CommScope Company Annual Report 2020

← All annual reports

FY2020 Annual Report · CommScope Company

Loading PDF…

2020 Annual Report

1100 CommScope Place, SE

Hickory, NC 28602

+1 828.324.2200

® or ™ are registered trademarks or trademarks,

respectively, of CommScope, Inc.

11711_CoverSpreads.indd 1

3/12/21 3:26 PM

Three-year
selected financial data

(Unaudited —in millions, except per share amounts)

Year Ended December 31

Result of operations

Net sales

Gross profit

Restructuring costs, net

Asset impairments

Operating income (loss)

Net interest expense

Net income (loss)

Series A convertible preferred stock dividends

Net income (loss) attributable to common stock holders

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 EBITDA (1)

Non-GAAP adjusted diluted 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

Series A convertible preferred stock

Stockholders’ equity

(1) See reconciliation of GAAP measures to Non-GAAP measures (page 6).

2020 Annual Report

2018

$4,568.5

1,633.3

44.0

15.0

450.0

(235.0)

140.2

—

140.2

192.0

195.3

$0.73

$0.72

$913.6

$2.27

$494.1

357.5

82.3

$458.2

4,204.3

450.9

6,630.5

1,187.2

3,985.9

—

1,756.8

2019

$8,345.1

2,404.1

87.7

376.1

(508.5)

(559.1)

(929.5)

(43.7)

(973.2)

193.7

$(5.02)

2020

$8,435.9

2,747.8

88.4

206.7

(51.8)

(573.4)

(56.1)

(629.5)

196.8

$(3.20)

$1,297.5

$2.15

$1,215.2

$1.56

$596.4

770.9

104.1

$436.2

823.3

121.2

As of December 31

$598.2

9,735.3

723.8

$521.9

8,936.9

684.5

14,431.6

13,576.8

1,469.8

9,832.4

1,000.0

836.3

1,401.1

9,520.6

1,041.8

355.0

Board of directors

Management team

Investor information

Claudius (Bud) E. Watts IV

Charles L. Treadway¹ ²

Annual meeting

Chairman, CommScope

President and Chief Executive Officer

Friday, May 7, 2021, 1:00 p.m. ET

Private Investor and Founding Partner

Meeting Street Capital, LLC

Charles L. Treadway ¹ ²

President and Chief Executive Officer,

CommScope

Austin A. Adams

Audit Committee Member

Former Corporate CIO, JP Morgan Chase

Mary S. Chan

Compensation Committee Member

Managing Partner, VectoIQ, LLC

Frank M. Drendel

Founder & Chairman Emeritus,

CommScope

Stephen (Steve) C. Gray

Chair of Compensation Committee

Founder and Chairman of Gray Venture

Partners, LLC

L. William (Bill) Krause

Compensation Committee Member,

Alexander W. Pease ¹ ²

Executive Vice President and

Chief Financial Officer

Morgan C. S. Kurk ¹

Executive Vice President,

Chief Technology Officer and Segment

Leader, Broadband Networks

John R. Carlson ¹

Senior Vice President and

Chief Commercial Officer

Frank (Burk) B. Wyatt, II ¹ ²

Senior Vice President, Chief Legal Officer/

General Counsel, & Secretary

Robyn T. Mingle ¹ ²

Senior Vice President and

Chief Human Resources Officer

Brooke B. Clark ¹

Senior Vice President and

Chief Accounting Officer

and Nominating and Corporate Governance

Suzan M. Campbell

Committee Member, Former Chairman &

Senior Vice President, Global Tax

CEO of 3Com Corporation

Ben Cardwell

Joanne M. Maguire

Senior Vice President, Segment Leader,

Chair of Nominating and Corporate

Venue and Campus Networks

Governance Committee, Former EVP,

Lockheed Martin Corporation

Joe Chow

Thomas J. Manning

Audit Committee Member

Former Chairman and Chief Executive

Officer, Dun & Bradstreet

Patrick R. McCarter

Compensation Committee Member, and

Nominating and Corporate Governance

Committee Member, Managing Director

and Head of the Global Technology,

Media and Telecommunications Group,

The Carlyle Group

Derrick A. Roman

Audit Committee Member

Former Partner,

PricewaterhouseCoopers LLP

Timothy T. Yates

Lead Independent Director

Chair of Audit Committee

Senior Vice President, Segment Leader,

Home Networks

Farid Firouzbakht

Senior Vice President, Segment Leader,

Outdoor Wireless Networks

Praveen Jonnala

Senior Vice President and

Chief Information Officer

Boris Kokotovic

Kyle Lorentzen

Senior Vice President and

Chief Transformation Officer

Gordon Robb ²

Senior Vice President, Global Supply Chain

1 Section 16 Officers

Virtual at ir.commscope.com

Corporate headquarters

CommScope Holding Company, Inc.

1100 CommScope Place, SE

Hickory, NC 28602

www.commscope.com

+1 828.324.2200

800.982.1708 (U.S. only)

Transfer agent and registrar

American Stock Transfer

& Trust Company, LLC

Shareholder Services Department

6201 15th Avenue

Brooklyn, NY 11219

help@astfinancial.com

+1 718.921.8124

800.937.5449 (U.S. only)

www.astfinancial.com

Investor relations

Russell Johnson

VP, Treasurer & Investor Relations

+1 828.431.2597

Michael (Mick) McCloskey

Manager, Investor Relations

+1 828 431 9874

Common stock

Trades on NASDAQ under

the symbol “COMM”

A copy of the Company’s 2020

Annual Report on Form 10-K for the

fiscal year ended December 31, 2020,

by any shareholder by writing to

CommScope Holding Company, Inc.,

1100 CommScope Place, SE, Hickory,

NC 28602, Attention: Investor

Relations. Our Annual Report on

Form 10-K is also available and may

be accessed free of charge through

the Investor Relations section

of our Internet website at

Senior Vice President, Global Quality

may be obtained, free of charge,

Former President and Chief Executive

Officer, Monster Worldwide, Inc.

2 Ethics, Compliance & Sustainability

ir.commscope.com.

Executive Council Members

11711_CoverSpreads.indd 2

CS_AR_2020.indd 2

3/12/21 3:21 PM

CS_AR_2020.indd 9

3/12/21 3:21 PM

3/12/21 3:26 PM

To our shareholders

CommScope achieved solid financial results

in 2020, and we are proud of our strong

execution in a remarkably challenging

business environment. As the pandemic

unfolded, our team reacted quickly to

adapt and innovate across all aspects of

the business, ensuring our customers were

able to sustain - and even extend - the

networking services that have been a

lifeline to us in 2020.

Across the globe, we pivoted quickly to

remote work, put in place robust health

and safety systems in our factories, and

initiated a business continuity program

second to none in the industry. Within a

matter of weeks, we had mitigated most

of our supply risk, and our factories were

running at capacity.

The experiences of 2020 have created new

Chuck Treadway
President and Chief Executive Officer

2020 financial and business performance

opportunities for us and our customers,

Net sales increased year over year due to the acquisition of ARRIS

accelerating demand for networking

on April 4, 2019 but were negatively impacted in many areas of

technology across the markets we serve.

the business by the global pandemic. And with challenges within

CommScope’s technologies and expertise,

our video set-top box products, we saw the business decline on the

combined with our passion to create

top- and bottom-lines from the prior year when adjusting our 2019

lasting connectivity, are key to the digital

results to include the ARRIS business for the full year. Broadband

transformation of business and society.

Networks delivered growth in profitability; however, this was more

True to our tagline, “now meets next,”

than offset by adjusted EBITDA reductions in all other businesses.

we are ready to support our customers

as they meet the demands of today’s and

tomorrow’s networks.

We moved quickly to help protect the bottom-line and serve our

customers in the challenging business environment of 2020. We

leveraged our diversified and global manufacturing footprint to

Our acquisition of ARRIS International

meet demand, aggressively managed our costs and accelerated our

extended our capabilities, customer

2020 synergy plans.

base, and global presence. Now we look

to shape our business for growth and

shareholder value.

Because of the significant steps we took, bottom-line results in

the fourth quarter grew both sequentially and year-over-year.

However, we acknowledge we must do more to drive and position

CommScope for sustained growth.

CS_AR_2020.indd 3

3/12/21 3:22 PM

Responding to the pandemic

Highlights

I am proud of how we responded to support our

Throughout the year, we helped our customers

customers, partners, employees, and communities

transform their customer experiences and services.

throughout the pandemic. Guided by our values of

Highlights include:

teamwork, integrity and innovation, we solved some of

the toughest connectivity challenges the world has faced.

- The deployment of up to 38,000 CommScope Wi-Fi

Here are some examples of how the CommScope team

6 access points and 12,000 multi-gigabit switches for

rose to the challenge:

- We rallied our resources to support critical

video-centric and virtual reality learning in classrooms

for the New Zealand Ministry of Education

communications needs. We donated in-building

- The delivery of the millionth DOCSIS 3.1 gateway

wireless systems for new hospitals being built to

(TG3442) to Vodafone Germany.

support COVID-19 patients in China, Europe and the

US, used our 3D printers to make face shields for health

- The switch-on of the Allegiant Stadium in Las Vegas,

workers, and equipped school buses and outdoor

where 227 miles of CommScope fiber and 1.5 million

facilities to give communities access to connectivity.

feet of copper cable enable a new era of guest and

business services.

- We launched a wireless Rapid Deployment Unit to

bring safe and reliable network connectivity to ad hoc

- Further trials of next-generation cable broadband

medical facilities, emergency response centers, and

with the 10G Mediacom Communications trial

other locations critical in the response to COVID-19.

highlighting the connected home experience of the not

- We helped our office-based employees transition to

too distant future.

working from home by providing a wide range of

- Partnering with Google’s Area 120 for its Orion Wi-Fi

resources, including a paid COVID leave program to

service, enabling secure wireless roaming.

support salaried employees when ill, caring for family

or serving their communities. We matched employee

- Working with Liberty Global to produce its smallest,

donations in support of global hunger relief and made

greenest set-top, deploying initially in Poland.

financial donations to several organizations, including

the American Red Cross, the Goa State COVID-19

- Receiving the Wi-Fi Alliance’s Industry Impact

Relief Account in India, ITDRC (Information Technology

Award for our “significant contributions to global

Disaster Resource Center) and United Way Chihuahua,

Wi-Fi adoption.”

Mexico.

- We offered over 50 courses and 150 hours of free

technology training to our partners and the network

and communications industry from our CommScope

- The growth and uptake of government and regional

incentives (legislative, financial, and operational) to

connect the unconnected, transform education and

healthcare with initiatives such as the CARES Act and

Infrastructure Academy, with over 18,000 attendees

RDOF in the US.

taking part.

- Extension of our customer base, as we serve more

utilities and new entrant service providers.

2020 Annual Report

CS_AR_2020.indd 4

3/12/21 3:22 PM

Our commitment to sustainability

Environmental, social and governance (ESG) remain a

We are moving toward vertically integrated, general

priority in everything we do. In 2020, we focused on

management organizations; away from being a highly

providing a safe, inclusive work culture and environment

matrixed organization. This will give each segment leader

for all employees, launching the CommScope Diversity

more transparency, control, and greater accountability for

and Inclusion Business Network (DIBN). To celebrate

all aspects of their business. Furthermore, we will realign

our people and our values, we inaugurated the Frank

sales and marketing, address under-covered territories

M. Drendel Community Service Excellence Awards to

and regions, and enhance our channel relationships and

recognize and support the most significant community

strategic partnerships with our distributors.

service efforts made by our employees.

We will focus on driving further efficiencies from our fixed

For the first time ever, CommScope was recognized

cost structure - reviewing our business processes from

by the CDP (Carbon Disclosure Project) for our climate

procurement to product development. We will invest in

change efforts, achieving “Leadership Level” status. For

growth areas to gain share, deliver on existing demand,

the second year running, we were named in Newsweek’s

and to get ahead in emerging markets and critical

2021 list of America’s Most Responsible Companies

technologies; focusing our capital where we have winning

and awarded “Gold Level” status by EcoVadis, a global

value propositions, industry-leading technology and a

leader in monitoring and benchmarking sustainability. In

clear path to growth and value creation.

addition, we received recognition from the Government

of Goa for being a “Role Model in the field of Corporate

As we continue to shape the future of networking,

Social Responsibility.”

CommScope NEXT

Delivering the networks of the future has never been

more critical. The 5G revolution will not only connect

more people and things but also empower the digital

transformation of society. While our portfolio of solutions

and expertise is extensive, there are opportunities to do

more and challenges to address to ensure we sustain our

competitive advantage. We are positioning CommScope

to be at the forefront, ahead of our competitors;

anticipating the needs of our customers to develop

technology that transforms our experiences and our

lives. That is why we are introducing a company-wide

initiative, CommScope NEXT, focused on driving growth

that outpaces the market, business optimization, and

portfolio evaluation that we expect to result in significant

shareholder and stakeholder value.

CommScope NEXT will require rigor, discipline, and focus

from everyone. We have a lot of work ahead of us and

still many challenges to overcome, but I’ve seen first-hand

the awe-inspiring things we can do together. I could not

feel more confident about the team’s strength, openness

to new ideas, and the future of CommScope.

Chuck Treadway

President and Chief Executive Officer

Go digital and
learn more.
Find our interactive
annual report at
ir.commscope.com

3/12/21 3:22 PM

CS_AR_2020.indd 5

Reconciliation of GAAP measures to non-GAAP adjusted measures

(Unaudited—in millions, except per share amounts)

Reconciliation of adjusted EBITDA

Net income (loss), as reported

Income tax expense (benefit), as reported

Interest income, as reported

Interest expense, as reported

Other expense, net, as reported

Operating income (loss), as reported

Adjustments:

Amortization of purchased intangible assets

Restructuring costs, net

Equity-based compensation

Asset impairments
Transaction and integration costs(1)
Acquisition accounting adjustments(2)
Patent claims and litigation settlements

Executive severance

Depreciation

Non-GAAP adjusted EBITDA

Reconciliation of adjusted net income
and adjusted diluted EPS

Net income (loss), as reported

Adjustments:

Total pretax adjustments to adjusted EBITDA
Pretax amortization of debt issuance costs and OID(3)
Pretax acquisition related interest(3)
Pretax pension and postretirement benefit plan terminations(4)
Pretax foreign currency loss on entity liquidation(4)
Pretax loss on debt transactions(4)
Tax effects of adjustments and other tax items(5)

Non-GAAP adjusted net income
Diluted EPS, as reported(6)
Non-GAAP adjusted diluted EPS(7)

Reconciliation of adjusted free cash flow
Cash flow generated by operating activities, as reported

Less: Additions to property, plant and equipment

Adjustments:

Cash paid for transaction and integration costs

Restructuring

Non-GAAP adjusted free cash flow

2018

$140.2

30.5

(7.0)

242.0

44.3

450.0

264.6

44.0

44.9

15.0

19.5

75.6

$913.6

Year Ended December 31

2019

$(929.5)

(144.5)

(18.1)

577.2

6.4

(508.5)

593.2

87.7

90.8

376.1

195.3

264.2

55.0

2020

$(573.4)

(81.1)

(4.4)

577.8

29.3

(51.8)

630.5

88.4

115.0

206.7

24.9

20.6

16.3

6.3

143.7

$1,297.5

158.3

$1,215.2

$140.2

$(929.5)

$(573.4)

388.0

17.3

25.0

14.0

(142.0)

$442.5

$0.72

$2.27

$494.1

(82.3)

8.3

40.2

$460.3

1,662.4

33.4

30.2

(317.1)

$479.4

$(5.02)

$2.15

$596.4

(104.1)

210.7

89.9

$792.9

1,108.7

34.5

17.9

(216.7)

$371.0

$(3.20)

$1.56

$436.2

(121.2)

21.7

78.7

$415.4

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

(1) In 2020 and 2019, primarily reflects transaction and integration costs related to the ARRIS
acquisition. In 2018, primarily reflects integration costs related to the acquisition of the BNS business
and transaction costs related to other potential and consummated acquisitions.

2) Reflects non-cash charges resulting from the application of acquisition accounting. For the years
ended December 31, 2020 and 2019, reflects acquisition accounting adjustments of $20.6 million and
$45.4 million, respectively, related to reducing deferred revenue to its estimated fair value. For the year
ended December 31, 2019, reflects acquisition accounting adjustments of $218.8 million related to the
mark up of inventory to its estimated fair value.

(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.

(6) For years ended December 31, 2020 and 2019, GAAP EPS was calculated using net loss
attributable to common stockholders in the numerator, which includes the impact of the
Series A convertible preferred stock dividend.

(7) Diluted shares used in the calculation of non-GAAP adjusted diluted EPS for the years
ended December 31, 2020, 2019 and 2018 were 238.3 million, 223.1 million and 195.3
million, respectively.

CommScope management believes that presenting EBITDA, 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.

2020 Annual Report

CS_AR_2020.indd 6

3/12/21 3:22 PM

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

(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the fiscal year ended December 31, 2020
OR
☐ 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)

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

Ticker symbol
COMM

Name of each exchange on which registered

Nasdaq

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

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 ☒ No ☐
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 ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
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 such files). Yes ☒ No ☐
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.

Accelerated filer

☐
Smaller reporting company ☐

☒
Large accelerated filer
Non-accelerated filer ☐
Emerging growth company ☐
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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ☒
The aggregate market value of shares of Common Stock held by non-affiliates of the registrant was approximately $1,603.3
million as of June 30, 2020. For purposes of this computation, shares held by affiliates and by directors and officers of the
registrant have been excluded.
As of February 5, 2021 there were 200,832,665 shares of the registrant’s Common Stock outstanding.

Documents Incorporated by Reference
Portions of the registrant’s Proxy Statement for the 2021 Annual Meeting of Stockholders are incorporated by reference in Part
III hereof.

CommScope Holding Company, Inc.
Form 10-K
December 31, 2020
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

120

121

122

131

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 certain statements that constitute “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, which reflect our current views with respect to future events and financial performance.
These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,”
“estimate,” “expect,” “project,” “projections,” “plans,” “anticipate,” “should,” “could,” “designed to,” “foreseeable
future,” “believe,” “think,” “scheduled,” “outlook,” “target,” “guidance” and similar expressions, although not all
forward-looking statements contain such terms. This list of indicative terms and phrases is not intended to be all-
inclusive.

These statements are subject to various risks and uncertainties, many of which are outside our control. 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.
Although the information contained in this Annual Report on Form 10-K represents our best judgment as of the date
of this report based on information currently available and reasonable assumptions, we can give no assurance that
the expectations will be attained or that any deviation will not be material. Given these uncertainties, we caution you
not to place undue reliance on these forward-looking statements, which speak only as of the date made. 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

CommScope Holding Company, Inc. was incorporated in Delaware on October 22, 2010 and our initial public
offering for our common stock was on October 25, 2013. Since our founding as an independent company in 1976,
we have consistently played a significant role in many of the world’s leading communication networks. Our
evolution has been driven by technological innovation and strategic acquisitions which expanded our product
offerings and complemented our existing solutions. We are a global provider of infrastructure solutions for
communication and entertainment networks. Our solutions for wired and wireless networks enable service providers
including cable, telephone and digital broadcast satellite operators and media programmers to deliver media, voice,
IP data services and Wi-Fi to their subscribers and allow enterprises to experience constant wireless and wired
connectivity across complex and varied networking environments. Our solutions are supported by our broad array of
services including technical support, systems design and integration. We are a leader in digital video and Internet
Protocol television (IPTV) distribution systems, broadband access infrastructure platforms, and associated data and
voice customer premises equipment. Our global leadership positions are built upon innovative technology, broad
solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution
scale.

We have a team of nearly 30,000 people to serve our customers in over 150 countries through a network of world-
class manufacturing and distribution facilities strategically located around the globe. Our customers include
substantially all 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.

On April 4, 2019, we completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash
transaction with a total purchase price of approximately $7.7 billion, including debt assumed. We acquired ARRIS
to drive profitable growth in new markets, shape the future of wired and wireless communications, and be in a
position to benefit from key industry trends, including network convergence, fiber and mobility everywhere, 5G,
Internet of Things (IoT) and rapidly changing network and technology architectures. The operations of ARRIS are
included in our consolidated operating results for the year ended December 31, 2020 and for the year ended
December 31, 2019 from the date of the Acquisition, which was April 4, 2019.

As of January 1, 2020, we reorganized our internal management and reporting structure as part of the integration of
the Acquisition. The reorganization aligned our segments with the markets they serve and changed the information
regularly reviewed by our chief operating decision maker for purposes of allocating resources and assessing
performance. As a result, we are reporting financial performance based on four new operating segments: Broadband
Networks (Broadband), Home Networks (Home), Outdoor Wireless Networks (OWN) and Venue and Campus
Networks (VCN). All prior period amounts in this report have been recast to reflect these operating segment
changes.

For the year ended December 31, 2020, our revenues were $8.44 billion and our net loss was $(573.4) million,
which included goodwill impairment charges of $206.7 million, restructuring costs of $88.4 million and transaction
and integration costs of $24.9 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.

Operating Segments

As discussed above, as of January 1, 2020, we reorganized our internal management and reporting structure as part
of the integration of the Acquisition. We operate and report based on four operating segments: Broadband, Home,
OWN and VCN.

The distribution of net revenues among our four segments was as follows:

Broadband
Home
OWN
VCN
Total

Year Ended December 31,

2020

2019

2018

34.3%
28.0
14.7
23.0
100.0%

28.3%
30.4
17.7
23.6
100.0%

31.7%
—
32.6
35.7
100.0%

Broadband (2020 Net Sales of $2.9 billion)

Our Broadband segment combines our Network Cable and Connectivity (NCC) and Network and Cloud (N&C)
businesses and provides an end-to-end product portfolio serving the telco and cable provider broadband market. The
Broadband segment includes converged cable access platform, passive optical networking, video systems, access
technologies, fiber and coaxial cable, fiber and copper connectivity and hardened closures.

Home Segment (2020 Net Sales of $2.4 billion)

The Home segment is comprised of the former Consumer Premises Equipment business and offers broadband and
video products. Home segment broadband offerings include devices that provide residential connectivity to a service
providers’ network, such as digital subscriber line and cable modems and telephony and data gateways which
incorporate routing and Wi-Fi functionality. Video offerings include set top boxes that support cable, satellite and
IPTV content delivery and include products such as digital video recorders, high definition set top boxes and hybrid
set top devices.

OWN Segment (2020 Net Sales of $1.2 billion)

Our OWN segment brings together our RF Products and Integrated Solutions businesses and focuses on the macro
and metro cell wireless markets. The segment’s offerings include base station antennas, RF filters, tower
connectivity, microwave antennas, metro cell products, cabinets, steel, accessories, Spectrum Access System and
Comsearch. As our wireless operator customers shift a portion of their 5G capital expenditures from the macro
tower to the metro cell, the OWN segment portfolio will strategically help make the transition smooth and cost-
effective.

VCN Segment (2020 Net Sales of $1.9 billion)

Our VCN segment targets both public and private networks for campuses, venues, data centers, and buildings and
includes our Ruckus Networks, Enterprise and Distributed Coverage and Capacity Systems (DCCS) businesses. The
segment combines Wi-Fi and switching, distributed antenna systems, licensed and unlicensed small cells, and
enterprise fiber and copper infrastructure.

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 demand 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 IoT. In addition, video distribution over the broadband
IP network is transforming how content is managed and consumed. IP facilitates new forms of video such as Over-
the-Top (OTT) and interactive television. Throughout 2020 due to the coronavirus (COVID-19) pandemic, we
learned even more about business and consumer reliance on their network connectivity, as our products and services
allowed a dramatic shift from working in offices to working in the home. We expect that as the world recovers from
the COVID-19 pandemic we will continue to see a mix of connectivity needs in homes, offices and while on the
move. As part of the shift in how people are using the network, we have seen more dramatic upticks in upstream
usage than downstream usage. Some of this will subside as people work less from home, but some recent network
usage trends will also become the new normal, requiring networks to be more symmetrical than in the past.

There are several major trends that we expect to drive network deployments and investment, including:

Evolving Network Architecture and Technology

The pace of change in networking has increased as consumers and data-driven businesses utilize more bandwidth
and shift toward cloud and mobile applications. Exponential growth in video and mobile data consumption 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.

Our customers are working to transition their networks to become faster, more responsive and more efficient. The
work from home trend caused by the COVID-19 pandemic has accelerated many of these network trends. We
believe the following key network trends will continue to impact CommScope and the industry during 2021 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 data network for
wired and wireless services.

2) Continued Disruption by Over-the-Top TV: Although content consumption continues to increase,

subscriptions to pay TV are declining. As a result, cable operators are compelled to invest in and upgrade
their networks and expand their video, voice, data and mobile services to deliver higher data rates in both
the uplink and downlink on their network. While past data trends have been defined by rapid growth in the
downlink, IoT will drive the need for major network change in the uplink.

3) Densification: As wireless operators work to meet consumer demand, cell splitting, in the form of
densification is expected to be a key driver for fulfilling the promise of 5G networks. Increased
sectorization at macro cell sites and establishing better inbuilding coverage will also play significant roles
in the 5G network. We expect that densification will require significant fiber cable and connectivity
between wireless cell sites.

4) Virtualization, Centralization and Disaggregation: Operators are virtualizing and centralizing their

networks to make them more flexible and efficient. Wireless operators are deploying centralized radio
access networks (CRAN) as a first step in the evolution to a virtualized radio access network. Eventually
this will enable servers and switches to replace some of the hardware specific equipment that exists today
and allow much of the processing to be performed on general purpose processors wherever and whenever it
is needed throughout the network. Cable operators are also seeking to virtualize their networks by moving
from a traditional converged cable access platform (CCAP) architecture to a distributed access architecture
(DAA). This moves some of the processing from the head end to the node and virtualizes the rest on
traditional switches and servers.

Transition to 5G

5G wireless is evolving from an industry vision toward a tangible, next generation wireless technology. Many
operators have begun a transition to 5G networks. The number of 5G-enabled devices is expected to continue to
increase during 2021. The primary benefits of 5G are expected to include:

(cid:129)

Enhanced mobile broadband—to support significant improvement in data rates and user experience in both
the uplink and downlink,

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

Low latency, high-reliability—to support applications that are critical or are needed in real time, like
factory machines, virtual reality and augmentation.

Wireless 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 infrastructure to connect wireless access points to each other to improve the response time of the
network. As wireless operators transition toward 5G, they must also manage the fundamental network deployment
issues of site acquisition, power, backhaul and in-building wireless proliferation.

In addition to investment required by wireless operators, the transition to 5G could also spark an investment cycle by
cable operators as they upgrade their networks to compete with fixed wireless broadband, which could become a
viable alternative to traditional broadband internet access.

Fiber Deep Deployments

Residential and business bandwidth consumption continues to grow substantially. The proliferation of OTT 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 improved 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 for us. 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, indoor cellular networks (private and
public), and IoT devices 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 and Wi-Fi solutions to result in 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 for in-house corporate data centers. Multi-tenant and hyperscale data center managers are
focused on ultra-low loss, high density, scalable fiber connectivity solutions.

Enterprises are also looking at using LTE and 5G for their own, private uses. It is expected that private networks
will become far more important to an enterprise’s information technology plans and will provide a level of reliable
connection that they have not been able to get from their Wi-Fi networks, further moving the demand of enterprise
communications into the wireless domain.

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

As demand growth continues to outpace macro cell 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 traditional macro cell sites.
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.

Small cell and DAS solutions 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.

Transition to Wi-Fi 6

Wi-Fi 6 is the next generation standard in Wi-Fi technology that builds on and improves the current Wi-Fi standard.
Until this point, all upgrades to Wi-Fi have been less than a gigabit, but Wi-Fi 6 breaks through this boundary and
will likely drive the upgrade of not only the access point but also the switch and cabling systems. Moreover,
regulatory efforts are underway to free up the necessary spectrum in the 6GHz band which will enable many more
use cases and, in combination with Wi-Fi 6, untether a whole host of equipment.

Strategy

With the global rise in demand for consumer, business and device connectivity, we expect the need and reliance on
communications networks to increase dramatically over the next ten years. Our strategy and 2021 priorities are to:

Continue Our Organizational Transformation

To support our goal of shaping the most advanced networks of the future, in January 2020, we realigned our
operating and management structure to center around the markets we serve. Based on this new operating and
management structure, our new segments are Broadband, Home, OWN and VCN. We are positioned as a leader in
each of these areas already and will endeavor to defend our leadership in the more mature parts of these markets,
while also shifting resources towards our targeted growth choices within them. We believe this realignment will not
only improve the execution of our strategy and help unlock the full potential of our portfolio of end-to-end
networking equipment, but it will also help us take advantage of greater revenue and cost synergy potential within
our current businesses to achieve the following:

(cid:129)

Further improve our market leadership positions;

(cid:129) Accelerate an integrated technology roadmap and position us to respond more quickly to new market

opportunities;

(cid:129) Allow us to create a unified supply chain organization to optimize our global manufacturing and

distribution footprint and better position us to respond quickly to rapidly changing market conditions; and

(cid:129)

Position us to take advantage of our leadership position in fast growing, strategic markets.

Over the coming years, we expect to transform our organization into one that has better operational speed and
resilience and can better service our existing customers, as well as new ones. One of the ways we can do this is to
embrace the digital revolution and embrace the move to cloud-based software solutions both in our products and in
our operations. We believe that by combining the strengths of our various products, services and technical
capabilities, we can create more valued solutions that help our customers achieve better business outcomes and
lower the overall cost per bit of communications networks, while making them more symmetrical and responsive at
the same time.

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 (R&D). We intend to drive profitable growth by enabling our
service provider, enterprise, hyperscale and emerging cloud customers with the necessary broadband capacity to
meet increased consumer demand. 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 intend to generate growth opportunities by:

(cid:129)

becoming more customer focused and increasing the value we provide to both our existing customers and
new customers around the world;

focusing on the value we can offer to customers at solving their stated and unstated problems;

offering existing products and solutions into new geographic markets;

collaborating with the world’s leading service and content providers and maintaining deep industry
relationships;

better utilization of our distribution and channel partnerships; and

building new integrated product offerings for existing and new use cases.

Become a Preferred Partner to our Customers

We plan to expand our industry leadership positions by developing and enhancing value-creating partner
relationships with our customers, suppliers and 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 ensure we are
providing solutions to their key network challenges.

Continue to Enhance Operational Efficiency and Cash Flow Generation

We continuously pursue strategic initiatives aimed at optimizing our utilization of 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
flow. We believe we will be able to increase overall cash flow from operations and we intend to use cash we
generate to reduce our indebtedness and eventually return to making strategic acquisitions.

Customers

Our customers include substantially all the leading global telecommunications operators, data center managers,
leading cable television, telecommunication and satellite multi-channel video service providers and MSOs,
thousands of enterprise customers, including many Fortune 500 companies, and end customers in hospitality,
venues, education, government and smart cities, which we serve both directly and indirectly. Major customers and
distributors include companies such as Anixter International Inc. (Anixter) (now Wesco International, Inc.); Charter
Communications, Inc.; Comcast Corporation (Comcast); Genesis Networks Enterprises, LLC.; Graybar Electric Co.
Inc.; KGP Co.; NBN Co. Limited; Talley Inc.; T-Mobile U.S. Inc.; and Verizon Communications Inc. For the year
ended December 31, 2020, we derived approximately 17% of our consolidated net sales from our top two direct
customers and our largest customer, Comcast, accounted for 11% of our consolidated net sales. For the year ended
December 31, 2019, after giving effect to the Acquisition as if it happened on January 1, 2019, we would have
derived approximately 13% of our consolidated net sales from Comcast. Sales to Comcast are derived from our
VCN, Broadband and Home segments. Net sales to Anixter accounted for 11% of our actual consolidated net sales
for the year ended December 31, 2018. Net sales to Anixter primarily originate in the VCN segment.

Products from our Broadband segment are primarily sold directly to wireline network service providers, such as
telephone companies and cable television network providers, to be deployed by them into their service delivery
networks. In some cases, we sell through specialized resellers and distributors who primarily provide logistics
support and in certain circumstances post-sale service and support. 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. We sell these products to most of the wireline and satellite operators globally.

Products from our Home segment are primarily sold directly to wireline network service providers, such as
telephone companies and cable television network providers, to be deployed by them into their subscribers’ homes
and businesses. We sell some products to satellite video distributors who also deploy our products into their
subscribers’ premises. In some cases, we sell through specialized resellers and distributors who primarily provide
logistics support and, in certain circumstances, post-sale service and support. 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. We sell these products to most of the wireline and satellite operators
globally. In the U.S., we also sell certain products directly to consumers over the internet and through brick and
mortar retailers.

Products from our OWN segment are primarily sold directly to wireless operators, OEMs that sell equipment to
wireless operators and 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. Although we sell to most
wireless operators globally, we are dependent on a small number of large operators.

Products from our VCN segment are primarily sold through independent distributors or system integrators for large
telecommunications operators and to customers in a broad range of enterprise vertical markets, including hospitality,
education, smart cities, government, venues and service providers indirectly through channel partners. We also sell
directly to cable television system operators, broadband operators and service providers that deploy broadband
networks. In certain circumstances, we do sell VCN segment products directly to end customers, but it is a relatively
small part of the overall business.

We generally have no minimum purchase commitments from any of our distributors, system integrators, channel
partners, value-added resellers, wireless operators or OEM customers, and our contracts with these parties generally
do not prohibit them from purchasing from our competitors 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 significant 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 1, Item 1A, “Risk Factors.”

Competition

The markets in which we participate are dynamic and highly competitive, requiring companies to react quickly to
capitalize on opportunity. We retain skilled and experienced personnel and deploy substantial resources to meet the
changing demands of the industry and to capitalize on change. The market for our products is highly competitive
and subject to rapid technological change. We encounter significant domestic and international competition across
all 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. Major
competitors by segment include the following: Broadband segment - Cisco Systems, Inc., Corning Inc., Harmonic
Inc., and Huawei Technologies Co., Ltd.; Home segment - Huawei Technologies Co., Ltd., Humax Co., Ltd.,
Sagemcom Broadband SAS and Technicolor S.A.; OWN segment - Comba Telecom Systems Holding Ltd.,
Telefonaktiebolaget LM Ericsson, Huawei Technologies Co., Ltd. and Rosenberger NA; and VCN segment - Cisco
Systems, Inc., Comba Telecom Systems Holding Ltd., Hewlett Packard Enterprise Development LP and Huawei
Technologies Co., Ltd.

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 and entertainment
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 cable
television and video network equipment industry, both CommScope and ARRIS are longstanding market leaders,
along with other brands we own such as Ruckus, Pace, Motorola Home, ADC and many smaller brands. 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 building better networks are differentiated in the marketplace and are a significant
global competitive advantage. We help our customers achieve better business outcomes, and serve their customers,
employees, and shareholders. We invested $703.3 million in research and development during 2020 to advance
product innovation and drive total cost of deployment and ownership down. Our ongoing innovation, supported by
proprietary intellectual property and technology know-how, has allowed us to build and sustain a competitive
advantage.

Established Sales Channels and Customer Relationships

We serve customers in over 150 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 and maintain high-performing
communication networks. Our customers include substantially all the leading global telecommunications operators,
data center managers, 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 significant 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. Most of our manufacturing employees are in lower-cost geographies such as Mexico, China, India
and the Czech Republic. The combination of our dynamic manufacturing organization, our global network of third-
party manufacturers and our distribution organization allows us to:

(cid:129)

Flex our capacity to meet market demand and expand our market position;

(cid:129) Deliver high-quality customer solutions;
(cid:129)

Provide high customer service levels due to proximity to the customer; and

(cid:129)

Effectively integrate acquisitions and capitalize on related synergies.

Record of Operational Excellence and Successful Acquisition Integration

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 pay down $1.4 billion of debt over the
past three years, while also investing $1.5 billion in research and development aimed at both driving profit
expansion and revenue growth. 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 are
ahead of plan on our commitment around the ARRIS synergy capture and have successfully reorganized the
combined business around our end markets. We completed the Broadband Network Systems (BNS) business
integration and delivered substantial synergies while also completing significant system integrations and
reorganizing the business. 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.

Manufacturing and Distribution

We maintain a balance of internal and external manufacturing providers to continue offering our customers a
competitive combination of quality, cost and flexibility in meeting their needs. 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.

In addition, we utilize contract manufacturers located throughout the world, including in Brazil, China, Malaysia,
Mexico, South Africa, Thailand, Vietnam and the U.S., for many of our product groups, including those in our
Home segment, certain Broadband segment products, certain OWN segment products and all of our Ruckus
products. Our global footprint allows us to hedge against macroeconomic headwinds in an everchanging
environment.

We continuously evaluate and adjust operations to improve service, lower cost and improve the return on our capital
investments, and we expect to continue modifying our global operations to adapt to changing product demand and
business conditions.

Raw Materials and Components

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
third-party suppliers. We depend upon sole suppliers for certain of these components, including memory and chip
capacitors. If these sources cannot 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. Our supply
agreements include technology licensing and component purchase contracts. Several of our competitors have similar
supply agreements for these components. In addition, we license software for operating network and security
systems or sub-systems and a variety of routing protocols from different suppliers.

Research and Development

We operate in an industry that is subject to rapid changes in technology, and our success is largely contingent upon
anticipating and reacting to such changes. Accordingly, R&D 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 $703.3
million in research and development during 2020, and we expect to continue with substantial investments in future
years. We intend to focus our major R&D activities on high-growth opportunities such as fiber optic connectivity for
fiber-to-the-x (FTTX) and data centers, Wi-Fi 6 and 6GHz, CCAP, DAA, Data Over Cable Service Interface
Specification (DOCSIS) 4.0, gigabit passive optical network (GPON), active and passive base-station antennas and
metro cell and small cell wireless solutions. We are also developing solutions that support the convergence of
wireline and wireless networks in connection with the rollout of 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.

Backlog and Seasonality

At December 31, 2020 and 2019 we had an order backlog of $1,964.3 million and $1,243.2 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.

Patents and Trademarks

We pursue an active policy of seeking intellectual property protection, including patents and registered trademarks,
for new products and designs. For technology that is not owned by us, we have a program for obtaining appropriate
licenses to ensure that we have the necessary license coverage for our products. In addition, we have formed
strategic relationships with leading technology companies to provide us with early access to technology that we
believe will help keep us at the forefront of our industry.

On a worldwide basis, we held approximately 15,000 patents and patent applications and approximately 3,000
registered trademarks and trademark applications. We consider our patents and trademarks to be valuable assets, and
although no single patent is material to our overall operations, we believe the COMMSCOPE, ARRIS,
SURFBOARD, RUCKUS, SYSTIMAX, NETCONNECT, ERA, ONECELL and HELIAX 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. From time to time there are disputes with respect to the ownership of the technology used in
our industry and accusations of patent infringements. We will continue to protect our key intellectual property
rights.

Government Regulation

We are subject to various domestic and international government regulations. For example, 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 also subject to governmental export and import
regulations and sanctions programs that could subject us to liability or impair our ability to compete in international
markets. In addition, because of the nature of information that may pass through or is stored on our solutions or
networks, we and our end customers may be subject to complex and evolving U.S. and foreign laws and regulations
regarding privacy, data protection and other matters. Further, we are subject to various federal, state, local and
foreign environmental laws and regulations governing, among other things, substances used in our products,
discharges to air and water, management of regulated materials, handling and disposal of solid and hazardous waste,
and investigation and remediation of contaminated sites. See Part I, Item 1A, “Risk Factors” for additional
discussion of our risks related to government laws and regulations.

Corporate Responsibility and Sustainability

We believe that corporate responsibility and sustainability means making decisions that have a positive impact on
our people, planet and bottom line. Our company-wide sustainability mission is to enable faster, smarter and more
sustainable solutions while demonstrating the utmost respect for our human and natural resources. We are
accomplishing this mission by utilizing innovative technology, intelligent engineering and energy efficient design to
build more sustainable networks that make our customers more agile, while at the same time seeking to preserve the
natural ecosystems from which we source our raw materials. While we may provide technological solutions, it is our
people who make the real difference in our communities. Their commitment to our customers, fellow employees and
the communities in which they live and work drives them to provide creative solutions, services and practices that
are safe and sustainable for our environment and future generations.

We understand how important it is to consider the larger impact of our actions beyond the balance sheet. We are
proud of CommScope’s prominent standing in one of the world’s most vital and dynamic industries. We push
ourselves and our thinking for the purpose of creating a better and sustainable tomorrow. For the sake of our current
and future generations, we will continue to grow as a sustainable, environmentally conscious business that benefits
the whole planet.

For additional information, see our Corporate Responsibility & Sustainability pages on the CommScope website:
https://www.commscope.com/About-Us/Corporate-Responsibility-and-Sustainability/.

Human Capital Management

Our employees are at the center of everything we do at CommScope, and we understand they are the driving force
for our innovation and success. CommScope works to ensure it provides a safe, inclusive, and enjoyable workplace
environment for all its employees. We have a global team of nearly 30,000 employees with approximately 60%
classified as manufacturing employees. The majority of these manufacturing employees are located in low-cost labor
countries such as Mexico, China, India and the Czech Republic. Our U.S. workforce is a mix of manufacturing and
non-manufacturing employees and makes up approximately 20% of our employee base.

More than ever, our employees have united behind our common purpose to “Create Lasting Connections” all over
the world. We unite, collaborate and innovate to create the world’s most advanced networks and succeed by having
people who come to work passionate about delivering on this vision every day. Core pillars underlying our Human
Capital Management strategy focus on employee engagement, employee training and development, employee
inclusion, equality, and diversity, and employee health, safety and well-being.

Employee Engagement

CommScope prides itself on creating a culture where feedback and communication are vital in building an engaging,
employee-centric organization. To that end, twice-yearly, around May and November, we “take the pulse” of our
organization through a global engagement survey. This Pulse Survey obtains the voice of our employees worldwide
and identifies strengths and development areas in our culture as well as management effectiveness. Strong results
have shown up consistently over the last year in areas such as engagement, teamwork and collaboration, pride in
working for CommScope as well as the strategic clarity of the business. CommScope plans to continue to build out
the total employee experience for our employees, in line with our purpose, vision and corporate values.

Employee Education, Training and Development

We are committed to developing the careers and capabilities of our current and future employees. We have an Early
Career Strategy aimed at recruiting people for internships and co-ops, ensuring we are hiring the top early career
talent where and when they’re needed. Once hired, our career development and learning philosophy is based on the
belief that employees learn best through a combination of work experience, coaching, feedback, training and
education.

We use an online platform, TalentConnections, to manage permanent employees’ performance and goals throughout
the year, providing continuous development opportunities through coaching and feedback. The Global LearnCenter
(GLC) is CommScope’s online learning platform consisting of a wealth of work-related development topics,
including product knowledge, leadership development, project management, general business content as well as
ethics and diversity training. Growth is not only achieved through these learning platforms but also through our
regular town halls, round tables and everyday interaction with our front-line managers. We focus heavily on
interacting with our employees how, when and where it matters most.

Employee Inclusion, Equality, and Diversity

CommScope strives to create an inclusive environment that draws upon the strength of the diversity within our
workforce to meet and exceed the expectations of our customers, employees and stockholders. CommScope’s global
workforce comprises individuals of many races, cultures, backgrounds, geographies and experiences. That’s
something we take pride in and work constantly to support. We know diversity makes us stronger and helps to
further grow our company and create fully inclusive teams. CommScope launched a global Diversity & Inclusion
Business Network in June 2020, providing employees with opportunities to network, learn and lead, grow their
careers and support their communities. We not only focus on diversity but also equality in the workplace.

CommScope regularly benchmarks its compensation and benefits by country with companies comparable in size and
scope to enable competitive and equitable pay. As part of our ongoing process, we work to ensure employees are
paid equitably, regardless of gender, nationality or disability. We base pay on the job being performed, employee
experience and performance.

Employee Health, Safety and Well-being

At CommScope, our employees’ health, safety and well-being are our top priority. In 2020 this has come more into
focus than ever with the ongoing COVID-19 pandemic. In response, we have implemented rigorous health and
safety protocols globally. Overall, our vision is to seek opportunities to protect the well-being of our employees,
customers, suppliers, environment and communities.

A commitment to business practices that are innovative, safe and sustainable is key to our company’s success. To
achieve this, we have established a robust Environment, Health & Safety (EHS) management system, set objectives
and targets, provided necessary resources and created a comprehensive well-being and benefits program. All this
encourages ongoing improvement as we continue to unlock the greatest potential for our employees. The global
EHS team has designed and implemented an integrated, companywide EHS management system based on the
requirements of the International Standards of ISO45001 and ISO14001.

CommScope seeks to inspire a culture of proactive health where our employees make lifestyle decisions that lead to
enjoyable careers and balanced lives. To realize this goal, we support our workforce by providing tools, services and
programs that help our employees achieve and maintain optimal personal health. We made a commitment in our
benefits program to ensure we provide our employees and their family members with a compelling and competitive
benefits package that offers value, choices and resources to help manage their well-being, including our
GuidanceResources program, which provides physical, emotional, legal and financial well-being resources to
employees.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments
to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as
amended, are available free of charge on our web site at www.commscope.com under Company — Investor
Relations as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
The information posted to our website is not incorporated into 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 related to us or our business.

Summary Risk Factors
The following is a summary of some of the risks, uncertainties and assumptions that could materially adversely
affect our business, financial position, results of operations and cash flows. You should read this summary together
with the more detailed description of each risk factor contained below.

Strategic Risks

(cid:129) Our business strategy relies in part on acquisitions to create growth. We may not fully realize anticipated

benefits from past or future acquisitions or investments in other companies.

(cid:129) We may sell or discontinue one or more of our product lines as a result of our evaluation of our products

(cid:129)

and markets.
The Carlyle Group (Carlyle) owns a substantial portion of our equity and its interests may not be aligned
with yours.

(cid:129) Difficulties may be encountered in the realignment of manufacturing capacity and capabilities among our
global manufacturing facilities and our contract manufacturers that could adversely affect our ability to
meet customer demand for our products.

(cid:129) We may need to undertake additional restructuring actions in the future.

Competitive Risks

(cid:129) Our business is dependent on third party capital spending for data, communication and entertainment

networks, and reductions in such capital spending could adversely affect our business.

(cid:129) A substantial portion of our business is derived from a limited number of key customers and channel

partners.

(cid:129) We face competitive pressures with respect to all our major product groups.
(cid:129) Our ability to sell our products is highly dependent on the quality of our support and services offerings after

(cid:129)

the sale, and our inability to execute after the sale would have a material adverse effect on business.
Changes to the regulatory environment in which our customers operate and changes in or uncertainty about
government funded programs may negatively impact our business.

Operational Risks

(cid:129)

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

(cid:129) Our future success depends on our ability to anticipate and adapt to changes in technology and customer

(cid:129)
(cid:129)

(cid:129)

preferences and develop, implement and market innovative solutions.
If we do not stay current with product life cycle developments, our business may suffer.
If our products do not effectively interoperate with cellular networks and mobile devices, future sales of our
products could be negatively affected.
If our service offerings or products, including material purchased from our suppliers, have quality or
performance issues, our business may suffer.

(cid:129) We depend on cloud computing infrastructure operated by third-parties and any disruption in these

operations could adversely affect our business.

(cid:129) Our business depends on effective management information systems.
(cid:129)

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.
Climate change may have a long-term impact on our business.

(cid:129)

Supply Chain Risks

(cid:129) Our dependence on commodities subjects us to cost volatility and potential availability constraints.
(cid:129) We are dependent on a limited number of key suppliers for certain raw materials and components.
(cid:129)

Capacity constraints with respect to our internal facilities and/or existing or new contract manufacturers
could have an adverse impact on our business.
If our contract manufacturers encounter production, quality, financial or other difficulties, we may
experience difficulty in meeting customer demands.

(cid:129)

Financial Risks

(cid:129) 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 financial obligations.

(cid:129) Despite current indebtedness levels and restrictive covenants, we may still incur additional indebtedness

(cid:129)

that could further exacerbate the risks associated with our substantial financial leverage.
To service our indebtedness and pay dividends on our preferred stock, we will require a significant amount
of cash and our ability to generate sufficient cash depends on many factors beyond our control.

(cid:129) We may need to recognize additional impairment charges related to goodwill, identified intangible assets

(cid:129)

and fixed assets.
The IRS may not agree ARRIS International plc (ARRIS) was a foreign corporation for U.S. federal
income tax purposes.

Labor Related Risks

(cid:129) We may not be able to attract and retain key employees.
(cid:129)

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

International Risks

(cid:129) Our significant international operations expose us to economic, political and other risks.
(cid:129) Additional tariffs or a global trade war could increase the cost of our products, which could adversely

impact the competitiveness of our products.

(cid:129) 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.

(cid:129) We are subject to governmental export and import controls and sanctions programs that could subject us to

liability or impair our ability to compete in international markets.

Litigation and Regulatory Risks

(cid:129) We may not be successful in protecting our intellectual property and in defending against claims that we

(cid:129)

are infringing on the intellectual property of others and such actions may be costly.
Because of the nature of information that may pass through or be stored on our solutions or networks, we,
our vendors and our end customers may be subject to complex and evolving U.S. and foreign laws and
regulations regarding privacy, data protection and other related matters.
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.

General Risks

(cid:129)

The current COVID-19 pandemic and any other future public health crisis, could materially adversely
affect our business, financial condition, results of operations and cash flows.

(cid:129) We may experience significant variability in our quarterly or annual effective income tax rate.
(cid:129) 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.
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.

(cid:129)

(cid:129) Our business could be negatively impacted as a result of actions by activist stockholders or others.

Strategic Risks

Our business strategy relies in part on acquisitions to create growth. We may not fully realize anticipated benefits
from past or future acquisitions or investments in other companies.

All acquisitions, including the 2019 acquisition of ARRIS (the Acquisition), involve risks, such as the assumption of
additional liabilities and expenses, issuance of debt, incurrence of transaction and integration costs, diversion of
management’s attention from other business concerns, assumption of unknown contingent liabilities and
unanticipated litigation costs. There are also 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 ERP systems;
integrating inventory management and accounting activities; integrating R&D activities; navigating markets in
which we potentially have limited or no prior experience; integrating and implementing effective disclosure controls
and procedures and internal controls over financial reporting; and the impact of goodwill or other impairment
charges, amortization costs for acquired intangible assets and acquisition accounting treatment, including the loss of
deferred revenue and increases in the fair values of inventory and other acquired assets, on our GAAP financial
condition and results of operations. Furthermore, such acquisitions may be dilutive to our financial results.

Although we typically expect to realize strategic, operational and financial benefits as a result of our past and future
acquisitions and investments, we cannot predict or guarantee whether and to what extent anticipated cost savings,
synergies and growth prospects will be achieved.

Both CommScope and ARRIS have completed a number of significant acquisitions and invested in other companies
over recent years and we expect to make additional acquisitions and strategic investments in the future. For instance,
in 2017, ARRIS acquired the Ruckus Wireless and ICX Switch business (Ruckus Networks); in 2016, ARRIS
combined with Pace plc (Pace); and in 2015, CommScope acquired TE Connectivity’s BNS business. We anticipate
that a portion of any future growth of our business will be accomplished by acquiring existing businesses, products
or technologies. However, we may not be able to identify suitable acquisition opportunities or obtain the 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.

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 financial position,
results of operations and cash flows. Divestitures of product lines have inherent risks and costs, including potential
post-closing claims for indemnification and potential loss of customers, even with respect to retained product lines.
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.

Carlyle owns a substantial portion of our equity and its interests may not be aligned with yours.

Funding for the Acquisition included an investment by Carlyle in our Series A Convertible Preferred Stock. As a
result, Carlyle owns approximately 16% of our common stock on an if-converted basis and has the right to designate
up to two directors on our Board of Directors. In addition, certain of our existing directors are senior advisors to
Carlyle. Circumstances may occur in which the interests of Carlyle could conflict with the interests of our other
stockholders.

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

We periodically realign manufacturing capacity among our global facilities and contract manufacturers 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 and
contract manufacturers. We have done this in the past related to the integration of certain acquisitions, including the
integration of the ARRIS business. Also, in prior years, with some of the uncertainties in the U.S. trade tariff
environment, we transitioned manufacturing for certain impacted products to non-tariff countries. In addition, in
response to intermittent shutdowns of our facilities during the COVID-19 pandemic, we transitioned certain
manufacturing to less impacted facilities. These changes are time-consuming and costly, and changes in our contract
manufacturers or manufacturing locations may cause significant interruptions in supply if the manufacturers have
difficulty manufacturing products to our specifications. There are significant risks inherent in the implementation of
these initiatives, including our failure to ensure the following: adequate inventory on hand or production capacity to
meet customer demand while capacity is being shifted among facilities; maintaining product quality as a result of
shifting capacity; adequate raw material and other service providers to meet the needs at the new production
locations; ability to successfully remove, transport and re-install equipment; and availability of adequate
supervisory, production and support personnel 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 the implementation of initiatives to reduce costs and improve efficiency of our operations. Most
recently, we have undertaken a number of initiatives to support the integration of ARRIS, which include mostly
workforce reductions. In the past, we have undertaken initiatives to support the integration of other acquisitions,
which included the closure of certain domestic and international manufacturing facilities and various other
workforce reductions. As a result of the continued integration efforts related to the acquisition of ARRIS, 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 adversely and materially affect our cash flows.

Competitive Risks

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

Our performance is dependent on third parties’ capital spending for constructing, rebuilding, maintaining or
upgrading data, communication and entertainment 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:

(cid:129)

competing technologies;

general economic and market conditions;

foreign currency fluctuations;

seasonality of outside deployments;

timing and adoption of the global rollout of new technologies;

customer-specific financial conditions;

changes in customer preferences or requirements;

availability and cost of capital;

governmental regulation;

demand for network services;

(cid:129)

competitive pressures, including pricing pressures;

customer acceptance of new services offered;

industry consolidation; and

real or perceived trends or uncertainties in these factors.

We have experienced a decrease in demand for certain of our products as a result of the COVID-19 pandemic in
2020 and this could continue in the near team. For a more complete discussion of our risks related to COVID-19, see
the risk factor under “General Risk Factors” in this Item 1A, Risk Factor section, “The current pandemic of the
novel coronavirus, or COVID-19, and any other future public health crisis, could materially adversely affect our
business, financial condition, results of operations and cash flows.” 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, value-added resellers and sales representatives. For the year ended
December 31, 2020, we derived approximately 17% of our consolidated net sales from our top two direct customers.
Our largest customer, Comcast, accounted for approximately 11% of our consolidated net sales. The concentration
of our net sales with these key customers subjects us to a variety of risks, including:

(cid:129)

lower sales that could result from the loss of one or more of our key customers;

dependency on customers with substantial purchasing power and leverage in negotiating contractual
obligations as well as the operational structure of the relationship, resulting in lower net sales and gross
profit;

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

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

election by our key customers to purchase products from our competitors in order to diversify their supplier
base and dual-source key products, resulting in reduced purchases of our products; and

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

We are also exposed to similar risks to the extent that we have significant indirect sales to one or more end-users of
our products, who may also be a direct customer.

We generally have no minimum purchase commitments with any of our distributors, value-added resellers, operators
or OEMs or other customers, and our contracts with these parties generally do not prohibit them from purchasing or
offering products or services that compete with ours. We have historically experienced variability in the level of
purchases by our key customers and expect similar variability that could affect future sales. 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.

We face competitive pressures with respect to all 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 preferences; product and service quality; timing of
the introduction of new products and services; speed of delivery; pricing; and customer service, including the total
customer experience. 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 offerings 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 continues to consolidate, and the combination of any of our
competitors could further increase these advantages and result in competitors with broader market presence.

Some competitors may be able to bundle their products and services together and may be capable of delivering more
complete solutions that better meet customer preferences than we are able to provide, which may cause us to lose
sales opportunities and revenue. Competitors’ actions, such as price reductions, acceptance of high-risk contractual
terms 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. For example, as networks become more
virtualized, the functionality of our products is at risk of being subsumed by competitors who utilize software to
provide the same functions as our products. A related trend that could affect us is the emerging interest in DAA,
which disaggregates some of the functions of the CCAP and the access and transport platforms to enable
deployment of these functions in ways that could reduce traditional operator capital expenditures in hybrid fiber-
coaxial. We have developed and deployed a line of DAA products, but some operators may not be aligned on the
specific implementations of DAA and we could lose market share to competitors. Service providers also have the
goal of virtualizing CCAP management and control functions as they deploy DAA, and although we are developing
a fully virtualized CCAP product, this could potentially enable new competitors to enter the market and reduce
operator dependence on our products. As there is technology evolution or transformation within the industry, be it
DOCSIS 4.0 or PON, there is risk that our market position would be weakened. If any of our competitors’ products
or technologies were to become the industry standard, our business would be negatively affected.

The continued industry move toward open standards may result in an increase in competition for our products that
may adversely impact our future revenues and margins. In addition, many of our customers participate in
“technology pools” and increasingly request that we donate a portion of our source code used by customers to these
pools, which may impact our ability to recapture the R&D investment made in developing such code. We believe
that we will be increasingly required to work with third-party technology providers. As a result, we expect the shift
to more open standards may require us to license software and other components indirectly to third parties via
various open-source or royalty-free licenses. In some circumstances, our use of such open-source technology may
include technology or protocols developed by standards settings bodies, other industry forums or third-party
companies. The terms of the open-source licenses granted by such parties, or the granting of royalty-free licenses,
may limit our ability to commercialize products that utilize such technology, which could have a material adverse
effect on our results.

In some instances, our customers themselves may also be our competition in other business areas. Some of our
customers may develop their own software requiring support within our products and/or may design and develop
products of their own that are produced to their own specifications directly by a contract manufacturer. Further, if
we are unable to transform our business processes to support changing customer expectations and deliver a superior
total customer experience, we may lose sales opportunities in the future.

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 business, financial condition, results
of operations and cash flows could be materially and adversely affected.

Our ability to sell our products is highly dependent on the quality of our support and services offerings after the
sale, and our inability to execute after the sale would have a material adverse effect on our business.

After our products are deployed, our channel partners and end customers depend on our support organization to
resolve any issues relating to our products. A high level of support is important for the successful marketing and sale
of our products. In many cases, our channel partners provide support directly to our end customers. We do not have
complete control over the level or quality of support provided by our channel partners. These channel partners may
also provide support for other third-party products, which may potentially distract resources from support for our
products. If we and our channel partners do not effectively assist our end customers in deploying our products,
quickly resolving post-deployment issues and provide effective ongoing support, it would adversely affect our
ability to sell our products to existing end customers and could harm our reputation with potential end customers. In
some cases, we guarantee a certain level of performance to our channel partners and end customers, which could
prove to be resource-intensive and expensive for us to fulfill if unforeseen technical problems arise.

Many of our service provider and large enterprise end customers have more complex networks and require higher
levels of support than our smaller end customers. If our support organization fails to meet the requirements of our
service provider or large enterprise end customers, it may be more difficult to execute on our strategy to increase our
sales to large end customers. In addition, given the extent of our international operations, our support organization
faces challenges, including those associated with delivering support, training and documentation in languages other
than English. Our failure to maintain high-quality support and services would have a material adverse effect on our
business, financial condition, results of operations and cash flows.

Changes to the regulatory environment in which our customers operate and changes in or uncertainty about
government funded programs may negatively impact our business.

The telecommunications and cable television industries are subject to significant and changing federal and state
regulation, both in the U.S. and other countries. Many of our customers are subject to various rules and regulations
as Internet service providers and changes to such rules and regulations could adversely impact our customers’
decisions regarding capital spending. Some of our customers include agencies of the U.S. federal government as
well as educational institutions that receive funding from the U.S. federal government. We, as well as some of our
customers, also participate in and benefit from government funded programs that encourage the development of
network infrastructures. 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 and could materially and adversely affect our business, financial condition, results of operations and cash
flows.

Operational Risks

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 manufacturing or contract manufacturing facilities
could adversely affect our ability to manufacture products at our other manufacturing or contract manufacturing
facilities in a cost-effective and timely manner. For example, the COVID-19 pandemic negatively impacted our
results in 2020 due to supply constraints primarily related to the shut-down of our factories in Suzhou, China in the
first quarter of 2020. For a more complete discussion of our risks related to the COVID-19 pandemic, see the risk
factor below under “General Risk Factors” in this Item 1A, “The current pandemic of the novel coronavirus, or
COVID-19, and any other future public health crisis, could materially adversely affect our business, financial
condition, results of operations and cash flows.” Also, some of our manufacturing and contract manufacturing
facilities rely on aging production equipment and information technology infrastructure, and if we fail or our
contract manufacturers fail to properly maintain or update this equipment, it could affect our ability to manufacture
or ship products. Other disruptions, including 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 manufacturing or contract manufacturer 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.

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 rapid advances in information processing and communications
capabilities that require increased transmission speeds and density and greater bandwidth. These advances require
significant investments in R&D in order to improve the capabilities of our products and services and develop new
offerings or solutions that will meet the needs and preferences of our customers. There can be no assurance that our
investments in R&D will yield marketable product or service 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
business, financial condition, results of operations and cash flows if we are not successful in our ongoing innovation
efforts.

As our products become more complex and customer preferences continue to change, we may encounter difficulties
in meeting customer preferences, including performance, service and delivery expectations. Developing our
products is expensive, complex and involves uncertainties. Each phase in the development of our products presents
serious risks of failure, rework or delay, any one of which could impact the timing and cost-effective development
of such product and could jeopardize end customer acceptance of the product. We have experienced in the past, and
may in the future experience, design, manufacturing, marketing and other difficulties that could delay or prevent the
development, introduction or marketing of new products and enhancements. Any such difficulties or delays 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.

To compete successfully, we must continue to innovate in anticipation of both our customers’ needs and developing
industry trends, which require us to quickly design, develop, manufacture and sell new or enhanced products that
provide increasingly higher levels of performance and reliability. If we do not have competitively priced, market-
accepted products available to meet our customers’ planned roll-out of new technologies, we may miss a significant
opportunity and our business, financial condition, results of operations and cash flows could be materially and
adversely affected.

The introduction of new or enhanced products requires that we carefully manage the transition from older products
to minimize disruption in customer ordering practices and ensure that new products can be timely delivered to meet
our customers’ demand. 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.

Furthermore, there are several major trends that we expect to continue to impact the enterprise market and product
life cycles, including the shift to 5G, enterprises shifting toward mobility indoors and adjusting in-building cabling
designs to support Wi-Fi, more access points and in-building cellular applications. Due to significant increases in
data traffic and migrations of applications to the cloud, enterprises are also shifting spending toward multi-tenant
data centers and hyperscale cloud service providers, which offer cloud data centers services as a replacement to in-
house corporate data centers. As a result, there is growing demand for fiber solutions and decelerating demand for
copper solutions. If we are unable to continue to support customers in these transitions, or if sales of copper products
decline faster than expected, we could experience a material adverse effect on our business, financial condition,
results of operations and cash flows.

In order to stay current with product life cycle developments, we have formed strategic relationships with leading
technology companies to provide us with early access to technology that we believe will help keep us at the
forefront of our industry. Our strategic alliances are generally based on business relationships that have not been the
subject of written agreements expressly providing for the alliance to continue for a significant period of time, and
the loss of any such strategic relationship could have a material adverse effect on our business and results of
operations.

If our products do not effectively interoperate with cellular networks and mobile devices, future sales of our
products could be negatively affected.

Many of our products are designed to interoperate with cellular networks and mobile devices using Wi-Fi
technology. These networks and devices have varied and complex specifications. As a result, we must ensure that
our products interoperate effectively with these existing and planned networks and devices. To meet these
requirements, we must continue development and testing efforts that require significant capital and employee
resources. We may not accomplish these development efforts quickly or cost-effectively, or at all. If our products do
not interoperate effectively, orders for our products could be delayed or cancelled, which would harm our revenue,
operating results and reputation, potentially resulting in the loss of existing and potential end customers. The failure
of our products to interoperate effectively with cellular networks or mobile devices may result in significant
warranty, support and repair costs, divert the attention of our engineering personnel from our product development
efforts and cause significant customer relations problems. In addition, our end customers may require our products
to comply with new and rapidly evolving security or other certifications and standards. If our products are late in
achieving or fail to achieve compliance with these certifications and standards, or our competitors first achieve
compliance with these certifications and standards, such end customers may not purchase our products, which would
harm our business, operating results, financial condition and cash flows.

If our service offerings or products, including material purchased from our suppliers, 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. Many of our products include both hardware and software components. It is not
unusual for software, especially in earlier versions, to contain bugs that can unexpectedly interfere with expected
operations. 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; and depending on the number of products
affected, the cost of fixing or replacing such products could have a material impact on our operating results.

In some cases, we are dependent on a sole supplier for components used in our products. Defects in sole-sourced
components subject us to additional risk of being able to quickly address any product issues or failures experienced
by our customers as a result of the component defect and could delay our ability to deliver new products until the
defective components are corrected or a new supplier is identified and qualified. This could increase our costs in
resolving the product issue, result in decreased sales of the impacted product or damage our reputation with
customers, any of which could negatively impact our operating results.

Hardware or software defects could also permit unauthorized users to gain access to our customers’ networks and/or
a consumer’s home network. In addition to potentially damaging our reputation with customers, such defects may
also subject us to claims for damages under agreements with our customers and fines by regulatory authorities.

We offer warranties on most products, the terms and conditions of which depend upon the product subject to the
warranty. In many cases, we also 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 a result of reputational damage.

Our products have been deployed in many different locations and user environments and are capable of providing
services and connectivity to many different types of devices operating a variety of applications. The ability of our
products to operate effectively can be negatively impacted by many different elements unrelated to our products. For
example, a user’s experience may suffer from an incorrect setting in a Wi-Fi device. Although certain technical
problems experienced by users may not be caused by our products, users often may perceive them to be the
underlying cause of poor performance of the wireless network. This perception, even if incorrect, could harm our
business and reputation. Similarly, a high-profile network failure may be caused by improper operation of the
network or failure of a network component that we did not supply, but service providers may perceive that our
products were implicated, which, even if incorrect, could harm our business, financial condition, results of
operations and cash flows.

We depend on cloud computing infrastructure operated by third parties and any disruption in these operations
could adversely affect our business.

For certain of our service offerings, in particular our Wi-Fi-related cloud services, we rely on third parties to provide
cloud computing infrastructure that offers storage capabilities, data processing and other services. We currently
operate our cloud-dependent services using Amazon Web Service (AWS), Google Compute Engine (GCE) or
Microsoft Azure. We cannot easily switch our AWS, GCE or Azure operations to another cloud provider. Any
disruption of or interference with our use of these cloud services would impact our operations and our business
could be adversely impacted.

Problems faced by our third party cloud services with the telecommunications network providers with whom we or
they contract or with the systems by which our telecommunications providers allocate capacity among their
customers, including us, could adversely affect the experience of our end customers. If AWS and GCE are unable to
keep up with our needs for capacity, this could have an adverse effect on our business. Any changes in third party
cloud services or any errors, defects, disruptions or other performance problems with our cloud-based applications,
could adversely affect our reputation and may damage our end customers’ stored files or result in lengthy
interruptions in our services. Interruptions in our services might adversely affect our reputation and operating
results, cause us to issue refunds or service credits, subject us to potential liabilities or result in contract
terminations.

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 (ERP)
systems to support critical business operations such as processing sales orders and invoicing, manufacturing,
shipping, inventory control, purchasing and supply chain management, human resources and financial reporting. In
2020, we began the upgrade of our ERP software to a newer, cloud-based version. We expect the first phase to be
complete in early 2021. We may experience difficulties as we transition to the upgraded systems, including loss or
corruption of data, delayed shipments, decreases in productivity as personnel implement and become familiar with
new systems and processes, unanticipated expenses (including increased costs of implementation or costs of
conducting business) and lost revenue. Difficulties in implementing the upgrade or significant system failure could
disrupt our operations, divert management’s attention and have an adverse effect on our capital resources, financial
condition, results of operations or cash flows.

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 or to make
additional investment in our digital platform to support e-commerce activities and improve our customer experience
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, produce information for business decision-making activities and support digital
customer experience 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
acting on our behalf receive, process, store and transmit confidential data, including “personally identifiable
information,” with respect to employees, vendors, customers and others. As the recent rise in cybersecurity 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 of 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, sensitive or personal information,
the deletion or modification of records or interruptions in our operations. These cybersecurity risks increase when
we transmit information from one location to another, including transmissions over the Internet or other electronic
networks. Any future significant compromise or breach of our data security, whether external or internal, or misuse
of employee, vendor, customer, or Company data, could result in significant costs, lost sales, fines, lawsuits, lost
customers and damage to our reputation. We employ a variety of security breach countermeasures and security
controls designed to mitigate these risks, but we cannot guarantee that all breach attempts can be successfully
thwarted by these measures as the sophistication of attacks increases. As cyber threats continue to evolve, we may
be required to expend additional resources to mitigate new and emerging threats while continuing to enhance our
information security capabilities or to investigate and remediate security vulnerabilities.

In addition, defects in some of the hardware or software we develop and sell, or in their implementation by our
customers, could also result in unauthorized access to our customers’ and/or consumers’ networks. Any such events
could result in theft of trade secrets and intellectual property; give rise to legal proceedings; cause us to incur
increased costs for insurance premiums, security, remediation and regulatory compliance; subject us to civil and
criminal penalties; expose us to liabilities to our customers, employees, vendors, governmental authorities or other
third parties; allow others to unfairly compete with us; disrupt our delivery of products and services; expose the
confidential information of our clients and others; 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.

Climate change may have a long-term impact on our business.

There are inherent climate change risks wherever business is conducted. The potential physical impacts of climate
change on our operations are highly uncertain and would be particular to the geographic circumstances in areas in
which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages,
changing sea levels and changing temperatures. These impacts may adversely impact the cost, production and
financial performance of our operations. Climate-related events, including the increasing frequency of extreme
weather events and their impact on critical infrastructure in the regions in which we operate, have the potential to
disrupt our business, our third-party suppliers, and/or the business of our customers and may cause us to experience
higher attrition, losses and additional costs to maintain or resume operations. CommScope aligns with the Global
Reporting Initiative (GRI) standard and makes use of the Carbon Disclosure Project (CDP) platform, which is
committed to aligning with the Task Force on Climate Related Financial Disclosures (TCFD) recommendations to
accurately assess, take potential proactive action and report as appropriate. For additional information, see our
Corporate Responsibility & Sustainability pages on the CommScope website: https://www.commscope.com/About-
Us/Corporate-Responsibility-and-Sustainability.

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 memory and chip capacitors, polymers, copper rod, copper and aluminum tapes, fine aluminum
wire, steel wire, optical fiber, circuit boards and other electronic components, subassemblies and modules. Certain
of our suppliers are sole source suppliers and a number of our agreements with suppliers are short-term in nature.

Our reliance on sole or limited suppliers, particularly foreign suppliers, and our reliance on subcontractors involves
several risks, including a potential inability to obtain an adequate supply of required materials, components and
other products, and reduced control over pricing, quality, terms and conditions of purchase and timely delivery.
Current limited supply of components in the memory and passives categories could impact our ability to deliver on a
timely basis and increase overall product costs. We are currently experiencing extended lead times from certain of
our key suppliers which could also impact our ability to deliver on a timely basis. 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. It could also affect our ability to ship
products on a timely basis, which could damage relationships with current and prospective customers and potentially
have a material adverse effect on our business.

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. For a more complete discussion of our
risks related to tariffs and trade restrictions, see the risk factor, “Additional tariffs or a global trade war could
increase the cost of our products, which could adversely impact the competitiveness of our products” under our
“International Risk Factors” in this Item 1A. Risk Factors section.

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 third-party 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.

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. Our reliance on these contract manufacturers reduces our control over the
manufacturing process and exposes us to risks, including reduced control over quality assurance, product costs and
product supply and timing. Any manufacturing disruption by these contract manufacturers could severely impair our
ability to fulfill orders. Our reliance on outsourced manufacturers also increases the potential for infringement or
misappropriation of our intellectual property. If we are unable to manage our relationships with our contract
manufacturers effectively, or if our contract manufacturers suffer delays or disruptions for any reason, including
financial instability, labor disturbances or geopolitical instability, experience increased manufacturing lead-times,
capacity constraints or quality control problems in their manufacturing operations, or fail to meet our future
requirements for timely delivery, our ability to ship products to our customers may be impaired, and our business
and operating results could be harmed.

These manufacturers typically fulfill our supply requirements on the basis of individual orders. In most cases, we do
not have long-term contracts with our contract manufacturers that guarantee capacity, the continuation of particular
pricing terms or the extension of credit limits. Accordingly, our contract manufacturers are not always obligated to
continue to fulfill our supply requirements, which could result in supply shortages, and the prices we are charged for
manufacturing services could be increased on short notice. In addition, as a result of fluctuating global financial
market conditions, natural disasters or other causes, it is possible that any of our manufacturers could experience
interruptions in production, cease operations or alter our current arrangements. If our manufacturers are unable or
unwilling to continue manufacturing our products in required volumes, we will be required to identify one or more
acceptable alternative manufacturers.

In the past, in response to uncertainty in the U.S. trade tariff environment, we transitioned manufacturing for certain
impacted products to non-tariff countries. It is time-consuming and costly to mitigate these uncertainties, and future
such changes in our contract manufacturers or manufacturing locations may cause significant interruptions in supply
if the manufacturers have difficulty manufacturing products to our specifications. As a result, our ability to meet our
scheduled product deliveries to our customers could be adversely affected, which could cause the loss of sales to
existing or potential customers, delayed revenue or an increase in our costs. For a more complete discussion of our
risks related to trade policies, see the risk factor “Additional tariffs or a global trade war could increase the cost of
our products, which could adversely impact the competitiveness of our products” under “International Risks” in this
Item 1A Risk Factors section.

Production interruptions for any reason, such as a natural disaster, pandemic/epidemic, capacity shortages or quality
problems, at one of our manufacturers would negatively affect sales of our products that are manufactured by that
manufacturer or utilize components produced by that manufacturer. Such difficulties could adversely affect our
business, financial condition, results of operations and cash flows. For a more complete discussion of our risks
related to the COVID-19 pandemic, see the risk factor, “The current pandemic of the novel coronavirus, or COVID-
19, and any other future public health crisis, could materially adversely affect our business, financial condition,
results of operations and cash flows.” under “General Risk Factors” in this Item 1A, Risk Factors section.

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 financial obligations.

See Note 8 in the Notes to Consolidated Financial Statements included in this Form 10-K for additional details of
our indebtedness. As of December 31, 2020, we had approximately $9.7 billion of indebtedness. As of December
31, 2020, we had no outstanding loans under our asset-based revolving credit facility and the remaining availability
was $735.1 million, reflecting a borrowing base of $766.9 million reduced by $31.8 million of letters of credit. 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. We have entered into certain hedging agreements to reduce our exposure to variable rate
debt.

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

(cid:129)

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

require a substantial portion of our cash flows to be dedicated to debt service payments and reduce the
amount of cash flows available for working capital, capital expenditures, investments or acquisitions and
other general corporate purposes;

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 or our ability to refinance existing indebtedness in the
future with reasonable terms and conditions, or at all; 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.

Our variable rate indebtedness currently uses LIBOR as a benchmark for establishing the rate. On July 27, 2017, the
authority that regulates LIBOR announced that it intends to stop compelling banks to submit rates for the calculation
of LIBOR after 2021. In November 2020, this deadline was extended for the LIBOR rates used in our variable rate
indebtedness until June 2023. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates
Committee, is considering replacing U.S. dollar LIBOR with a newly created index, calculated with a broad set of
short-term repurchase agreements backed by treasury securities, called the Secured Overnight Financing Rate. It is
not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in
the United Kingdom (U.K.), the U.S. or elsewhere. These changes could require us to renegotiate certain of our
variable rate indebtedness to address changes in the benchmark rates.

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 debt.

Despite current indebtedness levels and restrictive covenants, we may still 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 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.

To service our indebtedness and pay dividends on our preferred stock, we will require a significant amount of
cash, and our ability to generate sufficient 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 and pay cash dividends on our preferred stock will depend on the level of earnings and distributable
funds from our subsidiaries. Certain of our subsidiaries may have limitations or restrictions on paying dividends and
otherwise transferring funds 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 achieve 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 and dividends on our
preferred stock.

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. As of December 31, 2020, goodwill and
identified intangible assets represented approximately 66% of our total 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. In connection with an interim test of goodwill impairment in the second quarter of 2020, we recorded
an impairment charge to goodwill of $206.7 million. In addition, as of the October 2020 annual impairment test, the
fair value of certain reporting units only modestly exceeded their carrying value and slight changes in significant
assumptions or business factors could result in material impairment. In the future, indicators of impairment could
exist for other reporting units as well, and we may incur another material charge against earnings relating to our
remaining goodwill.

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 identified intangible assets and fixed assets. In the
future, we may again determine 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.

The IRS may not agree ARRIS was a foreign corporation for U.S. federal income tax purposes.

Following the Pace combination, ARRIS was incorporated under the laws of England and Wales and a tax resident
in the United Kingdom for U.K. tax purposes. There is a risk that the Internal Revenue Service does not agree that
ARRIS was a foreign corporation for U.S. federal income tax purposes in periods prior to the Acquisition and we
could be subject to substantial additional U.S. taxes. For U.K. tax purposes, ARRIS was expected to be treated as a
U.K. tax resident for all periods prior to the Acquisition and following the Pace combination, regardless of how
ARRIS was treated in the U.S. Therefore, if ARRIS was treated as a U.S. corporation for U.S. federal income tax
purposes, we could be liable for both U.S. and U.K. taxes in certain periods prior to the Acquisition, which could
have a material adverse effect on our financial condition, results of operations and cash flows.

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 or are at or near retirement age, including a
disproportionate amount of our workforce in key geographic areas who will reach retirement age in the next decade.
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
well. 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.

Furthermore, 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. In addition, many of our employees are highly experienced, skilled individuals who have extensive
knowledge or relationships in our industry. As these employees leave CommScope, we may not be able to easily
replicate their experience, knowledge and relationships. Difficulties in attracting or retaining employees with the
necessary management, technical and financial skills needed to achieve our business objectives may limit our
growth potential and may have a material adverse effect on our business, financial condition and results of
operations.

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

Although none of our U.S. employees are represented by unions, a significant portion of our international employees
are members of unions or subject to works’ councils or similar statutory arrangements. We are required to consult
with, and seek the consent or advice of, various employee groups or works’ councils that represent our employees
for any changes to our activities or employee benefits. Based on requests from two separate works councils in the
European Union, we are required to negotiate, and are currently negotiating, an agreement for the establishment of a
European Works Council that would serve as a representative body of our European workforce. Requirements to
consult with such groups could have a significant impact on our flexibility in managing costs and responding to
market changes. 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 manufacturing or 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.

International Risks

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

We have significant international sales, manufacturing, distribution and R&D operations. Our major international
manufacturing, distribution and R&D facilities are located in Australia, Belgium, China, the Czech Republic,
France, Germany, India, Ireland, Mexico, Singapore and the United Kingdom. For the year ended December 31,
2020, international sales represented 39% of our consolidated net sales. In general, our international sales have
lower gross margin percentages than our domestic sales. To the extent international sales increase as a percentage of
our net sales, our overall gross margin percentages may decline.

Our international sales, manufacturing, distribution and R&D operations are subject to the risks inherent in operating
abroad, including, but not limited to, coordinating communications among and managing international operations;
currency exchange rate fluctuations; economic and political destabilization; restrictive actions by foreign
governments; wage inflation; nationalizations; the laws and policies of the U.S. and other countries 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; volatile geopolitical turmoil, including
popular uprisings, regional conflicts, terrorism, and war; shipping interruptions; major health concerns (such as
pandemics and infectious diseases); inflexible labor contracts or labor laws in the event of business downturns; and
economic boycott for doing business in certain countries.

A significant portion of our products sold in the U.S. are manufactured outside the U.S. 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. For a
more complete discussion of our risks related to trade policies, see the risk factor, “Additional tariffs or a global
trade war could increase the cost of our products, which could adversely impact the competitiveness of our
products” under “International Risks” in this Item 1A, Risk Factors section.

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, British pound
sterling, Mexican peso, Australian dollar, Brazilian real, South African rand, Indian rupee and Czech koruna. We
manage our foreign currency rate risks through regular operating and financing activities and 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.

Additional tariffs or a global trade war could increase the cost of our products, which could adversely impact the
competitiveness of our products.

There is currently significant uncertainty about the future relationship between the U.S. and various other countries,
most significantly China, with respect to trade policies and tariffs. The former U.S. administration called for
substantial changes to U.S. foreign trade policy with respect to China and other countries, including the possibility
of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the
U.S. The new administration could have a different approach to U.S. foreign trade policy with China as well as other
countries but there remains much uncertainty.

This uncertainty about the future relationship between the U.S. and certain of its trading partners may reduce trade
between the U.S. and other nations, including countries in which we currently operate. Changes in policy or
continued uncertainty could depress economic activity and restrict our access to suppliers or customers. The tariffs
implemented on our products (or on materials, parts or components we use to manufacture our products) by the
former U.S. administration increased the cost of our products manufactured in the U.S. and imported into the U.S. If
additional tariffs or trade restrictions are implemented on our products (or on materials, parts or components we use
to manufacture our products) by the U.S. or other countries, the cost of our products manufactured in China, Mexico
or other countries and imported into the U.S. or other countries could increase further. We expect to continue to pass
along some of these costs to our customers, but the increased cost could adversely affect the demand for products.
We have been successful in the past in shifting the manufacturing locations for the impacted products, but this takes
time and results in additional one-time costs and these alternative locations may have higher ongoing manufacturing
costs. These cost increases could adversely affect the demand for our products and/or reduce margins, which could
have a material adverse effect on our business and our earnings.

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 anti-corruption laws and regulations of the U.S. government and various other
international jurisdictions, and our failure to comply with these laws 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 and
the U.K. Bribery Act. Violations of these legal requirements are punishable by significant criminal fines and
imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts and other
remedial measures. We have established policies, procedures and internal controls designed to assist us and our
personnel in complying with applicable U.S. and international anti-corruption 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 and sanctions programs 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 exemption. In addition, we are required
to comply with certain U.S. and foreign import and customs rules, 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, 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 a 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 and
have systems in place designed to prevent compliance failures, we cannot assure you 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, import or sell our products to existing or potential
customers, particularly those with international operations. Any limitation on our ability to export, import 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 not be successful in protecting our intellectual property and in defending against claims that we are
infringing on the intellectual property of others and such actions may be costly.

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. In addition, the payment of any damages or
any necessary licensing fees or indemnification costs associated with a patent infringement claim could be material
and could also materially adversely affect our operating results. 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.

Because of the nature of information that may pass through or be stored on our solutions or networks, we, our
vendors and our end customers may be subject to complex and evolving U.S. and foreign laws and regulations
regarding privacy, data protection and other related matters.

Globally, there has been an increase in laws and regulatory action concerning privacy-related matters. Some of these
laws impose requirements for the handling of personal data, including data of employees, consumers and business
contacts. Several U.S. states have adopted legislation requiring companies to protect the security of personal
information that they collect from consumers over the Internet, and more states may adopt similar legislation. For
example, the California Consumer Privacy Act, which went into effect on January 1, 2020, subjects us to stricter
obligations, greater fines and more private causes of action related to data security. The California Privacy Rights
Act (CPRA), which is effective in 2023, amends and further expands the California Consumer Privacy Act. Also,
many jurisdictions have enacted or are enacting laws requiring companies to notify regulators or individuals of data
security incidents involving certain types of personal data. These mandatory disclosures regarding security incidents
often lead to widespread negative publicity. Any security incident, whether actual or perceived, could harm our
reputation, erode customer confidence in the effectiveness of our data security measures, negatively impact our
ability to attract or retain customers, or subject us to third party lawsuits, regulatory fines or other action or liability,
which could materially and adversely affect our business and operating results.

Foreign data protection, privacy and other laws and regulations can be more restrictive than those in the U.S. For
example, the E.U.’s General Data Protection Regulation (GDPR), which became effective in May 2018, was
designed to harmonize data privacy laws across Europe, to protect all E.U. citizens’ data privacy, empower E.U.
citizens with respect to their personal data and to reshape the way organizations across the region approach data
privacy. Compliance with GDPR has required changes to products and service offerings, internal and external
software systems, including our websites, and changes to many company processes and policies. Failure to comply
with GDPR could cause significant penalties and loss of business. Recent judicial rulings in Europe about GDPR
have invalidated the E.U.-U.S. privacy shield framework, which is the mechanism relied upon by some of our
vendors for personal data transfers out of the E.U. Additionally, these rulings require companies like ours to assess
their personal data transfers from the E.U. to determine whether the protections in the U.S. or any country without
an adequacy determination meet E.U. standards in the context of the specific transfer. A European data protection
authority could disagree with our assessment of such transfers, resulting in penalties or required changes in how we
transfer data within our company.

In addition, some countries are considering or have passed legislation requiring local storage and processing of data.
For example, Brazil and India have each adopted such laws that became effective in January 2020. These new and
proposed laws could increase the cost and complexity of offering our solutions or maintaining our business
operations in those jurisdictions. The introduction of new solutions or expansion of our activities in certain
jurisdictions may subject us to additional laws and regulations. Our channel partners and end customers also may be
subject to such laws and regulations in the use of our products and services.

These U.S. federal and state and foreign laws and regulations, which often can be enforced by private parties or
government entities, are constantly evolving. In addition, the application and interpretation of these laws and
regulations are often uncertain, may be interpreted and applied inconsistently from jurisdiction to jurisdiction and
may be contradictory with each other. For example, a government entity in one jurisdiction may demand the transfer
of information forbidden from transfer by a government entity in another jurisdiction. If our actions were determined
to be in violation of any of these disparate laws and regulations, in addition to the possibility of fines, we could be
ordered to change our data practices, which could have an adverse effect on our business and results of operations
and financial condition. There is also a risk that we, directly or as the result of a third party service provider we use,
could be found to have failed to comply with the laws or regulations applicable in a jurisdiction regarding the
collection, handling, transfer, disposal or consent to the use of personal data, which could subject us to fines or other
sanctions, as well as adverse reputational impact.

Some states and countries are considering or have introduced laws and regulations requiring minimum or particular
security controls be incorporated into devices that connect to the internet (so called “Internet of Things Security
laws”). Where products we manufacture are considered in scope for some of these laws and regulations, compliance
obligations or customer contracts may necessitate modification of existing product features and specifications or
make inventory obsolete. Inconsistencies in these laws can introduce complexity into our design, manufacturing and
inventory management processes.

Compliance with these existing and proposed laws and regulations can be costly and require significant management
time and attention, and failure to comply can result in negative publicity and subject us to inquiries or investigations,
claims or other remedies, including fines or demands that we modify or cease existing business practices. Customers
may demand or request additional functionality in our products or services that they believe are necessary or
appropriate to comply with such laws and regulations, which can cause us to incur significant additional costs and
can delay or impede the development of new solutions. In addition, there is a risk that failures in systems designed
to protect private, personal or proprietary data held by us or our customers using our solutions will allow such data
to be disclosed to or seen by others, resulting in application of regulatory penalties, enforcement actions,
remediation obligations, private litigation by parties whose data were improperly disclosed or claims from our
customers for costs or damages they incur. There can be no assurance that the limitations of liability in our contracts
would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to
any particular claim. Our existing general liability insurance coverage and coverage for errors and omissions may
not continue to be available on acceptable terms or may not be available in sufficient amounts to cover one or more
large claims, or our insurers may deny coverage as to any future claim. The successful assertion of one or more large
claims against us that exceeds available insurance coverage, or the occurrence of changes in our insurance policies,
including premium increases or the imposition of large deductible or co-insurance requirements, could have a
material adverse effect on our business, financial condition, results of operations and cash flow.

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,
expansion of existing legal requirements related to our products, 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 continuing to evolve in the
U.S. and other countries where we operate, and this 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.

A number of governments or governmental bodies have also introduced or are contemplating regulatory changes in
response to various climate change interest groups and the potential impact of climate change. Legislation and
increased regulation regarding climate change could impose significant costs on us, our venture partners, and our
suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring
and reporting, and other costs to comply with such regulations. Any adopted future climate change regulations could
also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given
the political significance and uncertainty around the impact of climate change and how it should be dealt with, we
cannot predict how legislation and regulation will affect our financial condition, operating performance and ability
to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global
marketplace about potential impacts on climate change by us or other companies in our industry could harm our
reputation.

General Risk Factors

The current pandemic of the novel coronavirus, or COVID-19, and any other future public health crisis, could
materially adversely affect our business, financial condition, results of operations and cash flows.

In March 2020, the World Health Organization declared a new strain of coronavirus (COVID-19) a pandemic and
the U.S. declared a national emergency with respect to COVID-19. The COVID-19 pandemic has negatively
impacted regional and global economies, disrupted global supply chains and created significant volatility and
disruption of financial markets, and another pandemic in the future could have similar negative consequences. Many
jurisdictions, including those where we have operations, have reacted by instituting quarantines, restrictions on
travel, “shelter in place” rules, social distancing protocols and restrictions on types of business that may continue to
operate. Although we have been deemed an “essential” (or equivalent) business in most jurisdictions, and therefore,
we have been permitted to continue most of our operations in those jurisdictions, the impact of the COVID-19
pandemic on our operational and financial performance has included temporary closures of our facilities and the
facilities of certain of our customers, suppliers and other vendors in our supply chain, as well as disruptions and
restrictions on our employees’ ability to travel. The COVID-19 pandemic is negatively impacting almost every
industry directly or indirectly and has negatively impacted the demand for many of our products and our financial
performance in 2020.

The COVID-19 pandemic, or a future pandemic, could have material and adverse effects on our ability to
successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

(cid:129)

health concerns may lead to a complete or partial closure of, or other operational issues at, our
manufacturing facilities or those of our contract manufacturers;
the reduced economic activity may severely impact our customers’ financial condition and liquidity and
may lead to decreased demand for our products and services or impact the timing of on-going or planned
projects;

(cid:129)

difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and
instability in the global financial markets or deteriorations in credit and financing conditions may affect our
access to capital necessary to fund business operations or address existing and anticipated liabilities on a
timely basis;
a deterioration in our ability to operate in affected areas or delays in the supply of products or services to us
from vendors that are needed for our efficient operations could adversely affect our operations;
the potential negative impact on the health of our personnel, particularly if a significant number of them are
impacted, could result in a deterioration in our ability to ensure business continuity during a disruption; and
remote working arrangements may increase our vulnerability to cybersecurity incidents, including breaches
of information systems security, which could damage our reputation, disrupt operations and expose us to
claims from customers, suppliers, employees and others.

The extent to which COVID-19 or another future public health crisis impacts our operations and those of our
customers and suppliers will depend on the scope, severity, duration and spread of the health crisis, the actions taken
to contain it or mitigate its impact, and the direct and indirect economic effects of the crisis and containment
measures, among others, all of which are uncertain and cannot be predicted with confidence. The continued fluidity
of the COVID-19 pandemic precludes any prediction as to its full adverse impact. Nevertheless, the COVID-19
pandemic presents material uncertainty and risk. An extended period of global supply chain and economic
disruption could materially affect our business, financial condition, results of operations, cash flows and access to
sources of liquidity.

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 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 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. Tax law changes in the U.S.
and 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.

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 reduce our debt and fund our growth 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:129)

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;

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, particularly due to the overall decline in our stock price over the last two years. Our
business could be negatively affected as a result of stockholder activism, which could cause us to incur significant
legal fees and other costs, 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.

UNRESOLVED STAFF COMMENTS

None.

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, 2020, our principal facilities, grouped according to
the facility’s primary use, were as follows:

Location
Administrative facilities:

Approximate
square feet

Principal segments

Owned or leased

Hickory, NC (1)
Horsham, PA
Suwanee, GA
San Diego, CA
Shakopee, MN
Bangalore, India
Saltaire, UK
Lowell, MA
Santa Clara, CA
Richardson, TX (1)
Manufacturing and distribution facilities:
Catawba, NC (1)
Claremont, NC (1)
Kessel-Lo, Belgium
Suzhou, China (2)
Suzhou, China (2)
Goa, India (2)
Juarez, Mexico
Santa Teresa, NM
Brno, Czech Republic
Reynosa, Mexico
Veenendaal, Netherlands
Greensboro, NC (1)
Juarez, Mexico
Cary, NC
Mission, TX
Delicias, Mexico
Campbellfield, Australia
Bray, Ireland
Tijuana, Mexico
Buchdorf, Germany
Vacant facilities and properties:
Joliet, IL (3)
Sorocaba, Brazil (4)
Orland Park, IL (5)

84,000
325,000
103,000
187,000
177,000
151,000
112,000
144,000
132,000
100,000

Corporate headquarters
Corporate
Corporate
Broadband & Home
VCN

Home & Broadband
Home
Broadband
Broadband & Home
OWN

1,000,000
589,000
431,000
414,000
363,000
353,000
327,000
300,000
281,000
279,000
215,000
196,000
189,000
151,000
150,000
139,000
133,000
130,000
128,000
109,000

Broadband

VCN & Broadband

Broadband
OWN & VCN
Broadband
OWN & VCN
VCN
Broadband & VCN
Broadband
OWN
OWN & VCN
VCN
Broadband
Home & Broadband
VCN
VCN
OWN
VCN
Broadband & VCN
VCN

690,000
157,000
—

Corporate
OWN
Corporate

Owned
Owned
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned

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

Leased
Owned
Owned

(1)

(2)
(3)

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 8 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on
Form 10-K).
The buildings in these facilities are owned while the land is held under long-term lease agreements.
The Joliet facility is vacant and is currently being marketed for sublease.

(4)
(5)

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

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

The Company is party to certain intellectual property claims and also periodically receives notices asserting that its
products infringe on another party’s patents and other intellectual property rights. These claims and assertions,
whether against the Company directly or against its customers, could require the Company to pay damages,
royalties, stop offering the relevant products and/or cease other activities. The Company may also be called upon to
indemnify certain customers for costs related to products sold to such customers. While the outcome of the claims
and notices is uncertain and a reasonable estimate of the loss from unfavorable outcomes in certain of these matters
cannot be determined, an adverse outcome could result in a material loss.

The Company is also either a plaintiff or a defendant in certain other pending legal matters in the normal course of
business. Management believes none of these pending legal matters will have a material adverse effect on the
Company’s business or financial condition upon final disposition.

In addition, the Company is subject to various federal, state, local and foreign laws and regulations governing the
use, discharge, disposal and remediation of hazardous materials. Compliance with current laws and regulations has
not had, and is not expected to have, a materially adverse effect on the Company’s financial condition or results of
operations.

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

Market Information and Holders

Our common stock is traded on the Nasdaq Global Select Market under the symbol COMM. As of February 5, 2021,
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.

Issuer Purchases of Equity Securities

The following table summarizes the stock purchase activity for the three months ended December 31, 2020:

Average
Price
Paid
Per

Total Number
of Shares

Purchased (1)

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

Period

October 1, 2020 - October 31, 2020
November 1, 2020 - November 30, 2020
December 1, 2020 - December 31, 2020
Total

Share
701,023 $ 9.03
8.57
20,011 13.01
724,999 $ 9.14

3,965

— $
—
—
—

—
—
—

(1) The shares purchased were withheld to satisfy the 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 December 31, 2015 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 on its
common stock over this period.

Comparison of Cumulative Five Year Total Return

$250

$200

$150

$100

$50

$0
12/31/15

12/31/16

12/31/17

12/31/18

12/31/19

12/31/20

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
Index

12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020
51.76
203.04

143.68
111.96

54.81
171.49

146.12
136.40

63.31
130.42

100
100

100

119.72

146.60

165.02

188.38

190.29

ITEM 6.

SELECTED FINANCIAL DATA

Not required.

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 is for the year ended
December 31, 2020 compared with the year ended December 31, 2019. This comparison 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. For a discussion and analysis of our financial condition and
results of operations for the year ended December 31, 2019 compared to December 31, 2018, see Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2019
Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 20, 2020.

OVERVIEW

We are a global provider of infrastructure solutions for communication and entertainment networks. Our solutions
for wired and wireless networks enable service providers including cable, telephone and digital broadcast satellite
operators and media programmers to deliver media, voice, IP data services and Wi-Fi to their subscribers and allow
enterprises to experience constant wireless and wired connectivity across complex and varied networking
environments. Our solutions are complemented by a broad array of services including technical support, systems
design and integration. We are a leader in digital video and Internet Protocol Television distribution systems,
broadband access infrastructure platforms, and associated data and voice customer premises equipment. 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.

On April 4, 2019, we completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash
transaction with a total purchase price of approximately $7.7 billion, including debt assumed. The operations of the
ARRIS business are included in our consolidated operating results for the year ended December 31, 2020; however,
for the comparative year ended December 31, 2019, the operations of the ARRIS business are included only from
the date of the Acquisition. During the years ended December 31, 2020 and 2019, we recognized $24.9 million and
$195.3 million, respectively, of transaction and integration costs and $88.4 million and $87.7 million, respectively,
of restructuring costs mostly related to the Acquisition and integration activities. We will continue to incur
integration and restructuring costs and such costs may be material.

As of January 1, 2020, we reorganized our internal management and reporting structure as part of the integration of
the Acquisition. The reorganization changed the information regularly reviewed by our chief operating decision
maker for purposes of allocating resources and assessing performance. As a result, we are reporting financial
performance based on four new operating segments: Broadband Networks (Broadband), Home Networks (Home),
Outdoor Wireless Networks (OWN) and Venue and Campus Networks (VCN). These four segments represent non-
aggregated reportable operating segments. Prior to this change, we operated and reported five operating segments:
Connectivity Solutions, Mobility Solutions, Customer Premises Equipment, Network and Cloud (N&C) and Ruckus
Networks. Our change in segments as of January 1, 2020 resulted in a realignment of our existing reporting units.
Although the reporting units were realigned, our reporting units remained the same except for where two reporting
units have been combined into a new reporting unit. In this case, goodwill was simply combined in the new
reporting units. Since the composition of the reporting units and the assignment of goodwill to the reporting units
were unaffected, an interim goodwill impairment test was not performed due to our change in segments during the
first quarter of 2020.

In March 2020, the World Health Organization declared the new strain of coronavirus (COVID-19) a pandemic and
the United States (U.S.) declared a national emergency with respect to COVID-19. The COVID-19 pandemic has
negatively impacted regional and global economies, disrupted global supply chains and created significant volatility
and disruption of financial markets. Many jurisdictions, including those where we have operations, have reacted by
instituting quarantines, restrictions on travel, “shelter in place” rules, social distancing protocols and restrictions on
types of business that may continue to operate. While we have been deemed an “essential” (or equivalent) business
in most jurisdictions, and therefore, we have been permitted to continue most of our operations in those
jurisdictions, the impact of the COVID-19 pandemic on our operational and financial performance has included
temporary closures of our facilities and the facilities of certain of our customers, suppliers and other vendors in our
supply chain, as well as disruptions and restrictions on our employees’ ability to travel. We have taken measures to
protect the health and safety of our employees, including implementing new and increased cleaning procedures,
health screenings, safety protocols and social distancing requirements where appropriate, working with our
customers and vendors to minimize potential disruptions and supporting our community in addressing the challenges
posed by this global pandemic.

The COVID-19 outbreak negatively impacted our financial performance during the year ended December 31, 2020,
as discussed more below, particularly in our VCN, OWN and Home segments. While the impacts in the first quarter
of 2020 were primarily related to supply constraints due to the shutdown of our factories in Suzhou, China, the
impacts on the second, third and fourth quarters reflected a combination of changes in demand, business continuity
costs and supply constraints. Currently, most CommScope factories are fully operational, but we have experienced
periodic, temporary factory closures in certain jurisdictions due to health concerns. From a demand standpoint, the
impact has been mixed with network strain driving increased demand for our Broadband products, while VCN has
been negatively impacted due to social distancing measures and the general economic slowdown. We have taken a
number of actions to reduce our operating costs and manage our balance sheet in light of the COVID-19 pandemic,
including headcount reductions, improved working capital management, lower capital spending and suspension of
certain discretionary spending.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on
future developments, including the duration and spread of the pandemic, the effectiveness of vaccines and related
actions taken by domestic and international jurisdictions to maintain and prevent disease spread, all of which are
uncertain and cannot be predicted. We have considered the impact of the economic slowdown on our evaluation of
our significant estimates, including goodwill impairment indicators and credit losses, as of December 31, 2020.
Although no indicators of goodwill impairment or significant changes in credit risk were identified as of December
31, 2020, it is possible that impairments and/or credit losses could emerge as the long-term impact of the crisis
becomes clearer and those losses could be material. See the discussion below under “Critical Accounting Policies”
for more information regarding the interim goodwill impairment test performed during the second quarter of 2020.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in conformity with generally accepted accounting
principles (GAAP) in the 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 Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a
description of all our significant accounting policies.

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 exist that indicate the carrying value may no longer be recoverable. We compare the
fair value of our reporting units with the carrying amount, including goodwill. We recognize an impairment charge
for the amount by which the reporting unit’s carrying amount exceeds its fair value.

We estimate the fair value of a reporting unit using a discounted cash flow (DCF) method or, as appropriate, a
combination of the DCF method and a market approach known as the guideline public company method. Under the
DCF method, we calculate the fair value of a reporting unit based on the present value of estimated future cash
flows. The significant assumptions in the DCF model primarily include, but are not limited to, forecasts of annual
revenue growth rates, annual operating income margin, the terminal growth rate and the discount rate used to
determine the present value of the cash flow projections. When determining these assumptions and preparing these
estimates, we consider 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 and is commensurate with the risk and uncertainty inherent in each
reporting unit and in internally developed forecasts. Under the guideline public company method, we estimate the
fair value based upon market multiples of revenue and earnings derived from publicly traded companies with similar
operating and investment characteristics as the reporting unit. The weighting of the fair value derived from the
market approach may vary depending on the level of comparability of these publicly-traded companies to the
reporting unit. When comparable public companies are not meaningful or not available, we may estimate the fair
value of a reporting unit using only the DCF method.

Estimating the fair value of a reporting unit involves uncertainties because it requires management to develop
numerous assumptions, including assumptions about the future growth and potential volatility in revenues and costs,
capital expenditures, industry economic factors and future business strategy. 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 our strategy, changes in technology or other factors could negatively affect the
fair value in one or more of our reporting units and result in a material impairment charge in the future.

To assess the reasonableness of the calculated fair values of our reporting units, we also compare the sum of the
reporting units’ fair values to our market capitalization and calculate an implied control premium (the excess of the
sum of the reporting units’ fair values over the market capitalization). If the implied control premium is not
reasonable, we will reevaluate the fair value estimates of the reporting unit by adjusting the discount rates and/or
other assumptions.

2020 Interim Goodwill Analysis

During the second quarter of 2020, we determined that indicators of impairment existed for our Home Networks
reporting unit due to lower projected operating results, primarily driven by the accelerated decline in demand for
video devices. This trend was projected to continue as consumers adopt the use of other streaming applications and
was further impacted negatively by the macro-economic effects of COVID-19. Accordingly, we assessed the fair
value of our Home Networks reporting unit as of May 31, 2020 and recorded a goodwill impairment charge of
$206.7 million in the Home segment. This reflects a full impairment of the remaining goodwill in the Home
segment, and as such, the Home segment has no remaining goodwill balance as of December 31, 2020.

To determine the fair value of our Home Networks reporting unit and test for goodwill impairment, we developed a
revised forecast for 2020 and updated the annual financial forecasts for the years beyond 2020. We used an income
approach (DCF method) because we believe this is the most direct approach to incorporate the specific economic
attributes and risk profile of the reporting unit into our valuation model. Consistent with our 2019 annual
impairment test, we used a 9.0% discount rate for the interim goodwill impairment test for the Home Networks
reporting unit. We determined that the utilization of a market approach for the interim goodwill impairment test
would not impact the conclusion.

2020 Annual Goodwill Analysis

The annual test of goodwill impairment was performed for each of the reporting units with goodwill balances as of
October 1, 2020. There were no goodwill impairments identified as a result of the annual impairment test performed
in the fourth quarter of 2020. For the 2020 annual goodwill test, we determined the fair value of each reporting unit
using a DCF model and a guideline public company approach, with 75% of the value determined using the DCF
model and 25% of the value determined using the market approach. The range of discount rates used in our annual
tests were 9.0% to 10.5% for 2020 and 9.0% to 11.0% for 2019.

The following table provides summary information regarding our reporting units with the lowest level of headroom,
including key assumptions used in our annual goodwill analysis, along with sensitivity analysis showing the effect
of a change in certain key assumptions, assuming all other assumptions remain constant, to the resulting fair value
using an income approach. Accordingly, if performance is worse than anticipated for these reporting units, future
impairment tests could result in impairment charges that could be material to our results of operations. The
Enterprise reporting unit is in our VCN segment and the N&C reporting unit is in our Broadband segment.

Key Assumptions

Goodwill

Excess (Deficit) of Fair Value to Carrying Value

Reporting
Unit
Enterprise
N&C

Discount
Rate

Terminal
Growth
Rate

Balance at
December 31,
2020

% of
Total
Assets

Result of Annual
Goodwill Test as
of October 1,
2020

Decrease of
10%
in Cash
Flows

10.5%
9.5

1.5% $
2.0

987.3

7.3% $
2,036.6 15.0

35.7 $
375.8

(78.1) $
66.8

Decrease of
0.5% in
Long-term
Growth Rate
(1.2) $
240.0

Increase of
0.5%
in Discount
Rate

(30.2)
162.4

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 impaired as a result of restructuring actions, we did
not identify any impairments of definite-lived intangible assets or other long-lived assets in 2020. Changes in the
estimates of forecasted net cash flows may result in future asset impairments that could be material to our results of
operations.

Revenue Recognition

We recognize revenue based on the satisfaction of distinct obligations to transfer goods and services to customers.
Our revenue is generated primarily from product or equipment sales. We also generate revenue from custom design
and installation services as well as bundled sales arrangements that include product, software and services. Revenue
is recognized when performance obligations in a contract are satisfied through the transfer of control of the good or
service at the amount of consideration expected to be received. The following are required before revenue is
recognized:

(cid:129)

Identify the contract with the customer. A variety of arrangements are considered contracts; however,
contracts typically take the form of a master purchase agreement or customer purchase orders.

Identify the performance obligations in the contract. Performance obligations are identified as promised
goods or services that are distinct within an arrangement.

(cid:129) Determine the transaction price. The transaction price is the amount of consideration we expect to receive
in exchange for transferring the promised goods or services. The consideration may include fixed or
variable amounts or both.

(cid:129) Allocate the transaction price to the performance obligations. The transaction price is allocated to the

performance obligations on a relative standalone selling price basis.

(cid:129)

Recognize revenue as the performance obligations are satisfied. Revenue is recognized when transfer of
control of the promised goods or services has occurred. This is either at a point in time or over time.

Product sales represent over 90% of our revenue. For these sales, revenue is recognized when control of the product
has transferred to the customer, which is generally at the point in time when products have been shipped, right to
payment has been obtained and risk of loss has been transferred. Certain of our product performance obligations
include proprietary operating system software, which typically is not considered separately identifiable. Therefore,
sales of these products and the related software are considered one performance obligation.

License contracts include revenue recognized for the licensing of intellectual property, including software, sold
separately without products. Functional intellectual property licenses do not meet the criteria for revenue to be
recognized over time and revenue is most commonly recognized upon delivery of the license/software to the
customer.

Certain customer transactions may be project based and include multiple performance obligations based on the
bundling of equipment, software and services. When a multiple performance obligation arrangement exists, the
transaction price is allocated to the performance obligations based on the relative standalone selling price, and
revenue is recognized upon transfer of control of each deliverable. To determine the standalone selling price, we
first look to establish the standalone selling price through an observable price when the good or service is sold
separately in similar circumstances. If the standalone selling price cannot be established through an observable price,
we will make an estimate based on market conditions, customer specific factors and customer class. We may use a
combination of approaches to estimate the standalone selling price.

For performance obligations recognized over time, judgment is required to evaluate assumptions, including the total
estimated costs to determine progress towards completion of the performance obligation and to calculate the
corresponding amount of revenue to recognize. If estimated total costs on any contract are greater than the net
contract revenues, the entire estimated costs are recorded in the period in which the revisions to estimates are
identified and the amounts can be reasonably estimated.

Other customer contract types include a variety of post-contract support services offerings, including:

(cid:129) Maintenance and support services provided under annual service-level agreements with our customers.

These services represent stand-ready obligations that are recognized over time (on a straight-line basis over
the contract period) because the customer simultaneously receives and consumes the benefits of the
services as the services are performed.

(cid:129)

Professional services and other similar services consist primarily of “Day 2” services to help customers
maximize their utilization of deployed systems. The services are recognized over time because the
customer simultaneously receives and consumes the benefits of the service as the services are performed.

Installation services relate to the routine installation of equipment ordered by the customer at the
customer’s site and are distinct performance obligations from delivery of the related hardware. The
associated revenues are recognized over time as the services are provided.

Revenue is measured based on the consideration to which we expect to be entitled based on customer contracts. For
sales to distributors, system integrators and value-added resellers, revenue is adjusted for variable consideration
amounts, including but not limited to estimated discounts, returns, rebates and distributor price protection programs.
These estimates are determined based upon historical experience, contract terms, inventory levels in the distributor
channel and other related factors. Adjustments to variable consideration estimates are recorded when circumstances
indicate revisions may be necessary.

A contract liability for deferred revenue is recorded when consideration is received or is unconditionally due from a
customer prior to transferring control of goods or services to the customer under the terms of a contract. Deferred
revenue balances typically result from advance payments received from customers for product contracts or from
billings in excess of revenue recognized on project or services arrangements.

Unbilled receivables are recorded when revenues are recognized in advance of invoice issuance. A contract asset is
any portion of unbilled receivables for which the right to consideration is conditional on a factor other than the
passage of time, which is common for certain project contract performance obligations. These assets are presented
on a combined basis with accounts receivable and are converted to accounts receivable once our right to the
consideration becomes unconditional, which varies by contract but is generally based on achieving certain
acceptance milestones. We recognize the incremental costs of obtaining a contract as an expense when incurred if
the amortization period of the asset would be one year or less.

We include shipping and handling costs billed to customers in net sales and include the costs incurred to transport
product to customers as well as certain internal handling costs, which relate to activities to prepare goods for
shipment, as cost of sales. Shipping and handling costs incurred after control is transferred to the customer are
accounted for as fulfillment costs and are not accounted for as separate revenue obligations.

Leases

We determine if a contract is a lease or contains a lease at inception. Right of use assets related to operating type
leases are reported in other noncurrent assets and the present value of remaining lease obligations is reported in
accrued and other liabilities and other noncurrent liabilities on the Consolidated Balance Sheets. We do not currently
have any financing type leases.

Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the
lease term at commencement date. The majority of our leases do not provide an implicit rate; therefore, we use the
incremental borrowing rates applicable to the economic environment and the duration of the lease, based on the
information available at commencement date, in determining the present value of future payments. The right of use
asset for operating leases is measured using the lease liability adjusted for the impact of lease payments made prior
to commencement, lease incentives received, initial direct costs incurred and any asset impairments. Lease terms
may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised.
Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We remeasure and reallocate the consideration in a lease when there is a modification of the lease that is not
accounted for as a separate contract. The lease liability is remeasured when there is a change in the lease term or a
change in the assessment of whether we will exercise a lease option. We assess right of use assets for impairment in
accordance with our long-lived asset impairment policy.

We account for lease agreements with contractually required lease and non-lease components on a combined basis.
Lease payments made for cancellable leases, variable amounts that are not based on an observable index and lease
agreements with an original duration of less than twelve months are recorded directly to lease expense.

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
and may be material to earnings.

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 various periods, depending upon the product subject to the warranty and the terms of the individual
agreements. 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 and Liabilities for Unrecognized Tax Benefits

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 withholding and state income taxes). These liabilities are subject
to adjustment if there is a change in the assertion of whether the foreign earnings are considered to be permanently
reinvested.

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.

Business Combinations

We use the acquisition method of accounting for business combinations which requires the tangible and intangible
assets acquired and liabilities assumed to be recorded at their respective fair market value as of the acquisition date.
Goodwill represents the excess of the consideration transferred 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.

Comparison of results of operations for the year ended December 31, 2020 with the year ended December 31,
2019

RESULTS OF OPERATIONS

Year Ended December 31,

2020

2019

Amount

% of Net
Sales
(dollars in millions, except per share amounts)

% of Net
Sales

Amount

$
Change

Net sales
Gross profit
Operating loss
Non-GAAP adjusted EBITDA (1)
Net loss
Diluted loss per share

$ 8,435.9 100.0% $8,345.1 100.0% $
2,747.8
(51.8)
1,215.2
(573.4)
(3.20)

2,404.1
(508.5)
1,297.5
(929.5)
$ (5.02)

28.8
(6.1)
15.5
(11.1)

32.6
(0.6)
14.4
(6.8)

90.8
343.7
456.7
(82.3)
356.1
1.82
$

%
Change

1.1%
14.3
NM
(6.3)
NM
NM

(1)

See "Reconciliation of Non-GAAP Measures" in this Management’s Discussion and Analysis of Financial
Condition and Results of Operations, below.

Net sales

Domestic
International

Year Ended December 31,

2020
8,435.9 $
5,185.3
3,250.6

2019
8,345.1
4,923.3
3,421.8

$
Change

%
Change

90.8
262.0
(171.2)

1.1%
5.3
(5.0)

Net sales in 2020 increased compared to the prior year by $531.9 million in our Broadband segment, primarily
related to the addition of the ARRIS business for the full year of 2020 compared to only a partial year in 2019, but
also due to increased demand for our Network Cable and Connectivity (NCC) and N&C products. These increases
were partially offset by decreases in net sales of $231.3 million in our OWN segment, $179.0 million in our Home
segment and $30.8 million in our VCN segment. The decreases in the OWN and Home segments were driven
primarily by a slowdown in sales to both U.S. and international service provider customers as demand for video
products and wireless network equipment decreased. The decline in the VCN segment was driven by decreases in
sales of Enterprise products. Both the Home and VCN segments declined in 2020 despite the inclusion of the
ARRIS business for a full year in 2020 compared to a partial year in 2019. For further details by segment, see the
section titled “Segment Results” below.

From a regional perspective, net sales increased in 2020 in the U.S. by $262.0 million primarily due to the
Acquisition. Net sales decreased in the Asia Pacific (APAC) region by $122.5 million, the Caribbean and Latin
America (CALA) region by $40.4 million and the Europe, Middle East and Africa (EMEA) region by $13.4 million
and increased in Canada by $5.1 million. Net sales to customers located outside of the U.S. comprised 38.5% of
total net sales for 2020 compared to 41.0% for 2019.

We believe lower demand caused by COVID-19 reduced our net sales during 2020. While it is difficult to quantify
the demand impacts, we believe the most significant reductions in demand related to COVID-19 for 2020 were in
our VCN segment. We do not believe that supply chain disruptions related to COVID-19 materially impacted net
sales during the second half of 2020, but we estimate that supply chain disruptions reduced revenue by
approximately $90 million during the first half of 2020. Management currently expects the decline in net sales
caused by the economic slowdown to continue into 2021.

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

Year Ended December 31,

Gross profit

As a percent of sales

SG&A expense

As a percent of sales

R&D expense

As a percent of sales

2020
$ 2,747.8

2019
$ 2,404.1

Change
$

343.7

%
Change

14.3%

32.6%

28.8%

1,170.7

1,277.1

(106.4)

(8.3)

13.9%

15.3%

703.3

578.5

124.8

21.6

8.3%

6.9%

Gross profit (net sales less cost of sales)

Gross profit increased for 2020 compared to the prior year primarily due to the addition of the ARRIS business for
the full year in 2020 compared to a partial year in 2019. Gross profit in 2019 was negatively impacted by ARRIS
acquisition accounting adjustments of $264.2 million primarily related to the markup of inventory to its estimated
fair value. Excluding the acquisition accounting adjustments recorded in 2019, CommScope’s gross profit was
$2,668.3 million and gross profit as a percentage of sales was 32.0%. We estimate that a combination of supply
chain disruptions and business continuity costs related to COVID-19 reduced gross profit by approximately $70
million for 2020.

Selling, general and administrative expense

For 2020, selling, general and administrative (SG&A) expense decreased compared to the prior year due to a
reduction of $170.4 million in transaction and integration costs related to the Acquisition. Excluding transaction and
integration costs, SG&A expense for 2020 increased primarily due to the inclusion of the ARRIS business for a full
year in 2020 compared to a partial year in 2019 as well as higher variable incentive compensation. These increases
were partially offset by the benefits in 2020 of acquisition synergies and other cost savings initiatives.

Research and development expense

Research and development (R&D) expense for 2020 increased primarily due to the inclusion of the ARRIS business
for a full year in 2020 compared to a partial year in 2019 but also due to our continuing investment in certain VCN
segment products and higher variable incentive costs. 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, net and Asset impairments

Amortization of purchased intangible assets
Restructuring costs, net
Asset impairments

Amortization of purchased intangible assets

630.5 $
88.4
206.7

Year Ended December 31,

2020

2019

%
Change Change
37.3
0.7
(169.4)

6.3%
0.8
(45.0)

593.2 $
87.7
376.1

The amortization of purchased intangible assets was higher in 2020 compared to the prior year primarily due to the
inclusion of the ARRIS business for a full year in 2020 compared to a partial year in 2019. Excluding this
comparability impact, amortization decreased for 2020 compared to the prior year because certain of our intangible
assets became fully amortized.

Restructuring costs, net

The restructuring costs recorded in 2020 and 2019 were primarily related to integrating and preparing to integrate
the ARRIS business. From a cash perspective, we paid $76.7 million to settle restructuring liabilities during 2020
and expect to pay an additional $26.0 million between 2021 and 2022 related to restructuring actions that have been
initiated. Additional restructuring actions related to the Acquisition are expected to be identified and the resulting
charges and cash requirements are expected to be material. In 2020, we also recorded certain asset impairment
charges of $11.6 million identified as restructuring costs because they resulted from restructuring initiatives.

Asset impairments

In 2020, we recorded goodwill impairment charges of $206.7 million related to our Home Networks reporting unit
within our Home segment. See the discussion above under “Critical Accounting Policies” for more information
regarding the interim and annual goodwill impairment tests performed during 2020. In 2019, we recorded goodwill
impairment charges of $142.1 million, $192.8 million and $41.2 million related to our Broadband, Home and VCN
segments, respectively, as a result of our annual goodwill impairment test.

Other expense, net

Foreign currency loss
Other income (expense), net

Foreign currency loss

Year Ended December 31,
2019
2020

$
Change

%
Change

(19.2) $
(10.1)

(11.9) $
5.5

(7.3)
(15.6)

NM
(283.6)%

Foreign currency loss includes the net foreign currency gains and losses resulting from the settlement of receivables
and payables, foreign currency contracts and short-term intercompany advances in a currency other than the
subsidiary’s functional currency. The increase in foreign currency loss for 2020 compared to the prior year was
primarily driven by certain unhedged currencies.

Other income (expense), net

We paid redemption premiums of $17.9 million that were included in other income (expense), net during 2020 in
connection with the refinancing of the 5.00% senior notes due 2021 (the 2021 Notes) and the 5.50% senior notes due
2024 (the 2024 Notes) and the redemptions of $200.0 million of the 6.00% senior notes due 2025 (the 2025 Notes),
as further described in Note 8 in the Notes to Consolidated Financial Statements included in this Annual Report on
Form 10-K. We did not pay any similar redemption premiums during 2019.

Interest expense, Interest income and Income taxes

Interest expense
Interest income
Income tax benefit

Interest expense and interest income

Year Ended December 31,
2019
2020

$
Change

%
Change

(577.8) $
4.4
81.1

(577.2) $
18.1
144.5

(0.6)
(13.7)
(63.4)

NM
(75.7)%
(43.9)%

Interest expense for 2020 was relatively unchanged compared to the prior year period. Interest expense increased in
2020 due to the financing of the Acquisition that occurred in February 2019 but this increase was offset by lower
variable interest rates and lower debt balances due to voluntary repayments in 2019 and 2020.

In March 2019, we entered into pay-fixed, receive-variable interest rate swap derivatives and designated them as
cash flow hedges of interest rate risk. These swaps effectively fixed the interest rate on a portion of the senior
secured term loan due 2026 (the 2026 Term Loan). The total notional amount of the interest rate swap derivatives as
of December 31, 2020 was $600 million with outstanding maturities of up to thirty-nine months.

Our weighted average effective interest rate on outstanding borrowings, including the impact of the interest rate
swap and the amortization of debt issuance costs and original issue discount, was 5.86% at December 31, 2020 and
6.13% at December 31, 2019.

Interest income decreased during 2020 primarily due to $10.9 million of interest earned on the proceeds of the
acquisition-related debt that were held in an interest-bearing escrow account in the prior year until the Acquisition
date.

Income tax benefit

For 2020, our effective tax rate was 12.4% and we recognized a tax benefit of $81.1 million on a pretax loss of
$654.5 million. Our tax benefit was less than the statutory rate of 21.0% in 2020 primarily due to a goodwill
impairment charge of $206.7 million, for which minimal tax benefits were recorded. Our tax rate was also impacted
unfavorably by excess tax costs of $14.0 million related to equity compensation awards as well as U.S. anti-deferral
provisions and foreign withholding taxes. These unfavorable impacts were offset partially by favorable impacts
related to federal tax credits and foreign tax rate changes. See Note 13 in the Notes to Consolidated Financial
Statements included in this Annual Report on Form 10-K for more discussion of our income tax benefit.

For 2019, our effective tax rate was 13.5% and we recognized a tax benefit of $144.5 million on a pretax loss of
$1,074.0 million. Our tax benefit was less than the statutory rate primarily due to a goodwill impairment charge of
$376.1 million, for which minimal tax benefits were recorded. The rate was also unfavorably impacted by U.S. anti-
deferral provisions and foreign withholding taxes but these were partially offset by the favorable impact of federal
tax credits and the expiration of statutes of limitations on various uncertain tax positions.

Segment Results

Net sales by segment:

Broadband
Home
OWN
VCN

Consolidated net sales

Year Ended December 31,

2020

2019

Amount

% of Net
Sales

Amount

% of Net
Sales

Change

$ 2,895.7
2,360.0
1,243.7
1,936.5
$ 8,435.9

34.3 % $ 2,363.8
2,539.0
28.0
1,475.0
14.7
23.0
1,967.3
100.0 % $ 8,345.1

28.3 % $
30.4
17.7
23.6
100.0 % $

531.9
(179.0)
(231.3)
(30.8)
90.8

22.5 %
(7.1)
(15.7)
(1.6)
1.1 %

Operating income (loss) by segment:

Broadband
Home
OWN
VCN

Consolidated operating loss

Adjusted EBITDA by segment:

171.5
(289.7)
181.1
(114.7)
(51.8)

5.9 % $

(12.3)
14.6
(5.9)
(0.6) % $

(326.1)
(196.0)
200.3
(186.7)
(508.5)

(13.8) % $

(7.7)
13.6
(9.5)
(6.1) % $

497.6
(93.7)
(19.2)
72.0
456.7

NM
NM
(9.6) %
NM
NM

Broadband
Home
OWN
VCN

640.5
116.2
278.5
180.0

22.1 % $

4.9
22.4
9.3

473.3
193.7
361.2
269.3

20.0 % $

7.6
24.5
13.7

167.2
(77.5)
(82.7)
(89.3)

35.3 %
(40.0)
(22.9)
(33.2)

Non-GAAP consolidated adjusted
EBITDA (1)

$ 1,215.2

14.4 % $ 1,297.5

15.5 % $

(82.3)

(6.3) %

(1)

See “Reconciliation of Non-GAAP Measures” within this Management’s Discussion and Analysis of
Financial Condition and Results of Operations, below.

Broadband Networks Segment

Broadband segment net sales were higher in 2020 compared to the prior year primarily due to the inclusion of the
N&C business for a full year in 2020 compared to a partial year in 2019, but also due to higher sales of both our
NCC and N&C products. From a regional perspective, for 2020, Broadband segment net sales increased across all
major regions, driven by increases of $431.7 million in the U.S., $48.9 million in the EMEA region, $31.8 million in
the APAC region and $21.1 million in the CALA region. Supply constraints related to the COVID-19 pandemic
negatively affected Broadband segment net sales during the first half of 2020; however, we believe the segment also
benefitted from increased demand for certain of its products. The negative impacts of COVID-19 were not
significant to the Broadband segment in the second half of 2020 and we do not expect significant negative impacts
in 2021.

For 2020, Broadband segment operating income and adjusted EBITDA increased due to higher net sales, the impact
of cost savings initiatives and lower material costs. Broadband segment operating income was also favorably
impacted by reductions in goodwill impairment charges of $142.1 million, reductions in acquisition accounting
adjustments of $124.4 million primarily related to the mark-up of inventory to its estimated fair value, reductions in
transaction and integration costs of $112.3 million and reductions in restructuring costs of $19.1 million. Asset
impairment charges, transaction and integration costs, acquisition accounting adjustments and restructuring costs are
not reflected in adjusted EBITDA. See “Reconciliation of Segment adjusted EBITDA” within this Management’s
Discussion and Analysis of Financial Condition and Results of Operations, below.

Home Networks Segment

Net sales for the Home segment decreased in 2020, despite the inclusion of the ARRIS business for a full year in
2020 compared to a partial year in 2019, due to lower sales volumes of video products to service provider
customers. From a regional perspective, for 2020, the decrease in Home segment net sales was driven by decreases
of $96.0 million in the APAC region, $86.7 million in the U.S. and $39.9 million in the CALA region, but these
were partially offset by an increase in net sales in the EMEA region of $46.1 million. For 2020, we believe the
impacts from COVID-19 were a combination of supply chain disruptions and lower demand for video products. We
anticipate ongoing softness in the Home segment continuing into 2021, partially due to the impacts of COVID-19
but also due to the continuing declines in demand for video products.

For 2020, the Home segment operating loss increased and adjusted EBITDA decreased compared to the prior year
primarily due to lower sales volumes. Home segment operating loss was favorably impacted by a $25.9 million
reduction in acquisition accounting adjustments primarily related to the mark-up of inventory to its estimated fair
value, and the release of a $23.6 million accrual related to a patent royalty matter that was settled for less than
anticipated. These favorable impacts to operating loss were offset by higher goodwill impairment charges of $13.8
million, higher transaction and integration costs of $8.5 million and higher restructuring costs of $6.8 million. Asset
impairments, acquisition accounting adjustments, transaction and integration costs, restructuring costs and a portion
of the patent and litigation settlement described above are not reflected in adjusted EBITDA. Of the $23.6 million
patent royalty accrual release, $15.1 million related to pre-acquisition sales and was excluded from the calculation of
adjusted EBITDA; the remaining $8.5 million release provided a benefit to Home segment adjusted EBITDA in
2020. See “Reconciliation of Segment adjusted EBITDA” within this Management’s Discussion and Analysis of
Financial Condition and Results of Operations, below.

Outdoor Wireless Networks Segment

OWN segment net sales decreased during 2020 compared to the prior year primarily due to a slowdown in sales of
wireless network equipment to both U.S. and international service provider customers. From a regional perspective,
for 2020, OWN segment net sales were lower across all major regions and were primarily driven by decreases in the
U.S. of $156.5 million, the EMEA region of $56.8 million and the APAC region of $28.1 million. U.S. net sales of
OWN segment products in 2019 benefitted from the build out of next generation 4G networks to support
commercial and public safety markets, and that spending did not recur at the same level in 2020. In addition, we
believe a portion of the decline in OWN segment net sales for 2020 was caused by lower demand as a result of the
macroeconomic slowdown caused by the COVID-19 pandemic. We currently believe the impact from COVID-19
could continue to negatively affect the OWN segment into 2021.

For 2020, OWN segment operating income decreased compared to the prior year due to lower net sales in the
current year partially offset by the impact of a patent litigation claim settled during the prior year period for $55.0
million. Adjusted EBITDA decreased for 2020 compared to the prior year primarily due to the decrease in net sales.
Patent litigation settlements are not reflected in adjusted EBITDA. See “Reconciliation of Segment adjusted
EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations,
below.

Venue and Campus Networks Segment

VCN segment net sales were lower in 2020 compared to the prior year, primarily due to lower sales of Enterprise
products primarily driven by the COVID-19 pandemic, despite the incremental sales of the acquired Ruckus
business in 2020 compared to 2019. From a regional perspective, for 2020, VCN segment net sales increased $73.4
million in the U.S. but decreased across all other major regions, driven by decreases of $51.6 million in the EMEA
region, $30.2 million in the APAC region and $15.4 million in the CALA region. Management currently expects the
impact of COVID-19 to continue to negatively affect the VCN segment into 2021.

For 2020, VCN segment operating loss decreased due to a $93.3 million reduction in acquisition accounting
adjustments primarily related to the mark-up of inventory to its estimated fair value as well as reductions in
transaction and integration costs of $51.6 million. These favorable impacts were offset partially by a $13.7 million
increase in patent litigation costs and a $4.2 million increase in restructuring costs. For 2020, VCN segment
operating loss and adjusted EBITDA were negatively impacted by lower sales and unfavorable product mix, offset
partially by the impacts of cost savings initiatives. Acquisition accounting adjustments, restructuring costs, patent
litigation costs and transaction and integration costs are not reflected in adjusted EBITDA. See “Reconciliation of
Segment adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results
of Operations, below.

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 as a percentage of total
capitalization

December 31,

2020

2019

$
Change

Change

521.9

598.2

(76.3)

(12.8)%

911.2
735.1
9,520.6
10,917.4

903.6
796.8
9,832.4
11,668.7

7.6
(61.7)
(311.8)
(751.3)

0.8
(7.7)
(3.2)
(6.4)

87.2%

84.3%

(1) Working capital consists of current assets of $3,354.5 million less current liabilities of $1,953.4 million as of

December 31, 2020 and current assets of $3,511.8 million less current liabilities of $2,042.0 million as of
December 31, 2019.

(2)

Total capitalization includes long-term debt, including the current portion, Series A convertible preferred
stock (the Convertible Preferred Stock) 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 our credit facilities. In April 2020, we borrowed $250.0 million under our senior
secured revolving credit facility (the Revolving Credit Facility) as a precautionary measure to reinforce our cash
position and preserve financial flexibility in light of the uncertainty in the global economy at that time resulting from
the COVID-19 pandemic. We subsequently repaid the full amount in July 2020 because we did not believe the
proceeds were needed for future liquidity as our cash flow generation has continued to improve and the broader
financial markets have continued to stabilize. On a long-term basis, our potential sources of liquidity also include
raising capital through the issuance of additional equity and/or debt.

The primary uses of liquidity include debt service requirements (including voluntary debt repayments or
redemptions), funding working capital requirements, paying acquisition integration costs, paying transaction costs,
capital expenditures, paying restructuring costs, paying dividends related to the Convertible Preferred Stock if we
elect to pay such dividends in cash, paying litigation settlements and income tax payments. We believe that our
existing cash, cash equivalents and cash flows from operations, combined with availability under the 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 additional amounts under the 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 non-GAAP adjusted EBITDA as presented in the
“Reconciliation of Non-GAAP Measures” section below, but also give pro forma effect to certain events, including
acquisitions, synergies and savings from cost reduction initiatives such as facility closures and headcount reductions.
For the year ended December 31, 2020, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the
indentures governing our notes, was $1,289.9 million, which included annualized synergies expected to be realized
in the next two years ($32.6 million) and annualized savings expected from announced cost reduction initiatives
($42.1 million) so that the impact of the 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 based on similar financial measures. We believe we are in compliance with
the covenants under our indentures and senior secured credit facilities at December 31, 2020.

Cash and cash equivalents decreased during 2020 primarily due to debt redemptions of $1.0 billion, partially offset
by the issuance of $700.0 million of 7.125% senior unsecured notes due in 2028 (the 2028 Notes). We also invested
$121.2 million in capital expenditures. These uses of cash were offset partially by cash generated by operating
activities of $436.2 million. As of December 31, 2020, approximately 46% 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 slightly
during 2020 due to higher inventory and lower accounts payable balances mostly offset by lower accounts
receivable balances primarily due to lower fourth quarter sales in the current year. The net reduction in total
capitalization during 2020 reflected the net loss for the period and the $332.0 million net reduction in gross debt.

Cash Flow Overview

Year Ended December 31,

%
Change

2019

Change
596.4 $ (160.2)

(5,154.9) 5,034.7
4,698.6 (5,082.4)

(26.9)%
NM
(108.2)

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

2020

436.2 $
(120.2)
(383.8)

NM - Not meaningful

Operating Activities

Net loss
Adjustments to reconcile net 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

Year Ended December 31,
2019
2020

(573.4) $

(929.5)

823.3
115.0
(154.7)
206.7

228.4
(100.5)
(17.2)
(175.2)
(4.0)
28.8
59.0
436.2 $

770.9
90.8
(260.8)
376.1

258.8
489.1
19.5
(274.0)
7.2
46.0
2.3
596.4

Net cash generated by operating activities

During 2020, operating cash flows decreased compared to the prior year due to $109.0 million paid in the current
year related to patent claims and litigation and $55.7 million in additional interest paid in the current year as a result
of Acquisition-related debt.

Investing Activities

Additions to property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of long-term investments
Cash paid for ARRIS acquisition, net of cash acquired
Cash paid for Cable Exchange acquisition
Other

Net cash used in investing activities

Year Ended December 31,

2020

2019

(121.2) $
5.0
—
—
(3.5)
(0.5)
(120.2) $

(104.1)
1.6
9.3
(5,053.4)
(11.0)
2.7
(5,154.9)

During 2020, our investment in property, plant and equipment was higher due to the incremental time the ARRIS
business was owned in the current year compared to the prior year. Our investments in property, plant and
equipment were primarily related to supporting improvements in manufacturing operations, including expanding
production capacity and investing in information technology, including software developed for internal use. During
2020 and 2019, we sold property and equipment that was no longer being utilized for $5.0 million and $1.6 million,
respectively. During 2020 and 2019, we paid $3.5 million and $11.0 million, respectively, related to our 2017
acquisition of Cable Exchange. The payment in 2020 was the final payment related to the Cable Exchange
acquisition. During 2019, we paid $5.1 billion, net of cash acquired, using a combination of cash on hand, proceeds
from the issuance of long-term debt and proceeds from the issuance of the Convertible Preferred Stock to fund the
Acquisition.

Financing Activities

Long-term debt repaid
Long-term debt proceeds
Debt issuance costs
Debt extinguishment costs
Series A convertible preferred stock proceeds
Dividends paid on Series A convertible preferred stock
Deemed dividend paid on Series A convertible preferred 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

Year Ended December 31,

2020

2019

(1,282.0) $
950.0
(11.7)
(17.9)
—
(14.3)
—

(3,061.3)
6,933.0
(120.8)
—
1,000.0
(40.7)
(3.0)

9.0

4.6

(16.9)
(383.8) $

(13.2)
4,698.6

In 2020, we redeemed $100.0 million aggregate principal amount of the 2021 Notes. We then issued $700.0 million
of the 2028 Notes and used the net proceeds from the offering to redeem and retire the remaining $700.0 million
outstanding under the 2021 Notes and the 2024 Notes. We incurred $11.7 million of debt issuance costs in
connection with the issuance of the 2028 Notes. Also during 2020, we borrowed and repaid $250.0 million under the
Revolving Credit Facility. In addition, we redeemed $200.0 million aggregate principal amount of the 2025 Notes
and paid four quarterly scheduled amortization payments totaling $32.0 million on the 2026 Term Loan. We paid
redemption premiums of $11.9 million to retire the 2024 Notes and $6.0 million to partially redeem the 2025 Notes.
We may continue to look for favorable opportunities to refinance portions of our existing debt to lower borrowing
costs, extend the term or adjust the total amount of fixed or floating-rate debt.

During 2019, we received net proceeds from the Acquisition-related debt of approximately $6.9 billion to fund the
Acquisition. We repaid $225.0 million of the senior secured term loan due 2022 in the first quarter of 2019 and we
repaid the remaining balance of $261.3 million using proceeds from the 2026 Term Loan. In addition, we redeemed
$500.0 million aggregate principal amount of our 2021 Notes during 2019. We also paid an $8.0 million scheduled
payment during December 2019 related to the 2026 Term Loan. As part of funding the Acquisition, we repaid
ARRIS’ outstanding debt of $2.1 billion under its senior secured credit facilities. We also borrowed and repaid
$15.0 million under the Revolving Credit Facility in 2019. In connection with the Acquisition-related debt, we paid
$120.8 million of debt issuance costs during 2019.

As of December 31, 2020, we had no outstanding borrowings under the Revolving Credit Facility and the remaining
availability was $735.1 million, reflecting a borrowing base of $766.9 million reduced by $31.8 million of letters of
credit issued under the Revolving Credit Facility.

In 2019, in addition to the new debt, we funded the Acquisition by issuing the Convertible Preferred Stock to
Carlyle for an aggregate investment of $1.0 billion. We paid $3.0 million in transaction fees on Carlyle’s behalf
related to the Convertible Preferred Stock and we treated that as a deemed dividend during 2019. During 2020 and
2019, we paid $14.3 million and $40.7 million, respectively, in cash dividends for the Convertible Preferred Stock.
In 2020, we also paid $41.8 million of dividends in kind for the Convertible Preferred Stock but this was not
impactful to our cash flows.

During 2020, we received proceeds of $9.0 million related to the exercise of stock options. Also during 2020,
employees surrendered 1.8 million 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 $16.9 million. During 2019,
we received proceeds of $4.6 million related to the exercise of stock options and employees surrendered 0.7 million
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 $13.2 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 term non-GAAP adjusted EBITDA may vary from that of others in our
industry. This financial measure should not be considered as an alternative 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

Net income (loss)
Income tax expense (benefit)
Interest income
Interest expense
Other expense, net
Operating income (loss)
Adjustments:

Amortization of purchased intangible assets
Restructuring costs, net
Equity-based compensation
Asset impairments
Transaction and integration costs (1)
Acquisition accounting adjustments (2)
Patent claims and litigation settlements
Executive severance
Depreciation

Non-GAAP adjusted EBITDA

2020

Year Ended December 31,
2019

2018

(573.4) $
(81.1)
(4.4)
577.8
29.3
(51.8) $

630.5
88.4
115.0
206.7
24.9
20.6
16.3
6.3
158.3
1,215.2 $

(929.5) $
(144.5)
(18.1)
577.2
6.4
(508.5) $

593.2
87.7
90.8
376.1
195.3
264.2
55.0
—
143.7
1,297.5 $

140.2
30.5
(7.0)
242.0
44.3
450.0

264.6
44.0
44.9
15.0
19.5
—
—
—
75.6
913.6

(1)

(2)

In 2020 and 2019, primarily reflects transaction and integration costs related to the Acquisition. In 2018,
primarily reflects integration costs related to the acquisition of the BNS business and transaction costs related
to other potential and consummated acquisitions.

For the year ended December 31, 2020, reflects acquisition accounting adjustments related to reducing
deferred revenue to its estimated fair value. For the year ended December 31, 2019, reflects acquisition
accounting adjustments of $218.8 million related to the mark up of inventory to its estimated fair value and
acquisition accounting adjustments of $45.4 million related to reducing deferred revenue to its estimated fair
value.

Reconciliation of Segment Adjusted EBITDA

Segment adjusted EBITDA is provided as a performance measure in Note 17 in the Notes to Consolidated Financial
Statements included in this Annual Report on Form 10-K. Below we reconcile segment adjusted EBITDA for each
segment individually to operating income (loss) for that segment to supplement the reconciliation of the total
segment adjusted EBITDA to consolidated operating income (loss) in that footnote.

Broadband Networks Segment

Operating income (loss)
Adjustments:

Amortization of purchased intangible assets
Restructuring costs, net
Equity-based compensation
Asset impairments
Transaction and integration costs
Acquisition accounting adjustments
Patent claims and litigation settlements
Executive severance
Depreciation
Adjusted EBITDA

Home Networks Segment

Operating loss
Adjustments:

Year Ended December 31,
2019

2018

2020

171.5 $

(326.1) $

172.4

323.1
17.8
44.4
—
7.9
11.4
3.0
2.2
59.2
640.5 $

273.2
36.9
35.5
142.1
120.2
135.8
—
—
55.6
473.3 $

76.6
11.7
9.4
3.7
6.3
—
—
—
29.3
309.4

Year Ended December 31,
2019

2018

2020

(289.7) $

(196.0) $

103.9
30.0
22.1
206.7
6.2
1.9
(0.3)
1.2
34.3
116.2 $

103.9
23.2
14.1
192.8
(2.3)
27.8
—
—
30.2
193.7 $

—

—
—
—
—
—
—
—
—
—
—

Outdoor Wireless Networks Segment

Operating income
Adjustments:

Amortization of purchased intangible assets
Restructuring costs, net
Equity-based compensation
Asset impairments
Transaction and integration costs
Patent claims and litigation settlements
Executive severance
Depreciation
Adjusted EBITDA

Venue and Campus Networks Segment

Operating income (loss)
Adjustments:

Note: Components may not sum to total due to rounding

Year Ended December 31,
2019

2018

2020

181.1 $

200.3 $

198.4

45.8
15.7
13.6
—
4.2
—
1.2
17.0
278.5 $

49.5
6.9
12.9
—
19.1
55.0
—
17.5
361.2 $

64.2
17.1
12.9
7.5
6.0
—
—
17.4
323.6

Year Ended December 31,
2019

2018

2020

(114.7) $

(186.7) $

79.2

157.7
24.9
34.9
—
6.7
7.3
13.7
1.7
47.8
180.0 $

166.6
20.7
28.3
41.2
58.3
100.6
—
—
40.4
269.3 $

123.8
15.2
22.6
3.8
7.2
—
—
—
28.9
280.6

Contractual Obligations

During 2020, the Company redeemed $150.0 million aggregate principal amount of the 2021 Notes, $650.0 million
aggregate principal amount of the 2024 Notes and $200.0 million aggregate principal amount of the 2025 Notes.
Also during 2020, the Company issued $700.0 million of the 2028 Notes. This table does not include the obligations
related to our Series A convertible preferred stock discussed in Note 14 in our Notes to Consolidated Financial
Statements included elsewhere in this Annual Report on Form 10-K.

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)
Total contractual obligations

Amount of Payments Due per Period

Total
Payments
Due

2021

2022-2023 2024-2025 Thereafter

$ 9,660.0 $
2,813.5
220.9
326.8

32.0 $
517.0 1,030.8
85.1
73.5
—
326.8

64.0 $ 2,614.0 $ 6,950.0
387.4
878.3
23.7
38.6
—
—

11.1
25.1
—
$13,057.4 $

8.1
21.2
—

1.2
—
—
978.6 $ 1,184.8 $ 3,531.7 $ 7,362.3

0.8
—
—

1.0
3.9
—

(a) No prepayment or redemption of any of our long-term debt balances has been assumed. Refer to Note 8 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)

(c)

Interest on long-term debt excludes the amortization of debt issuance costs and original issue discount. Interest
on variable rate debt is estimated based upon rates in effect as of December 31, 2020.

Purchase obligations and other supplier agreements include $322.3 million related to obligations, primarily to
our contract manufacturers, with non-cancelable terms to purchase goods or services and payments of $4.5
million due in 2021 for minimum amounts owed under take-or-pay or requirements contracts. Generally,
amounts covered by open purchase orders, other than the portion that is noncancelable as disclosed above, are
excluded as there is no contractual obligation until goods or services are received.

(d) Amounts reflect expected contributions related to payments under the postretirement benefit plans through
2030 and expected pension contributions of $7.5 million in 2021 (see Note 12 in the Notes to Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K).

(e)

(f)

Future restructuring payments exclude payments due under lease arrangements which are included in
operating leases above.

Due to the uncertainty in predicting the timing of tax payments related to our unrecognized tax benefits,
$153.8 million has been excluded from the presentation. We anticipate a reduction of up to $8.5 million of
unrecognized tax benefits during the next twelve months (see Note 13 in the Notes to Consolidated Financial
Statements included elsewhere in this Annual Report on Form 10-K).

Recent Accounting Pronouncements

See Note 2 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-
K for a discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

We were not a party to any significant off-balance sheet arrangements during the year ended December 31, 2020.

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 and components purchased by us (memory and chip
capacitors, copper, aluminum, steel, optical fiber, plastics and other polymers) are subject to changes in market price
as they are influenced by commodity markets and other factors. Prices for these items 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
outstanding at December 31, 2020 (mainly the $3.2 billion variable rate senior secured term loan due 2026 (the 2026
Term Loan) and our asset-based revolving credit facility). The principal payments presented below are based on
scheduled maturities and assume no borrowings under our asset-based revolving credit facility. The interest
payments presented below assume the interest rates in effect as of December 31, 2020 (see Note 8 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.

2021

2022

2023

2024

2025

There-
after

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

142.4

$
3.51%

141.3

$
3.51%

140.3

$
3.51%

136.7

$
3.44%

134.4

$
3.40%

3,012.8

3.40%

31.4

31.1

30.8

30.5

30.2

3.8

We also have $6.5 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, 2020.

2021

2022

2023

2024

2025

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

406.6

$
6.26%

406.6

$
6.26%

406.6

$ 1,622.3

6.26%

6.34%

$ 1,598.9

$
6.50%

There-
after

4,324.6

6.94%

As part of our hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting from the
variable interest rate on the 2026 Term Loan, in March 2019, we entered into and designated pay-fixed, receive-
variable interest rate swap derivatives as cash flow hedges of interest rate risk. The total notional amount of the
interest rate swap derivatives as of December 31, 2020 was $600 million with outstanding maturities of up to thirty-
nine months. As of December 31, 2020, the combined fair value of the interest rate swaps was a $29.9 million loss.
The table above excludes the impact of these interest rate swap derivatives. See Note 9 in the Notes to Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of these
contracts.

Foreign Currency Risk

Approximately 39% and 41% of net sales for 2020 and 2019, respectively, 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 Brazilian real. 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. As of December 31, 2020, we had foreign exchange contracts with a net unrealized gain
of $8.4 million, with maturities of up to six months and aggregate notional value of $515.5 million (based on
exchange rates as of December 31, 2020). 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, 2020 or 2019. In addition, we hold certain foreign exchange forward contracts and cross currency
swaps designated 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, 2020, the notional value of these derivative contracts was
$300 million, with outstanding maturities of up to six months. The unrealized loss on the contracts was $21.1
million. Our derivative instruments are not leveraged and are not held for trading or speculation. See Note 9 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, 2020, we had forward purchase commitments outstanding under take-
or-pay contracts for certain metals of approximately $4.5 million that we expect to consume in the normal course of
operations through the second quarter of 2021. 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

Consolidated Statements of 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, 2020 and 2019, the related consolidated statements of operations, comprehensive
income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31,
2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at
December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2020, 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, 2020, 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 16, 2021 expressed an unqualified
opinion thereon.

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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to
which it relates.

Valuation of Goodwill

Description of
the Matter

As more fully described in Note 4 to the consolidated financial statements, at December 31, 2020,
the Company’s goodwill was $5,286.5 million. The Company’s goodwill is initially assigned to its
reporting units as of the acquisition date. Goodwill is tested for impairment at the reporting unit
level annually, or more frequently if indicators of potential goodwill impairment exist. During the
second quarter of 2020, the Company determined that indicators of goodwill impairment existed
for the Home Networks reporting unit and performed an interim goodwill impairment test using a
discounted cash flow (DCF) model, which indicated that the carrying value of the Home Networks

reporting unit exceeded its fair value. As a result, the Company recorded a goodwill impairment
charge of $206.7 million related to the Home Networks reporting unit, which reflects a full
impairment of the goodwill of that reporting unit. The Company performed its annual goodwill
impairment test for all reporting units in the fourth quarter of 2020 using both a DCF model and a
guideline public company approach. No goodwill impairments were identified as a result of the
annual goodwill impairment test.

Auditing management’s goodwill impairment tests was complex and highly judgmental due to the
significant estimation required in determining the fair value of the reporting units. In particular,
the fair value estimates were sensitive to changes in significant assumptions such as the discount
rate, revenue growth rate and operating income margin, which are affected by expectations about
future market or economic conditions, including uncertainty resulting from the COVID-19
pandemic.

How We
Addressed the
Matter in Our
Audit

We evaluated the Company’s assessments of the impairment of goodwill. We obtained an
understanding, evaluated the design and tested the operating effectiveness of controls that address
the risks of material misstatement relating to the goodwill impairment tests, including controls
over management’s development and review of the significant assumptions discussed above.

To test the estimated fair value of the reporting units, we performed audit procedures with the
assistance of our valuation specialists that included, among others, assessing methodologies and
testing the significant assumptions discussed above and the underlying data used by the Company
in its analyses. We compared the significant assumptions of revenue growth rate and operating
income margin used by management to current industry and economic trends, changes to the
Company’s business model, customer base or product mix and other relevant factors. We
evaluated the Company’s discount rate methodology and developed independent ranges of
reasonable discount rates. We also evaluated the reasonableness of the guideline public companies
used to develop the fair value estimates of the reporting units. We assessed the historical accuracy
of management’s estimates and performed sensitivity analyses of significant assumptions to
evaluate the changes in the fair value of the reporting units that would result from changes in the
assumptions. In addition, we tested management’s reconciliation of the fair value of the reporting
units to the market capitalization of the Company.

We have served as the Company’s auditor since 2008.

Charlotte, North Carolina
February 16, 2021

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,
2020, 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, 2020, 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, 2020 and 2019, the related
consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of
the three years in the period ended December 31, 2020, and the related notes and our report dated February 16, 2021
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 16, 2021

CommScope Holding Company, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)

2020

Year Ended December 31,
2019

2018

8,435.9
5,688.1
2,747.8

8,345.1
5,941.0
2,404.1

Net sales
Cost of sales
Gross profit
Operating expenses:

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

Total operating expenses

Operating income (loss)
Other expense, net
Interest expense
Interest income
Income (loss) before income taxes
Income tax (expense) benefit
Net income (loss)
Series A convertible preferred stock dividend
Deemed dividend on Series A convertible preferred stock
Net income (loss) attributable to common stockholders

Earnings (loss) per share:
Basic
Diluted

Weighted average shares outstanding:
Basic
Diluted

4,568.5
2,935.2
1,633.3

674.0
185.7
264.6
44.0
15.0
1,183.3
450.0
(44.3)
(242.0)
7.0
170.7
(30.5)
140.2
—
—
140.2

1,170.7
703.3
630.5
88.4
206.7
2,799.6

(51.8)
(29.3)
(577.8)
4.4
(654.5)
81.1
(573.4)
(56.1)
—
(629.5) $

1,277.1
578.5
593.2
87.7
376.1
2,912.6
(508.5)
(6.4)
(577.2)
18.1
(1,074.0)
144.5
(929.5)
(40.7)
(3.0)
(973.2) $

$
$

(3.20) $
(3.20) $

(5.02) $
(5.02) $

0.73
0.72

196.8
196.8

193.7
193.7

192.0
195.3

See notes to consolidated financial statements.

CommScope Holding Company, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In millions)

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 credit

Gain (loss) on hedging instruments

Total other comprehensive income (loss), net of tax

Total comprehensive income (loss)

2020

Year Ended December 31,
2019

2018

(573.4) $

(929.5) $

140.2

82.2

(22.2)

(10.8)
(0.2)
(30.1)
41.1
(532.3) $

(7.7)
(0.4)
(7.5)
(37.8)
(967.3) $

(87.7)

23.3
(11.7)
3.5
(72.6)
67.6

See notes to consolidated financial statements.

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

Assets

Cash and cash equivalents
Accounts receivable, less allowance for doubtful accounts of
$40.3 and $35.4, respectively
Inventories, net
Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net of accumulated depreciation
of $705.7 and $553.8, respectively
Goodwill
Other intangible assets, net
Other noncurrent assets

Total assets

Liabilities and Stockholders' Equity

Accounts payable
Accrued and other liabilities
Current portion of long-term debt

Total current liabilities

Long-term debt
Deferred income taxes
Other noncurrent liabilities

Total liabilities

Commitments and contingencies
Series A convertible preferred stock, $0.01 par value
Stockholders' equity:

Preferred stock, $0.01 par value: Authorized shares: 200,000,000;
Issued and outstanding shares: 1,041,819 Series A convertible
preferred stock

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

Issued and outstanding shares: 200,095,232 and 194,563,530,
respectively

Additional paid-in capital
Retained earnings (accumulated deficit)
Accumulated other comprehensive loss
Treasury stock, at cost: 9,223,081 shares and 7,411,382 shares,

respectively
Total stockholders' equity
Total liabilities and stockholders' equity

December 31,

2020

2019

521.9 $

598.2

1,487.4
1,088.9
256.3
3,354.5

684.5
5,286.5
3,650.4
600.9
13,576.8 $

1,010.8 $
910.6
32.0
1,953.4
9,488.6
206.2
531.8
12,180.0

1,698.8
975.9
238.9
3,511.8

723.8
5,471.7
4,263.6
460.7
14,431.6

1,148.0
862.0
32.0
2,042.0
9,800.4
215.1
537.8
12,595.3

1,041.8

1,000.0

—

2.1
2,512.9
(1,752.7)
(155.9)

(251.4)
355.0
13,576.8 $

2.0
2,445.1
(1,179.3)
(197.0)

(234.5)
836.3
14,431.6

See notes to consolidated financial statements.

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

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:

Net cash used in investing activities
Financing Activities:

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 equivalent at beginning of period
Cash and cash equivalents at end of period

Year Ended December 31,
2019

2018

2020

(573.4) $

(929.5) $

140.2

823.3
115.0
(154.7)
206.7

228.4
(100.5)
(17.2)
(175.2)
(4.0)
28.8
59.0
436.2

(121.2)
5.0
—
—
(3.5)
(0.5)
(120.2)

(1,282.0)
950.0
(11.7)
(17.9)
—
(14.3)
—

770.9
90.8
(260.8)
376.1

258.8
489.1
19.5
(274.0)
7.2
46.0
2.3
596.4

(104.1)
1.6
9.3
(5,053.4)
(11.0)
2.7
(5,154.9)

(3,061.3)
6,933.0
(120.8)
—
1,000.0
(40.7)
(3.0)

357.5
44.9
(49.2)
15.0

65.1
(48.5)
1.0
(0.8)
(54.6)
(8.0)
31.5
494.1

(82.3)
12.9
—
—
—
5.1
(64.3)

(550.0)
150.0
—
—
—
—
—

9.0

4.6

6.1

(16.9)
(383.8)
(8.5)
(76.3)
598.2
521.9 $

(13.2)
4,698.6
(0.1)
140.0
458.2
598.2 $

(15.7)
(409.6)
(16.0)
4.2
454.0
458.2

See notes to consolidated financial statements.

CommScope Holding Company, Inc.
Consolidated Statements of Stockholders' Equity
(In millions, 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
Balance at end of period

194,563,530
7,343,401
(1,811,699)
200,095,232

192,376,255
2,854,575
(667,300)
194,563,530

190,906,110
1,878,083
(407,938)
192,376,255

2020

Year Ended December 31,
2019

2018

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
Equity-based compensation assumed
Dividend on Series A convertible preferred stock
Deemed dividend on Series A convertible preferred stock
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
Balance at end of period
Total stockholders' equity

$
$

2.0 $
0.1
2.1 $

2.0 $
—
2.0 $

2,445.1 $
8.9
115.0
—
(56.1)
—
2,512.9 $

2,385.1 $
4.6
90.8
8.3
(40.7)
(3.0)
2,445.1 $

(1,179.3) $
(573.4)
—

(1,752.7) $

(249.8) $
(929.5)
—

(1,179.3) $

(197.0) $
41.1
(155.9) $

(234.5) $
(16.9)
(251.4) $
355.0 $

(159.2) $
(37.8)
(197.0) $

(221.3) $
(13.2)
(234.5) $
836.3 $

2.0
—
2.0

2,334.1
6.1
44.9
—
—
—
2,385.1

(396.0)
140.2
6.0
(249.8)

(86.6)
(72.6)
(159.2)

(205.6)
(15.7)
(221.3)
1,756.8

See notes to consolidated financial statements.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements
(In millions, 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 communication and entertainment networks. The Company’s
solutions for wired and wireless networks enable service providers including cable, telephone and digital broadcast
satellite operators and media programmers to deliver media, voice, Internet Protocol (IP) data services and Wi-Fi to
their subscribers and allow enterprises to experience constant wireless and wired connectivity across complex and
varied networking environments. The Company’s solutions are complemented by a broad array of services including
technical support, systems design and integration. CommScope is a leader in digital video and IP television
distribution systems, broadband access infrastructure platforms and equipment that delivers data and voice networks
to homes. 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.

On April 4, 2019, the Company completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in
an all-cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. See Note 3
for additional discussion of the Acquisition.

As of January 1, 2020, the Company reorganized its internal management and reporting structure as part of the
integration of the Acquisition. The reorganization changed the information regularly reviewed by the Company’s
chief operating decision maker for purposes of allocating resources and assessing performance. As a result, the
Company now reports financial performance for the 2020 year based on four operating segments: Broadband
Networks (Broadband), Home Networks (Home), Outdoor Wireless Networks (OWN) and Venue and Campus
Networks (VCN). These four segments represent non-aggregated reportable operating segments. Prior to this
change, the Company operated and reported five operating segments: Connectivity Solutions, Mobility Solutions,
Customer Premises Equipment, Network and Cloud and Ruckus Networks. All prior period amounts in these
consolidated financial statements have been recast to reflect these operating segment changes.

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.

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; purchase price allocations; impairment reviews for investments, property, plant and
equipment, goodwill and other intangible assets; 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.

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

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.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable and contract assets for unbilled receivables are stated at the amount owed by the
customer, net of allowances for estimated doubtful accounts, discounts, returns and rebates. The Company measures
the allowance for doubtful accounts using an expected credit loss model, which uses a lifetime expected loss
allowance for all trade accounts receivable and contract assets. To measure the expected credit losses, trade accounts
receivable and contract assets are grouped based on shared credit risk characteristics and the days past due. Contract
assets relate to unbilled work in progress and have substantially the same risk characteristics as trade accounts
receivable for the same types of contracts. Therefore, the Company has concluded that the expected loss rates for
trade accounts receivables are a reasonable approximation of the loss rates for the contract assets.

In calculating an allowance for doubtful accounts, the Company uses its historical experience, external indicators
and forward-looking information to calculate expected credit losses using an aging method. The Company assesses
impairment of trade accounts receivable on a collective basis as they possess shared credit risk characteristics which
have been grouped based on the days past due.

The expected loss rates are based on the payment profiles of sales over the preceding thirty-six months and the
corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle
their trade accounts receivable.

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.

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

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. Equity investments without readily determinable fair values are evaluated each reporting period for
impairment based on a qualitative assessment and are then measured at fair value if an impairment is determined to
exist. See Notes 4 and 10 for discussion of asset impairment charges.

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.

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.

The Company records the income tax effects related to the activity of its defined benefit plans and hedging
instruments in accumulated other comprehensive loss at the currently enacted tax rate and reclassifies it to net
income in the same period that the related pre-tax accumulated comprehensive income reclassifications are
recognized.

Revenue Recognition

The Company recognizes revenue based on the satisfaction of distinct obligations to transfer goods and services to
customers. The Company’s revenue is generated primarily from product or equipment sales. The Company also
generates revenue from custom design and installation services as well as bundled sales arrangements that include
product, software and services. Revenue is recognized when performance obligations in a contract are satisfied
through the transfer of control of the good or service at the amount of consideration expected to be received. The
following are required before revenue is recognized:

(cid:129)

Identify the contract with the customer. A variety of arrangements are considered contracts; however,
contracts typically take the form of a master purchase agreement or customer purchase orders.

Identify the performance obligations in the contract. Performance obligations are identified as promised
goods or services that are distinct within an arrangement.

(cid:129) Determine the transaction price. The transaction price is the amount of consideration the Company expects
to receive in exchange for transferring the promised goods or services. The consideration may include fixed
or variable amounts or both.

(cid:129) Allocate the transaction price to the performance obligations. The transaction price is allocated to the

performance obligations on a relative standalone selling price basis.

(cid:129)

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

Product sales represent over 90% of the Company’s revenue. For these sales, revenue is recognized when control of
the product has transferred to the customer, which is generally at the point in time when products have been shipped,
right to payment has been obtained and risk of loss has been transferred. Certain of the Company’s product
performance obligations include proprietary operating system software, which typically is not considered separately
identifiable. Therefore, sales of these products and the related software are considered one performance obligation.

Certain customer transactions may be project based and include multiple performance obligations based on the
bundling of equipment, software and services. When a multiple performance obligation arrangement exists, the
transaction price is allocated to the performance obligations based on their relative standalone selling price, and
revenue is recognized upon transfer of control of each deliverable. To determine the standalone selling price, the
Company first looks to establish the standalone selling price through an observable price when the good or service is
sold separately in similar circumstances. If the standalone selling price cannot be established through an observable
price, the Company will make an estimate based on market conditions, customer specific factors and customer class.
The Company may use a combination of approaches to estimate the standalone selling price.

Other customer contract types include a variety of post-contract support services offerings, including:

(cid:129) Maintenance and support services provided under annual service-level agreements with the Company’s
customers. These services represent stand-ready obligations that are recognized over time (on a straight-
line basis over the contract period) because the customer simultaneously receives and consumes the
benefits of the services as the services are performed.

(cid:129)

Revenue is measured based on the consideration the Company expects to be entitled based on customer contracts.
For sales to distributors, system integrators and value-added resellers, revenue is adjusted for variable consideration
amounts, including but not limited to estimated discounts, returns, rebates and distributor price protection programs.
These estimates are determined based upon historical experience, contract terms, inventory levels in the distributor
channel and other related factors. Adjustments to variable consideration estimates are recorded when circumstances
indicate revisions may be necessary.

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

Unbilled receivables are recorded when revenues are recognized in advance of invoice issuance. A contract asset is
any portion of unbilled receivables for which the right to consideration is conditional on a factor other than the
passage of time, which is common for certain project contract performance obligations. These assets are presented
on a combined basis with accounts receivable and are converted to accounts receivable once the Company’s right to
the consideration becomes unconditional, which varies by contract but is generally based on achieving certain
acceptance milestones. The Company recognizes the incremental costs of obtaining a contract as an expense when
incurred if the amortization period of the asset would be one year or less.

The Company includes shipping and handling costs billed to customers in net sales and includes the costs incurred
to transport product to customers as well as certain internal handling costs, which relate to activities to prepare
goods for shipment, as cost of sales. Shipping and handling costs incurred after control is transferred to the customer
are accounted for as fulfillment costs and are not accounted for as separate revenue obligations.

Leases

The Company determines if a contract is a lease or contains a lease at inception. Right of use assets related to
operating type leases are reported in other noncurrent assets and the present value of remaining lease obligations is
reported in accrued and other liabilities and other noncurrent liabilities on the Consolidated Balance Sheets. For the
periods presented, CommScope does not have any financing type leases.

Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the
lease term at commencement date. The majority of the Company’s leases do not provide an implicit rate; therefore,
the Company uses the incremental borrowing rates applicable to the economic environment and the duration of the
lease, based on the information available at commencement date, in determining the present value of future
payments. The right of use asset for operating leases is measured using the lease liability adjusted for the impact of
lease payments made prior to commencement, lease incentives received, initial direct costs incurred and any asset
impairments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the
option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the
lease term.

The Company remeasures and reallocates the consideration in a lease when there is a modification of the lease that
is not accounted for as a separate contract. The lease liability is remeasured when there is a change in the lease term
or a change in the assessment of whether the Company will exercise a lease option. The Company assesses right of
use assets for impairment in accordance with its long-lived asset impairment policy.

The Company accounts for lease agreements with contractually required lease and non-lease components on a
combined basis. Lease payments made for cancellable leases, variable amounts that are not based on an observable
index and lease agreements with an original duration of less than twelve months are recorded directly to lease
expense.

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 net sales.

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 various periods, depending on the product subject to the warranty and the terms of
the individual agreements. 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.

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

Advertising Costs

Advertising costs are expensed in the period in which they are incurred. Advertising expense was $45.9 million,
$39.5 million and $17.3 million for the years ended December 31, 2020, 2019 and 2018, 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 includes 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.

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. 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 designated as hedges for hedge
accounting purposes and are marked to market each period through earnings.

The Company has a hedging strategy to designate certain foreign currency 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 changes in the fair value of designated foreign currency contracts based on spot rates. For hedges that
meet the effectiveness requirements, changes in fair value are recorded as a component of other comprehensive
income (loss), net of tax. Amounts excluded from hedge effectiveness at inception under the spot method for
designated forward contracts are recognized on a straight-line basis over the life of each contract and for designated
cross-currency swap contracts are recognized as interest accrues.

The Company also has a hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting
from variable interest rates on the senior secured term loan due 2026 which are based on the one-month LIBOR
benchmark rate (see Note 8). Hedge effectiveness is assessed each quarter, and for hedges that meet the
effectiveness requirements, changes in fair value are recorded as a component of other comprehensive income (loss),
net of tax, and are reclassified to interest expense as interest payments are made on the Company’s variable rate
debt.

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. See Note 9 for further disclosure
related to the derivative instruments and hedging activities.

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

Foreign Currency Translation

For the years ended December 31, 2020, 2019 and 2018, approximately 39%, 41% and 44%, 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. Upon sale or liquidation of an investment in a foreign subsidiary, the amount
of net translation gains or losses that have been accumulated in other comprehensive loss attributable to that
investment are reported as a gain or loss in earnings in the period in which the sale or liquidation occurs.

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
$19.2 million, $11.9 million and $15.9 million during the years ended December 31, 2020, 2019 and 2018,
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 9 for
disclosure of foreign currency gains and losses specifically related to foreign currency contracts.

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
within income tax expense.

Earnings (Loss) Per Share

Basic earnings (loss) per share (EPS) is computed by dividing net income (loss), less any dividends and deemed
dividends related to the Series A convertible preferred stock (the Convertible Preferred Stock), by the weighted
average number of common shares outstanding during the period. The numerator in diluted EPS is based on the
basic EPS numerator adjusted to add back any dividends and deemed dividends related to the Convertible Preferred
Stock, subject to antidilution requirements. The denominator used in diluted EPS is based on the basic EPS
computation plus the effect of potentially dilutive common shares related to the Convertible Preferred Stock and
equity-based compensation plans, subject to antidilution requirements.

For the years ended December 31, 2020, 2019 and 2018, 17.4 million, 11.2 million and 2.1 million shares,
respectively, of outstanding equity-based compensation awards were not included in the computation of diluted EPS
because the effect was either antidilutive or the performance conditions were not met. Of those amounts, for the
years ended December 31, 2020 and 2019, 4.4 million and 2.4 million shares, respectively, would have been
considered dilutive if the Company had not been in a net loss position.

For the years ended December 31, 2020 and 2019, 37.1 million and 27.0 million, respectively, of as-if converted
shares related to the Convertible Preferred Stock were excluded from the diluted share count because they were anti-
dilutive; however, they would have been considered dilutive if the Company had not been in a net loss position.

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

Numerator:

Net income (loss)
Dividends on Series A convertible preferred stock
Deemed dividends on Series A convertible preferred
stock
Net income (loss) attributable to common stockholders

Year ended December 31,
2019

2020

2018

(573.4) $
(56.1)

(929.5) $
(40.7)

—
(629.5) $

(3.0)
(973.2) $

140.2
—

—
140.2

Denominator:

Weighted average common shares outstanding - basic

196.8

193.7

192.0

Dilutive effect of as-if converted Series A
convertible preferred stock
Dilutive effect of equity-based awards

Weighted average common shares outstanding - diluted

—
—
196.8

—
—
193.7

—
3.3
195.3

Earnings (loss) per share:

Basic
Diluted

Business Combinations

$
$

(3.20) $
(3.20) $

(5.02) $
(5.02) $

0.73
0.72

The Company uses the acquisition method of accounting for business combinations which requires the tangible and
intangible assets acquired and liabilities assumed to be recorded at their respective fair market value as of the
acquisition date. Goodwill represents the excess of the consideration transferred 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.

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
Consolidated Balance Sheets. See Note 17 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, 2020, 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.

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

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.

The Company relies on sole suppliers or a limited group of suppliers for certain key components (memory and chip
capacitors), subassemblies and modules and a limited group of contract manufacturers to manufacture a significant
portion of its products. Any disruption or termination of these arrangements could have a material adverse impact on
the Company’s results of operations.

Recent Accounting Pronouncements

Adopted in 2020

On January 1, 2020, the Company adopted ASU No. 2016-13, Measurement of Credit Losses on Financial
Instruments and subsequent amendments to the initial guidance: ASU No. 2018-19, ASU No. 2019-04, ASU No.
2019-05 and ASU No. 2020-02 (collectively, Topic 326). The new guidance replaces the incurred loss methodology
with the current expected credit loss (CECL) methodology. The measurement of expected credit losses under the
CECL methodology is applicable to financial assets measured at amortized cost, including trade accounts receivable.
It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby
letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a
lessor in accordance with Topic 842.

The Company adopted Topic 326 using the modified retrospective method for all financial assets measured at
amortized cost, which are primarily trade accounts receivable and contract assets for the Company. Results for
reporting periods beginning after January 1, 2020 are presented under Topic 326 while prior period amounts
continue to be reported in accordance with previously applicable U.S. GAAP. The impact of adopting Topic 326 as
of January 1, 2020 was not material to the consolidated financial statements.

Issued but Not Adopted

In August 2020, the Financial Accounting Standards Board (FASB) issued ASU No. 2020-06, Debt—Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity
(Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The new
guidance simplifies the accounting for convertible instruments by reducing the number of accounting models
available for convertible debt instruments and convertible preferred stock and amends the guidance for the
derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting
conclusions and requires the application of the if-converted method for calculating diluted earnings per share, along
with expanded disclosures. ASU No. 2020-06 is effective for the Company as of January 1, 2022 and early adoption
is permitted beginning January 1, 2021. The Company is currently evaluating the impact of the new guidance on the
consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects
of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease the potential
burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for
applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria
are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt
securities classified as held-to-maturity. The Company can elect to apply the amendments as of March 12, 2020
through December 31, 2022. The Company is currently evaluating the impact of this guidance on the consolidated
financial statements.

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

In January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments –
Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The new guidance is
based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for
these transactions. The amendments in this guidance clarify the interaction of accounting for equity securities under
Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting
for certain forward contracts and purchased options accounted for under Topic 815. ASU No. 2020-01 is effective
for the Company as of January 1, 2021. The Company anticipates that the adoption of this new guidance will not
have a material impact on the consolidated financial statements.

In December 2019 the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes. The new guidance simplifies the accounting for income taxes by removing certain exceptions to the
general principles in Topic 740 and clarifying and amending existing guidance. This guidance is effective for fiscal
years, and interim periods within those fiscal years, beginning January 1, 2021 for the Company. The Company is
currently evaluating the impact of the new guidance on the consolidated financial statements and disclosures.

3. ACQUISITION

On April 4, 2019, the Company acquired all of the issued ordinary shares of ARRIS in an all cash transaction with a
total consideration of approximately $7.7 billion, including debt assumed. ARRIS is a global leader in
entertainment, communications and networking technology. The Company acquired ARRIS to drive profitable
growth in new markets, shape the future of wired and wireless communications, and position the Company to
benefit from key industry trends, including network convergence, fiber and mobility everywhere, 5G, Internet of
Things and rapidly changing network and technology architectures.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the
acquisition date:

Assets
Cash and cash equivalents
Accounts receivable
Inventory
Other current assets
Property, plant and equipment
Goodwill
Identifiable intangible assets
Other noncurrent assets
Less: Liabilities assumed
Current liabilities
Debt
Other noncurrent liabilities
Net acquisition cost

Estimated Fair Value

556.1
1,155.0
995.5
132.0
316.6
2,981.4
3,509.6
447.7

(1,534.8)
(2,052.0)
(889.3)
5,617.8

The Company finalized the accounting for the business combination in the first quarter of 2020 and goodwill has
been assigned accordingly. The goodwill arising from the Acquisition is believed to result from ARRIS’ reputation
in the marketplace and assembled workforce and is not expected to be deductible for income tax purposes.

CommScope Holding Company, Inc.
Notes to Consolidated Financial Statements-(Continued)
(In millions, 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,
2020 and 2019:

Customer base
Trade names and trademarks
Patents and technologies
Other

Total intangible assets

2020

2019

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

$ 3,524.1 $
1,024.3
2,039.7
58.3
$ 6,646.4 $

1,563.2 $ 1,960.9 $ 3,503.3 $
647.7 1,021.9
376.6
997.9 1,041.8 2,021.6
58.3
58.3
2,996.0 $ 3,650.4 $ 6,605.1 $

—

1,318.8 $ 2,184.5
713.6
308.3
656.1 1,365.5
—
2,341.5 $ 4,263.6

58.3

There were no impairments of finite-lived intangible assets identified during the years ended December 31, 2020,
2019 or 2018.

Amortization expense for intangible assets was $630.5 million, $593.2 million and $264.6 million for the years
ended December 31, 2020, 2019 and 2018, respectively. Future amortization expense as of December 31, 2020 is as
follows:

2021
2022
2023
2024
2025
Thereafter

Estimated
Amortization
Expense

614.4
547.4
433.4
346.1
280.8
1,428.3

The following table presents goodwill by reportable segment. Foreign currency fluctuations are included within
other adjustments. Additions (deductions) reflect the preliminary allocation and subsequent measurement period
adjustments of the Company’s acquisition of ARRIS, which was completed in 2020.

December 31, 2019
Accumulated
Impairment
Losses

Goodwill

Broadband $ 3,355.1 $
402.1
Home
666.0
OWN
1,635.6
VCN
$ 6,058.8 $
Total

Total
(193.6) $ 3,161.5 $
209.3
(192.8)
(159.5)
506.5
(41.2) 1,594.4
(587.1) $ 5,471.7 $

Additions

(Deductions) Impairment Other

Goodwill

Total

(7.1) $
(1.3)
—
(1.4)
(9.8) $

— $
(206.7)
—
—
(206.7) $

21.7 $ 3,369.7 $
399.5
(1.3)
3.1
669.1
7.8 1,642.0
31.3 $ 6,080.3 $

(193.6) $ 3,176.1
—
(399.5)
(159.5)
509.6
(41.2) 1,600.8
(793.8) $ 5,286.5

December 31, 2020
Accumulated
Impairment
Losses

December 31, 2018
Accumulated
Impairment
Losses

Goodwill

Total

(Deductions) Impairment Other

Additions

Broadband $ 1,180.6 $
—
Home
666.4
OWN
1,216.3
VCN
$ 3,063.3 $
Total

—
(159.5)

(51.5) $ 1,129.1 $ 2,171.2 $
403.0
—
—
506.9
417.0
— 1,216.3
(211.0) $ 2,852.3 $ 2,991.2 $

(142.1) $
(192.8)
—
(41.2)
(376.1) $

December 31, 2019
Accumulated
Impairment
Losses

Goodwill
3.3 $ 3,355.1 $
402.1
(0.9)
(0.4)
666.0
2.3 1,635.6
4.3 $ 6,058.8 $

Total

(193.6) $ 3,161.5
209.3
(192.8)
(159.5)
506.5
(41.2) 1,594.4
(587.1) $ 5,471.7

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

The Company’s change in segments as of January 1, 2020 resulted in a realignment of its existing reporting units.
Although the reporting units were realigned under the new segments, the Company’s reporting units remained the
same except for where two reporting units have been combined into a new reporting unit. In this case, goodwill was
simply combined in the new reporting units. Since the composition of the reporting units and the assignment of
goodwill to the reporting units were unaffected, an interim goodwill impairment test due to the change in segments
was not performed in the first quarter of 2020.

During the second quarter of 2020, the Company determined that indicators of goodwill impairment existed for the
Home Networks reporting unit due to lower projected operating results, primarily from the accelerated decline in
video devices. This trend was projected to continue as consumers adopt the use of other streaming applications and
was further impacted by the macro-economic effects caused by the new strain of coronavirus (COVID-19). The
Company performed a quantitative goodwill impairment test during the second quarter of 2020 and recorded a
$206.7 million goodwill impairment charge during the second quarter 2020 relating to the Home Networks reporting
unit. It is reflected in the asset impairments line on the Consolidated Statements of Operations for the year ended
December 31, 2020. This reflected a full impairment of the remaining goodwill in the Home segment, and as such,
the Home segment has no remaining goodwill balance as of December 31, 2020.

There were no goodwill impairments identified as a result of the annual impairment test performed in the fourth
quarter of 2020. For the year ended December 31, 2019, the Company recorded goodwill impairment charges
totaling $376.1 million, of which $142.1 million related to the Network and Cloud reporting unit, $192.8 million
related to the Home Networks reporting unit and $41.2 million related to the Ruckus reporting unit. There were no
goodwill impairments identified for the year ended December 31, 2018.

Estimating the fair value of a reporting unit involves uncertainties because it requires management to develop
numerous assumptions, including assumptions about the future growth and potential volatility in revenues and costs,
capital expenditures, industry economic factors and future business strategy. 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 the Company’s strategy, changes in technology or other factors could negatively
affect the fair value in one or more of the Company’s reporting units and result in a material impairment charge in
the future.

5. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregated Net Sales

The following table presents net sales by reportable segment, disaggregated based on contract type:

Broadband

Home

OWN

VCN

Total

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Year Ended December 31,

Contract type:
Product contracts
Other contracts
Consolidated net
sales

$2,579.8 $2,072.3 $2,351.7 $2,529.4 $1,220.0 $1,452.5 $1,743.1 $1,861.8 $7,894.6 $7,916.0
429.1

105.5

193.4

291.5

315.9

541.3

23.7

22.5

8.3

9.6

$2,895.7 $2,363.8 $2,360.0 $2,539.0 $1,243.7 $1,475.0 $1,936.5 $1,967.3

$8,435.9 $8,345.1

The other contracts line above primarily includes service contracts, project contracts with multiple performance
obligations and other contracts with revenue recognized over time. Further information on net sales by reportable
segment and geographic region is included in Note 17.

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

Allowance for Doubtful Accounts

Allowance for doubtful accounts, beginning of period
Charged to costs and expenses
Write-offs
Recoveries
Foreign exchange and other
Allowance for doubtful accounts, end of period

Customer Contract Balances

2020

Year Ended December 31,
2019

2018

35.4 $
5.0
(3.2)
—
3.1
40.3 $

17.4 $
10.6
(1.7)
—
9.1
35.4 $

14.0
6.0
(1.2)
—
(1.4)
17.4

The following table provides the balance sheet location and amounts of contract assets and liabilities from contracts
with customers.

Balance Sheet Location

December 31,

2020

2019

Unbilled accounts
receivable
Deferred revenue

Accounts receivable, less allowance for doubtful accounts
Accrued and other liabilities and Other noncurrent liabilities

21.9 $
143.2

28.6
122.2

There were no material changes to contract asset balances for the year ended December 31, 2020 as a result of
changes in estimates or impairments. As of December 31, 2020, the aggregate amount of the transaction price
allocated to performance obligations that are unsatisfied and that have a duration of one year or less was $90.0
million, with the remaining $53.2 million having a duration greater than one year.

Contract Liabilities

The following table presents the changes in deferred revenue:

Balance at beginning of period
Fair value of deferred revenue acquired in ARRIS acquisition
Deferral of revenue
Recognition of unearned revenue
Balance at end of period

Year Ended December 31,

2020

2019

122.2
—
186.7
(165.7)
143.2

7.6
90.1
124.8
(100.3)
122.2

6. LEASES

The Company has operating type leases for real estate, equipment and vehicles both in the U.S. and internationally.
As of December 31, 2020, the Company had no finance type leases. Operating lease expense was $105.2 million and
$88.3 million for the years ended December 31, 2020 and 2019, respectively, inclusive of period cost for short-term,
cancellable and variable leases, not included in lease liabilities, of $31.3 million and $26.7 million for the years
ended December 31, 2020 and 2019, respectively.

The Company occasionally subleases all or a portion of certain unutilized real estate facilities. As of December 31,
2020, the Company’s sublease arrangements were classified as operating type leases and the income amounts were
not material for the years ended December 31, 2020 and 2019, respectively.

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

Supplemental cash flow information related to operating leases:

Operating cash paid to settle lease liabilities
Right of use asset additions in exchange for lease liabilities

Supplemental balance sheet information related to operating leases:

Year Ended December 31,
2019
2020

74.6 $
21.9

68.4
33.7

Right of use assets

Lease liabilities
Lease liabilities
Total lease liabilities

Balance Sheet Location

2020

2019

Other noncurrent assets

159.3 $

204.9

December 31,

Accrued and other liabilities
Other noncurrent liabilities

62.4 $
119.1
181.5 $

61.7
160.4
222.1

Weighted average remaining lease term (in years)
Weighted average discount rate

Future minimum lease payments under non-cancellable leases as of December 31, 2020 are as follows:

Operating Leases

2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less: imputed interest
Total

3.9
7.4%

73.5
48.2
36.9
25.5
13.1
23.7
220.9
(39.4)
181.5

7. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Inventories

Raw materials
Work in process
Finished goods

December 31,

2020

2019

280.2 $
140.6
668.1
1,088.9 $

240.1
121.6
614.2
975.9

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

Property, Plant and Equipment

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

Accumulated depreciation

December 31,

2020

2019

60.5 $
339.8
916.7
73.2
1,390.2
(705.7)
684.5 $

57.4
333.3
849.9
37.0
1,277.6
(553.8)
723.8

Depreciation expense was $158.3 million, $143.7 million and $75.6 million during the years ended December 31,
2020, 2019 and 2018, respectively. No interest was capitalized during the years ended December 31, 2020, 2019 or
2018.

Accrued and Other Liabilities

Compensation and employee benefit liabilities
Operating lease liabilities
Accrued interest
Deferred revenue
Accrued royalties
Product warranty accrual
Restructuring reserve
Income taxes payable
Value-added taxes payable
Contract manufacturing liability
Patent claims and litigation settlements
Other

December 31,

2020

2019

277.9 $
62.4
120.2
90.0
21.9
45.8
22.0
13.0
29.3
25.5
25.7
176.9
910.6 $

187.3
61.7
97.8
82.6
63.9
42.8
24.0
15.8
27.3
25.4
70.1
163.3
862.0

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

Accumulated Other Comprehensive Loss

The following table presents changes in 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

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

Defined benefit plan activity
Balance at beginning of period
Other comprehensive loss
Amounts reclassified from AOCL
Balance at end of period
Net AOCL at end of period

Year Ended December 31,
2019
2020

$
$

(162.7) $
82.2
—
(80.5) $

(8.9) $
(30.1)
(39.0) $

(25.4) $
(10.9)
(0.1)
(36.4) $
(155.9) $

(140.5)
(23.9)
1.7
(162.7)

(1.4)
(7.5)
(8.9)

(17.3)
(8.4)
0.3
(25.4)
(197.0)

Amounts reclassified from net AOCL related to foreign currency translation and defined benefit plans are recorded
in other expense, net in the Consolidated Statements of Operations.

Cash Flow Information

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

Year Ended December 31,

2020

2019

2018

94.4 $
520.9

120.9 $
465.2

112.1
231.3

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

8. FINANCING

7.125% senior notes due July 2028
5.00% senior notes due March 2027
8.25% 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
6.00% senior secured notes due March 2026
5.50% senior secured notes due March 2024
Senior secured term loan due April 2026
Senior secured revolving credit facility
Total principal amount of debt
Less: Original issue discount, net of amortization
Less: Debt issuance costs, net of amortization
Less: Current portion
Total long-term debt

Senior Notes

December 31,

2020

2019

700.0 $
750.0
1,000.0
1,300.0
—
—
1,500.0
1,250.0
3,160.0
—
9,660.0 $
(24.8)
(114.6)
(32.0)
9,488.6 $

—
750.0
1,000.0
1,500.0
650.0
150.0
1,500.0
1,250.0
3,192.0
—
9,992.0
(29.2)
(130.4)
(32.0)
9,800.4

In July 2020, CommScope, Inc., a wholly owned subsidiary of the Company, issued $700.0 million aggregate
principal amount of 7.125% senior notes due July 2028 (the 2028 Notes). The 2028 Notes were offered in a private
placement exempt from registration under the Securities Act of 1933, as amended (the Securities Act), to qualified
institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons outside of the
United States in reliance on Regulation S under the Securities Act. The Company used the net proceeds from the
offering of the 2028 Notes, together with cash on hand, to redeem and retire all of the outstanding 5.00% senior
notes due 2021 (the 2021 Notes) and the outstanding 5.50% senior notes due 2024 (the 2024 Notes) and pay fees
and expenses related to the transaction. The Company had previously redeemed $100.0 million of the 2021 Notes in
February 2020. The redemption of the 2024 Notes resulted in a charge of $11.9 million which is reflected in other
expense, net during the year ended December 31, 2020. In connection with the redemptions of the 2021 Notes and
the 2024 Notes, $5.0 million of debt issuance costs were written off and included in interest expense during the year
ended December 31, 2020. During 2019, $500.0 million aggregate principal amount of the 2021 Notes was
redeemed and resulted in the write-off of $2.1 million of debt issuance costs, which was reflected in interest
expense.

In connection with issuing the 2028 Notes, the Company incurred costs of $11.7 million during the year ended
December 31, 2020 which were recorded as a reduction of the carrying amount of the debt and are being amortized
over the term of the 2028 Notes.

As of December 31, 2020, the Company had outstanding two series of senior secured notes: (1) $1.5 billion of
6.00% senior secured notes due 2026 issued by CommScope, Inc. in February 2019 (the 2026 Secured Notes) and
(2) $1.25 billion of 5.50% senior secured notes due 2024 issued by CommScope, Inc. in February 2019 (the 2024
Secured Notes and, together with the 2026 Secured Notes, the Secured Notes). In addition to the 2028 Notes, as of
December 31, 2020, the Company had outstanding three series of senior notes: (1) $ 750.0 million initial aggregate
principal amount of 5.00% senior notes due March 15, 2027 issued by CommScope Technologies LLC
(CommScope Technologies), a wholly owned subsidiary of the Company, in March 2017 (the 5.00% 2027 Notes);
(2) $1.3 billion aggregate principal amount of 6.00% senior notes due June 15, 2025 issued by CommScope
Technologies in June 2015 (the 2025 Notes, and together with the 5.00% 2027 Notes, the CommScope Technologies
Notes); (3) $1.0 billion initial aggregate principal amount of 8.25% senior notes due March 1, 2027 issued by
CommScope, Inc. in February 2019 (the 8.25% 2027 Notes and, together with the 2028 Notes, the CommScope, Inc.
Notes; the Secured Notes, the CommScope Technologies Notes and the CommScope, Inc. Notes, collectively, the
Senior Notes).

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

The indentures governing the Senior Notes contain covenants that restrict the ability of CommScope, Inc. and its
restricted subsidiaries to, among other things, incur additional debt, make certain payments, including payment of
dividends (except, in the case of the CommScope, Inc. Notes and the Secured Notes, with respect to the Convertible
Preferred Stock) or repurchases of equity interests of CommScope, Inc. or the applicable issuer, make loans or
acquisitions or capital contributions and certain investments, incur certain liens, sell assets, merge or consolidate or
liquidate other entities and enter into certain transactions with affiliates.

There are no financial maintenance covenants in the indentures governing the Senior Notes. Events of default under
the indentures governing the Senior Notes include, among others, non-payment of principal or interest when due,
covenant defaults, bankruptcy and insolvency events and cross acceleration to material debt.

6.00% Senior Secured Notes due 2026 and 5.50% Senior Secured Notes due 2024 (the Secured Notes)

The 2024 Secured Notes mature on March 1, 2024 and the 2026 Secured Notes mature on March 1, 2026. Interest is
payable on the Secured Notes semi-annually in arrears on March 1 and September 1 of each year. The Secured
Notes are guaranteed on a senior secured basis by the Company and each of CommScope, Inc.’s existing and future
wholly owned domestic restricted subsidiaries that is an obligor under the senior secured credit facilities or certain
other debt, subject to certain exceptions. The Secured Notes and the related guarantees are secured on a first-priority
basis by security interests in all of the assets that secure indebtedness under the 2026 Term Loan (as defined below)
on a first-priority basis, and on a second-priority basis in all assets that secure the Revolving Credit Facility (as
defined below) on a first-priority basis and the 2026 Term Loan on a second-priority basis. The Secured Notes and
the related guarantees rank senior in right of payment to all of CommScope, Inc.’s and the guarantors’ subordinated
indebtedness and equally in right of payment with all of CommScope, Inc.’s and the guarantors’ senior indebtedness
(without giving effect to collateral arrangements), including the senior secured credit facilities and the other Senior
Notes. The Secured Notes and the related guarantees are effectively senior to all of CommScope, Inc.’s and the
guarantors’ unsecured indebtedness and debt secured by a lien junior to the liens securing the Secured Notes, in each
case to the extent of the value of the collateral, and effectively equal to all of CommScope, Inc.’s and the guarantors’
senior indebtedness secured on the same priority basis as the Secured Notes, including the 2026 Term Loan. The
Secured Notes and the related guarantees are effectively subordinated to any of CommScope, Inc.’s or the
guarantors’ indebtedness that is secured by assets that do not constitute collateral for the Secured Notes and
effectively subordinated to any of CommScope, Inc.’s or the guarantors’ indebtedness that is secured by a senior-
priority lien, including under the Revolving Credit Facility, in each case to the extent of the value of the assets
securing such indebtedness. In addition, the Secured Notes and related guarantees are structurally subordinated to all
existing and future liabilities (including trade payables) of CommScope, Inc.’s subsidiaries that do not guarantee the
Secured Notes.

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

The Secured Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control
events, the Secured Notes may be redeemed at the option of the holders at 101% of their face amount, plus accrued
and unpaid interest. The 2024 Secured Notes may be redeemed on or after March 1, 2021 by CommScope, Inc. at
the redemption prices specified in the indenture governing the Secured Notes. Prior to March 1, 2021, the 2024
Secured Notes may be redeemed by CommScope, Inc. at a redemption price equal to 100% of their principal
amount, plus a make-whole premium (as specified in the indenture governing the Secured Notes), plus accrued and
unpaid interest. Prior to March 1, 2021, under certain circumstances, CommScope, Inc. may also redeem up to 40%
of the aggregate principal amount of the 2024 Secured Notes at a redemption price of 105.50%, plus accrued and
unpaid interest, using the proceeds of certain equity offerings. At any time prior to March 1, 2021, CommScope, Inc.
may redeem during each calendar year up to 10.0% of the aggregate principal amount of the 2024 Secured Notes at
a redemption price equal to 103.0% of the aggregate principal amount of the 2024 Secured Notes to be redeemed,
plus accrued and unpaid interest, if any, to, but not including, the date of redemption. The 2026 Secured Notes may
be redeemed on or after March 1, 2022 by CommScope, Inc. at the redemption prices specified in the indenture
governing the 2026 Secured Notes. Prior to March 1, 2022, the 2026 Secured Notes may be redeemed by
CommScope, Inc. at a redemption price equal to 100% of their principal amount, plus a make-whole premium (as
specified in the indenture governing the Secured Notes), plus accrued and unpaid interest. Prior to March 1, 2022,
under certain circumstances, CommScope, Inc. may also redeem up to 40% of the aggregate principal amount of the
2026 Secured Notes at a redemption price of 106.00%, plus accrued and unpaid interest, using the proceeds of
certain equity offerings. At any time prior to March 1, 2022, CommScope, Inc. may redeem during each calendar
year up to 10.0% of the aggregate principal amount of the 2026 Secured Notes at a redemption price equal to
103.0% of the aggregate principal amount of the 2026 Secured Notes to be redeemed, plus accrued and unpaid
interest, if any, to, but not including, the date of redemption.

7.125% Senior Notes due 2028 and 8.25% Senior Notes due 2027 (the CommScope, Inc. Notes)

The 2028 Notes mature on July 1, 2028 and the 8.25% 2027 Notes mature on March 1, 2027. Interest is payable
semi-annually in arrears on the 2028 Notes on July 1 and January 1 of each year and on the 8.25% 2027 Notes on
March 1 and September 1 of each year. The CommScope, Inc. Notes are guaranteed on a senior unsecured basis by
each of CommScope, Inc.’s existing and future wholly owned domestic restricted subsidiaries that is an obligor
under the senior secured credit facilities or certain other capital markets debt, subject to certain exceptions. The
CommScope, Inc. Notes and the related guarantees rank senior in right of payment to all of CommScope, Inc.’s and
the guarantors’ subordinated indebtedness and equally in right of payment with all of CommScope, Inc.’s and the
guarantors’ senior indebtedness (without giving effect to collateral arrangements), including the senior secured
credit facilities and the other Senior Notes. The CommScope, Inc. Notes and the related guarantees are effectively
junior to all of CommScope, Inc.’s and the guarantors’ existing and future secured indebtedness, including the
Secured Notes and the senior secured credit facilities, to the extent of the value of the assets securing such secured
indebtedness. In addition, the CommScope, Inc. Notes and related guarantees are structurally subordinated to all
existing and future liabilities (including trade payables) of CommScope, Inc.’s subsidiaries that do not guarantee the
CommScope, Inc. Notes.

The CommScope, Inc. Notes may be redeemed prior to maturity under certain circumstances. Upon certain change
of control events, the CommScope, Inc. Notes may be redeemed at the option of the holders at 101% of their
principal amount, plus accrued and unpaid interest. The 2028 Notes may be redeemed by CommScope, Inc. on or
after July 1, 2023 at the redemption prices specified in the indenture governing the 2028 Notes. Prior to July 1,
2023, the 2028 Notes may be redeemed by CommScope, Inc. at a redemption price equal to 100% of their principal
amount, plus a make-whole premium (as specified in the indenture governing the 2028 Notes), plus accrued and
unpaid interest. Prior to July 1, 2023, under certain circumstances, CommScope, Inc. may also redeem up to 40% of
the aggregate principal amount of the 2028 Notes at a redemption price of 107.125%, plus accrued and unpaid
interest, using the proceeds of certain equity offerings. The 8.25% 2027 Notes may be redeemed by CommScope,
Inc. on or after March 1, 2022 at the redemption prices specified in the indenture governing the 8.25% 2027 Notes.
Prior to March 1, 2022, the 8.25% 2027 Notes may be redeemed by CommScope, Inc. at a redemption price equal to
100% of their principal amount, plus a make-whole premium (as specified in the indenture governing the 8.25%
2027 Notes), plus accrued and unpaid interest. Prior to March 1, 2022, under certain circumstances, CommScope,
Inc. may also redeem up to 40% of the aggregate principal amount of the 8.25% 2027 Notes at a redemption price of
108.25%, plus accrued and unpaid interest, using the proceeds of certain equity offerings.

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

5.00% Senior Notes due 2027 and 6.00% Senior Notes due 2025 (the CommScope Technologies Notes)

The 5.00% 2027 Notes mature on March 15, 2027 and the 2025 Notes mature on June 15, 2025. Interest is payable
on the 5.00% 2027 Notes semi-annually in arrears on March 15 and September 15 of each year and on the 2025
Notes on June 15 and December 15 of each year.

The CommScope Technologies Notes are guaranteed on a senior unsecured basis by CommScope, Inc. and each of
CommScope, Inc.’s existing and future wholly owned domestic restricted subsidiaries (other than CommScope
Technologies) that is an obligor under the senior secured credit facilities or certain other capital markets debt,
subject to certain exceptions. The CommScope Technologies Notes and the related guarantees rank senior in right of
payment to all of CommScope Technologies’ and the guarantors’ subordinated indebtedness and equally in right of
payment with all of CommScope Technologies’ and the guarantors’ senior indebtedness (without giving effect to
collateral arrangements), including the senior secured credit facilities and the other Senior Notes. The CommScope
Technologies Notes and the related guarantees are effectively junior to all of CommScope Technologies’ and the
guarantors’ existing and future secured indebtedness, including the Secured Notes and the senior secured credit
facilities, to the extent of the value of the assets securing such secured indebtedness. In addition, the CommScope
Technologies Notes and related guarantees are structurally subordinated to all existing and future liabilities
(including trade payables) of CommScope, Inc.’s subsidiaries that do not guarantee the CommScope Technologies
Notes.

The CommScope Technologies Notes may be redeemed prior to maturity under certain circumstances. Upon certain
change of control events, the CommScope Technologies Notes may be redeemed at the option of the holders at
101% of their principal amount, plus accrued and unpaid interest. The 5.00% 2027 Notes may be redeemed by
CommScope Technologies on or after March 15, 2022 at the redemption prices specified in the indenture governing
the 5.00% 2027 Notes. Prior to March 15, 2022, the 5.00% 2027 Notes may be redeemed by CommScope
Technologies at a redemption price equal to 100% of the aggregate principal amount of the 5.00% 2027 Notes to be
redeemed, plus a make-whole premium (as specified in the indenture governing the 5.00% 2027 Notes), plus
accrued and unpaid interest. The 2025 Notes may be redeemed by CommScope Technologies at the redemption
prices specified in the indenture governing the 2025 Notes.

During the year ended December 31, 2020, the Company redeemed $200.0 million aggregate principal amount of
the 2025 Notes, which resulted in charges of $6.0 million that are reflected in other expense, net. In connection with
the redemptions, $2.6 million of debt issuance costs was written off and included in interest expense during the year
ended December 31, 2020.

Senior Secured Credit Facilities

Senior Secured Term Loan due 2026

The senior secured term loan due 2026 (the 2026 Term Loan) has scheduled amortization payments of $32.0 million
per year due in equal quarterly installments, which began with the quarter ended December 31, 2019, with the
balance due at maturity (April 2026). The interest rate is, at the Company’s option, either (1) the base rate (which is
the highest of (w) the greater of the then-current federal funds rate set by the Federal Reserve Bank of New York
and the overnight federal funds rate, in each case, plus 0.5%, (x) the prime rate on such day, (y) the one-month
Eurodollar rate published on such date plus 1.00% and (z) 1.00% per annum) plus an applicable margin of 2.25% or
(2) one-, two-, three- or six-month LIBOR or, if available from all lenders, 12-month LIBOR or any shorter period
(selected at the option of CommScope, Inc.) plus an applicable margin of 3.25%. The 2026 Term Loan is subject to
a LIBOR floor of 0.00%.

Subject to certain conditions, the 2026 Term Loan may be increased or a new incremental term loan facility may be
added to increase the capacity by up to the sum of the greater of $950.0 million and 50% of Consolidated EBITDA,
as defined in the credit agreement governing the 2026 Term Loan (the Credit Agreement), plus an unlimited amount
as long as on a pro forma basis the Company meets certain net leverage ratios or fixed charge ratios as defined in the
Credit Agreement.

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

CommScope, Inc. may voluntarily prepay loans under the 2026 Term Loan, subject to minimum amounts, with prior
notice but without premium or penalty. CommScope, Inc. must prepay the 2026 Term Loan with the net cash
proceeds of certain asset sales, the incurrence or issuance of specified refinancing indebtedness and, commencing
with the fiscal year ending in December 2020, 50% of excess cash flow (such percentage subject to reduction based
on the achievement of specified Consolidated First Lien Net Leverage Ratios), in each case, subject to certain
reinvestment rights and other exceptions.

CommScope, Inc.’s obligations under the 2026 Term Loan are guaranteed by the Company and each of
CommScope, Inc.’s direct and indirect wholly owned U.S. subsidiaries (subject to certain permitted exceptions
based on immateriality thresholds of aggregate assets and revenues of excluded U.S. subsidiaries). The 2026 Term
Loan is secured by a lien on substantially all of CommScope, Inc.’s and the guarantors’ current and fixed assets
(subject to certain exceptions), and the 2026 Term Loan will have a first-priority lien on all fixed assets and a
second-priority lien on all current assets (second in priority to the liens securing the Revolving Credit Facility), in
each case, subject to other permitted liens.

The 2026 Term Loan contains customary negative covenants consistent with those applicable to the New Notes,
including, but not limited to, restrictions on the ability of CommScope, Inc. and its subsidiaries to merge and
consolidate with other companies, incur indebtedness, grant liens or security interests on assets, pay dividends
(except with respect to the Convertible Preferred Stock) or make other restricted payments, sell or otherwise transfer
assets or enter into certain transactions with affiliates.

The 2026 Term Loan provides that, upon the occurrence of certain events of default, the obligations thereunder may
be accelerated. Such events of default will include payment defaults, material inaccuracies of representations and
warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy
proceedings, material money judgments, material pension-plan events, change of control and other customary events
of default.

During the year ended December 31, 2020, the Company made scheduled amortization payments of $32.0 million
due in equal quarterly installments on the 2026 Term Loan. The current portion of long-term debt reflects $32.0
million of repayments due under the 2026 Term Loan.

No portion of the 2026 Term Loan was reflected as a current portion of long-term debt as of December 31, 2020
related to the potentially required excess cash flow payment because no such payment is expected to be required.

During 2019, the Company paid off the then existing senior secured term loan due 2022 (the 2022 Term Loan). In
connection with the repayments of the 2022 Term Loan, $4.1 million of original issue discount and $7.7 million of
debt issuance costs were written off and included in interest expense for the year ended December 31, 2019. The
Company also incurred ticking fees related to the 2026 Term Loan of $12.3 million during the year ended December
31, 2019 that were included in interest expense.

Senior Secured Revolving Credit Facility

The Company’s asset-based revolving credit facility (the Revolving Credit Facility) provides borrowing capacity of
up to $1.0 billion, subject to certain limitations, with a maturity in April 2024, available to CommScope, Inc. and its
U.S. subsidiaries designated as co-borrowers (the Revolving Borrowers). The ability to draw under the Revolving
Credit Facility or issue letters of credit is conditioned upon, among other things, delivery of prior written notice of a
borrowing or issuance, as applicable, the ability of the borrowers to reaffirm the representations and warranties
contained in the Revolving Credit Facility and the absence of any default or event of default. The Company
borrowed and repaid $250.0 million under the Revolving Credit Facility during the year ended December 31,
2020. As of December 31, 2020, the Company had no outstanding borrowings under the Revolving Credit Facility
and had availability of $735.1 million, after giving effect to borrowing base limitations and outstanding letters of
credit.

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

Letters of credit under the Revolving Credit Facility are limited to the lesser of (x) $250.0 million and (y) the
aggregate unused amount of commitments under the Revolving Credit Facility then in effect. Subject to certain
conditions, the Revolving Credit Facility may be expanded by up to $400.0 million in additional commitments.
Loans under the Revolving Credit Facility may be denominated, at the option of the Revolving Borrowers, in U.S.
dollars, euros, pounds sterling or Swiss francs.

Borrowings under the Revolving Credit Facility are limited by borrowing base calculations based on the sum of
specified percentages of eligible accounts receivable and eligible inventory, minus the amount of any applicable
reserves. Borrowings will bear interest at a floating rate, which can be either an adjusted Eurodollar rate plus an
applicable margin of 1.25% to 1.50% or, at the option of the Revolving Borrowers, a base rate plus an applicable
margin of 0.25% to 0.50%.

The obligations of the Revolving Borrowers under the Revolving Credit Facility are guaranteed by the Company,
CommScope, Inc. and each of CommScope, Inc.’s direct and indirect wholly owned U.S. subsidiaries (subject to
certain permitted exceptions based on immateriality thresholds of aggregate assets and revenues of excluded U.S.
subsidiaries). The Revolving Credit Facility is secured by a lien on substantially all of the Revolving Borrowers’ and
the guarantors’ current and fixed assets (subject to certain exceptions). The Revolving Credit Facility has a first-
priority lien on all current assets and a second-priority lien on all fixed assets (second in priority to the liens securing
the 2024 Secured Notes, the 2026 Secured Notes and the 2026 Term Loan), in each case, subject to other permitted
liens.

The following fees are applicable under the Revolving Credit Facility: (i) an unused line fee of (x) 0.25% per annum
of the unused portion of the Revolving Credit Facility when the average unused portion of the facility is less than
50% of the aggregate commitments under the Revolving Credit Facility or (y) 0.375% per annum of the unused
portion of the Revolving Credit Facility when the average unused portion of the facility is equal to or greater than
50% of the aggregate commitments under the Revolving Credit Facility; (ii) a letter of credit participation fee on the
aggregate stated amount of each letter of credit equal to the applicable margin for adjusted Eurodollar rate loans, as
applicable; (iii) a letter of credit fronting fee of 0.125% per annum, multiplied by the average aggregate daily
maximum amount available to be drawn under all applicable letters of credit issued by such letter of credit issuer;
and (iv) certain other customary fees and expenses of the lenders and agents thereunder.

The Revolving Borrowers will be required to make prepayments under the Revolving Credit Facility at any time
when, and to the extent that, the aggregate amount of the outstanding loans and letters of credit under the Revolving
Credit Facility exceeds the lesser of the aggregate amount of commitments in respect of the Revolving Credit
Facility and the borrowing base.

The Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on the ability
of CommScope, Inc. and its subsidiaries to merge and consolidate with other companies, incur indebtedness, grant
liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends (except with
respect to the Convertible Preferred Stock), sell or otherwise transfer assets, optionally prepay or modify terms of
any junior indebtedness, enter into certain transactions with affiliates or change lines of business. The Revolving
Credit Facility contains a Covenant Fixed Charge Coverage Ratio (as defined in the credit agreement governing the
Revolving Credit Facility) of 1.00 to 1.00. The credit agreement provides that the Covenant Fixed Charge Coverage
Ratio must be tested and must exceed the level set forth above only; in the event that excess availability under the
Revolving Credit Facility is less than the greater of $80 million and 10% of the borrowing base as of the end of the
most recent fiscal quarter. As of December 31, 2020, the Company’s excess availability and Covenant Fixed Charge
Coverage Ratio were in excess of the Revolving Credit Facility’s requirements.

The Revolving Credit Facility provides that, upon the occurrence of certain events of default, the obligations
thereunder may be accelerated and the lending commitments terminated. Such events of default include payment
defaults, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material
indebtedness, voluntary and involuntary bankruptcy proceedings, material money judgments, material pension-plan
events, certain change of control events and other customary events of default.

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

Other Matters

The following table summarizes scheduled maturities of long-term debt as of December 31, 2020:

Scheduled maturities of long-term debt

32.0 $

2021

2022

2023

Thereafter
32.0 $ 1,282.0 $ 1,332.0 $ 6,950.0

2024

2025

The Company’s non-guarantor subsidiaries held $2,466 million, or 18%, of total assets and $956 million, or 8%, of
total liabilities as of December 31, 2020 and accounted for $2,430 million, or 29%, of net sales for the year ended
December 31, 2020. As of December 31, 2019, the non-guarantor subsidiaries held $3,773 million, or 26%, of total
assets and $714 million, or 6%, of total liabilities. For the year ended December 31, 2019, the non-guarantor
subsidiaries accounted for $3,044 million, or 37%, 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 impact of the interest rate
swap, and the amortization of debt issuance costs and original issue discount, was 5.86% at December 31, 2020 and
6.13% at December 31, 2019.

9. 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, 2020, the Company had foreign
exchange contracts outstanding with maturities of up to six months and aggregate notional values of $515.5 million
(based on exchange rates as of December 31, 2020). 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.

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

Contract Type
Foreign currency contracts
Foreign currency contracts

Total derivatives not designated
as hedging instruments

Location of Asset (Liability)

December 31,

2020

2019

Prepaid expenses and other current assets
Accrued and other liabilities

11.7 $
(3.3)

8.4 $

4.9
(5.9)

(1.0)

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

Other expense, net

Location of Gain (Loss)

2020

Year Ended December 31,
2019

2018

24.9 $

(13.6) $

(17.8)

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

Derivative Instruments Designated As Net Investment Hedges

The Company has a hedging strategy to designate certain foreign currency 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, 2020, the Company held designated foreign currency contracts with outstanding maturities of up to six months
and an aggregate notional value of $300 million. As of December 31, 2020 and 2019, there was no ineffectiveness
on the instruments designated as net investment hedges.

The following table presents the balance sheet location and fair value of the derivative instruments designated as net
investment hedges:

Contract Type
Foreign currency contracts
Foreign currency contracts

Total derivatives designated as net
investment hedging instruments

Location of Asset (Liability)

Other noncurrent assets
Accrued and other liabilities

December 31,

2020

2019

— $
(21.1)

(21.1) $

5.8
—

5.8

The after tax impact of the forward contracts designated as net investment hedging instruments, both matured and
outstanding, on the Consolidated Statements of Operations is as follows:

Other comprehensive income (loss), net of tax

Location of Gain (Loss)

Year Ended December 31,
2019

2020

2018

(19.9) $

5.6 $

3.5

Derivative Instruments Designated As Cash Flow Hedges of Interest Rate Risk

The Company has a hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting from
variable interest rates on the senior secured term loan due 2026. The total notional amount of the interest rate swap
derivatives as of December 31, 2020 was $600 million with outstanding maturities up to thirty-nine months. As of
December 31, 2020 and 2019, there was no ineffectiveness on the instruments designated as cash flow hedges. The
Company did not have derivative instruments designated as cash flow hedges of interest rate during the year ended
December 31, 2018.

The following table presents the balance sheet location and fair value of the derivative instruments designated as
cash flow hedges of interest rate risk:

Contract Type

Location of Asset (Liability)

December 31,

2020

2019

Interest rate swap contracts

Other noncurrent liabilities

(29.9) $

(16.3)

The impact of the effective portion of the interest rate swap contracts designated as cash flow hedging instruments
on the Consolidated Statements of Comprehensive Income (Loss) is as follows:

Other comprehensive income (loss), net of tax

(10.2) $

(12.2)

Location of Gain (Loss)

Year Ended December 31,
2019

2020

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

10. FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist primarily of cash and cash equivalents, trade receivables, trade
payables, debt instruments, interest rate derivatives 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, 2020
and December 31, 2019 were considered representative of their fair values due to their short terms to maturity. The
fair values of the Company’s debt instruments, interest rate derivatives and foreign currency contracts were based on
indicative quotes.

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 debt instruments, interest
rate derivatives and foreign currency contracts as of December 31, 2020 and December 31, 2019, are as follows:

Assets:

Foreign currency contracts

Liabilities:

7.125% senior notes due 2028
5.00% senior notes due 2027
8.25% senior notes due 2027
6.00% senior notes due 2025
5.50% senior notes due 2024
5.00% senior notes due 2021
6.00% senior secured notes due 2026
5.50% senior secured notes due 2024
Senior secured term loan due 2026
Senior secured revolving credit facility
Foreign currency contracts
Interest rate swap contracts

December 31, 2020

December 31, 2019

Carrying
Amount

Fair Value

Carrying
Amount

Fair Value

Valuation
Inputs

11.7 $

10.7 $

10.7 Level 2

—
—

743.8 $
741.5

700.0 $
750.0

— $
750.0

— Level 2
696.4 Level 2
1,000.0 1,068.5 1,000.0 1,052.5 Level 2
1,300.0 1,329.3 1,500.0 1,501.7 Level 2
656.0 Level 2
149.9 Level 2
1,500.0 1,576.8 1,500.0 1,595.6 Level 2
1,250.0 1,285.9 1,250.0 1,302.1 Level 2
3,160.0 3,156.1 3,192.0 3,219.9 Level 2
— Level 2
5.9 Level 2
16.3 Level 2

—
24.4
29.9

—
5.9
16.3

—
24.4
29.9

650.0
150.0

—
—

Non-Recurring Fair Value Measurements

During the second quarter of 2020, the Company recorded a pretax goodwill impairment charge of $206.7 million
related to the Home Networks reporting unit in the Home segment (see Note 4). The fair value of the reporting unit
was determined as of May 31, 2020 using a DCF model. Under the DCF method, the fair value of a reporting unit is
based on the present value of estimated future cash flows. The inputs to the DCF model were Level 3 valuation
inputs.

During the fourth quarter of 2019, the Company recorded a pretax goodwill impairment charge of $376.1 million
related to the Broadband, Home and VCN segments (see Note 4). The determination of the impairment charge was
based on Level 3 valuation inputs.

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.

100

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

11. RESTRUCTURING COSTS

The Company incurs costs associated with restructuring initiatives intended to improve overall operating
performance and profitability. The costs related to restructuring actions are generally cash-based and primarily
consist of employee-related costs, which include severance and other one-time termination benefits.

In addition to the employee-related costs, the Company records other costs associated with restructuring actions
such as the (gain) loss on the sale of facilities and impairment costs arising from unutilized real estate or equipment.
The Company attempts to sell or lease this unutilized space but additional impairment charges may be incurred
related to these or other excess assets.

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

Broadband
Home
OWN
VCN
Total

2020

Year Ended December 31,
2019

2018

17.8
30.0
15.7
24.9
88.4

36.9
23.2
6.9
20.7
87.7

Restructuring reserves were included in the Company’s Consolidated Balance Sheets as follows:

Accrued and other liabilities
Other noncurrent liabilities
Total liability

December 31,

2020

2019

22.0 $
4.0
26.0 $

11.7
—
17.1
15.2
44.0

24.0
4.4
28.4

ARRIS Integration Restructuring Actions

In anticipation of and following the Acquisition, the Company initiated a series of restructuring actions, which are
currently ongoing, to integrate and streamline operations and achieve cost synergies. The activity within the liability
established for the ARRIS integration restructuring actions was as follows:

Balance at December 31, 2018
Obligation assumed in ARRIS acquisition
Additional expense
Cash paid
Non-cash items
Balance at December 31, 2019
Additional expense
Cash (paid) received
Non-cash items
Balance at December 31, 2020

Employee-
Related
Costs

Other

Total

—
2.3
81.8
(60.9)
(0.1)
23.1
78.3
(77.2)
0.2
24.4

—
—
4.3
(1.0)
(1.3)
2.0
10.1
3.0
(14.3)
0.8

—
2.3
86.1
(61.9)
(1.4)
25.1
88.4
(74.2)
(14.1)
25.2

The ARRIS integration actions include headcount reductions in manufacturing, sales, engineering, marketing and
administrative functions. The Company expects to make cash payments of $21.4 million during 2021 and additional
cash payments of $3.8 million in 2022 to settle the announced ARRIS integration initiatives.

101

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

The Company continues to implement certain facility consolidation actions as part of its ARRIS integration plans.
During the year ended December 31, 2020, the Company completed the sale of its facility in Forest, Virginia and
recorded net proceeds of $4.8 million resulting in a gain on the sale of the facility of $2.1 million, which is included
in restructuring costs, net on the Consolidated Statements of Operations. In addition, during the year ended
December 31, 2020, the Company recorded $8.8 million of impairment of operating lease right of use assets related
to ceasing use of certain leased facilities and $2.8 million of fixed asset impairments as part of restructuring
activities, which are both included in restructuring costs, net on the Consolidated Statements of Operations.

Additional restructuring actions related to the ARRIS integration are expected to be identified and the resulting
charges and cash requirements are expected to be material.

BNS Integration Restructuring Actions

Following the acquisition of Broadband Network Solutions (BNS) business in 2015, the Company initiated a series
of restructuring actions to integrate and streamline operations and achieve cost synergies. 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 $153.0 million since the BNS acquisition for integration actions. No additional restructuring actions are
expected in connection with the BNS integration initiatives. The Company has accrued $0.8 million for these BNS
integration restructuring actions as of December 31, 2020. The Company paid $2.5 million during the year ended
December 31, 2020 and expects to make cash payments of $0.8 million between 2021 and 2022.

12. 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, 2020, 2019 and 2018, the Company made
contributions to defined contribution retirement savings plans of $56.6 million, $41.8 million and $24.0 million,
respectively.

The Company also maintains noncontributory and contributory deferred compensation plans. During the years
ended December 31, 2020, 2019 and 2018, the Company recognized pretax costs of $2.6 million, $3.5 million and
$0.7 million, respectively, related to these plans. The liability related to these plans was $43.2 million and $43.8
million as of December 31, 2020 and 2019, respectively.

102

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

Pension Plans

The Company sponsors defined benefit pension plans covering certain active and former domestic and foreign
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:

Change in benefit obligation:

Benefit obligation, beginning
Obligation assumed in ARRIS acquisition
Service cost
Interest cost
Actuarial loss
Benefits paid
Settlements
Foreign exchange and other
Benefit obligation, ending

Change in plan assets:

Fair value of plan assets, beginning
Assets assumed in ARRIS acquisition
Employer and plan participant contributions
Return on plan assets
Benefits paid
Settlements
Foreign exchange and other
Fair value of plan assets, ending

Funded status, net liability

December 31,

U.S. Plans

Non-U.S. Plans

2020

2019

2020

2019

$
$

12.8 $
—
—
0.3
1.1
(0.7)
—
—
13.5 $

— $
—
0.7
—
(0.7)
—
—
— $
13.5 $

2.2 $
10.0
—
0.3
0.9
(0.6)
—
—
12.8 $

— $
—
0.6
—
(0.6)
—
—
— $
12.8 $

251.5 $208.8
— 12.6
4.0
4.3
4.0
5.2
29.1 27.5
(4.6)
(5.3)
(6.4)
(9.2)
36.1
4.4
310.5 $251.5

230.8 $203.4
4.2
—
6.8
4.9
23.2 25.0
(4.6)
(5.3)
(6.4)
(9.2)
32.8
4.3
279.1 $230.8
31.4 $ 20.7

The following table presents the balance sheet location of the Company's pension liabilities and assets:

Accrued and other liabilities
Other noncurrent liabilities
Other noncurrent assets

December 31,

U.S. Plans

Non-U.S. Plans

2020

2019

2020

2019

(0.8) $
(12.7)
—

(0.8) $
(12.0)
—

(0.5) $
(34.4)
3.5

(0.5)
(23.2)
3.0

The accumulated benefit obligation for the Company’s U.S. defined benefit pension plans was $13.5 million and
$12.8 million as of December 31, 2020 and 2019, respectively, and the accumulated benefit obligation for the
Company’s non-U.S. defined benefit pension plans was $261.8 million and $211.8 million as of December 31, 2020
and 2019, respectively.

103

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

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

2020

2019

2020

2019

13.5 $
13.5
—

12.8 $
12.8
—

51.5 $
48.5
26.1

30.9
26.1
8.5

The following table summarizes pretax amounts included in accumulated other comprehensive loss:

Unrecognized net actuarial loss
Unrecognized prior service cost
Total

December 31,

U.S. Plans

Non-U.S. Plans

2020

2019

2020

2019

(2.3) $
—
(2.3) $

(1.3) $
—
(1.3) $

(43.4) $
(0.5)
(43.9) $

(31.5)
(0.7)
(32.2)

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,

U.S. Plans

Non-U.S. Plans

Service cost
Interest cost
Recognized actuarial loss
Expected return on plan assets
Settlement loss
Net periodic benefit cost
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
Settlement

Total included in other comprehensive income (loss)
Total recognized in net periodic benefit cost and
included in other comprehensive income (loss)

2019

2018

2020
$ — $ — $ — $
4.2
0.3
0.3
0.4
0.1 —
(5.1)
— —
34.5
— —
34.0
0.3

0.4

1.0

0.9

8.7
— — —
(34.5)
— —
(25.8)
0.9

1.0

2020

4.3 $
4.0
1.3
(7.0)
1.5
4.1

2019

2018
4.0 $ 4.1
5.2 5.2
0.7 1.3
(6.8) (7.7)
0.9 —
4.0 2.9

13.4
(0.2)
(1.5)
11.7

9.6 (5.6)
— 0.3
(0.9) —
8.7 (5.3)

1.4 $

1.2 $

8.2 $ 15.8 $ 12.7 $(2.4)

The Company reports the service cost component of net periodic benefit cost in the same line item as other
compensation costs arising from the services rendered by the employee and records the other components of net
periodic benefit cost in other expense, net.

The Company terminated a significant U.S. defined benefit pension plan in the fourth quarter of 2018 through the
purchase of annuities. Upon termination, the Company recognized a pretax charge in other expense, net, of $34.5
million in 2018 primarily related to unrecognized net actuarial losses previously recorded in accumulated other
comprehensive loss.

104

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

Assumptions

Significant weighted average assumptions used in determining benefit obligations and net periodic benefit cost are
as follows:

2020

U.S. Plans
2019

2018

Non-U.S. Plans
2019

2020

2018

Benefit obligations:

Discount rate
Rate of compensation increase

Net periodic benefit cost:

Discount rate
Rate of return on plan assets
Rate of compensation increase

2.07 % 2.95 % 3.70 % 1.02 % 1.65 % 2.50 %
— % — % — % 3.59 % 3.74 % 3.92 %

2.95 % 3.70 % 3.50 % 1.65 % 2.50 % 2.23 %
— % — % — % 2.33 % 3.03 % 3.41 %
— % — % — % 3.74 % 3.92 % 3.92 %

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. 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.

105

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

The Company had no U.S. defined benefit pension plan assets as of December 31, 2020 or 2019. The estimated fair
values and the valuation input levels of the Company’s non-U.S. defined benefit pension plan assets are as follows:

Mutual funds:

International equity
International debt
Absolute return

Other
Total

Mutual funds:

International equity
International debt
Absolute return

Other
Total

Expected Cash Flows

December 31, 2020
Non-U.S. Plans

Level 1
Fair Value

Level 2
Fair Value

31.7 $
42.2
—
13.6
87.5 $

December 31, 2019
Non-U.S. Plans

Level 1
Fair Value

Level 2
Fair Value

27.7 $
37.7
—
8.3
73.7 $

30.8
101.7
29.3
29.8
191.6

16.4
97.5
33.8
9.4
157.1

The Company expects to contribute $0.8 million to U.S defined benefit pension plans and $6.7 million to non-U.S.
defined benefit pension plans during 2021.

The following table summarizes projected benefit payments from pension plans through 2030, including benefits
attributable to estimated future service (in millions):

2021
2022
2023
2024
2025
2026-2030

U.S. Plans

Non-U.S. Plans

0.8 $
0.8
0.9
0.9
0.9
4.6

9.0
8.1
6.4
10.2
10.1
56.6