** **

**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

** **

----

 

**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  September 30, 2007** |
| ** **                                             | ** ** | ** **                                                                                              |
| **OR**                                                 |
| ** **                                             | ** ** | ** **                                                                                              |
| **o**                                                  | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For the transition periodfrom                     to**

** **

**Commission file number 001-12929**

** **

**CommScope, Inc.**

(Exact name ofregistrant as specified in its charter)

 

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

 

**1100 CommScope Place, SE**

**P.O. Box 339**

**Hickory, North Carolina**

(Address ofprincipal executive offices)

 

**28602**

(Zip Code)

 

**(828) 324-2200**

(Registrant’stelephone number, including area code)

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.

Yes x    No o

 

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer or a non-accelerated filer (asdefined in Exchange Act Rule 12b-2). Large accelerated filer x   Acceleratedfiler o   Non-accelerated filer 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 October 31, 2007 there were 61,697,941shares of Common Stock outstanding.

 

 

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**CommScope, Inc.**

**Form 10-Q**

**September 30, 2007**

**Table 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 6. Exhibits                                                                                     |       |
|                                                 |                                                                                                 |       |
|                                                 | Signature                                                                                            |       |
|                                                      |                                                                                                      |            |  |

 

2

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**CommScope, Inc.**

**Condensed ConsolidatedStatements of Operations**

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

 
| ** **                                                                                | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|-------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                | ** ** | **September 30,**      | ** ** | **September 30,**     | ** ** |
| ** **                                                                                | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Net sales                                                                                 |       | $                      | 513,608    |                  | $          | 466,100 |   | $ | 1,468,204 |   | $ | 1,230,235 |   |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Operating costs and expenses:                                                             |       |                   |       |                  |       |   |   |   |   |
| Cost of sales                                                                             |       | 354,324                |       | 326,287               |       | 1,014,382 |   | 897,135 |   |
| Selling, general and administrative                                                       |       | 69,416                 |       | 62,799                |       | 196,659 |   | 175,229 |   |
| Research and development                                                                  |       | 8,288                  |       | 9,151                 |       | 24,610 |   | 24,821 |   |
| Restructuring costs                                                                       |       | 215                    |       | 3,011                 |       | 1,113 |   | 10,764 |   |
| Total operating costs and expenses                                                        |       | 432,243                |       | 401,248               |       | 1,236,764 |   | 1,107,949 |   |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Operating income                                                                          |       | 81,365                 |       | 64,852                |       | 231,440 |   | 122,286 |   |
| Other income (expense), net                                                               |       | 2,824                  |       | 207                   |       | 2,542 |   | 872 |   |
| Interest expense                                                                          |       | (1,665                 | )          | (2,110                | )          | (5,339 | ) | (6,082 | ) |
| Interest income                                                                           |       | 5,962                  |       | 3,145                 |       | 16,248 |   | 7,541 |   |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Income before income taxes and gain on OFS  BrightWave note receivable                    |       | 88,486                 |       | 66,094                |       | 244,891 |   | 124,617 |   |
| Income tax expense before income tax  provision on gain on OFS BrightWave note receivable |       | (28,213                | )          | (22,504               | )          | (77,634 | ) | (40,279 | ) |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Income before gain on OFS BrightWave note  receivable                                     |       | 60,273                 |       | 43,590                |       | 167,257 |   | 84,338 |   |
| Gain on OFS BrightWave note receivable, net  of tax of $11,175                            |       | —                 |       | —                |       | — |   | 18,625 |   |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Net income                                                                                |       | $                      | 60,273     |                  | $          | 43,590 |   | $ | 167,257 |   | $ | 102,963 |   |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Net income per share:                                                                     |       |                   |       |                  |       |   |   |   |   |
| Basic                                                                                     |       | $                      | 0.98       |                  | $          | 0.74 |   | $ | 2.74 |   | $ | 1.77 |   |
| Assuming dilution                                                                         |       | $                      | 0.81       |                  | $          | 0.61 |   | $ | 2.27 |   | $ | 1.46 |   |
|                                                                                      |       |                   |       |                  |       |   |   |   |   |
| Weighted average shares outstanding:                                                      |       |                   |       |                  |       |   |   |   |   |
| Basic                                                                                     |       | 61,661                 |       | 59,166                |       | 61,105 |   | 58,146 |   |
| Assuming dilution                                                                         |       | 74,978                 |       | 72,662                |       | 74,500 |   | 71,917 |   |
|                                                                                           |            |                        |            |                       |            |  |  |  |  |  |  |  |  |  |  |  |

 

Seenotes to condensed consolidated financial statements.

 

3

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**CommScope, Inc.**

**CondensedConsolidated Balance Sheets**

**(Unaudited—In thousands, except shareamounts)**

 
| ** **                                                                                                      | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|------------------|------------|
| ** **                                                                                                      | ** ** | **2007**          | ** ** | **2006**         | ** ** |
| **Assets**                                                                                                      | ** ** | ** **        | ** ** | ** **       | ** ** |
|                                                                                                            |       |              |       |             |       |
| Cash and cash equivalents                                                                                       |       | $                 | 333,316    |             | $          | 276,042 |   |
| Short-term investments                                                                                          |       | 238,575           |       | 151,868          |       |
| Total cash, cash equivalents and short-term  investments                                                        |       | 571,891           |       | 427,910          |       |
|                                                                                                            |       |              |       |             |       |
| Accounts receivable, less allowance for  doubtful accounts of $14,558 and $13,461, respectively                 |       | 257,564           |       | 186,824          |       |
| Inventories, net                                                                                                |       | 190,288           |       | 153,596          |       |
| Prepaid expenses and other current assets                                                                       |       | 18,982            |       | 14,914           |       |
| Deferred income taxes                                                                                           |       | 27,361            |       | 24,556           |       |
| Total current assets                                                                                            |       | 1,066,086         |       | 807,800          |       |
|                                                                                                            |       |              |       |             |       |
| Property, plant and equipment, net                                                                              |       | 222,707           |       | 242,012          |       |
| Goodwill                                                                                                        |       | 154,454           |       | 151,378          |       |
| Other intangibles, net                                                                                          |       | 68,184            |       | 63,967           |       |
| Deferred income taxes                                                                                           |       | 18,470            |       | 15,493           |       |
| Other assets                                                                                                    |       | 20,316            |       | 21,823           |       |
|                                                                                                            |       |              |       |             |       |
| Total Assets                                                                                                    |       | $                 | 1,550,217  |             | $          | 1,302,473 |   |
|                                                                                                            |       |              |       |             |       |
| **Liabilities and Stockholders’ Equity**                                                                   | ** ** | ** **        | ** ** | ** **       | ** ** |
|                                                                                                            |       |              |       |             |       |
| Accounts payable                                                                                                |       | $                 | 84,391     |             | $          | 74,927 |   |
| Other accrued liabilities                                                                                       |       | 114,754           |       | 95,316           |       |
| Current portion of long-term debt                                                                               |       | 11,550            |       | 13,000           |       |
| Total current liabilities                                                                                       |       | 210,695           |       | 183,243          |       |
|                                                                                                            |       |              |       |             |       |
| Long-term debt                                                                                                  |       | 250,000           |       | 271,100          |       |
| Pension and postretirement benefit  liabilities                                                                 |       | 89,272            |       | 89,995           |       |
| Other noncurrent liabilities                                                                                    |       | 33,154            |       | 19,031           |       |
| Total Liabilities                                                                                               |       | 583,121           |       | 563,369          |       |
|                                                                                                            |       |              |       |             |       |
| Commitments and contingencies                                                                                   |       |              |       |             |       |
|                                                                                                            |       |              |       |             |       |
| Stockholders’ Equity:                                                                                      |       |              |       |             |       |
| Preferred stock, $.01 par value; Authorized  shares: 20,000,000;                                                |       |              |       |             |       |
| Issued and outstanding shares: None at  September 30, 2007 and December 31, 2006                                |       | —            |       | —           |       |
| Common stock, $.01 par value; Authorized  shares: 300,000,000;                                                  |       |              |       |             |       |
| Issued shares, including treasury stock:  71,882,441 at September 30, 2007 and 69,934,533 at December 31, 2006; |       |              |       |             |       |
| Issued and outstanding shares: 61,682,441  at September 30, 2007 and 59,734,533 at December 31, 2006            |       | 719               |       | 699              |       |
| Additional paid-in capital                                                                                      |       | 591,043           |       | 532,344          |       |
| Retained earnings                                                                                               |       | 508,023           |       | 346,821          |       |
| Accumulated other comprehensive income                                                                          |       | 12,846            |       | 4,775            |       |
| Treasury stock, at cost: 10,200,000 shares  at September 30, 2007 and December 31, 2006                         |       | (145,535          | )          | (145,535         | )          |
| Total Stockholders’ Equity                                                                                 |       | 967,096           |       | 739,104          |       |
|                                                                                                            |       |              |       |             |       |
| Total Liabilities and Stockholders’ Equity                                                                 |       | $                 | 1,550,217  |             | $          | 1,302,473 |   |

 

See notes to condensed consolidated financialstatements.

 

4

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**CommScope, Inc.**

**CondensedConsolidated Statements of Cash Flows**

**(Unaudited—In thousands)**

 
| ** **                                                                         | ** ** | **Nine Months Ended** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                         | ** ** | **September 30,**     | ** ** |
| ** **                                                                         | ** ** | **2007**              | ** ** | **2006** | ** ** |
|                                                                               |       |                  |       |   |   |
| **Operating Activities:**                                                          | ** ** | ** **            | ** ** | ** ** | ** ** |
| Net income                                                                         |       | $                     | 167,257    |   | $ | 102,963 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities: |       |                  |       |   |   |
| Depreciation and amortization                                                      |       | 37,285                |       | 41,858 |   |
| Equity-based compensation                                                          |       | 7,747                 |       | 3,384 |   |
| Deferred income taxes                                                              |       | (10,096               | )          | 9,967 |   |
| Gain on OFS BrightWave note receivable                                             |       | —                |       | (29,800 | ) |
| Changes in assets and liabilities:                                                 |       |                  |       |   |   |
| Accounts receivable                                                                |       | (65,526               | )          | (88,289 | ) |
| Inventories                                                                        |       | (30,634               | )          | (30,061 | ) |
| Prepaid expenses and other current assets                                          |       | (3,679                | )          | (1,208 | ) |
| Accounts payable and other accrued  liabilities                                    |       | 30,210                |       | 32,260 |   |
| Other noncurrent liabilities                                                       |       | 4,922                 |       | (6,031 | ) |
| Other                                                                              |       | 1,027                 |       | (3,575 | ) |
| Net cash provided by operating activities                                          |       | 138,513               |       | 31,468 |   |
|                                                                               |       |                  |       |   |   |
| **Investing Activities:**                                                          | ** ** | ** **            | ** ** | ** ** | ** ** |
| Additions to property, plant and equipment                                         |       | (18,284               | )          | (22,625 | ) |
| Proceeds from OFS BrightWave note  receivable                                      |       | —                |       | 29,800 |   |
| Net purchases of short-term investments                                            |       | (86,707               | )          | (10,022 | ) |
| Proceeds from disposal of fixed assets                                             |       | 10,957                |       | 4,599 |   |
| Cash paid for acquisitions                                                         |       | (16,976               | )          | (13,810 | ) |
| Net cash used in investing activities                                              |       | (111,010              | )          | (12,058 | ) |
|                                                                               |       |                  |       |   |   |
| **Financing Activities:**                                                          | ** ** | ** **            | ** ** | ** ** | ** ** |
| Principal payments on long-term debt                                               |       | (22,550               | )          | (9,950 | ) |
| Proceeds from the issuance of shares under  equity-based compensation plans        |       | 34,667                |       | 48,969 |   |
| Tax benefit from the issuance of shares  under equity-based compensation plans     |       | 16,305                |       | 15,857 |   |
| Net cash provided by financing activities                                          |       | 28,422                |       | 54,876 |   |
|                                                                               |       |                  |       |   |   |
| Effect of exchange rate changes on cash                                            |       | 1,349                 |       | 775 |   |
|                                                                               |       |                  |       |   |   |
| Change in cash and cash equivalents                                                |       | 57,274                |       | 75,061 |   |
| Cash and cash equivalents, beginning of  period                                    |       | 276,042               |       | 146,549 |   |
| Cash and cash equivalents, end of period                                           |       | $                     | 333,316    |   | $ | 221,610 |   |

 

See notes to condensed consolidated financialstatements.

 

5

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**CommScope, Inc.**

**CondensedConsolidated Statements of Stockholders’ Equity**

**and Comprehensive Income**

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

 
| ** **                                                            | ** ** | **Nine Months Ended** | ** ** |
|-----------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                            | ** ** | **September 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             |       | 1,947,908             |       | 3,471,717 |   |
| Balance at end of period                                              |       | 61,682,441            |       | 59,345,064 |   |
|                                                                  |       |                  |       |   |   |
| Common stock:                                                         |       |                  |       |   |   |
| Balance at beginning of period                                        |       | $                     | 699        |   | $ | 661 |   |
| Issuance of shares under equity-based  compensation plans             |       | 20                    |       | 35 |   |
| Balance at end of period                                              |       | $                     | 719        |   | $ | 696 |   |
|                                                                  |       |                  |       |   |   |
| Additional paid-in capital:                                           |       |                  |       |   |   |
| Balance at beginning of period                                        |       | $                     | 532,344    |   | $ | 462,842 |   |
| Issuance of shares under equity-based  compensation plans             |       | 34,647                |       | 48,934 |   |
| Tax benefit from shares issued under  equity-based compensation plans |       | 16,305                |       | 15,857 |   |
| Expiration of registration rights                                     |       | —                |       | 500 |   |
| Equity-based compensation expense  recognized                         |       | 7,747                 |       | 3,384 |   |
| Reclassification due to adoption of SFAS  No. 123(R)                  |       | —                |       | (8,980 | ) |
| Balance at end of period                                              |       | $                     | 591,043    |   | $ | 522,537 |   |
|                                                                  |       |                  |       |   |   |
| 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                                                            |       | 167,257               |       | 102,963 |   |
| Impact of adoption of FIN 48                                          |       | (6,055                | )          | — |   |
| Balance at end of period                                              |       | $                     | 508,023    |   | $ | 319,651 |   |
|                                                                  |       |                  |       |   |   |
| Accumulated other comprehensive income  (loss):                       |       |                  |       |   |   |
| Balance at beginning of period                                        |       | $                     | 4,775      |   | $ | (3,651 | ) |
| Other comprehensive income, net of tax                                |       | 8,071                 |       | 3,603 |   |
| Balance at end of period                                              |       | $                     | 12,846     |   | $ | (48 | ) |
|                                                                  |       |                  |       |   |   |
| Treasury stock, at cost:                                              |       |                  |       |   |   |
| Balance at beginning and end of period                                |       | $                     | (145,535   | ) | $ | (145,535 | ) |
|                                                                  |       |                  |       |   |   |
| Total stockholders’ equity                                       |       | $                     | 967,096    |   | $ | 697,301 |   |

 
| ** **                                                                                       | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                       | ** ** | **September 30,**      | ** ** | **September 30,**     | ** ** |
| ** **                                                                                       | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
|                                                                                             |       |                   |       |                  |       |   |   |   |   |
| Comprehensive income:                                                                            |       |                   |       |                  |       |   |   |   |   |
| Net income                                                                                       |       | $                      | 60,273     |                  | $          | 43,590 |   | $ | 167,257 |   | $ | 102,963 |   |
| Other comprehensive income (loss), net of  tax:                                                  |       |                   |       |                  |       |   |   |   |   |
| Foreign currency translation gain (loss) -  foreign subsidiaries                                 |       | 1,394                  |       | (18                   | )          | 2,238 |   | (397 | ) |
| Foreign currency transaction gain (loss) on  long-term intercompany loans - foreign subsidiaries |       | 2,015                  |       | (184                  | )          | 5,229 |   | 4,586 |   |
| Gain (loss) on derivative financial  instrument designated as a net investment hedge             |       | (429                   | )          | 166                   |       | (653 | ) | (586 | ) |
| Amortization of unrecognized pension and  other postretirement benefit amounts                   |       | (208                   | )          | —                |       | (434 | ) | — |   |
| Revaluation of unrecognized other  postretirement benefit obligation                             |       | 1,691                  |       | —                |       | 1,691 |   | — |   |
| Total other comprehensive income (loss),  net of tax                                             |       | 4,463                  |       | (36                   | )          | 8,071 |   | 3,603 |   |
|                                                                                             |       |                   |       |                  |       |   |   |   |   |
| Total comprehensive income                                                                       |       | $                      | 64,736     |                  | $          | 43,554 |   | $ | 175,328 |   | $ | 106,566 |   |

 

See notes to condensed consolidated financialstatements.

 

6

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**CommScope, Inc.**

**Notes to Condensed ConsolidatedFinancial Statements**

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

 

**1.             BACKGROUND AND BASIS OFPRESENTATION**

 

**Background**

** **

CommScope, Inc., through its wholly ownedsubsidiaries (CommScope or the Company), is a world leader in infrastructuresolutions for communications networks. The Company’s highly engineered cableand connectivity 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 the distributionaccess or final link to the customer. The Company believes it is a globalleader in structured cabling solutions for business enterprise applications andbroadband coaxial cables for the cable television industry. The Company alsodesigns, manufactures and markets a broad line of high-performance electronic,coaxial and fiber optic cable and related products for data networking,Internet access, wireless communication, telephony and other broadbandapplications. In addition, the Company is an industry leader in the design andmanufacture of environmentally secure enclosures to integrate complex equipmentfor digital subscriber 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 isapproximately $2.6 billion, based on Andrew’s estimated 176 million sharesoutstanding on a fully diluted basis, which includes shares issuable underAndrew’s existing convertible notes. Andrew designs, manufactures and deliversequipment and solutions for the global communications infrastructure market. Thetransaction is expected to close, subject to customary closing conditions,before the end of 2007.

 

**Basis of Presentation**

** **

The condensedconsolidated balance sheet as of September 30, 2007, the condensed consolidatedstatements of operations and comprehensive income for the three and nine monthsended September 30, 2007 and 2006, and the condensed consolidated statements ofcash flows and stockholders’ equity for the nine months ended September 30,2007 and 2006 are unaudited and reflect all adjustments of a normal recurringnature that are, in the opinion of management, necessary for a fairpresentation of the interim period financial statements. The results ofoperations for the interim period are not necessarily indicative of the resultsof operations to be expected for the full year.

 

The unaudited interim condensed consolidatedfinancial statements of CommScope have been prepared pursuant to therules and regulations of the Securities and Exchange Commission (SEC).Accordingly, certain information and footnote disclosures normallyincluded in financial 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 nine months ended September 30, 2007other than the adoption of FASB Interpretation No. 48, “Accounting for Uncertaintyin Income Taxes” (FIN 48) as of January 1, 2007, which is discussed below. Inaddition, the Company reaffirms the use of estimates in the preparation of thefinancial statements as set forth in the 2006 Form 10-K as well as the useof estimates in the recognition and measurement of tax benefits arising fromuncertain tax positions as required by FIN 48. These interim condensedconsolidated financial statements should be read in conjunction with theCompany’s audited consolidated financial statements and notes thereto includedin the 2006 Form 10-K.

 

**Concentrations ofRisk**

** **

Net sales to AnixterInternational Inc. and its affiliates (Anixter) accounted for approximately 25%and 26% of the Company’s total net sales during the three and nine months endedSeptember 30, 2007, respectively, and approximately 32% and 29% of the Company’stotal net sales during the three and nine months ended September 30, 2006,respectively. Sales to Anixter primarily originate within the Enterprisesegment.

 

Net sales to Alcatel-Lucent,which primarily relate to their role as an original equipment manufacturer fora large telecommunications company, accounted for approximately 12% of theCompany’s total net sales during the three and nine 

 

7

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months ended September 30, 2007 and approximately 10%and 8% of the Company’s total net sales for the three and nine months endedSeptember 30, 2006, respectively. Sales to Alcatel-Lucent primarily originatewithin 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 nine months ended September 30, 2007 and 2006.

 

Accounts receivable fromAnixter represented approximately 27% and accounts receivable fromAlcatel-Lucent represented approximately 10% of net accounts receivable as ofSeptember 30, 2007. No other customer accounted for 10% or more of the Company’snet accounts receivable as of September 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. TheCompany bases its estimates on assumptions that are believed to be reasonableunder the circumstances and revises its estimates, as appropriate, when eventsor changes in circumstances indicate that revisions may be necessary.

 

Activity in the productwarranty accrual, included in other accrued liabilities, for the three and ninemonths ended September 30, 2007 and 2006 consisted of the following:

 
| ** **                                     | ** ** | **Three Months ****Ended****September 30,** | ** ** | **Nine Months Ended********September 30,** | ** ** |
|------------------------------------------------|------------|-------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                     | ** ** | **2007**                                              | ** ** | **2006**                                   | ** ** | **2007** | ** ** | **2006** | ** ** |
| Product warranty accrual, beginning of  period |       | $                                                     | 3,712      |                                       | $          | 2,578 |   | $ | 2,090 |   | $ | 2,035 |   |
| Provision for warranty claims                  |       | 1,093                                                 |       | 344                                        |       | 2,936 |   | 1,023 |   |
| Warranty claims paid                           |       | (297                                                  | )          | —                                     |       | (518 | ) | (136 | ) |
| Product warranty accrual, end of period        |       | $                                                     | 4,508      |                                       | $          | 2,922 |   | $ | 4,508 |   | $ | 2,922 |   |

 

**Commitments andContingencies**

** **

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 adjusted for after-tax interest and amortizationof debt issuance costs related to convertible debt, if dilutive, divided by theweighted average number of common shares outstanding adjusted for the dilutiveeffect of stock options, restricted stock, phantom stock, performance units andconvertible securities.

 

8

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Belowis a reconciliation of net income and weighted average common shares andpotential common shares outstanding for calculating diluted net income pershare:
| ** **                                                                                                             | ** ** | **Three Months ****Ended****September 30,** | ** ** | **Nine Months Ended********September 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                                                             | ** ** | **2007**                                              | ** ** | **2006**                                   | ** ** | **2007** | ** ** | **2006** | ** ** |
| Numerator:                                                                                                             |       |                                                  |       |                                       |       |   |   |   |   |
| Net income for basic net income per share                                                                              |       | $                                                     | 60,273     |                                       | $          | 43,590 |   | $ | 167,257 |   | $ | 102,963 |   |
| Effect of assumed conversion of 1%  convertible senior subordinated debentures due 2024                                |       | 629                                                   |       | 629                                        |       | 1,887 |   | 1,887 |   |
| Income available to common shareholders for  diluted net income per share                                         |       | $                                                     | 60,902     |                                       | $          | 44,219 |   | $ | 169,144 |   | $ | 104,850 |   |
| Denominator:                                                                                                           |       |                                                  |       |                                       |       |   |   |   |   |
| Weighted average number of common shares  outstanding for basic net income per share                                   |       | 61,661                                                |       | 59,166                                     |       | 61,105 |   | 58,146 |   |
| Effect of dilutive securities:                                                                                         |       |                                                  |       |                                       |       |   |   |   |   |
| Employee stock options (a)                                                                                             |       | 1,294                                                 |       | 1,823                                      |       | 1,436 |   | 2,136 |   |
| Restricted stock, phantom stock and  performance units                                                                 |       | 529                                                   |       | 179                                        |       | 465 |   | 141 |   |
| 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 |       | 74,978                                                |       | 72,662                                     |       | 74,500 |   | 71,917 |   |

 

----

(a)             Nooptions to purchase common shares were excluded from the computation of netincome per share, assuming dilution, for the three and nine months endedSeptember 30, 2007. Options to purchase approximately 0.6 million and 1.9million common shares were excluded from the computation of net income pershare, assuming dilution, for the three and nine months ended September 30,2006, respectively, because they would have been anti-dilutive.

 

**Income Tax Uncertainties**

 

The Company adopted theprovisions of FIN 48 as of January 1, 2007, resulting in a $4.2 millionincrease in the liability for unrecognized tax benefits with an offsettingreduction to opening retained earnings. In addition, the Company reduced along-term deferred tax asset by $4.0 million with an offsetting reduction toopening retained earnings of $1.9 million and an increase of $2.1 million tolong-lived assets as a purchase accounting adjustment. In the three and ninemonths ended September 30, 2007, there was a $1.2 million and $3.1 millionincrease in the liability for unrecognized tax benefits, respectively.

 

TheCompany files a consolidated U.S. federal income tax return as well asconsolidated or individual subsidiary returns in various states and foreignjurisdictions. With few exceptions, the Company is no longer subject to U.S.federal, state and local or foreign income tax examinations by taxingauthorities for years before 1997. The Internal Revenue Service (IRS) commencedan examination of the Company’s 2004 and 2005 U.S. income tax returns in 2006that is expected to be completed by the end of 2007. As of January 1, 2007, theIRS has proposed certain significant adjustments to the Company’s research anddevelopment tax credit positions related to years prior to 2004. The Company iscurrently protesting those proposed adjustments. If unsuccessful, it isreasonably possible that an additional payment will be made in the followingtwelve months, but the Company does not believe that any such payment would bematerial to the Company’s financial position. It is reasonably possible thatthe unrecognized tax benefits arising from other positions taken by the Companymay significantly increase or decrease in the next 12 months, but the Companydoes not expect any such adjustments to be material to the Company’s financialposition or results of operations.

 

Asof January 1, 2007, the Company’s liability for unrecognized tax benefits of$15.0 million included $12.9 million that, if recognized, would favorablyaffect the effective tax rate in future periods.

 

The Company recognizes interest and penaltiesrelated to unrecognized tax benefits in income tax expense. As of January 1,2007, the Company had accrued approximately $4.7 million for the paymentof interest and penalties. No material changes to the accrued amounts occurredin the three and nine months ended September 30, 2007.

 

9

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**Impact of Newly Issued Accounting Standards**

 

**In September 2006, the FASBissued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pensionand Other Postretirement Plans—an amendment of FASB Statements No. 87, 88,106, and 132(R).” SFAS No. 158 requires that the underfunded or overfundedposition of defined benefit plans be fully recognized as a liability or asseton the balance sheet of the sponsor. SFAS No. 158 does not change how theexpense related to such plans is determined. The Company’s accrued benefitliability was adjusted as of December 31, 2006 to fully recognize theunderfunded portion of the Company’s plans as a result of implementing SFASNo. 158. The provisions of SFAS No. 158 requiring that plan assetsand obligations be measured as of the year-end balance sheet date are notrequired to be adopted until December 31, 2008, though earlier adoption ispermitted. The Company does not expect that there will be a material impact onresults of operations or financial position from applying the provisions to beadopted 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 requiredto adopt SFAS No. 159 on January 1, 2008. The Company currently does not planto measure any of its existing financial assets and liabilities at fair valueunder the provisions of SFAS No. 159 and, therefore, does not anticipate amaterial impact to its results ofoperations or financial position related to the adoption of this standard.

 

**2.             ACQUISITIONS**

 

**Signal Vision, 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 $17.0 million was paid in cash and thebalance is payable within two years. The acquisition is included within theBroadband 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                       |       | 5.2                            |       |
| Non-compete agreement                |       | 5                        |       | 3.0                            |       |
| Other identifiable intangible assets |       | 6                        |       | 1.1                            |       |
| Goodwill                             |       |                     |       | 3.1                            |       |
| Less: Current liabilities assumed    |       |                     |       | (0.4                           | )          |
| Total purchase price                 |       |                     |       | $                              | 19.0       |   |

 

The weighted average estimated useful life of theamortizable intangible assets acquired is 7.8 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 acquired wereintegrated into the Broadband segment.

 

10

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The allocation of the purchase price, based onestimated fair values of the assets acquired, is as follows:

 
| ** **                           | ** ** | **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.

 

**Connectivity Solutions**

 

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 nine months ended September 30, 2006, the registration rightsexpired and the Company reversed the liability that had been established,resulting in an increase to additional paid-in capital of $0.5 million.

 

**Andrew Corporation**

 

On June 27, 2007, the Company announced an agreementto acquire Andrew’s common stock for $15.00 per share, comprised of $13.50 incash and an additional $1.50 in either cash, CommScope common stock or acombination thereof, at CommScope’s option. The total transaction value isapproximately $2.6 billion, based on Andrew’s estimated 176 million sharesoutstanding on a fully diluted basis, which includes shares issuable underAndrew’s existing convertible notes. Andrew designs, manufactures and deliversequipment and solutions for the global communications infrastructure market. Thetransaction is expected to close, subject to customary closing conditions,before the end of 2007.

 

**3.****                                     ****BALANCE SHEET DATA**

 

**Short-termInvestments**

** **

AtSeptember 30, 2007 and December 31, 2006, the Company’s short-terminvestments were composed of the following:
| ** **         | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------|------------|-------------------------|------------|-----------------------------|------------|
| Available for sale |       | $                       | 85,575     |                        | $          | 131,868 |   |
| Held-to-maturity   |       | 153,000                 |       | 20,000                      |       |
|               |       | $                       | 238,575    |                        | $          | 151,868 |   |

 

AtSeptember 30, 2007, the held-to-maturity short-term investments were composedof the following:
| ** **                 | ** ** | **Amortized Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair Value** | ** ** |
|----------------------------|------------|-------------------------|------------|------------------------------|------------|-------------------------------|------------|---------------------|------------|
| Corporate debt obligations |       | $                       | 153,000    |                         | $          | 27                            |       | $                   | —     |   | $ | 153,027 |   |
|                            |            |                         |            |                              |            |                               |            |                     |            |  |  |  |  |

 

11

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AtDecember 31, 2006, the held-to-maturity short-term investments werecomposed 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**
| ** **      | ** ** | **September 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------|------------|-------------------------|------------|-----------------------------|------------|
| Raw materials   |       | $                       | 59,449     |                        | $          | 56,888 |   |
| Work in process |       | 52,777                  |       | 38,936                      |       |
| Finished goods  |       | 78,062                  |       | 57,772                      |       |
|            |       | $                       | 190,288    |                        | $          | 153,596 |   |

 

**4.****                                     ****LONG-TERM DEBT**
| ** **                                     | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                     | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| Senior secured term loan                       |       | $                 | 11,550     |                  | $          | 23,300 |   |
| 1% convertible senior subordinated  debentures |       | 250,000           |       | 250,000               |       |
| IDA notes                                      |       | —            |       | 10,800                |       |
|                                           |       | 261,550           |       | 284,100               |       |
| Less: current portion                          |       | (11,550           | )          | (13,000               | )          |
|                                           |       | $                 | 250,000    |                  | $          | 271,100 |   |

 

See Note 9 in theNotes to the Consolidated Financial Statements in the 2006 Form 10-K forinformation on the terms and conditions of the senior secured credit facility.As of September 30, 2007, the Company had availability of approximately$96 million and no outstanding borrowings under the senior securedrevolving credit facility. The interest rate on the senior secured term loanwas 6.63% and 6.87% at September 30, 2007 and December 31, 2006,respectively. Management believes the Company was in compliance with all of itscovenants under this facility as of September 30, 2007.

 

See Note 9 in theNotes to the Consolidated Financial Statements in the 2006 Form 10-K forinformation on the terms and conditions of the 1% convertible seniorsubordinated debentures. The estimated fair value of the Company’s convertibledebentures as of September 30, 2007 and December 31, 2006 was $580.6 millionand $370.3 million, respectively. On May 1, 2007, the Company redeemed theIDA notes.

 

In conjunction with theproposed Andrew acquisition, the Company received debt commitments for anaggregate of $2.55 billion in senior secured credit facilities consisting of a$2.3 billion seven-year senior secured term loan facility and a $250 millionsix-year senior secured revolving credit facility. Since obtaining the debtcommitments, the Company has engaged in discussions with the lead arrangers anddebt providers regarding certain changes to the structure and terms of thesenior secured debt facilities. Although the debt commitments remain in effecton the original terms, the Company expects that the aggregate amount of seniorsecured credit facilities will be reduced from $2.55 billion to $2.5 billion,consisting of a $1.35 billion seven-year senior secured term loan facility, a$750 million six-year senior secured term loan facility and a $400 millionsix-year senior secured revolving credit facility. The Company and the leadarrangers proposed these changes to support the syndication of the seniorsecured credit facilities on acceptable terms. Because of continued instabilityin the debt financing markets, including the market for senior bank credit facilities,it is possible that the Company will elect to make further changes to thestructure and terms of the senior credit facilities in order to completesyndication. However, any such changes would not impair the obligation of thedebt providers to fund the senior credit facilities on the terms set forth inthe commitment letter.

 

The debt commitments aresubject to closing the acquisition and the satisfaction of other customaryconditions. Based on the recent changes described above, the debt commitmentsprovide for a weighted average initial interest rate of LIBOR plus 241 to 244basis points on the senior secured term loan facilities and an initial interestrate on the revolving credit facility of LIBOR plus 225 basis points. Futureinterest rates on the six-year senior secured term loan facility and therevolving credit facility may be reduced by up to 50 basis points, depending onthe achievement of certain financial metrics. The senior secured creditfacilities are expected to be secured by substantially all of the Company’sdomestic assets. The debt commitments expire on December 31, 2007 but will beextended to March 31, 2008 if the termination date for the merger agreement isautomatically extended to March 31, 2008 in accordance with the terms of themerger agreement.

 

12

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**5.             RESTRUCTURING CHARGES**

 

InAugust 2005, the Board of Directors of CommScope adopted globalmanufacturing initiatives to reduce costs by improving manufacturing efficiencyand to enhance the Company’s long-term competitive position. Implementation ofthese initiatives includes shifting significant Enterprise and Broadbandsegment cable production capacity among CommScope’s global facilities,consolidating operations at the CSMI Omaha facility into one building andclosing a Broadband segment manufacturing facility in Scottsboro, Alabama inlate 2006. As a result of these initiatives, the Company recognized net pretaxcharges during the three and nine months ended September 30, 2007 and 2006 asfollows: 

 
| ** **                            | ** ** | **Enterprise  Segment** | ** ** | **Broadband  Segment** | ** ** | **Carrier  Segment** | ** ** | **Total** | ** ** |
|---------------------------------------|------------|-------------------------|------------|------------------------|------------|----------------------|------------|-----------|------------|
| Three months ended September 30, 2007 |       | $                       | 149        |                   | $          | 66                   |       | $         | —     |   | $ | 215 |   |
| Nine months ended September 30, 2007  |       | 637                     |       | 390                    |       | 86                   |       | 1,113     |       |
|                                  |       |                    |       |                   |       |                 |       |      |       |
| Three months ended September 30, 2006 |       | 1,821                   |       | 838                    |       | 352                  |       | 3,011     |       |
| Nine months ended September 30, 2006  |       | 7,664                   |       | 2,396                  |       | 704                  |       | 10,764    |       |
|                                       |            |                         |            |                        |            |                      |            |           |            |  |  |  |  |

 

The activitywithin the liability (included in other accrued liabilities) for theserestructuring initiatives for the three and nine months ended September 30,2007 and 2006 was as follows:

 
| ** **                       | ** ** | **Employee-  Related  Costs** | ** ** | **Equipment  Relocation  Costs** | ** ** | **Asset  Impairment  Charges** | ** ** | **Total** | ** ** |
|----------------------------------|------------|-------------------------------|------------|----------------------------------|------------|--------------------------------|------------|-----------|------------|
| Balance as of June 30, 2007      |       | $                             | 217        |                             | $          | —                         |       | $         | —     |   | $ | 217 |   |
| Additional charge recorded       |       | 34                            |       | 77                               |       | 104                            |       | 215       |       |
| Cash paid                        |       | (93                           | )          | (77                              | )          | (104                           | )          | (274      | )          |
| Balance as of September 30, 2007 |       | $                             | 158        |                             | $          | —                         |       | $         | —     |   | $ | 158 |   |
|                             |       |                          |       |                             |       |                           |       |      |       |
| Balance as of December 31, 2006  |       | $                             | 1,510      |                             | $          | —                         |       | $         | —     |   | $ | 1,510 |   |
| Additional charge recorded       |       | (64                           | )          | 1,073                            |       | 104                            |       | 1,113     |       |
| Cash paid                        |       | (1,288                        | )          | (1,073                           | )          | (104                           | )          | (2,465    | )          |
| Balance as of September 30, 2007 |       | $                             | 158        |                             | $          | —                         |       | $         | —     |   | $ | 158 |   |
|                             |       |                          |       |                             |       |                           |       |      |       |
| Balance as of June 30, 2006      |       | $                             | 1,932      |                             | $          | —                         |       | $         | —     |   | $ | 1,932 |   |
| Additional charge recorded       |       | 673                           |       | 3,777                            |       | (1,439                         | )          | 3,011     |       |
| Cash paid                        |       | (1,023                        | )          | (3,777                           | )          | 1,439                          |       | (3,361    | )          |
| Balance as of September 30, 2006 |       | $                             | 1,582      |                             | $          | —                         |       | $         | —     |   | $ | 1,582 |   |
|                             |       |                          |       |                             |       |                           |       |      |       |
| Balance as of December 31, 2005  |       | $                             | 8,087      |                             | $          | —                         |       | $         | —     |   | $ | 8,087 |   |
| Additional charge recorded       |       | 4,705                         |       | 7,595                            |       | (1,536                         | )          | 10,764    |       |
| Cash paid                        |       | (11,210                       | )          | (7,595                           | )          | 1,536                          |       | (17,269   | )          |
| Balance as of September 30, 2006 |       | $                             | 1,582      |                             | $          | —                         |       | $         | —     |   | $ | 1,582 |   |

 

Employee-relatedcosts include the expected severance costs and related fringe benefits, accruedover the remaining period employees are required to work in order to receiveseverance benefits. No additional employee-related costs are expected to berecognized in completing the global manufacturing initiatives.

 

Equipmentrelocation costs relate directly to shifting manufacturing capacity among ourglobal manufacturing facilities and include costs to uninstall, pack, ship andre-install equipment as well as the costs to prepare the receiving facility toaccommodate the equipment. These costs are recognized as the expenses areincurred and no additional costs are expected to be recognized in completingthe global manufacturing initiatives.

 

The net assetimpairment charges recognized during the three and nine months ended September30, 2007 resulted primarily from the sales of the Omaha, Nebraska warehouse andthe Scottsboro, Alabama manufacturing facility. The proceeds from these sales,net of direct selling expenses were approximately $10.5 million. As ofSeptember 30, 2007, the 

 

13

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Company is attempting tosell additional land and buildings that are no longer in use. These assets havea net carrying value of $4.1 million and are reflected as property, plant andequipment in the Condensed Consolidated Balance Sheet. Additional netimpairment charges may be incurred or gains realized upon the disposition ofthese or other excess assets. During the three and nine months ended September30, 2006 there were gains recognized on the sale of excess manufacturingequipment that had previously been impaired.

 

**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 thenote had previously been reduced to zero as a result of recordingCommScope’s equity in losses of OFS BrightWave prior to the sale of CommScope’sequity interest in OFS BrightWave in June 2004 and an impairment charge of$11.1 million at the time of the sale in 2004.

 

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 nine monthsended September 30, 2006).

 

**7.             DERIVATIVES AND HEDGING ACTIVITIES**

** **

As of September 30, 2007 and 2006, the Company helda cross currency 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 valueof the derivative instrument, reflected in other noncurrent liabilities, wasapproximately $8.4 million and $7.1 million as of September 30, 2007 andDecember 31, 2006, respectively.

 

Pretax gains (losses) of$(449) and $47 on the portion of the swap designated as a fair value hedge arereflected in earnings during the three months ended September 30, 2007 and2006, respectively. Pretax gains (losses) of $(539) and $(164) on the portionof the swap designated as a fair value hedge are reflected in earnings duringthe nine months ended September 30, 2007 and 2006, respectively. Thedesignations of the hedging instrument were effective as of September 30, 2007and 2006, and are expected to continue to be effective for the duration of theagreement, resulting in no anticipated hedge ineffectiveness.

 

There were no reclassifications from othercomprehensive income (loss) to earnings related to derivatives and hedgingactivities during the three and nine months ended September 30, 2007 and 2006.

 

Activity in the accumulated net loss on derivativeinstruments included in accumulated other comprehensive income (loss) consistedof the following:

 
| ** **                                                                                    | ** ** | **Three Months  Ended September 30,** | ** ** | **Nine Months  Ended September 30,** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|------------------------------------------------|------------|
| ** **                                                                                    | ** ** | **2007**                                        | ** ** | **2006**                                       | ** ** | **2007** | ** ** | **2006** | ** ** |
| Accumulated net loss on derivative  instruments, beginning of period                     |       | $                                               | (5,425     | )                                              | $          | (5,026 | ) | $ | (5,201 | ) | $ | (4,274 | ) |
| Net gain (loss) on derivative financial  instrument designated as a net investment hedge |       | (429                                            | )          | 166                                            |       | (653 | ) | (586 | ) |
| Accumulated net loss on derivative  instruments, end of period                           |       | $                                               | (5,854     | )                                              | $          | (4,860 | ) | $ | (5,854 | ) | $ | (4,860 | ) |

 

During the three months ended September 30, 2007 and2006, the income tax expense (benefit) related to the gain (loss) on thederivative financial instrument designated as a net investment hedge andreported within other comprehensive income was $(251) and $98, respectively.During the nine months ended September 30, 2007 and 2006, the income taxexpense (benefit) related to the gain (loss) on the derivative financialinstrument designated as a net investment hedge and reported within othercomprehensive income was $(383) and $(344), respectively.

 

14

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**8.             EMPLOYEE BENEFIT PLANS**

** **
| ** **                            | ** ** | **Pension Benefits**                                | ** ** | **Other Postretirement  Benefits** | ** ** |
|---------------------------------------|------------|----------------------------------------------------------|------------|-----------------------------------------|------------|
| ** **                            | ** ** | **Three Months Ended September 30,** | ** ** |
| ** **                            | ** ** | **2007**                                                 | ** ** | **2006**                                | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service cost                          |       | $                                                        | 790        |                                    | $          | 828 |   | $ | 1,039 |   | $ | 1,128 |   |
| Interest cost                         |       | 1,808                                                    |       | 1,732                                   |       | 1,319 |   | 1,229 |   |
| Recognized actuarial loss             |       | —                                                   |       | 14                                      |       | 26 |   | 140 |   |
| Amortization of prior service costs   |       | (193                                                     | )          | (96                                     | )          | (21 | ) | (131 | ) |
| Amortization of transition obligation |       | 11                                                       |       | 10                                      |       | — |   | — |   |
| Return on plan assets                 |       | (2,198                                                   | )          | (1,974                                  | )          | (119 | ) | (139 | ) |
| Net periodic benefit cost             |       | $                                                        | 218        |                                    | $          | 514 |   | $ | 2,244 |   | $ | 2,227 |   |

 
| ** **                            | ** ** | **Nine Months Ended September 30,** | ** ** |
|---------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                            | ** ** | **2007**                                                | ** ** | **2006** | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service cost                          |       | $                                                       | 2,353      |   | $ | 2,467 |   | $ | 3,117 |   | $ | 3,384 |   |
| Interest cost                         |       | 5,413                                                   |       | 5,188 |   | 3,957 |   | 3,687 |   |
| Recognized actuarial loss             |       | —                                                  |       | 41 |   | 77 |   | 420 |   |
| Amortization of prior service costs   |       | (579                                                    | )          | (290 | ) | (64 | ) | (394 | ) |
| Amortization of transition obligation |       | 33                                                      |       | 30 |   | — |   | — |   |
| Return on plan assets                 |       | (6,584                                                  | )          | (5,913 | ) | (356 | ) | (417 | ) |
| Net periodic benefit cost             |       | $                                                       | 636        |   | $ | 1,523 |   | $ | 6,731 |   | $ | 6,680 |   |

 

The Company contributedapproximately $0.2 million and $5.7 million to its pension plans during thethree and nine months ended September 30, 2007, respectively, and anticipatesmaking additional contributions of approximately $0.2 million to these plansduring 2007. The Company contributed approximately $0.8 million and $2.5million to the postretirement benefit plans during the three and nine monthsended September 30, 2007, respectively, and anticipates making additionalcontributions of approximately $0.8 million to these plans during 2007.

 

During the three and ninemonths ended September 30, 2007, the Company reduced other comprehensive incomeby $0.2 million and $0.4 million, net of tax benefits of $0.1 million and $0.2million, respectively, related to the amortization of unrecognized pension andother postretirement benefit amounts reported within other comprehensive incomeand increased other comprehensive income by $1.7 million, net of tax of $1.0million, related to a revaluation of certain postretirement benefit obligationsas a result of updated census data.

 

**9.             EQUITY-BASED COMPENSATION PLANS**

 

Effective January 1, 2006, the Company adoptedthe fair value recognition provisions of SFAS No. 123(R), “Share-BasedPayment,” using the modified prospective transition method. The following tablesummarizes the impact of equity-based compensation expense recognized in theCondensed Consolidated Statement of Operations for the three and nine monthsended September 30, 2007 and 2006:
| ** **                                       | ** ** | **Three Months  Ended September 30,** | ** ** | **Nine Months  Ended September 30,** | ** ** |
|--------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                       | ** ** | **2007**                                             | ** ** | **2006**                                            | ** ** | **2007** | ** ** | **2006** | ** ** |
| Cost of sales                                    |       | $                                                    | 603        |                                                | $          | 369 |   | $ | 1,802 |   | $ | 995 |   |
| Selling, general and administrative expense      |       | 1,890                                                |       | 752                                                 |       | 5,185 |   | 2,027 |   |
| Research and development expense                 |       | 254                                                  |       | 134                                                 |       | 760 |   | 362 |   |
| Equity-based compensation expense before  taxes  |       | 2,747                                                |       | 1,255                                               |       | 7,747 |   | 3,384 |   |
| Less: Related income tax benefits                |       | (905                                                 | )          | (405                                                | )          | (2,551 | ) | (1,114 | ) |
| Equity-based compensation expense, net of  taxes |       | $                                                    | 1,842      |                                                | $          | 850 |   | $ | 5,196 |   | $ | 2,270 |   |

 

As of September 30,2007, $14.5 million of total unrecognized compensation costs related tonon-vested awards are expected to be recognized over a weighted average periodof 1.5 years. There were no significant capitalized equity-based compensationcosts at September 30, 2007.

 

15

----

 

**Stock Options**

 

The following tablesummarizes the stock option activity for the three and nine months endedSeptember 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 as of June  30, 2007          |       | 2,874      |       | $                                                      | 19.00      |                                                                |       |                            | $          | 113,074 |   |
| Exercised                                                      |       | (83        | )          | $                                                      | 22.04      |                                                                |       |                            | $          | 3,009 |   |
| Expired or forfeited                                           |       | —     |       |                                                   |       |                                                                |       |                            |       |
| Outstanding and expected to vest as of  September 30, 2007     |       | 2,791      |       | $                                                      | 18.91      |                                                                |       |                            | $          | 87,431 |   |
|                                                           |       |       |       |                                                   |       |                                                                |       |                            |       |
| Outstanding and expected to vest as of  December 31, 2006 |       | 4,742      |       | $                                                      | 18.47      |                                                                |       |                            | $          | 61,192 |   |
| Exercised                                                      |       | (1,948     | )          | $                                                      | 17.80      |                                                                |       |                            | $          | 46,967 |   |
| Expired or forfeited                                           |       | (3         | )          | $                                                      | 35.95      |                                                                | $          | 15.64                           |       |   |   |
| Outstanding and expected to vest as of  September 30, 2007     |       | 2,791      |       | $                                                      | 18.91      |                                                                |       |                            | $          | 87,431 |   |
| Exercisable as of September 30, 2007                           |       | 2,484      |       | $                                                      | 18.17      |                                                                |       |                            | $          | 79,676 |   |
|                                                                |            |            |            |                                                        |            |                                                                     |            |                                 |            |  |  |  |

 

The total intrinsic value of options exercisedduring the three and nine months ended September 30, 2006 was $7.2 million and$45.3 million, respectively. All of the non-vested options at September 30,2007 are expected to vest as they are primarily held by senior management anddirectors.

 

Key input assumptions used to estimate the fairvalue of stock options include the grant price of the award, the expectedoption term, volatility of the Company’s stock, the risk-free rate and theCompany’s projected dividend yield. The Company believes that the valuationtechnique and the approach utilized to develop the underlying assumptions areappropriate in estimating the fair values of CommScope stock options. Estimatesof fair value are not intended to predict actual future events or the valuethat will ultimately be realized by employees who receive equity awards, andsubsequent events are not indicative of the reasonableness of the originalestimates of fair value made by the Company under SFAS No. 123(R).

 

The following table presents theweighted-average assumptions used in the Black-Scholes model to estimate thefair value of stock option awards granted during the three and nine monthsended September 30, 2006. No stock option awards were granted during the threeand nine months ended September 30, 2007.

 
| ** **                                | ** ** | **Three Months Ended  September 30, 2006** | ** ** | **Nine Months Ended  September 30, 2006** | ** ** |
|-------------------------------------------|------------|----------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| Expected option term (in years)           |       | 5.0                                                            |       | 5.0                                                           |       |
| Risk-free interest rate                   |       | 4.9                                                            | %          | 4.8                                                           | %          |
| Expected volatility                       |       | 45                                                             | %          | 45                                                            | %          |
| Expected dividend yield                   |       | 0                                                              | %          | 0                                                             | %          |
| Weighted-average fair value at grant date |       | $                                                              | 13.94      |                                                          | $          | 12.78 |   |
|                                           |            |                                                                |            |                                                               |            |  |  |

 

The exercise prices of outstanding options atSeptember 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                      | 1,291      |                            | 5.2        |                                                                | $          | 13.09 |   | 1,271 |   | $ | 13.06 |   |
| $ 16.51 to  $24.00                     | 1,016      |                            | 5.9        |                                                                | $          | 18.52 |   | 886 |   | $ | 18.32 |   |
| $ 24.01 to  $47.06                     | 484        |                            | 4.5        |                                                                | $          | 35.26 |   | 327 |   | $ | 37.57 |   |
| $ 7.43 to  $47.06                      | 2,791      |                            | 5.4        |                                                                | $          | 18.91 |   | 2,484 |   | $ | 18.17 |   |

 

16

----

 

**Performance Share Units**

 

The following tablesummarizes the performance share unit activity for the three and nine monthsended September 30, 2007 (in thousands, except per share data):

 
| ** **                                            | ** ** | **Units** | ** ** | **Weighted  Average Grant  Date Fair  Value Per  Share** | ** ** |
|-------------------------------------------------------|------------|-----------|------------|-------------------------------------------------------------------------|------------|
| Outstanding and non-vested at June 30, 2007           |       | 445       |       | $                                                                       | 23.34      |   |
| Forfeited                                             |       | —    |       | $                                                                       | —     |   |
| Outstanding and non-vested at September 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 September 30,  2007     |       | 445       |       | $                                                                       | 23.34      |   |

 

**Restricted Stock Units**

 

The following tablesummarizes the restricted stock unit activity for the three and nine monthsended September 30, 2007 (in thousands, except per share data):

 
| ** **                                            | ** ** | **Units** | ** ** | **Weighted  Average Grant  Date Fair  Value Per  Share** | ** ** |
|-------------------------------------------------------|------------|-----------|------------|-------------------------------------------------------------------------|------------|
| Outstanding and non-vested at June 30, 2007           |       | 502       |       | $                                                                       | 25.03      |   |
| Granted                                               |       | 6         |       | $                                                                       | 56.51      |   |
| Forfeited                                             |       | (6        | )          | $                                                                       | 25.65      |   |
| Outstanding and non-vested at September 30,  2007     |       | 502       |       | $                                                                       | 25.42      |   |
|                                                  |       |      |       |                                                                    |       |
| Outstanding and non-vested at  December 31, 2006 |       | 503       |       | $                                                                       | 24.78      |   |
| Granted                                               |       | 16        |       | $                                                                       | 45.51      |   |
| Forfeited                                             |       | (17       | )          | $                                                                       | 25.32      |   |
| Outstanding and non-vested at September 30,  2007     |       | 502       |       | $                                                                       | 25.42      |   |

 

**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.

 

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

 

The 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.”

 

17

----

 

The following tables provide summary financialinformation by segment as of September 30, 2007 and December 31, 2006 andfor the three and nine months ended September 30, 2007 and 2006 (in millions):

 
| ** **                                        | ** ** | **As of**         | ** ** | **As of**        | ** ** |
|---------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                        | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
| ** **                                        | ** ** | **2007**               | ** ** | **2006**              | ** ** |
| Identifiable segment related assets:              |       |                   |       |                  |       |
| Enterprise                                        |       | $                      | 385.7      |                  | $          | 375.1 |   |
| Broadband                                         |       | 415.7                  |       | 365.0                 |       |
| Carrier                                           |       | 131.1                  |       | 94.5                  |       |
| Total identifiable segment related assets         |       | 932.5                  |       | 834.6                 |       |
|                                              |       |                   |       |                  |       |
| Reconciliation to total assets:                   |       |                   |       |                  |       |
| Cash, cash equivalents and short-term investments |       | 571.9                  |       | 427.9                 |       |
| Deferred income taxes                             |       | 45.8                   |       | 40.0                  |       |
| Total assets                                      |       | $                      | 1,550.2    |                  | $          | 1,302.5 |   |

 
| ** **                    | ** ** | **Three Months  Ended September 30,** | ** ** | **Nine Months  Ended September 30,** | ** ** |
|-------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                    | ** ** | **2007**                                             | ** ** | **2006**                                            | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net sales:                    |       |                                                 |       |                                                |       |   |   |   |   |
| Enterprise                    |       | $                                                    | 240.4      |                                                | $          | 237.7 |   | $ | 680.6 |   | $ | 614.9 |   |
| Broadband                     |       | 161.2                                                |       | 143.8                                               |       | 472.7 |   | 406.2 |   |
| Carrier                       |       | 112.3                                                |       | 85.0                                                |       | 316.2 |   | 210.7 |   |
| Inter-segment eliminations    |       | (0.3                                                 | )          | (0.4                                                | )          | (1.3 | ) | (1.6 | ) |
| Consolidated net sales        |       | $                                                    | 513.6      |                                                | $          | 466.1 |   | $ | 1,468.2 |   | $ | 1,230.2 |   |
|                          |       |                                                 |       |                                                |       |   |   |   |   |
| Operating income:             |       |                                                 |       |                                                |       |   |   |   |   |
| Enterprise                    |       | $                                                    | 42.5       |                                                | $          | 40.9 |   | $ | 119.8 |   | $ | 76.1 |   |
| Broadband                     |       | 17.0                                                 |       | 12.8                                                |       | 58.8 |   | 25.3 |   |
| Carrier                       |       | 21.9                                                 |       | 11.2                                                |       | 52.8 |   | 20.9 |   |
| Consolidated operating income |       | $                                                    | 81.4       |                                                | $          | 64.9 |   | $ | 231.4 |   | $ | 122.3 |   |

 

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

*** ***

**11.**                               SUPPLEMENTALCASH FLOW INFORMATION

*** ***
| ** **                                                                                                                            | ** ** | **Nine Months  Ended September 30,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                                                                            | ** ** | **2007**                                            | ** ** | **2006** | ** ** |
| Cash paid during the period for:                                                                                                      |       |                                                |       |   |   |
| Income taxes                                                                                                                          |       | $                                                   | 59,145     |   | $ | 22,599 |   |
| Interest                                                                                                                              |       | 4,391                                               |       | 5,198 |   |
| 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 |   |

 

18

----

 
| **ITEM 2.** | **MANAGEMENT’S DISCUSSION AND  ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF** |
|-------------|--------------------------------------------------------------------------------------|
| ** **  | **  OPERATIONS**                                                           |

 

The following discussionand analysis of our financial condition and results of operations for the threeand nine months ended September 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” in communications networks, which is thedistribution access or final link to the customer. We believe we are a globalleader in structured cabling for business enterprise applications and broadbandcoaxial cables for the cable television industry. We also design, manufactureand market a broad line of high-performance electronic, coaxial and fiber opticcable and related products for data networking, Internet access, wirelesscommunication, telephony and other broadband applications. In addition, we arean industry leader in the design and manufacture of environmentally secureenclosures to integrate complex equipment for digital subscriber line (DSL) andFiber-to-the-Node (FTTN) deployments by telecommunication service providers inthe 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 isapproximately $2.6 billion, based on Andrew’s estimated 176 million sharesoutstanding on a fully diluted basis, which includes shares issuable underAndrew’s existing convertible notes. Andrew designs, manufactures and deliversequipment and solutions for the global communications infrastructure market. Thetransaction is expected to close, subject to customary closing conditions,before the end of 2007. For the fiscal year ended September 30, 2006, Andrew’sAnnual Report on Form 10-K reported total assets of $2.4 billion, net revenueof $2.1 billion and a net loss of $34.3 million, which included a charge of$83.4 million to provide a full valuation allowance against certain deferredtax assets, among other special items. The results reported below do notreflect any actual or pro forma adjustments related to the acquisition. SeeLiquidity and Capital Resources — Future Cash Needs for a discussion of thecredit facilities that are expected to be utilized for borrowings necessary topay the cash portion of the purchase price and other related cash needs.

 

**CRITICAL ACCOUNTINGPOLICIES**

** **

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 NINE MONTHS ENDED SEPTEMBER 30, 2007WITH THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006**

 
| ** **                   | ** ** | **Three Months Ended September 30,**                          | ** ** | ** **        | ** ** | ** ** | ** ** |
|------------------------------|------------|-----------------------------------------------------------------------------------|------------|-------------------|------------|------------|------------|
| ** **                   | ** ** | **2007**                                                                          | ** ** | **2006**          | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                   | ** ** | ** **                                                                        | ** ** | **%**** of** | ** ** | ** ** | ** ** | **%**** of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                   | ** ** | ** **                                                                        | ** ** | **Net**           | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                   | ** ** | **Amount**                                                                        | ** ** | **Sales**         | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                   | ** ** | **(dollars in millions, except per share amounts)** | ** ** |
| Net sales                    |       | $                                                                                 | 513.6      |              | 100.0      | %          | $          | 466.1 |   | 100.0 | % | $ | 47.5 |   | 10.2 | % |
| Gross profit                 |       | 159.3                                                                             |       | 31.0              |       | 139.8      |       | 30.0 |   | 19.5 |   | 13.9 |   |
| SG&A expense             |       | 69.4                                                                              |       | 13.5              |       | 62.8       |       | 13.5 |   | 6.6 |   | 10.5 |   |
| R&D expense              |       | 8.3                                                                               |       | 1.6               |       | 9.2        |       | 2.0 |   | (0.9 | ) | (9.4 | ) |
| Restructuring costs          |       | 0.2                                                                               |       | 0.0               |       | 3.0        |       | 0.6 |   | (2.8 | ) | (92.9 | ) |
| Net income                   |       | 60.3                                                                              |       | 9.4               |       | 43.6       |       | 9.4 |   | 16.7 |   | 38.3 |   |
| Net income per diluted share |       | 0.81                                                                              |       |              |       | 0.61       |       |   |   | 0.20 |   | 32.8 |   |
|                              |            |                                                                                   |            |                   |            |            |            |  |  |  |  |  |  |  |  |  |

 

19

----

 
| ** **                             | ** ** | **Nine Months Ended September 30,**                           | ** ** | ** **        | ** ** | ** ** | ** ** |
|----------------------------------------|------------|-----------------------------------------------------------------------------------|------------|-------------------|------------|------------|------------|
| ** **                             | ** ** | **2007**                                                                          | ** ** | **2006**          | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                             | ** ** | ** **                                                                        | ** ** | **%**** of** | ** ** | ** ** | ** ** | **%**** of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                             | ** ** | ** **                                                                        | ** ** | **Net**           | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                             | ** ** | **Amount**                                                                        | ** ** | **Sales**         | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                             | ** ** | **(dollars in millions, except per share amounts)** | ** ** |
| Net sales                              |       | $                                                                                 | 1,468.2    |              | 100.0      | %          | $          | 1,230.2 |   | 100.0 | % | $ | 238.0 |   | 19.3 | % |
| Gross profit                           |       | 453.8                                                                             |       | 30.9              |       | 333.1      |       | 27.1 |   | 120.7 |   | 36.2 |   |
| SG&A expense                       |       | 196.7                                                                             |       | 13.4              |       | 175.2      |       | 14.2 |   | 21.4 |   | 12.2 |   |
| R&D expense                        |       | 24.6                                                                              |       | 1.7               |       | 24.8       |       | 2.0 |   | (0.2 | ) | (0.9 | ) |
| Restructuring costs                    |       | 1.1                                                                               |       | 0.1               |       | 10.8       |       | 0.9 |   | (9.7 | ) | (89.7 | ) |
| Gain on OFS BrightWave note receivable |       | —                                                                            |       | —            |       | 18.6       |       | 1.5 |   | (18.6 | ) | (100.0 | ) |
| Net income                             |       | 167.3                                                                             |       | 11.4              |       | 103.0      |       | 8.4 |   | 64.3 |   | 62.4 |   |
| Net income per diluted share           |       | 2.27                                                                              |       |              |       | 1.46       |       |   |   | 0.81 |   | 55.5 |   |
|                                        |            |                                                                                   |            |                   |            |            |            |  |  |  |  |  |  |  |  |  |

 

**Netsales**

** **

**Theincrease in net sales for the three and nine months ended September 30, 2007over the comparable prior year periods is attributable to international salesgrowth in each of our segments and domestic sales growth in our Carrier andBroadband segments. The increases for the three months ended September 30, 2007are largely the result of higher sales volume levels while the increases forthe nine months ended September 30, 2007 result from both higher sales volumelevels and price increases implemented primarily in the first half of 2006 inresponse to higher raw material costs. For further details by segment, see thesection titled “Segment Results” below.**

** **

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

** **

Gross profit margin forthe three months ended September 30, 2007 increased to 31.0% from 30.0% for thethree months ended September 30, 2006 and to 30.9% from 27.1% for thecomparable nine 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 material costs may reduce gross profit margin if wedelay implementing price increases, are unable to achieve market acceptance of futureprice increases or implement price reductions in response to a rapid decline inraw material costs.

 

**Selling, generaland administrative expense**

** **

The increase in selling,general and administrative expense (SG&A) for the three and nine monthsended September 30, 2007 as compared to the same periods in 2006 was primarilydue to higher marketing costs associated with the higher level of sales andspending to support and expand global sales initiatives. The reduction inSG&A expense as a percentage of net sales for the nine months endedSeptember 30, 2007 is a result of the higher sales revenue.

 

**Research anddevelopment**

** **

Research and development(R&D) expense decreased by $0.9 million and $0.2 million for the three andnine months ended September 30, 2007, respectively, as compared to the sameperiods in 2006. R&D expense as a percentage of net sales also decreasedmodestly to 1.6% and 1.7% for the three and nine months ended September 30,2007, respectively, as compared to 2.0% for the comparable 2006 three and ninemonth periods. The ongoing R&D activities generally relate to bringing newproducts to market and to modifying existing products to better serve ourcustomers.

 

**Restructuringcosts**

** **

We recognized pretaxrestructuring costs of $0.2 million and $1.1 million during the three and ninemonths ended September 30, 2007, respectively, compared with $3.0 million and$10.8 million during the comparable periods ended September 30, 2006,respectively. The 2007 costs resulted from the global manufacturing initiatives,which began during the third quarter of 2005 and are substantially complete asof September 30, 2007. No additional employee-related or equipment relocationcharges are expected to be incurred related to the global manufacturinginitiatives.

 

20

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During the three monthsended September 30, 2007, we sold properties in Scottsboro, Alabama and Omaha,Nebraska with a combined carrying value of $10.6 million and recognized apretax loss of $0.1 million, which is included in restructuring costs. As ofSeptember 30, 2007, we owned $4.1 million of land and buildings that, as aresult of the global manufacturing initiatives, are no longer in use and arebeing marketed for sale. Additional restructuring losses may be incurred orgains realized upon disposition of these or other excess assets.

 

**Net interestincome**

** **

We recognized netinterest income of $4.3 million and $10.9 million for the three and nine monthsended September 30, 2007, respectively, compared to $1.0 million and $1.5million for the comparable prior year periods. The increases were primarily theresult of significantly higher balances of invested funds (cash, cashequivalents and short-term investments). For the nine months ended September30, 2007, interest income increased due to improved rates of return on investedbalances as a result of increases in LIBOR and other short-term interest ratesover the comparable prior year period. Interest expense for the three and ninemonth periods declined slightly from the comparable prior year periodsprimarily as a result of lower levels of outstanding debt due to principalrepayments of the senior term loan and the repayment of the IDA notes in May2007. Our weighted average effective interest rate on outstanding borrowings,including amortization of associated long-term financing costs, was lower at2.32% as of September 30, 2007 compared to 2.68% as of December 31, 2006,primarily as a result of principal repayments of the senior term loan and therepayment of the IDA notes.

 

**Income taxes**

** **

Our effective income taxrate was 32% for the three and nine months ended September 30, 2007 compared to34% and 32%, excluding the impact of the gain on the OFS note receivable, forthe three and nine months ended September 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. Differencesin rates between periods generally result from changes in the relationship ofdomestic to international income and among the various internationaljurisdictions where we have activities.

 

**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. The carrying value of the note had previously beenreduced to zero as a result of recording our equity in losses of OFS BrightWaveprior to the sale of our interest in OFS BrightWave in June 2004 and animpairment charge of $11.1 million at the time of the sale in 2004. 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.

 

21

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**SegmentResults**

 
| ** **                    | ** ** | **Three Months Ended September 30,** | ** ** | ** **        | ** ** | ** ** | ** ** |
|-------------------------------|------------|----------------------------------------------------------|------------|-------------------|------------|------------|------------|
| ** **                    | ** ** | **2007**                                                 | ** ** | **2006**          | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | ** **                                               | ** ** | **%**** of** | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | ** **                                               | ** ** | **Net**           | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                    | ** ** | **Amount**                                               | ** ** | **Sales**         | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                    | ** ** | **(dollars in millions)**                      | ** ** |
| Net sales by segment:         |       |                                                     |       |              |       |       |       |   |   |   |   |   |   |
| Enterprise                    |       | $                                                        | 240.4      |              | 46.8       | %          | $          | 237.7 |   | 51.0 | % | $ | 2.7 |   | 1.1 | % |
| Broadband                     |       | 161.2                                                    |       | 31.4              |       | 143.8      |       | 30.9 |   | 17.4 |   | 12.1 |   |
| Carrier                       |       | 112.3                                                    |       | 21.9              |       | 85.0       |       | 18.2 |   | 27.3 |   | 32.2 |   |
| Inter-segment eliminations    |       | (0.3                                                     | )          | (0.1              | )          | (0.4       | )          | (0.1 | ) | 0.1 |   |   |   |
| Consolidated net sales        |       | $                                                        | 513.6      |              | 100.0      | %          | $          | 466.1 |   | 100.0 | % | $ | 47.5 |   | 10.2 | % |
|                          |       |                                                     |       |              |       |       |       |   |   |   |   |   |   |
| Total domestic sales (1)      |       | $                                                        | 345.1      |              | 67.2       | %          | $          | 324.5 |   | 69.6 | % | $ | 20.6 |   | 6.3 | % |
| Total international sales (1) |       | 168.5                                                    |       | 32.8              |       | 141.6      |       | 30.4 |   | 26.9 |   | 19.0 |   |
| Total worldwide sales         |       | $                                                        | 513.6      |              | 100.0      | %          | $          | 466.1 |   | 100.0 | % | $ | 47.5 |   | 10.2 | % |
|                          |       |                                                     |       |              |       |       |       |   |   |   |   |   |   |
| Operating income by segment:  |       |                                                     |       |              |       |       |       |   |   |   |   |   |   |
| Enterprise                    |       | $                                                        | 42.5       |              | 17.7       | %          | $          | 40.9 |   | 17.2 | % | $ | 1.6 |   | 3.8 | % |
| Broadband                     |       | 17.0                                                     |       | 10.6              |       | 12.8       |       | 8.9 |   | 4.2 |   | 33.2 |   |
| Carrier                       |       | 21.9                                                     |       | 19.5              |       | 11.2       |       | 13.2 |   | 10.7 |   | 96.3 |   |
| Consolidated operating income |       | $                                                        | 81.4       |              | 15.8       | %          | $          | 64.9 |   | 13.9 | % | $ | 16.5 |   | 25.5 | % |

 
| ** **                    | ** ** | **Nine Months Ended September 30,** | ** ** | ** **        | ** ** | ** ** | ** ** |
|-------------------------------|------------|---------------------------------------------------------|------------|-------------------|------------|------------|------------|
| ** **                    | ** ** | **2007**                                                | ** ** | **2006**          | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | ** **                                              | ** ** | **%**** of** | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | ** **                                              | ** ** | **Net**           | ** ** | ** ** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                    | ** ** | **Amount**                                              | ** ** | **Sales**         | ** ** | **Amount** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                    | ** ** | **(dollars in millions)**                     | ** ** |
| Net sales by segment:         |       |                                                    |       |              |       |       |       |   |   |   |   |   |   |
| Enterprise                    |       | $                                                       | 680.6      |              | 46.4       | %          | $          | 614.9 |   | 50.0 | % | $ | 65.8 |   | 10.7 | % |
| Broadband                     |       | 472.7                                                   |       | 32.2              |       | 406.2      |       | 33.0 |   | 66.4 |   | 16.4 |   |
| Carrier                       |       | 316.2                                                   |       | 21.5              |       | 210.7      |       | 17.1 |   | 105.5 |   | 50.1 |   |
| Inter-segment eliminations    |       | (1.3                                                    | )          | (0.1              | )          | (1.6       | )          | (0.1 | ) | 0.3 |   |   |   |
| Consolidated net sales        |       | $                                                       | 1,468.2    |              | 100.0      | %          | $          | 1,230.2 |   | 100.0 | % | $ | 238.0 |   | 19.3 | % |
|                          |       |                                                    |       |              |       |       |       |   |   |   |   |   |   |
| Total domestic sales (1)      |       | $                                                       | 1,003.3    |              | 68.3       | %          | $          | 847.0 |   | 68.9 | % | $ | 156.3 |   | 18.4 | % |
| Total international sales (1) |       | 464.9                                                   |       | 31.7              |       | 383.2      |       | 31.1 |   | 81.7 |   | 21.3 |   |
| Total worldwide sales         |       | $                                                       | 1,468.2    |              | 100.0      | %          | $          | 1,230.2 |   | 100.0 | % | $ | 238.0 |   | 19.3 | % |
|                          |       |                                                    |       |              |       |       |       |   |   |   |   |   |   |
| Operating income by segment:  |       |                                                    |       |              |       |       |       |   |   |   |   |   |   |
| Enterprise                    |       | $                                                       | 119.8      |              | 17.6       | %          | $          | 76.1 |   | 12.4 | % | $ | 43.7 |   | 57.4 | % |
| Broadband                     |       | 58.8                                                    |       | 12.5              |       | 25.3       |       | 6.2 |   | 33.5 |   | 132.4 |   |
| Carrier                       |       | 52.8                                                    |       | 16.7              |       | 20.9       |       | 9.9 |   | 31.9 |   | 152.1 |   |
| Consolidated operating income |       | $                                                       | 231.4      |              | 15.8       | %          | $          | 122.3 |   | 9.9 | % | $ | 109.1 |   | 89.2 | % |

 

----

(1)For the nine months ended September 30, 2007, domestic sales of $8.3 millionhave been reclassified to international sales to properly reflect customerlocation. For the three and nine months ended September 30, 2006, domesticsales of $4.5 million and $6.0 million, respectively, have been reclassified tointernational sales to properly reflect customer location.

 

*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.

 

22

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Enterprise segment netsales for the three months ended September 30, 2007 were essentially unchangedfrom the comparable prior year period with sales growth in internationalregions and slight declines in domestic sales as compared to very strongdomestic sales in the third quarter of 2006. Sales were higher in all majorgeographic regions for the nine months ended September 30, 2007 over thecomparable prior year period primarily due to higher sales volumes of certainproducts, the effect of price increases and the introduction of new products. Weimplemented price increases for certain Enterprise products primarily in thefirst half of 2006 as a result of significant increases in the cost of certainraw materials.

 

Operating income for theEnterprise segment for the three months ended September 30, 2007 increasedslightly over the comparable prior year period due to a $1.7 million reduction inrestructuring costs related to the implementation of our global manufacturinginitiatives. Enterprise segment operating income for the nine months endedSeptember 30, 2007 improved over the comparable prior year period primarily dueto increased sales volume, changes in the product mix towards products thatgenerate higher margins and the impact of cost control efforts. The priceincreases that were realized were substantially offset by the impact ofincreased raw material costs. Also contributing to the improved operatingincome for the nine months ended September 30, 2007 is a $7.0 million reductionin restructuring costs.

 

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 tobenefit from this expected continued demand will depend on whether we encounterany significant manufacturing constraints in our internal facilities or supplyconstraints with respect to either raw materials or contract manufacturers,among other factors.

 

*BroadbandSegment*

* *

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.

 

Domestic andinternational Broadband segment net sales increased during the three and nine monthsended September 30, 2007 as compared to the comparable prior year periods. Duringthe three months ended September 30, 2007, the increase in Broadband segmentsales was primarily due to higher international sales with particular strengthin the Central and Latin America region. For the nine months ended September30, 2007, higher sales in the United States as well as Central and LatinAmerica region accounted for the majority of the increase in Broadband segmentsales. These increases reflect the impact of higher sales volumes as well asthe impact of price increases implemented primarily in the first half of 2006in response to higher raw material costs. Domestic sales volume increases canbe attributed to continued infrastructure needs of our large cable televisionsystem operator customers. Increases in international sales volumes,particularly in the Central and Latin America region, are a result of newprojects and ongoing system maintenance. Domestic net sales for the three andnine months ended September 30, 2007 include incremental sales of $6.9 millionand $12.6 million, respectively, related to acquired businesses.

 

Operating income for thethree and nine months ended September 30, 2007 increased over the comparableprior year periods as a result of higher sales volumes and the impact of costreductions realized in connection with the global manufacturing initiatives.These improvements were somewhat offset in the nine months ended September 30,2007 by a $1.6 million provision for a specifically-identified warranty issueand $0.8 million related to inventory purchase accounting adjustments arisingfrom the Signal Vision acquisition. Operating income for the nine months endedSeptember 30, 2006 included a provision of $4.8 million recorded in cost ofgoods sold related to the portion of value added taxes receivable at ourBrazilian subsidiary that are not believed to be recoverable. The remainingbalance of Brazilian value added taxes receivable of $11.9 million is believedto be recoverable and has been classified largely as long-term in other assetson the Condensed Consolidated Balance Sheet as of September 30, 2007. Alsocontributing to the improved operating income are lower restructuring costsrelated to the implementation of our global manufacturing initiatives, whichwere $0.1 million and $0.4 million during the three and nine months endedSeptember 30, 2007, respectively, compared to $0.8 million and $2.4 millionduring the three and nine months ended September 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.

 

23

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*CarrierSegment*

* *

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.”

 

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

 

Sales of wireless andother Carrier segment products were also significantly higher during the threemonths ended September 30, 2007 as compared to the comparable prior year period.Year-to-date sales for these product groups were modestly higher in 2007 ascompared to 2006.

 

The improvement inCarrier segment operating income for the three and nine months ended September30, 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 volatile since customer spending is mainlyproject-driven, we remain optimistic about our opportunities for the ICS andwireless product groups. We anticipate sales growth in 2008 for our ICS productgroup primarily due to FTTN construction activity and DSL deployments. Ourability to meet increased customer demand for ICS products will depend onwhether we have sufficient production capacity through our internal operationsand contract manufacturers, among other factors. We also expect continuedinvestment in cellular telephone base stations, which provides growthopportunities for our wireless product group, though the rate of growth andproduct profitability may be adversely impacted by consolidation among wirelesscarriers, among other factors.

 

**LIQUIDITY ANDCAPITAL RESOURCES**

** **

**Cash Flow Overview**

** **

Our principal sources ofliquidity, both on a short-term and long-term basis, are cash and cashequivalents, short-term investments, cash flows provided by operations andavailability under credit facilities. A reduction in sales and profitabilitycould reduce cash provided by operations and limit availability under credit facilities.In addition, increases in working capital, excluding cash, cash equivalents andshort-term investments, related to increasing sales could reduce our operatingcash flows in the short term until cash collections of accounts receivablecatch up to the higher level of billings.

 
| ** **                                                                                                                     | ** ** | **As of**                      | ** ** | ** **            | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|-----------------------|------------|------------|------------|
| ** **                                                                                                                     | ** ** | **September 30,**              | ** ** | **December 31,** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                                                                                                                     | ** ** | **2007**                            | ** ** | **2006**              | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                                                                                                                     | ** ** | **(dollars in millions)** | ** ** |
| Cash, cash equivalents and short-term  investments                                                                             |       | $                                   | 571.9      |                  | $          | 427.9      |       | $ | 144.0 |   | 33.7 | % |
| Working capital, excluding cash, cash  equivalents and short-term investments and current portion  of long-term debt |       | 295.1                               |       | 209.6                 |       | 85.5       |       | 40.7 |   |
| Long-term debt, including current portion                                                                                      |       | 261.6                               |       | 284.1                 |       | (22.5      | )          | (7.9 | ) |
| Book capital structure                                                                                                         |       | 1,228.6                             |       | 1,023.2               |       | 205.4      |       | 20.1 |   |
| Long-term debt as a percentage of book  capital structure                                                                      |       | 21.3                                | %          | 27.8                  | %          |       |       |   |   |
|                                                                                                                                |            |                                     |            |                       |            |            |            |  |  |  |  |  |

 

The increase in cash,cash equivalents and short-term investments during the nine months endedSeptember 30, 2007 was primarily driven by operating cash flows of $138.5 million,proceeds of $51.0 million from the exercise of stock options and related taxbenefits, and net proceeds from the sale of excess properties of $10.5 million.These inflows of cash were somewhat offset by $22.6 million of principalpayments on long-term debt, capital expenditures of $18.3 million and a $17.0million investment to acquire substantially all of the assets and assumecertain current liabilities of Signal Vision, Inc.

 

24

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| ** **                                                                                                                                 | ** ** | **Nine Months Ended**     | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                                                                                 | ** ** | **September 30,**              | ** ** | **Dollar** | ** ** | **%**      | ** ** |
| ** **                                                                                                                                 | ** ** | **2007**                            | ** ** | **2006**   | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                                                                                                                                 | ** ** | **(dollars in millions)** | ** ** |
| Net cash provided by operating activities                                                                                                  |       | $                                   | 138.5      |       | $          | 31.5       |       | $ | 107.0 |   | 340.2 | % |
| Depreciation and amortization                                                                                                              |       | 37.3                                |       | 41.9       |       | (4.6       | )          | (109.1 | ) |
| Increase in working capital, excluding  cash, cash equivalents and short-term investments and current portion  of long-term debt |       | 85.5                                |       | 100.5      |       | (15.0      | )          | (14.9 | ) |
| Capital expenditures                                                                                                                       |       | 18.3                                |       | 22.6       |       | (4.3       | )          | (19.2 | ) |
|                                                                                                                                            |            |                                     |            |            |            |            |            |  |  |  |  |  |

 

**OperatingActivities**

** **

During the nine monthsended September 30, 2007, operating activities generated $138.5 million in cashcompared to $31.5 million during the nine months ended September 30, 2006. Duringthe nine months ended September 30, 2007, net income of $167.3 million,depreciation and amortization of $37.3 million and an increase of $30.2 millionin accounts payable and other accrued liabilities were somewhat offset by a$65.5 million increase in accounts receivable and a $30.6 million increase ininventories. The increase in accounts receivable is primarily attributable tothe increase in sales during the third quarter of 2007 over the fourth quarterof 2006. Inventory levels have increased since December 31, 2006 as a result ofincreased utilization of our international manufacturing facilities and otheraspects of our supply chain.

 

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 thebalance of 2007.

 

**InvestingActivities**

** **

We made netpurchases of $86.7 million of short-term investment securities during the ninemonths ended September 30, 2007 compared to $10.0 million during the sameperiod 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 $17.0 million was paid in cash. Duringthe nine months ended September 30, 2006, we acquired certain assets supportingthe MC2 75-ohm trunk and distribution cable television productsbusiness and certain other assets from Trilogy Communications, Inc. for acash payment of $13.8 million.

 

During the nine months ended September 30,2007 and 2006, we received proceeds from the sale of fixed assets of $11.0million and $4.6 million, respectively, primarily related to the sale of assetsidentified as excess in connection with our global manufacturing initiatives.

 

Investments in property, plant and equipment duringthe nine months ended September 30, 2007 decreased by $4.3 million year-over-yearto $18.3 million. The primary capital expenditures made during the first ninemonths of 2007 related to continuing investments to support cost reductioninitiatives and improve operating efficiency.

 

Excluding the impact of the anticipated completionof the acquisition of Andrew, we currently expect total capital expenditures tobe $24 million to $27 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 nine months ended September 30, 2006, wereceived $29.8 million as a repayment of principal under our note receivablefrom OFS BrightWave. This note was originally funded in 2001 in conjunctionwith our investment in OFS BrightWave.

 

**FinancingActivities**

** **

***The exercise of 1.95 million stock options during the ninemonths ended September 30, 2007 generated $34.7 million of proceeds and $16.3million from the tax benefits generated by such stock option exercises.***

*** ***

During the nine monthsended September 30, 2007, we reduced the principal balance of our outstandinglong-term debt by $22.6 million through payments in accordance with thescheduled maturities outlined in our respective debt agreements ($9.8 million),the redemption of the $10.8 million of IDA Notes in May 2007 and additionalpayments as a result of asset sales ($2.0 million). On October 26, 2007, werepaid the remaining $11.6 million balance of our senior secured term loan.

 

On November 5, 2007, wefiled a Registration Statement on Form S-4 with the SEC to effect theregistration of our shares of common stock that may be issued as part of themerger consideration for the Andrew acquisition. The Registration Statement wasdeclared effective by the SEC on November 7, 2007.

 

25

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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.

 

**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 as of September 30, 2007, other than the redemption of the$10.8 million of IDA notes on May 1, 2007 and our intention to repaythe balance of our senior secured term loan within the next twelve months. TheIDA Notes were presented as a payment due after 5 years and $10.3 millionof the senior secured term loan was presented as a payment due in one to threeyears in the Contractual Obligations section of our 2006 Annual Report onForm 10-K. As of September 30, 2007, our liability for unrecognized taxbenefits under FIN 48 was $18.1 million of which $11.8 million wouldbe excluded from a presentation of contractual obligations due to theuncertainty in predicting the timing of the related tax payments. The remainderof the liability would be presented as a payment due in less than one year.

 

In conjunction with the proposed Andrew acquisition,we received debt commitments for an aggregate of $2.55 billion in seniorsecured credit facilities consisting of a $2.3 billion seven-year seniorsecured term loan facility and a $250 million six-year senior secured revolvingcredit facility. Since obtaining the debt commitments, we have engaged indiscussions with the lead arrangers and debt providers regarding certainchanges to the structure and terms of the senior secured debt facilities. Althoughthe debt commitments remain in effect on the original terms, we expect that theaggregate amount of senior secured credit facilities will be reduced from $2.55billion to $2.5 billion, consisting of a $1.35 billion seven-year seniorsecured term loan facility, a $750 million six-year senior secured term loanfacility and a $400 million six-year senior secured revolving credit facility.These changes were proposed to support the syndication of the senior securedcredit facilities on acceptable terms. Because of continued instability in thedebt financing markets, including the market for senior bank credit facilities,it is possible that we will elect to make further changes to the structure andterms of the senior credit facilities in order to complete syndication. However,any such changes would not impair the obligation of the debt providers to fundthe senior credit facilities on the terms set forth in the commitment letter.

 

The debt commitments are subject to closing theacquisition and the satisfaction of other customary conditions. Based on thechanges described above, the debt commitments provide for a weighted averageinitial interest rate of LIBOR plus 241 to 244 basis points on the seniorsecured term loan facilities and an initial interest rate on the revolvingcredit facility of LIBOR plus 225 basis points. Future interest rates on thesix-year senior secured term loan facility and the revolving credit facilitymay be reduced by up to 50 basis points, depending on the achievement ofcertain financial metrics. We expect the senior secured credit facilities to besecured by substantially all of our domestic assets. The debt commitments willexpire on December 31, 2007 but will automatically be extended to March 31,2008 if the termination date for the merger agreement is automatically extendedto March 31, 2008 in accordance with the terms of the merger agreement.

 

The level of borrowing under the senior securedcredit facilities that will be required to complete the Andrew acquisition,including fees and expenses incurred in conjunction with the acquisition andthe financing arrangements, and refinancing certain existing CommScope andAndrew indebtedness will depend upon, among other factors, the amount ofCommScope common stock used to satisfy the merger consideration, the number ofAndrew shares, stock options and restricted shares outstanding as of the mergerdate and the level of available cash, cash equivalents and short-terminvestments at CommScope and Andrew as of the merger date.

 

### **FORWARD-LOOKING STATEMENTS**

###  

Certainstatements in this Form 10-Q that are other than historical facts areintended to be “forward-looking statements” within the meaning of theSecurities Exchange Act of 1934, the Private Securities LitigationReform Act of 1995 and other related laws and include but are not limitedto those statements relating to our business position, plans, outlook,revenues, earnings, margins, synergies and other financial items, restructuringplans, sales and earnings expectations, expected demand, cost and availabilityof key raw materials, internal and external production capacity and expansion,competitive pricing and relative market position. While we believe suchstatements are reasonable, the actual results and

 

26

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effectscould differ materially from those currently anticipated. These forward-lookingstatements are identified by the use of certain terms and phrases including butnot limited to “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plan,” “anticipate,” “should,” “designedto,” “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 uncertainties could cause actual results to differmaterially from those expressed in or implied by the forward-lookingstatements, and therefore should be carefully considered. Relevant risks anduncertainties relating to the proposed transaction include, but are not limitedto: the risk that required regulatory review and approval may not be obtainedin a timely manner, if at all; Andrew’s shareholders may not approve theproposed transaction; the anticipated benefits and synergies of the proposedtransaction may not be realized; the integration of Andrew’s operations withCommScope could be materially delayed or may be more costly or difficult thanexpected; the proposed transaction may not be consummated; legal proceedingsmay be commenced by or against CommScope or Andrew. Relevant risks anduncertainties generally applicable to CommScope and Andrew include, but are notlimited to: changes in cost and availability of key raw materials and theability to recover these costs from customers through pricing actions;concentration of sales among a limited number of key customers or distributors;customer demand for our products and the ability to maintain existing businessalliances with key customers or distributors; the risk that internal productioncapacity and that of contract manufacturers may be insufficient to meetcustomer demand for products; the risk that customers might cancel ordersplaced or that orders currently placed may reduce orders in the future;continuing consolidation among customers; competitive pricing and acceptance ofproducts; industry competition and the ability to retain customers throughproduct innovation; possible production disruption due to supplier or contractmanufacturer bankruptcy, reorganization or restructuring; successful ongoingoperation of our vertical integration activities; ability to achieve expectedsales, growth and earnings goals; costs of protecting or defending ourintellectual property; ability to obtain capital on commercially reasonableterms; and regulatory changes affecting us or the industries we serve. For amore complete description of factors that could cause such a difference, pleasesee Item 1A to our Annual Report on Form 10-K for the year endedDecember 31, 2006, Item 1A in this Form 10-Q and Andrew’s filings with theSecurities and Exchange Commission (SEC), which are available at Andrew’swebsite or at www.sec.gov. The information contained in this Form 10-Qrepresents our best judgment at the date of this report based on informationcurrently available. In providing forward-looking statements, neither CommScopenor Andrew intends, and neither undertakes any duty or obligation, to updatethese statements as a result of new information, future events or otherwise.

 

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

** **

As disclosed in ourAnnual Report on Form 10-K for the year ended December 31, 2006, ourmajor market risk exposure relates to adverse fluctuations in commodity prices,interest rates and foreign currency exchange rates. We have established a riskmanagement 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 ouracquisition of Andrew, which is expected to close before the end of 2007, webelieve our exposure associated with these market risks has not materiallychanged since December 31, 2006. We have not acquired any new derivativefinancial instruments since December 31, 2006 or terminated any derivativefinancial instruments that existed at that date.

 

**ITEM 4.**                    CONTROLS AND PROCEDURES

** **

Ourdisclosure controls 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.

 

Therewere no changes in our internal control over financial reporting during thethree months ended September 30, 2007 that have materially affected, or arereasonably likely to materially affect, our internal control over financialreporting.

 

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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 andnine months ended September 30, 2007 should be read in conjunction with therisk factors contained in Item 1A of our Annual Report on Form 10-K for theyear ended December 31, 2006 and the following update to our risk factorsrelating to the proposed acquisition of Andrew. These risks and uncertaintieshave the potential to have a material adverse impact on our business, financialcondition and results of operations.

 

***CommScope and Andrew may be required tocomply with material restrictions or conditions in order to obtain theregulatory approvals to complete the merger and any delays in obtainingregulatory approvals may delay and possibly prevent the merger.***

 

The merger is subject to review by the U.S.Department of Justice (DOJ) and the U.S. Federal Trade Commission (FTC) underthe Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act),and by certain antitrust authorities outside of the United States. Under theHSR 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 Andreweach filed a Notification and Report Form pursuant to the HSR Act with the DOJand FTC on July 16, 2007. On August 15, 2007, CommScope and Andrew eachreceived requests for additional information (commonly referred to as a “secondrequest”) from the Antitrust Division of the DOJ. The second requests wereissued under the notification requirements of the HSR Act. The second requestsextend the waiting period imposed by the HSR Act until 30 days after CommScopeand Andrew have substantially complied with the second requests, unless thatperiod is extended voluntarily by the parties or terminated sooner by the DOJ. CommScopeand Andrew have been cooperating fully with the DOJ.

 

The governmental entities from which approvals arerequired may request additional information from the parties in order tocomplete their review of the transaction and may condition their approval ofthe merger on the satisfaction of certain regulatory conditions that may have theeffect of imposing restrictions or additional costs on CommScope or Andrew. Theseconditions could include a complete or partial license, divestiture, spin-offor the sale of certain assets or businesses of either CommScope or Andrew,which may be on terms that are not as favorable to CommScope or Andrew as mayhave been attainable absent the merger, or other restrictions on the operationof the combined business. While we expect to obtain the required regulatoryapprovals, we cannot be certain that all of the required antitrust approvalswill be obtained, nor can we be certain that the approvals will be obtainedwithin the time limits contemplated by the merger agreement. A delay inobtaining the required approvals may delay and possibly prevent the completionof the merger.

 

***We are subject to certain restrictions on theconduct of our business under the terms of the merger agreement.***

 

Under the terms of the merger agreement, we haveagreed to certain restrictions on the operations of our business that arecustomary for transactions similar to the merger. We have agreed to limit theconduct of our business to those actions undertaken in the ordinary course ofbusiness. We have agreed that without Andrew’s consent we will not take certainactions that include amending our organization documents in a manner materiallyadverse to stockholders and acquiring interests in an entity, which acquisitionwould be expected to impede or delay the governmental approvals required forthe merger. Because of these restrictions, we may have been, and prior to theconsummation of the merger, may be, prevented from undertaking certain actionswith respect to the conduct of our business that we might otherwise have takenif not for the merger agreement.

 

***The anticipated benefits of the acquisitionmay not be realized.***

 

We entered into the merger agreement with Andrewwith the expectation that the merger will result in various benefits including,among other things, benefits relating to enhanced revenues, a broader array ofinfrastructure solutions, the expansion of our global distribution andmanufacturing capabilities, operational improvements and a diversification ofour customer base. The merger will present challenges to management, includingthe integration of operations, properties and personnel of Andrew andCommScope. Achieving the anticipated benefits of the merger is subject to anumber of uncertainties, including, but not limited to, whether we canintegrate our business and Andrew’s business in an efficient and effectivemanner, whether there will be increased spending by wireless carriers, ourability to manage potential volatility in commodities prices, the reaction ofexisting or potential competitors to the transaction, and general competitivefactors in the marketplace. Failure to achieve these anticipated benefits couldresult in increased costs, decreases in the amount of expected

 

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revenues and diversion ofmanagement’s time and energy and could materially impact our business,financial condition and operating results.

 

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

 

Our success after the merger will depend, inpart, on our ability to realize the anticipated growth opportunities and costsavings from combining our business with Andrew. We expect to generate annualpretax cost savings (excluding transition cash costs expected to totalapproximately $70 million to $80 million in the first two years aftercompletion) of approximately $90 million to $100 million in the second fullyear after completion of the transaction. We expect to achieve approximately$50 million to $60 million in the first full year after completion of themerger. We expect the cost savings to come from a combination of procurementsavings, rationalization of duplicate locations, streamlining overhead andintegration of infrastructure, and building upon best practices in technologyand manufacturing. We cannot provide any assurance that these cost savings canbe achieved in the amounts or during the periods predicted. To realize theseanticipated benefits, we must successfully combine our business with Andrew ina manner that permits these synergies to be realized. In addition, our successafter the merger will depend, in part, on these synergies being achievedwithout adversely affecting revenues. If we are not able to successfullyachieve these objectives, such anticipated benefits may not be realized fully,or at all, or may take longer to realize than expected.

 

***We may have difficulty integrating ourbusiness with Andrew’s business and may incur substantial costs in connectionwith the integration.***

 

Achieving the anticipated benefits of the mergerwill depend on the successful integration of our products, services,operations, personnel, technology and facilities with those of Andrew in atimely and efficient manner.

 

Although we do not anticipate material difficultiesin connection with such integration, the possibility exists that suchdifficulties could be experienced in connection with the merger, especiallygiven the relatively large size of the merger. The time and expense associatedwith converting 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 of combining sales and marketing forces,consolidating administrative functions, and coordinating product and serviceofferings can take longer, cost more, and provide fewer benefits than initiallyprojected. To the extent any of these events occurs, the benefits of thetransaction may be reduced.

 

Integrating our business with Andrew will be acomplex, time-consuming and expensive process. Before the merger, CommScope andAndrew operated independently, each with its own business, products, customers,employees, culture and systems. We may face substantial difficulties, costs anddelays in integrating the two businesses. These difficulties, costs and delaysmay include:

 

•                  Potentialdifficulty in combining the separate product technologies of CommScope andAndrew;

 

•                  Perceivedadverse changes in product offerings available to customers or in customerservice standards, whether or not these changes do, in fact, occur;

 

•                  Costsand delays in implementing common systems and procedures;

 

•                  Difficultiesin combining research and development teams and processes;

 

•                  Potentialcharges to earnings resulting from the application of purchase accounting tothe transaction;

 

•                  Difficultycomparing financial reports due to differing financial and/or internalreporting systems;

 

•                  Diversionof management resources from the business;

 

•                  Theinability to retain existing customers of each company;

 

•                  Reductionor loss of customer orders due to the potential for market confusion,hesitation and delay;

 

•                  Challengesin retaining and integrating management and other key employees of CommScopeand Andrew;

 

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•                  Difficultiesin coordinating infrastructure operations in an effective and efficient manner;and

 

•                  Theinability to achieve the synergies anticipated to be realized from the mergeron the timeline presently anticipated, or at all.

 

After the merger, we may seek to combine certainoperations and functions using common information and communication systems,operating procedures, financial controls and human resource practices,including training, professional development and benefit programs. We may beunsuccessful in implementing the integration of these systems and processes ina timely and efficient manner. Any one or all of these factors may causeincreased operating costs, worse than anticipated financial performance and/orthe loss of customers and employees. Many of these factors are also outside ofour control.

 

*We mayhave difficulty integrating our system of internal control over financialreporting with that of Andrew.*

 

The failure to integrate our system of internalcontrol over financial reporting with that of Andrew following the merger couldaffect adversely our ability to exercise effective internal control overfinancial reporting. A failure to exercise effective internal control overfinancial reporting could result in a material misstatement in our annual orinterim consolidated financial statements.

 

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

 

CommScope and Andrew depend on the services of theirkey personnel. Current and prospective employees of CommScope and Andrew may,either before or after the merger, experience uncertainty about their futureroles with CommScope after the merger, which may affect the performance of suchpersonnel adversely and the ability of each company to retain and attract keypersonnel. The loss of the services of one or more of these key employees orour inability to attract, train, and retain qualified employees could result inthe loss of customers or otherwise inhibit our ability to integrate and growthe business effectively after the merger.

 

*The mergermay result in a loss of customers.*

 

Some customers may seek alternative sources ofproduct and/or service after the announcement of the merger due to, among otherreasons, a desire not to do business with CommScope after the merger orperceived concerns that CommScope may not continue to support and developcertain product lines. Difficulties in combining operations could also resultin the loss of, or potential disputes or litigation with, customers. Any stepsby management to counter such potential increased customer attrition may not beeffective. Failure by management to retain customers could result in worse thananticipated 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 incursubstantial indebtedness, including the financing necessary to pay the cash portionof the merger consideration and transaction-related costs, in addition to debtassumed from Andrew. Our substantial indebtedness could have the followingconsequences:

 

•                  Ourability to obtain additional financing for working capital, capital expenditures,acquisitions, general corporate purposes or other purposes may be impaired inthe future;

 

•                  Asubstantial portion of our cash flow must be dedicated to the payment ofprincipal and interest on our indebtedness;

 

•                  Wewill be substantially more leveraged than certain of our competitors, whichmight place us at a competitive disadvantage;

 

•                  Wewill be subject to restrictive covenants that may negatively affect ouroperational or financial flexibility or our ability to pursue additionalacquisitions;

 

•                  Wemay be hindered in our ability to adjust rapidly to changing market conditions;and

 

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•                  Ourhigh degree of leverage could make us more vulnerable in the event of adownturn in general economic conditions or our business.

 

*Our ability to obtain additional capital oncommercially reasonable terms may be limited.*

 

Although we believe our current cash, cashequivalents and short-term investments as well as future cash from operationsand availability under our proposed credit facility will provide adequateresources to fund ongoing operating requirements, we may need to seekadditional financing to compete effectively. Our public debt ratings affect ourability to raise capital and the cost of that capital. On June 27, 2007,Standard & Poor’s Rating Services (S&P) lowered its credit rating onCommScope to “BB-” from “BB” and placed the ratings on CreditWatch withnegative implications. In addition, on October 12, 2007, Moody’s InvestorService lowered CommScope’s “Ba2” corporate family rating to “Ba3” with astable outlook. On October 17, 2007, S&P removed CommScope from CreditWatchand affirmed our “BB-” rating with a stable outlook. Future downgrades of ourdebt ratings may increase our borrowing costs and affect our ability to accessthe debt or equity capital markets on terms and in amounts that would besatisfactory to us.

 

If we are unable to obtain capital oncommercially reasonable terms, we could experience the following consequences:

 

•                  Areduction in funds available to us for purposes such as working capital,capital expenditures, research and development, strategic acquisitions andother general corporate purposes;

 

•                  Arestriction of our ability to introduce new products or exploit business opportunities;

 

•                  Anincrease in our vulnerability to economic downturns and competitive pressuresin the market in which we operate;

 

•                  Alimit on our financial flexibility to finance a full or partial redemption ofthe $250 million aggregate principal amount of our 1% convertible seniorsubordinated debentures; and

 

•                  Aloss of competitive advantage.

 

We may incur additional indebtedness in thefuture under the proposed credit facility, through future debt issuance,through assumption of liabilities in connection with future acquisitions orotherwise.

 

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

 

Specified conditions set forth in the mergeragreement must be satisfied or waived to complete the merger. If the conditionsare not satisfied or waived, to the extent waiver is permitted by law or therules or regulations of NASDAQ, the merger will not occur or will be delayed,and each of CommScope and Andrew may lose some or all of the intended benefitsof the merger.

 

The following conditions, in addition to othercustomary closing conditions, must be satisfied or waived, if permissible,before CommScope and Andrew are obligated to complete the merger:

 

•                  Themerger agreement must be adopted by the holders of at least a majority of theissued and outstanding shares of Andrew common stock as of the record date forthe vote;

 

•                  Thewaiting period (and any extension thereof) applicable to the merger pursuant tothe HSR Act, or any other applicable competition, merger, antitrust or similarlaw shall have expired or been terminated;

 

•                  Specifiedgovernmental consents or certain other approvals shall have been obtained andbe in full force and effect;

 

•                  Theremust not be any judgment, injunction, decree or order issued by any court orother governmental entity or any other statute, law, rule, legal restraint orprohibition which prohibits, materially restricts, makes illegal or enjoinsconsummation of the merger; and

 

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

** **

**ITEM 6.**                    EXHIBITS

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

 

**SIGNATURE**

** **

Pursuant to the requirements of theSecurities Exchange Act of 1934, the Registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.

 
|                       |     | COMMSCOPE, INC.                                        |
|-----------------------|----------|--------------------------------------------------------|
|                  |     |                                                   |
|                  |     |                                                   |
| November 7, 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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