EXHIBIT 99
COMMSCOPE, INC.
EXHIBIT 99 - FORWARD-LOOKING INFORMATION
The Securities Exchange Act of 1934, the Private Securities Litigation
Reform Act of 1995 and other related laws provide a "safe harbor" for
forward-looking statements. Our Form 10-K for the year ended December 31,
1999, our Annual Report to Stockholders, any Form 10-Q or Form 8-K of ours,
or any other oral or written statements made by us or on our behalf, may
include forward-looking statements which reflect our current views with
respect to future events and financial performance. These forward-looking
statements are identified, including without limitation, 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," "think", "designed to," "foreseeable future,"
"believe," "believes" and "scheduled" and similar expressions. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date the statement was made. We undertake no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Our actual results may differ significantly from the results discussed
in forward-looking statements. Factors that might cause such a difference
include, but are not limited to, (a) the general political, economic and
competitive conditions in the United States and other markets where we
operate; (b) changes in capital availability or costs, such as changes in
interest rates, market perceptions of the industry in which we operate, or
security ratings; (c) employee workforce factors; (d) authoritative
generally accepted accounting principles or policy changes from such
standard-setting bodies as the Financial Accounting Standards Board and the
Securities and Exchange Commission and the factors set forth below.
Our sales and profitability may be adversely affected by changes in cable
television capital spending.
Most of our revenues come from sales to the cable television industry.
Demand for our products depends primarily on capital spending by cable
television operators for maintaining, constructing, rebuilding or upgrading
their systems. The amount of this capital spending, and, therefore, our
sales and profitability, will be affected by a variety of factors,
including, without limitation:
o general economic conditions;
o acquisitions of cable television operators by non-cable television
operators;
o cable system consolidation within the industry;
o the financial condition of domestic cable television operators and
their access to financing;
o competition from satellite and wireless television providers and
telephone companies;
o technological developments; and
o new legislation and regulation of cable television operators.
We cannot assure you that cable television capital spending will
increase from historical levels or that existing levels of cable television
capital spending will be maintained.
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In recent years, cable television capital spending has been affected
by new legislation and regulation, on the federal, state and local level.
Many aspects of government regulation are currently the subject of judicial
proceedings and administrative or legislative proposals. The Federal
Communications Commission is continuing its implementation of the
Telecommunications Act of 1996 (the "Telecom Act") which, when fully
implemented, may significantly impact the communications industry and alter
federal, state and local laws and regulations regarding the provision of
cable, internet and telephony services. The Telecom Act eliminates
substantially all restrictions on the entry of telephone companies and
certain public utilities into the cable television business. Telephone
companies may now enter the cable television business as traditional cable
operators, as common carrier conduits for programming supplied by others,
as operators of wireless distribution systems, or as hybrid common
carrier/cable operator providers of programming on so-called "open video
systems." The economic impact of the Telecom Act, ongoing litigation in
this regard, other federal legislation, and the rules implementing these
laws on the cable television industry and our business is still uncertain.
The loss of some of our principal cable television customers could
materially adversely affect us.
Although the domestic cable television industry is comprised of
thousands of cable systems, a small number of cable television operators
own a majority of cable television systems and account for a majority of
the capital expenditures made by cable television operators. The loss of
some or all of our principal cable television customers could have a
material adverse effect on our business and financial condition.
Our failure to introduce new products successfully, and changes in
technology, could adversely affect us.
Many of our markets are characterized by advances in information
processing and communications capabilities which require increased
transmission speeds and greater capacity, or "bandwidth," for carrying
information. These advances require ongoing improvements in the
capabilities of wire and cable products. We believe that our future success
will depend in part upon our ability to enhance existing products and to
develop and manufacture new products that meet or anticipate these changes.
The failure to introduce successful new or enhanced products on a timely
and cost-competitive basis could adversely affect our business and
financial condition.
Fiber optic technology presents a potential substitute for the
products that comprise most of our sales. Fiber optic cables have
penetrated the cable television and local area network markets we serve in
high-bandwidth point-to-point and trunking applications. Fiber optic cables
have not significantly penetrated the local distribution and residential
application markets we serve because of the high relative cost of
electro-optic interfaces and the high cost of fiber termination and
connection. At the same time, advances in data transmission equipment and
copper cable technologies have increased the relative performance of
copper-based cables which are our principal products. However, a
significant decrease in the cost of fiber optic systems could make these
systems superior on a price/performance basis to copper systems. While we
are a fiber optic cable manufacturer and supplier to a small portion of the
cable television market and certain specialty markets, a significant
decrease in the cost of fiber optic systems would likely have an adverse
effect on us.
Our industry is highly competitive and rapid technological change may lead
to further competition.
Our coaxial, fiber optic and electronic cable products compete with
those of a substantial number of foreign and domestic companies, some of
which have greater resources, financial or otherwise, than we have. The
rapid technological changes occurring in the telecommunications industry
could lead to the entry of
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new competitors. Existing competitors' actions and new entrants may have an
adverse impact on our sales and profitability. We believe that we enjoy a
strong competitive position in the coaxial cable market because of our
position as a low-cost, high-volume coaxial cable producer and our
reputation as a high-quality provider of state-of-the-art cables, along
with our strong orientation toward customer service. However, we cannot
assure you that we will continue to compete successfully with our existing
competitors or that we will be able to compete successfully with new
competitors.
Our dependence on commodities subjects us to price fluctuations which could
adversely affect us.
The principal raw materials we purchase are fabricated aluminum,
plastics, bimetals, copper and optical fiber. Our profitability may be
affected by changes in the market price of these materials, which are
linked to the commodity markets. Although we have generally been able to
pass on increases in the price of these materials to our customers, we
cannot assure you that we will be able to do so in the future.
Additionally, significant increases in the price of our products due to
increases in the cost of raw materials could have a negative effect on
demand for our products.
Difficulties with our key suppliers could adversely affect us.
A significant portion of our raw material purchases are bimetallic
center conductors for coaxial cables. Copperweld has indicated its intent
to continue to supply us with those materials at volumes consistent with
its recent rate of supply for the remainder of calendar year 2000. Also,
Copperweld has agreed to supply us a fixed amount of bimetallic center
conductors for calendar year 2001 and to work with us towards a longer-term
supply arrangement. If we are unable to continue to purchase the necessary
quantities of bimetallic center conductors, namely copper clad aluminum
wire and copper clad steel wire, from this supplier, we may be unable to
obtain these raw materials on commercially acceptable terms from another
source. There are few, and limited, alternative sources of supply for these
raw materials. In February 1999, we purchased the clad wire fabrication
equipment and technology of Texas Instruments Incorporated for
manufacturing bimetallic center conductors, and we have recently begun to
produce a portion of our requirements of those materials. Management
believes that our current supply arrangement with Copperweld, together with
our increasing internal production of bimetallic center conductors,
addresses concerns regarding the continuing availability of these key
materials and enhances our ability to support the growing demand for
broadband cable. However, the loss of Copperweld as a supplier of
bimetallic center conductors, Copperweld's inability to supply, and/or our
failure to adequately expand our internal production of these products,
could have a material adverse effect on our business and financial
condition. In addition, we purchase fine aluminum wire and optical fiber
from a limited number of suppliers. Neither of these raw materials could be
readily replaced in sufficient quantities if all supplies from the
respective primary sources were disrupted for an extended period and we
were unable to vertically integrate the production of these products. In
such event, there could be a materially adverse impact on our financial
results.
Additionally, fluorinated-ethylene-propylene (FEP) is the primary raw
material used throughout the industry for producing flame-retarding cables
for local area network applications. There are few worldwide producers of
FEP and market supplies have been periodically limited over the past
several years. Availability of adequate supplies of FEP will be critical to
future local area network cable sales growth.
Our business is subject to the economic uncertainties and political risks
of selling our products in foreign countries.
We believe that growth in international markets, including the
developing markets in Asia, the Middle East and Latin America, and the
expected privatization of the telecommunications structure in many European
countries, represents significant future opportunities for us. However, we
cannot predict with certainty the outlook for international sales in the
short-term due to political and economic uncertainties.
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Our international operations are subject to the usual risks inherent
in sales abroad, including risks with respect to currency exchange rates,
economic and political destabilization, restrictive actions by foreign
governments, nationalizations, the laws and policies of the U.S. affecting
trade, foreign investment and loans, and foreign tax laws.
Potential environmental liabilities may arise in the future and adversely
impact our financial position.
We are subject to various federal, state, local and foreign laws and
regulations governing the use, discharge and disposal of hazardous
materials. We believe that our manufacturing facilities are in substantial
compliance with current laws and regulations. Compliance with current laws
and regulations has not had and is not expected to have a material adverse
effect on our financial condition.
Our present and past facilities have been in operation for many years,
and over that time in the course of those operations, these facilities have
used substances which are or might be considered hazardous, and we have
generated and disposed of wastes which are or might be considered
hazardous. Therefore, it is possible that environmental issues may arise in
the future which we cannot now predict.
Our indebtedness could restrict our operations, make us more vulnerable to
adverse economic conditions and make it more difficult for us to make
payments on our existing debt.
Our current and future indebtedness could have important consequences
to you. For example, it could:
o impair our ability to obtain additional financing in the future;
o reduce funds available to us for other purposes, including working
capital, capital expenditures, research and development, strategic
acquisitions and other general corporate purposes;
o restrict our ability to introduce new products or exploit business
opportunities;
o increase our vulnerability to economic downturns and competitive
pressures in the industry we operate in;
o increase our vulnerability to interest rate increases to the extent
variable-rate debt is not effectively hedged;
o limit, along with the financial and other restrictive covenants in
our indebtedness, our ability to dispose of assets or borrow
additional funds;
o make it more difficult for us to satisfy our obligations with respect
to our existing debt; or
o place us at a competitive disadvantage.
The restrictions imposed by our existing debt could negatively affect our
business and our failure to comply with these restrictions could result in
a default under our debt instruments.
Our existing debt agreements contain covenants that restrict our
ability and our subsidiaries' ability to:
o dispose of assets;
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o incur additional indebtedness;
o incur liens on property or assets;
o repay other indebtedness;
o pay dividends;
o enter into certain investments or transactions;
o repurchase or redeem capital stock;
o engage in mergers or consolidations; or
o engage in certain transactions with subsidiaries and affiliates
and otherwise restrict corporate activities.
In addition, our existing debt agreements contain financial covenants,
including:
o a total debt to EBITDA ratio;
o a net worth maintenance; and
o an interest expense coverage ratio.
Our compliance with our covenants in the future may be affected by
events beyond our control. Our breach of or failure to comply with any of
the covenants could result in a default under our debt agreements.
Our failure to effectively implement our new information management system
could adversely affect us.
On January 2, 2000, we began the implementation of a new integrated
information management system. Our goal for this new computer-based system
is to help us improve business practices, allow faster access to
information and ultimately enable us to service our customers better in the
future, among other things.
However, during January 2000 we experienced some delays in certain
shipments in connection with the transition to this new information system.
During the first quarter of 2000, we worked diligently to resolve these
transition issues and to increase shipping efforts to reduce the
system-related backlogs. During the first six months of 2000 the transition
also contributed to an increase in accounts receivable. We do not believe
that these transition issues will have a material impact on our results of
operations, liquidity or financial condition for the full year 2000.
However, we cannot assure you that we will incur no future issues with this
system.
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