**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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FORM 10-Q

**(Mark One)**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**Forthe quarterly period ended June 30, 2005**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**Forthe transition periodfrom                     to                     **

**Commissionfile number 001-12929**

**CommScope, Inc.**

(Exact name of registrantas specified in its charter)

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

 

**1100 CommScope Place, SEP.O. Box 339Hickory, North Carolina**

(Address of principal executiveoffices)

**28602**

(Zip Code)

**(828) 324-2200**

(Registrant’s telephonenumber, including area code)

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(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 markwhether the registrant is an accelerated filer (as defined in Rule 12b-2of the Exchange Act).

Yes x     No o

As of July 29, 2005there were 54,692,923 shares of Common Stock outstanding.

 

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**CommScope, Inc.Form 10-QJune 30, 2005Table of Contents**
| Part I—Financial Information (Unaudited): |   |                                                                                                 |
|-----------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|
|                                                |   | Item 1. Condensed  Consolidated Financial Statements:                                                |   |   |
|                                                |   |                                                                                                 | Condensed  Consolidated Statements of Operations |   | 3 |
|                                                |   |                                                                                                 | Condensed  Consolidated Balance Sheets |   | 4 |
|                                                |   |                                                                                                 | Condensed  Consolidated Statements of Cash Flows |   | 5 |
|                                                |   |                                                                                                 | Condensed  Consolidated Statements of Stockholders’ Equity and Comprehensive Income |   | 6 – 7 |
|                                                |   |                                                                                                 | Notes  to Condensed Consolidated Financial Statements |   | 8 – 18 |
|                                                |   | Item  2. Management’s Discussion and Analysis of Financial Condition and Results of  Operations |   | 19  – 29 |
|                                                |   | Item 3. Quantitative and  Qualitative Disclosures About Market Risk                                  |   | 29 |
|                                                |   | Item 4. Controls and Procedures                                                                      |   | 29 |
| Part II—Other Information:                |   |                                                                                                 |
|                                                |   | Item  4. Submission of Matters to a Vote of Security Holders                                         |   | 30 |
|                                                |   | Item 6. Exhibits                                                                                     |   | 30 |
|                                                |   | Signatures                                                                                           |   | 31 |

 

2

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**CommScope, Inc. Condensed ConsolidatedStatements of Operations(Unaudited—In thousands, except per share amounts)**
| ** **                                                                                                                  | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                                                  | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                                                                                  | ** ** | **2005**                         | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net sales                                                                                                                   |       | $                                | 336,711    |                           | $          | 312,949 |   | $ | 645,765 |   | $ | 548,010 |   |
| Operating costs  and expenses:                                                                                              |       |                             |       |                           |       |   |   |   |   |
| Cost of sales                                                                                                               |       | 248,102                          |       | 240,772                        |       | 484,994 |   | 438,449 |   |
| Selling, general and administrative                                                                                         |       | 54,016                           |       | 51,743                         |       | 107,898 |   | 87,727 |   |
| Research and development                                                                                                    |       | 8,437                            |       | 8,145                          |       | 16,207 |   | 13,011 |   |
| In-process research and development charges                                                                                 |       | —                           |       | —                         |       | — |   | 3,894 |   |
| Acquisition-related transition and startup costs                                                                            |       | —                           |       | 1,242                          |       | — |   | 7,981 |   |
| Restructuring costs                                                                                                         |       | 1,546                            |       | —                         |       | 3,575 |   | — |   |
| Total operating costs and expenses                                                                                          |       | 312,101                          |       | 301,902                        |       | 612,674 |   | 551,062 |   |
| Operating income (loss)                                                                                                     |       | 24,610                           |       | 11,047                         |       | 33,091 |   | (3,052 | ) |
| Other income  (expense), net                                                                                                |       | (612                             | )          | 241                            |       | (669 | ) | (885 | ) |
| Loss on early  extinguishment of debt                                                                                       |       | —                           |       | —                         |       | — |   | (5,029 | ) |
| Interest expense                                                                                                            |       | (2,289                           | )          | (2,440                         | )          | (4,367 | ) | (5,199 | ) |
| Interest income                                                                                                             |       | 1,149                            |       | 445                            |       | 2,148 |   | 924 |   |
| Income (loss) before income taxes, equity in losses  of OFS BrightWave, LLC and net gain on OFS BrightWave, LLC transaction |       | 22,858                           |       | 9,293                          |       | 30,203 |   | (13,241 | ) |
| Income tax  benefit (expense)                                                                                               |       | (6,554                           | )          | (1,038                         | )          | (8,365 | ) | 5,941 |   |
| Income (loss) before equity in losses of OFS  BrightWave, LLC and net gain on OFS BrightWave, LLC transaction          |       | 16,304                           |       | 8,255                          |       | 21,838 |   | (7,300 | ) |
| Equity in losses  of OFS BrightWave, LLC, net of tax of $362 and $865, respectively                                         |       | —                           |       | (578                           | )          | — |   | (1,393 | ) |
| Net gain on OFS  BrightWave, LLC transaction, net of tax of $44,890                                                    |       | —                           |       | 76,437                         |       | — |   | 76,437 |   |
| Net income                                                                                                                  |       | $                                | 16,304     |                           | $          | 84,114 |   | $ | 21,838 |   | $ | 67,744 |   |
| Net income per  share:                                                                                                      |       |                             |       |                           |       |   |   |   |   |
| Basic                                                                                                                       |       | $                                | 0.30       |                           | $          | 1.40 |   | $ | 0.40 |   | $ | 1.12 |   |
| Assuming dilution                                                                                                           |       | $                                | 0.25       |                           | $          | 1.16 |   | $ | 0.34 |   | $ | 1.01 |   |
| Weighted average  shares outstanding:                                                                                       |       |                             |       |                           |       |   |   |   |   |
| Basic                                                                                                                       |       | 54,561                           |       | 60,193                         |       | 54,537 |   | 60,436 |   |
| Assuming dilution                                                                                                           |       | 67,065                           |       | 72,988                         |       | 67,036 |   | 67,980 |   |

 

See notes to condensed consolidated financial statements.

3

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**CommScope, Inc. Condensed ConsolidatedBalance Sheets(Unaudited—In thousands, except share amounts)**
| ** **                                                                                                                                                                                                                                                                                          | ** ** | **June 30,** | ** ** | ** December 31, ** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------------------|------------|
| ** **                                                                                                                                                                                                                                                                                          | ** ** | **2005**          | ** ** | **2004**                          | ** ** |
| **Assets**                                                                                                                                                                                                                                                                                          |       |              |       |                              |       |   |   |
| Cash and cash  equivalents                                                                                                                                                                                                                                                                          |       | $                 | 121,080    |                              |       | $ | 99,631 |   |   |
| Short-term  investments                                                                                                                                                                                                                                                                             |       | 66,151            |       |                              | 77,620     |   |   |
| Total cash, cash equivalents and short-term  investments                                                                                                                                                                                                                                            |       | 187,231           |       |                              | 177,251    |   |   |
| Accounts receivable, less allowance for doubtful  accounts of $14,198 and $12,761, respectively                                                                                                                                                                                                     |       | 164,876           |       |                              | 122,612    |   |   |
| Inventories                                                                                                                                                                                                                                                                                         |       | 110,723           |       |                              | 108,342    |   |   |
| Prepaid expenses  and other current assets                                                                                                                                                                                                                                                          |       | 21,076            |       |                              | 13,244     |   |   |
| Deferred income  taxes                                                                                                                                                                                                                                                                              |       | 30,041            |       |                              | 26,644     |   |   |
| Total current assets                                                                                                                                                                                                                                                                                |       | 513,947           |       |                              | 448,093    |   |   |
| Property, plant and equipment, net                                                                                                                                                                                                                                                                  |       | 287,784           |       |                              | 311,453    |   |   |
| Goodwill                                                                                                                                                                                                                                                                                            |       | 151,360           |       |                              | 151,384    |   |   |
| Other  intangibles, net                                                                                                                                                                                                                                                                             |       | 76,318            |       |                              | 82,315     |   |   |
| Deferred income  taxes                                                                                                                                                                                                                                                                              |       | 16,931            |       |                              | 17,341     |   |   |
| Other assets                                                                                                                                                                                                                                                                                        |       | 18,172            |       |                              | 19,993     |   |   |
| Total Assets                                                                                                                                                                                                                                                                                        |       | $                 | 1,064,512  |                              |       | $ | 1,030,579 |   |   |
| **Liabilities and Stockholders’  Equity**                                                                                                                                                                                                                                                      |       |              |       |                              |       |   |   |
| Accounts payable                                                                                                                                                                                                                                                                                    |       | $                 | 64,672     |                              |       | $ | 52,898 |   |   |
| Other accrued  liabilities                                                                                                                                                                                                                                                                          |       | 95,762            |       |                              | 90,775     |   |   |
| Current portion  of long-term debt                                                                                                                                                                                                                                                                  |       | 13,000            |       |                              | 13,000     |   |   |
| Total current liabilities                                                                                                                                                                                                                                                                           |       | 173,434           |       |                              | 156,673    |   |   |
| Long-term debt                                                                                                                                                                                                                                                                                      |       | 290,800           |       |                              | 297,300    |   |   |
| Pension and  postretirement benefit liabilities                                                                                                                                                                                                                                                     |       | 93,601            |       |                              | 90,620     |   |   |
| Other noncurrent  liabilities                                                                                                                                                                                                                                                                       |       | 31,186            |       |                              | 36,523     |   |   |
| Total Liabilities                                                                                                                                                                                                                                                                                   |       | 589,021           |       |                              | 581,116    |   |   |
| Commitments and contingencies                                                                                                                                                                                                                                                                       |       |              |       |                              |       |   |   |
| Stockholders’ Equity:                                                                                                                                                                                                                                                                          |       |              |       |                              |       |   |   |
| Preferred stock, $.01 par value; Authorized shares:  20,000,000; Issued and outstanding shares: None at June 30, 2005  and December 31, 2004                                                                                                                                         |       | —            |       |                              | —     |   |   |
| Common stock, $.01 par value; Authorized shares:  300,000,000; Issued shares, including treasury stock: 64,865,170 at June 30,  2005 and 64,687,745 at December 31, 2004; Issued and outstanding  shares: 54,665,170 at June 30, 2005 and 54,487,745 at December 31,  2004 |       | 649               |       |                              | 647        |   |   |
| Additional paid-in capital                                                                                                                                                                                                                                                                          |       | 435,204           |       |                              | 432,839    |   |   |
| Retained earnings                                                                                                                                                                                                                                                                                   |       | 188,548           |       |                              | 166,710    |   |   |
| Accumulated other comprehensive loss                                                                                                                                                                                                                                                                |       | (3,375            | )          |                              | (5,198     | ) |   |
| Treasury stock, at cost: 10,200,000 shares at  June 30, 2005 and December 31, 2004                                                                                                                                                                                                   |       | (145,535          | )          |                              | (145,535   | ) |   |
| Total Stockholders’ Equity                                                                                                                                                                                                                                                                     |       | 475,491           |       |                              | 449,463    |   |   |
| Total Liabilities  and Stockholders’ Equity                                                                                                                                                                                                                                                    |       | $                 | 1,064,512  |                              |       | $ | 1,030,579 |   |   |

 

See notes to condensed consolidated financial statements.

4

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**CommScope, Inc.Condensed ConsolidatedStatements of Cash Flows(Unaudited—In thousands)**
| ** **                                                                          | ** ** | **Six Months Ended  June 30,** | ** ** |
|-------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                          | ** ** | **2005**                                      | ** ** | **2004** | ** ** |
| **Operating Activities:**                                                           |       |                                          |       |   |   |
| Net income                                                                          |       | $                                             | 21,838     |   | $ | 67,744 |   |
| Adjustments to reconcile  net income to net cash provided by operating  activities: |       |                                          |       |   |   |
| Depreciation and amortization                                                       |       | 30,616                                        |       | 30,253 |   |
| In-process research and development charges                                         |       | —                                        |       | 3,894 |   |
| Gain on OFS BrightWave, LLC transaction, pretax                                     |       | —                                        |       | (132,425 | ) |
| Impairment of note receivable from OFS BrightWave, LLC,  pretax                     |       | —                                        |       | 11,098 |   |
| Equity in losses of OFS BrightWave, LLC, pretax                                     |       | —                                        |       | 2,258 |   |
| Restructuring costs related to fixed asset  impairment                              |       | 2,225                                         |       | — |   |
| Deferred income taxes                                                               |       | (2,521                                        | )          | 26,968 |   |
| Tax benefit from stock option exercises                                             |       | 355                                           |       | 909 |   |
| Changes in assets  and liabilities:                                                 |       |                                          |       |   |   |
| Accounts receivable                                                                 |       | (42,403                                       | )          | (34,997 | ) |
| Inventories                                                                         |       | (2,314                                        | )          | 42,578 |   |
| Prepaid expenses and other current assets                                           |       | 2,669                                         |       | (1,196 | ) |
| Accounts payable and other accrued liabilities                                      |       | 16,732                                        |       | 34,649 |   |
| Other noncurrent liabilities                                                        |       | (334                                          | )          | 6,680 |   |
| Other                                                                               |       | 267                                           |       | (443 | ) |
| Net cash provided  by operating activities                                          |       | 27,130                                        |       | 57,970 |   |
| **Investing  Activities:**                                                          |       |                                          |       |   |   |
| Additions to property, plant and equipment                                          |       | (13,450                                       | )          | (4,507 | ) |
| Acquisition of Connectivity Solutions                                               |       | 653                                           |       | (260,522 | ) |
| Net proceeds from short-term investments                                            |       | 11,479                                        |       | 74,995 |   |
| Proceeds from disposal of fixed assets                                              |       | 1,576                                         |       | 170 |   |
| Net cash provided  by (used in) investing activities                                |       | 258                                           |       | (189,864 | ) |
| **Financing  Activities:**                                                          |       |                                          |       |   |   |
| Net borrowings under revolving credit facility                                      |       | —                                        |       | 2,500 |   |
| Proceeds from issuance of long-term debt                                            |       | —                                        |       | 100,000 |   |
| Principal payments on long-term debt                                                |       | (6,500                                        | )          | (35,000 | ) |
| Proceeds from issuance of convertible notes                                         |       | —                                        |       | 250,000 |   |
| Repayment of convertible notes                                                      |       | —                                        |       | (172,500 | ) |
| Long-term financing costs                                                           |       | (306                                          | )          | (10,656 | ) |
| Proceeds from exercise of stock options                                             |       | 1,982                                         |       | 5,817 |   |
| Net cash provided  by (used in) financing activities                                |       | (4,824                                        | )          | 140,161 |   |
| Effect of exchange rate changes on cash                                             |       | (1,115                                        | )          | (246 | ) |
| Change in cash and cash equivalents                                                 |       | 21,449                                        |       | 8,021 |   |
| Cash and cash  equivalents, beginning of period                                     |       | 99,631                                        |       | 110,358 |   |
| Cash and cash  equivalents, end of period                                           |       | $                                             | 121,080    |   | $ | 118,379 |   |

 

See notes to condensed consolidated financial statements.

5

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**CommScope, Inc.**

**CondensedConsolidated Statements of Stockholders’ Equity**

**and Comprehensive Income**

**(Unaudited—In thousands, except share amounts)**
| ** **                                    | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------|------------|--------------------------------|------------|
| ** **                                    | ** ** | **June 30,**              | ** ** |
| ** **                                    | ** ** | **2005**                       | ** ** | **2004** | ** ** |
| Number of common shares  outstanding:         |       |                           |       |   |   |
| Balance at beginning of period                |       | 54,487,745                     |       | 59,318,276 |   |
| Issuance of shares to Avaya Inc.              |       | —                         |       | 1,761,538 |   |
| Repurchase of shares from Furukawa            |       | —                         |       | (7,656,900 | ) |
| Issuance of shares for stock option exercises |       | 175,425                        |       | 544,631 |   |
| Issuance of shares to nonemployee directors   |       | 2,000                          |       | — |   |
| Balance at end of period                      |       | 54,665,170                     |       | 53,967,545 |   |
| Common stock:                                 |       |                           |       |   |   |
| Balance at beginning of period                |       | $                              | 647        |   | $ | 619 |   |
| Issuance of shares to Avaya Inc.              |       | —                         |       | 18 |   |
| Issuance of shares for stock option exercises |       | 2                              |       | 4 |   |
| Balance at end of period                      |       | $                              | 649        |   | $ | 641 |   |
| Additional  paid-in capital:                  |       |                           |       |   |   |
| Balance at beginning of period                |       | $                              | 432,839    |   | $ | 384,889 |   |
| Issuance of shares to Avaya Inc.              |       | —                         |       | 32,335 |   |
| Issuance of shares for stock option exercises |       | 1,980                          |       | 5,813 |   |
| Tax benefit from stock option exercises       |       | 355                            |       | 909 |   |
| Issuance of shares to nonemployee directors   |       | 30                             |       | — |   |
| Balance at end of period                      |       | $                              | 435,204    |   | $ | 423,946 |   |
| Retained  earnings:                           |       |                           |       |   |   |
| Balance at beginning of period                |       | $                              | 166,710    |   | $ | 90,955 |   |
| Net income                                    |       | 21,838                         |       | 67,744 |   |
| Balance at end of period                      |       | $                              | 188,548    |   | $ | 158,699 |   |
| Accumulated other  comprehensive loss:        |       |                           |       |   |   |
| Balance at beginning of period                |       | $                              | (5,198     | ) | $ | (7,533 | ) |
| Other comprehensive income (loss), net of tax |       | 1,823                          |       | (2,626 | ) |
| Balance at end of period                      |       | $                              | (3,375     | ) | $ | (10,159 | ) |
| Treasury stock, at cost:                      |       |                           |       |   |   |
| Balance at beginning of period                |       | $                              | (145,535   | ) | $ | (13,224 | ) |
| Treasury shares repurchased                   |       | —                         |       | (132,311 | ) |
| Balance at end of period                      |       | $                              | (145,535   | ) | $ | (145,535 | ) |
| Total stockholders’ equity               |       | $                              | 475,491    |   | $ | 427,592 |   |

 

See notes to condensed consolidated financial statements.

6

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**CommScope, Inc.**

**Condensed Consolidated Statements of Stockholders’Equity and Comprehensive Income (Continued)**

**(Unaudited—Inthousands, except share amounts)**
| ** **                                                                                          | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                          | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                                                          | ** ** | **2005**                         | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Comprehensive income:                                                                               |       |                             |       |                           |       |   |   |   |   |
| Net income                                                                                          |       | $                                | 16,304     |                           | $          | 84,114 |   | $ | 21,838 |   | $ | 67,744 |   |
| Other  comprehensive income (loss), net of tax:                                                     |       |                             |       |                           |       |   |   |   |   |
| Foreign currency translation gain (loss)—foreign  subsidiaries                                 |       | (3,248                           | )          | 816                            |       | (4,000 | ) | 780 |   |
| Foreign currency transaction gain (loss) on  long-term intercompany loans—foreign subsidiaries |       | 5,061                            |       | (2,247                         | )          | 4,682 |   | (3,409 | ) |
| Gain (loss) on derivative financial instrument  designated as a net investment hedge                |       | 783                              |       | (115                           | )          | 1,141 |   | 3 |   |
| Total other comprehensive income (loss), net of tax                                                 |       | 2,596                            |       | (1,546                         | )          | 1,823 |   | (2,626 | ) |
| Total comprehensive income                                                                          |       | $                                | 18,900     |                           | $          | 82,568 |   | $ | 23,661 |   | $ | 65,118 |   |

 

See notes to condensed consolidated financial statements.

7

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**CommScope, Inc.Notes to CondensedConsolidated Financial Statements(Unaudited—In Thousands, Unless Otherwise Noted)**

**1.**   BACKGROUND AND BASIS OFPRESENTATION

**Background**

CommScope, Inc. andits wholly owned subsidiaries (“CommScope” or the “Company”) is a world leaderin the design and manufacture of cable and connectivity solutions forcommunications networks. The Company focuses on the ‘last mile’ incommunications networks, which is the distribution access, or final link to thecustomer. Through the acquisition of substantially all of the assets and theassumption of certain liabilities of the Connectivity Solutions business (“ConnectivitySolutions”) of Avaya, Inc. (“Avaya”) as of January 31, 2004 (seeNote 2), the Company became a global leader in structured cabling forbusiness enterprise applications. The Company is also a global leader inbroadband coaxial cables for the cable television industry. The Company alsodesigns, manufactures and markets a broad line of high-performanceelectronic, coaxial and fiber optic cable products for data networking,Internet access, wireless communication, telephony and other broadbandapplications. In addition, the Company is a leading provider of environmentallysecure enclosures and structured cabling solutions supporting central officesfor telecommunication service providers in the United States.

**Basis of Presentation**

The condensed consolidated balance sheet as of June 30,2005, the condensed consolidated statements of operations and comprehensiveincome for the three and six months ended June 30, 2005 and 2004, and thecondensed consolidated statements of cash flows and stockholders’ equity forthe six months ended June 30, 2005 and 2004 are unaudited and reflect alladjustments of a normal recurring nature that are, in the opinion ofmanagement, necessary for a fair presentation of the interim period financialstatements. The results of operations for the interim period are notnecessarily indicative of the results of operations to be expected for the fullyear.

The accompanying condensed consolidated financialstatements for the three and six months ended June 30, 2004 include theresults of Connectivity Solutions from January 31, 2004, the date of theConnectivity Solutions acquisition (see Note 2). In addition, the condensedconsolidated results of operations for the three and six months ended June 30,2004 include the results of operations of OFS BrightWave, LLC (“OFS BrightWave”)through June 14, 2004, the date CommScope disposed of its equity interestin OFS BrightWave (see Note 6).

The unaudited interimcondensed consolidated financial statements of CommScope have been preparedpursuant to the rules and regulations of the Securities and ExchangeCommission (“SEC”). Accordingly, certain information and footnote disclosuresnormally included in financial statements prepared in accordance withaccounting principles generally accepted in the United States of America havebeen condensed or omitted. The significant accounting policies followed by theCompany are set forth in Note 2 to the consolidated financial statements in theCompany’s Annual Report on Form 10-K for the year ended December 31,2004 (the “2004 Form 10-K”). There were no changes in the Company’ssignificant accounting policies during the three or six months ended June 30,2005. In addition, the Company reaffirms the use of estimates in thepreparation of the financial statements as set forth in the 2004 Form 10-K.These interim condensed consolidated financial statements should be read inconjunction with the Company’s December 31, 2004 audited consolidatedfinancial statements and notes thereto included in the 2004 Form 10-K.

8

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**Concentrations of Risk**

Net sales to Anixter International Inc. and itsaffiliates (“Anixter”) accounted for approximately 35% and 34% of the Company’stotal net sales during the three and six months ended June 30, 2005,respectively, and approximately 33% and 31% of the Company’s total net salesduring the three and six months ended June 30, 2004, respectively. Salesto Anixter primarily originate within the Enterprise segment. No other customeraccounted for 10% or more of the Company’s total net sales for the three andsix months ended June 30, 2005 and 2004.

Accounts receivable fromAnixter represented approximately 40% of net accounts receivable as of June 30,2005. No other customer accounted for 10% or more of the Company’s net accountsreceivable as of June 30, 2005.

**Product Warranties**

The Company recognizes a liability for the estimatedclaims that may be paid under its customer warranty agreements to remedypotential deficiencies of quality or performance of the Company’s products. Theseproduct warranties extend over periods ranging from one to twenty-five yearsfrom the date of sale, depending upon the product subject to the warranty. TheCompany records a provision for estimated future warranty claims based upon thehistorical relationship of warranty claims to sales and specifically-identifiedwarranty issues. The Company bases its estimates on historical experience andon assumptions that are believed to be reasonable under the circumstances andrevises its estimates, as appropriate, when events or changes in circumstancesindicate that revisions may be necessary.

Activityin the product warranty accrual, included in other accrued liabilities, for thethree and six months ended June 30, 2005 consisted of the following:
| ** **                                     | ** ** | **Three Months**       | ** ** | **Six Months**         | ** ** |
|------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **                                     | ** ** | **Ended**                   | ** ** | **Ended**                   | ** ** |
| ** **                                     | ** ** | **June 30, 2005** | ** ** | **June 30, 2005** | ** ** |
| Product warranty  accrual, beginning of period |       |                        | $          | 1,433                       |       |   |   | $ | 1,531 |   |   |
| Provision for  warranty claims                 |       |                        | 31         |                        |       |   | 45 |   |   |
| Less: warranty  claims paid                    |       |                        | (135       | )                           |       |   | (247 | ) |   |
| Product warranty  accrual, end of period       |       |                        | $          | 1,329                       |       |   |   | $ | 1,329 |   |   |

 

**Commitments and Contingencies**

CommScope is either aplaintiff or a defendant in pending legal matters in the normal course ofbusiness; however, management believes none of these legal matters will have amaterially adverse effect on the Company’s financial statements upon finaldisposition. In addition, CommScope is subject to various federal, state, localand foreign laws and regulations governing the use, discharge, disposal andremediation of hazardous materials. Compliance with current laws andregulations has not had, and is not expected to have, a materially adverseeffect on the Company’s financial condition or results of operations.

**Net Income Per Share**

Basic net income per share is computed by dividing netincome by the weighted average number of common shares outstanding during theapplicable period. Diluted net income per share is based on net income adjustedfor after-tax interest and amortization of debt issuance costs related toconvertible debt, if dilutive, divided by the weighted average number of commonshares outstanding adjusted for the dilutive effect of stock options andconvertible securities.

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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 EndedJune 30,** | ** ** | **Six Months EndedJune 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                                                                             | ** ** | **2005**                                      | ** ** | **2004**                                    | ** ** | **2005** | ** ** | **2004** | ** ** |
| Numerator:                                                                                                             |       |                                          |       |                                        |       |   |   |   |   |
| Net income for basic net income per share                                                                              |       | $                                             | 16,304     |                                        | $          | 84,114 |   | $ | 21,838 |   | $ | 67,744 |   |
| Effect of assumed conversion of 1% convertible  senior subordinated debentures due 2024                                |       | 629                                           |       | 665                                         |       | 1,258 |   | 712 |   |
| Income available to common shareholders for diluted net  income per share                                         |       | $                                             | 16,933     |                                        | $          | 84,779 |   | $ | 23,096 |   | $ | 68,456 |   |
| Denominator:                                                                                                           |       |                                          |       |                                        |       |   |   |   |   |
| Weighted average number of common shares outstanding  for basic net income per share                                   |       | 54,561                                        |       | 60,193                                      |       | 54,537 |   | 60,436 |   |
| Effect of  dilutive securities:                                                                                        |       |                                          |       |                                        |       |   |   |   |   |
| Employee stock options(a)                                                                                              |       | 1,010                                         |       | 1,301                                       |       | 1,005 |   | 1,355 |   |
| 1% convertible senior subordinated debentures due  2024                                                                |       | 11,494                                        |       | 11,494                                      |       | 11,494 |   | 6,189 |   |
| Weighted average  number of common and potential common shares outstanding for diluted net  income per share |       | 67,065                                        |       | 72,988                                      |       | 67,036 |   | 67,980 |   |

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(a)           Optionsto purchase approximately 3.3 million and 0.7 million common shares wereexcluded from the computation of net income per share, assuming dilution, forthe three months ended June 30, 2005 and 2004, respectively, and optionsto purchase approximately 4.5 million and 0.7 million common shares wereexcluded from the computation of net income per share, assuming dilution, forthe six months ended June 30, 2005 and 2004, respectively, because theywould have been antidilutive.

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**Stock Options**

Thefollowing table illustrates the effect on net income and net income per shareas if the Company had applied the fair value recognition provisions ofStatement of Financial Accounting Standards (“SFAS”) No. 123, “Accountingfor Stock-Based Compensation,” to stock-based employee compensation using theBlack-Scholes option pricing model:
| ** **                                                                                                                                         | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                                                         | ** ** | **2005**                                        | ** ** | **2004**                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net income, as  reported                                                                                                                           |       | $                                               | 16,304     |                                          | $          | 84,114 |   | $ | 21,838 |   | $ | 67,744 |   |
| Deduct: Total stock-based employee compensation  expense determined under fair value based method for all awards, net of  related tax effects |       | 1,601                                           |       | 1,810                                         |       | 3,599 |   | 3,448 |   |
| Pro forma net income for basic net income per share                                                                                                |       | $                                               | 14,703     |                                          | $          | 82,304 |   | $ | 18,239 |   | $ | 64,296 |   |
| Add: Effect of assumed conversion of 1% convertible senior  subordinated debentures due 2024                                                       |       | 629                                             |       | 665                                           |       | 1,258 |   | 712 |   |
| Pro forma net income for diluted net income per  share                                                                                             |       | $                                               | 15,332     |                                          | $          | 82,969 |   | $ | 19,497 |   | $ | 65,008 |   |
| Net income per  share:                                                                                                                             |       |                                            |       |                                          |       |   |   |   |   |
| Basic—as reported                                                                                                                             |       | $                                               | 0.30       |                                          | $          | 1.40 |   | $ | 0.40 |   | $ | 1.12 |   |
| Basic—pro forma                                                                                                                               |       | $                                               | 0.27       |                                          | $          | 1.37 |   | $ | 0.33 |   | $ | 1.06 |   |
| Diluted—as reported                                                                                                                           |       | $                                               | 0.25       |                                          | $          | 1.16 |   | $ | 0.34 |   | $ | 1.01 |   |
| Diluted—pro forma                                                                                                                             |       | $                                               | 0.23       |                                          | $          | 1.14 |   | $ | 0.29 |   | $ | 0.96 |   |

 

**Impactof Newly Issued Accounting Standards**

In December 2004, the Financial AccountingStandards Board (“FASB”) issued SFAS No. 123 (revised), “Share-BasedPayment,” which establishes standards related to the accounting fortransactions in which an entity exchanges its equity instruments for goods orservices. This revised standard also addresses transactions in which an entityincurs liabilities in exchange for goods or services that are based on the fairvalue of the entity’s equity instruments or that may be settled by the issuanceof these equity instruments. SFAS No. 123 (revised) focuses primarily onaccounting for transactions in which an entity obtains employee services inshare-based payment transactions. This standard requires a public entity to measurethe cost of employee services received in exchange for an award of equityinstruments based on the grant-date fair value of the award and recognize thecost over the period during which an employee is required to provide service inexchange for the award. In April 2005, the SEC amended the effective dateto allow companies to implement this standard at the beginning of their nextfiscal year beginning after June 15, 2005. CommScope believes that thisstatement will have a material impact on its consolidated statement ofoperations. The pro forma effects on net income and net income per sharerelated to the application of this standard had CommScope applied fair valuerecognition provisions for the three and six months ended June 30, 2005and 2004 are reported within this Note in the section titled “StockOptions.”

In November 2004, the FASB issued SFAS No. 151,“Inventory Costs, an Amendment of ARB No. 43, Chapter 4.” SFAS No. 151clarifies that abnormal amounts of idle facility expense, freight, handlingcosts and wasted materials (spoilage) should be recognized as current-periodcharges and requires the allocation of fixed production overhead to inventorybased on the normal capacity of the production facilities. SFAS No. 151 iseffective for inventory costs incurred during fiscal years beginning after June 15,2005. Adoption of SFAS No. 151 is not expected to have a material impacton the Company’s financial condition, results of operations or cash flows.

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In May 2005, the FASBissued SFAS No. 154, “Accounting Changes and Error Corrections—areplacement of APB Opinion No. 20 and FASB Statement No. 3.” UnderSFAS No. 154, changes in accounting principles will generally be made bythe retrospective application of the new accounting principle to the financialstatements of prior periods unless it is impractical to determine the effect ofthe change on prior periods. The reporting of a change in accounting principleas a cumulative adjustment to net income in the period of the change, as waspreviously permitted under APB Opinion No. 20, will no longer be permittedunless it is impractical to determine the effect of the change on priorperiods. Correction of an error in the application of accounting principles willcontinue to be reported by retroactively restating the affected financialstatements. The provisions of SFAS No. 154 will not apply to newaccounting standards that contain specific transition provisions. SFAS No. 154is applicable to accounting changes made in fiscal years beginning on or after December 15,2005. The Company does not expect SFAS No. 154 to have a material effect,if any, on its consolidated financial statements.

**2.   ACQUISITIONOF CONNECTIVITY SOLUTIONS**

Effective January 31, 2004, CommScope acquiredsubstantially all of the assets and assumed certain liabilities of ConnectivitySolutions. The total purchase price consisted of approximately $250 million incash and approximately 1.8 million shares of CommScope common stock, valued at$32.4 million. CommScope assumed certain current liabilities and approximately$65 million of other specified liabilities, primarily related to employeebenefits.

CommScope’sconsolidated results of operations for the six months ended June 30, 2004include the results of operations of the Connectivity Solutions business forthe five-month period from February 1, 2004 through June 30, 2004. Thefollowing table presents pro forma consolidated results of operations forCommScope for the six months ended June 30, 2004, as though theacquisition of Connectivity Solutions had been completed as of January 1,2004. This pro forma information is intended to provide information regardinghow CommScope might have looked if the acquisition had occurred as of January 1,2004 and is based on the historical results of the Connectivity Solutionsbusiness as a division of Avaya for the month of January 2004. Therefore,the pro forma information may not be indicative of the actual results of theConnectivity Solutions business when operated as part of CommScope. Moreover,the pro forma information does not reflect all of the changes that may resultfrom the acquisition, including, but not limited to, challenges of transition,integration and restructuring associated with the transaction; challenges ofachieving anticipated synergies; ability to retain qualified employees andexisting business alliances; maintaining satisfactory relationships withrepresented employees; and customer demand for Connectivity Solutions products.The pro forma adjustments represent management’s best estimates based oninformation available at the time the pro forma information was prepared andmay differ from the adjustments that may actually have been required. Accordingly,the pro forma financial information should not be relied upon as beingindicative of the historical results that would have been realized had theacquisition occurred as of January 1, 2004 or that may be achieved in thefuture.
| ** **                      | ** ** | **Six MonthsEndedJune 30, 2004** | ** ** |
|---------------------------------|------------|-------------------------------------------------|------------|
| Pro forma revenue               |       |                                            | $          | 573,720 |   |   |
| Pro forma net  income           |       |                                            | 61,061     |   |   |
| Pro forma net income per  share |       |                                            | 0.91       |   |   |

 

These pro forma results reflect the elimination ofintercompany sales and immaterial adjustments for interest expense,depreciation, amortization and related income taxes. These pro forma resultsalso include an estimate of $4.0 million, pretax, for corporate overhead coststhat would have been allocated by Avaya to the Connectivity Solutions businessduring January 2004. During the five-month period from 

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February 1, 2004through June 30, 2004, CommScope incurred corporate overhead costs ofapproximately $3.4 million on behalf of Connectivity Solutions.

Thepro forma net income and net income per share for the six months ended June 30,2004 include certain material nonrecurring charges incurred during the period,as listed below on a pretax basis:
| Impact of  inventory purchase accounting adjustments             |   | $     | 14,628 |   |
|------------------------------------------------------------------|--------|-------|--------|--------|
| Acquisition-related  in-process research and development charges |   | 3,894 |   |
| Acquisition-related  transition and startup costs                |   | 7,981 |   |
| Loss on early  extinguishment of debt                            |   | 5,029 |   |

 

**3.   INVENTORIES**
| ** **      | ** ** | **June 30,  2005** | ** ** | **December 31,  2004** | ** ** |
|-----------------|------------|-------------------------|------------|-----------------------------|------------|
| Raw materials   |       | $                       | 39,600     |                        |       | $ | 40,250 |   |   |
| Work in process |       | 23,687                  |       |                        | 22,156     |   |   |
| Finished goods  |       | 47,436                  |       |                        | 45,936     |   |   |
|            |       | $                       | 110,723    |                        |       | $ | 108,342 |   |   |

 

**4.   LONG-TERMDEBT**
| ** **                                     | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                     | ** ** | **2005**          | ** ** | **2004**              | ** ** |
| Senior secured  term loan                      |       | $                 | 43,000     |                  |       | $ | 49,500 |   |   |
| 1% convertible  senior subordinated debentures |       | 250,000           |       |                  | 250,000    |   |   |
| IDA notes                                      |       | 10,800            |       |                  | 10,800     |   |   |
|                                           |       | 303,800           |       |                  | 310,300    |   |   |
| Less: current  portion                         |       | (13,000           | )          |                  | (13,000    | ) |   |
|                                           |       | $                 | 290,800    |                  |       | $ | 297,300 |   |   |

 

The Company entered into a 5-year, $185 million seniorsecured credit facility on January 31, 2004 in connection with its acquisitionof Connectivity Solutions. See Note 12 in the Notes to the ConsolidatedFinancial Statements in the 2004 Form 10-K for information on the termsand conditions of the senior secured credit facility. On June 27, 2005,the senior secured credit facility was amended to, among other things, extendthe maturity date of the $110 million revolving credit facility from January 31,2009 to January 31, 2010; reduce the interest rate on the $75 million termloan to, at the Company’s option, either the London Interbank Offered Rate (“LIBOR”)plus 1.50% to 2.00%, or the Base Rate, defined as the higher of Prime Rate orFederal Base Rate plus 0.50%, plus 0.00% to 0.75%, in each case based on theCompany’s fixed charge coverage ratio; reduce the interest rate on therevolving credit facility to, at the Company’s option, either LIBOR plus 1.25%to 1.75%, or the Base Rate plus 0.00% to 0.50%, in each case based on theCompany’s fixed charge coverage ratio; and loosen certain financial and othercovenants.

As of June 30, 2005, the Company had availabilityof approximately $72 million and no outstanding borrowings under the revolvingcredit facility. Management believes the Company was in compliance with all ofits covenants under this facility as of June 30, 2005.

In March 2004, theCompany issued $250 million aggregate principal amount of 1% convertible seniorsubordinated debentures due March 15, 2024. The proceeds from thesedebentures were used primarily to extinguish the Company’s outstanding 4% convertiblesubordinated notes due December 15, 2006, to repay outstanding borrowingsunder the Company’s revolving credit facility and for general corporatepurposes. The Company repurchased $102.9 million of its 4% convertiblesubordinated notes during 

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March 2004and redeemed the remaining $69.6 million of these notes in April 2004. Therepurchase and pending redemption of these 4% convertible subordinated notesresulted in a $5.0 million pretax loss on the early extinguishment of debtduring the three months ended March 31, 2004. The Company also repaid $25million of borrowings under its revolving credit facility in March 2004. SeeNote 12 in the Notes to the Consolidated Financial Statements in the 2004 Form 10-Kfor information on the terms and conditions of the 1% convertible seniorsubordinated debentures.

**5.**   RESTRUCTURING CHARGEAND EMPLOYEE TERMINATION BENEFITS

In October 2004, the Board of Directors ofConnectivity Solutions Manufacturing, Inc. (“CSMI”), a wholly ownedsubsidiary of the Company, adopted organizational and cost reductioninitiatives at its Omaha, Nebraska facility in order to improve its competitiveposition.

Theactivity within the liability for these restructuring initiatives during thethree and six months ended June 30, 2005 was as follows:
| ** **                                              | ** ** | **Employee-  Related  Costs** | ** ** | **Process  Improvement  Costs** | ** ** | **AssetImpairment  Charges** | ** ** | **Total** | ** ** |
|---------------------------------------------------------|------------|-------------------------------|------------|---------------------------------|------------|------------------------------|------------|-----------|------------|
| Activity during  three months ended June 30, 2005: |       |                          |       |                            |       |                         |       |      |       |   |   |   |   |   |   |
| Beginning balance                                       |       |                          | $          | 2,214                           |       |                         |       | $         | —     |   |   |   | $ | — |   |   | $ | 2,214 |   |
| Additional charge recorded                              |       |                          | —     |                            |       |                         | 1,249      |      |       |   | 547 |   |   | 1,796 |   |
| Cash paid                                               |       |                          | (1,387     | )                               |       |                         | (1,249     | )         |       |   | — |   |   | (2,636 | ) |
| Non-cash                                                |       |                          | —     |                            |       |                         | —     |      |       |   | (547 | ) |   | (547 | ) |
| Reversal of reserves                                    |       |                          | (250       | )                               |       |                         | —     |      |       |   | — |   |   | (250 | ) |
| Balance as of  June 30, 2005                       |       |                          | $          | 577                             |       |                         |       | $         | —     |   |   |   | $ | — |   |   | $ | 577 |   |
| Activity during six months ended June 30, 2005:    |       |                          |       |                            |       |                         |       |      |       |   |   |   |   |   |   |
| Beginning balance                                       |       |                          | $          | 4,132                           |       |                         |       | $         | —     |   |   |   | — |   |   | $ | 4,132 |   |
| Additional charge recorded                              |       |                          | —     |                            |       |                         | 2,853      |      |       |   | 2,225 |   |   | 5,078 |   |
| Cash paid                                               |       |                          | (2,052     | )                               |       |                         | (2,853     | )         |       |   | — |   |   | (4,905 | ) |
| Non-cash                                                |       |                          | —     |                            |       |                         | —     |      |       |   | (2,225 | ) |   | (2,225 | ) |
| Reversal of reserves                                    |       |                          | (1,503     | )                               |       |                         | —     |      |       |   | — |   |   | (1,503 | ) |
| Balance as of  June 30, 2005                       |       |                          | $          | 577                             |       |                         |       | $         | —     |   |   |   | $ | — |   |   | $ | 577 |   |

 

Included in the asset impairment charge recordedduring the six months ended June 30, 2005 is approximately $575 related toa warehouse building that is no longer in use. The warehouse has beenclassified as held for sale ($10.2 million) and is carried at estimated fairvalue less costs to sell and reported in other current assets as of June 30,2005. The remainder of the asset impairment charge relates to equipment that isno longer used in production and has been scrapped or sold.

A portion of the reserves established in 2004 foremployee-related costs was released during the first and second quarters of2005. There were fewer reductions in personnel under the initiatives than hadbeen initially projected by the Company, primarily due to higher thananticipated levels of business volume for certain products during the three andsix months ended June 30, 2005.

Approximately 60% of the net restructuring costsrecognized were allocable to the Enterprise segment with the remainder beingallocable to the Carrier segment. While the implementation of theserestructuring initiatives is essentially complete, the Company expects torecognize additional pretax restructuring costs of up to $1 million during thebalance of 2005 related to these initiatives. The amount and timing of suchcosts will depend on issues encountered and market conditions duringimplementation of the initiatives.

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During the first quarterof 2004, CommScope reduced the Connectivity Solutions workforce byapproximately 45 employees. The reductions were primarily related to theCompany’s efforts to improve operational efficiency and reduce cost. Theaffected employees were employed in management and support functions at theOmaha facility. This workforce reduction resulted in pretax charges ofapproximately $1.6 million during the first quarter of 2004 (which waspartially offset by an adjustment of approximately $0.3 million in thefourth quarter of 2004) that are recorded in acquisition-related transition andstartup costs. As of December 31, 2004, there was no remaining liabilityrelated to this workforce reduction.

**6.**   EQUITY INTEREST INOFS BRIGHTWAVE, LLC

In November 2001, CommScope acquired an 18.4% ownershipinterest in OFS BrightWave, an optical fiber and fiber cable venture betweenCommScope and The Furukawa Electric Co., Ltd. (“Furukawa”). On June 14,2004, CommScope exercised its contractual right to sell and sold its ownershipinterest in OFS BrightWave to Furukawa in exchange for the approximately 7.7million shares of CommScope common stock owned by Furukawa, which were valuedat $132.3 million as of the transaction date. As a result of this transaction,CommScope no longer owns any equity interest in OFS BrightWave.

This transaction does not affect CommScope’s right toreceive full payment from OFS BrightWave under a $30 million note due in 2006,based on its original terms. As of the transaction date, CommScope determinedthat there was an other-than-temporary impairment in the carrying value of thenote and recognized a pretax impairment charge of $11.1 million as a reductionof the gain on the OFS BrightWave transaction, thereby reducing the carryingvalue of the note to zero.

The OFS BrightWave transaction resulted in a netpretax gain of $121.3 million ($76.4 million after-tax). This gainrepresents (1) the fair value of the common stock received by CommScope inexchange for its ownership interest in OFS BrightWave, plus (2) therealized gain from CommScope’s cumulative equity method share of OFS BrightWave’sunrealized foreign currency translation gains previously recorded inaccumulated other comprehensive loss, less (3) the impairment chargerelated to the $30 million note.

CommScope’s share of the losses of OFS BrightWave forthe period from April 1, 2004 through June 14, 2004 and the periodfrom January 1, 2004 through June 14, 2004 have been included in theCompany’s condensed consolidated financial statements. These results are net ofelimination of intercompany profit in the amount of $14 and $30, net of tax,respectively, related to interest payments received from OFS BrightWave underthe $30 million note. OFS BrightWave has elected to be taxed as a partnership;therefore, the Company’s income tax benefit from flow-through losses has beenrecorded based on the Company’s tax rates.

Thefollowing table provides summary financial information for OFS BrightWave:
| ** **   | ** ** | **Period from  April 1 through  June 14, 2004** | ** ** | **Period from  January 1 through  June 14, 2004** | ** ** |
|--------------|------------|--------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| Net revenues |       |                                                                     | $          | 19,975                                                                     |       |   |   | $ | 40,497 |   |   |
| Gross profit |       |                                                                     | (2,771     | )                                                                          |       |   | (8,612 | ) |   |
| Net loss     |       |                                                                     | (8,904     | )                                                                          |       |   | (20,860 | ) |   |

 

**7.**   DERIVATIVES ANDHEDGING ACTIVITIES

As of June 30, 2005 and 2004, the only derivativefinancial instrument outstanding was a cross currency swap of U.S. dollars foreuros, which was designated and documented at inception as a net investmenthedge of a portion of the Company’s net investment in its Belgian subsidiary. Thehedging instrument was effective as of June 30, 2005 and 2004, and isexpected to continue to be effective for the 

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duration of the agreement,resulting in no anticipated hedge ineffectiveness. The fair value of thederivative instrument, reflected in other noncurrent liabilities, wasapproximately $6.5 million and $8.4 million as of June 30, 2005 and December 31,2004, respectively.

There were no material reclassifications from othercomprehensive income (loss) to earnings during the three and six months ended June 30,2005 and 2004.

Activityin the accumulated net loss on derivative instruments included in accumulatedother comprehensive loss consisted of the following:
| ** **                                                                                    | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                    | ** ** | **2005**                                        | ** ** | **2004**                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Accumulated net  loss on derivative instruments, beginning of period                     |       | $                                               | (5,358     | )                                             | $          | (3,863 | ) | $ | (5,716 | ) | $ | (3,981 | ) |
| Net gain (loss) on derivative financial instrument  designated as a net investment hedge |       | 783                                             |       | (115                                          | )          | 1,141 |   | 3 |   |
| Accumulated net  loss on derivative instruments, end of period                           |       | $                                               | (4,575     | )                                             | $          | (3,978 | ) | $ | (4,575 | ) | $ | (3,978 | ) |

 

During the three monthsended June 30, 2005 and 2004, the income tax expense (benefit) related tothe gain (loss) on the derivative financial instrument designated as a netinvestment hedge and reported within other comprehensive income (loss) was $460and $(68), respectively. During the six months ended June 30, 2005 and2004, the income tax expense related to the gain on the derivative financialinstrument designated as a net investment hedge and reported within othercomprehensive income (loss) was $670 and $2, respectively.

**8.   SUPPLEMENTALCASH FLOW INFORMATION**
| ** **                                                                                                                                                       | ** ** | **Six Months  Ended June 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                                                                       | ** ** | **2005**                                      | ** ** | **2004** | ** ** |
| Cash paid during the  period for:                                                                                                                                |       |                                          |       |   |   |
| Income taxes                                                                                                                                                     |       | $                                             | 11,390     |   | $ | 99 |   |
| Interest                                                                                                                                                         |       | 3,330                                         |       | 3,557 |   |
| Noncash investing  and financing activities:                                                                                                                     |       |                                          |       |   |   |
| Fair value of CommScope, Inc. common stock  received from Furukawa in exchange for CommScope’s transfer of its investment  in OFS BrightWave |       | $                                             | —     |   | $ | 132,311 |   |
| Fair value of CommScope, Inc. common stock  issued as partial consideration for Connectivity Solutions acquisition                                     |       | —                                        |       | 32,853 |   |
| Fair value less  costs to sell of held for sale assets transferred from property, plant and  equipment to other current assets                              |       | 10,190                                        |       | — |   |

 

**9.**   SEGMENTS

During 2004, as a result of the acquisition ofConnectivity Solutions, the Company’s management evaluated the results ofoperations in two reportable business segments: the Cable segment, which wasthe same as CommScope’s cable business prior to the acquisition of ConnectivitySolutions, and the Connectivity Solutions segment, which was the ConnectivitySolutions business that was acquired as of January 31, 2004.

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During the first quarter of 2005, as a result of thecontinued integration of the Connectivity Solutions business into the Company’sglobal operations and financial reporting systems, management changed thereportable segments used to evaluate the Company’s results of operations. Thenew reportable segments that have been identified are defined by major productcategory as follows: Enterprise, Broadband and Carrier. Results for the threeand six months ended June 30, 2004, which include the results of theConnectivity Solutions business for the period from February 1, 2004through June 30, 2004, have been restated to conform to the new reportablesegments.

The Enterprise segment consists mainly of structuredcabling systems for business enterprise applications. The segment also includescoaxial cable for various video and data applications.

The Broadband segment consists mainly of coaxialcable, fiber optic cable and conduit for cable television system operators. Theseproducts support multi-channel video, voice and high-speed data services forresidential and commercial customers using Hybrid Fiber Coaxial architecture.

The Carrier segment consists of secure environmentalenclosures for electronic devices and equipment, structured cabling solutionsfor telephone central offices and cables and components used by wirelessproviders to connect antennae to transmitters. These products are primarilyused by telecommunications service providers or “carriers.”

Thefollowing tables provide summary financial information for these new reportablesegments as of June 30, 2005 and December 31, 2004 and for the threeand six months ended June 30, 2005 and 2004 (in millions):
| ** **                                        | ** ** | **As of**    | ** ** | **As of**        | ** ** |
|---------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                        | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
| ** **                                        | ** ** | **2005**          | ** ** | **2004**              | ** ** |
| Identifiable  Segment Related Assets:             |       |              |       |                  |       |   |   |
| Enterprise                                        |       | $                 | 365.8      |                  |       | $ | 337.4 |   |   |
| Broadband                                         |       | 353.9             |       |                  | 353.1      |   |   |
| Carrier                                           |       | 92.4              |       |                  | 98.9       |   |   |
| Total  Identifiable Segment Related Assets        |       | 812.1             |       |                  | 789.4      |   |   |
| Reconciliation to Total Assets:                   |       |              |       |                  |       |   |   |
| Cash, cash equivalents and short-term investments |       | 187.2             |       |                  | 177.3      |   |   |
| Deferred income taxes                             |       | 47.0              |       |                  | 43.9       |   |   |
| Other assets, long-term                           |       | 18.2              |       |                  | 20.0       |   |   |
| Total Assets                                      |       | $                 | 1,064.5    |                  |       | $ | 1,030.6 |   |   |

 
| ** **                            | ** ** | **Three Months  Ended June 30,** | ** ** | **Six Months  Ended June 30,** | ** ** |
|---------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                            | ** ** | **2005**                                        | ** ** | **2004**                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net Sales:                            |       |                                            |       |                                          |       |   |   |   |   |
| Enterprise                            |       | $                                               | 173.8      |                                          | $          | 157.4 |   | $ | 331.5 |   | $ | 269.8 |   |
| Broadband                             |       | 109.9                                           |       | 112.5                                         |       | 218.0 |   | 203.6 |   |
| Carrier                               |       | 53.7                                            |       | 43.4                                          |       | 97.8 |   | 75.5 |   |
| Inter-segment eliminations            |       | (0.7                                            | )          | (0.4                                          | )          | (1.5 | ) | (0.9 | ) |
| Consolidated Net  Sales               |       | $                                               | 336.7      |                                          | $          | 312.9 |   | $ | 645.8 |   | $ | 548.0 |   |
| Operating Income  (Loss):             |       |                                            |       |                                          |       |   |   |   |   |
| Enterprise                            |       | $                                               | 22.2       |                                          | $          | 9.3 |   | $ | 31.1 |   | $ | (1.6 | ) |
| Broadband                             |       | 5.8                                             |       | 10.1                                          |       | 12.3 |   | 15.8 |   |
| Carrier                               |       | (3.4                                            | )          | (8.4                                          | )          | (10.3 | ) | (17.3 | ) |
| Consolidated Operating  Income (Loss) |       | $                                               | 24.6       |                                          | $          | 11.0 |   | $ | 33.1 |   | $ | (3.1 | ) |

 

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**10.   EMPLOYEEBENEFIT PLANS**
| ** **                             | ** ** | **Three Months Ended June 30,** | ** ** |
|----------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                             | ** ** | **Pension Benefits**                           | ** ** | **Other Postretirement  Benefits** | ** ** |
| ** **                             | ** ** | **2005**                                            | ** ** | **2004** | ** ** | **     2005     ** | ** ** | **     2004     ** | ** ** |
| Service cost                           |       | $                                                   | 983        |   | $ | 870 |   |   | $ | 1,043 |   |   |   | $ | 1,137 |   |   |
| Interest cost                          |       | 1,565                                               |       | 1,322 |   |   | 1,077 |   |   |   | 1,225 |   |   |
| Recognized  actuarial loss             |       | —                                              |       | — |   |   | (92 | ) |   |   | 203 |   |   |
| Amortization of  transition obligation |       | 10                                                  |       | 10 |   |   | — |   |   |   | — |   |   |
| Return on plan  assets                 |       | (1,581                                              | )          | (1,333 | ) |   | (131 | ) |   |   | (151 | ) |   |
| Net periodic  benefit cost             |       | $                                                   | 977        |   | $ | 869 |   |   | $ | 1,897 |   |   |   | $ | 2,414 |   |   |

 
| ** **                             | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------------------------|------------|---------------------------------------------------|------------|
| ** **                             | ** ** | **2005**                                          | ** ** | **2004** | ** ** | **    2005     ** | ** ** | **     2004     ** | ** ** |
| Service cost                           |       | $                                                 | 1,974      |   | $ | 1,437 |   |   | $ | 2,096 |   |   |   | $ | 2,195 |   |   |
| Interest cost                          |       | 3,135                                             |       | 2,216 |   |   | 2,229 |   |   |   | 2,270 |   |   |
| Recognized  actuarial loss             |       | —                                            |       | — |   |   | (3 | ) |   |   | 406 |   |   |
| Amortization of  transition obligation |       | 21                                                |       | 20 |   |   | — |   |   |   | — |   |   |
| Return on plan  assets                 |       | (3,165                                            | )          | (2,229 | ) |   | (262 | ) |   |   | (252 | ) |   |
| Net periodic  benefit cost             |       | $                                                 | 1,965      |   | $ | 1,444 |   |   | $ | 4,060 |   |   |   | $ | 4,619 |   |   |

 

The Company contributed approximately $3.2 million and$3.4 million to its pension plans during the three and six months ended June 30,2005, respectively, and anticipates making additional contributions ofapproximately $5.0 million to these plans during 2005. The Company contributedapproximately $0.3 million and $0.6 million to the postretirement benefitplans during the three and six months ended June 30, 2005, respectively,and anticipates making additional contributions of approximately $0.6 millionto these plans during 2005.

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

The following discussionand analysis of our financial condition and results of operations for the threeand six months ended June 30, 2005 and 2004 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 2004 AnnualReport on Form 10-K.

**Overview**

We, through our wholly-owned subsidiaries, are a worldleader in the design and manufacture of cable and connectivity solutions forcommunications networks. We focus on the ‘last mile’ in communicationsnetworks, which is the distribution access, or final link to the customer.Through our acquisition of the Connectivity Solutions business (“ConnectivitySolutions”) of Avaya, Inc. (“Avaya”) on January 31, 2004, we became aglobal leader in structured cabling for business enterprise applications. Weare also a global leader in broadband coaxial cables for the cable televisionindustry. We also design, manufacture and market a broad line ofhigh-performance electronic, coaxial and fiber optic cable products for datanetworking, Internet access, wireless communication, telephony and otherbroadband applications. In addition, we are a leading provider ofenvironmentally secure enclosures and structured cabling solutions supportingcentral offices for telecommunication service providers in the United States.

During 2004, as a result of the acquisition ofConnectivity Solutions, management evaluated the results of operations in tworeportable business segments: the Cable segment, which was the same as ourcable business prior to the acquisition of Connectivity Solutions, and theConnectivity Solutions segment, which was the Connectivity Solutions businessthat was acquired as of January 31, 2004.

During the three monthsended March 31, 2005, as a result of the continued integration of theConnectivity Solutions business into our global operations and financialreporting systems, management changed the reportable segments used to evaluateour results of operations. The new reportable segments that have beenidentified are defined by major product category as follows: Enterprise,Broadband and Carrier. Information for prior periods has been restated based onthe new segments.

**CRITICAL ACCOUNTING POLICIES**

There have been no changesin our critical accounting policies or significant accounting estimates asdisclosed in our 2004 Annual Report on Form 10-K.

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**COMPARISONOF RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005WITH THE THREE AND SIX MONTHS ENDED JUNE 30, 2004**
| ** **                                               | ** ** | **Three Months Ended June 30,** | ** ** | ** **    | ** ** | ** **     | ** ** |
|----------------------------------------------------------|------------|-----------------------------------------------------|------------|---------------|------------|----------------|------------|
| ** **                                               | ** ** | **2005**                                            | ** ** | **2004**      | ** ** | ** **     | ** ** | ** ** | ** ** |
| ** **                                               | ** ** | ** **                                          | ** ** | **% of** | ** ** | ** **     | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                               | ** ** | **$ **                                         | ** ** | **Net**       | ** ** | **$ **    | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                                               | ** ** | **(millions)**                                      | ** ** | **Sales**     | ** ** | **(millions)** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| Net sales                                                |       |                                                | $          | 336.7         |       |           | 100.0      | % |   | $ | 312.9 |   |   | 100.0 | % | $ | 23.8 |   | 7.6 | % |
| Gross profit                                             |       |                                                | 88.6       |          |       | 26.3           |       |   | 72.2 |   |   | 23.1 |   | 16.4 |   | 22.7 |   |
| SG&A expense                                         |       |                                                | 54.0       |          |       | 16.0           |       |   | 51.7 |   |   | 16.5 |   | 2.3 |   | 4.4 |   |
| R&D expense                                          |       |                                                | 8.4        |          |       | 2.5            |       |   | 8.1 |   |   | 2.6 |   | 0.3 |   | 3.7 |   |
| Acquisition-related transition and startup costs    |       |                                                | —     |          |       | —         |       |   | 1.2 |   |   | 0.4 |   | (1.2 | ) | (100.0 | ) |
| Restructuring  costs                                     |       |                                                | 1.5        |          |       | 0.4            |       |   | — |   |   | — |   | 1.5 |   | — |   |
| Net gain on OFS BrightWave, LLC transaction, net of  tax |       |                                                | —     |          |       | —         |       |   | 76.4 |   |   | 24.4 |   | (76.4 | ) | (100.0 | ) |
| Net income                                               |       |                                                | 16.3       |          |       | 4.8            |       |   | 84.1 |   |   | 26.9 |   | (67.8 | ) | (80.6 | ) |
| Net income per  diluted share                            |       |                                                | 0.25       |          |       |           |       |   | 1.16 |   |   |   |   | (0.91 | ) | (78.4 | ) |
|                                                          |            |                                                     |            |               |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| ** **                                               | ** ** | **Six Months Ended June 30,** | ** ** | ** **    | ** ** | ** **     | ** ** |
|----------------------------------------------------------|------------|---------------------------------------------------|------------|---------------|------------|----------------|------------|
| ** **                                               | ** ** | **2005**                                          | ** ** | **2004**      | ** ** | ** **     | ** ** | ** ** | ** ** |
| ** **                                               | ** ** | ** **                                        | ** ** | **% of** | ** ** | ** **     | ** ** | **% of** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                               | ** ** | **$**                                             | ** ** | **Net**       | ** ** | **$**          | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                                               | ** ** | **(millions)**                                    | ** ** | **Sales**     | ** ** | **(millions)** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| Net sales                                                |       |                                              | $          | 645.8         |       |           | 100.0      | % |   | $ | 548.0 |   |   | 100.0 | % | $ | 97.8 |   | 17.8 | % |
| Gross profit                                             |       |                                              | 160.8      |          |       | 24.9           |       |   | 109.6 |   |   | 20.0 |   | 51.2 |   | 46.7 |   |
| SG&A expense                                         |       |                                              | 107.9      |          |       | 16.7           |       |   | 87.7 |   |   | 16.0 |   | 20.2 |   | 23.0 |   |
| R&D expense                                          |       |                                              | 16.2       |          |       | 2.5            |       |   | 13.0 |   |   | 2.4 |   | 3.2 |   | 24.6 |   |
| In-process research and development   charges            |       |                                              | —     |          |       | —         |       |   | 3.9 |   |   | 0.7 |   | (3.9 | ) | (100.0 | ) |
| Acquisition-related transition and startup costs    |       |                                              | —     |          |       | —         |       |   | 8.0 |   |   | 1.5 |   | (8.0 | ) | (100.0 | ) |
| Restructuring  costs                                     |       |                                              | 3.6        |          |       | 0.6            |       |   | — |   |   | — |   | 3.6 |   | — |   |
| Net gain on OFS BrightWave, LLC transaction, net of  tax |       |                                              | —     |          |       | —         |       |   | 76.4 |   |   | 13.9 |   | (76.4 | ) | (100.0 | ) |
| Net income                                               |       |                                              | 21.8       |          |       | 3.4            |       |   | 67.7 |   |   | 12.4 |   | (45.9 | ) | (67.8 | ) |
| Net income per  diluted share                            |       |                                              | 0.34       |          |       |           |       |   | 1.01 |   |   |   |   | (0.67 | ) | (66.3 | ) |
|                                                          |            |                                                   |            |               |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Effective January 31,2004, we acquired substantially all of the assets and assumed certainliabilities of Connectivity Solutions from Avaya and the Connectivity Solutionsoperating results have been included in our consolidated financial statementssince the date of acquisition. Accordingly, the consolidated results for thesix months ended June 30, 2004 include the operating results ofConnectivity Solutions for the five-month period from February 1,2004 through June 30, 2004. However, the consolidated results reflectedabove for the six months ended June 30, 2004 do not include any actual orpro forma results for January 2004 for the Connectivity Solutionsbusiness. This information should be considered when comparing to financialresults of 2005. See Note 2 in the Notes to the Condensed ConsolidatedFinancial Statements included elsewhere in this Form 10-Q.

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**Net sales**

Belowis a summary that reflects our actual net sales for the three months ended June 30,2005 and 2004.
| ** **                 | ** ** | **Three months**               | ** ** | **Three months** | ** ** | ** ** | ** ** | ** **    | ** ** |
|----------------------------|------------|-------------------------------------|------------|-----------------------|------------|------------|------------|---------------|------------|
| ** **                 | ** ** | **ended**                           | ** ** | **ended**             | ** ** | ** ** | ** ** | ** **    | ** ** |
| ** **                 | ** ** | **June 30,**                   | ** ** | **June 30,**     | ** ** | ** ** | ** ** | ** **    | ** ** |
| ** **                 | ** ** | **2005**                            | ** ** | **2004**              | ** ** | ** ** | ** ** | ** **    | ** ** |
| ** **                 | ** ** | ** **                          | ** ** | **%** of         | ** ** | ** ** | ** ** | **%** of | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                 | ** ** | **Net**                             | ** ** | **Net**               | ** ** | **Net**    | ** ** | **Net**       | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                 | ** ** | **Sales**                           | ** ** | **Sales**             | ** ** | **Sales**  | ** ** | **Sales**     | ** ** | ** Change ** | ** ** | **Change** | ** ** |
| ** **                 | ** ** | **(dollars in millions)** | ** ** |
| Net sales by  segment:     |       |                                |       |                  |       |       |       |          |       |   |   |   |   |   |   |   |   |
| Enterprise                 |       | $                                   | 173.8      |                  | 51.6       | %          | $          | 157.4         |       | 50.3 | % |   | $ | 16.4 |   |   |   | 10.4 | % |   |
| Broadband                  |       | 109.9                               |       | 32.6                  |       | 112.5      |       | 36.0          |       |   | (2.6 | ) |   |   | (2.3 | ) |   |
| Carrier                    |       | 53.7                                |       | 16.0                  |       | 43.4       |       | 13.8          |       |   | 10.3 |   |   |   | 23.7 |   |   |
| Inter-segment eliminations |       | (0.7                                | )          | (0.2                  | )          | (0.4       | )          | (0.1          | )          |   | (.3 | ) |   |   |   |   |   |
| Consolidated net  sales    |       | $                                   | 336.7      |                  | 100.0      | %          | $          | 312.9         |       | 100.0 | % |   | $ | 23.8 |   |   |   | 7.6 | % |   |
| Total domestic sales       |       | $                                   | 223.2      |                  | 66.3       | %          | $          | 216.6         |       | 69.2 | % |   | $ | 6.6 |   |   |   | 3.0 | % |   |
| Total  international sales |       | 113.5                               |       | 33.7                  |       | 96.3       |       | 30.8          |       |   | 17.2 |   |   |   | 17.9 |   |   |
| Total worldwide sales      |       | $                                   | 336.7      |                  | 100.0      | %          | $          | 312.9         |       | 100.0 | % |   | $ | 23.8 |   |   |   | 7.6 | % |   |

 

Belowis a summary that reflects our actual net sales for the six months ended June 30,2005 and 2004. The net sales for the six months ended June 30, 2004incorporate the Connectivity Solutions net sales for the five-month period fromFebruary 1, 2004 through June 30, 2004. This summary also reflectspro forma net sales for the six months ended June 30, 2004, as ifConnectivity Solutions had been acquired on January 1, 2004. The pro formanet sales of Connectivity Solutions for the one-month period ended January 31,2004, which is included in the pro forma net sales for the six months ended June 30,2004, is based on the historical results of the Connectivity Solutions businessas operated by Avaya and therefore may not be indicative of the actual resultsof the Connectivity Solutions business as operated by us. Actual inter-segmentsales eliminations for the five-month period ended June 30 2004 and proforma inter-segment sales eliminations for January 2004 are includedbelow.
| ** **                   | ** ** | **Actual**                | ** ** | **Pro forma**  | ** ** | ** **          | ** ** | ** **                     | ** ** |
|------------------------------|------------|---------------------------|------------|---------------------|------------|---------------------|------------|--------------------------------|------------|
| ** **                   | ** ** | **Six months**       | ** ** | **Six months** | ** ** | **Six months** | ** ** | ** **                     | ** ** | ** ** | ** ** |
| ** **                   | ** ** | **ended**                 | ** ** | **ended**           | ** ** | **ended**           | ** ** | ** **                     | ** ** | ** ** | ** ** |
| ** **                   | ** ** | **June 30,**         | ** ** | **June 30,**   | ** ** | **June 30,**   | ** ** | **2005 Compared to** | ** ** |
| ** **                   | ** ** | **2005**                  | ** ** | **2004**            | ** ** | **2004**            | ** ** | **2004 Pro forma**   | ** ** |
| ** **                   | ** ** | ** **                | ** ** | **%** of       | ** ** | ** **          | ** ** | **%** of                  | ** ** | ** ** | ** ** | **%** of | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                   | ** ** | **Net**                   | ** ** | **Net**             | ** ** | **Net**             | ** ** | **Net**                        | ** ** | **Net** | ** ** | **Net** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                   | ** ** | **Sales**                 | ** ** | **Sales**           | ** ** | **Sales**           | ** ** | **Sales**                      | ** ** | **Sales** | ** ** | **Sales** | ** ** | **Change** | ** ** | **Change** | ** ** |
| ** **                   | ** ** | **(dollars in millions)** | ** ** |
| Net sales by  segment:       |       |                      |       |                |       |                |       |                           |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Enterprise                   |       | $                         | 331.5      |                | 51.3       | %                   | $          | 269.8                          |       | 49.2 | % | $ | 284.2 |   | 49.5 | % |   | $ | 47.3 |   |   |   | 16.6 | % |   |
| Broadband                    |       | 218.0                     |       | 33.8                |       | 203.6               |       | 37.2                           |       | 203.6 |   | 35.5 |   |   | 14.4 |   |   |   | 7.1 |   |   |
| Carrier                      |       | 97.8                      |       | 15.1                |       | 75.5                |       | 13.8                           |       | 86.8 |   | 15.1 |   |   | 11.0 |   |   |   | 12.7 |   |   |
| Inter-segment   eliminations |       | (1.5                      | )          | (.2                 | )          | (.9                 | )          | (.2                            | )          | (.9 | ) | (.1 | ) |   | (.6 | ) |   |   |   |   |   |
| Consolidated net  sales      |       | $                         | 645.8      |                | 100.0      | %                   | $          | 548.0                          |       | 100.0 | % | $ | 573.7 |   | 100.0 | % |   | $ | 72.1 |   |   |   | 12.6 | % |   |
| Total domestic sales         |       | $                         | 429.0      |                | 66.4       | %                   | $          | 378.0                          |       | 69.0 | % | $ | 392.4 |   | 68.4 | % |   | $ | 36.6 |   |   |   | 9.3 | % |   |
| Total  international sales   |       | 216.8                     |       | 33.6                |       | 170.0               |       | 31.0                           |       | 181.3 |   | 31.6 |   |   | 35.5 |   |   |   | 19.6 |   |   |
| Total worldwide sales        |       | $                         | 645.8      |                | 100.0      | %                   | $          | 548.0                          |       | 100.0 | % | $ | 573.7 |   | 100.0 | % |   | $ | 72.1 |   |   |   | 12.6 | % |   |

 

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The following discussion of changes in net sales forthe six months ended June 30, 2005 will be compared to the pro forma netsales for the six months ended June 30, 2004, since the actual net salesfor the six months ended June 30, 2004 would not be comparable. However,these pro forma results may not be indicative of the actual results of theproduct groups of the Connectivity Solutions business as operated by us.

The increase in net salesfor the three and six months ended June 30, 2005 over the comparable prioryear periods is primarily attributed to sales growth in the Enterprise andCarrier segments. Although Broadband segment sales decreased for the threemonths ended June 30, 2005 from the comparable prior year period, weexperienced sales growth for the six month comparable periods. The overallimprovement in net sales can be attributed to the positive impact of priceincreases implemented for certain products during 2004 in response tosignificant increases in the costs of raw materials, the introduction of newproducts, the negative impact on net sales of actions taken by us during thefirst half of 2004 to reduce inventory levels of distributors of SYSTIMAXproducts to a more appropriate level and improved economic conditions for thetelecommunications industry in 2005.

*Enterprise Segment*

The Enterprise segment consists mainly of structuredcabling systems for business enterprise applications. The segment also includescoaxial cable for various video and data applications.

The increase in Enterprise segment net sales for thethree and six months ended June 30, 2005 over the comparable prior yearperiods was primarily driven by the effect of price increases announced during2004, improved project business, the introduction of new products, strong internationalsales growth and management’s decision during 2004 to reduce inventory levelsof distributors to a more appropriate level. We implemented price increases forcertain Enterprise products during 2004 as a result of significant increases inthe cost of certain raw materials.

We expect demand forEnterprise products to be driven by the ongoing need for bandwidth andhigh-performance structured cabling in the enterprise market and globalinformation technology spending, among other things.

*Broadband Segment*

The Broadband segment consists mainly of coaxialcable, fiber optic cable and conduit for cable television system operators. Theseproducts support multi-channel video, voice and high-speed data services forresidential and commercial customers using Hybrid Fiber Coaxial architecture.

Broadband segment net sales for the three months endedJune 30, 2005 were slightly lower than the comparable prior year period. Domesticmarket activity primarily consists of maintenance needs of our large cabletelevision system operator customers. While price increases have beenimplemented for certain products, Broadband segment sales have been relativelystable since mid-2004 when the Company’s largest domestic Broadbandcustomer completed a major upgrade of its network.

The increase in net salesof Broadband products for the six months ended June 30, 2005 over the sixmonths ended June 30, 2004 primarily resulted from higher domestic salesfor most of our product lines. The increase in net sales can primarily beattributed to price increases announced during 2004 for certain products inresponse to the significant increase in raw material costs. Net sales remainedrelatively stable internationally. While the sale of fiber optic products increasedduring the first six months of 2005, we expect ongoing price pressure during2005.

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*Carrier Segment*

The Carrier segment consists of secure environmentalenclosures for electronic devices and equipment, structured cabling solutionsfor telephone central offices and cables and components used by wirelessproviders to connect antennae to transmitters. These products are primarilyused by telecommunications service providers or “carriers.”

The Carrier segment experienced net sales growth forthe three and six months ended June 30, 2005 over the comparable prioryear periods primarily due to the performance of the wireless and IntegratedCabinet Solutions (“ICS”) product groups. We have developed relationships withnew customers, who are generally purchasing a higher volume of wirelessproducts. We have made substantial progress communicating the Cell Reach® valueproposition to new and existing wireless customers, both domestically andinternationally, which was the primary contributor to the increase in sales ofwireless products. In addition, the improvement in general economic conditionshas led to increased spending by the major wireless carriers. The ICS businesshas rapidly expanded and reflects an increase in shipments related to DigitalSubscriber Line (“DSL”) deployments by telephone companies.

The increase in net sales of wireless and ICS productswas partially offset by a decrease in net sales of ExchangeMAX products. Thedecrease in ExchangeMAX sales is primarily related to the continued impact of competitivepricing pressures and weak demand for central office telecommunicationsequipment. We have taken steps to eliminate selected unprofitable products andto increase prices on certain products.

While we expect sales ofCarrier products to be somewhat volatile since customer spending is mainlyproject-driven, we remain optimistic about our opportunities for the ICS andwireless product groups. We anticipate strong sales growth for our ICS productgroup primarily due to DSL deployments and fiber-to-the-node constructionactivity. We also expect continuing expansion in cellular telephone basestations, which provides growth opportunities for our wireless product group.

**Grossprofit (net sales less cost of sales)**

Gross profit for the three months ended June 30,2005 increased to 26.3% from 23.1% for the three months ended June 30,2004. Gross profit for the six months ended June 30, 2005 increased to24.9% from 20.0% for the six months ended June 30, 2004. Theyear-over-year increases in gross profit for the three and six month periodswere primarily due to the positive effects of changes in sales mix among ourvarious product lines, the implementation of price increases on certain productlines, the ongoing cost reduction initiatives at the Omaha facility and theimpact in 2004 of inventory adjustments related to the acquisition of theConnectivity Solutions business. Gross profit for the three and six monthsended June 30, 2004 was adversely impacted by $1.3 million and $14.6million, respectively, related to inventory purchase accounting adjustments onthe Connectivity Solutions business. These purchase accounting adjustmentsresulted from the write-up above replacement manufacturing cost of a portion ofConnectivity Solutions’ finished goods and work in process inventory to reflectits fair value as of the acquisition date under purchase accounting guidance. Thewrite-up to fair value resulted in an increase in cost of sales and lowermargins following the acquisition as the inventory was sold.

During the first quarter of 2005, management decidedto terminate a joint venture that operates a manufacturing facility in Tianjin,China, primarily for telephone central office products. We own a 60% interestin the joint venture. The termination is expected to occur during 2005. Inconjunction with the decision to terminate the joint venture, we recognized animpairment loss during the first quarter of 2005 related to the investment inthe joint venture as it was determined that the investment was other than temporarilyimpaired. The impairment loss, recognized in cost of sales, was not material toour consolidated financial statements.

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We expect additionalincreases in the costs of certain raw materials, such as plastics and otherpolymers, which are derived from oil and natural gas, and copper to result inincreased cost of sales. The inability to achieve higher sales volume andcontinued cost efficiencies to offset the increasing costs of raw materialscould result in lower gross profit and gross profit margin.

**Selling,general and administrative expense**

The increase in selling,general and administrative expense (“SG&A”) for the six months ended June 30,2005 as compared to the same period in 2004 was primarily due to theacquisition of Connectivity Solutions as of January 31, 2004. SG&A hasincreased for the three and six month periods as compared to the prior yearprimarily due to increases in selling costs related to bringing new products tomarket and marketing existing products. In addition, SG&A increased due tohigher employee compensation and benefit costs and expenses related to ongoingregulatory reporting requirements. SG&A expense, as a percentage of netsales, remained relatively constant for the three and six month comparableperiods, ranging from approximately 16% to 17% of net sales.

**Research and development**

Research and development (“R&D”)expense increased by $0.3 million and $3.2 million for the three and six monthsended June 30, 2005, respectively, as compared to the same periods in 2004.R&D expense as a percentage of net sales remained relatively constant atapproximately 2.5% of net sales for the three and six month comparable periods.R&D expense is primarily related to the ongoing R&D activities relatedto developing new products and to modifying existing products to better serveour customers.

**In-processresearch and development charges**

We recognized a $3.9million pretax charge during the six months ended June 30, 2004 for thewrite-off of in-process R&D acquired in our acquisition of ConnectivitySolutions. This in-process R&D was valued as an intangible asset byindependent appraisal in accordance with purchase accounting guidance. SinceR&D activities are required to be expensed as incurred under U.S. generallyaccepted accounting principles, this acquired intangible asset was written offimmediately following the acquisition date.

**Acquisition-relatedtransition and startup costs**

We incurred pretax charges of $1.2 million and $8.0million during the three and six months ended June 30, 2004, respectively,for transition and startup costs related to the acquisition of ConnectivitySolutions. These charges primarily related to information technology,transition services and other acquisition-related costs.

We reduced theConnectivity Solutions workforce by approximately 45 employees, or 2% of theacquired business’ global workforce, during the six months ended June 30,2004. The reductions were primarily related to our efforts to improveoperational efficiency and reduce cost. We recorded total pretax charges ofapproximately $1.6 million in acquisition-related transition and startup costsfor employee termination benefits related to this workforce reduction duringthe six months ended June 30, 2004.

**Restructuring Costs**

We recognized pretax restructuring costs of $1.5million and $3.6 million during the three and six months ended June 30,2005, respectively. These costs resulted from the continued implementation ofthe organizational and cost reduction initiatives at the Omaha facility ofConnectivity Solutions Manufacturing, Inc., our wholly owned manufacturingsubsidiary. These initiatives were announced in October 2004 andimplementation began during the fourth quarter of 2004. Included in therestructuring costs for the three and six months ended June 30, 2005 wereongoing process improvement costs of 

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$1.3 million and $2.9million, respectively, which consisted of consulting and other costs associatedwith modifying manufacturing operations; asset impairment charges of $0.5million and $2.2 million, respectively, related to equipment that was no longerin use and included $0.6 million during the six months ended June 30, 2005related to a warehouse which was classified as held for sale; and reversal ofreserves for employee-related costs of $0.3 million and $1.5 million,respectively, as a result of fewer reductions in personnel than we hadinitially projected, primarily due to higher than anticipated levels ofbusiness volume.

While the implementation of these initiatives isessentially complete, we anticipate that we will recognize additional pretaxrestructuring charges of up to $1 million during the balance of 2005.

There continues to beexcess real estate and equipment capacity at the Omaha facility. Management iscontinuing to evaluate alternatives for such excess capacity and additionalcharges, which could be material to our results of operations and financialposition, may result from such evaluation.

**Loss on earlyextinguishment of debt**

We recognized a $5.0million pretax loss during the six months ended June 30, 2004 on the earlyextinguishment of our 4% convertible subordinated notes. This loss includes premiumspaid and accrued to note holders in the amount of $3.1 million and thewrite-off of the remaining balance of related long-term financing costs in theamount of $1.9 million.

**Net interestexpense**

The decrease in net interest expense for the three andsix months ended June 30, 2005 compared to the prior year was primarilydue to the impact of having repurchased or redeemed all $172.5 millionaggregate principal amount of our 4% convertible subordinated notes in March andApril 2004 with proceeds from our issuance of $250 million of 1%convertible senior subordinated debentures in March 2004. The decrease isalso attributable to the repayment of borrowings under the term loan andrevolving credit facility of our senior secured credit facility used to financea portion of the acquisition of Connectivity Solutions. Our weighted averageeffective interest rate on outstanding borrowings, including amortization ofassociated long-term financing costs, decreased to 2.63% as of June 30,2005 compared to 2.70% as of December 31, 2004. This decrease in oureffective interest rate was mainly due to a reduction in the interest rate onthe term loan as a result of the June 27, 2005 amendment to the seniorsecured credit facility (see Financing Activities section below), which wassubstantially offset by increases in LIBOR and other short-term interest rates.

Increases in interestincome resulting from higher average balances of invested funds and highershort-term interest rates also contributed to the decrease in net interestexpense.

**Income taxes**

Our effective income taxrate was 29% and 28% for the three and six months ended June 30, 2005,respectively, compared to 35% and 36% for the three and six months ended June 30,2004, respectively. The reduction in our effective income tax rate wasprimarily due to continuing benefits derived from our expanded internationalactivities in lower tax rate jurisdictions.

**OFS BrightWave, LLC**

On June 14, 2004 we exercised our contractualright to sell our ownership interest in OFS BrightWave, LLC (“OFS BrightWave”)to The Furukawa Electric Co. Ltd. (“Furukawa”) in exchange for theapproximately 7.7 million shares of our common stock owned by Furukawa whichhad a fair value of $132.3 million as of the transaction date.

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As a result of the transaction, we no longer own anyequity interest in OFS BrightWave. The OFS BrightWave transaction resulted in apretax gain of $121.3 million ($76.4 million net of tax). This gain represents (1) thefair value of the common stock received by us in exchange for the transfer ofour ownership interest to Furukawa, plus (2) the realized gain from ourcumulative equity method share of OFS BrightWave’s unrealized foreign currencytranslation gains previously recorded in accumulated other comprehensive loss, less(3) an $11.1 million impairment charge related to fully impairing the $30million note receivable from OFS BrightWave. This transaction does not affectour right to receive full payment from OFS BrightWave under the $30 millionnote due in 2006, based on its original terms.

For the three and sixmonths ended June 30, 2004, our share of the losses of OFS BrightWavethrough June 14, 2004 was approximately $0.9 million and $2.3 million,pretax, respectively. Since OFS BrightWave elected to be taxed as a partnership,we recorded a tax benefit related to our share in the flow-through losses ofapproximately $0.4 million and $0.9 million for the three and six months ended June 30,2004, respectively.

**LIQUIDITY ANDCAPITAL RESOURCES**

**Cash Flow Overview**

Ourprincipal sources of liquidity, both on a short-term and long-term basis, arecash and cash equivalents, short-term investments, cash flows provided byoperations and availability under credit facilities. A reduction in sales andprofitability could reduce cash provided by operations and limit availabilityunder credit facilities. In addition, increases in working capital, excludingcash, cash equivalents and short-term investments, related to increasing salescould reduce our operating cash flows in the short term until cash collectionsof accounts receivable catch up to the higher level of billings.
| ** **                                                                                                                     | ** ** | **As of**    | ** ** | ** **            | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|------------|------------|
| ** **                                                                                                                     | ** ** | **June 30,** | ** ** | **December 31,** | ** ** | **Dollar** | ** ** | **%** | ** ** |
| ** **                                                                                                                     | ** ** | **2005**          | ** ** | **2004**              | ** ** | **Change** | ** ** | **Change** | ** ** |
| Cash, cash  equivalents and short-term investments                                                                             |       | $                 | 187.2      |                  |       | $          | 177.3      |   |   | $ | 9.9 |   |   | 5.6 | % |   |
| Working capital,  excluding cash, cash equivalents and short-term investments and current  portion of long-term debt |       | 166.3             |       |                  | 127.2      |       |       | 39.1 |   |   | 30.7 |   |   |
| Long-term debt,  including current portion                                                                                     |       | 303.8             |       |                  | 310.3      |       |       | (6.5 | ) |   | (2.1 | ) |   |
| Book capital  structure                                                                                                        |       | 779.3             |       |                  | 759.8      |       |       | 19.5 |   |   | 2.6 |   |   |
| Long-term debt as a  percentage of book capital structure                                                                      |       | 39.0              | %          |                  | 40.8       | %          |       |   |   |   |   |   |   |
|                                                                                                                                |            |                   |            |                       |            |            |            |  |  |  |  |  |  |  |  |  |

 

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Theincrease in cash, cash equivalents and short-term investments during the sixmonths ended June 30, 2005 was primarily driven by net cash provided byoperations. A more detailed discussion of operating activities is providedbelow. The increase in working capital was primarily attributable to anincrease in accounts receivable and the reclassification of certain property,plant and equipment to other current assets. The increase in accountsreceivable was primarily the result of a change in our credit terms for certaincustomers to reduce the prompt payment discount. In conjunction with theongoing restructuring initiatives at our Omaha facility, we have reclassifiedassets with a net carrying value of approximately $10.2 million from property,plant and equipment to other current assets as a result of their beingconsidered held for sale.
| ** **                                                                                                                                             | ** ** | **Six months ended** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------|------------|------------|------------|------------|------------|
| ** **                                                                                                                                             | ** ** | **June 30,**              | ** ** | **Dollar** | ** ** | **%**      | ** ** |
| ** **                                                                                                                                             | ** ** | **2005**                       | ** ** | **2004**   | ** ** | **Change** | ** ** | **Change** | ** ** |
| Net cash provided  by operating activities                                                                                                             |       | $                              | 27.1       |       | $          | 58.0       |       | $ | (30.9 | ) |   | (53.3 | )% |   |
| Depreciation and  amortization                                                                                                                         |       | 30.6                           |       | 30.3       |       | 0.3        |       |   | 1.0 |   |   |
| Increase  (decrease) in working capital, excluding cash, current portion of long-term  debt, and acquisition of Connectivity Solutions working capital |       | 39.1                           |       | (36.4      | )          | 75.5       |       |   | 207.4 |   |   |
| Capital expenditures                                                                                                                                   |       | 13.4                           |       | 4.5        |       | 8.9        |       |   | 198.8 |   |   |
|                                                                                                                                                        |            |                                |            |            |            |            |            |  |  |  |  |  |  |  |

 

**OperatingActivities**

During the six months ended June 30, 2005,operating activities provided approximately $27.1 million in cash compared toproviding $58.0 million during the six months ended June 30, 2004. Cashgenerated from operations during the six months ended June 30, 2004 waspositively impacted by a decrease in working capital as we worked to reduceinventory balances, primarily in our SYSTIMAX product group, to a moreappropriate level. During the six months ended June 30, 2005, net incomeof $21.8 million, depreciation and amortization of $30.6 million and anincrease in accounts payable and accrued liabilities of $16.7 million more thanoffset a $42.4 million increase in accounts receivable. The increase inaccounts receivable can be primarily attributed to a change in credit terms forcertain customers to reduce the prompt payment discount as well as seasonaltrends. The change in credit practices was implemented in January 2005.

We expect to generate netcash from operations during 2005, primarily due to increased margins from salesof certain product groups. In addition, we will continue to focus on enhancingglobal operational efficiency, sales growth from our product groups and thefurther integration of the Connectivity Solutions business.

**InvestingActivities**

We generated $11.5 million in cash from proceeds ofmaturing investment securities during the six months ended June 30, 2005.Investment in property, plant and equipment for the six months ended June 30,2005 was $9.0 million higher than the comparable prior year period.Construction of our new manufacturing facility in Asia, that will provideadditional production capability, and continuing information technologyinitiatives were the primary reasons for the increase in capital expendituresduring the first six months of 2005.

We currently expect totalcapital expenditures to be $30 million or less in 2005 compared to $13.2 millionin 2004. The expected increase in capital spending is primarily for costreduction efforts, information technology initiatives and additional productioncapability in Asia. We expect total capital expenditures to remain at a levelbelow consolidated depreciation and amortization expense for the next severalyears.

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**FinancingActivities**

During the six months ended June 30, 2005, wereduced the principal balance of our outstanding long-term debt by $6.5 millionin accordance with the scheduled maturities outlined in our respective debtagreements.

On June 27, 2005, oursenior secured credit facility was amended to, among other things, extend thematurity date of the $110 million revolving credit facility from January 31,2009 to January 31, 2010; reduce the interest rate on the $75 million termloan to, at our option, either the London Interbank Offered Rate (“LIBOR”) plus1.50% to 2.00%, or the Base Rate, defined as the higher of Prime Rate orFederal Base Rate plus 0.50%, plus 0.00% to 0.75%, in each case based on ourfixed charge coverage ratio; reduce the interest rate on the revolving creditfacility to, at our option, either LIBOR plus 1.25% to 1.75%, or the Base Rateplus 0.00% to 0.50%, in each case based on our fixed charge coverage ratio; andloosen certain financial and other covenants.

**Future Cash Needs**

We expect that our primary future cash needs will beto fund working capital, capital expenditures, debt service and employeebenefit obligations. We contributed $3.4 million to defined benefit pensionplans during the six months ended June 30, 2005 and expect to makeadditional contributions of approximately $5.0 million during 2005, of which$3.0 million was contributed during July 2005. We expect that ournoncurrent employee benefit liabilities will be funded through cash flow fromfuture operations.

We believe that our existing cash, cash equivalentsand short-term investments and cash flows from operations, combined with availabilityunder our senior secured revolving credit facility, will be sufficient to meetour presently anticipated future cash needs. We may, from time to time, borrowunder our revolving credit facility or issue securities, if market conditionsare favorable, to meet our future cash needs or to reduce our borrowing costs.

There were no materialchanges in our contractual obligations during the quarter ended June 30, 2005.

**FORWARD-LOOKINGSTATEMENTS**

Certain statements in this Form 10-Q thatare other than historical facts are intended to be “forward-looking statements”within the meaning of the Securities Exchange Act of 1934, the PrivateSecurities Litigation Reform Act of 1995 and other related laws and include butare not limited to those statements relating to our business position, plans,transition, outlook, revenues, earnings, margins, accretion, synergies andother financial items, integration and restructuring plans related to ouracquisition of substantially all of the assets and certain liabilities of theConnectivity Solutions business, sales and earnings expectations, expecteddemand, cost and availability of key raw materials, internal productioncapacity and expansion, competitive pricing, relative market position andoutlook. While we believe such statements are reasonable, the actual resultsand effects could differ materially from those currently anticipated. Theseforward-looking statements are identified, including without limitation, bytheir use of such terms and phrases as “intends,” “intend,” “intended,” “goal,”“estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projects,”“projected,” “projections,” “plans,” “anticipates,” “anticipated,” “should,” “designedto,” “foreseeable future,” “believe,” “believes,” “think,” “thinks” and “scheduled”and similar expressions.

These statements aresubject to various risks and uncertainties, many of which are outside ourcontrol, including, without limitation, the challenges of integration andrestructuring associated with the acquisition of Connectivity Solutions or anyfuture acquisition or restructuring, including cost reduction plans at CSMI’sOmaha, Nebraska facility; the challenges of achieving anticipated synergies;the ability to retain 

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qualifiedemployees and existing business alliances; maintaining satisfactoryrelationships with represented employees; customer demand for our products,applications and services; expected demand from major domestic MSOs;telecommunications industry capital spending; ability to maintain successfulrelationships with our major distributors; industry consolidation; ability ofour customers to secure adequate financing to fund their infrastructureprojects or to pay us; changes or fluctuations in global business conditions;competitive pricing and acceptance of our products; changes in cost andavailability of key raw materials, especially those that are available onlyfrom limited sources; ability to recover higher material and transportationcosts from our customers through price increases; possible future impairmentcharges for goodwill and other long-lived assets; industry competition and theability to retain customers; possible production disruption due to supplierbankruptcy, reorganization or restructuring; variability in our effective tax rate;our ability to obtain financing and capital on commercially reasonable terms;covenant restrictions and our ability to comply with covenants in our debtagreements; successful operation of our vertical integration activities;successful expansion and related operation of our facilities; achievement ofsales, growth and earnings goals; ability to achieve reductions in costs;ability to retain and attract key personnel; developments in technology;intellectual property protection; product performance issues and associatedwarranties; adequacy and availability of insurance; regulatory changesaffecting us or the industries we serve; any changes required by the Securitiesand Exchange Commission in connection with its review of our public filings;authoritative changes in generally accepted accounting principles bystandard-setting bodies; environmental remediation issues; terrorist activityor armed conflict; political instability; major health concerns and otherfactors; and any statements of belief and any statements of assumptionsunderlying any of the foregoing. These and other factors are discussed ingreater detail in Exhibit 99.1 to this Form 10-Q. Theinformation contained in this Form 10-Q represents our best judgmentat the date of this report based on information currently available. However,we do not intend, and are not undertaking any duty or obligation, to updatethis information to reflect developments or information obtained after the dateof this report.

**ITEM 3.**                QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK

As disclosed in our AnnualReport on Form 10-K for the year ended December 31, 2004, 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. We believe our exposure associated with these market risks hasnot materially changed since December 31, 2004. We have not acquired anynew derivative financial instruments since December 31, 2004 or terminatedany derivative financial instruments that existed at that date.

**ITEM 4.**                CONTROLS ANDPROCEDURES

Our disclosure controls and procedures are designed toensure that information****requiredto be disclosed in reports that we file or submit under the Securities ExchangeAct of 1934 is recorded, processed, summarized and reported within the timeperiods specified in the rules and forms of the Securities and ExchangeCommission. Our Chief Executive Officer and our Chief Financial Officer havereviewed the effectiveness of our disclosure controls and procedures as of theend of the period covered by this report and have concluded that the disclosurecontrols and procedures are effective.

There were no changes in our internal control overfinancial reporting during the three months ended June 30, 2005 that havematerially affected, or are reasonably likely to materially affect, our internalcontrol over financial reporting.

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**PART II—OTHER INFORMATION**

**ITEM 4.**                SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Stockholders(the “Meeting”) on May 6, 2005. Proxies for the Meeting were solicitedpursuant to Regulation 14A under the Securities Exchange Act of 1934, asamended. A total of 54,526,688 shares of Common Stock with one vote each wereentitled to vote at the Meeting and holders of 50,904,884 shares voted inperson or by proxy, constituting a quorum.

At theMeeting, two of the Company’s directors were elected for three-year termsending at the 2008 Annual Meeting of Stockholders by the vote set forth below:
| **Name of Director** | ** ** | ** ** | ** ** | **Votes For** | ** ** | **Votes Withheld** | ** ** |
|--------------------------------|------------|------------|------------|--------------------|------------|-------------------------|------------|
| June E.  Travis           |       | 48,778,458 |       |               | 2,126,426  |                    |       |
| James N. Whitson               |       | 48,765,779 |       |               | 2,139,105  |                    |       |

 

The Company’s other six directors, whose terms ofoffice continue after the Meeting with terms expiring at the annual meetings inparentheses after their names, are Frank M. Drendel (2006), Duncan M. (“Lauch”)Faircloth (2006), Richard C. Smith (2006), Boyd L. George (2007), George N.Hutton, Jr. (2007), and Katsuhiko (Kat) Okubo (2007).

Aproposal to ratify the appointment of Deloitte & Touche LLP asindependent auditors for the Company for the 2005 fiscal year by the AuditCommittee of the Board of Directors of the Company was approved by 50,508,858votes cast in favor, 357,468 votes cast against and 38,558 votes abstaining.

**ITEM 6.**                EXHIBITS
|   | 10.1 | First Amendment to Amended and Restated Credit and  Security Agreement, dated as of June 27, 2005, among  CommScope, Inc. of North Carolina, CommScope Solutions, Inc., and  Connectivity Solutions Manufacturing, Inc. as Borrowers, Wachovia Bank,  National Association as Agent, Fleet Capital Corporation as Syndication  Agent, General Electric Capital Corporation, Harris N.A. (successor by merger  to Harris Trust and Savings Bank) and PNC Bank as Documentation Agents, and  the Lenders signatory thereto (Incorporated by reference from the Company’s  Current Report on Form 8-K dated June 29, 2005 (File No. 1 12929)). |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 31.1 | Certification of Chief  Executive Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 31.2 | Certification of Chief  Financial Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 32   | Certification of Chief  Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.  Section 1350 as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32)(ii) of  Regulation S-K).                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | 99.1 | Forward-Looking  Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

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**SIGNATURES**

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.                                         |
|---------------------|---------------------------------------------------------|
| August 5, 2005 |                                                    | /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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