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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                 FORM 10-K/A-2
 
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.....................FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER 0-22336
 
                               ANTEC CORPORATION
             (Exact name of Registrant as specified in its charter)
 
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           DELAWARE                  36-3892082
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
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                           5720 PEACHTREE PARKWAY, NW
                               NORCROSS, GA 30092
                                 (770) 441-0007
         (Address, including zip code, and telephone number, including
            area code, of Registrant's principal executive offices)
 
Securities registered pursuant to Section 12(b) of the Act:
 
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                                   NAME OF EACH EXCHANGE
     TITLE OF EACH CLASS            ON WHICH REGISTERED
     -------------------           ---------------------
<S>                            <C>
Common stock, $0.01 par value  NASDAQ National Market System
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Securities registered pursuant to Section 12(g) of the Act: None
 
     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
 
                            Yes [X]          No [ ]
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
 
     The aggregate market value of the shares of Registrant's common stock,
$0.01 par value, held by nonaffiliates of Registrant was approximately
$493,182,560 as of March 13, 1998.
 
     At March 13, 1998, 39,329,289 shares of Registrant's common stock, $0.01
par value, were outstanding.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
   
     Certain portions of the Registrant's Proxy Statement for the 1998 Annual
Meeting of Stockholders of ANTEC Corporation are incorporated by reference into
Part III. This document consists of 48 pages. Exhibit List is on page 46.
    
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                               TABLE OF CONTENTS
 
   
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                                                                            PAGE
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PART I.
Item 1.       Business....................................................    3
Item 2.       Properties..................................................    9
Item 3.       Legal Proceedings...........................................    9
Item 4.       Submission of Matters to a Vote of Security Holders.........   10
PART II.
Item 5.       Market for the Registrant's Common Stock and Related
                Stockholder Matters.......................................   12
Item 6.       Selected Consolidated Historical and Pro Forma Financial
                Data......................................................   13
Item 7.       Management's Discussion and Analysis of Financial Condition
                and Results of Operations.................................   14
Item 8.       Consolidated Financial Statements and Supplementary Data....   23
Item 9.       Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure..................................   23
PART III.
Item 10.      Directors and Executive Officers of the Registrant..........   44
Item 11.      Executive Compensation......................................   44
Item 12.      Security Ownership of Certain Beneficial Owners and
                Management................................................   44
Item 13.      Certain Relationships and Related Transactions..............   44
PART IV.
Item 14.      Exhibits, Financial Statement Schedules and Reports on Form
                8-K.......................................................   45
</TABLE>
    
 
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                                     PART I
 
ITEM 1. BUSINESS
 
GENERAL
 
     ANTEC Corporation ("ANTEC", or herein together with its consolidated
subsidiaries, called the "Company") is an international communications
technology company primarily serving hybrid fiber/coax ("HFC") broadband
networks. The Company was incorporated in Delaware in May 1993 as a wholly-owned
subsidiary of Anixter Inc. ("Anixter"), which is a subsidiary of Anixter
International Inc. ("Anixter International").
 
     The ANTEC business was originally formed as a division of Anixter in 1969
through the acquisition of a company involved in the cable industry. Commencing
in 1991, ANTEC established independent management, sales, marketing and data
processing functions and, in 1993, the establishment of ANTEC as a separate and
independent corporation was completed.
 
     In September 1993, the Company completed an initial public offering (the
"Offering") with the sale of 5,400,000 shares of ANTEC common stock by the
Company and 3,972,500 shares of ANTEC common stock by Anixter International at
an offering price of $18 per share. ANTEC's net proceeds of the Offering were
used to reduce its outstanding indebtedness under its Credit Facility by
approximately $59.6 million and to redeem all of the ANTEC preferred stock held
by Anixter International for approximately $30 million. In May 1994, Anixter
International sold 4,000,000 additional shares of its ANTEC common stock. As of
December 31, 1997, Anixter International was the beneficial owner of
approximately 18% of the outstanding ANTEC common stock.
 
     ANTEC strives to develop new or improved products and technology
applications, both through its own engineering resources and by forging
strategic alliances with other companies. The Company's role in the development
of new products is to identify new product needs in the broadband communications
industry and, through its own engineering resources and its work with strategic
allies, to develop and bring new or improved products to market. ANTEC and its
strategic partners develop products and integrated systems that enhance, enable
or are part of the emerging interactive, broadband fiber optic, video, voice and
data delivery networks in an open network architecture.
 
     ANTEC is one of the leading suppliers to the cable industry for fiber optic
products. ANTEC also supplies cable system operators with almost all of the
products required in a cable television system, including headend, distribution,
drop and in-home subscriber products. ANTEC serves its customers through an
efficient delivery network consisting of 25 sales and stocking locations
throughout the world. ANTEC maintains complete inventories and is able to
provide overnight, as well as staged delivery, of product on an "as needed"
basis.
 
     ANTEC has concentrated primarily on serving the cable television industry
and, as a result, has been able to identify and respond to the needs of cable
operators making the technological shift to an open network architecture. ANTEC
has developed strong relationships with its customers, having served major cable
operators such as Tele-Communications, Inc. ("TCI"), Time Warner Cable, Media
One, Inc., Comcast Corporation and Cox Communications, Inc. for many years.
ANTEC intends to continue: (i) developing innovative products and integrating
technologies through strategic alliances with other companies and through
internal research and development, (ii) maintaining its strong relationships
with its existing customers, and (iii) expanding its customer base to further
include both domestic and foreign communications companies. ANTEC intends to
achieve these objectives through internal growth and, as favorable opportunities
arise, through additional strategic acquisitions.
 
     During 1994, ANTEC made several strategic acquisitions. In March 1994,
ANTEC acquired Electronic System Products, Inc. ("ESP"), an Atlanta-based
engineering consulting firm with core capabilities in digital design, radio
frequency ("RF") design and application specific integrated circuit development
for the broadband communications industry. ESP has continued to provide
engineering consulting services to third
 
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<PAGE>   4
 
parties and to support the Company's product development efforts. In August
1994, ANTEC acquired Power Guard, Inc. ("Power Guard"), a leading manufacturer
of power supplies and high security enclosures for broadband communications
networks. Power Guard's products include uninterruptible, standby and
non-standby power supplies and new products being developed to meet the emerging
broadband communications network powering needs. In November 1994, ANTEC
acquired all of the outstanding stock of Keptel, Inc. ("Keptel"), a designer,
manufacturer and marketer of outside plant telecommunications and transmission
equipment for both residential and commercial use, primarily by telephone
companies. This acquisition provided ANTEC with new product design, development
and manufacturing capabilities and expanded the Company's product lines to
include a complete family of commercial and residential network interface
devices ("NIDs") and splice enclosures for the telephone and cable television
markets. Also in 1994, the Company entered into a joint venture, Comunicaciones
Broadband, with Scientific-Atlanta, Inc. ("Scientific-Atlanta") to provide a
wide range of broadband network communications products and services in Latin
America. Late in 1994, the Company purchased Scientific-Atlanta's ownership
interest in the joint venture.
 
     During the fourth quarter of 1995, the Company and Northern Telecom, Inc.
("Nortel") formed a joint venture company, called Arris Interactive, L.L.C.
("Arris"), of which the Company owns 25%. Arris focuses on development,
manufacture and sale of products (marketed under the Cornerstone brand name)
that enable the provision of broad range telephone services over the hybrid
fiber/coax architectures typically in use domestically and internationally for
video distribution. The Company serves as the distribution channel to the
domestic cable market for these products.
 
     In February 1997 the Company acquired TSX Corporation ("TSX") by a merger
of a wholly-owned subsidiary of the Company and TSX. TSX shareholders received
one share of ANTEC common stock for each share of TSX common stock they owned.
The transaction was tax-free for TSX shareholders and was accounted for as a
pooling of interests. At December 31, 1997, TCI, as a result of its prior
ownership of TSX common stock, was the beneficial owner of approximately 18% of
the outstanding ANTEC common stock. TCI's beneficial ownership includes options
to acquire an additional 854,341 shares. The acquisition brought the Company
electronic manufacturing capability and enabled the expansion of the Company's
product lines to include amplifiers and line extenders and to enhance its laser
transmitters and receiver and optical node product lines.
 
     In January 1998, ANTEC announced a consolidation plan being implemented
concurrently with the creation of the new President & Chief Operating Officer
organization in Atlanta. ANTEC will consolidate all of its Rolling Meadows,
Illinois corporate and administrative functions into either the Atlanta
Technology Center or the Englewood, Colorado TeleWire Supply division
headquarters during 1998 and 1999. It is also anticipated as part of this
consolidation that the two principal facilities located in Atlanta will be
consolidated and that certain international operating and administrative
functions located in Miami and Chicago will also be consolidated into Atlanta.
In connection with these consolidation changes, ANTEC will take a charge of
approximately $10 to $12 million in the first quarter of 1998 reflecting the
severance, move and real estate costs associated with these consolidations.
 
CABLE INDUSTRY
 
     Cable television is a service that delivers multiple channels of video
entertainment to subscribers who pay a monthly fee for the various entertainment
services they receive. A cable system consists of three principal segments. The
first is the headend where the cable system operator receives television signals
via satellite and other sources. The headend facility organizes, processes and
retransmits those signals through the second component, the distribution
network, to the subscriber. The distribution network consists of fiber optic and
coaxial cables and associated optical and electronic equipment which take the
original signal from the headend and transmit it throughout the cable system.
The third component is the "drop" which extends from the distribution network to
the subscriber's home and connects either directly to the subscriber's
television set or to a converter box. The converter box may be addressable (a
converter which permits the delivery of premium cable services, including
pay-per-view programming, by enabling the cable operator to control the
subscriber services through the headend) or non-addressable (where premium
channels are activated or eliminated by traps installed in the drop system
outside the home).
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     Industry sources estimate that U.S. cable systems pass 97% of America's TV
households and in excess of 68% of those households are subscribers. As a
result, the Company expects its future domestic revenues to come primarily from
upgrading, rebuilding and maintaining existing cable systems and from new
products, rather than from constructing new systems. Construction, maintenance,
expansion and upgrade of cable systems require significant capital expenditures
by operators for the various system components, including headend equipment,
fiber optic and coaxial cable, fiber optic transmitters and receivers, radio
frequency amplifiers, various items of distribution electronics and hardware and
converters.
 
     A major trend in the cable industry has been the continuing expansion of
channel capacity in response to the cable operators' desire to provide
subscribers with more programming selections, including pay-per-view and
additional premium programming services. In addition, the U.S. cable industry
has responded to rapid developments in fiber optic technology, digital
compression (which allows several channels to be transmitted within the same
bandwidth that a single analog channel currently requires), computer electronics
and mass storage technology by upgrading the technological capabilities of their
systems to market and supply a wide array of communication services. Such
upgrades enable not only additional enhanced channel capacity for premium
services, but also video-on-demand (a video entertainment and education library
available in the home on a real time, essentially unscheduled basis),
informational and transactional services, internet access services, interactive
entertainment and education services, competitive access services (the by-pass
of the local telephone company to access long-distance telephone carriers) and
switched voice, data and other two-way telephone communications services.
 
     The Company's performance is largely dependent on capital spending for
constructing, rebuilding, maintaining or upgrading of domestic cable systems.
Approximately 60% of the Company's sales for 1997 came from sales to the
domestic cable industry. Capital spending in the cable industry has been
cyclical. The amount of capital spending and, therefore, the Company's sales and
profits, are affected by a variety of factors, including general economic
conditions, availability and cost of capital, other demands and opportunities
for capital (such as acquisitions), regulation, demand for cable services,
competition and technology, and real or perceived trends or uncertainties in
these factors. For example, rate reductions for cable service imposed by the FCC
in 1994 caused scheduled capital spending to be delayed. Also during 1995,
delays in the passage of the telecommunications bill and increased merger and
acquisition activity in the cable industry depressed capital spending.
 
     In the first quarter of 1996, the telecommunications bill ("Bill") was
approved by Congress and signed by the President. Overall, the Bill allows
long-distance carriers, local phone companies and cable companies to provide
similar services across their networks. The Bill gives the FCC broad powers over
this process and the technology which will be used. The Bill also greatly eases
restrictions on ownership of radio and television stations, permits the regional
telephone companies to engage in manufacturing and research and development, and
is intended to facilitate the increased availability of wireless technologies.
The impact of the Bill on the Company and the industry it serves is not known as
the FCC, state regulators and the courts must decide how the Bill will be
implemented, and the companies must decide what services they will provide in
the future. A number of these companies are reviewing various equipment and
options, although it is too early to predict what services they will provide. To
the extent that the customers of the Company or others decide to offer
additional services that utilize technologies or products produced by the
Company, the Bill could benefit the Company's business. However, to the extent
that additional services are offered by companies that are not customers, or
that utilize technologies or products that are not provided by the Company, the
Bill could harm the Company's business.
 
     Technical developments and strategic decisions by cable system operators
and their competitors will significantly affect the Company. Cable systems are
now being bypassed by direct broadcast satellite services. New digital
technologies enable the compression of many channels into the bandwidth
currently used by one analog channel. There are new wireless technologies which
could be used to bypass existing distribution systems. The entrance of telephone
companies into the cable industry and the consolidation of cable companies and
telephone companies, as the result of the new Federal legislation discussed
above, may affect not only the level of capital spending in general, but the
portion thereof received by the Company.
 
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     In 1997, operators of cable systems continued or intensified efforts to
consolidate or simplify their systems. The resulting uncertainty caused delays
in expenditures for improvements in these systems.
 
PRINCIPAL PRODUCTS
 
     ANTEC has been a major supplier of products to the cable industry since
1969 and provides a broad range of products and services to cable system
operators. ANTEC supplies almost all of the products required in a cable system
including headend, distribution, drop and in-home subscriber products.
 
     ANTEC maintains a significant inventory of headend products which its
customers require for signal acquisition and processing. Such products include
satellite receivers for signal reception and modulators, amplifiers and
equalizers which manipulate signals for further transmission. ANTEC also stocks
products that encode or descramble signals for retransmission as premium
channels.
 
     Processed signals travel to the home along a distribution network of fiber
optic or coaxial cable. ANTEC supplies both types of cable, as well as products
capable of implementing either system design. Distribution networks, whether
fiber optic or coaxial, can be constructed either above or below ground. In an
aerial system, the transmission cable is supported by galvanized steel cables,
or "strand", which run from pole to pole. ANTEC supplies strand, as well as
other products such as bolts, braces, brackets, hooks and anchor rods used for
support and attachment. In an underground system, buried transmission cable
requires protection and is frequently encased in conduit which ANTEC also
supplies. Underground cable systems also require that underground connections be
waterproofed. The Company supplies both metal and plastic pedestals which encase
and protect such connections. ANTEC also manufacturers power supplies that
insert power at various points in the distribution system. In order to meet its
customers' needs for ancillary products, the Company supplies various
installation materials, tools and other safety equipment.
 
     ANTEC is a leading supplier of fiber optic products to the cable industry.
Traditionally, cable systems were designed using coaxial cable and a series of
amplifiers throughout the distribution network. Today, almost every substantial
upgrade or rebuild replaces elements of the traditional system with fiber optic
technology. The use of a fiber optic system enables the operator to send its
signals greater distances and with less signal degradation than the traditional
coaxial system. In addition, fiber optic cable's capacity to transmit a wider
bandwidth greater distances than coaxial cable allows for the transmission of
more channels to the subscriber's home. The use of fiber optic technology
reduces the need for overall maintenance costs associated with active electronic
components. ANTEC supplies the key product components of a fiber optic rebuild
or upgrade: fiber optic cable, laser transmitters, laser receivers, optical
nodes and distribution amplifiers. In a fiber optic network, optical signals are
transmitted throughout the distribution system along a fiber optic cable from
the headend to the node, where the signal is received and transferred via
coaxial cable to the home. Nodes provide the interface between the fiber optic
network and the coaxial distribution system. Distribution amplifiers strengthen
the signal either on its way to the node or from the node. Laser transmitters
convert incoming electronic video signals at the headend to an optical signal
which can be transmitted over the fiber optic cable. The laser receiver is able
to detect the light coming out of the cable and convert it back into electronic
signals for further transport to the home via coaxial cable.
 
     In addition to the key components of a fiber optic network, ANTEC sells a
variety of ancillary fiber optic products. These products include shelf
assemblies in which lasers are mounted, various splicing equipment that allows
individual fibers to be connected either mechanically or by a heat fusion
process, and splice enclosure cases. ANTEC also provides various fiber optic
technology training courses for its customers.
 
     Signals travel from the distribution system to the home via the drop which
consists primarily of coaxial cable, taps, line passives and splitters. These
products, of which ANTEC is a leading supplier under its Regal brand name,
primarily serve to split incoming signals for transmission to multiple homes and
televisions within a home. ANTEC's Regal taps, line passives and splitters are
capable of passing 600 megahertz ("Mhz") and one gigahertz ("Ghz") of signal
bandwidth and ANTEC is a leading supplier of such products. In addition, a new
line of Regal taps permits the passage of "power" down the distribution system,
which is essential to the providing of telephony services. Through its
acquisition of Keptel, ANTEC manufactures NIDs which serve as the demarcation
point where the signal from the service provider meets the wiring of the
subscribers'
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premise. ANTEC has taken additional steps to meet its customers' needs by
developing and marketing the Integrated Drop System(SM).
 
     A large portion of the products supplied by the Company are manufactured
for it by domestic and foreign manufacturers. Approximately 33% of the Company's
purchases in 1997 were from its ten largest suppliers. The loss of a significant
manufacturing source could adversely affect ANTEC's business, although
management believes that any such loss is unlikely to have a lasting impact on
its business, since such products are generally available from alternate
sources.
 
     ANTEC also manufactures certain telecommunications products, including T-1
repeater cases for AT&T and customized wire assemblies. The Company is also a
value-added supplier of electronic connectors for industrial original equipment
manufacturers and military markets, specializing in low-volume, hard-to-obtain
connector products.
 
     ANTEC, through ESP, provides consulting services primarily for developers
of cable television products.
 
     The Company also provides materials management services for several large
cable companies, including TCI. These services include providing procurement,
storage, shipping, tracking and reporting of product deployment, some of which
are on a "just-in-time" basis. The principle portion of the materials management
services program provided by the Company is scheduled to end in May 1998. 1997
net sales included approximately $8.9 million of fees related to these materials
management services programs.
 
DEVELOPMENTAL PRODUCTS
 
     ANTEC is committed to being a technology integrator and product development
specialist in the evolving broadband communications market. ANTEC strives to
develop new products and technology applications, both through its own
engineering resources and by forging strategic alliances with other companies.
ANTEC is currently involved in the development of several new products. There
can be no assurance that the technology applications under development by ANTEC
will be successfully developed or, if successfully developed, that they will be
widely used or that ANTEC will otherwise be able to successfully exploit these
technology applications. Furthermore, ANTEC's competitors may develop similar or
alternative new technology applications which, if successful, could have a
material adverse effect on ANTEC. ANTEC's strategic alliances are based on
business relationships and generally are not the subject of written agreements
expressly providing for the alliance to continue for a significant period of
time. The loss of a strategic partner could have a material adverse effect on
the development of new products under development with that partner.
 
SALES AND MARKETING
 
     ANTEC maintains strong customer relationships through an extensive and
experienced, worldwide sales and marketing force. The sales and marketing team
consists of (i) a senior executive sales team that calls on the highest level of
customer executives, (ii) an outside sales force organized by geographic regions
which focuses on upgrade and rebuild activity on a project by project basis, and
(iii) an inside sales group that is responsible for regular phone contact,
prompt order entry, timely and accurate delivery and effective sales
administration for the many changes frequently required in any substantial
rebuild or upgrade activity. In addition, the sales structure includes sales
engineers and technicians that can assist customers in system design and
specification and can promptly be on site to "trouble shoot" any problems as
they arise during a project. An important element of ANTEC's sales strategy is
to maintain optimal inventory levels of a wide variety of products to enable
prompt delivery to customers.
 
     ANTEC also employs an experienced marketing and product management team
that focuses on each of the various product categories and works with ANTEC
engineers and various technology partners on new products and product
improvements. This group is responsible for inventory levels and pricing,
delivery requirements, market demand and product positioning and advertising.
Product management works closely with the sales team and executive management to
assure that customers are getting the benefits of the newest technologies and
that the Company is abreast of market trends in the industry.
 
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     The Company utilizes a sophisticated computer system. The system is an
on-line, real time, fully integrated system providing the user with cost,
product location and availability, credit history, order tracking and material
management information, daily sales and profitability information, customer
profile information, product inquiry information and the capacity to permit
paperless transactions with customers.
 
INTERNATIONAL OPPORTUNITIES
 
     Although more than 76% of ANTEC's 1997 sales are sales to U.S. domestic
customers, ANTEC believes substantial international opportunities exist. ANTEC
has sales offices in Mexico, Argentina, Brazil, the United Kingdom, Italy,
Spain, Hong Kong, China and Singapore.
 
SEASONALITY
 
     Although the Company's business is not highly seasonal, the Company's sales
in the second and third quarters have generally been the strongest as cold
weather and the holiday season negatively impact construction and purchasing
patterns in the fourth quarter and, to a lesser extent, the first quarter of the
year.
 
SIGNIFICANT CUSTOMERS
 
   
     The cable industry is highly concentrated with the majority of U.S.
domestic subscribers being served by approximately twenty-five major domestic
multi-system operators ("MSOs"). In 1997, over 41% of the Company's revenues
were obtained from sales to the twenty-five largest MSOs. Traditionally, a
significant portion of the Company's revenue is derived from sales to TCI
aggregating $46.6 million, $153.7 million and $157.1 million for the years ended
December 31, 1997, 1996 and 1995, respectively. The October 1996 decision by TCI
to cease accepting shipments of the products the Company and its competitors
traditionally sold to it had a material adverse effect on the Company's
financial performance in 1997. According to TCI, its decision to cease accepting
products was intended to "ensure the successful deployment of our current
inventory and control unnecessary capital spending," and did not reflect any
dissatisfaction with the Company's products. TCI did not formally announce a
change in this decision, although such a change was implicit in its
announcements during the course of 1997 of new construction plans. The Company's
sales to TCI increased each quarter during 1997 from the low point in the first
quarter. This momentum is expected to continue through 1998, with total sales to
TCI expected to be substantially greater in 1998 than 1997 but maybe not as high
as years before 1997. The Company is not able to project future sales levels to
TCI. A future decision by TCI or other large cable companies to reduce purchases
could have a material adverse effect on the Company's business in the future. In
addition, the consolidation in the cable industry can have an adverse effect on
the Company's business as participants reduce capital expenditures. In 1997 for
example, the Company experienced a material slow-down in sales due in part to
the impact of trades, swaps and partnerships that occurred among domestic cable
operators throughout most of 1997. Recently TCI announced that it had agreed to
be acquired by AT&T Corp. The consequences, if any, to the Company of this
acquisition are not yet determinable.
    
 
TURNKEY CONSTRUCTION CONTRACTS
 
     In response to TCI's request for turnkey services, the Company has formed a
joint venture to provide turnkey construction for TCI. The Company's joint
venture partner is a consortium of two firms with experience in construction and
project management. To date this joint venture has been awarded the TCI San
Francisco, Seattle and Salt Lake City area system upgrades. The specific work to
be performed and the type and supplier of the equipment to be used will be
specified by TCI and governed by discrete project documentation to be agreed
upon by TCI and the joint venture for each segment or phase as the work
progresses. To the extent that the Company's products are used in these
projects, a substantial portion of these products will, at the beginning, come
from TCI's existing inventories. The actual performance of these turnkey
services has been subcontracted by the joint venture to the Company's partner,
which is a limited liability company with limited resources.
 
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COMPETITION
 
     All aspects of the Company's business are highly competitive. The Company
competes with national, regional and local manufacturers, distributors and
wholesalers including companies larger than ANTEC, such as General Instrument
Corporation and Scientific-Atlanta. Various manufacturers who are suppliers to
the Company sell directly as well as through distributors into the cable
marketplace. In addition, because of the convergence of the cable,
telecommunications and computer industries and rapid technological development,
new competitors are entering the cable market. Many of the Company's competitors
or potential competitors are substantially larger and have greater resources
than the Company. The principal methods of competition are product
differentiation, performance and quality; price and terms; and service,
technical and administrative support.
 
EMPLOYEES
 
     As of December 31, 1997, the Company had approximately 2,500 full-time
employees of which approximately 40 were members of a union. The Company
believes that its relationship with its employees is excellent. The future
success of the Company depends in part on its ability to attract and retain key
executive, marketing and sales personnel. Competition for qualified personnel in
the cable industry is intense, and the loss of certain key personnel could have
a material adverse effect on the Company. The Company has entered into
employment contracts with its key executive officers. The Company also has a
stock option program which is intended to provide substantial incentives for its
key employees to remain with the Company.
 
ITEM 2. PROPERTIES
 
     The Company conducts its operations from 25 different locations, two of
which are owned and the remainder of which are leased. These facilities consist
of sales and administrative offices, warehouses and manufacturing facilities
totaling approximately 1,200,000 square feet. The Company's long-term leases
expire at various dates through 2005. Two of these leases expire prior to
December 31, 1999, and the Company expects to renew these leases, or to obtain
alternative space, in the ordinary course of its business. The principal
properties are located in Ontario, California; Tinton Falls, New Jersey;
Atlanta, Georgia; Denver, Colorado; El Paso, Texas; Raleigh, North Carolina;
Rock Falls, Illinois; Juarez, Mexico and Chesham, England. The Company believes
that its current properties are adequate for its operations, although the
Company is in the process of consolidating its Atlanta, Georgia operations into
a newly leased facility.
 
ITEM 3. LEGAL PROCEEDINGS
 
     The Company is not currently engaged in any litigation that would have a
material adverse effect on its financial condition or results of operations.
 
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     During the fourth quarter of 1997, no matters were submitted to a vote of
the security holders.
 
                       EXECUTIVE OFFICERS OF THE COMPANY
 
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                 NAME                    AGE                         POSITION
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<S>                                      <C>   <C>
John M. Egan...........................  50    Chairman, Chief Executive Officer and Director
Robert J. Stanzione....................  50    President, Chief Operating Officer and Director
Lawrence A. Margolis...................  50    Executive Vice President and Chief Financial Officer
Gordon E. Halverson....................  55    Executive Vice President and Chief Executive Officer,
                                               Telewire Supply
James L. Faust.........................  56    Executive Vice President, International and Director
Daniel J. Distel.......................  51    Vice President and Controller
James A. Bauer.........................  56    Senior Vice President, Communications and
                                               Administration
James E. Knox..........................  60    General Counsel and Assistant Secretary
Randall L. Talcott.....................  37    Treasurer
</TABLE>
 
     John M. Egan joined the Company in 1973 and has been President and Chief
Executive Officer of ANTEC and its predecessors since 1980. He became Chairman
of ANTEC in 1997. During the period 1986-1990, he was also President of Anixter
Communications, a division of Anixter. Mr. Egan is on the Board of Directors of
the National Cable Television Association ("NCTA"), the Walter Kaitz Foundation
(an association seeking to help the cable industry diversify its management
workforce to include minorities), and has been actively involved with the
Society of Cable Television Engineers and Cable Labs, Inc. Mr. Egan received the
NCTA's 1990 Vanguard Award for Associates.
 
     Robert J. Stanzione has been President, Chief Operating Officer and
Director since January 1998. From October 1995 to December 1997, he was
President and Chief Executive Officer of Arris Interactive, a joint venture
company of ANTEC and Nortel. From 1969 to 1995, he held various positions with
AT&T Corporation.
 
     Lawrence A. Margolis has been Executive Vice President, Chief Financial
Officer and Secretary of ANTEC since 1992 and was Vice President, General
Counsel and Secretary of Anixter from 1986-1992 and General Counsel and
Secretary of Anixter from 1984-1986. Prior to 1984, he was a partner at the law
firm of Schiff Hardin & Waite.
 
     Gordon E. Halverson has been Executive Vice President and Chief Executive
Officer, Telewire Supply since April 1997. From 1990 to April 1997, he was
Executive Vice President, Sales of ANTEC. During the period 1969-1990, he held
various executive positions with predecessors of ANTEC. He received the NCTA's
1993 Vanguard Award for Associates. Mr. Halverson is a member of the NCTA,
Society of Cable Television Engineers, Illinois Cable Association, Cable
Television Administration and Marketing Society.
 
     James L. Faust was Executive Vice President, International from 1995 to
February 1998. During the period 1989-1994, he held various executive positions
with General Instrument Corporation.
 
     Daniel J. Distel has been Vice President and Controller of ANTEC and its
predecessors since 1982. He was Corporate Controller for U.S. Reduction Co., an
aluminum smelting company, from 1979 to 1982. Prior to 1979, he was an audit
manager with Coopers & Lybrand.
 
     James A. Bauer has been Senior Vice President Communications and
Administration since January 1995. From September 1993 to December 1994, he held
various executive positions for ANTEC. For the period 1983-1993, he held various
executive positions with Ameritech, Wisconsin Bell and Illinois Bell.
 
                                       10
<PAGE>   11
 
     James E. Knox has been General Counsel and Assistant Secretary since
February 1996. He has been Senior Vice President, General Counsel and Secretary
of Anixter International Inc. since 1986 and was a partner of Mayer, Brown &
Platt from 1992 to 1996.
 
     Randall L. Talcott has been Treasurer since May 1996. He has been acting
treasurer of ANTEC from 1994 to May 1996. From 1990 to 1994, he held various
positions with Anixter International, Inc.
 
                                       11
<PAGE>   12
 
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
 
     ANTEC Corporation's common stock trades on the NASDAQ National Market
System. The following table sets forth the high and low sales prices for the
Company's common stock on the NASDAQ.
 
<TABLE>
<CAPTION>
                                                              HIGH    LOW
                                                              ----    ---
<S>                                                           <C>     <C>
1996
First Quarter...............................................  $ 19 5/8 $ 14 1/2
Second Quarter..............................................    18 1/4   13 1/2
Third Quarter...............................................    16 3/8   13 1/2
Fourth Quarter..............................................    17 5/8    8 1/2
 
1997
First Quarter...............................................  $ 11 5/8 $  7 1/2
Second Quarter..............................................    14 5/16    7 3/8
Third Quarter...............................................    15 3/8   10 3/4
Fourth Quarter..............................................    16 5/8   12
 
1998
First Quarter (through March 13, 1998)......................    16 1/2   10 3/8
</TABLE>
 
     The Company has not paid dividends on its Common Stock since its inception.
The Credit Facility, the Company's primary loan agreement at December 31, 1997,
contains covenants which limit the Company's ability to pay dividends. The
Company does not anticipate paying any cash dividends in the foreseeable future,
and in 1997, such covenants precluded the Company from declaring any dividends
on its Common Stock.
 
     As of March 13, 1998, there were approximately 482 holders of record of
ANTEC common stock.
 
                                       12
<PAGE>   13
 
ITEM 6. SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
 
     The selected consolidated financial data for each of the three years in the
period ended December 31, 1997 set forth below are derived from the accompanying
audited consolidated financial statements of the Company and should be read in
conjunction with such statements and related notes thereto. The selected
consolidated financial data for 1994 and 1993 is derived from the Company's
unaudited financial statements. On February 6, 1997, shareholders of ANTEC
Corporation and TSX Corporation ("TSX") approved the Plan of Merger ("Merger")
dated as of October 28, 1996 among ANTEC Corporation, TSX Corporation and TSX
Acquisition Corporation, and the Merger resulting in TSX becoming a wholly-owned
subsidiary of ANTEC became effective on the date. Prior to the combination,
TSX's fiscal year ended April 30, and ANTEC's fiscal year ended December 31.
TSX's historical financial statements for the periods prior to December 31, 1996
had to be adjusted to within 93 days of ANTEC's year-end. Therefore, the
statement of operations for the twelve months ended December 31, 1996, 1995,
1994 and 1993 represent ANTEC's fiscal period ended on those dates combined with
TSX's twelve months ended the last Saturday in October 1996, 1995, 1994 and
1993, respectively. All intercompany sales between TSX and ANTEC were
eliminated. The historical consolidated financial information is not necessarily
indicative of the results of future operations and should be read in conjunction
with the historical consolidated financial statements of the Company and the
related notes thereto included elsewhere in this Report.
 
<TABLE>
<CAPTION>
                                              1997       1996       1995       1994     1993(5)
                                              ----       ----       ----       ----     -------
                                                     (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                         <C>        <C>        <C>        <C>        <C>
CONSOLIDATED OPERATING DATA:
  Net sales...............................  $480,078   $690,877   $738,235   $601,903   $459,828
  Cost of sales(1)(2).....................   365,860    511,646    546,591    462,963    366,678
                                            --------   --------   --------   --------   --------
  Gross profit............................   114,218    179,231    191,644    138,940     93,150
  Selling, general and administrative
     expenses.............................   110,803    125,997    135,046     90,013     67,990
  Amortization of goodwill................     4,927      4,981      4,817      3,160      2,772
  Non-recurring items(1)(2)(3)............    21,550      2,109     21,681         --         --
                                            --------   --------   --------   --------   --------
  Operating income (loss).................   (23,062)    46,144     30,100     45,767     22,388
  Interest expense and other, net.........     5,916      7,536     10,801      5,529      5,020
  Gain on sale of Canadian business(4)....        --     (3,835)        --         --         --
                                            --------   --------   --------   --------   --------
  Income (loss) before income tax
     expense..............................   (28,978)    42,443     19,299     40,238     17,368
  Income tax expense (benefit)............    (7,534)    16,083     10,497     17,526      9,098
                                            --------   --------   --------   --------   --------
  Income (loss) from continuing
     operations...........................   (21,444)    26,360      8,802     22,712      8,270
  Discontinued operations, net of tax.....        --         --         --       (109)       621
                                            --------   --------   --------   --------   --------
  Income (loss) from before extraordinary
     gain, net of tax.....................   (21,444)    26,360      8,802     22,603      8,891
  Extraordinary gain, net of tax..........        --         --         --        527         --
                                            --------   --------   --------   --------   --------
  Net income (loss).......................  $(21,444)  $ 26,360   $  8,802   $ 23,130   $  8,891
                                            ========   ========   ========   ========   ========
CONSOLIDATED BALANCE SHEET DATA:
  Working capital.........................  $133,302   $185,288   $165,202   $164,752   $ 81,053
  Total assets............................   443,883    510,249    509,821    472,167    270,472
  Long-term debt..........................    72,339    102,658    117,920    125,197     33,600
  Stockholders' equity....................   295,785    310,388    282,010    250,661    160,158
INCOME (LOSS) FROM CONTINUING OPERATIONS
  PER COMMON SHARE:
  Basic...................................     $(.55)      $.69       $.24       $.74
                                            ========   ========   ========   ========
  Diluted.................................     $(.55)      $.67       $.23       $.67
                                            ========   ========   ========   ========
NET INCOME (LOSS) PER COMMON SHARE:
  Basic...................................     $(.55)      $.69       $.24       $.75
                                            ========   ========   ========   ========
  Diluted.................................     $(.55)      $.67       $.23       $.69
                                            ========   ========   ========   ========
</TABLE>
 
                                       13
<PAGE>   14
 
-------------------------
 
(1) In the first quarter of 1997, in connection with the Merger, the Company
    recorded merger/integration costs aggregating approximately $28.0 million.
    Included in the merger/integration charge was a write-off of redundant
    inventories relating to overlapping product lines and product development
    efforts totaling approximately $6.5 million which has been reflected in cost
    of sales. See Note 5 of the Notes to the Consolidated Financial Statements.
 
(2) In the fourth quarter of 1996, the Company recorded a one-time charge to
    affect the downsizing of the Company's advertising insertion business.
    Included in the charge was a write-down of inventories related to the
    advertising insertion business of approximately $1.5 million which has been
    reflected in cost of sales. See Note 5 of the Notes to the Consolidated
    Financial Statements.
 
(3) In the third quarter of 1995, the non-recurring charge resulted from the
    Company's decision to reorganize, streamline and consolidate its existing
    businesses in order to reduce costs of operations and to refocus its product
    and market development activities. See Note 5 of the Notes to the
    Consolidated Financial Statements.
 
(4) In the third quarter of 1996, the Company sold its Canadian distribution
    business to Cabletel Communications Corporation ("Cabletel"). See Note 6 of
    the Notes to the Consolidated Financial Statements.
 
(5) The Company was incorporated in May 1993 and commenced independent
    operations in June 1993. Previously it had been a division of a larger
    company. As a result, it does not have any historical earnings per share
    data for 1993 that can be provided on a meaningful, non-pro forma, basis.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS
 
     The following should be read in conjunction with the Company's consolidated
financial statements and the related notes thereto and the description of the
Company's business included elsewhere in this Report.
 
INDUSTRY CONDITIONS
 
     The Company's performance is largely dependent on capital spending for
constructing, rebuilding, maintaining or upgrading of domestic cable systems.
Approximately 60% of the Company's sales for 1997 came from sales to the
domestic cable industry. Capital spending in the cable industry has been
cyclical. The amount of capital spending and, therefore, the Company's sales and
profits, are affected by a variety of factors, including general economic
conditions, availability and cost of capital, other demands and opportunities
for capital (such as acquisitions), regulation, demand for cable services,
competition and technology, and real or perceived trends or uncertainties in
these factors. For example, rate reductions for cable service imposed by the FCC
in 1994 caused scheduled capital spending to be delayed. Also during 1995,
delays in the passage of the telecommunications bill and increased merger and
acquisition activity in the cable industry depressed capital spending.
 
     In the first quarter of 1996, the telecommunications bill ("Bill") was
approved by Congress and signed by the President. Overall, the Bill allows
long-distance carriers, local phone companies and cable companies to provide
similar services across their networks. The Bill gives the FCC broad powers over
this process and the technology which will be used. The Bill also greatly eases
restrictions on ownership of radio and television stations, permits the regional
telephone companies to engage in manufacturing and research and development, and
is intended to facilitate the increased availability of wireless technologies.
The impact of the Bill on the Company and the industry it serves is not known as
the FCC, state regulators and the courts must decide how the Bill will be
implemented, and the companies must decide what services they will provide in
the future.
 
     Technical developments and strategic decisions by cable system operators
and their competitors will significantly affect the Company. Cable systems are
now being bypassed by direct broadcast satellite services. New digital
technologies enable the compression of many channels into the bandwidth
currently used by one analog channel. There are new wireless technologies which
could be used to bypass existing distribution systems. The entrance of telephone
companies into the cable industry and the consolidation of cable
 
                                       14
<PAGE>   15
 
companies and telephone companies, as the result of the new Federal legislation
discussed above, may affect not only the level of capital spending in general,
but the portion thereof received by the Company.
 
     In 1997, operators of cable systems continued or intensified efforts to
consolidate or simplify their systems. The resulting uncertainty caused delays
in expenditures for improvements in these systems.
 
SIGNIFICANT CUSTOMERS
 
   
     The cable industry is highly concentrated with the majority of U.S.
domestic subscribers being served by approximately twenty-five major domestic
multi-system operators ("MSOs"). In 1997, over 41% of the Company's revenues
were obtained from sales to the twenty-five largest MSOs. Traditionally, a
significant portion of the Company's revenue is derived from sales to TCI
aggregating $46.6 million, $153.7 million and $157.1 million for the years ended
December 31, 1997, 1996 and 1995, respectively. The October 1996 decision by TCI
to cease accepting shipments of the products the Company and its competitors
traditionally sold to it had a material adverse effect on the Company's
financial performance in 1997. According to TCI, its decision to cease accepting
products was intended to "ensure the successful deployment of our inventory and
control unnecessary capital spending," and did not reflect any dissatisfaction
with the Company's products. TCI did not formally announce a change in this
decision, although such a change was explicit in its announcements during the
course of 1997 of new construction projects. The Company's sales to TCI
increased each quarter during 1997 from the low point in the first quarter. The
momentum is expected to continue through 1998, with total sales for 1998 to TCI
expected to be substantially greater than 1997 but maybe not as high as years
before 1997. The Company is not able to project future sales levels to TCI. A
future decision by TCI or other large cable companies to reduce purchases could
have a material adverse effect on the Company's business in the future. In
addition, the consolidation in the cable industry can have an adverse effect on
the Company's business as participants reduce capital expenditures. In 1997 for
example, the Company experienced a material slow-down in sales due in part to
the impact of trades, swaps and partnerships that occurred among domestic cable
operators throughout most of 1997. Recently TCI announced that it had agreed to
be acquired by AT&T Corp. The consequences, if any, to the Company of this
acquisition are not yet determinable.
    
 
TURNKEY CONSTRUCTION CONTRACTS
 
     In response to TCI's request for turnkey services, the Company has formed a
joint venture to provide turnkey construction for TCI. The Company's joint
venture partner is a consortium of two firms with experience in construction and
project management. To date this joint venture has been awarded the TCI San
Francisco, Seattle and Salt Lake City area system upgrades. The specific work to
be performed and the type and supplier of the equipment to be used will be
specified by TCI and governed by discrete project documentation to be agreed
upon by TCI and the joint venture for each segment or phase as the work
progresses. To the extent that the Company's products are used in these
projects, a substantial portion of these products will at the beginning come
from TCI's existing inventories. The actual performance of these turnkey
services has been subcontracted by the joint venture to the Company's partner,
which is a limited liability company with limited resources.
 
MERGER
 
     On February 6, 1997, shareholders of ANTEC Corporation and TSX Corporation
approved the Plan of Merger ("Merger") dated as of October 28, 1996, among ANTEC
Corporation, TSX Corporation and TSX Acquisition Corporation, and the merger
became effective on that date. Under the terms of the transaction, TSX
shareholders received one share of ANTEC common stock for each share of TSX
common stock that they owned, while ANTEC shareholders continued to own their
existing shares. The transaction was tax-free for TSX shareholders and was
accounted for as a pooling of interests. As a result of the merger, Anixter
International Inc. ("Anixter International") and TCI are currently the
beneficial owners of approximately 18%, each, of the outstanding ANTEC common
stock. TCI's beneficial ownership includes options to acquire an additional
854,341 shares.
 
                                       15
<PAGE>   16
 
     The Merger provided ANTEC with a state-of-the-art manufacturing facility in
Juarez, Mexico. This facility will also be utilized to manufacture products
which the Company has purchased from others or has others manufacture for it.
With the addition of TSX's primary products of optical nodes and distribution
amplifiers, ANTEC completed its hybrid fiber/coax product line offering.
 
     ANTEC and TSX incurred employee-related and other merger/integration
charges in the first quarter of 1997 as a result of the Merger. (See Financial
Liquidity and Capital Resources.)
 
RESULTS OF OPERATIONS
 
     The following table sets forth certain financial data as a percentage of
net sales:
 
<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                        -----------------------------
                                                        1997        1996        1995
                                                        ----        ----        ----
<S>                                                     <C>         <C>         <C>
Net sales...........................................    100.0%      100.0%      100.0%
Cost of sales.......................................     76.2        74.1        74.0
                                                        -----       -----       -----
Gross profit........................................     23.8        25.9        26.0
Selling, general and administrative expenses........     23.1        18.2        18.3
Non-recurring items.................................      4.5         0.3         2.9
                                                        -----       -----       -----
Operating income (loss).............................     (4.8)        6.7         4.1
Interest expense and other, net.....................      1.2         1.1         1.5
Gain on sale of Canadian business...................       --        (0.5)         --
                                                        -----       -----       -----
Income (loss) before income tax expense (benefit)...     (6.0)        6.1         2.6
Income tax expense (benefit)........................     (1.5)        2.3         1.4
                                                        -----       -----       -----
Net income (loss)...................................     (4.5)%       3.8%        1.2%
                                                        =====       =====       =====
</TABLE>
 
COMPARISON OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
 
     Net Sales. Net sales were $480.1 million in 1997 as compared to $690.9
million in 1996. Of this decrease, approximately $107.1 million was attributable
to reduced sales to TCI, approximately $37.6 million was attributable to the
completion of a major Australian rebuild during 1996 and the balance was due to
the continued softness in the domestic market in general, due largely to the
impact of trades, swaps and partnerships that occurred among domestic cable
operators throughout most of 1997. The principle portion of the materials
management services program provided by the Company is scheduled to end in May
1998. 1997 net sales included approximately $8.9 million of fees related to
these materials management services programs. Traditionally, a significant
portion of the company's revenue is derived from sales to TCI, aggregating
$157.1 million, $153.7 million and $46.6 million for the years ended December
31, 1995, 1996 and 1997, respectively. The October 1996 decision by TCI to cease
accepting shipments of the products the Company and its competitors
traditionally sold to it had a material adverse effect on the Company's
financial performance in 1997. Sales to TCI in 1998 are expected to be
substantially greater than 1997 sales, but not as high as prior years. The
Company is not able to project future sales levels to TCI. A future decision by
TCI or other large cable companies to reduce purchases could have a material
adverse effect on the Company's business in the future.
 
     Gross Profit. Gross profit in 1997 was $114.2 million as compared to $179.2
million in 1996. Gross profit decreased primarily due to the decrease in net
sales. 1997 includes a $6.5 million write-off of redundant inventories relating
to overlapping product lines and product development efforts in connection with
the Merger. (See Financial Liquidity and Capital Resources.) 1996 includes a
$1.5 million inventory write-down related to the one-time advertising insertion
business downsizing charge. (See Financial Liquidity and Capital Resources.)
Excluding these charges, gross profit percentages decreased to 25.1% in 1997
from 26.2% in 1996 due to the higher mix of distributed versus manufactured
product sales in 1997.
 
   
     Gross profit for 1997 includes $1.0 million for the partial reversal of a
charge taken in December 1996 by TSX for modifications it had agreed to make to
products previously sold by TSX. The partial reversal of this
    
 
                                       16
<PAGE>   17
 
   
charge in the second quarter of 1997 was due to the agreement of the customer
during the second quarter to permit products to be modified in the Company's
factory instead of in the field as originally contemplated and the determination
as the result of testing that was completed during the second quarter that a
smaller number of units needed to be modified than originally contemplated. The
initial charge for $2.6 million was taken in December 1996 primarily because TSX
agreed at that time to replace the lids on 3,447 gate keepers, to install new
covers on 58,950 minibridgers, and to replace the plugs and gaskets on 10,771
amplifiers and line extenders for a customer who had purchased these products
from TSX over the period 1993 to 1994. The customer in November and December
1996 pressed TSX to agree to make these modifications because of the customer's
concern that these products might prematurely fail. TSX believed that the
customer's concern was not justified and that it was not obligated to make these
modifications under its warranties covering these products. Nevertheless, in
order to maintain good relations with a major customer, TSX agreed in December
1996 at the insistence of the customer to make these modifications. Having
agreed to make these modifications, TSX believed it was legally obligated to
make the modifications without further consideration from the customer other
than its forbearance. Although the agreement was not in writing, TSX's
understanding was that it was obligated to make the requested modifications to
the customer's reasonable satisfaction as soon as practicable at no significant
cost or inconvenience to the customer. The Company initially estimated the cost
of making the modifications by multiplying the estimated labor and material
costs for modifying each unit times the number of units then believed to be
involved based upon the number of units that had been sold to the customer. The
Company determined that it would cost approximately $2.4 million to complete the
modifications for this customer. (This estimate was subsequently revised as
described above.) It was contemplated that these modifications would begin
promptly and be completed in a few months. However because of a general hold on
construction imposed by the customer, only eight thousand dollars was incurred
for the modifications in 1997. It currently is contemplated that the
modifications will be substantially completed in 1998 and finally completed by
March 31, 1999. As explained in Note 4 of the Notes to the Consolidation
Financial Statements, the 1996 charge is not reflected in the Consolidated
Statement of Operations for 1996 which includes ANTEC's twelve month period
ended on December 31, 1996 and TSX's twelve month period ended on the last
Saturday in October 1996. Instead the charge, together with the other results of
operations for TSX for November and December 1996, was reflected as an
adjustment to retained earnings of the combined companies as of December 31,
1996.
    
 
     Selling, General and Administrative ("SG&A") Expenses. SG&A expenses in
1997 were $110.8 million as compared to $126.0 million in 1996. As a percentage
of sales, SG&A was 23.1% in 1997 as compared with 18.2% in 1996. The $15.2
million reduction reflects the Company's continued effort to control expenses
and the impact of lower sales volumes in 1997. However, since many SG&A items
are fixed or semi-fixed in nature and do not fluctuate with sales SG&A increased
as a percentage of sales despite the reduction as overall sales were
substantially less in 1997.
 
     Non-Recurring Items. In the first quarter of 1997, the Company recorded
merger/integration costs aggregating approximately $28.0 million. The
non-recurring charge included investment banking, legal, accounting and
contractual change of control payments associated with the Merger; facility and
operational consolidation and reorganization costs due to the combining of
various manufacturing operations; and severance costs resulting from the
elimination of positions duplicated by the Merger and integration. Also included
in the total merger/integration charge was a write-off of redundant inventories
totaling approximately $6.5 million which has been reflected in cost of sales
for the year ended December 31, 1997. (See Financial Liquidity and Capital
Resources.)
 
     In the fourth quarter of 1996, the Company recorded a one-time charge of
approximately $3.6 million to affect the downsizing of the Company's advertising
insertion business. The fourth quarter charge was established to write-down
inventories, trade receivables and fixed assets related to the advertising
insertion business, and accrue for severance and other related costs. The
write-down of inventories related to the advertising insertion business of
approximately $1.5 million has been reflected in cost of sales. (See Financial
Liquidity and Capital Resources.)
 
     Interest Expense and Other, Net. Interest expense and other, net was $5.9
million in 1997 as compared to $7.5 million in 1996. This decrease primarily
related to decreased debt levels resulting from lower sales volumes and
consequently lower working capital levels in 1997.
                                       17
<PAGE>   18
 
     Gain on Sale of Canadian Business. In the third quarter of 1996, the
Company sold its Canadian distribution business to Cabletel Communications
Corporation ("Cabletel") for approximately $6.0 million in cash and notes, as
well as 1,450,000 and 500,000 shares of common stock in Cabletel and ARC
International Corporation ("ARC"), respectively, for an aggregate sales price of
approximately $12.4 million. The Company recorded a pre-tax gain of
approximately $3.8 million in connection with the sale. The Canadian
distribution business was immaterial to the Company's consolidated results of
operations and financial position.
 
     Net Income (Loss). Net loss in 1997 was ($21.4) million as compared to net
income of $26.4 million in 1996. This decrease is due to the factors above.
 
   
     TSX Results. Results of operations for the fiscal year ended December 31,
1996, do not include the results of operations for TSX for the two months ended
December 31, 1996, since these two months were subsequent to the results for the
twelve month period ended October 31, 1996, that were used in pooling
accounting. However, net sales for this two month period were $8.7 million, as
compared with net sales of $14.8 million for the comparable period in the prior
year. Of this decline, approximately $5.0 million was due to the decision by TCI
to suspend acceptance of deliveries. TSX incurred an operating loss of $3.6
million for this period as compared with operating income of $2.2 million for
the comparable period for the prior year. Again, this change was primarily the
result of the TCI decision. TSX had a net loss of $2.6 million for this period
as compared with a net income of $1.6 million for the comparable period in the
prior year, again as a result of the TCI decision. In addition, TSX reported a
charge of approximately $2.6 million during this period as discussed above.
    
 
COMPARISON OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
 
     Net Sales. Net sales were $690.9 million in 1996 as compared to $738.2
million in 1995. Net sales decreased primarily due to continued softness in the
domestic cable TV market, including an abrupt decline in sales to TCI in the
fourth quarter of 1996 related to that company's capital spending reduction
program implemented in that same period. This domestic softness was partially
offset by international sales growth.
 
     Gross Profit. Gross profit in 1996 was $179.2 million as compared to $191.6
million in 1995. Gross profit decreased primarily due to the decrease in net
sales. 1996 includes a $1.5 million inventory write-down related to the one-time
advertising insertion business downsizing charge. (See Financial Liquidity and
Capital Resources.) Excluding this charge, gross profit percentages increased to
26.2% in 1996 from 26.0% in 1995 due to changes in product mix, notably an
increase in ANTEC manufactured product sales.
 
     Selling, General and Administrative ("SG&A") Expenses. SG&A expenses in
1996 were $126.0 million as compared to $135.0 million in 1995. This reduction
reflects the impact of ANTEC's reorganized structure and continued expense
control program.
 
     Non-Recurring Items. In the fourth quarter of 1996, the Company recorded a
one-time charge of approximately $3.6 million to affect the downsizing of the
Company's advertising insertion business. The fourth quarter charge was
established to write-down inventories, trade receivables and fixed assets
related to the advertising insertion business, and accrue for severance and
other related costs. The write-down of inventories related to the advertising
insertion business of approximately $1.5 million has been reflected in cost of
sales. (See Financial Liquidity and Capital Resources.)
 
     In the third quarter of 1995, a $21.7 million pre-tax non-recurring charge
was recorded resulting from the Company's decision to integrate its
manufacturing and engineering businesses to capture the potential synergies of
its recent acquisitions and streamline its distribution operations, merging two
distribution divisions into one, eliminating sales and warehouse facilities.
(See Financial Liquidity and Capital Resources.)
 
     Interest Expense and Other, Net. Interest expense and other, net was $7.5
million in 1996 as compared to $10.8 million in 1995. This decrease relates
primarily to decreased debt levels resulting from the full year impact of
improved working capital levels and, to a lesser extent, a lower average
interest rate under the Company's credit facility.
 
                                       18
<PAGE>   19
 
     Gain on Sale of Canadian Business. In the third quarter of 1996, the
Company sold its Canadian distribution business to Cabletel for approximately
$6.0 million in cash and notes, as well as 1,450,000 and 500,000 shares of
common stock in Cabletel and ARC, respectively, for an aggregate sales price of
approximately $12.4 million. The Company recorded a pre-tax gain of
approximately $3.8 million in connection with the sale. The Canadian
distribution business was immaterial to the Company's consolidated results of
operations and financial position.
 
     Net Income (Loss). Net income in 1996 was $26.4 million as compared to $8.8
million in 1995. This increase is due to factors described above.
 
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
 
     Reorganization/Merger Costs
 
     In the first quarter of 1997, in connection with the Merger discussed
above, the Company recorded merger/integration costs aggregating approximately
$28.0 million. The components of the non-recurring charge included $6.9 million
related to the investment banking, legal, accounting and contractual change of
control payments associated with the Merger; $11.2 million related to facility
and operational consolidation and reorganization due to the combining of various
manufacturing operations; and $3.4 million related to severance costs resulting
from the elimination of positions duplicated by the Merger and integration. The
personnel-related costs included charges related to the termination of
approximately 200 employees primarily resulting from the factors described
above. Also included in the total merger/integration charge was a write-off of
redundant inventories totaling approximately $6.5 million which has been
reflected in cost of sales for the year ended December 31, 1997. The costs
related to the facility and operational consolidation and reorganization were
comprised of costs associated with the shutdown of several of the Company's
operating locations. These costs consisted of lease termination payments, losses
on sale and disposal of building and equipment and other related fixed assets.
All of the planned facility closings were completed and related cash costs were
expended by the end of 1997. In 1997, the Company paid approximately $2.4
million relating to personnel-related costs which represented the termination of
approximately 175 employees. As of December 31, 1997, approximately $2.1 million
of cash costs had yet to be expended which consisted of contractual obligations
resulting from the Merger and other personnel-related costs. The Company
anticipates these costs will be expended in 1998. As of December 31, 1997, there
have been no significant adjustments to the liability.
 
     During the fourth quarter of 1996, the Company recorded a one-time charge
of $3.6 million to affect the downsizing of the Company's advertising insertion
business. The fourth quarter provision included: (a) write-downs of inventories,
trade receivables and fixed assets related to the advertising insertion business
of $1.5 million, $1.1 million and $0.3 million, respectively; and (b) accruals
for severance and other related costs of $0.4 million and $0.3 million,
respectively. The write-down of inventories of $1.5 million was reflected in
cost of sales for the year ended December 31, 1996. Management determined that
the downsizing was necessary due to the poor performance of this business's
digital advertising insertion product line and the substantial resources that
would have been required to ensure the continued marketability of this product
line. At December 31, 1997, substantially all of the cash costs had been
expended.
 
     In the third quarter of 1995, ANTEC announced plans to reorganize the
Company in order to reduce costs of operations and to refocus its product and
market development activities. The Company's decision to reorganize was a result
of the impact of reduced spending in the domestic CATV industry. The Company had
expected its aggressive product development and international expansion to be
funded by continued increases in spending by domestic customers. When this did
not occur, due to softness in the domestic market, the Company took steps
necessary to consolidate operations to reflect current customer spending
patterns. The four major components of the Company's reorganization plan were
to: (1) streamline the distribution organization by merging two divisions into
one, resulting in the closing of six sales offices and four warehouse locations
and a resultant planned reduction in inventory; (2) refocus product development
on those activities that directly support the network elements for the early
deployment of hybrid/fiber coax architectures and eliminate or delay spending on
other selected projects; (3) concentrate international activities on growing
existing programs, especially in Asia and South America; and (4) capture
synergies of 1994 acquisitions by
 
                                       19
<PAGE>   20
 
accelerating integration and consolidation of the engineering and manufacturing
operations functions of the acquired businesses. The components of the
non-recurring charge included $9.0 million related to personnel-related costs
and operating lease commitments for facility closings, $10.0 million for the
write-down to net realizable value of inventory in discontinued product lines
and $2.7 million for the write-down of other assets. The personnel-related costs
included charges related to the termination of approximately 100 employees
primarily resulting from the factors described above. The inventory write-down
to net realizable value related to the refocus of product development which
eliminated selected projects and related inventory and the consolidation of the
distribution divisions which eliminated certain competing product lines. In the
fourth quarter of 1995, the Company paid approximately $3.0 million relating to
the personnel and operating lease costs. In 1996, the Company paid approximately
$4.0 million relating to the personnel and operating lease costs. At December
31, 1997, all of the cash costs had been expended.
 
     In January 1998, ANTEC announced a consolidation plan being implemented
concurrently with the creation of the new President & Chief Operating Officer
organization in Atlanta. ANTEC will consolidate all of its Rolling Meadows,
Illinois corporate and administrative functions into either the Atlanta
Technology Center or the Englewood, Colorado TeleWire Supply division
headquarters during 1998 and 1999. It is also anticipated as part of this
consolidation that the two principal facilities located in Atlanta will be
consolidated and that certain international operating and administrative
functions located in Miami and Chicago will also be consolidated into Atlanta.
In connection with these consolidation changes, ANTEC will take a charge of
approximately $10 to $12 million in the first quarter of 1998 reflecting the
severance, move and real estate costs associated with these consolidations. The
Company anticipates that these consolidations will reduce annual operating costs
by as much as $10 million however, the impact of these savings is not expected
to be realized in full until 1999.
 
  Financing
 
     In March 1995, the Company and a group of banks executed a restatement and
amendment to the revolving credit facility (the "Credit Facility") extending the
maturity to 1999 and increasing the loan commitments to $225 million. After the
reorganization of the Company's business and related non-recurring charge in
September 1995, the terms and conditions of the Credit Facility were further
amended to enhance the Company's flexibility and reduce the size of the facility
to $185 million. As of December 31, 1997, the Company had approximately $23
million of available borrowings under the Credit Facility. The Company is
currently in the process of renewing the Credit Facility. The new credit
facility is expected to have higher interest costs and will require the Company
to pledge certain assets. The Company anticipates the size of the facility will
range from $125-135 million.
 
  Interest Rates
 
     As of December 31, 1997, the Company had approximately $70 million in
floating rate indebtedness. The Company has entered into an interest rate swap
agreement which effectively fixes the interest rate on a portion of its floating
rate obligation. The interest rate swap agreement has a notional principal
amount of $50 million and a fixed rate of approximately 6.0%. This agreement
expires in 2000. The interest differential paid or received is recognized as an
adjustment to interest expense. The fair value of the interest rate swap
agreement was estimated using a quote from an outside source and represents the
cash requirement as if the agreement had been settled at year end. The fair
value of the interest rate swap agreement, which is not reflected in the
financial statements, was approximately a $0.2 million liability at December 31,
1997.
 
  Foreign Currency
 
     A significant portion of the Company's products is manufactured or
assembled in Mexico and other countries outside the United States. The Company's
sales of its equipment into international markets have been and are expected in
the future to be an important part of the Company's business. These foreign
operations are subject to the usual risks inherent in conducting operations
abroad, including risks with respect to currency exchange rates, economic and
political destabilization, restrictive actions and taxation by foreign
governments, nationalization, the laws and policies of the United States
affecting trade, foreign investment
                                       20
<PAGE>   21
 
and loans, and foreign tax laws. Even though all of the Company's international
sales have been dollar denominated, the Company's business could be adversely
affected if relevant currencies fluctuate relative to the United States dollar.
 
  Capital Expenditures
 
     The Company's capital expenditures were $12.8 million in 1997 as compared
to $10.5 million in 1996. 1995 capital expenditures of $17.5 million included
planned sales office and warehouse improvements and expansion. Except for the
impact of the Year 2000 discussed below, the Company had no significant
commitments for capital expenditures at December 31, 1997.
 
  Cash Flow
 
     Cash flows provided by operating activities were $26.8 million, $28.1
million and $35.0 million for the years ended December 31, 1997, 1996 and 1995,
respectively. 1997 includes expenses paid related to the Merger. 1996 includes
payments made related to the Company's 1995 reorganization. 1995 includes the
impact of the Company's efforts to significantly improve working capital levels.
Cash flows used by investing activities were ($20.5) million, ($1.6) million and
($23.5) million for the years ended December 31, 1997, 1996 and 1995,
respectively. 1997 includes investments in/advances to joint ventures of
approximately $7.8 million. In 1996, the Company sold its ownership in the
Sumitomo joint venture and received $4.0 million in cash. Also in 1996, ANTEC
sold its Canadian distribution business for approximately $6.0 million in cash
and notes, as well as 1,450,000 and 500,000 shares of common stock in Cabletel
and ARC, respectively, for an aggregate sales price of approximately $12.4
million. 1995 includes planned sales office and warehouse improvements and
expansion. In 1995, the Company paid approximately $11.0 million in cash and
ANTEC common stock principally resulting from the final settlement of contingent
payments for certain 1994 acquisitions.
 
     Cash flows used by financing activities were ($26.4) million, ($13.2)
million and ($7.5) million for the years ended December 31, 1997, 1996 and 1995,
respectively. The net use of ($26.4) million in 1997 primarily reflects the
reduction of cash and cash equivalents held from December 31, 1996 to December
31, 1997 of $20.1 million and resultant pay down of corporate debt during the
year. Additionally, the use in 1997 was funded by net cash provided by operating
activities of $26.8, which positively reflected improved working capital levels
(i.e. accounts receivable and inventory) and the negative impact of costs paid
relating to the merger/integration. This cash provided by operating activities
available to fund financing activities was largely offset by net cash used by
investing activities of ($20.5). The net use of ($13.2) million in 1996 reflects
positive cash flow from operations of $28.1 million partially used to increase
cash and cash equivalents by $13.3 million. The net use of ($7.5) million in
1995 reflects positive results from operations and improved working capital,
primarily inventories. These positive cash flows from operations were offset by
investing activities of ($23.5) million and an increase in cash and cash
equivalents of $4.0 million.
 
  NOL Carryforwards
 
     As of December 31, 1997, the Company had net operating loss carryforwards
("NOL") for domestic and foreign income tax purposes of approximately $13.2
million and $6.9 million, respectively. The Company established a valuation
allowance in accordance with the provisions of SFAS No. 109 Accounting for
Income Taxes. The Company continually reviews the adequacy of the valuation
allowance and recognizes the benefits only as reassessment indicates that it is
more likely than not that the benefits will be realized. As of December 31,
1997, the valuation allowance on deferred tax assets was approximately $4.9
million.
 
     The availability of tax benefits of NOL carryforwards to reduce the
Company's Federal and state income tax liability is subject to various
limitations under the Internal Revenue Code. The availability of tax benefits of
NOL carryforwards to reduce the Company's foreign income tax liability is
subject to the various tax provisions of the respective countries.
 
     Tax benefits arising from NOL carryforwards of approximately $7.7 million
originating prior to TSX's quasi-reorganization would be credited directly to
additional paid-in capital if and when realized.
                                       21
<PAGE>   22
 
  Impact of Year 2000
 
     The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
 
     Based on a recent assessment, and the Company's ongoing assessment of its
computer processing systems, the Company determined that it will be required to
modify or replace significant portions of its software to significantly improve
those systems and to enable these systems to function properly with respect to
dates in the year 2000 and thereafter. The Company presently believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Company.
 
     The Company's total Year 2000 project cost and estimates to complete
include the estimated costs and time associated with the impact of third party
Year 2000 Issues based on presently available information. However, there can be
no guarantee that the systems of other companies on which the Company's systems
rely will be timely converted and would not have an adverse effect on the
Company's systems. The Company has determined it has no exposure to
contingencies related to the Year 2000 Issue for the products it has sold.
 
     If any of the Company's suppliers or customers do not, or if the Company
itself does not, successfully deal with the Year 2000 Issue, the Company could
experience delays in receiving or sending goods that would increase its costs
and that could cause the Company to lose business and even customers and could
subject the Company to claims for damages. Problems with the Year 2000 Issue
could also result in delays in the Company invoicing its customers or in the
Company receiving payments from them that would affect the Company's liquidity.
Problems with the Year 2000 Issue could affect the activities of the Company's
customers to the point that their demand for the Company's products is reduced.
The severity of these possible problems would depend on the nature of the
problem and how quickly it could be corrected or an alternative implemented,
which is unknown at this time. In the extreme such problems could bring the
Company to a standstill.
 
     The Company, based on its normal interaction with its customers and
suppliers and the wide attention the Year 2000 Issue has received, believes that
its suppliers and customers will be prepared for the Year 2000 Issue. There can,
however, be no assurance that this will be so. The Company has not sought any
written assurances from its suppliers or customers because it does not believe
that any such assurances would be meaningful. The Company has not yet seen any
need for contingency plans for the Year 2000 Issue, but this need will be
continuously monitored as the Company acquires more information about the
preparations of its suppliers and customers. Some risks of the Year 2000 Issue
are beyond the control of the Company and its suppliers and customers. For
example no preparations or contingency plan will protect the Company from a down
turn in economic activity caused by the possible ripple effect through out the
entire economy that could be caused by problems of others with the Year 2000
Issue.
 
     The Company will utilize both internal and external resources to reprogram,
or replace, and test the software for the system improvement and Year 2000
modifications. The Company anticipates completing the system improvement and the
Year 2000 project within one year but not later than March 31, 1999, which is
prior to any anticipated impact on its operating systems. The total cost of the
system improvement and the Year 2000 project is estimated at approximately $5.0
million and is being funded through operating cash flows. Of the total project
cost, approximately $2.0 million is attributable to the purchase of new software
and hardware which will be capitalized. The remaining $3.0 million, which will
be expensed as incurred, is not expected to have a material effect on the
results of operations. To date, the Company has incurred approximately $2.3
million ($0.9 million expensed and $1.4 million capitalized for new systems)
related to its system improvement and the Year 2000 project.
 
                                       22
<PAGE>   23
 
     The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third party modification plans
and other factors. However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.
 
FORWARD LOOKING STATEMENTS
 
     Any of the above statements that are not statements about historical facts
are forward looking statements. The forward looking statements, as outlined in
the Private Securities litigation Reform Act of 1995 , can be identified by the
use of terms such as "may," "expect," "anticipate," "intend," "estimate,"
"believe," "continue," or similar variations or the negative thereof. Such
forward looking statements are based on current expectations but involve risks
and uncertainties. The Company's business is dependent upon general economic
conditions as well as competitive, technological, and regulatory developments
and trends specific to the Company's industry and customers. These conditions
and events could be substantially different than believed or expected and these
differences may cause actual results to vary materially from the forward looking
statements made or the results which could be expected to accompany such
statements. Specific factors which could cause such material differences include
the following: design or manufacturing defects in the Company's products which
could curtail sales and subject the Company to substantial costs for removal,
replacement and reinstallation of such products; manufacturing or product
development problems that the Company does not anticipate because of the
Company's relative experience with these activities; and inability to absorb or
adjust costs in response to lower than anticipated sales volumes; unanticipated
costs or inefficiencies from the ongoing consolidation of certain activities;
loss of key management, sales or technical employees; decisions, by the
Company's larger customers, to cancel contracts or orders as they are entitled
to do or not enter into new contracts or orders with the Company because of
dissatisfaction, technological or competitive changes, changes in control or
other reasons; and the Company's inability, as a result of the Company's
relative experience, to deliver construction services within anticipated costs
and time frames which could cause loss of business, operating losses and damage
claims. The above list is representative of the factors which could affect the
Company's forward looking statements and is not intended as an all encompassing
list of such factors. In providing forward looking statements, the Company is
not undertaking any obligation to update publicly or otherwise these statements,
whether as a result of new information, future events or otherwise.
 
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     The report of independent auditors and consolidated financial statements
and notes thereto for the Company are included in this Report and are listed in
the Index to Consolidated Financial Statements which appears on page 23.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
     None
 
                                       23
<PAGE>   24
 
                               ANTEC CORPORATION
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
   
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Auditors..............................   25
Consolidated Balance Sheets at December 31, 1997 and 1996...   26
Consolidated Statements of Operations for the years ended
  December 31, 1997, 1996 and 1995..........................   27
Consolidated Statements of Cash Flows for the years ended
  December 31, 1997, 1996 and 1995..........................   28
Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 1997,
  1996 and 1995.............................................   29
Notes to the Consolidated Financial Statements..............   30
</TABLE>
    
 
                                       24
<PAGE>   25
 
                         REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors and Stockholders
ANTEC Corporation
 
     We have audited the accompanying consolidated balance sheets of ANTEC
Corporation as of December 31, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of ANTEC's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not audit
the 1996 and 1995 financial statements of TSX Corporation, which statements
reflect approximately 14.2% of consolidated assets as of December 31, 1996 and
approximately 13.0% and 11.4% of consolidated sales for the years ended December
31, 1996 and 1995, respectively. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
data included for TSX Corporation for 1996 and 1995, is based solely on the
report of other auditors.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial presentation. We believe
that our audits and the report of other auditors provide a reasonable basis for
our opinion.
 
     In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ANTEC Corporation at
December 31, 1997 and 1996, and the consolidated results of its operations and
its cash flows for the three years ended December 31, 1997, in conformity with
generally accepted accounting principles.
 
                                                     ERNST & YOUNG LLP
Chicago, Illinois
January 30, 1998
 
                                       25
<PAGE>   26
 
                               ANTEC CORPORATION
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,    DECEMBER 31,
                                                                  1997            1996
                                                              ------------    ------------
                                                                     (IN THOUSANDS)
<S>                                                           <C>             <C>
                                          ASSETS
Current assets:
  Cash and cash equivalents.................................    $  7,244        $ 27,398
  Accounts receivable (net of allowances for doubtful
     accounts
     of $4,289 in 1997 and $3,539 in 1996)..................      87,800         106,602
  Inventories, primarily finished goods.....................     111,698         138,785
  Other current assets......................................       2,319           9,706
                                                                --------        --------
     Total current assets...................................     209,061         282,491
Property, plant and equipment, net..........................      36,108          35,947
Goodwill (net of accumulated amortization of $36,785 in 1997
  and $31,858 in 1996)......................................     159,692         167,128
Deferred income taxes, net..................................      19,281          11,531
Other assets................................................      19,741          13,152
                                                                --------        --------
                                                                $443,883        $510,249
                                                                ========        ========
                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $ 38,404        $ 54,039
  Accrued compensation, benefits and related taxes..........      15,958          20,748
  Other accrued liabilities.................................      21,397          22,416
                                                                --------        --------
     Total current liabilities..............................      75,759          97,203
Long-term debt..............................................      72,339         102,658
                                                                --------        --------
     Total liabilities......................................     148,098         199,861
Stockholders' equity:
  Preferred stock, par value $1.00 per share, 5 million
     shares authorized; none issued and outstanding.........          --              --
  Common stock, par value $0.01 per share, 50 million shares
     authorized; 39.3 million and 38.4 million shares issued
     and outstanding in 1997 and 1996, respectively.........         393             384
  Capital in excess of par value............................     261,081         254,181
  Retained earnings.........................................      34,365          56,008
  Cumulative translation adjustments........................         (54)           (185)
                                                                --------        --------
     Total stockholders' equity.............................     295,785         310,388
                                                                --------        --------
                                                                $443,883        $510,249
                                                                ========        ========
</TABLE>
 
        See accompanying notes to the consolidated financial statements.
 
                                       26
<PAGE>   27
 
                               ANTEC CORPORATION
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                             ---------------------------------
                                                               1997        1996        1995
                                                               ----        ----        ----
                                                             (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                          <C>         <C>         <C>
Net sales..................................................  $ 480,078   $ 690,877   $ 738,235
Cost of sales..............................................    365,860     511,646     546,591
                                                             ---------   ---------   ---------
     Gross profit..........................................    114,218     179,231     191,644
Operating expenses:
     Selling, general and administrative expenses..........    110,803     125,997     135,046
     Amortization of goodwill..............................      4,927       4,981       4,817
     Non-recurring items...................................     21,550       2,109      21,681
                                                             ---------   ---------   ---------
                                                               137,280     133,087     161,544
                                                             ---------   ---------   ---------
Operating income (loss)....................................    (23,062)     46,144      30,100
Other expense (income):
     Interest expense and other, net.......................      5,916       7,536      10,801
     Gain on sale of Canadian business.....................         --      (3,835)         --
                                                             ---------   ---------   ---------
Income (loss) before income tax expense (benefit)..........    (28,978)     42,443      19,299
Income tax expense (benefit)...............................     (7,534)     16,083      10,497
                                                             ---------   ---------   ---------
Net income (loss)..........................................  $ (21,444)  $  26,360   $   8,802
                                                             =========   =========   =========
Net income (loss) per common share:
          Basic............................................  $    (.55)  $     .69   $     .24
                                                             =========   =========   =========
          Diluted..........................................  $    (.55)  $     .67   $     .23
                                                             =========   =========   =========
Weighted average common shares:
          Basic............................................     38,751      38,286      36,823
                                                             =========   =========   =========
          Diluted..........................................     38,751      39,523      38,884
                                                             =========   =========   =========
</TABLE>
 
        See accompanying notes to the consolidated financial statements.
 
                                       27
<PAGE>   28
 
                               ANTEC CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                             ---------------------------------
                                                               1997        1996        1995
                                                               ----        ----        ----
                                                                      (IN THOUSANDS)
<S>                                                          <C>         <C>         <C>
Operating activities:
  Net income (loss)........................................  $ (21,444)  $  26,360   $   8,802
  Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
       Depreciation and amortization.......................     15,234      14,726      13,528
       Deferred income taxes...............................     (7,750)      3,289      (7,741)
       Gain on sale of Canadian business...................         --      (3,835)         --
       Changes in operating assets and liabilities, net of
          effects of acquisitions:
          Accounts receivable..............................     18,802       8,409     (19,929)
          Inventories......................................     27,087      (6,114)      9,755
          Accounts payable and accrued liabilities.........     (6,868)    (16,596)     29,925
          Other, net.......................................      1,748       1,850         698
                                                             ---------   ---------   ---------
Net cash provided by operating activities..................     26,809      28,089      35,038
Investing activities:
  Purchases of property, plant and equipment...............    (12,841)    (10,502)    (17,533)
  Sale of Canadian business................................         --       3,000          --
  Investments in/Advances to joint ventures................     (7,780)      5,590      (2,859)
  Acquisitions of other businesses.........................         --          --      (2,734)
  Other....................................................         72         345        (344)
                                                             ---------   ---------   ---------
Net cash used by investing activities......................    (20,549)     (1,567)    (23,470)
                                                             ---------   ---------   ---------
Net cash provided before financing activities..............      6,260      26,522      11,568
Financing activities:
  Borrowings...............................................    119,500     182,984     132,262
  Reductions in borrowings.................................   (149,819)   (198,262)   (144,886)
  Other....................................................      3,905       2,079       5,113
                                                             ---------   ---------   ---------
Net cash used by financing activities......................    (26,414)    (13,199)     (7,511)
                                                             ---------   ---------   ---------
Net increase (decrease) in cash and cash equivalents.......    (20,154)     13,323       4,057
Cash and cash equivalents at beginning of year.............     27,398      14,075      10,018
                                                             ---------   ---------   ---------
Cash and cash equivalents at end of year...................  $   7,244   $  27,398   $  14,075
                                                             =========   =========   =========
Supplemental cash flow information:
  Interest paid during the year............................  $   6,277   $   7,875   $  11,116
                                                             =========   =========   =========
  Income taxes paid during the year........................  $     948   $  18,014   $  10,193
                                                             =========   =========   =========
</TABLE>
 
        See accompanying notes to the consolidated financial statements.
 
                                       28
<PAGE>   29
 
                               ANTEC CORPORATION
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                               FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                             --------------------------------------------------------
                                                      CAPITAL IN              CUMULATIVE
                                             COMMON   EXCESS OF    RETAINED   TRANSLATION
                                             STOCK    PAR VALUE    EARNINGS   ADJUSTMENTS     TOTAL
                                             ------   ----------   --------   -----------    --------
                                                                  (IN THOUSANDS)
<S>                                          <C>      <C>          <C>        <C>            <C>
Balance, December 31, 1994.................   $356     $227,062    $ 23,425      $(181)      $250,662
  Net income...............................     --           --       8,802         --          8,802
  Issuance of common stock and other.......     26       13,866          (6)        --         13,886
  Charge in lieu of tax....................     --          169          --         --            169
  Tax benefit related to exercise of stock
     options/warrants......................     --        8,834          --         --          8,834
  Translation adjustment...................     --           --          --       (232)          (232)
                                              ----     --------    --------      -----       --------
Balance, December 31, 1995.................    382      249,931      32,221       (413)       282,121
  Net income...............................     --           --      26,360         --         26,360
  Issuance of common stock and other.......      2        2,076          --         --          2,078
  Charge in lieu of tax....................  --...        1,904          --         --          1,904
  Tax benefit related to exercise of stock
     options/warrants......................     --          270          --         --            270
  Translation adjustment...................     --           --          --        228            228
  Reporting period adjustment (See Note
     3)....................................     --           --      (2,573)        --         (2,573)
                                              ----     --------    --------      -----       --------
Balance, December 31, 1996.................    384      254,181      56,008       (185)       310,388
  Net loss.................................     --           --     (21,444)        --        (21,444)
  Issuance of common stock and other.......      9        3,896        (199)        --          3,706
  Tax benefit related to exercise of stock
     options/warrants......................     --        3,004          --         --          3,004
  Translation adjustment...................  --...           --          --        131            131
                                              ----     --------    --------      -----       --------
Balance, December 31, 1997.................   $393     $261,081    $ 34,365      $ (54)      $295,785
                                              ====     ========    ========      =====       ========
</TABLE>
 
        See accompanying notes to the consolidated financial statements.
 
                                       29
<PAGE>   30
 
                               ANTEC CORPORATION
 
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
 
     ANTEC Corporation ("ANTEC," or herein together with its consolidated
subsidiaries called the "Company") is an international communications technology
company, headquartered in Atlanta, Georgia, with a major office in Denver. ANTEC
specializes in the design and engineering of hybrid fiber/coax broadband
networks. ANTEC is a leading developer, manufacturer and supplier of optical
transmission, construction, rebuild and maintenance equipment for the broadband
communications industry. ANTEC provides a broad range of products and services
to cable system operators. ANTEC supplies almost all of the products required in
a cable TV system, including headend, distribution, drop and in-home subscriber
products. As of December 31, 1997, Anixter International Inc. ("Anixter
International") and Tele-Communications, Inc. ("TCI") were the beneficial owners
of approximately 18%, each, of the outstanding ANTEC common stock. TCI's
beneficial ownership includes options to acquire an additional 854,341 shares.
Prior to its initial public offering in 1993, the ANTEC business was operated as
several divisions or business units of Anixter Inc. ("Anixter"), a subsidiary of
Anixter International.
 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
CONSOLIDATION
 
     The consolidated financial statements include the accounts of the Company
after elimination of intercompany transactions.
 
USE OF ESTIMATES
 
     The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
 
CASH AND CASH EQUIVALENTS
 
     The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents. The carrying amount reported in the
consolidated balance sheets for cash and cash equivalents approximates fair
value.
 
INVENTORIES
 
     Inventories are stated at the lower of average, approximating first-in,
first-out, cost or market.
 
REVENUE RECOGNITION
 
     Sales and related cost of sales are recognized as products are shipped and
services are rendered.
 
DEPRECIATION
 
     The Company provides for depreciation of plant and equipment principally on
the straight-line basis over the estimated useful lives of 25 to 40 years for
buildings and improvements, 3 to 10 years for machinery and equipment, and the
term of the lease for leasehold improvements.
 
GOODWILL AND LONG-LIVED ASSETS
 
     Goodwill relates to the excess of cost over net assets resulting
principally from the acquisition of Anixter by Anixter International in 1986
which has been allocated to the Company, and from subsequent acquisitions by
ANTEC and by Anixter of businesses now owned by ANTEC. Goodwill resulting from
the acquisition of
                                       30
<PAGE>   31
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
Anixter by Anixter International was allocated to the Company based on the
Company's proportionate share of total operating earnings of Anixter for the
period subsequent to the acquisition by Anixter International. The Company
assesses the recoverability of goodwill and other long-lived assets whenever
events or changes in circumstances indicate that expected future undiscounted
cash flows may not be sufficient to support the carrying amount of an asset. If
expected future undiscounted cash flows from operations are less than its
carrying amount, an asset is determined to be impaired, and a loss is recorded
for the amount by which the carrying value of the asset exceeds its fair value.
Fair value is based on discounting estimated future cash flows or using other
valuation methods as appropriate. Non-cash amortization expense is being
recognized as a result of amortization of goodwill on a straight-line basis over
a period of 40 years from the respective dates of acquisition.
 
ADVERTISING AND SALES PROMOTION
 
     Advertising and sales promotion costs are expensed as incurred. Advertising
expense was approximately $2.2 million, $2.5 million and $2.0 million for the
years ended December 31, 1997, 1996 and 1995, respectively.
 
WARRANTY
 
     The Company provides, by a current charge to income in the period in which
the related revenue is recognized, an amount it estimates will be needed to
cover future warranty obligations.
 
INCOME TAXES
 
     The Company uses the liability method of accounting for income taxes which
requires recognition of temporary differences between financial statement and
income tax basis of assets and liabilities, measured by enacted tax rates.
 
FOREIGN CURRENCY
 
     The financial position and operating results of the Company's foreign
operations are consolidated using the local currency as the functional currency.
All balance sheet accounts of foreign subsidiaries are translated at the current
exchange rate at the end of the accounting period. Income statement items are
translated at average currency exchange rates. The resulting translation
adjustment is recorded as a separate component of stockholders' equity.
 
STOCK-BASED COMPENSATION
 
     The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees, and, accordingly,
recognizes no compensation expense for the stock option grants. As required by
FASB Statement 123, the Company presents supplemental information disclosing pro
forma net income (loss) and net income (loss) per common share as if the Company
had recognized compensation expense on stock options granted subsequent to
December 31, 1994 under the fair value method of that statement (see Note 11).
 
NON-CASH TRANSACTIONS
 
     In the second half of 1995, the Company issued approximately 512,000 shares
of ANTEC common stock as partial consideration for the final payment of
contingent consideration for certain 1994 acquisitions.
 
                                       31
<PAGE>   32
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
INTEREST RATE AGREEMENTS
 
     The Company has entered into an interest rate swap agreement which
effectively fixes the interest rate on a portion of its floating rate
obligation. The interest rate swap agreement has a notional principal amount of
$50 million and a fixed rate of approximately 6.0%. This agreement expires in
2000. The interest differential paid or received is recognized as an adjustment
to interest expense. The fair value of the interest rate swap agreement was
estimated using a quote from an outside source and represents the cash
requirement as if the agreement had been settled at year end. The fair value of
the interest rate swap agreement, which is not reflected in the financial
statements, was approximately a $0.2 million liability at December 31, 1997.
 
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
     In June 1997, the Financial Accounting Standards Board issued Statement No.
130, Reporting of Comprehensive Income, which is required to be adopted in years
beginning after December 15, 1997. The Statement establishes standards for the
reporting and display of comprehensive income and its components. The Company
does not anticipate the adoption of the new statement to have a significant
impact on the current presentation of its financial statements.
 
     In June 1997, the FASB issued Statement No. 131, Disclosures about Segments
of an Enterprise and Related Information, which establishes standards for the
way that public business enterprises report information about operating segments
and related disclosures about products and services, geographic areas, and major
customers. Statement 131 is effective for financial statements for fiscal years
beginning after December 15, 1997, and therefore the Company will adopt the new
requirements retroactively in 1998. Management has not completed its review of
Statement 131, but does not anticipate that the adoption of this statement will
have a significant effect on the Company's financial information.
 
NOTE 3. EARNINGS PER SHARE
 
     The following is an illustration of the reconciliation of the numerators
and denominators of the basic and diluted earnings per share ("EPS")
computations and other related disclosures.
 
<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                              ----------------------------------
                                                                 1997        1996        1995
                                                              ----------   ---------   ---------
<S>                                                           <C>          <C>         <C>
Numerator:
  Net income (loss); numerator for basic and diluted
     earnings per share -- income (loss) available to common
     stockholders...........................................   $(21,444)    $26,360     $ 8,802
Denominator:
  Denominator for basic earnings per
     share -- weighted-average common shares................     38,751      38,286      36,823
  Effects of dilutive securities:
     Options / warrants.....................................         --       1,237       2,061
                                                               --------     -------     -------
  Denominator for diluted earnings per share................     38,751      39,523      38,884
                                                               ========     =======     =======
Basic earnings per share....................................   $  (0.55)    $  0.69     $  0.24
                                                               ========     =======     =======
Diluted earnings per share..................................   $  (0.55)    $  0.67     $  0.23
                                                               ========     =======     =======
</TABLE>
 
     The effects of the options and warrants, approximately 1.6 million common
stock equivalents were not presented for the year ended December 31, 1997 as the
Company incurred a net loss and inclusion of these securities would be
antidilutive.
 
                                       32
<PAGE>   33
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 4. MERGER
 
     On February 6, 1997, shareholders of ANTEC Corporation and TSX Corporation
approved the Plan of Merger ("Merger") dated as of October 28, 1996 among ANTEC
Corporation, TSX Corporation ("TSX") and TSX Acquisition Corporation, and the
Merger resulting in TSX becoming a wholly-owned subsidiary of ANTEC became
effective on that date. Under the terms of the transaction, TSX shareholders
received one share of ANTEC common stock for each share of TSX common stock that
they owned, while ANTEC shareholders continued to own their existing shares. As
a result of the Merger, ANTEC issued approximately 15.4 million shares of Common
Stock. The transaction was tax-free for TSX shareholders and was accounted for
as a pooling of interests. As a result, all amounts from the prior years have
been restated to reflect the Merger.
 
     Prior to the combination, TSX's fiscal year ended April 30, and ANTEC's
fiscal year ended December 31. TSX's historical financial statements for periods
prior to December 31, 1996 had to be adjusted to within 93 days of ANTEC's
year-end. Therefore, the statement of operations for the twelve months ended
December 31, 1996 and 1995 represent ANTEC's fiscal period ended on those dates
combined with TSX's twelve months ended the last Saturday in October 1996 and
1995, respectively. All intercompany sales between TSX and ANTEC were
eliminated. Operating results for the years ended December 31, 1996 and 1995
were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                                ------------------------
                                                                   1996          1995
                                                                   ----          ----
<S>                                                             <C>           <C>
Revenue:
  ANTEC.....................................................     $604,382      $658,237
  TSX.......................................................       89,695        84,272
  Intercompany sales elimination............................       (3,200)       (4,274)
                                                                 --------      --------
     Combined...............................................     $690,877      $738,235
                                                                 ========      ========
Net income (loss):
  ANTEC.....................................................     $ 13,457      $ (3,619)
  TSX.......................................................       12,903        12,421
                                                                 --------      --------
     Combined...............................................     $ 26,360      $  8,802
                                                                 ========      ========
</TABLE>
 
     As a result of the change in the fiscal year end of TSX, the operating
results of TSX for the two months ended December 31, 1996 was reflected as an
adjustment to retained earnings of the combined companies as of December 31,
1996. The following summarizes TSX's operating results for the two months ended
December 31, 1996 and 1995 (in thousands):
 
<TABLE>
<CAPTION>
                                                                TWO MONTHS ENDED
                                                                  DECEMBER 31,
                                                              --------------------
                                                               1996        1995
                                                               ----        ----
                                                                         (UNAUDIT)
<S>                                                           <C>        <C>
Net sales...................................................  $ 8,668     $14,793
Cost of sales...............................................    8,565       9,310
                                                              -------     -------
Gross profit................................................      103       5,483
Selling, general and administrative expenses................    3,663       3,307
                                                              -------     -------
Operating income (loss).....................................   (3,560)      2,176
Interest income and other, net..............................      322         328
                                                              -------     -------
Income (loss) before income taxes...........................   (3,238)      2,504
Income taxes expense (benefit)..............................     (665)        950
                                                              -------     -------
Net income (loss)...........................................  $(2,573)    $ 1,554
                                                              =======     =======
</TABLE>
 
                                       33
<PAGE>   34
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
   
     Included in the operating loss was a provision of approximately $2.6
million relating to preemptive repairs and modifications of equipment that had
previously been sold by TSX. Most of this provision arose from a binding
agreement made by TSX in December 1996 with its largest customer in response to
that customer's concern at that time about possible premature failures. TSX did
not believe this concern was justified. At that time TSX estimated the
modifications that it had agreed to make for this customer would cost
approximately $2.4 million. Subsequently, it was determined that the
modifications would cost approximately $1 million less than initially estimated
and the provision was reduced by this amount in the second quarter of 1997. The
modifications began in late 1997 and are expected to be substantially completed
in 1998.
    
 
     For the two months ended December 31, 1996, cash flows provided by
operations were $785,000, cash flows used by investing activities were $870,000,
and cash flows provided by financing activities were $40,000.
 
NOTE 5. NON-RECURRING ITEMS
 
     In the first quarter of 1997, in connection with the Merger discussed in
Note 3, the Company recorded merger/integration costs aggregating approximately
$28.0 million. The components of the non-recurring charge included $6.9 million
related to the investment banking, legal, accounting and contractual change of
control payments associated with the Merger; $11.2 million related to facility
and operational consolidation and reorganization due to the combining of various
manufacturing operations; and $3.4 million related to severance costs resulting
from the elimination of positions duplicated by the Merger and integration. The
personnel-related costs included charges related to the termination of
approximately 200 employees primarily resulting from the factors described
above. Also included in the total merger/integration charge was a write-off of
redundant inventories totaling approximately $6.5 million which has been
reflected in cost of sales for the year ended December 31, 1997. The costs
related to the facility and operational consolidation and reorganization were
comprised of costs associated with the shutdown of several of the Company's
operating locations. These costs consisted of lease termination payments, losses
on sale and disposal of building and equipment and other related fixed assets.
All of the planned facility closings were completed and related cash costs were
expended by the end of 1997. In 1997, the Company paid approximately $2.4
million relating to personnel-related costs which represented the termination of
approximately 175 employees. As of December 31, 1997, approximately $2.1 million
of cash costs had yet to be expended which consisted of contractual obligations
resulting from the Merger and other personnel-related costs. The Company
anticipates these costs will be expended in 1998. As of December 31, 1997, there
have been no significant adjustments to the liability.
 
     During the fourth quarter of 1996, the Company recorded a one-time charge
of $3.6 million to affect the downsizing of the Company's advertising insertion
business. The fourth quarter provision included: (a) write-downs of inventories,
trade receivables and fixed assets related to the advertising insertion business
of $1.5 million, $1.1 million and $0.3 million, respectively; (b) accruals for
severance and other related costs of $0.4 million and $0.3 million,
respectively. The write-down of inventories of $1.5 million was reflected in
cost of sales for the year ended December 31, 1996. As of December 31, 1997,
substantially all of the cash costs had been expended.
 
     In the third quarter of 1995, a $21.7 million pre-tax non-recurring charge
was recorded resulting principally from the Company's decision to accelerate the
integration and consolidation of its 1994 engineering and manufacturing
acquisitions and the streamlining of its distribution business by merging two
divisions. The components of the non-recurring charge included $9.0 million
related to operating lease commitments for facility closings and
personnel-related costs, $10.0 million for the write-down to net realizable
value of inventory in discontinued product lines and $2.7 million for the
write-down of other assets. As of December 31, 1997, all of the cash costs had
been expended.
 
                                       34
<PAGE>   35
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 6. SALE OF CANADIAN BUSINESS
 
     In the third quarter of 1996, the Company sold its Canadian distribution
business to Cabletel Communications Corp. ("Cabletel") for approximately $6.0
million in cash and notes, as well as 1,450,000 and 500,000 shares of common
stock in Cabletel and ARC International Corporation, respectively, for an
aggregate sales price of approximately $12.4 million. The Company recorded a
pre-tax gain of approximately $3.8 million in connection with the sale. The
Canadian distribution business was immaterial to the Company's consolidated
results of operations and financial position.
 
NOTE 7. PROPERTY, PLANT AND EQUIPMENT, NET
 
     Property, plant and equipment, at cost, consisted of the following (in
thousands):
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                            ----------------------
                                                              1997          1996
                                                              ----          ----
<S>                                                         <C>           <C>
Land....................................................    $  3,094      $  2,347
Buildings and improvements..............................      13,641        14,265
Machinery and equipment.................................      51,806        52,395
                                                            --------      --------
                                                              68,541        69,007
Less: Accumulated depreciation..........................     (32,433)      (33,060)
                                                            --------      --------
                                                            $ 36,108      $ 35,947
                                                            ========      ========
</TABLE>
 
NOTE 8. LONG-TERM DEBT
 
     Long-term debt consisted of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                            ----------------------
                                                              1997          1996
                                                              ----          ----
<S>                                                         <C>           <C>
Credit Facility.........................................    $ 70,000      $100,000
Other...................................................       2,339         2,658
                                                            --------      --------
                                                            $ 72,339      $102,658
                                                            ========      ========
</TABLE>
 
     The Credit Facility provides for various interest rate alternatives. The
average interest rate on borrowings was approximately 6.7% and 6.4% at December
31, 1997 and 1996, respectively. The commitment fee on unused borrowings is
approximately 1/4 of 1%. The Credit Facility contains various restrictions and
covenants, including a restriction on the incurrence of additional debt,
limitations on dividends and certain other payments to stockholders and interest
coverage and net worth maintenance tests. The Company does not anticipate paying
any cash dividends in the foreseeable future, and in 1997, such covenants
precluded the Company from declaring any dividends on its Common Stock. The
interest rates on the Company's debt are periodically adjusted to reflect
changes in overall market interest rates and, therefore, the carrying amount
approximates fair value.
 
     The Credit Facility matures in 1999, and as of December 31, 1997, the
Company had approximately $23 million of available borrowings under the Credit
Facility.
 
                                       35
<PAGE>   36
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 9. INCOME TAXES
 
     Income (loss) before income taxes consisted of the following (in
thousands):
 
<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                       ------------------------------
                                                         1997       1996       1995
                                                         ----       ----       ----
<S>                                                    <C>         <C>        <C>
Domestic (U.S.)....................................    $(28,978)   $40,340    $16,653
Foreign............................................          --      2,103      2,646
                                                       --------    -------    -------
                                                       $(28,978)   $42,443    $19,299
                                                       ========    =======    =======
</TABLE>
 
     Income tax expense (benefit) consisted of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                       ------------------------------
                                                         1997       1996       1995
                                                         ----       ----       ----
<S>                                                    <C>         <C>        <C>
Current -- Federal.................................    $    313    $ 5,849    $15,249
            State..................................         (97)     1,388      1,826
            Foreign................................          --      3,653        994
                                                       --------    -------    -------
                                                            216     10,890     18,069
                                                       --------    -------    -------
Deferred -- Federal................................      (6,384)     1,474     (6,369)
             State.................................      (1,366)     1,013     (1,372)
             Foreign...............................          --        802         --
                                                       --------    -------    -------
                                                         (7,750)     3,289     (7,741)
                                                       --------    -------    -------
Provision in lieu of tax...........................          --      1,904        169
                                                       --------    -------    -------
                                                       $ (7,534)   $16,083    $10,497
                                                       ========    =======    =======
</TABLE>
 
     A reconciliation of income tax expense (benefit) to the Statutory Federal
tax rate of 35% was as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                       ------------------------------
                                                         1997       1996       1995
                                                         ----       ----       ----
<S>                                                    <C>         <C>        <C>
Statutory Federal income tax expense (benefit).....    $(10,142)   $14,855    $ 6,755
Effects of:
  Amortization of goodwill.........................       1,531      1,531      1,530
  State income taxes, net of Federal benefit.......        (951)     1,561        295
  Acquisition fees.................................         998         --         --
  Meals and entertainment..........................         279        634        844
  Reduction in deferred tax valuation allowance....          --     (2,533)        --
  Other, net.......................................         751         35      1,073
                                                       --------    -------    -------
                                                       $ (7,534)   $16,083    $10,497
                                                       ========    =======    =======
</TABLE>
 
     Deferred income taxes reflect the net tax effects of temporary differences
between carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
 
                                       36
<PAGE>   37
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Significant components of the Company's net deferred tax assets were as
follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                --------------------
                                                                  1997        1996
                                                                  ----        ----
<S>                                                             <C>         <C>
Federal/state net operating loss carryforwards..............    $  5,195    $  5,195
Foreign net operating loss carryforwards....................       2,358       2,358
Inventory costs.............................................       9,452       5,901
Merger related reserves.....................................       2,892          --
Plant and equipment, depreciation differences...............       2,292         569
Other, principally operating expenses.......................       1,973       2,389
                                                                --------    --------
     Total deferred tax assets..............................      24,162      16,412
Valuation allowance on deferred tax assets..................      (4,881)     (4,881)
                                                                --------    --------
     Net deferred tax assets................................    $ 19,281    $ 11,531
                                                                ========    ========
</TABLE>
 
     The Company established a valuation allowance in accordance with the
provisions of SFAS No. 109 Accounting for Income Taxes. The Company continually
reviews the adequacy of the valuation allowance and recognizes the benefits only
as reassessment indicates that it is more likely than not that the benefits will
be realized. In 1996, the Company determined that earnings would more likely
than not be sufficient to realize net deferred tax assets of $4.2 million.
Accordingly, a valuation allowance reduction was recorded as a $2.5 million
reduction in tax expense and a $1.7 million credit to equity for the portion of
the benefit originating prior to TSX's quasi-reorganization. The valuation
allowance was reduced to the extent deferred tax assets were expected to be
realized. The Company will continue to review the deferred tax asset valuation
allowance on a timely basis and make adjustments as appropriate.
 
     The Company had U.S. and foreign net operating loss carryforwards at
December 31, 1997 expiring as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                              U.S.      FOREIGN
                EXPIRATION IN CALENDAR YEAR                  AMOUNT      AMOUNT
                ---------------------------                  -------    --------
<S>                                                          <C>        <C>
  2001.....................................................  $ 5,493     $   --
  2003.....................................................    1,099         --
  2004.....................................................    1,099         --
  2005.....................................................       --      6,935
  2006.....................................................      501         --
  2007.....................................................    2,793         --
  2008.....................................................    1,099         --
  2009.....................................................    1,099         --
                                                             -------     ------
                                                             $13,183     $6,935
                                                             =======     ======
</TABLE>
 
     The actual amount of loss carryforwards that will be available to offset
future taxable income may be subject to change depending upon the tax laws in
effect in the years in which the carryforwards are used and may be further
limited in subsequent years should future changes in ownership take place as
defined in the Tax Reform Act of 1986. The Company also had a loss carryforward
for alternative minimum tax ("AMT") purposes of approximately $13.2 million at
December 31, 1997 that could be used to offset up to 90% of future alternative
minimum taxable income. The AMT loss carryforwards expire as shown in the table
above. Tax benefits arising from loss carryforwards of approximately $7.7
million originating prior to TSX's quasi-reorganization on November 22, 1985
would be credited directly to additional paid-in capital if and when realized.
 
                                       37
<PAGE>   38
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 10. COMMITMENTS
 
     The Company leases certain office, distribution, and manufacturing
facilities and equipment under long-term operating leases expiring at various
dates through 2005. Future minimum lease payments under non-cancelable operating
leases (excluding operating leases related to closed facilities -- See Note 4)
at December 31, 1997 were as follows (in thousands):
 
<TABLE>
<S>                                                           <C>
1998........................................................  $ 6,592
1999........................................................    5,449
2000........................................................    3,815
2001........................................................    2,713
2002........................................................    1,835
Thereafter..................................................    2,200
                                                              -------
Total minimum lease payments................................  $22,604
                                                              =======
</TABLE>
 
     Total rental expense for all operating leases amounted to approximately
$9.4 million, $11.0 million and $11.3 million for the years ended December 31,
1997, 1996 and 1995, respectively.
 
NOTE 11. STOCK-BASED COMPENSATION
 
     The Company grants stock options for a fixed number of shares to employees
and directors with an exercise price equal to the market price of the shares at
the date of grant. The Company accounts for stock option grants in accordance
with APB Opinion No. 25, Accounting for Stock Issued to Employees and,
accordingly, recognizes no compensation expense for the stock option grants. The
Company has elected to follow APB 25 because, as discussed below, the
alternative fair value accounting provided for under FASB Statement No. 123,
Accounting for Stock-Based Compensation, requires use of option valuation models
that were not developed for use in valuing employee stock options.
 
     The Company grants stock options under its 1997 Stock Incentive Plan
("SIP"), its 1993 Employee Stock Incentive Plan ("ESIP"), and Director Stock
Option Plan ("DSOP") and issued stock purchase rights under its Employee Stock
Purchase Plan ("ESPP"). Additionally, TSX issued options under its Long-Term
Incentive Plan ("LTIP"). For descriptions of these plans, see below.
 
     As required by FASB Statement 123, the Company presents below supplemental
information disclosing pro forma net income (loss) and net income (loss) per
common share as if the Company had recognized compensation expense on stock
options granted subsequent to December 31, 1994 under the fair value method of
that statement. The fair value for these options was estimated using a
Black-Sholes option pricing model. The assumptions used in this model to
estimate the fair value of options granted under the SIP for 1997 were as
follows: risk-free interest rate of 5.79%; a dividend yield of 0%; volatility
factor of the expected market price of the Company's common stock of .54; and
expected life of 6 years. In respect to the ESIP, LTIP and DSOP, the weighted
average assumptions used in this model to estimate the fair value of options
granted under these plans for 1997, 1996 and 1995 were as follows: risk-free
interest rates of 5.36%, 5.46% and 6.81%, respectively; a dividend yield of 0%;
volatility factor of the expected market price of the Company's common stock of
 .54; and a weighted average expected life of 5 years. The assumptions used for
the ESPP for 1997, 1996 and 1995 were as follows: risk-free rate of 5.0%, 5.8%
and 5.8%, respectively; a dividend yield of 0%; volatility factor of the
expected market price of the Company's common stock of .54; and an expected life
of one year.
 
     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options,
 
                                       38
<PAGE>   39
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
and because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.
 
     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands, except share data):
 
<TABLE>
<CAPTION>
                                                            1997         1996         1995
                                                            ----         ----         ----
<S>                                                       <C>           <C>          <C>
Pro forma net income (loss)............................   $(23,980)     $23,796      $7,819
                                                          ========      =======      ======
Pro forma net income (loss) per common share:
  Basic................................................   $   (.62)     $   .62      $  .21
                                                          ========      =======      ======
  Diluted..............................................   $   (.62)     $   .60      $  .20
                                                          ========      =======      ======
</TABLE>
 
     Compensation expense recognized for pro forma purposes was approximately
$4.2 million, $4.3 million and $1.6 million for 1997, 1996 and 1995,
respectively. FASB Statement 123 is applicable only to options granted
subsequent to December 31, 1994.
 
     In 1997, the Board of Directors approved the SIP to facilitate the hiring,
retention and continued motivation of key employees, consultants and directors
and to align more closely their interests with those of the Company and its
stockholders. Awards under the SIP may be in the form of incentive stock
options, non-qualified stock options, stock grants, stock units, restricted
stock, stock appreciation rights, performance shares and units, dividend
equivalent rights and reload options. A total of 3,750,000 shares of the
Company's common stock may be issued pursuant to this plan. Vesting requirements
for issuances under the SIP may vary.
 
     A total of 3,234,000 options were granted under the SIP in 1997 with a
weighted average exercise price and fair value of $9.37 and $5.39, respectively.
During the year, 137,000 were terminated with exercise prices of $8.88. At
December 31, 1997, 3,097,000 options were outstanding under the SIP with a
weighted average exercise price of $9.39. Of the options outstanding at
year-end, 2,752,000 had an exercise price of $8.88 and remaining contractual
life of 6.33 years. The remaining outstanding options at December 31, 1997 have
exercise prices ranging from $13.44 to $15.56 with a weighted average exercise
price of $13.50 and weighted average remaining contractual life of 6.95 years.
No issues under the SIP were vested as of December 31, 1997. Substantially all
of these options become exercisable in May 2003, although vesting will
accelerate if the Company's stock closes above specified prices ($15, $20 and
$25) for 20 consecutive days and the Company's diluted earnings per common share
(before non-recurring items) over a period of four consecutive quarters exceed
$1.00 per common share.
 
     In 1993, the Board of Directors approved the ESIP which provides for
granting key employees and consultants options to purchase up to 1,925,000
shares of ANTEC common stock. In 1996, an amendment to the ESIP was approved
increasing the number of shares of ANTEC common stock which may be issued
pursuant to that plan from 1,925,000 shares to 3,225,000 shares. One-third of
these options vest each year on the anniversary of the date of grant beginning
with the second anniversary. The options terminate seven years from the date of
grant.
 
     In 1993, the Board of Directors also approved the DSOP which provides for
the granting to each director of the Company who has not been granted any
options under the ESIP each January 1, commencing January 1, 1994, an option to
purchase 2,500 shares of ANTEC common stock for the average closing price for
the ten trading days preceding the date of grant. A total of 75,000 shares of
ANTEC common stock have been allocated to this plan. These options vest six
months from date of grant and terminate seven years from date of grant.
 
                                       39
<PAGE>   40
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Pursuant to the Merger, an option to purchase TSX common stock under the
LTIP was converted to an option to purchase ANTEC common stock. A total of
883,900 shares of ANTEC common stock have been allocated to this plan.
 
     Pursuant to the Merger Agreement between ANTEC and Keptel, on November 17,
1994 under the ANTEC/Keptel Exchange Option Plan ("EOP"), each Keptel stock
option, whether or not then exercisable, was canceled and substituted with an
ANTEC/Keptel exchange option to acquire shares of ANTEC common stock. Each
ANTEC/Keptel exchange option provides the option holder with rights and benefits
that are no less favorable than were provided under the former Keptel stock
option plan. A total of 360,850 shares of ANTEC common stock have been allocated
to this plan.
 
     A summary of activity of the Company's options granted under its ESIP,
DSOP, LTIP and EOP is presented below:
 
<TABLE>
<CAPTION>
                                        1997                         1996                         1995
                             --------------------------   --------------------------   ---------------------------
                                            WEIGHTED                     WEIGHTED                      WEIGHTED
                                            AVERAGE                      AVERAGE                       AVERAGE
                              OPTIONS    EXERCISE PRICE    OPTIONS    EXERCISE PRICE    OPTIONS     EXERCISE PRICE
                              -------    --------------    -------    --------------    -------     --------------
<S>                          <C>         <C>              <C>         <C>              <C>          <C>
Beginning balance.........   3,406,657       $11.11       2,938,327       $ 9.99        3,519,150       $ 6.43
Grants....................     793,000       $10.88         675,010       $15.74          695,200       $16.92
Exercises.................    (817,339)      $ 3.80        (131,713)      $ 7.43       (1,095,890)      $ 2.62
Terminations..............    (223,100)      $14.75         (74,967)      $15.56         (148,400)      $14.42
Expirations...............     (68,968)      $14.09              --           --          (31,733)      $16.62
                             ---------       ------       ---------       ------       ----------       ------
Ending balance............   3,090,250       $12.65       3,406,657       $10.60        2,938,327       $ 9.32
                             =========       ======       =========       ======       ==========       ======
Vested at period end......   1,668,582       $11.76       1,893,795       $ 8.84        1,459,073       $ 7.51
                             =========       ======       =========       ======       ==========       ======
Weighted average fair
  value of options granted
  during year.............   $    5.77                    $    8.20                    $     9.20
                             =========                    =========                    ==========
</TABLE>
 
     The following table summarizes information about ESIP, DSOP, LTIP and EOP
options outstanding at December 31, 1997.
 
<TABLE>
<CAPTION>
                                                OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                                  -----------------------------------------------   ----------------------------
                                                    WEIGHTED
                                    NUMBER          AVERAGE           WEIGHTED        NUMBER         WEIGHTED
                                  OUTSTANDING      REMAINING          AVERAGE       EXERCISABLE      AVERAGE
            RANGE OF              AT 12/31/97   CONTRACTUAL LIFE   EXERCISE PRICE   AT 12/31/97   EXERCISE PRICE
        EXERCISE PRICES           -----------   ----------------   --------------   -----------   --------------
<S>                               <C>           <C>                <C>              <C>           <C>
          $ 2.00................      20,000       5.25 years          $ 2.00           20,000        $ 2.00
          $ 5.00................       2,400       6.58 years          $ 5.00            2,400        $ 5.00
$ 9.23 to $10.00................   1,162,517       2.03 years          $ 9.99        1,162,517        $ 9.99
$10.50 to $15.83................   1,475,750       5.80 years          $12.95          231,750        $13.64
$16.60 to $25.09................     429,583       3.74 years          $19.35          251,915        $19.04
                                   ---------       ----------          ------        ---------        ------
$ 2.00 to $25.09................   3,090,250       4.09 years          $12.65        1,668,582        $11.76
                                   =========       ==========          ======        =========        ======
</TABLE>
 
                                       40
<PAGE>   41
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Additionally, ANTEC has an ESPP which enables its employees to purchase a
total of 300,000 shares of ANTEC common stock over a period of time. The Company
accounts for the ESPP in accordance with APB No. 25, Accounting for Stock Issued
to Employees, and accordingly recognizes no compensation expense. Participants
can request that up to 10% of their base compensation be applied toward the
purchase of ANTEC common stock under ANTEC's ESPP. Purchases by any one
participant are limited to $25,000 in any one year. The exercise price is the
lower of 85% of the fair market value of the ANTEC common stock at the date of
grant or at the later exercise date (currently one year). Under the ESPP,
employees of the Company purchased 48,377, 90,057 and 49,515 shares of ANTEC
common stock in 1997, 1996 and 1995, respectively. At December 31, 1997,
approximately 59,577 shares are subject to purchase under the ESPP at a price of
no more than $9.99 per share.
 
     Pursuant to the Merger Agreement between ANTEC and Keptel, on November 17,
1994, each Keptel warrant, whether or not then exercisable, was canceled and
substituted with a warrant to acquire shares of ANTEC common stock. Each warrant
provides the warrant holder with rights and benefits that are no less favorable
than were provided under the former Keptel warrant plan. At December 31, 1997,
12,600 warrants were outstanding and exercisable at prices ranging from $8.57 to
$10.71, expiring January 28, 1998.
 
     In 1989, Anixter and Anixter International established an equity
participation plan ("EPP") which provided for awards of EPP units to its key
employees, including certain employees of the then ANTEC division. The value of
units at the date of grant and at the conversion date was based upon a formula
which takes into consideration earnings and return on investment of the Company.
The employees did not purchase the units but upon conversion received cash for
the difference between the escalating beginning unit value and the unit value at
date of conversion. Each holder of EPP units was granted stock options effective
January 1, 1993 pursuant to the ESIP. Options under this plan can be exercised
only if all EPP units held by the optionee are surrendered unconverted. The
Company has not recorded an expense for the value of the outstanding EPP units
for the years ended December 31, 1997, 1996 and 1995 because management believes
the liability relating to the units is insignificant since exercise of any EPP
units precludes the holder from exercising stock options granted prior to 1995.
 
     In 1997, the Company paid its non-employee directors annual retainer fees
of $50,000 in the form of stock units. These stock units convert to Common Stock
of the Company at the prearranged time selected by each director. The Company
amortizes the compensation expense related to these stock units on a straight
line basis over a period of one year. Compensation expense for non-employee
directors stock units was approximately $.1 million for the year ended December
31, 1997. At December 31, 1997 there were 20,500 units issued and outstanding.
 
NOTE 12. PENSION PLANS
 
     The Company sponsors two non-contributory defined-benefit pension plans
which cover substantially all of the Company's U.S. employees.
 
     The U.S. pension plan benefit formulas generally provide for payments to
retired employees based upon their length of service and compensation as defined
in the plans. The Company's policy is to fund the plans as
 
                                       41
<PAGE>   42
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
required by the Employee Retirement Income Security Act of 1974 (ERISA) and to
the extent that such contributions are tax deductible.
 
<TABLE>
<CAPTION>
                                                               1997      1996
                                                              -------   -------
<S>                                                           <C>       <C>
Actuarial Present Value of Benefits Obligation
  Vested benefits...........................................  $ 8,318   $ 6,847
  Non-vested benefits.......................................      805       439
                                                              -------   -------
Accumulated benefit obligation..............................    9,123     7,286
Effect of projected future compensation levels..............    7,563     7,367
                                                              -------   -------
Projected benefit obligation................................   16,686    14,653
Plan assets at fair value...................................   10,300     8,336
                                                              -------   -------
Projected benefit obligations in excess of plan assets......   (6,386)   (6,317)
Unrecognized prior service cost.............................       78        84
Unrecognized net gain due to past experience different from
  assumptions...............................................    1,324     2,678
                                                              -------   -------
Pension liability recognized in the Consolidated Balance
  Sheets....................................................  $(4,984)  $(3,555)
</TABLE>
 
     The plans' assets consist of corporate and government debt securities and
equity securities. Net periodic pension cost for 1997, 1996 and 1995 for pension
and supplemental benefit plans includes the following components (dollars in
thousands):
 
<TABLE>
<CAPTION>
                                                               1997      1996     1995
                                                              -------   ------   -------
<S>                                                           <C>       <C>      <C>
Service cost................................................  $ 1,487   $1,020   $   790
Interest cost...............................................    1,091      766       619
Actual return on assets.....................................   (1,700)    (868)   (1,085)
Net amortization and deferral...............................    1,109      390       635
                                                              -------   ------   -------
Net periodic pension cost...................................  $ 1,987   $1,308   $   959
</TABLE>
 
     The assumptions used in accounting for the Company's defined benefit plans
for the three years presented are set forth below:
 
<TABLE>
<CAPTION>
                                                              1997   1996   1995
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Assumed discount rate.......................................  7.5%   7.5%   7.5%
Rates of compensation increase..............................  6.0%   6.0%   6.0%
Expected long-term rate of return on plan assets............  8.0%   8.0%   8.0%
</TABLE>
 
NOTE 13. SALES INFORMATION
 
     A significant portion of the Company's revenue is derived from sales to TCI
aggregating $46.6 million, $153.7 million and $157.1 million for the years ended
December 31, 1997, 1996 and 1995, respectively. Export sales accounted for
approximately 17%, 17% and 12% of total sales for the years ended December 31,
1997, 1996 and 1995, respectively. Sales to international customers (including
export sales) were approximately 24%, 24% and 21% of total sales for the years
ended December 31, 1997, 1996 and 1995, respectively.
 
NOTE 14. SUBSEQUENT EVENT
 
     In January 1998, ANTEC announced a consolidation plan being implemented
concurrently with the creation of the new President & Chief Operating Officer
organization in Atlanta. ANTEC will consolidate all of its Rolling Meadows,
Illinois corporate and administrative functions into either the Atlanta
Technology Center or the Englewood, Colorado TeleWire Supply division
headquarters during 1998 and 1999. It is also anticipated as part of this
consolidation that the two principal facilities located in Atlanta will be
consolidated and that certain international operating and administrative
functions located in Miami and Chicago will also
 
                                       42
<PAGE>   43
                               ANTEC CORPORATION
 
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
be consolidated into Atlanta. In connection with these consolidation changes,
ANTEC will take a charge of approximately $10 to $12 million in the first
quarter of 1998 reflecting the severance, move and real estate costs associated
with these consolidations.
 
NOTE 15. SUMMARY QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
 
     The following table summarizes the Company's quarterly consolidated
financial information (in thousands, except share data).
 
<TABLE>
<CAPTION>
                                                              QUARTERS IN 1997 ENDED
                                               ----------------------------------------------------
                                               MARCH 31,      JUNE 30,      SEPT. 30,      DEC. 31,
                                               ---------      --------      ---------      --------
<S>                                            <C>            <C>           <C>            <C>
Net sales....................................  $120,034       $124,262      $120,365       $115,417
Gross profit(1)..............................    26,128         33,593        29,316         25,181
Operating income (loss)(1)...................   (23,731)         4,954          (164)        (4,121)
Income (loss) before income taxes............   (25,093)         3,275        (1,669)        (5,491)
Net income (loss)............................  $(16,124)      $    983      $ (1,999)      $ (4,304)
                                               ========       ========      ========       ========
Net income (loss) per common share:
  Basic......................................  $   (.42)      $    .03      $   (.05)      $   (.11)
                                               ========       ========      ========       ========
  Diluted....................................  $   (.42)      $    .02      $   (.05)      $   (.11)
                                               ========       ========      ========       ========
</TABLE>
 
<TABLE>
<CAPTION>
                                                              QUARTERS IN 1996 ENDED
                                               ----------------------------------------------------
                                               MARCH 31,      JUNE 30,      SEPT. 30,      DEC. 31,
                                               ---------      --------      ---------      --------
<S>                                            <C>            <C>           <C>            <C>
Net sales....................................  $183,149       $188,742      $178,329       $140,657
Gross profit(2)..............................    45,778         48,069        47,346         38,038
Operating income (loss)(2)...................    12,380         14,968        13,847          4,949
Income (loss) before income taxes(3).........    10,030         12,991        15,931          3,491
Net income (loss)............................  $  7,470       $  7,540      $  9,594       $  1,756
                                               ========       ========      ========       ========
Net income (loss) per common share:
  Basic......................................  $    .20       $    .20      $    .25       $    .05
                                               ========       ========      ========       ========
  Diluted....................................  $    .19       $    .19      $    .24       $    .04
                                               ========       ========      ========       ========
</TABLE>
 
-------------------------
(1) First quarter 1997 includes $28 million of merger/integration costs of which
    $6.5 million relating to the write-off of inventories has been reflected in
    cost of sales. See Note 5 to the Consolidated Financial Statements.
 
(2) Fourth quarter 1996 includes a $3.6 million one-time charge to affect the
    downsizing of the Company's advertising insertion business. Included in the
    charge was a write-down of inventories related to the advertising insertion
    business of approximately $1.5 million which has been reflected in cost of
    sales. See Note 5 to the Consolidated Financial Statements.
 
(3) Third quarter 1996 includes a $3.8 million pre-tax gain in connection with
    the sale of the Company's Canadian distribution business. See Note 6 to the
    Consolidated Financial Statements.
 
                                       43
<PAGE>   44
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Information relating to directors of the Company is set forth under the
caption entitled "Election of Directors" in the Company's Proxy Statement for
the 1998 Annual Meeting of Stockholders and is incorporated herein by reference.
Certain information concerning the executive officers of the Company is set
forth in Part I of this Report on Form 10-K under the caption entitled
"Executive Officers of the Company." Information about Section 16(a) Reporting
Delinquencies is set forth under this caption in the Proxy Statement.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     Information regarding compensation of officers and directors of the Company
is set forth under the captions entitled "Executive Compensation," "Compensation
of Directors," "Employment Contracts and Termination of Employment and
Change-In-Control Arrangements" and "Compensation Committee Interlocks and
Insider Participation" in the Proxy Statement and is incorporated herein by
reference.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     Information regarding ownership of the Company's common stock is set forth
under the captions entitled "Security Ownership of Management" and "Security
Ownership of Principal Stockholders" in the Proxy Statement and is incorporated
herein by reference.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Information regarding certain relationships and related transactions with
the Company is set forth under the captions entitled "Compensation Committee
Interlocks and Insider Participation" and "Certain Relationships and Related
Transactions" in the Proxy Statement and is incorporated herein by reference.
 
                                       44
<PAGE>   45
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
     (A) EXHIBITS.
 
     The exhibits listed below in Item 14(a)1, 2 and 3 are filed as part of this
Report. Each management contract or compensatory plan required to be filed as an
exhibit is identified by an asterisk(*).
 
     (B) REPORTS ON FORM 8-K.
 
     None
 
ITEM 14(A)1 & 2. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL
                 STATEMENT SCHEDULES
 
FINANCIAL STATEMENTS
 
     The following Consolidated Financial Statements of ANTEC Corporation and
Report of Independent Auditors are filed as part of this Report.
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Auditors..............................   24
Consolidated Balance Sheets at December 31, 1997 and 1996...   25
Consolidated Statements of Operations for the years ended
  December 31, 1997, 1996 and 1995..........................   26
Consolidated Statements of Cash Flows for the years ended
  December 31, 1997, 1996 and 1995..........................   27
Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 1997,
  1996 and 1995.............................................   28
Notes to the Consolidated Financial Statements..............   29
</TABLE>
 
FINANCIAL STATEMENT SCHEDULES
 
     Schedules have been omitted for the reason that they are not required or
are not applicable, or the required information is shown in the financial
statements or notes thereto.
 
                                       45
<PAGE>   46
 
ITEM 14(A)3. EXHIBIT LIST
 
     Each management contract or compensation plan required to be filed as an
exhibit is identified by an asterisk(*).
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                        DESCRIPTION OF EXHIBIT                       PAGE
 -------                       ----------------------                       ----
<C>         <S>                                                             <C>
 3.1        Certificate of Incorporation and Certificate of Amendment
            thereto**...................................................
 3.1(a)     Restated Certificate of Incorporation**.....................
 3.2        By-laws**...................................................
 4.1        Form of Certificate for Common Stock**......................
10.1(a)*    Amended and Restated Employee Stock Incentive Plan**........
10.1(b)*    Form of Stock Option Grant**................................
10.1(c)*    Amendment Increasing Number of Shares Covered by Amended and
            Restated Employee Stock Incentive Plan (Incorporated by
            reference from ANTEC Corporation's Registration Statement on
            Form S-8, Registration Number 33-12131, Exhibit 4). ........
10.1(d)*    Amended Form of Stock Option Grant (Incorporated by
            reference from ANTEC Corporation's Annual Report on Form
            10-K for the fiscal year ended December 31, 1996, as the
            same number exhibit). ......................................
10.1(e)*    Amended Form of Stock Option................................
10.1(f)*    1997 Stock Incentive Plan***................................
10.2        Form of Employee Stock Purchase Plan**......................
10.2(a)     Amendment to Employee Stock Purchase Plan**.................
10.3*       Form of Director Stock Option Plan**........................
10.4*       Form of Supplemental Retirement Benefits Plan**.............
10.5        Form of Tax Allocation Agreement**..........................
10.6*       Form of Agreement with Bruce Van Wagner**...................
10.7        Form of Management Services Agreement**.....................
10.8        Form of Directors & Officers Insurance Agreement**..........
10.9        Registration Rights Agreement with Anixter
            International**.............................................
10.10       Revolving Credit Agreement**................................
10.10(a)    Amendment No. 1 to Revolving Credit Agreement**.............
10.10(b)    Amended and Restated Revolving Credit Agreement
            (Incorporated by reference from ANTEC Corporation's
            Quarterly Report on Form 10-Q for the fiscal quarter ended
            March 31, 1995, Exhibit 10.18)..............................
10.10(c)    Amendment No. 1 to the Amended and Restated Revolving Credit
            Agreement (Incorporated by reference from ANTEC
            Corporation's Annual Report on Form 10-K for the fiscal year
            ended December 31, 1995, as the same number exhibit). ......
10.11       Bill of Sale and General Conveyance and Assumption of
            Liabilities**...............................................
10.12*      Form of Employment Agreement for John M. Egan**.............
10.13*      Form of Employment Agreement for Lawrence A. Margolis,
            Gordon E. Halverson and Martin C. Ingram**..................
10.14*      Consulting Agreement dated February 1, 1998 for James L.
            Faust.......................................................
10.15*      Form of Stock Option Grant for Converted Keptel Options
            (Incorporated by reference from ANTEC Corporation's Annual
            Report on Form 10-K for the fiscal year ended December 31,
            1994, as the same number exhibit). .........................
10.16       Agreement and Plan of Merger with Keptel, Inc., dated July
            27, 1994 (Incorporated by reference to Keptel, Inc.
            Registration Statement on Form S-1, Registration Number
            33-16278, as amended). .....................................
10.17*      Retainer Agreement with James E. Knox (Incorporated by
            reference from ANTEC Corporation's Annual Report on Form
            10-K for the fiscal year ended December 31, 1996, as the
            same number exhibit). ......................................
</TABLE>
 
                                       46
<PAGE>   47
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                        DESCRIPTION OF EXHIBIT                       PAGE
 -------                       ----------------------                       ----
<C>         <S>                                                             <C>
10.18       Amendments to Employment Agreements for Messrs. Margolis,
            Halverson, Ingram and Faust (Incorporated by reference from
            ANTEC Corporation's Annual Report on Form 10-K for the
            fiscal year ended December 31, 1995, as the same number
            exhibit). ..................................................
10.19       Limited Liability Company Agreement of Products Venture
            L.L.C. (Incorporated by reference from ANTEC Corporation's
            Annual Report on Form 10-K for the fiscal year ended
            December 31, 1995, as the same number exhibit)..............
10.20       Agreement dated as of February 27, 1998 among Northern
            Telecom Inc., ANTEC Corporation and Arris Interactive
            L.L.C., amending among other agreements the Limited
            Liability Company Agreement of Products Venture L.L.C.......
10.21       Products Distribution Agreement between Products Venture
            L.L.C. and ANTEC Corporation (Incorporated by reference from
            ANTEC Corporation's Annual Report on Form 10-K for the
            fiscal year ended December 31, 1995, Exhibit 10.20). .......
10.22       Plan of Merger dated October 28, 1996, among ANTEC
            Corporation, TSX Corporation and TSX Acquisition Corporation
            (Incorporated by reference to ANTEC Corporation's
            Registration Statement on Form S-4, Registration Number
            333-19129, Exhibit 2.1). ...................................
10.23*      Employment Agreement, dated May 1, 1995, for William H.
            Lambert (Incorporated by reference from TSX Corporation's
            Annual Report on Form 10-K for the fiscal year ended April
            30, 1995, Exhibit 10(A)(1)1). ..............................
10.24*      Amendment to Employment Agreement for William H. Lambert
            (Incorporated by reference from ANTEC Corporation's Annual
            Report on Form 10-K for the fiscal year ended December 31,
            1996, as the same number exhibit)...........................
10.25*      Stock Option Agreement with William H. Lambert dated March
            14, 1994 (Incorporated by reference from TSX Corporation's
            Annual Report on Form 10-K for the fiscal year ended April
            30, 1994, Exhibit 10(A)(1)3)................................
10.26*      Employment Agreement dated October 16, 1995 for Robert J.
            Stanzione...................................................
10.27*      Amendment to Employment Agreement for Robert J. Stanzione...
13.1++      Report of KPMG Peat Marwick LLP.............................
21.1++      Subsidiaries of the Registrant..............................
23.1        Consent of Ernst & Young LLP................................
23.2+       Consent of KPMG Peat Marwick LLP............................
24.1++      Power of Attorney executed by Rod F. Dammeyer...............
24.2++      Power of Attorney executed by John R. Petty.................
24.3++      Power of Attorney executed by Bruce Van Wagner..............
24.4++      Power of Attorney executed by Samuel K. Skinner.............
24.5++      Power of Attorney executed by William H. Lambert............
24.6++      Power of Attorney executed by James L. Faust................
</TABLE>
 
-------------------------
 ** Incorporated by reference to ANTEC Corporation's Registration Statement on
    Form S-1, Registration Number 33-65488, filed July 2, 1993, as amended, as
    the same number exhibit.
 
*** Incorporated by reference to the Company's proxy statement for the Company's
    Annual Meeting of Stockholders held May 6, 1997.
 
  + Incorporated by reference to Antec Corporation's Registration Statement on
    Form S-3, Registration Number 333-58437, filed July 2, 1998, as amended, as
    Exhibit 23.3.
 
 ++ Previously filed.
 
                                       47
<PAGE>   48
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
 
                                          ANTEC CORPORATION
 
                                          /s/      LAWRENCE A. MARGOLIS
 
                                          --------------------------------------
                                                   Lawrence A. Margolis
                                                 Executive Vice President
 
   
Dated: October   , 1998
    
 
                                       48