CommScope Company Annual Report 2017

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FY2017 Annual Report · CommScope Company

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2017 Annual Report

Enabling a Connected Lifestyle

Three-year
selected financial data

(Unaudited —in thousands, except per share amounts)

Year Ended December 31

2015

$3,807,828

1,345,820

29,488

90,784

181,593

(230,533)

(70,875)

189,876

$(0.37)

2016

$4,923,621

2,033,589

42,875

38,552

574,750

(272,010)

222,838

192,470

196,459

$1.16

$1.13

$729,779

$1,051,353

$1.86

$2.64

$327,115

303,500

56,501

$640,221

399,053

68,314

$562,884

4,838,119

528,706

7,502,631

1,319,548

5,243,651

1,222,720

As of December 31

$428,228

4,567,369

474,990

7,141,986

1,135,946

4,562,010

1,394,084

2017

$4,560,582

1,771,894

43,782

477,610

(252,838)

193,764

192,430

196,811

$1.01

$0.98

$882,275

$2.14

$586,286

378,012

68,721

$453,977

4,522,714

467,289

7,041,666

1,220,142

4,369,401

1,647,826

Result of operations

Net sales

Gross profit

Restructuring costs, net

Asset impairments

Operating income

Net interest expense

Net income (loss)

Earnings (loss) per share information:

Weighted average number of shares outstanding:

Basic

Diluted

Earnings (loss) per share:

Basic

Diluted

Non-GAAP adjusted results:

Non-GAAP adjusted operating income(1)

Non-GAAP adjusted earnings per share(1)

Other information:

Net cash generated by operating activities

Depreciation and amortization

Additions to property, plant, and equipment

Balance sheet data

Cash and cash equivalents

Goodwill and other intangible assets, net

Property, plant, and equipment, net

Total assets

Working capital

Long-term debt, including current maturities

Stockholders’ equity

(1) See reconciliation of GAAP measures to Non-GAAP measures (page 12).

2017 Annual Report

To our
shareholders

I am proud of CommScope’s significant standing in one

of the world’s most vital and dynamic industries. We

continue to fortify our position by helping design, build,

and manage both wired and wireless networks that deliver

bandwidth for the world’s growing connectivity needs.

While we’re pleased with the significant progress we’ve

made in strengthening CommScope for the long term,

2017 was clearly a challenging year for us and the

industry. Our overall performance declined year-over-

year primarily because of lower spending by major

North American service providers and the timing of large

customer projects. As we’ve said before, transitions in

global networking are not linear, and 2017 clearly was

a year of significant transition. Network architectural

changes were explored, competitive dynamics shifted

with the pullback of a nontraditional service provider,

and multiple customers were involved in M&A.

At the same time, CommScope was transitioning

through the final integration stages of our successful

Broadband Network Solutions (BNS) acquisition, a

substantial internal and resource-intensive project. Since

completing the transaction in 2015, we have strengthened

our capabilities and solutions while significantly increasing

CommScope’s size.

We continue to fortify
our position by helping
design, build, and
manage both wired
and wireless networks.

Building a better CommScope

Repaid more than $1 billion of debt since the

August 2015 BNS acquisition, equivalent to paying

Our recent 40-year anniversary is a reminder of the

down approximately one-third of the acquisition debt

continuous evolution and innovation at the heart of our

in two years.

company. Throughout 2017, we undertook a number of

initiatives to optimize our solutions, our operations, and

· Acquired Cable Exchange with the goal of continuing

our approach to serving our customers.

to improve our agility, a core company value. Now we

can serve data center customers with more speed and

Throughout the year, CommScope aggressively focused

efficiency and with deeper capabilities to support the

on managing profitability and cash generation. We acted

growing high-capacity, multitenant, and hyperscale

quickly to enact cost-saving measures by implementing

data center markets.

substantial reductions in operating expenses and delivering

on significant synergies from the 2015 BNS acquisition.

Implemented a refreshed corporate strategy

We take pride in the strength of our business and in our

(centered on being a preferred partner, focused

track record of generating a significant amount of cash

innovation, and team excellence) that has spurred

throughout various economic cycles. This operational

progress as we shortened product development cycles,

excellence is a result of our financial foundation, our

simplified customer order processing, and automated

employees’ talent and dedication, our established

more operations.

long-term customer relationships, and our continuous

commitment to innovation and excellence.

Revitalized our brand by creating a simplified and

CommScope’s 2017 highlights

compelling presence in the market. From our website

to trade shows and our innovation centers, we are

highlighting our value and promise in new ways that

engage customers and prospects and advance our

Realized BNS cost synergies of more than $170 million

preferred partner strategy.

through 2017 with at least another $30 million in

savings expected in 2018.

Transitioned senior leadership with the retirements

of Randy Crenshaw, chief operating officer, and

· Generated more than $586 million of cash flow from

Mark Olson, chief financial officer. We deeply

operations, despite the significant short-term pause in

appreciate their service and commitment. Morgan

operator spending.

Kurk became our new COO as of January 1, 2018,

2017 Annual Reportand his extensive background and strong track

· We prepared for the deployment of the FirstNet US

record within CommScope and elsewhere have

public safety network, beginning in 2018. We have

prepared him well for this top operational role.

designed and developed a number of multiband

Our search for a new CFO continues, and we expect

antenna systems to further enhance our leadership

to name one soon.

position.

Although our performance in 2017 did not meet our

· We introduced our High Speed Migration Platform

expectations, we are particularly encouraged by the

and the formation of our Multi Tenant Data Center

significant opportunities available as we look ahead to

Alliance. These two major initiatives, coupled with

2018. The heavy lifting of the BNS integration is essentially

our acquisition of Cable Exchange, strengthened our

complete, which enables us to leverage the benefits of the

position in the data center market. Further, we have

new CommScope in recommitting our primary focus to our

reorganized a portion of our sales force to focus on

customers around the world. We are also excited about the

hyperscale and multitenant data center customers.

potential for large-scale wireless and fiber deployments—

particularly in North America—as well as growth prospects

· We enhanced our metro cell and small cell portfolios,

within the hyperscale data center market. We look forward

including successful trials of our OneCell solution

to returning to growth in 2018.

with a large European operator in a significant sports

stadium in the UK.

A focus on what’s next

· We extended a long-term optical fiber supply

partnership with OFS to secure access to a premier

The CommScope team is united in its renewed focus

supply of optical fiber for development of innovative

on customer needs. We look forward to meeting

fiber cabling products for global wireline and wireless

the requirements of an ever-evolving marketplace.

networks.

Innovation—the lifeblood of our company—inspired

and motivated a considerable amount of 2017 activity,

· We developed solutions for the transition to 5G.

including the following:

As we participate in shaping the standards for 5G,

we have a unique perspective in understanding the

· We invested $185 million in 2017 on R&D to solve the

complexity and challenges our customers will face.

challenges of tomorrow.

We remain confident in CommScope’s ability to succeed as

Actively adding value with strong financial

we innovate, invest, and focus on growth opportunities.

performance over the long term

We will continue to build on our achievements by doing

Our seasoned management team has an exceptional

the following:

track record of focusing on strong margins, robust

cash generation, and successful acquisitions.

Investing in long-term growth opportunities

With a focus on innovation and substantial investment

In the past year, we have worked to achieve our capital

in R&D, we will solve more wired and wireless

allocation priorities of strategically reinvesting in the

network challenges in more markets worldwide.

business, paying down debt, and returning capital to

shareholders. We remain committed to enhancing value

Continuing to enhance our global

for shareholders, and we believe our platform of world-

manufacturing and distribution footprint to

class differentiated solutions and services positions us

reach any opportunity anywhere

to create value in 2018 and beyond. As always, we will

Our unique combination of scale, cost efficiency, and

continue to operate while maintaining our strong culture

operational excellence creates more opportunities and

of integrity, ethics, and compliance.

satisfies more customers around the world.

While the past year presented unexpected challenges,

Providing industry-leading wireless, fiber,

we have never been more capable of and committed to

and copper solutions

delivering a successful 2018 for shareholders. Our position

We hold more than 10,000 patents and patent

in the overall market is as strong as ever, and the need for

applications globally that showcase our ingenuity and

the network bandwidth we enable continues to expand.

expertise in any network infrastructure.

Thank you for your continued support of CommScope.

Maintaining a culture of high-performing

people and operations

Our teams are committed to high-quality

customer experiences and high-performing solutions

that solve our customers’ most complex network

Eddie Edwards

infrastructure problems.

President and Chief Executive Officer

2017 Annual ReportLeadership transition

One of CommScope’s differentiators is the strength and experience of its management

team. Two of the leaders who have helped build our global leadership position, develop

our deep management team, and serve our company—and shareowners—exceedingly well

have chosen to retire.

Randy Crenshaw, our former executive vice president and chief operating officer, retired

December 31, 2017, after 32 years with CommScope. He capped a distinguished career

by successfully overseeing our massive and complex BNS integration efforts, which were

essentially completed in 2017.

Mark Olson, our executive vice president and chief financial officer, will retire from

CommScope effective March 31, 2018. Mark concludes a terrific 25-year career at our

company (including Andrew Corporation) in which his finance and business acumen helped

successfully guide us through multiple acquisitions and business cycles.

Randy and Mark have left an indelible mark on CommScope. CommScope has a well-

earned reputation for profitability, cash generation, market leadership, and operational

excellence, and Randy’s and Mark’s impact on that has been enormous. They also have been

outstanding examples of integrity in action.

As long-time executives, Randy and Mark also have been leaders of people. They have

touched the lives of thousands of CommScope employees and have had a significant role in

grooming other managers and future leaders of our company. Through their years of great

work and their development of others, Randy’s and Mark’s impact on our company will

endure for a long time.

The CommScope team wishes Randy and Mark the best of life in retirement. We thank

them for their service, leadership, and friendship to all the people they touched at

CommScope and to the customers and shareowners they served so well.

Executive
Q&A

Eddie Edwards, president and chief executive

officer, and Morgan Kurk, executive vice president

and chief operating officer, share answers to

frequently asked questions.

How is 5G evolving,

CommScope has long been preparing for the coming of 5G, and we

and how is

have a strong understanding of the complexity and challenges involved

CommScope taking

in the transition toward these networks. We have a strong track record

advantage of this

of helping customers through every previous technology evolution in

transformation?

wireless; in fact, a significant part of our nearly $200 million annual R&D

budget is used to develop new solutions to increase network speed and

efficiency and to improve network response time in 5G infrastructures.

Our view is that 5G will be a “network of networks”— a convergence of

fixed and mobile with deep fiber penetration to support the variety of

5G use cases. Because today’s evolved 4G network will be a cornerstone

for 5G, operators need to continue to bring wireless access closer to

their customers, known as densification. Densification requires solutions

we specialize in, including metrocells, small cells, fiber, and backhaul

capability. CommScope is a global leader in both wireless and fiber, a

powerful combination that has been and will continue to be a significant

competitive advantage.

Our technology teams are also participants in the standards bodies and

advocacy groups responsible for creating and supporting 5G, ensuring

we are well-versed in the requirements our customers will face and

positioning us to create solutions that meet their needs.

CommScope has played a key role in virtually all the world’s premier

communication networks, and we are confident that 5G will be no

different. Our portfolio of end-to-end solutions includes key components

our customers need to build high-performing 5G networks.

Our view is
that 5G will be
a “network of
networks.”

2017 Annual ReportWe believe that the development
of a unified network for homes,
businesses, and wireless locations will
be a high priority for many operators.

What do you

There are multiple growth drivers in fiber markets today, whether they be in the data

see as the

center or in the access layer supporting fixed or mobile networks. Data centers that were

most exciting

deployed centrally are now migrating out of the core and toward the edge to support

opportunities for

faster network response time and reduce network congestion. Fixed and mobile networks

fiber solutions in

are converging as the need for high-speed connectivity and cost efficiency become

2018 and beyond?

even more pressing. We believe that the development of a unified network for homes,

businesses, and wireless locations will be a high priority for many operators.

This network convergence was the thesis around our BNS acquisition in August 2015,

which enables us to serve our customers with a global portfolio of leading wireless and

fiber solutions. In anticipation of growing demand, we have entered into an eight-year

supply commitment with OFS to help ensure our optical fiber supply. So, no matter how

our customers deliver gigabit speed to consumers, we have an optimal solution.

In addition to the growing demand for fiber in outdoor fixed and mobile networks, we

are excited about the opportunities for fiber in data centers. With the rising demand for

bandwidth, data center managers must design their infrastructure to manage both higher

speeds and increased density.

To address these needs and position CommScope to take advantage of the future

transformation of this infrastructure, we continue to innovate, make strategic investments,

and build a portfolio of solutions. We developed our High Speed Migration Platform to

help data center managers accelerate the growth of their data center capacity and the

speed of their digital transformation initiatives, which is unique in the industry. In addition,

we greatly improved our quick-turn delivery capabilities with the acquisition of Cable

Exchange. We believe that the addition of Cable Exchange and the expansion of our high-

speed data center platform will position us for hyperscale and multitenant data center

growth in 2018.

Fiber will be the foundation of networks in the future, and we’re excited about

CommScope’s ability to support this.

What factors

Looking ahead, we are expecting more normalized order patterns and

should investors

are preparing to capitalize on numerous global developments to ensure

monitor for

CommScope’s

we return to growth in 2018. Due to the nature of the markets we serve,

the timing of large-project spending is impactful to our results. One of

progress in 2018?

the key wireless projects expected for 2018 is the FirstNet deployment,

which is a network dedicated to US public safety. This multiyear network

build is a growth driver for our Mobility Solutions segment, and one for

which we believe we are well-positioned. We also will be looking at the

pace and intensity of deep-fiber builds to homes, businesses, and cell

sites. Beyond North America, although we have seen positive trends in

some regions, we remain cautious on most international markets.

M&A by our customers and the impact that may have on the timing of

spending remains a key variable. Other items we are keeping an eye on

include our customers’ reactions to the repeal of net neutrality, which

could spur increased network investment, and the transition toward 5G,

which is a demand driver in both our Mobility Solutions and Connectivity

Solutions segments.

US tax reform is another issue on which we have kept a close eye. Under

the recently enacted US tax reform legislation, CommScope expects

to benefit with a lower adjusted effective tax rate. In addition to our

beneficial tax rates, some of our customers have announced their intent

to increase CapEx spending due to the passage of tax reform.

For additional executive questions and answers,

please visit commscope.com/Annual-Report/.

One of the key
wireless projects
expected for 2018
is the FirstNet
deployment.

2017 Annual ReportCommScope at a glance

CommScope overview
$4.56 billion 2017 revenue

Mobility Solutions segment
$1.75 billion 2017 revenue

CommScope helps design, build, and manage wired and

CommScope is a global leader in providing infrastructure

wireless networks around the world. As a communications

for the most advanced wireless networks. CommScope’s

infrastructure leader, we shape the always-on networks

Mobility Solutions segment portfolio includes the integral

of tomorrow. For more than 40 years, our global team

building blocks for cellular base station sites and related

of over 20,000 employees, innovators, and technologists

connectivity; for indoor, small cell, and distributed antenna

has empowered customers in all regions of the world

wireless systems; and for wireless network backhaul

to anticipate what’s next and to push the boundaries of

planning and optimization products and services.

what’s possible.

Our size, reach, expertise, and operational precision

position us to enable the future of communications around

the globe. We are delivering more innovation, smarter

solutions, and greater scale for customers who demand

Connectivity Solutions segment
$2.81 billion 2017 revenue

the following features:

CommScope is a global leader in innovative fiber optic and

copper connectivity solutions for use in business enterprise,

· More bandwidth and capacity

telecommunications, cable television, and residential

Better performance and availability

broadband networks. CommScope’s Connectivity Solutions

· More efficient energy usage

segment portfolio includes innovative solutions for indoor

Simpler, faster technology migrations

environments, such as commercial buildings, data centers,

central offices, and cable television headends, and outdoor

Our culture of innovation is supported by a legacy

environments, such as coaxial and fiber optic cabling,

of excellence. Our experts helped write the standards

connectors, and management systems.

for nearly every evolution of wired and wireless

network technology. CommScope was instrumental

in the creation of the following innovations:

· Cable television infrastructure

The first wireless networks

The first data centers

The first intelligent buildings

We are invested in what’s next.

Reconciliation of GAAP measures
to non-GAAP adjusted measures

(Unaudited—in millions, except per share amounts)

Year Ended December 31

Reconciliation of adjusted operating income
Operating income, as reported

Adjustments:

Amortization of purchased intangible assets

Restructuring costs, net

Equity-based compensation

Asset impairments
Purchase accounting adjustments(1)
Integration and transaction costs(2)

Total adjustments to operating income

Non-GAAP adjusted operating income

Reconciliation of adjusted net income

Income (loss) before income taxes, as reported

Income tax expense, as reported

Net income (loss), as reported

Adjustments:

Total pretax adjustments to operating income
Pretax amortization of deferred financing costs & OID(3)
Pretax acquisition related interest(3)
Pretax loss on debt transactions(4)
Pretax net investment gains(4)
Tax effects of adjustments and other tax items(5)

Non-GAAP adjusted net income

Diluted EPS, as reported
Non-GAAP diluted EPS(6)

Reconciliation of adjusted free cash flow
Cash flow generated by operating activities, as reported(7)
Less: Additions to property, plant, and equipment

Adjustments:

Capital spending for BNS acquisition integration

Cash paid for integration and transaction costs

Non-GAAP adjusted free cash flow(7)

2015
$181.6

220.6

29.5

28.7

90.8

81.7

96.9

548.2

$729.8

$(62.0)

(8.9)

$(70.9)

548.2

22.3

29.2

(2.7)

(164.4)

$361.7

$(0.37)

$1.86

$327.1

(56.5)

12.7

96.1

$379.4

2016
$574.8

297.2

42.9

35.0

38.6

0.6

62.3

476.6

$1,051.4

$272.6

(49.7)

$222.8

476.6

21.4

17.8

(0.5)

(218.9)

$519.2

$1.13

$2.64

$640.2

(68.3)

6.1

64.8

$642.8

2017
$477.6

271.0

43.8

41.9

48.0

404.7

$882.3

$209.7

(16.0)

$193.8

404.7

25.4

16.0

(9.0)

(210.5)

$420.4

$0.98

$2.14

$586.3

(68.7)

50.6

$568.2

Note: Components may not sum to total due to rounding.

(1) Reflects non-cash charges resulting from purchase accounting adjustments, including adjustments to the estimated fair value of contingent consideration payable.
(2) Reflects integration costs related to the acquisition of the BNS business, transaction costs related to potential and consummated acquisitions, and costs related to secondary stock offerings.
(3) Included in interest expense.
(4) Included in other expense, net.
(5) The tax rates applied to adjustments reflect the tax expense or benefit based on the tax jurisdiction of the entity generating the adjustment. There are certain items for which we expect little or no tax effect.
Given the complexities of the U.S. tax legislation enacted in late 2017, we applied a non-GAAP effective tax rate of 35% for the fourth quarter 2017, consistent with the adjusted rate in prior quarters of 2017.
(6) Diluted shares used in the calculation of non-GAAP diluted EPS for the years ended December 31, 2017, 2016, and 2015 were 196.8 million, 196.5 million, and 194.2 million, respectively.
(7) 2015 and 2016 excess tax benefits on equity based compensation have been reclassified in the cash flow statement as an operating activity rather than a financing activity in accordance with ASU
No. 2016-09, Improvements to Employee Share-Based Payment Accounting. In addition, 2016 debt redemption premium paid has been reclassified in the cash flow statement as a financing activity in
accordance with ASU No. 2016-15,Cash Flow Classification of Certain Cash Receipts and Cash Payments.

CommScope management believes that presenting operating income, net income, diluted EPS, and cash flow information excluding the special items noted above provides meaningful information to investors in
understanding operating results and may enhance investors’ ability to analyze financial and business trends, when considered together with the GAAP financial measures. In addition, CommScope management believes
that these non-GAAP financial measures allow investors to compare period-to-period more easily by excluding items that could have a disproportionately negative or positive impact on results in any particular period.

2017 Annual Report

FORM 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
(cid:95)(cid:3) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the fiscal year ended December 31, 2017
OR

(cid:133)(cid:3) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the transition period from to
Commission file number: 001-36146

CommScope Holding Company, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
1100 CommScope Place, SE
Hickory, North Carolina
(Address of principal executive offices)

28602
(Zip Code)

27-4332098
(I.R.S. Employer
Identification No.)

(828) 324-2200
(Telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, par value $.01 per share

Name of each exchange on which registered
Nasdaq

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:95)(cid:3)No (cid:133)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes (cid:133) No (cid:95)
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 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 (cid:95) No (cid:133)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes (cid:95) No (cid:133)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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. (cid:95)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Accelerated filer
(cid:133)
Smaller reporting company (cid:133)

Large accelerated filer (cid:95)
Non-accelerated filer(cid:3) (cid:133) (Do not check if a smaller reporting company)
Emerging growth company (cid:133)
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes (cid:133) No (cid:95)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. (cid:133)
The aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately $7,236
million as of June 30, 2017. For purposes of this computation, shares held by affiliates and by directors and officers of the
registrant have been excluded.
As of February 5, 2018 there were 190,971,960 shares of the registrant’s Common Stock outstanding.

Documents Incorporated by Reference
Portions of the registrant’s Proxy Statement for the 2018 Annual Meeting of Stockholders are incorporated by reference in Part
III hereof.

CommScope Holding Company, Inc.
Form 10-K
December 31, 2017
Table of Contents

Part I

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Part II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

of Equity Securities

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Part III

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Part IV

Item 15. Exhibits and Financial Statement Schedule

Signatures

106

107

108

115

PART I

Unless the context otherwise requires, references to “CommScope Holding Company, Inc.,” “CommScope,” “the
Company,” “Registrant,” “we,” “us,” or “our” are to CommScope Holding Company, Inc. and its direct and indirect
subsidiaries on a consolidated basis.

This Annual Report on Form 10-K includes forward-looking statements identified by certain terms and phrases
including but not limited to “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “anticipate,”
“should,” “could,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,” “outlook,” “target,”
“guidance” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date the statement was made. Item 1A, “Risk Factors,” of this Annual Report
on Form 10-K sets forth more detailed information about the factors that may cause our actual results to differ,
perhaps materially, from the views stated in such forward-looking statements. We are not undertaking any duty or
obligation to update any forward-looking statements to reflect developments or information obtained after the date
of this Annual Report on Form 10-K, except to the extent required by law.

ITEM 1.

BUSINESS

Company Overview

We are a global leader in providing infrastructure solutions for the core, access and edge layers of communications
networks. Our portfolio includes robust and innovative wireless and fiber optic solutions for today’s evolving digital
lifestyle. Our talented and experienced global team helps customers increase bandwidth; maximize existing
capacity; improve network response time and performance; and simplify technology migration. Our solutions are
found in some of the largest venues and outdoor spaces; in data centers and buildings of all shapes, sizes and
complexities; at wireless cell sites; in telecom central offices and cable television headends; in fiber-to-the-X
(FTTX) deployments; and in airports, trains, and tunnels. Vital networks around the world run on CommScope
solutions.

We have a team of over 20,000 people to serve our customers in over 100 countries through a network of more than
30 world-class manufacturing and distribution facilities strategically located around the globe. Our customers
include substantially all of the leading global telecommunication operators, data center managers, leading multi-
system operators (MSOs) and thousands of enterprise customers, including many Fortune 500 companies. We have
long-standing, direct relationships with our customers and serve them through a direct sales force and a global
network of channel partners.

For the year ended December 31, 2017, our revenues were $4.56 billion and our net income was $193.8 million. For
further discussion of our current and prior year financial results, see Part II, Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements included in
Part II, Item 8 of this Annual Report on Form 10-K.

CommScope enables and empowers many of the top-performing wireless, telecommunications, business enterprise,
broadband and cable television networks in existence today by providing solutions for the core, access and edge
layers of these networks. The core layer is the central part of a network that provides very high-speed services to
entities that are connected to the network. The core layer includes data centers, headends and central offices and the
high-speed networks that connect them. The access layer connects subscribers and edge devices to the core and
includes outside-plant distribution networks. The access layer typically runs from a central office, headend or wiring
center to cell sites, commercial buildings, multi-dwelling units or homes. The edge layer is the entry point on or off
the network. The edge network includes routers, certain wireless base stations and building and campus networks,
including single and multi-dwelling unit residences. The table below summarizes 2017 revenue, global leadership
position and solutions offerings for our two segments:

Connectivity Solutions (CCS)

Mobility Solutions (CMS)

2017 Revenue

$2,810 million

$1,751 million

Global
Leadership
Position

A global leader in innovative fiber optic and copper
connectivity solutions for use in data centers and
business enterprise, telecommunications, cable
television and residential broadband networks

A global leader in providing infrastructure
for the most advanced wireless networks

Network
CORE

Network
ACCESS

(cid:120) High density fiber connectivity

(shelves/panels, modules, trunks,
jumpers/arrays and cable)

(cid:120) Pre-terminated fiber and copper cable and

connectivity

(cid:120) Intelligent infrastructure management

hardware and software

(cid:120) Data center raceways and cable assemblies
(cid:120) Fiber and central office LAN solutions
(cid:120) Quick-turn delivery of fiber and copper

assemblies

(cid:120) High-capacity fiber and apparatus
(cid:120) Plug and play hardened connector systems for

harsh environments

(cid:120) FTTX solutions
(cid:120) Fiber distribution hubs and management

systems

(cid:120) Broadband MSO solutions
(cid:120) Intelligent infrastructure management

hardware and software

Network
EDGE

(cid:120) Single mode and multi-mode fiber and apparatus
(cid:120) Coaxial and structured copper cabling systems

and apparatus

(cid:120) Campus network fiber cabling systems
(cid:120) Intelligent infrastructure management hardware

and software

(cid:120) Residential connectivity (amplifiers, splitters, drop

cable, interconnects)

(cid:120) Microwave backhaul antennas and

power solutions

(cid:120) Base station antenna systems
(cid:120) Interconnectivity (fiber, hybrid

fiber/power and coaxial feeder cabling;
connectors and assemblies)

(cid:120) Radio frequency (RF) conditioning and
interference mitigation (amplifiers,
filters, diplexers and combiners)
(cid:120) Metro cell antenna and concealment

solutions

(cid:120) DAS and small cell solutions
(cid:120) In-building cellular solutions

Industry Background

We participate in the large and growing global market for connectivity and essential communications infrastructure.
This market is being driven by the growth in bandwidth demand associated with the continued adoption of
smartphones, tablets and machine-to-machine (M2M) communication as well as the proliferation of data centers,
Big Data, cloud-based services, streaming media content and the Internet of Things (IoT). Telecommunications
operators are deploying 4G and fiber optic networks and are planning 5G networks to support the dramatic growth
in bandwidth demand. As users consume more data on smartphones, tablets and computers, enterprises face a
growing need for higher bandwidth networks, in-building cellular coverage and more robust, efficient and intelligent
data centers. Operators are investing in their networks to deliver a competitive triple-play of services (voice, video
and high-speed data) and to maintain service quality. There are several major trends that we expect to drive network
deployments and investment, including:

Evolving Network Architecture

The pace of change in networking has increased as consumers and data-driven businesses utilize more bandwidth
and shift toward ubiquitous mobile applications. Exponential growth in video and “universal mobility” are
revolutionizing how we connect to each other and changing the network architecture needed to support consumer
demand. This trend requires better network coverage, greater broadband access and increased capacity and data
storage.

Operators are working to transition their networks to become faster and more efficient. CommScope sees several
key network trends that will continue to impact CommScope and the industry during 2018 and beyond:

1) Network Convergence: Operators are moving toward converged or multi-use network architectures.

Rather than building upon independent wireline and wireless networks, operators are now shifting toward
networks that combine voice, video and data communications into a single, converged network. In fact, we
are developing solutions that support the convergence of wireline and wireless networks in preparation for
5G. These changes are expected to help operators increase the efficiency and capability of the network,
improve asset utilization and reduce cost. We expect that fiber and wireless technologies will be essential
building blocks of converged networks. Convergence of fiber-based broadband networks and traditional
wireless networks will be essential for the success of 5G technologies.

2) Densification: As wireless operators work to meet consumer demand, they utilize three primary tools to

increase capacity: a) adding wireless spectrum, b) improving network efficiency and c) increasing network
density (i.e., adding more cell sites or sectors to an existing cell site). Although the Company benefits from
all three strategies, densification of cell sites is expected to be a key driver as operators transition toward
5G networks. A solid 4G network will be the foundation for 5G. Densification includes enhanced
sectorization at macro cell sites, building new metro cell or small cell sites and establishing better in-
building coverage. The Company expects that densification will require significant fiber cable and
connectivity between wireless cell sites (fronthaul, crosshaul and backhaul).

3) Virtualization and Centralization: Operators are virtualizing and centralizing wireless networks to make

them more flexible and efficient. The first step toward capacity virtualization is deploying centralized radio
access networks (CRAN). CRAN is a centralized computing architecture for radio networks which requires
installation of direct fiber connectivity to individual cell sites. By leveraging the signal carrying capacity of
fiber, operators can centrally control dozens or even hundreds of cell sites in the network. Centralizing
independent wireless base stations can support the efficient distribution of capacity, improve network
response time, reduce the amount of equipment needed at each individual cell site, and lower power and
leasing costs. These CRAN nodes will evolve to become “Cloud RAN” nodes as operators “virtualize” the
network by combining hardware and software network resources and network functionality into a single,
software-based administrative entity. Network virtualization also supports the transition to 5G.

4) Optimization: Deployment of wired and wireless networks is complex and costly. Operators are highly

focused on optimizing network resources and reducing the total cost of ownership. Optimization includes
techniques such as innovative fiber connectivity solutions to reduce installation time, network intelligence
to monitor equipment efficiency, precise antenna patterns to optimize cell site capacity, spectrum reuse,
offloading traffic onto Wi-Fi and utilization of unlicensed spectrum—especially inside buildings.

Fiber Deep Deployments

Residential and business bandwidth consumption continues to grow substantially. The proliferation of over-the-top
video, multiscreen viewing, cloud services and social media are prompting operators to accelerate fiber
deployment. Operators can increase network capacity by installing fiber deeper into their networks. Although
consumer devices are increasingly connected to the network via a wireless connection such as LTE or Wi-Fi, these
wireless access points must have abundant backhaul capacity available to provide consumers the experience they
expect. Operators around the globe are deploying fiber deep to build next generation networks. These networks use
the capabilities of fiber to enable consumers access to content at higher speeds with lower network response time.
As networks improve and deliver higher speed and greater reliability, many operators are choosing to provide both
residential and business services over a common physical layer infrastructure, saving them time and money. In
addition, with the deployments of metro cells, outdoor small cells and fixed wireless broadband to the home, these
same service providers are planning to utilize this common physical layer infrastructure to provide connectivity to
these wireless access points.

Shift in Enterprise Spending

Several trends in the enterprise market are expected to create opportunities and challenges. First, the shift toward
mobility in business enterprises is expected to impact the amount and type of structured copper connectivity needed
over the longer-term. As the bandwidth requirements for Wi-Fi and indoor cellular networks increase, more access
points will be needed throughout commercial buildings. As a result, enterprises are expected to adjust in-building
cabling designs to deliver both power and high-speed data to those devices. Power-over-ethernet is expected to
become increasingly important as the number of devices used for Wi-Fi and indoor cellular networks
multiplies. While enterprises continue to need copper connectivity to power edge devices, enterprises are deploying
fiber more extensively in data centers. Over the next several years, we expect the growing demand for fiber
solutions to be somewhat offset by decelerating demand for copper solutions in networks. Due to huge increases in
data traffic and migration of applications to the cloud, enterprises are also shifting spending toward multi-tenant (co-
located) data centers and hyperscale cloud service providers, which offer cloud data center services as a replacement
to in-house corporate data centers. Multi-tenant and hyperscale data center managers are focused on ultra-low loss,
high density, scalable fiber connectivity solutions.

An increase in average data center size and the number of assets in a data center significantly raises the total cost of
ownership and the complexity of managing data center infrastructure. Data center operators strive to manage their
resources efficiently and to reduce energy consumption by monitoring all elements within the data center.
Automated infrastructure management software helps operators improve operational efficiency, maximize capability
and reduce costs by providing clear insight into cooling capacity, power usage, utilization, applications and overall
performance.

Momentum of 5G

Although not expected to be standardized until the end of the decade, 5G wireless is evolving from an industry
vision toward a tangible, next generation wireless technology. Some operators are already planning for a transition
to 5G wireless and have announced trials and pre-standard deployments of 5G technology. The primary benefits of
5G are expected to include:

o Enhanced mobile broadband—to support significant improvement in data rates and user

experience,

IoT and M2M communications to support the expected billions of connections between machines
as well as short bursts of information to other systems and

o Ultra-fast response time—to support applications like public safety, autonomous vehicles and

drones.

Densification, virtualization and optimization of the network are all required to support 5G. Operators will need to
both acquire and launch new spectrum for 5G, as well as continue their strategy of re-allocation of spectrum from
one generation to another. Some of this spectrum will be at much higher frequencies and will use new technologies
to deliver exceptional amounts of bandwidth to subscribers. 5G also requires significant fiber to connect wireless
access points to each other to improve the response time of the network. As operators transition toward 5G, they
must also manage the fundamental network deployment issues of site acquisition, power, backhaul and in-building
wireless proliferation.

Metro Cell, DAS and Small Cell Investment to Enhance and Expand Wireless Coverage and Capacity

The traditional macro cell network requires mobile users to connect directly to macro cell base stations. Macro cells
are primarily designed to provide coverage over wide areas and typically transmit high power. Alone, they are not
optimal for dense urban areas where physical structures often create coverage gaps and capacity is frequently
constrained. Adding new macro cells or increasing the number of sectors on existing sites has been the traditional
way to increase mobile capacity and will continue to be a foundational layer of the network. As demand growth
continues to outpace capacity growth, new solutions are required for densely populated areas. Metro cells and indoor
networks have emerged as important layers of the network. Metro cells are smaller outdoor cell sites, located closer
to the ground, having a lower power level than a traditional macro cell site. Metro cells blend into their environment
and are often found integrated with traditional street furniture, which helps alleviate zoning restrictions that have
made traditional deployments difficult. Finally, there are small cell and DAS solutions that address the capacity and
speed requirements from an indoor perspective. These systems provide coverage and capacity to the indoor
environment and reduce the load from the macro and metro layers, which improves overall network performance.
Small cell and DAS systems may range from small single operator, single-band, low-capacity systems for use in
enterprise buildings to large multi-carrier, multi-technology, multi-band systems for use in high-capacity public
venues.

Wireless operators view in-building coverage as a critical component of their network deployment strategies. Key
challenges for wireless operators in providing in-building cellular coverage are signal loss while penetrating
building structures and interference created by mobile devices while connected to macro cell sites. In-building DAS
solutions bring the antenna significantly closer to the user, which results in better coverage and capacity while
simultaneously reducing interference. In-building DAS provides seamless signal handover for users inside buildings
and can support multi-operator, multi-frequency and multi-protocol (2G, 3G, 4G, 5G) solutions. Small cells are self-
contained radio units that generally provide support for fewer bands from a single service provider to a relatively
small area, similar to a Wi-Fi access point. The benefits of small cell technologies are becoming increasingly
important with the trend towards mobility in the enterprise market.

Operators also commonly use traditional DAS solutions to address outdoor capacity issues in urban areas, deploying
them in effect as metro cells. By deploying multi-band, multi-technology solutions in this way, operators can create
small coverage re-use areas, which optimizes use of existing licensed spectrum by increasing repeated usage of the
same frequencies within a defined coverage area.

Strategy

We believe consumer demand for bandwidth, competition among operators and continuous technology
advancements are driving communication network deployments and investment. We believe these trends position us
for future growth and value creation because of our leading positions across diverse and growing market segments
and geographies, our platform of innovative solutions, complementary market opportunities and our strong financial
profile. We see growth opportunities in the markets we serve and it is our plan to capitalize on these opportunities by
providing our customers with products that can transform their networks with efficient solutions that optimize
network performance and deployment speed. Our strategy and 2018 priorities are to:

Become a Preferred Partner to Our Customers

We plan to expand our industry leadership positions in fiber and wireless by developing and enhancing value-
creating partner relationships with our customers, suppliers, distributors as well as our channel and technology
partners. We intend to expand these relationships by innovating, collaborating and selling with our customers. We
expect to meet our commitments and maintain our product quality while collaborating with our customers to provide
solutions to their key network challenges.

Relentlessly Focus on Innovation to Solve Critical Problems

We plan to build on our legacy of innovation and on our worldwide portfolio of patents and patent applications by
continuing to invest in research and development. We also intend to utilize our deep industry expertise to offer
unique perspectives to solve customers’ challenges. We intend to focus our investment on high growth markets.

Enhance Sales Growth

We expect to capitalize on our technology leadership, operational excellence, scale, market position, broad product
offerings and quality to generate growth opportunities by:

(cid:120) Differentiating with speed. We intend to make it easier for customers to do business with CommScope by

improving our business velocity related to decisions, delivery, sales and customer service.

(cid:120) Enabling growth. We intend to drive organic sales growth by refocusing on key markets and developing

processes and tools to turn new ideas into growth.

(cid:120) Continuing to drive solutions offerings. We intend to focus on selling solutions to our customers that align with
their evolving needs, thereby enhancing our position as a strategic partner. With the addition of our high-speed
migration portfolio and quick-turn delivery capabilities, we have broadened our range of solutions.

(cid:120) Making strategic acquisitions. We will continue our disciplined approach to evaluating, executing and

successfully integrating strategic acquisitions.

Expand Culture of Excellence

We strive to be viewed as a top employment destination where premier talent is hired, developed and retained. We
also intend to make high-performance and operational excellence the standard throughout the Company while
prioritizing collaboration and zero-tolerance for quality issues.

Continue to Enhance Operational Efficiency and Cash Flow Generation

We continuously pursue strategic initiatives aimed at optimizing our resources by reducing manufacturing and
distribution costs and optimizing our overall cost structure. We believe that we have a strong track record of
improving operational efficiency and successfully executing on formalized annual profit improvement plans, cost-
savings initiatives and working capital improvements to drive future profitability and cash flows. We intend to use
the cash we generate to invest in our business to make strategic acquisitions, reduce our indebtedness and return
capital to stockholders.

Operating Segments

We report financial performance based on two operating segments: CommScope Connectivity Solutions (CCS) and
CommScope Mobility Solutions (CMS).

The distribution of net revenues between our two segments is as follows:

CCS
CMS
Total

Year Ended December 31,

2017

2016

2015

61.6%
38.4
100.0%

60.2 %
39.8
100.0 %

48.4%
51.6
100.0%

CommScope Connectivity Solutions Segment

Indoor Connectivity Solutions

We have a leading global market position in enterprise connectivity for data centers and commercial buildings. Our
solutions support mission-critical, high bandwidth applications. We integrate our structured cabling, connectors, in-
building cellular solutions and network intelligence capabilities to create physical layer solutions that enable voice,
video and data communication and building automation. We use proprietary modeling and simulation techniques to
optimize networks to provide performance that exceeds established standards. Through our Cable Exchange
acquisition, we have expanded our capabilities and presence in the hyperscale and cloud data center market. Our
global network of partners offers customers custom, turnkey network solutions that are tailored to each customer’s
unique requirements. Data centers and other fiber solutions account for nearly one-third of indoor network solutions
net sales.

We believe that our strong market position results from our differentiated technology, long-standing relationships
with customers and channel partners, strong brand recognition, premium product features and the performance and
reliability of our solutions. These comprehensive solutions, sold primarily under the SYSTIMAX, NETCONNECT
and Uniprise brands, include optical fiber and twisted pair structured cable solutions, intelligent infrastructure
management hardware and software and network rack and cabinet enclosures.

Our data center, central office and headend solutions include a robust portfolio of high-density fiber optic
connectivity, including shelves/panels, modules, trunks, jumpers/arrays and cable. We also offer fiber management
systems, patch cords and panels, pre-terminated fiber connectivity, complete cabling systems and cable assemblies
for use in offices and data centers. These connectivity solutions can deliver data speeds of more than 100 gigabits
per second (Gbps).

Outdoor Connectivity Solutions

We have a leading global position in providing fiber optic and coaxial cable solutions that support the multichannel
video, voice and high-speed data services provided by telecommunications operators and MSOs. We provide a
broad portfolio of connectivity solutions including fiber-to-the-home (FTTH) equipment. Our fiber optic
connectivity solutions are primarily comprised of hardened connector systems, fiber distribution hubs and
management systems, couplers and splitters, plug and play multiport service terminals, hardened optical terminating
enclosures, high density cable assemblies and splice closures. These products are used in both local-area and wide-
area networks and “last-mile” FTTH installations, including deployments of fiber-to-the-node (FTTN), fiber-to-the-
premises (FTTP) and fiber-to-the-distribution point (FTTdP) to homes, businesses and cell sites. These networks use
the capabilities of fiber to enable consumers access to content at higher speeds and faster response times.

Our customers are pushing fiber deeper into networks. They are investing in broadband to deliver higher-speed data
to homes and businesses; fiber to macro cell towers, metro cells and small cells; and enabling network virtualization
in wireless networks. These networks are capital intensive with a high portion of deployment costs related to labor in
the field. We are focused on enabling solutions for our customers to build an effective and efficient FTTX network.
With our technological capabilities and diverse fiber connectivity portfolio, we can help operators lower capital
expenditures and reduce the total cost of ownership by creating solutions that shift labor from the field to the
factory. While the timing of cable and connectivity deployments can be difficult to predict, we have a broad,
technologically-advanced FTTX connectivity portfolio which we believe positions us to capitalize on the expected
growth in fiber networks.

CommScope Mobility Solutions Segment

Our solutions, marketed primarily under the Andrew brand, enable wireless operators to meet coverage and capacity
requirements for next generation networks. We focus our physical-layer solutions on all aspects of the Radio Access
Network (RAN) from the macro through the metro, to the indoor layer. Our macro cell site, metro cell site, DAS and
small cell solutions establish us as a global leader in RF infrastructure solutions for wireless operators and original
equipment manufacturers (OEMs). We strive to provide a one-stop source for managing the technology lifecycle of
a wireless network, including complete physical layer infrastructure solutions for 2G, 3G, 4G and 5G applications.
In preparation for 5G networks, we continue to invest heavily in relevant research and development, support
customer technology trials and actively participate in industry forums to help shape 5G standards. Our
comprehensive solutions include products for every major wireless protocol and allow wireless network operators to
operate across multiple frequency bands, reduce cost, achieve faster data rates, improve network response time and
accelerate migration to the latest wireless technologies. Our wireless solutions are built using a modular approach,
which has allowed us to leverage our core technology across generations of networks and mitigate technology risk.
We provide a complete portfolio of RF infrastructure products, and we are recognized for our leading technologies,
best-in-class performance, comprehensive product portfolio and global scale.

Our macro cell site solutions include base station antennas, microwave antennas, hybrid fiber-feeder and power
cables, coaxial cables, connectors and filters. We also provide a comprehensive portfolio at the base of the tower
including cabinets, platforms, fiber backhaul connectivity hubs and power solutions that allow operators to minimize
capital expenditures, operating expenses and deployment time.

Our metro cell solutions include RF delivery, equipment, housing and concealment. The fully integrated outdoor
systems include specialized antennas, filters/combiners, backhaul solutions, intra-system cabling and power
distribution, all minimized to fit an urban environment. These solutions facilitate site acquisition and improve RF
network performance in the metro area while minimizing interference with the macro layer. Furthermore, they
enable faster zoning approvals and expedite construction.

Our small cell and DAS solutions are primarily comprised of distributed antenna systems and distributed cell
solutions. The combination of our innovative small cell offerings and our industry-leading DAS portfolio enables us
to provide a broader range of solutions, addressing single-operator, single-band, low capacity environments all the
way through multi-carrier, multi-technology, multi-band, high capacity environments.

Manufacturing and Distribution

We develop, design, fabricate, manufacture and assemble many of our products and solutions in-house at our
facilities located around the world. We have strategically located our manufacturing and distribution facilities to
provide superior service levels to customers. We utilize lower-cost geographies for high labor content products
while investing in largely automated plants in higher-cost regions close to customers. Most of our manufacturing
employees are located in lower-cost geographies such as Mexico, China, India and the Czech Republic. We
continually evaluate and adjust operations to improve service, lower cost and improve the return on our capital
investments. In addition, we utilize contract manufacturers for many of our product groups, including certain
cabinets and filter products. We expect to continue modifying global operations to adapt to changing product
demand or business conditions.

Research and Development

Research and development is important to preserve and expand our position as a market leader and to provide the
most technologically advanced solutions in the marketplace. We invested $185 million in research and development
during 2017 and expect to continue with substantial investments in future years. We continue to focus our major
research and development activities on high-growth opportunities such as fiber optic connectivity for FTTX and data
centers, active and passive base-station antennas, and metro cell and small cell wireless solutions. We are also in the
process of developing solutions that support the convergence of wireline and wireless networks in preparation for
5G. Several of our professionals are leaders and active contributors in standards-setting organizations which helps
ensure that our products can be formulated to achieve broad market acceptance.

Customers

Our customers include substantially all of the leading global telecom operators, data center managers, leading cable
television providers or MSOs and thousands of enterprise customers, including many Fortune 500 companies, which
we serve both directly and indirectly. Major customers and distributors include companies such as America Movil,
S.A.B. de C.V.; Anixter International Inc.; AT&T Inc.; Charter Communications, Inc.; Comcast Corporation;
Deutsche Telekom AG; Ericsson, Inc.; Graybar Electric Company, Inc.; NBN Co. Limited; Talley Inc.; T-Mobile;
Verizon Communications Inc.; Vodafone Group, Plc; and Wesco International Inc. We support our global sales
organization with regional service centers in locations around the world.

Products from our CCS segment are primarily sold through independent distributors or system integrators for large
telecommunications operators. We also sell directly to cable television system operators, broadband operators, or
service providers that deploy broadband networks. Sales to our top three CCS segment customers represented 18%
and 19% of our consolidated net sales for the years ended December 31, 2017 and 2016, respectively. Net sales to
our largest customer, Anixter International Inc. and its affiliates (Anixter), accounted for 11% of our consolidated
net sales for the years ended December 31, 2017 and 2016.

Products from our CMS segment are primarily sold directly to wireless operators, OEMs that sell equipment to
wireless operators or other service providers that deploy elements of wireless networks at the direction of wireless
operators. Our customer service and engineering groups maintain close working relationships with these customers
due to the significant amount of customization associated with some of these products. Sales to our top three CMS
segment operator customers represented 13% and 17% of our consolidated net sales for the years ended
December 31, 2017 and 2016, respectively. Sales to our top three OEM customers represented 5% of our
consolidated net sales for the years ended December 31, 2017 and 2016. No CMS segment customer accounted for
10% or more of our consolidated net sales for the years ended December 31, 2017 and 2016. While we sell to most
wireless operators globally, we are dependent on a small number of large operators.

We generally have no minimum purchase commitments with any of our distributors, system integrators, value-added
resellers, wireless operators or OEM customers, and our contracts with these parties do not prohibit them from
purchasing or offering products or services that compete with ours. Although we maintain long-term relationships
with these parties and have not historically lost key customers, we have experienced variability in the level of
purchases by our key customers. Any significant reduction in sales to these customers, including as a result of the
inability or unwillingness of these customers to continue purchasing our products, could materially and adversely
affect our business, financial condition, results of operations and cash flows. See Part I, Item 1A, “Risk Factors.”

We employ a global manufacturing and distribution strategy to control production costs and provide world-class
service to customers. We support our international sales efforts with sales representatives based in Europe, Latin
America, Asia and other regions throughout the world. Our net sales from international operations were $2.1 billion,
$2.3 billion and $1.9 billion for the years ended December 31, 2017, 2016 and 2015, respectively.

Patents and Trademarks

We pursue an active policy of seeking intellectual property protection, including patents and registered trademarks,
for new products and designs. On a worldwide basis, we held approximately 10,000 patents and patent applications
and approximately 2,400 registered trademarks and trademark applications as of December 31, 2017. We consider
our patents and trademarks to be valuable assets, and while no single patent is material to our overall operations, we
believe the CommScope, Andrew, SYSTIMAX, HELIAX and NETCONNECT trade names and related trademarks
are critical assets to our business. We intend to rely on our intellectual property rights, including our proprietary
knowledge, trade secrets and continuing technological innovation, to develop and maintain our competitive position.
We will continue to protect our key intellectual property rights.

Backlog and Seasonality

At December 31, 2017 and 2016 we had an order backlog of $492 million and $612 million, respectively. Orders
typically fluctuate from quarter to quarter based on customer demand and general business conditions. Our backlog
includes only orders that are believed to be firm. Sometimes, unfilled orders may be canceled prior to shipment of
goods, but cancellations historically have not been material. However, our current order backlog may not guarantee
future demand.

Due to the variability of shipments under large contracts, customers’ seasonal installation considerations and
variations in product mix and in profitability of individual orders, we can experience significant quarterly
fluctuations in sales and operating income. Our operating performance is typically weaker during the first and fourth
quarters and stronger during the second and third quarters. These variations are expected to continue in the future. It
may be more meaningful to focus on annual rather than interim results.

Competition

The market for our products is highly competitive and subject to rapid technological change. We encounter
significant domestic and international competition across both segments of our business. Our competitors include
large, diversified companies — some of whom have substantially more assets and greater financial resources than
we do. We also face competition from small to medium-sized companies and less diversified companies that have
concentrated efforts in one or more areas of the markets we serve. Our competitors include AFL (a subsidiary of
Fujikura, Ltd.,); Amphenol Corporation; Belden Inc.; Berk-Tek (a Company of Nexans S.A.); Comba Telecom
Systems Holding Ltd.; Corning Incorporated; Emerson Electric Co.; Ericsson Inc.; Huawei Technologies Co., Ltd.;
JMA Wireless; KATHREIN-Werke KG; Leviton Manufacturing Co., Inc.; Nokia Corp; Ortronics (a brand of
Legrand NA, LLC); Panduit Corp.; RFS (a subsidiary of Nokia Corp); SOLiD Technologies; SpiderCloud Wireless
(a subsidiary of Corning Incorporated); Sumitomo Corp; and ZTE Corp. We compete primarily on the basis of
delivering solutions, product specifications, quality, price, customer service and delivery time. We believe that we
differentiate ourselves in many of our markets based on our market leadership, global sales channels, intellectual
property, strong reputation with our customer base, the scope of our product offering, the quality and performance of
our solutions and our service and technical support.

Competitive Strengths

We are a global leader in connectivity and essential infrastructure solutions for communications networks, and we
believe we hold leading market positions in our segments. Since our founding in 1976, CommScope has been a
leading brand in connectivity solutions for communications networks. In the wireless industry, Andrew is one of the
world’s most recognized brands and a global leader in RF solutions for wireless networks. In the enterprise market,
SYSTIMAX, NETCONNECT and Uniprise are recognized as global market leaders in enterprise connectivity
solutions for business enterprise and data center applications.

We believe the following competitive strengths have been instrumental to our success and position us well for future
growth and strong financial performance:

Differentiated Solutions Supported by Ongoing Innovation and Significant Proprietary Intellectual Property (IP)

Our integrated solutions for wireless, enterprise, fiber optic and broadband networks are differentiated in the
marketplace and are a significant global competitive advantage. We invested $185 million in research and
development during 2017 and expect to continue with substantial investments in future years. We have also added
significant IP and innovation through acquisitions, such as BNS, which added approximately 7,000 patents and
patent applications worldwide and gave us access to leading fiber technology that will help us better address a
transition to fiber deployments deeper into networks and data centers as consumers and businesses generate
increasing bandwidth requirements; Airvana, which expanded our leadership and capabilities in providing indoor
wireless capacity and coverage; and Argus Technologies (Argus), which enhanced our next-generation base station
antenna technology. Our ongoing innovation, supported by proprietary IP and technology know-how, has allowed us
to sustain this competitive advantage. With these new innovative solutions, we expect to solve more customer
communications challenges, while providing greater opportunities to our business partners.

(cid:120)

Integrated solutions. Our wireless network offerings include complete connectivity solutions supporting
2G, 3G and 4G wireless technologies for both macro and metro, as well as DAS and small cell sites. We
are also developing solutions that support the convergence of wireline and wireless networks in preparation
for 5G. We provide a complete portfolio of integrated RF solutions from the output of the base station (or
baseband processor) at the bottom of the tower to the antenna at the top of the tower. In the enterprise and
data center markets, we deliver a comprehensive solution including connectivity and cables, enclosures and
network intelligence software. In the FTTX market, we offer end-to-end solutions including connectors,
cabling, splice closures and fiber management systems. Our ability to provide integrated connectivity
solutions for wireless, enterprise, fiber optic and broadband networks makes us a value-added solutions
provider to our customers and gives us a significant competitive advantage.

Strong design capabilities and technology know-how. We have a long tradition of developing highly
engineered connectivity solutions, demonstrating superior performance across various generations of
networks. Our ongoing focus on engineering innovation has enabled us to create high quality products that
are reliable, have a desirable form factor and enable our customers to optimize the performance, flexibility,
installation time, energy consumption and space requirements of their network deployments.

Significant proprietary IP. Our proven record of innovation and decades of experience creating market-
leading technology products are evidenced by our approximately 10,000 patents and patent applications, as
well as our approximately 2,400 registered trademarks and trademark applications, worldwide. Our
significant proprietary IP, when combined with our deep engineering expertise, allows us to create industry
defining solutions for customers around the world.

Established Sales Channels and Customer Relationships

We serve customers in over 100 countries and have become a trusted advisor to many of them through our industry
expertise, quality products, leading technology and long-term relationships. These factors enable us to provide
mission-critical connectivity solutions that our customers need to build high-performing communication networks.

Our customers include substantially all of the leading global telecom operators, data center managers, leading cable
television providers or MSOs and thousands of enterprise customers, including many Fortune 500 companies. We
are a key supplier within the wireless infrastructure market and enjoy established sales channels across all
geographies and technologies. Our long-standing relationships with telecommunication operators enable us to work
closely with them in providing highly customized solutions aligned with their technology roadmaps. We have a
global sales force with sales representatives based in North America, Europe, Latin America, Asia and other regions,
and an extensive global network of channel partners including independent distributors, system integrators and
value-added resellers. Our sales force has direct relationships with our customers and end users which generates
demand for our products, with a large portion of our sales fulfilled through channel partners. Our direct sales force
and channel partner relationships give us extensive reach and distribution capabilities to customers globally.

Global Scale, Manufacturing Footprint and Quality

Our global manufacturing and distribution footprint and worldwide sales force give us significant scale within our
addressable markets. We believe our scale, stability and quality make us an attractive strategic partner to our large
global customers, and we have been repeatedly recognized by key customers for these attributes. In addition, our
ability to leverage our core competencies across our business, coupled with our successful track record of
operational efficiencies, has allowed us to improve our margins and cash flows over time while continuing to invest
in research and development and acquisitions targeting new products and markets.

Our manufacturing and distribution facilities are strategically located to optimize service levels and product delivery
times. We also utilize lower-cost geographies for high labor content products and largely automated plants in higher-
cost regions. Over half of our manufacturing employees are in lower-cost geographies such as Mexico, China, India
and the Czech Republic. Our dynamic manufacturing and distribution organization allows us to:

(cid:120) Flex our capacity to meet market demand and expand our market position;

(cid:120) Deliver high-quality customer solutions;

(cid:120) Provide high customer service levels due to proximity to the customer; and

(cid:120) Effectively integrate acquisitions and capitalize on related synergies.

Proven Management Team with Record of Operational Excellence and Successful M&A Integration

We have a strong track record of organically growing market share, establishing leadership positions in new
markets, managing cash flows, delivering profitable growth across multiple economic cycles and integrating large
and small acquisitions. Our senior management team has extensive experience in connectivity solutions for the
communications infrastructure industry.

We have a history of strong operating cash flow and have generated over $1.5 billion in cumulative operating cash
flow over the last three years. Our strong cash flow profile has allowed us to continue to invest in innovative
research and development, pursue strategic acquisitions, repay debt and return cash to stockholders. We
continuously pursue strategic initiatives aimed at optimizing our resources, reducing manufacturing and distribution
costs and lowering our overall cost structure.

Throughout our history, we have successfully complemented our organic growth with strategic acquisitions. We
have substantially completed the BNS business integration and we have delivered substantial synergies, completed
significant system integrations and re-organized the business. Our management team has effectively integrated other
large acquisitions, such as Andrew Corporation in 2007 and Avaya Connectivity Solutions in 2004. We have also
executed tuck-in acquisitions, such as Cable Exchange, Airvana, Argus and Alifabs, to help expand our market
opportunities and continue to solve our customers’ business challenges in multiple growth areas. We have also made
strategic minority investments in order to gain access to key technologies or capabilities.

Raw Materials

Our products are manufactured or assembled from both standard components and parts that are unique to our
specifications. Our internal manufacturing operations are largely process oriented and we use significant quantities
of various raw materials, including aluminum, bimetals, brass, copper, plastics and other polymers, optical fiber and
steel, among others. We use significant volumes of copper, aluminum, steel and polymers in manufacturing coaxial
and twisted pair cables and antennas. Other parts are produced using processes such as stamping, machining,
molding and pressing from metals or plastics. Portions of the requirements for these materials are purchased under
supply arrangements where some portion of the unit pricing may be indexed to commodity market prices for these
metals. We may occasionally enter forward purchase commitments or otherwise secure availability for specific
commodities to mitigate our exposure to price changes for a portion of our anticipated purchases. Certain of the raw
materials utilized in our products may only be available from a few suppliers, and we may enter into longer term
agreements to secure access to certain key inputs. We may, therefore, encounter availability issues and/or significant
price increases.

Our profitability may be materially affected by changes in the market price of our raw materials, most of which are
linked to the commodity markets. Prices for aluminum, copper, plastics and certain other polymers derived from oil
and natural gas have fluctuated substantially during the past several years. We have adjusted our prices for certain
products and may have to adjust prices again. Delays in implementing price increases, failure to achieve market
acceptance of price increases, or price reductions in response to a rapid decline in raw material costs, could have a
material adverse impact on the results of our operations.

In addition, some of our products are assembled from specialized components and subassemblies manufactured by
suppliers. We depend upon sole suppliers for certain key components for some of our products. If these sources
could not provide these components in sufficient quantity and quality on a timely and cost efficient basis, it could
materially impact our results of operations until another qualified supplier is found. We believe that our supply
contracts and our supplier contingency plans mitigate some of this risk.

Environment

Employees

As of December 31, 2017 we had a team of over 20,000 people to serve our customers worldwide. The majority of
our employees are located outside of the United States. As a matter of policy, we seek to maintain good relations
with our employees at all locations. We are not subject to any collective bargaining agreements in the United States.
A significant portion of our international employees are members of unions or subject to workers’ councils or
similar statutory arrangements. From a companywide perspective, we believe that our relations with our employees
and unions or workers’ councils are satisfactory, though we have experienced challenges in certain countries and
may encounter more such challenges. Historically, periods of labor unrest or work stoppage have not had a material
impact on our operations or results.

Available Information

Our website (www.commscope.com) contains frequently updated information about us and our operations. Our
filings with the Securities and Exchange Commission (SEC) on Form 10-K, Form 10-Q, Form 8-K and Proxy
Statements and all amendments to those reports can be viewed and downloaded free of charge as soon as reasonably
practicable after the reports and amendments are electronically filed with or furnished to the SEC by accessing
www.commscope.com and clicking on Company, Investor Relations, Financial Information and then clicking on
SEC Filings. The information contained on or incorporated by reference to our website is not a part of this Annual
Report on Form 10-K.

SEC Certifications

The certifications by the Chief Executive Officer and Chief Financial Officer of the Company, required under
Section 302 of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act), have been filed as exhibits to this Annual
Report on Form 10-K.

ITEM 1A.

RISK FACTORS

The following is a cautionary discussion of risks, uncertainties and assumptions that we believe are significant to
our business. In addition to the factors discussed elsewhere in this Annual Report on Form 10-K, the following are
some of the important factors that, individually or in the aggregate, we believe could make our results differ
materially from those described in any forward-looking statements. It is impossible to predict or identify all such
factors and, as a result, you should not consider the following factors to be a complete discussion of risks,
uncertainties and assumptions.

Competitive Risks

Our business is dependent on capital spending for data and communication networks, and reductions in such
capital spending could adversely affect our business.

Our performance is dependent on capital spending for constructing, rebuilding, maintaining or upgrading data and
communication networks, which can be volatile and difficult to forecast. Capital spending in the communications
industry is cyclical and can be curtailed or deferred on short notice. A variety of factors affect the timing and amount
of capital spending in the communications industry including: competing technologies; general economic
conditions; seasonality of outside deployments; timing and adoption of the global rollout of new technologies;
customer specific financial or general market conditions; changes in customer preferences or requirements;
availability and cost of capital; governmental regulation; demands for network services; competitive pressures,
including pricing pressures; acceptance of new services offered by our customers; industry consolidation; and real or
perceived trends or uncertainties in these factors. As a result of these factors, we may not be able to maintain or
increase our sales in the future, and our business, financial condition, results of operations and cash flows could be
materially and adversely affected.

A substantial portion of our business is derived from a limited number of key customers and channel partners.

Our customer base includes direct customers, original equipment manufacturers (OEMs) and channel partners,
which include distributors, system integrators and value-added resellers. We derived 24% of our 2017 consolidated
net sales from our top three customers. Our largest customer, Anixter International Inc., accounted for 11% of our
2017 consolidated net sales. The concentration of our net sales among these key customers subjects us to a variety of
risks including:

(cid:120)

lower sales resulting from the loss of one or more of our key customers;

less efficient operations resulting in higher costs from an inability to accurately forecast and plan for
volatile spending patterns of key customers;

renegotiations of agreements with key customers resulting in materially less favorable terms;

financial difficulties experienced by one or more of our key customers, resulting in reduced
purchases of our products and/or delays or difficulties in collecting accounts receivable balances;
and

reductions in inventory levels held by channel partners and OEMs, which may be unrelated to
purchasing trends by end customers.

We face competitive pressures with respect to all of our major product groups.

Competition in our industry depends on a number of factors, including innovative product and service solution
offerings, the ability to adapt to changing markets and customer requirements, quality and timing of the introduction
of new products and services, customer service, pricing, and speed of delivery. In each of our major product groups,
we compete with a substantial number of foreign and domestic companies, some of which have greater financial,
technical, marketing and other resources or lower operating costs. They may also have broader product lines and
market focus. This gives many of these enterprises a competitive advantage to withstand any significant reduction in
capital spending by customers in our markets over the long term. Further, our industry is consolidating, and the
combination of any of our competitors could further increase these advantages and result in competitors with
broader market presence.

Some competitors may also be able to bundle their products and services together to meet the needs of a particular
customer and may be capable of delivering more complete solutions than we are able to provide which may cause us
to lose sales opportunities and revenue. Competitors’ actions, such as price reductions or the introduction of new
innovative products and services, and the use of exclusively price driven auctions by customers have caused lost
sales opportunities in the past and may cause us to lose sales opportunities in the future. The rapid technological
changes occurring in the communications industry could also lead to the entry of new competitors against whom we
may not be able to compete successfully. In addition, if any of our competitors’ products or technologies were to
become the industry standard, our business would be negatively affected. Changes in trade policies could decrease
the price competitiveness of our products and/or increase our operating costs. Specifically, the renegotiation or
cancellation of free trade agreements with countries in which we operate internationally, including the North
American Free Trade Agreement, could negatively impact us.

We cannot assure you that we will continue to compete successfully with our existing competitors or with new
competitors. If we are unable to compete in any of our markets at the same level as we have in the past or are forced
to reduce the prices of our products in order to continue to be competitive, our operating results, financial condition
and cash flows could be materially and adversely affected.

Changes to the regulatory environment in which our customers operate may negatively impact our business.

The telecommunications and cable television industries are subject to significant and changing federal and state
regulation, both in the United States (U.S.) and other countries. We have benefited from government programs that
encourage spending on initiatives that utilize our products. Changes to the way in which internet service providers
are regulated, changes in government programs in our industry or uncertainty regarding future changes could
adversely impact our customers’ decisions regarding capital spending, which could decrease demand for our
products.

Operational Risks

Our future success depends on our ability to anticipate and adapt to changes in technology and customer
preferences and develop, implement and market innovative solutions.

Many of our markets are characterized by advances in information processing and communications capabilities that
require increased transmission speeds and greater bandwidth. These advances require significant investments in
research and development in order to improve the capabilities of our products and services and develop new
offerings or solutions that will meet the needs of our customers. There can be no assurance that our investments in
research and development will yield marketable product innovations.

We may not be successful in our ongoing innovation efforts if, among other things, our products and services are not
cost effective; brought to market in a timely manner; compliant with evolving industry standards; accepted in the
market; or recognized as meeting customer requirements. We could experience a material adverse effect on our
results of operations and financial condition if we are not successful in our ongoing innovation efforts.

We must also anticipate and respond to customer preferences by developing processes to understand trends and
expanding investment in our digital platform. Failure to continually respond to changing customer preferences,
maintain a positive customer experience or maintain an adequate digital platform could have a material adverse
impact on our business through lost sales opportunities.

As our products become more complex and customer preferences continue to change, we may encounter difficulties
in meeting customer performance, service and delivery expectations, which could have a material adverse effect on
our results of operations, financial condition and cash flows.

If we do not stay current with product life cycle developments, our business may suffer.

A significant portion of our revenues is dependent on the commercial deployment of technologies based on 3G and
4G wireless communications equipment and products. If we are not able to support our customers in an effective and
cost-efficient manner as they advance from older generation networks or as they expand the capacity of their
networks, our business will suffer. If we do not have competitively priced, market-accepted products available to
meet our customers’ planned roll-out of 5G wireless communications systems, we may miss a significant
opportunity and our business, financial condition and results of operations could be materially and adversely
affected.

In addition, a significant portion of our revenue is dependent on the copper enterprise business. We could experience
unfavorable financial impacts if this business erodes at a rate faster than our current forecasts and we are unable to
gain market acceptance of new or replacement fiber-based solutions for our customers.

If our products, including material purchased from our suppliers, or service offerings have quality or
performance issues, our business may suffer.

Our business depends on delivering products and services of consistently high quality. Many of our solutions are
highly complex and testing procedures used by us and our customers are limited to evaluating them under likely and
foreseeable failure scenarios. For various reasons, once deployed, our products may fail to perform as expected.
Performance issues could result from faulty design, defective raw materials or components purchased from
suppliers, problems in manufacturing or installation errors. We have experienced such performance issues in the past
and remain exposed to such performance issues in the future. In some cases, recall of some or all affected products,
product redesigns or additional capital expenditures may be required to correct a defect. In addition, we generally
offer warranties on most products, the terms and conditions of which depend upon the product subject to the
warranty. In some cases, we indemnify our customers against damages or losses that might arise from certain claims
relating to our products and services. Future claims may have a material adverse effect on our business, financial
condition, results of operations and cash flows. Any significant or systemic product or service failure could also
result in lost future sales as well as reputational damage.

Our business depends on effective management information systems.

We rely on effective management information systems for critical business operations, to support strategic business
decisions and to maintain a competitive edge in the marketplace. We rely on our enterprise resource planning
systems to support such critical business operations as processing sales orders and invoicing; manufacturing;
shipping; inventory control; purchasing and supply chain management; human resources; and financial reporting.
We also rely on management information systems to produce information for business decision-making and
planning and to support e-commerce activities. Failure to maintain an adequate digital platform to support e-
commerce activities could have a material adverse impact on our business through lost sales opportunities.

If we are unable to maintain our management information systems, including our IT infrastructure, to support
critical business operations and to produce information for business decision-making activities, we could experience
a material adverse impact on our business or an inability to timely and accurately report our financial results.

Cyber-security incidents, including data security breaches, ransomware or computer viruses, could harm our
business by exposing us to various liabilities, disrupting our delivery of products and services and damaging our
reputation.

We rely extensively on our management information technology systems and those of third parties to operate our
business and store proprietary information about our products and intellectual property. Additionally, we and others
on our behalf store “personally identifiable information” with respect to employees, vendors, customers and others.
As the recent rise in cyber-security incidents around the world indicates, all management information technology
systems are vulnerable. Despite the security controls we have in place, our facilities, systems and procedures, and
those of our third-party service providers, are at risk to security breaches, acts of vandalism, ransomware, software
viruses, misplaced or lost data, programming and/or human errors or other similar events. In particular, unauthorized
access to our computer systems or stored data could result in the theft or improper disclosure of proprietary,
confidential or sensitive information, the deletion or modification of records or interruptions in our operations. Any
such events could subject us to civil and criminal penalties; expose us to liabilities to our customers, employees,
vendors, third parties or governmental authorities; allow others to unfairly compete with us; disrupt our delivery of
products and services; and have a negative impact on our reputation, all of which could have a material adverse
effect on our business, financial condition, results of operations and cash flows.

There has been an increase in the adoption of laws and regulations in the U.S., Europe and elsewhere imposing
requirements for the handling of personal data, as well as requirements for remediation actions and financial
penalties for noncompliance. In particular, we will be subject to the European Union’s General Data Protection
Regulation (GDPR), which is scheduled to go into effect in May 2018. While we expect to be fully compliant, our
efforts are also dependent on third parties and we may be unable to ensure full compliance. We employ a variety of
security breach countermeasures and security controls that we believe will achieve compliance, but we cannot
guarantee that all breach attempts can be successfully thwarted by these measures as the sophistication of attacks
increases. Noncompliance with laws and regulations related to cyber-security breaches could have an adverse effect
on our business, financial condition, results of operations and cash flows.

If our integrated global manufacturing operations suffer production or shipping delays, we may have difficulty
meeting customer demands.

Disruption of our ability to produce at or distribute from our facilities due to failure of our manufacturing
infrastructure, information technology outage, labor disturbances, fire, electrical outage, natural disaster, acts of
violence or terrorism, shipping interruptions or some other catastrophic event could adversely affect our ability to
manufacture products at our other manufacturing facilities in a cost-effective and timely manner, which could have a
material adverse effect on our business, financial condition, results of operations and cash flows.

Capacity constraints with respect to our internal facilities and/or existing or new contract manufacturers could
have an adverse impact on our business.

We internally produce, both domestically and internationally, a portion of the components used in our finished
products. We also rely on unaffiliated contract manufacturers, both domestically and internationally, to produce
certain products or key components of products. If we do not have sufficient production capacity, either through our
internal facilities or independent contract manufacturers, or if we cannot ramp up capacity for complex products fast
enough to meet customer demand, we may experience lost sales opportunities, lost market share and customer
relations problems, which could have a material adverse effect on our business, financial condition, results of
operations and cash flows.

Supply Chain Risks

Our dependence on commodities subjects us to cost volatility and potential availability constraints.

Our profitability may be materially affected by changes in the market price and availability of certain raw materials,
most of which are linked to the commodity markets. The principal raw materials and components we purchase are
made of metals such as copper, steel, aluminum or brass; plastics and other polymers; and optical fiber. Fabricated
copper, steel and aluminum are used in the production of coaxial and twisted pair cables and polymers are used to
insulate and protect cables. Prices for copper, steel, aluminum, fluoropolymers and certain other polymers derived
from oil and natural gas have experienced significant volatility as a result of changes in the levels of global demand,
supply disruptions and other factors. As a result, we have adjusted our prices for certain products and may have to
adjust prices again in the future. Delays in implementing price increases or a failure to achieve market acceptance of
price increases has in the past and could in the future have a material adverse impact on our results of operations. In
an environment of falling commodities prices, we may be unable to sell higher-cost inventory before implementing
price decreases, which could have a material adverse impact on our business, financial condition and results of
operations.

We are dependent on a limited number of key suppliers for certain raw materials and components.

We are dependent on a limited number of key suppliers for certain of our raw material and component purchases,
including certain polymers, copper rod, copper and aluminum tapes, fine aluminum wire, steel wire, optical fiber,
circuit boards and other electronic components.

Our key suppliers have experienced in the past, and could experience in the future, production, operational or
financial difficulties, or there may be global shortages of certain raw materials or components we use. Our inability
to find sufficient sources of supply on reasonable terms could impact our ability to manufacture products in a cost-
effective manner, which could have a material adverse effect on our gross margin and results of operations.

We also source many of our components from international markets. Any changes in the laws and policies of the
U.S. or other countries affecting trade is a risk to us. To the extent there are unfavorable changes imposed by the
U.S. or other countries and/or retaliatory actions taken by trading partners, such as the addition of new tariffs or
trade restrictions, we may experience material adverse impacts on earnings.

If our contract manufacturers encounter production, quality, financial or other difficulties, we may experience
difficulty in meeting customer demands.

We rely on unaffiliated contract manufacturers, both domestically and internationally, to produce certain products or
key components of products. If these contract manufacturers encounter production, quality, financial or other
difficulties, including labor disturbances or geopolitical instability, and if acceptable alternative suppliers cannot be
identified, we may encounter difficulty in meeting customer demands. Any such difficulties could have a material
adverse effect on our business, financial results, results of operations and cash flows.

Strategic Risks

We may not fully realize anticipated benefits from past or future acquisitions or investments in other companies.

We have completed a number of acquisitions and invested in other companies over recent years, including most
significantly, the BNS business acquisition from TE Connectivity in 2015. There are significant challenges to
integrating an acquired operation into our business, including, but not limited to: successfully managing the
operations, manufacturing facilities and technology; integrating the sales organizations; maintaining and increasing
the customer base; retaining key employees, suppliers and distributors; integrating management information
systems, including enterprise resource planning systems; integrating inventory management and accounting
activities; integrating research and development activities; and addressing operating losses that may exist related to
individual markets, facilities or product lines. Although we expect to realize strategic, operational and financial
benefits as a result of past or future acquisitions and investments, we cannot predict or guarantee whether and to
what extent anticipated cost savings, synergies and growth prospects will be achieved.

We anticipate that a portion of any future growth of our business may be accomplished by acquiring existing
businesses, products or technologies. However, we may not be able to identify suitable acquisition opportunities or
obtain any necessary financing on acceptable terms. We may spend time and money investigating and negotiating
with potential acquisition or investment targets but not complete the transaction.

Any future acquisition could involve other risks, including the assumption of additional liabilities and expenses,
issuances of debt, incurrence of transaction and integration costs and diversion of management’s attention from
other business concerns, and such acquisition may be dilutive to our financial results.

We may sell or discontinue one or more of our product lines, as a result of our evaluation of our products and
markets.

We periodically evaluate our various product lines and may consider the divestiture or discontinuance of one or
more of those product lines. Any such divestiture or discontinuance could adversely affect our results of operations,
cash flows and financial position.

Divestitures of product lines have inherent risks, including the expense of selling the product line; the possibility
that any anticipated sale will not occur; possible delays in closing any sale; the risk of lower-than-expected proceeds
from the sale of the divested business; unexpected costs associated with the separation of the business to be sold
from our management information and other operating systems; potential post-closing claims for indemnification;
and potential loss of customers. Expected cost savings may also be difficult to achieve or maximize due to a fixed
cost structure, and we may experience varying success in the timely reduction of fixed costs or transferring of
liabilities previously associated with the divested or discontinued business.

Difficulties may be encountered in the realignment of manufacturing capacity and capabilities among our global
manufacturing facilities that could adversely affect our ability to meet customer demand for our products.

We periodically realign manufacturing capacity among our global facilities in order to reduce costs by improving
manufacturing efficiency and to strengthen our long-term competitive position. The implementation of these
initiatives may include significant shifts of production capacity among facilities.

There are significant risks inherent in the implementation of these initiatives, including our failure to ensure the
following: there is adequate inventory on hand or production capacity to meet customer demand while capacity is
being shifted among facilities; there is no decrease in product quality as a result of shifting capacity; adequate raw
material and other service providers are available to meet the needs at the new production locations; equipment can
be successfully removed, transported and re-installed; and adequate supervisory, production and support personnel
are available to accommodate the shifted production.

In the event manufacturing realignment initiatives are not successfully implemented, we could experience lost future
sales and increased operating costs as well as customer relations problems, any of which could have a material
adverse effect on our business, financial condition, results of operations and cash flows.

We may need to undertake additional restructuring actions in the future.

We have previously recognized restructuring charges in response to slowdowns in demand for our products and in
conjunction with implementation of initiatives to reduce costs and improve efficiency of our operations. Most
recently, we have undertaken a number of initiatives to support the BNS integration which included the closure of
certain domestic and international manufacturing facilities and various other workforce reductions. As a result of
changes in business conditions and other developments, we may need to initiate additional restructuring actions that
could result in workforce reductions and restructuring charges, which could be material.

Financial Risks

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations,
limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of
our variable rate debt and prevent us from meeting our obligations with respect to our indebtedness.

As of December 31, 2017, we had approximately $4.4 billion of indebtedness on a consolidated basis. See Note 6 in
the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for
additional details of our indebtedness. We had no outstanding loans under our revolving credit facility and
approximately $425.4 million in borrowing capacity. Our ability to borrow under our revolving credit facility
depends, in part, on inventory, accounts receivable and other assets that fluctuate from time to time and may further
depend on lenders’ discretionary ability to impose reserves and availability blocks.

Our substantial indebtedness could have important consequences. For example, it could:

(cid:120)

limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions,
general corporate purposes or other purposes;

require us to dedicate a substantial portion of our annual cash flow for the next several years to the
payment of interest on our indebtedness;

expose us to the risk of increased interest rates as the interest cost on a significant portion of our
indebtedness is subject to changes in interest rates;

place us at a competitive disadvantage compared to certain of our competitors who have less debt;

hinder our ability to adjust rapidly to changing market conditions;

limit our ability to secure adequate bank financing in the future with reasonable terms and
conditions; and

increase our vulnerability to and limit our flexibility in planning for, or reacting to, a potential
downturn in general economic conditions or in one or more of our businesses.

In addition, the indentures and credit agreements governing our indebtedness contain affirmative and negative
covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to
comply with those covenants could result in an event of default which, if not cured or waived, could result in the
acceleration of all of our debts.

Despite current indebtedness levels and restrictive covenants, we may incur additional indebtedness that could
further exacerbate the risks associated with our substantial financial leverage.

We may incur significant additional indebtedness in the future under the agreements governing our indebtedness.
Although the indentures and the credit agreements governing our indebtedness contain restrictions on the incurrence
of additional indebtedness, these restrictions are subject to a number of thresholds, qualifications and exceptions,
and the additional indebtedness incurred in compliance with these restrictions could be substantial. Additionally,
these restrictions permit us to incur obligations that, although preferential to our common stock in terms of payment,
do not constitute indebtedness.

In addition, if new debt is added or we buy back stock or pay dividends, the risks we face as a result of our leverage
would increase.

To service our indebtedness, we will require a significant amount of cash and our ability to generate cash
depends on many factors beyond our control.

Our operations are conducted through our global subsidiaries and our ability to make cash payments on our
indebtedness will depend on the earnings and the distribution of funds from our subsidiaries. Certain of our
subsidiaries may have limitations or restrictions on paying dividends and otherwise transferring assets to us. Our
ability to make cash payments on and to refinance our indebtedness will depend upon our financial condition and
operating performance, which are subject to prevailing economic and competitive conditions and to financial,
business, legislative, regulatory and other factors beyond our control. We might not be able to maintain a level of
cash flows from operating activities or transfer sufficient funds from our subsidiaries to permit us to pay the
principal, premium, if any, and interest on our indebtedness.

If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required
payments of principal, premium, if any, and interest on our indebtedness or if we fail to comply with the various
covenants in the instruments governing our indebtedness and we are unable to obtain waivers from the required
lenders, we could be in default under the terms of the agreements governing such indebtedness. In the event of such
default, the holders of our indebtedness could elect to declare all the funds borrowed to be due and payable, together
with accrued and unpaid interest. The lenders under our revolving credit facility could elect to terminate their
commitments, cease making further loans and institute foreclosure proceedings against our assets. As a result, we
could be forced into bankruptcy or liquidation.

We may need to recognize additional impairment charges related to goodwill, identified intangible assets and
fixed assets.

We have substantial balances of goodwill and identified intangible assets. We are required to test goodwill for
possible impairment on the same date each year and on an interim basis if there are indicators of a possible
impairment. We are also required to evaluate identified intangible assets and fixed assets for impairment if there are
indicators of a possible impairment.

In the past, due to revisions in financial performance outlooks or deterioration in certain markets, we have
recognized significant impairment charges on our goodwill, identified intangible assets and fixed assets. In the
future, we may determine, again, that one or more of our long-lived assets is impaired and additional impairment
charges may be recognized that could have a material adverse effect on our financial condition and results of
operations.

We may experience significant variability in our quarterly or annual effective income tax rate.

We have a large and complex international tax profile and a significant level of foreign tax credit carryforwards in
the U.S. and other carryforwards in various jurisdictions. Variability in the mix and profitability of domestic and
international activities, identification and resolution of various tax uncertainties and the inability to realize foreign
tax credits and other carryforwards included in deferred tax assets, among other matters, have impacted our effective
income tax rate in the past and may impact our effective income tax rate in the future. The U.S. tax legislation
enacted in late 2017 is complex and subject to future interpretation and regulations. Determining the ultimate impact
on us will take time and require management judgment. In addition to the U.S. legislation, tax law changes in certain
other countries have also impacted our effective income tax rate in the past and may impact our effective tax rate in
the future. A significant increase in our quarterly or annual effective income tax rate could have a material adverse
impact on our results of operations.

We are commonly audited by various tax authorities, and some jurisdictions, both in the U.S. and abroad, have
become more aggressive in their approach to audits and their enforcement of their applicable tax laws. In the
ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is
uncertain. Significant judgment is required in determining our worldwide provision for income taxes. Although we
believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be
materially different from our historical income tax provisions and accruals. The results of an audit or litigation could
have a material effect on our financial statements in the period or periods for which that determination is made and
on our overall effective income tax rate.

Labor Related Risks

We may not be able to attract and retain key employees.

Our business depends upon our continued ability to hire and retain key employees. Effective succession planning is
important to our long-term success. We depend on our senior management team and other key employees for
strategic success. Some of our key employees have retired, announced their decision to retire or are at or near
retirement age. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees
could hinder our strategic planning and execution.

Key employees include individuals in our sales force, operations management, engineers and skilled production
workers at our operations around the world. Competition for skilled personnel and highly qualified managers in the
industries in which we operate is intense. Our growth by acquisitions creates challenges in retaining employees. As
the corporate culture evolves to incorporate new workforces, some employees may not find the new culture
appealing. In addition, the pace of integration may cause retention issues with our workforce due to integration
fatigue. Difficulties in obtaining or retaining employees with the necessary management, technical and financial
skills needed to achieve our business objectives may have a material adverse effect on our business, financial
condition and results of operations.

As our workforce ages, we are challenged to find and attract a younger population to replace them. Younger
generations are motivated by progression and opportunity which may be limited by our current employee
population. Our growth potential may be limited if we fail to attract and retain competent employees or we are
unable to sustain necessary employment levels long-term.

Labor unrest could have a material adverse effect on our business, results of operations and financial condition.

While none of our U.S. employees are represented by unions, a significant part of our international employees are
members of unions or subject to workers’ councils or similar statutory arrangements. In addition, many of our direct
and indirect customers and vendors have unionized workforces. Strikes, work stoppages or slowdowns experienced
by us at our international locations or experienced by our customers or vendors could have a negative impact on us.
Organizations responsible for shipping our products may also be impacted by labor disruptions. Any interruption in
the delivery of our products could harm our reputation with our customers, reduce demand for our products, increase
costs and have a material adverse effect on us.

We have obligations under our defined benefit employee benefit plans and may be required to make plan
contributions in excess of current estimates.

At December 31, 2017, our net liability for pension and other postretirement benefits was $15.8 million (benefit
obligations of $403.3 million and plan assets of $387.5 million). See Note 10 in the Notes to the Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K. Significant declines in the valuation
of the assets and/or increases in the liabilities related to these obligations as a result of changes in actuarial
estimates, asset performance, interest rates or benefit changes, among other assumptions, could have a material
adverse impact on our financial position and/or results of operations.

The amounts and timing of the contributions we expect to make to our defined benefit plans reflect a number of
actuarial estimates and other assumptions. The actual amounts and timing of these contributions may differ
materially from those presented in this Annual Report on Form 10-K. If we elect to terminate one or more of these
plans and settle the obligation through the purchase of annuities, we could incur a charge and/or be required to make
additional contributions and such amounts could be material.

International Risks

Our significant international operations expose us to economic, political and other risks.

We have significant international sales, manufacturing and distribution operations. Our major international
manufacturing and/or distribution facilities are located in Australia, Belgium, China, the Czech Republic, Germany,
India, Ireland, Mexico, Singapore and the United Kingdom (U.K.). For the years ended December 31, 2017, 2016
and 2015, international sales represented approximately 46%, 46% and 51%, respectively, of our consolidated net
sales. In general, our international sales have lower gross margin percentages than our domestic sales. To the extent
international sales represent a greater percentage of our revenue, our overall gross margin percentages may decline.

Our international sales, manufacturing and distribution operations are subject to the risks inherent in operating
abroad, including, but not limited to, risks with respect to currency exchange rate fluctuations; economic and
political destabilization; restrictive actions by foreign governments; wage inflation; nationalizations; the laws and
policies of the U.S affecting trade, anti-bribery, foreign investment and loans; foreign tax laws, including the ability
to recover amounts paid as value-added and similar taxes; potential restrictions on the repatriation of cash; reduced
protection of intellectual property; longer customer payment cycles; compliance with local laws and regulations;
armed conflict; regional violence; terrorism; shipping interruptions; and major health concerns (such as infectious
diseases). A significant portion of our products sold in the U.S. are manufactured outside the U.S. We utilize lower-
cost geographies for high labor content products while investing in largely automated plants in higher-cost regions
close to customers. Most of our manufacturing employees are located in lower-cost geographies such as Mexico,
China, India and the Czech Republic. To the extent there are changes in U.S. trade policies, such as significant
increases in tariffs or duties for goods brought into the U.S., our competitive position may be adversely impacted
and the resulting effect on our earnings could be material.

Risks related to fluctuations in foreign currency rates can impact our sales, results of operations, cash flows and
financial position. Our foreign currency risk exposure is mainly concentrated in Chinese yuan, euro, Czech koruna,
Australian dollar, Indian rupee, Mexican peso and British pound. We manage our foreign currency rate risks through
regular operating and financing activities and periodically use derivative financial instruments such as foreign
exchange forward contracts. There can be no assurance that our risk management strategies will be effective or that
the counterparties to our derivative contracts will be able to perform. In addition, foreign currency rates in many of
the countries in which we operate have at times been extremely volatile and unpredictable. We may choose not to
hedge or determine we are unable to effectively hedge the risks associated with this volatility. In such cases, we may
experience declines in sales and adverse impacts on earnings and such changes could be material.

Our international operations expose us to increased challenges in complying with anti-corruption laws and
regulations of the U.S. government and various other international jurisdictions.

We are required to comply with the laws and regulations of the U.S. government and various other international
jurisdictions, and our failure to comply with these rules and regulations may expose us to significant liabilities.
These laws and regulations may apply to companies, individual directors, officers, employees and agents, and may
restrict our operations, trade practices, investment decisions and partnering activities. In particular, we are subject to
U.S. and foreign anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices Act (FCPA) and
the UK Anti-Bribery Act. Violations of these legal requirements are punishable by criminal fines and imprisonment,
civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial
measures. We have established policies and procedures designed to assist us and our personnel in complying with
applicable U.S. and international laws and regulations. However, our employees, subcontractors or channel partners
could take actions that violate these requirements. In addition, some of the international jurisdictions in which we
operate have elevated levels of corruption. As a result, we are exposed to an increased risk of violating anti-
corruption laws. Violation of anti-corruption laws could adversely affect our reputation, business, financial
condition, results of operations and cash flows and such effects could be material.

We are subject to governmental export and import controls that could subject us to liability or impair our ability
to compete in international markets.

Certain of our products, including purchased components of such products, are subject to export controls and may be
exported only with the required export license or through an export license exception. In addition, we are required to
comply with certain U.S. and foreign sanctions and embargos. If we were to fail to comply with applicable export
licensing, customs regulations, economic sanctions and other laws, we could be subject to substantial civil and
criminal penalties, including fines for us, the incarceration of responsible employees and managers, and the possible
loss of export or import privileges. In addition, if our distributors fail to obtain appropriate import, export or re-
export licenses or permits, we may also be adversely affected through reputational harm and penalties. Obtaining the
necessary export license for a particular sale may be time-consuming and may result in the delay or loss of sales
opportunities. Furthermore, export control laws and economic sanctions prohibit the shipment of certain products to
embargoed or sanctioned countries, governments and persons. While we train our employees to comply with these
regulations, we cannot assure that a violation will not occur, whether knowingly or inadvertently. Any such
shipment could have negative consequences including government investigations, penalties, fines, civil and criminal
sanctions, and reputational harm. Any change in export or import regulations, economic sanctions or related
legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments,
persons or technologies targeted by such regulations, could result in our decreased ability to export or sell our
products to existing or potential customers with international operations. Any decreased use of our products or
limitation on our ability to export or sell our products could adversely affect our business, financial condition, results
of operations and cash flows and such effects could be material.

Litigation and Regulatory Risks

We may incur costs and may not be successful in protecting our intellectual property and in defending claims
that we are infringing on the intellectual property of others.

We may encounter difficulties and significant costs in protecting our intellectual property rights or obtaining rights
to additional intellectual property to permit us to continue or expand our business. Other companies, including some
of our largest competitors, hold intellectual property rights in our industry and the intellectual property rights of
others could inhibit our ability to introduce new products unless we secure necessary licenses on commercially
reasonable terms.

In the past, we have initiated litigation in order to enforce patents issued or licensed to us or to determine the scope
and/or validity of a third party’s patent or other proprietary rights and we may initiate similar litigation in the future.
We also have been and may in the future be subject to lawsuits by third parties seeking to enforce their own
intellectual property rights, including against certain of the products or intellectual property that we have acquired
through acquisitions. Any such litigation, regardless of outcome, could be costly and could subject us to significant
liabilities or require us to cease using proprietary third party technology and, consequently, could have a material
adverse effect on our results of operations, financial condition and cash flows. Such litigation can also be a
significant distraction to management.

In certain markets, we may be required to address counterfeit versions of our products. We may incur significant
costs in pursuing the originators of such counterfeit products and, if we are unsuccessful in eliminating them from
the market, we may experience a reduction in the value of our products and/or a reduction in our net sales.

Compliance with current and future environmental laws and potential environmental liabilities may have a
material adverse impact on our business, financial condition and results of operations.

We are subject to various federal, state, local and foreign environmental laws and regulations governing, among
other things, discharges to air and water, management of regulated materials, handling and disposal of solid and
hazardous waste, and investigation and remediation of contaminated sites. In addition, we are subject to laws and
regulations regarding the types of substances allowable in certain of our products and the handling of our products at
the end of their useful life. Because of the nature of our business, we have incurred and will continue to incur costs
relating to compliance with or liability under these environmental laws and regulations and these costs could be
material. In addition, new laws and regulations, new or different interpretations of existing laws and regulations, the
discovery of previously unknown contamination or the imposition of new remediation or discharge requirements,
could require us to incur costs or become the basis for new or increased liabilities that could have a material adverse
effect on our financial condition.

Efforts to regulate emissions of greenhouse gases (GHGs), such as carbon dioxide, are underway in the U.S. and
other countries which could increase the cost of raw materials, production processes and transportation of our
products. If we are unable to comply with such regulations or sufficiently increase prices or otherwise reduce costs
to offset the increased costs of compliance, GHG regulation could have a material adverse effect on our business,
financial condition, results of operations and cash flow.

Certain environmental laws impose strict and in some circumstances joint and several liability on current or former
owners or operators of a contaminated property, as well as companies that generated, disposed of or arranged for the
disposal of hazardous substances at a contaminated property, for the costs of investigation and remediation of the
contaminated property. Our present and past facilities have been in operation for many years and over that time, in
the course of those operations, hazardous substances and wastes have been used, generated and occasionally
disposed of at such facilities, and we have disposed of waste products either directly or through third parties at
numerous disposal sites. Consequently, it has been necessary to undertake investigation and remediation projects at
certain sites and we have been and may in the future be held responsible for a portion of the investigation and clean-
up costs at these sites and our share of those costs may be material.

Stockholder Equity Risks

We do not intend to pay dividends on our common stock and, consequently, the ability of investors to achieve a
return on their investment will depend on appreciation in the price of our common stock.

We do not intend to declare and pay dividends on our common stock for the foreseeable future. The payment of
future dividends will be at the discretion of our Board of Directors; however, the indentures and the credit
agreements governing our indebtedness place limitations on our ability to pay dividends. We currently intend to
invest our future earnings, if any, to fund our growth and reduce our debt and our Board of Directors may choose to
provide returns to our stockholders through share repurchases. The success of an investment in our common stock
will largely depend upon future appreciation in value, and there can be no guarantee that our common stock will
appreciate in value.

Provisions of our certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a
change of control of our company or changes in our management and, as a result, depress the trading price of
our common stock.

Our certificate of incorporation and bylaws contain provisions that could discourage, delay or prevent a change in
control of our company or changes in our management that the stockholders of our company may deem
advantageous. These provisions:

(cid:120)

authorize 1,300,000,000 shares of common stock, which, to the extent unissued, could be issued by
the Board of Directors, without stockholder approval, to increase the number of outstanding shares
and to discourage a takeover attempt;

authorize the issuance, without stockholder approval, of blank check preferred stock that our Board
of Directors could issue to increase the number of outstanding shares and to discourage a takeover
attempt;

(cid:120)

grant to the Board of Directors the sole power to set the number of directors and to fill any vacancy
on the Board of Directors;

limit the ability of stockholders to remove directors only “for cause” and require any such removal to
be approved by holders of at least three-quarters of the outstanding shares of common stock;

prohibit our stockholders from calling a special meeting of stockholders;

prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a
meeting of our stockholders;

provide that the Board of Directors is expressly authorized to adopt, or to alter or repeal our bylaws;
establish advance notice and certain information requirements for nominations for election to our
Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder
meetings;

establish a classified Board of Directors, with three staggered terms; and

require the approval of holders of at least three-quarters of the outstanding shares of common stock
to amend the bylaws and certain provisions of the certificate of incorporation.

These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our
company and may prevent our stockholders from receiving the benefit from any premium to the market price of our
common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of
these provisions may adversely affect the prevailing market price of our common stock if the provisions are viewed
as discouraging takeover attempts in the future. These provisions could also discourage proxy contests and make it
more difficult for our stockholders to elect directors of their choosing and cause us to take corporate actions other
than those our stockholders may desire.

Our business could be negatively impacted as a result of actions by activist stockholders or others.

Stockholder activism has been increasing in publicly traded companies in recent years and we are subject to the risks
associated with such activism. Our business could be negatively affected as a result of stockholder activism, which
could cause us to incur significant expense, hinder execution of our business strategy and impact the trading value of
our securities. Additionally, stockholder activism could give rise to perceived uncertainties as to our future direction,
adversely affect our relationships with key executives and business partners and make it more difficult to attract and
retain qualified employees. Any of these impacts could materially and adversely affect our business and operating
results.

ITEM 1B.
None.

UNRESOLVED STAFF COMMENTS

ITEM 2.

PROPERTIES

Our facilities are used primarily for manufacturing, distribution and administration. Facilities primarily used for
manufacturing may also be used for distribution, engineering, research and development, storage, administration,
sales and customer service. Facilities primarily used for administration may also be used for research and
development, sales and customer service. As of December 31, 2017, our principal facilities, grouped according to
the facility’s primary use, were as follows:

Location
Administrative facilities:

Hickory, NC (1)
Joliet, IL (2)
Shakopee, MN
Lochgelly, United Kingdom (3)
Richardson, TX (1)
Richardson, TX

Manufacturing and distribution facilities:

Catawba, NC (1)
Claremont, NC (1)
Kessel-Lo, Belgium
Suzhou, China (4)
Suzhou, China (4)
Santa Teresa, NM
Juarez, Mexico
Juarez, Mexico
Goa, India (4)
Brno, Czech Republic
Reynosa, Mexico
Greensboro, NC (1)
Mission, TX
Delicias, Mexico
Campbellfield, Australia
Bray, Ireland
Brno, Czech Republic
Buchdorf, Germany
Berkeley Vale, Australia (5)
Vacant facilities and properties:

Orland Park, IL (1)(6)
Sorocaba, Brazil (7)

Approximate
square feet

Principal segments

Owned or leased

84,000 Corporate headquarters

690,000 Corporate
177,000 CCS
132,000 CMS and CCS
100,000 CMS
75,000 CCS

1,000,000 CCS
583,000 CCS
554,000 CCS
414,000 CMS
363,000 CCS
334,000 CCS
327,000 CCS
304,000 CCS
298,000 CMS
281,000 CCS
279,000 CMS
196,000 CCS
150,000 CMS
139,000 CCS
133,000 CMS
130,000 CCS
120,000 CMS
109,000 CMS
99,000 CCS

— CMS
152,000 CMS

Owned
Leased
Leased
Owned
Owned
Leased

Owned
Owned
Owned
Owned
Owned
Leased
Owned
Leased
Owned
Leased
Owned
Owned
Leased
Owned
Leased
Owned
Leased
Owned
Owned

Owned
Owned

(1) Our interest in each of these properties is encumbered by a mortgage or deed of trust lien securing our senior secured

credit facilities (see Note 6 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on
Form 10-K).
The former manufacturing portion of the Joliet facility is vacant and is currently being marketed for sublease.
The former manufacturing portion of the Lochgelly, United Kingdom facility is vacant and is currently being marketed for
sale.
The buildings in these facilities are owned while the land is held under long-term lease agreements.

The planned closure of the Berkeley Vale, Australia site was announced in 2017 and the site is expected to be marketed for

sale in 2018.
The building at the Orland Park facility was demolished and cleared and the 73 acre parcel is vacant.
The Sorocaba, Brazil facility is currently being marketed for sale.

(2)
(3)

(4)
(5)

(6)
(7)

We believe that our facilities and equipment generally are well maintained, in good condition and suitable for our
purposes and adequate for our present operations. While we currently have excess manufacturing capacity in certain
of our facilities, utilization is subject to change based on customer demand. We can give no assurances that we will
not have excess manufacturing capacity or encounter capacity constraints over the long term.

ITEM 3.

LEGAL PROCEEDINGS

We are either a plaintiff or a defendant in certain pending legal matters in the normal course of business.
Management believes none of these legal matters will be material to our business or financial condition upon their
final disposition.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stock Price and Dividends

Our common stock is traded on the Nasdaq Global Select Market under the symbol COMM. The following table
sets forth the high and low sale prices as reported by Nasdaq for the periods indicated:

Common Stock
Price Range

High

2016
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2017
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

$
$
$
$

28.14
33.09
32.77
38.00

42.34
42.75
38.47
39.26

$
$
$
$

Low

19.37
26.16
28.28
29.88

34.89
33.35
31.03
30.95

As of February 5, 2018, all of our outstanding shares of common stock are held by one stockholder of record, Cede
& Co., as nominee for the Depository Trust Company. Many brokers, banks and other institutions hold shares of
common stock as nominees for beneficial owners that deposit these shares of common stock in participant accounts
at the Depository Trust Company.

Although we have paid cash dividends from time to time in the past while we were a privately-held company, we do
not currently intend to pay dividends in the foreseeable future. The declaration and payment of any dividends in the
future will be determined by our Board of Directors, in its discretion, and will depend on a number of factors,
including our earnings, capital requirements, overall financial condition and contractual restrictions, including
covenants under our senior notes and senior secured credit facilities, which may limit our ability to pay dividends.

Issuer Purchases of Equity Securities

On August 2, 2017, the Company announced that its Board of Directors had authorized the repurchase of up to
$100.0 million of the Company’s outstanding common stock. The program does not obligate the Company to
acquire any particular amount of its common stock, and the program may be extended, modified, suspended or
discontinued at any time. The repurchase authorization expires on July 31, 2018.

The following table summarizes the stock purchase activity for the three months ended December 31, 2017:

Period

October 1, 2017 - October 31, 2017
November 1, 2017 - November 30, 2017
December 1, 2017 - December 31, 2017
Total

Total
Number of
Shares
Purchased (1)
172
13,062

— $

13,234

Average
Price
Paid Per
Share
$ 33.21
$ 33.81
—
$ 33.80

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Maximum Value of
Shares that May Yet be
Purchased Under the
Plans or Programs

— $
— $
— $
—

25,000,000
25,000,000
25,000,000

(1) The shares purchased were withheld to satisfy the minimum withholding tax obligations related to restricted
stock units and performance share units that vested during the period.

Stock Performance Graph

The following graph compares cumulative total return on $100 invested on October 25, 2013 in each of
CommScope’s Common Stock, the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the Standard & Poor’s
1500 Communications Equipment Index (S&P 1500 Communications Equipment). The return of the Standard &
Poor’s indices is calculated assuming reinvestment of dividends. CommScope has not paid any dividends over this
period.

Comparison of Cumulative Total Return

$300

$250

$200

$150

$100

$50

$0
10/25/13

12/31/13

12/31/14

12/31/15

12/31/16

12/31/17

CommScope Holding Company, Inc.

S&P 500 Index

S&P 1500 Communications Equipment Index

Base

Period

INDEXED RETURNS

Period Ending

Company / Index
CommScope Holding Company, Inc.
S&P 500 Index
S&P 1500 Communications Equipment

10/25/2013
100
100
100

12/31/2013
126.28
105.49
105.56

12/31/2014
152.30
119.93
119.17

12/31/2015 12/31/2016 12/31/2017
252.37
165.84
155.16

172.72
121.58
105.84

248.17
136.13
126.71

ITEM 6.

SELECTED FINANCIAL DATA

The following table presents our historical selected financial data as of the dates and for the periods indicated. The
data for each of the years presented are derived from our audited consolidated financial statements. The information
set forth below should be read in conjunction with our audited consolidated financial statements and notes thereto
and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of
this Annual Report.

Five-Year Summary of Selected Financial Data
(In thousands, except per share amounts)

2017

Year Ended December 31,
2015

2014

2016

2013

Results of Operations:
Net sales
Gross profit
Restructuring costs, net
Asset impairments
Operating income
Net interest expense
Net income (loss)
Earnings (Loss) Per Share Information:
Weighted average number of shares outstanding:

$4,560,582
1,771,894
43,782
—
477,610
(252,838)
193,764

$4,923,621
2,033,589
42,875
38,552
574,750
(272,010)
222,838

29,488
90,784

$3,807,828 $ 3,829,614 $3,480,117
1,345,820 1,397,269 1,200,940
22,104
45,529
329,714
(205,492)
19,396

19,267
12,096
181,593 577,449
(230,533) (173,981 )
(70,875) 236,772

Basic
Diluted

Earnings (loss) per share:

Basic
Diluted

Other Information:
Net cash generated by operating activities (1)
Depreciation and amortization
Additions to property, plant and equipment
Cash dividends per share

192,430
196,811

192,470
196,459

189,876 186,905
189,876 191,450

160,641
164,013

$
$

1.01
0.98

$
$

1.16
1.13

$
$

(0.37) $
(0.37) $

1.27 $
1.24 $

0.12
0.12

$ 586,286
378,012
68,721

$ 640,221
399,050
68,314

— $

$ 327,115 $ 394,733 $ 270,930
256,616
36,780
3.47

303,500 259,504
36,935
— $

56,501
— $

2017

2016

As of December 31,
2015

2014

2013

Balance Sheet Data:
Cash and cash equivalents
Goodwill and intangible assets
Property, plant and equipment, net
Total assets (2)
Working capital
Long-term debt, including current maturities (2)
Stockholders' equity

$ 453,977
4,522,714
467,289
7,041,666
1,220,142
4,369,401
1,647,826

$ 428,228
4,567,369
474,990
7,141,986
1,135,946
4,562,010
1,394,084

528,706 289,371

$ 562,884 $ 729,321 $ 346,320
4,838,119 2,712,814 2,872,698
310,143
7,502,631 4,917,058 4,690,800
1,319,548 1,351,805
860,042
5,243,651 2,668,898 2,471,297
1,222,720 1,307,619 1,088,016

(1) As of January 1, 2017, the Company adopted new accounting guidance requiring that excess benefits on equity-based

compensation be reported as an operating activity rather than a financing activity and that debt redemption premiums paid
be reported as a financing activity rather than an operating activity. The guidance has been applied retrospectively to the
prior periods presented.

(2) As of June 30, 2015, the Company adopted new accounting guidance that requires debt issuance costs related to a

recognized debt liability be reported as a direct deduction from the carrying amount of that debt liability. The guidance has
been applied retrospectively to the prior periods presented.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report
on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve
risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth under "Risk Factors" included in Part I, Item 1A
or in other parts of this Annual Report on Form 10-K.

OVERVIEW

We are a global provider of infrastructure solutions for the core, access and edge layers of communication networks.
Our solutions and services for wired and wireless networks enable high-bandwidth data, video and voice
applications. Our portfolio includes innovative wireless and fiber optic solutions for today’s evolving digital
lifestyle. Our global leadership position is built upon innovative technology, broad solution offerings, high-quality
and cost-effective customer solutions and global manufacturing and distribution scale. Our talented and experienced
global team helps customers increase bandwidth; maximize existing capacity; improve network response time and
performance; and simplify technology migration. Our solutions are found in some of the largest venues and outdoor
spaces; in buildings and data centers of all sizes and complexities; at wireless cell sites; in telecom central offices
and cable headends; in fiber-to-the-X (FTTX) deployments; and in airports, trains, and tunnels. Vital networks
around the world run on CommScope solutions.

On August 28, 2015, we completed the acquisition of TE Connectivity’s Broadband Network Solutions (BNS)
business in an all-cash transaction valued at approximately $3.0 billion. The BNS business provides fiber optic and
copper connectivity for wireline and wireless networks and also provides small-cell distributed antenna system
(DAS) solutions for the wireless market. Much of the BNS business operated under the TE Connectivity fiscal
calendar in 2016, and as a result, the BNS business results include 53 weeks in 2016 compared to 52 weeks in 2017.
During the years ended December 31, 2017, 2016 and 2015, we recorded $48.0 million, $62.3 million and $96.9
million, respectively, of integration and transaction costs, primarily related to the BNS acquisition. We expect to
incur significantly lower integration costs in 2018.

We report financial performance based on two operating segments: CommScope Connectivity Solutions (CCS) and
CommScope Mobility Solutions (CMS). Our CCS segment provides innovative fiber optic and copper cable and
connectivity solutions for use in data centers and business enterprise, telecommunications, cable television and
residential broadband networks. Our CCS portfolio includes innovative solutions for indoor and outdoor network
applications. Indoor network solutions are found in commercial buildings and in the network core. They are
primarily delivered through our SYSTIMAX, NETCONNECT and Uniprise brands and offer a complete end-to-end
physical layer solution, including optical fiber and twisted pair structured cable solutions, intelligent infrastructure
management hardware and software and network rack and cabinet enclosures. Our outdoor network solutions are
found in access and edge networks and include a broad portfolio of fiber-to-the-home equipment and headend
solutions. Our fiber optic connectivity solutions are primarily comprised of hardened connector systems, fiber
distribution hubs and management systems, couplers and splitters, plug and play multiport service terminals,
hardened optical terminating enclosures, high density cable assemblies, splices and splice closures. Products from
our CCS segment are sold to large multinational companies, primarily through a global network of distributors,
system integrators and value-added resellers. Demand for CCS segment products depends primarily on information
technology spending by enterprises, such as communications projects in new data centers, buildings or campuses
and deployments of FTTX solutions. To deepen our capabilities in supporting the growing market for high-capacity,
multi-tenant data centers and hyperscale data centers, in August 2017, we acquired Cable Exchange, a quick-turn
supplier of fiber optic and copper assemblies for data, voice and video communications, for $123.2 million ($119.7
million net of cash acquired). The acquisition was funded with cash on hand.

Under our CMS segment, primarily through our Andrew brand, we are a global leader in providing the integral
building blocks for cellular base station sites and related connectivity; indoor, small cell and distributed antenna
wireless systems; and wireless network backhaul planning and optimization products and services. The primary
sources of revenue for our CMS segment are (i) product sales of primarily passive transmission devices for the
wireless infrastructure market including base station and microwave antennas, hybrid fiber-feeder and power cables,
coaxial cable connectors and equipment primarily used by wireless operators, (ii) product sales of active electronic
devices and services including filters and tower-mounted amplifiers and (iii) engineering and consulting services
and products like DAS that are used to extend and enhance the coverage of wireless networks in areas where signals
are difficult to send or receive such as large buildings, urban areas, stadiums and transportation systems. Demand for
CMS segment products depends primarily on capital spending by wireless operators to expand their distribution
networks or to increase the capacity of their networks.

Our future financial condition and performance will be largely dependent upon: global spending by wireless
operators; global spending by business enterprises on information technology; investment by cable operators and
communications companies in video and communications infrastructure; overall global business conditions; and our
ability to manage costs successfully across our global operations. Our profitability is also affected by the mix and
volume of sales among our various product groups and between domestic and international customers and
competitive pricing pressures.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in conformity with generally accepted accounting
principles (GAAP) in the United States (U.S.). The preparation of these financial statements requires management to
make estimates and assumptions that affect the amounts reported in the financial statements and accompanying
notes. These estimates and their underlying assumptions form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other objective sources. Management bases its
estimates on historical experience and on assumptions that are believed to be reasonable under the circumstances
and revises its estimates, as appropriate, when changes in events or circumstances indicate that revisions may be
necessary.

The following critical accounting policies and estimates reflected in our financial statements are based on
management’s knowledge of and experience with past and current events and on management’s assumptions about
future events. While we have generally not experienced significant deviations from our critical estimates in the past,
it is reasonably possible that these estimates may ultimately differ materially from actual results. See Note 2 in the
Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a
description of all of our significant accounting policies.

Business Combinations

We use the acquisition method of accounting for business combinations which requires assets acquired and
liabilities assumed be recorded at their fair values on the acquisition date. Goodwill represents the excess of the
purchase price over the fair value of the net assets acquired. The fair values of the assets acquired and liabilities
assumed are determined based upon management’s valuation and involves making significant estimates and
assumptions based on facts and circumstances that existed as of the acquisition date. We use a measurement period
following the acquisition date to gather information that existed as of the acquisition date that is needed to determine
the fair value of the assets acquired and liabilities assumed. The measurement period ends once all information is
obtained, but no later than one year from the acquisition date.

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or service has been
rendered, the selling price is fixed or determinable and collectability is reasonably assured. The majority of our
revenue comes from product sales. Revenue from product sales is recognized when the risks and rewards of
ownership have passed to the customer and revenue is measurable. Revenue is not recognized related to products
sold to contract manufacturers that the Company anticipates repurchasing in order to complete the sale to the
ultimate customer.

Revenue for certain of the Company’s products is derived from multiple-element contracts. The value of the revenue
elements within these contracts is allocated based on the relative selling price of each element. The relative selling
price is determined using vendor-specific objective evidence of selling price or other third party evidence of selling
price, if available. If these forms of evidence are unavailable, revenue is allocated among elements based on
management’s best estimate of the stand-alone selling price of each element.

We record reductions to revenue for anticipated sales returns as well as customer programs and incentive offerings,
such as discounts, allowances, rebates and distributor price protection programs. These estimates are based on
contract terms, historical experience, inventory levels in the distribution channel and other factors.

Management generally believes it has sufficient historical experience to allow for reasonable and reliable estimation
of these reductions to revenue. However, deteriorating market conditions could result in increased sales returns and
allowances and potential distributor price protection incentives, resulting in future reductions to revenue. If
management does not have sufficient historical experience to make a reasonable estimation of these reductions to
revenue, recognition of the revenue is deferred until management believes there is a sufficient basis to recognize
such revenue.

Inventory Reserves

We maintain reserves to reduce the value of inventory based on the lower of cost or net realizable value, including
allowances for excess and obsolete inventory. These reserves are based on management’s assumptions about and
analysis of relevant factors including current levels of orders and backlog, forecasted demand, market conditions and
new products or innovations that diminish the value of existing inventories. If actual market conditions deteriorate
from those anticipated by management, additional allowances for excess and obsolete inventory could be required.

Product Warranty Reserves

We recognize a liability for the estimated claims that may be paid under our customer assurance-type warranty
agreements to remedy potential deficiencies of quality or performance of our products. The product warranties
extend over periods ranging from one to twenty-five years from the date of sale, depending upon the product subject
to the warranty. We record a provision for estimated future warranty claims based upon the historical relationship of
warranty claims to sales and specifically identified warranty issues. We base our estimates on historical experience
and on assumptions that are believed to be reasonable under the circumstances and revise our estimates, as
appropriate, when events or changes in circumstances indicate that revisions may be necessary. Although these
estimates are based on management’s knowledge of and experience with past and current events and on
management’s assumptions about future events, it is reasonably possible that they may ultimately differ materially
from actual results, including in the case of a significant product failure.

Tax Valuation Allowances, Liabilities for Unrecognized Tax Benefits and Other Tax Matters

In response to tax legislation enacted in the U.S. in late 2017, the Securities and Exchange Commission (SEC)
issued guidance to provide companies with transitional relief. As a result, certain income tax amounts presented in
our consolidated financial statements as of and for the year ended December 31, 2017 are provisional estimates that
may be adjusted as amounts are finalized during 2018.

We establish an income tax valuation allowance when available evidence indicates that it is more likely than not that
all or a portion of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, we
consider the amounts, character, source and timing of expected future deductions or carryforwards as well as sources
of taxable income and tax planning strategies that may enable utilization. We maintain an existing valuation
allowance until sufficient positive evidence exists to support its reversal. Changes in the amount or timing of
expected future deductions or taxable income may have a material impact on the level of income tax valuation
allowances. If we determine that we will not be able to realize all or part of a deferred tax asset in the future, an
increase to an income tax valuation allowance would be charged to earnings in the period such determination was
made.

We recognize income tax benefits related to particular tax positions only when it is considered more likely than not
that the tax position will be sustained if examined on its technical merits by tax authorities. The amount of benefit
recognized is the largest amount of tax benefit that is evaluated to be greater than 50% likely to be realized.
Considerable judgment is required to evaluate the technical merits of various positions and to evaluate the likely
amount of benefit to be realized. Lapses in statutes of limitations, developments in tax laws, regulations and
interpretations, and changes in assessments of the likely outcome of uncertain tax positions could have a material
impact on the overall tax provision.

We establish deferred tax liabilities for the estimated tax cost associated with foreign earnings that we do not
consider permanently reinvested (primarily foreign withholdings and state income taxes). These liabilities are
subject to adjustment if foreign earnings previously considered to be permanently reinvested were no longer so
considered.

We also establish allowances related to value-added and similar recoverable taxes when it is considered probable
that those assets are not recoverable. Changes in the probability of recovery or in the estimates of the amount
recoverable are recognized in the period such determination is made and may be material to earnings.

Asset Impairment Reviews

Impairment Reviews of Goodwill

We test goodwill at the reporting unit level for impairment annually as of October 1 and on an interim basis when
events occur or circumstances indicate the carrying value may no longer be recoverable. The goodwill impairment
test starts with a comparison of the carrying value of a reporting unit to its estimated fair value. We estimate the fair
value of a reporting unit through the use of a discounted cash flow (DCF) valuation model. The significant
assumptions in the DCF model are the annual revenue growth rate, the annual operating income margin and the
discount rate used to determine the present value of the cash flow projections. Among other inputs, the annual
revenue growth rate and operating income margin are determined by management using historical performance
trends, industry data, insight derived from customers, relevant changes in the reporting unit’s underlying business
and other market trends that may affect the reporting unit. The discount rate is based on the estimated weighted
average cost of capital as of the test date of market participants in the industry in which the reporting unit operates.
The assumptions used in the DCF model are subject to significant judgment and uncertainty. Changes in projected
revenue growth rates, projected operating income margins or estimated discount rates due to uncertain market
conditions, loss of one or more key customers, changes in technology, or other factors, could result in one or more
of our reporting units with a significant amount of goodwill failing the goodwill impairment test in the future. It is
possible that future impairment reviews may indicate additional impairments of goodwill, which could be material
to our results of operations and financial position. Our historical or projected revenues or cash flows may not be
indicative of actual future results.

2017 Annual Goodwill Analysis

The annual test of goodwill was performed for each of the reporting units with goodwill balances as of October 1,
2017. The weighted average discount rates used in the 2017 annual test were 9.5% for the CCS reporting units and
10.0% for the CMS reporting units. These discount rates were 0.5% lower than those used in the 2016 annual
goodwill impairment tests. Based on the estimated fair values generated by our DCF models, the reporting units
passed the annual goodwill impairment test and no impairment charge was deemed necessary. The Company
considered the sensitivity to changes in key assumptions for the reporting unit with the lowest level of headroom and
determined that a fifty basis point change in the discount rate, long-term operating margin or long-term growth rate
would not result in an impairment. If performance is worse than anticipated, future impairment tests could result in
impairment charges that could be material.

Definite-Lived Intangible Assets and Other Long-Lived Assets

Management reviews definite-lived intangible assets and other long-lived assets for impairment when events or
changes in circumstances indicate that their carrying values may not be fully recoverable. This analysis differs from
our goodwill impairment analysis in that an intangible or other long-lived asset impairment is only deemed to have
occurred if the sum of the forecasted undiscounted future net cash flows related to the assets being evaluated is less
than the carrying value of the assets. If the forecasted net cash flows are less than the carrying value, then the asset is
written down to its estimated fair value. Other than certain assets abandoned or disposed of as part of a restructuring
action, we did not identify any impairments of definite-lived intangible assets or other long-lived assets in 2017.
Changes in the estimates of forecasted net cash flows may result in future asset impairments that could be material
to our results of operations.

Comparison of results of operations for the year ended December 31, 2017 with the year ended December 31,
2016

RESULTS OF OPERATIONS

Year Ended December 31,

2017

2016

Amount

% of Net
Sales

Amount

% of Net
Sales

Dollar
Change

%
Change

Net sales
Gross profit
Operating income
Non-GAAP adjusted operating income (1)
Net income
Diluted earnings per share

$ 4,560.6
1,771.9
477.6
882.3
193.8
0.98

(1)

See "Reconciliation of Non-GAAP Measures".

Net sales

Domestic net sales
International net sales

(dollars in millions, except per share amounts)
100.0% $ 4,923.6
2,033.6
38.9
10.5
574.8
1,051.4
19.3
222.8
4.2
1.13

100.0% $ (363.0 )
(261.7 )
41.3
11.7
(97.2 )
(169.1 )
21.4
(29.0 )
4.5
(0.15 )

Year Ended December 31,

Change

2017

4,560.6
2,449.4
2,111.2

2016

$
(dollars in millions)
4,923.6
2,634.9
2,288.7

(363.0 )
(185.5 )
(177.5 )

(7.4)%
(12.9)
(16.9)
(16.1)
(13.0)
(13.3)

(7.4)%
(7.0)
(7.8)

Net sales. Net sales for 2017 were lower across all regions compared to the prior year except the Europe, Middle
East and Africa (EMEA) region, with the U.S. and Asia Pacific (APAC) region having the largest declines. Net sales
to customers located outside of the U.S. comprised 46% of total net sales for both 2017 and 2016. Foreign exchange
rate changes did not significantly impact net sales for 2017 compared to 2016.

From a segment perspective, CCS segment net sales decreased by 5.3% and CMS segment net sales decreased by
10.6% for 2017 compared to the prior year due to lower sales in both domestic and international markets. For further
details by segment, see the section titled “Segment Results” below.

Gross profit, SG&A expense and R&D expense

Year Ended December 31,

Change

Gross profit

As a percent of sales

SG&A expense

As a percent of sales

R&D expense

As a percent of sales

2017

1,771.9

2016
(dollars in millions)
2,033.6

(261.7 )

(12.9)%

38.9%
794.3
17.4%
185.2

4.1%

41.3%
879.5
17.9%
200.7

4.1%

(85.2 )

(9.7)

(15.5 )

(7.7)

Gross profit (net sales less cost of sales). The decrease in gross profit for 2017 compared to 2016 was mainly driven
by decreases in sales volume, reductions in price, unfavorable geographic and product mix and higher material costs.
This decrease was partially offset by the favorable impact of cost reduction initiatives.

Selling, general and administrative expense. Selling, general and administrative (SG&A) expense for 2017 was
lower than 2016 due primarily to lower incentive compensation expense and benefits from cost reduction initiatives.
Despite lower net sales, SG&A expense as a percentage of sales decreased from 2016 as a result of these lower
costs.

Research and development. Research and development (R&D) expense decreased for 2017 compared to 2016
primarily as a result of lower incentive compensation expense. R&D expense as a percentage of sales remained
unchanged from 2016. R&D activities generally relate to ensuring that our products are capable of meeting the
evolving technological needs of our customers, bringing new products to market and modifying existing products to
better serve our customers.

Amortization of purchased intangible assets, Restructuring costs and Asset impairments

Year Ended December 31,

Change

2017

2016

$
(dollars in millions)

Amortization of purchased intangible assets
Restructuring costs, net
Asset impairments

271.0
43.8
—

297.2
42.9
38.6

(26.2 )
0.9
(38.6 )

(8.8)%
2.1
(100.0)

Amortization of purchased intangible assets. The amortization of purchased intangible assets was lower for 2017
compared to 2016 primarily because certain of our intangible assets became fully amortized. This was partially
offset by the amortization of intangible assets related to the Cable Exchange acquisition.

Restructuring costs, net. The restructuring costs for 2017 and 2016 were primarily related to the continuing
integration of the BNS acquisition. We expect to incur additional pretax costs of up to $2.0 million to complete
actions announced to date. We paid $44.1 million of restructuring costs during 2017 and expect to pay an additional
$26.5 million in 2018 related to restructuring actions that have been initiated. In addition, we expect to pay $7.5
million between 2019 and 2022 related to restructuring actions that have been initiated. We expect that additional
restructuring actions will be identified and the resulting charges and cash requirements may be material.

Asset impairments. We did not record any asset impairment charges during 2017. During 2016, we recorded
impairment charges of $15.0 million within the CCS segment due to the revised business plan for a product line that
indicated its intangible assets would not be recoverable. Also during 2016, we recorded impairment charges of $8.3
million related to certain long-lived assets acquired with the BNS business that were no longer expected to be
utilized in operations within the CCS segment. In addition to these intangible asset and long-lived asset impairment
charges, 2016 included a $15.3 million goodwill impairment charge in the CCS segment as a result of the
impairment analysis required by the change in reportable segments.

Net interest expense, Other expense, net and Income taxes

Net interest expense
Other expense, net
Income tax expense

Year Ended December 31,

Change

2017

(252.8) $
(15.0)
(16.0)

2016

$
(dollars in millions)
(272.0) $
(30.2)
(49.7)

19.2
15.2
33.7

(7.1)%
(50.3)
(67.8)

Net interest expense. The decrease in net interest expense for 2017 as compared to 2016 resulted primarily from
decreases in our long-term debt due to our debt redemptions and repayments in 2017 and 2016. Our average long-
term debt outstanding decreased by more than $400.0 million for 2017 as compared to 2016. During 2017, the
reduction in interest expense was offset partially by the write-off of $14.1 million of debt issuance costs and original
issue discount in connection with the redemption of $500.0 million of the 4.375% senior secured notes due 2020
(the 2020 Notes) and the prepayment of $460.0 million of senior secured term loans. The redemption of the 2020
Notes and the prepayment of the senior secured term loans were substantially funded by the issuance of $750.0
million of new 5.00% senior notes due 2027 (the 2027 Notes) in March 2017.

During 2016, we repaid $150.0 million of our senior secured term loan due in 2018 and voluntarily redeemed $536.6
million of the 6.625%/7.375% senior payment-in-kind toggle notes (the senior PIK toggle notes). In connection with
the repayment and redemption, we wrote off $7.1 million of debt issuance costs and original issue discount to
interest expense during 2016.

Our weighted average effective interest rate on outstanding borrowings, including the amortization of debt issuance
costs and original issue discount, was 5.45% at December 31, 2017 and 5.24% at December 31, 2016.

Other expense, net. In connection with the redemption of the 2020 Notes during 2017, we paid a redemption
premium of $14.8 million which was included in other expense, net. In May 2017, we amended the senior secured
loan due December 2022 (the 2022 Term Loan) to reduce the interest rate margin, and in connection with the
amendment, we incurred debt modification costs of $1.1 million which were included in other expense, net for 2017.
In connection with the debt redeemed or repaid during 2016, we incurred redemption premiums of $17.7 million and
other fees of $1.2 million which were included in other expense, net.

Foreign exchange losses of $8.7 million were included in other expense, net for 2017 compared to losses of $9.5
million for 2016.

During 2017, we sold the remainder of our investment in Hydrogenics Corporation (Hydrogenics) resulting in pretax
gains of $9.0 million which were recorded in other expense, net. During 2016, sales of Hydrogenics shares resulted
in pretax gains of $1.2 million.

Income taxes. Our effective income tax rate of 7.6% for 2017 reflects the impact of U.S. tax legislation enacted in
December 2017. See Note 11 in the Notes to the Consolidated Financial Statements included elsewhere in this
Annual Report on Form 10-K for further discussion of the impact of the U.S. tax legislation. Our effective income
tax rate was also favorably affected by changes in tax legislation in certain other jurisdictions and a reduction in tax
expense related to the expiration of statutes of limitations on various uncertain tax positions. The effective tax rate
was also favorably affected by $14.4 million of excess tax benefits related to equity-based compensation awards for
2017. Such benefits, which were previously reflected in additional paid-in capital, are now recognized in income tax
expense as a result of the adoption of Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee
Share-Based Payment Accounting. See the discussion under Recent Accounting Pronouncements in Note 2 to the
Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further information
regarding the adoption of this new accounting guidance.

Our effective income tax rate of 18.2% for 2016 was lower than the statutory rate of 35% primarily due to a
reduction in tax expense related to the release of valuation allowances related to certain federal tax credit
carryforwards and certain other deferred tax assets. The effective income tax rate was also favorably affected by the
reduction of reserves for uncertain tax positions and earnings in foreign jurisdictions that we do not plan to
repatriate. These foreign earnings were generally taxed at rates lower than the U.S. Offsetting these decreases in
2016 was the effect of the provision for state income taxes as well as the goodwill impairment charge for which only
partial tax benefits were recorded.

Segment Results

Net sales by segment:

CCS
CMS

Consolidated net sales

Operating income by segment:

CCS
CMS

Consolidated operating income

Year Ended December 31,

2017

2016

Amount

% of Net
Sales

Amount

% of Net
Sales

Dollar
Change

Change

(dollars in millions)

$2,809.8
1,750.8
$4,560.6

61.6 % $2,965.5
1,958.1
38.4
100.0 % $4,923.6

60.2 % $ (155.7 )
39.8 (207.3 )
100.0 % $ (363.0 )

(5.3)%
(10.6)
(7.4)%

$ 242.0
235.6
$ 477.6

8.6 % $ 291.2
13.5
283.6
10.5 % $ 574.8

9.8 % $ (49.2 )
14.5
(48.0 )
11.7 % $ (97.2 )

(16.9)%
(16.9)
(16.9)%

Non-GAAP adjusted operating income by
segment:
CCS
CMS

$ 526.3
356.0

18.7 % $ 632.3
419.1
20.3

21.3 % $ (106.0 )
(63.1 )
21.4

(16.8)%
(15.1)

Non-GAAP consolidated adjusted
operating income (1)

$ 882.3

19.3 % $1,051.4

21.4 % $ (169.1 )

(16.1)%

(1) See “Reconciliation of Non-GAAP Measures”.

CommScope Connectivity Solutions Segment

CCS segment net sales were lower in 2017 compared to 2016 in all regions except the EMEA region. The decrease
was driven by the U.S. and the APAC region as a result of a slowdown in the rollout of new projects by certain
North American service providers, continued weakness in demand for our indoor network products, and certain
large projects in the APAC region in 2016 that did not recur in 2017. In addition, we experienced BNS integration
issues early in 2017 that negatively affected customer service levels and order rates. Incremental sales related to the
Cable Exchange acquisition completed in August 2017 were not material to the CCS segment for 2017. Foreign
exchange rate changes did not significantly impact segment sales for 2017 compared to 2016.

CCS segment operating income and non-GAAP adjusted operating income decreased for 2017 compared to 2016
primarily due to lower sales volumes, price reductions, unfavorable geographic and product mix and higher material
costs. These decreases were partially offset by the favorable impact of cost reduction initiatives and lower incentive
compensation. The decrease in CCS segment operating income was also partially offset by lower intangible asset
amortization, lower impairment charges and lower integration and transaction costs during 2017 compared to 2016.
The impacts of intangible asset amortization, impairment charges and integration and transaction costs are excluded
from the calculation of non-GAAP adjusted operating income. See “Reconciliation of Non-GAAP Measures.”

We expect demand for our indoor network CCS products to be driven by global information technology spending
and spending in core networks as the ongoing need for bandwidth and intelligence in the network continues to create
demand for high-performance connectivity solutions. We expect demand for our outdoor network CCS products to
be driven by global deployment of fiber-optic solutions for FTTX applications, new services, competitive dynamics
in the access market, ongoing maintenance requirements of cable networks and residential construction market
activity in North America. Spending patterns by service providers can be volatile and can shift between wireless and
wireline. Uncertain global economic conditions, variability in the levels of commercial and residential construction
activity, construction permitting and approvals, consolidation among service providers, uncertain levels of
information technology spending and reductions in the levels of distributor inventories may negatively affect
demand for our products. The increasing demand for fiber solutions is expected to be somewhat offset by
decelerating demand for copper solutions in networks. We expect a return to growth in North America in 2018.

CommScope Mobility Solutions Segment

The CMS segment experienced a decrease in net sales for 2017 compared to 2016 in all major regions, with the
decrease being most pronounced in the U.S. and the APAC region. While CMS segment net sales benefited from
increased spending by certain domestic operators in the first quarter of 2017, we saw a slowdown in their spending
during the remainder of 2017. The decline in sales of our CMS products in the APAC region was primarily due to
certain large projects in 2016 that did not recur during 2017. Foreign exchange rate changes did not significantly
impact segment sales for 2017 compared to 2016.

CMS segment operating income and non-GAAP adjusted operating income decreased for 2017 compared to 2016
primarily due to lower sales volumes, price reductions and unfavorable geographic mix, partially offset by lower
incentive compensation. The decrease in CMS segment operating income for 2017 compared to 2016 was partially
offset by lower intangible amortization and restructuring costs. Non-GAAP adjusted operating income excludes the
impacts of intangible amortization and restructuring costs. See “Reconciliation of Non-GAAP Measures.”

Our sales to wireless operators are volatile. We expect longer-term demand for our CMS products to be positively
affected by wireless coverage and capacity expansion in emerging markets and growth in mobile data services and
network capacity requirements in developed markets. In addition, we expect demand for our CMS products to be
favorably affected by government initiatives to promote the expansion of wireless networks (e.g., FirstNet) over the
next few years. We also expect longer-term demand for our CMS products to be positively affected by the
introduction of 5G technology. In preparation for 5G networks, we continue to invest heavily in R&D, support
customer trials and participate in industry forums to help shape 5G standards. Uncertainty in the global economy or
a particular region or consolidation among wireless operators may slow the growth or cause a decline in capital
spending by wireless operators and negatively impact our net sales. We expect a return to growth in North America
in 2018 particularly in the second half of the year.

Comparison of results of operations for the year ended December 31, 2016 with the year ended December 31,
2015

Year Ended December 31,

2016

2015

Amount

% of Net
Sales

Amount

% of Net
Sales

Dollar
Change

%
Change

$ 4,923.6
Net sales
2,033.6
Gross profit
Operating income
574.8
Non-GAAP adjusted operating income (1) 1,051.4
222.8
Net income (loss)
1.13
Diluted earnings (loss) per share

See "Reconciliation of Non-GAAP Measures".

(1)
NM - Not meaningful

(dollars in millions, except per share amounts)
100.0% $ 3,807.8
1,345.8
41.3
181.6
11.7
729.8
21.4
(70.9)
4.5
(0.37)

100.0 % $ 1,115.8
687.8
35.3
393.2
4.8
321.6
19.2
293.7
(1.9 )
1.50

29.3%
51.1
216.5
44.1
NM
NM

Net sales

Domestic net sales
International net sales

Year Ended December 31,

Change

2016

4,923.6
2,634.9
2,288.7

2015

$
(dollars in millions)
3,807.8
1,869.4
1,938.4

1,115.8
765.5
350.3

29.3%
40.9
18.1

Net sales. Net sales for 2016 included $1.24 billion of incremental net sales attributable to the BNS acquisition,
which reflects the additional eight months that the BNS business was owned in 2016 compared to 2015. Legacy
CommScope net sales for 2016 compared to the prior year were down $0.12 billion, or 3.8%, reflecting decreases
across all major geographical regions except the U.S. Net sales to customers located outside the U.S. comprised 46%
of total net sales for 2016 compared to 51% for 2015. Foreign exchange rate changes had a negative impact of
approximately 1% on net sales for 2016 compared to 2015.

From a segment perspective, net sales from the CCS segment increased 61.0% in 2016 compared to 2015 as a result
of the BNS acquisition. In addition to the incremental eight months of net sales included in 2016 compared with
2015, BNS net sales for 2016 also included 53 weeks in the fiscal year. Excluding the incremental net sales related
to the BNS acquisition, net sales from the CCS segment decreased by 6.4% in 2016 due to lower sales in
international markets. Net sales in 2016 from the CMS segment decreased slightly compared to the prior year
despite the addition of incremental net sales as a result of the BNS acquisition. For further details by segment, see
the section titled “Segment Results” below.

Gross profit, SG&A expense and R&D expense

Year Ended December 31,

Change

Gross profit

As a percent of sales

SG&A expense

As a percent of sales

R&D expense

As a percent of sales

2016

2,033.6

2015
(dollars in millions)
1,345.8

41.3%
879.5
17.9%
200.7

4.1%

35.3%
687.4
18.1%
136.0

3.6%

687.8

51.1%

192.1

27.9

64.7

47.6

Gross profit (net sales less cost of sales). Gross profit for 2016 included $651.6 million of incremental gross profit
related to the BNS acquisition. This reflects the additional eight months that the BNS business was owned in 2016
compared to 2015 as well as the negative impact of the purchase accounting adjustments of $81.6 million that were
incurred in 2015, primarily related to the mark-up of inventory to its estimated fair value less the estimated costs
associated with its sale. The increase in gross margin percentage reflected favorable changes in geographic and
product mix and benefits from cost reduction initiatives as well as the impact of the purchase accounting
adjustments on 2015 gross margin percentage.

Selling, general and administrative expense. SG&A expense for 2016 increased compared to the prior year
primarily due to incremental SG&A costs from the acquired BNS business and higher variable cash compensation
expense partially offset by a decline in integration and transaction costs, lower bad debt expense and the benefit of
cost reduction initiatives. SG&A expense as a percent of sales in 2016 remained in line with 2015. Excluding the
impact of integration and transaction costs, SG&A as a percentage of sales increased to 16.6% in 2016 from 15.5%
in 2015 primarily due to the higher cost structure of the BNS business compared to the legacy CommScope
business.

Research and development. R&D expense increased in 2016 compared to the prior year primarily as a result of the
incremental R&D costs from the BNS and Airvana acquisitions, both of which were acquired in the second half of
2015 and have historically made significant investments in R&D activities. Excluding the impact of the BNS and
Airvana acquisitions, R&D expense and R&D expense as a percentage of net sales increased slightly in 2016
compared to 2015 primarily due to higher variable cash compensation expense.

Amortization of purchased intangible assets, Restructuring costs and Asset impairments

Amortization of purchased intangible assets
Restructuring costs, net
Asset impairments

Year Ended December 31,

Change

2016

2015

$
(dollars in millions)

297.2
42.9
38.6

220.6
29.5
90.8

76.6
13.4
(52.2 )

34.7%
45.4
(57.5)

Amortization of purchased intangible assets. The amortization of purchased intangible assets was higher in 2016
compared to the prior year primarily due to the additional amortization resulting from a full year of amortization
related to the BNS acquisition.

Restructuring costs, net. The restructuring costs in 2016 were primarily related to the integration of BNS. The
restructuring costs in 2015 were also primarily related to the integration of BNS but also included costs from the
first half of the year related to our efforts to realign and lower our overall cost structure.

Asset impairments. During 2016 we recorded impairment charges of $15.0 million within the CCS segment due to
the revised outlook for certain product lines that indicated their intangible assets would not be recoverable. Also
during 2016, we recorded impairment charges of $8.3 million related to certain long-lived assets acquired with the
BNS business no longer expected to be utilized in operations in the CCS segment. In addition, we recorded a $15.3
million goodwill impairment charge as of January 1, 2016 in the CCS segment as a result of the change in reportable
segments.

During 2015 we recorded goodwill impairment charges of $74.4 million in the CMS segment, primarily as a result
of lower projected future operating results for a certain reporting unit. Also during 2015, we determined that certain
intangible assets in the CCS segment were no longer recoverable and recorded a $5.5 million impairment charge. In
addition, we determined during 2015 that a note receivable related to a previous divestiture was impaired and
recorded a $10.9 million charge in the CCS segment.

Net interest expense, Other expense, net and Income taxes

Net interest expense
Other expense, net
Income tax expense

Year Ended December 31,

Change

2016

(272.0) $
(30.2)
(49.7)

2015

$
(dollars in millions)
(230.5) $
(13.1)
(8.9)

(41.5 )
(17.1 )
(40.8 )

18.0%
130.5
458.4

Net interest expense. The increase in net interest expense in 2016 compared to 2015 was driven by increases in our
long-term debt. In June 2015, we issued $1.5 billion of 6.0% senior notes due 2025 (the 2025 Notes) and $500.0
million of the 2020 Notes, and we entered into the 2022 Term Loan. The proceeds from the 2025 Notes and the
2022 Term Loan were used to fund, in part, the BNS acquisition. The proceeds from the 2020 Notes were used to
repay a portion of our existing term loans. We incurred $67.0 million of incremental interest expense in 2016 as a
result of the acquisition-related debt. In connection with various debt repayments and redemptions, we wrote off
$7.1 million and $6.7 million of debt issuance costs and original debt discount in 2016 and 2015, respectively. These
increases in interest expense were partially offset by reductions in interest expense resulting from the debt
repayments and redemptions as well as the 2016 amendment of our 2022 Term Loan to lower the margin on the
interest rate from 3.00% to 2.50%.

Our weighted average effective interest rate on outstanding borrowings, including the amortization of debt issuance
costs and original issue discount was 5.24% as of December 31, 2016 and 5.50% as of December 31, 2015.

Other expense, net. In connection with the debt redeemed or repaid during 2016, we incurred redemption premiums
of $17.7 million and other fees of $1.2 million, both of which were included in other expense, net. Foreign exchange
losses of $9.5 million were included in other expense, net for 2016 compared to losses of $15.1 million for 2015.

During 2016 and 2015, we sold portions of our investment in Hydrogenics that resulted in pretax gains of $1.2
million and $2.7 million, respectively, which were recorded in other expense, net.

Income taxes. Our effective income tax rate of 18.2% for 2016 was lower than the statutory rate of 35% primarily
due to a reduction in tax expense related to the release of valuation allowances related to certain federal tax credit
carryforwards and certain other deferred tax assets. The effective income tax rate was also favorably affected by the
reduction of reserves for uncertain tax positions and earnings in foreign jurisdictions that we do not plan to
repatriate. These foreign earnings are generally taxed at rates lower than the U.S. Offsetting these decreases in 2016
was the effect of the provision for state income taxes as well as the goodwill impairment charge for which only
partial tax benefits were recorded.

Our effective income tax rate for 2015 was negatively impacted by tax valuation allowances related to federal tax
credit carryforwards, impairment charges for which minimal tax benefits were recorded and losses in certain
jurisdictions where we did not recognize tax benefits due to the likelihood of them not being realizable. These
negative impacts were partially offset by the favorable effects of earnings in foreign jurisdictions, lower levels of
planned repatriation as a result of funds used outside the U.S. for a portion of the BNS purchase price, benefits
recognized from adjustments related to prior years’ tax returns and a reduction in tax expense related to uncertain
tax positions.

Segment Results

Net sales by segment:

CCS
CMS

Consolidated net sales

Operating income by segment:

CCS
CMS

Consolidated operating income

Year Ended December 31,

2016

2015

Amount

% of Net
Sales

Amount

% of Net
Sales

Dollar
Change

Change

(dollars in millions)

$2,965.5
1,958.1
$4,923.6

60.2 % $1,841.7
1,966.1
39.8
100.0 % $3,807.8

48.4 % $ 1,123.8
(8.0 )
51.6
100.0 % $ 1,115.8

61.0 %
(0.4)
29.3 %

$ 291.2
283.6
$ 574.8

9.8 % $

16.1
14.5
165.5
11.7 % $ 181.6

0.9 % $ 275.1 1,708.7 %
8.4 118.1
4.8 % $ 393.2

71.4
216.5 %

Non-GAAP adjusted operating income by
segment:
CCS
CMS

$ 632.3
419.1

21.3 % $ 349.9
379.9
21.4

19.0 % $ 282.4
39.2
19.3

80.7 %
10.3

Non-GAAP consolidated adjusted
operating income (1)

$1,051.4

21.4 % $ 729.8

19.2 % $ 321.6

44.1 %

(1) See “Reconciliation of Non-GAAP Measures”.

CommScope Connectivity Solutions Segment

CCS segment net sales for 2016 were higher than the prior year in all major geographical regions as a result of the
BNS acquisition. CCS segment 2016 net sales included incremental net sales from the BNS acquisition of $1.21
billion. Legacy CommScope net sales in the CCS segment decreased across all major geographical regions except
the U.S. compared to 2015. The decrease was primarily due to lower sales of indoor network solutions. Foreign
exchange rate changes had a negative impact on legacy CommScope CCS segment net sales of approximately 1% in
2016 compared to 2015.

CCS segment operating income and non-GAAP adjusted operating income increased for 2016 compared to the prior
year primarily due to the acquisition of the BNS business. In addition, the CCS segment also benefited from cost
savings initiatives in 2016 partially offset by higher variable cash compensation costs. CCS segment operating
income for 2016 included asset impairment charges of $38.6 million which were excluded from the calculation of
non-GAAP adjusted operating income. CCS operating income for 2015 included an asset impairment charge of
$16.4 million, purchase accounting adjustments related to the BNS acquisition of $78.2 million and higher
integration and transactions costs, all of which were excluded from the calculation of non-GAAP adjusted operating
income.

CommScope Mobility Solutions Segment

The CMS segment experienced a slight decrease in net sales for 2016 compared to the prior year, with incremental
net sales from the BNS acquisition of $31.1 million. Legacy CommScope CMS segment net sales for 2016
decreased across all major geographical regions except the U.S., which benefited from an increase in spending by
certain domestic operators. Foreign exchange rate changes had a negative impact of approximately 1% on legacy
CommScope CMS segment net sales for 2016 compared to the prior year.

CMS segment operating income increased for 2016 primarily due to the unfavorable impact of the $74.4 million
goodwill impairment charge recorded in the prior year, which was excluded from the calculation of non-GAAP
adjusted operating income. CMS segment operating income and non-GAAP adjusted operating income also
increased in 2016 compared to 2015 due to more favorable geographic and product mix, partially offset by the effect
of lower sales volumes, higher variable cash compensation costs and increased R&D spending.

Liquidity and Capital Resources

The following table summarizes certain key measures of our liquidity and capital resources:

Cash and cash equivalents
Working capital (1), excluding cash and cash
equivalents and current portion of long-term debt
Availability under revolving credit facility
Long-term debt, including current portion
Total capitalization (2)
Long-term debt, including current portion, as a
percentage of total capitalization

December 31,

2017

2016

Dollar
Change

%
Change

454.0

(dollars in millions)
428.2

25.8

6.0 %

766.2
425.4
4,369.4
6,017.2

720.2
441.1
4,562.0
5,956.1

46.0
(15.7 )
(192.6 )
61.1

6.4
(3.6)
(4.2)
1.0

72.6%

76.6%

(1) Working capital consists of current assets of $1,943.9 million less current liabilities of $723.7 million as of

December 31, 2017 and current assets of $1,993.8 million less current liabilities of $857.8 million as of
December 31, 2016.

(2) Total capitalization includes long-term debt, including the current portion, and stockholders’ equity.

Our principal sources of liquidity on a short-term basis are cash and cash equivalents, cash flows provided by
operations and availability under credit facilities. Refer to Note 6 in the Notes to Consolidated Financial Statements
included elsewhere in this Annual Report on Form 10-K for information regarding the terms of our credit facilities.
On a long-term basis, our potential sources of liquidity also include raising capital through the issuance of debt
and/or equity. The primary uses of liquidity include debt service requirements (including voluntary debt repayments
or redemptions), funding working capital requirements, funding acquisitions, paying acquisition integration costs,
capital expenditures, paying restructuring costs, income tax payments, funding pension and other postretirement
obligations, prepayments under supply agreements and potential stock repurchases. We believe that our existing
cash, cash equivalents and cash flows from operations, combined with availability under our revolving credit
facility, will be sufficient to meet our presently anticipated future cash needs. We may experience volatility in cash
flows between periods due to, among other reasons, variability in the timing of vendor payments and customer
receipts. We may, from time to time, borrow under our revolving credit facility or issue securities, if market
conditions are favorable, to meet future cash needs or to reduce our borrowing costs.

Although there are no financial maintenance covenants under the terms of our senior notes, there is a limitation,
among other limitations, on certain future borrowings based on an adjusted leverage ratio or a fixed charge coverage
ratio. These ratios are based on financial measures similar to adjusted EBITDA as presented in the “Reconciliation
of Non-GAAP Measures” section below, but also give pro forma effect to certain events, including acquisitions and
savings from cost reduction initiatives such as facility closures and headcount reductions. For the year ended
December 31, 2017, our pro forma adjusted EBITDA, as measured pursuant to indentures governing our notes, was
$990.7 million, which included the impact of the Cable Exchange acquisition and savings from announced cost
reduction initiatives (combined total of $26.8 million) so that the impact of the acquisition and cost reduction
initiatives is fully reflected in the twelve-month period used in the calculation of the ratios. In addition to limitations
under these indentures, our senior secured credit facilities contain customary negative covenants. We believe we
were in compliance with the covenants under our indentures and senior secured credit facilities at December 31,
2017.

Cash and cash equivalents increased during 2017 due to $586.3 million of cash generated from operations largely
offset by $210.0 million used for voluntary net repayments of our debt, the repurchase of $175.0 million of our
common stock, $105.2 million used to acquire Cable Exchange and $68.7 million used for capital expenditures. As
of December 31, 2017, approximately 72% of our cash and cash equivalents were held outside the U.S.

Working capital, excluding cash and cash equivalents and the current portion of long-term debt, increased as of
December 31, 2017 compared to December 31, 2016 primarily because of lower accrued compensation balances and
a reduction of income tax payable due to the timing of certain international tax payments. The net increase in total
capitalization as of December 31, 2017 compared to December 31, 2016 primarily reflected current year earnings
and foreign currency translation gains, partially offset by stock repurchases
.

Cash Flow Overview

Comparison for the year ended December 31, 2017 with the year ended December 31, 2016

Year Ended December 31,

2017

Dollar
Change

Change

2016
(dollars in millions)

Net cash generated by operating activities
Net cash used in investing activities
Net cash used in financing activities

586.3
(166.2)
(413.6)

640.2
(54.6)
(708.4)

(53.9 )
(111.6 )
294.8

(8.4) %
NM
NM

NM - Not meaningful

Operating Activities

During 2017, we generated $586.3 million of cash through operating activities compared to $640.2 million during
2016. The lower level of cash generation was primarily due to the prior year benefit generated from the extension of
vendor payment terms as well as higher 2016 incentive compensation which was paid in 2017 and lower operating
performance in 2017 compared to 2016. These declines were partially offset by higher cash flow from accounts
receivable due to changes in the timing of sales and collections as well as approximately $60.0 million of customer
payments received in late 2017 that were not due until 2018. In addition, we paid lower cash taxes and cash interest
during 2017 than in 2016.

Investing Activities

During 2017, we acquired Cable Exchange and paid $105.2 million, net of cash acquired, using cash on hand. We
recorded a noncurrent liability for the remaining $14.5 million of payments due to the sellers. During 2016, we
received adjustments to the BNS acquisition purchase price of $7.1 million and paid $1.0 million as a final payment
on a previous acquisition.

Investment in property, plant and equipment during 2017 was $68.7 million compared with $68.3 million for the
prior year. The investment in property, plant and equipment was primarily related to supporting improvements in
manufacturing operations, including expanding production capacity and investing in information technology,
including software developed for internal use.

During 2017, we received proceeds of $9.9 million related to the sale of the remainder of our investment in
Hydrogenics. During 2016, we received $1.3 million in proceeds related to the sale of a portion of that investment.

During 2017, we paid $7.6 million to settle a net investment hedge that we entered into in 2017 for the purpose of
mitigating a portion of the foreign currency risk on the euro net investment in a foreign subsidiary. As of December
31, 2017, we had entered into another net investment hedge intended to mitigate the same risk with an outstanding
maturity of twelve months.

During 2017 and 2016, we sold properties no longer being utilized for $5.0 million and $3.7 million, respectively.

Financing Activities

In March 2017, we issued the 2027 Notes for $750.0 million and the proceeds, together with cash on hand, were
used to (i) redeem all $500.0 million of the outstanding 2020 Notes, (ii) repay a portion of the outstanding
borrowings under our senior secured term loans, including the $111.9 million of outstanding principal on our senior
secured term loan due 2018 and $138.1 million of outstanding principal on the 2022 Term Loan, and (iii) pay related
fees and expenses. We paid a $14.8 million premium to redeem the 2020 Notes and paid $7.2 million in debt
issuance costs related to the 2027 Notes.

During 2017, we amended the 2022 Term Loan to reduce the interest rate margin by 50 basis points which resulted
in the repayment of $30.4 million to certain lenders under the senior secured credit facilities and the receipt of $30.4
million in proceeds from the new lenders and existing lenders who increased their positions. We also paid $1.1
million in debt modification costs related to this amendment.

In addition to the above activities, we voluntarily repaid $210.0 million of the 2022 Term Loan during 2017. We
expect to voluntarily repay additional debt and may repurchase certain of our senior notes if market conditions are
favorable and the applicable indenture and the credit agreements governing the senior secured credit facilities permit
such repayment or repurchase. We may also refinance portions of our existing debt to reduce interest rates, extend
the term or adjust the total amount of fixed or floating-rate debt.

As of December 31, 2017, we had no outstanding borrowings under our revolving credit facility and the remaining
availability was $425.4 million, reflecting a borrowing base of $452.4 million reduced by $27.0 million of letters of
credit issued under the revolving credit facility.

During the first half of the year, we paid cash of $100.0 million to repurchase stock under the stock repurchase
program authorized by our Board of Directors in February 2017. We had no remaining authorization under this
stock repurchase program as of December 31, 2017. In August 2017, our Board of Directors approved a new stock
repurchase plan of up to $100.0 million. We paid cash of $75.0 million to repurchase stock under this plan during
2017. We had $25.0 million remaining authorized under this stock repurchase program as of December 31, 2017.
The repurchase authorization under this plan expires on July 31, 2018.

During 2017, we received proceeds of $9.9 million related to the exercise of stock options. Also during 2017,
employees surrendered 411,932 shares of our common stock to satisfy their tax withholding requirements on vested
restricted stock units and performance share units, which reduced cash flows by $15.4 million.

During 2016, we voluntarily redeemed the remaining $536.6 million of our senior PIK toggle notes and made
mandatory debt repayments of $12.5 million on the 2022 Term Loan. In connection with the debt redeemed or
repaid in 2016, we paid redemption premiums of $17.7 million and other fees of $1.2 million. Also during 2016, we
received proceeds of $16.8 million related to the exercise of stock options and employees surrendered 143,000
shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units, which
reduced cash flows by $3.9 million.

Comparison for the year ended December 31, 2016 with the year ended December 31, 2015

Year Ended December 31,

2016

Dollar
Change

Change

2015
(dollars in millions)

Net cash generated by operating activities
Net cash used in investing activities
Net cash generated by (used in) financing activities

640.2
(54.6)
(708.4)

327.1
(3,050.6)
2,578.1

313.1

2,996.0
(3,286.5 )

95.7 %
NM
NM

NM - Not meaningful

Operating Activities

During 2016, we generated $640.2 million of cash through operating activities compared to $327.1 million during
2015. The improvement was primarily due to higher adjusted operating income in 2016 as a result of the BNS
acquisition. In addition, we benefited from initiatives to improve payment terms with vendors in 2016, lower
variable cash compensation payments than in the prior year and lower payments of integration and transaction costs
in 2016 compared to 2015. Cash paid for interest was $53.4 million higher for 2016 than in the prior year primarily
as a result of the incremental debt incurred to finance the acquisition of the BNS business. Cash paid for taxes was
$26.4 million higher for 2016 compared to 2015.

Investing Activities

Investment in property, plant and equipment during 2016 was $68.3 million, of which $6.1 million was related to
capital spending to support the integration of the BNS business. During 2015, investment in property, plant and
equipment was $56.5 million, of which $12.7 million was related to capital spending to support the integration of the
BNS business. The investment in property, plant and equipment was primarily related to supporting improvements
in manufacturing operations, including expanding production capacity, and investing in information technology
(including software developed for internal use).

During 2016, we sold a facility that was no longer being utilized for $3.7 million.

During 2016, we received $7.1 million in net settlements for working capital, pension and other adjustments related
to the BNS acquisition. Also during 2016, we paid the final $1.0 million in purchase price payable related to the
Airvana acquisition.

During 2015, we acquired the BNS business and paid $2,957.5 million, net of cash acquired, using a combination of
cash on hand and proceeds from the issuance of long-term debt. Also in 2015, we acquired Airvana and paid $43.5
million, net of cash acquired, using cash on hand.

Financing Activities

During 2016, we voluntarily redeemed the remaining $536.6 million of our senior PIK toggle notes. We also made a
voluntary debt payment of $150.0 million on our senior secured term loan due 2018 (2018 Term Loan) as well as
mandatory debt repayments of $12.5 million on our 2022 Term Loan. Also in 2016, in connection with the
amendment of our 2022 Term Loan to reduce our interest rate, we recorded debt repayments and offsetting debt
proceeds of $19.8 million. In connection with the debt redeemed or repaid in 2016, we paid redemption premiums of
$17.7 million and other fees of $1.2 million.

As of December 31, 2016, we had no outstanding borrowings under our revolving credit facility and availability of
$441.1 million, reflecting a borrowing base of $466.1 million reduced by $25.0 million of letters of credit issued
under the revolving credit facility.

During 2016, we received proceeds of $16.8 million related to the exercise of stock options. Also during 2016,
employees surrendered 143,000 shares of our common stock to satisfy their tax withholding requirements on vested
restricted stock units, which reduced cash flows by $3.9 million.

During 2015, we received $500.0 million from the issuance of the 2020 Notes which was used, together with cash
on hand, to repay $500.0 million of our existing term loans and to pay the fees, costs and expenses related to the
issuance. In addition, we issued $1.5 billion of 2025 Notes and borrowed $1.25 billion under the 2022 Term Loan.
The proceeds from the 2025 Notes and the 2022 Term Loan were used to fund a substantial portion of the BNS
acquisition. In connection with these financing transactions and an amendment of our revolving credit facility, we
incurred $74.3 million of debt issuance costs. Also during 2015, we made a mandatory debt repayment of $3.1
million on the 2022 Term Loan and a voluntary repayment of $100.0 million on the 2018 Term Loan. We also
voluntarily repurchased $13.4 million of our senior PIK toggle notes and paid a $0.3 million premium related to the
repurchase. During 2015, we received proceeds of $25.6 million related to the exercise of stock options. Also during
2015, employees surrendered 24,656 shares of our common stock to satisfy their tax withholding requirements on
vested restricted stock units, which reduced cash flows by $0.7 million.

Reconciliation of Non-GAAP Measures

We believe that presenting certain non-GAAP financial measures enhances an investor’s understanding of our
financial performance. We further believe that these financial measures are useful in assessing our operating
performance from period to period by excluding certain items that we believe are not representative of our core
business. We also use certain of these financial measures for business planning purposes and in measuring our
performance relative to that of our competitors. We believe these financial measures are commonly used by
investors to evaluate our performance and that of our competitors. However, our use of the terms non-GAAP
adjusted operating income and non-GAAP adjusted EBITDA may vary from that of others in our industry. These
financial measures should not be considered as alternatives to operating income (loss), net income (loss) or any
other performance measures derived in accordance with U.S. GAAP as measures of operating performance,
operating cash flows or liquidity.

Consolidated

Operating income
Adjustments:

Amortization of purchased intangible
assets
Restructuring costs, net
Equity-based compensation
Asset impairments
Integration and transaction costs (a)
Purchase accounting adjustments (b)
Non-GAAP adjusted operating income

Depreciation

Non-GAAP adjusted EBITDA

2017

Year Ended December 31,
2016
(in millions)

2015

477.6

574.8 $

181.6

271.0
43.8
41.9
—
48.0
—
882.3
81.7
963.9

297.2
42.9
35.0
38.6
62.3
0.6
1,051.4 $
80.5
1,131.8 $

220.6
29.5
28.7
90.8
96.9
81.7
729.8
60.6
790.3

(a) Reflects integration costs related to the acquisition of the BNS business, transaction costs related to potential

and consummated acquisitions and costs related to secondary stock offerings.

(b) Reflects non-cash charges resulting from the application of acquisition accounting.

CCS Segment

Operating income
Adjustments:

Amortization of purchased intangible assets
Restructuring costs, net
Equity-based compensation
Asset impairments
Integration and transaction costs
Purchase accounting adjustments
Non-GAAP adjusted operating income

CMS Segment

Operating income
Adjustments:

Note: Components may not sum to total due to rounding

2017

Year Ended December 31,
2016
(in millions)

2015

242.0

291.2 $

16.1

175.5
36.6
24.4
—
47.9
—
526.3

195.9
27.1
19.8
38.6
59.1
0.6
632.3 $

124.0
16.9
16.1
16.3
82.3
78.2
349.9

2017

Year Ended December 31,
2016
(in millions)

2015

235.6

283.6 $

165.5

95.5
7.2
17.5
—
0.2
—
356.0

101.3
15.8
15.2
—
3.3
—
419.1 $

96.6
12.6
12.6
74.4
14.6
3.6
379.9

Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2017:

Contractual Obligations

Long-term debt, including current
maturities (a)
Interest on long-term debt (a)(b)
Operating leases
Purchase obligations and other supplier
agreements (c)
Pension and other postretirement
benefit liabilities (d)
Restructuring costs, net (e)
Unrecognized tax benefits (f)
Tax repatriation payment (g)
Total contractual obligations

Total
Payments
Due

Amount of Payments Due per Period

2018

2019-2020 2021-2022 Thereafter
(in millions)

$ 4,436.3 $
1,516.5
112.1

— $

226.8
34.5

— $ 1,536.3 $
402.1
24.4

452.9
42.4

2,900.0
434.7
10.8

37.6

11.2
25.6
—
25.1

$ 6,164.4 $

23.1

14.5

—

7.0
22.0
—
2.2
315.6 $

1.4
3.1
—
4.4

1.1
0.5
—
6.2
518.7 $ 1,970.6 $

1.7
—
—
12.3
3,359.5

(a) No prepayment or redemption of any of our long-term debt balances has been assumed. Refer to Note 6 in the
Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for
information regarding the terms of our long-term debt agreements.

(b)

Interest on long-term debt excludes the amortization of deferred financing fees and original issue discount.
Interest on variable rate debt is estimated based upon rates in effect as of December 31, 2017.

(c) Purchase obligations and other supplier agreements include payments of $5.6 million in 2018 for minimum
amounts owed under take-or-pay or requirements contracts. Amounts covered by open purchase orders are
excluded as there is no contractual obligation until goods or services are received. This item also includes
$17.5 million in payments in 2018 to a supplier for access to certain goods over multiple years and $14.5
million of payments in 2019 and 2020 related to the acquisition of Cable Exchange.

(d) Amounts reflect expected contributions related to payments under the postretirement benefit plans through
2027 and expected pension contributions of $6.0 million in 2018 (see Note 10 in the Notes to Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K).

(e) Future restructuring payments exclude payments due under lease arrangements which are included in

operating leases above.

(f) Due to the uncertainty in predicting the timing of tax payments related to our unrecognized tax benefits,

$46.3 million has been excluded from the presentation. We anticipate a reduction of up to $28.0 million of
unrecognized tax benefits during the next twelve months (see Note 11 in the Notes to Consolidated Financial
Statements included elsewhere in this Annual Report on Form 10-K).

(g) Amounts reflect the one-time tax repatriation obligation to be paid in installments over eight years under the
Tax Cuts and Jobs Act (see Note 11 in the Notes to Consolidated Financial Statements included elsewhere in
this Annual Report on Form 10-K).

Recent Accounting Pronouncements

Adopted in 2017

We adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, on January 1, 2017.
The new standard simplifies several aspects of the accounting for employee equity-based payment transactions,
including the income tax consequences, classification of awards as either equity or liabilities and classification on
the statement of cash flows. Beginning January 1, 2017, we recognized all excess tax benefits in income tax
expense. An income tax benefit of $14.4 million was recognized for the year ended December 31, 2017 under ASU
No. 2016-09. We recognized a $0.2 million, net of tax, cumulative effect adjustment to retained earnings
(accumulated deficit) as a result of our election to change our accounting policy to account for forfeitures as they
occur. The impact of the adoption of ASU No. 2016-09 to the Consolidated Statements of Cash Flows was to
present excess tax benefits or deficiencies as an operating activity rather than as a financing activity. We elected to
present the impact on the Consolidated Statements of Cash Flows retrospectively; therefore, the Consolidated
Statement of Cash Flows for the years ended December 31, 2016 and 2015 reflect an increase to both net cash
generated by operating activities and net cash used in financing activities of $15.0 million and $24.8 million,
respectively.

We also adopted ASU No. 2016-15, Cash Flow Classification of Certain Cash Receipts and Cash Payments, as of
January 1, 2017. This guidance amends or clarifies guidance on classification of certain transactions in the statement
of cash flows, including debt extinguishment costs and contingent consideration payments after a business
combination. During the year ended December 31, 2017, the impact of adoption on our Consolidated Statements of
Cash Flows was to present $14.8 million of debt redemption premium paid as a financing activity rather than as an
operating activity. The provisions of this new standard are required to be applied retrospectively; therefore, the
Consolidated Statement of Cash Flows for the years ended December 31, 2016 and 2015 reflect the payments of
$19.0 million and $0.3 million, respectively, of debt redemption premiums and other financing costs as a financing
activity rather than as an operating activity.

Issued but Not Adopted

In March 2017, the Financial Accounting Standards Board (FASB) issued ASU No. 2017-07, Improving the
Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires an
employer to report the service cost component in the same line item as other compensation costs arising from
services rendered by the employee and requires the other components of net benefit cost to be reported outside the
subtotal of operating income. ASU No. 2017-07 is effective for us as of January 1, 2018 and must be applied
retrospectively. We believe the application of this new guidance will result in a reduction of operating income and a
reduction of other expense, net in 2018. For the years ended December 31, 2017, 2016 and 2015, the reclassification
between operating income and other expense, net would have been $5.6 million, $7.1 million and $12.0 million,
respectively. The details on the components of our net periodic benefit cost can be found in Note 10 to the
Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test of Goodwill Impairment, which
eliminates Step 2 from the goodwill impairment test. Under the new guidance, an entity will perform its annual or
interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity
will recognize a goodwill impairment charge for the excess of the reporting unit’s carrying amount over its fair
value, up to the amount of goodwill allocated to that reporting unit. ASU No. 2017-04 is effective for us as of
January 1, 2020 and early adoption is permitted. We are evaluating the impact of the new guidance on the
consolidated financial statements and when it may be adopted.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The
new guidance replaces the current incurred loss method used for determining credit losses on financial assets,
including trade receivables, with an expected credit loss method. ASU No. 2016-13 is effective for us as of January
1, 2020 and early adoption is permitted. We are evaluating the impact of the new guidance on the consolidated
financial statements and when it may be adopted.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which supersedes the current leasing guidance in
Topic 840, Leases. Under the new guidance, lessees are required to recognize assets and lease liabilities for the
rights and obligations created by leased assets previously classified as operating leases. ASU No. 2016-02 is
effective for us as of January 1, 2019 and early adoption is permitted. We plan to adopt this new guidance as of
January 1, 2019. We are continuing to evaluate the impact of adoption on the consolidated financial statements but
we expect the ASU to have a material impact on our Consolidated Balance Sheets as a result of the requirement to
recognize right-of-use assets and lease liabilities. Additional information on our commitments under equipment and
facility operating leases can be found in Note 13 to the Consolidated Financial Statements included elsewhere in this
Annual Report on Form 10-K.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and
Financial Liabilities, which modifies how entities measure equity investments (except those accounted for under the
equity method of accounting) and present changes in the fair value of financial liabilities; simplifies the impairment
assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to
identify impairment; changes presentation and disclosure requirements; and clarifies that an entity should evaluate
the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with
the entity’s other deferred tax assets. The guidance is effective for us as of January 1, 2018 and, with the exception
of certain provisions, early adoption is not permitted. We do not expect the new guidance to have a material impact
on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard defines a
single comprehensive model of accounting for revenue arising from contracts with customers and supersedes most
current revenue recognition guidance, including industry-specific guidance. The core principle of the ASU is to
recognize revenues when promised goods or services are transferred to customers in an amount that reflects the
consideration that is expected to be received for those goods or services. We will be required to adopt the new
standard, including subsequently issued clarifying guidance, as of January 1, 2018 using either: (i) full retrospective
application to each prior reporting period presented; or (ii) modified retrospective application with the cumulative
effect of initially applying the standard recognized at the date of initial application and providing certain additional
required disclosures. We will adopt the new accounting model as of January 1, 2018 using the modified
retrospective method.

We completed an impact assessment and determined that adoption of the standard will generally result in an
acceleration of revenues recognized for certain contracts containing multiple performance obligations. These
contract revenues are currently accounted for using the multi-element guidance and are primarily for certain metro
cell, DAS and small cell solutions within the CMS segment. These multi-element revenue contracts represented less
than 2% of net sales for the year ended December 31, 2017. Based on customer-specific contracts in effect at
December 31, 2017, we expect to recognize a cumulative effect adjustment, net of tax, of $2 million to $5 million in
2018 that reduces the accumulated deficit on the Consolidated Balance Sheets. This adjustment reflects revenue of
$5 million to $10 million that would have been recognized in 2018.

We are prepared to make the necessary changes to our accounting policies, processes, internal controls and
information systems that are required to meet the new standard’s reporting and disclosure requirements.

Off-Balance Sheet Arrangements

We are not a party to any significant off-balance sheet arrangements, except for operating leases. There have not
been any material changes to our off-balance sheet arrangements during the year ended December 31, 2017.

Effects of Inflation and Changing Prices

We continually attempt to minimize the effect of inflation on earnings by controlling our operating costs and
adjusting our selling prices. The principal raw materials purchased by us (copper, aluminum, steel, plastics and other
polymers, bimetals and optical fiber) are subject to changes in market price as they are influenced by commodity
markets and other factors. Prices for copper, fluoropolymers and certain other polymers derived from oil and natural
gas have, at times, been volatile. As a result, we have adjusted our prices for certain products and may have to adjust
prices again in the future. To the extent that we are unable to pass on cost increases to customers without a
significant decrease in sales volume or must implement price reductions in response to a rapid decline in raw
material costs, these cost changes could have a material adverse impact on the results of our operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks related to changes in interest rates, foreign currency exchange rates and commodity
prices. We may utilize derivative financial instruments, among other methods, to hedge some of these exposures.
We do not use derivative financial instruments for speculative or trading purposes.

Interest Rate Risk

The table below summarizes the expected interest and principal payments associated with our variable rate debt (the
$886.3 million senior secured term loan and revolving credit facility) as of December 31, 2017. The principal
payments presented below are based on scheduled maturities and assume no borrowings under the revolving credit
facility. The interest payments presented below assume the interest rates in effect as of December 31, 2017 (see
Note 6 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K).
The impact of a 1% increase in the interest rate index on projected future interest payments on the variable rate debt
is also included in the table below.

2018

2019

2020
(dollars in millions)

2021

2022

There-
after

Principal and interest payments
on variable rate debt
Average cash interest rate
Impact of 1% increase in interest rate index $

31.1
3.50%
9.2

30.4
3.43%
9.2

29.7 $ 915.9 $
3.35 %
3.35 %
9.2 $
9.2 $

—
—
—

We also have $3.60 billion aggregate principal amount of fixed rate senior notes. The table below summarizes our
expected interest and principal payments related to our fixed rate debt at December 31, 2017.

Principal and interest payments
on fixed rate debt
Average cash interest rate

2018

2019

2021
2020
(dollars in millions)

2022

There-
after

$ 195.7

$ 829.5 $ 163.3 $ 3,334.7

5.51%

5.57 %

5.63 %

5.44%

Foreign Currency Risk

Approximately 46% of net sales for both 2017 and 2016 were to customers located outside the U.S. Significant
changes in foreign currency exchange rates could adversely affect our international sales levels and the related
collection of amounts due. In addition, a significant decline in the value of currencies used in certain regions of the
world as compared to the U.S. dollar could adversely affect product sales in those regions because our products may
become more expensive for those customers to pay for in their local currency. Conversely, significant increases in
the value of foreign currencies as compared to the U.S. dollar could adversely affect profitability as certain product
costs increase relative to a U.S. dollar-denominated sales price. The foreign currencies to which we have the greatest
exposure include the Chinese yuan, euro, Czech koruna, Australian dollar, Indian rupee, Mexican peso and British
pound. Local manufacturing provides a partial natural hedge and we continue to evaluate additional alternatives to
help us reasonably manage the market risk related to foreign currency exposures.

We use derivative instruments such as forward exchange contracts to manage the risk of fluctuations in the value of
certain foreign currencies. At December 31, 2017, we had foreign exchange contracts with a net unrealized gain of
$8.5 million, with maturities of up to twelve months and aggregate notional value of $422 million (based on
exchange rates as of December 31, 2017). These contracts are not designated as hedges for accounting purposes and
are marked to market each period through earnings and, as such, there were no unrecognized gains or losses as of
December 31, 2017 or 2016. In addition, we hold certain foreign exchange forward contracts designated as net
investment hedges to mitigate a portion of the foreign currency risk on our euro net investment in a foreign
subsidiary. At December 31, 2017, we held a designated forward contract with a notional value of $30 million and a
maturity of twelve months. Our derivative instruments are not leveraged and are not held for trading or speculation.
See Note 7 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-
K for further discussion of these contracts. We continuously evaluate the amount and type of derivative instruments
utilized to manage the market risk related to foreign currency exposures.

Commodity Price Risk

Materials account for a large portion of our cost of sales. These materials, such as copper, aluminum, steel, plastics
and other polymers, bimetals and optical fiber, are subject to changes in market price as they are influenced by
commodity markets and supply and demand levels, among other factors. Management attempts to mitigate these
risks through effective requirements planning and by working closely with key suppliers to obtain the best possible
pricing and delivery terms. We may also enter into agreements with certain suppliers to guarantee our access to
certain key components. As of December 31, 2017, we had forward purchase commitments outstanding under take-
or-pay contracts for certain metals of approximately $5.6 million that we expect to consume in the normal course of
operations through the first quarter of 2018. We continuously evaluate the amount and type of derivative instruments
utilized to manage commodity price risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

Reports of Independent Registered Public Accounting Firm

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders’ Equity

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of CommScope Holding Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CommScope Holding Company, Inc. (the
Company) as of December 31, 2017 and 2016, and the related consolidated statements of operations and
comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended
December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the consolidated financial position of the Company at
December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) and our report dated February 14, 2018 expressed an unqualified
opinion thereon.

Adoption of New Accounting Standards

As discussed in Note 2 to the financial statements, the Company changed its method of accounting for share-based
payments and classification of certain amounts in the cash flow statement.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2008.
Charlotte, North Carolina
February 14, 2018

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of CommScope Holding Company, Inc.

Opinion on Internal Control over Financial Reporting

We have audited CommScope Holding Company, Inc.’s internal control over financial reporting as of December 31,
2017, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,
CommScope Holding Company, Inc. (the Company) maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, and the
related consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows
for each of the three years in the period ended December 31, 2017, and the related notes, of the Company and our
report dated February 14, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

Charlotte, North Carolina
February 14, 2018

CommScope Holding Company, Inc.
Consolidated Statements of Operations
and Comprehensive Income (Loss)
(In thousands, except per share amounts)

Net sales
Operating costs and expenses:

Cost of sales
Selling, general and administrative
Research and development
Amortization of purchased intangible assets
Restructuring costs, net
Asset impairments

Total operating costs and expenses

Operating income
Other expense, net
Interest expense
Interest income
Income (loss) before income taxes
Income tax expense
Net income (loss)

Earnings (loss) per share:
Basic
Diluted

Weighted average shares outstanding:
Basic
Diluted

Comprehensive income (loss):

Net income (loss)
Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss)
Defined benefit plans:

Change in unrecognized actuarial gain (loss)
Change in unrecognized net prior service cost (credit)

Loss on net investment hedge
Available-for-sale securities

Total other comprehensive income (loss), net of tax

Total comprehensive income (loss)

2017
4,560,582 $

Year Ended December 31,
2016
4,923,621 $

2,788,688
794,291
185,222
270,989
43,782
—
4,082,972
477,610
(15,040)
(257,059)
4,221
209,732
(15,968)
193,764 $

2,890,032
879,495
200,715
297,202
42,875
38,552
4,348,871
574,750
(30,171 )
(277,534 )
5,524
272,569
(49,731 )
222,838 $

2015
3,807,828

2,462,008
687,389
135,964
220,602
29,488
90,784
3,626,235
181,593
(13,061)
(234,661)
4,128
(62,001)
(8,874)
(70,875)

1.01 $
0.98 $

1.16 $
1.13 $

(0.37)
(0.37)

192,430
196,811

192,470
196,459

189,876
189,876

193,764 $

222,838 $

(70,875)

201,378

(93,528 )

(80,137)

6,876
(2,255)
(4,981)
(2,508)
198,510
392,274 $

(16,002 )
96
—
(4,001 )
(113,435 )
109,403 $

3,571
(6,181)
—
(5,383)
(88,130)
(159,005)

$
$

See notes to consolidated financial statements.

CommScope Holding Company, Inc.
Consolidated Balance Sheets
(In thousands, except share amounts)

Assets

Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of
$13,976 and $17,211, respectively
Inventories, net
Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net of accumulated depreciation
of $390,389 and $303,734, respectively
Goodwill
Other intangible assets, net
Other noncurrent assets
Total assets

Liabilities and Stockholders' Equity

Accounts payable
Other accrued liabilities
Current portion of long-term debt

Total current liabilities

Long-term debt
Deferred income taxes
Pension and other postretirement benefit liabilities
Other noncurrent liabilities
Total liabilities

Commitments and contingencies
Stockholders' equity:

December 31,

2017

2016

453,977 $

428,228

898,829
444,941
146,112
1,943,859

467,289
2,886,630
1,636,084
107,804
7,041,666 $

436,737 $
286,980
—
723,717
4,369,401
134,241
25,140
141,341
5,393,840

952,367
473,267
139,902
1,993,764

474,990
2,768,304
1,799,065
105,863
7,141,986

415,921
429,397
12,500
857,818
4,549,510
199,121
31,671
109,782
5,747,902

Preferred stock, $.01 par value: Authorized shares: 200,000,000;

Issued and outstanding shares: None

Common stock, $0.01 par value: Authorized shares: 1,300,000,000;

Issued and outstanding shares: 190,906,110 and 193,837,437,
respectively

Additional paid-in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive loss
Treasury stock, at cost: 6,336,144 shares and 1,129,222 shares,

respectively

Total stockholders' equity
Total liabilities and stockholders' equity

—

1,972
2,334,071
(395,998 )
(86,603 )

1,950
2,282,014
(589,556)
(285,113)

(205,616 )
1,647,826
7,041,666 $

(15,211)
1,394,084
7,141,986

See notes to consolidated financial statements.

CommScope Holding Company, Inc.
Consolidated Statements of Cash Flows
(In thousands)

Operating Activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash generated
by operating activities:

Depreciation and amortization
Equity-based compensation
Deferred income taxes
Asset impairments
Changes in assets and liabilities:

Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable and other accrued liabilities
Other noncurrent liabilities
Other noncurrent assets

Other

Net cash generated by operating activities
Investing Activities:

Additions to property, plant and equipment
Proceeds from sale of property, plant and equipment
Cash paid for acquisitions, including purchase price adjustments,
net of cash acquired
Proceeds from sale of businesses and long-term investments
Payments upon settlement of net investment hedge
Other

Net cash used in investing activities
Financing Activities:

Long-term debt repaid
Long-term debt proceeds
Debt issuance and modification costs
Debt extinguishment costs
Cash paid for repurchase of common stock
Proceeds from the issuance of common shares under equity-based
compensation plans
Tax withholding payments for vested equity-based compensation
awards

Net cash generated by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Year Ended December 31,
2016

2015

2017

$ 193,764

$ 222,838 $

(70,875)

378,012
41,850
(71,475)

399,053
35,006
(100,878 )
38,552

—

96,745
53,658
(1,273)
(154,691)
14,644
(8,418)
43,470
586,286

(100,867 )
(31,996 )
14,273
191,405
(35,950 )
(1,834 )
10,619
640,221

303,500
28,665
(101,826)
90,784

(6,984)
162,164
(65,271)
6,921
(13,320)
(11,966)
5,323
327,115

(68,721)
5,424

(68,314 )
4,084

(56,501)
3,417

(105,249)
9,898
(7,558)

—

(166,206)

6,098 (3,000,991)
2,817
1,292
—
—
646
2,253
(54,587 ) (3,050,612)

(990,379)
780,379
(8,363)
(14,800)
(175,000)

(718,914 )

(619,056)
19,764 3,246,875
(74,319)
(4,318 )
(301)
(17,779 )
—
—

9,949

16,756

25,570

(15,405)
(413,619)
19,288
25,749
428,228
$ 453,977

(3,878 )

(698)
(708,369 ) 2,578,071
(11,921 )
(21,011)
(134,656 )
(166,437)
729,321
562,884
$ 428,228 $ 562,884

See notes to consolidated financial statements.

CommScope Holding Company, Inc.
Consolidated Statements of Stockholders' Equity
(In thousands, except share amounts)

Number of common shares outstanding:
Balance at beginning of period
Issuance of shares under equity-based compensation plans
Shares surrendered under equity-based compensation plans
Repurchase of common stock
Balance at end of period

Common stock:

Balance at beginning of period
Issuance of shares under equity-based compensation plans
Balance at end of period

Additional paid-in capital:

Balance at beginning of period
Issuance of shares under equity-based compensation plans
Equity-based compensation
Cumulative effect of change in accounting principle
Tax benefit from shares issued under equity-based compensation
plans
Balance at end of period

Retained earnings (accumulated deficit):

Balance at beginning of period
Net income (loss)
Cumulative effect of change in accounting principle
Balance at end of period

Accumulated other comprehensive loss:
Balance at beginning of period
Other comprehensive income (loss), net of tax
Balance at end of period

Treasury stock, at cost:

Balance at beginning of period
Net shares surrendered under equity-based compensation plans
Repurchase of common stock
Balance at end of period

Total stockholders' equity

Year Ended December 31,
2016

2015

2017

193,837,437
2,275,595
(411,932)
(4,794,990)
190,906,110

191,368,727 187,831,389
3,561,994
(24,656)
—
193,837,437 191,368,727

2,611,710
(143,000 )
—

$
$

1,950 $
22
1,972 $

1,923 $
27
1,950 $

1,888
35
1,923

2,282,014 $
9,927
41,835
295

2,216,202 $ 2,141,433
25,570
25,087
—

16,729
34,756
—

—

2,334,071 $

14,327

24,112
2,282,014 $ 2,216,202

(589,556) $
193,764
(206)

(395,998) $

(812,394 ) $
222,838
—
(589,556 ) $

(741,519)
(70,875)
—
(812,394)

(285,113) $
198,510
(86,603) $

(171,678 ) $
(113,435 )
(285,113 ) $

(83,548)
(88,130)
(171,678)

(15,211) $
(15,405)
(175,000)
(205,616) $
1,647,826 $

(11,333 ) $
(3,878 )
—
(15,211 ) $

(10,635)
(698)
—
(11,333)
1,394,084 $ 1,222,720

See notes to consolidated financial statements.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements
(In thousands, unless otherwise noted)

1. BACKGROUND AND DESCRIPTION OF THE BUSINESS

CommScope Holding Company, Inc., along with its direct and indirect subsidiaries (CommScope or the Company),
is a global provider of infrastructure solutions for the core, access and edge layers of communication networks. The
Company’s solutions and services for wired and wireless networks enable high-bandwidth data, video and voice
applications. CommScope’s global leadership position is built upon innovative technology, broad solution offerings,
high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation

The accompanying consolidated financial statements include CommScope Holding Company, Inc., along with its
direct and indirect subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Prior to January 1, 2017, the Company consolidated the operating results of the Broadband Network Solutions
(BNS) business acquired from TE Connectivity based on the BNS fiscal reporting calendar that resulted in a
reporting lag of one day for the year ended December 31, 2016. The BNS business results included 52 weeks for the
year ended December 31, 2017 compared to 53 weeks for the year ended December 31, 2016. Effective January 1,
2017, the reporting lag was eliminated as a result of system conversions that were part of the BNS integration. The
elimination of the reporting lag represents a change in accounting principle which the Company believes to be
preferable because it provides more current information to the users of its financial statements. The Company
determined that it was impracticable to apply the effects of the lag elimination to financial reporting periods prior to
January 1, 2017. The cumulative effect of not retroactively applying this change in accounting, however, was
immaterial as of January 1, 2017. Therefore, the Company reported the cumulative effect of the change in
accounting principle in net income for the year ended December 31, 2017 and did not retrospectively apply the
effects of this change to prior periods.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates in the Preparation of the Financial Statements

The preparation of the accompanying consolidated financial statements in conformity with accounting principles
generally accepted in the United States (U.S.) requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. These estimates and their underlying
assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other objective sources. The Company bases its estimates on historical experience and on
assumptions that are believed to be reasonable under the circumstances and revises its estimates, as appropriate,
when events or changes in circumstances indicate that revisions may be necessary. Significant accounting estimates
reflected in the Company’s financial statements include the allowance for doubtful accounts; reserves for sales
returns, discounts, allowances, rebates and distributor price protection programs; inventory excess and obsolescence
reserves; product warranty reserves and other contingent liabilities; tax valuation allowances; liabilities for
unrecognized tax benefits; effects of the 2017 Tax Cuts and Jobs Act; purchase price allocations; impairment
reviews for investments, fixed assets, goodwill and other intangibles; and pension and other postretirement benefit
costs and liabilities. Although these estimates are based on management’s knowledge of and experience with past
and current events and on management’s assumptions about future events, it is at least reasonably possible that they
may ultimately differ materially from actual results.

Cash and Cash Equivalents

Cash and cash equivalents represent deposits in banks and cash invested temporarily in various instruments with a
maturity of three months or less at the time of purchase.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are stated at the amount owed by the customer, net of allowances for estimated doubtful
accounts, discounts, returns and rebates. The Company maintains allowances for doubtful accounts for estimated
losses expected to result from the inability of its customers to make required payments. These estimates are based
on management’s evaluation of the ability of customers to make payments, focusing on historical experience,
known customer financial difficulties and the age of receivable balances. Accounts receivable are charged to the
allowance when determined to be no longer collectible.

Inventories

Inventories are stated at the lower of cost or net realizable value. Inventory cost is determined on a first-in, first-out
(FIFO) basis. Costs such as idle facility expense, excessive scrap and re-handling costs are expensed as incurred.
The Company maintains reserves to reduce the value of inventory to the lower of cost or net realizable value,
including reserves for excess and obsolete inventory.

Long-Lived Assets
Property, Plant and Equipment

Property, plant and equipment are stated at cost. Upon application of acquisition accounting, property, plant and
equipment are measured at estimated fair value as of the acquisition date to establish a new historical cost basis.
Provisions for depreciation are based on estimated useful lives of the assets using the straight-line method. Useful
lives generally range from 10 to 35 years for buildings and improvements and 3 to 10 years for machinery and
equipment. Expenditures for repairs and maintenance are expensed as incurred. Assets that management intends to
dispose of and that meet held for sale criteria are carried at the lower of the carrying value or fair value less costs to
sell.

Goodwill and Other Intangible Assets

Goodwill is assigned to reporting units based on the difference between the purchase price as allocated to the
reporting units and the estimated fair value of the identified net assets acquired as allocated to the reporting units.
Purchased intangible assets with finite lives are carried at their estimated fair values at the time of acquisition less
accumulated amortization and any impairment charges. Amortization is recognized on a straight-line basis over the
estimated useful lives of the respective assets (see Note 4).

Asset Impairments

Goodwill is tested for impairment annually or at other times if events have occurred or circumstances exist that
indicate the carrying value of the reporting unit may exceed its fair value. Property, plant and equipment and
intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying value of the assets may not be recoverable, based on the undiscounted cash flows expected to be
derived from the use and ultimate disposition of the assets. Assets identified as impaired are carried at estimated fair
value. See Note 4 for discussion of impairment charges. Due to uncertain market conditions, it is possible that future
impairment reviews may indicate additional impairments of goodwill, other intangible assets and/or property, plant
and equipment, which could result in charges that are material to the Company’s results of operations.

Income Taxes

Deferred income taxes reflect the future tax consequences of differences between the financial reporting and tax
basis of assets and liabilities. The Company records a valuation allowance, when appropriate, to reduce deferred tax
assets to an amount that is more likely than not to be realized.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Tax benefits that result from uncertain tax positions may be recognized only if they are considered more likely than
not to be sustainable, based on their technical merits. The amount of benefit to be recognized is the largest amount
of tax benefit that is at least 50% likely to be realized.

In addition, the Company does not provide for U.S. taxes related to the foreign currency remeasurement gains and
losses on its long-term intercompany loans with foreign subsidiaries. These loans are not expected to be repaid in the
foreseeable future, and the foreign currency gains and losses are therefore recorded to accumulated other
comprehensive loss.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or service has been
rendered, the selling price is fixed or determinable and collectability is reasonably assured. The majority of the
Company’s revenue comes from product sales. Revenue from product sales is recognized when the risks and
rewards of ownership have passed to the customer and revenue is measurable. Revenue is not recognized related to
product sold to contract manufacturers that the Company anticipates repurchasing in order to complete the sale to
the ultimate customer.

For sales to distributors, system integrators and value-added resellers (primarily for the CommScope Connectivity
Solutions segment), revenue is recorded at the net amount to be received after deductions for estimated discounts,
allowances, returns, rebates and distributor price protection programs. These estimates are determined based upon
historical experience, contract terms, inventory levels in the distribution channel and other related factors.
Adjustments are recorded when circumstances indicate revisions may be necessary. If management does not have
sufficient historical experience to make a reasonable estimation of these reductions to revenue, recognition of the
revenue is deferred until management believes there is a sufficient basis to recognize such revenue.

Tax Collected from Customers

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-
producing transaction, which are collected by the Company from customers, are excluded from revenue.

Product Warranties

The Company recognizes a liability for the estimated claims that may be paid under its customer assurance-type
warranty agreements to remedy potential deficiencies of quality or performance of the Company’s products. These
product warranties extend over periods ranging from one to twenty-five years from the date of sale, depending upon
the product subject to the warranty. The Company records a provision for estimated future warranty claims as cost
of sales based upon the historical relationship of warranty claims to sales and specifically identified warranty issues.
The Company bases its estimates on assumptions that are believed to be reasonable under the circumstances and
revises its estimates, as appropriate, when events or changes in circumstances indicate that revisions may be
necessary. Such revisions may be material.

Shipping and Handling Costs

CommScope includes shipping and handling costs billed to customers in net sales and includes the costs incurred to
transport product to customers as cost of sales. Certain internal handling costs, which relate to activities to prepare
goods for shipment, are recorded in selling, general and administrative expense and were approximately $62.1
million, $56.2 million and $29.3 million for the years ended December 31, 2017, 2016 and 2015, respectively.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Advertising Costs

Advertising costs are expensed in the period in which they are incurred. Advertising expense was $21.2 million,
$20.0 million and $13.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Research and Development

Research and development (R&D) costs are expensed in the period in which they are incurred. R&D costs include
materials and equipment that have no alternative future use, depreciation on equipment and facilities currently used
for R&D purposes, personnel costs, contract services and reasonable allocations of indirect costs, if clearly related to
an R&D activity. Expenditures in the pre-production phase of an R&D project are recorded as R&D expense.
However, costs incurred in the pre-production phase that are associated with output actually used in production are
recorded in cost of sales. A project is considered finished with pre-production efforts when management determines
that it has achieved acceptable levels of scrap and yield, which vary by project. Expenditures related to ongoing
production are recorded in cost of sales.

Derivative Instruments and Hedging Activities

CommScope is exposed to risks resulting from adverse fluctuations in commodity prices, interest rates and foreign
currency exchange rates. CommScope’s risk management strategy may include the use of derivative financial
instruments whenever management determines their use to be reasonable and practical. This strategy does not permit
the use of derivative financial instruments for trading or speculation. Derivative contracts not designated as hedging
instruments are measured at fair value and are marked to market each period through earnings.

During 2017, the Company began a hedging strategy to designate certain foreign exchange forward contracts as net
investment hedges to mitigate a portion of the foreign currency risk on the euro net investment in a foreign
subsidiary. Hedge effectiveness is assessed each quarter based on the net investment in the foreign subsidiary
designated as the hedged item and the overall changes in the fair value of the designated forward contracts. For
hedges that meet the effectiveness requirements, changes in fair value are recorded as a component of other
comprehensive income (loss), net of tax. Any change in fair value that is the result of ineffectiveness is recognized
immediately in earnings. There was no ineffectiveness recognized in earnings during the year ended December 31,
2017. The Company did not designate any transactions as hedges in the years ended December 31, 2016 or 2015.
See Note 7 for further disclosure related to the derivative instruments and hedging activities.

The Company has elected and documented the use of the normal purchases and sales exception for normal purchase
and sales contracts that meet the definition of a derivative financial instrument.

Foreign Currency Translation

For the years ended December 31, 2017, 2016 and 2015, approximately 46%, 46% and 51%, respectively, of the
Company’s net sales were to customers located outside the U.S. A portion of these sales were denominated in
currencies other than the U.S. dollar, particularly sales from the Company’s foreign subsidiaries. The financial
position and results of operations of certain of the Company’s foreign subsidiaries are measured using the local
currency as the functional currency. Revenues and expenses of these subsidiaries have been translated into U.S.
dollars at average exchange rates prevailing during the period. Assets and liabilities of these subsidiaries have been
translated at the exchange rates as of the balance sheet date. Translation gains and losses are recorded in
accumulated other comprehensive loss.

Aggregate foreign currency gains and losses, such as those resulting from the settlement of receivables or payables,
foreign currency contracts and short-term intercompany advances in a currency other than the subsidiary’s
functional currency, are recorded currently in earnings (included in other expense, net) and resulted in losses of $8.7
million, $9.5 million and $15.1 million during the years ended December 31, 2017, 2016 and 2015, respectively.
Foreign currency remeasurement gains and losses related to certain long-term intercompany loans that are not
expected to be settled in the foreseeable future and the effective portion of foreign currency contracts designated as
net investment hedges are recorded in accumulated other comprehensive loss. See Note 7 for disclosure of foreign
currency gains and losses specifically related to foreign currency contracts.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Equity-Based Compensation

The estimated fair value of stock awards is recognized as expense over the requisite service periods. Forfeitures of
stock awards are recognized as they occur. The Company records deferred tax assets related to compensation
expense for awards that are expected to result in future tax deductions for the Company, based on the amount of
compensation cost recognized and the Company’s statutory tax rate in the jurisdiction in which it expects to receive
a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and actual tax
deductions reported on the Company’s income tax return are recorded in the Consolidated Statements of Operations
and Comprehensive Income (Loss) within income tax expense.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of
common shares outstanding during the period. Diluted earnings (loss) per share is based on net income (loss)
divided by the weighted average number of common shares outstanding plus the dilutive effect of potential common
shares outstanding during the period using the treasury stock method. Dilutive potential common shares include
outstanding equity-based awards (stock options, restricted stock units and performance share units). Certain
outstanding equity-based awards were not included in the computation of diluted earnings (loss) per share because
the effect was either antidilutive or the performance condition was not met (1.5 million, 1.0 million and 5.9 million
shares for the years ended December 31, 2017, 2016 and 2015, respectively). Antidilutive securities for the year
ended December 31, 2015 included 4.3 million shares of equity-based awards which would have been considered
dilutive if the Company had not been in a net loss position.

The following table presents the basis for the earnings (loss) per share computations:

Numerator:

Net income (loss) for basic and diluted earnings (loss)
per share

Denominator:

Year Ended December 31,
2016

2015

2017

193,764

222,838 $

(70,875)

Weighted average common shares outstanding - basic

Dilutive effect of equity-based awards

Weighted average common shares outstanding - diluted

192,430
4,381
196,811

192,470
3,989
196,459

189,876
—
189,876

Earnings (loss) per share:

Basic
Diluted

Business Combinations

$
$

1.01
0.98

$
$

1.16 $
1.13 $

(0.37)
(0.37)

The Company uses the acquisition method of accounting for business combinations which requires assets acquired
and liabilities assumed to be recognized at their fair values on the acquisition date. Goodwill represents the excess of
the purchase price over the fair value of the net assets acquired. The fair values of the assets acquired and liabilities
assumed are determined based upon the Company’s valuation and involves making significant estimates and
assumptions based on facts and circumstances that existed as of the acquisition date. The Company uses a
measurement period following the acquisition date to gather information that existed as of the acquisition date that is
needed to determine the fair value of the assets acquired and liabilities assumed. The measurement period ends once
all information is obtained, but no later than one year from the acquisition date.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Concentrations of Risk

Non-derivative financial instruments used by the Company in the normal course of business include letters of credit
and commitments to extend credit, primarily accounts receivable. The Company generally does not require collateral
on its accounts receivable. These financial instruments involve risk, including the credit risk of nonperformance by
the counterparties to those instruments, and the actual loss may exceed the reserves provided in the Company’s
balance sheet. See Note 14 for further discussion of customer-related concentrations of risk.

The Company manages its exposures to credit risk associated with accounts receivable using such tools as credit
approvals, credit limits and monitoring procedures. CommScope estimates the allowance for doubtful accounts
based on the actual payment history and individual circumstances of significant customers as well as the age of
receivables. In management’s opinion, as of December 31, 2017, the Company did not have significant unreserved
risk of credit loss due to the non-performance of customers or other counterparties related to amounts receivable.
However, an adverse change in financial condition of a significant customer or group of customers or in the
telecommunications industry could materially affect the Company’s estimates related to doubtful accounts.

The principal raw materials purchased by CommScope (aluminum, bimetals, copper, optical fiber, plastics and other
polymers and steel) are subject to changes in market price as these materials are linked to various commodity
markets. The Company attempts to mitigate these risks through effective requirements planning and by working
closely with its key suppliers to obtain the best possible pricing and delivery terms.

Recent Accounting Pronouncements

Adopted in 2017

The Company adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, on
January 1, 2017. The new standard simplifies several aspects of the accounting for employee equity-based payment
transactions, including the income tax consequences, classification of awards as either equity or liabilities and
classification on the statement of cash flows. Beginning January 1, 2017, the Company recognized all excess tax
benefits in income tax expense. An income tax benefit of $14.4 million was recognized for the year ended December
31, 2017 under ASU No. 2016-09. The Company recognized a $0.2 million, net of tax, cumulative effect adjustment
to retained earnings (accumulated deficit) as a result of its election to change its accounting policy to account for
forfeitures as they occur. The impact of the adoption of ASU No. 2016-09 to the Consolidated Statements of Cash
Flows was to present excess tax benefits or deficiencies as an operating activity rather than as a financing activity.
The Company elected to present the impact on the Consolidated Statements of Cash Flows retrospectively;
therefore, the Consolidated Statement of Cash Flows for the years ended December 31, 2016 and 2015 reflect an
increase to both net cash generated by operating activities and net cash used in financing activities of $15.0 million
and $24.8 million, respectively.

The Company also adopted ASU No. 2016-15, Cash Flow Classification of Certain Cash Receipts and Cash
Payments, as of January 1, 2017. This guidance amends or clarifies guidance on classification of certain transactions
in the statement of cash flows, including debt extinguishment costs and contingent consideration payments after a
business combination. During the year ended December 31, 2017, the impact of adoption on the Company’s
Consolidated Statements of Cash Flows was to present $14.8 million of debt redemption premium paid as a
financing activity rather than as an operating activity. The provisions of this new standard are required to be applied
retrospectively; therefore, the Consolidated Statement of Cash Flows for the years ended December 31, 2016 and
2015 reflect the payments of $19.0 million and $0.3 million, respectively, of debt redemption premiums and other
financing costs as a financing activity rather than as an operating activity.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Issued but Not Adopted

In March 2017, the Financial Accounting Standards Board (FASB) issued ASU No. 2017-07, Improving the
Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires an
employer to report the service cost component in the same line item as other compensation costs arising from
services rendered by the employee and requires the other components of net benefit cost to be reported outside the
subtotal of operating income. ASU No. 2017-07 is effective for the Company as of January 1, 2018 and must be
applied retrospectively. The Company believes that the application of this new guidance will result in a reduction of
operating income and a reduction of other expense, net in 2018. For the years ended December 31, 2017, 2016 and
2015, the reclassification between operating income and other expense, net would have been $5.6 million, $7.1
million and $12.0 million, respectively. See Note 10 for details on the components of the Company’s annual net
periodic benefit cost.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test of Goodwill Impairment, which
eliminates Step 2 from the goodwill impairment test. Under the new guidance, an entity will perform its annual or
interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity
will recognize a goodwill impairment charge for the excess of the reporting unit’s carrying amount over its fair
value, up to the amount of goodwill allocated to that reporting unit. ASU No. 2017-04 is effective for the Company
as of January 1, 2020 and early adoption is permitted. The Company is evaluating the impact of the new guidance on
the consolidated financial statements and when it may be adopted.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The
new guidance replaces the current incurred loss method used for determining credit losses on financial assets,
including trade receivables, with an expected credit loss method. ASU No. 2016-13 is effective for the Company as
of January 1, 2020 and early adoption is permitted. The Company is evaluating the impact of the new guidance on
the consolidated financial statements and when it may be adopted.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which supersedes the current leasing guidance in
Topic 840, Leases. Under the new guidance, lessees are required to recognize assets and lease liabilities for the
rights and obligations created by leased assets previously classified as operating leases. ASU No. 2016-02 is
effective for the Company as of January 1, 2019 and early adoption is permitted. The Company plans to adopt this
new guidance as of January 1, 2019. The Company continues to evaluate the impact of adoption on the consolidated
financial statements but expects the ASU to have a material impact on its Consolidated Balance Sheets as a result of
the requirement to recognize right-of-use assets and lease liabilities. See Note 13 for more information on the
Company’s commitments under equipment and facility operating leases.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and
Financial Liabilities, which modifies how entities measure equity investments (except those accounted for under the
equity method of accounting) and present changes in the fair value of financial liabilities; simplifies the impairment
assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to
identify impairment; changes presentation and disclosure requirements; and clarifies that an entity should evaluate
the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with
the entity’s other deferred tax assets. The guidance is effective for the Company as of January 1, 2018 and, with the
exception of certain provisions, early adoption is not permitted. The Company does not expect the new guidance to
have a material impact on the consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard defines a
single comprehensive model of accounting for revenue arising from contracts with customers and supersedes most
current revenue recognition guidance, including industry-specific guidance. The core principle of the ASU is to
recognize revenues when promised goods or services are transferred to customers in an amount that reflects the
consideration that is expected to be received for those goods or services. The Company is required to adopt the new
standard, including subsequently issued clarifying guidance, as of January 1, 2018 using either: (i) full retrospective
application to each prior reporting period presented; or (ii) modified retrospective application with the cumulative
effect of initially applying the standard recognized at the date of initial application and providing certain additional
required disclosures. The Company plans to adopt the new accounting model as of January 1, 2018 using the
modified retrospective method.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The Company has completed an impact assessment and determined that adoption of the standard will generally
result in an acceleration of revenues recognized for certain contracts containing multiple performance obligations.
These contract revenues are currently accounted for using the multi-element guidance and are primarily for certain
metro cell, distributed antenna system (DAS) and small cell solutions within the CommScope Mobility Solutions
(CMS) segment. These multi-element revenue contracts represented less than 2% of total net sales for the year
ended December 31, 2017. Based on customer-specific contracts in effect at December 31, 2017, the Company
expects to recognize a cumulative effect adjustment, net of tax, of $2 million to $5 million in 2018 that reduces the
accumulated deficit on the Consolidated Balance Sheets. This adjustment reflects revenue of $5 million to $10
million that would have been recognized in 2018.

The Company is prepared to make the necessary changes to its accounting policies, processes, internal controls and
information systems that are required to meet the new standard’s reporting and disclosure requirements in 2018.

3. ACQUISITIONS

Cable Exchange

On August 1, 2017, the Company acquired Cable Exchange for $123.2 million in an all-cash transaction. The
Company paid $108.7 million ($105.2 million net of cash acquired) and recorded a $14.5 million liability for the
remaining payments due. Cable Exchange is a quick-turn supplier of fiber optic and copper assemblies for data,
voice and video communications. Net sales of Cable Exchange products are included in the CommScope
Connectivity Solutions (CCS) segment and were not material to the Consolidated Statements of Operations and
Comprehensive Income (Loss) for the year ended December 31, 2017.

The preliminary allocation of the purchase price, based on estimates of the fair values of the assets acquired and
liabilities assumed, is as follows (in millions):

Cash and cash equivalents
Accounts receivable
Inventory
Property, plant and equipment
Goodwill
Identifiable intangible assets
Less: Liabilities assumed
Net acquisition cost

Estimated Fair
Value

3.5
6.4
4.4
0.9
49.6
61.1
(2.7)
123.2

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The goodwill arising from the purchase price allocation of the Cable Exchange acquisition is believed to result from
the Company’s reputation in the marketplace and assembled workforce and is expected to be deductible for income
tax purposes.

As additional information is obtained, adjustments may be made to the preliminary purchase price allocation. The
Company is still finalizing the estimated fair value of certain liabilities assumed.

Broadband Network Solutions

On August 28, 2015, the Company acquired TE Connectivity’s BNS business for approximately $3.0 billion in an
all-cash transaction. The BNS business provides fiber optic and copper connectivity for wireline and wireless
networks and also provides small-cell DAS solutions for the wireless market. The BNS business is primarily
reported in the CCS segment. The following table presents unaudited pro forma consolidated results of operations
for CommScope for the year ended December 31, 2015 as though the BNS acquisition had been completed as of
January 1, 2014 (in millions, except per share amounts):

Net sales
Net income
Net income per diluted share

4,978.4
46.7
0.24

These pro forma results reflect adjustments for net interest expense for the debt related to the acquisition;
depreciation expense for property, plant and equipment that has been adjusted to its estimated fair value;
amortization of intangible assets with finite lives identified separate from goodwill; equity-based compensation for
equity awards issued to BNS employees; and the related income tax impacts of these adjustments. The pro forma
results for the year ended December 31, 2015, exclude $93.6 million of integration and transaction costs related to
the BNS acquisition and $81.6 million of additional cost of goods sold related to the inventory mark up included in
the purchase price allocation as these costs are nonrecurring to the Company.

The BNS amounts included in the pro forma information are based on their historical results prepared on a carve-out
basis of accounting and, therefore, may not be indicative of the actual results when operated as part of CommScope.
The pro forma adjustments represent management’s best estimates based on information available at the time the
pro forma information was prepared and may differ from the adjustments that may actually have been required.
Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that
would have been realized had the acquisition occurred as of the date indicated or that may be achieved in the future.

Airvana

On October 1, 2015, the Company acquired the assets and assumed certain liabilities of Airvana LP (Airvana), a
provider of small cell solutions for wireless networks in an all-cash transaction. The Company paid $45.1 million
($44.5 million net of cash acquired). Airvana provides 4G LTE and 3G small cell solutions that enable
communication and access to information and entertainment in challenging and high-value environments, such as
office buildings and public venues. Airvana is reported in the CMS segment.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents details of the Company’s intangible assets other than goodwill as of December 31,
2017 and 2016 (in millions):

Gross
Carrying
Amount

2017

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

2016

Accumulated
Amortization

Net
Carrying
Amount

Customer base
Trade names and trademarks
Patents and technologies
Non-compete agreements
Total intangible assets

$ 1,930.3 $
609.7
592.0
0.3

$ 3,132.3 $

935.2 $
215.3
345.4
0.3

995.1 $ 1,837.6 $
394.4
246.6
—
1,496.2 $ 1,636.1 $ 3,011.1 $

606.2
567.0
0.3

757.7 $ 1,079.9
426.5
179.7
292.7
274.3
—
0.3
1,212.0 $ 1,799.1

There were no intangible asset impairments identified during the year ended December 31, 2017. During the years
ended December 31, 2016 and 2015, the Company determined that certain patent and technology intangible assets in
the CCS segment were no longer recoverable and recorded pretax charges of $15.0 million and $5.5 million,
respectively, in asset impairments on the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company’s finite-lived intangible assets are being amortized on a straight-line basis over the weighted-average
amortization periods in the following table. The aggregate weighted-average amortization period is 11.8 years.

Customer base
Trade names and trademarks
Patents and technologies

Weighted-
Average
Amortization
Period
(in years)
11.0
18.8
6.8

Amortization expense for intangible assets was $271.0 million, $297.2 million and $220.6 million for the years
ended December 31, 2017, 2016 and 2015, respectively. Estimated amortization expense for the next five years is as
follows (in millions):

2018
2019
2020
2021
2022

Estimated
Amortization
Expense

265.7
236.7
230.3
210.3
143.5

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The following table presents goodwill by reportable segments (in millions):

Goodwill, gross, as of December 31, 2014
Acquisitions and adjustments to purchase price allocations
Foreign exchange
Goodwill, gross, as of December 31, 2015
Adjustments to purchase price allocations
Foreign exchange
Goodwill, gross, as of December 31, 2016
Acquisitions
Foreign exchange
Goodwill, gross, as of December 31, 2017

Accumulated impairment charges as of December 31, 2014
Impairment charges for year ended December 31, 2015
Accumulated impairment charges as of December 31, 2015
Impairment charges for year ended December 31, 2016
Accumulated impairment charges as of December 31, 2016 and 2017
Goodwill, net, as of December 31, 2017

CCS

CMS

Total

740.1
1,265.1
(18.6)
1,986.6
107.7
(16.8)
2,077.5
49.6
66.1
2,193.2

833.1 $ 1,573.2
1,334.8
69.7
(3.1 )
(21.7)
2,886.3
899.7
112.1
4.4
(2.3 )
(19.1)
2,979.3
901.8
49.6
—
68.7
2.6
904.4 $ 3,097.6

(36.2)

$
—

(36.2)
(15.3)
(51.5)
2,141.7

(121.3)
(85.1 ) $
(74.4)
(74.4 )
(195.7)
(159.5 )
(15.3)
—
(211.0)
(159.5 )
744.9 $ 2,886.6

There were no goodwill impairments identified during the year ended December 31, 2017. A goodwill impairment
charge of $15.3 million was recorded in the CCS segment during the year ended December 31, 2016 as a result of
the change in reportable segments and a goodwill impairment charge of $74.4 million was recorded during the year
ended December 31, 2015 primarily due to lower future projected operating results for certain reporting units that
are now part of the CMS segment.

5. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Allowance for Doubtful Accounts

Period
Year ended December 31, 2015
Year ended December 31, 2016
Year ended December 31, 2017

Balance at
Beginning of
Period

Charged to
Costs and
Expenses

8,797
19,392
17,211

12,508
(5,986)
1,277

Deductions (1)
$

1,913 $
(3,805 )
4,512

Balance at
End
of Period

19,392
17,211
13,976

(1) Uncollectible customer accounts written off, net of recoveries of previously written off customer accounts.

Inventories

Raw materials
Work in process
Finished goods

December 31,

2017

2016

126,558 $
98,526
219,857
444,941 $

126,027
135,848
211,392
473,267

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Property, Plant and Equipment

Land and land improvements
Buildings and improvements
Machinery and equipment
Construction in progress

Accumulated depreciation

December 31,

2017

2016

54,002 $
217,396
556,809
29,471
857,678
(390,389 )
467,289 $

53,182
208,515
480,654
36,373
778,724
(303,734)
474,990

Depreciation expense was $81.7 million, $80.5 million and $60.6 million during the years ended December 31,
2017, 2016 and 2015, respectively. No interest was capitalized during the years ended December 31, 2017, 2016 or
2015.

Other Accrued Liabilities

Compensation and employee benefit liabilities
Deferred revenue
Product warranty accrual
Accrued interest
Restructuring reserve
Income taxes payable
Value-added taxes payable
Accrued professional fees
Other

December 31,

2017

2016

97,522 $
12,611
16,928
23,485
24,961
16,949
11,838
10,224
72,462
286,980 $

169,923
25,859
21,631
8,586
30,438
49,984
14,885
10,621
97,470
429,397

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Accumulated Other Comprehensive Loss

The following table presents changes in accumulated other comprehensive income (AOCI), net of tax, and
accumulated other comprehensive loss (AOCL), net of tax:

Foreign currency translation

Balance at beginning of period
Other comprehensive income (loss)
Amounts reclassified from AOCL
Balance at end of period

Defined benefit plan activity

Balance at beginning of period
Other comprehensive income (loss)
Amounts reclassified from AOCL
Balance at end of period

Net investment hedge

Balance at beginning of period
Other comprehensive loss
Balance at end of period

Available-for-sale securities

Balance at beginning of period
Other comprehensive income (loss)
Amounts reclassified from AOCI
Balance at end of period
Net AOCL at end of period

Year Ended December 31,
2016
2017

(254,148 ) $
201,133
245
(52,770 ) $

(160,620)
(93,840)
312
(254,148)

(33,473 ) $
6,047
(1,426 )
(28,852 ) $

(17,567)
(13,048)
(2,858)
(33,473)

— $

(4,981 )
(4,981 ) $

—
—
—

2,508
3,159
(5,667 )

— $
(86,603 ) $

6,509
(3,262)
(739)
2,508
(285,113)

$
$

Amounts reclassified from net AOCL related to foreign currency translation and available-for-sale securities are
recorded in other expense, net in the Consolidated Statements of Operations and Comprehensive Income (Loss).
Defined benefit plan amounts reclassified from net AOCL are included in the computation of net periodic benefit
cost (income) and are primarily recorded in cost of sales and selling, general and administrative expenses in the
Consolidated Statements of Operations and Comprehensive Income (Loss).

Cash Flow Information

Cash paid during the period for:
Income taxes, net of refunds
Interest

Year Ended December 31,
2016

2015

2017

100,929
216,739

148,984 $
260,773

122,571
207,331

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

6. FINANCING

5.00% senior notes due March 2027
6.00% senior notes due June 2025
5.50% senior notes due June 2024
5.00% senior notes due June 2021
4.375% senior secured notes due June 2020
Senior secured term loan due December 2022
Senior secured term loan due January 2018
Senior secured revolving credit facility expires May 2020
Total face value of debt
Less: Original issue discount, net of amortization
Less: Debt issuance costs, net of amortization
Less: Current portion
Total long-term debt

5.00% Senior Notes Due 2027

December 31,

2017

2016

750,000 $
1,500,000
650,000
650,000
—
886,250
—
—
4,436,250 $
(3,389 )
(63,460 )
—
4,369,401 $

—
1,500,000
650,000
650,000
500,000
1,234,375
111,875
—
4,646,250
(5,857)
(78,383)
(12,500)
4,549,510

In March 2017, CommScope Technologies LLC (CommScope Technologies), a wholly owned subsidiary of the
Company, issued $750.0 million of 5.00% senior notes due March 15, 2027 (the 2027 Notes). Interest is payable on
the 2027 Notes semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15,
2017. The Company used the proceeds of the issuance of the 2027 Notes, together with cash on hand, to (i) redeem
all of the 4.375% senior secured notes due 2020 (the 2020 Notes), (ii) repay a portion of the outstanding borrowings
under its senior secured term loans, including all $111.9 million of outstanding principal on the senior secured term
loan due 2018 (the 2018 Term Loan) and $138.1 million of outstanding principal on the senior secured term loan
due 2022 (the 2022 Term Loan), and (iii) pay related fees and expenses.

CommScope, Inc., a wholly owned subsidiary of the Company, and each of CommScope, Inc.’s existing and future
domestic subsidiaries (other than CommScope Technologies) that guarantees the senior secured credit facilities also
guarantees the 2027 Notes on a senior unsecured basis, subject to certain exceptions. The 2027 Notes rank senior in
right of payment with all of CommScope Technologies’ and the guarantors’ future subordinated indebtedness and
equally in right of payment with all of CommScope Technologies’ and the guarantors’ existing and future senior
indebtedness, including the senior secured credit facilities, the 6.00% senior notes due June 15, 2025 (the 2025
Notes), the 5.50% senior notes due June 15, 2024 (the 2024 Notes) and the 5.00% senior notes due June 15, 2021
(the 2021 Notes). The 2027 Notes and guarantees are effectively junior to all of CommScope Technologies’ and the
guarantors’ existing and future secured indebtedness, including the senior secured credit facilities, to the extent of
the value of the assets securing such secured indebtedness. In addition, the 2027 Notes are structurally subordinated
to all existing and future liabilities (including trade payables) of CommScope, Inc.’s subsidiaries that do not
guarantee the 2027 Notes, including indebtedness incurred by certain of CommScope, Inc.’s non-U.S. subsidiaries
under the revolving credit facility.

The 2027 Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control
events, the 2027 Notes may be redeemed at the option of the holders at 101% of their principal amount, plus accrued
and unpaid interest. The 2027 Notes may be redeemed on or after March 15, 2022 at the redemption prices specified
in the indenture governing the 2027 Notes. Prior to March 15, 2022, the 2027 Notes may be redeemed at a
redemption price equal to 100% of the aggregate principal amount of the 2027 Notes to be redeemed, plus a make-
whole premium (as specified in the indenture governing the 2027 Notes), plus accrued and unpaid interest. At any
time prior to March 15, 2020, CommScope Technologies may also redeem up to 40% of the aggregate principal
amount of the 2027 Notes at a redemption price of 105%, plus accrued and unpaid interest, using the proceeds of
certain equity offerings.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

In connection with issuing the 2027 Notes, the Company paid $7.2 million of debt issuance costs during the year
ended December 31, 2017, which was recorded as a reduction of the carrying amount of the debt and is being
amortized over the term of the notes.

6.00% Senior Notes Due 2025

In June 2015, CommScope Technologies issued $1.5 billion of the 2025 Notes. Interest is payable on the 2025 Notes
semi-annually in arrears on June 15 and December 15 of each year. The Company used the proceeds from the 2025
Notes, together with cash on hand and borrowings under the 2022 Term Loan, to finance the acquisition of the BNS
business.

The 2025 Notes are guaranteed on a senior unsecured basis by CommScope, Inc. and each of CommScope, Inc.’s
existing and future domestic subsidiaries (other than CommScope Technologies) that guarantees the senior secured
credit facilities, subject to certain exceptions, and rank as described above for the 2027 notes.

The 2025 Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control
events, the 2025 Notes may be redeemed at the option of the holders at 101% of their principal amount, plus accrued
and unpaid interest. The 2025 Notes may be redeemed on or after June 15, 2020 at the redemption prices specified
in the indenture governing the 2025 Notes. Prior to June 15, 2020, the 2025 Notes may be redeemed at a redemption
price equal to 100% of the aggregate principal amount to be redeemed, plus a make-whole premium (as specified in
the indenture governing the 2025 Notes), plus accrued and unpaid interest. At any time prior to June 15, 2018, under
certain circumstances, the Company may also redeem up to 40% of the aggregate principal amount of the 2025
Notes at a redemption price of 106.0%, plus accrued and unpaid interest, using the proceeds of certain equity
offerings.

In connection with issuing the 2025 Notes, the Company incurred costs of $35.9 million during the year ended
December 31, 2015, which were recorded as a reduction of the carrying amount of the debt and are being amortized
over the term of the 2025 Notes.

5.00% Senior Notes Due 2021 and 5.50% Senior Notes Due 2024

In May 2014, CommScope, Inc., a wholly owned subsidiary of the Company, issued $650.0 million of the 2021
Notes and $650.0 million of the 2024 Notes. Interest is payable on the 2021 Notes and the 2024 Notes semi-annually
in arrears on June 15 and December 15 of each year.

The 2021 Notes and the 2024 Notes are guaranteed on a senior unsecured basis by each of CommScope, Inc.’s
existing and future domestic subsidiaries that guarantees the senior secure credit facilities, subject to certain
exceptions, and rank as described above for the 2027 Notes.

The 2021 Notes and the 2024 Notes may be redeemed prior to maturity under certain circumstances. Upon certain
change of control events, the 2021 Notes and the 2024 Notes may be redeemed at the option of the holders at 101%
of their principal amount, plus accrued and unpaid interest to the date of purchase. The 2021 Notes and the 2024
Notes may be redeemed on or after June 15, 2017 or June 15, 2019, respectively, at the redemption prices specified
in the respective indentures governing the 2021 Notes and the 2024 Notes. Prior to June 15, 2019, the 2024 Notes
may be redeemed at a redemption price equal to 100% of the aggregate principal amount, plus a make-whole
premium (as specified in the indentures governing the 2024 Notes), plus accrued and unpaid interest to the
redemption date.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Senior PIK Toggle Notes

In May 2013, the Company issued $550.0 million of 6.625%/7.375% senior payment-in-kind toggle notes due 2020
(the senior PIK toggle notes) in a private offering. During the year ended December 31, 2015, the Company
repurchased $13.4 million of the senior PIK toggle notes and during the year ended December 31, 2016, the
Company voluntarily redeemed the remaining $536.6 million of the senior PIK toggle notes. The repurchases and
redemptions resulted in charges of $17.7 million and $0.3 million which are reflected in other expense, net for the
years ended December 31, 2016 and 2015, respectively. In connection with the repurchases and redemptions, $6.1
million and $0.2 million of debt issuance costs were written off and included in interest expense for the years ended
December 31, 2016 and 2015, respectively.

4.375% Senior Secured Notes Due 2020

In June 2015, CommScope, Inc. issued $500.0 million of the 2020 Notes. In connection with issuing the 2020 Notes,
the Company incurred costs of approximately $8.5 million during the year ended December 31, 2015. The 2020
Notes were redeemed during the year ended December 31, 2017, which resulted in a charge for the redemption
premium of $14.8 million, which is reflected in other expense, net, and the write-off of $5.8 million of debt issuance
costs, which is reflected in interest expense.

Senior Secured Credit Facilities

The Company’s asset-based revolving credit facility provides borrowing capacity of up to $550.0 million, subject to
certain limitations. The revolving credit facility expires in May 2020, subject to acceleration under certain
circumstances. As of December 31, 2017, the Company had no outstanding borrowings under its revolving credit
facility and the Company did not borrow under its revolving credit facility during the year ended December 31,
2017. As of December 31, 2017, the Company had availability of $425.4 million under its revolving credit facility,
after giving effect to borrowing base limitations and outstanding letters of credit.

As of December 31, 2017, the Company had one term loan outstanding under its senior secured credit facilities, the
2022 Term Loan. The Company incurred costs of $29.7 million during the year ended December 31, 2015 related to
the issuance of the 2022 Term Loan. These costs were recorded as a reduction of the carrying amount of the debt
and are being amortized over the term of the 2022 Term Loan.

In May 2017, the Company amended the 2022 Term Loan to reduce the interest rate margin. The interest rate is, at
the Company’s option, either (1) the base rate (as described in the credit agreement, as amended) plus a margin of
1.00% or (2) one-, two-, three- or six-month LIBOR or, if available from all lenders, twelve-month LIBOR (selected
at the Company’s option) plus a margin of 2.00%. Before the amendment, the margin on the interest rate with
respect to base rate loans was 1.50% and with respect to LIBOR loans was 2.50%. The amendment also reduced the
1.75% base rate floor to 1.00% and eliminated the 0.75% LIBOR floor. The amendment resulted in the repayment of
$30.4 million to certain lenders under the senior secured credit facilities and the receipt of $30.4 million in proceeds
from new lenders and existing lenders who increased their positions. In conjunction with the amendment, the
Company recorded $1.1 million of debt modification costs in other expense, net.

During the year ended December 31, 2017, the Company repaid $348.1 million of the 2022 Term Loan and $111.9
million of the 2018 Term Loan. In connection with these repayments, $8.3 million of original issue discount and
debt issuance costs were written off and included in interest expense.

During the year ended December 31, 2016, the Company amended the 2022 Term Loan to reduce the margin on the
interest rate and recorded an additional $3.1 million of original issue discount related to this amendment.

During the years ended December 31, 2016 and 2015, the Company voluntarily repaid $150.0 million and $605.3
million, respectively, of its senior secured term loans. In connection with these repayments, combined original issue
discount and debt issuance costs of $1.0 million and $7.9 million were written off and included in interest expense
during the years ended December 31, 2016 and 2015, respectively.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The 2022 Term Loan is secured by a first priority lien on certain of the Company’s non-current assets in the U.S.
and a second priority lien on current assets in the U.S. The asset-based revolving credit facility is secured by a first
priority lien on certain of the Company’s current assets in the U.S. and several European countries and a second
priority lien on the Company’s non-current assets in the U.S.

No portion of the 2022 Term Loan was reflected as a current portion of long-term debt as of December 31, 2017
related to the potentially required excess cash flow payment because no such payment is expected to be required.
There was no excess cash flow payment required in 2017 related to 2016.

Other Matters
The following table summarizes scheduled maturities of long-term debt as of December 31, 2017 (in millions):

Scheduled maturities of long-term debt

2018

Thereafter
$ — $ — $ — $ 650.0 $ 886.3 $ 2,900.0

2020

2022

2019

2021

The Company’s non-guarantor subsidiaries held $2,587 million, or 37%, of total assets and $569 million, or 11%, of
total liabilities as of December 31, 2017 and accounted for $1,915 million, or 42%, of net sales for the year ended
December 31, 2017. As of December 31, 2016, the non-guarantor subsidiaries held $2,211 million, or 31%, of total
assets and $615 million, or 11%, of total liabilities. For the year ended December 31, 2016, the non-guarantor
subsidiaries accounted for $2,101 million, or 43%, of net sales. All amounts presented exclude intercompany
balances.

The Company is dependent upon the earnings and cash flow of its subsidiaries to make certain payments, including
debt and interest payments. Certain subsidiaries may have limitations or restrictions on transferring funds to other
subsidiaries that may be necessary to meet those requirements.

The weighted average effective interest rate on outstanding borrowings, including the amortization of debt issuance
costs and original issue discount, was 5.45% at December 31, 2017 and 5.24% at December 31, 2016.

7. DERIVATIVES AND HEDGING ACTIVITIES

Derivatives Not Designated As Hedging Instruments

The Company uses forward contracts to hedge a portion of its balance sheet foreign exchange re-measurement risk
and to hedge certain planned foreign currency expenditures. As of December 31, 2017, the Company had foreign
exchange contracts outstanding with maturities of up to twelve months and aggregate notional values of $422
million (based on exchange rates as of December 31, 2017). Unrealized gains and losses resulting from these
contracts are recognized in other expense, net and partially offset corresponding foreign exchange gains and losses
on the balances and expenditures being hedged. These instruments are not held for speculative or trading purposes
and are not designated as hedges for hedge accounting and are marked to market each period through earnings.

The following table presents the balance sheet location and fair value of the Company’s derivatives not designated
as hedging instruments:

Foreign currency contracts
Foreign currency contracts

Prepaid expenses and other current assets
Other accrued liabilities

Balance Sheet Location

Total derivatives not designated as
hedging instruments

Fair Value of Asset (Liability)
December 31,

2017

2016

9,050 $
(574 )

289
(8,349)

8,476 $

(8,060)

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The pretax impact of the foreign currency forward contracts, both matured and outstanding, on the Consolidated
Statements of Operations and Comprehensive Income (Loss) is as follows:

Foreign Currency Forward Contracts
Year ended December 31, 2017
Year ended December 31, 2016
Year ended December 31, 2015

Location of Gain (Loss)

Other expense, net
Other expense, net
Other expense, net

Gain (Loss)
Recognized

28,633
(21,470)
(14,309)

Derivative Instruments Designated As Net Investment Hedge

During 2017, the Company began a hedging strategy to designate foreign exchange forward contracts as net
investment hedges to mitigate a portion of the foreign currency risk on the euro net investment in a foreign
subsidiary. As of December 31, 2017, the Company held a designated forward contract with an outstanding maturity
of twelve months and an aggregate notional value of $30.0 million.

Hedge effectiveness is assessed each quarter based on the net investment in the foreign subsidiary designated as the
hedged item and the overall changes in the fair value of designated forward contracts. For hedges that meet the
effectiveness requirements, changes in fair value are recorded as a component of other comprehensive income (loss),
net of tax. Any change in fair value that is the result of ineffectiveness is recognized immediately in earnings. As of
December 31, 2017, there was no ineffectiveness on the instrument designated as a net investment hedge.

The following table presents the balance sheet location and fair value of the derivative instrument designated as a
net investment hedge:

Foreign currency contracts
Foreign currency contracts

Prepaid expenses and other current assets
Other accrued liabilities

Balance Sheet Location

Total derivatives designated as
hedging instruments

Fair Value of Asset (Liability)
December 31,

2017

2016

— $
(403 )

(403 ) $

—
—

—

The after tax impact of the effective portion of forward contracts designated as net investment hedging instruments,
both matured and outstanding, on the Consolidated Statements of Operations and Comprehensive Income (Loss) is
as follows:

Foreign Currency Forward Contracts
Year ended December 31, 2017
Year ended December 31, 2016
Year ended December 31, 2015

Location of Loss

Effective Portion
of Loss
Recognized

Other comprehensive income (loss), net of tax
Other comprehensive income (loss), net of tax
Other comprehensive income (loss), net of tax

(4,981)
—
—

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

8. FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist primarily of cash and cash equivalents, trade receivables, trade
payables, debt instruments and foreign currency contracts. For cash and cash equivalents, trade receivables and trade
payables, the carrying amounts of these financial instruments as of December 31, 2017 and December 31, 2016 were
considered representative of their fair values due to their short terms to maturity. The fair values of the Company’s
debt instruments and foreign currency contracts were based on indicative quotes. The fair value of the available-for-
sale securities held by the Company as of December 31, 2016 was based on quoted market prices.

Fair value measurements using quoted prices in active markets for identical assets and liabilities fall within Level 1
of the fair value hierarchy, measurements using significant other observable inputs fall within Level 2, and
measurements using significant unobservable inputs fall within Level 3.

The carrying amounts, estimated fair values and valuation input levels of the Company’s available-for-sale
securities, foreign currency contracts and debt instruments as of December 31, 2017 and December 31, 2016, are as
follows:

Assets:

Available-for-sale securities
Foreign currency contracts

Liabilities:

December 31, 2017

December 31, 2016

Carrying
Amount

Fair Value

Carrying
Amount

Fair Value

Valuation
Inputs

— $

9,050

5,212 $
289

5,212 Level 1
289 Level 2

5.00% senior notes due 2027
6.00% senior notes due 2025
5.50% senior notes due 2024
5.00% senior notes due 2021
4.375% senior secured notes due 2020
Senior secured term loan due 2022, at par
Senior secured term loan due 2018, at par
Foreign currency contracts

750,000
1,500,000
650,000
650,000
—
886,250
—
977

753,750
1,591,800
676,780
661,375
—
892,343
—
977

—

— Level 2
1,500,000 1,585,350 Level 2
650,000 673,530 Level 2
650,000 669,500 Level 2
500,000 513,100 Level 2
1,234,375 1,245,145 Level 2
111,875 112,364 Level 2
8,349 Level 2

8,349

These fair value estimates are based on pertinent information available to management as of the valuation date.
Although management is not aware of any factors that would significantly affect these fair value estimates, such
amounts have not been comprehensively revalued for purposes of these financial statements since those dates, and
current estimates of fair value may differ significantly from the amounts presented.

9. RESTRUCTURING COSTS

Prior to the acquisition of the BNS business in August 2015, the Company initiated restructuring actions to realign
and lower its cost structure primarily through workforce reductions and other cost reduction initiatives, including the
cessation of manufacturing operations at various facilities. Production capacity from these facilities has been shifted
to other existing facilities or unaffiliated suppliers. These actions are referred to as the cost alignment restructuring
actions. Following the acquisition of BNS, the Company initiated a series of restructuring actions, which are
currently ongoing, to integrate the BNS operations (the BNS integration restructuring actions) to achieve cost
synergies. All charges related to these restructuring actions are reported in restructuring costs, net.

The Company’s net pretax restructuring charges, by segment, were as follows:

CCS
CMS
Total

Year Ended December 31,
2016
27,098 $ 16,937
15,777
12,551
42,875 $ 29,488

2017
36,551 $
7,231
43,782 $

2015

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The costs related to restructuring actions are composed of employee-related costs, lease termination costs and fixed
asset related costs. Employee-related costs include the expected severance costs and related benefits as well as one-
time severance benefits that are accrued over the remaining period employees are required to work in order to
receive such benefits. Lease termination costs relate to the discounted cost that will continue to be incurred for
unused leased facilities, net of anticipated sub-lease income. Fixed asset related costs include non-cash impairments
and/or fixed asset disposals associated with restructuring actions in addition to the cash costs to uninstall, pack, ship
and reinstall manufacturing equipment and the costs to prepare the receiving facility to accommodate relocated
equipment. Fixed asset related costs are expensed as incurred. Cash paid is net of proceeds received from the sale of
related assets.

As a result of restructuring and consolidation actions, the Company owns unutilized real estate at various facilities in
the U.S. and internationally. The Company is attempting to sell or lease this unutilized space. Additional impairment
charges may be incurred related to these or other excess assets.

The activity within the liability established for the cost alignment restructuring actions was as follows:

Balance at December 31, 2014
Additional charge recorded
Cash paid
Consideration received
Foreign exchange and other non-cash items
Balance at December 31, 2015
Additional charge (credit) recorded
Cash paid
Consideration received
Foreign exchange and other non-cash items
Balance at December 31, 2016
Additional charge recorded
Cash paid
Foreign exchange and other non-cash items
Balance at December 31, 2017

Employee-
Related
Costs

Lease
Termination
Costs

Fixed Asset
Related
Costs

Total

3,822
3,024
(5,773)
—
(68)
1,005
71
(769)
—
4
311
86
(463)
66
— $

8,243
865
(1,738)

—
—

7,370
298
(1,618)

—
—

6,050
577
(1,298)

—
$

5,329

— $
1,828
(247 )
2,986
(4,567 )
—
(203 )
—
3,656
(3,453 )
—
—
—
—
— $

12,065
5,717
(7,758)
2,986
(4,635)
8,375
166
(2,387)
3,656
(3,449)
6,361
663
(1,761)
66
5,329

The Company has recognized restructuring charges of $89.6 million since January 2011 for cost alignment
restructuring actions. Additional pretax costs of $0.5 million are expected to be incurred to complete these
previously announced initiatives. Cash payments of $2.1 million are expected in 2018 and $3.7 million between
2019 and 2022.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The activity within the liability established for the BNS integration restructuring actions was as follows:

Balance at December 31, 2014
Liabilities assumed in BNS acquisition
Additional charge recorded
Cash paid
Foreign exchange and other non-cash items
Balance at December 31, 2015
Additional charge recorded
Cash paid
Foreign exchange and other non-cash items
Balance at December 31, 2016
Additional charge recorded
Cash paid
Consideration received
Foreign exchange and other non-cash items
Balance at December 31, 2017

Employee-
Related
Costs

Lease
Termination
Costs

Fixed Asset
Related
Costs

— $

9,000
23,771
(3,996)
(61)
28,714
35,848
(31,569)
(253)
32,740
33,565
(41,084)
—
367
25,588

— $
—
—
—
—
—
378
(256)
249
371
1,352
(648)
—

5
1,080

— $
—
—
—
—
—
6,483
(3,079 )
(3,404 )
—
8,202
(582 )
2,699
(10,319 )
— $

Total

—
9,000
23,771
(3,996)
(61)
28,714
42,709
(34,904)
(3,408)
33,111
43,119
(42,314)
2,699
(9,947)
26,668

In conjunction with the BNS acquisition, the Company assumed a liability of $9.0 million for BNS employee-related
restructuring initiated prior to the acquisition. The BNS integration actions include the announced closures or
reduction in activities at various U.S. and international facilities as well as headcount reductions in sales, marketing
and administrative functions. The Company has recognized restructuring charges of $109.6 million since the BNS
acquisition for integration actions. Additional pretax costs of $1.5 million are expected to be incurred to complete
the previously announced BNS integration initiatives. Cash payments of $24.4 million are expected in 2018 with
additional payments of $3.8 million between 2019 and 2021. Future integration actions are expected to be identified
and the resulting amounts may be material.

Restructuring reserves related to all actions were included in the Company’s Consolidated Balance Sheets as
follows:

Other accrued liabilities
Other noncurrent liabilities
Total liability

December 31,

2017

2016

24,961 $
7,036
31,997 $

30,438
9,034
39,472

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

10. EMPLOYEE BENEFIT PLANS
Defined Contribution Plans

The Company and certain of its subsidiaries have defined contribution retirement savings plans, the most significant
of which is a 401(k) plan in the U.S. These plans allow employees meeting certain requirements to contribute a
portion of their compensation on a pretax and/or after-tax basis in accordance with guidelines established by the
plans and the Internal Revenue Service or other tax authorities. The Company matches a percentage of the employee
contributions up to certain limits. During the years ended December 31, 2017, 2016 and 2015, the Company made
contributions to defined contribution retirement savings plans of $25.9 million, $24.5 million and $21.7 million,
respectively.

The Company maintains noncontributory and contributory deferred compensation plans. During the years ended
December 31, 2017, 2016 and 2015, the Company recognized pretax costs of $2.9 million, $2.6 million and $1.4
million, respectively, related to these plans. The liability was $38.7 million and $32.5 million as of December 31,
2017 and 2016, respectively.

Pension Plans

The Company sponsors defined benefit pension plans covering certain domestic former employees and certain
foreign current and former employees. Included in the defined benefit pension plans are both funded and unfunded
plans. The following table summarizes information for the defined benefit pension plans based on a December 31
measurement date:

U.S. Plans

Non-U.S. Plans

2017

2016

2017

2016

$ 156,522 $ 159,973 $ 216,634 $ 203,117
5,352
—
6,096
6,452
115
—
—
(7,073)
39,296
966
—
—
(6,861)
(10,869 )
(23,408)
$ 156,729 $ 156,522 $ 240,749 $ 216,634

4,876
5,300
116
—
(2,670 )
432
(6,583 )
— 22,644

—
5,929
—
—
5,100
—
(10,822)
—

260
—
15,912
(10,822)
—

$ 155,638 $ 152,661 $ 196,818 $ 199,915
6,119
261
38
—
21,683
13,585
(6,861)
(10,869 )
(24,076)
$ 160,988 $ 155,638 $ 226,512 $ 196,818
884 $ 14,237 $ 19,816
$ (4,259) $

4,990
—
9,955
(6,583 )
— 21,332

Change in benefit obligation:

Benefit obligation, beginning
Service cost
Interest cost
Plan participants' contributions
Adjustments related to BNS acquisition
Actuarial loss (gain)
Plan amendments
Benefits paid, including settlements
Foreign exchange and other
Benefit obligation, ending

Change in plan assets:

Fair value of plan assets, beginning
Employer and plan participant contributions
Adjustments related to BNS acquisition
Return on plan assets
Benefits paid, including settlements
Foreign exchange and other
Fair value of plan assets, ending

Funded status, (net asset) or net liability

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The following table presents the balance sheet location of the Company's pension liabilities and assets:

December 31,

Other accrued liabilities
Pension and other postretirement benefit liabilities
Other noncurrent assets

U.S. Plans

2017

2016

(260) $

(260 ) $

Non-U.S. Plans

2016

2017
(1,235 ) $ (1,145)
(21,603)
2,932

(2,242 ) (18,176 )
5,174
1,618

(2,152)
6,671

The accumulated benefit obligation for the Company’s U.S. defined benefit pension plans was $156,729 and
$156,522 as of December 31, 2017 and 2016, respectively and the accumulated benefit obligation for the
Company’s non-U.S. defined benefit pension plans was $195,922 and $175,016 as of December 31, 2017 and 2016,
respectively.

The following table summarizes information for the Company’s pension plans with an accumulated benefit
obligation in excess of plan assets:

Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

December 31,

U.S. Plans

Non-U.S. Plans

2017

2016

2017

2016

2,412
2,412
—

2,502 $ 16,755 $
2,502 14,683
4,034

—

14,467
12,518
3,640

The following table summarizes pretax amounts included in accumulated other comprehensive loss as of
December 31, 2017 and 2016:

U.S. Plans

Non-U.S. Plans

2017

2016

2017

2016

$ (26,261) $ (30,968 ) $ (28,410 ) $ (32,411)
—
—
$ (26,261) $ (30,968 ) $ (28,847 ) $ (32,411)

(437 )

—

Unrecognized net actuarial loss
Unrecognized prior service cost
Total

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Actuarial gains and losses are amortized using a corridor approach. The corridor is equal to 10% of the greater of the
benefit obligation and the fair value of the assets. Gains and losses in excess of the corridor are generally amortized
over the average remaining life of the plan participants. Pretax amounts for net periodic benefit cost and other
amounts included in other comprehensive income (loss) for the defined benefit pension plans consisted of the
following components:

Year Ended December 31,

Service cost
Interest cost
Recognized actuarial loss
Expected return on plan assets
Net periodic benefit cost (income)
Changes in plan assets and benefit obligations
included in other comprehensive income (loss):
Change in unrecognized net actuarial loss (gain)
Change in unrecognized prior service cost

Total included in other comprehensive income (loss)
Total recognized in net periodic benefit cost and
included in other comprehensive income (loss)

U.S. Plans
2016

Non-U.S. Plans
2016

2017

2015
$ — $ — $ — $ 4,876 $ 5,352
5,300 6,096
6,498
116
1,523
675
(7,598 ) (8,632)
(7,516)
4,101 2,932
(343)

6,452
923
(7,002)
373

5,929
664
(6,769)
(176)

2015
$ 2,271
5,988
52
(7,357)
954

(4,707)
—
(4,707)

(6,540)
—
(6,540)

5,735
—
5,735

(4,001 ) 23,750
437 —
(3,564 ) 23,750

(6,867)
—
(6,867)

$(4,883) $(6,167) $ 5,392 $

537 $ 26,682

$ (5,913)

Amortization of amounts included in accumulated other comprehensive loss as of December 31, 2017 is expected to
increase net periodic benefit cost during 2018 as follows:

Amortization of net actuarial loss
Amortization of prior service cost
Total

Assumptions

U.S. Plans

Non-U.S. Plans

481 $
—
481 $

1,236
41
1,277

Significant weighted average assumptions used in determining benefit obligations and net periodic benefit cost are
as follows:

2017

U.S. Plans
2016

2015

2017

Non-U.S. Plans
2016

2015

Benefit obligations:

Discount rate
Rate of compensation increase

Net periodic benefit cost:

Discount rate
Rate of return on plan assets
Rate of compensation increase

3.50 % 3.94 % 4.19 % 2.23 % 2.38 % 3.52 %
— % — % — % 3.92 % 4.04 % 4.36 %

3.94 % 4.19 % 3.89 % 2.38 % 3.52 % 3.75 %
4.10 % 4.50 % 4.65 % 3.49 % 3.71 % 4.45 %
— % — % — % 4.04 % 4.18 % 4.00 %

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

The Company considered the available yields on high-quality fixed-income investments with maturities
corresponding to the Company’s expected benefit obligations to determine the discount rates at each measurement
date.

Plan Assets

In developing the expected rate of return on plan assets, the Company considered the expected long-term rate of
return on individual asset classes. Expected return on plan assets is based on the market value of the assets.
Substantially all of the U.S. pension assets and a portion of the non-U.S. pension assets are managed by independent
investment advisors with an objective of transitioning to a portfolio of fixed income and absolute return investments
that matches the durations of the obligations as the funded status of each plan improves. The absolute return
investment fund is a diversified portfolio designed to achieve long-term total returns. The remainder of the non-U.S.
pension assets is invested with the objective of maximizing return.

Mutual funds classified as Level 1 are valued at net asset value, which is based on the fair value of the funds’
underlying securities. Certain mutual funds are classified as Level 2 because a portion of the funds’ underlying
assets are valued using significant other observable inputs. Other assets are primarily composed of fixed income
investments (including insurance and real estate products) and are valued based on the investment’s stated rate of
return, which approximates market interest rates.

The estimated fair values and the valuation input levels of the Company’s plan assets as of December 31, 2017 are
as follows:

Mutual funds:
U.S. equity
International equity
U.S. debt
International debt
Absolute return

Other
Total

U.S. Plans

Level 1
Fair Value

Level 2
Fair Value

Non-U.S. Plans

Level 1
Fair Value

Level 2
Fair Value

257
1,934
145,967
10,252
—
2,578
160,988

— $
—
—
—
—
—
— $

— $
34,704
—
31,192
—
6,645
72,541 $

—
26,781
—
98,789
21,994
6,407
153,971

The estimated fair values and the valuation input levels of the Company’s plan assets as of December 31, 2016 are
as follows:

Mutual funds:
U.S. equity
International equity
U.S. debt
International debt
Absolute return

Other
Total

U.S. Plans

Level 1
Fair Value

Level 2
Fair Value

Non-U.S. Plans

Level 1
Fair Value

Level 2
Fair Value

2,693
1,284
142,121
6,847
—
2,693
155,638

— $
—
—
—
—
—
— $

— $
30,295
—
27,004
—
3,688
60,987 $

—
29,618
—
81,242
18,727
6,244
135,831

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In thousands, unless otherwise noted)

Expected Cash Flows

The Company expects to contribute $0.3 million to U.S defined benefit pension plans and $5.7 million to non-U.S.
defined benefit pension plans during 2018.

The following table summarizes projected benefit payments from pension plans through 2027, including benefits
attributable to estimated future service (in millions):

2018
2019
2020
2021
2022
2023-2027

U.S. Plans

10.7
10.6
10.5
10.4
10.3
48.9

Non-U.S. Plans
9.8
6.1
6.0
6.8
7.9
48.1