What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-26 · 175 added, 227 removed, 281 unchanged (59% of the section changed)

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Our global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

We completed the acquisition of certain assets of Casa Systems, Inc.

and its subsidiaries (Casa) on June 7, 2024 (the Casa Transaction).

As part of the Casa Transaction, we acquired certain assets (the Casa Assets) and assumed certain specified liabilities (the Casa Liabilities) of Casa.

The sale was conducted pursuant to the bid procedures (the Bid Procedures) established in the chapter 11 cases of Casa Systems, Inc.

and certain affiliates in the U.S.

Bankruptcy Court for the District of Delaware (the Bankruptcy Court).

Pursuant to the Bid Procedures, we were designated as the successful bidder following an auction held on May 29, 2024.

On June 5, 2024, the Bankruptcy Court entered an order authorizing the sale of the Casa Assets to us pursuant to section 363 of the U.S.

Bankruptcy Code (subject to the terms thereof).

The sale closed on June 7, 2024 and, at such time, we funded the purchase price of $45.1 million and settled certain assumed Casa Liabilities, with cash on hand.

We are integrating this strategic acquisition into our Access Network Solutions (ANS) segment and expect the acquisition to strengthen our ANS segment’s position by enhancing its virtual cable modem termination systems and passive optical network product offerings, which will enable customers to migrate to distributed access architecture solutions at their own speed, and further grow our customer base.

We recorded $1.4 million of transaction and integration costs for the year ended December 31, 2024 related to the Casa Transaction, and these costs were recognized in selling, general and administrative expense in the Condensed Consolidated Statements of Operations.

See Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion of the Casa Transaction.

CommScope NEXT

Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars:

Since 2021, we have been engaged in a transformation initiative designed to drive shareholder value through three pillars:

profitable growth, operational efficiency and portfolio optimization.

We believe these efforts are critical to making us more competitive and allowing us to invest in growth, de-leverage our indebtedness and maximize stockholder and other stakeholder value in the future.

In 2022, CommScope NEXT generated positive impacts on net sales, profitability and cash flow from our execution on pricing initiatives, capacity expansion and operational efficiencies.

In 2023, we experienced headwinds related to a slow-down in spending by our customers as discussed further below, but we continued to execute under CommScope NEXT to improve our profitability and cash flows by continuing to drive operational efficiencies and focusing on portfolio optimization, all of which is enabling us to take advantage of the recovery in demand that we began to see in late 2024.

To that end, we incurred $36.7 million, $25.1 million and $41.8 million of net restructuring costs and $63.4 million, $27.1 million and $35.1 million of transaction, transformation and integration costs during the years ended December 31, 2024, 2023 and 2022, respectively, primarily related to CommScope NEXT initiatives.

We expect to continue to incur such costs in 2025 as we continue executing on CommScope NEXT initiatives, and the resulting charges and cash requirements could be material.

On January 31, 2025, we completed the previously announced sale of our Outdoor Wireless Networks (OWN) segment and the Distributed Antenna Systems (DAS) business unit of our Networking, Intelligent Cellular & Security Solutions (NICS) segment to Amphenol Corporation (Amphenol), pursuant to the Purchase Agreement dated July 18, 2024, in exchange for approximately $2.1 billion in cash.

In the third quarter of 2024, we determined the sale of our OWN segment and DAS business unit 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, due to its relative size and strategic rationale.

For all periods presented, amounts in these consolidated financial statements have been recast to reflect the discontinuation of our OWN segment and DAS business unit in accordance with guidance.

All discussions and results related to our NICS segment exclude the DAS business unit, since the DAS business unit was moved to held for sale in the third quarter of 2024.

On January 9, 2024, we completed the sale of our Home Networks (Home) segment and substantially all of the associated segment assets and liabilities (Home business) to Vantiva SA (Vantiva) pursuant to the Call Option Agreement entered into on October 2, 2023 and the Purchase Agreement dated as of December 7, 2023.

In the fourth quarter of 2023, we determined the sale of our Home business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with accounting guidance.

All prior period amounts have been recast to reflect the discontinuation of our Home business.

Our continuing operations results include general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment.

These indirect costs, reflected on the corporate and other line item within our segment information below, are classified as continuing operations, since they were not directly attributable to these discontinued operations.

Beginning in the first quarter of 2024, the corporate and other costs related to the Home segment have been reallocated to our remaining segments and partially offset by income from our transition services agreement with Vantiva.

The corporate and other costs related to the OWN segment and DAS business will be reallocated to our remaining segments beginning in the first quarter of 2025.

Additionally, below we refer to certain supplementary Core financial measures, which reflect the results of the CCS, NICS excluding DAS, and ANS segments, in the aggregate, and exclude general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment, since these costs were not directly attributable to the discontinued operations.

We continue to focus on driving operational efficiencies and other cost savings initiatives, as well as portfolio optimization, all of which enabled us to take advantage of the recovery in demand that we started to see beginning in late 2024 and continuing through 2025.

We continue to analyze the impacts of the recently announced tariffs under the current U.S.

administration;

however, we believe we have a manageable plan in place to prepare for potential impacts.

Our approach of focusing on matters in our control has driven improved results in 2025 and will remain our focus into 2026.

As a result, we incurred $19.7 million, $36.7 million and $29.4 million of net restructuring costs and $29.9 million, $63.4 million and $27.1 million of transaction, transformation and integration costs during the years ended December 31, 2025, 2024 and 2023, respectively, primarily related to our transformation initiative.

We expect to continue to incur such costs during 2026 as we continue executing on our transformation initiative, and the resulting charges and cash requirements could be material.

During the years ended December 31, 2023, 2024 and 2025, we executed several strategic transactions that are further described in Note 3 and Note 4 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

These transactions included the acquisition of certain assets of Casa Systems, Inc.

(Casa), as well as multiple divestitures, including the Home business, the Outdoor Wireless Networks (OWN) segment, the Distributed Antenna Systems (DAS) business unit, the OneCell business, and the Connectivity and Cable Solutions (CCS) segment.

Several of these divestitures met the criteria for discontinued operations under Accounting Standard Codification (ASC) 205‑20, Presentation of Financial Statements—Discontinued Operations and "held for sale" classification under ASC 360-10, Impairment and Disposal of Long Lived Assets.

Detailed financial information, gain or loss recognition, held for sale measurements, and the related balance sheet, statement of operations, and statement of cash flow impacts are included within those notes.

Segment Renaming

Effective April 1, 2025, following the divestiture of the DAS business unit, we renamed our Networking, Intelligent Cellular & Security Solutions (NICS) segment to RUCKUS.

The name change did not impact our operating or reportable segment structure, chief operating decision maker (CODM) reporting, or historical segment results.

Historical activities occurring prior to the effective date are referenced under the former NICS name.

In connection with the divestiture of the CCS segment, and effective upon the closing of that transaction on January 9, 2026, we renamed our Access Network Solutions (ANS) segment to Aurora Networks (Aurora).

The name change did not alter our operating or reportable segments, the information reviewed by the CODM, or previously reported segment results.

Historical activities occurring prior to the effective date are referenced under the former ANS name.

Operating Segment Realignments

To better align product oversight with how the business is managed:

• Effective January 1, 2025, a product line was transferred from the RUCKUS (formerly NICS) segment to the Aurora (formerly ANS) segment.

• Effective January 1, 2024, certain product lines were transferred from the CCS segment (which became a discontinued operation in the fourth quarter of 2025) to the Aurora (formerly ANS) segment.

All prior periods presented have been recast to reflect these organizational changes.

Unless otherwise noted, the following discussions relate solely to our continuing operations.

As a result, we are reporting financial performance based on the following remaining reportable segments:

RUCKUS and Aurora.

For further discussion of the discontinued operations related to our CCS segment, OWN segment, DAS business unit and Home business, see Note 4 in the Notes to Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.

Our continuing operations results include general corporate costs that were previously allocated to the CCS segment, OWN segment and DAS business unit.

These indirect costs, reflected on the corporate and other line item within our segment information below, are classified as continuing operations, since the costs were not directly attributable to these discontinued operations.

Beginning in the first quarter of 2025, the corporate and other costs related to the OWN segment and DAS business unit have been reallocated to our remaining segments and partially offset by income from our transition service agreement with Amphenol Corporation (Amphenol TSA).

The corporate and other costs related to the CCS segment will be reallocated to our remaining segments beginning in the first quarter of 2026.

Additionally, below we refer to certain supplementary Core financial measures, which reflect the results of the RUCKUS and Aurora segments, in the aggregate, and exclude general corporate costs that were previously allocated to the CCS segment, OWN segment and DAS business unit, since these costs were not directly attributable to the discontinued operations.

The Core results represent the business results as currently managed and reported by the Company.

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See the “Segment Results” section below for the aggregation of our Core financial measures.

Unless otherwise noted, the following discussions relate solely to our continuing operations.

As a result, we are reporting financial performance based on the following remaining three operating segments, which excludes the OWN segment, DAS business unit in NICS and Home business:

Connectivity and Cable Solutions (CCS), NICS and ANS.

For further discussion of the discontinued operations related to our OWN segment, DAS business unit and Home business, see Note 4 in the Notes to Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.

As of January 1, 2024, we shifted certain product lines from our CCS segment to our ANS segment to better align with how the businesses are managed.

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

Impacts of Current Economic Conditions

In 2023, macroeconomic factors such as higher interest rates, inflation and concerns about a global economic slow-down softened demand for our products, with certain customers reducing purchases as they right-sized their inventories and others pausing capital spending.

This industry recession has continued to negatively impact our net sales in all markets except data centers, which saw increased investment during 2024.

We are beginning to see a recovery in demand in certain businesses and expect to see additional recovery in demand in 2025.

In 2023, we also began implementing additional cost savings initiatives to improve profitability, and we continued to implement further initiatives during 2024.

These initiatives should enable us to take advantage of the expected recovery in demand in 2025.

If this expected recovery does not occur in 2025, our outlook will be materially impacted.

For more discussion on risks related to our customers, see Part I, Item 1A, “Risk Factors” elsewhere in this Annual Report on Form 10-K.

RESULTS OF OPERATIONS

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Core adjusted EBITDA (1)

Loss from continuing operations

Diluted loss from continuing operations

Income (loss) from continuing operations

Diluted earnings (loss) from continuing

operations per share

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(1) Core financial measures reflect the results of the CCS, NICS and ANS segments, in the aggregate, and exclude general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment, since these costs were not directly attributable to these discontinued operations.

Beginning in the first quarter of 2024, these costs related to the Home segment have been reallocated to our remaining segments.

These costs related to the OWN segment and DAS business unit will be reallocated to our remaining segments beginning in the first quarter of 2025.

(1) Core financial measures reflect the results of the RUCKUS and Aurora segments, in the aggregate, and exclude general corporate costs that were previously allocated to the CCS segment, OWN segment and DAS business unit, since these costs were not directly attributable to these discontinued operations.

Beginning in the first quarter of 2025, these costs related to the OWN segment and DAS business unit have been reallocated to our remaining segments.

These costs related to the CCS segment will be reallocated to our remaining segments beginning in the first quarter of 2026.

See “Segment Results” section below for the aggregation of our Core financial measures.

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International

Net sales in 2024 decreased $359.4 million, or 7.9%, compared to the prior year primarily driven by decreased sales volumes as certain customers reduced purchases as they right-size their inventories and others paused capital spending and lower pricing.

The decrease was driven by lower net sales in the ANS segment of $260.5 million and the NICS segment of $220.7 million, partially offset by higher net sales of $121.8 million in the CCS segment.

For further details by segment, see the discussion of Segment Results below.

From a regional perspective in 2024, net sales decreased in the U.S.

by $248.1 million, the Caribbean and Latin American (CALA) region by $78.0 million and the Europe, Middle East and Africa (EMEA) region by $43.1 million, and increased in Canada by $7.5 million and the Asia Pacific (APAC) region by $2.3 million.

Net sales in 2025 increased $549.0 million, or 39.7%, compared to the prior year primarily driven by increased sales volumes, partially offset by lower pricing and unfavorable product mix.

The increase was driven by higher net sales in the Aurora segment of $396.9 million and the RUCKUS segment of $152.6 million.

For further details by segment, see “Segment Results” below.

From a regional perspective in 2025, net sales increased in the U.S.

by $458.2 million, the Europe, Middle East and Africa (EMEA) region by $64.8 million, the Asia Pacific (APAC) region by $30.0 million and Canada by $5.5 million, partially offset by a decrease in the Caribbean and Latin American (CALA) region by $9.5 million.

Net sales to customers located outside of the U.S.

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As a percent of sales

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Gross profit (net sales less cost of sales)

Gross profit decreased in 2024 compared to the prior year primarily due to lower net sales volumes, lower pricing and higher input costs, partially offset by favorable product mix.

Transition service agreement income

Transition service agreement (TSA) income is related to the TSA we entered into with Vantiva in conjunction with the closing of the transaction to divest of the Home business in January 2024.

Under the TSA agreement, we provided (and in some instances received) certain post-closing support on a transitional basis.

As of the end of 2024, the services for Vantiva have ceased.

Gross profit increased in 2025 compared to the prior year primarily due to higher net sales volumes, partially offset by lower pricing, unfavorable product mix and higher input costs.

Transition service agreement income (TSA)

TSA income is related to the Amphenol TSA executed in conjunction with the closing of the transactions to divest of the OWN segment and DAS business unit and the OneCell business, as well as the TSA we entered into with Vantiva in conjunction with the closing of the transaction to divest of the Home business.

Under the TSAs, we provide and receive certain post-closing support on a transitional basis.

As of the year ended December 31, 2024, the majority of the Vantiva TSA services had ceased.

For additional information related to the TSAs, see Note 4 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Selling, general and administrative expense

For 2024, selling, general and administrative (SG&A) expense decreased by $27.7 million compared to 2023, primarily due to cost saving initiatives and lower bad debt expense of $11.6 million, partially offset by higher transaction, transformation, and integration costs of $36.2 million and higher variable incentive compensation expense of $14.3 million.

We expect to continue to incur transaction, transformation and integration costs in 2025 and the resulting charges and cash requirements could be material.

For 2025, selling, general and administrative (SG&A) expense increased by $25.4 million compared to 2024, primarily due to higher variable incentive compensation expense of $42.0 million and higher realization of cost savings in the prior year related to our transformation initiative, partially offset by lower transaction, transformation and integration costs of $33.5 million.

Research and development expense

Research and development (R&D) expense for 2024 decreased by $66.9 million compared to the prior year primarily due to lower spending within all segments.

Research and development (R&D) expense for 2025 increased by $36.0 million due to higher spending within both the RUCKUS and Aurora segments, but decreased as a percentage of sales, compared to the prior year.

R&D activities generally involve ensuring that our products are capable of meeting the evolving technological needs of our customers, bringing new products to market and modifying existing products to better serve our customers.

Amortization of purchased intangible assets, Restructuring costs, net and Asset impairments

Amortization of purchased intangible assets, Restructuring costs, net and Other

Year Ended December 31,

(dollars in millions)

Amortization of purchased intangible assets

Amortization of purchased

intangible assets

Restructuring costs, net

Asset impairments

NM – Not meaningful

Amortization of purchased intangible assets

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Restructuring costs, net

The net restructuring costs recorded in 2024 were primarily related to CommScope NEXT.

The net restructuring costs recorded in 2025 were primarily related to our transformation initiative.

For the year ended December 31, 2025, our net restructuring costs were $19.7 million and we paid $9.5 million to settle restructuring liabilities.

We expect to make cash payments of $4.0 million in 2025 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.

Asset impairments

We did not record any asset impairment charges during the year ended December 31, 2024.

We recorded goodwill impairment charges of $472.3 million and $99.1 million in 2023 related to our ANS and Building Data Center Connectivity (BDCC) reporting units, respectively.

The ANS reporting unit is the same as our ANS segment and the BDCC reporting unit is in our CCS segment.

See the discussion below under “Critical Accounting Policies and Estimates” for more information regarding the goodwill impairment tests performed during 2024.

Other income, net

We expect to make cash payments of $4.6 million in 2026 and $0.3 million during 2027 to settle our transformation restructuring actions.

Additional restructuring actions related to our transformation initiative are expected to be identified, and the resulting charges and cash requirements could be material.

For the year ended December 31, 2025, the change in other represents the pretax loss of $4.8 million on the sale of our OneCell business to Amphenol, which was completed in May 2025.

For additional information related to the disposal of our OneCell business, see Note 4 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Other income (expense), net

Year Ended December 31,

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Foreign currency gain (loss)

Other income, net

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Other income (expense), net

Foreign currency gain (loss)

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The change in foreign currency gain (loss) in 2025 compared to 2024 was primarily driven by certain unhedged currencies.

Other income, net

The change in other income, net in 2024 compared to 2023 was primarily driven by a gain of $74.3 million on the early extinguishment of debt related to our debt repurchases in 2023 and $6.4 million of debt issuance costs related to the debt refinancing transactions in December 2024.

See Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of the 2024 debt refinancing transactions.

Other income (expense), net

The change in other income (expense), net in 2025 compared to 2024 was not significant.

Interest expense, Interest income and Income taxes

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(dollars in millions)

Interest income

Income tax benefit

Interest expense

In connection with the sale of the CCS segment that was completed subsequent to the fiscal year end on January 9, 2026, we repaid our third‑party debt at closing, and all interest expense was reported within discontinued operations.

However, we expect to incur interest expense in the future.

Interest income

Income tax expense

Interest expense and Interest income

Interest expense for the year ended December 31, 2024 increased $11.1 million compared to the prior year primarily due to the write-off of $16.2 million of existing debt issuance costs and original issuance discount associated with the redemption of our senior unsecured notes due June 15, 2025 (2025 Notes) and the refinancing of our existing senior secured term loan due 2026 (2026 Term Loan) as further discussed in Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

The increase was partially offset by favorable impacts from lower long-term balances as a result of the debt repurchases in 2023.

Our 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 8.09% at December 31, 2024 and 7.22% at December 31, 2023.

Our interest expense and payments on our variable rate debt could increase if the Federal Reserve increases interest rates in 2025.

Income tax expense

For 2024, we recognized income tax expense of $51.7 million on a pretax loss of $409.3 million.

Our tax expense on a pretax loss was less than the statutory rate of 21.0% in 2024 primarily due to the unfavorable impact related to an additional net $135.2 million of valuation allowance recorded during the year.

Our tax expense was also impacted unfavorably by the U.S.

anti-deferral provisions and non-creditable withholding taxes, partially offset by tax benefits related to federal tax credits.

See Note 14 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for more discussion of our income tax expense.

For 2023, we recognized income tax expense of $97.4 million on a pretax loss of $998.4 million.

Our tax expense was more than the statutory rate of 21.0% in 2023 primarily due to the unfavorable impact related to a net $165.4 million of valuation allowance recorded during the year and a goodwill impairment charge of $571.4 million, for which minimal tax benefits were recorded.

Our tax expense was also impacted by the unfavorable impacts of U.S.

anti-deferral provisions and non-creditable withholding taxes, partially offset by tax benefits related to federal tax credits.

The change in interest income in 2025 compared to 2024 was not significant.

Income tax benefit

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (OBBBA).

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing and expansions to the business interest expense limitation.

The effects of OBBBA are reflected in the consolidated financial statements for the year ended December 31, 2025.

For 2025, we recognized an income tax benefit of $269.4 million on pretax income of $54.9 million.

For the year ended December 31, 2025, our income taxes were less than the statutory rate of 21% due to $259.8 million of tax benefit from the release of a valuation allowance as well as the tax benefit associated with federal tax credits.

Offsetting these benefits for the year ended December 31, 2025, were non-deductible employee compensation expense of $25.6 million and the unfavorable impacts of U.S.

anti-deferral provisions.

See Note 13 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for more discussion of our income taxes.

For 2024, we recognized an income tax benefit of $66.9 million on a pretax loss of $272.9 million.

Our tax benefit was more than the statutory rate of 21.0% in 2024 primarily due to tax benefits related to federal tax credits.

Our tax benefit was also impacted unfavorably by the U.S.

anti-deferral provisions.

Segment Results

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Net sales by segment:

Corporate and other (2)

Consolidated net sales

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Adjusted EBITDA by segment:

RUCKUS (1) (4)

Core adjusted EBITDA (3) (4)

Corporate and other (2)

Non-GAAP consolidated adjusted EBITDA (3)

Non-GAAP consolidated adjusted

NM – Not meaningful

(2) The corporate and other line item above reflects general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment.

(1) Includes activity of the OneCell business for periods prior to its disposition.

(2) The corporate and other line item above primarily reflects general corporate costs that were previously allocated to the OWN segment and DAS business unit.

These indirect expenses have been classified as continuing operations, since the costs were not directly attributable to these discontinued operations.

Beginning in the first quarter of 2024, the corporate and other costs related to the Home segment have been reallocated to our remaining segments and partially offset by income from the Vantiva TSA.

The corporate and other costs related to the OWN segment and DAS business unit will be reallocated to our remaining segments beginning in the first quarter of 2025.

The corporate and other costs related to the CCS segment will be reallocated to our remaining segments beginning in the first quarter of 2026.

(3) Core financial measures reflect the results of the RUCKUS and Aurora segments, in the aggregate, and exclude general corporate costs that were previously allocated to the CCS segment, OWN segment and DAS business unit, since these costs were not directly attributable to these discontinued operations.

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

Connectivity and Cable Solutions Segment

Net sales for the CCS segment increased in 2024 compared to the prior year primarily due to higher sales volumes in the Enterprise business, partially offset by lower outdoor network solutions sales volumes in the first half of the year as certain customers paused spending as they right-sized their inventory levels.

Net sales for the RUCKUS segment increased in 2025 compared to the prior year primarily due to higher sales volumes and pricing.

From a regional perspective in 2025, net sales increased in the U.S.

by $115.5 million, the EMEA region by $36.7 million, the APAC region by $13.5 million and Canada by $6.3 million, but decreased in the CALA region by $50.2 million compared to the prior year.

Foreign exchange rate changes did not have a material impact on CCS segment net sales during 2024.

For 2024, CCS segment operating income and adjusted EBITDA increased compared to the prior year primarily due to higher sales volumes, favorable product mix and lower input costs, partially offset by higher SG&A costs.

The increases in SG&A costs were primarily due to higher variable incentive compensation expense, partially offset by lower bad debt expense and cost savings initiatives.

In 2024, compared to the prior year, CCS segment operating income was favorably impacted by a reduction to impairment charges resulting from the prior year goodwill impairment charge of $99.1 million, a reduction of $12.6 million in restructuring costs and a reduction of $3.2 million in amortization expense, partially offset by an increase of $13.9 million in transaction, transformation and integration costs.

Goodwill impairment charges, restructuring costs, amortization expense and transaction, transformation and integration costs are not reflected in adjusted EBITDA.

See “Reconciliation of Segment Adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.

Networking, Intelligent Cellular and Security Solutions Segment

Net sales for the NICS segment decreased in 2024 compared to the prior year primarily due to lower sales volumes of our Ruckus products driven by lower demand and channel inventory digestion.

From a regional perspective in 2024, net sales decreased in the U.S.

by $140.2 million, the EMEA region by $47.8 million, the APAC region by $27.0 million and Canada by $8.7 million, but increased in the CALA region by $3.0 million compared to the prior year.

Foreign exchange rate changes did not have a material impact on NICS segment net sales during 2024.

For 2024, NICS segment operating income and adjusted EBITDA decreased compared to the prior year primarily due to lower sales volumes and E&O reserves recorded for excess inventory, partially offset by lower R&D costs and favorable product mix.

In 2024, compared to the prior year, NICS segment operating income was unfavorably impacted by an increase of $3.2 million in transaction, transformation and integrations costs and a reduction of $3.5 million in gains related to the settlement of an intellectual property litigation claim received in the prior year.

These unfavorable impacts were partially offset by a reduction of $4.6 million in restructuring costs.

Transaction, transformation and integration costs, intellectual property litigation costs and restructuring costs are not reflected in adjusted EBITDA.

by $91.1 million, the EMEA region by $37.5 million, the APAC region by $19.3 million, Canada by $4.2 million and the CALA region by $0.5 million compared to the prior year.

Foreign exchange rate changes did not have a material impact on RUCKUS segment net sales during 2025.

For 2025, RUCKUS segment operating income and adjusted EBITDA increased compared to the prior year primarily due to higher sales volumes and pricing, partially offset by higher SG&A, R&D and input costs.

In 2025, RUCKUS segment operating income was unfavorably impacted by the pretax loss of $4.8 million on the sale of our OneCell business which is not reflected in adjusted EBITDA.

See “Reconciliation of Segment Adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.

Access Network Solutions Segment

Net sales for our ANS segment decreased in 2024 compared to the prior year primarily due to lower sales volume as certain customers have paused spending as they right-size their inventory levels.

From a regional perspective in 2024, net sales decreased in the U.S.

by $223.4 million, the EMEA region by $32.0 million and the CALA region by $30.8 million, but increased in the APAC region by $15.8 million and Canada by $9.9 million compared to the prior year.

Foreign exchange rate changes did not have a material impact on ANS segment net sales during 2024.

Excluding the prior year goodwill impairment charge of $472.3 million from operating loss, for 2024, ANS segment operating loss and adjusted EBITDA were negatively impacted by lower sales volumes and unfavorable product mix, partially offset by benefits from lower SG&A, input and R&D costs, compared to the prior year.

The reductions in SG&A costs were primarily due to cost savings initiatives.

ANS segment operating loss was favorably impacted by a reduction of $63.1 million in amortization expense, partially offset by an increase of $37.8 million in restructuring costs.

Net sales for our Aurora segment increased in 2025 compared to the prior year primarily due to higher sales volume from an increase in demand.

From a regional perspective in 2025, net sales increased in the U.S.

by $367.1 million, the EMEA region by $27.8 million, the APAC region by $10.7 million and Canada by $1.3 million, but decreased in the CALA region by $10.0 million.

Foreign exchange rate changes did not have a material impact on Aurora segment net sales during 2025.

For 2025, ANS segment operating income and adjusted EBITDA increased compared to the prior year primarily due to higher sales volumes, partially offset by higher SG&A, R&D and input costs and unfavorable product mix.

For 2025, ANS segment operating income was favorably impacted by reductions in amortization expense of $21.7 million, restructuring costs of $21.7 million and transaction, transformation and integration costs of $13.8 million.

Amortization expense, restructuring costs and transaction, transformation and integration costs and are not reflected in adjusted EBITDA.

Also see “Reconciliation of Segment Adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.

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Working capital, net of assets and liabilities held for

sale (2) and excluding cash and cash equivalents and

current portion of long-term debt

sale (2) and excluding cash and cash equivalents

Availability under Revolving Credit Facility (3)

Long-term debt, including current portion

Long-term debt (3)

Total capitalization (4)

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(2) Working capital is net of assets and liabilities held for sale and consists of current assets of $1,471.7 million less current liabilities of $711.6 million as of December 31, 2025 and current assets of $1,148.7 million less current liabilities of $580.4 million as of December 31, 2024.

(3) Total capitalization includes long-term debt, including the current portion, Series A convertible preferred stock (Convertible Preferred Stock) and stockholders’ deficit.

Our principal sources of liquidity on a short-term basis are cash and cash equivalents, cash flows provided by operations and availability under our credit facilities.

On a long-term basis, our potential sources of liquidity also include raising capital through the issuance of additional equity and/or debt.

The primary uses of liquidity include debt service requirements, voluntary debt repayments, redemptions or purchases on the open market, working capital requirements, capital expenditures, business separation transaction costs, transformation costs, restructuring costs, dividends related to the Convertible Preferred Stock if we elect to pay such dividends in cash, litigation settlements, income tax payments and other contractual obligations.

As of December 31, 2024, we have repaid the $1.27 billion previously outstanding on our 2025 Notes.

We currently believe that our existing cash, cash equivalents and cash flows from operations, combined with availability under our Revolving Credit Facility, will be sufficient to meet our presently anticipated future cash needs.

However, we may be required to obtain additional financing in the future to address our liquidity needs, and, subject to market conditions, we may from time to time seek to amend, refinance, restructure, exchange or repurchase our outstanding indebtedness and/or raise additional equity or other financing.

Any debt we incur in the future may have terms (including cash interest rate, financial covenants and covenants limiting our operating flexibility or ability to obtain additional financings) that are not favorable to us, and any such additional equity financing may dilute the economic and/or voting interests of our existing stockholders, may be preferred in right of payment to our outstanding common stock or confer other privileges to the holders and may contain financial or operational covenants that restrict our operating flexibility or ability to obtain additional financings.

Furthermore, our failure to obtain any necessary financing, amendment, refinancing, restructuring, exchange or repurchases could have a material and adverse effect on our results of operations, cash flows, financial condition and liquidity.

(3) In connection with the sale of the CCS segment that was completed subsequent to fiscal year end on January 9, 2026, on the closing date, we repaid in full all outstanding indebtedness using a portion of the proceeds from the transaction and terminated all outstanding commitments under each of our Revolving Credit Agreement dated as of April 4, 2019.

(4) Total capitalization includes long-term debt, including the current portion, Convertible Preferred Stock and stockholders’ deficit.

Our principal sources of liquidity on a short-term basis are cash and cash equivalents and cash flows provided by operations.

On a long-term basis, our potential sources of liquidity also include raising capital through the issuance of equity and/or debt.

The primary uses of liquidity include working capital requirements, capital expenditures, business separation transaction costs, transformation costs, restructuring costs, litigation settlements, income tax payments and other contractual obligations.

In connection with the sale of the CCS segment that was completed subsequent to fiscal year end on January 9, 2026, we repaid and issued notices of full redemption of our then-existing indebtedness and redeemed all of the outstanding shares of the Convertible Preferred Stock.

Therefore, the uses of liquidity related to the indebtedness and Convertible Preferred Stock that were outstanding as of December 31, 2025, are no longer relevant.

We currently believe that our existing cash, cash equivalents and cash flows from operations will be sufficient to meet our presently anticipated future cash needs.

However, we may be required to obtain financing in the future to address our liquidity needs, and, subject to market conditions, we may from time to time seek to amend, refinance, restructure, exchange or repurchase our outstanding indebtedness and/or raise equity or other financing.

Any debt we incur in the future may have terms (including cash interest rate, financial covenants and covenants limiting our operating flexibility or ability to obtain financings) that are not favorable to us, and any such equity financing may dilute the economic and/or voting interests of our existing stockholders, may be preferred in right of payment to our outstanding common stock or confer other privileges to the holders and may contain financial or operational covenants that restrict our operating flexibility or ability to obtain additional financings.

Furthermore, our failure to obtain any necessary financing, or any future amendment, refinancing, restructuring, exchange or repurchases could have a material and adverse effect on our results of operations, cash flows, financial condition and liquidity.

We may experience volatility in cash flows between periods due to, among other reasons, variability in the timing of vendor payments and customer receipts.

We may, from time to time, seek to obtain alternative sources of financing, by borrowing additional amounts under our Revolving Credit Facility, issuing debt or equity securities or incurring other indebtedness, if market conditions are favorable, utilizing trade credit, selling assets (including businesses or business lines) or securitizing receivables to meet future cash needs or to reduce our borrowing costs.

We may, from time to time, seek to obtain alternative sources of financing, by issuing debt or equity securities or incurring other indebtedness, if market conditions are favorable, utilizing trade credit, selling assets (including businesses or business lines) or securitizing receivables to meet future cash needs or to reduce our borrowing costs.

Any issuance of equity or debt may be for cash or in exchange for our outstanding securities or indebtedness, or a combination thereof.

2 In connection with the repayment of all outstanding amounts under our Revolving Credit Facility on January 31, 2025, the committed amount thereunder was reduced to $750.0 million, subject to borrowing base limitations.

Certain of our outstanding debt securities and debt under our credit facilities are currently trading at discounts to their respective principal amounts.

In order to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption, we may, from time to time, purchase such debt for cash, in exchange for common or preferred stock or debt, or for a combination thereof, in each case in open-market purchases and/or privately negotiated transactions, tender offers or exchange offers and upon such terms and at such prices as we may determine.

Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions and applicable regulatory, legal and accounting factors.

Whether or not we engage in any such transactions will be determined at our discretion.

The amounts involved in any such transactions, individually or in the aggregate, may be material.

Our interest payments on long-term debt are expected to total $2,906.8 million over the duration of the debt, with $613.5 million due in 2025 (assuming interest rates in effect as of December 31, 2024 on our variable rate debt).

In 2024, the interest payments on our variable rate debt were higher than the prior year as a result of the Federal Reserve maintaining higher interest rates throughout most of the year.

While the Federal Reserve ended 2024 with several rate cuts, our interest payments on our variable debt could increase if the Federal Reserve chooses to raise interest rates in future periods.

For additional information regarding our long-term debt obligations, see Note 9 in the Notes to Consolidated Financial Statements and our discussion of our interest rate risk in Item 7A.

Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this Annual Report on Form 10-K.

For information on our obligations related to our Convertible Preferred Stock, see Note 15 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

In July 2023, we 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, we 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.

We have committed to purchases of raw material under this agreement beginning in 2023 and growing to a level of approximately $137 million per year by 2026 and continuing through 2032.

We have $140.7 million in unrecognized tax benefits;

however, the timing of the related tax payments is highly uncertain.

We anticipate a reduction of up to $22.0 million of unrecognized tax benefits during the next twelve months.

See Note 14 in the Notes to Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K for further discussion.

Although there are no financial maintenance covenants under the terms of our senior notes, there is a limitation, among other limitations, on certain future borrowings based on an adjusted leverage ratio or a fixed charge coverage ratio.

These ratios are based on financial measures similar to non-GAAP adjusted EBITDA as presented in the “Reconciliation of Non-GAAP Measures” section below, but also give pro forma effect to certain events, including acquisitions, synergies and savings from cost reduction initiatives such as facility closures and headcount reductions.

Our senior notes and senior secured credit facilities that existed as of December 31, 2025, contained certain limitations and covenants based on financial measures similar to non-GAAP adjusted EBITDA as presented in the “Reconciliation of Non-GAAP Measures” section below, but also giving pro forma effect to certain events, including acquisitions, synergies and savings from cost reduction initiatives such as facility closures and headcount reductions.

For the year ended December 31, 2025, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $300.8 million, which included annualized savings expected from cost reduction initiatives of $8.8 million so that the impact of cost reduction initiatives is fully reflected in the twelve-month period used in the calculation of the ratios.

In addition to limitations under these indentures, our senior secured credit facilities contain customary negative covenants based on similar financial measures.

We believe we are in compliance with the covenants under our indentures and senior secured credit facilities at December 31, 2024.

We believe we were in compliance with the covenants under our then-existing note indentures and senior secured credit facilities at December 31, 2025.

Cash and cash equivalents increased by $259.5 million during 2025 as described under the Cash Flow Overview section below.

As of December 31, 2025, approximately 8% of our cash and cash equivalents were held outside the U.S.

Working capital, net of assets and liabilities held for sale and excluding cash and cash equivalents and the current portion of long-term debt, decreased during 2024 compared to the prior year primarily due to lower inventory driven by inventory reduction initiatives, higher accounts payable due to timing of payments and higher accrued expenses including a higher variable incentive compensation expense in 2024.

These impacts were partially offset by higher accounts receivable due to timing of collections.

Working capital, net of assets and liabilities held for sale and excluding cash and cash equivalents, decreased during 2025 compared to the prior year primarily due to an increase in accounts payable and other accrued liabilities, as well as a reduction in inventory, partially offset by higher accounts receivable due to increased net sales in 2025.

During 2025, we sold accounts receivable under customer-sponsored supplier financing agreements.

This had an impact of approximately $103 million on working capital, excluding cash and cash equivalents and the current portion of long-term debt, as of December 31, 2024.

This had an impact of approximately $12 million on working capital, excluding cash and cash equivalents, as of December 31, 2025.

Under these agreements, we are able to sell accounts receivable to a bank, and we retain no interest in and have no servicing responsibilities for the accounts receivable sold.

The net reduction in total capitalization during 2024 reflected the net loss for the year.

The net increase in total capitalization during 2025 reflected the net income for the year.

Cash Flow Overview

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Accordingly, the following cash flow overview includes the results of continuing and discontinued operations.

Cash and cash equivalents increased during 2024 primarily driven by cash generated by operating activities of $273.1 million, partially offset by net cash paid for the debt refinancing transaction of $57.1 million, amortization payments totaling $24.0 million related to the 2026 Term Loan, cash paid related to the Casa Transaction of $45.1 million and capital expenditures of $26.2 million.

For additional discussion related to the debt refinancing transactions, see Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Year Ended December 31,

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Net cash used in financing activities

NM - Not Meaningful

Operating Activities

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(in millions)

Adjustments to reconcile net loss to net cash generated by operating activities:

Net income (loss)

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

Depreciation and amortization

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Asset impairments

(Gain) loss on disposal of discontinued operations

Changes in assets and liabilities:

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Net cash generated by operating activities

During 2024, the decrease in cash generated by operating activities compared to the prior year was primarily driven by lower operating performance, partially offset by decreases in working capital in the current year due to a reduction in net sales driving lower inventory purchases and lower accounts receivable.

During 2025, the increase in net cash generated by operating activities compared to the prior year was primarily driven by improved operating performance and lower cash interest paid, partially offset by additional investment in working capital and higher cash taxes paid in the current year compared to the prior year.

For information on significant non-cash operating activities related to our discontinued operations, see Note 4 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

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Proceeds from sale of property, plant and equipment

Net proceeds from divestitures

Acquisition of a business

Net cash generated by (used in) investing activities

During 2024, the decrease in cash generated by investing activities compared to the prior year was primarily due to lower cash of $71.0 million driven by proceeds collected in the prior year on the sale of property, plant and equipment and cash paid of $45.1 million in the current year related to the Casa Transaction, partially offset by higher cash of $35.4 million driven by a reduction of capital expenditures in the current year.

Capital expenditures related to our discontinued operations were $0.7 million in 2024 compared to $5.2 million in the prior year.

Cash generated by other investing activities in the current year included proceeds of $13.0 million on the sale of certain nonfinancial assets.

Cash generated by other investing activities in the prior year period included proceeds of $11.1 million related to the sale of an equity investment and proceeds of $9.3 million on the sale of certain nonfinancial assets.

During 2025, the increase in net cash generated by investing activities compared to the prior year was primarily driven by net proceeds of $2,034.5 million related to the sale of the OWN segment and DAS business unit to Amphenol, net proceeds of $7.4 million related to the sale of the OneCell business and cash paid in the prior period of $45.1 million related to the Casa Transaction.

These favorable impacts were partially offset by unfavorable impacts due to increased capital expenditures of $45.0 million compared to the prior year and proceeds received in the prior year of $13.0 million on the sale of certain nonfinancial assets.

Financing Activities

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Long-term debt repaid

Long-term debt repurchases

Long-term debt proceeds

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Debt issuance costs

Dividends paid on Series A convertible preferred stock

Tax withholding payments for vested equity-based compensation awards

Net cash used in financing activities

In 2024, we completed certain refinancing transactions including the issuance of $1,000 million in aggregate principal amount of 9.500% senior secured notes due 2031 and entry into the new senior secured term loan facility due December 2029 with an initial aggregate principal amount of $3,150.0 million.

We used the net proceeds, together with cash on hand and $200.0 million of borrowings under our asset-based revolving credit facility (Revolving Credit Facility) , to refinance in full the Company’s existing 2026 Term Loan and redeem all of the approximately $1,274.6 million in outstanding aggregate principal amount of our 2025 Notes.

In 2025, we repurchased $299.0 million in aggregate principal amount of our 4.75% senior secured notes due September 1, 2029 and repurchased in full the $1,500.0 million outstanding principal amount of our 6.00% senior secured notes due March 1, 2026.

In connection with the debt transactions, we paid $5.7 million of debt issuance costs.

We also borrowed $50.0 million and repaid $250.0 million of outstanding borrowings under our asset-based revolving credit facility (Revolving Credit Facility).

In 2024, we completed certain refinancing transactions including the issuance of $1,000 million in aggregate principal amount of our 9.50% senior secured notes due December 15, 2031 and entry into the senior secured term loan facility due December 2029 with an initial aggregate principal amount of $3,150.0 million.

We used the net proceeds, together with cash on hand and $200.0 million of borrowings under our Revolving Credit Facility, to refinance the outstanding $3,064.0 million of our then-existing senior secured term loan facility due April 2026 (2026 Term Loan) and redeem all of the approximately $1,274.6 million in outstanding aggregate principal amount of our 6.00% senior notes due 2025.

In connection with the refinancing transactions, we paid approximately $59.4 million of original issuance discount and $33.1 million of debt issuance costs.

In 2024, we paid quarterly scheduled amortization payments totaling $24.0 million on the 2026 Term Loan prior to the refinancing.

As of December 31, 2024, we had $200.0 million of outstanding borrowings and the remaining availability was $449.3 million, reflecting a borrowing base subject to maximum capacity of $719.2 million reduced by $69.9 million of letters of credit issued under our Revolving Credit Facility.

In 2023, we repurchased $133.1 million aggregate principal amount of our 8.25% senior notes due 2027, $58.4 million aggregate principal amount of our 7.125% senior notes due 2028 and $25.4 million aggregate principal amount of our 2025 Notes, for total cash consideration paid of $142.6 million.

We also paid four quarterly scheduled amortization payments totaling $32.0 million on our 2026 Term Loan during 2023.

We did not borrow under our Revolving Credit Facility during 2023.

In 2024, we paid dividends of $65.2 million in additional shares due under the Convertible Preferred Stock.

In 2023, we paid dividends of $61.8 million in additional shares due under the Convertible Preferred Stock.

During 2024, employees surrendered shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units (RSUs) and performance share units (PSUs), which reduced cash flows by $1.9 million compared to $9.1 million in the prior year.

We also paid the quarterly scheduled amortization payments totaling $24.0 million on our 2026 Term Loan.

In 2025, employees surrendered shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units (RSUs) and performance share units (PSUs), which reduced cash flows by $31.3 million compared to $1.9 million in the prior year.

In 2025, we paid $17.6 million of cash dividends and $51.3 million of dividends in additional shares due under the Convertible Preferred Stock.

In 2024, we paid $65.2 million of dividends in additional shares due under the Convertible Preferred Stock.

Reconciliation of Non-GAAP Measures

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GAAP as measures of operating performance, operating cash flows or liquidity.

Although there were no financial maintenance covenants under the terms of our senior notes that existed as of December 31, 2025, there were certain limitations based on an adjusted leverage ratio or a fixed charge coverage ratio.

These ratios are based on financial measures similar to non-GAAP adjusted EBITDA as presented in this section, but also give pro forma effect to certain events, including acquisitions and savings from cost reduction initiatives such as facility closures and headcount reductions.

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(in millions)

Loss from continuing operations

Income (loss) from continuing operations

Income tax expense (benefit)

Interest income

Interest expense

Other income, net

Other (income) expense, net

Operating income (loss)

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Non-GAAP adjusted EBITDA

(1) In 2024 and 2023, primarily reflects transaction costs related to certain CommScope NEXT initiatives.

In 2022, primarily reflects transformation costs related to certain CommScope NEXT initiatives and integration costs related to the ARRIS International plc (ARRIS) acquisition.

(2) In 2023 and 2022, reflects ARRIS acquisition accounting adjustments related to reducing deferred revenue to its estimated fair value.

(1) In 2025, 2024 and 2023, primarily reflects transaction costs related to our transformation initiative that began in 2021.

(2) In 2023, reflects ARRIS International plc acquisition accounting adjustments related to reducing deferred revenue to its estimated fair value.

(3) In 2023, primarily reflects costs of the identification, investigation, defense, recovery and litigation efforts related to a cyber incident that occurred in late March of 2023.

(4) In 2025, reflects a pretax loss of $4.8 million related to the sale of our OneCell business.

Reconciliation of Segment Adjusted EBITDA

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Below we reconcile segment adjusted EBITDA for each segment individually to operating income (loss) for that segment to supplement the reconciliation of the total segment adjusted EBITDA to consolidated operating income (loss) in that footnote.

The corporate and other line item as presented in Note 18 in the Notes to Consolidated Financial Statements represents general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment.

These indirect costs are classified as continuing operations since they were not directly attributable to these discontinued operations.

Beginning in the first quarter of 2024, the corporate and other costs related to the Home segment have been reallocated to the Company’s remaining segments and partially offset by income from the Vantiva TSA.

The corporate and other costs related to the OWN segment and DAS business unit will be reallocated to our remaining segments beginning in the first quarter of 2025.

Connectivity and Cable Solutions Segment

Year Ended December 31,

(in millions)

Operating income

Amortization of purchased intangible assets

Restructuring costs, net

Equity-based compensation

Asset impairments

Transaction, transformation and integration costs

Patent claims and litigation settlements

Recovery of Russian accounts receivable

Cyber incident costs

Adjusted EBITDA

Networking, Intelligent Cellular and Security Solutions Segment

The corporate and other line item as presented in Note 17 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report, primarily reflects general corporate costs that were previously allocated to the CCS segment, OWN segment, DAS business unit and Home segment.

These indirect costs are classified as continuing operations since these costs were not directly attributable to these discontinued operations.

Beginning in the first quarter of 2024, the corporate and other costs related to the Home segment have been reallocated to our remaining segments and partially offset by income from the Vantiva TSA;

those costs related to the OWN segment and DAS business unit have been reallocated to our remaining segments beginning in the first quarter of 2025 and partially offset by income from the Amphenol TSA;

and those costs related to the CCS segment will be reallocated to our remaining segments beginning in the first quarter of 2026.

Year Ended December 31,

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Adjusted EBITDA

Access Network Solutions Segment

(1) Includes activity of the OneCell business for periods prior to its disposition.

Year Ended December 31,

(in millions)

Operating loss

Operating income (loss)

Amortization of purchased intangible assets

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We test goodwill at the reporting unit level for impairment annually as of October 1 and on an interim basis when events occur or circumstances exist that indicate the carrying value may no longer be recoverable.

We compare the fair value of our reporting units with the carrying amount, including goodwill.

We may first elect to perform a qualitative evaluation to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The qualitative assessment considers, among other factors, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in management or strategy, and other entity‑specific events.

If, based on the qualitative assessment, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if we elect to bypass the qualitative assessment, we perform a quantitative impairment test.

The quantitative test compares the estimated fair value of our reporting units with the carrying amount, including goodwill.

We recognize an impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value.

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If the implied control premium is not reasonable, we will reevaluate the fair value estimates of the reporting units by adjusting the discount rates and/or other assumptions.

2024 Interim and Annual Goodwill Analysis

2025 Annual Goodwill Analysis

Goodwill is tested for impairment annually or at other times if events have occurred or circumstances exist that indicate the carrying value of the reporting unit may exceed its fair value.

As of January 1, 2024, we assessed goodwill for impairment due to changes in the composition of certain reporting units and performed impairment testing immediately before and after the change once goodwill was reallocated and determined that no goodwill impairment existed.

During the third quarter of 2024, we completed an impairment analysis for goodwill recorded within the NICS reporting unit, which is impacted by the divestiture of the DAS business.

The quantitative assessment was used, and the Company determined that the fair value of the impacted reporting unit exceeded the carrying value and that no impairment existed immediately prior to or subsequent to allocating goodwill to the disposal group that includes our DAS business.

The annual test of goodwill impairment was performed for each of the reporting units with goodwill balances as of October 1, 2025.

For the 2024 annual goodwill test, we determined the fair value of each reporting unit using a DCF model and a guideline public company approach, with 75% of the value determined using the DCF model and 25% of the value determined using the market approach.

The range of discount rates used in our annual tests was 9.5% to 14.5% for 2024.

For reporting units within the CCS segment, management elected to perform a qualitative assessment to determine whether it was more likely than not that the fair value of the reporting units was less than their carrying amounts.

Based on this qualitative assessment, we concluded that no goodwill impairment existed for these reporting units and that a quantitative impairment test was not required.

For our remaining reporting units, we determined the fair value of each reporting unit using the DCF model and a guideline public company approach, with 75% of the value determined using the DCF model and 25% of the value determined using the market approach.

The discount rates used in our annual test for the year ended December 31, 2025 were 13.0% and 13.5% for Aurora and RUCKUS, respectively.

We determined that the fair value of the reporting units exceeded the carrying value and that no impairment existed.

Considering the low headroom going forward for the ANS reporting unit, there is a risk for future impairment in the event of further declines in general economic, market or business conditions or any significant unfavorable change in the forecasted cash flows, weighted average cost of capital or growth rates.

If current and long-term projections for the ANS reporting unit is not realized or decrease materially, we may be required to recognize additional goodwill impairment charges, and these charges could be material to our results of operations.

Considering the low headroom going forward for the Aurora reporting unit, there is a risk for future impairment in the event of further declines in general economic, market or business conditions or any significant unfavorable change in the forecasted cash flows, weighted average cost of capital or growth rates.

If current and long-term projections for the Aurora reporting unit is not realized or decrease materially, we may be required to recognize additional goodwill impairment charges, and these charges could be material to our results of operations.

The following table provides summary information regarding our reporting units with goodwill balances as of December 31, 2025 that have the lowest level of headroom.

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Our revenue is generated primarily from product or equipment sales.

We also generate revenue from custom design and installation services as well as bundled sales arrangements that include product, software and services.

We apply a five-step approach as defined in ASC 606, Revenue from Contracts with Customers , in determining the amount and timing of revenue to be recognized:

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Functional intellectual property licenses do not meet the criteria for revenue to be recognized over time, and revenue is most commonly recognized upon delivery of the license/software to the customer.

We have service arrangements where net sales are recognized over time.

These arrangements include a variety of post-contract support service offerings, which are generally recognized over time as the services are provided, including the following:

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.

Revenue is measured based on the consideration to which we expect to be entitled based on customer contracts.

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Variable consideration is primarily related to sales to our distributors, system integrators and value-added resellers.

A contract liability for deferred revenue is recorded when consideration is received or is unconditionally due from a customer prior to transferring control of goods or services to the customer under the terms of a contract.

Deferred revenue balances typically result from advance payments received from customers from billings in excess of revenue recognized on services arrangements.

Unbilled receivables represent amounts earned for which we have an unconditional right to payment but have not yet invoiced the customer.

When our right to consideration is conditional on future performance or other factors beyond the passage of time, these amounts are classified as contract assets and presented separately from trade accounts receivable in other receivables in the consolidated balance sheet and are converted to accounts receivable once our right to the consideration becomes unconditional, which varies by contract but is generally based on achieving certain acceptance milestones.

Contingencies and Litigation

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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 7. Management’s Discussion and Analysis