CommScope Inc. (CTV, Financial) filed Quarterly Report for the period ended 2010-09-30.
Commscope Inc. has a market cap of $2.19 billion; its shares were traded at around $30.22 with a P/E ratio of 11.9 and P/S ratio of 0.7. Commscope Inc. had an annual average earning growth of 14% over the past 10 years.CTV is in the portfolios of Lee Ainslie of Maverick Capital, Robert Olstein of Olstein Financial Alert Fund, George Soros of Soros Fund Management LLC, Chase Coleman of TIGER GLOBAL MANAGEMENT LLC, David Williams of Columbia Value and Restructuring Fund, David Dreman of Dreman Value Management, Columbia Wanger of Columbia Wanger Asset Management, RS Investment Management, Bruce Kovner of Caxton Associates, Pioneer Investments, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
The objectives of the 2010 Restructuring Initiatives are to realign and lower our cost structure and improve capacity utilization. To achieve these objectives, we have announced the closure of production facilities in Omaha, Nebraska and Newton, North Carolina, among other actions. Much of the capacity at those facilities will be shifted to other existing facilities or contract manufacturers. Charges incurred during the three months ended September 30, 2010 for these restructuring actions included $1.6 million for employee-related costs, lease termination costs of $1.2 million and equipment relocation costs of $1.2 million. Charges incurred during the nine months ended September 30, 2010 for these restructuring actions included $44.3 million for employee-related costs (including a $5.0 million estimated net curtailment loss related to pension and other postretirement benefits) and $8.9 million for asset impairment charges, primarily related to reducing the carrying value of the Omaha facility to its estimated fair value.
Additional pretax costs related to actions announced to date under the 2010 Restructuring Initiatives of up to $2 million (net of projected curtailment gains of $2 million) are expected to be recognized by the end of 2011. Cash payments related to these costs and the completion of the 2008 Integration Initiatives of $5 million to $6 million are expected during the remainder of 2010 with an additional $33 million to $35 million expected to be paid in 2011 and beyond. Additional restructuring actions may be identified and resulting charges and cash requirements could be material.
Foreign exchange losses of $1.5 million and $1.4 million are included in net other expense for the three and nine months ended September 30, 2010, respectively, compared to losses of $1.6 million and $4.6 million for the comparable periods ended September 30, 2009, respectively. Realized losses of $0.5 million on the sale of auction rate securities are also included in net other expense for the three and nine months ended September 30, 2009. Net other expense for the nine months ended September 30, 2009 includes a loss of $8.6 million on the induced conversion of our 1% convertible senior subordinated debentures.
We incurred net interest expense of $20.2 million and $64.5 million during the three and nine months ended September 30, 2010, respectively, compared to net interest expense of $24.8 million and $96.1 million for the three and nine months ended September 30, 2009, respectively. Interest expense for the nine months ended September 30, 2009 included an $11.3 million charge for the interest make-whole payment related to the conversion of our 3.50% convertible debentures. Interest expense for the nine months ended September 30, 2010 and 2009 includes $2.1 million and $7.5 million, respectively, related to the write off of deferred financing costs in connection with accelerated debt payments. Interest expense for the three and nine months ended September 30, 2010 benefited from lower levels of debt as compared to the same periods in the prior year.
The effective income tax rate was 28.0% and 28.2% for the three and nine months ended September 30, 2010, respectively, compared to 28.8% and 38.0% for the three and nine months ended September 30, 2009, respectively. Income tax expense for the three and nine months ended September 30, 2010 includes expense (benefit) of $2.1 million and $(0.5) million, respectively, resulting from adjustments to valuation allowances related to various domestic matters. Also included in income tax expense for the nine months ended September 30, 2010 is a $2.5 million benefit related to adjustments to the estimated tax impact of repatriation of foreign earnings and a charge of $2.3 million related to changes to the tax deductibility of prescription drug benefits to certain retirees (Medicare Part D) made as part of the health care reform legislation enacted in March 2010.
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Commscope Inc. has a market cap of $2.19 billion; its shares were traded at around $30.22 with a P/E ratio of 11.9 and P/S ratio of 0.7. Commscope Inc. had an annual average earning growth of 14% over the past 10 years.CTV is in the portfolios of Lee Ainslie of Maverick Capital, Robert Olstein of Olstein Financial Alert Fund, George Soros of Soros Fund Management LLC, Chase Coleman of TIGER GLOBAL MANAGEMENT LLC, David Williams of Columbia Value and Restructuring Fund, David Dreman of Dreman Value Management, Columbia Wanger of Columbia Wanger Asset Management, RS Investment Management, Bruce Kovner of Caxton Associates, Pioneer Investments, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
The year-over-year increase in gross profit of $4.2 million for the three months ended September 30, 2010 is primarily attributable to the increase in net sales. This increase was partially offset by higher raw materials costs and price reductions on certain cable products. The $63.4 million increase in gross profit for the nine months ended September 30, 2010 is largely due to the increase in net sales, $21.2 million in litigation charges recorded in cost of sales in 2009 and an $8.6 million reduction of cost of sales recorded in 2010 as a result of receiving payment from EMS Technologies, Inc. (EMS) to settle a warranty claims dispute following the arbitrators final decision in the matter. The litigation charges recorded in the nine months ended September 30, 2009 related to the TruePosition litigation.The objectives of the 2010 Restructuring Initiatives are to realign and lower our cost structure and improve capacity utilization. To achieve these objectives, we have announced the closure of production facilities in Omaha, Nebraska and Newton, North Carolina, among other actions. Much of the capacity at those facilities will be shifted to other existing facilities or contract manufacturers. Charges incurred during the three months ended September 30, 2010 for these restructuring actions included $1.6 million for employee-related costs, lease termination costs of $1.2 million and equipment relocation costs of $1.2 million. Charges incurred during the nine months ended September 30, 2010 for these restructuring actions included $44.3 million for employee-related costs (including a $5.0 million estimated net curtailment loss related to pension and other postretirement benefits) and $8.9 million for asset impairment charges, primarily related to reducing the carrying value of the Omaha facility to its estimated fair value.
Additional pretax costs related to actions announced to date under the 2010 Restructuring Initiatives of up to $2 million (net of projected curtailment gains of $2 million) are expected to be recognized by the end of 2011. Cash payments related to these costs and the completion of the 2008 Integration Initiatives of $5 million to $6 million are expected during the remainder of 2010 with an additional $33 million to $35 million expected to be paid in 2011 and beyond. Additional restructuring actions may be identified and resulting charges and cash requirements could be material.
Foreign exchange losses of $1.5 million and $1.4 million are included in net other expense for the three and nine months ended September 30, 2010, respectively, compared to losses of $1.6 million and $4.6 million for the comparable periods ended September 30, 2009, respectively. Realized losses of $0.5 million on the sale of auction rate securities are also included in net other expense for the three and nine months ended September 30, 2009. Net other expense for the nine months ended September 30, 2009 includes a loss of $8.6 million on the induced conversion of our 1% convertible senior subordinated debentures.
We incurred net interest expense of $20.2 million and $64.5 million during the three and nine months ended September 30, 2010, respectively, compared to net interest expense of $24.8 million and $96.1 million for the three and nine months ended September 30, 2009, respectively. Interest expense for the nine months ended September 30, 2009 included an $11.3 million charge for the interest make-whole payment related to the conversion of our 3.50% convertible debentures. Interest expense for the nine months ended September 30, 2010 and 2009 includes $2.1 million and $7.5 million, respectively, related to the write off of deferred financing costs in connection with accelerated debt payments. Interest expense for the three and nine months ended September 30, 2010 benefited from lower levels of debt as compared to the same periods in the prior year.
The effective income tax rate was 28.0% and 28.2% for the three and nine months ended September 30, 2010, respectively, compared to 28.8% and 38.0% for the three and nine months ended September 30, 2009, respectively. Income tax expense for the three and nine months ended September 30, 2010 includes expense (benefit) of $2.1 million and $(0.5) million, respectively, resulting from adjustments to valuation allowances related to various domestic matters. Also included in income tax expense for the nine months ended September 30, 2010 is a $2.5 million benefit related to adjustments to the estimated tax impact of repatriation of foreign earnings and a charge of $2.3 million related to changes to the tax deductibility of prescription drug benefits to certain retirees (Medicare Part D) made as part of the health care reform legislation enacted in March 2010.
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