remainder of fiscal 1998.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative ("SG&A") expense for the first quarter 1998
increased $1 million (11%) from the first quarter 1997 to $13 million. As a
percentage of net sales, SG&A expense was 9% and 8%, respectively, for the first
quarter 1998 and 1997. The increase in SG&A expense was principally attributable
to increased sales and marketing expenditures to support product expansion and
growth opportunities. Over the remainder of 1998 the Company expects SG&A
expense to be approximately 8 1/2% of net sales.
RESEARCH AND DEVELOPMENT
Research and development expense as a percentage of net sales was 1% in both the
first quarter 1998 and 1997. The Company has ongoing programs to develop new
products and market opportunities for its products and core capabilities and new
manufacturing technologies to achieve cost reductions.
OTHER INCOME, NET
In February 1998, the Company sold certain real and personal property and
inventories of its high-temperature aerospace and industrial cables business for
an adjusted price of $13 million. The Company recognized a pre-tax gain from the
sale of $2 million ($0.03 per share, net of tax effect).
INTEREST EXPENSE
Interest expense for the first quarter 1998, totaling $4.2 million, represents
actual interest incurred on outstanding borrowings under the Company's credit
facilities. Interest expense for the first quarter 1997 represents an allocation
of net interest expense from General Instrument, which was based upon the
Company's net assets as a percentage of the total net assets of General
Instrument.
Pro forma net interest expense for the first quarter 1997, totaling $4.6
million, reflects the historical interest expense of the Company adjusted to
reflect a net debt level of $275 million at the beginning of 1997 presented at
an assumed weighted average borrowing rate of 6.35% plus the amortization of
debt issuance costs associated with the new borrowings incurred at the
Distribution. These pro forma net interest costs are not necessarily indicative
of what the actual interest costs would have been had CommScope operated as a
separate, stand-alone entity. The reduction in actual interest costs for the
first quarter 1998 as compared to the pro forma interest costs for the first
quarter of 1997 is due to the reduction in borrowings under the Company's credit
facility since the Distribution.
INCOME TAXES
The effective tax rate was 37% for the first quarter 1998 and 38% for the first
quarter 1997. The provision for income taxes for the first quarter 1997 has been
determined as if the Company had filed separate tax returns under its previously
existing structure as an indirect wholly owned subsidiary of General Instrument.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations was $19 million for the first quarter 1998 compared
to $12 million for the first quarter 1997, an increase of $7 million or 57%.
This increase primarily results from lower working capital increases during the
first quarter 1998 as compared to the first quarter 1997, partially offset by
the decrease in net income.
Working capital was $113 million at both March 31, 1998 and December 31, 1997.
Based on current levels of orders and backlog, management of the Company
believes that working capital levels are appropriate to support future
operations.
During the first quarter 1998 the Company invested $3 million in equipment and
facilities compared to $5 million for the first quarter 1997. The capital
spending in each period was primarily attributable to capacity expansion,
primarily for LAN Products, and vertical integration projects to meet increased
current and anticipated future business demands. During the first quarter 1998
the Company received initial cash proceeds of $9 million related to the sale of
its high temperature aerospace and industrial cables business.
The Company's principal sources of liquidity both on a short-term and long-term
basis are cash flows provided by operations and funds available under long-term
credit facilities. In the first quarter 1998 the Company repaid $15 million
under its revolving credit facility. Management believes that, based upon its
analysis of the Company's consolidated financial position and the expected
results of its operations in the future, the Company will have sufficient cash
flows from future operations and the financial flexibility to attract both
short- and long-term capital on acceptable terms as may be needed to fund
operations, capital expenditures and other growth objectives. There can be no
assurance, however, that future industry-specific developments, general economic
trends or other situations will not adversely affect the Company's operations or
its ability to meet its cash requirements.
In the normal course of business, CommScope uses various financial instruments,
including derivative financial instruments, for purposes other than trading.
Non-derivative financial instruments include letters of credit and commitments
to extend credit (accounts receivable). The Company controls its exposure to
credit risk associated with its financial instruments through credit approvals,
credit limits and monitoring procedures. At March 31, 1998, in management's
opinion, CommScope did not have any significant exposure to any individual
customer or counter-party, nor did CommScope have any significant concentration
of credit risk related to any financial instrument.
Derivative financial instruments utilized by CommScope, which are not entered
into for speculative purposes, include commodity pricing contracts, foreign
currency exchange contracts, and contracts hedging exposure to interest rates.
At March 31, 1998, the Company evaluated its commodity pricing and foreign
currency exchange exposures and concluded that it was not currently beneficial
to use financial instruments to hedge its current positions with respect to
those exposures. As of March 31, 1998, the Company had entered into interest
rate swap agreements to effectively convert an aggregate amount of $100 million
of outstanding variable-rate borrowings to a fixed-rate basis. Contracts for
notional amounts of $50 million each expire in February and April 1999,
respectively. The contract expiring in April 1999 may be terminated at the
option of the counter-party to the swap agreement in October 1998. Under the
agreements, interest settlement payments will be made quarterly based upon the
spread between the three month LIBOR, as adjusted quarterly, and fixed rates of
5.92% and 5.79%, respectively. Net payments or receipts resulting from the swap
agreements are recorded as adjustments to interest expense in each quarter.
At March 31, 1998, the weighted average variable interest rate on outstanding
borrowings under the Credit Agreement and the Alabama State Industrial
Development Authority Notes was 6.3%.
<PAGE>
NEWLY ISSUED ACCOUNTING STANDARDS
In June 1997, Statement of Financial Accounting Standard ("SFAS") No. 130,
"Reporting Comprehensive Income", was issued. SFAS No. 130 will require
disclosure of comprehensive income (which is defined as "the change in equity
during a period excluding changes resulting from investments by shareholders and
distributions to shareholders") and its components. SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997, with reclassification of
comparative years required. The Company plans to provide appropriate financial
statement disclosures under SFAS No. 130 in Form 10-K for the fiscal year ended
December 31, 1998. Had the new standard been applied in the quarter ended March
31, 1998, comprehensive income would not differ from net income for all periods
presented in the condensed consolidated statements of income.
Also in June 1997, SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information", was issued. SFAS No. 131 is effective for fiscal years
beginning after December 15, 1997. The Company plans to provide appropriate
financial statement disclosures under SFAS No. 131 in Form 10-K for the fiscal
year ended December 31, 1998. SFAS No. 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. Management is currently
evaluating the effect of SFAS No. 131 on the Company's current disclosures.
FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q which 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. These forward-looking statements are identified by their use
of such terms and phrases as "intends", "intend", "intended", "goal",
"estimate", "estimates", "expects", "expect", "expected", "project", "projects",
"projected", "projections", "plans", "anticipates", "anticipated", "should",
"designed to", "foreseeable future", "believe", "believes" and "scheduled" and
similar expressions. These statements are subject to various risks and
uncertainties, many of which are outside the control of the Company, such as the
level of market demand for the Company's products, competitive pressures, the
ability to achieve reductions in costs and to continue to integrate
acquisitions, price fluctuations of materials and the potential unavailability
thereof, foreign currency fluctuations, technological obsolescence, and other
specific factors discussed in Exhibit 99 to the Company's Form 10-K for the year
ended December 31, 1997. The information contained in this Form 10-Q represents
the Company's best judgment at the date of this report based on information
currently available. However, the Company does not intend to update this
information to reflect developments or information obtained after the date of
this report and disclaims any legal obligation to do so.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No.
10.1 CommScope, Inc. Amended and Restated 1997 Long-Term
Incentive Plan
10.2 CommScope, Inc. Annual Incentive Plan
27 Financial Data Schedule
(b) Reports on Form 8-K filed during the three months ended March 31,
1998:
None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMSCOPE, INC.
May 12, 1998 /s/ Jearld L. Leonhardt
- ------------ ---------------------------
Date Jearld L. Leonhardt
Executive Vice President,
Finance and Administration
Signing both in his
capacity as Executive Vice
President on behalf of the
Registrant and as Chief
Financial Officer of the
Registrant
AMENDED AND RESTATED
COMMSCOPE, INC.
1997 LONG-TERM INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
Page
1. Establishment, Purpose and Effective Date.................................1
(a) Establishment...................................................1
(b) Purpose.........................................................1
(c) Effective Date..................................................1
2. Definitions...............................................................1
3. Scope of the Plan.........................................................7
(a) Number of Shares Available Under the Plan.......................7
(b) Reduction in the Available Shares in Connection
with Award Grants...............................................7
(c) Effect of the Expiration or Termination of Awards...............8
4. Administration............................................................8
(a) Committee Administration........................................8
(b) Board Reservation and Delegation................................8
(c) Committee Authority.............................................8
(d) Committee Determinations Final..................................9
5. Eligibility..............................................................10
6. Conditions to Grants.....................................................10
(a) General Conditions.............................................10
(b) Grant of Options and Option Price..............................10
(c) Grant of Incentive Stock Options...............................11
(d) Grant of Shares of Restricted Stock............................12
(e) Grant of Performance Units and Performance Shares..............14
(f) Grant of Phantom Stock.........................................16
(g) Grant of Director's Shares.....................................16
(h) Tandem Awards..................................................16
7. Non-transferability......................................................16
8. Exercise.................................................................17
(a) Exercise of Options............................................17
(b) Exercise of Performance Units..................................17
(c) Payment of Performance Shares..................................18
(d) Payment of Phantom Stock Awards................................19
(e) Exercise, Cancellation, Expiration or Forfeiture
of Tandem Awards...............................................19
9. Spin-off and Substitute Options..........................................19
10. Effect of Certain Transactions..........................................20
11. Mandatory Withholding Taxes.............................................20
12. Termination of Employment...............................................20
13. Securities Law Matters..................................................20
14. No Funding Required.....................................................21
15. No Employment Rights....................................................21
16. Rights as a Stockholder.................................................21
17. Nature of Payments......................................................21
18. Non-Uniform Determinations..............................................22
19. Adjustments.............................................................22
20. Amendment of the Plan...................................................23
21. Termination of the Plan.................................................23
22. No Illegal Transactions.................................................23
23. Governing Law...........................................................23
24. Severability............................................................23
<PAGE>
1. Establishment, Purpose and Effective Date.
(a) Establishment
. The Company hereby establishes the Amended and Restated
CommScope, Inc. 1997 Long-Term Incentive Plan (as set forth
herein and from time to time amended, the "Plan").
(b) Purpose
. The primary purpose of the Plan is to provide a means by
which key employees and directors of the Company and its Subsidiaries can
acquire and maintain stock ownership, thereby strengthening their commitment to
the success of the Company and its Subsidiaries and their desire to remain
employed by the Company and its Subsidiaries, focusing their attention on
managing the Company as an equity owner, and aligning their interests with those
of the Company's stockholders. The Plan also is intended to attract and retain
key employees and to provide such employees with additional incentive and reward
opportunities designed to encourage them to enhance the profitable growth of the
Company and its Subsidiaries.
(c) Effective Date
. The Plan shall become effective upon its adoption
by the Board.
2. Definitions.
As used in the Plan, terms defined parenthetically immediately after
their use shall have the respective meanings provided by such definitions and
the terms set forth below shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
(a) "Award" means Options, shares of restricted Stock,
performance units, performance shares or Director's
Shares granted under the Plan.
(b) "Award Agreement" means the written agreement by
which an Award is evidenced.
(c) "Beneficial Owner," "Beneficially Owned" and
"Beneficially Owning" shall have the meanings
applicable under Rule 13d-3 promulgated under the
1934 Act.
(d) "Board" means the board of directors of the Company.
(e) "Change in Capitalization" means any increase or reduction in the
number of shares of Stock, or any change in the shares of Stock or exchange
of shares of Stock for a different number or kind of shares or other
securities by reason of a stock dividend, extraordinary dividend, stock
split, reverse stock split, share combination, reclassification,
recapitalization, merger, consolidation, spin-off, split-up,
reorganization, issuance of warrants or rights, liquidation, exchange of
shares, repurchase of shares, change in corporate structure, or similar
event, of or by the Company.
(f) "Change of Control" means, any of the following:
(i) the acquisition by any Person other than
Instrument Partners or Forstmann Little & Co. Subordinated
Debt and Equity Management Buyout Partnership IV or any of
their affiliates (collectively, the "Forstmann Little
Companies") of Beneficial Ownership of Voting Securities
which, when added to the Voting Securities then Beneficially
Owned by such Person, would result in such Person Beneficially
Owning (A) 33% or more of the combined Voting Power of the
Company's then outstanding Voting Securities, and (B) a number
of Voting Securities greater than the aggregate number of
Voting Securities then Beneficially Owned by the Forstmann
Little Companies; provided, however, that for purposes of this
paragraph (i), a Person shall not be deemed to have made an
acquisition of Voting Securities if such Person: (1) acquires
Voting Securities as a result of a stock split, stock dividend
or other corporate restructuring in which all stockholders of
the class of such Voting Securities are treated on a pro rata
basis; (2) acquires the Voting Securities directly from the
Company; (3) becomes the Beneficial Owner of 33% or more of
the combined Voting Power of the Company's then outstanding
Voting Securities solely as a result of the acquisition of
Voting Securities by the Company or any Subsidiary which, by
reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned
by such Person, provided that if (x) a Person would own at
least such percentage as a result of the acquisition by the
Company or any Subsidiary and (y) after such acquisition by
the Company or any Subsidiary, such Person acquires Voting
Securities, then an acquisition of Voting Securities shall
have occurred; (4) is the Company or any corporation or other
Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly
by the Company (a "Controlled Entity"); or (5) acquires Voting
Securities in connection with a "Non-Control Transaction" (as
defined in paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date,
are members of the Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of the Board;
provided, however, that if either the election of any new
director or the nomination for election of any new director by
the Company's stockholders was approved by a vote of at least
two-thirds of the Incumbent Board prior to such election or
nomination, such new director shall be considered as a member
of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or
other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(iii) approval by stockholders of the Company of:
(A) a merger, consolidation or
reorganization involving the Company
(a "Business Combination"), unless
(1) the stockholders of the Company,
immediately before the Business Combination,
own, directly or indirectly immediately
following the Business Combination, at least
a majority of the combined voting power of
the outstanding voting securities of the
corporation resulting from the Business
Combination (the "Surviving Corporation") in
substantially the same proportion as their
ownership of the Voting Securities
immediately before the Business Combination,
and
(2) the individuals who were members
of the Incumbent Board immediately prior to
the execution of the agreement providing for
the Business Combination constitute at least
a majority of the members of the Board of
Directors of the Surviving Corporation, and
(3) no Person (other than the
Company or any Controlled Entity, a trustee
or other fiduciary holding securities under
one or more employee benefit plans or
arrangements (or any trust forming a part
thereof) maintained by the Company, the
Surviving Corporation or any Controlled
Entity, or any Person who, immediately prior
to the Business Combination, had Beneficial
Ownership of 33% or more of the then
outstanding Voting Securities) has
Beneficial Ownership of 33% or more of the
combined voting power of the Surviving
Corporation's then outstanding voting
securities (a Business Combination
satisfying the conditions of clauses (1),
(2) and (3) of this subparagraph (A) shall
be referred to as a "Non-Control
Transaction");
(B) a complete liquidation or
dissolution of the Company; or
(C) the sale or other disposition of all or
substantially all of the assets of the Company (other
than a transfer to a Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because 33% or more of the then outstanding Voting Securities is
Beneficially Owned by (x) a trustee or other fiduciary holding securities under
one or more employee benefit plans or arrangements (or any trust forming a part
thereof) maintained by the Company or any Controlled Entity or (y) any
corporation which, immediately prior to its acquisition of such interest, is
owned directly or indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company immediately prior to such
acquisition.
(g) "Committee" means the committee of the Board appointed
pursuant to Article 4.
(h) "Company" means CommScope, Inc., a Delaware corporation.
(i) "Director's Shares" means the shares of Stock awarded
to a nonemployee director of the Company pursuant to
Article 6(h).
(j) "Disability" means a mental or physical condition
which, in the opinion of the Committee, renders a
Grantee unable or incompetent to carry out the job
responsibilities which such Grantee held or the
duties to which such Grantee was assigned at the time
the disability was incurred, and which is expected to
be permanent or for an indefinite duration.
(k) "Effective Date" means the date that the Plan is
adopted by the Board.
(l) "Fair Market Value" of any security of the Company or
any other issuer means, as of any applicable date:
(i) if the security is listed for trading on the New
York Stock Exchange, the closing price, regular way, of the
security as reported on the New York Stock Exchange Composite
Tape, or if no such reported sale of the security shall have
occurred on such date, on the next preceding date on which
there was such a reported sale, or
(ii) if the security is not so listed, but is listed
on another national securities exchange or authorized for
quotation on the National Association of Securities Dealers
Inc.'s NASDAQ National Market System ("NASDAQ/NMS"), the
closing price, regular way, of the security on such exchange
or NASDAQ/NMS, as the case may be, or if no such reported sale
of the security shall have occurred on such date, on the next
preceding date on which there was such a reported sale, or
(iii) if the security is not listed for trading on a
national securities exchange or authorized for quotation on
NASDAQ/NMS, the average of the closing bid and asked prices as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or, if no such prices
shall have been so reported for such date, on the next
preceding date for which such prices were so reported, or
(iv) if the security is not listed for trading on a
national securities exchange or is not authorized for
quotation on NASDAQ/NMS or NASDAQ, the fair market value of
the security as determined in good faith by the Committee.
(m) "Grant Date" means the date of grant of an Award
determined in accordance with Article 6.
(n) "Grantee" means an individual who has been
granted an Award.
(o) "Incentive Stock Option" means an Option satisfying
the requirements of Section 422 of the Internal
Revenue Code and designated by the Committee as an
Incentive Stock Option.
(p) "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, and regulations and rulings
thereunder. References to a particular Section of the
Internal Revenue Code shall include references to
successor provisions.
(q) "Measuring Period" has the meaning specified
in Article 6(f)(ii)(B).
(r) "Minimum Consideration" means the $.0l par value per
share of Stock or such larger amount determined
pursuant to resolution of the Board to be capital
within the meaning of Section 154 of the Delaware
General Corporation Law.
(s) "1934 Act" means the Securities Exchange Act of
1934, as amended.
(t) "Nonqualified Stock Option" means an Option which is
not an Incentive Stock Option or other type of
statutory stock option under the Internal Revenue
Code.
(u) "Option" means an option to purchase Stock granted or
issued under the Plan, including Substitute and
Spin-off Options.
(v) "Option Price" means the per share purchase price of
(i) Stock subject to an Option or (ii) restricted
Stock subject to an Option.
(w) "Performance-Based Compensation" means any Option or
Award that is intended to constitute "performance
based compensation" within the meaning of Section
162(m)(4)(C) of the Code and the regulations
promulgated thereunder.
(x) "Performance Percentage" has the meaning specified
in Article 6(f)(ii)(C).
(y) "Person" means a person within the
meaning of Sections 13(d) and 14(d) of the 1934 Act.
(z) "Plan" has the meaning set forth in Article 1(a).
(aa) "SEC" means the Securities and Exchange Commission.
(bb) "Section 16 Grantee" means a person subject to
potential liability with respect to equity securities
of the Company under Section 16(b) of the 1934 Act.
(cc) "Spin-off Option" means an Option that has been
issued under this Plan to certain named persons
pursuant to the Employee Benefits Allocation
Agreement between General Semiconductor, Inc. ("GS"),
CommScope, Inc. and the Company, dated June 25, 1997,
as amended, modified, or otherwise supplemented (the
"Benefits Agreement").
(dd) "Stock" means common stock, par value $.01 per share,
of the Company.
(ee) "Subsidiary" means a corporation as [defined in
Section 424(f) of the Internal Revenue Code, with the
Company being treated as the employer corporation for
purposes of this definition].
(ff) "Substitute Option" means an Option that has been
issued under this Plan to certain persons pursuant to
the Benefits Agreement.
(gg) "10% Owner" means a person who owns stock (including
stock treated as owned under Section 424(d) of the
Internal Revenue Code) possessing more than 10% of
the Voting Power of the Company.
(hh) "Termination of Employment" occurs the first day on
which an individual is for any reason no longer
employed by the Company or any of its Subsidiaries,
or with respect to an individual who is an employee
of a Subsidiary, the first day on which the Company
no longer owns Voting Securities possessing at least
50% of the Voting Power of such Subsidiary.
(ii) "Voting Power" means the combined voting power of the
then outstanding Voting Securities.
(jj) "Voting Securities" means, with respect to the
Company or any Subsidiary, any securities issued by
the Company or such Subsidiary, respectively, which
generally entitle the holder thereof to vote for the
election of directors of the Company.
3. Scope of the Plan.
(a) Number of Shares Available Under the Plan
. The maximum number of shares of Stock that may be made the
subject of Awards granted under the Plan is 4,600,000 plus the number of shares
of Stock that are covered by Substitute Options and Spin-off Options (or the
number and kind of shares of Stock or other securities to which such shares of
Stock are adjusted upon a Change in Capitalization pursuant to Article 18);
provided, however, that in the aggregate, not more than 200,000 shares of Stock
may be made the subject of Awards other than Options. The maximum number of
shares of Stock that may be the subject of Options (other than Substitute
Options and Spin-off Options) and Awards granted to any individual pursuant to
the Plan in any three (3) calendar year period may not exceed 500,000. The
maximum dollar amount of cash or the Fair Market Value of Stock that any
individual may receive in any calendar year in respect of performance units
denominated in dollars may not exceed $1,000,000. The Company shall reserve for
the purpose of the Plan, out of its authorized but unissued shares of Stock or
out of shares held in the Company's treasury, or partly out of each, such number
of shares as shall be determined by the Board. The Board shall have the
authority to cause the Company to purchase from time to time shares of Stock to
be held as treasury shares and used for or in connection with Awards. The
issuance of Substitute Options and Spin-off Options shall not reduce the shares
available for grants under the Plan or to a Grantee in any calendar year.
(b) Reduction in the Available Shares in Connection with
Award Grants
. Upon the grant of an Award, the number of shares of Stock
available under Article 3(a) for the granting of further Awards shall be reduced
as follows:
(i) Performance Units Denominated in Dollars. In
connection with the granting of each performance unit
denominated in dollars, the number of shares of Stock
available under Article 3(a) for the granting of further
Awards shall be reduced by the quotient of (x) the dollar
amount represented by the performance unit divided by (y) the
Fair Market Value of a share of Stock on the date immediately
preceding the Grant Date of the performance unit.
(ii) Other Awards. In connection with the granting of
each Award, other than a performance unit denominated in
dollars, the number of shares of Stock available under Article
3(a) for the granting of further Awards shall be reduced by a
number of shares equal to the number of shares of Stock in
respect of which the Award is granted or denominated;
provided, however, that if any Award is exercised by tendering
shares of Stock, either actually or by attestation, to the
Company as full or partial payment of the exercise price, the
maximum number of shares of Stock available under Section 3(a)
shall be increased by the number of shares of Stock so
tendered.
Notwithstanding the foregoing, where two or more Awards are granted
with respect to the same shares of Stock, such shares shall be taken into
account only once for purposes of this Article 3(b).
(c) Effect of the Expiration or Termination of Awards
. If and to the extent an Option or Award (including a
Substitute Option or a Spin-off Option) expires, terminates or is canceled,
settled in cash (including the settlement of tax withholding obligations using
shares of Stock) or forfeited for any reason without having been exercised in
full (including, without limitation, a cancellation of an Option pursuant to
Article 4(c)(vi)), the shares of Stock associated with the expired, terminated,
canceled, settled or forfeited portion of the Award (to the extent the number of
shares available for the granting of Awards was reduced pursuant to Article
3(b)) shall again become available for Awards under the Plan.
4. Administration.
(a) Committee Administration
. Subject to Article 4(b), the Plan shall be administered by
the Committee, which shall consist of not less than two "non-employee directors"
within the meaning of Rule 16b-3, and to the extent necessary for any Award
intended to qualify as Performance-Based Compensation to so qualify, each member
of the Committee shall be an "outside director" within the meaning of Section
162(m) of the Internal Revenue Code.
(b) Board Reservation and Delegation
. The Board may, in its discretion, reserve to itself or
exercise any or all of the authority and responsibility of the Committee
hereunder. It may also delegate to another committee of the Board any or all of
the authority and responsibility of the Committee with respect to Awards to
Grantees who are not Section 16 Grantees at the time any such delegated
authority or responsibility is exercised. Such other committee may consist of
one or more directors who may, but need not be, officers or employees of the
Company or of any of its Subsidiaries. To the extent that the Board has reserved
to itself, or exercised the authority and responsibility of the Committee, or
delegated the authority and responsibility of the Committee to such other
committee, all references to the Committee in the Plan shall be to the Board or
to such other committee.
(c) Committee Authority
. The Committee shall have full and final authority, in its
discretion, but subject to the express provisions of the
Plan, as follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and
(B) whether or not specific Awards shall be identified with
other specific Awards, and if so, whether they shall be
exercisable cumulatively with, or alternatively to, such other
specific Awards,
(iii) to issue Substitute Options and Spin-off
Options,
(iv) to interpret the Plan and to make all
determinations necessary or advisable
for the administration of the Plan,
(v) to prescribe, amend, and rescind rules and
regulations relating to the Plan, including, without
limitation, rules with respect to the exercisability and
nonforfeitability of Awards upon the Termination of Employment
of a Grantee,
(vi) to determine the terms and provisions of the
Award Agreements, which need not be identical and, with the
consent of the Grantee, to modify any such Award Agreement at
any time,
(vii) to cancel, with the consent of the Grantee,
outstanding Awards,
(viii) to accelerate the exercisability of, and
to accelerate or waive any or all of
the restrictions and conditions applicable
to, any Award,
(ix) to make such adjustments or modifications to
Awards to Grantees working outside the United States as are
necessary and advisable to fulfill the purposes of the Plan,
(x) to authorize any action of or make any
determination by the Company as the Committee shall deem
necessary or advisable for carrying out the purposes of the
Plan, and
(xi) to impose such additional conditions,
restrictions, and limitations upon the grant, exercise or
retention of Awards as the Committee may, before or
concurrently with the grant thereof, deem appropriate,
including, without limitation, requiring simultaneous exercise
of related identified Awards, and limiting the percentage of
Awards which may from time to time be exercised by a Grantee.
(d) Committee Determinations Final
. The determination of the Committee on all matters relating
to the Plan or any Award Agreement shall be conclusive and final. No member of
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Award.
5. Eligibility.
Awards may be granted to any employee of the Company or any of its
Subsidiaries. In selecting the individuals to whom Awards may be granted, as
well as in determining the number of shares of Stock subject to, and the other
terms and conditions applicable to, each Award, the Committee shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan. In addition, Nonqualified Stock Options will be granted to nonemployee
directors of the Company, as set forth in Article 6(b)(ii), and Director's
Shares will be issued to nonemployee directors of the Company pursuant to
Article 6(h).
6. Conditions to Grants.
(a) General Conditions
.
(i) The Grant Date of an Award shall be the date on
which the Committee grants the Award or such later date as
specified in advance by the Committee.
(ii) The term of each Award (subject to Article 6(c)
with respect to Incentive Stock Options) shall be a period of
not more than ten years from the Grant Date and shall be
subject to earlier termination as provided herein or in the
applicable Award Agreement; provided, however, that the
Committee may provide that an Option (other than an Incentive
Stock Option) may, upon the death of the Grantee, be exercised
for up to one year following the date of the Grantee's death
even if such period extends beyond ten years from the date the
Option is granted.
(iii) A Grantee may, if otherwise eligible, be
granted additional Awards in any combination.
(iv) The Committee may grant Awards with terms and
conditions which differ among the Grantees thereof. To the
extent not set forth in the Plan, the terms and conditions of
each Award shall be set forth in an Award Agreement.
(b) Grant of Options and Option Price
. The Committee may, in its discretion, and shall as
provided in Article 6(b)(ii), grant Options as follows:
(i) Employee Options. Options to acquire unrestricted
Stock or restricted Stock may be granted to any employee
eligible under Article 5 to receive Awards. No later than the
Grant Date of any Option, the Committee shall determine the
Option Price which shall not be less than 100% of the Fair
Market Value of the Stock on the Grant Date.
(ii) Nonemployee Director Options. Nonqualified Stock
Options with respect to 20,000 shares of unrestricted Stock
shall be granted to each nonemployee director of the Company
(other than a nonemployee director who is a general partner of
any of the Forstmann Little Companies or any of their
affiliates) upon his or her initial election to the Board and
every three years thereafter on the anniversary of such
nonemployee director's initial election to the Board as long
as such nonemployee director is then still serving on the
Board, at an Option Price equal to 100% of the Fair Market
Value of the Stock on the Grant Date; provided, however, that
the Grant Date of the first grants of Nonqualified Stock
Options to nonemployee directors under this Plan shall be the
fifth trading day after the NextLevel Systems Distribution
Date (as defined in the Benefits Agreement). Each Nonqualified
Stock Option granted to a nonemployee director will become
exercisable with respect to one-third of the underlying shares
on each of the first, second and third anniversaries of the
Grant Date, and will have a term of ten years. If a
nonemployee director ceases to serve as a director of the
Company for any reason, any Nonqualified Stock Option granted
to such nonemployee director shall be exercisable during its
remaining term, to the extent that such Nonqualified Stock
Option was exercisable on the date such nonemployee director
ceased to be a director.
(c) Grant of Incentive Stock Options
. At the time of the grant of any Option, the Committee may
designate that such Option shall
be an Incentive Stock Option. Any Option designated as an
Incentive Stock Option:
(i) shall have an Option Price of (A) not less than
100% of the Fair Market Value of the Stock on the Grant Date
or (B) in the case of a 10% Owner, not less than 110% of the
Fair Market Value of the Stock on the Grant Date;
(ii) shall have a term of not more than ten years
(five years, in the case of a 10% Owner) from the Grant Date,
and shall be subject to earlier termination as provided herein
or in the applicable Award Agreement;
(iii) shall, if, with respect to any grant, the
aggregate Fair Market Value of Stock (determined on the Grant
Date) of all Incentive Stock Options granted under the Plan
and "incentive stock options" (within the meaning of Section
422 of the Code) granted under any other stock option plan of
the Grantee's employer or any parent or subsidiary thereof (in
either case determined without regard to this Article 6(c))
are exercisable for the first time during any calendar year
exceeds $100,000, be treated as Nonqualified Stock Options.
For purposes of the foregoing sentence, Incentive Stock
Options shall be treated as Nonqualified Stock Options
according to the order in which they were granted such that
the most recently granted Incentive Stock Options are first
treated as Nonqualified Stock Options.
(iv) shall be granted within ten years from the
earlier of the date the Plan is adopted by the Board or the
date the Plan is approved by the stockholders of the Company;
and
(v) shall require the Grantee to notify the Committee
of any disposition of any Stock issued pursuant to the
exercise of the Incentive Stock Option under the circumstances
described in Section 421(b) of the Internal Revenue Code
(relating to certain disqualifying dispositions), within ten
days of such disposition.
(d) Grant of Shares of Restricted Stock
.
(i) The Committee may, in its discretion, grant
shares of restricted Stock to any employee eligible under
Article 5 to receive Awards.
(ii) Before the grant of any shares of restricted
Stock, the Committee shall determine, in its discretion:
(A) whether the certificates for such shares
shall be delivered to the Grantee or held (together
with a stock power executed in blank by the Grantee)
in escrow by the Secretary of the Company until such
shares become nonforfeitable or are forfeited,
(B) the per share purchase price of such
shares, which may be zero, provided, however, that
the per share purchase price of all such shares
(other than treasury shares) shall not be less than
the Minimum Consideration for each such share;
(C) the restrictions applicable to such
grant and the time or times upon which any applicable
restrictions on the restricted Stock shall lapse;
provided, however, that except in the case of shares
of restricted Stock issued in full or partial
settlement of another Award or other earned
compensation, or in the event of the Grantee's
termination of employment, as determined by the
Committee and set forth in an Award Agreement, such
restrictions shall not lapse prior to the third
anniversary of the Grant Date of the restricted
Stock; and
(D) whether the payment to the Grantee of
dividends, or a specified portion thereof, declared
or paid on such shares by the Company shall be
deferred until the lapsing of the restrictions
imposed upon such shares and shall be held by the
Company for the account of the Grantee, whether such
dividends shall be reinvested in additional shares of
restricted Stock (to the extent shares are available
under Article 3) subject to the same restrictions and
other terms as apply to the shares with respect to
which such dividends are issued or otherwise
reinvested in Stock or held in escrow, whether
interest will be credited to the account of the
Grantee with respect to any dividends which are not
reinvested in restricted or unrestricted Stock, and
whether any Stock dividends issued with respect to
the restricted Stock to be granted shall be treated
as additional shares of restricted Stock.
(iii) Payment of the purchase price (if greater than
zero) for shares of restricted Stock shall be made in full by
the Grantee before the delivery of such shares and, in any
event, no later than ten days after the Grant Date for such
shares. Such payment may be made, as determined by the
Committee in its discretion, in any one or any combination of
the following:
(A) cash, or
(B) with the prior approval of the
Committee, shares of restricted or unrestricted Stock
owned by the Grantee prior to such grant and valued
at its Fair Market Value on the business day
immediately preceding the date of payment;
provided, however, that, in the case of payment in shares of
restricted or unrestricted Stock, if the purchase price for
restricted Stock ("New Restricted Stock") is paid with shares
of restricted Stock ("Old Restricted Stock"), the restrictions
applicable to the New Restricted Stock shall be the same as if
the Grantee had paid for the New Restricted Stock in cash
unless, in the judgment of the Committee, the Old Restricted
Stock was subject to a greater risk of forfeiture, in which
case a number of shares of New Restricted Stock equal to the
number of shares of Old Restricted Stock tendered in payment
for New Restricted Stock shall be subject to the same
restrictions as the Old Restricted Stock, determined
immediately before such payment.
(iv) The Committee may, but need not, provide that
all or any portion of a Grantee's Award of restricted Stock
shall be forfeited
(A) except as otherwise specified in the
Award Agreement, upon the Grantee's Termination of
Employment within a specified time period after the
Grant Date, or
(B) if the Company or the Grantee does not
achieve specified performance goals within a
specified time period after the Grant Date and before
the Grantee's Termination of Employment, or
(C) upon failure to satisfy such other
restrictions as the Committee may specify in the
Award Agreement.
(v) If a share of restricted Stock is forfeited,
then
(A) the Grantee shall be deemed to have
resold such share of restricted Stock to the Company
at the lesser of (1) the purchase price paid by the
Grantee (such purchase price shall be deemed to be
zero dollars ($0) if no purchase price was paid) or
(2) the Fair Market Value of a share of Stock on the
date of such forfeiture;
(B) the Company shall pay to the Grantee the
amount determined under clause (A) of this sentence,
if not zero, as soon as is administratively
practicable, but in any case within 90 days after
forfeiture; and
(C) such share of restricted Stock shall
cease to be outstanding, and shall no longer confer
on the Grantee thereof any rights as a stockholder of
the Company, from and after the date of the Company's
tender of the payment specified in clause (B) of this
sentence, whether or not such tender is accepted by
the Grantee, or the date the restricted Stock is
forfeited if no purchase price was paid for the
restricted Stock.
(vi) Any share of restricted Stock shall bear an
appropriate legend specifying that such share is
non-transferable and subject to the restrictions set forth in
the Plan and the Award Agreement. If any shares of restricted
Stock become nonforfeitable, the Company shall cause
certificates for such shares to be issued or reissued without
such legend and delivered to the Grantee or, at the request of
the Grantee, shall cause such shares to be credited to a
brokerage account specified by the Grantee.
(e) Grant of Performance Units and Performance Shares
.
(i) The Committee may, in its discretion, grant
performance units or performance shares to any employee
eligible under Article 5 to receive Awards.
(ii) Before the grant of any performance unit or
performance share, the Committee shall:
(A) designate a period, of not less than one
year nor more than five years, for the measurement of
the extent to which performance goals are attained
(the "Measuring Period");
(B) determine performance goals applicable
to such grant; provided, however, that the
performance goals with respect to a Measuring Period
shall be established in writing by the Committee by
the earlier of (x) the date on which a quarter of the
Measuring Period has elapsed or (y) the date which is
ninety (90) days after the commencement of the
Measuring Period, and in any event while the
performance relating to the performance goals remain
substantially uncertain; and
(C) assign a "Performance Percentage" to
each level of attainment of performance goals during
the Measuring Period, with the percentage applicable
to minimum attainment being zero percent (0%) and the
percentage applicable to optimum attainment to be
determined by the Committee from time to time.
(iii) The performance goals applicable to performance
units or performance shares shall, in the discretion of the
Committee, be based on stock price, earnings per share,
operating income, return on equity or assets, cash flow,
EBITDA or any combination of the foregoing. Such performance
goals may be absolute or relative (to prior performance or to
the performance of one or more other entities or external
indices) and may be expressed in terms of a progression within
a specified range. At the time of the granting of performance
units or performance shares, or at any time thereafter, in
either case to the extent permitted under Section 162(m) of
the Code and the regulations thereunder without adversely
affecting the treatment of the performance unit or performance
share as Performance-Based Compensation, the Committee may
provide for the manner in which performance will be measured
against the performance goals (or may adjust the performance
goals) to reflect the impact of specified corporate
transactions, special charges, foreign currency effects,
accounting or tax law changes and other extraordinary or
nonrecurring events.
(iv) Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any performance
unit or performance share that is intended to constitute
Performance-Based Compensation made to a Grantee who is
subject to Section 162(m) of the Code, the Committee shall
certify in writing that the applicable performance goals have
been satisfied.
(v) Unless otherwise expressly stated in the relevant
Award Agreement, each performance unit and performance share
granted under the Plan is intended to be Performance-Based
Compensation and the Committee shall interpret and administer
the applicable provisions of the Plan in a manner consistent
therewith. Any provisions inconsistent with such treatment
shall be inoperative and shall not adversely affect the
treatment of performance units or performance shares granted
hereunder as Performance-Based Compensation. The Committee
shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such performance unit or
performance share if the ability to exercise such discretion
or the exercise of such discretion itself would cause the
compensation attributable to such performance unit or
performance share to fail to qualify as Performance-Based
Compensation.
(f) Grant of Phantom Stock. The Committee may, in its
discretion, grant shares of phantom stock to any employee who is eligible under
Article 5 to receive Awards. Such phantom stock shall be subject to the terms
and conditions established by the Committee and set forth in the applicable
Award Agreement.
(g) Grant of Director's Shares. There shall be granted
Director's Shares with respect to 1,000 shares of Stock to each nonemployee
director of the Company (other than a nonemployee director who is a general
partner of any of the Forstmann Little Companies or any of their affiliates)
upon his or her initial election to the Board. Director's Shares shall be fully
vested and transferable upon issuance.
(h) Tandem Awards. The Committee may grant and identify any
Award with any other Award granted under the Plan ("Tandem Award"), other than a
Substitute Option or a Spin-off Option, on terms and conditions determined by
the Committee.
7. Non-transferability.
Unless set forth in the applicable Award Agreement, no Award (other
than an Award of restricted Stock) granted hereunder shall by its terms be
assignable or transferable except by will or the laws of descent and
distribution or, in the case of an Option other than an Incentive Stock Option,
pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act). An Option may be exercised during the
lifetime of a Grantee only by the Grantee or his or her guardian or legal
representatives. Notwithstanding the foregoing, the Committee may set forth in
the Award Agreement evidencing an Award (other than an Incentive Stock Option)
at the time of grant or thereafter, that the Award may be transferred to members
of the Grantee's immediate family, to trusts solely for the benefit of such
immediate family members and to partnerships in which such family members and/or
trusts are the only partners, and for purposes of this Plan, a transferee of an
Award shall be deemed to be the Grantee. For this purpose, immediate family
means the Grantee's spouse, parents, children, stepchildren and grandchildren
and the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Award shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Grantee. Each share of
restricted Stock shall be non-transferable until such share becomes
nonforfeitable.
8. Exercise.
(a) Exercise of Options
. Subject to Articles 4(c)(vii), 12 and 13 and such terms and
conditions as the Committee may impose, each Option shall be exercisable in one
or more installments commencing not earlier than the first anniversary of the
Grant Date of such Option; provided, however, that all Options held by each
Grantee shall become fully (100%) exercisable upon the occurrence of a Change of
Control regardless of whether the acceleration of the exercisability of such
Options would cause such Options to lose their eligibility for treatment as
Incentive Stock Options. Notwithstanding the foregoing, Options may not be
exercised by a Grantee for twelve months following a hardship distribution to
the Grantee, to the extent such exercise is prohibited under Treasury Regulation
ss.1.401(k)-1(d)(2)(iv)(B)(4). Each Option shall be exercised by delivery to the
Company of written notice of intent to purchase a specific number of shares of
Stock subject to the Option. The Option Price of any shares of Stock as to which
an Option shall be exercised shall be paid in full at the time of the exercise.
Payment may be made, as determined by the Committee in its discretion with
respect to Options granted to eligible employees and in all cases with respect
to Options granted to nonemployee directors pursuant to Article 6(b)(ii), in any
one or any combination of the following:
(i) cash,
(ii) shares of unrestricted Stock held by the Grantee
for at least six months (or such lesser period as may be
permitted by the Committee) prior to the exercise of the
Option, and valued at its Fair Market Value on the last
business day immediately preceding the date of exercise, or
(iii) through simultaneous sale through a broker of
shares of unrestricted Stock acquired on exercise, as
permitted under Regulation T of the Federal Reserve Board.
Shares of unrestricted Stock acquired by a Grantee on exercise of an
Option shall be delivered to the Grantee or, at the request of the Grantee,
shall be credited directly to a brokerage account specified by the Grantee.
(b) Exercise of Performance Units
.
(i) Subject to Articles 4(c)(vii), 12 and 13 and such
terms and conditions as the Committee may impose, and unless
otherwise provided in the applicable Award Agreement, if, with
respect to any performance unit, the Committee has determined
in accordance with Article 6(f)(iv) that the minimum
performance goals have been achieved during the applicable
Measuring Period, then such performance unit shall be deemed
exercised on the date on which it first becomes exercisable.
(ii) The benefit for each performance unit
exercised shall be an amount equal to
the product of
(A) the Unit Value (as defined below),
multiplied by
(B) the Performance Percentage attained
during the Measuring Period for such performance
unit.
(iii) The Unit Value shall be, as specified by
the Committee,
(A) a dollar amount,
(B) an amount equal to the Fair Market
Value of a share of Stock on the
Grant Date,
(C) an amount equal to the Fair Market Value
of a share of Stock on the exercise date of the
performance unit, plus, if so provided in the Award
Agreement, an amount ("Dividend Equivalent Amount")
equal to the Fair Market Value of the number of
shares of Stock that would have been purchased if
each dividend paid on a share of Stock on or after
the Grant Date and on or before the exercise date
were invested in shares of Stock at a purchase price
equal to its Fair Market Value on the respective
dividend payment date, or
(D) an amount equal to the Fair Market Value
of a share of Stock on the exercise date of the
performance unit (plus, if so specified in the Award
Agreement, a Dividend Equivalent Amount), reduced by
the Fair Market Value of a share of Stock on the
Grant Date of the performance unit.
(iv) The benefit upon the exercise of a performance
unit shall be payable as soon as is administratively
practicable (but in any event within 90 days) after the later
of (A) the date the Grantee is deemed to exercise such
performance unit, or (B) the date (or dates in the event of
installment payments) as provided in the applicable Award
Agreement. Such benefit shall be payable in cash, except that
the Committee, with respect to any particular exercise, may,
in its discretion, pay benefits wholly or partly in Stock
delivered to the Grantee or credited to a brokerage account
specified by the Grantee. The number of shares of Stock
payable in lieu of cash shall be determined by valuing the
Stock at its Fair Market Value on the business day next
preceding the date such benefit is to be paid.
(c) Payment of Performance Shares
. Subject to Articles 4(c)(vii), 12 and 13 and such terms and
conditions as the Committee may impose, and unless otherwise provided in the
applicable Award Agreement, if the Committee has determined in accordance with
Article 6(f)(iv) that the minimum performance goals with respect to an Award of
performance shares have been achieved during the applicable Measuring Period,
then the Company shall pay to the Grantee of such Award (or, at the request of
the Grantee, deliver to a brokerage account specified by the Grantee) shares of
Stock equal in number to the product of the number of performance shares
specified in the applicable Award Agreement multiplied by the Performance
Percentage achieved during such Measuring Period, except to the extent that the
Committee in its discretion determines that cash be paid in lieu of some or all
of such shares of Stock. The amount of cash payable in lieu of a share of Stock
shall be determined by valuing such share at its Fair Market Value on the
business day next preceding the date such cash is to be paid. Payments pursuant
to this Article 8(d) shall be made as soon as administratively practicable (but
in any event within 90 days) after the end of the applicable Measuring Period.
Any performance shares with respect to which the performance goals have not been
achieved by the end of the applicable Measuring Period shall expire.
(d) Payment of Phantom Stock Awards
. Upon the vesting of a phantom stock Award, the Grantee shall
be entitled to receive a cash payment in respect of each share of phantom stock
which shall be equal to the Fair Market Value of a share of Stock as of the date
the phantom stock Award was granted, or such other date as determined by the
Committee at the time the phantom stock Award was granted. The Committee may, at
the time a phantom stock Award is granted, provide a limitation on the amount
payable in respect of each share of phantom stock. In lieu of a cash payment,
the Committee may settle phantom stock Awards with shares of Stock having a Fair
Market Value equal to the cash payment to which the Grantee has become entitled.
(e) Exercise, Cancellation, Expiration or Forfeiture of
Tandem Awards
. Upon the exercise, cancellation, expiration, forfeiture or
payment in respect of any Award which is identified with any Tandem Award
pursuant to Article 6(i), the Tandem Award shall automatically terminate to the
extent of the number of shares in respect of which the Award is so exercised,
cancelled, expired, forfeited or paid, unless otherwise provided by the
Committee at the time of grant of the Tandem Award or thereafter.
9. Spin-off and Substitute Options.
Spin-off Options and Substitute Options shall be issued under this Plan
pursuant to and in accordance with the terms of the Benefits Agreement. Spin-off
Options and Substitute Options shall be governed by the terms of the Plan to the
extent that the terms of the Plan do not conflict with the terms of the
agreements evidencing the Spin-off Options and Substitute Options.
10. Effect of Certain Transactions.
With respect to any Award which relates to Stock, in the event of (i)
the liquidation or dissolution of the Company or (ii) a merger or consolidation
of the Company (a "Transaction"), the Plan and the Awards issued hereunder shall
continue in effect in accordance with their respective terms and each Grantee
shall be entitled to receive in respect of each share of Stock subject to any
outstanding Awards, upon the vesting, payment or exercise of the Award (as the
case may be), the same number and kind of stock, securities, cash, property, or
other consideration that each holder of a share of Stock was entitled to receive
in the Transaction in respect of a share of Stock.
11. Mandatory Withholding Taxes.
The Company shall have the right to deduct from any distribution of
cash to any Grantee an amount equal to the federal, state and local income taxes
and other amounts as may be required by law to be withheld (the "Withholding
Taxes") with respect to any Award. If a Grantee is to experience a taxable event
in connection with the receipt of shares pursuant to an Option exercise or the
vesting or payment of another type of Award (a "Taxable Event"), the Grantee
shall pay the Withholding Taxes to the Company prior to the issuance, or release
from escrow, of such shares or payment of such Award. Payment of the applicable
Withholding Taxes may be made, as determined by the Committee in its discretion,
in any one or any combination of (i) cash, (ii) shares of restricted or
unrestricted Stock owned by the Grantee prior to the Taxable Event and valued at
its Fair Market Value on the business day immediately preceding the date of
exercise, or (iii) by making a Tax Election (as described below). For purposes
of this Article 11, the Committee may provide in the Award Agreement at the time
of grant, or at any time thereafter, that the Grantee, in satisfaction of the
obligation to pay Withholding Taxes to the Company, may elect to have withheld a
portion of the shares then issuable to him or her having an aggregate Fair
Market Value equal to the Withholding Taxes.
12. Termination of Employment.
The Award Agreement pertaining to each Award shall set forth the terms
and conditions applicable to such Award upon a Termination of Employment of the
Grantee by the Company, a Subsidiary or an operating division or unit, which,
except for Options granted to nonemployee directors pursuant to Article
6(b)(ii), shall be as the Committee may, in its discretion, determine at the
time the Award is granted or thereafter.
13. Securities Law Matters.
(a) If the Committee deems it necessary to comply with the
Securities Act of 1933, the Committee may require a written investment intent
representation by the Grantee and may require that a restrictive legend be
affixed to certificates for shares of Stock.
(b) If, based upon the opinion of counsel for the Company, the
Committee determines that the exercise or nonforfeitability of, or delivery of
benefits pursuant to, any Award would violate any applicable provision of (i)
federal or state securities law or (ii) the listing requirements of any national
securities exchange on which are listed any of the Company's equity securities,
then the Committee may postpone any such exercise, nonforfeitability or
delivery, as the case may be, but the Company shall use its best efforts to
cause such exercise, nonforfeitability or delivery to comply with all such
provisions at the earliest practicable date.
(c) Notwithstanding any provision of the Plan or any Award
Agreement to the contrary, no shares of Stock shall be issued to any Grantee in
respect of any Award prior to the time a registration statement under the
Securities Act of 1933 is effective with respect to such shares.
14. No Funding Required.
Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise segregate
assets to be used for payment of, benefits under the Plan.
15. No Employment Rights.
Neither the establishment of the Plan, nor the granting of any Award
shall be construed to (a) give any Grantee the right to remain employed by the
Company or any of its Subsidiaries or to any benefits not specifically provided
by the Plan or (b) in any manner modify the right of the Company or any of its
Subsidiaries to modify, amend, or terminate any of its employee benefit plans.
16. Rights as a Stockholder.
A Grantee shall not, by reason of any Award (other than restricted
Stock), have any right as a stockholder of the Company with respect to the
shares of Stock which may be deliverable upon exercise or payment of such Award
until such shares have been delivered to him. Shares of restricted Stock held by
a Grantee or held in escrow by the Secretary of the Company shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan.
17. Nature of Payments.
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and shall
not be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
Subsidiaries or (b) any agreement between the Company or any Subsidiary, on the
one hand, and the Grantee, on the other hand, except as such plan or agreement
shall otherwise expressly provide.
18. Non-Uniform Determinations.
Neither the Committee's nor the Board's determinations under the Plan
need be uniform and may be made by the Committee or the Board selectively among
persons who receive, or are eligible to receive, Awards (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, and (c) the treatment of Terminations of Employment.
19. Adjustments.
In the event of Change in Capitalization, the Committee shall,
in its sole discretion, make equitable adjustment of
(a) the aggregate number and class of shares of
Stock or other stock or securities
available under Article 3,
(b) the number and class of shares of Stock or other
stock or securities covered by an Award and to be
covered by Options granted to nonemployee directors
pursuant to Article 6(b)(ii),
(c) the Option Price applicable to outstanding Options,
(d) the terms of performance unit and performance share
grants (to the extent permitted under Section 162(m)
of the Code and the regulations thereunder without
adversely affecting the treatment of the performance
unit or performance share as Performance-Based
Compensation, and
(e) the Fair Market Value of Stock to be used to
determine the amount of the benefit payable upon
exercise of performance units, performance shares or
phantom stock.
(f) the maximum number and class of shares of Stock or
other securities with respect to which Awards may be
granted to any individual in any three calendar year
period
(g) the number and class of shares of Stock or other
securities with respect to which Director Shares are
to be granted under Article 6(h).
20. Amendment of the Plan.
The Board may from time to time in its discretion amend or modify the
Plan without the approval of the stockholders of the Company, except as such
stockholder approval may be required (a) to retain Incentive Stock Option
treatment under Section 422 of the Internal Revenue Code, (b) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act or (c) under the listing requirements of any
securities exchange on which any of the Company's equity securities are listed.
21. Termination of the Plan.
The Plan shall terminate on the tenth (10th) anniversary of the
Effective Date or at such earlier time as the Board may determine. Any
termination, whether in whole or in part, shall not affect any Award then
outstanding under the Plan.
22. No Illegal Transactions.
The Plan and all Awards granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable thereto;
and notwithstanding any provision of the Plan or any Award, Grantees shall not
be entitled to exercise Awards or receive the benefits thereof and the Company
shall not be obligated to deliver any Stock or pay any benefits to a Grantee if
such exercise, delivery, receipt or payment of benefits would constitute a
violation by the Grantee or the Company of any provision of any such law or
regulation.
23. Governing Law.
Except where preempted by federal law, the law of the State of Delaware
shall be controlling in all matters relating to the Plan, without giving effect
to the conflicts of law principles thereof.
24. Severability.
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of the Plan not declared to be unlawful or
invalid. Any Article or part of an Article so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Article or part of an Article to the fullest extent possible while
remaining lawful and valid.
COMMSCOPE, INC.
ANNUAL INCENTIVE PLAN
1. Purpose
The purpose of the Annual Incentive Plan is to enhance
CommScope, Inc.'s ability to attract, motivate, reward and retain employees, to
strengthen their commitment to the success of the Company and to align their
interests with those of the Company's stockholders by providing additional
compensation to designated employees of the Company based on the achievement of
performance objectives. To this end, the Annual Incentive Plan provides a means
of annually rewarding participants primarily based on the performance of the
Company and its Operating Units and secondarily based on the achievement of
personal performance objectives. The adoption of this Plan as it relates to the
CEO is subject to the approval of the stockholders of the Company.
2. Definitions
(a) "Award" shall mean the incentive award earned by a
Participant under the Plan for any Performance Period.
(b) "Base Salary" shall mean the Participant's annual base
salary actually paid by the Company and received by the Participant during the
applicable Performance Period. Annual base salary does not include (i) Awards
under the Plan, (ii) long-term incentive awards, (iii) signing bonuses or any
similar bonuses, (iv) cash payments received pursuant to the Company's Profit
Sharing and Savings Plan, (v) imputed income from such programs as executive
life insurance, or (vi) nonrecurring earnings such as moving expenses, and is
based on salary earnings before reductions for such items as contributions under
Section 401(k) of the Internal Revenue Code of 1986, as amended.
(c) "Beneficial Owner", "Beneficially Owned" and "Beneficially
Owning" shall have the meanings applicable under Rule
13d-3 promulgated under the 1934 Act.
(d) "Board" shall mean the Board of Directors of the Company.
(e) " CEO" shall mean the Chief Executive Officer of the
Company.
(f) "Change of Control" shall mean any of the following:
(i) the acquisition by any Person other than
Instrument Partners or Forstmann
Little & Co. Subordinated Debt and Equity Management Buyout Partnership IV or
any of their affiliates (collectively, the "Forstmann Little Companies") of
Beneficial Ownership of Voting Securities which, when added to the Voting
Securities then Beneficially Owned by such Person, would result in such Person
Beneficially Owning (A) 33% or more of the combined Voting Power of the
Company's then outstanding Voting Securities, and (B) a number of Voting
Securities greater than the aggregate number of Voting Securities then
Beneficially Owned by the Forstmann Little Companies; provided, however, that
for purposes of this paragraph (i), a Person shall not be deemed to have made an
acquisition of Voting Securities if such Person: (1) acquires Voting Securities
as a result of a stock split, stock dividend or other corporate restructuring in
which all stockholders of the class of such Voting Securities are treated on a
pro rata basis; (2) acquires the Voting Securities directly from the Company;
(3) becomes the Beneficial Owner of 33% or more of the combined Voting Power of
the Company's then outstanding Voting Securities solely as a result of the
acquisition of Voting Securities by the Company or any Subsidiary which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by such Person, provided that if (x) a
Person would own at least such percentage as a result of the acquisition by the
Company or any Subsidiary and (y) after such acquisition by the Company or any
Subsidiary, such Person acquires Voting Securities, then an acquisition of
Voting Securities shall have occurred; (4) is the Company or any corporation or
other Person of which a majority of its voting power or its equity securities or
equity interest is owned directly or indirectly by the Company (a "Controlled
Entity"); or (5) acquires Voting Securities in connection with a "Non-Control
Transaction" (as defined in paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date,are members of the Board(the
"Incumbent Board") cease for any reason to constitute at least two-thirds of the
Board; provided, however, that if either the election of any new director or the
nomination for election of any new director by the Company's stockholders was
approved by a vote of at least two-thirds of the Incumbent Board prior to such
election or nomination, such new director shall be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule l4a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(iii) approval by stockholders of the Company of:
(A) a merger, consolidation or
reorganization involving the Company
(a "Business Combination"), unless
(1) the stockholders of the
Company, immediately before the
Business Combination, own,
directly or indirectly
immediately following the
Business Combination, at least
a majority of the combined
voting power of the
outstanding voting securities
of the corporation resulting
from the Business
Combination (the "Surviving
Corporation") in substantiall
the same proportion
as their ownership of the
Voting Securities immediately
before the Business
Combination, and
(2) the individuals who were
members of the Incumbent Board
immediately prior to the
execution of the agreement
providing for the Business
Combination constitute at
least a majority of the
members of the Board of
Directors of the Surviving
Corporation, and
(3) no Person (other than the
Company or any Controlled
Entity, a trustee or other
fiduciary holding securities
under one or more employee
benefit plans or arrangements
(or any trust forming a part
thereof) maintained
by the Company, the Surviving
Corporation or any Controlled
Entity, or any
Person who, immediately
prior to the Business
Combination, had Beneficial
Ownership of 33% or more of
the then outstanding Voting
Securities) has
Beneficial Ownership of 33%
or more of the combined
voting power of the
Surviving Corporation's then
outstanding voting securities
(a Business
Combination satisfying the
conditions of clauses (1),
(2) and (3) of this
subparagraph (A) shall be
referred to as a "Non-Control
Transaction");
(B) a complete liquidation or
dissolution of the Company; or
(C) the sale or other disposition of all
or substantially all of the
assets of the Company (other than a
transfer to a Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur solely because 33% or more of the then outstanding Voting
Securities is Beneficially Owned by (x) a trustee or other fiduciary holding
securities under one or more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the Company or any Controlled Entity
or (y) any corporation which, immediately prior to its acquisition of such
interest, is owned directly or indirectly by the stockholders of the Company in
the same proportion as their ownership of stock in the Company immediately prior
to such acquisition.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Committee" shall mean the Compensation Committee of the
Board.
(i) "Company" shall mean CommScope, Inc., its successors and
assigns.
(j) "Disability" shall mean permanent disability, as provided
in the Company's long-term disability plan.
(k) "Effective Date" shall mean the date that the Plan is
adopted by the Board.
(l) "Employee" shall mean any person (including an officer)
employed by the Company or any of its subsidiaries on
a full-time salaried basis.
(m) "Financial Target", for any Performance Period, shall mean
the one or more of the financial performance goals of the Company, or an
Operating Unit, if applicable, as determined in accordance with Section 5.
Financial Targets may be expressed in terms of (i) earnings per share, (ii)
operating income, (iii) return on equity or assets, (iv) cash flow, (v) EBITDA
or (vi) any combination of the foregoing. Financial Targets may be expressed as
a combination of Company and/or Operating Unit performance goals and may be
absolute or relative (to prior performance or to the performance of one or more
other entities or external indices) and may be expressed in terms of a
progression within a specified range.
(n) "Financial Target Award Earned", for any Performance
Period, shall mean the percentage of Target Awards earned
based on the Company's and/or, if applicable, an
Operating Unit's achievement of Financial Target(s)
for that Performance Period.
(o) "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
(p) "Operating Unit", for any Performance Period, shall mean a
division, Subsidiary, group, product line or product line
grouping for which an
income statement reflecting sales and operating income
is produced.
(q) "Participant", for any Performance Period, shall mean an
Employee selected to participate in the Plan for such
Performance Period.
(r) "Performance-Based Compensation" shall mean any Award that
is intended to constitute "performance based compensation"
within the meaning of Section 162(m)(4)(C) of the Code and
the regulations promulgated thereunder.
(s) "Performance Period" shall mean the fiscal year of the
Company.
(t) "Person" shall mean a person within the meaning of
Sections 13(d) and 14(d) of the
1934 Act.
(u) "Personal Performance Percentage", with respect to
Participants (other than the CEO) for any Performance
Period, shall mean the percentage based on the
Participant's personal performance, as determined in
accordance with Section 5(e) of the Plan.
(v) "Plan" shall mean this CommScope, Inc. Annual Incentive
Plan, as from time to time amended and in effect.
(w) "Retirement" shall mean retirement at or after age 65 or
early retirement with the prior written approval of the
Company.
(x) "Schedules" for any Performance Period, shall mean the
schedules described in Section 5(a) of the Plan.
(y) "Subsidiary" shall mean a corporation as defined in
Section 424(f) of the Internal Revenue Code of 1986,
as amended, with the Company being treated as the
employer corporation for purposes of this definition.
(z) "Target Award", for any Participant with respect to any
Performance Period, shall mean the Participant's Base
Salary multiplied by his or her Target Award Percentage.
(aa) "Target Award Percentage" for any Participant with
respect to any Performance Period, shall mean the percentage of the
Participant's Base Salary that the Participant would earn as an Award for that
Performance Period if each of the Financial Target Award Earned and Personal
Performance Percentage (if applicable) for that Performance Period is 100%, and
shall be determined by the Committee with respect to Participants who are
officers and the CEO with respect to all other Participants, based on the
Participant's responsibility level or the position or positions held during the
Performance Period; provided, however, that if any Participant held more than
one position during the Performance Period, then the Committee or CEO, as
applicable, may designate different Target Award Percentages with respect to
each position and the Award will be pro-rated to reflect the number of days
during which such Participant had each Target Award Percentage.
(bb) "Voting Power" shall mean the combined voting power
of the then outstanding Voting Securities.
(cc) "Voting Securities" shall mean, with respect to the
Company or any Subsidiary, any securities issued
by the Company or such
Subsidiary, respectively, which generally entitle the
holder thereof to vote for
the election of directors of the Company or such
Subsidiary, respectively.
3. Eligibility
Generally, all Employees are eligible to participate in the
Plan for any Performance Period. However, participation may be limited to those
Employees who, because of their significant impact on the current and future
success of the Company, the Committee or CEO selects, in accordance with Section
5 of this Plan, to participate in the Plan for that Performance Period.
Notwithstanding the foregoing, the CEO shall participate in the Plan in every
Performance Period.
To be eligible to participate in the Plan in any Performance
Period an Employee shall have had at least three months active tenure during
such Performance Period and be actively employed by the Company on the Award
payment date. The CEO may approve, for Participants other than the CEO and in
accordance with Sections 7 and 8 of this Plan, exceptions for special
circumstances.
If an Employee becomes a Participant during a Performance
Period, such Participant's Award will be pro-rated based on the number of days
that he or she is a Participant, unless, with respect to Employees other than
the CEO, the Committee otherwise determines.
4. Administration
The administration of the Plan shall be consistent with the
purpose and the terms of the Plan. The Plan shall be administered by the
Committee with respect to Participants who are officers and by the CEO with
respect to all other Participants. Each member of the Committee shall be an
"outside director" within the meaning of Treasury Regulations promulgated under
Section 162(m) of the Code. The Committee and the CEO, as the case may be, shall
have full authority to establish the rules and regulations relating to the Plan,
to interpret the Plan and those rules and regulations, to select Participants in
the Plan, to determine the Company's and, if applicable, each Operating Unit's
Financial Target(s) and each Participant's Target Award Percentage for each
Performance Period, to approve all the Awards, to decide the facts in any case
arising under the Plan and to make all other determinations and to take all
other actions necessary or appropriate for the proper administration of the
Plan, including the delegation of such authority or power, where appropriate;
provided, however, that the Committee shall not be authorized to increase the
amount of the Award payable to the CEO that would otherwise be payable pursuant
to the terms of the Plan but may in its sole discretion decrease the amount of
an Award that would otherwise be payable to the CEO pursuant to the terms of the
Plan, and provided, further, that the Committee shall only exercise such
discretion over the Plan and the Awards granted thereunder, to the extent
permitted under Section 162(m) of the Code and the regulations thereunder
without adversely affecting the treatment of the CEO's Award as
Performance-Based Compensation.
The Committee's and the CEO's administration of the Plan,
including all such rules and regulations, interpretations, selections,
determinations, approvals, decisions, delegations, amendments, terminations and
other actions, shall be final and binding on the Company, the Subsidiaries,
their respective stockholders and all employees of the Company and the
Subsidiaries, including the Participants and their respective beneficiaries.
5. Determination of Awards
(a) Prior to, or as soon as practicable following, the
commencement of each Performance Period, the Committee with respect to officers
and the CEO with respect to all other Employees shall determine the Employees
who shall be Participants during that Performance Period and determine each
Participant's Target Award Percentage. The Committee shall also establish the
Financial Target(s) for that Performance Period (which shall be established in
writing by the earlier of (1) the date on which one-quarter of the Performance
Period has elapsed or (2) the date which is 90 days after the commencement of
the Performance Period, and in any event while the performance relating to the
Financial Target(s) remains substantially uncertain). The Participants, each
Participant's Target Award Percentage and the Financial Targets for each
Performance Period shall be set forth on a Schedule. The Company shall notify
each Participant of his or her Target Award Percentage and the applicable
Financial Targets for the Performance Period.
(b) Generally, a Participant earns an Award for a Performance
Period based on the Company's and/or his or her Operating Unit's achievement of
applicable Financial Target(s). In addition, the Award for any Participant
(other than the CEO) may be adjusted based on the Participant's Personal
Performance Percentage. The Committee may determine that different Financial
Targets are applicable to different Participants, groups of Participants,
Operating Units or groups of Operating Units with respect to a specific
Performance Period. The Committee may also establish minimum threshold of
Company or Operating Unit performance which must be achieved in order for any
portion of an Award to be earned for that Performance Period, provided such
threshold is established by the earlier of (1) the date on which one-quarter of
the Performance Period has elapsed or (2) the date which is 90 days after the
commencement of the Performance Period, and in any event while the performance
relating to the Financial Target(s) remains substantially uncertain).
Notwithstanding the foregoing, if in any Performance Period a minimum threshold
of Company and/or Operating Unit performance is established and the Company's
and/or any Operating Unit's actual performance as measured against that minimum
threshold would otherwise preclude the earning of Awards for that Performance
Period, the Committee may upon consideration of the events of the Performance
Period, determine that Awards may be earned by Participants (other than the CEO)
for that Performance Period.
(c) The maximum Award any Participant (other than the CEO) may
receive for any Performance Period is 150% of the Participant's Target Award for
that Performance Period. The maximum award the CEO may receive for any
Performance Period is $1.5 million.
(d) Awards shall be earned by Participants in accordance with
the following formula:
Personal Performance
Target Financial Percentage (other
Award x Base x Target x than the CEO)
Percentage Salary Award Earned
Where:
Target Award Percentage is as defined in Section 2(aa) of the
Plan.
Base Salary is as defined in Section 2(b) of the Plan.
Financial Target Award Earned is as defined in Section 2(n)
of the Plan and is determined based on the Company's and/or,
if applicable an Operating Unit's performance as measured
against the applicable Financial Target(s).
Personal Performance Percentage ranges from 0 to 120 percent
and is determined, in accordance with subsection (e) below.
(e) Personal Performance Percentage The CEO is not eligible
for an adjustment based on personal performance. Each other Participant's
performance shall be evaluated and a Personal Performance Percentage for such
Participant shall be recommended for approval by the CEO. The Personal
Performance Percentage may range from 0 to 120 percent to reflect the
Participant's personal performance during the Performance Period; provided,
however, that the application of this Section 5(f) shall not result in (i) the
Participant's Award exceeding 150% of his or her or Target Award for the
Performance Period; or (ii) an increase in the aggregate dollar amount of all
Awards earned by all Participants for that Performance Period.
6. Changes to the Target Award Percentage
The Committee, with respect to Participants who are officers,
and the CEO, with respect to all other Participants, may at any time prior to
the final determination of Awards change the Target Award Percentage of any
Participant (other than the CEO) or assign a different Target Award Percentage
to a Participant (other than the CEO) to reflect any change in the Participant's
responsibility level or position during the course of the Performance Period.
The Committee, with respect to Participants who are officers,
and the CEO, with respect to all other Participants, may at the time Financial
Target(s) are determined for a Performance Period, or at any time prior to the
final determination of Awards in respect of that Performance Period to the
extent permitted under Section 162(m) of the Code and the regulations
promulgated thereunder without adversely affecting the treatment of the Award as
Performance-Based Compensation, provide for the manner in which performance will
be measured against the Financial Target(s) (or to the extent permitted under
Section 162(m) of the Code and the regulations promulgated thereunder without
adversely affecting the treatment of an Award as Performance Based Compensation,
may adjust the Financial Target(s)) to reflect the impact of specified corporate
transactions (such as a stock-split or stock dividend), special charges, foreign
currency effects, accounting or tax law changes and other extraordinary or
nonrecurring events.
7. Payment of Awards
As soon as practicable after the close of a Performance Period
and prior to the payment of any Award that is intended to constitute
Performance-Based Compensation, the Committee, with respect to Participants who
are officers, and the CEO, with respect to all other Participants, shall review
each Participant's Award and certify in writing that the applicable Financial
Targets have been satisfied. Subject to the provisions of Section 8 of the Plan,
each Award to the extent earned shall be paid in a single lump sum cash payment,
as soon as practicable following the Performance Period, but in no event later
than 120 days following the Performance Period. The Committee shall certify in
writing the amount of the CEO's Award prior to payment thereof.
If a Change of Control occurs, the Company shall, within 60
days thereafter, pay to each Participant in the Plan immediately prior to the
Change of Control (regardless of whether the Participant remains employed after
the Change of Control) an Award which is calculated assuming that all
performance percentages are 100 percent, and such Award shall be prorated to the
date of the Change of Control based on the number of days that have elapsed
during the Performance Period through the date of the Change of Control.
8. Limitations on Rights to Payment of Awards
No Participant shall have any right to receive payment of an
Award under the Plan for a Performance Period unless the Participant remains in
the employ of the Company through the payment date of the Award for such
Performance Period, except as provided in the last paragraph of Section 7 of the
Plan. However, if the Participant has active service with the Company or the
Subsidiary for at least three months during any Performance Period, but, prior
to payment of the Award for such Performance Period, a Participant's employment
with the Company terminates due to the Participant's death, Disability or,
except in the case of the CEO, Retirement or such other special circumstances as
determined by the CEO on a case by case basis, the Participant (or, in the event
of the Participant's death, the Participant's estate, beneficiary or
beneficiaries as determined under Section 9 of the Plan) shall remain eligible
to receive a prorated portion of any earned Award, based on the number of days
that the Participant was actively employed and performed services during such
Performance Period.
9. Designation of Beneficiary
A Participant may designate a beneficiary or beneficiaries
who, in the event of the Participant's death prior to full payment of any Award
hereunder, shall receive payment of any Award due under the Plan. Such
designation shall be made by the Participant on a form prescribed by the
Committee. The Participant may, at any time, change or revoke such designation.
A beneficiary designation, or revocation of a prior beneficiary designation,
will be effective only if it is made in writing on a form provided by the
Company, signed by the Participant and received by the Secretary of the Company.
If the Participant does not designate a beneficiary or the beneficiary dies
prior to receiving any payment of an Award, Awards payable under the Plan shall
be paid to the Participant's estate.
10. Amendments
The Committee may at any time amend (in whole or in part) this
Plan. No such amendment which adversely affects any Participant's rights to or
interest in an Award earned prior to the date of the amendment shall be
effective unless the Participant shall have agreed thereto.
11. Termination
The Committee may terminate this Plan (in whole or in part) at
any time. In the case of such termination of the Plan, the following provisions
of this Section 11 shall apply notwithstanding any other provisions of the Plan
to the contrary:
(i) The Committee shall promulgate administrative rules
applicable to Plan termination, pursuant to which each affected
Participant (other than the CEO) shall receive, with respect to each
Performance Period which has commenced on or prior to the effective
date of the Plan termination (the "Termination Date") and for which the
Award has not yet been paid, the amount described in such rules and the
CEO shall receive an amount equal to the amount his Award would have
been had the Plan not been terminated (prorated for the Performance
Period in which the Termination Date occurred), subject to reduction in
the discretion of the Committee.
(ii) Each Award payable under this Section 11 shall be paid as
soon as practicable, but in no event later than 120 days after the
Termination Date.
12. Miscellaneous Provisions
(a) This Plan is not a contract between the Company and the
Employees or the Participants. Neither the establishment of this Plan, nor any
action taken hereunder, shall be construed as giving any Employee or any
Participant any right to be retained in the employ of the Company or any of its
Subsidiaries. Neither, the Company nor any of its Subsidiaries is under any
obligation to continue the Plan.
(b) A Participant's right and interest under the Plan may not
be assigned or transferred, except as provided in Section 9 of the Plan, and any
attempted assignment or transfer shall be null and void and shall extinguish, in
the Company's sole discretion, the Company's obligation under the Plan to pay
Awards with respect to the Participant.
(c) The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund, or to make any other
segregation of assets, to assure payment of Awards.
(d) The Company shall have the right to deduct from Awards
paid and any interest thereon, any taxes or other amounts required by law to be
withheld.
(e) Nothing contained in the Plan shall limit or affect in any
manner or degree the normal and usual powers of management, exercised by the
officers and the Board of Directors or committees thereof, to change the duties
or the character of employment of any employee of the Company or any of its
Subsidiaries or to remove the individual from the employment of the Company or
any of its Subsidiaries at any time, all of which rights and powers are
expressly reserved.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
CommScope, Inc. condensed consolidated financial statements as of and for
the three months ended March 31, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001035884
<NAME> CommScope, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<CASH> 14,254
<SECURITIES> 0
<RECEIVABLES> 98,977
<ALLOWANCES> 3,985
<INVENTORY> 35,305
<CURRENT-ASSETS> 162,914
<PP&E> 197,976
<DEPRECIATION> 69,527
<TOTAL-ASSETS> 482,621
<CURRENT-LIABILITIES> 50,368
<BONDS> 250,800
0
0
<COMMON> 492
<OTHER-SE> 156,265
<TOTAL-LIABILITY-AND-EQUITY> 482,621
<SALES> 133,602
<TOTAL-REVENUES> 133,602
<CGS> 106,034
<TOTAL-COSTS> 106,034
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,197
<INCOME-PRETAX> 10,067
<INCOME-TAX> 3,735
<INCOME-CONTINUING> 6,332
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,332
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
