What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-02-23 · 520 added, 426 removed, 995 unchanged (49% of the section changed)

6 unchanged sentences

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders’

Equity (Deficit)

Consolidated Statements of Stockholders’ Deficit

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of CommScope Holding Company, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss , stockholders’

equity (deficit) and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, 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, 2022, 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 22, 2023 expressed an unqualified opinion thereon.

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, 2023, 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 28, 2024 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.

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.

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The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill for the ANS Reporting Unit

Valuation of Goodwill

Description of the Matter

As more fully described in Note 3 to the consolidated financial statements, at December 31, 2022, the Company’s goodwill was $4,072.4 million, of which $734.0 million relates to the Access Network Solutions (ANS) reporting unit.

The Company’s goodwill is initially assigned to its reporting units as of the acquisition date.

Goodwill is tested for impairment at least annually at the reporting unit level.

The Company performed its annual goodwill impairment test in the fourth quarter of 2022 using both a discounted cash flow model and a guideline public company approach.

As a result of the annual goodwill impairment test, the Company recorded a $1,119.6 million impairment charge in the ANS reporting unit, which reflects a partial impairment of the goodwill of that reporting unit, as its estimated fair value was less than the carrying value.

Auditing management’s goodwill impairment test was complex and highly judgmental due to the significant estimation required in determining the fair value of the ANS reporting unit.

In particular, the fair value estimate was sensitive to changes in significant assumptions, such as the estimated discount rates, projected revenue growth rates and projected operating income margins, which are affected by expectations about future market or economic conditions.

As more fully described in Note 4 to the consolidated financial statements, at December 31, 2023, the Company’s goodwill was $3,514.4 million, of which $261.4 million and $881.5 million relate to the Access Network Solutions (ANS) and Building and Data Center Connectivity (BDCC) reporting units, respectively.

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.

The Company performed its goodwill impairment tests using both a discounted cash flow model and a guideline public company approach.

During the third quarter of 2023, the Company determined that indicators of goodwill impairment existed for the ANS and BDCC reporting units and performed an interim goodwill impairment test, which indicated that the carrying value of the ANS reporting unit exceeded its fair value.

The Company performed its annual goodwill impairment test in the fourth quarter of 2023.

As a result of the impairment tests, the Company recorded goodwill impairment charges of $472.3 million and $99.1 million related to the ANS and BDCC reporting units, respectively, which reflects a partial impairment of the goodwill of these reporting units.

Auditing management’s goodwill impairment tests was complex and highly judgmental due to the significant estimation required in determining the fair values of the ANS and BDCC reporting units.

In particular, the fair value estimates were sensitive to changes in estimated discount rates, projected revenue growth rates and projected EBITDA margin percentages.

How We Addressed the Matter in Our Audit

We evaluated the Company’s assessment of the impairment of goodwill for the ANS reporting unit.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the annual goodwill impairment test for this reporting unit, including controls over management’s development and review of the significant assumptions discussed above.

To test the estimated fair value of the ANS reporting unit, 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 analysis.

We evaluated the Company’s estimated discount rate methodology and developed independent ranges of reasonable discount rates.

We compared the significant assumptions of projected revenue growth rates and projected operating income margins 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 also evaluated the reasonableness of the guideline public companies used to develop the fair value estimate of the ANS reporting unit.

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 this reporting unit that would result from changes in the assumptions.

We evaluated the Company’s assessments of the impairment of goodwill for the ANS and BDCC reporting units.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the interim and annual goodwill impairment tests for these reporting units, including controls over management’s development and review of the assumptions discussed above.

To test the estimated fair values of the ANS and BDCC reporting units, we performed audit procedures with the assistance of our valuation specialists that included, among others, assessing methodologies and testing the assumptions discussed above and the underlying data used by the Company in its analyses.

We evaluated the Company’s estimated discount rate methodology and developed independent ranges of reasonable discount rates.

We compared the assumptions of projected revenue growth rates and projected EBITDA margin percentages used by management to current industry and economic trends, changes to the Company’s business and other relevant factors.

We also evaluated the reasonableness of the guideline public companies used to develop the fair value estimates of the ANS and BDCC reporting units.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses to evaluate the changes in the fair value of these reporting units that would result from changes in the assumptions discussed above.

We also evaluated the related goodwill disclosures included in Note 4 to the consolidated financial statements.

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As more fully described in Note 13 to the consolidated financial statements, at December 31, 2023, the Company recognized deferred tax assets related to deductible temporary differences and carryforwards of $913.0 million, net of valuation allowances of $838.5 million.

Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available evidence, in management’s judgment, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

Auditing management’s assessment of the realizability of deferred tax assets involved especially challenging and subjective auditor judgment in determining whether the reversal of existing taxable temporary differences and the generation of sufficient future taxable income support the realization of the Company’s existing deferred tax assets before expiration.

Auditing management’s assessment of the realizability of deferred tax assets was complex and highly judgmental due to the significant estimation required in determining whether sufficient projected future taxable income supports the realization of the Company’s existing deferred tax assets before expiration.

How We Addressed the Matter in Our Audit

We evaluated the Company’s assessment of the realizability of deferred tax assets, with the assistance of our income tax professionals.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets, including controls over management’s development and review of the estimated future taxable income discussed above.

To test the realizability of deferred tax assets, we performed audit procedures that included, among others, evaluating whether the sources of management’s estimated future taxable income were of the appropriate character and would be sufficient to utilize the deferred tax assets under the relevant tax laws.

We tested the forecasted timing of the reversal of existing taxable temporary differences by evaluating the projected sources of future taxable income and considering the nature of the temporary differences.

We evaluated the Company’s assessment of the realizability of deferred tax assets, with the assistance of our income tax professionals.

We also evaluated the significant assumptions used by the Company to develop estimates of future taxable income and tested the completeness and accuracy of the underlying data.

For example, we compared management’s estimates of future income with current industry and economic trends, the actual results of prior periods and other forecasted financial information prepared by the Company.

We also evaluated the related income tax disclosures included in Note 13 to the consolidated financial statements.

/s/ Ernst & Young LLP

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

Charlotte, North Carolina

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Opinion on Internal Control Over Financial Reporting

We have audited CommScope Holding Company, Inc.’s internal control over financial reporting as of December 31, 2022, 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).

We have audited CommScope Holding Company, Inc.’s internal control over financial reporting as of December 31, 2023, 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, 2023, based on the COSO criteria.

equity (deficit) and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 22, 2023 expressed an unqualified opinion thereon.

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, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ deficit and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 28, 2024 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.

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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.

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Operating income (loss)

Other expense, net

Other income (expense), net

Interest expense

Interest income

Loss before income taxes

Income tax benefit

Loss from continuing operations before income taxes

Income tax (expense) benefit

Loss from continuing operations

Loss from discontinued operations, net of income tax (expense)

benefit of $ 184.0 , $( 1.9 ) and $ 32.6 , respectively

Series A convertible preferred stock dividends

Net loss attributable to common stockholders

Loss from continuing operations per share

Loss from discontinued operations per share

Loss per share

Loss from continuing operations per share

Loss from discontinued operations per share

Loss per share

Weighted average shares outstanding:

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Prepaid expenses and other current assets

Current assets held for sale

Total current assets

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Other intangible assets, net

Deferred income taxes

Other noncurrent assets

Noncurrent assets held for sale

Liabilities and Stockholders' Deficit

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Current portion of long-term debt

Current liabilities held for sale

Total current liabilities

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Other noncurrent liabilities

Noncurrent liabilities held for sale

Total liabilities

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Proceeds from sale of property, plant and equipment

Cash paid for Cable Exchange acquisition

Payments upon settlement of net investment hedge

Net cash used in investing activities

Net cash generated by (used in) investing activities

Financing Activities:

Long-term debt repaid

Long-term debt repurchases

Long-term debt proceeds

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Dividends paid on Series A convertible preferred stock

Proceeds from the issuance of common shares under equity-based

compensation plans

Proceeds from the issuance of common shares under equity-based compensation plans

Tax withholding payments for vested equity-based compensation awards

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Cash and cash equivalents at end of period

(1) The cash flows related to discontinued operations have not been segregated.

Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

See notes to consolidated financial statements.

CommScope Holding Company, Inc.

Consolidated Statements of Stockholders' Equity (Deficit)

Consolidated Statements of Stockholders' Deficit

(In millions, except share amounts)

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Balance at end of period

Total stockholders' equity (deficit)

Total stockholders' deficit

See notes to consolidated financial statements.

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CommScope Holding Company, Inc., along with its direct and indirect subsidiaries (CommScope or the Company), is a global provider of infrastructure solutions for communication, data center 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 services including technical support, systems design and integration.

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 services including technical support, systems design and integration.

CommScope is a leader in digital video and IP television (IPTV) 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.

As of January 1, 2022, the Company reorganized its internal management and reporting structure to align its portfolio of products and solutions more closely with the markets it serves and provides better performance comparability with its competitive peer set.

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 is now reporting financial performance based on the following operating segments:

Connectivity and Cable Solutions (CCS), Outdoor Wireless Networks (OWN), Networking, Intelligent Cellular and Security Solutions (NICS), Access Network Solutions (ANS) and Home Networks (Home).

These five segments represent non-aggregated reportable operating segments.

Prior to this change, the Company operated and reported four operating segments:

Broadband Networks, Outdoor Wireless Networks, Venue and Campus Networks and Home Networks.

All prior period amounts in these consolidated financial statements have been recast to reflect these operating segment changes.

The Company determined the anticipated sale of the Home business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Accounting Standards Codification (ASC) No.

360-10, Impairment and Disposal of Long Lived Assets , and ASC No.

205-20, Presentation of Financial Statements:

Discontinued Operations, in the fourth quarter of 2023 due to its relative size and strategic rationale.

All prior period amounts in these consolidated financial statements have been recast to reflect the discontinuation of the Home business in accordance with ASC 205-20.

The discussions in these consolidated financial statements relate solely to the Company’s continuing operations, unless otherwise noted.

As a result, the Company is reporting financial performance based on the following remaining four operating segments, which excludes the Home segment:

Connectivity and Cable Solutions (CCS), Outdoor Wireless Networks (OWN), Networking, Intelligent Cellular and Security Solutions (NICS) and Access Network Solutions (ANS).

For further discussion of the discontinued operation related to the Home business, see Note 3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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;

contingent liabilities;

tax valuation allowances;

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and pension and other postretirement benefit costs and liabilities.

Although these estimates are based on management’s knowledge of and experience with past and current events and on management’s assumptions about future events, it is at least reasonably possible that they may ultimately differ materially from actual results.

Cash and Cash Equivalents

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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.

Therefore, the Company has concluded that the expected loss rates for trade accounts receivable 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.

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The Company sold approximately $ 183 million and $ 339 million of trade accounts receivable under this program during the years ended December 31, 2023 and 2022 , respectively, and the cost of factoring such receivables was not material.

The Company derecognizes the accounts receivable on the Consolidated Balance Sheet once sold to the bank, as it retains no interest in and has no servicing responsibilities for them once they have been sold.

The Company derecognizes the accounts receivable on the Consolidated Balance Sheets once sold to the bank, as it retains no interest in and has no servicing responsibilities for them once they have been sold.

The cash received from the bank is classified within the operating activities section in the Consolidated Statements of Cash Flows.

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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.

Assets Held for Sale and Discontinued Operations

The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results when the business is sold, in accordance with the criteria of ASC Topic 205-20, Presentation of Financial Statements—Discontinued Operations , and classified as held for sale, in accordance with ASC Topic 360-10, Impairment and Disposal of Long Lived Assets .

The results of discontinued operations are reported in loss from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Operations for the current and prior periods and include any gain or loss recognized on classification as held for sale, or adjustment of the carrying amount or estimated fair value less cost to sell.

If the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized.

Assets and liabilities related to a business classified as held for sale are segregated in the current and prior periods on the Consolidated Balance Sheets.

If a business is classified as held for sale after the balance sheet date but before the financial statements are issued or are available to be issued, the business continues to be classified as held and used in those financial statements when issued or when available to be issued.

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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The Company periodically 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.

Unrealized gains and losses resulting from these contracts are recognized in other income (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 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 (2026 Term Loan), which are based on the one-month LIBOR benchmark rate.

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 also utilizes a hedging strategy to mitigate the interest rate risk from its variable rate debt, initially associated with its amended senior secured term loan due 2026 (2026 Term Loan) and extending to future borrowings or debt issued, to fix a portion of the future interest cash flows by designating qualifying receive-variable and pay-fixed interest rate swaps as a cash flow hedge for accounting and financial reporting purposes.

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)

The Company determines if a contract is a lease or contains a lease at inception.

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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.

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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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Goodwill and Other Intangible Assets

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See Notes 4 and 10 for discussion of asset impairment charges.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Inventory Repurchase Obligations

The Company periodically enters into sell / buy transactions with its contract manufacturers, where it sells certain component inventory to its contract manufacturers for use in its finished goods.

The Company is obligated to subsequently repurchase this inventory either as a finished food or the original component inventory if it is not consumed after a specific period of time.

The Company records an accounts receivable and a corresponding contract manufacturer inventory repurchase obligation in accrued and other liabilities related to these transactions.

The Company does not record a sale upon shipment of the inventory to the contract manufacturer and the original value of the inventory remains in its inventory balance.

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.

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However, if a contract is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling price.

Product sales to end-customers or distributors represent over 90 % of the Company’s revenue and are recognized at a point-in-time, 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.

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maintenance and support services provided under annual service-level agreements;

“Day 2”

professional services to help customers maximize their utilization of deployed systems;

and installation services related to the routine installation of equipment ordered by the customer at the customer’s site.

“Day 2” professional services to help customers maximize their utilization of deployed systems;

and installation services related to the routine installation of equipment ordered by the customer at the customer’s site.

Revenue is measured based on the consideration the Company expects to be entitled based on customer contracts.

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Variable consideration is primarily related to the Company’s sales to distributors, system integrators and value-added resellers.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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.

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Unbilled receivables are recorded when revenues are recognized in advance of invoice issuance.

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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Shipping and Handling Costs

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Advertising costs are expensed in the period in which they are incurred and are reflected in selling, general and administrative expense on the Consolidated Statements of Operations.

Advertising expense was $ 39.4 million, $ 35.8 million and $ 45.9 million for the years ended December 31, 2022, 2021 and 2020 , respectively.

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.

Advertising expense was $ 22.9 million, $ 32.1 million and $ 28.4 mi llion for the years ended December 31, 2023, 2022 and 2021 , respectively.

Research and Development

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Expenditures related to ongoing production are recorded in cost of sales.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Restructuring

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Restructuring charges may include ongoing and enhanced termination benefits related to employee separations, contract termination costs, impairment of certain assets and other related costs associated with exit or disposal activities.

Severance benefits are provided to employees primarily under the Company’s ongoing benefit arrangements.

These severance costs are accrued once management commits to a plan of termination and it becomes probable that employees will be separated and entitled to benefits at amounts that can be reasonably estimated.

In some instances, the Company enhances its ongoing termination benefits with one-time termination benefits, which are recognized when employees are notified of their enhanced termination benefits.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Foreign Currency Translation

For the years ended December 31, 2022, 2021 and 2020 , approximately 38 %, 42 % and 39 %, respectively, of the Company’s net sales were to customers located outside the U.S.

For the years ended December 31, 2023, 2022 and 2021 , approximately 35 %, 33 % and 40 %, respectively, of the Company’s net sales were to customers located outside the U.S.

A portion of these sales was 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.

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.

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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 $ 4.1 million, $ 4.4 million and $ 19.2 million during the years ended December 31, 2022, 2021 and 2020, respectively.

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 income (expense), net) and resulted in losses o f $ 13.9 million, $ 4.6 million and $ 4.1 mi llion during the years ended December 31, 2023, 2022 and 2021 , 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 are recorded in accumulated other comprehensive loss.

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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 benefit.

Deferred income taxes reflect the future tax consequences of differences between the financial reporting and tax basis of assets and liabilities.

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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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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 (loss) in the same period that the related pre-tax accumulated comprehensive income (loss) reclassifications are recognized.

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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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

For the years ended December 31, 2023, 2022 and 2021 , 17.9 million, 11.3 million and 12.2 million shares, respectively, of outstanding equity-based compensation awards were not included in the computation of diluted EPS because either the effect was antidilutive or the performance conditions were not met.

Of those amounts, for the years ended December 31, 2022, 2021 and 2020, 2.9 million, 4.9 million and 4.4 million shares, respectively, would have been considered dilutive if the Company had not been in a net loss position.

Of those amounts, for the years ended December 31, 2023, 2022 and 2021 , 1.5 million, 2.9 million and 4.9 million shares, respectively, would have been considered dilutive if the Company had not been in a net loss attributable to common stockholders position.

For the years ended December 31, 2023, 2022 and 2021 , 40.8 million, 39.1 million and 37.9 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 may have been considered dilutive if the Company had not been in a net loss position .

however, they may have been considered dilutive if the Company had not been in a net loss attributable to common stockholders position .

The following table presents the basis for the EPS computations (in millions, except per share data):

Year ended December 31,

Loss from continuing operations

Loss from discontinued operations, net of tax

Dividends on Series A convertible preferred stock

Net loss attributable to common stockholders

Weighted average common shares outstanding –

Weighted average common shares outstanding – basic

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

Dilutive effect of equity-based awards

Weighted average common shares outstanding –

Weighted average common shares outstanding – diluted

Loss from continuing operations per share

Loss from discontinued operations per share

Loss per share

Loss from continuing operations per share

Loss from discontinued operations per share

Loss per share

Concentrations of Risk

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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.

The Company manages its exposures to credit risk associated with accounts receivable using tools such 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, 2022, 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.

In management’s opinion, as of December 31, 2023, 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.

CommScope Holding Company, Inc.

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The Company relies on sole suppliers or a limited group of suppliers for certain key components (memory devices, capacitors and silicon chips), 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

1 unchanged sentence

On January 1, 2023, the Company adopted Accounting Standards Update (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.

The impact of adopting this new guidance was not material to the consolidated financial statements.

On January 1, 2022, the Company early adopted ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The new guidance improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability, as well as payment terms which affect subsequent revenue recognized by the acquirer.

According to the guidance, at the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if the acquirer had originated the contracts.

The adoption of this new guidance had no impact to the consolidated financial statements but will be applied prospectively to future business combinations.

Issued but Not Adopted

In September 2022, the Financial Accounting Standards Board (FASB) issued ASU No.

2022-04, Liabilities–Supplier Finance Programs (Subtopic 405-50):

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

The new guidance is expected to improve the transparency of supplier finance programs by requiring that a buyer in a supplier finance program disclose sufficient qualitative and quantitative information about the program to allow a user of its financial statements to understand the program's nature, activity during the period, changes from period to period and potential magnitude.

2022-04 is effective for the Company as of January 1, 2023 on a retrospective basis including interim periods within those fiscal years, except for the requirement to disclose rollforward information which is effective for the Company as of January 1, 2024.

Early adoption is permitted.

The Company had no material supplier finance programs in 2022.

The Company does not expect this guidance to have a material impact on the consolidated financial statements.

In March 2020, January 2021 and December 2022, the FASB issued ASU No.

The new guidance improves the transparency of supplier finance programs by requiring that a buyer in a supplier finance program disclose sufficient qualitative and quantitative information about the program to allow a user of its financial statements to understand the program’s nature, activity during the period, changes from period to period and potential effect on an entity’s financial statements.

This guidance has been applied retrospectively to all periods in which a balance sheet is presented, except for the requirement to disclose rollforward information, which is effective prospectively for the Company as of January 1, 2024.

The impact of adopting this new guidance was not material to the consolidated financial statements.

In June 2023, the Company adopted ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, ASU No.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting and the related updates , ASU No.

2021-01, Reference Rate Reform (Topic 848):

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2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, respectively.

Deferral of the Sunset Date of Topic 848 .

Together, the ASUs provide 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 most recent amendment defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

The guidance provides optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to transactions affected by reference rate reform if certain criteria are met.

The Company adopted the reference rate reform guidance in connection with its amendment of the 2026 Term Loan on June 8, 2023 to transition from the Eurodollar Rate based on the London Interbank Offered Rate (LIBOR) to a Secured Overnight Financing Rate (SOFR), as the reference interest rate, effective as of July 1, 2023, in anticipation of the cessation of LIBOR in 2023 (see Note 8 for further discussion).

The impact of adopting this guidance was not material to the consolidated financial statements.

The Company continues to evaluate and monitor developments and its assessment of this guidance during the LIBOR transition period.

Issued but Not Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The new guidance is expected to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information by requiring 1) consistent categories and greater disaggregation of information in the rate reconciliation and 2) income taxes paid disaggregated by jurisdiction.

The guidance is effective for the Company on a prospective basis, although retrospective application is permitted, as of January 1, 2025 for the annual period.

Early adoption is permitted.

The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The new guidance is expected to improve reportable segment disclosure requirements, primarily through enhanced disclosures for significant segment expenses.

The guidance is effective for the Company on a retrospective basis as of January 1, 2024 for the annual period and January 1, 2025 for the interim periods.

Early adoption is permitted.

The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

CommScope Holding Company, Inc.

1 unchanged sentence

(In millions, unless otherwise noted)

DISCONTINUED OPERATIONS

On October 2, 2023, the Company entered into a Call Option Agreement with Vantiva SA, a société anonyme organized under the Laws of France (Vantiva), pursuant to which the Company granted Vantiva a binding call option to acquire the Home segment and substantially all of the associated segment assets and liabilities, which was subsequently exercised and a Purchase Agreement signed on December 7, 2023, in exchange for (i) 134,704,669 shares of Vantiva common stock representing a 24.73 % equity stake in Vantiva (determined on a fully diluted basis), (ii) $ 250,465 in cash (in addition to cash paid in exchange for the cash on the Home business companies’ balance sheets) and (iii) an earn-out of up to $ 100 million in the aggregate.

The $ 250,465 in cash paid in connection with the closing was expected to be used to acquire additional shares of Vantiva common stock, following which the Company was expected to own a 25 % equity stake in Vantiva (on a fully diluted basis).

The earn-out payments are contingent on Vantiva achieving adjusted EBITDA equal to or greater than € 400 million for one or more of Vantiva’s first five fiscal years following the closing of the transaction.

The earn-out payment with respect to any fiscal year will be subject to an additional annual cap, the amount of which will depend on certain elections made by the Company following Vantiva reaching the € 400 million adjusted EBITDA threshold for the first time, and on Vantiva’s maintenance of certain liquidity levels (after giving effect to such payment).

The Home business qualified as “held for sale” per ASC 360-10 in the fourth quarter of 2023 and was classified as a discontinued operation per ASC 205-20, as the Company determined, qualitatively and quantitatively, that this transaction represents a strategic shift that has or will have a major effect on the Company’s operations and financial results.

As such, activity directly attributable to the Home business has been removed from continuing operations and presented in loss from discontinued operations, net of income taxes on the Consolidated Statements of Operations for all periods presented.

In addition, all assets and liabilities of the Home business have been classified as assets and liabilities held for sale on the Consolidated Balance Sheets as of December 31, 2023 and 2022.

In connection with the “held for sale” classification, the Company recognized a loss on classification as held for sale of $ 177.0 million, which has been included in loss from discontinued operations, net of income taxes on the Consolidated Statements of Operations for the year ended December 31, 2023.

Following the closing of this transaction, the Company’s ownership interest in Vantiva is expected to be reported as an equity method investment.

In addition, the Company has also entered into a Supply Agreement, whereby the Company will sell certain retained inventory to Vantiva for a period of two years following the close of the transaction at market prices.

The following table presents the summarized components of loss from discontinued operations, net of income taxes:

Year Ended December 31,

Cost of sales

Operating expenses:

Selling, general and administrative

Research and development

Amortization of purchased intangible assets

Restructuring costs (credits), net

Asset impairments

Total operating expenses

Operating loss

Other income, net

Loss from discontinued operations before income taxes

Loss on classification as held for sale

Income tax (expense) benefit

Loss from discontinued operations, net of income taxes

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The following table presents balance sheet information for assets and liabilities held for sale:

Cash and cash equivalents

Accounts receivable, net

Inventories, net

Prepaid expenses and other

Total current assets

Loss on classification of held for sale

Total current assets held for sale

Property, plant, and equipment, net

Other intangible assets, net

Other noncurrent assets

Total noncurrent assets

Total assets held for sale

Accounts payable

Accrued and other liabilities

Other liabilities

Total current liabilities held for sale

Deferred income taxes

Other noncurrent liabilities

Total noncurrent liabilities

Total liabilities held for sale

The cash flows related to discontinued operations have not been segregated in the Consolidated Statements of Cash Flows, and accordingly, they include the results from continuing and discontinued operations.

The following table summarizes significant non-cash operating items and capital expenditures of the discontinued operation included in the Consolidated Statements of Cash Flows:

Year Ended December 31,

Significant non-cash operating items:

Depreciation and amortization

Equity-based compensation

Asset impairments (1)

Capital expenditures

(1) Includes loss of $ 177.0 million on classification as held for sale and $ 469.2 million on impairment of long-lived assets.

The loss on classification as held for sale of $ 177.0 million recorded in the fourth quarter of 2023 reduced the carrying value of the Home business disposal group, comprised of all the assets and liabilities of the Home business, to its fair value less cost to sell.

The Company estimated the fair value of the disposal group using Company-specific inputs, including estimates of consideration to be exchanged upon the close of the divestiture.

The determination of the loss on classification as held for sale was based on Level 3 valuation inputs.

The Company also recorded a partial impairment of $ 469.2 million related to the Home segment's intangible assets during the third quarter of 2023.

The Company estimated the fair value of the asset group using Company-specific inputs, including estimates of consideration to be received upon the impending divestiture, as well as other market participant assumptions.

The determination of the impairment charge was based on Level 3 valuation inputs.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents details of the Company’s intangible assets other than goodwill as of December 31, 2022 and 2021:

The following table presents details of the Company’s intangible assets other than goodwill:

December 31, 2023

December 31, 2022

Gross Carrying

5 unchanged sentences

Customer base

Trade names and trademarks

Trade names and

Patents and technologies

3 unchanged sentences

Future amortization expense as of December 31, 2023 is as follows:

The table above includes amortization expense of $ 19.5 million in 2024 and $ 4.4 million in 2025 related to retained patents in the Home business, which will be classified as discontinued operations.

The following table presents the activity in goodwill by reportable segment.

5 unchanged sentences

Accumulated Impairment Losses

(1) As of December 31, 2023, the CCS reportable segment goodwill balance of $ 2,140.4 million includes goodwill balances of $ 881.5 million and $ 1,258.9 million for the Building and Data Center Connectivity (BDCC) and Network Cable and Connectivity reporting units, respectively.

December, 31, 2021

7 unchanged sentences

(In millions, unless otherwise noted)

During the annual impairment test performed in the fourth quarter of 2023 and in conjunction with the development of the Company's 2024 and long-range plans, CommScope continued to evaluate its ANS and BDCC reporting units' expected cash flows and market valuations.

The Company determined the goodwill balances in the ANS and BDCC reporting units were impaired and recorded partial impairment charges of $ 46.4 million and $ 99.1 million, respectively, in asset impairments in the Consolidated Statements of Operations.

The impairment charges resulted from the Company's assessment of further lower revenue growth and EBITDA margins in the fourth quarter of 2023, due to adverse impacts of market conditions on the current year profitability and estimated future business results and cash flows.

The ANS reporting unit is the same as the ANS segment, and the BDCC reporting unit is part of the CCS reportable segment.

See Note 10 for further discussion of the assumptions used in the valuation.

During the third quarter of 2023, the Company concluded that a triggering event occurred, primarily due to a sustained decrease in the market value of the Company’s debt and common stock affecting the overall business and changes in expected future cash flows due to reduced earnings forecasts and current macroeconomic conditions, including a rising interest rate environment.

The Company performed an interim quantitative goodwill impairment test for its ANS and BDCC reporting units, which were most sensitive to negative performance and outlook, to compare the fair values of the reporting units to their carrying amounts, including the goodwill.

As a result, the Company recorded a goodwill impairment charge of $ 425.9 million in asset impairments in the Consolidated Statements of Operations to partially write down the carrying amount of the ANS reporting unit goodwill in the ANS segment.

There was no impairment identified in the BDCC reporting unit.

During the annual impairment test performed in the fourth quarter of 2022 and in conjunction with the development of its 2023 and long-range plans, the Company identified changes in the ANS reporting unit’s expected future cash flows due to various market trends expected to affect the business, including technology shifts affecting hardware sales, trends affecting bandwidth growth and other operational challenges, as well as an increase in the cost of capital.

As a result, the Company determined the goodwill balance in the ANS reporting unit was impaired and recorded a $ 1,119.6 million impairment charge.

The ANS reporting unit is the same as the ANS segment.

In the second quarter of 2021, management shifted certain product lines from the Company’s ANS segment to its Home segment to better align the Home segment with how the business is being managed.

The realignment of product lines changed the composition of the Company’s reporting units which resulted in the reallocation of $ 13.7 million of goodwill from the ANS reporting unit, within the ANS segment, to the Home Networks reporting unit, within the Home segment, which is reflected as additions (deductions) in the table above.

During the annual impairment test performed in the fourth quarter of 2021 and in conjunction with the development of the Company's 2022 and long-range plans, the Company identified further weakness in the projected results of its Home Networks reporting unit that stemmed from the continued decline in customer demand for video products.

As a result, the Company determined the goodwill balance in the Home Networks reporting unit was impaired and recorded a $ 13.7 million impairment charge.

The goodwill balance for the year ended December 31, 2020 reflects the final measurement period adjustments from the ARRIS acquisition.

During the second quarter of 2020, the Company recorded a $ 206.7 million goodwill impairment charge relating to the Home Networks reporting unit which resulted in a full impairment of the remaining goodwill in the Home segment, and as such, the Home segment had no remaining goodwill balance as of December 31, 2020.

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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Changes in projected revenue growth rates, projected EBITDA margin percentages or estimated discount rates due to uncertain market conditions, terminal growth rates, lower market multiples, 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.

REVENUE FROM CONTRACTS WITH CUSTOMERS

4 unchanged sentences

Allowance for doubtful accounts, beginning of period

Provision (benefit)

Foreign exchange and other

Allowance for doubtful accounts, end of period

During the year ended December 31, 2021, the Company recorded an allowance for $ 30.3 million to reserve the balance due from a value-added reseller in the Home segment due to deterioration in the customer’s risk profile.

These charges are included in the provision line in the table above and in selling, general and administrative expense on the Consolidated Statements of Operations.

During the year ended December 31, 2022, the Company recorded an allowance for $ 20.9 million to reserve the balance due from a distributor in the OWN segment based on deterioration in the customer’s risk profile which is included in the provision line in the table above and in selling, general and administrative expense on the Consolidated Statements of Operations.

During the year ended December 31, 2023, the Company subsequently wrote off $ 18.5 million related to the balance.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Customer Contract Balances

18 unchanged sentences

The Company occasionally subleases all or a portion of certain unutilized real estate facilities.

As of December 31, 2022, the Company’s sublease arrangements were classified as operating type leases and the income amounts were not material for the years ended December 31, 2022, 2021 and 2020, respectively.

Supplemental cash flow information related to operating leases:

As of December 31, 2023, the Company’s sublease arrangements were classified as operating type leases and the income amounts were not material for the years ended December 31, 2023, 2022 and 2021, respectively.

Supplemental cash flow information related to operating leases, which includes both continuing operations and discontinued operations:

Year Ended December 31,

1 unchanged sentence

Right of use asset additions in exchange for lease liabilities

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Supplemental balance sheet information related to operating leases:

9 unchanged sentences

Weighted average discount rate

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Future minimum lease payments under non-cancellable leases as of December 31, 2023 are as follows:

12 unchanged sentences

Total inventories, net

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Property, Plant and Equipment

5 unchanged sentences

Total property, plant and equipment, net

D epreciation expense was $ 127.2 million, $ 136.7 million and $ 158.3 million during the years ended December 31, 2022, 2021 and 2020 , respectively.

Depreciation expense was $ 111.8 million, $ 113.8 million and $ 117.8 million during the years ended December 31, 2023, 2022 and 2021 , respectively.

No interest was capitalized during the years ended December 31, 2023, 2022 or 2021.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Accrued and Other Liabilities

2 unchanged sentences

Deferred revenue

Contract manufacturer inventory repurchase obligation

Restructuring liabilities

Operating lease liabilities

Product warranty accrual

Restructuring liabilities

Total accrued and other liabilities

4 unchanged sentences

Balance at beginning of period

Other comprehensive loss

Other comprehensive income (loss)

Amounts reclassified from AOCL

2 unchanged sentences

Balance at beginning of period

Other comprehensive income (loss)

Other comprehensive loss

Amounts reclassified from AOCL

2 unchanged sentences

Balance at beginning of period

Other comprehensive income

Other comprehensive income (loss)

Balance at end of period

Net AOCL at end of period

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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.

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

Cash Flow Information

2 unchanged sentences

Income taxes, net of refunds

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

7.125 % senior notes due July 2028

12 unchanged sentences

As of December 31, 2023, the Company had outstanding two series of senior secured notes:

(1) $ 1,250.0 million of 4.75 % senior secured notes due September 1, 2029 (the 2029 Secured Notes) issued by CommScope, Inc.

in August 2021;

and (2) $ 1.5 billion of 6.00 % senior secured notes due March 1, 2026 issued by CommScope, Inc.

in February 2019 (the 2026 Secured Notes and, together with the 2029 Secured Notes, the Secured Notes).

(1) $ 1,250.0 million of 4.75 % senior secured notes due September 1, 2029 (the 2029 Secured Notes) issued by CommScope, LLC (f/k/a CommScope, Inc.) in August 2021;

and (2) $ 1.5 billion of 6.00 % senior secured notes due March 1, 2026 issued by CommScope, LLC in February 2019 (the 2026 Secured Notes and, together with the 2029 Secured Notes, the Secured Notes).

As of December 31, 2023, the Company had outstanding four series of senior unsecured notes:

(1) $ 700.0 million initial aggregate principal amount of 7.125 % senior notes due July 1, 2028 (the 2028 Notes) issued by CommScope, Inc.

in July 2020;

(1) $ 700.0 million initial aggregate principal amount of 7.125 % senior notes due July 1, 2028 (the 2028 Notes) issued by CommScope, LLC in July 2020;

(2) $ 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);

(3) $ 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);

(4) $ 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.

the Secured Notes, the CommScope Technologies Notes and the CommScope, Inc.

Notes, collectively, the Senior Notes).

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.

(3) $ 1.3 billion initial 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);

and (4) $ 1.0 billion initial aggregate principal amount of 8.25 % senior notes due March 1, 2027 issued by CommScope, LLC in February 2019 (the 8.25 % 2027 Notes and, together with the 2028 Notes, the CommScope, LLC Notes;

the Secured Notes, the CommScope Technologies Notes and the CommScope, LLC Notes, collectively, the Senior Notes).

The indentures governing the Senior Notes contain covenants that restrict the ability of CommScope, LLC 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, LLC Notes and the Secured Notes, with respect to the Convertible Preferred Stock) or repurchases of equity interests of CommScope, LLC 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.

6 unchanged sentences

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 are guaranteed on a senior secured basis by the Company and each of CommScope, LLC’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 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.

The Secured Notes and the related guarantees rank senior in right of payment to all of CommScope, LLC’s and the guarantors’ subordinated indebtedness and equally in right of payment with all of CommScope, LLC’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, LLC’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, LLC’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, LLC’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, LLC’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, LLC’s subsidiaries that do not guarantee the Secured Notes.

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 2029 Secured Notes may be redeemed on or after September 1, 2024 by CommScope, Inc.

at the redemption prices specified in the indenture governing the 2029 Secured Notes.

Prior to September 1, 2024 , 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 2029 Secured Notes), plus accrued and unpaid interest.

Prior to September 1, 2024 , under certain circumstances, CommScope, Inc.

may also redeem up to 40 % of the aggregate principal amount of the 2029 Secured Notes at a redemption price of 104.750 %, plus accrued and unpaid interest, using the proceeds of certain equity offerings.

At any time prior to September 1, 2024 , CommScope, Inc.

may redeem during each calendar year up to 10.0 % of the aggregate principal amount of the 2029 Secured Notes at a redemption price equal to 103.0 % of the aggregate principal amount of the 2029 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 by CommScope, Inc.

at the redemption prices specified in the indenture governing the 2026 Secured Notes.

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

The 2029 Secured Notes may be redeemed on or after September 1, 2024 by CommScope, LLC at the redemption prices specified in the indenture governing the 2029 Secured Notes.

Prior to September 1, 2024 , the 2029 Secured Notes may be redeemed by CommScope, LLC at a redemption price equal to 100 % of their principal amount, plus a make-whole premium (as specified in the indenture governing the 2029 Secured Notes), plus accrued and unpaid interest.

Prior to September 1, 2024 , under certain circumstances, CommScope, LLC may also redeem up to 40 % of the aggregate principal amount of the 2029 Secured Notes at a redemption price of 104.750 %, plus accrued and unpaid interest, using the proceeds of certain equity offerings.

At any time prior to September 1, 2024 , CommScope, LLC may redeem during each calendar year up to 10.0 % of the aggregate principal amount of the 2029 Secured Notes at a redemption price equal to 103.0 % of the aggregate principal amount of the 2029 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 by CommScope, LLC at the redemption prices specified in the indenture governing the 2026 Secured Notes.

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

The CommScope, LLC Notes are guaranteed on a senior unsecured basis by each of CommScope, LLC’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, LLC Notes and the related guarantees rank senior in right of payment to all of CommScope, LLC’s and the guarantors’ subordinated indebtedness and equally in right of payment with all of CommScope, LLC’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, LLC Notes and the related guarantees are effectively junior to all of CommScope, LLC’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, LLC Notes and related guarantees are structurally subordinated to all existing and future liabilities (including trade payables) of CommScope, LLC’s subsidiaries that do not guarantee the CommScope, LLC Notes.

The CommScope, LLC Notes may be redeemed prior to maturity under certain circumstances.

Upon certain change of control events, the CommScope, LLC 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, LLC at the redemption prices specified in the indenture governing the 2028 Notes.

The 8.25% 2027 Notes may be redeemed by CommScope, LLC at the redemption prices specified in the indenture governing the 8.25% 2027 Notes.

CommScope Holding Company, Inc.

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(In millions, unless otherwise noted)

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.

at the redemption prices specified in the indenture governing the 8.25% 2027 Notes.

During the year ended December 31, 2023, the Company repurchased $ 58.4 million and $ 133.1 million aggregate principal amounts of the 2028 Notes and 2027 Notes, respectively, which resulted in gains on the early extinguishment of debt of $ 73.1 million reflected in other income (expense), net, and the write-off of debt issuance costs of $ 1.8 million reflected in interest expense, in the Consolidated Statements of Operations.

See the “Other Matters” section below for the summarized debt repurchase activity for the year ended December 31, 2023.

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

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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 are guaranteed on a senior unsecured basis by CommScope, LLC and each of CommScope, LLC’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, LLC’s subsidiaries that do not guarantee the CommScope Technologies Notes.

The CommScope Technologies Notes may be redeemed prior to maturity under certain circumstances.

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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, 2023, the Company repurchased $ 25.4 million aggregate principal amount of the 2025 Notes, which resulted in gains on the early extinguishment of debt of $ 1.2 million reflected in other income (expense), net, and the write-off of debt issuance costs of $ 0.2 million reflected in interest expense, in the Consolidated Statements of Operations.

See the “Other Matters” section below for the summarized debt repurchase activity for the year ended December 31, 2023.

Senior Secured Credit Facilities

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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 ).

For the year ended December 31, 2022, the interest rate was, 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 %.

For the year ended December 31, 2022, the 2026 Term Loan was subject to a LIBOR floor of 0.00 %.

On June 8, 2023, the Company amended its 2026 Term Loan to transition from the Eurodollar Rate based on LIBOR to SOFR, effective as of July 1, 2023, as the reference interest rate in anticipation of the cessation of LIBOR in 2023.

As a result, the 2026 Term Loan bears interest at (1) an adjusted Term SOFR rate, subject to certain adjustments, plus an applicable margin of 3.25 % or (2) at the option of the Company, a base rate plus an applicable margin of 2.25 %.

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.

2 unchanged sentences

(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.

CommScope, LLC may voluntarily prepay loans under the 2026 Term Loan, subject to minimum amounts, with prior notice but without premium or penalty.

CommScope, LLC must prepay the 2026 Term Loan with the net cash proceeds of certain asset sales, the incurrence or issuance of specified refinancing indebtedness and 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, LLC’s obligations under the 2026 Term Loan are guaranteed by the Company and each of CommScope, LLC’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 2026 Secured 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 is secured by a lien on substantially all of CommScope, LLC’s and the guarantors’ current and fixed assets (subject to certain exceptions), and the 2026 Term Loan has 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 2026 Secured Notes, including, but not limited to, restrictions on the ability of CommScope, LLC 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.

8 unchanged sentences

Senior Secured Revolving Credit Facility

On October 19, 2022, the Company completed the refinancing (the Refinancing) of the Company’s asset-based revolving credit facility (Revolving Credit Facility) which continues to provide borrowing capacity of up to $ 1.0 billion, subject to certain limitations, available to CommScope, Inc.

subsidiaries designated as co-borrowers (the U.S.

Revolving Borrowers).

The Refinancing, among other things, (i) refinanced in full all existing loans outstanding under the Revolving Credit Facility immediately prior to the Refinancing, (ii) extended the maturity of the Revolving Credit Facility from April 2024 to the earliest of (x) September 30, 2027, (y) the date the commitments of the lenders under the Revolving Credit Agreement are reduced to zero and (z) 91 days prior to the maturity date of any other indebtedness of a "Credit Party" (as defined in the credit agreement governing the Revolving Credit Facility) that has a scheduled maturity or weighted average life to maturity that is prior to September 30, 2027 (subject to certain exceptions) and (iii) replaced the existing revolving loan commitments outstanding under the Revolving Credit Facility immediately prior to the Refinancing with a new tranche of commitments (the Tranche A Revolving Commitments) for borrowings denominated in U.S.

The Refinancing, among other things, (i) refinanced in full all existing loans outstanding under the Revolving Credit Facility immediately prior to the Refinancing, (ii) extended the maturity of the Revolving Credit Facility from April 2024 to the earliest of (x) September 30, 2027, (y) the date the commitments of the lenders under the agreement governing the Revolving Credit Facility are reduced to zero and (z) 91 days prior to the maturity date of any other indebtedness of a “Credit Party” (as defined in the credit agreement governing the Revolving Credit Facility) that has a scheduled maturity or weighted average life to maturity that is prior to September 30, 2027 (subject to certain exceptions) and (iii) replaced the existing revolving loan commitments outstanding under the Revolving Credit Facility immediately prior to the Refinancing with a new tranche of commitments (the Tranche A Revolving Commitments) for borrowings denominated in U.S.

dollars, euros and pounds sterling made to the U.S.

16 unchanged sentences

Borrowings under the Revolving Credit Facility will bear interest at a floating rate, which can be either (1) an adjusted Term SOFR rate (for borrowings denominated in U.S.

dollars), (2) the EURIBOR rate (for borrowings denominated in euros), (3) the Sterling Overnight Index Average (SONIA) (for borrowings denominated in pounds sterling) or (4) the Swiss Average Rate Overnight (SARON) (for borrowings denominated in Swiss francs), in each case, subject to certain adjustments 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 %.

dollars), (2) the Euro Interbank Offered Rate (EURIBOR) (for borrowings denominated in euros), (3) the Sterling Overnight Index Average (SONIA) (for borrowings denominated in pounds sterling) or (4) the Swiss Average Rate Overnight (SARON) (for borrowings denominated in Swiss francs), in each case, subject to certain adjustments 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 U.S.

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.

Revolving Borrowers under the Revolving Credit Facility are guaranteed by the Company, CommScope, LLC and each of CommScope, LLC’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.

1 unchanged sentence

The Revolving Credit Facility is secured by a lien on substantially all of the U.S.

Revolving Borrowers’

and the guarantors’

current and fixed assets (subject to certain exceptions).

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 2029 Secured Notes, the 2026 Secured Notes and the 2026 Term Loan), in each case, subject to other permitted liens.

8 unchanged sentences

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 customary covenants, including, but not limited to, restrictions on the ability of CommScope, LLC 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 governing the Revolving Credit Facility 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 maximum credit as of the end of the most recent fiscal quarter.

As of December 31, 2022, the Company’s excess availability and Covenant Fixed Charge Coverage Ratio were in excess of the Revolving Credit Facility’s requirements.

As of December 31, 2023, 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.

1 unchanged sentence

Other Matters

The table below summarizes the debt repurchase activity during the year ended December 31, 2023:

Reacquisition

7.125 % senior notes due July 2028

8.25 % senior notes due March 2027

6.00 % senior notes due June 2025

For the year ended December 31, 2023, the repurchase of debt resulted in gains on the early extinguishment of debt of $ 74.3 million reflected in other income (expense), net , and the write-off of debt issuance costs of $ 2.0 million reflected in interest expense, in the Consolidated Statements of Operations.

The following table summarizes scheduled maturities of long-term debt as of December 31, 2023:

Scheduled maturities of long-term debt

The Company’s non-guarantor subsidiaries held $ 3,664 million, or 31 %, of total assets and $ 1,029 million, or 8 %, of total liabilities as of December 31, 2022 and accounted for $ 2,708 million, or 29 %, of net sales for the year ended December 31, 2022.

The Company’s non-guarantor subsidiaries held $ 2,828 million, or 30 %, of total assets and $ 623 million, or 6 %, of total liabilities as of December 31, 2023 and accounted for $ 2,144 million, or 31 %, of net sales for the year ended December 31, 2023.

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 6.91 % at December 31, 2022 and 5.74 % at December 31, 2021 .

CommScope Holding Company, Inc.

1 unchanged sentence

(In millions, unless otherwise noted)

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 contracts and the amortization of debt issuance costs and original issue discount, was 7.22 % at December 31, 2023 and 6.91 % at December 31, 2022 .

DERIVATIVES AND HEDGING ACTIVITIES

1 unchanged sentence

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, 2022, the Company had foreign exchange contracts outstanding with maturities of up to eight months and aggregate notional values of $ 522.2 million (based on exchange rates as of December 31, 2022).

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

As of December 31, 2023, the Company had foreign exchange contracts outstanding with maturities of up to nine months and aggregate notional values of $ 630.1 million (based on exchange rates as of December 31, 2023).

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

Contract Type

9 unchanged sentences

Location of Gain (Loss)

Other expense, net

Other income (expense), net

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 2026 Term Loan.

The total notional amount of the interest rate swap derivatives as of December 31, 2022 was $ 300 million with outstanding maturities up to fifteen months .

The Company has utilized a hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting from variable interest rates on the 2026 Term Loan.

In conjunction with the amendment to its 2026 Term Loan due to reference rate reform, on June 28, 2023, the Company settled its cash flow hedges with a notional value of $ 300.0 million and received cash of $ 6.8 million which is included within operating cash flow activity in accordance with the Company’s accounting policy.

The cash flow hedges were derecognized, and the gain of $ 6.1 million remaining as a component of accumulated comprehensive loss in the Consolidated Balance Sheets continues to be reclassified to earnings through interest expense as the interest payments are made on the 2026 Term Loan unless the forecasted hedged transaction becomes probable of not occurring.

See Note 8 for further discussion of the amendment to the 2026 Term Loan.

Following the amendment to the 2026 Term Loan and settlement of the cash flow hedges noted above, during the third quarter of 2023, the Company reenacted its hedging strategy to mitigate the interest rate risk from its variable rate debt, initially associated with its amended 2026 Term Loan and extending to future borrowings or debt issued, to fix a portion of the future interest cash flows by designating qualifying receive-variable and pay-fixed interest rate swaps as a cash flow hedge for accounting and financial reporting purposes.

The total notional amount of the interest rate swap derivatives as of December 31, 2023 was $ 700.0 million with outstanding maturities up to thirty-one months .

There was no ineffectiveness on the instruments designated as cash flow hedges for the years ended December 31, 2023, 2022 or 2021.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

4 unchanged sentences

Interest rate swap contracts

Accrued and other liabilities

Interest rate swap contracts

Other noncurrent liabilities

5 unchanged sentences

Other comprehensive income (loss), net of tax

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables, debt instruments, interest rate swap contracts 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, 2022 and December 31, 2021 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 swap contracts and foreign currency contracts were based on indicative quotes.

The Company’s financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables, debt instruments, interest rate swap contracts 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, 2023 and 2022 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 swap contracts 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, 2022 and 2021, are as follows:

December 31, 2023

11 unchanged sentences

Interest rate swap contracts

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Non-Recurring Fair Value Measurements

During the annual impairment test in the fourth quarter of 2022, a goodwill impairment charge of $ 1,119.6 million was recorded related to the ANS reporting unit in the ANS segment.

The fair value of each reporting unit was determined using a discounted cash flow (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 guideline public company approach.

During the annual impairment test in the fourth quarter of 2023, a goodwill impairment charge of $ 46.4 million was recorded related to the ANS reporting unit which is the same as the ANS segment, and $ 99.1 million was recorded related to the BDCC reporting unit which is part of the CCS segment.

The fair value of the reporting unit was determined using a discounted cash flow (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 guideline public company approach.

Under the DCF method, the fair value of a reporting unit is based on the present value of estimated future cash flows.

1 unchanged sentence

The inputs to both the DCF model and the guideline public company analysis are Level 3 valuation inputs.

Changes in any of these inputs, among other factors, could negatively affect the fair value of one or more of the Company’s reporting units and result in a material impairment charge in the future.

During the annual impairment test in the fourth quarter of 2021, the Company recorded a pretax goodwill impairment charge of $ 13.7 million in the Home segment related to the goodwill reallocated from the ANS reporting unit to the Home Networks reporting unit in the second quarter of 2021 as a result of a segment realignment.

The fair value of each reporting unit was determined consistent with the approach used in the annual test in 2022 and used Level 3 valuation inputs.

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.

The fair value of the reporting unit was determined as of May 31, 2020 based on the present value of estimated future cash flows using a DCF model.

The inputs to the DCF model were Level 3 valuation inputs.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Changes in any of these inputs, among other factors, could negatively affect the fair value of the ANS and BDCC reporting units and result in a material impairment charge in the future.

In the third quarter of 2023, a goodwill impairment charge of $ 425.9 million was recorded related to the ANS reporting unit.

The fair value of each reporting unit was determined using Level 3 valuation inputs with an approach consistent with the 2023 annual impairment test.

During the annual impairment test in the fourth quarter of 2022, a goodwill impairment charge of $ 1,119.6 million was recorded related to the ANS reporting unit.

The fair value of each reporting unit was determined using Level 3 valuation inputs with an approach consistent with the 2023 annual impairment test.

These fair value estimates are based on pertinent information available to management as of the valuation date.

5 unchanged sentences

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 activity included in restructuring costs, net on the Consolidated Statements of Operations, by segment, was as follows:

Year Ended December 31,

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

Corporate and other

The corporate and other line item above reflects general corporate restructuring costs that were previously allocated to the Home segment.

These indirect expenses have been classified as continuing operations for all periods presented since the costs were not directly attributable to the discontinued operations of the Home business.

These costs will be reallocated to the Company’s remaining segments in future years.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

Accrued and other liabilities

6 unchanged sentences

The activity within the liability established for CommScope NEXT restructuring actions was as follows:

Employee-Related Costs

Balance at December 31, 2021

2 unchanged sentences

Balance at December 31, 2022

Additional expense, net

Additional expense (income), net

Cash received (paid)

Foreign exchange and other non-cash items

Balance at December 31, 2023

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

CommScope NEXT actions to date have included employee costs related to the closure of an international manufacturing facility as well as headcount reductions in manufacturing, engineering, marketing, sales and administrative functions.

Asset impairment charges related to real estate and property, plant and equipment that are affected by restructuring activities are included in the other category in the table above and in restructuring costs, net on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021.

CommScope NEXT actions to date have included the closure of manufacturing, administration and warehouse facilities as well as headcount reductions in other manufacturing locations and engineering, marketing, sales and administrative functions and asset impairments associated with restructuring related actions.

During the year ended December 31, 2023, additional expenses were recorded for employee related costs for severance.

Other costs included asset impairments for certain leased real estate and equipment, and sales of several owned properties, including an international manufacturing facility, along with U.S.

office and warehouse facilities.

The Company recorded net proceeds of $ 67.6 million related primarily to facility sales, resulting in a gain of $ 33.9 million.

Employee related and other costs are recorded as restructuring costs, net on the Consolidated Statements of Operations.

Concurrent with the international manufacturing facility sale, the Company entered into a sale leaseback transaction whereby a minor portion of the building used to support research and development operations was leased back for a term of nine years with annual payments that range from € 800 thousand to € 1.5 million.

The Company determined the lease to be an operating lease, and upon entering into the lease, recognized a right of use asset and operating lease liability of € 7.5 million based on the present value of the minimum lease payments discounted using an incremental borrowing rate of 7.15 %.

The Company has recognized restructuring charges of $ 174.5 million to date related to CommScope NEXT actions.

The Company expects to make cash payments of $ 58.2 million in 2023 and $ 0.5 million in 2024 to settle CommScope NEXT restructuring actions.

The Company expects to make cash payments of $ 11.7 million in 2024 to settle CommScope NEXT restructuring actions.

Additional restructuring actions related to CommScope NEXT are expected to be identified, and the resulting charges and cash requirements could be material.

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During the years ended December 31, 2023, 2022 and 2021 , the Company made contributions to defined contribution retirement savings plans of $ 27.9 million, $ 48.1 million and $ 49.0 million, respectively.

The Company temporarily paused its employer contribution as of July 1, 2023 and incurred no expenses for contributions through the end of 2023.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The Company also maintains noncontributory and contributory deferred compensation plans.

During the years ended December 31, 2022, 2021 and 2020, the Company recognized pretax costs of $ 2.7 million, $ 1.3 million and $ 2.6 million, respectively, related to these plans.

During the years ended December 31, 2023, 2022 and 2021 , the Company recognized pretax costs (benefits) of $ 2.1 million, $( 2.7 ) million and $ 1.3 million, respectively, related to these plans.

The liability related to these plans was $ 22.7 million and $ 22.5 million as of December 31, 2023 and 2022, respectively.

1 unchanged sentence

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.

Both funded and unfunded plans are included in the defined benefit pension plans.

The following table summarizes information for the defined benefit pension plans:

2 unchanged sentences

Interest cost

Actuarial gain

Actuarial loss (gain)

Benefits paid

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Fair value of plan assets, ending

Funded status, net liability (asset)

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Funded status, net liability

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

2 unchanged sentences

Other noncurrent assets

The accumulated benefit obligation for the Company’s U.S.

defined benefit pension plans was $ 9.4 million and $ 12.5 million as of December 31, 2022 and 2021 , respectively, and the accumulated benefit obligation for the Company’s non-U.S.

The accumulated benefit obligation for the Company’s U.S.

defined benefit pension plans was $ 9.4 million for both periods as of December 31, 2023 and 2022 , and the accumulated benefit obligation for the Company’s non-U.S.

defined benefit pension plans was $ 181.5 million and $ 159.9 million as of December 31, 2023 and 2022, respectively.

The following table summarizes information for the Company’s pension plans with an accumulated benefit obligation in excess of plan assets:

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

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included in other comprehensive income (loss)

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 income (expense), net.

CommScope Holding Company, Inc.

1 unchanged sentence

(In millions, unless otherwise noted)

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

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Rate of compensation increase

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.

In developing the expected rate of return on plan assets, the Company considered the expected long-term rate of return on individual asset classes.

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In general, the investment strategy is designed to accumulate a diversified portfolio among markets, asset classes or individual securities in order to reduce market risk and assure that the pension assets are available to pay benefits as they come due.

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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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.

The Company had no U.S.

defined benefit pension plan assets as of December 31, 2023 or 2022.

The estimated fair values and the valuation input levels of the Company’s non-U.S.

defined benefit pension plan assets are as follows:

3 unchanged sentences

International debt

Absolute return

December 31, 2022

3 unchanged sentences

Absolute return

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Expected Cash Flows

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The following table summarizes projected benefit payments from pension plans through 2033, including benefits attributable to estimated future service (in millions):

L oss before income taxes includes the results from domestic and international operations as follows:

Loss from continuing operations before income taxes includes the results from domestic and international operations as follows:

Year Ended December 31,

Loss before income taxes

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The components of income tax benefit were as follows:

Loss from continuing operations before income taxes

The components of income tax expense (benefit) were as follows:

Year Ended December 31,

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Deferred income tax benefit

Total income tax benefit

Total income tax expense (benefit)

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The reconciliation of income taxes calculated at the statutory U.S.

federal income tax rate to the Company’s benefit for income taxes was as follows:

federal income tax rate to the Company’s expense (benefit) for income taxes was as follows:

Year Ended December 31,

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Change in valuation allowances

Total benefit for income taxes

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Total expense (benefit) for income taxes

The components of deferred income tax assets and liabilities and the classification of deferred tax balances on the balance sheet were as follows:

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Deferred taxes recognized on the balance sheet:

Noncurrent deferred tax asset (included with other noncurrent assets)

Noncurrent deferred tax asset

Noncurrent deferred tax liability

Net deferred tax asset

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The deferred tax asset for foreign net operating loss and tax credit carryforwards as of December 31, 2023 includes foreign net operating loss carryforwards (net of federal tax effects) of $ 582.4 million, which begin to expire in 2024 , and foreign tax credit carryforwards (net of federal tax effects) of $ 11.0 million, which begin to expire in 2024 .

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A valuation allowance of $ 87.8 million has been established against these and other state income tax related deferred tax assets.

The deferred tax asset for federal and state interest limitation carryforwards as of December 31, 2023 are $ 158.8 million which have an indefinite carryforward.

During 2023, a valuation allowance of $ 158.8 million has been established against these federal and state deferred tax assets.

In addition to the valuation allowances detailed above, the Company has also established a valuation allowance of $ 2.6 million against other deferred tax assets.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Under current U.S.

tax regulations, in general, repatriation of foreign earnings to the U.S.

can be completed with no incremental U.S.

tax regulations, repatriation of foreign earnings to the U.S.

can generally be completed with no incremental U.S.

However, repatriation of foreign earnings could subject the Company to U.S.

1 unchanged sentence

jurisdictional taxes (including withholding taxes) on distributions.

As of December 31, 2022 , the Company has a deferred tax liability of $ 20.6 million for the estimated foreign and state tax costs associated with the expected repatriation of the Company’s undistributed foreign earnings.

As of December 31, 2023 , the Company has a deferred tax liability of $ 21.4 million for the estimated foreign and state tax costs associated with the expected repatriation of the Company’s undistributed foreign earnings.

The unrecorded deferred tax liability for foreign and state tax costs associated with earnings considered permanently reinvested is not material as of December 31, 2023.

7 unchanged sentences

Decrease related to lapse in statutes of limitations

Decrease related to the ARRIS acquisition

Balance at end of period

The Company’s liability for unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods was $ 115.6 million as of December 31, 2022.

The Company’s liability for unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods was $ 110.7 million as of December 31, 2023.

The Company operates in numerous jurisdictions worldwide and is subject to routine tax audits on a regular basis.

The determination of the Company’s unrecognized tax benefits involves significant management judgment regarding interpretation of relevant facts and tax laws in each of these jurisdictions.

Unrecognized tax benefits are reviewed and evaluated on an ongoing basis and may be adjusted for changing facts and circumstances including the lapse of applicable statutes of limitation and closure of tax examinations.

Although the timing and outcome of such events are difficult to predict, the Company estimates that the balance of unrecognized tax benefits, excluding the impact of accrued interest and penalties, may be reduced by up to $ 8.0 million within the next twelve months.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The Company provides for interest and penalties related to unrecognized tax benefits as income tax expense.

The Company accrued $ 9.4 million for interest and penalties as of both December 31, 2022 and 2021.

During the years ended December 31, 2022, 2021 and 2020 the net expense (benefit) for interest and penalties recognized through income tax benefit was $ 0.1 million, $( 0.1 ) million and $( 1.3 ) million, respectively.

The Company accrued $ 5.4 million and $ 9.4 million for interest and penalties as of December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023, 2022 and 2021 , the net expense (benefit) for interest and penalties recognized through income tax expense (benefit) was $( 4.0 ) million, $ 0.1 million and $( 0.1 ) million, respectively.

The Company files federal, state and local tax returns with statutes of limitation generally ranging from 3 to 4 years.

1 unchanged sentence

federal income tax audit for the 2019 tax year and is generally no longer subject to state and local tax examinations for years prior to 2020.

Tax returns filed by the Company’s significant foreign subsidiaries are generally subject to statutes of limitation of 3 to 7 years and are generally no longer subject to examination for years prior to 2017.

In many jurisdictions, tax authorities retain the ability to review prior years’

tax returns and to adjust any net operating loss or tax credit carryforwards from these years that are available to be utilized in subsequent periods.

In many jurisdictions, tax authorities retain the ability to review prior years’ tax returns and to adjust any net operating loss or tax credit carryforwards from these years that are available to be utilized in subsequent periods.

During 2023, the Company recognized $( 2.3 ) million (net of payments) related to the lapse of applicable statutes of limitations and the conclusion of various domestic and foreign examinations.

3 unchanged sentences

Defined benefit plans

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

SERIES A CONVERTIBLE PREFERRED STOCK

2 unchanged sentences

Dividend Rights

The Convertible Preferred Stock ranks senior to the shares of the Company’s common stock, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

The Convertible Preferred Stock ranks senior to the shares of the Company’s common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.

The Convertible Preferred Stock has a liquidation preference of $ 1,000 per share.

1 unchanged sentence

If CommScope does not declare and pay a dividend, the dividend rate will increase by 2.5 % to 8.0 % per year (and that rate will increase by an additional 0.50 % every three months until such unpaid dividend is declared and paid, subject to a cap of 11.0 % per year) until all accrued but unpaid dividends have been paid in full.

Dividends can be paid in cash, in-kind through the issuance of additional shares of Convertible Preferred Stock or any combination of the two, at the Company’s option.

During the years ended December 31, 2022, 2021 and 2020 , the Company paid cash dividends of $ 14.9 million, $ 43.0 million and $ 14.3 million, respectively, and dividends in-kind of $ 44.1 million, $ 14.3 million and $ 41.8 million, respectively, which were recorded as additional Convertible Preferred Stock on the Consolidated Balance Sheets.

Dividends can be paid in cash, in-kind through the issuance of additional shares of Convertible Preferred Stock or any combination of the two, at the Company’s option.

During the years ended December 31, 2023, 2022 and 2021 , the Company paid dividends in-kind of $ 61.8 million, $ 44.2 million and $ 14.3 million, respectively, which were recorded as additional Convertible Preferred Stock on the Consolidated Balance Sheets.

The Company did no t pay cash dividends for the year ended December 31, 2023 but did pay cash dividends of $ 14.9 million and $ 43.0 million for the years ended December 31, 2022 and 2021, respectively.

Conversion Features

The Convertible Preferred Stock is convertible at the option of the holders at any time into shares of CommScope common stock at an initial conversion rate of 36.3636 shares of common stock per share of the Convertible Preferred Stock (equivalent to $ 27.50 per common share).

The conversion rate is subject to customary anti-dilution and other adjustments.

At any time after the third anniversary of the issuance of the Convertible Preferred Stock, if the volume weighted average price of CommScope’s common stock exceeds the conversion price of $ 49.50 , as may be adjusted pursuant to the Certificate of Designations, for at least thirty trading days in any period of forty-five consecutive trading days (including the final five trading days of any such forty-five-trading day period) all of the Convertible Preferred Stock may be converted at the election of CommScope into the relevant number of shares of CommScope common stock.

Redemption Rights

On any date during the three months following the eight year and six-month anniversary of the Investment Agreement closing date and the three months following each anniversary thereafter, holders of the Convertible Preferred Stock will have the right to require CommScope to redeem all or any portion of the Convertible Preferred Stock at 100 % of the liquidation preference thereof plus all accrued and unpaid dividends.

The redemption price is payable, at the Company’s option, in cash or a combination of cash and common stock, subject to certain restrictions.

Upon certain change of control events involving CommScope, CommScope has the right, subject to the holder’s right to convert prior to such redemption, to redeem all of the Convertible Preferred Stock for the greater of (i) an amount in cash equal to the sum of the liquidation preference of the Convertible Preferred Stock, all accrued but unpaid dividends and, if the applicable redemption date is prior to the fifth anniversary of the first dividend payment date, the present value, discounted at a rate of 10 %, of any remaining scheduled dividends through the five year anniversary of the first dividend payment date, assuming CommScope chose to pay such dividends in cash and (ii) the consideration the holders would have received if they had converted their shares of the Convertible Preferred Stock into CommScope common stock immediately prior to the change of control event.

To the extent that CommScope does not exercise the redemption right described above, following the effective date of any such change of control event, the holders of the Convertible Preferred Stock can require CommScope to repurchase the Convertible Preferred Stock at the greater of (i) an amount in cash equal to 100 % of the liquidation preference thereof plus all accrued but unpaid dividends and (ii) the consideration the holders would have received if they had converted their shares of the Convertible Preferred Stock into CommScope common stock immediately prior to the change of control event.

CommScope Holding Company, Inc.

1 unchanged sentence

(In millions, unless otherwise noted)

Redemption Rights

The redemption price is payable, at the Company’s option, in cash or a combination of cash and common stock, subject to certain restrictions.

Voting Rights

Holders of the Convertible Preferred Stock are entitled to vote with the holders of the Company’s common stock on an as-converted basis.

Holders of the Convertible Preferred Stock are entitled to a separate class vote with respect to, among other things, amendments to CommScope’s organizational documents that have an adverse effect on the Convertible Preferred Stock, issuances by CommScope of securities that are senior to, or equal in priority with, the Convertible Preferred Stock and issuances of shares of the Convertible Preferred Stock after the closing date of the Acquisition, other than shares issued as dividends with respect to shares of the Convertible Preferred Stock.

STOCKHOLDERS’

Holders of the Convertible Preferred Stock are entitled to vote with the holders of the Company’s common stock on an as-converted basis.

Holders of the Convertible Preferred Stock are entitled to a separate class vote with respect to, among other things, amendments to CommScope’s organizational documents that have an adverse effect on the Convertible Preferred Stock, issuances by CommScope of securities that are senior to, or equal in priority with, the Convertible Preferred Stock and issuances of shares of the Convertible Preferred Stock after the closing date of the ARRIS International plc ( ARRIS) acquisition, other than shares issued as dividends with respect to shares of the Convertible Preferred Stock.

STOCKHOLDERS’ EQUITY

Equity-Based Compensation Plans

In 2019, the Company’s stockholders approved the 2019 Long-Term Incentive Plan authorizing 8.0 million shares for issuance, plus additional shares underlying awards outstanding under the predecessor plans.

Subsequently, in each of the years 2020, 2021 and 2022, the Company’s stockholders approved the Amended and Restated 2019 Long-Term Incentive Plan (the 2019 Plan) and authorized an additional aggregate 15.8 million shares for issuance.

Subsequently, in each of the years 2020 through 2023, the Company’s stockholders approved the Amended and Restated 2019 Long-Term Incentive Plan (the 2019 Plan) and authorized an additional aggregate 24.5 million shares for issuance.

All future equity awards will be made from the 2019 Plan.

3 unchanged sentences

There were no significant capitalized equity-based compensation costs at December 31, 2023.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The following table shows a summary of the equity-based compensation expense included in the Consolidated Statements of Operations:

8 unchanged sentences

Stock Options

Stock options are awards that allow the recipient to purchase shares of the Company’s common stock at a fixed price.

Stock options are granted at an exercise price equal to the Company’s stock price at the date of grant.

Stock options are awards that allow the recipient to purchase shares of the Company’s common stock at a fixed price.

Stock options are granted at an exercise price equal to the Company’s stock price at the date of grant.

The Company uses the Black-Scholes model to estimate the fair value of stock options at the date of grant.

2 unchanged sentences

There were no stock options granted during the years ended December 31, 2023, 2022 or 2021.

The intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 0.1 million, $ 5.4 million and $ 7.1 million, respectively.

The intrinsic value of options exercised during the years ended December 31, 2023 and 2022 was not material.

The intrinsic value of options exercised during the year ended December 31, 2021 was $ 5.3 million.

Restricted Stock Units

RSUs entitle the holder to shares of common stock after a vesting period of generally three years .

The fair value of the awards is determined on the grant date based on the Company’s stock price.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The fair value of the awards is determined on the grant date based on the Company’s stock price.

The following table summarizes the RSU activity (in millions, except per share data):

4 unchanged sentences

Non-vested share units at December 31, 2023

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The weighted average grant date fair value per unit of these awards granted during the years ended December 31, 2023, 2022 and 2021 was $ 4.57 , $ 8.05 and $ 20.16 , respectively.

2 unchanged sentences

PSUs are stock awards in which the number of shares ultimately received by the employee depends on achievement towards a performance measure.

Certain of CommScope’s PSUs have an internal performance measure and the awards vest at the end of three years.

The number of shares issued under these awards can vary between 0 % and 300 % of the number of PSUs granted.

16 unchanged sentences

Non-vested share units at December 31, 2022

Vested and shares issued

Non-vested share units at December 31, 2023

The weighted average grant date fair value per unit of these awards granted during the years ended December 31, 2023, 2022 and 2021 was $ 5.73 , $ 9.54 and $ 14.55 , respectively.

The total fair value of PSUs that vested during the years ended December 31, 2022, 2021 and 2020 was $ 3.5 million, $ 1.0 million, and $ 18.4 million, respectively.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The total fair value of PSUs that vested during the year ended December 31, 2023, was no t material.

The total fair value of PSUs that vested during the years ended December 31, 2022 and 2021 was $ 3.1 million, and $ 1.0 million, respectively.

COMMITMENTS AND CONTINGENCIES

6 unchanged sentences

Product warranty accrual, end of period

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Third-Party Guarantees

4 unchanged sentences

As of December 31, 2023, these instruments reduced the available borrowings under the Revolving Credit Facility.

Non-cancellable Purchase Obligations

In July 2023, the Company entered into a long-term supply contract with a third-party to secure the supply of certain raw materials.

Under the terms of the contract, the Company will make advance payments through 2026 totaling $ 120.0 million (undiscounted) and based on meeting certain minimum purchase requirements through 2031, such advance payments will be credited and applied to future orders on a quarterly basis beginning in 2027 through 2031.

Advance payments of $ 30.0 million are recorded as other noncurrent assets in the Consolidated Balance Sheets as of December 31, 2023.

The Company has committed to purchases of raw materials under this agreement beginning in 2023, growing to a level of approximately $ 137 million per year by 2026 and continuing through 2032.

Legal Proceedings

The Company is a 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.

These claims and assertions, whether against the Company directly or against its customers, could require the Company to pay damages or 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.

1 unchanged sentence

The actual loss, through settlement or trial, could be material and may vary significantly from the Company’s estimates.

From time to time, the Company may also be involved as a plaintiff involving intellectual property claims.

From time to time, the Company may also be involved as a plaintiff in intellectual property claims.

Gain contingencies, if any, are recognized when they are realized.

As of December 31, 2022 and 2021, the Company had liabilities of $ 37.1 million and $ 24.6 million, respectively, recorded in accrued and other liabilities and noncurrent liabilities on the Consolidated Balance Sheets related to certain intellectual property assertions that have been settled or are in the process of settlement.

For the years ended December 31, 2022, 2021 and 2020, the Company recorded charges to cost of sales in the Consolidated Statements of Operations of $ 31.0 million, $ 48.6 million and $ 7.8 million, respectively, related to these intellectual property assertions.

The current year charges are reflected in the results of the Home, NICS and CCS segments.

The Company paid $ 21.0 million, $ 56.1 million and $ 109.0 million during the years ended December 31, 2022, 2021 and 2020, respectively, to settle intellectual property assertions.

During the year ended December 31, 2021, the Company received $ 17.1 million in the settlement of a warranty indemnification matter that was assumed in the acquisition of ARRIS in 2019.

1 unchanged sentence

The Company is either a plaintiff or a defendant in certain other pending legal matters in the normal course of business.

Management believes none of these other pending legal matters will have a material adverse effect on the Company’s business or financial condition upon final disposition.

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.

INDUSTRY SEGMENTS, MAJOR CUSTOMERS, RELATED PARTY TRANSACTIONS AND GEOGRAPHIC INFORMATION

Segment Information

As a result of the pending divestiture of the Home business, the Company is now reporting financial performance based on the following remaining four operating segments, which excludes the Home segment:

CCS, OWN, NICS and ANS.

For all periods presented, amounts have been recast to reflect these operating segment changes.

CommScope Holding Company, Inc.

1 unchanged sentence

(In millions, unless otherwise noted)

INDUSTRY SEGMENTS, MAJOR CUSTOMERS, RELATED PARTY TRANSACTIONS AND GEOGRAPHIC INFORMATION

Segment Information

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 is now reporting financial performance based on the following operating segments:

CCS, OWN, NICS, ANS and Home.

All prior period amounts below have been recast to reflect these operating segment changes.

The Connectivity and Cable Solutions (CCS) segment provides fiber optic and copper connectivity and cable solutions for use in telecommunications, cable television, residential broadband networks, data centers and business enterprises.

1 unchanged sentence

Indoor network solutions include optical fiber and twisted pair structured cable solutions, intelligent infrastructure management hardware and software and network rack and cabinet enclosures.

Outdoor network solutions are used in both local-area and wide-area networks and “last mile”

fiber-to-the-home installations, including deployments of fiber-to-the-node, fiber-to-the-premises and fiber-to-the-distribution point to homes, businesses and cell sites.

Outdoor network solutions are used in both local-area and wide-area networks and “last mile” fiber-to-the-home installations, including deployments of fiber-to-the-node, fiber-to-the-premises and fiber-to-the-distribution point to homes, businesses and cell sites.

The Outdoor Wireless Networks (OWN) segment focuses on the macro and metro cell markets.

1 unchanged sentence

The Networking, Intelligent Cellular and Security Solutions (NICS) segment provides wireless networks for enterprises and service providers.

Product offerings include indoor and outdoor Wi-Fi and long-term evolution (LTE) access points, access and aggregation switches;

Product offerings include indoor cellular solutions such as distributed antenna systems, public key infrastructure solutions, indoor and outdoor Wi-Fi and long-term evolution (LTE) access points, access and aggregation switches;

an Internet of Things suite, on-premises and cloud-based control and management systems;

and software and software-as-a-service applications addressing security, location, reporting and analytics.

The Access Network Solutions (ANS) segment’s product solutions include cable modem termination systems, video infrastructure, distribution and transmission equipment and cloud solutions that enable facility-based service providers to construct a state-of-the-art residential and metro distribution network.

The Home Networks (Home) segment includes subscriber-based solutions that support broadband and video applications.

The broadband offerings in the Home segment include devices that provide residential connectivity to a service provider’s 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 IP television content delivery and include products such as digital video recorders, high definition set top boxes and hybrid set top devices.

The following table provides summary financial information by reportable segment:

Identifiable segment-related assets:

Corporate and other

Total identifiable segment-related assets

2 unchanged sentences

Deferred income tax assets

Assets held for sale

The corporate and other line item above reflects certain assets retained by the Company related to the Home business, with the primary asset being net inventory in the amount of $ 88.0 million as of December 31, 2023.

The Company has entered into a Supply Agreement, whereby the Company will sell the retained inventory to Vantiva for a period of two years following the close of the transaction at market prices.

The Company’s measurement of segment performance is adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization).

The Company defines adjusted EBITDA as operating income (loss), adjusted to exclude depreciation, amortization of intangible assets, restructuring costs, asset impairments, equity-based compensation, transaction, transformation and integration costs and other items that the Company believes are useful to exclude in the evaluation of operating performance from period to period because these items are not representative of the Company’s core business.

CommScope Holding Company, Inc.

1 unchanged sentence

(In millions, unless otherwise noted)

The Company’s measurement of segment performance is adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization).

The following table provides net sales, adjusted EBITDA, depreciation expense and additions to property, plant and equipment by reportable segment:

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Segment adjusted EBITDA:

Corporate and other

Total segment adjusted EBITDA

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Patent claims and litigation settlements

Executive severance

Reserve of Russian accounts receivable

Recovery (reserve) of Russian accounts receivable

Cyber incident costs

Consolidated operating income (loss)

Depreciation expense:

Corporate and other

Consolidated depreciation expense

Additions to property, plant and equipment:

Corporate and other

Consolidated additions to property, plant and equipment

The corporate and other line item above reflects general corporate costs that were previously allocated to the Home segment.

These indirect expenses have been classified as continuing operations for all periods presented since the costs were not directly attributable to the discontinued operations of the Home segment.

These costs will be reallocated to the Company's remaining segments in future years and will be at least partially offset by income from a transition services agreement with Vantiva or other restructuring actions.

CommScope Holding Company, Inc.

3 unchanged sentences

No direct customer accounted for 10 % or more of the Company’s total net sales during the years ended December 31, 2023, 2022 or 2021.

Net sales to Comcast Corporation and affiliates (Comcast) accounted for 11 % of the Company’s net sales during the year ended December 31, 2020.

Net sales to Comcast are mostly derived from the Home, ANS and CCS segments.

Other than Comcast, no direct customer accounted for 10 % or more of the Company’s total net sales during the year ended December 31, 2020.

Accounts receivable from Comcast Corporation (Comcast) represented approximately 11 % of accounts receivable as of December 31, 2023.

Accounts receivable from Charter Communications, Inc.

(Charter) represented approximately 14 % of accounts receivable as of December 31, 2022.

Other than Charter, no direct customer accounted for 10 % or more of the Company's accounts receivable as of December 31, 2022.

No direct customers accounted for 10 % or more of the Company’s accounts receivable as of December 31, 2021.

Other than Comcast and Charter, no direct customer accounted for 10 % or more of the Company’s accounts receivable as of December 31, 2023 or 2022.

The Company relies on sole suppliers or a limited group of suppliers for certain key components, 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.

Related Party Transactions

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Geographic Region:

United States (U.S.)

Europe, Middle East and Africa (EMEA)

Asia Pacific (APAC)

Caribbean and Latin America (CALA)

United States

Europe, Middle East and Africa

Caribbean and Latin America

Consolidated net sales

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Long-lived assets, excluding intangible assets, consist substantially of property, plant and equipment and right of use assets.

The Company’s long-lived assets, excluding intangible assets, located in the U.S., EMEA, APAC and CALA regions represented the following percentages of such long-lived assets:

61 %, 14 %, 16 % and 9 %, respectively, as of December 31, 2023 and 61 %, 14 %, 17 % and 8 %, respectively, as of December 31, 2022 .

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

QUARTERLY FINANCIAL DATA (UNAUDITED)

The unaudited interim financial information below has been recast to reflect the discontinuation of the Home business.

See Note 3 for further information on discontinued operations.

Operating income (loss)

Loss from continuing operations

Net income (loss)

Net loss attributable to common stockholders

Basic earnings (loss) from continuing operations per share

Diluted earnings (loss) from continuing operations per share

Operating income (loss)

Loss from continuing operations

Net income (loss)

Net income (loss) attributable to common stockholders

Basic earnings (loss) from continuing operations per share

Diluted earnings (loss) from continuing operations per share

SUBSEQUENT EVENTS

On January 9, 2024, the Company completed the previously announced sale of the Home Business to Vantiva pursuant to the Purchase Agreement, dated as of December 7, 2023.

Vantiva acquired the Home Business in exchange for (i) 134,704,669 shares of Vantiva common stock, representing a 24.73 % equity stake in Vantiva (determined on a fully diluted basis), (ii) $ 250,465 in cash (in addition to cash paid in exchange for the cash on the Home Business companies’ balance sheets) and (iii) an earn-out of up to $ 100 million, subject to the satisfaction of certain conditions.

The $ 250,465 in cash paid in connection with the closing is expected to be used to acquire additional shares of Vantiva common stock, following which the Company is expected to own a 25 % equity stake in Vantiva (on a fully diluted basis).

In conjunction with the closing of the transaction, the Company entered into a transition services agreement (TSA) with Vantiva, whereby the Company will provide and receive certain post-closing support on a transitional basis.

The TSA has varying terms for duration up to sixteen months, depending on the service, and provides for options to extend services for up to two renewal terms of three months each.

The loss recognized upon disposal at closing of the transaction is currently estimated to be less than $ 50 million.

CHANGES IN AND DISAGREEMENTS WITH ACCOUN TANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data