**UNITED STATES**

**SECURITIES AND 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, 2007** |
| ** **                                             |
| **OR**                                                 |
| ** **                                             | ** ** | ** ** |
| **o******                                              | ** ** | **TRANSITION REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934** |
| ** **                                             |

 

**Forthe transition periodfrom                     to                       **

**Commissionfile number 001-12929**

**CommScope, Inc.**

(Exact name of registrantas specified in its charter)

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

 

**1100 CommScope Place, SE**

**P.O. Box 339**

**Hickory, North Carolina**

(Address of principalexecutive offices)

**28602**

(Zip Code)

**(828)324-2200**

(Registrant’s telephonenumber, 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 markwhether the registrant is a large accelerated filer, an accelerated filer or anon-accelerated filer (as defined in Exchange Act Rule 12b-2). Largeaccelerated filer x   Acceleratedfiler o   Non-acceleratedfiler o

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

Yes o    No x

As of July 27, 2007 there were 61,664,296 sharesof Common Stock outstanding.

 

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**CommScope, Inc.Form 10-QJune 30, 2007Table 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  1A. Risk Factors                                                                               |   |
|                                                |                                                                                                 |   |
|                                                | Item 4. Submission  of Matters to a Vote of Security Holders                                         |   |
|                                                |                                                                                                 |   |
|                                                | Item  6. Exhibits                                                                                    |   |
|                                                |                                                                                                 |   |
|                                                | Signature                                                                                            |   |

 

2

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**CommScope, Inc.Condensed Consolidated Statements of Operations(Unaudited—In thousands, except per share amounts)**
| ** **                                                                                | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                                                | ** ** | **2007**                         | ** ** | **2006**                       | ** ** | **2007** | ** ** | **2006** | ** ** |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Net sales                                                                                 |       | $                                | 519,144    |                           | $          | 411,881 |   | $ | 954,596 |   | $ | 764,135 |   |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Operating costs and  expenses:                                                            |       |                             |       |                           |       |   |   |   |   |
| Cost of sales                                                                             |       | 356,550                          |       | 303,333                        |       | 660,058 |   | 570,848 |   |
| Selling, general  and administrative                                                      |       | 67,561                           |       | 58,253                         |       | 127,243 |   | 112,430 |   |
| Research and  development                                                                 |       | 8,453                            |       | 8,205                          |       | 16,322 |   | 15,670 |   |
| Restructuring  costs                                                                      |       | 169                              |       | 4,004                          |       | 898 |   | 7,753 |   |
| Total operating  costs and expenses                                                       |       | 432,733                          |       | 373,795                        |       | 804,521 |   | 706,701 |   |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Operating income                                                                          |       | 86,411                           |       | 38,086                         |       | 150,075 |   | 57,434 |   |
| Other income (expense),  net                                                              |       | (451                             | )          | 27                             |       | (282 | ) | 665 |   |
| Interest expense                                                                          |       | (1,781                           | )          | (1,987                         | )          | (3,674 | ) | (3,972 | ) |
| Interest income                                                                           |       | 5,790                            |       | 2,343                          |       | 10,286 |   | 4,396 |   |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Income before income  taxes and gain on OFS BrightWave note receivable                    |       | 89,969                           |       | 38,469                         |       | 156,405 |   | 58,523 |   |
| Income tax expense  before income tax provision on gain on OFS BrightWave note receivable |       | (28,840                          | )          | (10,448                        | )          | (49,421 | ) | (17,775 | ) |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Income before gain on  OFS BrightWave note receivable                                     |       | 61,129                           |       | 28,021                         |       | 106,984 |   | 40,748 |   |
| Gain on OFS BrightWave  note receivable, net of tax of $11,175                            |       | —                           |       | 18,625                         |       | — |   | 18,625 |   |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Net income                                                                                |       | $                                | 61,129     |                           | $          | 46,646 |   | $ | 106,984 |   | $ | 59,373 |   |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Net income per share:                                                                     |       |                             |       |                           |       |   |   |   |   |
| Basic                                                                                     |       | $                                | 1.00       |                           | $          | 0.80 |   | $ | 1.76 |   | $ | 1.03 |   |
| Assuming  dilution                                                                        |       | $                                | 0.83       |                           | $          | 0.65 |   | $ | 1.46 |   | $ | 0.85 |   |
|                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Weighted average shares  outstanding:                                                     |       |                             |       |                           |       |   |   |   |   |
| Basic                                                                                     |       | 61,380                           |       | 58,502                         |       | 60,817 |   | 57,626 |   |
| Assuming dilution                                                                         |       | 74,755                           |       | 72,221                         |       | 74,207 |   | 71,519 |   |

 

See notes tocondensed consolidated financial statements.

3

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**CommScope, Inc.Condensed Consolidated Balance Sheets(Unaudited—In thousands, except share amounts)**
| ** **                                                                                                                                                                                                                                                                 | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                                                                                 | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| **Assets**                                                                                                                                                                                                                                                                 | ** ** | ** **        | ** ** | ** **            | ** ** |
| ** **                                                                                                                                                                                                                                                                 | ** ** | ** **        | ** ** | ** **            | ** ** |
| Cash and cash  equivalents                                                                                                                                                                                                                                                 |       | $                 | 247,647    |                  | $          | 276,042 |   |
| Short-term investments                                                                                                                                                                                                                                                     |       | 241,998           |       | 151,868               |       |
| Total cash, cash  equivalents and short-term investments                                                                                                                                                                                                                   |       | 489,645           |       | 427,910               |       |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Accounts receivable,  less allowance for doubtful accounts of $13,685 and $13,461, respectively                                                                                                                                                                            |       | 275,452           |       | 186,824               |       |
| Inventories, net                                                                                                                                                                                                                                                           |       | 179,946           |       | 153,596               |       |
| Prepaid expenses and  other current assets                                                                                                                                                                                                                                 |       | 12,884            |       | 14,914                |       |
| Deferred income taxes                                                                                                                                                                                                                                                      |       | 28,173            |       | 24,556                |       |
| Total current  assets                                                                                                                                                                                                                                                      |       | 986,100           |       | 807,800               |       |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Property, plant and  equipment, net                                                                                                                                                                                                                                        |       | 235,867           |       | 242,012               |       |
| Goodwill                                                                                                                                                                                                                                                                   |       | 153,884           |       | 151,378               |       |
| Other intangibles, net                                                                                                                                                                                                                                                     |       | 70,851            |       | 63,967                |       |
| Deferred income taxes                                                                                                                                                                                                                                                      |       | 15,918            |       | 15,493                |       |
| Other assets                                                                                                                                                                                                                                                               |       | 22,652            |       | 21,823                |       |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Total Assets                                                                                                                                                                                                                                                               |       | $                 | 1,485,272  |                  | $          | 1,302,473 |   |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| **Liabilities  and Stockholders’ Equity**                                                                                                                                                                                                                             | ** ** | ** **        | ** ** | ** **            | ** ** |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Accounts payable                                                                                                                                                                                                                                                           |       | $                 | 98,558     |                  | $          | 74,927 |   |
| Other accrued  liabilities                                                                                                                                                                                                                                                 |       | 102,368           |       | 95,316                |       |
| Current portion of  long-term debt                                                                                                                                                                                                                                         |       | 16,800            |       | 13,000                |       |
| Total current  liabilities                                                                                                                                                                                                                                                 |       | 217,726           |       | 183,243               |       |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Long-term debt                                                                                                                                                                                                                                                             |       | 250,000           |       | 271,100               |       |
| Pension and  postretirement benefit liabilities                                                                                                                                                                                                                            |       | 90,232            |       | 89,995                |       |
| Other noncurrent  liabilities                                                                                                                                                                                                                                              |       | 30,588            |       | 19,031                |       |
| Total  Liabilities                                                                                                                                                                                                                                                         |       | 588,546           |       | 563,369               |       |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Commitments and  contingencies                                                                                                                                                                                                                                             |       |              |       |                  |       |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Stockholders’ Equity:                                                                                                                                                                                                                                                 |       |              |       |                  |       |
| Preferred stock,  $.01 par value; Authorized shares: 20,000,000; Issued and outstanding shares:  None at June 30, 2007 and December 31, 2006                                                                                                                               |       | —            |       | —                |       |
| Common stock,  $.01 par value; Authorized shares: 300,000,000; Issued shares, including  treasury stock: 71,799,216 at June 30, 2007 and 69,934,533 at December 31,  2006; Issued and outstanding shares: 61,599,216 at June 30, 2007 and  59,734,533 at December 31, 2006 |       | 718               |       | 699                   |       |
| Additional  paid-in capital                                                                                                                                                                                                                                                |       | 585,410           |       | 532,344               |       |
| Retained  earnings                                                                                                                                                                                                                                                         |       | 447,750           |       | 346,821               |       |
| Accumulated  other comprehensive income                                                                                                                                                                                                                                    |       | 8,383             |       | 4,775                 |       |
| Treasury stock,  at cost: 10,200,000 shares at June 30, 2007 and December 31, 2006                                                                                                                                                                                         |       | (145,535          | )          | (145,535              | )          |
| Total  Stockholders’ Equity                                                                                                                                                                                                                                           |       | 896,726           |       | 739,104               |       |
|                                                                                                                                                                                                                                                                       |       |              |       |                  |       |
| Total  Liabilities and Stockholders’ Equity                                                                                                                                                                                                                           |       | $                 | 1,485,272  |                  | $          | 1,302,473 |   |

 

See notes tocondensed consolidated financial statements.

4

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**CommScope, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited—In thousands)**
| ** **                                                                                   | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                                                   | ** ** | **June 30,**              | ** ** |
| ** **                                                                                   | ** ** | **2007**                       | ** ** | **2006** | ** ** |
|                                                                                         |       |                           |       |   |   |
| **Operating Activities:**                                                                    |       |                           |       |   |   |
| Net income                                                                                   |       | $                              | 106,984    |   | $ | 59,373 |   |
| Adjustments to  reconcile net income to net cash provided by (used in) operating activities: |       |                           |       |   |   |
| Depreciation and  amortization                                                               |       | 24,912                         |       | 28,409 |   |
| Equity-based  compensation                                                                   |       | 5,000                          |       | 2,129 |   |
| Deferred income  taxes                                                                       |       | (7,730                         | )          | 6,904 |   |
| Gain on OFS  BrightWave note receivable                                                      |       | —                         |       | (29,800 | ) |
| Changes in  assets and liabilities:                                                          |       |                           |       |   |   |
| Accounts  receivable                                                                         |       | (84,623                        | )          | (51,446 | ) |
| Inventories                                                                                  |       | (20,985                        | )          | (26,902 | ) |
| Prepaid expenses  and other current assets                                                   |       | 2,112                          |       | 3,037 |   |
| Accounts payable  and other accrued liabilities                                              |       | 32,153                         |       | 15,387 |   |
| Other noncurrent  liabilities                                                                |       | 1,658                          |       | (8,485 | ) |
| Other                                                                                        |       | (1,622                         | )          | (1,951 | ) |
| Net cash provided by  (used in) operating activities                                         |       | 57,859                         |       | (3,345 | ) |
|                                                                                         |       |                           |       |   |   |
| **Investing Activities:**                                                                    |       |                           |       |   |   |
| Additions to  property, plant and equipment                                                  |       | (11,248                        | )          | (15,050 | ) |
| Proceeds from  OFS BrightWave note receivable                                                |       | —                         |       | 29,800 |   |
| Net purchases of  short-term investments                                                     |       | (90,130                        | )          | (8,680 | ) |
| Proceeds from  disposal of fixed assets                                                      |       | 97                             |       | 550 |   |
| Cash paid for  acquisitions                                                                  |       | (16,392                        | )          | (13,810 | ) |
| Net cash used in  investing activities                                                       |       | (117,673                       | )          | (7,190 | ) |
|                                                                                         |       |                           |       |   |   |
| **Financing Activities:**                                                                    |       |                           |       |   |   |
| Principal  payments on long-term debt                                                        |       | (17,300                        | )          | (6,500 | ) |
| Proceeds from  the issuance of shares under equity-based compensation plans                  |       | 32,832                         |       | 42,035 |   |
| Tax benefit from  the issuance of shares under equity-based compensation plans               |       | 15,253                         |       | 12,981 |   |
| Net cash provided by  financing activities                                                   |       | 30,785                         |       | 48,516 |   |
|                                                                                         |       |                           |       |   |   |
| Effect of exchange rate  changes on cash                                                     |       | 634                            |       | 808 |   |
|                                                                                         |       |                           |       |   |   |
| Change in cash and cash  equivalents                                                         |       | (28,395                        | )          | 38,789 |   |
| Cash and cash  equivalents, beginning of period                                              |       | 276,042                        |       | 146,549 |   |
| Cash and cash  equivalents, end of period                                                    |       | $                              | 247,647    |   | $ | 185,338 |   |

 

See notes tocondensed consolidated financial statements.

5

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**CommScope, Inc.Condensed Consolidated Statements of Stockholders’ Equityand Comprehensive Income(Unaudited—In thousands, except share amounts)**
| ** **                                                            | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                            | ** ** | **June 30,**              | ** ** |
| ** **                                                            | ** ** | **2007**                       | ** ** | **2006** | ** ** |
|                                                                  |       |                           |       |   |   |
| Number of common shares  outstanding:                                 |       |                           |       |   |   |
| Balance at  beginning of period                                       |       | 59,734,533                     |       | 55,873,347 |   |
| Issuance of  shares under equity-based compensation plans             |       | 1,864,683                      |       | 2,992,307 |   |
| Balance at end  of period                                             |       | 61,599,216                     |       | 58,865,654 |   |
|                                                                  |       |                           |       |   |   |
| Common stock:                                                         |       |                           |       |   |   |
| Balance at  beginning of period                                       |       | $                              | 699        |   | $ | 661 |   |
| Issuance of  shares under equity-based compensation plans             |       | 19                             |       | 30 |   |
| Balance at end  of period                                             |       | $                              | 718        |   | $ | 691 |   |
|                                                                  |       |                           |       |   |   |
| Additional paid-in  capital:                                          |       |                           |       |   |   |
| Balance at  beginning of period                                       |       | $                              | 532,344    |   | $ | 462,842 |   |
| Issuance of  shares under equity-based compensation plans             |       | 32,813                         |       | 42,005 |   |
| Tax benefit from  shares issued under equity-based compensation plans |       | 15,253                         |       | 12,981 |   |
| Expiration of  registration rights                                    |       | —                         |       | 500 |   |
| Equity-based  compensation expense recognized                         |       | 5,000                          |       | 2,129 |   |
| Reclassification  due to adoption of SFAS No. 123(R)                  |       | —                         |       | (8,980 | ) |
| Balance at end  of period                                             |       | $                              | 585,410    |   | $ | 511,477 |   |
|                                                                  |       |                           |       |   |   |
| Deferred equity-based  compensation:                                  |       |                           |       |   |   |
| Balance at  beginning of period                                       |       | $                              | —     |   | $ | (8,980 | ) |
| Reclassification  due to adoption of SFAS No. 123(R)                  |       | —                         |       | 8,980 |   |
| Balance at end  of period                                             |       | $                              | —     |   | $ | — |   |
|                                                                  |       |                           |       |   |   |
| Retained earnings:                                                    |       |                           |       |   |   |
| Balance at  beginning of period                                       |       | $                              | 346,821    |   | $ | 216,688 |   |
| Net income                                                            |       | 106,984                        |       | 59,373 |   |
| Impact of  adoption of FIN 48                                         |       | (6,055                         | )          | — |   |
| Balance at end  of period                                             |       | $                              | 447,750    |   | $ | 276,061 |   |
|                                                                  |       |                           |       |   |   |
| Accumulated other  comprehensive income (loss):                       |       |                           |       |   |   |
| Balance at beginning  of period                                       |       | $                              | 4,775      |   | $ | (3,651 | ) |
| Other  comprehensive income, net of tax                               |       | 3,608                          |       | 3,639 |   |
| Balance at end  of period                                             |       | $                              | 8,383      |   | $ | (12 | ) |
|                                                                  |       |                           |       |   |   |
| Treasury stock, at  cost:                                             |       |                           |       |   |   |
| Balance at  beginning and end of period                               |       | $                              | (145,535   | ) | $ | (145,535 | ) |
|                                                                  |       |                           |       |   |   |
| Total stockholders’ equity                                       |       | $                              | 896,726    |   | $ | 642,682 |   |

 
| ** **                                                                                        | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                        | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                                                        | ** ** | **2007**                         | ** ** | **2006**                       | ** ** | **2007** | ** ** | **2006** | ** ** |
|                                                                                              |       |                             |       |                           |       |   |   |   |   |
| Comprehensive income:                                                                             |       |                             |       |                           |       |   |   |   |   |
| Net income                                                                                        |       | $                                | 61,129     |                           | $          | 46,646 |   | $ | 106,984 |   | $ | 59,373 |   |
| Other  comprehensive income, net of tax:                                                          |       |                             |       |                           |       |   |   |   |   |
| Foreign currency  translation gain (loss) - foreign subsidiaries                                  |       | 344                              |       | 982                            |       | 844 |   | (379 | ) |
| Foreign currency  transaction gain (loss) on long-term intercompany loans - foreign  subsidiaries |       | 2,068                            |       | 321                            |       | 3,214 |   | 4,770 |   |
| Loss on derivative  financial instrument designated as a net investment hedge                     |       | (122                             | )          | (581                           | )          | (224 | ) | (752 | ) |
| Amortization of  unrecognized pension and other postretirement benefit amounts                    |       | (113                             | )          | —                         |       | (226 | ) | — |   |
| Total other  comprehensive income, net of tax                                                     |       | 2,177                            |       | 722                            |       | 3,608 |   | 3,639 |   |
|                                                                                              |       |                             |       |                           |       |   |   |   |   |
| Total comprehensive  income                                                                       |       | $                                | 63,306     |                           | $          | 47,368 |   | $ | 110,592 |   | $ | 63,012 |   |

 

See notes to condensedconsolidated financial statements.

6

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**CommScope, Inc.Notes to Condensed Consolidated Financial Statements**

**(Unaudited—InThousands, Unless Otherwise Noted)**

**1.****     BACKGROUNDAND BASIS OF PRESENTATION**

**Background**

CommScope, Inc., through its wholly ownedsubsidiaries (CommScope or the Company), is a world leader in infrastructuresolutions for communications networks. Our highly engineered cable andconnectivity solutions enable a host of information-rich and interactiveservices that are delivered to the home, office and mobile devices. The Companyfocuses on the “last mile” in communications networks, which is thedistribution access or final link to the customer. The Company believes it is aglobal leader in structured cabling solutions for business enterpriseapplications and broadband coaxial cables for the cable television industry.The Company also designs, manufactures and markets a broad line ofhigh-performance electronic, coaxial and fiber optic cable and related productsfor data networking, Internet access, wireless communication, telephony andother broadband applications.  Inaddition, the Company is an industry leader in the design and manufacture ofenvironmentally secure enclosures to integrate complex equipment for digitalsubscriber line (DSL) and Fiber-to-the-Node (FTTN) deployments bytelecommunication service providers in the United States.

On June 27, 2007, the Company announced an agreementto acquire Andrew Corporation (Andrew). Under the terms of the agreement, eachshare of Andrew common stock will be acquired for $15.00, comprised of $13.50in cash and an additional $1.50 in either cash, CommScope common stock or acombination thereof, at CommScope’s option.  The total transaction value is approximately $2.6 billion, based onAndrew’s estimated 176 million shares outstanding on a fully diluted basis,which includes shares issuable under Andrew’s existing convertible notes.  Andrew designs, manufactures and deliversequipment and solutions for the global communications infrastructuremarket.  The transaction is expected toclose, subject to customary closing conditions, before the end of 2007.

**Basis ofPresentation**

The condensedconsolidated balance sheet as of June 30, 2007, the condensed consolidatedstatements of operations and comprehensive income for the three and six monthsended June 30, 2007 and 2006, and the condensed consolidated statements ofcash flows and stockholders’ equity for the six months ended June 30, 2007and 2006 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.

The unaudited interim condensed consolidated financialstatements of CommScope have been prepared pursuant to the rules andregulations of the Securities and Exchange Commission (SEC). Accordingly,certain information and footnote disclosures normally included infinancial statements prepared in accordance with accounting principlesgenerally accepted in the United States of America have been condensed oromitted. The significant accounting policies followed by the Company are setforth in Note 2 to the consolidated financial statements in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2006 (the2006 Form 10-K). There were no changes in the Company’s significantaccounting policies during the three or six months ended June 30, 2007other than the adoption of FASB Interpretation No. 48, “Accounting forUncertainty in Income Taxes” (FIN 48) as of January 1, 2007, which is discussedbelow. In addition, the Company reaffirms the use of estimates in thepreparation of the financial statements as set forth in the 2006 Form 10-Kas well as the use of estimates in the recognition and measurement of taxbenefits arising from uncertain tax positions as required by FIN 48. Theseinterim condensed consolidated financial statements should be read in conjunctionwith the Company’s audited consolidated financial statements and notes theretoincluded in the 2006 Form 10-K.

7

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**Concentrations ofRisk**

Net sales to AnixterInternational Inc. and its affiliates (Anixter) accounted for approximately 26%and 27% of the Company’s total net sales during the three and six months endedJune 30, 2007, respectively, and approximately 32% and 31% of the Company’stotal net sales during the three and six months ended June 30, 2006,respectively.  Sales to Anixter primarilyoriginate within the Enterprise segment.

Net sales toAlcatel-Lucent, which primarily relate to their role as an original equipmentmanufacturer for a large telecommunications company, accounted forapproximately 13% and 12% of the Company’s total net sales during the three andsix months ended June 30, 2007, respectively, and were less than 10% ofthe Company’s total net sales for the three and six months ended June 30,2006.  Sales to Alcatel-Lucent primarilyoriginate within the Carrier segment.

Other than Anixter andAlcatel-Lucent, no customer accounted for 10% or more of the Company’s totalnet sales for the three and six months ended June 30, 2007 and 2006.

Accounts receivable fromAnixter represented approximately 28% and accounts receivable fromAlcatel-Lucent represented approximately 13% of net accounts receivable as ofJune 30, 2007. No other customer accounted for 10% or more of the Company’snet accounts receivable as of June 30, 2007.

**Product Warranties**

The Company recognizes aliability for the estimated claims that may be paid under its customer warrantyagreements to remedy potential deficiencies of 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. The Companybases its estimates on assumptions that are believed to be reasonable under thecircumstances and revises its estimates, as appropriate, when events or changesin circumstances indicate that revisions may be necessary.

As ofJune 30, 2007, a specifically-identified warranty issue existed that resultedin an increase of $1.6 million to the product warranty accrual. Although theultimate settlement of this warranty issue is uncertain, the Company does notbelieve it will have a material adverse effect on its results of operations.Activity in the product warranty accrual, included in other accruedliabilities, for the three and six months ended June 30, 2007 and 2006consisted of the following:
|                                                | ** ** | **Three Months EndedJune 30,** | ** ** | **Six Months EndedJune 30,** | ** ** |
|------------------------------------------------|------------|-----------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                     | ** ** | **2007**                                      | ** ** | **2006**                                    | ** ** | **2007** | ** ** | **2006** | ** ** |
| Product warranty  accrual, beginning of period |       | $                                             | 2,103      |                                        | $          | 2,346 |   | $ | 2,090 |   | $ | 2,035 |   |
| Provision for  warranty claims                 |       | 1,829                                         |       | 232                                         |       | 1,843 |   | 679 |   |
| Warranty claims  paid                          |       | (220                                          | )          | —                                      |       | (221 | ) | (136 | ) |
| Product warranty accrual,  end of period       |       | $                                             | 3,712      |                                        | $          | 2,578 |   | $ | 3,712 |   | $ | 2,578 |   |

 

**Commitments and Contingencies**

CommScope is either aplaintiff or a defendant in pending legal matters in the normal course ofbusiness; however, management believes none of these legal matters will have amaterially 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.

**Net Income PerShare**

Basic net income pershare is computed by dividing net income by the weighted average number ofcommon shares outstanding during the applicable period. Diluted net income pershare is based on net income 

8

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adjusted for after-taxinterest and amortization of debt issuance costs related to convertible debt,if dilutive, divided by the weighted average number of common sharesoutstanding adjusted for the dilutive effect of stock options, restrictedstock, phantom stock, performance units and convertible securities.

Belowis a reconciliation of net income and weighted average common shares andpotential common shares outstanding for calculating diluted net income pershare:
|                                                                                                                        | ** ** | **Three Months EndedJune 30,** | ** ** | **Six Months EndedJune 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                                                             | ** ** | **2007**                                      | ** ** | **2006**                                    | ** ** | **2007** | ** ** | **2006** | ** ** |
| Numerator:                                                                                                             |       |                                          |       |                                        |       |   |   |   |   |
| Net income for basic net income per share                                                                              |       | $                                             | 61,129     |                                        | $          | 46,646 |   | $ | 106,984 |   | $ | 59,373 |   |
| Effect of assumed conversion of 1% convertible  senior subordinated debentures due 2024                                |       | 629                                           |       | 629                                         |       | 1,258 |   | 1,258 |   |
| Income available to common shareholders for  diluted net income per share                                         |       | $                                             | 61,758     |                                        | $          | 47,275 |   | $ | 108,242 |   | $ | 60,631 |   |
| Denominator:                                                                                                           |       |                                          |       |                                        |       |   |   |   |   |
| Weighted average number of common shares outstanding  for basic net income per share                                   |       | 61,380                                        |       | 58,502                                      |       | 60,817 |   | 57,626 |   |
| Effect of dilutive securities:                                                                                         |       |                                          |       |                                        |       |   |   |   |   |
| Employee stock options (a)                                                                                             |       | 1,408                                         |       | 2,073                                       |       | 1,469 |   | 2,277 |   |
| Restricted stock, phantom stock and performance  units                                                                 |       | 473                                           |       | 152                                         |       | 427 |   | 122 |   |
| 1% convertible senior subordinated debentures due  2024                                                                |       | 11,494                                        |       | 11,494                                      |       | 11,494 |   | 11,494 |   |
| Weighted average  number of common and potential common shares outstanding for  diluted net income per share |       | 74,755                                        |       | 72,221                                      |       | 74,207 |   | 71,519 |   |

 

----

(a)             Nooptions to purchase common shares were excluded from the computation of netincome per share, assuming dilution, for the three and six months endedJune 30, 2007. Options to purchase approximately 0.6 million commonshares were excluded from the computation of net income per share, assumingdilution, for the three and six months ended June 30, 2006 because theywould have been anti-dilutive.

**Income Tax Uncertainties**

The Company adopted the provisions of FIN 48 as of January 1, 2007,resulting in a $4.2 million increase in the liability for unrecognized taxbenefits with an offsetting reduction to opening retained earnings.  In addition, the Company reduced a long-termdeferred tax asset by $4.0 million with an offsetting reduction to openingretained earnings of $1.9 million and an increase of $2.1 million to long-livedassets as a purchase accounting adjustment. In the three and six months ended June 30, 2007, there was a $1.3million and $1.9 million increase in the liability for unrecognized taxbenefits, respectively.

The Company filesa consolidated U.S. federal income tax return as well as consolidated orindividual subsidiary returns in various states and foreign jurisdictions.  With few exceptions, the Company is no longersubject to U.S. federal, state and local or foreign income tax examinations bytaxing authorities for years before 1997. The Internal Revenue Service (IRS) commenced an examination of theCompany’s 2004 and 2005 U.S. income tax returns in 2006 that is expected to becompleted by the end of 2007.  As ofJanuary 1, 2007, the IRS has proposed certain significant adjustments to theCompany’s research and development tax credit positions related to years priorto 2004.  The Company is currentlyprotesting those proposed adjustments. If unsuccessful, the Company anticipates that it is reasonably possiblethat an additional payment will be made in the following twelve months, but theCompany does not believe that any such payment would be material to the Company’sfinancial position.  It is reasonablypossible that the unrecognized tax benefits arising from other positions takenby the Company may significantly increase or decrease in the next 12 months,but the Company does not expect any such adjustments to be material to theCompany’s financial position or results of operations.

As of January 1,2007, the Company’s liability for unrecognized tax benefits of $15.0 millionincluded $12.9 million that, if recognized, would favorably affect theeffective tax rate in future periods.

The Company recognizes interest and penalties relatedto unrecognized tax benefits in income tax expense.  As of January 1, 2007, the Company hadaccrued approximately $4.7 million for the payment of interest andpenalties.  No material changes to theaccrued amounts occurred in the three and six months ended June 30, 2007.

9

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**Impact of Newly Issued Accounting Standards**

**InSeptember 2006, the FASB issued SFAS No. 158, “Employers’ Accountingfor Defined Benefit Pension and Other Postretirement Plans—an amendment of FASBStatements No. 87, 88, 106, and 132(R).” SFAS No. 158 requires thatthe underfunded or overfunded position of defined benefit plans be fullyrecognized as a liability or asset on the balance sheet of the sponsor. SFASNo. 158 does not change how the expense related to such plans isdetermined. The Company’s accrued benefit liability was adjusted as ofDecember 31, 2006 to fully recognize the underfunded portion of theCompany’s plans as a result of implementing SFAS No. 158. The provisionsof SFAS No. 158 requiring that plan assets and obligations be measured asof the year-end balance sheet date are not required to be adopted untilDecember 31, 2008, though earlier adoption is permitted. The Company doesnot expect that there will be a material impact on results of operations orfinancial position from applying the provisions to be adopted by 2008.**

In February 2007, the FASB issued SFAS No. 159, “TheFair Value Option for Financial Assets and Financial Liabilities,” which givescompanies the option to carry most financial assets or liabilities at fairvalue, with changes in fair value recorded in earnings.  The Company is required to adopt SFAS No. 159on January 1, 2008.  The Companycurrently does not plan to measure any of its financial assets and liabilitiesat fair value under the provisions of SFAS No. 159 and, therefore, does notanticipate a material impact to its resultsof operations or financial position related to the adoption of this standard.

**2.****     ACQUISITIONS**

**SignalVision, Inc.**

On May 1, 2007, CommScope acquired substantially allof the assets and assumed certain current liabilities of Signal Vision, Inc., aleading supplier of broadband radio frequency subscriber products, forapproximately $19.0 million, of which $16.4 million was paid in cash and thebalance is payable within two years.  Theacquisition is included within the Broadband segment.

The preliminary allocationof the purchase price, based on estimated fair values of the assets acquired,is as follows:
|                                      | ** ** | **Amortization  Period** | ** ** | **Estimated Fair  Value** | ** ** |
|--------------------------------------|------------|--------------------------|------------|--------------------------------|------------|
| ** **                           | ** ** | **(in years)**      | ** ** | **(in millions)**         | ** ** |
| Inventory                            |       |                     |       | $                              | 4.4        |   |
| Accounts  receivable                 |       |                     |       | 2.5                            |       |
| Machinery and  equipment             |       |                     |       | 0.1                            |       |
| Intangible  assets:                  |       |                     |       |                           |       |
| Customer relationships               |       | 10                       |       | 5.8                            |       |
| Non-compete agreement                |       | 5                        |       | 3.0                            |       |
| Other identifiable intangible assets |       | 6                        |       | 1.1                            |       |
| Goodwill                             |       |                     |       | 2.5                            |       |
| Less: Current  liabilities assumed   |       |                     |       | (0.4                           | )          |
| Total purchase price                 |       |                     |       | $                              | 19.0       |   |

 

The weighted average estimated useful life of theamortizable intangible assets acquired is 7.9 years.

**MC****2 Product Line**

On March 6, 2006, CommScope acquired the assetssupporting the trunk and distribution cable television products business ofTrilogy Communications, Inc., along with certain other assets. Thepurchase price of $13.8 million was paid in cash. The products acquiredwere integrated into the Broadband segment.

10

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The allocation of thepurchase price, based on estimated fair values of the assets acquired, is asfollows:
|                                      | ** ** | **Amortization  Period** | ** ** | **Estimated Fair  Value** | ** ** |
|--------------------------------------|------------|--------------------------|------------|--------------------------------|------------|
| ** **                           | ** ** | **(in years)**      | ** ** | **(in millions)**         | ** ** |
| Inventory                            |       |                     |       | $                              | 4.9        |   |
| Other current  assets                |       |                     |       | 0.3                            |       |
| Machinery and  equipment             |       |                     |       | 1.1                            |       |
| Intangible  assets:                  |       |                     |       |                           |       |
| Customer relationships               |       | 10                       |       | 4.0                            |       |
| Non-compete agreement                |       | 7                        |       | 1.7                            |       |
| Other identifiable intangible assets |       | 10                       |       | 1.8                            |       |
| Total purchase price                 |       |                     |       | $                              | 13.8       |   |

 

The weighted average estimated useful life of theintangible assets acquired is 9.3 years.

**ConnectivitySolutions**

In conjunction with the Company’s acquisition ofsubstantially all of the assets and assumption of certain liabilities of theConnectivity Solutions business of Avaya Inc. in January 2004, the Companyissued approximately 1.8 million shares of CommScope common stock. Theseunregistered shares included registration rights and the Company established aliability at the time the shares were issued for such registration costs.During the six months ended June 30, 2006, the registration rights expiredand the Company reversed the liability that had been established, resulting inan increase to additional paid-in capital of $0.5 million.

**AndrewCorporation**

On June 27, 2007, the Company announced an agreementto acquire Andrew’s common stock for $15.00 per share, comprised of $13.50 pershare in cash and an additional $1.50 per share in either cash, CommScopecommon stock or a combination thereof, at CommScope’s option.   The total transaction value is approximately$2.6 billion, based on Andrew’s estimated 176 million shares outstanding on afully diluted basis, which includes shares issuable under Andrew’s existingconvertible notes.  Andrew designs,manufactures and delivers equipment and solutions for the global communicationsinfrastructure market.  The transactionis expected to close, subject to customary closing conditions, before the endof 2007.

**3.****     BALANCESHEET DATA**

**Short-termInvestments**

At June 30, 2007 and December 31, 2006, theCompany’s short-term investments were composed of the following:
|                     | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------|------------|-------------------------|------------|-----------------------------|------------|
| Available for  sale |       | $                       | 192,113    |                        | $          | 131,868 |   |
| Held-to-maturity    |       | 49,885                  |       | 20,000                      |       |
|                |       | $                       | 241,998    |                        | $          | 151,868 |   |

 

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At June 30, 2007,the held-to-maturity short-term investments were composed of the following:

 
|                             | ** ** | **Amortized Cost** | ** ** | **Gross   Unrealized   Gains** | ** ** | **Gross   Unrealized   Losses** | ** ** | **Fair Value** | ** ** |
|-----------------------------|------------|-------------------------|------------|------------------------------------------|------------|-------------------------------------------|------------|---------------------|------------|
| Corporate debt  obligations |       | $                       | 49,885     |                                     | $          | 6                                         |       | $                   | —     |   | $ | 49,891 |   |
|                             |            |                         |            |                                          |            |                                           |            |                     |            |  |  |  |  |

 

At December 31, 2006, the held-to-maturityshort-term investments were composed of the following:
|                             | ** ** | **Amortized Cost** | ** ** | **Gross   Unrealized   Gains** | ** ** | **Gross   Unrealized   Losses** | ** ** | **Fair Value** | ** ** |
|-----------------------------|------------|-------------------------|------------|------------------------------------------|------------|-------------------------------------------|------------|---------------------|------------|
| Corporate debt  obligations |       | $                       | 10,000     |                                     | $          | —                                    |       | $                   | —     |   | $ | 10,000 |   |
| Federal agency  notes       |       | 10,000                  |       | —                                   |       | (3                                        | )          | 9,997               |       |
|                        |       | $                       | 20,000     |                                     | $          | —                                    |       | $                   | (3         | ) | $ | 19,997 |   |

 

**Inventories**
|                 | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------|------------|-------------------------|------------|-----------------------------|------------|
| Raw materials   |       | $                       | 61,985     |                        | $          | 56,888 |   |
| Work in process |       | 44,350                  |       | 38,936                      |       |
| Finished goods  |       | 73,611                  |       | 57,772                      |       |
|            |       | $                       | 179,946    |                        | $          | 153,596 |   |

 

**4.****   LONG-TERM DEBT**
|                                                | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                     | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| Senior secured  term loan                      |       | $                 | 16,800     |                  | $          | 23,300 |   |
| 1% convertible  senior subordinated debentures |       | 250,000           |       | 250,000               |       |
| IDA notes                                      |       | —            |       | 10,800                |       |
|                                           |       | 266,800           |       | 284,100               |       |
| Less: current  portion                         |       | (16,800           | )          | (13,000               | )          |
|                                           |       | $                 | 250,000    |                  | $          | 271,100 |   |

 

See Note 9 inthe Notes to the Consolidated Financial Statements in the 2006 Form 10-Kfor information on the terms and conditions of the senior secured creditfacility. As of June 30, 2007, the Company had availability ofapproximately $96 million and no outstanding borrowings under the seniorsecured revolving credit facility. The interest rate on the senior secured termloan was 6.86% and 6.87% at June 30, 2007 and December 31, 2006,respectively. Management believes the Company was in compliance with all of itscovenants under this facility as of June 30, 2007.

As of June 30,2007, the entire remaining balance of the senior secured term loan was includedin the current portion of long-term debt due to management’s intent to repaythe outstanding balance of the loan within the next twelve months. On May 1,2007, the Company redeemed the IDA notes.

See Note 9 in the Notes to the ConsolidatedFinancial Statements in the 2006 Form 10-K for information on the termsand conditions of the 1% convertible senior subordinated debentures. Theestimated fair value of the Company’s convertible debentures as ofJune 30, 2007 and December 31, 2006 was $706.3 million and$370.3 million, respectively.

In conjunction with the proposed Andrew acquisition,the Company has received debt commitments for an aggregate of $2.55 billion insenior secured credit facilities consisting of a $2.3 billion seven-year seniorsecured term loan facility and a $250 million six-year senior secured revolvingcredit facility.  The debt commitments,which are subject to closing the acquisition and the satisfaction of othercustomary conditions, provide for a variable interest rate based on LIBOR plus atleast 175 basis points but not greater than 275 basis points, depending on the Company’sdebt ratings as promulgated by Standard and Poor’s and Moody’s, among otheritems.  The senior secured creditfacilities are expected to be secured by substantially all of the Company’s domesticassets.  The debt commitments expire onDecember 31, 2007 but will be extended to March 31, 2008 if the mergeragreement is extended to such date in accordance with its terms.

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**5.****     RESTRUCTURINGCHARGES**

In August 2005, the Board of Directors ofCommScope adopted global manufacturing initiatives to reduce costs by improvingmanufacturing efficiency and to enhance the Company’s long-term competitiveposition. Implementation of these initiatives includes shifting significantEnterprise and Broadband segment cable production capacity among CommScope’sglobal facilities, consolidating operations at the CSMI Omaha facility into onebuilding and closing a Broadband segment manufacturing facility in Scottsboro,Alabama in late 2006. As a result of these initiatives, the Company recognizedpretax charges during the three and six months ended June 30, 2007 and 2006 asfollows:  
|                                   | ** ** | **Enterprise  Segment** | ** ** | **Broadband  Segment** | ** ** | **Carrier  Segment** | ** ** | **Total** | ** ** |
|-----------------------------------|------------|-------------------------|------------|------------------------|------------|----------------------|------------|-----------|------------|
| Three months  ended June 30, 2007 |       | $                       | —     |                   | $          | 169                  |       | $         | —     |   | $ | 169 |   |
| Six months ended  June 30, 2007   |       | 488                     |       | 324                    |       | 86                   |       | 898       |       |
|                              |       |                    |       |                   |       |                 |       |      |       |
| Three months  ended June 30, 2006 |       | 2,833                   |       | 818                    |       | 353                  |       | 4,004     |       |
| Six months ended June  30, 2006   |       | 5,843                   |       | 1,557                  |       | 353                  |       | 7,753     |       |
|                                   |            |                         |            |                        |            |                      |            |           |            |  |  |  |  |

 

The activity within theliability (included in other accrued liabilities) for these restructuringinitiatives for the three and six months ended June 30, 2007 and 2006 wasas follows:
|                                   | ** ** | **Employee-  Related  Costs** | ** ** | **Equipment  Relocation  Costs** | ** ** | **Asset  Impairment  Charges** | ** ** | **Total** | ** ** |
|-----------------------------------|------------|-------------------------------|------------|----------------------------------|------------|--------------------------------|------------|-----------|------------|
| Balance as of  March 31, 2007     |       | $                             | 353        |                             | $          | —                         |       | $         | —     |   | $ | 353 |   |
| Additional  charge recorded       |       | (2                            | )          | 171                              |       | —                         |       | 169       |       |
| Cash paid                         |       | (134                          | )          | (171                             | )          | —                         |       | (305      | )          |
| Balance as of  June 30, 2007 |       | $                             | 217        |                             | $          | —                         |       | $         | —     |   | $ | 217 |   |
|                              |       |                          |       |                             |       |                           |       |      |       |
| Balance as of  December 31, 2006  |       | $                             | 1,510      |                             | $          | —                         |       | $         | —     |   | $ | 1,510 |   |
| Additional  charge recorded       |       | (98                           | )          | 996                              |       | —                         |       | 898       |       |
| Cash paid                         |       | (1,195                        | )          | (996                             | )          | —                         |       | (2,191    | )          |
| Balance as of  June 30, 2007 |       | $                             | 217        |                             | $          | —                         |       | $         | —     |   | $ | 217 |   |
|                              |       |                          |       |                             |       |                           |       |      |       |
| Balance as of  March 31, 2006     |       | $                             | 2,177      |                             | $          | —                         |       | $         | —     |   | $ | 2,177 |   |
| Additional  charge recorded       |       | 2,092                         |       | 2,009                            |       | (97                            | )          | 4,004     |       |
| Cash paid                         |       | (2,337                        | )          | (2,009                           | )          | 97                             |       | (4,249    | )          |
| Balance as of  June 30, 2006 |       | $                             | 1,932      |                             | $          | —                         |       | $         | —     |   | $ | 1,932 |   |
|                              |       |                          |       |                             |       |                           |       |      |       |
| Balance as of  December 31, 2005  |       | $                             | 8,087      |                             | $          | —                         |       | $         | —     |   | $ | 8,087 |   |
| Additional  charge recorded       |       | 4,032                         |       | 3,818                            |       | (97                            | )          | 7,753     |       |
| Cash paid                         |       | (10,187                       | )          | (3,818                           | )          | 97                             |       | (13,908   | )          |
| Balance as of  June 30, 2006 |       | $                             | 1,932      |                             | $          | —                         |       | $         | —     |   | $ | 1,932 |   |

 

Employee-related costs include the expected severancecosts and related fringe benefits, accrued over the remaining period employeesare required to work in order to receive severance benefits.  Additional pretax employee-related costs ofless than $0.1 million are expected to be recognized during the balance of2007 to complete the global manufacturing initiatives.

Equipment relocation costs relate directly to shiftingmanufacturing capacity among our global manufacturing facilities and includecosts to uninstall, pack, ship and re-install equipment as well as the costs toprepare the receiving facility to accommodate the equipment. These costs arerecognized as the expenses are incurred, and additional pretax costs of lessthan $0.1 million are expected to be recognized during the balance of 2007to complete the global manufacturing initiatives.

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No asset impairment charges were recognized during thethree and six months ended June 30, 2007 and an immaterial gain was recognizedduring the three and six months ended June 30, 2006 related to the sale ofexcess equipment. The Company is attempting to sell land and buildings that areno longer in use.  These assets have anet carrying value of $15.5 million as of June 30, 2007 and $15.8 million as ofDecember 31, 2006 and are reflected as property, plant and equipment in theCondensed Consolidated Balance Sheets. Additional net impairment charges may be incurred or gains realized uponthe disposition of these or other excess assets.

**6.**     OFS BRIGHTWAVE, LLC

On June 30, 2006,CommScope received a payment of $29.8 million plus accrued interest infull satisfaction of the amount owed by OFS BrightWave, LLC (OFS BrightWave)under a $30 million Revolving Credit Agreement (the Agreement) datedNovember 16, 2001 and the Agreement was terminated.  The carrying value of the note hadpreviously been reduced to zero as a result of recording CommScope’s equity inlosses of OFS BrightWave prior to the sale of CommScope’s equity interest inOFS BrightWave in June 2004 and an impairment charge of $11.1 millionat the time of the sale.

The recovery of the OFSBrightWave note resulted in a pretax gain of $29.8 million($18.6 million after-tax, or $0.26 per diluted share for the three and sixmonths ended June 30, 2006).

**7.**     DERIVATIVESAND HEDGING ACTIVITIES

As of June 30, 2007and 2006, the only derivative financial instrument outstanding was a crosscurrency swap of U.S. dollars for euros with a notional amount of$14.0 million. A portion of the swap was designated and documented as ahedge of the Company’s net investment in its Belgian subsidiary to reduce thevolatility in stockholders’ equity caused by changes in euro exchange rates andthe remainder of the swap was designated as a hedge against fluctuations in thefair value of certain of the Company’s euro-denominated assets.  The fair value of the derivative instrument,reflected in other noncurrent liabilities, was approximately $7.4 millionand $7.1 million as of June 30, 2007 and December 31, 2006,respectively.

Pretax losses of $49 and $163 on the portion of theswap designated as a fair value hedge are reflected in earnings during thethree months ended June 30, 2007 and 2006, respectively. Pretax losses of $90and $211 on the portion of the swap designated as a fair value hedge arereflected in earnings during the six months ended June 30, 2007 and 2006,respectively. The designations of the hedging instrument were effective as ofJune 30, 2007 and 2006, and are expected to continue to be effective forthe duration of the agreement, resulting in no anticipated hedgeineffectiveness.

There were noreclassifications from other comprehensive income (loss) to earnings related toderivatives and hedging activities during the three and six months endedJune 30, 2007 and 2006.

Activity in theaccumulated net loss on derivative instruments included in accumulated othercomprehensive income (loss) consisted of the following:
|                                                                                        | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|----------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                             | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| Accumulated net  loss on derivative instruments, beginning of period              |       | $                                               | (5,303     | )                                             | $          | (4,445 | ) | $ | (5,201 | ) | $ | (4,274 | ) |
| Net loss on  derivative financial instrument designated as a net investment hedge |       | (122                                            | )          | (581                                          | )          | (224 | ) | (752 | ) |
| Accumulated net  loss on derivative instruments, end of period                    |       | $                                               | (5,425     | )                                             | $          | (5,026 | ) | $ | (5,425 | ) | $ | (5,026 | ) |

 

During the three months ended June 30, 2007 and2006, the income tax benefit related to the loss on the derivative financialinstrument designated as a net investment hedge and reported within othercomprehensive income was $72 and $341, respectively. During the six monthsended June 30, 2007 and 2006, the income tax 

14

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benefit related to theloss on the derivative financial instrument designated as a net investmenthedge and reported within other comprehensive income was $132 and $442,respectively.

**8.     EMPLOYEE BENEFIT PLANS**
|                                        | ** ** | **Pension Benefits**                           | ** ** | **Other Postretirement  Benefits** | ** ** |
|----------------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------|------------|
| ** **                             | ** ** | **Three Months Ended June 30,** | ** ** |
| ** **                             | ** ** | **2007**                                            | ** ** | **2006**                                | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service cost                           |       | $                                                   | 785        |                                    | $          | 825 |   | $ | 1,039 |   | $ | 1,128 |   |
| Interest cost                          |       | 1,804                                               |       | 1,731                                   |       | 1,319 |   | 1,229 |   |
| Recognized  actuarial loss             |       | —                                              |       | 14                                      |       | 25 |   | 140 |   |
| Amortization of  prior service costs   |       | (193                                                | )          | (97                                     | )          | (21 | ) | (131 | ) |
| Amortization of  transition obligation |       | 11                                                  |       | 10                                      |       | — |   | — |   |
| Return on plan  assets                 |       | (2,195                                              | )          | (1,972                                  | )          | (119 | ) | (139 | ) |
| Net periodic benefit  cost             |       | $                                                   | 212        |                                    | $          | 511 |   | $ | 2,243 |   | $ | 2,227 |   |

 
|                                        | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------------------------|------------|---------------------------------------------------|------------|
| ** **                             | ** ** | **2007**                                          | ** ** | **2006** | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service cost                           |       | $                                                 | 1,563      |   | $ | 1,639 |   | $ | 2,078 |   | $ | 2,256 |   |
| Interest cost                          |       | 3,605                                             |       | 3,456 |   | 2,638 |   | 2,458 |   |
| Recognized  actuarial loss             |       | —                                            |       | 27 |   | 51 |   | 280 |   |
| Amortization of  prior service costs   |       | (386                                              | )          | (194 | ) | (43 | ) | (263 | ) |
| Amortization of  transition obligation |       | 22                                                |       | 20 |   | — |   | — |   |
| Return on plan  assets                 |       | (4,386                                            | )          | (3,939 | ) | (237 | ) | (278 | ) |
| Net periodic benefit  cost             |       | $                                                 | 418        |   | $ | 1,009 |   | $ | 4,487 |   | $ | 4,453 |   |

 

The Company contributedapproximately $5.3 million and $5.5 million to its pension plans during thethree and six months ended June 30, 2007, respectively, and anticipatesmaking additional contributions of approximately $0.4 million to these plansduring 2007. The Company contributed approximately $0.8 million and $1.7million to the postretirement benefit plans during the three and six monthsended June 30, 2007, respectively, and anticipates making additionalcontributions of approximately $1.7 million to these plans during 2007.

During the three and sixmonths ended June 30, 2007, the income tax benefit related to theamortization of unrecognized pension and other postretirement benefit amountsreported within other comprehensive income was $70 and $140, respectively.

**9.     EQUITY-BASED COMPENSATION PLANS**

EffectiveJanuary 1, 2006, the Company adopted the fair value recognition provisionsof SFAS No. 123(R), “Share-Based Payment,” using the modified prospectivetransition method. The following table summarizes the impact of equity-basedcompensation expense recognized in the Condensed Consolidated Statement ofOperations for the three and six months ended June 30, 2007 and 2006:
|                                                  | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|--------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                       | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| Cost of sales                                    |       | $                                               | 596        |                                          | $          | 328 |   | $ | 1,199 |   | $ | 626 |   |
| Selling, general  and administrative expense     |       | 1,512                                           |       | 664                                           |       | 3,295 |   | 1,275 |   |
| Research and  development expense                |       | 251                                             |       | 117                                           |       | 506 |   | 228 |   |
| Equity-based  compensation expense before taxes  |       | 2,359                                           |       | 1,109                                         |       | 5,000 |   | 2,129 |   |
| Less: Related  income tax benefits               |       | (767                                            | )          | (369                                          | )          | (1,646 | ) | (709 | ) |
| Equity-based  compensation expense, net of taxes |       | $                                               | 1,592      |                                          | $          | 740 |   | $ | 3,354 |   | $ | 1,420 |   |

 

Asof June 30, 2007, $17.0 million of total unrecognized compensation costsrelated to non-vested awards 

15

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are expected to berecognized over a weighted average period of 1.7 years. There were nosignificant capitalized equity-based compensation costs at June 30, 2007.

**StockOptions**

Thefollowing table summarizes the stock option activity for the three and sixmonths ended June 30, 2007 (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, 2007    |       | 3,536      |       | $                                                            | 19.29      |                                                                |       |                            | $          | 83,521 |   |
| Exercised                                                   |       | (661       | )          | $                                                            | 20.48      |                                                                |       |                            | $          | 18,431 |   |
| Expired or forfeited                                        |       | (1         | )          | $                                                            | 30.42      |                                                                | $          | 13.85                           |       |   |   |
| Outstanding and  expected to vest at June 30, 2007          |       | 2,874      |       | $                                                            | 19.00      |                                                                |       |                            | $          | 113,074 |   |
|                                                        |       |       |       |                                                         |       |                                                                |       |                            |       |
| Outstanding and  expected to vest at December 31, 2006 |       | 4,742      |       | $                                                            | 18.47      |                                                                |       |                            | $          | 61,192 |   |
| Exercised                                                   |       | (1,865     | )          | $                                                            | 17.61      |                                                                |       |                            | $          | 43,958 |   |
| Expired or forfeited                                        |       | (3         | )          | $                                                            | 35.95      |                                                                | $          | 15.64                           |       |   |   |
| Outstanding and  expected to vest at June 30, 2007          |       | 2,874      |       | $                                                            | 19.00      |                                                                |       |                            | $          | 113,074 |   |
| Exercisable at June 30,  2007                               |       | 2,560      |       | $                                                            | 18.26      |                                                                |       |                            | $          | 102,636 |   |

 

The total intrinsic valueof options exercised during the three and six months ended June 30, 2006 was$16.9 million and $38.1 million, respectively. All of the non-vested options at June 30, 2007 are expected to vest asthey are primarily held by senior management and directors.

Key input assumptionsused to estimate the fair value of stock options include the grant price of theaward, the expected option term, volatility of the Company’s stock, therisk-free rate and the Company’s projected dividend yield. The Company believesthat the valuation technique and the approach utilized to develop theunderlying assumptions are appropriate in estimating the fair values ofCommScope stock options. Estimates of fair value are not intended to predictactual future events or the value that will ultimately be realized by employeeswho receive equity awards, and subsequent events are not indicative of thereasonableness of the original estimates of fair value made by the Companyunder SFAS No. 123(R).

The following tablepresents the weighted-average assumptions used in the Black-Scholes model toestimate the fair value of stock option awards granted during the three and sixmonths ended June 30, 2006.  No stockoption awards were granted during the three and six months ended June 30, 2007.
|                                            | ** ** | **Three Months  Ended June 30, 2006** | ** ** | **Six Months  Ended June 30, 2006** | ** ** |
|--------------------------------------------|------------|-----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| Expected option  term (in years)           |       | 5.0                                                       |       | 5.0                                                     |       |
| Risk-free  interest rate                   |       | 4.9                                                       | %          | 4.5                                                     | %          |
| Expected  volatility                       |       | 45                                                        | %          | 45                                                      | %          |
| Expected  dividend yield                   |       | 0                                                         | %          | 0                                                       | %          |
| Weighted-average fair  value at grant date |       | $                                                         | 13.74      |                                                    | $          | 10.25 |   |
|                                            |            |                                                           |            |                                                         |            |  |  |

 

16

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The exerciseprices of outstanding options at June 30, 2007 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                             |       | 1,318                           |       | 5.5                                                                      |       | $ | 13.06 |   | 1,298 |   | $ | 13.03 |   |
| 16.51 to 24.00                              |       | 1,045                           |       | 6.2                                                                      |       | $ | 18.52 |   | 915 |   | $ | 18.32 |   |
| 24.01 to 47.06                              |       | 511                             |       | 4.6                                                                      |       | $ | 35.35 |   | 347 |   | $ | 37.67 |   |
| $7.43 to $47.06                             |       | 2,874                           |       | 5.6                                                                      |       | $ | 19.00 |   | 2,560 |   | $ | 18.26 |   |

 

**PerformanceShare Units**

Thefollowing table summarizes the performance share unit activity for the threeand six months ended June 30, 2007 (in thousands, except per share data):
| ** **                                            | ** ** | **Units** | ** ** | **Weighted   Average Grant  Date Fair    Value Per   Share** | ** ** |
|-------------------------------------------------------|------------|-----------|------------|-------------------------------------------------------------------------------------------------|------------|
| Outstanding and  non-vested at March 31, 2007    |       | 448       |       | $                                                                                               | 23.34      |   |
| Forfeited                                             |       | (3        | )          | $                                                                                               | 23.19      |   |
| Outstanding and  non-vested at June 30, 2007          |       | 445       |       | $                                                                                               | 23.34      |   |
|                                                  |       |      |       |                                                                                            |       |
| Outstanding and  non-vested at December 31, 2006 |       | 449       |       | $                                                                                               | 23.26      |   |
| Forfeited                                             |       | (4        | )          | $                                                                                               | 22.54      |   |
| Outstanding and  non-vested at June 30, 2007          |       | 445       |       | $                                                                                               | 23.34      |   |

 

**RestrictedStock Units**

Thefollowing table summarizes the restricted stock unit activity for the three andsix months ended June 30, 2007 (in thousands, except per share data):
| ** **                                            | ** ** | **Units** | ** ** | **Weighted   Average Grant  Date Fair    Value Per   Share** | ** ** |
|-------------------------------------------------------|------------|-----------|------------|-------------------------------------------------------------------------------------------------|------------|
| Outstanding and  non-vested at March 31, 2007    |       | 506       |       | $                                                                                               | 24.97      |   |
| Granted                                               |       | 1         |       | $                                                                                               | 44.81      |   |
| Forfeited                                             |       | (5        | )          | $                                                                                               | 24.91      |   |
| Outstanding and  non-vested at June 30, 2007          |       | 502       |       | $                                                                                               | 25.03      |   |
|                                                  |       |      |       |                                                                                            |       |
| Outstanding and  non-vested at December 31, 2006 |       | 503       |       | $                                                                                               | 24.78      |   |
| Granted                                               |       | 9         |       | $                                                                                               | 38.09      |   |
| Forfeited                                             |       | (10       | )          | $                                                                                               | 25.06      |   |
| Outstanding and  non-vested at June 30, 2007          |       | 502       |       | $                                                                                               | 25.03      |   |

 

**10.****  SEGMENTS**

The Company defines itsreportable segments by major product category, which is consistent with themanner in which the business is managed, as follows: Enterprise, Broadband andCarrier.

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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 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.

The Carrier segmentconsists of secure environmental enclosures for electronic devices andequipment, cables and components used by wireless providers to connect antennaeto transmitters and connectivity solutions for telephone central offices. Theseproducts are primarily used by telecommunications service providers or “carriers.”

The following tables provide summary financialinformation by segment as of June 30, 2007 and December 31, 2006 and forthe three and six months ended June 30, 2007 and 2006 (in millions):
|                                                   | ** ** | **As of**    | ** ** | **As of**        | ** ** |
|---------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                        | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
| ** **                                        | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| Identifiable  segment related assets:             |       |              |       |                  |       |
| Enterprise                                        |       | $                 | 394.8      |                  | $          | 375.1 |   |
| Broadband                                         |       | 420.5             |       | 365.0                 |       |
| Carrier                                           |       | 136.3             |       | 94.5                  |       |
| Total  identifiable segment related assets        |       | 951.6             |       | 834.6                 |       |
|                                              |       |              |       |                  |       |
| Reconciliation  to total assets:                  |       |              |       |                  |       |
| Cash, cash equivalents and short-term investments |       | 489.6             |       | 427.9                 |       |
| Deferred income taxes                             |       | 44.1              |       | 40.0                  |       |
| Total assets                                      |       | $                 | 1,485.3    |                  | $          | 1,302.5 |   |

 
|                                | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|--------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                     | ** ** | **2007**                                        | ** ** | **2006**                                      | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net sales:                     |       |                                            |       |                                          |       |   |   |   |   |
| Enterprise                     |       | $                                               | 239.4      |                                          | $          | 205.1 |   | $ | 440.3 |   | $ | 377.2 |   |
| Broadband                      |       | 163.4                                           |       | 136.5                                         |       | 311.5 |   | 262.4 |   |
| Carrier                        |       | 116.7                                           |       | 71.0                                          |       | 203.8 |   | 125.7 |   |
| Inter-segment eliminations     |       | (0.4                                            | )          | (0.7                                          | )          | (1.0 | ) | (1.2 | ) |
| Consolidated net  sales        |       | $                                               | 519.1      |                                          | $          | 411.9 |   | $ | 954.6 |   | $ | 764.1 |   |
|                           |       |                                            |       |                                          |       |   |   |   |   |
| Operating  income:             |       |                                            |       |                                          |       |   |   |   |   |
| Enterprise                     |       | $                                               | 47.8       |                                          | $          | 23.8 |   | $ | 77.3 |   | $ | 35.1 |   |
| Broadband                      |       | 20.3                                            |       | 4.5                                           |       | 41.9 |   | 12.5 |   |
| Carrier                        |       | 18.3                                            |       | 9.8                                           |       | 30.9 |   | 9.8 |   |
| Consolidated operating  income |       | $                                               | 86.4       |                                          | $          | 38.1 |   | $ | 150.1 |   | $ | 57.4 |   |

 

***Management will consider revisions to the reportablesegments upon closing and integrating the Andrew acquisition.***

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**11.**       SUPPLEMENTAL CASH FLOWINFORMATION
|                                                                                                                                       | ** ** | **Six Months  Ended June 30,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                                            | ** ** | **2007**                                      | ** ** | **2006** | ** ** |
| Cash paid during  the period for:                                                                                                     |       |                                          |       |   |   |
| Income taxes                                                                                                                          |       | $                                             | 27,724     |   | $ | 7,747 |   |
| Interest                                                                                                                              |       | 2,628                                         |       | 3,002 |   |
| Noncash  investing and financing activities:                                                                                          |       |                                          |       |   |   |
| Fair value, less costs to sell, of held for sale  assets transferred from property, plant and equipment to other current  assets |       | $                                             | —     |   | $ | 10,128 |   |

 

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** **

**ITEM 2.****   MANAGEMENT’S DISCUSSION ANDANALYSIS 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, 2007 and 2006 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 2006 AnnualReport on Form 10-K.

**Overview**

CommScope is a worldleader in the infrastructure solutions for communications networks. Our highlyengineered cable and connectivity solutions enable a host of information-richand interactive services that are delivered to the home, office and mobiledevices.  We focus on the “last mile” incommunications networks, which is the distribution access or final link to thecustomer. We believe we are a global leader in structured cabling for businessenterprise applications and broadband coaxial cables for the cable televisionindustry. We also design, manufacture and market a broad line ofhigh-performance electronic, coaxial and fiber optic cable and related productsfor data networking, Internet access, wireless communication, telephony andother broadband applications. In addition, we are an industry leader in thedesign and manufacture of environmentally secure enclosures to integratecomplex equipment for digital subscriber line (DSL) and Fiber-to-the-Node(FTTN) deployments by telecommunication service providers in the United States.

On June 27, 2007, the Company announced an agreementto acquire Andrew Corporation (Andrew). Under the terms of the agreement, eachshare of Andrew common stock will be acquired for $15.00, comprised of $13.50in cash and an additional $1.50 in either cash, CommScope common stock or acombination thereof, at CommScope’s option.  The total transaction value is approximately $2.6 billion, based onAndrew’s estimated 176 million shares outstanding on a fully diluted basis,which includes shares issuable under Andrew’s existing convertible notes.  Andrew designs, manufactures and deliversequipment and solutions for the global communications infrastructure market.  The transaction is expected to close, subjectto customary closing conditions, before the end of 2007.  For the fiscal year ended September 30, 2006,Andrew’s Annual Report on Form 10-K reported total assets of $2.4 billion, netrevenue of $2.1 billion and a net loss of $34.3 million, which included acharge of $83.4 million to provide a full valuation allowance against certaindeferred tax assets, among other special items. The results reported below donot reflect any actual or pro forma adjustments related to theacquisition.  See Liquidity and CapitalResources — Future Cash Needs for a discussion of the credit facilities thatare expected to be utilized for borrowings necessary to pay the cash portion ofthe purchase price and other related cash needs.

**CRITICALACCOUNTING POLICIES**

There have been nochanges in our critical accounting policies or significant accounting estimatesas disclosed in our 2006 Annual Report on Form 10-K other than theimplementation of FASB Interpretation No. 48, “Accounting for Uncertainty inIncome Taxes,” (see Note 1 in the Notes to the Condensed Consolidated FinancialStatements included elsewhere in this Form 10-Q).

**COMPARISON OFRESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2007WITH THE THREE AND SIX MONTHS ENDED JUNE 30, 2006**
| ** **                              | ** ** | **Three Months Ended June 30,**                               | ** ** | ** **    | ** ** | ** **       | ** ** |
|-----------------------------------------|------------|-----------------------------------------------------------------------------------|------------|---------------|------------|------------------|------------|
| ** **                              | ** ** | **2007**                                                                          | ** ** | **2006**      | ** ** | ** **       | ** ** | ** ** | ** ** |
| ** **                              | ** ** | ** **                                                                        | ** ** | **% of** | ** ** | ** **       | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                              | ** ** | ** **                                                                        | ** ** | **Net**       | ** ** | ** **       | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                              | ** ** | **Amount**                                                                        | ** ** | **Sales**     | ** ** | **Amount ** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                              | ** ** | **(dollars in millions, except per share amounts)** | ** ** |
| Net sales                               |       | $                                                                                 | 519.1      |          | 100.0      | %                | $          | 411.9 |   | 100.0 | % | $ | 107.3 |   | 26.0 | % |
| Gross profit                            |       | 162.6                                                                             |       | 31.3          |       | 108.5            |       | 26.3 |   | 54.0 |   | 49.8 |   |
| SG&A expense                        |       | 67.6                                                                              |       | 13.0          |       | 58.3             |       | 14.1 |   | 9.3 |   | 16.0 |   |
| R&D expense                         |       | 8.5                                                                               |       | 1.6           |       | 8.2              |       | 2.0 |   | 0.2 |   | 3.0 |   |
| Restructuring  costs                    |       | 0.2                                                                               |       | 0.0           |       | 4.0              |       | 1.0 |   | (3.8 | ) | (95.8 | ) |
| Gain on OFS  BrightWave note receivable |       | —                                                                            |       | —        |       | 18.6             |       | 4.5 |   | (18.6 | ) | (100.0 | ) |
| Net income                              |       | 61.1                                                                              |       | 11.8          |       | 46.6             |       | 11.3 |   | 14.5 |   | 31.0 |   |
| Net income per diluted  share           |       | 0.83                                                                              |       |          |       | 0.65             |       |   |   | 0.18 |   | 27.7 |   |
|                                         |            |                                                                                   |            |               |            |                  |            |  |  |  |  |  |  |  |  |  |

 

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| ** **                              | ** ** | **Six Months Ended June 30,**                                 | ** ** | ** **    | ** ** | ** ** | ** ** |
|-----------------------------------------|------------|-----------------------------------------------------------------------------------|------------|---------------|------------|------------|------------|
| ** **                              | ** ** | **2006**                                                                          | ** ** | **2005**      | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                              | ** ** | ** **                                                                        | ** ** | **% of** | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                              | ** ** | ** **                                                                        | ** ** | **Net**       | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                              | ** ** | **Amount**                                                                        | ** ** | **Sales**     | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                              | ** ** | **(dollars in millions, except per share amounts)** | ** ** |
| Net sales                               |       | $                                                                                 | 954.6      |          | 100.0      | %          | $          | 764.1 |   | 100.0 | % | $ | 190.5 |   | 24.9 | % |
| Gross profit                            |       | 294.5                                                                             |       | 30.9          |       | 193.3      |       | 25.3 |   | 101.3 |   | 52.4 |   |
| SG&A expense                        |       | 127.2                                                                             |       | 13.3          |       | 112.4      |       | 14.7 |   | 14.8 |   | 13.2 |   |
| R&D expense                         |       | 16.3                                                                              |       | 1.7           |       | 15.7       |       | 2.1 |   | 0.7 |   | 4.2 |   |
| Restructuring  costs                    |       | 0.9                                                                               |       | 0.1           |       | 7.8        |       | 1.0 |   | (6.9 | ) | (88.4 | ) |
| Gain on OFS  BrightWave note receivable |       | —                                                                            |       | —        |       | 18.6       |       | 2.4 |   | (18.6 | ) | (100.0 | ) |
| Net income                              |       | 107.0                                                                             |       | 11.2          |       | 59.4       |       | 7.8 |   | 47.6 |   | 80.2 |   |
| Net income per diluted  share           |       | 1.46                                                                              |       |          |       | 0.85       |       |   |   | 0.61 |   | 71.8 |   |
|                                         |            |                                                                                   |            |               |            |            |            |  |  |  |  |  |  |  |  |  |

 

**Net sales**

**Theincrease in net sales for the three and six months ended June 30, 2007over the comparable prior year periods is attributable to domestic andinternational sales growth in each of our segments. These increases are largelythe result of higher sales volume levels and price increases implementedprimarily in the first half of 2006 in response to higher raw materialcosts.  For further details by segment,see the section titled “Segment Results” below.**

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

Gross profit margin forthe three months ended June 30, 2007 increased to 31.3% from 26.3% for thethree months ended June 30, 2006 and to 30.9% from 25.3% for thecomparable six months periods. The improved gross profit margins reflect theimpact of improved manufacturing utilization as a result of higher salesvolumes, changes in the product mix toward products that generate highermargins, cost savings achieved as a result of restructuring activities andprice increases implemented primarily in the first half of 2006 that werelargely in response to raw material cost increases.

We expect continuedvolatility in the costs of certain raw materials, such as copper, aluminum,steel, and plastics and other polymers that are derived from oil and naturalgas.  This volatility in raw materialcosts may reduce gross profit margin if we delay implementing price increases,are unable to achieve market acceptance of future price increases or implementprice reductions in response to a rapid decline in raw material costs.

**Selling, generaland administrative expense**

The increase in selling,general and administrative expense (SG&A) for the three and six monthsended June 30, 2007 as compared to the same periods in 2006 was primarilydue to higher marketing costs associated with the higher level of sales.  The reduction in SG&A expense as apercentage of net sales is a result of the higher sales revenue.

**Research anddevelopment**

Research and development(R&D) expense increased by $0.2 million and $0.7 million for the three andsix months ended June 30, 2007, respectively, as compared to the sameperiods in 2006. R&D expense as a percentage of net sales decreasedmodestly to 1.6% and 1.7% for the three and six months ended June 30,2007, respectively, as compared to 2.0% and 2.1% for the comparable 2006 threeand six month periods. The ongoing R&D activities generally relate tobringing new products to market and to modifying existing products to betterserve our customers.

**RestructuringCosts**

We recognized pretaxrestructuring costs of $0.2 million and $0.9 million during the three and sixmonths ended June 30, 2007, respectively, compared with $4.0 million and $7.8million during the comparable periods 

21

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ended June 30, 2006,respectively. The 2007 costs resulted from the global manufacturing initiativeswhich began during the third quarter of 2005 and are substantially complete asof June 30, 2007.

We anticipate that wewill recognize additional pretax employee-related and equipment relocationcharges of up to $0.2 million to complete the implementation of the globalmanufacturing initiatives during the balance of 2007.

As of June 30, 2007, weowned $15.5 million of land and buildings that, as a result of the globalmanufacturing initiatives, are no longer in use and is being marketed forsale.  Additional restructuring lossesmay be incurred or gains realized upon disposition of these or other excessassets.

**Net interestincome**

We recognized net interestincome of $4.0 million and $6.6 million for the three and six months ended June30, 2007, respectively, compared to $0.4 million for both of the comparableprior year periods.  The increases weredue to the impact of significantly higher balances of invested funds (cash,cash equivalents and short-term investments) as well as improved rates ofreturn on invested balances as a result of increases in LIBOR and othershort-term interest rates.  Interestexpense for the three and six month periods declined slightly from thecomparable prior year periods as a result of lower levels of outstanding debtdue to scheduled principal repayments and the repayment of the IDA notes in May2007, offset by the impact of increases in LIBOR and other short-term interestrates.  Our weighted average effectiveinterest rate on outstanding borrowings, including amortization of associatedlong-term financing costs, was slightly lower at 2.42% as of June 30, 2007compared to 2.68% as of December 31, 2006, primarily as a result of therepayment of the IDA notes.

**Income taxes**

Our effective income taxrate was 32% for the three and six months ended June 30, 2007 compared to27% and 30%, excluding the impact of the gain on the OFS note receivable, forthe three and six months ended June 30, 2006, respectively. Our effectiveincome tax rate is generally lower than the U.S. statutory rate due to benefitsreceived from international activities that are taxed at lower rates.  The higher rates for the 2007 period are dueto changes in the relationship of domestic to international income and amongthe various international jurisdictions where we have activities.  In addition, we realized benefits in thesecond quarter of 2006 as a result of favorable outcomes on various mattersraised during federal and state income tax audits that lowered the effectivetax rate for the three and six months ended June 30, 2006.

**Gain on OFSBrightWave note receivable**

On June 30, 2006, wereceived a payment of $29.8 million plus accrued interest in full satisfactionof the amount owed by OFS BrightWave, LLC (OFS BrightWave) under a $30 millionRevolving Credit Agreement that was by its terms scheduled to be repaid nolater than November 16, 2006.  Thecarrying value of the note had previously been reduced to zero as a result ofrecording our equity in losses of OFS BrightWave prior to the sale of ourinterest in OFS BrightWave in June 2004 and an impairment charge of $11.1million at the time of the sale.  TheRevolving Credit Agreement was terminated on June 30, 2006.

The reported gain on theOFS BrightWave note receivable is net of a tax provision of $11.2 million.

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**SegmentResults**
| ** **                     | ** ** | **Three Months Ended June 30,** | ** ** | ** **    | ** ** | ** ** | ** ** |
|--------------------------------|------------|-----------------------------------------------------|------------|---------------|------------|------------|------------|
| ** **                     | ** ** | **2007**                                            | ** ** | **2006**      | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                     | ** ** | ** **                                          | ** ** | **%** of | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                     | ** ** | ** **                                          | ** ** | **Net**       | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                     | ** ** | **Amount**                                          | ** ** | **Sales**     | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                     | ** ** | **(dollars in millions)**                 | ** ** |
| Net sales by  segment:         |       |                                                |       |          |       |       |       |   |   |   |   |   |   |
| Enterprise                     |       | $                                                   | 239.4      |          | 46.1       | %          | $          | 205.1 |   | 49.8 | % | $ | 34.3 |   | 16.7 | % |
| Broadband                      |       | 163.4                                               |       | 31.5          |       | 136.5      |       | 33.1 |   | 26.9 |   | 19.7 |   |
| Carrier                        |       | 116.7                                               |       | 22.4          |       | 71.0       |       | 17.2 |   | 45.7 |   | 64.5 |   |
| Inter-segment eliminations     |       | (0.4                                                | )          | (0.0          | )          | (0.7       | )          | (0.1 | ) | 0.4 |   |   |   |
| Consolidated net  sales        |       | $                                                   | 519.1      |          | 100.0      | %          | $          | 411.9 |   | 100.0 | % | $ | 107.3 |   | 26.0 | % |
|                           |       |                                                |       |          |       |       |       |   |   |   |   |   |   |
| Total domestic  sales          |       | $                                                   | 359.0      |          | 69.2       | %          | $          | 279.0 |   | 67.7 | % | $ | 80.0 |   | 28.7 | % |
| Total  international sales     |       | 160.1                                               |       | 30.8          |       | 132.9      |       | 32.3 |   | 27.2 |   | 20.5 |   |
| Total worldwide  sales         |       | $                                                   | 519.1      |          | 100.0      | %          | $          | 411.9 |   | 100.0 | % | $ | 107.3 |   | 26.0 | % |
|                           |       |                                                |       |          |       |       |       |   |   |   |   |   |   |
| Operating income  by segment:  |       |                                                |       |          |       |       |       |   |   |   |   |   |   |
| Enterprise                     |       | $                                                   | 47.8       |          | 20.0       | %          | $          | 23.8 |   | 11.6 | % | $ | 24.0 |   | 100.6 | % |
| Broadband                      |       | 20.3                                                |       | 12.4          |       | 4.5        |       | 3.3 |   | 15.8 |   | 355.3 |   |
| Carrier                        |       | 18.3                                                |       | 15.7          |       | 9.8        |       | 13.8 |   | 8.5 |   | 86.8 |   |
| Consolidated operating  income |       | $                                                   | 86.4       |          | 16.6       | %          | $          | 38.1 |   | 9.2 | % | $ | 48.3 |   | 126.9 | % |

 
| ** **                     | ** ** | **Six Months Ended June 30,** | ** ** | ** **    | ** ** | ** ** | ** ** |
|--------------------------------|------------|---------------------------------------------------|------------|---------------|------------|------------|------------|
| ** **                     | ** ** | **2007**                                          | ** ** | **2006**      | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                     | ** ** | ** **                                        | ** ** | **%** of | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                     | ** ** | ** **                                        | ** ** | **Net**       | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                     | ** ** | **Amount**                                        | ** ** | **Sales**     | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                     | ** ** | **(dollars in millions)**               | ** ** |
| Net sales by  segment:         |       |                                              |       |          |       |       |       |   |   |   |   |   |   |
| Enterprise                     |       | $                                                 | 440.3      |          | 46.1       | %          | $          | 377.2 |   | 49.4 | % | $ | 63.1 |   | 16.7 | % |
| Broadband                      |       | 311.5                                             |       | 32.6          |       | 262.4      |       | 34.3 |   | 49.1 |   | 18.7 |   |
| Carrier                        |       | 203.8                                             |       | 21.4          |       | 125.7      |       | 16.5 |   | 78.1 |   | 62.2 |   |
| Inter-segment eliminations     |       | (1.0                                              | )          | (0.1          | )          | (1.2       | )          | (0.2 | ) | 0.2 |   |   |   |
| Consolidated net  sales        |       | $                                                 | 954.6      |          | 100.0      | %          | $          | 764.1 |   | 100.0 | % | $ | 190.5 |   | 24.9 | % |
|                           |       |                                              |       |          |       |       |       |   |   |   |   |   |   |
| Total domestic  sales (1)      |       | $                                                 | 658.2      |          | 69.0       | %          | $          | 522.5 |   | 68.4 | % | $ | 135.7 |   | 26.0 | % |
| Total  international sales (1) |       | 296.4                                             |       | 31.0          |       | 241.6      |       | 31.6 |   | 54.8 |   | 22.7 |   |
| Total worldwide  sales         |       | $                                                 | 954.6      |          | 100.0      | %          | $          | 764.1 |   | 100.0 | % | $ | 190.5 |   | 24.9 | % |
|                           |       |                                              |       |          |       |       |       |   |   |   |   |   |   |
| Operating income  by segment:  |       |                                              |       |          |       |       |       |   |   |   |   |   |   |
| Enterprise                     |       | $                                                 | 77.3       |          | 17.6       | %          | $          | 35.1 |   | 9.3 | % | $ | 42.2 |   | 119.8 | % |
| Broadband                      |       | 41.9                                              |       | 13.5          |       | 12.5       |       | 4.7 |   | 29.4 |   | 235.7 |   |
| Carrier                        |       | 30.9                                              |       | 15.2          |       | 9.8        |       | 7.8 |   | 21.1 |   | 215.7 |   |
| Consolidated operating  income |       | $                                                 | 150.1      |          | 15.7       | %          | $          | 57.4 |   | 7.5 | % | $ | 92.7 |   | 161.3 | % |

 

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(1) For the sixmonths ended June 30, 2007 and 2006, domestic sales of $8.3 million and $1.5million, respectively, have been reclassified to international sales toproperly reflect customer location. The reclassifications relate to firstquarter sales for 2007 and 2006.

*EnterpriseSegment*

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 30,2007 over the comparable prior year periods was primarily driven by highersales volumes of certain products, the effect of price 

23

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increases and theintroduction of new products.  Sales werehigher in all major geographic regions. We implemented price increases for certain Enterprise products primarilyin the first half of 2006, as a result of significant increases in the cost ofcertain raw materials.

The improvement inEnterprise segment operating income for the three and six months ended June 30,2007 over the comparable prior year periods was primarily due to the increasedsales volume, changes in the product mix towards products that generate highermargins and the impact of cost control efforts. The price increases that were realized were substantially offset by theimpact of increased raw material costs. Also contributing to the improvedoperating income are lower restructuring costs related to the implementation ofour global manufacturing initiatives, which were $2.8 million lower during thethree months ended June 30, 2007 and $5.3 million lower during the six monthsended June 30, 2007.

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, among other things.  Our ability to benefit from this expectedcontinued demand will depend on whether we encounter any significant manufacturingconstraints in our internal facilities or supply constraints with respect toeither raw materials or contract manufacturers, among other factors.

*Broadband Segment*

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.

The increase in Broadbandsegment net sales for the three and six months ended June 30, 2007compared to the comparable prior year periods was primarily due to strongdomestic sales.  This increase reflectsthe impact of higher sales volumes as well as the impact of price increasesimplemented primarily in the first half of 2006 in response to higher rawmaterial costs.  Domestic sales volumeincreases can be attributed to continued infrastructure needs of our largecable television system operator customers. Sales volumes also increased in international regions, particularly theCentral and Latin America region, as a result of new projects and ongoingsystem maintenance.  Domestic net salesfor the three and six months ended June 30, 2007 include incremental sales of$4.2 million and $6.5 million, respectively, related to acquired businesses.

Operating income for thethree and six months ended June 30, 2007 increased over the comparable prioryear period as a result of higher sales volumes and the impact of costreductions realized as a result of the global manufacturing initiatives. Theseimprovements were somewhat offset by a $1.6 million provision for aspecifically-identified warranty issue and $0.6 million related to inventorypurchase accounting adjustments arising from the acquisition of Signal Vision,Inc.  Operating income for the three andsix months ended June 30, 2006 included a provision of $4.8 million recorded incost of goods sold related to the portion of value added taxes receivable atour Brazilian subsidiary that are not believed to be recoverable.  The remaining balance of Brazilian valueadded taxes receivable of $11.1 million is believed to be recoverable and hasbeen classified primarily as long-term in other assets on the CondensedConsolidated Balance Sheet as of June 30, 2007. Also contributing to the improved operating income are lowerrestructuring costs related to the implementation of our global manufacturinginitiatives, which were $0.2 million and $0.3 million during the three and sixmonths ended June 30, 2007, respectively, compared to $0.9 million and $1.6million during the three and six months ended June 30, 2006, respectively.

Our ability to increasesales and operating income in the Broadband segment depends on continuedcapital spending by the major cable television system operators and whether weare able to pass raw material price increases along to our customers, amongother factors.

*Carrier Segment*

The Carrier segmentconsists of secure environmental enclosures for electronic devices andequipment, cables and components used by wireless providers to connect antennaeto transmitters and structured cabling solutions for telephone central offices.These products are primarily used by telecommunications service providers or “carriers.”

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The Carrier segmentexperienced substantial net sales growth for the three and six months endedJune 30, 2007 over the comparable prior year periods primarily due to theperformance of the Integrated Cabinet Solutions (ICS) product group. The ICS businesshas rapidly expanded and reflects an increase in shipments related to DSL andFTTN deployments by telephone companies.

Sales of ExchangeMAXproducts were essentially unchanged for the three and six months ended June 30,2007 compared to the comparable prior year periods, while sales of wirelessproducts declined over the same period due to a reduction in the level ofcapital expenditures by certain wireless carriers.

The improvement inCarrier segment operating income for the three and six months ended June 30,2007 over the comparable 2006 periods is primarily due to the higher salesvolume of ICS products and the impact of cost reductions realized as a resultof the global manufacturing initiatives.

While we expect sales ofCarrier products to be somewhat volatile since customer spending is mainlyproject-driven, we remain optimistic about our opportunities for the ICS andwireless product groups. We anticipate sales growth for our ICS product groupprimarily due to FTTN construction activity and DSL deployments. Our ability tomeet increased customer demand for ICS products will depend on whether we havesufficient production capacity through our internal operations and contractmanufacturers, among other factors.  Wealso expect a resumption of expansion in cellular telephone base stations,which provides growth opportunities for our wireless product group, though therate of growth and product profitability may be adversely impacted byconsolidation among wireless carriers, among other factors.

**LIQUIDITY ANDCAPITAL RESOURCES**

**Cash Flow Overview**

Ourprincipal sources of liquidity, both on a short-term and long-term basis, arecash and cash equivalents, short-term investments, cash flows provided byoperations and availability under credit facilities. A reduction in sales andprofitability could reduce cash provided by operations and limit availabilityunder credit facilities. In addition, increases in working capital, excludingcash, cash equivalents and short-term investments, related to increasing salescould reduce our operating cash flows in the short term until cash collectionsof accounts receivable catch up to the higher level of billings.
|                                                                                                                                | ** ** | **As of**                      | ** ** | ** **            | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|-----------------------|------------|------------|------------|
| ** **                                                                                                                     | ** ** | **June 30,**                   | ** ** | **December 31,** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                                                                                                                     | ** ** | **2007**                            | ** ** | **2006**              | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                                                                                                                     | ** ** | **(dollars in millions)** | ** ** |
| Cash, cash  equivalents and short-term investments                                                                             |       | $                                   | 489.6      |                  | $          | 427.9      |       | 61.7 |   | 14.4 | % |
| Working capital,  excluding cash, cash equivalents and short-term investments and current  portion of long-term debt |       | 295.5                               |       | 209.6                 |       | 85.9       |       | 41.0 |   |
| Long-term debt,  including current portion                                                                                     |       | 266.8                               |       | 284.1                 |       | (17.3      | )          | (6.1 | ) |
| Book capital  structure                                                                                                        |       | 1,163.5                             |       | 1,023.2               |       | 140.3      |       | 13.7 |   |
| Long-term debt as a  percentage of book capital structure                                                                      |       | 22.9                                | %          | 27.8                  | %          |       |       |   |   |
|                                                                                                                                |            |                                     |            |                       |            |            |            |  |  |  |  |

 

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The increase in cash,cash equivalents and short-term investments during the six months endedJune 30, 2007 was primarily driven by operating cash flows of $57.9million and proceeds of $48.1 million from the exercise of stock options andrelated tax benefits.  These inflows ofcash were somewhat offset by $17.3 million of principal payments on long-termdebt, capital expenditures of $11.2 million and a $16.4 million investment toacquire substantially all of the assets and assumption of certain currentliabilities of Signal Vision, Inc.
| ** **                                                                                                                                 | ** ** | **Six Months Ended**      | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                                                                                 | ** ** | **June 30,**                   | ** ** | **Dollar** | ** ** | **%**      | ** ** |
| ** **                                                                                                                                 | ** ** | **2007**                            | ** ** | **2006**   | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                                                                                                                                 | ** ** | **(dollars in millions)** | ** ** |
| Net cash  provided by (used in) operating activities                                                                                       |       | $                                   | 57.9       |       | $          | (3.3       | )          | $ | 61.2 |   |   |   |
| Depreciation and  amortization                                                                                                             |       | 24.9                                |       | 28.4       |       | (3.5       | )          | (12.3 | )% |
| Increase in  working capital, excluding cash, cash equivalents and short-term  investments and current portion of long-term debt |       | 85.9                                |       | 71.8       |       | 14.1       |       | 19.6 |   |
| Capital expenditures                                                                                                                       |       | 11.2                                |       | 15.1       |       | (3.9       | )          | (25.6 | ) |
|                                                                                                                                            |            |                                     |            |            |            |            |            |  |  |  |  |  |

 

**OperatingActivities**

During the six monthsended June 30, 2007, operating activities generated $57.9 million in cashcompared to utilizing $3.3 million during the six months ended June 30,2006.  During the six months endedJune 30, 2007, net income of $107.0 million, depreciation and amortizationof $24.9 million and an increase of $32.2 million in accounts payable weresomewhat offset by an $84.6 million increase in accounts receivable and a $21.0million increase in inventories. The increase in accounts receivable isprimarily attributable to the increase in sales during the second quarter of2007 over the fourth quarter of 2006. Higher anticipated sales volumes is the primary driver of the increasein inventory.

Excluding the impact ofthe acquisition of Andrew, which is expected to be completed before the end of2007, we expect to continue to generate net cash from operations during 2007.

**InvestingActivities**

We made net purchases of $90.1 million of short-term investmentsecurities during the six months ended June 30, 2007 compared to $8.7million during the same period in 2006.

On May 1, 2007, we acquired substantially all of theassets and assumed certain current liabilities of Signal Vision, Inc., forapproximately $19.0 million, of which $16.4 million was paid in cash.  During the six months ended June 30, 2006, weacquired certain assets supporting the MC2 75-ohm trunk and distribution cable televisionproducts business and certain other assets from TrilogyCommunications, Inc. for a cash payment of $13.8 million.

Investments in property, plant and equipment duringthe six months ended June 30, 2007 decreased by $3.8 million year-over-year to$11.2 million. The primary capital expenditures made during the first half of2007 related to continuing investments to support cost reduction initiativesand improve operating efficiency.

Excluding the impact of the anticipated completion ofthe acquisition of Andrew, we currently expect total capital expenditures to be$30 million to $40 million in 2007 compared to $31.6 million in 2006. Theexpected capital spending during 2007 is primarily for cost reduction effortsand additional production capability.

During the six months ended June 30, 2006, we received$29.8 million as a repayment of principal under our note receivable from OFSBrightWave.  This note was originallyfunded in 2001 in conjunction with our investment in OFS BrightWave.

26

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**FinancingActivities**

***The exercise of 1.86 million stock options during the sixmonths ended June 30, 2007 generated $32.8 million of proceeds and $15.3million from the tax benefits generated by such stock option exercises.***

During the sixmonths ended June 30, 2007, we reduced the principal balance of ouroutstanding long-term debt by $17.3 million through payments in accordance withthe scheduled maturities outlined in our respective debt agreements and theredemption of the $10.8 million of IDA Notes in May 2007.

On June 7, 2006, wefiled a shelf registration statement for the issuance of common or preferredstock, senior or subordinated debt, convertible debt securities, warrantsexercisable for any of the foregoing, or any combination thereof. Thisregistration statement was automatically effective upon filing, pursuant to SECrules, and no securities have been issued under this registration statement.

In connection with theproposed acquisition of Andrew, we intend to file a Registration Statement on FormS-4 with the SEC to effect the registration of our shares of common stock thatmay be issued as part of the merger consideration.

**Future Cash Needs**

Excluding the impact ofthe anticipated completion of the acquisition of Andrew, we believe that ourexisting cash, cash equivalents and short-term investments and cash flows fromoperations, combined with availability under our existing senior securedrevolving credit facility, will be sufficient to meet our presently anticipatedfuture cash needs.

There were no material changes in our contractualobligations during the quarter ended June 30, 2007, other than the redemptionof the $10.8 million of IDA notes on May 1, 2007 and our intention torepay the balance of our senior secured term loan within the next twelvemonths.  The IDA Notes were presented asa payment due after 5 years and $10.3 million of the senior secured termloan was presented as a payment due in one to three years in the ContractualObligations section of our 2006 Annual Report on Form 10-K. As of June 30,2007, our liability for unrecognized tax benefits under FIN 48 was$16.9 million of which $13.9 million would be excluded from apresentation of contractual obligations due to the uncertainty in predictingthe timing of the related tax payments. The remainder of the liability would bepresented as a payment due in less than one year.

In conjunction with the anticipated Andrewacquisition, we have received debt commitments for an aggregate of $2.55billion in senior secured credit facilities consisting of a $2.3 billionseven-year senior secured term loan facility and a $250 million six-year seniorsecured revolving credit facility. The debt commitments, which are subject toclosing the acquisition and the satisfaction of other customary conditions, providefor a variable interest rate based on LIBOR plus at least 175 basis points butnot greater than 275 basis points, depending on our debt ratings as promulgatedby Standard and Poor’s and Moody’s, among other items.  We expect the senior secured credit facilitiesto be secured by substantially all of our domestic assets. The debt commitmentswill expire on December 31, 2007 but will automatically be extended to March31, 2008 if the merger agreement is extended to such date in accordance withits terms.

The level of borrowing under the senior secured creditfacilities that will be required to complete the Andrew acquisition, includingfees and expenses incurred in conjunction with the acquisition and thefinancing arrangements, and refinancing certain existing CommScope and Andrewindebtedness will depend upon, among other factors, the amount of CommScopestock used to satisfy the merger consideration, the number of Andrew shares,stock options and restricted shares outstanding as of the merger date and thelevel of available cash, cash equivalents and short-term investments atCommScope and Andrew as of the merger date.

### **FORWARD-LOOKINGSTATEMENTS**

Certain statementsin this 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

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of 1995 and other relatedlaws and include but are not limited to those statements relating to ourbusiness position, plans, outlook, revenues, earnings, margins, synergies andother financial items, restructuring plans, sales and earnings expectations,expected demand, cost and availability of key raw materials, internal andexternal production capacity and expansion, competitive pricing and relativemarket position. While we believe such statements are reasonable, the actualresults and effects could differ materially from those currently anticipated.These forward-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.

Forward-looking statements are not a guarantee ofperformance and are subject to a number of risks and uncertainties, many ofwhich are difficult to predict and are beyond the control of CommScope orAndrew.  These risks and uncertaintiescould cause actual results to differ materially from those expressed in orimplied by the forward-looking statements, and therefore should be carefullyconsidered.  Relevant risks and uncertaintiesrelating to the proposed transaction include, but are not limited to: the riskthat required regulatory review and approval may not be obtained in a timelymanner, if at all; Andrew’s shareholders may not approve the proposedtransaction; the anticipated benefits and synergies of the proposed transactionmay not be realized; the integration of Andrew’s operations with CommScopecould be materially delayed or may be more costly or difficult than expected;the proposed transaction may not be consummated; legal proceedings may becommenced by or against CommScope or Andrew. Relevant risks and uncertainties generally applicable to CommScope andAndrew include, but are not limited to: changes in cost and availability of key raw materials and the ability torecover these costs from customers through pricing actions; concentration ofsales among a limited number of key customers or distributors; customer demandfor our products and the ability to maintain existing business alliances withkey customers or distributors; the risk that internal production capacity andthat of contract manufacturers may be insufficient to meet customer demand forproducts; the risk that customers might cancel orders placed or that orderscurrently placed may reduce orders in the future; continuing consolidation amongcustomers; competitive pricing and acceptance of products; industry competitionand the ability to retain customers through product innovation; possibleproduction disruption due to supplier or contract manufacturer bankruptcy,reorganization or restructuring; successful ongoing operation of our verticalintegration activities; ability to achieve expected sales, growth and earningsgoals; costs of protecting or defending our intellectual property; ability toobtain capital on commercially reasonable terms; regulatory changes affectingus or the industries we serve. For a more complete description offactors that could cause such a difference, please see Item 1A to our AnnualReport on Form 10-K for the year ended December 31, 2006, Item 1A inthis Form 10-Q and Andrew’s filings with the Securities and Exchange Commission(SEC), which are available at Andrew’s website or at www.sec.gov. Theinformation contained in this Form 10-Q represents our best judgment atthe date of this report based on information currently available. In providingforward-looking statements, neither CommScope nor Andrew intends, and neitherundertakes any duty or obligation, to update these statements as a result ofnew information, future events or otherwise.

**ITEM3.**                    QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As disclosed inour Annual Report on Form 10-K for the year ended December 31, 2006,our major market risk exposure relates to adverse fluctuations in commodityprices, interest rates and foreign currency exchange rates. We have establisheda risk management strategy that includes the reasonable use of derivative andnonderivative financial instruments primarily to manage our exposure to thesemarket risks. Other than additional market risks that may result from our acquisitionof Andrew, which is expected to close before the end of 2007, we believe ourexposure associated with these market risks has not materially changed sinceDecember 31, 2006. We have not acquired any new derivative financialinstruments since December 31, 2006 or terminated any derivative financialinstruments that existed at that date.

**ITEM4.**                    CONTROLSAND PROCEDURES

Our disclosurecontrols and 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 therules and forms of the Securities and Exchange Commission. Our ChiefExecutive Officer and our Chief Financial Officer have reviewed theeffectiveness of our disclosure controls and procedures as of the end of theperiod covered by this report and have concluded that the disclosure controlsand procedures are effective.

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Other than theupgrade in our consolidation software discussed below, there were no changes inour internal control over financial reporting during the three months endedJune 30, 2007 that have materially affected, or are reasonably likely tomaterially affect, our internal control over financial reporting.

During the threemonths ended June 30, 2007, we completed an upgrade of the software we use toconsolidate our financial results.  Thisupgrade was not in response to any identified weakness or deficiency in ourinternal control over financial reporting.

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**PART II—OTHER  INFORMATION**

**ITEM 1A.**           RISK FACTORS

The discussion andanalysis of our financial condition and results of operations for the three andsix months ended June 30, 2007 should read in conjunction with the risk factorscontained in Item 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2006 and the following update to our risk factors relating to theproposed acquisition of Andrew.  Theserisks and uncertainties have the potential to have a material adverse impact onour business, financial condition and results of operations.

***CommScope and Andrew may berequired to comply with material restrictions or conditions in order to obtainthe regulatory approvals to complete the merger and any delays in obtainingregulatory approvals may delay and possibly prevent the merger.***

The merger is subject toreview by the U.S. Department of Justice and the U.S. Federal Trade Commissionunder the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSRAct), and by certain antitrust authorities outside of the United States. Underthe HSR Act, CommScope and Andrew are required to make pre-merger notificationfilings and await the expiration or early termination of the applicablestatutory waiting period prior to completing the merger.  CommScope and Andrew each filed aNotification and Report Form pursuant to the HSR Act with the U.S. Departmentof Justice and U.S. Federal Trade Commission on July 16, 2007.

The governmental entitiesfrom which approvals are required may request additional information from theparties in order to complete their review of the transaction and may conditiontheir approval of the merger on the satisfaction of certain regulatoryconditions that may have the effect of imposing restrictions or additional costson CommScope or Andrew.  These conditionscould include a complete or partial license, divestiture, spin-off or the saleof certain assets or businesses of either CommScope or Andrew, which may be onterms that are not as favorable to CommScope or Andrew as may have beenattainable absent the merger, or other restrictions on the operation of thecombined business.  While we expect toobtain the required regulatory approvals, we cannot be certain that all of therequired antitrust approvals will be obtained, nor can we be certain that theapprovals will be obtained within the time limits contemplated by the mergeragreement.  A delay in obtaining therequired approvals may delay and possibly prevent the completion of the merger.

***We are subject to certain restrictionson the conduct of our business under the terms of the merger agreement.***

Under the terms of themerger agreement, we have agreed to certain restrictions on the operations ofour business that are customary for transactions similar to the merger.  We have agreed to limit the conduct of ourbusiness to those actions undertaken in the ordinary course of business.  We have agreed that without Andrew’s consentwe will not take certain actions that include amending our organizationdocuments in a manner materially adverse to stockholders and acquiringinterests in an entity, which acquisition would be expected to impede or delaythe governmental approvals required for the merger.  Because of these restrictions, we may havebeen, and prior to the consummation of the merger, may be, prevented fromundertaking certain actions with respect to the conduct of our business that wemight otherwise have taken if not for the merger agreement.

***The anticipated benefits of theacquisition may not be realized.***

We entered into the mergeragreement with Andrew with the expectation that the merger will result invarious benefits including, among other things, benefits relating to enhancedrevenues, a broader array of infrastructure solutions, the expansion of ourglobal distribution and manufacturing capabilities, operational improvementsand a diversification of our customer base. The merger will present challenges to management, including theintegration of operations, properties and personnel of Andrew and CommScope.Achieving the anticipated benefits of the merger is subject to a number ofuncertainties, including, but not limited to, whether we can integrate ourbusiness and Andrew’s business in an efficient and effective manner, whetherthere will be increased spending by wireless carriers, our ability to managepotential volatility in commodities prices, the reaction of existing orpotential competitors to the transaction, and general competitive factors inthe marketplace.  Failure to achievethese anticipated benefits could result in increased costs, decreases in theamount of expected revenues and

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diversion of management’stime and energy and could materially impact our business, financial conditionand operating results.

***We may fail to realize theanticipated synergies and cost savings expected from the merger.***

Our success after themerger will depend, in part, on our ability to realize the anticipated growthopportunities and cost savings from combining our business with Andrew.  We expect to generate annual pretax costsavings (excluding transition cash costs expected to total approximately $70million to $80 million in the first two years after completion) ofapproximately $90 million to $100 million in the second full year aftercompletion of the transaction. We expect to achieve approximately $50 millionto $60 million in the first full year after completion of the merger.  We expect the cost savings to come from acombination of procurement savings, rationalization of duplicate locations,streamlining overhead and integration of infrastructure, and building upon bestpractices in technology and manufacturing. We cannot provide any assurance that these cost savings can be achievedin the amounts or during the periods predicted. To realize these anticipated benefits, we must successfully combine ourbusiness with Andrew in a manner that permits these synergies to berealized.  In addition, our success afterthe merger will depend, in part, on these synergies being achieved withoutadversely affecting revenues.  If we arenot able to successfully achieve these objectives, such anticipated benefitsmay not be realized fully, or at all, or may take longer to realize thanexpected.

***We may have difficultyintegrating our business with Andrew’s business and may incur substantial costsin connection with the integration.***

Achieving the anticipatedbenefits of the merger will depend on the successful integration of ourproducts, services, operations, personnel, technology and facilities with thoseof Andrew in a timely and efficient manner.

Although we do notanticipate material difficulties in connection with such integration, thepossibility exists that such difficulties could be experienced in connectionwith the merger, especially given the relatively large size of the merger.  The time and expense associated withconverting the businesses of CommScope and Andrew to a common platform mayexceed our expectations and limit or delay the intended benefits of thetransaction.  Similarly, the process ofcombining sales and marketing forces, consolidating administrative functions,and coordinating product and service offerings can take longer, cost more, andprovide fewer benefits than initially projected.  To the extent any of these events occurs, thebenefits of the transaction may be reduced.

Integrating our businesswith Andrew will be a complex, time-consuming and expensive process.  Before the merger, CommScope and Andrewoperated independently, each with its own business, products, customers,employees, culture and systems.  We mayface substantial difficulties, costs and delays in integrating the twobusinesses.  These difficulties, costsand delays may include:

·                  Potential difficulty incombining the separate product technologies of CommScope and Andrew;

·                  Perceived adverse changes inproduct offerings available to customers or in customer service standards,whether or not these changes do, in fact, occur;

·                  Costs and delays inimplementing common systems and procedures;

·                  Difficulties in combiningresearch and development teams and processes;

·                  Potential charges toearnings resulting from the application of purchase accounting to thetransaction;

·                  Difficulty comparingfinancial reports due to differing financial and/or internal reporting systems;

·                  Diversion of management resourcesfrom the business;

·                  The inability to retainexisting customers of each company;

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·                  Reduction or loss ofcustomer orders due to the potential for market confusion, hesitation anddelay;

·                  Challenges in retaining andintegrating management and other key employees of CommScope and Andrew;

·                  Difficulties in coordinatinginfrastructure operations in an effective and efficient manner; and

·                  The inability to achieve thesynergies anticipated to be realized from the merger on the timeline presentlyanticipated, or at all.

After the merger, we mayseek to combine certain operations and functions using common information andcommunication systems, operating procedures, financial controls and humanresource practices, including training, professional development and benefitprograms.  We may be unsuccessful inimplementing the integration of these systems and processes in a timely andefficient manner.  Any one or all ofthese factors may cause increased operating costs, worse than anticipatedfinancial performance and/or the loss of customers and employees.

*We may have difficulty integrating our system of internalcontrol over financial reporting with that of Andrew.*

The failure to integrate oursystem of internal control over financial reporting with that of Andrewfollowing the merger could affect adversely our ability to exercise effectiveinternal control over financial reporting. A failure to exercise effective internal control over financialreporting could result in a material misstatement in our annual or interimconsolidated financial statements.

*CommScope and Andrew both depend on key personnel, and theloss of any of these key personnel because of uncertainty regarding the merger,either before or after the merger, could hurt our business after the merger.*

CommScope and Andrew dependon the services of their key personnel. Current and prospective employees of CommScope and Andrew may, eitherbefore or after the merger, experience uncertainty about their future roles withCommScope after the merger, which may affect the performance of such personneladversely and the ability of each company to retain and attract keypersonnel.  The loss of the services ofone or more of these key employees or our inability to attract, train, andretain qualified employees could result in the loss of customers or otherwiseinhibit our ability to integrate and grow the business effectively after themerger.

*The merger may result in a loss of customers.*

Somecustomers may seek alternative sources of product and/or service after theannouncement of the merger due to, among other reasons, a desire not to dobusiness with CommScope after the merger or perceived concerns that CommScopemay not continue to support and develop certain product lines.  Difficulties in combining operations couldalso result in the loss of, or potential disputes or litigation with,customers.  Any steps by management tocounter such potential increased customer attrition may not be effective.  Failure by management to retain customerscould result in worse than anticipated financial performance.

*As aresult of the merger, including the financing necessary to consummate themerger, we will have substantial indebtedness.*

As a result of the merger,we expect to incur substantial indebtedness, including the financing necessaryto pay the cash portion of the merger consideration and transaction-relatedcosts, in addition to debt assumed from Andrew. Our substantial indebtedness could have the following consequences:

·                  Our ability to obtainadditional financing for working capital, capital expenditures, acquisitions,general corporate purposes or other purposes may be impaired in the future;

·                  A substantial portion of ourcash flow must be dedicated to the payment of principal and interest on ourindebtedness;

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·                  We will be substantiallymore leveraged than certain of our competitors, which might place us at acompetitive disadvantage;

·                  We may be hindered in ourability to adjust rapidly to changing market conditions; and

·                  Our high degree of leveragecould make us more vulnerable in the event of a downturn in general economicconditions or our business.

*If the conditions to the merger are not satisfied or waived,the merger may not occur.*

Specified conditions setforth in the merger agreement must be satisfied or waived to complete themerger.  If the conditions are notsatisfied or waived, to the extent waiver is permitted by law or the rules orregulations of NASDAQ, the merger will not occur or will be delayed, and eachof CommScope and Andrew may lose some or all of the intended benefits of themerger.

The following conditions, inaddition to other customary closing conditions, must be satisfied or waived, ifpermissible, before CommScope and Andrew are obligated to complete the merger:

·                  The merger agreement must beadopted by the holders of at least a majority of the issued and outstandingshares of Andrew common stock as of the record date for the vote;

·                  The waiting period (and anyextension thereof) applicable to the merger pursuant to the HSR Act, or anyother applicable competition, merger, antitrust or similar law shall haveexpired or been terminated;

·                  Specified governmentalconsents or certain other approvals shall have been obtained and be in fullforce and effect;

·                  There must not be anyjudgment, injunction, decree or order issued by any court or other governmentalentity or any other statute, law, rule, legal restraint or prohibition whichprohibits, materially restricts, makes illegal or enjoins consummation of themerger; and

**·**                   There must not be any action or proceeding pendingby a governmental entity challenging or seeking to prevent the consummation ofthe merger.

**ITEM4.**                    SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held itsAnnual Meeting of Stockholders (the Meeting) on May 4, 2007. Proxies forthe Meeting were solicited pursuant to Regulation 14A under the SecuritiesExchange Act of 1934, as amended. A total of 60,706,575 shares of Common Stockwith one vote each were entitled to vote at the Meeting and holders of 54,912,880shares voted in person or by proxy, constituting a quorum.

At the Meeting,three of the Company’s directors were elected for three-year terms ending atthe 2010 Annual Meeting of Stockholders by the vote set forth below:
| **Name of Director** | ** ** | **Votes For** | ** ** | **Votes Withheld** | ** ** |
|--------------------------------|------------|--------------------|------------|-------------------------|------------|
| George L. Boyd                 |       | 52,246,005         |       | 2,666,875               |       |
| George N.  Hutton, Jr.         |       | 54,172,095         |       | 740,785                 |       |
| Katsuhiko (Kat) Okubo          |       | 49,421,913         |       | 5,490,967               |       |

The Company’s other fourdirectors, whose terms of office continue after the Meeting with terms expiringat the annual meetings in parentheses after their names, are Frank M. Drendel(2009), Richard C. Smith (2009), June E. Travis (2008) and James N. Whitson(2008).

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A proposal toratify the appointment of Deloitte & Touche LLP as independentauditors for the Company for the 2007 fiscal year by the Audit Committee of theBoard of Directors of the Company was approved by 53,715,473 votes cast infavor, 1,162,184 votes cast against and 35,223 votes abstaining.

**ITEM6.**                    EXHIBITS

| 2.1  |   | Agreement and Plan of Merger, by and among  CommScope, Inc., DJRoss, Inc. and Andrew Corporation dated as of June 26,  2007 (Incorporated herein by reference from CommScope, Inc.’s Current Report  on Form 8-K filed on June 27, 2007 (File No. 1-12929)). |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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 2, 2007 |     | /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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