Overview
We are a leading global provider of broadband communications network infrastructure products and related services. Our products offer comprehensive solutions that enable the delivery of high-speed Internet, data, video and voice communications over wireline, wireless, cable, enterprise and broadcast networks. These products include fiber-optic, copper and coaxial based frames, cabinets, cables, connectors and cards, wireless capacity and coverage solutions, network access devices and other physical infrastructure components. Our products are used primarily in the "last mile/kilometer" of communications networks where Internet, data, video and voice traffic are linked from the serving office of a communications service provider to the end-user of communication services.
We also provide professional services to our customers. These services help our customers plan, deploy and maintain Internet, data, video and voice communication networks. We also assist our customers in integrating broadband communications equipment used in wireline, wireless, cable and enterprise networks. By providing these services, we have additional opportunities to sell our products.
Our customers consist primarily of long-distance and local communications service providers and private enterprises that operate their own communication networks. In addition, our customers include cable television operators, wireless service providers, new competitive telephone service providers, broadcasters, government agencies, system integrators and communications equipment manufacturers and distributors.
We offer broadband connectivity products, wireless capacity and coverage optimization products, wireline access products and professional services to our customers through the following three reportable business segments:
• Connectivity

• Network Solutions

• Professional Services

During the fourth quarter of fiscal 2008, management initiated a restructuring of the Network Solutions segment by exiting several outdoor wireless product lines. During the first quarter of fiscal 2009, management made further changes to the Network Solutions segment by moving the Wireline solutions business to the Connectivity segment in order to better manage and utilize resources and drive profitability. As a result of this change, we have changed our reportable segments to conform to our current management reporting presentation. We have reclassified prior year segment disclosures to conform to the new segment presentation.
Our Connectivity products connect wireline, wireless, cable, enterprise and broadcast communications networks over fiber-optic, copper (twisted pair), coaxial and wireless media. These products provide the physical interconnections between network components and access points into networks.
Our Network Solutions products help improve coverage and capacity for wireless networks. These products improve signal quality, expand coverage and capacity into expanded geographic areas, increase the speed and expand the delivery and capacity of networks,

and help reduce the capital and operating costs of delivering wireless services. Applications for these products include in-building solutions, outdoor coverage solutions and mobile network solutions.
Our Professional Services business provides integration services for broadband and multiservice communications over wireline, wireless, cable and enterprise networks. Our Professional Services business unit helps customers plan, deploy and maintain communications networks that deliver Internet, data, video and voice services.
Marketplace Conditions
Current Global Macro-Economic Conditions The widely reported global recession has had, and likely will continue to have, a significant impact on our industry and our business. During the first three quarters of fiscal 2009 our financial results were impacted materially and adversely by lower than expected spending by our customers. We believe it is likely our customers will continue to spend conservatively for the remainder of our fiscal 2009 and into our fiscal 2010 because of the uncertainties regarding the profitability and growth of their own businesses. However, it is extremely difficult to predict how long, and to what extent, the global recession will continue to affect our business. During the first three quarters of fiscal 2009, the recession impacted our business specifically in a number of ways. For instance:
• As compared to the three and nine months ended August 1, 2008, our net sales decreased by 25.8% and 26.4%, respectively;

• As a result of significant international sales, our net sales have been negatively impacted in recent quarters from the relative strengthening of the U.S. dollar against a majority of other currencies. Changes in foreign currency exchange rates negatively impacted sales in the three and nine months ended July 31, 2009 by approximately $10.0 million and $34.0 million, respectively, versus the same periods in fiscal 2008;

• Despite reducing actual expenditures for research and development and selling and administrative costs in the three and nine months ended July 31, 2009 compared to the same periods in fiscal 2008, these costs grew as a percentage of our net sales because of lower sales volumes;

• Our gross margin percentage for the nine months ended July 31, 2009 was 32.9%. This compares to 35.5% for the same period in fiscal 2008, primarily because of lower sales volumes; and

• We recorded a $413.9 million charge related to the impairment of goodwill and other long-lived assets as a result of our reduced expectations of near-term financial performance and the decline in our market capitalization.

In response to the adverse impacts on our business caused by the recession, we have taken significant steps to lower our operating cost structure. Over the last year, we have announced a series of significant restructuring initiatives that are either completed or are still being executed. These initiatives included reductions in our employee base at various locations around the world and facility closures. These actions were designed to adjust our operations appropriately to lower levels of demand from our customers. We also discontinued certain outdoor wireless coverage product lines in the first quarter of fiscal 2009 and completed the sale of APS Germany on July 31, 2009. Depending on the severity and length of the recession and its impact on our business, we may determine it appropriate to take additional actions to reduce costs and improve our business model in the future.
Industry Conditions
Longer term, we continue to believe that the ever-increasing consumption of bandwidth will drive a continued migration to next-generation networks that can deliver reliable broadband services at low, often flat-rate prices over virtually any medium anytime and anywhere. We believe this evolution particularly will impact the "last mile/kilometer" portion of networks where our products and services primarily are used and where constraints in the high-speed delivery of communications services are most likely to occur. For us to participate as fully as possible in this evolution we must focus on the development and sale of next-generation network infrastructure products.
We believe there are two key elements driving the migration to next-generation networks:
• First, businesses and consumers worldwide are becoming increasingly dependent on broadband, multi-service communications networks to conduct a wide range of daily communications tasks for business and personal purposes (e.g., emails with large

amounts of data, online gaming, video streaming and photo sharing). This demand for additional broadband services increases the need for broadband network infrastructure products.

• Second, end-users of communications services increasingly expect to do business over a single network connection at a low price. Both public networks operated by communications service providers and private enterprise networks are evolving to provide combinations of Internet, data, video and voice services that can be offered over the same high-speed network connection.

This evolution to next-generation networks impacts our industry significantly. Many of our communications service provider customers have begun to focus their investments in these next-generation networks to differentiate themselves from their competitors by providing more robust services at increasing speeds. They believe such network advancements will attract business and consumer customers and allow them to grow their businesses.
Next-generation network investment by communications service providers has tended to come in the form of large, multi-year projects, and these significant projects have attracted many equipment vendors, including us. We believe that it is important for us to participate in these projects to grow our business and have therefore focused our strategy around the products that help make these projects successful. These include central office fiber-based equipment, wireless coverage and capacity equipment, and equipment to aid the deployment of fiber-based networks closer to the ultimate customer (i.e., fiber to the node, curb, residence, cell site, or business, which we collectively refer to as our "FTTX" products).
Communication service provider spending on these next-generation initiatives has not resulted in significant overall spending increases on all categories of network infrastructure equipment. In fact, spending on network infrastructure equipment in total has increased only modestly in recent years as our customers have reallocated their spending towards new next-generation initiatives and away from their legacy networks. Even prior to the current recession, industry observers anticipated that in the next few years overall global spending on communications infrastructure equipment would be relatively flat. Over the long-term, we therefore believe our ability to compete in the communications equipment marketplace depends in significant part on whether we can continue to develop and market effectively next-generation network infrastructure products. Strategy
Given current economic conditions and our expectations about the marketplace, we believe we must focus on the following three priorities for us to compete effectively in our industry over the long-term.
First, we must grow our business in areas of strategic importance. This means increasing our business in high growth segments within fiber-based and wireless communications networks with central office fiber, FTTX and wireless coverage and capacity product solutions. We will also focus on rapidly growing geographies, such as developing markets in China, Latin America, Eastern Europe, Russia, the Middle East, Africa and India. We believe growth in these areas may come either from our own internal initiatives to expand our product offerings through research and development activities, additional sales and marketing resources, or from the acquisition of new products, sales channels and businesses.
Our internal research and development efforts are focused on those areas where we believe we are most likely to achieve success and on projects that we believe directly advance our strategic aims. Our research and development projects have varying risk and reward profiles and we consistently monitor these efforts to ensure that they appropriately balance the potential opportunities against the investments required.
Several of our largest customers have engaged in consolidation to gain greater scale and broaden their service offerings. These consolidations create companies with greater market power which, in recent years, has placed significant pricing pressure on the products we and other equipment vendors sell. To better serve these larger customers, we believe it is appropriate for companies within our industry to consolidate in order to gain greater scale and position themselves to offer a wider array of products. We also continually evaluate and monitor our existing business and product lines for growth and profitability potential and, when we believe appropriate, deemphasize or divest product lines and businesses that we no longer believe can advance our strategic vision or most effectively serve our customers' needs.
Second, we are focused on developing ways to sell more of our current portfolio and our newly developed products to existing customers and to introduce our products to new customers. We recently reorganized many of our sales and marketing activities around the types of customers we serve (e.g., carriers, enterprise, original equipment manufacturers, etc.). This differs from a historical

alignment of our sales and marketing resources that was focused more narrowly on the product sets we sell. We believe this new market-based alignment will enable us to better understand and serve the needs of our customers.
We also continuously seek to partner with other companies as a means to serve the public and private communication network markets and to offer more complete solutions for our customers' needs. Many of our connectivity products in particular are conducive to incorporation by other equipment vendors into systems level solutions. We also believe there are opportunities to sell more of our products through indirect sales channels, including systems integrators and value added resellers. In addition, we are expanding our relationships with distributors that make our products more readily available to a wider base of customers worldwide.
Third, we remain highly committed to creating a compelling value proposition for our customers. This includes helping them maximize their return on investment, evolve their networks and simplify network deployment and maintenance challenges. We strive to offer customer-specific solutions, price competitive products with high functionality and quality, and world-class customer service and support that collectively will position us to grow our business in a cost-effective manner.
We also continue to implement initiatives designed to better align our business with changing macro-economic and market conditions that we believe will better enable us to meet the needs of our global customer base more efficiently and effectively. These initiatives are designed to reduce our operating cost structure and improve organizational efficiency through a variety of actions that, among others, include:
• migrating sales volume to customer-preferred, leading technology products and sunsetting end of life products;

• improving our customers' ordering experience through a faster, simpler, more efficient inquiry-to-invoice process;

• redesigning product lines to gain efficiencies from the use of more common components and improve customization capabilities;

• increasing direct material savings from strategic global sourcing;

• improving cash flow from supplier-managed inventory and lead-time reduction programs;

• relocating certain manufacturing, engineering and other operations from higher-cost geographic areas to lower-cost areas;

• conducting LEAN activities and implementing Six Sigma methodologies;

• reducing the number of locations from which we conduct operations and general and administrative support functions; and

• focusing our resources on core operations and, where appropriate, using third parties to perform non-core processes.

These initiatives have yielded significant ongoing cost savings to our operations since fiscal 2006. These savings help to generate leverage in our operating model and to offset pricing pressures and unfavorable mixes in product sales that can have negative impacts on our operating results. Our ability to continue to implement these initiatives is subject to numerous risks and uncertainties and no assurance can be given that this strategy will be successful. In addition, our gross profit percentages will continue to fluctuate from period to period due to several factors, including, but not limited to, sales volume, raw material and freight costs, product mix and the impact of future potential efficiency and cost saving initiatives.
A more detailed description of the risks to our business can be found in Item 1A of our Annual Report on Form 10-K for the year ended October 31, 2008 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended January 30, 2009.

Results of Operations
Net Sales
   The following table shows net sales and expense items from continuing
operations for the three and nine months ended July 31, 2009 and August 1, 2008:

                                                              Three months ended                   Percentage
                                                         July 31,           August 1,          Increase (Decrease)
                                                           2009               2008               Between Periods
                                                                (In millions)
Net sales                                               $    283.4         $     381.8                        (25.8 )%

Cost of sales                                                184.7               251.2                        (26.5 )

Gross profit                                                  98.7               130.6                        (24.4 )
Gross margin                                                  34.8 %              34.2 %
Operating expenses:
Research and development                                      17.3                21.7                        (20.3 )
Selling and administration                                    62.9                83.0                        (24.2 )
Restructuring charges                                          5.3                 0.1                            -
Impairment charges                                             0.1                   -                        100.0

Total operating expenses                                      85.6               104.8                        (18.3 )

Operating income (loss)                                       13.1                25.8                        (49.2 )
Operating margin                                               4.6 %               6.8 %
Other income (expense), net:
Interest income, net                                          (4.9 )              (0.8 )                      512.5
Other, net                                                    (2.2 )              (8.7 )                      (74.7 )

Income (loss) before income taxes                              6.0                16.3                        (63.2 )
Provision for income taxes                                     0.4                 2.9                        (86.2 )

Income (loss) from continuing operations                $      5.6         $      13.4                        (58.2 )%




                                                             Nine months ended                   Percentage
                                                        July 31,          August 1,          Increase (Decrease)
                                                          2009               2008              Between Periods
                                                               (In millions)
Net sales                                               $   812.8         $  1,104.1                        (26.4 )%

Cost of sales                                               545.3              711.6                        (23.4 )

Gross profit                                                267.5              392.5                        (31.8 )
Gross margin                                                 32.9 %             35.5 %
Operating expenses:
Research and development                                     54.7               63.0                        (13.2 )
Selling and administration                                  200.9              249.6                        (19.5 )
Restructuring charges                                        13.1                2.3                        469.6
Impairment charges                                          414.3                  -                        100.0

Total operating expenses                                    683.0              314.9                        116.9

Operating income (loss)                                    (415.5 )             77.6                       (635.4 )
Operating margin                                            (51.1 )%             7.0 %
Other income (expense), net:
Interest income, net                                        (13.9 )              3.8                       (465.8 )
Other, net                                                  (19.3 )            (74.1 )                      (74.0 )

Income (loss) before income taxes                          (448.7 )              7.3                            -
Provision (benefit) for income taxes                         (2.2 )              6.3                       (134.9 )

Income (loss) from continuing operations                $  (446.5 )       $      1.0                            - %

The following table sets forth our net sales for the three and nine months ended July 31, 2009 and August 1, 2008 for each of our reportable segments:

                                     Three months ended               Percentage
                                  July 31,        August 1,       Increase (Decrease)
   Reportable Segment               2009            2008            Between Periods
                                        (In millions)
   Connectivity                  $    226.5      $     304.3                     (25.6 )%
   Network Solutions:
   Products                            15.3             24.8                     (38.3 )
   Services                             4.0              7.3                     (45.2 )

   Total Network Solutions             19.3             32.1                     (39.9 )

   Professional Services:
   Products                             9.4             12.3                     (23.6 )
   Services                            28.2             33.1                     (14.8 )

   Total Professional Services         37.6             45.4                     (17.2 )

   Total Net Sales               $    283.4      $     381.8                     (25.8 )%




                                     Nine months ended              Percentage
                                  July 31,      August 1,       Increase (Decrease)
    Reportable Segment              2009           2008           Between Periods
                                       (In millions)
    Connectivity                  $   643.8     $    872.2                     (26.2 )%
    Network Solutions:
    Products                           47.0           78.9                     (40.4 )
    Services                           12.8           17.0                     (24.7 )

    Total Network Solutions            59.8           95.9                     (37.6 )

    Professional Services:
    Products                           28.7           37.1                     (22.6 )
    Services                           80.5           98.9                     (18.6 )

    Total Professional Services       109.2          136.0                     (19.7 )

    Total Net Sales               $   812.8     $  1,104.1                     (26.4 )%

Our net sales decreases for the three and nine months ended July 31, 2009 compared to the three and nine months ended August 1, 2008 were driven by significant sales declines in all reporting segments. These decreases are due to the general downturn of the global economy, which extended across a majority of our geographies in the first three quarters of fiscal 2009. Geographically, there was particular weakness in the Europe, Middle East, Africa (EMEA) region and Latin America, and relative strength in China.
International sales comprised 39.1% and 40.5% of our net sales for the three and nine months ended July 31, 2009, respectively. This compares to 44.1% and 41.6% for the three and nine months ended August 1, 2008, respectively. As a result of significant international sales, our net sales have been negatively impacted in recent quarters from the relative strengthening of the U.S. dollar against a majority of other currencies. Changes in foreign currency exchange rates negatively impacted sales in the three and nine months ended July 31, 2009 by approximately $10.0 million and $34.0 million, respectively, versus the same periods in fiscal 2008.
The three and nine months ended July 31, 2009 included sales in Connectivity of $17.4 million and $55.6 million, respectively, as a result of the Century Man acquisition that closed during January 2008. This compares to $10.3 million and $19.9 million for the three and nine months ended August 1, 2008, respectively. This increase was due to the inclusion of Century Man in our results for the full first quarter of fiscal 2009 and increased demand largely as a result of the Chinese government economic stimulus package and the issuance of 3G wireless licenses in China.
The decrease in Network Solutions sales was driven, in part, by our decision to shutdown certain outdoor wireless product lines in the fourth quarter of fiscal 2008 as well as by significant declines in sales outside of North America that we believe are the result of the global recession.
Relative to our other reporting segments, Professional Services experienced a less significant decline in sales due to continued spending by a primary customer.

Gross Margin
During the three and nine months ended July 31, 2009, our gross margin percentages were 34.8% and 32.9%, respectively, compared to 34.2% and 35.5%, respectively, for the comparable 2008 periods.
The increase in our gross margin percentages for the three month period ended July 31, 2009 was driven primarily by our continued cost reduction initiatives, partially offset by lower sales volumes as compared to last year. Our cost reduction initiatives have included headcount reductions to align our production-related activities with current levels of demand, closure of certain manufacturing locations, and efficiencies generated in our manufacturing operations and supply chain.
The decrease in gross margins for the nine month period ended July 31, 2009 was driven primarily by a decrease in sales volumes due to the global recession, partially offset by our cost reduction initiatives.
If sales volumes, product mix, pricing or other significant factors that impact our gross margins continue to be affected by the economic downturn, our gross margins could continue to be adversely affected. As a result of these and other factors, our future gross margin rate is difficult to predict and could fluctuate significantly.
Operating Expenses
Total operating expenses for the three and nine months ended July 31, 2009 represented 30.2% and 84.0% of net sales, respectively. Our fiscal 2009 year-to-date results include a $413.9 million impairment of goodwill and intangible assets. Total operating expenses represented 27.4% and 28.5% of net sales for the same fiscal 2008 periods, respectively. As discussed below, operating expenses include research and development, selling and administration expenses and restructuring and impairment charges.
Research and development: Research and development expenses for the three and . . .