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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: JUNE 15, 2004
DATE OF EARLIEST EVENT REPORTED: JUNE 11, 2004
COMMSCOPE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-12929 36-4135495
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation)
1100 COMMSCOPE PLACE, SE
P.O. BOX 339
HICKORY, NORTH CAROLINA 28602
(Address of principal executive
offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (828) 324-2200
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Item 5. Other Events.
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Background of the Transaction
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OFS BrightWave, LLC ("OFS BrightWave") was formed by The Furukawa
Electric Co., Ltd. ("Furukawa") and CommScope, Inc. (the "Company") to
operate certain optical fiber and fiber optic cable assets of the Optical
Fiber Solutions Group acquired from Lucent Technologies Inc. ("Lucent") in
November 2001.
On November 15, 2001, the Company and Furukawa entered into an Amended
and Restated Memorandum of Understanding (the "MOU") providing the terms
and conditions for the Company's investment in OFS BrightWave. The Company
originally issued 10,200,000 shares of its common stock, par value, $0.01
per share ("Common Stock"), to Lucent, valued at $203,388,000 in the
aggregate, in lieu of a portion of the cash purchase price payable by
Furukawa to Lucent. Of the amount paid by the Company, $173,388,000
represented its capital contribution for an 18.4% equity ownership interest
in OFS BrightWave and the remaining $30,000,000 represented a revolving
loan from the Company to OFS BrightWave under a revolving credit agreement
(the "Revolving Credit Agreement"), dated as of November 16, 2001, between
CommScope Optical Technologies, Inc. ("CommScope Optical"), a wholly owned
subsidiary of the Company, and OFS BrightWave. The Company initially had a
one-time, contractual right to sell its equity ownership interest in OFS
BrightWave to Furukawa in 2004 for a cash payment equal to its original
equity investment of $173,388,000.
In October 2002, Furukawa and the Company purchased the 10,200,000
shares of Common Stock held by Lucent for $53,040,000 (the Company
purchased 2,543,100 shares and Furukawa purchased 7,656,900 shares). In
connection with the purchase in October 2002, the Company agreed with
Furukawa to change from 2004 to 2006 the date when the Company could first
exercise its contractual right to sell its equity ownership interest in OFS
BrightWave to Furukawa for a cash payment equal to its original equity
investment in OFS BrightWave. In addition, Furukawa granted to the Company
the right to purchase all, but not less than all, of the shares of Common
Stock owned by Furukawa and its affiliates for an amount payable in cash
equal to 90% of the fair market value of such Common Stock based on the
average closing price of the Common Stock on the New York Stock Exchange
for a ten day period prior to the exercise of this right.
Effective April 1, 2004, Furukawa contributed its ownership interest
in certain additional manufacturing facilities to OFS BrightWave. Because
the Company did not elect to make further corresponding investments in OFS
BrightWave, this additional investment in OFS BrightWave by Furukawa
reduced the Company's ownership percentage from 18.4% to 9.4%.
Restructuring of Relationship with Furukawa
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On June 11, 2004, the Company assigned all of its rights and duties
under the MOU to CommScope Optical (the "Assignment"). A copy of the
Assignment is filed as Exhibit 10.1 hereto.
On June 14, 2004, Commscope, Inc. of North Carolina, ("Commscope NC"),
a wholly owned subsidiary of the Company, and OFS Fitel, LLC ("OFS Fitel"),
a wholly owned subsidiary of Furukawa, entered into a four year optical
fiber supply agreement (the "Supply Agreement"). A copy of the Supply
Agreement is attached as Exhibit 10.2 hereto.
On June 14, 2004, CommScope Optical and Furukawa entered into
Amendment No. 2 to the MOU, which, among other things, (i) amended the date
when CommScope Optical could first exercise its contractual right to sell
its equity ownership interest in OFS BrightWave to Furukawa to any time on
or after June 14, 2004 and (ii) changed the consideration receivable from
Furukawa upon exercise of this right from $173,388,000 in cash to the
7,656,900 shares of Common Stock owned by Furukawa. A copy of Amendment No.
2 to the MOU is filed as Exhibit 10.3 hereto. On June 14, 2004, CommScope
Optical exercised its contractual right to sell, and sold, its equity
ownership interest in OFS BrightWave in exchange (the "Exchange
Transaction") for the 7,656,900 shares of Common Stock owned by Furukawa
(which represented approximately 12% of CommScope's outstanding Common
Stock). As a result of the Exchange Transaction, the Company no longer owns
any equity interest in OFS BrightWave and Furukawa no longer owns any
shares of Common Stock of the Company.
On June 14, 2004, the Company and Furukawa entered into a Letter
Agreement (the "Letter Agreement") providing, among other things, that upon
the closing of the transactions contemplated by Section 5.6 of the MOU as
amended by Amendment No. 2 (i.e., the exercise of CommScope Optical's
contractual right to sell its equity ownership interest in OFS BrightWave),
each of the Stockholders Agreement, dated as of October 9, 2002, between
the Company and Furukawa and the Registration Rights Agreement, dated as of
October 9, 2002, between the Company and Furukawa would terminate. A copy
of the Letter Agreement is filed as Exhibit 4.1 hereto.
On June 14, 2004, CommScope Optical and OFS BrightWave entered into
the Second Amendment to the Revolving Credit Agreement providing, among
other things, for the deletion of the provision requiring repayment of the
Revolving Credit Agreement upon exercise of CommScope Optical's contractual
right to sell its equity ownership interest in OFS BrightWave. The Second
Amendment to the Revolving Credit Agreement is attached as Exhibit 10.4
hereto.
The existing $30,000,000 loan under the Revolving Credit Agreement due
to the Company from OFS BrightWave will remain outstanding and is scheduled
to mature in 2006. Although advances to OFS BrightWave had a carrying value
of approximately $12,000,000 on CommScope's balance sheet as of March 31,
2004, the Company has now fully impaired this asset primarily due to market
conditions for optical fiber and because the Company will no longer have an
equity ownership interest in OFS BrightWave.
The Company expects to record a net pretax gain of approximately
$121.3 million, or approximately $1.24 per diluted share, net of tax, as a
result of the Exchange Transaction during the second quarter of 2004. The
value of the 7,656,900 shares of Common Stock acquired by CommScope Optical
was determined using the closing market price of the Common Stock on the
New York Stock Exchange on June 14, 2004.
Item 7. Financial Statements and Exhibits.
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(c) Exhibit Description
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4.1 Letter Agreement, dated June 14, 2004, by and
between The Furukawa Electric Co., Ltd. and
CommScope, Inc.
10.1 Assignment, dated June 11, 2004, by and
between CommScope, Inc. and CommScope Optical
Technologies, Inc.
10.2 Optical Fiber Supply Agreement, dated as of
June 14, 2004, between Commscope, Inc. of
North Carolina and OFS Fitel, LLC. Portions of
this exhibit have been omitted pursuant to an
application for confidential treatment
pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.
10.3 Amendment No. 2, dated as of June 14, 2004,
to the Amended and Restated Memorandum of
Understanding dated as of November 15, 2001,
as amended by Amendment No. 1 dated as of
October 9, 2002, by and between The Furukawa
Electric Co., Ltd. and CommScope Optical
Technologies, Inc.
10.4 Second Amendment, dated as of June 14, 2004,
to the Revolving Credit Agreement dated as of
November 16, 2001, as amended by the First
Amendment dated as of October 9, 2002, by and
between CommScope Optical Technologies, Inc.
and OFS BrightWave, LLC.
99.1 CommScope, Inc. press release relating to the
restructuring of its relationship with The
Furukawa Electric Co, Ltd. dated June 15,
2004.
Item 9. Regulation FD Disclosure.
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On June 15, 2004, the Company issued a press release relating to the
restructuring of its relationship with Furukawa, a copy of which is
attached hereto as Exhibit 99.1 and is being furnished, not filed, pursuant
to Item 9 of this Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on behalf of the
undersigned hereunto duly authorized.
Dated: June 15, 2004
COMMSCOPE, INC.
By: /s/ Frank B. Wyatt, II
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Frank B. Wyatt, II
Senior Vice President, General
Counsel and Secretary
Index of Exhibits
Exhibit No. Description
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4.1 Letter Agreement, dated June 14, 2004, by and between The
Furukawa Electric Co., Ltd. and CommScope, Inc.
10.1 Assignment, dated June 11, 2004, by and between
CommScope, Inc. and CommScope Optical Technologies, Inc.
10.2 Optical Fiber Supply Agreement, dated as of June 14,
2004, between Commscope, Inc. of North Carolina and OFS
Fitel, LLC. Portions of this exhibit have been omitted
pursuant to an application for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.
10.3 Amendment No. 2 dated, as of June 14, 2004, to the
Amended and Restated Memorandum of Understanding dated as
of November 14, 2001, as amended by Amendment No. 1 dated
as of October 9, 2002, by and between The Furukawa
Electric Co., Ltd. and CommScope Optical Technologies,
Inc.
10.4 Second Amendment, dated as of June 14, 2004, to the
Revolving Credit Agreement dated as of November 16, 2001,
as amended by the First Amendment dated as of October 9,
2002, by and between CommScope Optical Technologies, Inc.
and OFS BrightWave, LLC.
99.1 CommScope, Inc. press release relating to the
restructuring of its relationship with The Furukawa
Electric Co, Ltd. dated June 15, 2004.