**EXHIBIT 99.1**

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# **COMMSCOPE,INC.**

# **FORWARD-LOOKINGINFORMATION**

 

The Securities Exchange Act of 1934, the PrivateSecurities Litigation Reform Act of 1995 and other related laws provide a “safeharbor” for forward-looking statements. Our Form 10-K/A for the year ended December 31, 2003, our Annual Reportto Stockholders, any Form 10-Q or Form 8-K of ours, or any other oral orwritten statements made by us or on our behalf, may include forward-lookingstatements which reflect our current views with respect to future events andfinancial performance.  Theseforward-looking statements are identified, including without limitation, bytheir use of such terms and phrases as “intends,” “intend,” “intended,” “goal,”“estimate,” “estimates,” “expects,” “expect,” “expected,” “project,”“projects,” “projected,” “projections,” “plans,” “anticipates,” “anticipated,”“should,” “think,” “thinks,” “designed to,” “foreseeable future,” “believe,”“believes” and “scheduled” and similar expressions. Readers are cautioned notto place undue reliance on these forward-looking statements, which speak onlyas of the date the statement was made. We do not intend, and are not undertaking any duty or obligation, toupdate any forward-looking statements to reflect developments or information obtainedafter the date of this Exhibit 99.1.

 

Our actual results may differ significantly from theresults discussed in forward-looking statements.  Factors that might cause such a differenceinclude, but are not limited to (a) the general political, military, economicand competitive conditions in the United States and other markets where weoperate; (b) changes in capital availability or costs, such as changes ininterest rates, market perceptions of the industry in which we operate,security ratings or general stock market fluctuations; (c) employee workforcefactors; (d) authoritative generally accepted accounting principles or policychanges from such standard-setting bodies as the Financial Accounting StandardsBoard, the Public Company Accounting Oversight Board and the Securities andExchange Commission (“SEC”); (e) the impact of corporate governance, accountingand securities law reforms by the United States Congress, the SEC and the NewYork Stock Exchange;  (f) risks relatedto inventory, including warranty costs, obsolescence charges, excess capacityand material and labor costs; (g) significant joint ventures and acquisitions;and (h) the factors set forth below.

 

### **We may fail to realize the anticipated benefits of ouracquisition of Connectivity Solutions because of the challenges of integratingand operating the Connectivity Solutions business.**

 

On January 31, 2004, we acquired substantially all ofthe assets and assumed certain specified liabilities of the ConnectivitySolutions business (“Connectivity Solutions”) of Avaya Inc. (“Avaya”).  Although we expect to realize strategic,operational and financial benefits as a result of the Connectivity Solutionsacquisition, we cannot predict whether and to what extent such benefits will beachieved.  There are significantchallenges to integrating the Connectivity Solutions operations into ourbusiness, including:

 

**•**            successfullymanaging the operations, manufacturing facilities and technology ofConnectivity Solutions;

 

**•**            maintainingand increasing the customer base for Connectivity Solutions products;

 

**•**            successfullymarketing and selling two potentially competing LAN products; and

 

**•**            integratingmanagement information, inventory, accounting and sales systems of CommScopeand Connectivity Solutions.

 

The ConnectivitySolutions acquisition is significant to us in size and range of productofferings and we have not previously had comparable experience integratingoperations as substantial and geographically diverse as those of ConnectivitySolutions.  As a result of thisacquisition, we now have

 

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subsidiaries, orrepresentative branch offices, in numerous foreign countries, subjecting us todiverse foreign laws and regulations.

 

In connection with our acquisition of ConnectivitySolutions, our wholly owned subsidiary Connectivity Solutions Manufacturing,Inc. (“CSMI”) assumed a collective bargaining agreement, with applicablemodifications, effective January 31, 2004 with the International Brotherhood ofElectrical Workers.  This agreementexpires on May 31, 2006.  Disputes underthis agreement, our inability to successfully negotiate future agreements, orattempts to organize our non-union employees could result in disruption of ouroperations and higher ongoing labor costs.   Prior to the Connectivity Solutions acquisition, none of our domesticemployees were subject to a collective bargaining agreement.

 

Also, in connection with the Connectivity Solutionsacquisition, we assumed underfunded pension plan and retiree medicalliabilities for U.S. represented employees of the Connectivity Solutionsbusiness upon the transfer of plan assets and obligations to us.  Declines in equity and fixed income marketscould decrease the value of plan assets and further increase the unfundedamount of our obligations under these plans, resulting in increased costs andthe need to possibly establish a minimum pension liability and record a chargeto accumulated other comprehensive income/loss.

 

On October 11, 2004, CSMI adopted organizational andcost reduction initiatives at its Omaha, Nebraska site designed to improve thecompetitive position of Omaha’s operations. These initiatives are expected to be substantially in place by mid-year2005. As a result of these CSMI initiatives, CSMI expects to incur costs forprocess improvements, including facility redesign, and employee-related costs,including severance pay, related fringe benefits and a curtailment loss forpension and post-retirement benefits. The incremental pretax costs, primarily in cash, to implement theseinitiatives are currently expected to be $10 to $15 million.  Approximately half of these costs areexpected to be recognized in the fourth quarter of 2004, with the balance to beincurred in 2005.  As a result of theseinitiatives, CSMI may identify fixed assets that are no longer needed.  CSMI may consider disposing of these assetsand as a result could incur pretax losses on disposal or impairment of theseassets of up to $10 million.  Annualizedsavings resulting from the initiatives are currently projected to be $20 to $25million once the initiatives are in place. The timing of implementation of the cost reduction initiatives will bedependent on future business conditions, including volume, pricing and seasonality.  In addition, the actual costs and benefits ofthe initiatives may differ from projected estimates as a result of a number ofuncertainties including business conditions, sales volumes, pricing and seasonality,among others.

 

Our failure to successfully integrate and operate ourConnectivity Solutions segment, and to realize the anticipated benefits of theacquisition and cost reduction initiatives, could adversely impact ouroperating performance and financial results.

 

### **The historical financial information of ConnectivitySolutions is not necessarily indicative of the future financial condition orperformance of our Connectivity Solutions segment subsequent to theacquisition.**

 

The historical financial information of ConnectivitySolutions as a division of Avaya differs from the future financial conditionand performance of our Connectivity Solutions segment subsequent to theacquisition because, among other reasons:

 

**•**                  theConnectivity Solutions financial statements include assets and liabilities thatwere not acquired or assumed by us;

 

**•**                  theConnectivity Solutions financial statements include an allocation of corporateoverhead from Avaya which would not be applicable after the acquisition;

 

**•**                  thefinancial information does not reflect anticipated transaction costs orexpected synergies resulting from the acquisition;

 

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**•**                  thefinancial results of Connectivity Solutions may not be indicative of the actualresults of the Connectivity Solutions business when operated as a part of ourcompany; and

 

**•**                  ConnectivitySolutions’ balance sheet as of September 30, 2003 does not reflect the currentmarket value of the assets acquired as of January 31, 2004.

 

Accordingly, thehistorical financial information of the Connectivity Solutions business as adivision of Avaya should not be relied upon as indicative of the futurefinancial condition or performance of our Connectivity Solutions segmentsubsequent to the acquisition.

 

**The pro forma financial information ofCommScope and Connectivity Solutions is not necessarily indicative of thefuture financial condition or performance of the combined businesses.**

 

The pro forma financial information of CommScope withrespect to the acquisition of Connectivity Solutions that is included in ourSEC filings is intended to provide information regarding how CommScope mighthave looked if the acquisition had occurred as of the dates indicated in suchinformation.  The amounts for the ConnectivitySolutions business of Avaya included in this pro forma information for periodsin the year ended December 31, 2003 and the month of January 2004 are based onthe historical results of the Connectivity Solutions business as a division ofAvaya, however, and therefore may not be indicative of the actual results ofour Connectivity Solutions segment when operated as part of CommScope goingforward.  Moreover, the pro formainformation does not reflect all of the changes that may result from theacquisition, including, but not limited to, challenges of transition,integration and restructuring associated with the transaction; challenges ofachieving anticipated synergies; ability to retain qualified employees andexisting business alliances; maintaining satisfactory relationships with representedemployees; and customer demand for Connectivity Solutions products.  The pro forma adjustments representmanagement’s best estimates based on information available at the time the proforma information was prepared and may differ from the adjustments that mayactually be required.  Accordingly, thepro forma financial information should not be relied upon as being indicativeof the historical results that would have been realized had the acquisitionoccurred as of the dates indicated or that may be achieved in the future.

 

### **Our sales and profitability have been adverselyaffected by a reduction in capital spending in the cable television andtelecommunications industries.**

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Prior to our acquisition of Connectivity Solutions,most of our revenues have come from sales of communications cable products tothe cable television industry.  Demandfor our communications cable products depends primarily on capital spending bycable television operators for maintaining, constructing, rebuilding orupgrading their systems.  Capitalspending in the cable television and telecommunications industries iscyclical.  The amount of this capitalspending, and, therefore, our sales and profitability, will be affected by avariety of factors, including, without limitation:

 

**•**                  generaleconomic conditions;

 

**•**                  availabilityand cost of capital;

 

**•**                  changesin ownership of cable television operators;

 

**•**                  cablesystem consolidation within the industry;

 

**•**                  thefinancial condition of domestic and international cable television operators andtheir access to financing;

 

**•**                  competitionfrom satellite and wireless television providers and telephone companies;

 

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**•**                  technologicaldevelopments;

 

**•**                  levelsof network maintenance spending;

 

**•**                  newlegislation and regulation of cable television operators; and

 

**•**                  governmentinvestigations into industry practices.

 

In recent years, cable television capital spending hasdecreased substantially and we expect ongoing volatility in the near term.  Our 2003 sales were negatively impacted by asignificant slowdown in spending by our international customers, substantiallylower sales of fiber optic cable and a major slowdown in spending by AdelphiaCommunications Corporation, primarily as a result of its Chapter 11 bankruptcyfiling.  We also experienced asignificant slowdown in spending by Charter Communications, Inc. during2003.  A shift away from rebuilding orupgrading activities has negatively impacted our profit margins.  Comcast Corporation has stated publicly thatit is nearing the end of its major capital spending for upgrade and rebuildactivities, and we expect lower sales of Broadband/Video products for thebalance of 2004.  We cannot assure youthat cable television capital spending will not decrease in the future or when,if at all, it will increase.  Lack ofdemand could increase competition for existing customers and negatively affectpricing.  In addition, if we are unable toadequately manage our costs in response to reduced demand for our products,there could be a material adverse effect on our profitability.

 

**Thesales and profitability of Connectivity Solutions have been adversely affectedby a reduction in capital spending in the corporate information technologysector as well as in the telecommunications industry.**

 

The majority of the salesof Connectivity Solutions as operated by Avaya were derived from corporateinformation technology spending by global enterprises.  In 2001 and 2002, global enterprises reducedtheir information technology capital spending in light of, and to a greaterextent than, the overall decline in the economy.  In addition, a significant portion of thesales of Connectivity Solutions historically were derived from capital spendingby telecommunications service providers. These telecommunications customers have greatly reduced their spendingon communications equipment, as demand for products in the telecommunicationsequipment market remains at historically low levels due to the overall declinein the economy.  If capital spendinglevels in the corporate information technology sector and in thetelecommunications industry continue to decline and/or do not increase, oursales and profitability relating to our Connectivity Solutions segment will beadversely affected.

 

### **Our communications cable customers are subject tosignificant government regulation that could materially adversely affect ourbusiness.**

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In recent years, cable television capital spending hasbeen affected by new legislation and regulation, on the federal, state andlocal level.  Many aspects of governmentregulation are currently the subject of judicial proceedings and administrativeor legislative proposals.  The FederalCommunications Commission is continuing its implementation of theTelecommunications Act of 1996, referred to herein as the “Telecom Act” which,when fully implemented, may significantly impact the communications industryand alter federal, state and local laws and regulations regarding the provisionof cable, internet and telephony services. The Telecom Act eliminates substantially all restrictions on the entryof telephone companies and certain public utilities into the cable televisionbusiness.  Telephone companies may nowenter the cable television business as traditional cable operators, as commoncarrier conduits for programming supplied by others, as operators of wirelessdistribution systems, or as hybrid common carrier/cable operator providers ofprogramming on so-called “open video systems.” The economic impact of the Telecom Act, ongoing litigation in thisregard, other recent federal legislation and the rules implementing these lawson the cable television industry and our business is still uncertain.

 

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### **The loss of one or more of our principal customers,distributors, value-added resellers and system integrators could materiallyadversely affect us.**

 

Although the domestic cable television industry iscomprised of thousands of cable systems, a small number of cable televisionoperators own a majority of cable television systems and account for a majorityof the capital expenditures made by cable television operators.  Although we sell to a wide variety ofcustomers dispersed across many different geographic areas, sales to the fivelargest domestic broadband service providers represented approximately 20.3% ofour consolidated net sales for the nine months ended September 30, 2004.  Accordingly, the loss of one or more of ourprincipal communications cable customers could have a material adverse effecton our business and financial condition.

 

We distribute SYSTIMAX® solutions and certain otherproducts through a worldwide network of more than 2,000 distributors,value-added resellers and system integrators. Prior to our acquisition of Connectivity Solutions, for the fiscal yearended September 30, 2003, sales of SYSTIMAX® by the Connectivity Solutionsbusiness of Avaya to the top five distributors, value-added resellers andsystem integrators represented approximately 77% of the net sales of SYSTIMAX®in that period.  In particular, AnixterInternational Inc. and affiliates (“Anixter”) accounted for approximately 53%and Graybar Electric Company accounted for approximately 14% of the net salesof SYSTIMAX® for the fiscal year ended September 30, 2003.  Total sales to Anixter accounted forapproximately 34.5% of our consolidated net sales during the nine months endedSeptember 30, 2004.  The loss of one or moreof our principal distributors, value-added resellers and system integrators couldhave a material adverse effect on our business and financial condition.

 

### **Consolidation among our major customers couldmaterially adversely affect our business.**

 

The telecommunications industry has experienced theconsolidation of many industry participants and this trend is expected tocontinue.  Consolidations could result indelays in purchasing decisions by the merged businesses, and we could playeither a greater or lesser role in supplying products to the mergedentity.  These purchasing decisions ofthe merged companies could have a material adverse effect on our business.  In November 2002, AT&T Broadband, thelargest domestic multiple system operator and one of our significant customers,merged with Comcast Corporation to form a new company named ComcastCorporation, creating a concentration of credit risk for us in the new mergedentity.    We cannot determine whether orto what extent future potential regional clustering of cable systems andsubscriber trades, will delay expected cable spending or negatively impact oursales volumes or profits.

 

In addition, CommScope sells directly or indirectly toa very small group of telecommunications service providers, primarily theformer Bell operating companies and their extended supply chain.  Additional consolidation of providers or theloss of access to their product portfolios could have a material adverse effecton our business and financial condition.

 

### **The financial condition of some of our majorcommunications cable customers has deteriorated, which has resulted inwrite-offs and increased our credit risk.**

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Some of our major communications cable customers haveexperienced financial difficulties as a result of weakness in thetelecommunications industry or for other reasons.

 

One of our significant communications cable customers,Adelphia, filed for Chapter 11 debtor-in-possession reorganization on June 25,2002.  During 2002, we wrote off $21.4million of Adelphia receivables, which we sold in 2003.  We have reached an agreement with Adelphia onthe terms under which we will continue to do business with Adelphia during itsChapter 11 reorganization but we do not expect a significant recovery ofbusiness with Adelphia in the near term.

 

If the current weakness in the telecommunicationsindustry continues, or if conditions deteriorate further, or for other reasons,our customers may experience financial difficulties, become subject to

 

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government investigationor file with the courts seeking protection under the applicable bankruptcy orreorganization laws.  Upon the financialfailure of a customer, we may experience losses as a result of our inability tocollect, in a timely manner or at all, the accounts receivable outstanding tosuch customer, as well as the loss of such customer’s ongoing business.  If our customers fail to meet their paymentobligations to us, we could experience reduced cash flows and losses in excessof amounts reserved.

 

### **Although we believe that our existing goodwill andother intangible assets are not currently impaired, we may incur impairmentcharges related to these assets in the future.**

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Effective January 1, 2002, we adopted Statement ofFinancial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other IntangibleAssets.”  SFAS No. 142 requires the useof a nonamortization approach to account for purchased goodwill and  other intangible assets with indefinite livesand also requires at least an annual assessment for impairment by applying afair-value-based test.

 

SFAS No. 142 requires that goodwill and otherintangible assets with indefinite lives be tested for impairment annually atthe same time each year and on an interim basis when events or circumstanceschange.  We elected to perform our annualimpairment test as of August 31.  Ourmost recent annual impairment test as of August 31, 2004 indicates thatgoodwill and other intangible assets with indefinite lives were not impaired asof this date.

 

Existing goodwill, which totaled $151 million as ofDecember 31, 2003, arose from previous acquisitions accounted for underthe purchase method of accounting.  Inconnection with the acquisition of Connectivity Solutions, we recognized anintangible asset of $12 million for trademarks which was determined to have anindefinite life.  If the current weaknessin the telecommunications industry is prolonged or further deteriorates, wecannot assure you that future tests will not result in impairment of existinggoodwill and other intangible assets with indefinite lives and that potentialfuture impairment will not materially adversely affect our results ofoperations.

 

### **We have recognized impairment charges for fixed assetsand may need to do so again in the future.**

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Effective January 1,2002, we adopted SFAS No. 144, “Accounting for Impairment or Disposal ofLong-Lived Assets,” which supersedes SFAS No. 121, “Accounting for theImpairment or Disposal of Long-Lived Assets and for Long-Lived Assets to beDisposed Of,” but retains many of its fundamental provisions.  Long-lived assets must be tested forimpairment in accordance with SFAS No. 144 whenever events or changes incircumstances indicate that their carrying amounts may not be recoverable.  Due to the difficult business environment intelecommunications and the continuing decline in demand for our products, werecognized impairment charges of $31.7 million during the three months endedJune 30, 2003 primarily related to our broadband cable manufacturingassets.  We previously recognized impairmentcharges of $25.1 million during the three months ended September 30, 2002primarily related to fixed assets used in the manufacture of our wireless,fiber optic cable and other telecommunications products.  These impairment charges represented approximately17% and 11% of our total net property, plant and equipment as of June 30, 2003and September 30, 2002, respectively.

 

As a result of the organizational and cost reductioninitiatives at the CSMI Omaha, Nebraska facility, CSMI may identify fixedassets that are no longer needed.  CSMImay consider disposing of these assets and as a result could incur pretaxlosses on disposal or impairment of these assets of up to $10 million.

 

Utilization in our facilities is subject to changebased on customer demand.  We can give noassurances that we will not have excess manufacturing capacity over thelong-term.  If the current weakness inthe telecommunications industry is prolonged or further deteriorates, we cannotassure you that future tests will not result in additional impairment oflong-lived assets and that potential future impairment of long-lived assetswill not materially adversely affect our results of operations.

 

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### **Our failure to introduce new products successfully,and changes in technology, could materially adversely affect us.**

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Many of our markets are characterized by advances ininformation processing and communications capabilities which require increasedtransmission speeds and greater capacity, or “bandwidth,” for carryinginformation.  These advances requireongoing improvements in the capabilities of wire and cable products.  We believe that our future success willdepend in part upon our ability to enhance existing products and to develop andmanufacture new products that meet or anticipate these changes.  The failure to introduce successful new orenhanced products on a timely and cost-competitive basis or the inability tocontinue to market existing products on a cost-competitive basis could materiallyadversely affect our business and financial condition.

 

Fiber optic technology presents a potential substitutefor some of the communications cable products we sell.  A significant decrease in the cost of fiberoptic systems could make these systems superior on a price/performance basis tocopper systems.  A significant decreasein the cost of fiber optic systems would reasonably be expected to have amaterially adverse effect on our coaxial cable sales.

 

### **The communications cable industry is highlycompetitive globally and rapid technological change may lead to furthercompetition.**

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Our coaxial, fiber optic and electronic cable productscompete with those of a substantial number of foreign and domestic companies,some of which have greater resources (financial or otherwise), or lower operatingcosts, than we have.  The rapidtechnological changes occurring in the telecommunications industry could leadto the entry of new competitors. Existing competitors’ actions, such as price reductions, use of internetauctions or introduction of new innovative products, and new entrants may havea materially adverse impact on our sales and profitability.  We cannot assure you that we will continue tocompete successfully with our existing competitors or that we will be able tocompete successfully with new competitors.

 

### **Our dependence on commodities subjects us to pricefluctuations which could materially adversely affect our profitability.**

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Our profitability may be materially affected bychanges in the market price and availability of our raw materials, most ofwhich are linked to the commodity markets. The principal raw materials we purchase are polymers, fabricatedaluminum, steel, copper, and optical fiber. Polymers are used to insulate and protect cables and fabricatedaluminum, copper and steel are used in the production of coaxial and twisterpair cables.  Prices for metals andpolymers, derived from oil and natural gas, have increased substantially overthe last twelve months.  As a result, wehave increased our prices for certain products and may have to increase pricesagain in the future.  Our inability toachieve market acceptance of future price increases could have a materialimpact on the results of our operations.

 

### **Difficulties with our key suppliers could materiallyadversely affect us.**

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For certain of our raw material purchases, includingfluorinated ethylene propylene (FEP), copper rods, fine aluminum wire, steeland optical fiber, we are dependant on key suppliers.

 

FEP is the primary raw material used throughout theindustry for producing flame retarding cables for local area networkapplications.  There are few worldwideproducers of FEP and market supplies have been periodically limited over thepast several years.  Availability ofadequate supplies of FEP will be critical to future local area network cablesales growth.  If FEP is not available inadequate quantities on acceptable terms, our business and financial conditioncould be materially adversely affected.

 

A portion of our raw material purchases are bimetalliccenter conductors for coaxial cables. During 2003, we produced substantially all of our requirementsinternally and purchased the remaining amount from Copperweld Corporation.  We will continue to use our internalproduction capabilities to meet the

 

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majority of ourbimetallic center conductor requirements for 2004.  However, the loss of our ability to producebimetallic center conductors would likely require the purchase of bimetalliccenter conductors from Copperweld or other sources, which are limited.  Copperweld’s inability to supply, and/or ourfailure to manufacture or adequately expand our internal production of theseproducts, could have a materially adverse effect on our business and financialcondition.

 

We internally produce a significant portion of ourrequirements for fine aluminum wire, which is available externally from only alimited number of suppliers.  Althoughthis is a smaller raw material purchase than bimetallic center conductors, ourfailure to manufacture or adequately expand our internal production of finealuminum wire, and/or our inability to obtain these materials from othersources in adequate quantities on acceptable terms, could have a materiallyadverse effect on our business and financial condition.

 

Optical fiber is a primary material used for makingfiber optic cables.  There are fewworldwide suppliers of these premium optical fibers.  Availability of adequate supplies of premiumoptical fibers will be critical to future fiber optic cable sales growth.  We believe that our optical fiber supplyarrangements with two suppliers address concerns about the continuingavailability of these materials to us, although there can be no assurance ofthis.

 

Our key suppliers could experience financialdifficulties, or there may be global shortages of the raw materials we use, andour inability to find sources of supply on reasonable terms could materiallyadversely affect our ability to manufacture products in a cost effective way.

 

### **Because of our vertical integration of supply andproduction of some products, a disruption or failure at one of ourmanufacturing facilities could materially adversely affect our ability tomanufacture products at other manufacturing facilities in a cost-effective andtimely manner.**

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We internally produce a significant portion of some ofthe components used in our finished products, including bimetallic centerconductors and fine aluminum wire, at certain of our manufacturing facilities.Disruption at these facilities due to failure of our technology, fire,electrical outage, natural disaster, acts of terrorism or some othercatastrophic event could materially adversely affect our ability to manufactureproducts at our other manufacturing facilities in a cost-effective and timelymanner.

 

### **If our products or components purchased from oursuppliers experience performance issues, our business will suffer.**

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Our business depends on our producing excellentproducts of consistently high quality. To this end, our products, including components and raw materialspurchased from our suppliers, are rigorously tested for quality both by us andour customers.  Nevertheless, ourproducts are highly complex and our customers’ testing procedures are limitedto evaluating our products under likely and foreseeable failure scenarios.  For various reasons (including, among others,the occurrence of performance problems unforeseeable in testing), our productsand components and raw materials purchased from our suppliers may fail toperform as expected.  Performance issuescould result from faulty design or problems in manufacturing.  We have experienced such performance issuesin the past and remain exposed to such performance issues. In some cases,recall of some or all affected products, product redesigns or additionalcapital equipment may be required to correct a defect.  In addition, we warrant or indemnify certainproducts over varying periods of time. In particular, we warrant the operation of our SYSTIMAX Solutionsproducts for a period of 20 years from installation.  Although historical warranty and indemnityclaims have not been significant, we cannot assure you that future claims willnot have a materially adverse effect on our results of operations.  Any significant or systemic product failurecould also result in lost future sales of the affected product and otherproducts, as well as result in customer relations problems.

 

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### **Our business is subject to the economic uncertaintiesand political risks of making and selling our products in foreign countries.**

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With the acquisition of Connectivity Solutions, wehave significantly increased our international manufacturing operations andinternational sales.  For the nine monthsended September 30, 2004, international sales represented approximately 30.8%of our net sales (including sales from our Connectivity Solutionssegment).  Our international sales andoperations are subject to the risks inherent in operating abroad, includingrisks with respect to currency exchange rates, economic and politicaldestabilization, restrictive actions by foreign governments, nationalizations,the laws and policies of the United States affecting trade, foreign investmentand loans, foreign tax laws, compliance with local laws and regulations, armedconflict, war, terrorism and major health concerns (such as SARS).

 

### **Potential environmental liabilities may arise in thefuture and materially adversely impact our financial position.**

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We are subject to various federal, state, local andforeign environmental laws and regulations governing, among other things,discharges to air and water, management of hazardous substances, handling anddisposal of solid and hazardous waste, and investigation and remediation ofhazardous substance contamination. Because of the nature of our business, we have incurred and willcontinue to incur, costs relating to compliance with these environmental lawsand regulations.  Compliance with currentlaws and regulations has not had and is not expected to have a material adverseeffect on our financial condition. However, new laws and regulations, including those regulating the typesof substances allowable in certain of our consumer products, stricter enforcementof existing laws and regulations, the discovery of previously unknowncontamination or the imposition of new remediation or discharge requirementscould require us to incur costs or become the basis for new or increasedliabilities that could have a material adverse effect on our business,financial condition and results of operations.

 

Pursuant to the Comprehensive Environmental Response,Compensation and Liability Act and similar state statutes, current or formerowners or operators of a contaminated property, as well as companies that generated,disposed of, or arranged for the disposal of hazardous substances at acontaminated property, can be held jointly and severally liable for the costsof investigation and remediation of the contaminated property, regardless offault.  Our present and past facilitieshave been in operation for many years, and over that time in the course ofthose operations, these facilities have used substances which are or might beconsidered hazardous, and we have generated and disposed of wastes which are ormight be considered hazardous. Therefore, it is possible that environmental liabilities may arise inthe future which we cannot now predict.

 

### **Although we believe cash from operations andavailability under our senior secured credit facility provide adequate resourcesto fund ongoing operating requirements, we may be limited in our ability toobtain additional capital on commercially reasonable terms.**

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Although we believe cash from operations andavailability under our senior secured revolving credit facility provideadequate resources to fund ongoing operating requirements, we may need to seekadditional financing to compete effectively. Our public debt ratings affect our ability to raise capital and the costof that capital.  Future downgrades ofour debt ratings may increase our borrowing costs and affect our ability toaccess the equity capital markets on terms and in amounts that would besatisfactory to us.

 

### **Our indebtedness could restrict our operations, makeus more vulnerable to adverse economic conditions and make it more difficult toinvest in our business.**

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Our current and future indebtedness could haveimportant consequences to you.  Forexample, it could:

 

**•**                  impairour ability to obtain additional financing in the future;

 

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**•**                  reducefunds available to us for other purposes, including working capital, capitalexpenditures, research and development, strategic acquisitions and othergeneral corporate purposes;

 

**•**                  restrictour ability to introduce new products or exploit business opportunities;

 

**•**                  increaseour vulnerability to economic downturns and competitive pressures in theindustry we operate in;

 

**•**                  increaseour vulnerability to interest rate increases to the extent variable-rate debtis not effectively hedged;

 

**•**                  limit,including as a result of the financial and other restrictive covenants in thatindebtedness, our ability to dispose of assets or borrow additional funds; and

 

**•**                  placeus at a competitive disadvantage.

 

We may incur additional indebtedness in the future,either under the revolving credit facility that is part of our senior securedcredit facility, through future debt issuances, in connection with futureacquisitions or otherwise.

 

### **A significant uninsured loss or a loss in excess ofour insurance coverage could materially adversely affect our financialcondition.**

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We maintain insurance covering normal businessoperations, including fire, property and casualty protection that we believe isadequate.  We do not generally carryinsurance covering wars, acts of terrorism, earthquakes or other similarcatastrophic events.  Because insurancehas generally become more expensive, we may not be able to obtain adequateinsurance coverage on financially reasonable terms.  A significant uninsured loss or a loss inexcess of our insurance coverage could materially adversely affect ourfinancial condition.

 

### **We have in the past reduced the size of our workforceand may need to do so again in the future.**

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In response to the level of business and outlook forfuture business, in recent years we have reduced the size of ourworkforce.  During 2002 and 2003, wereduced our workforce by a total of approximately 350 employees and recordedtotal pretax charges related to these workforce reductions of approximately$2.5 million for employee termination benefits during 2002.  During the three months ended March 31, 2004,we reduced our Connectivity Solutions segment workforce by 45 employees andrecorded total pretax charges related to these workforce reductions of approximately$1.6 million for employee termination benefits. Our manufacturing subsidiary CSMI recently adopted organizational andcost reduction initiatives at its Omaha, Nebraska site, which includeemployee-related initiatives.  If wereduce our expectations for future business we may again reduce our workforceand incur restructuring costs or impairment charges if we adopt a restructuringplan in response to changing business conditions.

 

### **We may experience difficulties in obtaining orprotecting intellectual property.**

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We may encounter difficulties, costs or risks inprotecting our intellectual property rights or obtaining rights to additionalintellectual property to permit us to continue or expand our business.  Other companies, including some of our largestcompetitors, hold intellectual property rights in our industry and theintellectual property rights of others could inhibit our ability to introducenew products in our field of operations unless we secure licenses oncommercially reasonable terms, as such are needed.

 

**Changes in accounting standards orpractices could affect our financial results; the recent change in accountingrequirements applicable to our outstanding convertible debt is expected to havea dilutive effect on our earnings per share.**

 

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The Financial Accounting Standards Board (“FASB”),and other regulatory or standard setting bodies, periodically revise accountingstandards and practices.  Any suchrevisions could adversely, and potentially materially adversely, affect ourfinancial results.  In particular, theFASB recently adopted new accounting requirements for convertible debtinstruments with contingent conversion features, effective for reportingperiods ending after December 15, 2004.  The new accounting requirements specify that all instruments that haveembedded conversion features that are contingent on market conditions indexedto an issuer’s share price be included in diluted earnings per sharecomputations (if dilutive) regardless of whether the market conditions havebeen met.    In addition, prior perioddiluted earnings per share amounts presented for comparative purposes must berestated.  We presently have $250 millionaggregate principal amount of 1% convertible senior subordinated debenturesoutstanding and the impact of the assumed conversion of these debentures isexcluded from the calculation of our diluted earnings per share, as theconversion contingencies applicable to the debentures have not been met.  As a result of the new accountingrequirements, we will be required to reflect the dilutive effect of thedebentures on our earnings per share in the fourth quarter of 2004, and willrestate prior period earnings per share amounts presented for comparative purposes,unless we pursue modifications to the debentures that may reduce the dilutiveimpact of the new accounting treatment. If these new accounting requirements had gone into effect in the thirdquarter of 2004, our earnings per share for the third quarter would have beenreduced from $0.27 to $0.23, due to the inclusion in this computation of11,494,250 shares of our common stock issuable upon conversion of thedebentures.  The new accountingrequirements for our debentures will have no effect on our revenues, operatingincome or cash position.

 

**If we fail to timely complete thedocumentation and testing required to comply with Section 404 of theSarbanes-Oxley Act and related regulations (or if our independent auditorscannot timely attest to our assessment) we could lose investor confidence inthe accuracy or completeness of our financial reports which could have amaterial adverse effect on our stock price.**

 

We are in the process ofdiligently documenting and testing our internal control procedures in order tosatisfy the requirements of Section 404 of the Sarbanes-Oxley Act and relatedregulations, which require annual management assessments of the effectivenessof our internal controls over financial reporting and an attestation by ourindependent auditors addressing these assessments.  Our acquisition of the Connectivity Solutionsbusiness earlier this year has increased the challenges of timely completingthe documentation and testing process and has required us to devote significantadditional resources to our efforts. During the course of our testing we may identify deficiencies which wemay not be able to remediate, retest and have reviewed by our independentauditors in time to meet the deadline imposed for compliance with therequirements of Section 404.  If we areunable to conclude that our internal control over financial reporting iseffective as of December 31, 2004 (or if our independent auditors are unable totimely attest that management’s assessment is fairly stated and that ourinternal controls are effective in all material respects), we could loseinvestor confidence in the accuracy and completeness of our financialstatements, which in turn could have an adverse effect on the trading price ofour common stock.

 

**We may experience significantvariability in our effective income tax rate.**

 

Our acquisition ofConnectivity Solutions in the first quarter of 2004 significantly expanded ourinternational activities in lower tax rate jurisdictions.  Variability in the profitability of domesticand international activities may significantly impact our effective income taxrate.  A significant increase in oureffective income tax rate could have a material impact on the results of ouroperations.

 

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