Table of Contents

 

 

 

**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

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**FORM 10-Q**

 
| **(Mark One)** | ** ** | ** **                                                                                               |
|----------------|------------|----------------------------------------------------------------------------------------------------------|
| **x**          | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**  |
| ** **     | ** ** | ** **                                                                                               |
| ** **     | ** ** | **For the quarterly period ended June 30,  2008**                                                   |
| ** **     | ** ** | ** **                                                                                               |
| ** **     | ** ** | **OR**                                                                                                   |
| ** **     | ** ** | ** **                                                                                               |
| **o**          | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |

 

**For the transition periodfrom               to               **

** **

**Commission file number001-12929**

** **

**CommScope, Inc.**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                                                     | ** ** | **36-4135495**                         |
|------------------------------------------------------------------|------------|----------------------------------------|
| (State or other jurisdiction of   incorporation or organization) |       | (I.R.S. Employer   Identification No.) |

 

** **

**1100 CommScope Place, SE**

**P.O. Box 339**

**Hickory, North Carolina**

(Address of principal executive offices)

 

**28602**

(Zip Code)

 

**(828) 324-2200**

(Registrant’s telephone number, including area code)

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

Yes x    No o

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See definitions of “large accelerated filer,” “accelerated filer,” and“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Checkone):

 

| Large  accelerated filer x | Accelerated  filer o | Non-accelerated  filer o                       | Smaller  reporting company o |
|----------------------------|---------------------------|------------------------------------------------|-----------------------------------|
|                       |                      | (Do not check if a smaller  reporting company) |                              |

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No x

 

As of July 31, 2008 there were 70,224,892 sharesof Common Stock outstanding.

 

 

 

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**Tableof Contents**

** **

**CommScope, Inc.Form 10-QJune 30, 2008Table of Contents**

 
| Part I—Financial  Information (Unaudited): |                                                                                                 |
|------------------------------------------------------|------------------------------------------------------------------------------------------------------|
|                                                 |                                                                                                 |
|                                                 | Item 1.  Condensed Consolidated Financial Statements:                                                |   |
|                                                 |                                                                                                 |   |
|                                                 | Condensed Consolidated Statements of Operations                                                      |   |
|                                                 |                                                                                                 |   |
|                                                 | Condensed Consolidated Balance Sheets                                                                |   |
|                                                 |                                                                                                 |   |
|                                                 | Condensed Consolidated Statements of Cash Flows                                                      |   |
|                                                 |                                                                                                 |   |
|                                                 | Condensed Consolidated Statements of Stockholders’  Equity and Comprehensive Income             |   |
|                                                 |                                                                                                 |   |
|                                                 | Notes to  Condensed Consolidated Financial Statements                                                |   |
|                                                 |                                                                                                 |   |
|                                                 | Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of  Operations |   |
| ** **                                           | ** **                                                                                           | ** ** |
|                                                 | Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                  |   |
|                                                 |                                                                                                 |   |
|                                                 | Item 4. Controls  and Procedures                                                                     |   |
|                                                 |                                                                                                 |   |
| Part II—Other  Information:                |                                                                                                 |
|                                                 |                                                                                                 |   |
|                                                 | Item  1. Legal Proceedings                                                                           |   |
|                                                 |                                                                                                 |   |
|                                                 | Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                 |   |
|                                                 |                                                                                                 |   |
|                                                 | Item 4.  Submission of Matters to a Vote of Security Holders                                         |   |
|                                                 |                                                                                                 |   |
|                                                 | Item 6. Exhibits                                                                                     |   |
|                                                 |                                                                                                 |   |
|                                                 | Signature                                                                                            |   |

 

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Table of Contents

 

**CommScope, Inc.**

**CondensedConsolidated Statements of Operations**

**(Unaudited— In thousands, except per share amounts)**

 
| ** **                            | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|---------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                            | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                            | ** ** | **2008**                         | ** ** | **2007**                       | ** ** | **2008** | ** ** | **2007** | ** ** |
|                                  |       |                             |       |                           |       |   |   |   |   |
| Net sales                             |       | $                                | 1,087,377  |                           | $          | 519,144 |   | $ | 2,092,471 |   | $ | 954,596 |   |
|                                  |       |                             |       |                           |       |   |   |   |   |
| Operating costs and expenses:         |       |                             |       |                           |       |   |   |   |   |
| Cost of sales                         |       | 776,735                          |       | 356,550                        |       | 1,565,385 |   | 660,058 |   |
| Selling, general and administrative   |       | 131,615                          |       | 66,312                         |       | 259,633 |   | 124,954 |   |
| Research and development              |       | 34,269                           |       | 8,453                          |       | 70,234 |   | 16,322 |   |
| Amortization of purchased intangibles |       | 24,552                           |       | 1,249                          |       | 49,104 |   | 2,289 |   |
| Restructuring costs                   |       | 22,636                           |       | 169                            |       | 22,768 |   | 898 |   |
| Total operating costs and expenses    |       | 989,807                          |       | 432,733                        |       | 1,967,124 |   | 804,521 |   |
|                                  |       |                             |       |                           |       |   |   |   |   |
| Operating income                      |       | 97,570                           |       | 86,411                         |       | 125,347 |   | 150,075 |   |
| Other expense, net                    |       | (9,237                           | )          | (451                           | )          | (15,994 | ) | (282 | ) |
| Interest expense                      |       | (35,629                          | )          | (1,781                         | )          | (75,208 | ) | (3,674 | ) |
| Interest income                       |       | 4,402                            |       | 5,790                          |       | 9,585 |   | 10,286 |   |
|                                  |       |                             |       |                           |       |   |   |   |   |
| Income before income taxes            |       | 57,106                           |       | 89,969                         |       | 43,730 |   | 156,405 |   |
| Income tax expense                    |       | (16,890                          | )          | (28,840                        | )          | (14,563 | ) | (49,421 | ) |
|                                  |       |                             |       |                           |       |   |   |   |   |
| Net income                            |       | $                                | 40,216     |                           | $          | 61,129 |   | $ | 29,167 |   | $ | 106,984 |   |
|                                  |       |                             |       |                           |       |   |   |   |   |
| Earnings per share:                   |       |                             |       |                           |       |   |   |   |   |
| Basic                                 |       | $                                | 0.57       |                           | $          | 1.00 |   | $ | 0.42 |   | $ | 1.76 |   |
| Diluted                               |       | $                                | 0.50       |                           | $          | 0.83 |   | $ | 0.38 |   | $ | 1.46 |   |
|                                  |       |                             |       |                           |       |   |   |   |   |
| Weighted average shares outstanding:  |       |                             |       |                           |       |   |   |   |   |
| Basic                                 |       | 69,974                           |       | 61,380                         |       | 68,694 |   | 60,817 |   |
| Diluted                               |       | 80,922                           |       | 74,755                         |       | 80,676 |   | 74,207 |   |

 

See notes to unaudited condensed consolidated financial statements.

 

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**CommScope, Inc.**

**Condensed Consolidated Balance Sheets**

**(Unaudited — In thousands, except share amounts)**

 
| ** **                                                                                                                                                                                                                                                                                    | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                                                                                                    | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| **Assets**                                                                                                                                                                                                                                                                                    |       |              |       |                  |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Cash and cash equivalents                                                                                                                                                                                                                                                                     |       | $                 | 499,573    |                  | $          | 649,451 |   |
| Accounts receivable, less allowance for  doubtful accounts of $19,686 at June 30, 2008 and $22,154 at  December 31, 2007                                                                                                                                                            |       | 884,306           |       | 793,366               |       |
| Inventories, net                                                                                                                                                                                                                                                                              |       | 506,607           |       | 548,360               |       |
| Prepaid expenses and other current assets                                                                                                                                                                                                                                                     |       | 81,749            |       | 133,737               |       |
| Deferred income taxes                                                                                                                                                                                                                                                                         |       | 79,811            |       | 106,476               |       |
| Total current assets                                                                                                                                                                                                                                                                          |       | 2,052,046         |       | 2,231,390             |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Property, plant and equipment, net                                                                                                                                                                                                                                                            |       | 524,777           |       | 525,305               |       |
| Goodwill                                                                                                                                                                                                                                                                                      |       | 1,280,251         |       | 1,211,214             |       |
| Other intangibles, net                                                                                                                                                                                                                                                                        |       | 979,526           |       | 1,042,765             |       |
| Other assets                                                                                                                                                                                                                                                                                  |       | 71,600            |       | 95,897                |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Total Assets                                                                                                                                                                                                                                                                                  |       | $                 | 4,908,200  |                  | $          | 5,106,571 |   |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| **Liabilities  and Stockholders’ Equity**                                                                                                                                                                                                                                                |       |              |       |                  |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Accounts payable                                                                                                                                                                                                                                                                              |       | $                 | 358,098    |                  | $          | 350,615 |   |
| Other accrued liabilities                                                                                                                                                                                                                                                                     |       | 334,583           |       | 399,944               |       |
| Current portion of long-term debt                                                                                                                                                                                                                                                             |       | 217,702           |       | 247,662               |       |
| Total current liabilities                                                                                                                                                                                                                                                                     |       | 910,383           |       | 998,221               |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Long-term debt                                                                                                                                                                                                                                                                                |       | 2,084,432         |       | 2,348,157             |       |
| Deferred income taxes                                                                                                                                                                                                                                                                         |       | 276,816           |       | 268,647               |       |
| Pension and postretirement benefit  liabilities                                                                                                                                                                                                                                               |       | 103,714           |       | 108,275               |       |
| Other noncurrent liabilities                                                                                                                                                                                                                                                                  |       | 88,155            |       | 103,263               |       |
| Total Liabilities                                                                                                                                                                                                                                                                             |       | 3,463,500         |       | 3,826,563             |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Commitments and contingencies                                                                                                                                                                                                                                                                 |       |              |       |                  |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Stockholders’ Equity:                                                                                                                                                                                                                                                                    |       |              |       |                  |       |
| Preferred stock, $.01 par value; Authorized  shares: 20,000,000; Issued and outstanding shares: None at June 30, 2008  and December 31, 2007                                                                                                                                        |       | —            |       | —                |       |
| Common stock, $.01 par value; Authorized  shares: 300,000,000; Issued shares, including treasury stock: 80,335,342 at June 30,  2008 and 77,070,029 at December 31, 2007; Issued and outstanding shares:  70,135,342 at June 30, 2008 and 66,870,029 at December 31, 2007 |       | 803               |       | 770                   |       |
| Additional paid-in capital                                                                                                                                                                                                                                                                    |       | 955,473           |       | 856,452               |       |
| Retained earnings                                                                                                                                                                                                                                                                             |       | 574,774           |       | 545,607               |       |
| Accumulated other comprehensive income                                                                                                                                                                                                                                                        |       | 59,185            |       | 22,714                |       |
| Treasury stock, at cost: 10,200,000 shares  at June 30, 2008 and December 31, 2007                                                                                                                                                                                                  |       | (145,535          | )          | (145,535              | )          |
| Total Stockholders’ Equity                                                                                                                                                                                                                                                               |       | 1,444,700         |       | 1,280,008             |       |
|                                                                                                                                                                                                                                                                                          |       |              |       |                  |       |
| Total Liabilities and Stockholders’ Equity                                                                                                                                                                                                                                               |       | $                 | 4,908,200  |                  | $          | 5,106,571 |   |

** **

See notes to unaudited condensed consolidated financial statements.

 

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**CommScope, Inc.**

**CondensedConsolidated Statements of Cash Flows**

**(Unaudited — In thousands)**

 
| ** **                                                                         | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                         | ** ** | **June 30,**              | ** ** |
| ** **                                                                         | ** ** | **2008**                       | ** ** | **2007** | ** ** |
|                                                                               |       |                           |       |   |   |
| **Operating Activities:**                                                          |       |                           |       |   |   |
| Net income                                                                         |       | $                              | 29,167     |   | $ | 106,984 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities: |       |                           |       |   |   |
| Depreciation and amortization                                                      |       | 109,298                        |       | 24,912 |   |
| Equity-based compensation                                                          |       | 9,892                          |       | 5,000 |   |
| Changes in assets and liabilities:                                                 |       |                           |       |   |   |
| Accounts receivable                                                                |       | (69,817                        | )          | (84,623 | ) |
| Inventories                                                                        |       | 52,480                         |       | (20,985 | ) |
| Other assets and liabilities                                                       |       | (12,864                        | )          | 27,409 |   |
| Other                                                                              |       | 3,748                          |       | (838 | ) |
| Net cash provided by operating activities                                          |       | 121,904                        |       | 57,859 |   |
|                                                                               |       |                           |       |   |   |
| **Investing Activities:**                                                          |       |                           |       |   |   |
| Additions to property, plant and equipment                                         |       | (22,974                        | )          | (11,248 | ) |
| Net purchases of short-term investments                                            |       | —                         |       | (90,130 | ) |
| Proceeds from disposal of property, plant  and equipment                           |       | 6,053                          |       | 97 |   |
| Proceeds from sale of product line                                                 |       | 8,513                          |       | — |   |
| Cash paid for acquisitions                                                         |       | (60,686                        | )          | (16,392 | ) |
| Other                                                                              |       | (5,012                         | )          | — |   |
| Net cash used in investing activities                                              |       | (74,106                        | )          | (117,673 | ) |
|                                                                               |       |                           |       |   |   |
| **Financing Activities:**                                                          |       |                           |       |   |   |
| Principal payments on long-term debt                                               |       | (224,926                       | )          | (17,300 | ) |
| Proceeds from the issuance of shares under  equity-based compensation plans        |       | 9,153                          |       | 32,832 |   |
| Tax benefit from the issuance of shares  under equity-based compensation plans     |       | 3,402                          |       | 15,253 |   |
| Long-term financing costs                                                          |       | (246                           | )          | — |   |
| Net cash (used in) provided by financing  activities                               |       | (212,617                       | )          | 30,785 |   |
|                                                                               |       |                           |       |   |   |
| Effect of exchange rate changes on cash                                            |       | 14,941                         |       | 634 |   |
|                                                                               |       |                           |       |   |   |
| Change in cash and cash equivalents                                                |       | (149,878                       | )          | (28,395 | ) |
| Cash and cash equivalents, beginning of  period                                    |       | 649,451                        |       | 276,042 |   |
| Cash and cash equivalents, end of period                                           |       | $                              | 499,573    |   | $ | 247,647 |   |

** **

See notes to unaudited condensed consolidated financial statements.

 

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**CommScope, Inc.**

**CondensedConsolidated Statements of Stockholders’ Equityand Comprehensive Income**

**(Unaudited — In thousands, except share amounts)**

 
| ** **                                                                     | ** ** | **Six Months Ended**   | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                     | ** ** | **June 30,**                | ** ** |
| ** **                                                                     | ** ** | **2008**                         | ** ** | **2007** | ** ** |
|                                                                           |       |                             |       |   |   |
| Number of common shares outstanding:                                           |       |                             |       |   |   |
| Balance at beginning of period                                                 |       | 66,870,029                       |       | 59,734,533 |   |
| Issuance of shares under equity-based  compensation plans                      |       | 387,064                          |       | 1,864,683 |   |
| Issuance of shares for conversion of  convertible debentures                   |       | 2,878,249                        |       | — |   |
| Balance at end of period                                                       |       | 70,135,342                       |       | 61,599,216 |   |
|                                                                           |       |                             |       |   |   |
| Common stock:                                                                  |       |                             |       |   |   |
| Balance at beginning of period                                                 |       | $                                | 770        |   | $ | 699 |   |
| Issuance of shares under equity-based  compensation plans                      |       | 4                                |       | 19 |   |
| Issuance of shares for conversion of  convertible debentures                   |       | 29                               |       | — |   |
| Balance at end of period                                                       |       | $                                | 803        |   | $ | 718 |   |
|                                                                           |       |                             |       |   |   |
| Additional paid-in capital:                                                    |       |                             |       |   |   |
| Balance at beginning of period                                                 |       | $                                | 856,452    |   | $ | 532,344 |   |
| Issuance of shares under equity-based  compensation plans                      |       | 9,149                            |       | 32,813 |   |
| Tax benefit from shares issued under  equity-based compensation plans          |       | 3,402                            |       | 15,253 |   |
| Equity-based compensation expense  recognized                                  |       | 9,892                            |       | 5,000 |   |
| Issuance of shares for conversion of  convertible debentures                   |       | 76,578                           |       | — |   |
| Balance at end of period                                                       |       | $                                | 955,473    |   | $ | 585,410 |   |
|                                                                           |       |                             |       |   |   |
| Retained earnings:                                                             |       |                             |       |   |   |
| Balance at beginning of period                                                 |       | $                                | 545,607    |   | $ | 346,821 |   |
| Net income                                                                     |       | 29,167                           |       | 106,984 |   |
| Impact of adoption of FIN 48                                                   |       | —                           |       | (6,055 | ) |
| Balance at end of period                                                       |       | $                                | 574,774    |   | $ | 447,750 |   |
|                                                                           |       |                             |       |   |   |
| Accumulated other comprehensive income:                                        |       |                             |       |   |   |
| Balance at beginning of period                                                 |       | $                                | 22,714     |   | $ | 4,775 |   |
| Other comprehensive income, net of tax                                         |       | 36,471                           |       | 3,608 |   |
| Balance at end of period                                                       |       | $                                | 59,185     |   | $ | 8,383 |   |
|                                                                           |       |                             |       |   |   |
| Treasury stock, at cost:                                                       |       |                             |       |   |   |
| Balance at beginning and end of period                                         |       | $                                | (145,535   | ) | $ | (145,535 | ) |
|                                                                           |       |                             |       |   |   |
| Total stockholders’ equity                                                |       | $                                | 1,444,700  |   | $ | 896,726 |   |
| ** **                                                                     | ** ** | ** **                       | ** ** | ** ** | ** ** |
| ** **                                                                     | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
| ** **                                                                     | ** ** | **June 30,**                | ** ** | **June 30,** | ** ** |
| ** **                                                                     | ** ** | **2008**                         | ** ** | **2007** | ** ** | **2008** | ** ** | **2007** | ** ** |
|                                                                           |       |                             |       |   |   |   |   |   |   |
| Comprehensive income:                                                          |       |                             |       |   |   |   |   |   |   |
| Net income                                                                     |       | $                                | 40,216     |   | $ | 61,129 |   | $ | 29,167 |   | $ | 106,984 |   |
| Other comprehensive income, net of tax:                                        |       |                             |       |   |   |   |   |   |   |
| Foreign currency translation gain                                              |       | 9,750                            |       | 344 |   | 39,688 |   | 844 |   |
| Foreign currency transaction gain on  long-term intercompany loans             |       | 1,484                            |       | 2,068 |   | 2,511 |   | 3,214 |   |
| Gain (loss) on derivative financial  instruments                               |       | 24,731                           |       | (122 | ) | (5,306 | ) | (224 | ) |
| Amortization of unrecognized pension and  other postretirement benefit amounts |       | (200                             | )          | (113 | ) | (422 | ) | (226 | ) |
| Total other comprehensive income, net of  tax                                  |       | 35,765                           |       | 2,177 |   | 36,471 |   | 3,608 |   |
|                                                                           |       |                             |       |   |   |   |   |   |   |
| Total comprehensive income                                                     |       | $                                | 75,981     |   | $ | 63,306 |   | $ | 65,638 |   | $ | 110,592 |   |
|                                                                                |            |                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

** **

See notes to unaudited condensed consolidated financial statements.

 

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**CommScope, Inc.**

**Notes to Unaudited CondensedConsolidated Financial Statements**

**(In Thousands, Unless Otherwise Noted)**

 

**1.     BACKGROUND AND BASIS OFPRESENTATION**

 

**Background**

** **

CommScope, Inc. and its wholly owned subsidiaries (CommScope orthe Company) is a world leader in infrastructure solutions for communicationsnetworks. With the December 27, 2007 acquisition of Andrew Corporation(Andrew), the Company is a global leader in providing radio frequency subsystemsolutions for wireless networks. Through its SYSTIMAX® and Uniprise® brands,the Company is also a global leader in structured cabling systems for businessenterprise applications. In addition, CommScope is the premier manufacturer ofcoaxial cable for broadband cable television networks and one of the leadingNorth American providers of environmentally secure cabinets for digitalsubscriber line (DSL) and Fiber-to-the-Node applications.

 

**Basis of Presentation**

** **

The condensedconsolidated balance sheet as of June 30, 2008, the condensed consolidatedstatements of operations and comprehensive income for the three and six monthsended June 30, 2008 and 2007, and the condensed consolidated statements ofcash flows and stockholders’ equity for the six months ended June 30, 2008and 2007 are unaudited and reflect all adjustments of a normal recurring naturethat are, in the opinion of management, necessary for a fair presentation ofthe interim period financial statements. The results of operations for theinterim period are not necessarily indicative of the results of operations tobe expected for the full year.

 

Theunaudited interim condensed consolidated financial statements of CommScope havebeen prepared pursuant to the rules and regulations of the Securities andExchange Commission (SEC). Accordingly, certain information andfootnote disclosures normally included in financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America have been condensed or omitted. The significant accounting policiesfollowed by the Company are set forth in Note 2 to the consolidatedfinancial statements in the Company’s Annual Report on Form 10-K for theyear ended December 31, 2007 (the 2007 Form 10-K). There were nochanges in the Company’s significant accounting policies during the three orsix months ended June 30, 2008 other than the implementation of Statementof Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”(SFAS No. 157) and SFAS No. 159, “The Fair Value Option for FinancialAssets and Financial Liabilities” (SFAS No. 159) (see Note 7).  In addition, the Company reaffirms the use ofestimates in the preparation of the financial statements as set forth in the2007 Form 10-K. These interim condensed consolidated financial statementsshould be read in conjunction with the Company’s audited consolidated financialstatements and notes thereto included in the 2007 Form 10-K.

 

Certainprior year amounts have been reclassified to conform to the current yearpresentation.

 

**Concentrations of Risk**

** **

Net sales to AnixterInternational Inc. and its affiliates (Anixter) accounted for approximately 11%of the Company’s total net sales during both the three and six months ended June 30,2008, and approximately 26% and 27% of the Company’s total net sales during thethree and six months ended June 30, 2007, respectively.  Sales to Anixter primarily originate withinthe Enterprise segment.

 

Net sales toAlcatel-Lucent, an original equipment manufacturer (OEM) for telecommunicationscompanies, were less than 10% of the Company’s total net sales during the threeand six months ended June 30, 2008, but accounted for approximately 13%and 12% of the Company’s total net sales during the three and six months ended June 30,2007.  Sales to Alcatel-Lucent primarilyoriginate within the Antenna, Cable and Cabinets Group segment.  Other than Anixter and Alcatel-Lucent, nocustomer accounted for 10% or more of the Company’s total net sales for thethree and six months ended June 30, 2008 or 2007.

 

Accounts receivable fromAnixter, Alcatel-Lucent and Nokia Siemens Networks represented approximately13%, 10% and 10%, respectively, of net accounts receivable as of June 30,2008. No other customer accounted for 10% or more of the Company’s net accountsreceivable as of June 30, 2008.

 

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**Product Warranties**

** **

The Company recognizes aliability for the estimated claims that may be paid under its customer warrantyagreements to remedy potential deficiencies in quality or performance of theCompany’s products. These product warranties extend over periods ranging fromone to twenty-five years from the date of sale, depending upon the productsubject to the warranty. The Company records a provision for estimated futurewarranty claims as cost of sales based upon the historical relationship ofwarranty claims to sales and specifically-identified warranty issues. Duringthe three and six months ended June 30, 2008, the Company recordedadditions to the product warranty accrual as adjustments to the Andrewpreliminary purchase price allocation as a result of additional informationobtained regarding warranty exposure on certain products sold prior toCommScope’s acquisition of Andrew.  TheCompany bases its estimates on assumptions that are believed to be reasonableunder the circumstances and revises its estimates, as appropriate, when eventsor changes in circumstances indicate that revisions may be necessary.

 

The following tablesummarizes the activity in the product warranty accrual, included in otheraccrued liabilities, for the three and six months ended June 30, 2008 and2007.  The beginning balance and theactivity for the three and six months ended June 30, 2008 include theactivity related to legacy Andrew products.

 
| ** **                                     | ** ** | **Three Months ****Ended****June 30,** | ** ** | **Six Months ****Ended****June 30,** | ** ** |
|------------------------------------------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                     | ** ** | **2008**                                              | ** ** | **2007**                                            | ** ** | **2008** | ** ** | **2007** | ** ** |
| Product warranty accrual, beginning of  period |       | $                                                     | 33,878     |                                                | $          | 2,103 |   | $ | 29,183 |   | $ | 2,090 |   |
| Provision for warranty claims                  |       | 5,496                                                 |       | 1,829                                               |       | 9,369 |   | 1,843 |   |
| Revision of Andrew purchase price  allocation  |       | 4,787                                                 |       | —                                              |       | 14,162 |   | — |   |
| Warranty claims paid                           |       | (7,919                                                | )          | (220                                                | )          | (16,472 | ) | (221 | ) |
| Product warranty accrual, end of period        |       | $                                                     | 36,242     |                                                | $          | 3,712 |   | $ | 36,242 |   | $ | 3,712 |   |

 

**Commitmentsand Contingencies**

In 2007, a jury ruled infavor of TruePosition, Inc., finding that Andrew had willfully infringed asingle TruePosition patent, and the jury awarded $45.3 million in damages toTruePosition (see Note 16 in the Notes to the Consolidated Financial Statementsin the 2007 Form 10-K). As a result of the jury verdict, a $45.3 million liabilitywas included in other accrued liabilities as of December 31, 2007.  On July 31, 2008, the court reduced thecompensatory damages award to $18.6 million and awarded enhanced damages of$4.7 million for willful infringement. As a result, the liability was reduced to $27.6 million (includinginterest) as of June 30, 2008, which represents the Company’s best estimate ofthe probable liability to TruePosition. Subject to the outcome of possibleadditional legal actions taken by the Company and/or TruePosition, the ultimateresolution of the TruePosition litigation may be materially different than theCompany’s current estimate, which does not include legal fees the Company mayincur in appeals or other proceedings. In addition to the TruePosition litigationdescribed above, CommScope is either a plaintiff or a defendant in pendinglegal matters in the normal course of business; however, management believesnone of these legal matters, other than the TruePosition litigation, will havea materially adverse effect on the Company’s financial statements upon finaldisposition. In addition, CommScope is subject to various federal, state, localand foreign laws and regulations governing the use, discharge, disposal andremediation of hazardous materials. Compliance with current laws andregulations has not had, and is not expected to have, a materially adverseeffect on the Company’s financial condition or results of operations.

 

**Earnings Per Share**

** **

### Basic earnings per share is computed bydividing net income by the weighted average number of common shares outstandingduring the applicable period. Diluted earnings per share is based on net incomeadjusted for after-tax interest and amortization of debt issuance costs relatedto convertible debt, if dilutive, divided by the weighted average number ofcommon shares outstanding adjusted for the dilutive effect of stock options,restricted stock units, performance share units and convertible securities.

 

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Below is a reconciliationof earnings and weighted average common shares and potential common sharesoutstanding for calculating diluted earnings per share:

 
| ** **                                                                                                          | ** ** | **Three Months ****Ended****June 30,** | ** ** | **Six Months ****Ended****June 30,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                                                          | ** ** | **2008**                                              | ** ** | **2007**                                            | ** ** | **2008** | ** ** | **2007** | ** ** |
| Numerator:                                                                                                          |       |                                                  |       |                                                |       |   |   |   |   |
| Net income for basic earnings per share                                                                             |       | $                                                     | 40,216     |                                                | $          | 61,129 |   | $ | 29,167 |   | $ | 106,984 |   |
| Effect of assumed conversion of convertible  senior subordinated debentures                                         |       | 499                                                   |       | 629                                                 |       | 1,146 |   | 1,258 |   |
| Income applicable to common shareholders  for diluted earnings per share                                       |       | $                                                     | 40,715     |                                                | $          | 61,758 |   | $ | 30,313 |   | $ | 108,242 |   |
| Denominator:                                                                                                        |       |                                                  |       |                                                |       |   |   |   |   |
| Weighted average number of common shares  outstanding for basic earnings per share                                  |       | 69,974                                                |       | 61,380                                              |       | 68,694 |   | 60,817 |   |
| Effect of dilutive securities:                                                                                      |       |                                                  |       |                                                |       |   |   |   |   |
| Employee stock options (a)                                                                                          |       | 997                                                   |       | 1,408                                               |       | 967 |   | 1,469 |   |
| Restricted stock units and performance  share units                                                                 |       | 776                                                   |       | 473                                                 |       | 693 |   | 427 |   |
| Convertible senior subordinated debentures                                                                          |       | 9,175                                                 |       | 11,494                                              |       | 10,322 |   | 11,494 |   |
| Weighted average number of common and  potential common shares outstanding for diluted earnings per share |       | 80,922                                                |       | 74,755                                              |       | 80,676 |   | 74,207 |   |

 

----

(a)    Options topurchase approximately 0.7 million and 0.9 million common shares were excludedfrom the computation of diluted earnings per share for the three and six monthsended June 30, 2008, respectively, because they would have beenantidilutive.  No options to purchasecommon shares were excluded from the computation of diluted earnings per sharefor the three and six months ended June 30, 2007.

 

**IncomeTaxes**

 

The Company adopted theprovisions of Financial Accounting Standards Board (FASB) Interpretation No. 48(FIN 48) as of January 1, 2007, resulting in a $4.2 million increase inthe liability for unrecognized tax benefits with an offsetting reduction toopening retained earnings. In addition, the Company reduced a long-termdeferred tax asset by $4.0 million with an offsetting reduction to opening retainedearnings of $1.9 million and an increase of $2.1 million to long-lived assetsas a purchase accounting adjustment related to the 2004 acquisition ofConnectivity Solutions.

 

Theliability for unrecognized tax benefits and related interest and penalties underFIN 48 was $61.4 million at June 30, 2008 and $68.0 million at December 31,2007. Of the net decrease in this liability for the six months ended June 30,2008, $3.9 million related to the effective settlement of various U.S. andforeign income tax audits that was recorded as a reduction of income taxexpense.  The remainder of the netdecrease was primarily related to amounts transferred to income taxes payable.

 

The Company’s effectiveincome tax rate was 29.6% and 33.3% for the three and six months ended June 30,2008, respectively, compared to 32.1% and 31.6% for the three and six monthsended June 30, 2007, respectively. Income before income taxes for thethree and six months ended June 30, 2008 includes $22.3 million and $25.5million, respectively, of charges, primarily related to restructuringinitiatives, for which tax benefits have not been recognized. Also included inincome tax expense for the three and six months ended June 30, 2008 is thebenefit of $3.9 million described above related to the settlement of taxaudits. The Company’s effective tax rate reflects the benefits derived fromsignificant operations outside the U.S., which are generally taxed at rateslower than the U.S. statutory rate of 35%, partially offset by U.S. stateincome taxes and valuation allowances for losses in certain foreignjurisdictions for which tax benefits cannot be recognized.

 

**Impact of Newly Issued Accounting Standards**

 

In December 2007, the FASB issued SFAS No. 141(revised 2007), “Business Combinations” (SFAS No. 141(R)). SFAS No. 141(R) modifieshow acquirers recognize and measure the consideration transferred, identifiableassets acquired, liabilities assumed, noncontrolling interests and goodwillacquired in a business combination. SFAS No. 141(R) requires thatacquisition related expenses and restructuring costs be expensed.  SFAS No. 141(R) will be implementedas of January 1, 2009 and will generally be effective, on a prospectivebasis, for transactions consummated on or after January 1, 2009.  Provisions of SFAS No. 141(R) relatedto the accounting for certain income tax assets and liabilities will also beeffective for 

 

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acquisitionscompleted prior to the effective date. The Company is unable to determine the impact of adopting SFAS No. 141(R).

 

In December 2007, the FASB issued SFAS No. 160,“Noncontrolling Interests in Consolidated Financial Statements” (SFAS No. 160).SFAS No. 160 establishes requirements for ownership interests insubsidiaries held by parties other than the Company (i.e., minorityinterests) to be shown separate from the parent’s equity within the equitysection of the consolidated statement of financial position. Changes in theparent’s ownership interests are required to be accounted for as equitytransactions and any noncontrolling equity investments in unconsolidatedsubsidiaries must be measured initially at fair value. SFAS No. 160 willbe implemented, on a prospective basis, as of January 1, 2009.  Presentation and disclosure requirements mustbe retrospectively applied to comparative financial statements. SFAS No. 160is not expected to have a material impact on the Company’s consolidatedfinancial position and results of operations.

 

InMarch 2008, the FASB issued SFAS No. 161, “Disclosures aboutDerivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”(SFAS No. 161). SFAS No. 161 expands required disclosure about anentity’s derivative instruments and hedging activities and is effective forfiscal years beginning after November 15, 2008.

 

InApril 2008, the FASB issued FASB Staff Position (FSP) No. FAS 142-3, “Determinationof the Useful Life of Intangible Assets,” which amends guidance regarding theassumptions used in determining the useful lives of intangible assets that maybe renewed or extended.  This FSP iseffective for fiscal years beginning after December 15, 2008 and is notexpected to have a material impact on the Company’s consolidated financialstatements.

 

InMay 2008, the FASB issued FSP No. APB 14-1, “Accounting forConvertible Debt Instruments That May Be Settled in Cash Upon Conversion(Including Partial Cash Settlement),” which requires the liability and equitycomponents of convertible debt to be accounted for separately with interestexpense recognized on the liability component at a non-convertible debtborrowing rate.  This FSP is effectivefor fiscal years beginning after December 15, 2008 and is required to beapplied retrospectively to all past periods presented.  The Company does not expect this FSP to havean impact on its consolidated financial statements based upon the convertibledebt instruments currently outstanding.

 

**2.     ACQUISITIONS**

 

**Andrew Corporation**

 

On December 27, 2007,CommScope completed its acquisition of Andrew. The total purchase priceconsisted of approximately $2.3 billion in cash and approximately5.1 million shares of CommScope common stock, with a value ofapproximately $255 million. The cash portion of the purchase price wasfunded primarily through $2.1 billion of borrowings under new seniorsecured credit facilities. The Company prepared the following preliminaryestimate of the acquisition date fair values of each major asset and liabilitycategory of Andrew as of June 30, 2008 (in millions):

 
| ** **                                                 | ** ** | **Estimated Fair   Value** | ** ** |
|------------------------------------------------------------|------------|--------------------------------------|------------|
| Cash and cash  equivalents                                 |       | $                                    | 165.7      |   |
| Accounts  receivable                                       |       | 590.7                                |       |
| Inventories                                                |       | 386.6                                |       |
| Other current  assets                                      |       | 185.7                                |       |
| Property, plant  and equipment                             |       | 318.4                                |       |
| Identifiable  intangible assets                            |       | 970.4                                |       |
| Goodwill                                                   |       | 1,125.7                              |       |
| Other noncurrent  assets                                   |       | 38.5                                 |       |
| Total assets                                               |       | $                                    | 3,781.7    |   |
| Accounts payable                                           |       | $                                    | 279.9      |   |
| Other accrued  liabilities                                 |       | 212.8                                |       |
| Current portion  of long-term debt                         |       | 234.2                                |       |
| Long-term debt                                             |       | 11.7                                 |       |
| Noncurrent  pension and postretirement benefit liabilities |       | 35.9                                 |       |
| Noncurrent  deferred tax liabilities                       |       | 403.0                                |       |
| Other noncurrent  liabilities                              |       | 48.2                                 |       |
| Total liabilities                                          |       | $                                    | 1,225.7    |   |
| Net acquisition  cost                                      |       | $                                    | 2,556.0    |   |

 

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Revisions to the preliminarypurchase price allocation from the initial allocation reflect new informationreceived.  Such information included thedetermination that certain foreign earnings will be repatriated to the U.S., developmentsin the TruePosition litigation, warranty exposure from certain productsexhibiting performance issues, asset valuations related to assets that wereeither sold or subject to sales agreements, updated information in support ofidentifiable intangible asset valuations and initial restructuring plans thathave been put into place.  As additionalinformation is obtained regarding these and other matters, including additionalrestructuring initiatives, there may be further adjustments to the preliminarypurchase price allocation.

 

The table below summarizespreliminary valuations of the intangible assets acquired that were determinedby management to meet the criteria for recognition apart from goodwill. Thevalues presented below are preliminary estimates and are subject to change asmanagement completes its valuation of the Andrew acquisition.

 
| ** **                          | ** ** | **Estimated Fair   Value** | ** ** | **Weighted Average   Amortization   Period** | ** ** |
|-------------------------------------|------------|--------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                          | ** ** | **(in millions)**               | ** ** | **(in years)**                                         | ** ** |
| Customer base                       |       | $                                    | 552.6      |                                                        | 7.1        |   |
| Trade names and trademarks          |       | 336.2                                |       | 23.0                                                        |       |
| Patents and technologies            |       | 81.6                                 |       | 6.6                                                         |       |
| Total amortizable intangible assets |       | $                                    | 970.4      |                                                        | 12.6       |   |

 

The identifiable intangibleassets were determined by management to have finite lives. The useful lives forthe customer base were based on management’s forecasts of customer turnover,sales levels with major customers and types of customers. The useful lives forthe trade names and trademarks were estimated based on the periods that thetrade names and trademarks have been in use and the absence of a definite planto discontinue their use in the foreseeable future. The useful lives for thepatents and technologies were based on review of historical lives of similarproducts, in conjunction with technology-specific factors and anticipatedfuture trends in the industry as well as the remaining lives of the relatedpatents.

 

The goodwill arising from thepreliminary purchase price allocation is believed to be consistent with Andrew’sreputation in the marketplace (which is expected to lead to sales to newcustomers), synergies expected to be realized from the acquisition and thegoing concern value of the assembled Andrew business. The goodwill is notexpected to be deductible for tax purposes.

 

The Andrew amounts included in thefollowing pro forma information are based on Andrew’s historical resultsand, therefore, may not be indicative of the actual results when operated as partof CommScope. The pro forma adjustments represent management’s bestestimates based on information available at the time the pro formainformation was prepared and may differ from the adjustments that may actuallyhave been required. Accordingly, the pro forma financial informationshould not be relied upon as being indicative of the historical results thatwould have been realized had the acquisition occurred as of the date indicatedor that may be achieved in the future.

 

The following table presentsconsolidated results of operations for CommScope for the three and six monthsended June 30, 2007 as though the acquisition had been completed as of January 1,2007 (in millions, except per share amounts):

 
| ** **     | ** ** | **Three Months Ended   June 30, 2007** | ** ** | **Six Months Ended   June 30, 2007** | ** ** |
|----------------|------------|-----------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| Net sales      |       | $                                                               | 1,064.8    |                                                          | $          | 2,003.0 |   |
| Net loss       |       | (68.7                                                           | )          | (61.2                                                         | )          |
| Loss per share |       | (1.03                                                           | )          | (0.92                                                         | )          |
|                |            |                                                                 |            |                                                               |            |  |  |

 

The pro forma resultsabove reflect pro forma adjustments for net interest expense,depreciation, amortization and related income taxes. No pro forma adjustmentshave been made to reverse asset impairments or to provide a tax benefit forAndrew’s actual net losses.

 

Net income during the threeand six months ended June 30, 2008 includes certain charges that relatedirectly or indirectly to the acquisition, as listed below on a pretax basis(in millions):

 
| ** **                                | ** ** | **Three Months Ended   June 30, 2008** | ** ** | **Six Months Ended   June 30, 2008** | ** ** |
|-------------------------------------------|------------|-----------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| Purchase accounting inventory adjustment  |       | $                                                               | 4.7        |                                                          | $          | 57.5 |   |
| Acquisition and integration related costs |       | 0.9                                                             |       | 3.8                                                           |       |
|                                           |            |                                                                 |            |                                                               |            |  |  |

 

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On January 31, 2008,the Company sold the Satellite Communications (SatCom) product line acquired aspart of the Andrew acquisition to ASC Signal Corporation (ASC). The Companyreceived $8.5 million in cash, $2.5 million in notes receivable due April 30,2010, a 17.9% ownership interest in ASC and the potential for up to anadditional $25.0 million of cash if certain financial targets are met overa three year period from the date of the divestiture. In addition, the Companywill receive an additional note receivable for $2.5 million also due April 30,2010, upon completion of certain manufacturing asset transfers, expected to becompleted within one year of the sale. Net sales from the SatCom product linefor the six months ended June 30, 2008 and 2007 were $11.6 millionand $53.6 million, respectively.  Nogain or loss was recognized on the sale of SatCom.

 

On March 26, 2008, theCompany entered into an agreement to divest its minority interest in AndesIndustries, Inc. (Andes), which had been acquired as part of the Andrewacquisition.  The agreement was approvedby the United States Department of Justice on April 24, 2008 and thetransaction was consummated on April 28, 2008.  No gain or loss was recognized on thedisposal of the Andes interest.

 

**SignalVision, Inc.**

 

OnMay 1, 2007, CommScope acquired substantially all of the assets andassumed certain current liabilities of Signal Vision, Inc., a leadingsupplier of broadband radio frequency subscriber products, for approximately$19.0 million, of which $18.5 million has been paid as of June 30, 2008and the balance is payable by May 2009. The acquisition is included within the Broadband segment and resulted innet sales of $4.6 million and $10.1 million for the three and six months ended June 30,2008, respectively, and $4.2 million for the three and six months ended June 30,2007.

 

Theallocation of the purchase price, based on estimated fair values of the assetsacquired, is as follows:

 
| ** **                        | ** ** | **Estimated Fair   Value** | ** ** | **Amortization   Period** | ** ** |
|-----------------------------------|------------|--------------------------------------|------------|--------------------------------|------------|
| ** **                        | ** ** | **(in millions)**               | ** ** | **(in years)**            | ** ** |
| Inventory                         |       | $                                    | 4.4        |                           |       |   |
| Accounts receivable               |       | 2.5                                  |       |                           |       |
| Machinery and equipment           |       | 0.1                                  |       |                           |       |
| Intangible assets:                |       |                                 |       |                           |       |
| Customer base                     |       | 5.2                                  |       | 9.7                            |       |
| Trade name                        |       | 0.7                                  |       | 3.7                            |       |
| Patents and technologies          |       | 0.4                                  |       | 10.0                           |       |
| Other                             |       | 3.0                                  |       | 5.0                            |       |
| Goodwill                          |       | 3.1                                  |       |                           |       |
| Less: Current liabilities assumed |       | (0.4                                 | )          |                           |       |
| Total purchase price              |       | $                                    | 19.0       |                           |       |   |

 

Theweighted average estimated useful life of the amortizable intangible assetsacquired is 7.8 years.

 

**3.     BALANCE SHEET DATA**

 

**Inventories**

 
| ** **      | ** ** | **June 30,   2008** | ** ** | **December 31,   2007** | ** ** |
|-----------------|------------|-------------------------------|------------|-----------------------------------|------------|
| Raw materials   |       | $                             | 144,623    |                              | $          | 137,606 |   |
| Work in process |       | 133,579                       |       | 158,721                           |       |
| Finished goods  |       | 228,405                       |       | 252,033                           |       |
|            |       | $                             | 506,607    |                              | $          | 548,360 |   |

 

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**Other Current Accrued Liabilities**

 
| ** **                                     | ** ** | **June 30,   2008** | ** ** | **December 31,   2007** | ** ** |
|------------------------------------------------|------------|-------------------------------|------------|-----------------------------------|------------|
| Compensation and employee benefit  liabilities |       | $                             | 112,499    |                              | $          | 118,361 |   |
| Purchase price payable                         |       | 3,876                         |       | 61,240                            |       |
| Litigation reserve                             |       | 27,620                        |       | 45,300                            |       |
| Warranty reserve                               |       | 36,242                        |       | 29,183                            |       |
| Restructuring reserve                          |       | 45,259                        |       | 34,695                            |       |
| Other                                          |       | 109,087                       |       | 111,165                           |       |
|                                           |       | $                             | 334,583    |                              | $          | 399,944 |   |

 

**4.****    ****FINANCING**

 
| ** **                                        | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                        | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| Seven-year senior secured term loan               |       | $                 | 1,333,599  |                  | $          | 1,350,000 |   |
| Six-year senior secured term loan                 |       | 750,000           |       | 750,000               |       |
| 1% convertible senior subordinated  debentures    |       | 199,550           |       | 250,000               |       |
| 3.25% convertible senior subordinated  debentures |       | 105               |       | 231,264               |       |
| Other                                             |       | 18,880            |       | 14,555                |       |
|                                              |       | 2,302,134         |       | 2,595,819             |       |
| Less current portion                              |       | (217,702          | )          | (247,662              | )          |
|                                              |       | $                 | 2,084,432  |                  | $          | 2,348,157 |   |

 

SeeNote 9 in the Notes to the Consolidated Financial Statements in the 2007 Form 10-Kfor information on the terms and conditions of the senior secured creditfacilities. As of June 30, 2008, the Company had availability ofapproximately $372 million and no outstanding borrowings under the seniorsecured revolving credit facility. The weighted average effective interest rateon outstanding borrowings under the above debt instruments, including theeffect of the interest rate swap (see Note 6 below) and amortization of associatedloan fees was 6.03% and 6.23% at June 30, 2008 and December 31, 2007,respectively.

 

Duringthe six months ended June 30, 2008, the Company agreed with certainholders of the 1% convertible senior subordinated debentures to increase theconversion rate as an inducement for them to convert their debentures to commonstock.  Accordingly, $50.45 million ofthe debentures were converted into 2,393,513 shares of common stock (2,319,540related to the original conversion ratio and 73,973 related to the inducement).  As a result of the inducement, the Companyrecorded a $2.8 million pretax charge in other expense in the CondensedConsolidated Statement of Operations.

 

During the six months ended June 30, 2008, holders ofsubstantially all of the 3.25% convertible senior subordinated debenturesassumed in the Andrew acquisition chose to convert their debentures into thecontractual merger consideration.  As aresult, $207.5 million of cash was paid and 484,736 shares of CommScope commonstock were issued.

 

SeeNote 9 in the Notes to the Consolidated Financial Statements in the 2007 Form 10-Kfor information on the terms and conditions of the 1% convertible seniorsubordinated debentures. The 1% convertible senior debentures are classified ascurrent liabilities as of June 30, 2008 because they may be redeemed bythe holders on March 20, 2009.

 

**5.     RESTRUCTURING COSTS**

 

During the three and sixmonths ended June 30, 2008, the Company recorded net restructuring chargesof $22,636 and $22,768, respectively. The net restructuring charges for the three months ended June 30,2008 were primarily composed of $18,404 related to further restructuringactions at the Company’s legacy CommScope Belgian manufacturing facility and$3,917 related to restructuring actions at the Company’s legacy CommScopeBrazilian manufacturing facility.  Therestructuring charges recognized during the three and six months ended June 30,2008 resulted from actions taken to lower the overall manufacturing coststructure following the Andrew acquisition. The pretax restructuring charges recognized by the Company by segmentduring the three and six months ended June 30, 2008 and 2007 were asfollows:

 

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| ** **                                | ** ** | **Three Months ****Ended****June 30,** | ** ** | **Six Months ****Ended****June 30,** | ** ** |
|-------------------------------------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                | ** ** | **2008**                                              | ** ** | **2007**                                            | ** ** | **2008** | ** ** | **2007** | ** ** |
|                                      |       |                                                  |       |                                                |       |   |   |   |   |
| Antenna, Cable and Cabinets Group segment |       | $                                                     | —     |                                                | $          | — |   | $ | — |   | $ | 86 |   |
| Enterprise segment                        |       | 890                                                   |       | —                                              |       | 610 |   | 488 |   |
| Wireless Network Solutions segment        |       | —                                                |       | —                                              |       | — |   | — |   |
| Broadband segment                         |       | 21,746                                                |       | 169                                                 |       | 22,158 |   | 324 |   |
| Total                                     |       | $                                                     | 22,636     |                                                | $          | 169 |   | $ | 22,768 |   | $ | 898 |   |

 

Theactivity within the liability (included in other accrued liabilities) for theserestructuring initiatives was as follows:

 
| ** **                                    | ** ** | **Employee-   Related   Costs** | ** ** | **Lease   Termination   Costs** | ** ** | **Asset   Impairment   Charges** | ** ** | **Equipment   Relocation   Costs** | ** ** | **Total** | ** ** |
|-----------------------------------------------|------------|-------------------------------------------|------------|-------------------------------------------|------------|--------------------------------------------|------------|----------------------------------------------|------------|-----------|------------|
| Balance as of March 31, 2008             |       | $                                         | 24,158     |                                      | $          | 2,392                                      |       | $                                            | —     |      | $          | — |   | $ | 26,550 |   |
| Additional charge recorded                    |       | 22,142                                    |       | 362                                       |       | —                                     |       | 132                                          |       | 22,636    |       |
| Revision of Andrew purchase price  allocation |       | 2,968                                     |       | 1,816                                     |       | —                                     |       | —                                       |       | 4,784     |       |
| Cash paid                                     |       | (8,257                                    | )          | (831                                      | )          | —                                     |       | (132                                         | )          | (9,220    | )          |
| Foreign exchange and other non-cash items     |       | 470                                       |       | 39                                        |       | —                                     |       | —                                       |       | 509       |       |
| Balance as of June 30, 2008              |       | $                                         | 41,481     |                                      | $          | 3,778                                      |       | $                                            | —     |      | $          | — |   | $ | 45,259 |   |
|                                          |       |                                      |       |                                      |       |                                       |       |                                         |       |      |       |
| Balance as of December 31, 2007          |       | $                                         | 32,506     |                                      | $          | 2,189                                      |       | $                                            | —     |      | $          | — |   | $ | 34,695 |   |
| Additional charge (recovery) recorded         |       | 22,554                                    |       | 362                                       |       | (280                                       | )          | 132                                          |       | 22,768    |       |
| Revision of Andrew purchase price  allocation |       | 4,905                                     |       | 2,374                                     |       | —                                     |       | —                                       |       | 7,279     |       |
| Cash paid                                     |       | (18,938                                   | )          | (1,186                                    | )          | —                                     |       | (132                                         | )          | (20,256   | )          |
| Foreign exchange and other non-cash items     |       | 454                                       |       | 39                                        |       | 280                                        |       | —                                       |       | 773       |       |
| Balance as of June 30, 2008              |       | $                                         | 41,481     |                                      | $          | 3,778                                      |       | $                                            | —     |      | $          | — |   | $ | 45,259 |   |

 

Employee-related costs includethe expected severance costs and related benefits, accrued over the remainingperiod employees are required to work in order to receive severancebenefits.  Lease termination costs relateto the cost of vacating leased facilities, net of anticipated sub-rentalincome.  Equipment relocation costsrelate to the costs to uninstall, pack, ship and reinstall manufacturingequipment as well as the costs to prepare the receiving facility to accommodatethe equipment. The Company expects to complete these restructuring actions bylate 2009. Additional charges and purchase accounting adjustments are expectedduring the balance of 2008 as further restructuring plans related to theintegration of Andrew operations and other cost reduction initiatives areimplemented.

 

Asa result of restructuring and consolidation actions, there is unutilized realestate at various facilities in the U.S. and internationally, which is recordedin property, plant and equipment on the Condensed Consolidated Balance Sheets atthe lower of cost or fair value.  TheCompany is attempting to sell or lease this unutilized space. As additionalrestructuring initiatives are implemented, additional excess property may beidentified and impairment charges, which may be material, may be incurred.

 

**6.     DERIVATIVES AND HEDGINGACTIVITIES**

 

In December 2007, the Company entered into an interest rate swapagreement to hedge the variability of forecasted interest payments attributableto changes in interest rates on a portion of the term loans issued under thenew senior secured credit facilities. Through this swap, the Company fixed thefollowing notional amounts at 4.1275% (before application of the applicablemargin): $1.5 billion from December 27, 2007 through December 31,2008; $1.3 billion during 2009; $1.0 billion during 2010; and$400 million during 2011. The interest rate swap agreement was designatedas a cash flow hedge at inception and such designation was substantiallyeffective at June 30, 2008 and is expected to continue to be effective forthe duration of the swap agreement. During the three and six months ended June 30,2008, interest income (expense) of $0.2 million and $(1.7) million,respectively, was recognized as a result of hedge ineffectiveness related tothe interest rate swap.  The fair valueof the interest rate swap, reflected in other noncurrent liabilities, was $13.8million as of June 30, 2008 and $4.5 million as of December 31,2007.

 

During the three months ended June 30, 2008, the Company paidapproximately $5.0 million to amend its cross currency swap of U.S. dollars foreuros to reduce the notional amount from $14 million to $7 million. Thispayment is included as an investing use of cash on the Condensed ConsolidatedStatement of Cash Flows. Prior to this amendment, a 

 

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portionof the swap was designated and documented as a hedge of the Company’s netinvestment in its Belgian subsidiary to reduce the volatility in stockholders’equity caused by changes in euro exchange rates.  Subsequent to this amendment, the entire swapis designated as a hedge against fluctuations in the fair value of certain ofthe Company’s euro-denominated assets. Pretax gains (losses) of $17 and $(49)on the portion designated as a fair value hedge are reflected in the Company’sCondensed Consolidated Statements of Operations for the three months ended June 30,2008 and 2007, respectively. Pretax losses of $(884) and $(90) on the portiondesignated as a fair value hedge are reflected in the Company’s CondensedConsolidated Statements of Operations for the six months ended June 30,2008 and 2007, respectively.  Thedesignation of the hedging instrument as a fair value hedge was effective as ofJune 30, 2008 and is expected to continue to be effective for the durationof the agreement, resulting in no anticipated hedge ineffectiveness. The fairvalue of the hedging instrument, reflected in other noncurrent liabilities, was$5.1 million and $8.7 million as of June 30, 2008 and December 31,2007, respectively.

 

Therewere no reclassifications from accumulated other comprehensive income toearnings related to derivatives and hedging activities during the three and sixmonths ended June 30, 2008 and 2007.

 

Activityin the accumulated net loss on derivative instruments included in accumulatedother comprehensive income consisted of the following:

 
| ** **                                                                                  | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|---------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                  | ** ** | **2008**                                        | ** ** | **2007**                                      | ** ** | **2008** | ** ** | **2007** | ** ** |
| Accumulated net loss on derivative  instruments, beginning of period                   |       | $                                               | (38,886    | )                                             | $          | (5,303 | ) | $ | (8,849 | ) | $ | (5,201 | ) |
| Gain (loss) on cross currency swap  designated as a net investment hedge, net of taxes |       | 81                                              |       | (122                                          | )          | (486 | ) | (224 | ) |
| Gain (loss) on interest rate swap  designated as a cash flow hedge, net of taxes       |       | 24,650                                          |       | —                                        |       | (4,820 | ) | — |   |
| Accumulated net loss on derivative  instruments, end of period                         |       | $                                               | (14,155    | )                                             | $          | (5,425 | ) | $ | (14,155 | ) | $ | (5,425 | ) |

 

During the three months ended June 30, 2008 and2007, the income tax expense (benefit) related to the gain (loss) on thederivative financial instruments reported within other comprehensive income was$14,525 and $(72), respectively. During the six months ended June 30, 2008and 2007, the income tax benefit related to the loss on the derivativefinancial instruments reported within other comprehensive income was $(3,116)and $(132), respectively.

 

**7. FAIR VALUE MEASUREMENTS**

 

Asof January 1, 2008, the Company implemented SFAS No. 157, whichdefines fair value, establishes a framework for measuring fair value asrequired by other accounting pronouncements and expands disclosurerequirements.  In February 2008, theFASB issued FSP No. FAS 157-2, which delays the effective date of SFAS No. 157as it applies to non-financial assets and liabilities that are not required tobe measured at fair value on a recurring (at least annual) basis.  As a result of the delay, SFAS No. 157will be applied to non-financial assets and liabilities for fiscal yearsbeginning after November 15, 2008.

 

SFASNo. 157 establishes a three-tier hierarchy for evaluating fair valuesbased on the inputs utilized to measure the fair values as follows:

 

Level1 – Observable inputs such as quoted prices in active markets;

Level 2 – Inputs other than quoted market prices inactive markets that are observable, either directly or indirectly; and

Level 3 – Inputs for which there is little or noobservable market data, which requires the reporting entity to develop its ownassumptions.

 

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Forfinancial assets and liabilities measured at fair value as of June 30,2008, the following table provides the quantitative disclosures regarding thefair value.  A market approach, based onprices or other relevant information from market transactions involvingidentical or comparable assets or liabilities, was used to determine the fairvalues.

 
| ** **                                                                                    | ** ** | **Fair Value as of   June 30, 2008** | ** ** | **Valuation   Inputs** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|-----------------------------|------------|
| Cash and cash equivalents                                                                     |       | $                                                                  | 499,573    |                        | Level 1    |   |
| Auction rate securities (included in other  noncurrent assets) (1)                            |       | 4,568                                                              |       | Level 2                     |       |
| Interest rate and cross currency swap  liabilities (included in other noncurrent liabilities) |       | (18,926                                                            | )          | Level 2                     |       |
|                                                                                               |            |                                                                    |            |                             |            |  |

 

----

(1) During the six months ended June 30,2008, the Company determined these auction rate securities (original principalof $5.8 million) were further impaired and that the impairment wasother-than-temporary, resulting in a pretax loss of approximately $0.6 million,which is included in other expense.

 

Theprovisions of SFAS No. 159 became effective for the Company as of January 1,2008.  This standard gives companies theirrevocable option to carry most financial assets or liabilities at fair value,with changes in fair value recorded in earnings. The Company did not elect tocarry any of its financial assets or liabilities at fair value under theprovisions of SFAS No. 159.

 

**8.     EMPLOYEE BENEFIT PLANS**

 
| ** **                            | ** ** | **Pension Benefits**                           | ** ** | **Other Postretirement   Benefits** | ** ** |
|---------------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                            | ** ** | **Three Months Ended June 30,** | ** ** |
| ** **                            | ** ** | **2008**                                            | ** ** | **2007**                                      | ** ** | **2008** | ** ** | **2007** | ** ** |
| Service cost                          |       | $                                                   | 872        |                                          | $          | 785 |   | $ | 842 |   | $ | 1,039 |   |
| Interest cost                         |       | 3,620                                               |       | 1,804                                         |       | 1,509 |   | 1,319 |   |
| Recognized actuarial (gain) loss      |       | —                                              |       | —                                        |       | (124 | ) | 25 |   |
| Amortization of prior service credit  |       | (192                                                | )          | (193                                          | )          | (21 | ) | (21 | ) |
| Amortization of transition obligation |       | 13                                                  |       | 11                                            |       | — |   | — |   |
| Expected return on plan assets        |       | (4,106                                              | )          | (2,195                                        | )          | (126 | ) | (119 | ) |
| Net periodic benefit cost             |       | $                                                   | 207        |                                          | $          | 212 |   | $ | 2,080 |   | $ | 2,243 |   |
|                                       |            |                                                     |            |                                               |            |  |  |  |  |  |  |  |  |  |  |

 
| ** **                            | ** ** | **Six Months Ended June 30,** | ** ** |
|---------------------------------------|------------|---------------------------------------------------|------------|
| ** **                            | ** ** | **2008**                                          | ** ** | **2007** | ** ** | **2008** | ** ** | **2007** | ** ** |
| Service cost                          |       | $                                                 | 1,733      |   | $ | 1,563 |   | $ | 1,684 |   | $ | 2,078 |   |
| Interest cost                         |       | 7,232                                             |       | 3,605 |   | 3,018 |   | 2,638 |   |
| Recognized actuarial (gain) loss      |       | —                                            |       | — |   | (248 | ) | 51 |   |
| Amortization of prior service credit  |       | (385                                              | )          | (386 | ) | (42 | ) | (43 | ) |
| Amortization of transition obligation |       | 25                                                |       | 22 |   | — |   | — |   |
| Expected return on plan assets        |       | (8,206                                            | )          | (4,386 | ) | (252 | ) | (237 | ) |
| Net periodic benefit cost             |       | $                                                 | 399        |   | $ | 418 |   | $ | 4,160 |   | $ | 4,487 |   |

 

The Company contributedapproximately $0.5 million and $10.7 million to its pension plans during thethree and six months ended June 30, 2008, respectively, and anticipatesmaking additional contributions of approximately $1.0 million to these plansduring 2008. The Company contributed approximately $1.2 million and $2.4 millionto its other postretirement benefit plans during the three and six months endedJune 30, 2008, respectively, and anticipates making additionalcontributions of approximately $2.4 million to these plans during 2008.

 

**9.****             ****EQUITY-BASED COMPENSATION PLANS**

 

As of June 30, 2008, $41.9 million ofunrecognized compensation costs related to non-vested awards are expected to berecognized over a weighted average period of 2.2 years. There were nosignificant capitalized equity-based compensation costs at June 30, 2008.

 

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**Stock Options**

 

The following table summarizes the stock optionactivity for the three and six months ended June 30, 2008 (in thousands,except per share data):

 
| ** **                                                  | ** ** | **Shares** | ** ** | **Weighted   Average    Exercise   Price Per   Share** | ** ** | **Weighted   Average   Grant Date   Fair   Value Per   Share** | ** ** | **Aggregate   Intrinsic   Value** | ** ** |
|-------------------------------------------------------------|------------|------------|------------|--------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| Outstanding and expected to vest at March 31,  2008    |       | 3,600      |       | $                                                                                    | 27.82      |                                                                                              |       |                                        |       |   |
| Exercised                                                   |       | (331       | )          | $                                                                                    | 24.53      |                                                                                              |       |                                        |       |   |
| Expired or forfeited                                        |       | (39        | )          | $                                                                                    | 61.25      |                                                                                              | $          | 8.86                                        |       |   |   |
| Outstanding and expected to vest at June 30,  2008     |       | 3,230      |       | $                                                                                    | 27.75      |                                                                                              |       |                                        | $          | 86,513 |   |
|                                                        |       |       |       |                                                                                 |       |                                                                                              |       |                                        |       |
| Outstanding and expected to vest at  December 31, 2007 |       | 3,585      |       | $                                                                                    | 28.45      |                                                                                              |       |                                        |       |   |
| Granted                                                     |       | 278        |       | $                                                                                    | 41.22      |                                                                                              | $          | 20.85                                       |       |   |   |
| Exercised                                                   |       | (387       | )          | $                                                                                    | 23.65      |                                                                                              |       |                                        |       |   |
| Expired or forfeited                                        |       | (246       | )          | $                                                                                    | 59.66      |                                                                                              | $          | 3.98                                        |       |   |   |
| Outstanding and expected to vest at June 30,  2008     |       | 3,230      |       | $                                                                                    | 27.75      |                                                                                              |       |                                        | $          | 86,513 |   |
| Exercisable at June 30, 2008                           |       | 2,756      |       | $                                                                                    | 26.30      |                                                                                              |       |                                        | $          | 78,617 |   |

 

The total intrinsic value of options exercisedduring the three and six months ended June 30, 2008 was $8.4 million and$9.8 million, respectively.  The totalintrinsic value of options exercised during the three and six months ended June 30,2007 was $18.4 million and $44.0 million, respectively.  All of the non-vested options at June 30,2008 are expected to vest as they are primarily held by senior management anddirectors.

 

The exercise prices of outstanding options at June 30,2008 were in the following ranges:

 
| ** **                                  | ** ** | **Options Outstanding**          | ** ** | **Options Exercisable**                                                                     | ** ** |
|---------------------------------------------|------------|---------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|
| **Range of Exercise Prices** | ** ** | **Shares   (in thousands)** | ** ** | **Weighted   Average   Remaining   Contractual Life   (in years)** | ** ** | **Weighted   Average   Exercise Price   Per Share** | ** ** | **Shares   (in thousands)** | ** ** | **Weighted   Average   Exercise Price   Per Share** | ** ** |
| $  7.43 to  $16.50                |       | 1,177                                 |       | 4.6                                                                                              |       | $ | 12.98 |   | 1,177 |   | $ | 12.98 |   |
| $16.51 to $24.00                            |       | 809                                   |       | 5.4                                                                                              |       | $ | 18.63 |   | 745 |   | $ | 18.52 |   |
| $24.01 to $52.76                            |       | 845                                   |       | 6.3                                                                                              |       | $ | 38.50 |   | 435 |   | $ | 38.36 |   |
| $52.77 to $75.48                            |       | 399                                   |       | 1.7                                                                                              |       | $ | 67.01 |   | 399 |   | $ | 67.01 |   |
| $  7.43 to  $75.48                |       | 3,230                                 |       | 4.9                                                                                              |       | $ | 27.75 |   | 2,756 |   | $ | 26.30 |   |

 

The Company usesthe Black-Scholes model to estimate the fair value of stock option awards. Keyinput assumptions used in the model to estimate the fair value of stock optionsinclude the grant price of the award, the expected option term, volatility ofthe Company’s stock, the risk-free rate and the Company’s projected dividendyield. The Company believes that the valuation technique and the approachutilized to develop the underlying assumptions are appropriate in estimatingthe fair values of CommScope stock options. Estimates of fair value are notintended to predict actual future events or the value ultimately realized byemployees who receive equity awards, and subsequent events are not indicativeof the reasonableness of the original estimates of fair value made by theCompany.  The following table presentsthe weighted average assumptions used to estimate the fair value of stockoption awards granted during the six months ended June 30, 2008.  No stock option awards were granted in thethree months ended June 30, 2008 or the three or six months ended June 30,2007.

 
| ** **                                | ** ** | **Six Months Ended   June 30, 2008** | ** ** |
|-------------------------------------------|------------|---------------------------------------------------------------|------------|
| Expected option term (in years)           |       | 7.0                                                           |       |
| Risk-free interest rate                   |       | 3.0                                                           | %          |
| Expected volatility                       |       | 45                                                            | %          |
| Expected dividend yield                   |       | 0                                                             | %          |
| Weighted-average fair value at grant date |       | $                                                             | 20.85      |   |
|                                           |            |                                                               |            |  |

 

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**Performance Share Units**

 

The following table summarizes the performanceshare unit activity for the three and six months ended June 30, 2008 (inthousands, except per share data):

 
| ** **                                            | ** ** | **Performance   Share   Units** | ** ** | **Weighted    Average Grant   Date Fair     Value Per    Share** | ** ** |
|-------------------------------------------------------|------------|-------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------|------------|
| Outstanding and non-vested at March 31, 2008     |       | 840                                       |       | $                                                                                                                       | 30.86      |   |
| Forfeited                                             |       | (2                                        | )          | $                                                                                                                       | 41.22      |   |
| Outstanding and non-vested at June 30, 2008      |       | 838                                       |       | $                                                                                                                       | 30.82      |   |
|                                                  |       |                                      |       |                                                                                                                    |       |
| Outstanding and non-vested at December 31,  2007 |       | 514                                       |       | $                                                                                                                       | 24.29      |   |
| Granted                                               |       | 329                                       |       | $                                                                                                                       | 41.22      |   |
| Forfeited                                             |       | (5                                        | )          | $                                                                                                                       | 41.22      |   |
| Outstanding and non-vested at June 30, 2008      |       | 838                                       |       | $                                                                                                                       | 30.82      |   |

 

**Restricted Stock Units**

 

The following table summarizes the restrictedstock unit activity for the three and six months ended June 30, 2008 (inthousands, except per share data):

 
| ** **                                            | ** ** | **Restricted   Stock   Units** | ** ** | **Weighted    Average Grant   Date Fair     Value Per    Share** | ** ** |
|-------------------------------------------------------|------------|------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------|------------|
| Outstanding and non-vested at March 31, 2008     |       | 954                                      |       | $                                                                                                                       | 33.09      |   |
| Forfeited                                             |       | (9                                       | )          | $                                                                                                                       | 38.94      |   |
| Outstanding and non-vested at June 30, 2008      |       | 945                                      |       | $                                                                                                                       | 33.00      |   |
|                                                  |       |                                     |       |                                                                                                                    |       |
| Outstanding and non-vested at December 31,  2007 |       | 495                                      |       | $                                                                                                                       | 25.43      |   |
| Granted                                               |       | 467                                      |       | $                                                                                                                       | 41.21      |   |
| Forfeited                                             |       | (17                                      | )          | $                                                                                                                       | 36.58      |   |
| Outstanding and non-vested at June 30, 2008      |       | 945                                      |       | $                                                                                                                       | 33.00      |   |

 

**10.  SEGMENTS**

 

As a result of theacquisition of Andrew, management reorganized its internal reporting structure,which consequently affects the Company’s reportable segments.  The Company’s four reportable segments, whichalign with the manner in which the business is managed, are as follows: Antenna,Cable and Cabinets Group (ACCG); Enterprise; Broadband; and Wireless NetworkSolutions (WNS).

 

The ACCG segment includesproduct offerings of primarily passive transmission devices for the wirelessinfrastructure market including base station antennas, coaxial cable andconnectors and microwave antennas as well as secure environmental enclosuresfor electronic devices and equipment used by wireline and wirelessproviders.  The ACCG segment is largelycomposed of product lines that were part of legacy Andrew.

 

The Enterprise segmentconsists mainly of structured cabling systems for business enterpriseapplications and connectivity solutions for wired and wireless networks withinorganizations. The segment also includes coaxial cable for various video and dataapplications that are not related to cable television.

 

The WNS segmentincludes a variety of active electronic devices and services including poweramplifiers, filters and tower mounted amplifiers, geolocation products, networkoptimization analysis systems, and engineering and consulting services as wellas products that are used to extend and enhance the coverage of wirelessnetworks in areas where signals are difficult to send or receive such astunnels, subways, airports and commercial buildings.  The WNS segment is entirely composed ofproduct lines that were part of legacy Andrew.

 

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The Broadbandsegment consists mainly of coaxial cable, fiber optic cable and conduit forcable television system operators. These products support multi-channel video,voice and high-speed data services for residential and commercial customersusing Hybrid Fiber Coaxial architecture.

 

The following tableprovides summary asset information by segment as of June 30, 2008 and December 31,2007 (in millions):

 
| ** **                                | ** ** | **As of**    | ** ** | **As of**        | ** ** |
|-------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
| ** **                                | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| Identifiable segment related assets:      |       |              |       |                  |       |
| ACCG                                      |       | $                 | 2,496.9    |                  | $          | 2,560.0 |   |
| Enterprise                                |       | 394.6             |       | 352.6                 |       |
| WNS                                       |       | 1,018.5           |       | 1,048.7               |       |
| Broadband                                 |       | 418.8             |       | 389.3                 |       |
| Total identifiable segment related assets |       | 4,328.8           |       | 4,350.6               |       |
|                                      |       |              |       |                  |       |
| Reconciliation to total assets:           |       |              |       |                  |       |
| Cash and cash equivalents                 |       | 499.6             |       | 649.5                 |       |
| Deferred income taxes                     |       | 79.8              |       | 106.5                 |       |
| Total assets                              |       | $                 | 4,908.2    |                  | $          | 5,106.6 |   |

 

The following tablepresents the allocation of goodwill, including the preliminary goodwillallocation arising from the Andrew acquisition, to reportable segments as of June 30,2008 and December 31, 2007 (in millions):

 
| ** **           | ** ** | **As of**    | ** ** | **As of**        | ** ** |
|----------------------|------------|-------------------|------------|-----------------------|------------|
| ** **           | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
| ** **           | ** ** | **2008**          | ** ** | **2007**              | ** ** |
| Goodwill allocation: |       |              |       |                  |       |
| ACCG                 |       | $                 | 822.5      |                  | $          | 760.9 |   |
| Enterprise           |       | 20.9              |       | 20.9                  |       |
| WNS                  |       | 303.2             |       | 295.9                 |       |
| Broadband            |       | 133.7             |       | 133.5                 |       |
| Total goodwill       |       | $                 | 1,280.3    |                  | $          | 1,211.2 |   |

 

The following tableprovides net sales and operating income (loss) by segment for the three and sixmonths ended June 30, 2008 and 2007 (in millions):

 
| ** **                    | ** ** | **Three Months   Ended June 30,** | ** ** | **Six Months   Ended June 30,** | ** ** |
|-------------------------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                    | ** ** | **2008**                                              | ** ** | **2007**                                            | ** ** | **2008** | ** ** | **2007** | ** ** |
| Net sales:                    |       |                                                  |       |                                                |       |   |   |   |   |
| ACCG                          |       | $                                                     | 500.2      |                                                | $          | 116.7 |   | $ | 979.2 |   | $ | 203.8 |   |
| Enterprise                    |       | 243.1                                                 |       | 239.4                                               |       | 454.6 |   | 440.3 |   |
| WNS                           |       | 185.4                                                 |       | —                                              |       | 366.0 |   | — |   |
| Broadband                     |       | 163.7                                                 |       | 163.4                                               |       | 299.2 |   | 311.5 |   |
| Inter-segment eliminations    |       | (5.0                                                  | )          | (0.4                                                | )          | (6.5 | ) | (1.0 | ) |
| Consolidated net sales        |       | $                                                     | 1,087.4    |                                                | $          | 519.1 |   | $ | 2,092.5 |   | $ | 954.6 |   |
|                          |       |                                                  |       |                                                |       |   |   |   |   |
| Operating income (loss):      |       |                                                  |       |                                                |       |   |   |   |   |
| ACCG                          |       | $                                                     | 66.1       |                                                | $          | 18.3 |   | $ | 86.4 |   | $ | 30.9 |   |
| Enterprise                    |       | 40.9                                                  |       | 47.8                                                |       | 76.9 |   | 77.3 |   |
| WNS                           |       | (0.7                                                  | )          | —                                              |       | (32.6 | ) | — |   |
| Broadband                     |       | (8.7                                                  | )          | 20.3                                                |       | (5.4 | ) | 41.9 |   |
| Consolidated operating income |       | $                                                     | 97.6       |                                                | $          | 86.4 |   | $ | 125.3 |   | $ | 150.1 |   |

 

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**11.  SUPPLEMENTAL CASHFLOW INFORMATION**

 
| ** **                                                    | ** ** | **Six Months   Ended June 30,** | ** ** |
|---------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                    | ** ** | **2008**                                            | ** ** | **2007** | ** ** |
| Cash paid during the period for:     | ** ** | ** **                                          | ** ** | ** ** | ** ** |
| Income taxes, net of refunds                                  |       | $                                                   | 7,616      |   | $ | 27,724 |   |
| Interest                                                      |       | 70,215                                              |       | 2,628 |   |
|                                                          |       |                                                |       |   |   |
| Noncash investing and financing activities:                   |       |                                                |       |   |   |
| Conversion of senior subordinated debentures to  common stock |       | $                                                   | 76,607     |   | — |   |
| Assets acquired under capital lease                           |       | 4,830                                               |       | — |   |
|                                                               |            |                                                     |            |  |  |  |  |

 

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**ITEM 2.****        MANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF****  OPERATIONS**

 

The following discussionand analysis of our financial condition and results of operations for the threeand six months ended June 30, 2008 and 2007 is provided to increase theunderstanding of, and should be read in conjunction with, the unauditedcondensed consolidated financial statements and accompanying notes included inthis document as well as the audited consolidated financial statements, relatednotes thereto and management’s discussion and analysis of financial conditionand results of operations, including management’s discussion and analysis aboutthe application of critical accounting policies, included in our 2007 AnnualReport on Form 10-K.

 

**Overview**

** **

### CommScope, Inc. is a world leader ininfrastructure solutions for communications networks. With the acquisition ofAndrew Corporation (Andrew), we are a global leader in providing radiofrequency subsystem solutions for wireless networks. Through our SYSTIMAX® and Uniprise® brands, we arealso a global leader in structured cabling systems for business enterpriseapplications. In addition, we are the premier manufacturer of coaxial cable forbroadband cable television networks and one of the leading North Americanproviders of environmentally secure cabinets for digital subscriber line (DSL)and Fiber-to-the-Node applications.

###  

                As a result of the acquisition of Andrew, managementreorganized its internal reporting structure and revised our reportablesegments.  Our four reportable segments,which align with the manner in which the business is managed, are as follows:Antenna, Cable and Cabinet Group (ACCG); Enterprise; Broadband; and WirelessNetwork Solutions (WNS).

 

**CRITICAL ACCOUNTING POLICIES**

** **

There have been nochanges in our critical accounting policies or significant accounting estimatesas disclosed in our 2007 Annual Report on Form 10-K other than theimplementation of SFAS No. 157, “Fair Value Measurements” and SFAS No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities.”  See Note 7 to the Condensed ConsolidatedFinancial Statements included elsewhere in this Form 10-Q.

 

**COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE ANDSIX MONTHS ENDED JUNE 30, 2008 WITH THE THREE AND SIX MONTHS ENDEDJUNE 30, 2007**

 
| ** **                                  | ** ** | **Three Months Ended June 30,**                               | ** ** | ** **        | ** ** | ** ** | ** ** |
|---------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|-------------------|------------|------------|------------|
| ** **                                  | ** ** | **2008**                                                                          | ** ** | **2007**          | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                  | ** ** | ** **                                                                        | ** ** | **%**** of** | ** ** | ** ** | ** ** | **%**** of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                  | ** ** | ** **                                                                        | ** ** | **Net**           | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                                  | ** ** | **Amount**                                                                        | ** ** | **Sales**         | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                                  | ** ** | **(dollars in millions, except per share amounts)** | ** ** |
| Net sales                                   |       | $                                                                                 | 1,087.4    |              | 100.0      | %          | $          | 519.1 |   | 100.0 | % | $ | 568.3 |   | 109.5 | % |
| Gross profit                                |       | 310.6                                                                             |       | 28.6              |       | 162.6      |       | 31.3 |   | 148.0 |   | 91.1 |   |
| SG&A expense                            |       | 131.6                                                                             |       | 12.1              |       | 66.3       |       | 12.8 |   | 65.3 |   | 98.5 |   |
| R&D expense                             |       | 34.3                                                                              |       | 3.2               |       | 8.5        |       | 1.6 |   | 25.8 |   | 305.4 |   |
| Amortization of purchased intangible assets |       | 24.6                                                                              |       | 2.3               |       | 1.2        |       | 0.2 |   | 23.4 |   | 1,865.7 |   |
| Restructuring costs                         |       | 22.6                                                                              |       | 2.1               |       | 0.2        |       | 0.0 |   | 22.4 |   | 13,294.1 |   |
| Net income                                  |       | 40.2                                                                              |       | 3.7               |       | 61.1       |       | 11.8 |   | (20.9 | ) | (34.2 | ) |
| Earnings per diluted share                  |       | 0.50                                                                              |       |              |       | 0.83       |       |   |   | (0.33 | ) | (39.8 | ) |
|                                             |            |                                                                                   |            |                   |            |            |            |  |  |  |  |  |  |  |  |  |

 
| ** **                                  | ** ** | **Six Months Ended June 30,**                                 | ** ** | ** **        | ** ** | ** ** | ** ** |
|---------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|-------------------|------------|------------|------------|
| ** **                                  | ** ** | **2008**                                                                          | ** ** | **2007**          | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                  | ** ** | ** **                                                                        | ** ** | **%**** of** | ** ** | ** ** | ** ** | **%**** of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                  | ** ** | ** **                                                                        | ** ** | **Net**           | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                                  | ** ** | **Amount**                                                                        | ** ** | **Sales**         | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                                  | ** ** | **(dollars in millions, except per share amounts)** | ** ** |
| Net sales                                   |       | $                                                                                 | 2,092.5    |              | 100.0      | %          | $          | 954.6 |   | 100.0 | % | $ | 1,137.9 |   | 119.2 | % |
| Gross profit                                |       | 527.1                                                                             |       | 25.2              |       | 294.5      |       | 30.9 |   | 232.6 |   | 79.0 |   |
| SG&A expense                            |       | 259.6                                                                             |       | 12.4              |       | 125.0      |       | 13.1 |   | 134.6 |   | 107.8 |   |
| R&D expense                             |       | 70.2                                                                              |       | 3.4               |       | 16.3       |       | 1.7 |   | 53.9 |   | 330.3 |   |
| Amortization of purchased intangible assets |       | 49.1                                                                              |       | 2.3               |       | 2.3        |       | 0.2 |   | 46.8 |   | 2,045.2 |   |
| Restructuring costs                         |       | 22.8                                                                              |       | 1.1               |       | 0.9        |       | 0.1 |   | 21.9 |   | 2,435.4 |   |
| Net income                                  |       | 29.2                                                                              |       | 1.4               |       | 107.0      |       | 11.2 |   | (77.8 | ) | (72.7 | ) |
| Earnings per diluted share                  |       | 0.38                                                                              |       |              |       | 1.46       |       |   |   | (1.08 | ) | (74.0 | ) |
|                                             |            |                                                                                   |            |                   |            |            |            |  |  |  |  |  |  |  |  |  |

 

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**Net sales**

** **

**Theincrease in net sales for the three and six months ended June 30, 2008over the comparable prior year periods is primarily attributable to theacquisition of Andrew on December 27, 2007.  Net sales for Andrew during the three and sixmonths ended June 30, 2008 were $581.0 million and $1,149.9 million,respectively, and are included in the ACCG and WNS segments.  Net sales of $11.3 million for the four dayperiod from December 28, 2007 to December 31, 2007 are included insales for the six months ended June 30, 2008. For further details bysegment, see the section titled “Segment Results” below.**

** **

**Gross profit (net sales less cost of sales)**

** **

The year-over-yearincrease in gross profit of $148.0 million and $232.6 million for the three andsix months ended June 30, 2008, respectively, is primarily attributable tothe acquisition of Andrew.  Gross profitfor the three and six months ended June 30, 2008 was adversely affected by$4.7 million and $57.5 million, respectively, of purchase accountingadjustments, primarily related to the effect on cost of sales of the step-up ofthe acquired inventory to its estimated fair value less the costs to sell theinventory.  Cost of sales for the threeand six months ended June 30, 2008 includes amortization expense of $3.9million and $7.8 million, respectively, related to intangible assets.

 

Our gross profit marginfor the three months ended June 30, 2008 was 28.6% compared to 31.3% forthe comparable prior year period.  Thegross profit margin for the three months ended June 30, 2008, excludingthe impact of the purchase accounting adjustments and amortization expensediscussed above, was 29.4%.  Our grossprofit margin for the six months ended June 30, 2008 was 25.2% compared to30.9% for the comparable prior year period. The gross profit margin for the six months ended June 30, 2008,excluding the impact of the purchase accounting adjustments and amortizationexpense discussed above, was 28.3%. These adjusted gross profit margins are lower than the prior periodsreflecting legacy Andrew products whose historical gross profit margins werelower than those of CommScope and a reduction in certain legacy CommScopeproduct lines, particularly in the Broadband segment (see the section titled “SegmentResults” below).

 

In response to increasedraw material costs, we announced price increases for certain cable productswithin the ACCG, Enterprise and Broadband segments.  These price increases provided slight benefitto gross profit in the second quarter and are expected to provide moresignificant benefits in the second half of the year.

 

We expect continuedvolatility in the costs of certain raw materials, particularly copper,aluminum, plastics and other polymers. If raw material costs continue toincrease and we delay implementing price increases or are unable to achievemarket acceptance of announced or future price increases, gross profit may beadversely affected.  Price reductions inresponse to a significant decline in raw material costs may also have anadverse impact on gross profit.

 

**Selling, general and administrative expense**

** **

The increase in selling,general and administrative expense (SG&A) for the three and six monthsended June 30, 2008 as compared to the same periods in 2007 was primarilydue to the acquisition of Andrew. Included in SG&A for the three and six months ended June 30,2008 are acquisition and integration related costs of $0.9 million and $3.8million, respectively.  The reduction inSG&A expense as a percentage of net sales is a result of the higher saleslevels.

 

**Research and development**

** **

Research and development(R&D) expense increased by $25.8 million and $53.9 million for the threeand six months ended June 30, 2008, respectively, as compared to the sameperiods in 2007 primarily as a result of the Andrew acquisition.  R&D expense as a percentage of net salesincreased to 3.2% and 3.4% for the three and six months ended June 30,2008, respectively, as compared to 1.6% and 1.7% for the comparable 2007 threeand six month periods.  Thisyear-over-year increase in R&D expense as a percentage of net salesreflects the higher level of R&D spending required to support the Andrewproducts, particularly those in the WNS segment. R&D activities generallyrelate to ensuring that our products are capable of meeting the developingtechnological needs of our customers, bringing new products to market andmodifying existing products to better serve our customers.

 

### **Amortization of purchased intangibles**

###  

As a result of the Andrewacquisition, we recognized approximately $970 million of identifiableintangible assets, which increased our total amortization expense by $26.5million to $28.5 million for the three months ended June 30, 2008 and by$52.8 million to $56.9 million for the six months ended June 30,2008.  Of the total amortization expensefor the three 

 

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andsix months ended June 30, 2008, $3.9 million and $7.8 million,respectively, relates to patents and technologies and is included in cost ofsales.  In the comparable prior yearperiods, amortization expense of $0.8 million and $1.8 million was included incost of sales.

 

**Restructuring Costs**

** **

We recognized pretaxrestructuring costs of $22.6 million and $22.8 million during the three and sixmonths ended June 30, 2008, respectively, compared with $0.2 million and$0.9 million during the comparable periods ended June 30, 2007,respectively.  The restructuring costs inthe three months ended June 30, 2008 included an $18.4 million charge relatedto restructuring actions at legacy CommScope’s Belgian manufacturing facilityand a $3.9 million charge related to restructuring actions at the legacyCommScope Brazilian manufacturing facility. Both of these facilities haveprimarily supported operations of the Broadband segment. The restructuringcosts incurred during the three and six months ended June 30, 2008resulted from an effort to lower the overall manufacturing cost structure ofthe Company following the Andrew acquisition.

 

We anticipate that therewill be additional restructuring charges recognized and additions to theliability for restructuring activities through further adjustments to the preliminaryallocation of the Andrew purchase price during 2008.  We have announced the consolidation ofcertain legacy Andrew cable and antenna production operations, which may resultin the closure of locations in the Stratford, England area and changes at otherfacilities.  The costs associated withthis initiative, which have not yet been determined, are expected to berecognized primarily as an adjustment to the preliminary purchase priceallocation. In addition, we have also announced the planned closure of a legacyCommScope manufacturing facility in Australia which is expected to result inrestructuring charges during the third and fourth quarters of 2008. The levelof such charges has not been determined. We expect to complete theserestructuring actions by late 2009. Additional restructuring initiativesrelated to the Andrew integration or cost reduction efforts are being evaluatedand any resulting charges or additions to the liability for restructuringactivities as adjustments to the preliminary allocation of the Andrew purchaseprice could be material.

 

As a result ofrestructuring and consolidation actions, there is unutilized real estate atvarious facilities in the U.S. and internationally.  We are attempting to sell or lease thisunutilized space. As additional restructuring initiatives are implemented,additional excess real estate or equipment may be identified and impairmentcharges, which may be material, may be incurred.

 

**Otherexpense, net**

 

During the three and six months ended June 30,2008, net other expense increased $8.8 million and $15.7 million, respectively,due primarily to foreign exchange losses of $9.0 million and $11.8 million,respectively.  Also included in net otherexpense for the six months ended June 30, 2008, is a $2.8 million costrelated to the inducement of our 1% senior subordinated convertible debenturesand a $0.6 million impairment of our auction rate securities.

 

**Net interest income (expense)**

** **

We incurred net interest expense of $31.2 million and$65.6 million during the three and six months ended June 30, 2008,respectively, compared to recognizing net interest income of $4.0 millionand $6.6 million for the three and six months ended June 30, 2007,respectively. This change is the result of the significant borrowingsundertaken and the cash, cash equivalents and short-term investments that wereutilized to finance the Andrew acquisition. Our weighted average effective interest rate on outstanding borrowings,including the interest rate swap and amortization of long-term financing costs,was 6.03% as of June 30, 2008 compared to 6.23% as of December 31,2007.

 

Interest expense for the three and six months ended June 30,2008 includes a $0.2 million benefit and a $1.7 million charge, respectively,related to ineffectiveness on the interest rate swap entered into to fix theinterest rate on a portion of the debt incurred to finance the Andrewacquisition.  No material amount ofadditional ineffectiveness is expected over the remainder of the term of theinterest rate swap.

 

**Income taxes**

** **

Our effective income taxrate was 29.6% and 33.3% for the three and six months ended June 30, 2008,respectively, compared to 32.1% and 31.6% for the three and six months ended June 30,2007, respectively. Income before income taxes for the three and six monthsended June 30, 2008 includes $22.3 million and $25.5 million, respectively,of charges primarily related to restructuring initiatives, for which we do not expectto realize tax benefits. Also included in the income tax provision for the 

 

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three and six months ended June 30, 2008 is abenefit of $3.9 million related to the settlement of various U.S. and foreignincome tax audits. The effective rate excluding these items was 26.1% and 26.6%for the three and six months ended June 30, 2008, respectively. Oureffective tax rate reflects the benefits derived from significant operationsoutside the U.S., which are generally taxed at rates lower than the U.S.statutory rate of 35%, partially offset by U.S. state income taxes andvaluation allowances for losses in certain foreign jurisdictions for which wecannot record tax benefits.  Theeffective tax rate (excluding the items noted above) decreased from thecomparable prior year periods primarily due to a shift in the geographic mix ofearnings as a result of the Andrew acquisition.

 

**SegmentResults**

 

The pro forma information provided below is intendedto show how CommScope’s results might have looked if the acquisition of Andrewhad occurred as of January 1, 2007. The Andrew amounts included in this pro forma information are based onAndrew’s actual results and, therefore, may not be indicative of the actualresults when operated as part of CommScope. No pro forma adjustments have been made other than combining CommScope’shistorical results with those of Andrew. The pro forma financial information should not be relied upon as beingindicative of the historical results that would have been realized had theacquisition occurred as of the date indicated or that may be achieved in thefuture.

 
| ** **                          | ** ** | **Actual**                                      | ** ** | **Pro Forma**                                      | ** ** |
|-------------------------------------|------------|-------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                          | ** ** | **Three Months Ended  June 30,** | ** ** | **Three Months Ended  June 30,****2007** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | **2008**                                        | ** ** | **2007**                                                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | **Amount **                                | ** ** | **% of Net   Sales**                                    | ** ** | **Amount ** | ** ** | **% of Net  Sales** | ** ** | **Amount** | ** ** | **% of Net  Sales** | ** ** | **Dollar   Change ** | ** ** | **%****Change** | ** ** |
| ** **                          | ** ** | **(dollars in millions)**             | ** ** |
| Net sales by segment:               |       |                                            |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| ACCG                                |       | $                                               | 500.2      |                                                    | 46.0       | % | $ | 116.7 |   | 22.4 | % | $ | 466.7 |   | 43.8 | % | $ | 33.5 |   | 7.2 | % |
| Enterprise                          |       | 243.1                                           |       | 22.4                                                    | %          | 239.4 |   | 46.1 | % | 239.4 |   | 22.5 | % | 3.7 |   | 1.5 | % |
| WNS                                 |       | 185.4                                           |       | 17.1                                                    | %          | — |   | — | % | 195.7 |   | 18.4 | % | (10.3 | ) | (5.3 | )% |
| Broadband                           |       | 163.7                                           |       | 15.1                                                    | %          | 163.4 |   | 31.5 | % | 163.4 |   | 15.3 | % | 0.3 |   | 0.2 | % |
| Inter-segment eliminations          |       | (5.0                                            | )          | (0.5                                                    | )%         | (0.4 | ) | (0.0 | )% | (0.4 | ) | (0.0 | )% | (4.6 | ) | NM |   |
| Consolidated net sales              |       | $                                               | 1,087.4    |                                                    | 100.0      | % | $ | 519.1 |   | 100.0 | % | $ | 1,064.8 |   | 100.0 | % | $ | 22.6 |   | 2.1 | % |
|                                |       |                                            |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total domestic sales                |       | $                                               | 502.7      |                                                    | 46.2       | % | $ | 359.0 |   | 69.2 | % | $ | 550.3 |   | 51.7 | % | $ | (47.6 | ) | (8.6 | )% |
| Total international sales           |       | 584.7                                           |       | 53.8                                                    | %          | 160.1 |   | 30.8 | % | 514.5 |   | 48.3 | % | 70.2 |   | 13.6 | % |
| Total worldwide sales               |       | $                                               | 1,087.4    |                                                    | 100.0      | % | $ | 519.1 |   | 100.0 | % | $ | 1,064.8 |   | 100.0 | % | $ | 22.6 |   | 2.1 | % |
|                                |       |                                            |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss) by segment: |       |                                            |       |                                                    |       |   |   |   |   |   |   |   |   |   |   |   |   |
| ACCG                                |       | $                                               | 66.1       |                                                    | 13.2       | % | $ | 18.3 |   | 15.7 | % | $ | 49.4 |   | 10.6 | % | $ | 16.7 |   | 33.8 | % |
| Enterprise                          |       | 40.9                                            |       | 16.8                                                    | %          | 47.8 |   | 20.0 | % | 47.8 |   | 20.0 | % | (6.9 | ) | (14.4 | )% |
| WNS                                 |       | (0.7                                            | )          | (0.4                                                    | )%         | — |   | — | % | (116.8 | ) | (59.7 | )% | 116.1 |   | NM |   |
| Broadband                           |       | (8.7                                            | )          | (5.5                                                    | )%         | 20.3 |   | 12.4 | % | 20.3 |   | 12.4 | % | (29.0 | ) | NM |   |
| Consolidated operating income       |       | $                                               | 97.6       |                                                    | 9.0        | % | $ | 86.4 |   | 16.6 | % | $ | 0.7 |   | 0.0 | % | $ | 96.9 |   | NM |   |

 

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| ** **                          | ** ** | **Actual**                                    | ** ** | **Pro Forma**                            | ** ** |
|-------------------------------------|------------|-----------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                          | ** ** | **Six Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | **2008**                                      | ** ** | **2007**                                      | ** ** | **2007** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                          | ** ** | **Amount**                                    | ** ** | **% of Net****Sales**               | ** ** | **Amount** | ** ** | **% of Net****Sales** | ** ** | **Amount** | ** ** | **% of Net****Sales** | ** ** | **Dollar****Change** | ** ** | **% Change** | ** ** |
| Net sales by segment:               |       |                                          |       |                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| ACCG                                |       | $                                             | 979.2      |                                          | 46.8       | % | $ | 203.8 |   | 21.4 | % | $ | 867.9 |   | 43.3 | % | $ | 111.3 |   | 12.8 | % |
| Enterprise                          |       | 454.6                                         |       | 21.7                                          | %          | 440.3 |   | 46.1 | % | 440.3 |   | 22.0 | % | 14.3 |   | 3.2 | % |
| WNS                                 |       | 366.0                                         |       | 17.5                                          | %          | — |   | — | % | 384.3 |   | 19.1 | % | (18.3 | ) | (4.8 | )% |
| Broadband                           |       | 299.2                                         |       | 14.3                                          | %          | 311.5 |   | 32.6 | % | 311.5 |   | 15.6 | % | (12.3 | ) | (3.9 | )% |
| Inter-segment eliminations          |       | (6.5                                          | )          | (0.3                                          | )%         | (1.0 | ) | (0.0 | )% | (1.0 | ) | (0.0 | )% | (5.5 | ) | NM |   |
| Consolidated  net sales             |       | $                                             | 2,092.5    |                                          | 100.0      | % | $ | 954.6 |   | 100.0 | % | $ | 2,003.0 |   | 100.0 | % | $ | 89.5 |   | 4.5 | % |
|                                |       |                                          |       |                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total  domestic sales               |       | $                                             | 1,007.1    |                                          | 48.1       | % | $ | 658.2 |   | 69.0 | % | $ | 1,039.0 |   | 51.9 | % | $ | (31.9 | ) | (3.1 | )% |
| Total  international sales          |       | 1,085.4                                       |       | 51.9                                          | %          | 296.4 |   | 31.0 | % | 964.0 |   | 48.1 | % | 121.4 |   | 12.6 | % |
| Total  worldwide sales              |       | $                                             | 2,092.5    |                                          | 100.0      | % | $ | 954.6 |   | 100.0 | % | $ | 2,003.0 |   | 100.0 | % | $ | 89.5 |   | 4.5 | % |
|                                |       |                                          |       |                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss) by segment: |       |                                          |       |                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| ACCG                                |       | $                                             | 86.4       |                                          | 8.8        | % | $ | 30.9 |   | 15.2 | % | $ | 87.4 |   | 10.1 | % | $ | (1.0 | ) | (1.1 | )% |
| Enterprise                          |       | 76.9                                          |       | 16.9                                          | %          | 77.3 |   | 17.6 | % | 77.3 |   | 17.6 | % | (0.4 | ) | (0.5 | )% |
| WNS                                 |       | (32.6                                         | )          | (8.9.                                         | )%         | — |   | — | % | (133.3 | ) | (34.7 | )% | 100.7 |   | NM |   |
| Broadband                           |       | (5.4                                          | )          | (1.8                                          | )%         | 41.9 |   | 13.5 | % | 41.9 |   | 13.5 | % | (47.3 | ) | NM |   |
| Consolidated  operating income      |       | $                                             | 125.3      |                                          | 6.0        | % | $ | 150.1 |   | 15.7 | % | $ | 73.3 |   | 3.7 | % | $ | 52.0 |   | 70.9 | % |

 

*Antenna, Cable and Cabinet Group*

 

The ACCG segment includesproduct offerings of primarily passive transmission devices for the wirelessinfrastructure market including base station antennas, coaxial cable andconnectors, and microwave antennas and secure environmental enclosures for electronicdevices and equipment used by wireline and wireless telecommunicationsproviders.

 

Higher internationalsales of most product lines as well as the positive impact of foreign exchangerate changes were primarily responsible for the increase in ACCG segment netsales for the three and six months ended June 30, 2008 as compared to thepro forma net sales for the comparable 2007 periods.  For the three and six months ended June 30,2008, the ACCG segment experienced particularly strong international growth inthe Europe, Middle East and Africa (EMEA) region.  Higher sales of microwave antennas and basestation antennas contributed to the increase in ACCG net sales in the three andsix months ended June 30, 2008 as compared to pro forma 2007 net sales forthe same periods.  These increased saleswere somewhat offset by lower wireline sales for both the three and six monthsended June 30, 2008.

 

In response to increasesin raw material costs, price increases have been announced for certain ACCGcable products, the impact of which should begin to be realized in the secondhalf of 2008.

 

We expect demand for ourACCG products to be affected by wireless capacity expansion in emerging marketsand growth in mobile data services in developed markets.

 

Operating income for theACCG segment for the three and six months ended June 30, 2008 includes thenegative impact of $0.3 million and $31.7 million, respectively, from thestep-up of inventory to its estimated fair value as a result of the acquisitionof Andrew and approximately $16.9 million and $33.3 million, respectively, ofincremental intangible asset amortization expense resulting from thepreliminary purchase price allocation from the Andrew acquisition. Theseincreased costs were offset by the benefits of higher sales volumes and costreduction synergies realized in both the three and six months ended June 30,2008.

* *

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* *

*Enterprise*

* *

The Enterprise segmentconsists mainly of structured cabling systems for business enterpriseapplications and connectivity solutions for wired and wireless networks withinorganizations. The segment also includes coaxial cable for various video anddata applications that are not related to cable television.

 

The increase inEnterprise segment net sales for the three and six months ended June 30,2008 over the comparable prior year periods was primarily driven by higherinternational sales volume with all major regions generating higher sales.  Domestic net sales were slightly lower in thethree and six months ended June 30, 2008 than in the comparable prior yearperiods.  In response to higher rawmaterial costs, price increases for several major product groups were announcedearlier in the year and more price increases are expected to be announced inthe third quarter of 2008.  These priceincreases are expected to provide benefits during the second half of 2008.

 

We expect demand forEnterprise products to be driven by the ongoing need for bandwidth andhigh-performance structured cabling in the enterprise market and affected byglobal information technology spending.

 

The year-over-yeardecline in Enterprise segment operating income for the three months ended June 30,2008 is primarily attributable to flat sales, increased raw material costs andincreasing selling and marketing costs. For the six months ended June 30,2008, operating income was essentially unchanged when compared to the six monthsended June 30, 2007. Operating income was also adversely affected by a $0.9million and $0.1 million increase in restructuring costs for the three and sixmonths ended June 30, 2008, respectively, compared to the same periods in2007.

 

*WirelessNetwork Solutions*

 

The WNS segmentincludes a variety of active electronic devices and services including poweramplifiers, filters and tower mounted amplifiers, geolocation products, networkoptimization analysis systems, and engineering and consulting services as wellas products that are used to extend and enhance the coverage of wirelessnetworks in areas where signals are difficult to send or receive, such astunnels, subways, airports and commercial buildings.

 

WNS segment netsales decreased during the three and six months ended June 30, 2008compared to the comparable pro forma 2007 periods primarily due to thedivestiture of the Satellite Communications (SatCom) product line on January 31,2008.  SatCom sales for the three and sixmonths ended June 30, 2008 were $3.0 million and $11.6 million,respectively, as compared to $22.9 million and $53.6 million for the pro formathree and six months ended June 30, 2007. The SatCom sales subsequent to its divestiture relate to transitionservices.  Excluding the impact ofSatCom, WNS segment net sales increased 5.5% and 6.9% during the three and sixmonths ended June 30, 2008, respectively, as compared to the comparablepro forma 2007 periods, primarily due to increased sales of repeaters, filtersand tower mounted amplifiers.  Net salesin the WNS segment also benefited from changes in foreign exchange rates inboth the three and six months ended June 30, 2008. Net sales ofgeolocation products in the WNS segment are not material and are not expectedto be materially impacted by developments in the TruePosition litigation (seePart II—Other Information, Item 1—Legal Proceedings).

 

*WNSsegment operating income for the three and six months ended June 30, 2008improved over the comparable prior year periods primarily due to an assetimpairment charge of $107.9 million that was recorded in the pro forma threemonths ended June 30, 2007.  WNSoperating income for the three and six months ended June 30, 2008 includedthe negative impact of $4.4 million and $25.8 million, respectively, from thestep-up of inventory to its estimated fair value as a result of the acquisitionof Andrew and $4.9 million and $9.4 million, respectively, of incrementalintangible amortization from the Andrew acquisition preliminary purchase priceallocation.  Operating income from filterproducts benefited from improved product mix, higher volume, cost reductionsand a rationalized product portfolio. WNS operating income was also favorably affected by reduced SatComlosses as a result of the sale of the SatCom product line in January 2008.*

* *

*Broadband*

* *

The Broadband segmentconsists mainly of coaxial cable, fiber optic cable and conduit for cabletelevision system operators. These products support multi-channel video, voiceand high-speed data services for residential and commercial customers usingHybrid Fiber Coaxial architecture.

 

Broadband segment netsales were essentially flat in the three months ended June 30, 2008 ascompared to the comparable prior year period due to a decline in domestic salesthat was offset by stronger international sales, particularly in Central andLatin America. The decrease in net sales of Broadband products for the sixmonths ended June 30, 2008 as compared to the comparable prior year periodprimarily resulted from reduced sales volume to domestic cable systemoperators.  The slowdown in purchasing bythese domestic customers is largely attributable to the deterioration ingeneral economic conditions, particularly the residential housing market.  The increase in international sales reflectscontinued 

 

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spending on new projectsand system maintenance.  Net sales forthe three and six months ended June 30, 2008 includes incremental netsales of $1.4 million and $6.9 million, respectively, related to the SignalVision product line that was acquired in May 2007.

 

The reduction inBroadband segment operating income for the three and six months ended June 30,2008 as compared to the same periods in the prior year is primarily due to anincrease of $21.6 million and $21.8 million in restructuring charges,respectively.  In addition to therestructuring charges, operating income in the Broadband segment declined dueto the impact of higher raw material prices, lower production volume due to thedecline in domestic sales and product warranty charges of $2.8 million and $4.6million in the three and six months ended June 30, 2008, respectively,related to an isolated manufacturing defect. Operating income is expected toimprove during the balance of 2008 as a result of higher projected salesvolume, price increases that have been announced and price increases that areexpected to be announced in the third quarter of 2008. Further increases in rawmaterial costs, a continued slowdown in purchasing by cable system operatorsand further charges for the warranty matter may limit the improvement inoperating income.

 

**LIQUIDITY AND CAPITAL RESOURCES**

** **

The following tablesummarizes certain key measures of our liquidity and capital resources.

 
| ** **                                                                                  | ** ** | **As of**          | ** ** | ** **                  | ** ** | ** **               | ** ** |
|---------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|--------------------------|------------|
| ** **                                                                                  | ** ** | **June 30,  2008** | ** ** | **December 31,  2007** | ** ** | **Dollar  Change ** | ** ** | **%  Change** | ** ** |
| ** **                                                                                  | ** ** | ** **              | ** ** | ** **                  | ** ** | ** **               | ** ** | ** ** | ** ** |
| Cash and cash equivalents                                                                   |       | $                       | 499.6      |                        | $          | 649.5                    |       | $ | (149.9 | ) | (23.1 | )% |
| Working capital, excluding cash and cash  equivalents and current portion of long-term debt |       | 859.8                   |       | 831.4                       |       | 28.4                     |       | 3.4 |   |
| Long-term debt, including current portion                                                   |       | 2,302.1                 |       | 2,595.8                     |       | (293.7                   | )          | (11.3 | ) |
| Total capitalization (1)                                                                    |       | 3,746.8                 |       | 3,875.8                     |       | (129.0                   | )          | (3.3 | ) |
| Long-term debt as a percentage of total  capitalization                                     |       | 61.4                    | %          | 67.0                        | %          |                     |       |   |   |
|                                                                                             |            |                         |            |                             |            |                          |            |  |  |  |  |  |

 

----

(1)  Totalcapitalization includes long-term debt, including the current portion, andstockholders’ equity.

 

Our principal sources ofliquidity, both on a short-term and long-term basis, are cash and cashequivalents, cash flows provided by operations and availability under creditfacilities. The primary uses of liquidity include funding working capitalrequirements (primarily inventory and accounts receivable, net of accountspayable and other accrued liabilities), debt service requirements, capitalexpenditures, payment of certain restructuring costs and funding of pension andother postretirement obligations.

 

The decrease in cash andcash equivalents during the six months ended June 30, 2008 was primarilydriven by $207.5 million disbursed in conjunction with exchanging substantiallyall of the 3.25% convertible debentures assumed in the Andrew acquisition intomerger consideration and the payment of $57.0 million as part of the mergerconsideration paid to former Andrew shareholders as their Andrew shares werepresented.  These decreases were offsetby $121.9 million in net cash flow from operations.

 

The decrease in long-termdebt and the reduction in long-term debt as a percentage of totalcapitalization were primarily the result of the exchange of substantially allof the 3.25% convertible debentures for merger consideration and the negotiatedconversion of a portion of the 1% convertible debentures into shares of ourcommon stock.  The decline in totalcapitalization was primarily driven by the cash portion of the mergerconsideration that was exchanged for the 3.25% convertible debentures.

 

**Cash Flow Overview**

*** ***
| ** **                                           | ** ** | **Six Months Ended  June 30,** | ** ** | **Dollar** | ** ** | **%**      | ** ** |
|------------------------------------------------------|------------|-----------------------------------------------|------------|------------|------------|------------|------------|
| ** **                                           | ** ** | **2008**                                      | ** ** | **2007**   | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                                           | ** ** | **(dollars in millions)**           | ** ** |
| Net cash provided by operating activities            |       | $                                             | 121.9      |       | $          | 57.9       |       | $ | 64.0 |   | 110.5 | % |
| Net cash used in investing activities                |       | (74.1                                         | )          | (117.7     | )          | 43.6       |       | 37.0 |   |
| Net cash provided by (used in) financing  activities |       | (212.6                                        | )          | 30.8       |       | (243.4     | )          | NM |   |
|                                                      |            |                                               |            |            |            |            |            |  |  |  |  |  |

** **

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*** ***

***Operating Activities***

** **

During the six monthsended June 30, 2008, operating activities generated $121.9 million in cashcompared to $57.9 million during the six months ended June 30, 2007.  During the six months ended June 30,2008, net income of $29.2 million, depreciation and amortization of $109.3million and a decrease of $52.5 million in inventories were partially offset bya $69.8 million increase in accounts receivable.   The increase in accounts receivable isprimarily attributable to the increase in sales during the second quarter of2008 over the fourth quarter of 2007 as well as the shift in the mix of salesto more international customers whose payment terms are generally longer thandomestic customers.

 

We expect to continue togenerate net cash from operations during 2008, primarily due to improvedoperating income from higher sales, the impact of our cost reduction effortsand the anticipated reduction in the level of working capital excluding cashand cash equivalents and the current portion of long-term debt.

 

***Investing Activities***

** **

Investment in property,plant and equipment during the six months ended June 30, 2008 increased by$11.7 million year over year to $23.0 million largely due to capitalexpenditures made by the acquired Andrew business.  We currently expect total capitalexpenditures of $60 million to $70 million in 2008 compared to $27.9 million in2007. The expected capital spending during 2008 is primarily for expanding andupgrading production capability, cost reduction efforts and investments ininformation technology.

 

During the six monthsended June 30, 2008, we received proceeds of approximately $8.5 millionfrom the sale of the SatCom product line. These proceeds were used to reduce the principal outstanding under ourseven-year senior secured term loan.

 

During the six monthsended June 30, 3008, we paid an additional $59.2 million in connectionwith the Andrew acquisition.  Themajority ($57.0 million) of this cash outflow related to the payment of mergerconsideration to former Andrew shareholders. In the six months ended June 30, 2008, we also paid $1.5 million ofthe remaining $2.0 million balance related to the SVI acquisition that wascompleted in May 2007.

 

During the six monthsended June 30, 2008, we paid approximately $5.0 million to amend our crosscurrency swap of U.S. dollars for euros to reduce the notional amount from $14million to $7 million.

 

***Financing Activities***

** **

In connection withthe exchange of substantially all of our 3.25% convertible senior subordinateddebentures for merger consideration, we paid $207.5 million in cash, which isreflected as a financing use of cash, and issued 0.5 million shares ofCommScope common stock, which is reflected as a non-cash transaction.  In connection with the negotiated conversionof $50.5 million in face value of our 1% convertible senior subordinated debentures,we issued 2.5 million shares of CommScope common stock, which is reflected as anon-cash transaction.  We also made otherprincipal repayments of $17.4 million, primarily to reduce the amountoutstanding under our seven-year senior secured term loan.  As of June 30, 2008, our availabilityunder the $400 million revolving credit portion of the facilities wasapproximately $372 million due to $28 million of letters of credit issuedunder the facilities.  We had nooutstanding borrowings under the revolving credit portion as of June 30,2008.

 

Management isevaluating our capital structure and may consider various alternatives,including but not limited to, reducing debt levels by making additionalprincipal payments on our outstanding term loans, inducing additionalconversions of some or all of our 1% convertible debentures or raisingadditional capital.

 

**Future Cash Needs**

** **

We expect that ourprimary future cash needs will be debt service, working capital, capitalexpenditures, restructuring costs, disposition of TruePosition litigation andemployee benefit obligations. We paid $9.2 million and $20.3 million ofrestructuring costs during the three and six months ended June 30, 2008,respectively, and expect to pay the majority of the $45.3 million liability forrestructuring initiatives during the remainder of 2008.  We made contributions of $1.7 million and $13.1million to our pension and other postretirement benefit plans during the threeand six months ended June 30, 2008, respectively. We expect to makeadditional contributions of up to $3.4 million to our pension and otherpostretirement benefit plans during 2008. We expect that our noncurrentemployee benefit liabilities will be funded through cash flow from futureoperations.

 

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We believe that ourexisting cash and cash equivalents and cash flows from operations, combinedwith availability under our senior secured revolving credit facility, will besufficient to meet our presently anticipated future cash needs, including cashrequirements related to restructuring initiatives or other costs related to theAndrew integration. We may, from time to time, borrow under our revolvingcredit facility or issue securities, if market conditions are favorable, tomeet our future cash needs or to reduce our borrowing costs.

 

### **FORWARD-LOOKINGSTATEMENTS**

###  

Certain statements inthis Form 10-Q that are other than historical facts are intended to be “forward-lookingstatements” within the meaning of the Securities Exchange Act of 1934, thePrivate Securities Litigation Reform Act of 1995 and other related lawsand include but are not limited to those statements relating to our businessposition, plans, outlook, revenues, earnings, margins, synergies and otherfinancial items, restructuring plans, sales and earnings expectations, expecteddemand, cost and availability of key raw materials, internal and externalproduction capacity and expansion, competitive pricing and relative marketposition. While we believe such statements are reasonable, the actual resultsand effects could differ materially from those currently anticipated. Theseforward-looking statements are identified by the use of certain terms andphrases including but not limited to “intend,” “goal,” “estimate,”  “expect,” “project,” “projections,” “plan,” “anticipate,”“should,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,”“outlook,” “guidance” and similar expressions.

 

These statements aresubject to various risks and uncertainties, many of which are outside ourcontrol, including, without limitation, continued economic weakness anduncertainties, changes in cost and availability of key raw materials and ourability to recover these costs from our customers through pricing; customerdemand for our products and the ability to maintain existing business allianceswith key customers or distributors; the risk that our internal productioncapacity and that of our contract manufacturers may be insufficient to meetcustomer demand or quality standards for our products; the risk that customersmight cancel orders placed or that orders currently placed may reduce orders inthe future; continuing consolidation among our customers; competitive pricingand acceptance of our products; industry competition and the ability to retaincustomers through product innovation; possible production disruption due tosupplier or contract manufacturer bankruptcy, reorganization or restructuring;successful ongoing operation of our vertical integration activities; the impactof variability in foreign exchange rates; the possibility of furtherrestructuring actions; possible future impairment charges for fixed orintangible assets; increased obligations under employee benefit plans; abilityto achieve expected sales growth and earnings goals; ability to achieveexpected benefits from prior or future acquisitions; costs of protecting ordefending our intellectual property; ability to obtain capital on commerciallyreasonable terms; adequacy and availability of insurance; costs and challengesof compliance with domestic and foreign environmental laws; variability ineffective tax rate and ability to recover amounts recorded as value added taxreceivables; product performance issues and associated warranty claims; abilityto successfully implement major systems initiatives; the outcome of theTruePosition, Inc. litigations; regulatory changes affecting us or theindustries we serve; authoritative changes in generally accepted accountingprinciples by standard-setting bodies; political instability; and anystatements of belief and any statements of assumptions underlying any of theforegoing. These and other factors are discussed in greater detail in Item 1Ato our Annual Report on Form 10-K for the year ended December 31,2007. The information contained in this Form 10-Q represents our bestjudgment at the date of this report based on information currently available.However, we do not intend, and are not undertaking any duty or obligation, toupdate this information to reflect developments or information obtained afterthe date of this report.

 

**ITEM 3.**                    QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK

** **

As disclosed in our Annual Report on Form 10-Kfor the year ended December 31, 2007, our major market risk exposurerelates to adverse fluctuations in interest rates, commodity prices and foreigncurrency exchange rates. We have established a risk management strategy thatincludes the reasonable use of derivative and nonderivative financialinstruments primarily to manage our exposure to these market risks. With theacquisition of Andrew, a greater portion of our sales are to foreign customersand are denominated in currencies other than the U.S. dollar.  Other than the increased level of exposure toforeign currency fluctuations, we believe our exposure associated with thesemarket risks has not materially changed since December 31, 2007. We havenot acquired any new derivative financial instruments since December 31,2007.  During the three months ended June 30,2008, we amended our cross currency swap of U.S. dollars for euros to reducethe notional amount from $14 million to $7 million.

 

**ITEM 4.**                    CONTROLS AND PROCEDURES

** **

Our disclosure controlsand procedures are designed to ensure that information****required to be disclosed in reports thatwe file or submit under the Securities Exchange Act of 1934 is recorded,processed, summarized and reported within the time periods specified in the rules andforms of the Securities and Exchange Commission. Our Chief Executive Officerand 

 

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our Chief FinancialOfficer have reviewed the effectiveness of our disclosure controls andprocedures as of the end of the period covered by this report and haveconcluded that the disclosure controls and procedures are effective.

 

There were no changes inour internal control over financial reporting during the three months ended June 30,2008 that have materially affected, or are reasonably likely to materiallyaffect, our internal control over financial reporting.

 

**PART II—OTHER INFORMATION**

** **

**ITEM 1.  LEGAL PROCEEDINGS**

 

OnOctober 25, 2005, TruePosition, Inc. filed a complaint in the U.S. DistrictCourt for the District of Delaware, alleging that Andrew’s sale of certainmobile location products to acustomer located in the Middle East infringed a TruePosition patent. Mobilelocation systems installed in wireless networks are used to determine theposition of mobile devices. The complaint sought, among other things,injunctive relief and unspecified monetary damages.

 

OnSeptember 14, 2007, a jury ruled in favor of TruePosition, finding that Andrewhad willfully infringed a single TruePosition patent in providing a mobilelocation system to the customer, and the jury awarded $45.3 million in damagesto TruePosition. Management believed the verdict was in error and sought tohave it reversed pursuant to various post-verdict motions.

 

OnOctober 1, 2007, TruePosition filed a motion seeking a permanent injunction anda motion seeking to increase the damages awarded, up to trebling the amount.TruePosition also sought to recover its attorneys’ fees and expenses as well asinterest on the judgment.

 

OnJuly 31, 2008, the trial court ruled on these pending motions.  Although the court's order left a portion ofthe original jury verdict undisturbed, it reduced the compensatory judgmentamount from $45.3 million to $18.6 million plus interest. While the courtdenied TruePosition’s motion for trebling of damages, it enhanced the reduceddamage amount by 25%, bringing the total judgment to $23.25 million.  The court also rejected TruePosition’srequest for recovery of its attorneys’ fees and expenses.  The court also granted TruePosition’s motionfor a permanent injunction related to the products at issue and indicated thatit will enter such an injunction.

 

CommScopedisagrees with the underlying verdict, the enhancement of damages and the entryof an injunction and continues to believe that the products at issue do notinfringe TruePosition's patent. CommScope expects to appeal the remaining portion of the underlyingjudgment, as well as the injunction which the court indicated it will enter. 

 

Asa result of the July 31, 2008 ruling in the case, our estimate of the probableloss was reduced from $45.3 million to $27.6 million (including interest).  Subject to the outcome of possible additionallegal actions taken by CommScope and/or TruePosition, the ultimate resolutionof the TruePosition litigation may be materially different than our currentestimate, which does not include legal fees we may incur in appeals or otherproceedings. The litigation with TruePosition may result in the loss of futurerevenue opportunities, including opportunities to manufacture and sell productsusing uplink time difference of arrival (U-TDOA) technology; however, we arenot currently able to assess the likelihood or magnitude of such potential lostopportunities.

 

Atissue in the litigation with TruePosition is a patent that TruePosition arguedwas infringed by an Andrew U-TDOA mobile location system that is being deployedunder multiple phases with the customer. Andrew was awarded the initial twophases with this customer for an expanded deployment of this strategic projectwhich, when completed, will cover approximately a thousand cell sites. Thereare additional phases, not all of which have been awarded by the customer. Thejury verdict included claims related to all such cell sites, including thosealready installed and those to be installed. The July 31, 2008 ruling in thecase awarded damages based upon the initial two phases of the project. The patentat issue relates only to certain implementations using U-TDOA technology. As aresult, other customer installations and projects that use different mobilelocation technologies are not impacted.

 

InMarch 2008, TruePosition Inc. served Andrew with a complaint in a lawsuit filedin the Superior Court, New Castle County in Delaware.  The suit alleges that Andrew breached certainpatent license royalty obligations to TruePosition under a 2004 settlementagreement related to a prior lawsuit between the parties and alleges thatAndrew owes TruePosition approximately $30 million.  The Company believes it has valid defensesand will vigorously defend itself in this action.

 

Weare either a plaintiff or a defendant in other pending legal matters in thenormal course of business. As a result of the Andrew acquisition, we becamesubject to additional legal matters, including asserted and unasserted claims.Management believes none of these other legal matters, other than thatdiscussed above, will have a material adverse effect on our business orfinancial condition upon their final disposition.

 

# **ITEM 2.****                 UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

#  

During the sixmonths ended June 30, 2008, the Company agreed with certain holders of its1% convertible senior subordinated debentures to increase the conversion rateas an inducement for them to convert their debentures to common stock.  Accordingly, $50.45 million of the debentureswere converted into 2,393,513 shares of common stock (2,319,540 related to theoriginal conversion ratio and 73,973 related to the inducement).  The conversion was made in reliance on theexemption from registration provided by Section 3(a)(9) of theSecurities Act of 1933.

** **

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**ITEM 4.**                    SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS

** **

The Company held itsAnnual Meeting of Stockholders (the Meeting) on May 2, 2008. Proxies forthe Meeting were solicited pursuant to Regulation 14A under the SecuritiesExchange Act of 1934, as amended. A total of 67,394,991 shares of Common Stockwith one vote each were entitled to vote at the Meeting and holders of59,885,680 shares voted in person or by proxy, constituting a quorum.

 

At the Meeting, theCompany’s Class II directors were elected for three-year terms ending atthe 2011 Annual Meeting of Stockholders by the vote set forth below:

 
| **Name of Director** | ** ** | **Votes For** | ** ** | **Votes Withheld** | ** ** |
|--------------------------------|------------|--------------------|------------|-------------------------|------------|
| June E. Travis            |       | 59,683,578         |       | 202,162                 |       |
| James N. Whitson               |       | 59,372,420         |       | 513,260                 |       |

 

The Company’sother five directors, whose terms of office continue after the Meeting withterms expiring at the annual meetings in parentheses after their names, areGeorge L. Boyd (2010), George N. Hutton, Jr. (2010), Katsuhiko (Kat) Okubo(2010), Frank M. Drendel (2009), and Richard C. Smith (2009).

 

A proposal to re-approvethe material terms of the performance goals set forth under the annualincentive plan as required under section 162(m) of the Internal RevenueCode and the regulations promulgated thereunder was approved by 58,733,108votes cast in favor, 1,085,086 votes cast against and 67,486 votes abstaining.

 

A proposal to ratify theappointment of Ernst & Young LLP as the Company’s independentregistered public accounting firm for the 2008 fiscal year by the AuditCommittee of the Board of Directors of the Company was approved by 59,289,072votes cast in favor, 546,683 votes cast against and 49,925 votes abstaining.

 
| **ITEM 6.** | ** ** | **EXHIBITS**                                                                                                                                                                                                                                                   |
|-------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                                                           |
| 31.1        |       | Certification of  Chief Executive Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                     |
| 31.2        |       | Certification of  Chief Financial Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                     |
| 32          |       | Certification of  Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.  Section 1350 as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32)(ii) of  Regulation S-K). |

 

**SIGNATURE**

** **

Pursuant to the requirements of the Securities Exchange Actof 1934, the Registrant has duly caused this report to be signed on its behalfby the undersigned thereunto duly authorized.

 
|                     |     | COMMSCOPE, INC.                                         |
|---------------------|----------|---------------------------------------------------------|
|                |     |                                                    |
|                |     |                                                    |
| August 6, 2008 |     | /s/ JEARLD L. LEONHARDT                                 |
| Date                |     | Jearld L. Leonhardt                                     |
| * *            | * * | *Executive Vice President and  Chief Financial Officer* |
| * *            | * * | *signing both in his capacity as  Executive Vice*       |
| * *            | * * | *President on behalf of the  Registrant and as*         |
| * *            | * * | *Chief Financial Officer of the  Registrant*            |

 

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