ANTEC CORP, 10-K405, 1999-03-29

ANTEC CORP
10-K405, 1999-03-29
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number 0-22336

ANTEC CORPORATION
(Exact name of Registrant as specified in its charter)

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DELAWARE 36-3892082
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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5720 PEACHTREE PARKWAY, NW
NORCROSS, GA 30092
(770) 441-0007
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:

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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common stock, $0.01 par value NASDAQ National Market System
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Securities registered pursuant to Section 12(g) of the Act: None

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the shares of Registrant's common stock,
$0.01 par value, held by nonaffiliates of Registrant was approximately
$960,471,380 as of March 12, 1999.

At March 12, 1999, 36,244,203 shares of Registrant's common stock, $0.01
par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the Registrant's Proxy Statement for the 1999 Annual
Meeting of Stockholders of ANTEC Corporation are incorporated by reference into
Part III. This document consists of 55 pages. Exhibit List is on page 52.
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TABLE OF CONTENTS

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PAGE
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PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 9
Item 3. Legal Proceedings........................................... 9
Item 4. Submission of Matters to a Vote of Security Holders......... 9
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters....................................... 11
Item 6. Selected Consolidated Historical Financial Data............. 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 13
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 25
Item 8. Consolidated Financial Statements and Supplementary Data.... 25
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 25
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 49
Item 11. Executive Compensation...................................... 49
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 49
Item 13. Certain Relationships and Related Transactions.............. 49
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 50
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PART I

ITEM 1. BUSINESS

GENERAL

ANTEC Corporation ("ANTEC", or herein together with its consolidated
subsidiaries, called the "Company") is an international communications
technology company specializing in the design and engineering of hybrid
fiber/coax ("HFC") architectures and the development and distribution of
products for these broadband networks. The Company provides its customers with
products and services that enable reliable, high-speed, two-way broadband
transmission of video, telephony, and data. The Company was incorporated in
Delaware in May 1993 as a wholly owned subsidiary of Anixter Inc. ("Anixter"),
which is a subsidiary of Anixter International Inc. ("Anixter International").

The ANTEC business was originally formed as a division of Anixter in 1969
through the acquisition of a company involved in the cable industry. Commencing
in 1991, ANTEC established independent management, sales, marketing and data
processing functions and, in 1993, the establishment of ANTEC as a separate and
independent corporation was completed.

In September 1993, the Company completed an initial public offering (the
"Offering") with the sale of 5,400,000 shares of ANTEC common stock by the
Company and 3,972,500 shares of ANTEC common stock by Anixter International at
an offering price of $18 per share. ANTEC's net proceeds of the Offering were
used to reduce its outstanding indebtedness under its Credit Facility by
approximately $59.6 million and to redeem all of the ANTEC preferred stock held
by Anixter International for approximately $30.0 million. In 1998, the Company
repurchased and retired 4,376,500 shares of ANTEC common stock owned by Anixter
International for approximately $63.5 million and issued $115.0 million of
convertible subordinated notes convertible into 4,791,667 shares of ANTEC common
stock. As of December 31, 1998, Anixter International was no longer a beneficial
owner of the outstanding common stock of ANTEC.

The Company operates in one business segment, Communications, providing a
range of customers with broadband hybrid fiber/coax ("HFC") networking and
integrative systems, coupled with a full range of products and services to
support those networks and systems. This segment accounts for 100% of
consolidated sales, operating profit and identifiable assets of the Company.

ANTEC strives to develop new or improved products and technology
applications, both through its own engineering resources and by forging
strategic alliances with other companies. The Company's role in the development
of new products is to identify new product needs in the broadband communications
industry and, through its own engineering resources and its work with strategic
allies, to develop and bring new or improved products to market. ANTEC and its
strategic partners develop products and integrated systems that enhance, enable
or are part of the emerging interactive, broadband fiber optic, video, voice and
data delivery networks in an open network architecture.

ANTEC is one of the leading suppliers to the cable industry for fiber optic
products. The Company also supplies cable system operators with almost all of
the products required in a cable television system, including headend,
distribution, drop and in-home subscriber products. The Company serves its
customers through an efficient delivery network consisting of 25 sales and
stocking locations throughout the world. The Company maintains complete
inventories and is able to provide overnight, as well as staged delivery, of
product on an "as needed" basis.

ANTEC has concentrated primarily on serving the cable television industry
and, as a result, has been able to identify and respond to the needs of cable
operators making the technological shift to an open network architecture. The
Company has developed strong relationships with its customers, having served
major cable operators such as Tele-Communications, Inc. ("TCI"), Time Warner
Cable, Media One, Inc., Comcast Corporation and Cox Communications, Inc. for
many years. ANTEC intends to continue: (i) developing innovative products and
integrating technologies through strategic alliances with other companies and
through internal research and development, (ii) maintaining its strong
relationships with its existing customers, and (iii) expanding its customer base
to further include both domestic and foreign communications companies.

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The Company intends to achieve these objectives through internal growth and, as
favorable opportunities arise, through additional strategic acquisitions.

During 1994, ANTEC made several strategic acquisitions. In March 1994, the
Company acquired Electronic System Products, Inc. ("ESP"), an Atlanta-based
engineering consulting firm with core capabilities in digital design, radio
frequency ("RF") design and application specific integrated circuit development
for the broadband communications industry. ESP has continued to provide
engineering consulting services to third parties and to a large extent support
the Company's internal product development efforts. In August 1994, ANTEC
acquired Power Guard, Inc. ("Power Guard"), a leading manufacturer of power
supplies and high security enclosures for broadband communications networks.
Power Guard's products include uninterruptible, standby and non-standby power
supplies and new products being developed to meet the emerging broadband
communications network powering needs. In November 1994, ANTEC acquired all of
the outstanding stock of Keptel, Inc. ("Keptel"), a designer, manufacturer and
marketer of outside plant telecommunications and transmission equipment for both
residential and commercial use, primarily by telephone companies. This
acquisition provided the Company with new product design, development and
manufacturing capabilities and expanded the Company's product lines to include a
complete family of commercial and residential network interface devices ("NIDs")
and splice enclosures for the telephone and cable television markets. Also in
1994, the Company entered into a joint venture, Comunicaciones Broadband, with
Scientific-Atlanta, Inc. ("Scientific-Atlanta") to provide a wide range of
broadband network communications products and services in Latin America. Late in
1994, the Company purchased Scientific-Atlanta's ownership interest in the joint
venture.

During the fourth quarter of 1995, the Company and Northern Telecom, Inc.
("Nortel") formed a joint venture company, called Arris Interactive, L.L.C.
("Arris"), of which the Company currently owns 25%. Through 1998, Arris focused
on the development, manufacture and sale of products (marketed under the
Cornerstone brand name) that enable the provision of a broad range of telephone
and data services over the hybrid fiber/coax architectures typically in use
domestically and internationally for video distribution. In December 1998, the
Company and Nortel signed a memorandum of understanding whereby Nortel will
contribute its Bay Networks/LANcity cable modem and headend business to Arris.
It is anticipated that consideration will be in the form of either dilution of
the Arris investment, cash, ANTEC common stock or some combination thereof. This
transaction should close in the early part of 1999. In addition to the current
Arris product offering, the Company will also serve as the distribution channel
to the domestic cable market for the LANcity products.

In February 1997 the Company acquired TSX Corporation ("TSX") by a merger
of a wholly owned subsidiary of the Company and TSX. TSX shareholders received
one share of ANTEC common stock for each share of TSX common stock they owned.
The transaction was tax-free for TSX shareholders and was accounted for as a
pooling of interests. At December 31, 1998, TCI, as a result of its prior
ownership of TSX common stock and its purchase of an additional 500,000 shares
of ANTEC common stock in 1998 from Anixter International, was the beneficial
owner of approximately 19% of the outstanding ANTEC common stock. TCI's
beneficial ownership includes options to acquire an additional 854,341 shares.
The acquisition brought the Company electronic manufacturing capability and
expanded the Company's product lines to include amplifiers and line extenders
and enhanced its laser transmitters and receiver and optical node product lines.

In January 1998, ANTEC announced a consolidation plan being implemented
concurrently with the creation of the new President & Chief Operating Officer
organization in Atlanta. The Company is in the process of consolidating all of
its Rolling Meadows, Illinois corporate and administrative functions into either
the Norcross, Georgia or the Englewood, Colorado location to be concluded during
1999. In addition, the two principal facilities located in Atlanta will be
consolidated and international operating and administrative functions previously
located in Miami and Chicago will also be consolidated into a single facility in
Atlanta. In connection with these consolidation changes, the Company took a
charge of approximately $12.0 million in the first quarter of 1998 reflecting
the severance and real estate costs associated with these consolidations. Upon
further review of this charge during the third quarter of 1998, the charge was
reduced to $10.0 million and the Company revised previously filed financial
statements for the quarters ended March 31, 1998 and
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June 30, 1998. These restatements were made primarily to eliminate a portion of
the restructuring charge related to the impairment of equipment and leasehold
improvements directly resulting from the Company's plan to consolidate several
facilities. The estimated impairment of fixed assets, as it relates to this
plan, is now being written off over the remaining estimated useful lives of the
fixed assets. During the fourth quarter of 1998, the restructuring charge was
further reduced by $0.9 million as a result of the ongoing evaluation of the
estimated costs associated with these actions.

CABLE INDUSTRY

Cable television is a service that delivers multiple channels of video
entertainment to subscribers who pay a monthly fee for the various entertainment
services they receive. A cable system consists of three principal segments. The
first is the headend where the cable system operator receives television signals
via satellite and other sources. The headend facility organizes, processes and
retransmits those signals through the second component, the distribution
network, to the subscriber. The distribution network consists of fiber optic and
coaxial cables and associated optical and electronic equipment that take the
original signal from the headend and transmit it throughout the cable system.
The third component is the "drop" which extends from the distribution network to
the subscriber's home and connects either directly to the subscriber's
television set or to a converter box. The converter box may be addressable (a
converter which permits the delivery of premium cable services, including
pay-per-view programming, by enabling the cable operator to control the
subscriber services through the headend) or non-addressable (where premium
channels are activated or eliminated by traps installed in the drop system
outside the home).

Industry sources estimate that U.S. cable systems pass 97% of America's TV
households and in excess of 68% of those households are subscribers. As a
result, the Company expects its future domestic revenues to come primarily from
upgrading, rebuilding and maintaining existing cable systems and from new
products, rather than from constructing new systems. Construction, maintenance,
expansion and upgrade of cable systems require significant capital expenditures
by operators for the various system components, including headend equipment,
fiber optic and coaxial cable, fiber optic transmitters and receivers, radio
frequency amplifiers, various items of distribution electronics and hardware and
converters.

A major trend in the cable industry has been the continuing expansion of
channel capacity in response to the cable operators' desire to provide
subscribers with more programming selections, including pay-per-view and
additional premium programming services. In response to rapid developments in
fiber optic technology, digital compression (which allows several channels to be
transmitted within the same bandwidth that a single analog channel currently
requires), computer electronics and mass storage technology the U.S. cable
industry is upgrading the technological capabilities of their systems to market
and supply a wide array of communication services. Such upgrades enable not only
additional enhanced channel capacity for premium services, but also potential
new services such as video-on-demand (a video entertainment and education
library available in the home on a real time, essentially unscheduled basis),
informational and transactional services, internet access services, interactive
entertainment and education services, competitive access services (the by-pass
of the local telephone company to access long-distance telephone carriers) and
switched voice, data and other two-way telephone communications services.

The Company's performance is largely dependent on capital spending for the
constructing, rebuilding, maintaining or upgrading of domestic cable systems.
Approximately 76% of the Company's sales for 1998 came from sales to the
domestic cable industry. Capital spending in the cable industry has been
cyclical. The amount of capital spending and, therefore, the Company's sales and
profits, are affected by a variety of factors, including general economic
conditions, availability and cost of capital, other demands and opportunities
for capital (such as acquisitions), regulation, demand for cable services,
competition and technology, and real or perceived trends or uncertainties in
these factors. For example, rate reductions for cable service imposed by the FCC
in 1994 caused scheduled capital spending to be delayed. Also during 1995,
delays in the passage of the telecommunications bill and increased merger and
acquisition activity in the cable industry depressed capital spending.

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In the first quarter of 1996, the telecommunications bill ("Bill") was
approved by Congress and signed by the President. Overall, the Bill allows
long-distance carriers, local phone companies and cable companies to provide
similar services across their networks. The Bill gives the FCC broad powers over
this process and the technology which will be used. The Bill also greatly eases
restrictions on ownership of radio and television stations, permits the regional
telephone companies to engage in manufacturing and research and development, and
is intended to facilitate the increased availability of wireless technologies.
The impact of the Bill on the Company and the industry it serves is not known as
the FCC, state regulators and the courts must decide how the Bill will be
implemented, and the companies must decide what services they will provide in
the future. A number of these companies are reviewing various equipment and
options, although it is too early to predict what services they will provide. To
the extent that the customers of the Company or others decide to offer
additional services that utilize technologies or products produced by the
Company, the Bill could benefit the Company's business. However, to the extent
that additional services are offered by companies that are not customers, or
that utilize technologies or products that are not provided by the Company, the
Bill could harm the Company's business.

Technical developments and strategic decisions by cable system operators
and their competitors will significantly affect the Company. Cable systems are
now being bypassed by direct broadcast satellite services. New digital
technologies enable the compression of many channels into the bandwidth
currently used by one analog channel. There are new wireless technologies that
could be used to bypass existing distribution systems. The entrance of telephone
companies into the cable industry and the consolidation of cable companies and
telephone companies, as the result of the new Federal legislation discussed
above, may affect not only the level of capital spending in general, but the
portion thereof received by the Company.

In 1997, operators of cable systems continued or intensified efforts to
consolidate or simplify their systems. The resulting uncertainty caused delays
in expenditures for improvements in these systems during that year.

PRINCIPAL PRODUCTS

ANTEC has been a major supplier of products to the cable industry since
1969 and provides a broad range of products and services to cable system
operators. The Company supplies almost all of the products required in a cable
system including headend, distribution, drop and in-home subscriber products.

The Company maintains inventory of headend products that its customers
require for signal acquisition and processing. Such products include satellite
receivers for signal reception and modulators, amplifiers and equalizers that
manipulate signals for further transmission. The Company also stocks products
that encode or descramble signals for retransmission as premium channels. Sales
of the aforementioned products accounted for less than 10% of consolidated net
sales of the Company for the years ended December 31, 1998, 1997 and 1996,
respectively.

Processed signals are transmitted to the home along a distribution network
of fiber optic or coaxial cable. The Company supplies both types of cable, as
well as products capable of implementing either system design. Distribution
networks, whether fiber optic or coaxial, can be constructed either above or
below ground. In an aerial system, the transmission cable is supported by
galvanized steel cables, or "strand", which run from pole to pole. ANTEC
supplies strand, as well as other products such as bolts, braces, brackets,
hooks and anchor rods used for support and attachment. In an underground system,
buried transmission cable requires protection and is frequently encased in
conduit that the Company also supplies. Underground cable systems also require
that underground connections be waterproofed. The Company supplies both metal
and plastic pedestals that encase and protect such connections. ANTEC also
manufacturers power supplies that insert power at various points in the
distribution system. In order to meet its customers' needs for ancillary
products, the Company supplies various installation materials, tools and other
safety equipment.

ANTEC is one of the leading suppliers of fiber optic products to the cable
industry. Traditionally, cable systems were designed using coaxial cable and a
series of amplifiers throughout the distribution network. Today, almost every
substantial upgrade or rebuild replaces elements of the traditional system with
fiber optic technology. The use of a fiber optic system enables the operator to
send its signals greater distances and with
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less signal degradation than the traditional coaxial system. In addition, fiber
optic cable's capacity to transmit a wider bandwidth greater distances than
coaxial cable allows for the transmission of more channels to the subscriber's
home. The use of fiber optic technology reduces the need for overall maintenance
costs associated with active electronic components. ANTEC supplies the key
product components of a fiber optic rebuild or upgrade: fiber optic cable, laser
transmitters, laser receivers, optical nodes and distribution amplifiers. In a
fiber optic network, optical signals are transmitted throughout the distribution
system along a fiber optic cable from the headend to the node, where the signal
is received and transferred via coaxial cable to the home. Nodes provide the
interface between the fiber optic network and the coaxial distribution system.
Distribution amplifiers strengthen the signal either on its way to the node or
from the node. Laser transmitters convert incoming electronic video signals at
the headend to an optical signal that can be transmitted over the fiber optic
cable. The laser receiver is able to detect the light coming out of the cable
and convert it back into electronic signals for further transport to the home
via coaxial cable. In addition to the key components of a fiber optic network,
ANTEC sells a variety of ancillary fiber optic products. These products include
shelf assemblies in which lasers are mounted, various splicing equipment that
allows individual fibers to be connected either mechanically or by a heat fusion
process, and splice enclosure cases.

Sales of the aforementioned products related to the distribution network
and transmission of signal were 63%, 58% and 61%, respectively, of the
consolidated net sales of the Company for the years ended December 31, 1998,
1997 and 1996.

Signals travel from the distribution system to the home via the drop, which
consists primarily of coaxial cable, taps, line passives and splitters. These
products, of which the Company is a leading supplier under its Regal brand name,
primarily serve to split incoming signals for transmission to multiple homes and
televisions within a home. ANTEC's Regal taps, line passives and splitters are
capable of passing 600 megahertz ("Mhz") and one gigahertz ("Ghz") of signal
bandwidth and ANTEC is a leading supplier of such products. In addition, a new
line of Regal taps permits the passage of "power" down the distribution system,
which is essential to the providing of telephony services. Through its
acquisition of Keptel, the Company manufactures NIDs that serve as the
demarcation point where the signal from the service provider meets the wiring of
the subscribers' premise. The Company has taken additional steps to meet its
customers' needs by developing and marketing the Integrated Drop System(SM).
Sales of drop related products accounted for approximately 21%, 23% and 20% of
consolidated net sales of the Company for the years ended December 31, 1998,
1997 and 1996, respectively.

The Company also manufactures certain telecommunications products,
including T-1 repeater cases and customized wire assemblies. The Company is also
a value-added supplier of electronic connectors for industrial original
equipment manufacturers and military markets, specializing in low-volume,
hard-to-obtain connector products. These products accounted for less than 10% of
consolidated net sales of the Company for each of the years ended December 31,
1998, 1997 and 1996.

ANTEC, through ESP, provides engineering consulting services primarily for
developers of cable television products.

The Company also provides materials management services for several large
cable companies, including TCI. These services include providing procurement,
storage, shipping, tracking and reporting of product deployment, some of which
are on a "just-in-time" basis. The principle portion of the TCI materials
management services program provided by the Company ended in May 1998. Net sales
for 1998 included approximately $8.3 million of fees related to these materials
management services programs of which the TCI material management services
program accounted for approximately $3.6 million.

The Company distributes to the domestic cable market the cable telephony
products of Arris. These products enable cable operators to offer a broad range
of voice and data services over their hybrid fiber/coax networks. The Company
also provides training and technical support for these products. Sales of these
products were less than 10% of the consolidated net sales of the Company for the
years ended December 31, 1998, 1997 and 1996, respectively.

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DEVELOPMENTAL PRODUCTS

ANTEC is committed to being a technology integrator and product development
specialist in the evolving broadband communications market. The Company strives
to develop new products and technology applications, both through its own
engineering resources and by forging strategic alliances with other companies.
The Company is currently involved in the development of several new products.
There can be no assurance that the technology applications under development by
ANTEC will be successfully developed or, if successfully developed that they
will be widely used or that the Company will otherwise be able to successfully
exploit these technology applications. Furthermore, the Company's competitors
may develop similar or alternative new technology applications that, if
successful, could have a material adverse effect on ANTEC. The Company's
strategic alliances are based on business relationships and generally are not
the subject of written agreements expressly providing for the alliance to
continue for a significant period of time. The loss of a strategic partner could
have a material adverse effect on the development of new products under
development with that partner.

SALES AND MARKETING

ANTEC maintains strong customer relationships through an extensive and
experienced, worldwide sales and marketing force. The sales and marketing team
consists of (i) a senior executive sales team that calls on the highest level of
customer executives, (ii) an outside sales force organized by geographic regions
which focuses on upgrade and rebuild activity on a project by project basis, and
(iii) an inside sales group that is responsible for regular phone contact,
prompt order entry, timely and accurate delivery and effective sales
administration for the many changes frequently required in any substantial
rebuild or upgrade activity. In addition, the sales structure includes sales
engineers and technicians that can assist customers in system design and
specification and can promptly be on site to "trouble shoot" any problems as
they arise during a project. An important element of the Company's sales
strategy is to maintain optimal inventory levels of a wide variety of products
to enable prompt delivery to customers.

The Company also employs an experienced marketing and product management
team that focuses on each of the various product categories and works with the
Company's engineers and various technology partners on new products and product
improvements. This group is responsible for inventory levels and pricing,
delivery requirements, market demand and product positioning and advertising.
Product management works closely with the sales team and executive management to
assure that customers are getting the benefits of the newest technologies and
that the Company is abreast of market trends in the industry.

The Company utilizes a sophisticated computer system. The system is an
on-line, real time, fully integrated system providing the user with cost,
product location and availability, credit history, order tracking and material
management information, daily sales and profitability information, customer
profile information, product inquiry information and the capacity to permit
paperless transactions with customers.

RESEARCH AND DEVELOPMENT

ANTEC conducts an active research and development program to strengthen and
broaden its existing products and systems and to develop new products and
systems. The Company's strategy behind its research and development efforts is
to identify the products and systems which are, or are reasonably expected to
be, needed by a substantial number of customers in the Company's markets. Upon
further assessment of these products and systems and their potential
marketability, the Company then allocates its resources to areas with the
highest potential for future benefits to the Company. The Company's research and
development expenditures for the years ended December 31, 1998, 1997 and 1996
were approximately $14.4 million, $13.4 million and $11.5 million, respectively.

MANUFACTURING

The Company develops, manufactures, assembles or acquires all of its
products. The Company maintains a vertically integrated structure that ensures
quick response from the design phase through the manufacturing process. This
capability is a critical factor in shortening product development time and
permits ANTEC to
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react quickly to the needs of its customers. Manufacturing operations range from
mechanical, labor intensive assembly to sophisticated electronic surface mount
automated assembly lines. The typical production cycle for the Company's
products, from the purchasing of raw components to manufacturing and shipping
products, is three months or less.

ANTEC operates five major manufacturing facilities which produce its
products, all of which are ISO 9000 registered. The Company also utilizes
various contract manufacturers to supplement its manufacturing needs. The
Company also acquires product for resale from other domestic and foreign
manufacturers.

Plastic injection molded parts are manufactured in a 50,000 square foot
facility in El Paso, Texas. The Company produces its own molding tools in Tinton
Falls, New Jersey using state-of-the-art computer design software and machining
systems. All metal housings are manufactured in a new metal fabricating facility
also located in El Paso, Texas. This 120,000 square foot plant supplies
enclosures for various powering, demarcation and outside plant products.

The Company operates two facilities in Juarez, Mexico. The first, a 60,000
square foot mechanical assembly plant, produces various fiber optic closures and
apparatus as well as intermediate and final assemblies for powering and
demarcation products. The second, a 135,000 square foot electronic assembly
facility, manufactures the majority of all opto-electronic and RF amplifier
lines.

The Company also operates a 130,000 square foot facility in Rock Falls,
Illinois. This facility manufactures various outside plant equipment including
T-1 repeater cases and transition cable.

All of the manufacturing facilities, with the exception of the electronic
assembly facility, are leased. The remaining lease terms vary from three to
eight years. The lease rates are very competitive for the geographic areas in
which they are located and ANTEC enjoys outstanding relationships with all of
its landlords.

MATERIALS AND SUPPLIES

Approximately 42% of the Company's purchases in 1998 were from its ten
largest suppliers. The loss of a significant supplier could adversely affect the
Company's business, although management believes that any such loss is unlikely
to have a lasting impact on its business, since such products are generally
available from alternate sources.

PATENTS

The Company holds various patents with respect to certain of its products
and actively seeks to obtain patent protection for significant inventions and
developments.

BACKLOG

The Company's backlog consists of unfilled customer orders believed to be
firm and long term contracts that have not been completed. The Company's backlog
for the years ended December 31, 1998 and 1997 was approximately $37.4 million
and $44.7 million, respectively.

The Company believes that substantially all of the backlog existing at
December 31, 1998 will be shipped within the succeeding year. With respect to
long-term contracts, the Company includes in its backlog only amounts
representing orders currently released for production. The amount contained in
backlog for any contract or order may not be the total amount of the contract or
order. The amount of the Company's backlog at any given time does not reflect
expected revenues for any fiscal period.

INTERNATIONAL OPPORTUNITIES

More than 88% of the Company's 1998 sales were sales to U.S. domestic
customers. ANTEC continues to believe that international opportunities exist
despite the economic volatility within these markets. The Company maintains
sales offices in Mexico, Argentina, Brazil, the United Kingdom, Italy, Spain,
Hong Kong, China and Singapore.

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SEASONALITY

Although the Company's business is not highly seasonal, the Company's sales
in the second and third quarters have generally been the strongest as cold
weather and the holiday season negatively impact construction and purchasing
patterns in the fourth quarter and, to a lesser extent, the first quarter of the
year.

SIGNIFICANT CUSTOMERS

The cable industry is highly concentrated with the majority of U.S.
domestic subscribers being served by approximately twenty-five major domestic
multi-system operators ("MSOs"). In 1998, over 59% of the Company's revenues
were obtained from sales to the twenty-five largest MSOs. Traditionally, a
significant portion of the Company's revenue is derived from sales to TCI
aggregating $142.7 million, $46.6 million and $153.7 million for the years ended
December 31, 1998, 1997 and 1996, respectively. The October 1996 decision by TCI
to cease accepting shipments of the products the Company and its competitors
traditionally sold to it had a material adverse effect on the Company's
financial performance in 1997. According to TCI, its decision to cease accepting
products was intended to "ensure the successful deployment of our current
inventory and control unnecessary capital spending," and did not reflect any
dissatisfaction with the Company's products. TCI did not formally announce a
change in this decision, although such a change was implicit in its
announcements during the course of 1997 of new construction plans. The Company's
sales to TCI increased each quarter during 1997 from the low point in the first
quarter. This momentum continued through 1998, with total sales to TCI
increasing approximately 300% from 1997 levels. The Company is not able to
project future sales levels to TCI. In late 1998, AT&T Corporation agreed to buy
$50.0 million of Arris's telephony products from the Company under a contract
which could be expanded by AT&T to up to $900 million of these products over a
several year period. In 1999 AT&T Corporation completed its previously announced
acquisition of TCI. The consequences, if any, to the Company of this acquisition
are not yet known. A future decision by AT&T, TCI or other large cable companies
to reduce purchases could have a material adverse effect on the Company's
business in the future. In addition, the consolidation in the cable industry can
have an adverse effect on the Company's business as participants reduce capital
expenditures. In 1997 for example, the Company experienced a material slow-down
in sales due in part to the impact of trades, swaps and partnerships that
occurred among domestic cable operators throughout most of 1997.

TURNKEY CONSTRUCTION CONTRACTS

In response to TCI's request for turnkey services, the Company has formed a
joint venture to provide turnkey construction for TCI. The Company's joint
venture partner is a firm with experience in construction and project
management. As of December 31, 1998, this joint venture had been awarded the TCI
San Francisco, Seattle and Salt Lake City area system upgrades. The specific
work to be performed and the type and supplier of the equipment to be used is
specified by TCI and governed by discrete project documentation agreed upon by
TCI and the joint venture for each segment or phase as the work progresses. The
actual performance of these turnkey services has been subcontracted by the joint
venture to the Company's partner, which is a limited liability company with
limited resources. During the first quarter of 1999, TCI exercised its right to
terminate, for convenience, the Seattle contract with the joint venture and to
take over the management of the project directly. The Company is currently
working with TCI towards a smooth transition for the Seattle system upgrade
project. The joint venture was not designed as a profit-generating vehicle and
the termination of this contract is not expected to have a material adverse
effect on the Company or its product sales to TCI.

8
<PAGE> 11

COMPETITION

All aspects of the Company's business are highly competitive. The Company
competes with national, regional and local manufacturers, distributors and
wholesalers including companies larger than ANTEC, such as General Instrument
Corporation and Scientific-Atlanta. Various manufacturers who are suppliers to
the Company sell directly as well as through distributors into the cable
marketplace. In addition, because of the convergence of the cable,
telecommunications and computer industries and rapid technological development,
new competitors are entering the cable market. Many of the Company's competitors
or potential competitors are substantially larger and have greater resources
than the Company. The principal methods of competition are product
differentiation, performance and quality; price and terms; and service,
technical and administrative support.

EMPLOYEES

As of December 31, 1998, the Company had approximately 2,900 full-time
employees of which approximately 44 were members of a union. The Company
believes that its relationship with its employees is excellent. The future
success of the Company depends in part on its ability to attract and retain key
executive, marketing, engineering and sales personnel. Competition for qualified
personnel in the cable industry is intense, and the loss of certain key
personnel could have a material adverse effect on the Company. The Company has
entered into employment contracts with its key executive officers. The Company
also has a stock option program that is intended to provide substantial
incentives for its key employees to remain with the Company.

ITEM 2. PROPERTIES

The Company conducts its operations from 25 different locations; two of
which are owned and the remainder are leased. These facilities consist of sales
and administrative offices, warehouses and manufacturing facilities totaling
approximately 1,200,000 square feet. The Company's long-term leases expire at
various dates through 2005. Two of these leases expire prior to December 31,
1999, and the Company expects to renew these leases, or to obtain alternative
space, in the ordinary course of its business. The principal properties are
located in Ontario, California; Tinton Falls, New Jersey; Atlanta, Georgia;
Denver, Colorado; El Paso, Texas; Raleigh, North Carolina; Rock Falls, Illinois;
Juarez, Mexico and Chesham, England. The Company believes that its current
properties are adequate for its operations, although the Company is in the
process of consolidating its Atlanta, Georgia operations into a newly leased
facility that will also house most of the corporate functions previously located
in Rolling Meadows, Illinois.

ITEM 3. LEGAL PROCEEDINGS

The Company is not currently engaged in any litigation that it believes
would have a material adverse effect on its financial condition or results of
operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 1998, no matters were submitted to a vote of
the Company's security holders.

9
<PAGE> 12

EXECUTIVE OFFICERS OF THE COMPANY

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
John M. Egan............................... 51 Chairman, Chief Executive Officer and
Director
Robert J. Stanzione........................ 51 President, Chief Operating Officer and
Director
Lawrence A. Margolis....................... 51 Executive Vice President and Chief
Financial Officer
Gordon E. Halverson........................ 56 Executive Vice President and Chief
Executive Officer, Telewire Supply
Mark J. Scagliuso.......................... 40 Vice President and Chief Accounting Officer
James E. Knox.............................. 61 General Counsel and Assistant Secretary
Michael Graziano........................... 38 Treasurer
</TABLE>

John M. Egan joined the Company in 1973 and has been President and Chief
Executive Officer of ANTEC and its predecessors since 1980. He became Chairman
of ANTEC in 1997. During the period 1986-1990, he was also President of Anixter
Communications, a division of Anixter. Mr. Egan is on the Board of Directors of
the National Cable Television Association ("NCTA"), the Walter Kaitz Foundation
(an association seeking to help the cable industry diversify its management
workforce to include minorities), and has been actively involved with the
Society of Cable Television Engineers and Cable Labs, Inc. Mr. Egan received the
NCTA's 1990 Vanguard Award for Associates.

Robert J. Stanzione has been President, Chief Operating Officer and
Director since January 1998. From October 1995 to December 1997, he was
President and Chief Executive Officer of Arris Interactive, a joint venture
company of ANTEC and Nortel. From 1969 to 1995, he held various positions with
AT&T Corporation.

Lawrence A. Margolis has been Executive Vice President, Chief Financial
Officer and Secretary of ANTEC since 1992 and was Vice President, General
Counsel and Secretary of Anixter from 1986-1992 and General Counsel and
Secretary of Anixter from 1984-1986. Prior to 1984, he was a partner at the law
firm of Schiff Hardin & Waite.

Gordon E. Halverson has been Executive Vice President and Chief Executive
Officer, Telewire Supply since April 1997. From 1990 to April 1997, he was
Executive Vice President, Sales of ANTEC. During the period 1969-1990, he held
various executive positions with predecessors of ANTEC. He received the NCTA's
1993 Vanguard Award for Associates. Mr. Halverson is a member of the NCTA,
Society of Cable Television Engineers, Illinois Cable Association, Cable
Television Administration and Marketing Society.

Mark J. Scagliuso has been Vice President and Chief Accounting Officer of
ANTEC since June 1998 and Chief Financial Officer of the manufacturing arm of
the Company since 1994. From 1989 to 1994, he was Executive Vice President,
Chief Operating and Financial Officer and Corporate Secretary of Keptel, Inc., a
designer, manufacturer and marketer of outside plant telecommunications and
transmission equipment for both residential and commercial use, primarily by
telephone companies acquired by ANTEC in 1994. Prior to 1989 he was a Senior
Manager with the auditing and consulting practice at Ernst & Young (then Ernst &
Whinney).

James E. Knox has been General Counsel and Assistant Secretary since
February 1996. He has been Senior Vice President and Secretary of Anixter
International Inc. since 1986 and was a partner of Mayer, Brown & Platt from
1992 to 1996.

Michael Graziano has been Treasurer since June 1998 and Director of Finance
of the Company since 1997. From 1995 to 1997 he was the Chief Financial Officer
of DVMI, Inc., a manufacturer of retail fixtures and design elements. During the
period of 1990 to 1995 he was the Director of Finance for Keptel, Inc., a
designer, manufacturer and marketer of outside plant telecommunications and
transmission equipment for both residential and commercial use, primarily by
telephone companies acquired by ANTEC in 1994. Prior to 1989 he was a Senior
Auditor with Ernst & Young (then Ernst & Whinney).

10
<PAGE> 13

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

ANTEC Corporation's common stock trades on the NASDAQ National Market
System. The following table sets forth the high and low sales prices for the
Company's common stock on the NASDAQ.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1997
First Quarter............................................... $11 5/8 $ 7 1/2
Second Quarter.............................................. 14 5/16 7 3/8
Third Quarter............................................... 15 3/8 10 3/4
Fourth Quarter.............................................. 16 5/8 12
1998
First Quarter............................................... $17 15/16 $10 3/8
Second Quarter.............................................. 24 1/4 14 1/2
Third Quarter............................................... 25 12 3/4
Fourth Quarter.............................................. 21 11 1/2
1999
First Quarter (through March 12, 1999)...................... 28 1/2 18
</TABLE>

The Company has not paid dividends on its Common Stock since its inception.
The New Credit Facility, the Company's primary loan agreement at December 31,
1998, contains covenants which limit the Company's ability to pay dividends. The
Company does not anticipate paying any cash dividends in the foreseeable future,
and in 1998, such covenants precluded the Company from declaring any dividends
on its Common Stock.

As of March 12, 1999, there were approximately 484 holders of record of
ANTEC common stock.

11
<PAGE> 14

ITEM 6. SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

The selected consolidated financial data as of December 31, 1998 and 1997
and for each of the three years in the period ended December 31, 1998 set forth
below are derived from the accompanying audited consolidated financial
statements of the Company and should be read in conjunction with such statements
and related notes thereto. The selected consolidated financial data as of
December 31, 1996 and 1995 and for the year ended December 31, 1995 are derived
from audited consolidated financial statements that have not been included in
this filing. The selected consolidated financial data for 1994 is derived from
the Company's unaudited financial statements. On February 6, 1997, shareholders
of ANTEC Corporation and TSX Corporation ("TSX") approved the Plan of Merger
("Merger") dated as of October 28, 1996 among ANTEC Corporation, TSX Corporation
and TSX Acquisition Corporation, and the Merger resulting in TSX becoming a
wholly-owned subsidiary of ANTEC became effective on that date. Prior to the
combination, TSX's fiscal year ended April 30, and ANTEC's fiscal year ended
December 31. TSX's historical financial statements for the periods prior to
December 31, 1996 had to be adjusted to within 93 days of ANTEC's year-end.
Therefore, the statements of operations for the twelve months ended December 31,
1996, 1995, and 1994 represent ANTEC's fiscal period ended on those dates
combined with TSX's twelve months ended the last Saturday in October 1996, 1995,
and 1994, respectively. All intercompany sales between TSX and ANTEC were
eliminated. The historical consolidated financial information is not necessarily
indicative of the results of future operations and should be read in conjunction
with the historical consolidated financial statements of the Company and the
related notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Report.

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING DATA:
Net sales................................. $546,767 $480,078 $690,877 $738,235 $601,903
Cost of sales(2)(3)....................... 404,999 365,860 511,646 546,591 462,963
-------- -------- -------- -------- --------
Gross profit.............................. 141,768 114,218 179,231 191,644 138,940
Selling, general and administrative
expenses............................... 105,643 110,803 125,997 135,046 90,013
Amortization of goodwill.................. 4,910 4,927 4,981 4,817 3,160
Restructuring and other(1)(2)(3)(4)....... 9,119 21,550 2,109 21,681 --
-------- -------- -------- -------- --------
Operating income (loss)................... 22,096 (23,062) 46,144 30,100 45,767
Interest expense and other, net........... 8,360 5,916 7,536 10,801 5,529
Gain on sale of Canadian business(5)...... -- -- (3,835) -- --
-------- -------- -------- -------- --------
Income (loss) before income tax expense... 13,736 (28,978) 42,443 19,299 40,238
Income tax expense (benefit).............. 7,911 (7,534) 16,083 10,497 17,526
-------- -------- -------- -------- --------
Income (loss) from continuing
operations............................. 5,825 (21,444) 26,360 8,802 22,712
Discontinued operations, net of tax....... -- -- -- -- (109)
-------- -------- -------- -------- --------
Income (loss) from before extraordinary
gain, net of tax....................... 5,825 (21,444) 26,360 8,802 22,603
Extraordinary gain, net of tax............ -- -- -- -- 527
-------- -------- -------- -------- --------
Net income (loss)......................... $ 5,825 $(21,444) $ 26,360 $ 8,802 $ 23,130
======== ======== ======== ======== ========
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................... $183,605 $133,302 $185,288 $165,202 $164,752
Total assets.............................. 532,645 443,883 510,249 509,821 472,167
Long-term debt............................ 181,000 72,339 102,658 117,920 125,197
Stockholders' equity...................... 249,778 295,785 310,388 282,010 250,661
INCOME (LOSS) FROM CONTINUING OPERATIONS PER
COMMON SHARE:
Basic..................................... $ .16 $ (.55) $ .69 $ .24 $ .74
======== ======== ======== ======== ========
Diluted................................... $ .15 $ (.55) $ .67 $ .23 $ .67
======== ======== ======== ======== ========
</TABLE>

12
<PAGE> 15

<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
NET INCOME (LOSS) PER COMMON SHARE:
Basic..................................... $ .16 $ (.55) $ .69 $ .24 $ .75
======== ======== ======== ======== ========
Diluted................................... $ .15 $ (.55) $ .67 $ .23 $ .69
======== ======== ======== ======== ========
</TABLE>

- ---------------

(1) In the first quarter of 1998, in connection with the consolidation plan of
the Company's corporate and administrative functions, the Company recorded a
charge of approximately $10.0 million. Included in the charge was
approximately $7.6 million related to personnel costs and approximately $2.4
million related to lease termination and other costs. During the fourth
quarter of 1998, the restructuring charge was reduced by $0.9 million as a
result of the ongoing evaluation of the estimated costs associated with
these actions. See Note 5 of the Notes to the Consolidated Financial
Statements.
(2) In the first quarter of 1997, in connection with the Merger, the Company
recorded merger/integration costs aggregating approximately $28.0 million.
Included in the merger/integration charge was a write-off of redundant
inventories totaling approximately $6.5 million which has been reflected in
cost of sales. See Note 5 of the Notes to the Consolidated Financial
Statements.
(3) In the fourth quarter of 1996, the Company recorded a charge to affect the
downsizing of the Company's advertising insertion business. Included in the
charge was a write-down of inventories related to the advertising insertion
business of approximately $1.5 million that has been reflected in cost of
sales. See Note 5 of the Notes to the Consolidated Financial Statements.
(4) In the third quarter of 1995, the restructuring charge resulted from the
Company's decision to reorganize, streamline and consolidate its existing
businesses in order to reduce costs of operations and to refocus its product
and market development activities. See Note 5 of the Notes to the
Consolidated Financial Statements.
(5) In the third quarter of 1996, the Company sold its Canadian distribution
business to Cabletel Communications Corporation ("Cabletel"). See Note 7 of
the Notes to the Consolidated Financial Statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following should be read in conjunction with the Company's consolidated
financial statements and the related notes thereto and the description of the
Company's business included elsewhere in this Report.

INDUSTRY CONDITIONS

The Company's performance is largely dependent on capital spending for
constructing, rebuilding, maintaining or upgrading of domestic cable systems.
Approximately 76% of the Company's sales for 1998 came from sales to the
domestic cable industry. Capital spending in the cable industry has been
cyclical. The amount of capital spending and, therefore, the Company's sales and
profits, are affected by a variety of factors, including general economic
conditions, availability and cost of capital, other demands and opportunities
for capital (such as acquisitions), regulation, demand for cable services,
competition and technology, and real or perceived trends or uncertainties in
these factors. For example, rate reductions for cable service imposed by the FCC
in 1994 caused scheduled capital spending to be delayed. Also during 1995,
delays in the passage of the telecommunications bill and increased merger and
acquisition activity in the cable industry depressed capital spending.

13
<PAGE> 16

Company and the industry it serves is not known as the FCC, state regulators and
the courts must decide how the Bill will be implemented, and the companies must
decide what services they will provide in the future.

SIGNIFICANT CUSTOMERS

The cable industry is highly concentrated with the majority of U.S.
domestic subscribers being served by approximately twenty-five major domestic
multi-system operators ("MSOs"). In 1998, over 59% of the Company's revenues
were obtained from sales to the twenty-five largest MSOs. Traditionally, a
significant portion of the Company's revenue is derived from sales to TCI
aggregating $142.7 million, $46.6 million, and $153.7 million for the three
years ended December 31, 1998, 1997, and 1996, respectively. The October 1996
decision by TCI to cease accepting shipments of the products the Company and its
competitors traditionally sold to it had a material adverse effect on the
Company's financial performance in 1997. According to TCI, its decision to cease
accepting products was intended to "ensure the successful deployment of our
inventory and control unnecessary capital spending," and did not reflect any
dissatisfaction with the Company's products. TCI did not formally announce a
change in this decision, although such a change was explicit in its
announcements during the course of 1997 of new construction projects. The
Company's sales to TCI increased each quarter during 1997 from the low point in
the first quarter. The momentum continued through 1998, with total sales to TCI
increasing approximately 300% from 1997 levels. The Company is not able to
project future sales levels to TCI. In late 1998, AT&T Corporation agreed to buy
$50 million of Arris's telephony products from the Company under a contract
which could be expanded by AT&T to up to $900 million of these products over a
several year period. In 1999 AT&T Corporation completed its previously announced
acquisition of TCI. The consequences, if any, to the Company of this acquisition
are not yet known. A future decision by AT&T, TCI or other large cable companies
to reduce purchases could have a material adverse effect on the Company's
business in the future. In addition, the consolidation in the cable industry can
have an adverse effect on the Company's business as participants reduce capital
expenditures. In 1997 for example, the Company experienced a material slow-down
in sales due in part to the impact of trades, swaps and partnerships that
occurred among domestic cable operators throughout most of 1997.

TURNKEY CONSTRUCTION CONTRACTS

In response to TCI's request for turnkey services, the Company has formed a
joint venture to provide turnkey construction for TCI. The Company's joint
venture partner is a firm with experience in construction and project
management. As of December 31, 1998, this joint venture had been awarded the TCI
San Francisco, Seattle and Salt Lake City area system upgrades. The specific
work to be performed and the type and supplier of the equipment to be used is
specified by TCI and governed by discrete project documentation agreed upon by
TCI and the joint venture for each segment or phase as the work progresses. The
actual performance of these turnkey services has been subcontracted by the joint
venture to the Company's partner, which is a limited liability company with
limited resources. During the first quarter of 1999, TCI exercised its right to
terminate, for convenience, the Seattle contract with the joint venture and take
over the management of the project directly. The Company is currently working
with TCI towards a smooth transition for the Seattle system upgrade project. The
joint venture was not designed as a profit-generating vehicle and the
termination of this contract is not expected to have a material adverse effect
on the Company or its product sales to TCI.

14
<PAGE> 17

MERGER

On February 6, 1997, shareholders of ANTEC Corporation and TSX Corporation
approved the Plan of Merger ("Merger") dated as of October 28, 1996, among ANTEC
Corporation, TSX Corporation and TSX Acquisition Corporation, and the merger
became effective on that date. Under the terms of the transaction, TSX
shareholders received one share of ANTEC common stock for each share of TSX
common stock that they owned, while ANTEC shareholders continued to own their
existing shares. The transaction was tax-free for TSX shareholders and was
accounted for as a pooling of interests. As of the date of the merger, Anixter
International Inc. ("Anixter International") and TCI were the beneficial owners
of approximately 18%, each, of the outstanding ANTEC common stock. TCI's
beneficial ownership includes options to acquire an additional 854,341 shares.

The Merger provided ANTEC with a state-of-the-art manufacturing facility in
Juarez, Mexico. This facility manufactures products that the Company had
previously purchased from others or had others manufacture for it. With the
addition of TSX's primary products of optical nodes and distribution amplifiers,
ANTEC completed its hybrid fiber/coax product line offering.

ANTEC and TSX incurred employee-related and other merger/integration
charges in the first quarter of 1997 as a result of the Merger. (See Financial
Liquidity and Capital Resources.)

RESULTS OF OPERATIONS

The following table sets forth certain financial data as a percentage of
net sales:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Net sales................................................... 100.0% 100.0% 100.0%
Cost of sales............................................... 74.1 76.2 74.1
----- ----- -----
Gross profit................................................ 25.9 23.8 25.9
Selling, general and administrative expenses................ 19.3 23.1 18.2
Amortization of goodwill.................................... 0.9 1.0 0.7
Restructuring and other..................................... 1.7 4.5 0.3
----- ----- -----
Operating income (loss)..................................... 4.0 (4.8) 6.7
Interest expense and other, net............................. 1.5 1.2 1.1
Gain on sale of Canadian business........................... -- -- (0.5)
----- ----- -----
Income (loss) before income tax expense (benefit)........... 2.5 (6.0) 6.1
Income tax expense (benefit)................................ 1.4 (1.5) 2.3
----- ----- -----
Net income (loss)........................................... 1.1% (4.5)% 3.8%
===== ===== =====
</TABLE>

COMPARISON OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

Net Sales. Net sales increased approximately 13.9% to $546.8 million in
1998 as compared to $480.1 million in 1997. This increase was achieved despite a
44% decrease in international revenues to $63.5 million in 1998 from $112.8
million in 1997. Sales to TCI, the Company's largest customer, increased
approximately 300% to $142.7 million in 1998 from $46.6 million in 1997.
Traditionally, a significant portion of the Company's revenue is derived from
sales to TCI. The October 1996 decision by TCI to cease accepting shipments of
the products the Company and its competitors traditionally sold to it had a
material adverse effect on the Company's financial performance in 1997. The
Company is not able to project future sales levels to TCI. A future decision by
AT&T, TCI or other large cable companies to reduce purchases could have a
material adverse effect on the Company's business in the future. The majority of
the international shortfall is attributable to the Latin American market. Sales
to Latin America were approximately $24.2 million during 1998 as compared to
$66.3 million in 1997. Regulatory uncertainties and volatile economic conditions
have plagued the Company's efforts in Latin America, specifically Brazil, during
1998. Although resolution to some regulatory and licensing issues within Brazil
became effective in late December 1998, the devaluation of the

15
<PAGE> 18

currency in January 1999 is expected to continue to depress the market for the
Company's products. Buying power within Brazil is down dramatically because of
the devaluation and the Brazilian companies are experiencing difficulty in
purchasing and affording products. However, there are milestones that have been
committed to within the country with regard to their builds; therefore the
Company believes the prospect for business still exists in the long term.

Gross Profit. Gross profit in 1998 was $141.8 million as compared to
$114.2 million in 1997. Gross profit margins for 1998 improved 2.1 percentage
points to 25.9% versus 23.8% for the prior year. Gross profit for 1997 includes
a $6.5 million write-off of redundant inventories relating to overlapping
product lines in connection with the Merger. (See Financial Liquidity and
Capital Resources.) Excluding these charges, gross profit percentages increased
to 25.9% in 1998 from 25.1% in 1997.

Gross profit for the period ended December 31, 1998 does not reflect the
$1.1 million that was incurred to make modifications to previously sold TSX
products. These costs were charged against a reserve created in December 1996
when TSX agreed to make these modifications. (See the discussion below.) As of
December 31, 1998 this reserve stood at $0.5 million, the current estimated cost
for the completion of the modifications. It is currently estimated that these
modifications will be substantially completed by March 31, 1999 with the final
expenses related to this reserve being taken during the second quarter of 1999.

Gross profit for 1997 includes $1.0 million for the partial reversal of a
charge taken in December 1996 by TSX for modifications it had agreed to make to
products previously sold by TSX. The partial reversal of this charge in the
second quarter of 1997 was due to the agreement of the customer during the
second quarter to permit products to be modified in the Company's factory
instead of in the field as originally contemplated and the determination as the
result of testing that was completed during the second quarter that a smaller
number of units needed to be modified than originally contemplated. The initial
charge for $2.6 million was taken in December 1996 primarily because TSX agreed
at that time to replace the lids on 3,447 gate keepers, to install new covers on
58,950 minibridgers, and to replace the plugs and gaskets on 10,771 amplifiers
and line extenders for a customer who had purchased these products from TSX over
the period 1993 to 1994. The customer in November and December 1996 pressed TSX
to agree to make these modifications because of the customer's concern that
these products might prematurely fail. TSX believed that the customer's concern
was not justified and that it was not obligated to make these modifications
under its warranties covering these products. Nevertheless, in order to maintain
good relations with a major customer, TSX agreed in December 1996 at the
insistence of the customer to make these modifications. Having agreed to make
these modifications, TSX believed it was legally obligated to make the
modifications without further consideration from the customer other than its
forbearance. Although the agreement was not in writing, TSX's understanding was
that it was obligated to make the requested modifications to the customer's
reasonable satisfaction as soon as practicable at no significant cost or
inconvenience to the customer. The Company initially estimated the cost of
making the modifications by multiplying the estimated labor and material costs
for modifying each unit times the number of units then believed to be involved
based upon the number of units that had been sold to the customer. The Company
determined that it would cost approximately $2.4 million to complete the
modifications for this customer. (This estimate was subsequently revised as
described above.) It was contemplated that these modifications would begin
promptly and be completed in a few months. However because of a general hold on
construction imposed by the customer, only $8 thousand was incurred for the
modifications in 1997. It currently is contemplated that the modifications,
which were substantially completed in 1998, will be finally completed by March
31, 1999. As explained in Note 5 of the Notes to the Consolidated Financial
Statements, the 1996 charge is not reflected in the Consolidated Statement of
Operations for 1996 which includes ANTEC's twelve month period ended on December
31, 1996 and TSX's twelve month period ended on the last Saturday in October
1996. Instead the charge, together with the other results of operations for TSX
for November and December 1996, was reflected as an adjustment to retained
earnings of the combined companies as of December 31, 1996.

16
<PAGE> 19

Selling, General and Administrative ("SG&A") Expenses. SG&A expenses in
1998 were $105.6 million as compared to $110.8 million in 1997. As a percentage
of sales, SG&A was 19.3% in 1998 as compared with 23.1% in 1997. The $5.2
million or 4.7% reduction in SG&A expenses reflects the Company's continued
effort to control expenses.

Restructuring and Other. In the first quarter of 1998, in connection with
the consolidation plan of the Company's corporate and administrative functions,
the Company recorded a charge of approximately $10.0 million. Included in the
charge was approximately $7.6 million related to personnel costs and
approximately $2.4 million related to lease termination and other costs. During
the fourth quarter of 1998, the restructuring charge was reduced by $0.9 million
as a result of the ongoing evaluation of the estimated costs associated with
these actions. (See Financial Liquidity and Capital Resources.)

In the first quarter of 1997, the Company recorded merger/integration costs
aggregating approximately $28.0 million. The non-recurring charge included
investment banking, legal, accounting and contractual change of control payments
associated with the Merger; facility and operational consolidation and
reorganization costs due to the combining of various manufacturing operations;
and severance costs resulting from the elimination of positions duplicated by
the Merger and integration. Also included in the total merger/integration
charge was a write-off of redundant inventories totaling approximately $6.5
million that has been reflected in cost of sales for the year ended December 31,
1997. (See Financial Liquidity and Capital Resources.)

Interest Expense and Other, Net. Interest expense and other, net was $8.4
million in 1998 as compared to $5.9 million in 1997. This increase primarily
related to the 1998 impact of the issuance of $115.0 million of 4.5% Convertible
Subordinated Notes and the related deferred financing fees. Additionally,
interest expense in 1998 includes the write-off of the remaining deferred
financing fees related to the Company's previous credit facility paid down
during the year. (See Financial Liquidity and Capital Resources.)

Net Income (Loss). Net income in 1998 was $5.8 million as compared to a
net loss of ($21.4) million in 1997. This increase is due to the factors above.
Included in the net income (loss) for the years ended December 31, 1998 and 1997
were restructuring and other charges of approximately $9.1 million and $28.0
million, respectively. (See Financial Liquidity and Capital Resources.)

COMPARISON OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

Net Sales. Net sales were $480.1 million in 1997 as compared to $690.9
million in 1996. Of this decrease, approximately $107.1 million was attributable
to reduced sales to TCI, approximately $37.6 million was attributable to the
completion of a major Australian rebuild during 1996 and the balance was due to
the continued softness in the domestic market in general, due largely to the
impact of trades, swaps and partnerships that occurred among domestic cable
operators throughout most of 1997. The principle portion of the materials
management services program provided by the Company is scheduled to end in May
1998. 1997 net sales included approximately $8.9 million of fees related to
these materials management services programs. Traditionally, a significant
portion of the company's revenue is derived from sales to TCI, aggregating
$153.7 million and $46.6 million for the years ended December 31, 1996 and 1997,
respectively. The October 1996 decision by TCI to cease accepting shipments of
the products the Company and its competitors traditionally sold to it had a
material adverse effect on the Company's financial performance in 1997. The
Company is not able to project future sales levels to TCI. A future decision by
TCI or other large cable companies to reduce purchases could have a material
adverse effect on the Company's business in the future.

Gross Profit. Gross profit in 1997 was $114.2 million as compared to
$179.2 million in 1996. Gross profit decreased primarily due to the decrease in
net sales. 1997 includes a $6.5 million write-off of redundant inventories
relating to overlapping product lines and product development efforts in
connection with the Merger. (See Financial Liquidity and Capital Resources.)
1996 includes a $1.5 million inventory write-down related to the one-time
advertising insertion business downsizing charge. (See Financial Liquidity and
Capital Resources.) Excluding these charges, gross profit percentages decreased
to 25.1% in 1997 from 26.2% in 1996 due to the higher mix of distributed versus
manufactured product sales in 1997.
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<PAGE> 20

Gross profit for 1997 includes $1.0 million for the partial reversal of a
charge taken in December 1996 by TSX for modifications it had agreed to make to
products previously sold by TSX. The partial reversal of this charge in the
second quarter of 1997 was due to the agreement of the customer during the
second quarter to permit products to be modified in the Company's factory
instead of in the field as originally contemplated and the determination as the
result of testing that was completed during the second quarter that a smaller
number of units needed to be modified than originally contemplated. The initial
charge for $2.6 million was taken in December 1996 primarily because TSX agreed
at that time to replace the lids on 3,447 gate keepers, to install new covers on
58,950 minibridgers, and to replace the plugs and gaskets on 10,771 amplifiers
and line extenders for a customer who had purchased these products from TSX over
the period 1993 to 1994. The customer in November and December 1996 pressed TSX
to agree to make these modifications because of the customer's concern that
these products might prematurely fail. TSX believed that the customer's concern
was not justified and that it was not obligated to make these modifications
under its warranties covering these products. Nevertheless, in order to maintain
good relations with a major customer, TSX agreed in December 1996 at the
insistence of the customer to make these modifications. Having agreed to make
these modifications, TSX believed it was legally obligated to make the
modifications without further consideration from the customer other than its
forbearance. Although the agreement was not in writing, TSX's understanding was
that it was obligated to make the requested modifications to the customer's
reasonable satisfaction as soon as practicable at no significant cost or
inconvenience to the customer. The Company initially estimated the cost of
making the modifications by multiplying the estimated labor and material costs
for modifying each unit times the number of units then believed to be involved
based upon the number of units that had been sold to the customer. The Company
determined that it would cost approximately $2.4 million to complete the
modifications for this customer. (This estimate was subsequently revised as
described above.) It was contemplated that these modifications would begin
promptly and be completed in a few months. However because of a general hold on
construction imposed by the customer, only $8 thousand was incurred for the
modifications in 1997. It was contemplated, at the end of 1997, that the
modifications would be substantially completed in 1998 and finally completed by
March 31, 1999. As explained in Note 5 of the Notes to the Consolidated
Financial Statements, the 1996 charge is not reflected in the Consolidated
Statement of Operations for 1996 which includes ANTEC's twelve month period
ended on December 31, 1996 and TSX's twelve month period ended on the last
Saturday in October 1996. Instead the charge, together with the other results of
operations for TSX for November and December 1996, was reflected as an
adjustment to retained earnings of the combined companies as of December 31,
1996.

Selling, General and Administrative ("SG&A") Expenses. SG&A expenses in
1997 were $110.8 million as compared to $126.0 million in 1996. As a percentage
of sales, SG&A was 23.1% in 1997 as compared with 18.2% in 1996. The $15.2
million reduction reflects the Company's continued effort to control expenses
and the impact of lower sales volumes in 1997. However, since many SG&A items
are fixed or semi-fixed in nature and do not fluctuate with sales, SG&A
increased as a percentage of sales despite the reduction as overall sales were
substantially less in 1997.

Restructuring and Other. In the first quarter of 1997, the Company
recorded merger/integration costs aggregating approximately $28.0 million. The
merger/integration charge included investment banking, legal, accounting and
contractual change of control payments associated with the Merger; facility and
operational consolidation and reorganization costs due to the combining of
various manufacturing operations; and severance costs resulting from the
elimination of positions duplicated by the Merger and integration. Also included
in the total merger/integration charge was a write-off of redundant inventories
totaling approximately $6.5 million that has been reflected in cost of sales for
the year ended December 31, 1997. (See Financial Liquidity and Capital
Resources.)

In the fourth quarter of 1996, the Company recorded a charge of
approximately $3.6 million to affect the downsizing of the Company's advertising
insertion business. The fourth quarter charge was established to write-down
inventories, trade receivables and fixed assets related to the advertising
insertion business, and accrue for severance and other related costs. The
write-down of inventories related to the advertising insertion business of
approximately $1.5 million has been reflected in cost of sales. (See Financial
Liquidity and Capital Resources.)

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<PAGE> 21

Interest Expense and Other, Net. Interest expense and other, net was $5.9
million in 1997 as compared to $7.5 million in 1996. This decrease primarily
related to decreased debt levels resulting from lower sales volumes and
consequently lower working capital levels in 1997.

Gain on Sale of Canadian Business. In the third quarter of 1996, the
Company sold its Canadian distribution business to Cabletel Communications
Corporation ("Cabletel") for approximately $6.0 million in cash and notes, as
well as 1,450,000 and 500,000 shares of common stock in Cabletel and ARC
International Corporation ("ARC"), respectively, for an aggregate sales price of
approximately $12.4 million. The Company recorded a pre-tax gain of
approximately $3.8 million in connection with the sale. The Canadian
distribution business was immaterial to the Company's consolidated results of
operations and financial position.

Net Income (Loss). Net loss in 1997 was ($21.4) million as compared to net
income of $26.4 million in 1996. This decrease is due to the factors above.

TSX Results. Results of operations for the fiscal year ended December 31,
1996, do not include the results of operations for TSX for the two months ended
December 31, 1996, since these two months were subsequent to the results for the
twelve month period ended October 31, 1996, that were used in pooling
accounting. However, net sales for this two-month period were $8.7 million, as
compared with net sales of $14.8 million for the comparable period in the prior
year. Of this decline, approximately $5.0 million was due to the decision by TCI
to suspend acceptance of deliveries. TSX incurred an operating loss of $3.6
million for this period as compared with operating income of $2.2 million for
the comparable period for the prior year. Again, this change was primarily the
result of the TCI decision. TSX had a net loss of $2.6 million for this period
as compared with a net income of $1.6 million for the comparable period in the
prior year, again as a result of the TCI decision. In addition, TSX reported a
charge of approximately $2.6 million during this period as discussed above.

FINANCIAL LIQUIDITY AND CAPITAL RESOURCES

Reorganization/Merger Costs

In January 1998, ANTEC announced a consolidation plan being implemented
concurrently with the creation of the new President and Chief Operating Officer
organization in Atlanta. The Company is in the process of consolidating all of
its Rolling Meadows, Illinois corporate and administrative functions into either
the Norcross, Georgia or the Englewood, Colorado locations to be concluded
during 1999. In addition, the two principal facilities located in Atlanta will
be consolidated and international operating and administrative functions located
in Miami and Chicago will also be consolidated in Atlanta. In connection with
these consolidations, the Company recorded a charge of approximately $10.0
million in the first quarter of 1998. The components of this charge included
approximately $7.6 million related to personnel costs and approximately $2.4
million related to lease termination payments and other costs. The
personnel-related costs included termination costs related to the involuntary
termination of approximately 177 employees, primarily related to the finance,
management information systems, and international operations functions located
in Chicago and Miami. Terminated employees were offered separation amounts in
accordance with the Company's severance policy and were provided specific
separation dates. As of December 31, 1998, 115 of the estimated 177 employees
have been terminated. As of December 31, 1998, approximately $3.3 million of the
cash costs related to personnel costs had yet to be expended and approximately
$1.2 million of cash costs related to lease termination payments and other costs
had yet to be expended. The Company anticipates these remaining costs will be
expended in 1999. During the fourth quarter of 1998, the restructuring charge
was further reduced by $0.9 million as a result of the ongoing evaluation of the
estimated costs associated with these actions. The Company anticipates that
these consolidations will reduce annual operating costs (i.e., personnel and
facility related) however, the impact of these savings is not expected to be
realized in full until 1999.

In the first quarter of 1997, in connection with the Merger discussed
above, the Company recorded merger/integration costs aggregating approximately
$28.0 million. The components of this charge included $6.9 million related to
the investment banking, legal, accounting and contractual change of control
payments associated with the Merger; $11.2 million related to facility and
operational consolidation and reorganization

19
<PAGE> 22

due to the combining of various manufacturing operations; and $3.4 million
related to severance costs resulting from the elimination of positions
duplicated by the Merger and integration. The personnel-related costs included
charges related to the termination of approximately 200 employees primarily
resulting from the factors described above. Also included in the total
merger/integration charge was a write-off of redundant inventories totaling
approximately $6.5 million that has been reflected in cost of sales for the year
ended December 31, 1997. The costs related to the facility and operational
consolidation and reorganization were comprised of costs associated with the
shutdown of several of the Company's operating locations. These costs consisted
of lease termination payments, losses on sale and disposal of building and
equipment and other related fixed assets. All of the planned facility closings
were completed and related cash costs were expended by the end of 1997. In 1997,
the Company paid approximately $2.4 million relating to personnel-related costs
that represented the termination of approximately 175 employees. As of December
31, 1997, approximately $2.1 million of cash costs had yet to be expended which
consisted of contractual obligations resulting from the Merger and other
personnel-related costs. The Company has expended the remainder of these costs
during 1998.

During the fourth quarter of 1996, the Company recorded a charge of $3.6
million to affect the downsizing of the Company's advertising insertion
business. The fourth quarter provision included: (a) write-downs of inventories,
trade receivables and fixed assets related to the advertising insertion business
of $1.5 million, $1.1 million and $0.3 million, respectively; and (b) accruals
for severance and other related costs of $0.4 million and $0.3 million,
respectively. The write-down of inventories of $1.5 million was reflected in
cost of sales for the year ended December 31, 1996. Management determined that
the downsizing was necessary due to the poor performance of this business's
digital advertising insertion product line and the substantial resources that
would have been required to ensure the continued marketability of this product
line. At December 31, 1998, all of the cash costs had been expended.

Financing

On May 8, 1998, the Company issued $115.0 million of 4.5% Convertible
Subordinated Notes ("Notes") due May 15, 2003 (the "Offering"). The Notes are
convertible, at the option of the holder, at any time prior to the close of
business on the stated maturity date, into the Company's Common Stock at a
conversion price of $24.00 per share. The Notes are redeemable, in whole or in
part, at the Company's option, at any time on or after May 15, 2001. The net
proceeds from the Offering were used to repay all outstanding amounts under the
Company's existing credit facility, and the remainder of the net proceeds were
invested in government securities, certificates of deposits or similar
investment grade securities until June 1998 when the Company completed the
repurchase and retirement of approximately 4.4 million shares of Common Stock
owned by Anixter International for approximately $63.5 million. (See Note 9 and
Note 10 of the Notes to the Consolidated Financial Statements.)

On May 21, 1998, the Company entered into a new secured four-year credit
facility ("New Credit Facility") with a group of banks aggregating $85.0
million. The New Credit Facility permits the Company to borrow, on a revolving
basis, an amount contingent upon the level of certain eligible assets. The New
Credit Facility provides for various interest rate alternatives. The average
annual interest rate on borrowings was approximately 7.50% at December 31, 1998.
The commitment fee on unused borrowings is approximately 0.5%. The New Credit
Facility contains various restrictions and covenants, including limits on
payments to stockholders, interest coverage, and net worth tests. As of December
31, 1998, the Company is in compliance with all such covenants.

The previous Credit Facility provided for various interest rate
alternatives. The average interest rate on borrowings was approximately 6.7% at
December 31, 1997. The commitment fee on unused borrowings was approximately
1/4 of 1%. The Credit Facility contained various restrictions and covenants,
including a restriction on the incurrence of additional debt, limitations on
dividends and certain other payments to stockholders, interest coverage, and net
worth maintenance tests. The Company does not anticipate paying any cash
dividends in the foreseeable future, and in 1997, such covenants precluded the
Company from declaring any dividends on its Common Stock. The interest rates on
the Company's debt were periodically adjusted to reflect changes in overall
market interest rates and, therefore, the carrying amount approximated fair
value.
20
<PAGE> 23

The credit facility had a maturity date of 1999, and as of December 31, 1997,
the Company had approximately $23.0 million of available borrowings under the
Credit Facility. This Credit Facility was repaid with the proceeds from the
$115.0 million Notes as discussed above.

Interest Rates

As of December 31, 1998, the Company had approximately $66.0 million in
floating rate indebtedness. In June 1995 the Company entered into an interest
rate swap agreement that effectively fixes the interest rate on a portion of its
floating rate obligation. The interest rate swap agreement includes a basic
transaction for a notional amount of $50.0 million under which the Company pays
a fixed rate of 6.0175% and receives an interest rate based on the three month
London Interbank Offered Rate (LIBOR). This agreement expires in June 2000. The
bank may exercise either of two options to shorten the term of the agreement by
one year or extend the term by one year. A net settlement is calculated and paid
on a quarterly basis and is recognized as an adjustment to interest expense. The
fair value of the interest rate swap agreement was estimated using a quote from
an outside source and represents the cash requirement as if the agreement had
been settled at year-end. The fair value of the interest rate swap agreement,
which is not reflected in the financial statements, was approximately a $1.2
million liability at December 31, 1998.

Foreign Currency

A significant portion of the Company's products is manufactured or
assembled in Mexico and other countries outside the United States. The Company's
sales of its equipment into international markets have been and are expected in
the future to be an important part of the Company's business. These foreign
operations are subject to the usual risks inherent in conducting operations
abroad, including risks with respect to currency exchange rates, economic and
political destabilization, restrictive actions and taxation by foreign
governments, nationalization, the laws and policies of the United States
affecting trade, foreign investment and loans, and foreign tax laws. Even though
all of the Company's international sales have been dollar denominated, the
Company's business could be adversely affected if relevant currencies fluctuate
relative to the United States dollar.

Liquidity Table

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1998 1997 1996
------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Working capital............................................. $183.6 $133.3 $185.3
Current ratio............................................... 2.8 2.8 2.9
Cash provided by (used in) operations....................... $(29.0) $ 26.8 $ 28.1
Proceeds from issuance of common stock...................... $ 9.1 $ 3.9 $ 2.1
Capital expenditures........................................ $ 16.8 $ 12.8 $ 10.5
A/R collection period (days)................................ 82.8 66.8 56.3
Inventory turnover.......................................... 3.0 3.1 4.3
</TABLE>

Capital Expenditures

The Company's capital expenditures were $16.8 million in 1998 as compared
to $12.8 million in 1997 and $10.5 million in 1996. Except for the impact of the
Year 2000 discussed below, the Company had no significant commitments for
capital expenditures at December 31, 1998.

Cash Flow

Cash levels have decreased by approximately $2.8 million and $20.2 million
during the years ended December 31, 1998 and 1997, respectively and have
increased approximately $13.3 million during the year ended December 31, 1996.
During 1998 cash used in operating activities was $29.0 million while the
Company spent $16.8 million in capital expenditures and $6.8 million in
additional investments in/advances to its joint

21
<PAGE> 24

ventures. These cash outlays during 1998 were partially offset by positive cash
flows of $49.2 million provided through financing activities and $0.6 million
provided through other investing activities. Cash provided by operating
activities during 1997 and 1996 was $26.8 million and $28.1 million
respectively. Cash used by investing activities was $20.5 million during 1997
and $1.6 million during 1996. During the year ended 1997, $26.4 million was used
in financing activities while $13.2 million was used during the same period for
1996.

Operating activities utilized cash of $29.0 million during the year ended
December 31, 1998, which is reflective of the increased working capital levels
required by increased sales volume during the period. Most significant to this
negative cash flow were increases in accounts receivable levels of approximately
$36.2 million since year-end 1997 to $124.0 million and inventories of
approximately $39.3 million since year-end 1997 to $151.0 million.

Days sales outstanding have increased to approximately 83 days at year-end
1998 as compared to approximately 67 days in 1997. This increase was driven by
two specific factors. First is the economic volatility in the international
market and the subsequent tightening of bank credit that has resulted in ANTEC
offering extended payment terms to credit-worthy international customers. Second
is the terms of specific turnkey contracts in which payment is made subsequent
to the successful testing of the installed networks.

This increase in current inventory levels, as compared to December 31,
1997, is comprised of approximately $9.5 million in raw material, $4.2 million
in work in process, and $25.6 million in finished goods. This inventory increase
is reflective of the higher revenues and product demands during 1998. Inventory
turns have slipped slightly to 3.0 times as compared to 3.1 times recorded in
1997 and 4.3 times recorded in 1996.

An increase in accounts payable and accrued liabilities of $28.9 million
helped to offset these negative cash flows during 1998. This increase in the
level of payables and accrued expenses is indicative of the increased purchasing
necessary to meet product demand volumes. The positive cash flow provided by
operating activities during 1997 and 1996 includes the impact of expenses paid
for the TSX Merger and payments made related to the Company's reorganization,
respectively.

Cash flows used by investing activities were approximately $23.0 million
for the year ended December 31, 1998 as compared to $20.5 million and $1.6
million used during 1997 and 1996, respectively. The investments during 1998
included $16.8 million spent on capital assets and $6.8 million invested
in/advanced to the Company's joint ventures. During 1997 the Company spent $12.8
million on capital assets and invested in/advanced to its joint ventures
approximately $7.8 million. During 1996 the Company's expenditures on capital
assets was approximately $10.5 million. In addition, during 1996 ANTEC sold its
ownership in the Sumitomo joint venture and received $4.0 million in cash. Also
in 1996, the Company sold its Canadian distribution business for approximately
$6.0 million in cash and notes, as well as 1,450,000 and 500,000 shares of
common stock in Cabletel and ARC, respectively, for an aggregate price of
approximately $12.4 million.

Cash flows provided by financing activities were $49.2 million for the
twelve months ended December 31, 1998 as compared to negative cash flows of
$26.4 million and $13.2 million for 1997 and 1996, respectively. The most
significant financing activities which occurred during 1998 include the impact
of the issuance of $115.0 million of 4.5% Notes and the repurchase of
approximately 4.4 million shares of Common Stock from Anixter International for
approximately $63.5 million. (See Notes 9 and 10 of the Notes to the
Consolidated Financial Statements.) The net use of $26.4 million during 1997 and
$13.2 million during 1996 relates predominantly to the reduction of corporate
debt during those years.

Based upon current levels of operations and anticipated growth, the Company
expects that sufficient cash flow will be generated from operations so that,
combined with other financing alternatives available, including cash on hand and
bank credit facilities, the Company will be able to meet all of its debt
service, capital expenditure and working capital requirements for the
immediately foreseeable future.

NOL Carryforwards

As of December 31, 1998, the Company had net operating loss carryforwards
("NOL") for domestic and foreign income tax purposes of approximately $13.2
million and $6.9 million, respectively. The Company
22
<PAGE> 25

established a valuation allowance in accordance with the provisions of SFAS No.
109, Accounting for Income Taxes. The Company continually reviews the adequacy
of the valuation allowance and recognizes the benefits only as reassessment
indicates that it is more likely than not that the benefits will be realized. As
of December 31, 1998, the valuation allowance on deferred tax assets was
approximately $4.9 million.

The availability of tax benefits of NOL carryforwards to reduce the
Company's Federal and state income tax liability is subject to various
limitations under the Internal Revenue Code. The availability of tax benefits of
NOL carryforwards to reduce the Company's foreign income tax liability is
subject to the various tax provisions of the respective countries.

Tax benefits arising from NOL carryforwards of approximately $7.7 million
originating prior to TSX's quasi-reorganization would be credited directly to
additional paid-in capital if and when realized.

Impact of Year 2000

The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.

Based on a recent assessment, and the Company's ongoing assessment of its
computer processing systems, the Company determined that it would be required to
modify or replace significant portions of its software to improve those systems.
It is anticipated that these modifications and improvements will enable its
computer processing systems to function properly with respect to dates in the
year 2000 and thereafter. The Company presently believes that with modifications
to existing software and conversions to new software, the Year 2000 Issue will
not pose significant operational problems for its computer systems. However, if
such modifications and conversions are not made, or are not completed timely,
the Year 2000 Issue could have a material impact on the operations of the
Company.

The Company's total Year 2000 project cost and estimates to complete
include the estimated costs and time associated with the impact of third party
Year 2000 Issues based on presently available information. However, there can be
no guarantee that the systems of other companies on which the Company's systems
rely will be timely converted and would not have an adverse effect on the
Company's operations. The Company has determined that it has no exposure to
contingencies related to the Year 2000 Issue for the products it has sold.

If any of the Company's suppliers or customers do not, or if the Company
itself does not, successfully deal with the Year 2000 Issue, the Company could
experience delays in receiving or sending goods that would increase its costs
and that could cause the Company to lose business and even customers and could
subject the Company to claims for damages. Problems with the Year 2000 Issue
could also result in delays in the Company invoicing its customers or in the
Company receiving payments from them that would affect the Company's liquidity.
Problems with the Year 2000 Issue could affect the activities of the Company's
customers to the point that their demand for the Company's products is reduced.
The severity of these possible problems would depend on the nature of the
problem and how quickly it could be corrected or an alternative implemented,
which is unknown at this time. In the extreme such problems could bring the
Company to a standstill.

The Company, based on its normal interaction with its customers and
suppliers and the wide attention the Year 2000 Issue has received, believes that
its suppliers and customers will be prepared for the Year 2000 Issue. There can,
however, be no assurance that this will be so. The Company is in the process of
soliciting written assurances from its major suppliers, customers, and service
providers, however, these assurances, if given, may not be enforceable. The
Company has not yet seen any need for contingency plans for the Year 2000 Issue,
but this need will be continuously monitored as the Company acquires more
information about the preparations of its suppliers and customers. Some risks of
the Year 2000 Issue are beyond the control of the Company and its suppliers and
customers. For example no preparations or contingency plan will protect the

23
<PAGE> 26

Company from a down turn in economic activity caused by the possible ripple
effect throughout the entire economy that could be caused by problems of others
with the Year 2000 Issue.

The Company will utilize both internal and external resources to reprogram,
or replace, and test the software for the system improvements and Year 2000
modifications. The Company anticipates completing the system improvement and the
Year 2000 project within one year but not later than June 30, 1999, which is
prior to any anticipated impact on its operating systems. The total cost of the
system improvement and the Year 2000 project was originally estimated at
approximately $5.0 million. Upon the Company's current review of this estimated
cost, the expenditures related to the Year 2000 project are now anticipated to
be approximately $6.0 million and will be funded through operating cash flows.
This increase of $1.0 million to our estimated Year 2000 project cost relates
predominantly to consultant fees related to the Company's system implementation.

Of the total project cost, approximately $3.8 million is attributable to
the purchase of new software and hardware that will be capitalized. The
remaining $2.2 million, which will be expensed as incurred, is not expected to
have a material effect on the results of operations. To date, the Company has
incurred approximately $4.3 million ($3.1 million capitalized for new systems
and $1.2 million expenses as incurred) related to its system improvement and the
Year 2000 project.

The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates.
These estimates were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.

FORWARD LOOKING STATEMENTS

Any of the above statements that are not statements about historical facts
are forward looking statements. The forward looking statements, as outlined in
the Private Securities Litigation Reform Act of 1995 ("the Act"), can be
identified by the use of terms such as "may," "expect," "anticipate," "intend,"
"estimate," "believe," "continue," "could be," or similar variations or the
negative thereof. Such forward-looking statements are based on current
expectations but involve risks and uncertainties. The Company's business is
dependent upon general economic conditions as well as competitive,
technological, and regulatory developments and trends specific to the Company's
industry and customers. These conditions and events could be substantially
different than believed or expected and these differences may cause actual
results to vary materially from the forward-looking statements made or the
results which could be expected to accompany such statements. Specific factors,
which could cause such material differences, include the following:

- design or manufacturing defects in the Company's products which could
curtail sales and subject the Company to substantial costs for removal,
replacement and reinstallation of such products;

- manufacturing or product development problems that the Company does not
anticipate because of the Company's relative experience with these
activities;

- an inability to absorb or adjust costs in response to lower than
anticipated sales volumes;

- unanticipated costs or inefficiencies from the ongoing consolidation of
certain activities;

- loss of key management, sales or technical employees;

- decisions, by the Company's larger customers, to cancel contracts or
orders as they are entitled to do or not enter into new contracts or
orders with the Company because of dissatisfaction, technological or
competitive changes, changes in control or other reasons;

- and the Company's inability, as a result of the Company's relative
experience, to deliver construction services within anticipated costs and
time frames that could cause loss of business, operating losses and
damage claims.

24
<PAGE> 27

The above list is representative of the factors which could affect the Company's
forward looking statements and is not intended as an all encompassing list of
such factors. In providing forward looking statements, the Company is not
undertaking any obligation to update publicly or otherwise these statements,
whether as a result of new information, future events or otherwise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion of the Company's risk-management activities
includes "forward-looking statements" that involve risks and uncertainties.
Actual results could differ materially from those projected in the
forward-looking statements.

ANTEC is exposed to various market risks, including interest rates and
foreign currency rates. Changes in these rates may adversely affect its results
of operations and financial condition. To manage the volatility relating to
these typical business exposures, ANTEC may enter into various derivative
transactions, when appropriate. ANTEC does not hold or issue derivative
instruments for trading or other speculative purposes.

ANTEC uses an interest rate swap agreement, with large creditworthy
financial institutions, to manage its exposure to interest rate changes. The
swap involves the exchange of fixed and variable interest rate payments without
exchanging the notional principal amount. Payments or receipts on the agreement
are recorded as adjustments to interest expense. At December 31, 1998 the
Company had an outstanding interest rate swap agreement denominated in dollars,
maturing in 2001, with an aggregate notional principal amount of $50.0 million.
Under this agreement the Company receives a floating rate marked to LIBOR and
pays a fixed interest rate. The swap effectively changes the Company's payment
of interest on $50.0 million of variable rate debt to fixed rate debt.

The fair value of the interest rate swap agreement represents the estimated
receipts or payments that would be made to terminate the agreement. At December
31, 1998, the Company would have paid $1.2 million to terminate the agreement. A
1% decrease in short-term borrowing rates would increase the amount paid to
terminate the agreement by approximately $1.3 million. See Notes 2 and 9 of
Notes to the Consolidated Financial Statements for a discussion of the
accounting policies for interest rate swaps and financial instruments,
respectively.

The Company is exposed to foreign currency exchange rate risk as a result
of sales of its products in various foreign counties and manufacturing
operations conducted in Juarez, Mexico. In order to minimize the risks
associated with foreign currency fluctuations most sales contracts are issued in
U.S. dollars. The Company has previously used foreign currency contracts to
hedge the risks associated from foreign currency fluctuations for significant
sales contracts. The Company constantly monitors the exchange rate between the
U.S. dollar and Mexican peso to determine if any adverse exposure exists
relative to its costs of manufacturing. As a result of current market conditions
there are currently no material contracts denominated in foreign currencies.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The report of independent auditors and consolidated financial statements
and notes thereto for the Company are included in this Report and are listed in
the Index to Consolidated Financial Statements which appears on page 26.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

25
<PAGE> 28

ANTEC CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... 27
Consolidated Balance Sheets at December 31, 1998 and
1997...................................................... 28
Consolidated Statements of Operations for the years ended
December 31, 1998, 1997 and 1996.......................... 29
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.......................... 30
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1998, 1997 and 1996.............. 31
Notes to the Consolidated Financial Statements.............. 32
</TABLE>

26
<PAGE> 29

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
ANTEC Corporation

We have audited the accompanying consolidated balance sheets of ANTEC
Corporation as of December 31, 1998 and 1997 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1998. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of ANTEC's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits. We did not audit the 1996 financial statements of
TSX Corporation, which statements reflect approximately 13.0% of consolidated
sales for the year ended December 31, 1996. Those statements were audited by
other auditors whose report has been furnished to us, and our opinion, insofar
as it relates to data included for TSX Corporation for 1996, is based solely on
the report of other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial presentation. We believe
that our audits and the report of other auditors provide a reasonable basis for
our opinion.

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ANTEC Corporation at
December 31, 1998 and 1997, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
February 10, 1999

27
<PAGE> 30

ANTEC CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,436 $ 7,244
Accounts receivable (net of allowances for doubtful
accounts of $4,609 in 1998 and $4,289 in 1997)......... 123,959 87,800
Inventories............................................... 150,988 111,698
Other current assets...................................... 6,089 2,319
-------- --------
Total current assets.............................. 285,472 209,061

Property, plant and equipment, net.......................... 41,612 36,108
Goodwill (net of accumulated amortization of $41,695 in 1998
and $36,785 in 1997)...................................... 154,782 159,692
Deferred income taxes, net.................................. 22,591 19,281
Other assets................................................ 28,188 19,741
-------- --------
$532,645 $443,883
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 57,383 $ 38,404
Accrued compensation, benefits and related taxes.......... 19,804 15,958
Other accrued liabilities................................. 24,680 21,397
-------- --------
Total current liabilities......................... 101,867 75,759

Long-term debt.............................................. 181,000 72,339
-------- --------
Total liabilities................................. 282,867 148,098

Stockholders' equity:
Preferred stock, par value $1.00 per share, 5 million
shares authorized; none issued and outstanding......... -- --
Common stock, par value $0.01 per share, 50 million shares
authorized; 35.8 million and 39.3 million shares issued
and outstanding in 1998 and 1997, respectively......... 358 393
Capital in excess of par value............................ 209,193 261,081
Retained earnings......................................... 40,190 34,365
Cumulative translation adjustments........................ 37 (54)
-------- --------
Total stockholders' equity........................ 249,778 295,785
-------- --------
$532,645 $443,883
======== ========
</TABLE>

See accompanying notes to the consolidated financial statements.

28
<PAGE> 31

ANTEC CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales.................................................. $546,767 $480,078 $690,877
Cost of sales.............................................. 404,999 365,860 511,646
-------- -------- --------
Gross profit............................................. 141,768 114,218 179,231
Operating expenses:
Selling, general and administrative expenses............. 105,643 110,803 125,997
Amortization of goodwill................................. 4,910 4,927 4,981
Restructuring and other charges.......................... 9,119 21,550 2,109
-------- -------- --------
119,672 137,280 133,087
-------- -------- --------
Operating income (loss).................................... 22,096 (23,062) 46,144
Other expense (income):
Interest expense and other, net.......................... 8,360 5,916 7,536
Gain on sale of Canadian business........................ -- -- (3,835)
-------- -------- --------
Income (loss) before income tax expense (benefit).......... 13,736 (28,978) 42,443
Income tax expense (benefit)............................... 7,911 (7,534) 16,083
-------- -------- --------
Net income (loss).......................................... $ 5,825 $(21,444) $ 26,360
======== ======== ========
Net income (loss) per common share:
Basic.................................................... $ .16 $ (.55) $ .69
======== ======== ========
Diluted.................................................. $ .15 $ (.55) $ .67
======== ======== ========
Weighted average common shares:
Basic.................................................... 37,195 38,751 38,286
======== ======== ========
Diluted.................................................. 38,751 38,751 39,523
======== ======== ========
</TABLE>

See accompanying notes to the consolidated financial statements.

29
<PAGE> 32

ANTEC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
--------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating activities:
Net income (loss)......................................... $ 5,825 $(21,444) $ 26,360
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization.......................... 16,163 15,234 14,726
Deferred income taxes.................................. (3,310) (7,750) 3,289
Gain on sale of Canadian business...................... -- -- (3,835)
Changes in operating assets and liabilities, net of
effects of acquisitions:
(Increase) decrease in accounts receivable........... (36,159) 18,802 8,409
(Increase) decrease in inventories................... (39,290) 27,087 (6,114)
Increase (decrease) in accounts payable and accrued
liabilities....................................... 28,904 (6,868) (16,596)
(Increase) decrease in other, net.................... (1,147) 1,748 1,850
--------- -------- ---------
Net cash (used in) provided by operating activities......... (29,014) 26,809 28,089

Investing activities:
Purchases of property, plant and equipment................ (16,757) (12,841) (10,502)
Sale of Canadian business................................. -- -- 3,000
Investments in/Advances to joint ventures................. (6,800) (7,780) 5,590
Other..................................................... 584 72 345
--------- -------- ---------
Net cash (used in) investing activities..................... (22,973) (20,549) (1,567)
--------- -------- ---------

Net cash (used) provided before financing activities........ (51,987) 6,260 26,522

Financing activities:
Net borrowings under credit facilities.................... 151,000 119,500 182,984
Net reductions in borrowings under credit facilities...... (157,339) (149,819) (198,262)
Issuance of 4.5% convertible subordinated notes........... 115,000 -- --
Purchase and retirement of common stock................... (63,459) -- --
Deferred financing costs paid............................. (5,142) -- --
Proceeds from issuance of common stock.................... 9,119 3,905 2,079
--------- -------- ---------
Net cash provided by (used in) financing activities......... 49,179 (26,414) (13,199)

Net (decrease) increase in cash and cash equivalents........ (2,808) (20,154) 13,323
Cash and cash equivalents at beginning of year.............. 7,244 27,398 14,075
--------- -------- ---------
Cash and cash equivalents at end of year.................... $ 4,436 $ 7,244 $ 27,398
========= ======== =========

Supplemental cash flow information:
Interest paid during the year............................. $ 7,119 $ 6,277 $ 7,875
========= ======== =========
Income taxes paid during the year......................... $ 9,384 $ 948 $ 18,014
========= ======== =========
</TABLE>

See accompanying notes to the consolidated financial statements.

30
<PAGE> 33

ANTEC CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------------------------------------
CAPITAL IN CUMULATIVE
COMMON EXCESS OF RETAINED TRANSLATION
STOCK PAR VALUE EARNINGS ADJUSTMENTS TOTAL
-------- ---------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995.................. $ 382 $249,931 $32,221 $(413) $282,121
Comprehensive income:
Net income............................. -- -- 26,360 -- 26,360
Translation adjustment................. -- -- -- 228 228
--------
Comprehensive income................... 26,588
Issuance of common stock and other..... 2 2,076 -- -- 2,078
Charge in lieu of tax.................. -- 1,904 -- -- 1,904
Tax benefit related to exercise of
stock options/warrants............... -- 270 -- -- 270
Reporting period adjustment (See Note
12).................................. -- -- (2,573) -- (2,573)
-------- -------- ------- ----- --------
Balance, December 31, 1996.................. 384 254,181 56,008 (185) 310,388
Comprehensive income:
Net loss............................... -- -- (21,444) -- (21,444)
Translation adjustment................. -- -- -- 131 131
--------
Comprehensive income................... (21,313)
Issuance of common stock and other..... 9 3,896 (199) -- 3,706
Tax benefit related to exercise of
stock options/warrants............... -- 3,004 -- -- 3,004
-------- -------- ------- ----- --------
Balance, December 31, 1997.................. 393 261,081 34,365 (54) 295,785
Comprehensive income:
Net income............................. -- -- 5,825 -- 5,825
Translation adjustment................. -- -- -- 91 91
--------
Comprehensive income................... 5,916
Issuance of common stock and other..... 8 9,111 -- -- 9,119
Tax benefit related to exercise of
stock options/warrants............... -- 2,417 -- -- 2,417
Repurchase of common stock............. (43) (63,416) -- -- (63,459)
-------- -------- ------- ----- --------
Balance, December 31, 1998.................. $ 358 $209,193 $40,190 $ 37 $249,778
======== ======== ======= ===== ========
</TABLE>

See accompanying notes to the consolidated financial statements.

31
<PAGE> 34

ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

ANTEC Corporation ("ANTEC," or herein together with its consolidated
subsidiaries called the "Company") is an international communications technology
company, headquartered in Atlanta, Georgia, with a major office in Englewood,
Colorado. ANTEC specializes in the design and engineering of hybrid fiber/coax
("HFC") architectures and the development and distribution of products for these
broadband networks. The Company provides its customers with products and
services that enable reliable, high-speed, two- way broadband transmission of
video, telephony, and data.

The Company operates in one business segment, Communications, providing a
range of customers with hybrid fiber/coax ("HFC") networking and integrative
systems, coupled with a full range of products and services to support those
networks and systems. This segment accounts for 100% of consolidated sales,
operating profit and identifiable assets of the Company. ANTEC is a leading
developer, manufacturer and supplier of optical transmission, construction,
rebuild and maintenance equipment for the broadband communications industry.
ANTEC provides a broad range of products and services to cable system operators.
ANTEC supplies almost all of the products required in a cable TV system,
including headend, distribution, drop and in-home subscriber products.

As of December 31, 1998, Tele-Communications, Inc. ("TCI") was the
beneficial owner of approximately 19% of the outstanding ANTEC common stock.
TCI's beneficial ownership includes options to acquire an additional 854,341
shares. A significant portion of the Company's revenue is derived from sales to
TCI aggregating $142.7 million, $46.6 million and $153.7 million for the years
ended December 31, 1998, 1997 and 1996, respectively. The Company had accounts
receivable from TCI of approximately $25.0 million and $9.2 million at December
31, 1998 and 1997, respectively.

Prior to its initial public offering in 1993, the ANTEC business was
operated as several divisions or business units of Anixter Inc. ("Anixter"), a
subsidiary of Anixter International.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include the accounts of the Company
after elimination of intercompany transactions.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents. The carrying amount reported in the
consolidated balance sheets for cash and cash equivalents approximates fair
value.

INVENTORIES

Inventories are stated at the lower of average, approximating first-in,
first-out, cost or market.

32
<PAGE> 35
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

EQUITY INVESTMENTS

The Company owns a 50% interest in Tanco L.L.C., a joint venture accounted
for under the equity method. Tanco provides turnkey construction or upgrading of
broadband distribution services. The carrying value of this interest is
approximately $3.1 million and $3.0 million at December 31, 1998 and 1997,
respectively. Net sales to Tanco were approximately $29.0 million and $0 for the
years ended December 31, 1998 and 1997, respectively. The Company had accounts
receivable from Tanco of approximately $19.9 million and $0 at December 31, 1998
and 1997, respectively.

The Company also owns a 25% interest in Arris Interactive, L.L.C.
("Arris"), a joint venture accounted for under the equity method. Arris is
focused on the development, manufacture and sale of products that enable the
provision of a broad range of telephone and data services over hybrid fiber/coax
architectures typically in use for video distribution. The carrying value of
this interest was $0 at December 31, 1998 and 1997, respectively. Purchases from
Arris were approximately $31.3 million, $25.2 million, and $0 for the years
ended December 31, 1998, 1997, and 1996, respectively. The Company had accounts
payable to Arris of approximately $4.0 million and $0.9 million, and net
accounts receivable from Arris of approximately $0.2 million and $0.5 million
for the years ended December 31, 1998 and 1997, respectively. The Company also
holds a participation in a note receivable from Arris of approximately $10.7
million and $5.7 million for the years ended December 31, 1998 and 1997,
respectively. In December 1998, the Company and Nortel signed a memorandum of
understanding whereby Nortel will contribute its Bay Networks/LANcity cable
modem and headend business to Arris. It is anticipated that consideration will
be in the form of either dilution of the Arris investment, cash, ANTEC common
stock or some combination thereof. This transaction should close in the early
part of 1999.

REVENUE RECOGNITION

Sales and related cost of sales are recognized as products are shipped and
services are rendered.

DEPRECIATION

The Company provides for depreciation of plant and equipment principally on
the straight-line basis over the estimated useful lives of 25 to 40 years for
buildings and improvements, 3 to 10 years for machinery and equipment, and the
term of the lease for leasehold improvements.

GOODWILL AND LONG-LIVED ASSETS

Goodwill relates to the excess of cost over net assets resulting
principally from the acquisition of Anixter by Anixter International in 1986
which has been allocated to the Company, and from subsequent acquisitions by
ANTEC and by Anixter of businesses now owned by ANTEC. Goodwill resulting from
the acquisition of Anixter by Anixter International was allocated to the Company
based on the Company's proportionate share of total operating earnings of
Anixter for the period subsequent to the acquisition by Anixter International.
The Company assesses the recoverability of goodwill and other long-lived assets
whenever events or changes in circumstances indicate that expected future
undiscounted cash flows might not be sufficient to support the carrying amount
of an asset. If expected future undiscounted cash flows from operations are less
than their carrying amounts, an asset is determined to be impaired, and a loss
is recorded for the amount by which the carrying value of the asset exceeds its
fair value. Fair value is based on discounting estimated future cash flows or
using other valuation methods as appropriate. Non-cash amortization expense is
being recognized as a result of amortization of goodwill on a straight-line
basis over a period of 40 years from the respective dates of acquisition.

33
<PAGE> 36
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ADVERTISING AND SALES PROMOTION

Advertising and sales promotion costs are expensed as incurred. Advertising
expense was approximately $2.1 million, $2.2 million and $2.5 million for the
years ended December 31, 1998, 1997 and 1996, respectively.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred. The Company's
research and development expenditures for the years ended December 31, 1998,
1997 and 1996 were approximately $14.4 million, $13.4 million and $11.5 million,
respectively.

WARRANTY

The Company provides, by a current charge to income in the period in which
the related revenue is recognized, an amount it estimates will be needed to
cover future warranty obligations.

INCOME TAXES

The Company uses the liability method of accounting for income taxes which
requires recognition of temporary differences between financial statement and
income tax basis of assets and liabilities, measured by enacted tax rates.

FOREIGN CURRENCY

The financial position and operating results of the Company's foreign
operations are consolidated using the local currency as the functional currency.
All balance sheet accounts of foreign subsidiaries are translated at the current
exchange rate at the end of the accounting period. Income statement items are
translated at average currency exchange rates. The resulting translation
adjustment is recorded as a separate component of stockholders' equity.

STOCK-BASED COMPENSATION

The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly, does
not recognize compensation expense for the stock option grants. As required by
FASB Statement No. 123, Accounting for Stock-Based Compensation, the Company
presents supplemental information disclosing pro forma net income (loss) and net
income (loss) per common share as if the Company had recognized compensation
expense on stock options granted subsequent to December 31, 1994 under the fair
value method of that statement (see Note 15 of Notes to the Consolidated
Financial Statements).

INTEREST RATE AGREEMENTS

As of December 31, 1998, the Company had approximately $66.0 million in
floating rate indebtedness. In June 1995 the Company entered into an interest
rate swap agreement that effectively fixes the interest rate on a portion of its
floating rate obligation. The interest rate swap agreement includes a basic
transaction for a notional amount of $50.0 million under which the Company pays
a fixed rate of 6.0175% and receives an interest rate based on the three-month
London Interbank Offered Rate (LIBOR). The agreement expires in June 2000. The
bank may exercise either of two options to shorten the term of the agreement by
one year or extend the term by one year. A net settlement is calculated and paid
on a quarterly basis and is recognized as an adjustment to interest expense. The
fair value of the interest rate swap agreement was estimated using a quote from
an outside source and represents the cash requirement as if the agreement had
been settled at year-
34
<PAGE> 37
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

end. The fair value of the interest rate swap agreement, which is not reflected
in the financial statements, was approximately a $1.2 million liability at
December 31, 1998.

BASIS OF PRESENTATION

Certain prior year amounts have been reclassified to conform to the 1998
financial statement presentation.

CONCENTRATIONS OF CREDIT

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and accounts receivable. The Company places its temporary cash investments with
high credit quality financial instruments in accordance with debt agreements.
Concentrations with respect to accounts receivable are limited as the Company
sells primarily to large, well established companies which significantly
diminishes the risk of loss from extension of credit. The Company closely
monitors extensions of credit and, where necessary, requires letters of credit
or cash on delivery terms.

The Company is exposed to credit risk to the extent of potential
nonperformance by the counterparties to the interest rate swap agreement. In the
event of nonperformance by the counterparties to the Company's interest rate
swap agreement, the effective interest rate on the underlying transaction would
revert to the respective contractual rate. The counterparties to the Company's
interest rate swap agreement are major financial institutions with an investment
grade rating, thus the Company believes the risk of incurring losses due to
credit risk is remote.

Exposure to market risk on financial instrument results from fluctuations
in interest rates during the period in which the contract is outstanding. The
market-to-market valuations of the interest rate swap agreement and of
associated underlying exposures are closely monitored. Overall financial
strategies and the effect of using a hedge is reviewed periodically.

NOTE 3. RESTATEMENT

The Company has revised previously filed financial statements for the
quarters ended March 31, 1998 and June 30, 1998. These restatements have been
made primarily to eliminate a portion of a restructuring charge, included in the
quarter ended March 31, 1998 results, relating to the impairment of equipment
and leasehold improvements directly resulting from the Company's plan to
consolidate several facilities. The estimated impairment of fixed assets, as it
relates to this plan, is now being written off over the remaining estimated
useful lives of the fixed assets. These changes are reflected in the
twelve-month period ended December 31, 1998. The amended Form 10-Qs for the
periods ended March 31, 1998 and June 30, 1998 have been filed.

The effect of these adjustments on the quarter ended March 31, 1998 was an
increase in net income of $0.9 million from a loss of $(5.5) million to a loss
of $(4.6) million or an increase of $.02 per common share. The effect of these
adjustments in the quarter ended June 30, 1998 decreased net income by $0.3
million from $4.0 million to approximately $3.7 million or a decrease of
approximately $.01 per share.

NOTE 4. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In the first quarter of 1998, the Company adopted FASB Statement No. 130,
Reporting of Comprehensive Income, which establishes standards for the financial
presentation of comprehensive income and its components. Adoption of FASB
Statement No. 130 had no effect on the Company's financial position or operating
results.

In June 1997, the Financial Accounting Standards Board issued FASB
Statement No. 131, Disclosures about Segments of an Enterprise and Related
Information, which establishes standards for the way that public

35
<PAGE> 38
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

business enterprises report information about operating segments and related
disclosures about products and services, geographic areas, and major customers.
Statement 131 is effective for financial statements for fiscal years beginning
after December 15, 1997, and therefore the Company has adopted the new
requirements retroactively in its 1998 annual financial statements. The Company
evaluates and manages the business on a consolidated basis. The adoption of FASB
Statement No. 131 did not effect results of operations or financial position,
but did effect the disclosure of segment information. (See Note 1 and Note 17 of
Notes to the Consolidated Financial Statements.)

Effective December 31, 1998, the Company adopted FASB Statement No. 132,
Employers' Disclosures about Pensions and Other Postretirement Benefits. The
provisions of FASB Statement No. 132 revise employers' disclosures about
pensions and other postretirement benefit plans. It does not change the
measurement or recognition of these plans. It standardizes the disclosure
requirements for pensions and postretirement benefits to the extent practicable.
(See Note 16 of Notes to the Consolidated Financial Statements.)

In June 1998, the Financial Accounting Standards Board issued FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
FASB Statement No. 133 is effective for fiscal years beginning June 15, 1999.
The Statement will require the Company to disclose certain information regarding
derivative financial instruments. The Company does not anticipate that the
adoption of FASB Statement No. 133 will have a significant effect on its results
of operations or financial position.

NOTE 5. RESTRUCTURING AND OTHER CHARGES

In January 1998, ANTEC announced a consolidation plan being implemented
concurrently with the creation of the new President and Chief Operating Officer
organization in Atlanta. The Company will consolidate all of its Rolling
Meadows, Illinois corporate and administrative functions into either the
Atlanta, Georgia or the Englewood, Colorado locations during 1998 and 1999. It
is also anticipated as part of this plan that the two principal facilities
located in Atlanta will be consolidated and that certain international operating
and administrative functions located in Miami and Chicago will also be
consolidated in Atlanta. In connection with these consolidations, the Company
recorded a charge of approximately $10.0 million in the first quarter of 1998.
The components of the restructuring charge included approximately $7.6 million
related to personnel costs; and approximately $2.4 million related to lease
termination payments and other costs. The personnel-related costs included
termination costs related to the involuntary termination of approximately 177
employees, primarily related to the finance, management information systems, and
international operations functions located in Chicago and Miami. Terminated
employees were offered separation amounts in accordance with the Company's
severance policy and were provided specific separation dates. As of December 31,
1998, 115 of the estimated 177 employees have been terminated. As of December
31, 1998, approximately $3.3 million of the cash costs related to personnel
costs had yet to be expended and approximately $1.2 million of cash costs
related to lease termination payments and other costs had yet to be expended.
The Company anticipates these costs will be expended in 1999. As of December 31,
1998, the restructuring charge was reduced by $0.9 million as a result of the
ongoing evaluation of the estimated costs associated with these actions. The
Company anticipates that these consolidations will reduce annual operating costs
(i.e., personnel and facility related), however, the impact of these savings is
not expected to be realized in full until 1999.

In the first quarter of 1997, in connection with the Merger discussed in
Note 12, the Company recorded merger/integration costs aggregating approximately
$28.0 million. The components of the merger/integration charge included $6.9
million related to the investment banking, legal, accounting and contractual
change of control payments associated with the Merger; $11.2 million related to
facility and operational consolidation and reorganization due to the combining
of various manufacturing operations; and $3.4 million related to severance costs
resulting from the elimination of positions duplicated by the Merger and
integration. The

36
<PAGE> 39
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

personnel-related costs included charges related to the termination of
approximately 200 employees primarily resulting from the factors described
above. Also included in the total merger/integration charge was a write-off of
redundant inventories totaling approximately $6.5 million that has been
reflected in cost of sales for the year ended December 31, 1997. The costs
related to the facility and operational consolidation and reorganization were
comprised of costs associated with the shutdown of several of the Company's
operating locations. These costs consisted of lease termination payments, losses
on sale and disposal of building and equipment and other related fixed assets.
All of the planned facility closings were completed and related cash costs were
expended by the end of 1997. In 1997, the Company paid approximately $2.4
million relating to personnel-related costs that represented the termination of
approximately 175 employees. As of December 31, 1998, all of the cash costs
related to the contractual obligations resulting from the Merger and other
personnel-related costs had been expended.

During the fourth quarter of 1996, the Company recorded a charge of $3.6
million to affect the downsizing of the Company's advertising insertion
business. The fourth quarter provision included: (a) write-downs of inventories,
trade receivables and fixed assets related to the advertising insertion business
of $1.5 million, $1.1 million and $0.3 million, respectively; (b) accruals for
severance and other related costs of $0.4 million and $0.3 million,
respectively. The write-down of inventories of $1.5 million was reflected in
cost of sales for the year ended December 31, 1996. As of December 31, 1998, all
of the cash costs had been expended.

NOTE 6. INVENTORIES

Inventories are stated at the lower of average, approximating first-in,
first-out, cost or market. The components of inventory are as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Raw material................................................ $ 37,437 $ 27,931
Work in process............................................. 10,496 6,343
Finished goods.............................................. 103,055 77,424
-------- --------
Total inventories................................. $150,988 $111,698
======== ========
</TABLE>

NOTE 7. SALE OF CANADIAN BUSINESS

In the third quarter of 1996, the Company sold its Canadian distribution
business to Cabletel Communications Corp. ("Cabletel") for approximately $6.0
million in cash and notes, as well as 1,450,000 and 500,000 shares of common
stock in Cabletel and ARC International Corporation, respectively, for an
aggregate sales price of approximately $12.4 million. The Company recorded a
pre-tax gain of approximately $3.8 million in connection with the sale. The
Canadian distribution business was immaterial to the Company's consolidated
results of operations and financial position.

37
<PAGE> 40
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, at cost, consisted of the following (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Land........................................................ $ 2,549 $ 3,094
Buildings and improvements.................................. 14,548 13,641
Machinery and equipment..................................... 60,448 51,806
-------- --------
77,545 68,541
Less: Accumulated depreciation.............................. (35,933) (32,433)
-------- --------
$ 41,612 $ 36,108
======== ========
</TABLE>

NOTE 9. LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1998 1997
-------- -------
<S> <C> <C>
Revolving Credit Facility................................... $ 66,000 $70,000
4.5% Convertible Subordinated Notes......................... 115,000 --
Other....................................................... -- 2,339
-------- -------
$181,000 $72,339
======== =======
</TABLE>

On May 8, 1998, the Company issued $115.0 million of 4.5% Convertible
Subordinated Notes ("Notes") due May 15, 2003 (the "Offering"). The Notes are
convertible, at the option of the holder, at any time prior to the close of
business on the stated maturity date, into the Company's common stock ("Common
Stock") at a conversion price of $24.00 per share. The Notes are redeemable, in
whole or in part, at the Company's option, at any time on or after May 15, 2001.
The net proceeds from the Offering were used to repay all outstanding amounts
under the Company's existing credit facility, and the remainder of the net
proceeds were invested in government securities, certificates of deposits or
similar investment grade securities until June 1998 when the Company completed
the repurchase and retirement of approximately 4.4 million shares of Common
Stock owned by Anixter International Inc. for approximately $63.5 million. (See
Note 10 of the Notes to the Consolidated Financial Statements.)

On May 21, 1998, the Company entered into a new secured four-year credit
facility ("New Credit Facility") with a group of banks aggregating $85.0
million. The New Credit Facility permits the Company to borrow, on a revolving
basis, an amount contingent upon the level of certain eligible assets. The New
Credit Facility provides for various interest rate alternatives. The average
annual interest rate on borrowings was approximately 7.50% at December 31, 1998.
The commitment fee on unused borrowings is approximately 0.5%. The New Credit
Facility contains various restrictions and covenants, including limits on
payments to stockholders, interest coverage, and net worth tests. All borrowings
under the New Credit Facility are secured by substantially all of the Company's
assets. As of December 31, 1998, the Company had approximately $19.0 million of
available borrowings under the Credit Facility.

The previous Credit Facility provided for various interest rate
alternatives. The average interest rate on borrowings was approximately 6.7% at
December 31, 1997. The commitment fee on unused borrowings was approximately
1/4 of 1%. The Credit Facility contained various restrictions and covenants,
including a restriction on the incurrence of additional debt, limitations on
dividends and certain other payments to stockholders, interest coverage, and net
worth maintenance tests. The interest rates on the Company's debt were
periodically adjusted to reflect changes in overall market interest rates and,
therefore, the carrying amount approximated fair value. The Credit Facility had
a maturity date of 1999. This Credit Facility was repaid with the proceeds from
the $115.0 million Notes as discussed above.

38
<PAGE> 41
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10. COMMON STOCK

In June 1998, the Company repurchased and retired approximately 4.4 million
shares of ANTEC Common Stock owned by Anixter International Inc. for
approximately $63.5 million.

The following shares of common stock have been reserved for future
issuance:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1998 1997 1996
---------- --------- ---------
<S> <C> <C> <C>
Convertible subordinated notes................... 4,791,667 -- --
Stock options.................................... 6,612,469 7,289,518 4,356,857
Warrants......................................... -- 4,200 12,609
Director stock units............................. 35,900 20,500 --
Employee stock purchase plan..................... 11,358 59,018 107,395
TCI options...................................... 854,341 854,341 854,341
---------- --------- ---------

Total.................................. 12,305,735 8,227,577 5,331,202
========== ========= =========
</TABLE>

NOTE 11. EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share ("EPS") computations.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
--------- ---------- ---------
(IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Numerator:
Net income (loss)......................................... $ 5,825 $(21,444) $ 26,360
======== ======== ========
Denominator:
Denominator for basic earnings per
share -- weighted-average common shares................ 37,195 38,751 38,286
Effects of dilutive securities:
Options / warrants..................................... 1,556 -- 1,237
-------- -------- --------

Denominator for diluted earnings per share................ $ 38,751 $ 38,751 $ 39,523
======== ======== ========

Basic earnings per share.................................... $ 0.16 $ (0.55) $ 0.69
======== ======== ========
Diluted earnings per share.................................. $ 0.15 $ (0.55) $ 0.67
======== ======== ========
</TABLE>

The 4.5% Convertible Subordinated Notes issued in May 1998, were
antidilutive for the year ended December 31, 1998. The effects of the options
and warrants, approximately 1.6 million common stock equivalents, were not
presented for the year ended December 31, 1997 as the Company incurred a net
loss and inclusion of these securities would be antidilutive.

NOTE 12. MERGER

On February 6, 1997, shareholders of ANTEC Corporation and TSX Corporation
approved the Plan of Merger ("Merger") dated as of October 28, 1996 among ANTEC
Corporation, TSX Corporation ("TSX") and TSX Acquisition Corporation, and the
Merger resulting in TSX becoming a wholly-owned subsidiary of ANTEC became
effective on that date. Under the terms of the transaction, TSX shareholders
received one share of ANTEC common stock for each share of TSX common stock that
they owned, while ANTEC

39
<PAGE> 42
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shareholders continued to own their existing shares. As a result of the Merger,
ANTEC issued approximately 15.4 million shares of Common Stock. The transaction
was tax-free for TSX shareholders and was accounted for as a pooling of
interests. As a result, all amounts from the prior years have been restated to
reflect the Merger.

Prior to the combination, TSX's fiscal year ended April 30, and ANTEC's
fiscal year ended December 31. TSX's historical financial statements for periods
prior to December 31, 1996 had to be adjusted to within 93 days of ANTEC's
year-end. Therefore, the statement of operations for the twelve months ended
December 31, 1996 represents ANTEC's fiscal period ended on that date combined
with TSX's twelve months ended the last Saturday in October 1996. All
intercompany sales between TSX and ANTEC were eliminated. Operating results for
the year ended December 31, 1996 were as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
1996
-------------
<S> <C>
Revenue:
ANTEC..................................................... $604,382
TSX....................................................... 89,695
Intercompany sales elimination............................ (3,200)
--------
Combined............................................... $690,877
========
Net income (loss):
ANTEC..................................................... $ 13,457
TSX....................................................... 12,903
--------
Combined............................................... $ 26,360
========
</TABLE>

As a result of the change in the fiscal year end of TSX, the operating
results of TSX for the two months ended December 31, 1996 were reflected as an
adjustment to retained earnings of the combined companies as of December 31,
1996. The following summarizes TSX's operating results for the two months ended
December 31, 1996 (in thousands):

<TABLE>
<CAPTION>
TWO MONTHS
ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Net sales................................................ $ 8,668
Cost of sales............................................ 8,565
-------
Gross profit............................................. 103
Selling, general and administrative expenses............. 3,663
-------
Operating (loss)......................................... (3,560)
Interest income and other, net........................... 322
-------
(Loss) before income taxes............................... (3,238)
Income tax (benefit)..................................... (665)
-------
Net (loss)............................................... $(2,573)
=======
</TABLE>

Included in the operating loss was a provision of approximately $2.6
million relating to preemptive repairs and modifications of equipment that had
previously been sold by TSX. Most of this provision arose from a binding
agreement made by TSX in December 1996 with its largest customer in response to
that customer's concern at that time about possible premature failures. TSX did
not believe this concern was justified. At that time TSX estimated the
modifications that it had agreed to make for this customer would cost
approximately $2.4 million. Subsequently, it was determined that the
modifications would cost approximately $1.0 million less than initially
estimated and the provision was reduced by this amount in the second quarter of
1997. The

40
<PAGE> 43
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

modifications began in late 1997, were substantially completed in 1998 and are
currently expected to be finally completed by March 31, 1999.

For the two months ended December 31, 1996, cash flows provided by
operations were $785,000, cash flows used by investing activities were $870,000,
and cash flows provided by financing activities were $40,000.

NOTE 13. INCOME TAXES

Income (loss) before income taxes consisted of the following (in
thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1998 1997 1996
------- -------- -------
<S> <C> <C> <C>
Domestic (U.S.).......................................... $13,736 $(28,978) $40,340
Foreign.................................................. -- -- 2,103
------- -------- -------
$13,736 $(28,978) $42,443
======= ======== =======
</TABLE>

Income tax expense (benefit) consisted of the following (in thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Current -- Federal........................................ $ 9,268 $ 313 $ 5,849
State.......................................... 1,953 (97) 1,388
Foreign........................................ -- -- 3,653
------- ------- -------
11,221 216 10,890
------- ------- -------
Deferred -- Federal....................................... (2,661) (6,384) 1,474
State......................................... (649) (1,366) 1,013
Foreign....................................... -- -- 802
------- ------- -------
(3,310) (7,750) 3,289
------- ------- -------
Provision in lieu of tax.................................. -- -- 1,904
------- ------- -------
$ 7,911 $(7,534) $16,083
======= ======= =======
</TABLE>

A reconciliation of income tax expense (benefit) to the Statutory Federal
tax rate of 35% was as follows (in thousands):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1998 1997 1996
------ -------- -------
<S> <C> <C> <C>
Statutory Federal income tax expense (benefit)............ $4,807 $(10,142) $14,855
Effects of:
Amortization of goodwill................................ 1,531 1,531 1,531
State income taxes, net of Federal benefit.............. 848 (951) 1,561
Acquisition fees........................................ -- 998 --
Meals and entertainment................................. 361 279 634
Reduction in deferred tax valuation allowance........... -- -- (2,533)
Other, net.............................................. 364 751 35
------ -------- -------
$7,911 $ (7,534) $16,083
====== ======== =======
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

41
<PAGE> 44
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of the Company's net deferred tax assets were as
follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1998 1997
------- -------
<S> <C> <C>
Current deferred tax assets:
Inventory costs........................................... $10,544 $ 9,452
Merger/restructuring related reserves..................... 3,013 2,892
Other, principally operating expenses..................... 3,032 1,973
------- -------
Total current deferred tax assets................. 16,589 14,317
Long-term deferred tax assets:
Federal/state net operating loss carryforwards............ 5,195 5,195
Foreign net operating loss carryforwards.................. 2,358 2,358
Plant and equipment, depreciation differences............. 3,330 2,292
------- -------
Total long-term deferred tax assets............... 10,883 9,845
------- -------
Total deferred tax assets................................... 27,472 24,162
Valuation allowance on deferred tax assets................ (4,881) (4,881)
------- -------
Net deferred tax assets........................... $22,591 $19,281
======= =======
</TABLE>

As of December 31, 1998, the Company has recorded estimated federal and
foreign tax loss carryforwards of $13.2 million and $6.9 million, respectively.
The federal and foreign tax loss carryforwards expire through 2009 and 2005,
respectively. In addition, the Company has alternative minimum tax loss
carryforwards of approximately $13.2 million that expire through 2009. Tax
benefits arising from loss carryforwards of approximately $7.7 million
originating prior to TSX's quasi-reorganization on November 22, 1985 would be
credited directly to additional paid in capital if and when realized.

The Company established a valuation allowance in accordance with the
provisions of FASB Statement No. 109, Accounting for Income Taxes. The Company
continually reviews the adequacy of the valuation allowance and recognizes the
benefits of deferred tax assets only as reassessment indicates that it is more
likely than not that the deferred tax assets will be realized.

The Company had U.S. and foreign net operating loss carryforwards at
December 31, 1998 expiring as follows (in thousands):

<TABLE>
<CAPTION>
U.S. FOREIGN
EXPIRATION IN CALENDAR YEAR AMOUNT AMOUNT
- --------------------------- ------- -------
<S> <C> <C>
2001........................................................ $ 5,493 $ --
2003........................................................ 1,099 --
2004........................................................ 1,099 --
2005........................................................ -- 6,935
2006........................................................ 501 --
2007........................................................ 2,793 --
2008........................................................ 1,099 --
2009........................................................ 1,099 --
------- ------
$13,183 $6,935
======= ======
</TABLE>

42
<PAGE> 45
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 14. COMMITMENTS

The Company leases certain office, distribution, and manufacturing
facilities and equipment under long-term operating leases expiring at various
dates through 2009. Future minimum lease payments under non-cancelable operating
leases (excluding operating leases related to closed facilities -- See Note 5)
at December 31, 1998 were as follows (in thousands):

<TABLE>
<S> <C>
1999........................................................ $ 6,334
2000........................................................ 5,669
2001........................................................ 4,312
2002........................................................ 2,884
2003........................................................ 1,816
Thereafter.................................................. 5,602
-------
Total minimum lease payments...................... $26,617
=======
</TABLE>

Total rental expense for all operating leases amounted to approximately
$9.5 million, $9.4 million and $11.0 million for the years ended December 31,
1998, 1997 and 1996, respectively.

NOTE 15. STOCK-BASED COMPENSATION

The Company grants stock options for a fixed number of shares to employees
and directors with an exercise price equal to the market price of the shares at
the date of grant. The Company accounts for stock option grants in accordance
with APB Opinion No. 25, Accounting for Stock Issued to Employees and,
accordingly, does not recognize compensation expense for the stock option
grants. The Company has elected to follow APB Opinion No. 25 because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, Accounting for Stock-Based Compensation, requires use of
option valuation models that were not developed for use in valuing employee
stock options.

The Company grants stock options under its 1997 Stock Incentive Plan
("SIP"), its 1993 Employee Stock Incentive Plan ("ESIP"), and Director Stock
Option Plan ("DSOP") and issued stock purchase rights under its Employee Stock
Purchase Plan ("ESPP"). Additionally, TSX issued options under its Long-Term
Incentive Plan ("LTIP"). These plans are described below.

As required by FASB Statement No. 123, the Company presents below
supplemental information disclosing pro forma net income (loss) and net income
(loss) per common share as if the Company had recognized compensation expense on
stock options granted subsequent to December 31, 1994 under the fair value
method of that statement. The fair value for these options was estimated using a
Black-Scholes option-pricing model. The weighted average assumptions used in
this model to estimate the fair value of options granted under the SIP, ESIP,
DSOP and LTIP for 1998, 1997 and 1996 were as follows: risk-free interest rates
of 5.21%, 5.81% and 5.46%, respectively; a dividend yield of 0%; volatility
factor of the expected market price of the Company's common stock of .54; and a
weighted average expected life of 5, 6, and 5 years, respectively. The
assumptions used for the ESPP for 1998, 1997 and 1996 were as follows: risk-free
rate of 4.57%, 4.96% and 5.83%, respectively; a dividend yield of 0%; volatility
factor of the expected market price of the Company's common stock of .54; and an
expected life of one year.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially effect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

43
<PAGE> 46
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands, except per share data):

<TABLE>
<CAPTION>
1998 1997 1996
------ -------- --------
<S> <C> <C> <C>
Pro forma net income (loss).............................. $3,204 $(23,980) $ 23,796
====== ======== ========
Pro forma net income (loss) per common share:
Basic.................................................. $ .09 $ (.62) $ .62
====== ======== ========
Diluted................................................ $ .08 $ (.62) $ .60
====== ======== ========
</TABLE>

Compensation expense recognized for pro forma purposes was approximately
$4.4 million, $4.2 million and $4.3 million for 1998, 1997 and 1996,
respectively. FASB Statement No. 123 is applicable only to options granted
subsequent to December 31, 1994.

In 1997, the Board of Directors approved the SIP to facilitate the hiring,
retention and continued motivation of key employees, consultants and directors
and to align more closely their interests with those of the Company and its
stockholders. Awards under the SIP may be in the form of incentive stock
options, non-qualified stock options, stock grants, stock units, restricted
stock, stock appreciation rights, performance shares and units, dividend
equivalent rights and reload options. A total of 3,750,000 shares of the
Company's common stock may be issued pursuant to this plan. Vesting requirements
for issuances under the SIP may vary.

Substantially all of the SIP options granted become exercisable in May
2003. Vesting will accelerate if the Company's stock closes above specified
prices ($15, $20 and $25) for 20 consecutive days and the Company's diluted
earnings per common share (before non-recurring items) over a period of four
consecutive quarters exceed $1.00 per common share. One-third of all other
options granted under this plan vest each year on the anniversary of the date of
grant beginning with the second anniversary. All options under the SIP terminate
seven years from the date of grant.

In 1993, the Board of Directors approved the ESIP that provides for
granting key employees and consultants options to purchase up to 1,925,000
shares of ANTEC common stock. In 1996, an amendment to the ESIP was approved
increasing the number of shares of ANTEC common stock that may be issued
pursuant to that plan from 1,925,000 shares to 3,225,000 shares. One-third of
these options vest each year on the anniversary of the date of grant beginning
with the second anniversary. The options terminate seven years from the date of
grant.

In 1993, the Board of Directors also approved the DSOP that provides for
the granting, to each director of the Company who has not been granted any
options under the ESIP each January 1, commencing January 1, 1994, an option to
purchase 2,500 shares of ANTEC common stock for the average closing price for
the ten trading days preceding the date of grant. A total of 75,000 shares of
ANTEC common stock have been allocated to this plan. These options vest six
months from date of grant and terminate seven years from date of grant.

Pursuant to the Merger, an option to purchase TSX common stock under the
LTIP was converted to a fully vested option to purchase ANTEC common stock. A
total of 883,900 shares of ANTEC common stock have been allocated to this plan.
The options under the LTIP terminate ten years from the original grant date.

Pursuant to the Merger Agreement between ANTEC and Keptel, on November 17,
1994 under the ANTEC/Keptel Exchange Option Plan ("EOP"), each Keptel stock
option, whether or not then exercisable, was canceled and substituted with an
ANTEC/Keptel exchange option to acquire shares of ANTEC common stock. Each
ANTEC/Keptel exchange option provides the option holder with rights and benefits
that are no

44
<PAGE> 47
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

less favorable than were provided under the former Keptel stock option plan. A
total of 360,850 shares of ANTEC common stock have been allocated to this plan.
There were no options granted under the EOP during the years ended December 31,
1998, 1997, and 1996. Additionally, as of December 31, 1998 no options issued
under this plan remain outstanding.

A summary of activity of the Company's options granted under its SIP, ESIP,
DSOP, and LTIP is presented below:

<TABLE>
<CAPTION>
1998 1997 1996
---------------------- --------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
----------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning balance............... 6,187,250 $11.02 3,406,657 $11.11 2,938,327 $ 9.99
Grants.......................... 1,006,450 $14.68 4,027,000 $ 9.67 675,010 $15.74
Exercises....................... (677,049) $12.05 (817,339) $ 3.80 (131,713) $ 7.43
Terminations.................... (1,040,831) $10.93 (360,100) $12.51 (74,967) $15.56
Expirations..................... (24,917) $17.71 (68,968) $14.09 -- --
----------- ---------- ----------
Ending balance.................. 5,450,903 $11.55 6,187,250 $11.02 3,406,657 $10.60
=========== ========== ==========
Vested at period end............ 1,284,952 $12.54 1,668,582 $11.76 1,893,795 $ 8.84
=========== ========== ==========
Weighted average fair value of
options granted during year... $ 7.84 $ 5.46 $ 8.20
=========== ========== ==========
</TABLE>

The following table summarizes information about SIP, ESIP, DSOP, and LTIP
options outstanding at December 31, 1998.

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------- ----------------------------
NUMBER WEIGHTED AVERAGE WEIGHTED NUMBER WEIGHTED
OUTSTANDING REMAINING AVERAGE EXERCISABLE AVERAGE
RANGE OF EXERCISE PRICES AT 12/31/98 CONTRACTUAL LIFE EXERCISE PRICE AT 12/31/98 EXERCISE PRICE
- ------------------------ ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 2.00................. 20,000 4.25 years $ 2.00 20,000 $ 2.00
$ 5.00................. 1,200 5.58 years $ 5.00 1,200 $ 5.00
$ 8.88 to $10.00................. 2,917,500 4.26 years $ 9.15 725,500 $ 9.99
$10.50 to $15.88................. 1,818,586 5.15 years $13.01 314,418 $14.04
$16.60 to $25.09................. 693,617 5.30 years $18.10 223,834 $19.65
--------- ---------
$ 2.00 to $25.09................. 5,450,903 4.69 years $11.55 1,284,952 $12.54
========= =========
</TABLE>

Additionally, ANTEC has an ESPP that enables its employees to purchase a
total of 300,000 shares of ANTEC common stock over a period of time. The Company
accounts for the ESPP in accordance with APB Opinion No. 25, Accounting for
Stock Issued to Employees, and accordingly recognizes no compensation expense.
Participants can request that up to 10% of their base compensation be applied
toward the purchase of ANTEC common stock under ANTEC's ESPP. Purchases by any
one participant are limited to $25,000 in any one year. The exercise price is
the lower of 85% of the fair market value of the ANTEC common stock at the date
of grant or at the later exercise date (currently one-year). Under the ESPP,
employees of the Company purchased 47,660, 48,377 and 90,057 shares of ANTEC
common stock in 1998, 1997 and 1996, respectively. At December 31, 1998,
approximately 47,374 shares are subject to purchase under the ESPP at a price of
no more than $13.07 per share.

Pursuant to the Merger Agreement between ANTEC and Keptel, on November 17,
1994, each Keptel warrant, whether or not then exercisable, was canceled and
substituted with a warrant to acquire shares of ANTEC common stock. Each warrant
provides the warrant holder with rights and benefits that are no less favorable
than were provided under the former Keptel warrant plan. At December 31, 1998,
all warrants had been exercised.

45
<PAGE> 48
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In both 1998 and 1997, the Company paid its non-employee directors annual
retainer fees of $50,000 in the form of stock units. These stock units convert
to Common Stock of the Company at the prearranged time selected by each
director. The Company amortizes the compensation expense related to these stock
units on a straight-line basis over a period of one year. At the years ended
December 31, 1998 and 1997 there were 35,900 units and 20,500 units issued and
outstanding, respectively.

NOTE 16. EMPLOYEE BENEFIT PLANS

The Company sponsors two non-contributory defined benefit pension plans
that cover the majority of the Company's U.S. employees.

The U.S. pension plan benefit formulas generally provide for payments to
retired employees based upon their length of service and compensation as defined
in the plans. The Company's policy is to fund the plans as required by the
Employee Retirement Income Security Act of 1974 (ERISA) and to the extent that
such contributions are tax deductible.

<TABLE>
<CAPTION>
1998 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Change in Benefit Obligation:
Benefit obligation at the beginning of year............... $16,686 $14,653
Service cost.............................................. 1,559 1,487
Interest cost............................................. 1,202 1,091
Actuarial (gain) loss..................................... 2,067 (251)
Benefit payments.......................................... (157) (294)
------- -------
Benefit obligation at year end............................ $21,357 $16,686
======= =======
Change in Plan Assets:
Fair value of plan assets at beginning of year............ $10,300 $ 8,512
Actual return on plan assets.............................. 369 1,700
Company contributions..................................... 1,005 368
Benefits paid from plan assets............................ (157) (280)
------- -------
Fair value of plan assets at year end..................... $11,517 $10,300
======= =======
Funded Status:
Funded status of plan..................................... $(9,840) $(6,386)
Unrecognized actuarial loss............................... 3,823 1,324
Unrecognized prior service cost........................... 70 78
------- -------
(Accrued) benefit cost.................................... $(5,947) $(4,984)
======= =======
</TABLE>

The plans' assets consist of corporate and government debt securities and
equity securities. Net periodic pension cost for 1998, 1997 and 1996 for pension
and supplemental benefit plans includes the following components (dollars in
thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Service cost................................................ $1,559 $1,487 $1,020
Interest cost............................................... 1,202 1,091 766
Return on assets (expected)................................. (836) (704) (521)
Recognized net actuarial loss............................... 36 107 37
Amortization of prior service cost.......................... 7 6 6
------ ------ ------
Net periodic pension cost................................... $1,968 $1,987 $1,308
====== ====== ======
</TABLE>

46
<PAGE> 49
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The assumptions used in accounting for the Company's defined benefit plans
for the three years presented are set forth below:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Assumed discount rate....................................... 6.5% 7.5% 7.5%
Rates of compensation increase.............................. 6.0% 6.0% 6.0%
Expected long-term rate of return on plan assets............ 8.0% 8.0% 8.0%
</TABLE>

Additionally, the Company has established defined contribution plans
pursuant to the Internal Revenue Code Section 401(a) that cover all eligible
U.S. employees. The Company contributes to these plans based upon the dollar
amount of each participant's contribution. The Company made contributions to
these plans of approximately $0.7 million, $0.6 million and $0.8 million in
1998, 1997 and 1996, respectively.

NOTE 17. SALES INFORMATION

As stated in Note 1, a significant portion of the Company's revenue is
derived from sales to TCI aggregating $142.7 million, $46.6 million and $153.7
million for the years ended December 31, 1998, 1997 and 1996, respectively.

Export sales accounted for approximately 6.0%, 17.1% and 17.0% of total
sales for the years ended December 31, 1998, 1997 and 1996, respectively. Sales
to international customers (including export sales) were approximately 11.4%,
23.8% and 24.2% of total sales for the years ended December 31, 1998, 1997 and
1996, respectively.

The Company sells its products primarily in the United States with its
international revenue being generated from Asia Pacific, Europe, Latin America
and Canada. The Asia Pacific market includes Australia, New Zealand, China, Hong
Kong, Taiwan, India, Indonesia, Japan, Korea, Malaysia, Philippines, Sampan,
Singapore and Thailand. The European market includes the United Kingdom,
Ireland, France, Italy, Portugal and Spain. International sales for the three
years ended December 31, 1998, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
International region
Asia Pacific.................................... $ 24,691 $ 30,101 $ 61,906
Europe.......................................... 12,020 14,184 20,106
Latin America................................... 24,233 66,321 66,097
Canada.......................................... 2,559 2,192 19,296
-------- -------- --------
Total international sales............... $ 63,503 $112,798 $167,405
======== ======== ========
</TABLE>

Total identifiable international assets are immaterial.

47
<PAGE> 50
ANTEC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 18. SUMMARY QUARTERLY CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)

The following table summarizes the Company's quarterly consolidated
financial information (in thousands, except share data).

<TABLE>
<CAPTION>
QUARTERS IN 1998 ENDED
-------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Net sales............................................. $123,441 $140,704 $150,336 $132,286
Gross profit.......................................... 32,827 36,768 38,781 33,392
Operating income (loss)(1)............................ (5,168) 9,064 11,647 6,553
Income (loss) before income taxes..................... (6,523) 7,141 8,927 4,191
Net income (loss)..................................... $ (4,618) $ 3,649 $ 4,979 $ 1,815
======== ======== ======== ========
Net income (loss) per common share:
Basic............................................... $ (.12) $ .10 $ .14 $ .05
======== ======== ======== ========
Diluted............................................. $ (.12) $ .09 $ .13 $ .05
======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
QUARTERS IN 1997 ENDED
-------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Net sales............................................. $120,034 $124,262 $120,365 $115,417
Gross profit(2)....................................... 26,128 33,593 29,316 25,181
Operating income (loss)(2)............................ (23,731) 4,954 (164) (4,121)
Income (loss) before income taxes..................... (25,093) 3,275 (1,669) (5,491)
Net income (loss)..................................... $(16,124) $ 983 $ (1,999) $ (4,304)
======== ======== ======== ========
Net income (loss) per common share:
Basic............................................... $ (.42) $ .03 $ (.05) $ (.11)
======== ======== ======== ========
Diluted............................................. $ (.42) $ .02 $ (.05) $ (.11)
======== ======== ======== ========
</TABLE>

- ---------------

(1) First quarter 1998 includes $10.0 million of restructuring costs related to
the consolidation of certain functions and facilities to Atlanta, Georgia.
The fourth quarter 1998 includes a partial reversal of $0.9 million of this
charge as a result of the ongoing evaluation of the estimated costs related
to these actions. See Note 5 of Notes to the Consolidated Financial
Statements.
(2) First quarter 1997 includes $28 million of merger/integration costs of which
$6.5 million relating to the write-off of inventories has been reflected in
cost of sales. See Note 5 of Notes to the Consolidated Financial Statements.

48
<PAGE> 51

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to directors of the Company is set forth under the
caption entitled "Election of Directors" in the Company's Proxy Statement for
the 1999 Annual Meeting of Stockholders and is incorporated herein by reference.
Certain information concerning the executive officers of the Company is set
forth in Part I of this Report on Form 10-K under the caption entitled
"Executive Officers of the Company." Information about Section 16(a) Reporting
Delinquencies is set forth under this caption in the Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding compensation of officers and directors of the Company
is set forth under the captions entitled "Executive Compensation," "Compensation
of Directors," "Employment Contracts and Termination of Employment and
Change-In-Control Arrangements" and "Compensation Committee Interlocks and
Insider Participation" in the Proxy Statement and is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding ownership of the Company's common stock is set forth
under the captions entitled "Security Ownership of Management" and "Security
Ownership of Principal Stockholders" in the Proxy Statement and is incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and related transactions with
the Company is set forth under the captions entitled "Compensation Committee
Interlocks and Insider Participation" and "Certain Relationships and Related
Transactions" in the Proxy Statement and is incorporated herein by reference.

49
<PAGE> 52

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A) EXHIBITS.

The exhibits listed below in Item 14(a)1, 2 and 3 are filed as part of this
Report. Each management contract or compensatory plan required to be filed as an
exhibit is identified by an asterisk(*).

(B) REPORTS ON FORM 8-K.

None

ITEM 14(A)1 & 2. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES

FINANCIAL STATEMENTS

The following Consolidated Financial Statements of ANTEC Corporation and
Report of Independent Auditors are filed as part of this Report.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. 27
Consolidated Balance Sheets at December 31, 1998 and 1997... 28
Consolidated Statements of Operations for the years ended
December 31, 1998, 1997 and 1996.......................... 29
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.......................... 30
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1998, 1997 and 1996.............. 31
Notes to the Consolidated Financial Statements.............. 32
</TABLE>

FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statement schedule of ANTEC
Corporation included in Item 14(a)2 pursuant to paragraph (d) of Item 14:

Schedule II -- Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under related instructions or are not applicable, and therefore have been
omitted.

50
<PAGE> 53

SCHEDULE II

ANTEC CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT CHARGE TO BALANCE AT
DESCRIPTION BEGINNING OF PERIOD EXPENSES DEDUCTIONS END OF PERIOD
- ----------- ------------------- --------- ---------- -------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1998
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts... $4,289 $1,971 $1,651(1) $4,609

YEAR ENDED DECEMBER 31, 1997
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts... $3,539 $2,642 $1,892(1) $4,289

YEAR ENDED DECEMBER 31, 1996
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts... $2,214 $2,334 $1,009(1) $3,539
</TABLE>

- ---------------

(1) Uncollectible accounts written off, net of recoveries.

51
<PAGE> 54

ITEM 14(A)3. EXHIBIT LIST

Each management contract or compensation plan required to be filed as an
exhibit is identified by an asterisk(*).

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
3.1 -- Certificate of Incorporation and Certificate of Amendment
thereto**
3.1(a) -- Restated Certificate of Incorporation**
3.2 -- By-laws**
4.1 -- Form of Certificate for Common Stock**
10.1(a)* -- Amended and Restated Employee Stock Incentive Plan**
10.1(b)* -- Form of Stock Option Grant**
10.1(c)* -- Amendment Increasing Number of Shares Covered by Amended and
Restated Employee Stock Incentive Plan (Incorporated by
reference from ANTEC Corporation's Registration Statement on
Form S-8, Registration Number 33-12131, Exhibit 4)
10.1(d)* -- Amended Form of Stock Option Grant (Incorporated by
reference from ANTEC Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, as the
same number exhibit).
10.1(e)* -- Amended Form of Stock Option (Incorporated by reference from
ANTEC Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, as the same number
exhibit)
10.1(f)* -- 1997 Stock Incentive Plan***
10.2 -- Form of Employee Stock Purchase Plan**
10.2(a) -- Amendment to Employee Stock Purchase Plan**
10.3* -- Form of Director Stock Option Plan**
10.4* -- Form of Supplemental Retirement Benefits Plan**
10.5 -- Form of Tax Allocation Agreement**
10.10 -- Credit Agreement+
10.11 -- Bill of Sale and General Conveyance and Assumption of
Liabilities**
10.12* -- Form of Employment Agreement for John M. Egan**
10.13* -- Form of Employment Agreement for Lawrence A. Margolis,
Gordon E. Halverson and Martin C. Ingram**
10.14* -- Consulting Agreement dated February 1, 1998 for James L.
Faust
10.15* -- Form of Stock Option Grant for Converted Keptel Options
(Incorporated by reference from ANTEC Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1994, as the same number exhibit)
10.16 -- Agreement and Plan of Merger with Keptel, Inc., dated July
27, 1994 (Incorporated by reference to Keptel, Inc.
Registration Statement on Form S-1, Registration Number 33-
16278, as amended)
10.17* -- Retainer Agreement with James E. Knox (Incorporated by
reference from ANTEC Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, as the
same number exhibit)
10.18 -- Amendments to Employment Agreements for Messrs. Margolis,
Halverson, Ingram And Faust (Incorporated by reference from
ANTEC Corporation's Annual Report On Form 10-K for the
fiscal year ended December 31, 1995, as the same number
Exhibit)
</TABLE>

52
<PAGE> 55

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
10.19 -- Limited Liability Company Agreement of Products Venture
L.L.C. (Incorporated by reference from ANTEC Corporation's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as the same number exhibit)
10.21 -- Products Distribution Agreement between Products Venture
L.L.C. and ANTEC Corporation (Incorporated by reference from
ANTEC Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, Exhibit 10.20)
10.22 -- Plan of Merger dated October 28, 1996, among ANTEC
Corporation, TSX Corporation and TSX Acquisition Corporation
(Incorporated by reference to ANTEC Corporation's
Registration Statement on Form S-4, Registration Number
333-19129, Exhibit 2.1)
10.25* -- Stock Option Agreement with William H. Lambert dated March
14, 1994 (Incorporated by reference from TSX Corporation's
Annual Report on Form 10-K for the fiscal year ended April
30, 1994, Exhibit 10(A)(1)3)
10.26* -- Employment Agreement dated October 16, 1995 for Robert J.
Stanzione (Incorporated by reference from ANTEC
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, as the same number exhibit)
10.27* -- Amendment to Employment Agreement for Robert J. Stanzione
(Incorporated by Reference from ANTEC Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1997, as the same number exhibit)
10.28 -- 4.5% Convertible Subordinate Notes due 2003 dated May 5,
1998****
10.30 -- Evolve Products, Inc. Agreement
13.1 -- Report of KPMG LLP
21.1 -- Subsidiaries of the Registrant**
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of KPMG LLP
24.1 -- Power of Attorney executed by Rod F. Dammeyer
24.2 -- Power of Attorney executed by John R. Petty
24.3 -- Power of Attorney executed by Bruce Van Wagner
24.4 -- Power of Attorney executed by Samuel K. Skinner
24.5 -- Power of Attorney executed by William T. Schleyer
24.6 -- Power of Attorney executed by James L. Faust
24.7 -- Power of Attorney executed by William H. Lambert
27.1 -- Financial Data Schedule (for SEC use only)
</TABLE>

- ---------------

** Incorporated by reference to ANTEC Corporation's Registration Statement on
Form S-1, Registration Number 33-65488, filed July 2, 1993, as amended, as
the same number exhibit.
*** Incorporated by reference to the Company's proxy statement for the
Company's Annual Meeting of Stockholders held May 6, 1997.
**** Incorporated by reference to the Company's quarterly report filed on Form
10-Q/A-2 for the quarterly period ended March 31, 1998 and filed November
17, 1998 as exhibit 10.28.
+ Incorporated by reference to ANTEC Corporation's Registration Statement on
Form S-3, Registration Number 333-58437, filed July 2, 1998, as amended, as
Exhibit 10.1.

53
<PAGE> 56

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

ANTEC CORPORATION

/s/ LAWRENCE A. MARGOLIS
--------------------------------------
Lawrence A. Margolis
Executive Vice President

Dated: March 29, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ JOHN M. EGAN Chairman, Chief Executive March 29, 1999
- ----------------------------------------------------- Officer and Director
John M. Egan

/s/ ROBERT J. STANZIONE President, Chief Operating March 29, 1999
- ----------------------------------------------------- Officer and Director
Robert J. Stanzione

/s/ LAWRENCE A. MARGOLIS Executive Vice President, Chief March 29, 1999
- ----------------------------------------------------- Financial Officer
Lawrence A. Margolis

/s/ MARK J. SCAGLIUSO Vice President, Chief March 29, 1999
- ----------------------------------------------------- Accounting Officer
Mark J. Scagliuso

/s/ ROD F. DAMMEYER* Director March 29, 1999
- -----------------------------------------------------
Rod F. Dammeyer

/s/ JOHN R. PETTY* Director March 29, 1999
- -----------------------------------------------------
John R. Petty

/s/ BRUCE VAN WAGNER* Director March 29, 1999
- -----------------------------------------------------
Bruce Van Wagner

/s/ SAMUEL K. SKINNER* Director March 29, 1999
- -----------------------------------------------------
Samuel K. Skinner

/s/ JAMES L. FAUST* Director March 29, 1999
- -----------------------------------------------------
James L. Faust

Director
- -----------------------------------------------------
J. A. Ian Craig

/s/ WILLIAM T. SCHLEYER* Director March 29, 1999
- -----------------------------------------------------
William T. Schleyer
</TABLE>

54
<PAGE> 57

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ WILLIAM H. LAMBERT* Director March 29, 1999
- -----------------------------------------------------
William H. Lambert

By: /s/ LAWRENCE A. MARGOLIS
----------------------------------
Lawrence A. Margolis
(Attorney in fact)
</TABLE>

- ---------------

* Lawrence A. Margolis, as attorney in fact for each person indicated.

<PAGE> 1
EXHIBIT 10.30

SERIES C PREFERRED STOCK PURCHASE AGREEMENT

This Purchase Agreement ("Agreement") is made as of July 17, 1998,
between Evolve Products, Inc., a Delaware corporation (the "Company"), and each
of the parties listed on Schedule 1 hereto, each of whom is herein referred to
individually as an "Investor" and together as the "Investors"). Except as
otherwise indicated herein, capitalized terms used herein are defined in Section
6 hereof.

The parties hereto agree as follows:

SECTION 1. AUTHORIZATION AND CLOSING.

1a. Authorization of the Series C Preferred Stock. The Company
has authorized or shall authorize the issuance and sale to the Investors of up
to 3,000,000 shares of its Series C Preferred Stock, $.001 par value per share
("Series C Preferred Stock"), having the rights and preferences set forth in
Exhibit A attached hereto.

1b. Purchase and Sale of the Series C Preferred Stock. At the
Closing (as defined below) and subject to the terms and conditions set forth
herein, the Company agrees to sell to each Investor and, each Investor severally
agrees to purchase from the Company, the number of shares of Series C Preferred
Stock shown opposite such Investor's name on Schedule 1 hereto at a price of
$1.66 per share.

1c. Closing. The initial closing of the purchase and sale of
the Series C Preferred Stock (the "Closing") shall take place at the offices of
Brobeck Phleger & Harrison LLP, 38 Technology Drive, Irvine, California, on the
date or dates and at such time or times as the Company shall designate, but in
no event later than July 17, 1998. At the Closing, the Company shall issue to
each Investor stock certificates evidencing the Series C Preferred Stock to be
purchased by each Investor, registered in the Investor's name, upon payment of
the purchase price thereof by a check or by wire transfer of immediately
available funds to the account designated by the Company.

The Company may sell up to 600,000 additional shares of Series
C Preferred Stock at any time on or before the date which is ninety (90) days
from the date hereof, under the terms of this Agreement. By execution of a
counterpart of this Agreement, a purchaser of any such shares shall be deemed an
"Investor" for all purposes hereof and Schedule 1 hereto shall be amended to
reflect such additional sale of Series C Preferred Stock.

SECTION 2. CONDITIONS OF PURCHASER'S OBLIGATION AT THE CLOSING. The
obligation of each Investor to purchase and pay for the Series C Preferred Stock
at the Closing is subject to the satisfaction as of the Closing of the following
conditions:

- 1 -
<PAGE> 2

2a. Representations and Warranties; Covenants. The
representations and warranties contained in Section 5 hereof shall be true and
correct at and as of the Closing as though then made, except to the extent the
representations and warranties speak to an earlier date, and the Company shall
have performed in all material respects all of the covenants required to be
performed by it hereunder prior to the Closing.

2b. Restated and Amended Stockholder Rights Agreement. The
Company and the Investors shall have entered into a Restated and Amended
Stockholder Rights Agreement in the form set forth in Exhibit B attached hereto
(the "Rights Agreement"), and the Rights Agreement shall be in full force and
effect as of the Closing.

2c. Stock Restriction Agreement. The Second Restated and
Amended Stock Restriction and Purchase Agreement in the form set forth in
Exhibit C attached hereto (the "Stock Restriction Agreement") shall have been
entered into by the Company, the Investors and the holders of not less than
two-thirds of the shares of Common Stock, Series A Preferred Stock and Series B
Preferred Stock of the Company subject to the Stock Restriction Agreement, and
the Stock Restriction Agreement shall be in full force and effect as of the
Closing.

2d. Certificate of Amendment. The Certificate of Amendment of
the Company in the form attached hereto as Exhibit A (the "Certificate of
Amendment") shall have been filed with the Secretary of State of the State of
Delaware.

2e. Minimum Investment. A minimum of 1,807,722 shares of
Series C Preferred Stock shall have been sold to the Investors pursuant to the
Agreement and at least $3,000,000 of shares of Series C Preferred Stock shall
have been purchased by Investors.

2f. Waiver. Any condition specified in this Section 2 may be
waived in writing by the Investors who have agreed to purchase a majority of
shares of Series C Preferred Stock to be purchased hereunder.

SECTION 3. CONDITIONS OF COMPANY'S OBLIGATION AT THE CLOSING. The
obligation of the Company to sell the Series C Preferred Stock at the Closing is
subject to the satisfaction as of the Closing of the following conditions:

3a. Representations and Warranties; Covenants. The
representations and warranties contained in the Subscription Agreements shall be
true and correct at and as of the Closing as though then made and the Investors
shall have performed in all material respects all of the covenants required to
be performed by them thereunder and hereunder prior to the Closing.

3b. Rights Agreement. The Company and the Investors shall have
entered into the Rights Agreement and the Rights Agreement shall be in full
force and effect as of the Closing.

3c. Stock Restriction Agreement. The Second Restated and
Amended Stock Restriction and Purchase Agreement in the form set forth in
Exhibit C attached hereto (the

2
<PAGE> 3

"Stock Restriction Agreement") shall have been entered into by the Company, the
Investors and the holders of not less than two-thirds of the shares of Common
Stock, Series A Preferred Stock and Series B Preferred Stock of the Company
subject to the Stock Restriction Agreement, and the Stock Restriction Agreement
shall be in full force and effect as of the Closing.

3d. Certificate of Amendment. The Certificate of Amendment
shall have been filed with the Secretary of State of the State of Delaware.

3e. Compliance with Applicable Laws. The sale of Series C
Preferred Stock by the Company shall not be prohibited by any applicable law or
governmental rule or regulation and shall not subject the Company to any
penalty, liability or, in the Company's sole judgment, other onerous condition
under or pursuant to any applicable law or governmental rule or regulation, and
the sale of the Series C Preferred Stock by the Company shall be permitted by
laws, rules and regulations of the jurisdictions and governmental authorities
and agencies to which the Company is subject.

3f. Payment of Purchase Price. The Investors shall have
tendered to the Company the purchase price for the Series C Preferred Stock
being purchased on the Closing Date.

SECTION 4. COVENANTS.

4a. Financial Statements and Other Information. Upon request
by any Investor, the Company shall deliver to such Investor (so long as such
Investor holds at least 50,000 shares of the Company's Common Stock, no par
value ("Common Stock"), on an as-converted basis, which number shall be adjusted
proportionately to reflect any stock split, stock combination, stock dividend,
recapitalization or similar event):

(i) Within forty-five (45) days after the end of each of
the first three quarterly accounting periods in each fiscal year, unaudited
statements of income and cash flows of the Company for such quarterly period and
for the period from the beginning of the fiscal year to the end of such quarter,
and an unaudited balance sheet of the Company as of the end of such quarterly
period, setting forth in each case comparisons to the corresponding period in
the preceding fiscal year, all prepared in accordance with generally accepted
accounting principles, consistently applied (subject to the absence of footnote
disclosure);

(ii) within ninety (90) days after the end of each fiscal
year, statements of income and cash flows of the Company for such fiscal year,
and a balance sheet of the Company as of the end of such fiscal year, setting
forth in each case comparisons to the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles, consistently applied,
and audited by a nationally recognized independent accounting firm.

4b. Notwithstanding the foregoing, the provisions of paragraph
4(a) shall not be effective during any period when the Company is subject to the
periodic reporting requirements of the Securities Exchange Act.

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<PAGE> 4

4c. Except as otherwise required by law or judicial order or
decree or by any governmental agency or authority, each Person entitled to
receive information regarding the Company under paragraph 4(a) shall maintain
the confidentiality of all nonpublic information obtained by it hereunder.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Investor that, except as set forth on a
Schedule of Exceptions furnished to each Investor, specifically identifying the
relevant subparagraph(s) hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder:

5a. Organization, Corporate Power and Licenses. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware and is duly qualified to do business in every jurisdiction in
which the failure to be so qualified would have a material adverse effect on the
business or properties of the Company. The Company possesses all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted and to carry out the
transactions contemplated by this Agreement.

5b. Capital Stock and Related Matters.

(i) Immediately prior to the Closing, the authorized
capital stock of the Company shall consist of 21,000,000 shares of Common Stock,
of which 1,000,080 are issued and outstanding and (b) 21,010,000 shares of
Preferred Stock, of which (X) 9,010,000 shares are designated as Series A
Preferred Stock, of which 9,000,720 are issued and outstanding, (Y) 2,000,000
shares are designated as Series B Preferred Stock, of which 1,189,124 are issued
and outstanding and (Z) 3,000,000 are designated as Series C Preferred Stock, of
which no shares are issued and outstanding. As of the Closing, the Company shall
have no outstanding stock or securities convertible or exchangeable for any
shares of its capital stock or containing any profit participation features, nor
shall it have outstanding any rights or options to subscribe for or to purchase
its capital stock or any stock or securities convertible into or exchangeable
for its capital stock or any stock appreciation rights or phantom stock plans,
except as set forth on the attached on Schedule 5(b) hereto. Schedule 5(b)
accurately sets forth the following information with respect to all outstanding
options and rights to acquire the Company's capital stock: the holder, the
number of shares covered and the exercise price. As of the Closing, the Company
shall be subject to no obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any warrants,
options or other rights to acquire its capital stock, except as set forth on
Schedule 5(b). As of the Closing, all of the outstanding shares of the Company's
capital stock shall be validly issued, fully paid and nonassessable.

(ii) Except as set forth on Schedule 5(b), there are no
statutory or contractual stockholders preemptive rights or rights of first
refusal with respect to the issuance

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<PAGE> 5

of the Series C Preferred Stock hereunder. To the Company's knowledge, there are
no agreements between the Company's stockholders with respect to the voting or
transfer of the Company's capital stock or with respect to any other aspect of
the Company's affairs, except as contemplated by this Agreement and as set forth
on Schedule 5(b).

(iii) The Series C Preferred Stock that is being purchased
by the Investors hereunder, when issued, sold and delivered in accordance with
the terms of this Agreement for the consideration expressed herein, will be duly
and validly issued, fully paid, and nonassessable, and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement, the Rights Agreement, the Stock Restriction Agreement and under
applicable state and federal securities laws. The Common Stock issuable upon
conversion of the Series C Preferred Stock purchased under this Agreement has
been or will be prior to Closing duly and validly reserved for issuance and,
upon issuance in accordance with the terms of the Company's Certificate of
Incorporation, will be duly and validly issued, fully paid, and nonassessable
and will be free of restrictions on transfer other than restrictions on transfer
under this Agreement, the Rights Agreement, the Stock Restriction Agreement and
under applicable state and federal securities laws.

(iv) Subject in part to the truth and accuracy of each
Investor's representations set forth in the Subscription Agreement related to
this Agreement, the offer, sale and issuance of the Series C Preferred Stock as
contemplated by this Agreement are exempt from the registration requirements of
any applicable state and federal securities laws, and neither the Company nor
any authorized agent acting on its behalf will take any action hereafter that
would cause the loss of such exemption.

5c. Subsidiaries; Investments. The Company does not own or
hold either directly or indirectly any rights to acquire any shares of stock or
any other security or interest in any other Person, and the Company has never
had any Subsidiary. The Company is not a participant in any partnership, joint
venture or similar arrangement.

5d. Authorization; No Breach. The execution, delivery and
performance of this Agreement, the Stock Restriction Agreement, the Rights
Agreement and all other agreements contemplated hereby to which the Company is a
party have been duly authorized by the Company. This Agreement, the Stock
Restriction Agreement, the Rights Agreement and all other agreements
contemplated hereby to which the Company is a party each constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms. Except as set forth on the attached Schedule 5(d), the execution
and delivery by the Company of this Agreement, the Stock Restriction Agreement,
the Rights Agreement and all other agreements contemplated hereby to which the
Company is a party, the offering, sale and issuance of the Series C Preferred
Stock hereunder and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company, do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon the Company's capital stock or assets pursuant to,
(iv) give any third party the right to modify, terminate or accelerate any
obligation under, (v) result in a violation of, or (vi) require

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<PAGE> 6

any authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency pursuant to, the Certificate of Incorporation or bylaws of the Company
or any law, statute, rule or regulation to which the Company is subject, or any
material agreement, instrument, order, judgment or decree to which the Company
is subject.

5e. Financial Statements. Attached hereto as Schedule 5(e) are
the unaudited balance sheet of the Company as of May 31, 1998 (the "Latest
Balance Sheet"), and the related statements of operations and cash flows (or the
equivalent) for the five (5) month period then ended. Each of the foregoing
financial statements (including in all cases the notes thereto, if any) is
accurate and complete in all material respects, is consistent with the books and
records of the Company (which, in turn, are accurate and complete in all
material respects) and has been prepared in accordance with generally accepted
accounting principles, consistently applied, presents fairly the financial
condition, results of operations and cash flows of the Company in accordance
with generally accepted accounting principles applied on a consistent basis as
of the dates and for the periods set forth therein, subject to the absence of
footnote disclosure.

5f. Absence of Undisclosed Liabilities. Except as set forth on
Schedule 5(f), the Company knows of no obligation or liability arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
Closing other than: (i) liabilities set forth on the Latest Balance Sheet
(including any notes thereto), (ii) liabilities and obligations which have
arisen after the date of the Latest Balance Sheet in the ordinary course of
business (none of which is a material liability resulting from breach of
contract, breach of warranty, tort, infringement, claim or lawsuit) and (iii)
other liabilities and obligations expressly disclosed in the other Schedules to
this Agreement.

5g. No Material Adverse Change. There has been no material
adverse change in the financial condition, operating results, assets,
operations, business prospects, employee relations or customer or supplier
relations of the Company.

5h. Absence of Certain Developments.

(i) Except as expressly contemplated by this Agreement or
as set forth on the attached Schedule 5(h), since the date of the Latest Balance
Sheet, the Company has not:

(a) issued any notes, bonds or other debt securities
or any capital stock or other equity securities or any securities
convertible, exchangeable or exercisable into any capital stock or
other equity securities;

(b) borrowed any amount or incurred or become subject
to any liabilities, except current liabilities incurred in the ordinary
course of business and liabilities under contracts entered into in the
ordinary course of business;

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<PAGE> 7

(c) discharged or satisfied any Lien or paid
any obligation or liability, other than current liabilities paid in the
ordinary course of business;

(d) declared or made any payment or
distribution of cash or other property to its stockholders with respect
to its capital stock or other equity securities or purchased or
redeemed any shares of its capital stock or other equity securities
(including, without limitation, any warrants, options or other rights
to acquire its capital stock or other equity securities);

(e) mortgaged or pledged any of its
properties or assets or subjected them to any Lien, except Liens for
current property taxes not yet due and payable;

(f) sold, assigned or transferred any of its
tangible assets, except in the ordinary course of business, or canceled
any debts or claims;

(g) sold, assigned or transferred any
patents or patent applications, trademarks, service marks, trade names,
corporate names, copyrights or copyright registrations, trade secrets
or other intangible assets, or disclosed any proprietary confidential
information to any Person;

(h) suffered any extraordinary losses or
waived any rights of value, whether or not in the ordinary course of
business or consistent with past practice;

(i) made capital expenditures or commitments
therefor that aggregate in excess of $10,000;

(j) made any loans or advances to,
guarantees for the benefit of, or any Investments in, any Persons in
excess of $5,000 in the aggregate;

(k) made any charitable contributions or
pledges in excess of $5,000 in the aggregate;

(l) suffered any damage, destruction or
casualty loss exceeding in the aggregate $5,000, whether or not covered
by insurance;

(m) made any Investment in or taken steps to
incorporate any Subsidiary; or

(n) entered into any other material
transaction, whether or not in the ordinary course of business.

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<PAGE> 8

(ii) No officer, director, employee or agent of the
Company has been or is authorized to make or receive, and the Company does not
know of any such person making or receiving, any bribe, kickback or other
illegal payment.

5i. Assets. Except as set forth on Schedule 5(i), the Company
has good and marketable title to, a valid leasehold interest in, or a license to
use, the properties and assets used by it, located on its premises or shown on
the Latest Balance Sheet or acquired thereafter, free and clear of all Liens,
except for properties and assets disposed of in the ordinary course of business
since the date of the Latest Balance Sheet and except for Liens disclosed on the
Latest Balance Sheet (including any notes thereto) and Permitted Liens. Except
as described on Schedule 5(i), the Company's buildings, equipment and other
tangible assets, taken as a whole, are in good operating condition in all
material respects and are fit for use in the ordinary course of business. The
Company owns, has a valid leasehold interest in, or a license to use, all
material assets necessary for the conduct of its business as presently
conducted.

5j. Tax Matters.

(i) Except as set forth on Schedule 5(j), the Company has
filed all Tax Returns which it is required to file under applicable laws and
regulations; all such Tax Returns are complete and correct in all material
respects and have been prepared in compliance with all applicable laws and
regulations in all material respects; the Company in all material respects has
paid all Taxes due and owing by it (whether or not such Taxes are required to be
shown on a Tax Return) and has withheld and paid over to the appropriate taxing
authority all Taxes which it is required to withhold from amounts paid or owing
to any employee, stockholder, creditor or other third party; the Company has not
waived any statute of limitations with respect to any Taxes or agreed to any
extension of time with respect to any Tax assessment or deficiency; the accrual
for Taxes on the Latest Balance Sheet would be adequate to pay all Tax
liabilities of the Company if its current tax year was treated as ending on the
date of the Latest Balance Sheet (excluding any amount recorded which is
attributable solely to timing differences between book and Tax income); since
the date of the Latest Balance Sheet, the Company has not incurred any material
liability for Taxes other than in the ordinary course of business; the
assessment of any additional Taxes for periods for which Tax Returns have been
filed by the Company shall not exceed the recorded liability therefor on the
Latest Balance Sheet (excluding any amount recorded which is attributable solely
to timing differences between book and Tax income); the federal income Tax
Returns of the Company have not been audited; no foreign, federal, state or
local tax audits or administrative or judicial proceedings are pending or, to
the Company's knowledge, being conducted with respect to the Company; no
information related to Tax matters has been requested by any foreign, federal,
state or local taxing authority and no written notice indicating an intent to
open an audit or other review has been received by the Company from any foreign,
federal, state or local taxing authority; and to the Company's knowledge, there
are no unresolved questions or claims concerning the Company's Tax liability.

(ii) The Company has not made an election under ss.341 (f)
of the IRC. The Company is not liable for the Taxes of another Person in a
material amount under (a) Treas. Reg. ss. 1.1502-6 (or comparable provisions of
state, local or foreign law), (b) as a

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<PAGE> 9

transferee or successor, (c) by contract or indemnity or (d) otherwise. The
Company is not a party to any tax sharing agreement. The Company has disclosed
on its federal income Tax Returns any position taken for which substantial
authority (within the meaning of IRC ss.6662(d)(2)(B)(i)) did not exist at the
time the return was filed. The Company has not made any payments, is not
obligated to make payments and is not a party to an agreement that could
obligate it to make any payments that would not be deductible under IRC ss.280G.

(iii) "Tax" or "Taxes" means federal, state, county,
local, foreign or other income, gross receipts, ad valorem, franchise, profits,
sales or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license, payroll, wage
or other withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind whatsoever
(including, without limitation, deficiencies, penalties, additions to tax, and
interest attributable thereto) whether disputed or not. "Tax Return" means any
return, information report or filing with respect to Taxes, including any
schedules attached thereto and including any amendment thereof. "Affiliated
Group" means any affiliated group as defined in IRC ss.1504 that has filed a
consolidated return for federal income tax purposes (or any similar group under
state, local or foreign law) for a period during which the Company was a member.

5k. Contracts and Commitments.

(i) Except for verbal contracts with the Company's
customers in the ordinary course of business or as expressly contemplated by
this Agreement or as set forth on Schedule 5(k), the Company is not a party to
or bound by any written or oral:

(a) pension, profit sharing, stock option, employee
stock purchase or other plan or arrangement providing for deferred or
other compensation to employees or any other employee benefit plan or
arrangement, or any collective bargaining agreement or any other
contract with any labor union, or severance agreements, programs,
policies or arrangements;

(b) contract for the employment of any officer,
individual employee or other Person on a full-time, part-time,
consulting or other basis providing annual compensation in excess of
$50,000 or contract relating to loans to officers, directors or
Affiliates;

(c) contract under which the Company or Subsidiary has
advanced or loaned any other Person amounts in the aggregate exceeding
$5,000;

(d) agreement or indenture relating to borrowed money
or other Indebtedness or the mortgaging, pledging or otherwise placing
a Lien on any material asset or material group of assets of the
Company;

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<PAGE> 10

(f) lease or agreement under which the
Company is lessee of or holds or operates any property, real or
personal, owned by any other party;

(g) lease or agreement under which the
Company is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by the Company;

(h) contract or group of related contracts
with the same party or group of affiliated parties the performance of
which involves consideration in excess of $10,000;

(i) assignment, license, indemnification or
agreement with respect to any intangible property (including, without
limitation, any Intellectual Property Rights);

(j) warranty agreement with respect to its
services rendered or its products sold or leased;

(k) agreement under which it has granted any
Person any registration rights (including, without limitation, demand
and piggyback registration rights);

(l) sales, distribution or franchise
agreement;

(m) agreement with a term of more than six
(6) months which is not terminable by the Company upon less than thirty
(30) days notice without penalty;

(n) contract or agreement prohibiting it
from freely engaging in any business or competing anywhere in the
world; or

(o) any other agreement which is material to
its operations and business prospects or involves a consideration in
excess of $10,000 annually.

(ii) All of the material contracts,
agreements and instruments set forth on Schedule 5(k) (the "Material Contracts")
are valid, binding and enforceable against the Company in accordance with their
respective terms. The Company has performed in all material respect all
obligations required to be performed by it and is not in default under or in
breach of nor in receipt of any claim of default or breach under any material
contract, agreement or instrument to which the Company is subject; no event has
occurred which with the passage of time or the giving of notice or both would
result in a default, breach or event of noncompliance by the Company under any
material contract, agreement or instrument to which the Company is subject; the
Company has no present expectation or intention of not fully performing all such

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<PAGE> 11
obligations; and the Company has no knowledge of any breach or anticipated
breach by the other parties to any material contract, agreement, instrument or
commitment to which it is a party.

5l. Intellectual Property Rights.

(i) Schedule 5(l) contains a complete and accurate list of
all (a) patented or registered Intellectual Property Rights owned by the
Company, (b) pending patent applications and applications for registrations of
other Intellectual Property Rights filed by the Company, (c) unregistered trade
names and corporate names owned by the Company and (d) unregistered trademarks,
service marks, copyrights, mask works and computer software owned by the Company
and which are material to the business of the Company. Schedule 5(l) also
contains a complete and accurate list of all licenses and other rights granted
by the Company to any third party with respect to any Intellectual Property
Rights and all licenses and other rights granted by any third party to the
Company with respect to any Intellectual Property Rights, in each case
identifying the subject Intellectual Property Rights.

(ii) Except as set forth on Schedule 5(l), (a) the Company
owns all right, title and interest in and to all of the material Intellectual
Property Rights listed on such schedule, free and clear of all Liens other than
the Permitted Liens, (b) there have been no claims made against the Company
asserting the invalidity, misuse or unenforceability of any of such Intellectual
Property Rights, and to the Company's knowledge there are no grounds for the
same, (c) the Company has received no notices of, and is not aware of any facts
which indicate a likelihood of, any infringement or misappropriation by, or
conflict with, any third party with respect to such Intellectual Property Rights
(including, without limitation, any demand or request that the Company license
any rights from a third party), (d) to the best of the Company's knowledge, the
conduct of the Company's business has not infringed, misappropriated or
conflicted with and does not infringe, misappropriate or conflict with any
Intellectual Property Rights of other Persons in a manner that would result in a
material liability to the Company, and (e) to the best of the Company's
knowledge, the Intellectual Property Rights owned by or licensed to the Company
have not been infringed, misappropriated or conflicted by other Persons.

5m. Litigation, etc. Except as set forth on Schedule 5(m),
there are no actions, suits, proceedings, orders, investigations or claims
pending or, to the Company's knowledge, threatened against or affecting the
Company, or pending or threatened by the Company against any third party, at law
or in equity, or before or by any governmental department, commission, board,
bureau, agency or instrumentality (including, without limitation, any actions,
suit, proceedings or investigations with respect to the transactions
contemplated by this Agreement); and, to the Company's knowledge, there is no
reasonable basis for any of the foregoing. The Company is subject to no
judgment, order or decree of any court or other governmental agency.

5n. Brokerage. Except as set forth on Schedule 5(n), there are
no claims for brokerage commissions, finders' fees or similar compensation in
connection with the

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transactions contemplated by this Agreement based on any arrangement or
agreement binding upon the Company.

5o. Governmental Consent, etc. Except as set forth on Schedule
5(o), no permit, consent, approval or authorization of, or declaration to or
filing with, any governmental authority is required in connection with the
execution, delivery and performance by the Company of this Agreement or the
other agreements contemplated hereby, or the consummation by the Company of any
other transactions contemplated hereby or thereby.

5p. Insurance. Schedule 5(p) contains a description of each
insurance policy maintained by the Company with respect to its properties,
assets and businesses, and each such policy is in full force and effect as of
the Closing. The Company is not in default with respect to its obligations under
any insurance policy maintained by it, and the Company has not been denied
insurance coverage. Except as set forth on Schedule 5(p), the Company does not
have any self-insurance or co-insurance programs, and the reserves set forth on
the Latest Balance Sheet are adequate to cover all anticipated liabilities with
respect to any such self-insurance or co-insurance programs.

5q. Employees. Except as set forth on Schedule 5(q), the
Company is not aware that any executive or key employee of the Company or any
group of employees of the Company has any plans to terminate employment with the
Company. The Company has complied in all material respects with all laws
relating to the employment of labor (including, without limitation, provisions
thereof relating to wages, hours, equal opportunity, collective bargaining and
the payment of social security and other taxes), and the Company is not aware
that it has any material labor relations problems (including, without
limitation, any union organization activities, threatened or actual strikes or
work stoppages or material grievances). Neither the Company nor, to the
Company's knowledge, any of its employees is subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar agreements
relating to, affecting or in conflict with the present business activities of
the Company, except for agreements between the Company and its present and
former employees and independent contractors.

5r. ERISA.

(i) Multiemployer Plans. Except as set forth on Schedule
5(r), the Company does not have any obligation to contribute to (or any other
liability, including current or potential withdrawal liability, with respect to)
any "multiemployer plan" (as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")).

(ii) Retiree Welfare Plans. Except as set forth on
Schedule 5(r), the Company does not maintain or have any obligation to
contribute to (or any other liability with respect to) any plan or arrangement
whether or not terminated, which provides medical, health, life insurance or
other welfare-type benefits for current or future retired or

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terminated employees (except for limited continued medical benefit coverage
required to be provided under Section 4980B of the IRC or as required under
applicable state law).

(iii) Defined Benefit Plans. Except as set forth in
the Employee Benefits Schedule, the Company does not maintain, contribute to or
have any liability under (or with respect to) any employee plan which is a
tax-qualified "defined benefit plan" (as defined in Section 3(35) of ERISA),
whether or not terminated.

(iv) Defined Contribution Plans. Except as set forth
on Schedule 5(r), the Company does not maintain, contribute to or have any
liability under (or with respect to) any employee plan which is a tax-qualified
"defined contribution plan" (as defined in Section 3(34) of ERISA), whether or
not terminated.

(v) Other Plans. Except as set forth on Schedule
5(r), the Company does not maintain, contribute to or have any liability under
(or with respect to) any plan or arrangement providing benefits to current or
former employees, including any bonus plan, plan for deferred compensation,
employee health or other welfare benefit plan or other arrangement, whether or
not terminated.

(vi) The Company. For purposes of this Schedule 5(r),
the term "Company" includes all organizations under common control with the
Company pursuant to Section 414(b) or (c) of the IRC.

5s. Compliance with Laws. Except as set forth on Schedule
5(s), the Company is not in violation of any provision of its Certificate of
Incorporation or By-laws, or any judgment, order, writ, decree or law or any
governmental regulation or requirement which violation has had or would
reasonably be expected to have a material adverse effect upon the financial
condition, operating results, assets, operations or business prospects of the
Company, and the Company has received no notice of any such violation. Except as
set forth on Schedule 5(s), the Company is not subject to, and has no reason to
believe it may become subject to, any material liability (contingent or
otherwise) or corrective or remedial obligation arising under any federal,
state, local or foreign law, rule or regulation (including the common law)
relating to or regulating health, safety, pollution or the protection of the
environment ("Environmental Laws"). Without limiting the generality of the
foregoing, (i) the Company has obtained all permits, licenses and authorizations
required under, and has complied in all material respects with, all
Environmental Laws, (ii) no notice has been received by the Company regarding
any violation of, or any claim, liability or corrective or remedial obligation
under, any Environmental Laws and (iii) no facts or circumstances exist with
respect to the past or present operations or facilities of the Company which
would give rise to a material liability or corrective or remedial obligation
under any Environmental Laws.

5t. Affiliated Transactions. Except as set forth on
Schedule 5(t), no officer, director, employee, stockholder or Affiliate of the
Company or, to the knowledge of the Company, any individual related by blood,
marriage or adoption to any such individual or any entity in which any such
Person or individual owns any beneficial interest, is a party to any

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<PAGE> 14

agreement, contract, commitment or transaction with the Company or has any
material interest in any material property used by the Company.

5u. Business Plan. The Business Plan Executive Summary (the
"Business Plan") previously delivered to each Investor has been prepared in good
faith by the Company and does not contain any untrue statement of a material
fact nor does it omit to state a material fact necessary to make the statements
made therein not misleading except that with respect to projections contained in
the Business Plan, the Company represents only that such projections were
prepared in good faith and that the Company reasonably believes in its business
judgment there is a reasonable basis for such projections based upon information
currently available to the Company (as such projections have been revised on the
Business Plan Schedule).

5v. Registration Rights. Except as provided in the Rights
Agreement and Schedule 5(v), the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.

SECTION 6. Representations and Warranties of the Investors. Each
Investor as to itself severally and not jointly hereby represents and warrants
to the Company that:

6a. Authorization. Each Investor represents that it has full
power and authority to enter into this Agreement and that this Agreement
constitutes a valid and legally binding obligation of such Investor.

6b. Purchase Entirely for Own Account. This Agreement is made
with each Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Series C Preferred Stock to be purchased by such
Investor and the Common Stock issuable upon conversion thereof (collectively,
the "Securities") will be acquired for investment for such Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, each Investor further represents that
such Investor does not have any contract, undertaking, agreement or arrangement
with any Person to sell, transfer or grant participations to such Person or to
any third person, with respect to any of the Securities.

6c. Reliance Upon Investors' Representations. Each Investor
understands that the Series C Preferred Stock is not, and any Common Stock
acquired on conversion thereof at the time of issuance may not be, registered
under the Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to section 4(2) thereof, and that the
Company's reliance on such exemption is predicated on the Investors'
representations set forth herein. Each Investor realizes that the basis for the
exemption may not be present if, notwithstanding such representations, the
Investor has in mind merely acquiring shares of the Series C Preferred Stock for
a fixed or determinable period in the future, or for a market rise, or for sale
if the market does not rise. No Investor has any such intention.

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<PAGE> 15

6d. Receipt of Information. Each Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series C Preferred Stock. Each Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series C Preferred Stock and the business, properties, prospects and financial
condition of the Company and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify the accuracy of any information furnished
to it or to which it had access. The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 6 of this
Agreement or the right of the Investors to rely thereon.

6e. Investment Experience. Each Investor represents that it is
experienced in evaluating and investing in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Series C Preferred Stock. If other than an
individual, Investor also represents it has not been organized for the purpose
of acquiring the Series C Preferred Stock.

6f. Accredited Investor.

(i) The term "Accredited Investor" as used herein refers
to a person or entity who:

(a) is a director or executive officer of the
Company; or

(b) Any bank as defined in section 3(a)(2) of the Act,
or any savings and loan association or other institution as defined in
section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section
15 of the Securities Exchange Act of 1934; insurance company as defined
in section 2(13) of the Act; investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in section 2(a)(48) of that Act; Small Business Investment
Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958;
employee benefit Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in section
3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if
the employee benefit plan has total assets in excess of $5,000,000 or,
if a selfdirected plan, with investment decisions made solely by
persons that are accredited investors;

15
<PAGE> 16

(d) Any organization described in section
501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or
similar business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;

(e) Any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of his
purchase exceeds $1,000,000;

(f) Any natural person who had an individual
income in excess of $200,000 in each of the two most recent years or
joint income with that person's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year;

(g) Any trust, with total assets in excess
of $5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective
investment; or

(h) Any entity in which all of the equity
owners are accredited investors.

As used in this Section 6(f), the term "net worth" means the
excess of total assets over total liabilities. For the purpose of determining a
person's net worth, the principal residence owned by an individual should be
valued at fair market value, including the cost of improvements, net of current
encumbrances. As used in this Section 6(f), "income" means actual economic
income, which may differ from adjusted gross income for income tax purposes.
Accordingly, the undersigned should consider whether it should add any or all of
the following items to its adjusted gross income for income tax purposes in
order to reflect more accurately its actual economic income: any amounts
attributable to tax-exempt income received, losses claimed as a limited partner
in any limited partnership, deductions claimed for depletion, contributions to
an IRA or Keogh retirement plan, and alimony payments.

(ii) Each Investor as to itself severally and not
jointly further represents to the Company that except as otherwise disclosed to
the Company, in writing, prior to its execution hereof, such Investor is either:

(a) such Investor is an Accredited Investor
(as indicated on such Investor's counterpart signature page attached hereto); or

(b) such Investor is not an Accredited
Investor and neither such Investor nor any beneficiary of any trust or any
investment client for whose account such Investor is purchasing is a citizen or
resident of the United States or Canada, or any state, territory or possession
thereof, including but not limited to any estate of any such person, or any
corporation, partnership, trust or

16
<PAGE> 17

other entity created or existing under the laws thereof, or any entity
controlled or owned by any of the foregoing (a "U.S. Person").

(iii) "The capital contribution of the Investor does not
exceed 10% of the Investor's net worth or, in the case of an individual, joint
net worth with that person's spouse."

6g. Restricted Securities. Each Investor understands that the
Securities may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Securities or an
available exemption from registration under the Securities Act, the Securities
must be held indefinitely. In particular, each Investor is aware that the
Securities may not be sold pursuant to Rule 144 promulgated under the Securities
Act unless all of the conditions of that Rule are met. Among the conditions for
use of Rule 144 is the availability of current information to the public about
the Company. Such information is not now available and the Company has no
present plans to make such information available.

6h. Legends. To the extent applicable, each certificate or
other document evidencing any of the Series C Preferred Stock or any Common
Stock issued upon conversion thereof shall be endorsed with the legends set
forth below, and each Investor covenants that, except to the extent such
restrictions are waived by the Company, such Investor shall not transfer the
shares represented by any such certificate without complying with the
restrictions on transfer described in the legends endorsed on such certificate:

(i) The following legend under the Act:

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE
144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."

(ii) In the case of an Investor that is not a U.S. Person
and is not an Accredited Investor:

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF PRIOR TO ONE YEAR FROM THE DATE OF THE CLOSING AT
WHICH SUCH SHARES WERE PURCHASED, WITHIN THE UNITED STATES, CANADA,
THEIR TERRITORIES AND

17
<PAGE> 18

POSSESSIONS OR ANY AREA SUBJECT TO THEIR JURISDICTION OR TO ANY CITIZEN
OR RESIDENT OF THE UNITED STATES OR CANADA, OR ANY STATE, TERRITORY OR
POSSESSION THEREOF, INCLUDING ANY ESTATE OF SUCH PERSON OR ANY
CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY CREATED OR EXISTING
UNDER THE LAWS THEREOF, AND THEREAFTER MAY NOT BE SO TRANSFERRED ABSENT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."

6i. Public Sale. Each Investor agrees not to make, without the
prior written consent of the Company, any public offering or sale of the Series
C Preferred Stock, or any Common Stock issued upon the conversion thereof,
although permitted to do so pursuant to Rule 144(k) promulgated under the
Securities Act, until the earlier of (i) the date on which the Company effects
its initial registered public offering pursuant to the Securities Act or (ii)
the date on which it becomes a registered company pursuant to section 12(g) of
the Securities Exchange Act or (iii) five years after the Closing of the sale of
such Securities to Investor by the Company.

6j. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
more than 50% of the Common Stock (that has not been sold to the public) issued
or issuable upon conversion of the Series C Preferred Stock. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been converted), each
future holder of all such securities, and the Company.

SECTION 7. DEFINITIONS.

7a. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:

"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.

"Indebtedness" means at a particular time, without duplication, (i) any
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of property or services with

18
<PAGE> 19

respect to which a Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business), (iv) any commitment by which a Person assures
a creditor against loss (including, without limitation, contingent reimbursement
obligations with respect to letters of credit), (v) any indebtedness guaranteed
in any manner by a Person (including, without limitation, guarantees in the form
of an agreement to repurchase or reimburse), (vi) any obligations under
capitalized leases with respect to which a Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations a Person assures a creditor against loss, (vii) any indebtedness
secured by a Lien on a Person's assets and (viii) any unsatisfied obligation for
"withdrawal liability" to a "multiemployer plan" as such terms are defined under
ERISA.

"Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
computer software, and documentation thereof, and (vi) copies and tangible
embodiments thereof (in whatever form or medium).

"Investment" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.

"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.

"IRS" means the United States Internal Revenue Service.

"Liens" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any filing or agreement to file a
financing statement as debtor under the Uniform Commercial Code or any similar
statute other than to reflect ownership by a third party of property leased to
the Company under a lease which is not in the nature of a conditional sale or
title retention agreement, or any subordination arrangement in favor of another
Person (other than any subordination arising in the ordinary course of
business).

"Permitted Liens" means:

(i) tax liens with respect to taxes not yet due and payable or which
are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with generally accepted
accounting principles, consistently applied;

19
<PAGE> 20

(ii) deposits or pledges made in connection with, or to secure payment
of, utilities or similar services, workers' compensation, unemployment
insurance, old age pensions or other social security obligations;

(iii) purchase money security interests in any property acquired by the
Company;

(iv) interests or title of a lessor under any lease permitted by this
Agreement;

(v) mechanics', materialmen's or contractors' liens or encumbrances or
any similar lien or restriction for amounts not yet due and payable;

(vi) easements, rights-of-way, restrictions and other similar charges
and encumbrances not interfering with the ordinary conduct of the business of
the Company and its Subsidiaries or detracting from the value of the assets of
the Company;

(vii) rights of licensors under licenses granted to the Company; and

(viii) liens outstanding on the date hereof which secure Indebtedness
and which are described in the schedules to this Agreement.

"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.

"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.

"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.

"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability

20
<PAGE> 21

company, partnership, association or other business entity if such Person or
Persons shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control any
managing director or general partner of such limited liability company,
partnership, association or other business entity.

SECTION 8. MISCELLANEOUS.

8a. Consent to Amendments. The provisions of this Agreement
may be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the holders of a majority of the outstanding
shares of the Series C Preferred Stock.

8b. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.

8c. Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors, assigns, heirs, legatees and personal representatives
of the parties hereto, as the case may be.

8d. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

8e. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement.

8f. Descriptive Headings; Interpretation. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. The use of the word "including"
in this Agreement shall be by way of example rather than by limitation.

8g. Governing Law. The construction, validity, enforcement and
interpretation of this Agreement and the exhibits and schedules hereto shall be
governed by, and construed in accordance with, the laws of the State of
Delaware.

8h. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable overnight
courier service (charges prepaid) or mailed to the recipient by

21
<PAGE> 22

certified or registered mail, return receipt requested and postage prepaid. Such
notices, demands and other communications shall be sent to each Investor and to
the Company at the respective addresses indicated below:

To the Company at: Evolve Products, Inc.
152 Technology, Suite 200
Irvine, California 92618
Attention: Chief Financial Officer

With a copy to: Brobeck Phleger & Harrison LLP
38 Technology
Irvine, California 92618-2301
Attention: Richard A. Fink, Esq.

To any Investor at: At such Investor's address set forth on
Exhibit B hereto or to such other address
or to the attention of such other person
as the recipient party has specified by
prior written notice to the sending party.

8i. Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein.

8j. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
more than 50% of the Common Stock (that has not been sold to the public) issued
or issuable upon conversion of the Series C Preferred Stock. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been converted), each
future holder of all such securities, and the Company.

[SIGNATURE PAGE FOLLOWS]

22
<PAGE> 23

IN WITNESS WHEREOF, this Purchase Agreement has been executed as of the
date first written above by the parties hereto.

COMPANY:

EVOLVE PRODUCTS, INC.

By:
------------------------------------
Its:
-----------------------------------

INVESTORS:

ANTEC CORPORATION

By:
------------------------------------
Its:
-----------------------------------

B.E. DUVAL COMPANY PROFIT SHARING PLAN

By:
------------------------------------
Its:
-----------------------------------

B.E. DUVAL COMPANY

By:
------------------------------------
Its:
-----------------------------------

LAUREN D. GROSS TRUST DTD 9/1/91

By:
------------------------------------
Lauren Gross
Its: Trustee

EMERALD PRIVATE EQUITY FUND, LLC

By: Ashlay Asset Maintenance Company
Its: Manager

By:
------------------------------------
Sheldon J. Gross
Its: President

23
<PAGE> 24

MARTHA PORTER MITCHELL TRUST

By:
---------------------------
Martha C. Porter
Its: Trustee

------------------------------
GREGORY E. PORTER

------------------------------
COLLEEN NOYES

------------------------------
WILLIAM NOYES

------------------------------
CHARLES R. MORRIS III

------------------------------
GARY M. LAUDER

------------------------------
FRANK DOHERTY

------------------------------
FRANK O'DONNELL

------------------------------
JAMES L. FAUST

------------------------------
ROBERT STANZIONE

------------------------------
CLARKE W. PORTER

------------------------------
CLAIRE P. EICHLER

------------------------------
THOMAS DOHERTY

24
<PAGE> 25

FIDELITONE, INC.

By:
---------------------------
Name: Ron S. Comm
Its:
--------------------------

By:
---------------------------
Name:
-------------------------
Its:
--------------------------

25
<PAGE> 26

-------------------------------
ROCHELLE DARBEE

-------------------------------
THOMAS KELLY, JR.

-------------------------------
CHARLES K. STEWART

By:
----------------------------
Its:
---------------------------

26
<PAGE> 27

LIST OF EXHIBITS

Schedule 1 - Investors

Exhibit A - Certificate of Incorporation

Exhibit B - Rights Agreement

Exhibit C - Stock Restriction Agreement

<PAGE> 1
Exhibit 13.1

Independent Auditors' Report

The Board of Directors and Stockholder
TSX Corporation:

We have audited the consolidated statements of operations, changes in
stockholders' equity, and cash flows of TSX Corporation and Subsidiary for the
twelve-month period ended the last Saturday of October 1996 (not presented
herein). Those consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on those
consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
TSX Corporation and subsidiary for the twelve-month period ended the last
Saturday of October 1996 in conformity with generally accepted accounting
principles.

/s/ KPMG LLP

El Paso, Texas
May 30, 1997

<PAGE> 1
EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements and
in the related prospectuses of ANTEC Corporation listed below of our report
dated February 10, 1999, with respect to the consolidated financial statements
and schedules of ANTEC Corporation included in this Annual Report (Form 10K) for
the year ended December 31, 1998:

Registration Statement No. 33-71384 on Form S-8 (Amended and
Restated Employee Stock Incentive Plan)
Registration Statement No. 3371386 on Form S-8 (ANTEC Corporation
Director Stock Option Plan)
Registration Statement No. 3371388 on Form S-8 (ANTEC Corporation
Employee Stock Purchase Plan)
Registration Statement No. 3389704 on Form S-8 (ANTEC/Keptel
Exchange Options)
Registration Statement No. 333-11921 on Form S-8 (ESP Stock Plan)
Registration Statement No. 333-12131 on Form S-8 (ANTEC Corporation
Amended and Restated Employee Stock Incentive Plan)
Registration Statement No. 333-19129 on Form S-8 (TSX Corporation
1996 Second Amended and Restated Long-Term Incentive
Compensation Program; TSX Corporation 1993 Amended and
Restated Directors Stock Option Plan, As Amended; TSX
Corporation 1994 W.H. Lambert Stock Option Agreement)
Registration Statement No. 333-58437 on Form S-3 (ANTEC Corporation
Convertible Subordinated Notes/Common Stock)

/s/ ERNST & YOUNG LLP

Atlanta, Georgia
March 29, 1999

<PAGE> 1

The Board of Directors Exhibit 23.2
TSX Corporation:

We consent to incorporation by reference in the following ANTEC Corporation
registration statements of our report dated May 30, 1997, relating to the
consolidated statements of operations, changes in stockholders' equity, and cash
flows of TSX Corporation and subsidiary for the twelve-month period ended the
last Saturday of October 1996, which report appears in the December 31, 1998
annual report on Form 10-K of ANTEC Corporation.

Registration Statement No. 33-71384 on Form S-8
(Amended and Restated Employee Stock Incentive Plan)

Registration Statement No. 33-71386 on Form S-8
(ANTEC Corporation Director Stock Option Plan)

Registration Statement No. 33-71388 on Form S-8
(ANTEC Corporation Employee Stock Purchase Plan)

Registration Statement No. 33-89704 on Form S-8
(ANTEC/Keptel Exchange Options)

Registration Statement No. 333-11921 on Form S-8
(ESP Stock Plan)

Registration Statement No. 333-12131 on Form S-8
(ANTEC Corporation Amended and Restated Employee Stock Incentive Plan)

Registration Statement No. 333-19129 on Form S-8
(TSX Corporation 1996 Second Amended and Restated Long-Term
Incentive Compensation Program; TSX Corporation 1993 Amended
and Restated Directors Stock Option Plan, As Amended; TSX
Corporation 1994 W.H. Lambert Stock Option Agreement)

Registration Statement No. 333-58437 on Form S-3
(ANTEC Corporation Convertible Subordinated Notes/
Common Stock)

/s/ KPMG LLP

El Paso, Texas
March 29, 1999

<PAGE> 1

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of ANTEC Corporation, a Delaware corporation (the "Corporation"), which
is about to file an annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, on Form 10-K, hereby constitutes
and appoints Lawrence A. Margolis, Mark J. Scagliuso and James E. Knox and each
of them his or her true and lawful attorney-in-fact and agent, with full power
and all capacities, to sign the Corporation's Form 10-K and any and all
amendments thereto, and any other documents in connection therewith, to be
filed with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as she or he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact
agents or their substitutes may lawfully do or cause to be done by virtue
hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
and seal as of the 16th day of March, 1999.

/s/ ROD F. DAMMEYER
-------------------
Rod F. Dammeyer

<PAGE> 1

Exhibit 24.2

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
and seal as of the 16th day of March, 1999.

/s/ JOHN R. PETTY
-----------------
John R. Petty

<PAGE> 1

Exhibit 24.3

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
and seal as of the 16th day of March, 1999.

/s/ BRUCE VAN WAGNER
--------------------
Bruce Van Wagner

<PAGE> 1

Exhibit 24.4

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
and seal as of the 16th day of March, 1999.

/s/ Samuel K. Skinner
---------------------
Samuel K. Skinner

<PAGE> 1

Exhibit 24.5

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
and seal as of the 16th day of March, 1999.

/s/ WILLIAM T. SCHLEYER
-----------------------
William T. Schleyer

<PAGE> 1

Exhibit 24.6

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
and seal as of the 16th day of March, 1999.

/s/ JAMES L. FAUST
------------------
James L. Faust

<PAGE> 1

Exhibit 24.7

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or
officer of ANTEC Corporation, a Delaware corporation (the "Corporation"), which
is about to file an annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, on Form 10-K, hereby constitutes
and appoints Lawrence A. Margolis, Mark J. Scagliuso and James E. Knox and each
of them his or her true and lawful attorney-in-fact and agent, with full power
and all capacities, to sign the Corporation's Form 10-K and any and all
amendments thereto, and any other documents in connection therewith, to be filed
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as she or he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact agents
or their substitutes may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand
and seal as of the 16th day of March, 1999.

/s/ WILLIAM H. LAMBERT
----------------------
William H. Lambert

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS OF ANTEC CORPORATION AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND RELATED NOTES IN ANTEC
CORPORATION'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
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0
0
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</TABLE>