Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

The aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately ~~$5,530~~$2,998.5 million as of June 30, ~~2018.~~2019. For purposes of this computation, shares held by affiliates and by directors and officers of the registrant have been excluded.

As of ~~April 12, 2019~~February 7, 2020 there were ~~193,467,296~~194,642,610 shares of the registrant’s Common Stock outstanding.

Portions of the registrant’s Proxy Statement for the 2020 Annual Meeting of Stockholders are incorporated by reference in Part III hereof.

~~This Amendment No. 1 on Form 10-K/A (Amendment No. 1) amends the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the 2018 Annual Report) of~~ CommScope Holding Company, Inc. ~~filed with the Securities and Exchange Commission (the SEC) on February 21, 2019. In this Amendment No. 1, unless~~

Unless the context ~~indicates~~ otherwise requires, references to “CommScope Holding Company, Inc.,” “CommScope,” “the Company,” “Registrant,” “we,” ~~“us”~~“us,” or “our” ~~refer~~are to CommScope Holding Company, Inc. and its ~~wholly-owned subsidiaries.~~

This ~~Amendment No. 1 is being filed solely to include~~Annual Report on Form 10-K includes certain statements that constitute “forward-looking statements” within the ~~information required by Items 10 - 14~~meaning of ~~Part III of Form 10-K. The reference on the cover page~~Section 27A of the ~~2018 Annual Report to the incorporation by reference~~Securities Act of ~~portions of our definitive proxy statement into Part III of the 2018 Annual Report is hereby deleted. Items 10, 11, 12, 13 and 14 of Part III of the 2018 Annual Report are~~1933, as amended, and ~~restated in their entirety as set forth in this Amendment No. 1. In addition, pursuant to Rule 13a-14(a)~~Section 21E of the Securities Exchange Act of 1934, as amended, (the Exchange Act), we are including with this Amendment No. 1 certain currently dated certifications. Because no financial statements have been included in this Amendment No. 1 and this Amendment No. 1 does not contain or amend any disclosurewhich reflect our current views with respect to ~~Items 307~~future events and ~~308~~financial performance. These forward-looking statements are generally identified by their use of ~~Regulation S-K, paragraphs 3, 4~~such terms and 5phrases as “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “anticipate,” “should,” “could,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,” “outlook,” “target,” “guidance” and similar expressions, although not all forward-looking statements contain such terms. This list of indicative terms and phrases is not intended to be all-inclusive. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the ~~certifications have been omitted.~~ date the statement was made.

These statements are subject to various risks and uncertainties, many of which are outside our control. Item 1A, “Risk Factors,” of this Annual Report on Form 10-K sets forth more detailed information about the factors that may cause our actual results to differ, perhaps materially, from the views stated in such forward-looking statements. Although the information contained in this Annual Report on Form 10-K represents our best judgment as of the date of this report based on information currently available and reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date made. We are not ~~including~~undertaking any duty or obligation to update any forward-looking statements to reflect developments or information obtained after the ~~certifications under Section 906~~date of ~~the Sarbanes-Oxley Act of 2002 as no financial statements are being filed with~~ this ~~Amendment No. 1.~~

~~Except as described above, no other amendments are being made~~Annual Report on Form 10-K, except to the 2018 Annual Report. This Amendment No. 1 does not reflect events occurring after the February 21, 2019 filing of the 2018 Annual Report or modify or update the disclosure contained in the 2018 Annual Report in any way other than asextent required ~~to reflect the amendments discussed above and reflected below. Accordingly, this Amendment No. 1 should be read in conjunction with the 2018 Annual Report and our other filings with the SEC.~~

~~The following table provides information regarding our executive officers:~~by law.

Mr. Edwards has been our President and Chief Executive Officer and a member of our Board of Directors since 2011. From 2010 to 2011, Mr. Edwards was our President and Chief Operating Officer. Prior to that, Mr. Edwards served as our Executive Vice President of Business Development and General Manager, Wireless Network Solutions from 2007 to 2010. From 2005 to 2007, he served as our Executive Vice President of Business Development. Mr. Edwards also served as President and Chief Executive Officer of OFS Fitel, LLC and OFS BrightWave, LLC, a joint venture between our Company ~~and The Furukawa Electric Co. Mr. Edwards has also served in various capacities with Alcatel, including President of Alcatel North America Cable Systems and President of Radio Frequency Systems.~~

Mr. McClelland became our Executive Vice President and Chief Operating Officer upon close of the acquisition of ARRIS International plc (ARRIS). Mr. McClelland was the Chief Executive Officer of ARRIS and a member of the ARRIS board of directors prior to the acquisition from 2016 to 2019. Mr. McClelland joined ARRIS in 1999, and his prior roles at ARRIS also included President of ARRIS’ Network & Cloud and Global Services business, ARRIS’ Group President for Products and Services, Vice President and General Manager for ARRIS’ Customer Premises Equipment Unit, and Vice President of Engineering. Prior to joining ARRIS, Mr. McClelland was responsible for the development of Nortel’s Signaling System #7 and Signal Transfer Point product lines as well as several development roles within Nortel’s Class 4/5 DMS switching product line. Mr. McClelland received a Bachelor of Electrical Engineering from the University of Saskatchewan.

Mr. Pease has been our Executive Vice President and Chief Financial Officer since 2018. From 2016 to 2018, Mr. Pease served as Executive Vice President and Chief Financial Officer of Snyder’s-Lance, Inc. Mr. Pease served as a principal at McKinsey & Company as a leader in their global corporate finance and business functions practice from 2015 to 2016. From 2011 to 2015, he was Senior Vice President and Chief Financial Officer at EnPro Industries, Inc., overseeing six operating divisions in addition to finance, accounting, strategy and development, global supply chain and information technology. Before joining EnPro, Mr. Pease worked at McKinsey & Company and served in the US Navy as a SEAL Platoon commander.

Mr. Kurk became our Executive Vice President and Chief Technology Officer upon close of the ARRIS acquisition, a position he previously held from 2016 to 2017. Mr. Kurk most recently served as our Executive Vice President and Chief Operating Officer in 2018 and 2019. Prior to 2016, he served as Senior Vice President of the Wireless segment, with responsibility for indoor, outdoor, and backhaul businesses from 2012 to 2015. Mr. Kurk joined CommScope in 2009 as Senior Vice President of the Enterprise business unit. From 1997 to 2009, Mr. Kurk held a variety of positions at Andrew Corporation and one of its successors, including Director of Business Development, Vice President of R&D, PLM, and Strategy and Vice President and General Manager of the Wireless Innovations Group. Prior to joining Andrew, Mr. Kurk worked for Motorola, where he was a hardware development engineer for cellular base stations and a product manager for a CDMA base station product line.

Mr. Wyatt has been Senior Vice President, Chief Legal Officer and Secretary of CommScope since 2000. Prior to joining our Company as General Counsel and Secretary in 1996, Mr. Wyatt was an attorney in private practice with Bell, Seltzer, Park & Gibson, P.A. (now Alston & Bird LLP).

Ms. Clark has been our Senior Vice President, Chief Accounting Officer since September 2018. Ms. Clark previously served as Vice President, Corporate Accounting since 2013. She served in various positions within our finance organization since joining CommScope in 2004. Prior to joining CommScope, Ms. Clark was employed by Deloitte & Touche, LLP. Ms. Clark is a Certified Public Accountant in North Carolina.

Ms. Mingle became our Senior Vice President, Chief Human Resources Officer, in 2016. Prior to joining CommScope, she was the Chief Human Resource Officer at Xylem Inc. from 2011 to 2015, where she was a founding executive team member for the global water Company spin-off from ITT Corp. From 2003 to 2011, Ms. Mingle was the Senior Vice President, Human Resources at Hovnanian Enterprises, Inc., one of the nation’s largest homebuilders. She spent the first 14 years of her career with The Black & Decker Corporation in various human resource roles.

Our Company is governed by a board of directors. Pursuant to our certificate of incorporation, the precise number of directors shall be fixed, and may be altered from time to time, exclusively by a Board resolution adopted by the affirmative vote of a majority of the total number of directors then in office. The number of directors constituting our whole Board is currently fixed at eleven. Two directors are designated by The Carlyle Group (Carlyle) per the Investment Agreement and our remaining directors are divided into three classes with staggered three-year terms so that the term of one class expires at each annual meeting of stockholders.

The professional experience and skills and qualifications highlighted in the nominee and continuing directors’ biographies below summarize the experience, qualifications, areas of expertise or skills that the Board of Directors used to determine that the person should serve as a director.

Our Board believes that good corporate governance is important to ensure our business is managed for the long-term benefit of our stockholders. We have adopted a Code of Conduct that applies to all our directors, executive officers and senior financial and accounting officers, as well as a Code of Ethics and Business Conduct that applies to all of our employees. We have also adopted Corporate Governance Guidelines. Current versions of the Code of Conduct, the Code of Ethics and Business Conduct and the Corporate Governance Guidelines, are available on our website at www.commscope.com and will also be provided upon request to any person without charge. Requests should be made in writing to our Corporate Secretary at CommScope Holding Company, Inc., 1100 CommScope Place, SE, Hickory, NC 28602, or by phone at (828) 324-2200. In the event of any amendment or waiver of our Code of Conduct or Code of Ethics and Business Conduct applicable to our directors or executive officers, such amendment or waiver will be posted on our website.

The Company currently has separate individuals serving in the positions of Chairman of the Board and Chief Executive Officer. The Board of Directors does not have a set policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer, as the Board believes it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board regularly evaluates whether the roles of Chairman of the Board and Chief Executive Officer should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or be an employee of the Company. The Board believes these issues should be considered as part of the Board’s broader oversight and succession planning process. The Board continues to believe that Mr.

Drendel is appropriate to serve as non-executive Chairman as he is a founder of the Company and has significant experience in the Company’s industry and in managing through challenging business environments.

Mr. Watts was appointed as Lead Independent Director in 2017. Among other things, our Lead Independent Director presides at all meetings of the independent directors and any Board meeting when the Chairman is not present, advises the Chairman as to the Board’s agenda and information to be provided to the Board, and serves as the principal liaison and facilitator between the independent directors and the Chairman and Chief Executive Officer. In addition, our Lead Independent Director has the authority to convene special meetings of the independent directors, responds to stockholder questions directed to the independent directors and is available to major stockholders for consultation and direct communication.

As reflected in our Corporate Governance Guidelines, the Board’s primary responsibilities include planning for Chief Executive Officer succession and monitoring and advising on management’s succession planning for other executive officers. The Board’s goal is to have a long-term and continuing program for effective senior leadership development and succession. The Board is actively engaged in these endeavors and has a contingency plan in place for emergencies such as the departure, death or disability of the Chief Executive Officer or other executive officers.

~~The Chief Executive Officer and Chief Human Resources Officer report to the Board at least twice a year on succession planning and management development.~~

While risk management is primarily the responsibility of our management, the Board provides overall risk oversight focusing on the most significant risks facing the Company. The Board oversees the risk management processes that have been designed and are implemented by our executives to determine whether those processes are functioning as intended and are consistent with our business and strategy. The Board executes its oversight responsibility for risk management directly and through its committees. The Board’s role in risk oversight has not affected its leadership structure.

The Audit Committee is specifically tasked with reviewing with management, the independent auditors and our legal counsel, as appropriate, our compliance with legal and regulatory requirements and any related compliance policies and programs. The Audit Committee is also tasked with reviewing our financial and risk management policies and oversight of our enterprise risk management program, which is our comprehensive assessment of key risks related to finance, operations and management information systems, including those related to cybersecurity. Members of our management who have responsibility for designing and implementing our risk management processes regularly meet with the Audit Committee. Additionally, the Nominating and Corporate Governance Committee is tasked with overseeing our environmental and corporate responsibility efforts and any related risks. The Board’s other committees oversee risks associated with their respective areas of responsibility.

The full Board considers specific risk topics, including risk-related issues pertaining to laws and regulations enforced by the United States (U.S.) and foreign government regulators and risks associated with our business plan and capital structure. In addition, the Board receives reports from members of our management that include discussions of the risks and exposures involved with their respective areas of responsibility, and the Board is routinely informed of developments that could affect our risk profile or other aspects of our business.

The Nominating and Corporate Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board of Directors those candidates to be nominated for election. In reviewing such candidates, our Corporate Governance Guidelines, which are available on our website as described above, set forth criteria that the Nominating and Corporate Governance Committee must consider when evaluating a director candidate for membership on the Board of Directors. These criteria are as follows:

~~The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for any prospective nominee.~~

Our Corporate Governance Guidelines also require the Nominating and Corporate Governance Committee to consider the mix of backgrounds and qualifications of the directors in order to assure that the Board of Directors has the necessary experience, knowledge and abilities to perform its responsibilities effectively and to consider the value of diversity on the Board of Directors, including diversity of experience, gender, race, ethnicity and age. While diversity and variety of experiences and viewpoints represented on the Board should always be considered, a director nominee should not be chosen or excluded solely or largely because of race, religion, national origin, gender, sexual orientation or disability.

Our Board of Directors currently consists of eleven members. Frank M. Drendel has been our Chairman of the Board of Directors since 2011. Claudius E. Watts IV was appointed as Lead Independent Director in 2017.

As of April 4, 2019, per the Investment Agreement between Carlyle and CommScope and effective with the closing of the acquisition of ARRIS, Carlyle designated two directors to our Board and they will each serve a one-year term expiring in 2020 or until their successors are duly elected and qualified. These directors will be on the slate of nominees recommended by the Board for election in 2020 and expiring at the next annual meeting. These directors will be designated by Carlyle and voted on by the holders of Series A Convertible Preferred Stock as a single class in 2020 and at each annual meeting thereafter until certain beneficial ownership conditions are no longer met as detailed in the Investment Agreement.

The remainder of our Board is divided into three classes whose members serve three-year terms expiring in successive years. These directors hold office until their successors have been duly elected and qualified or until the earlier of their respective death, resignation or removal. At each annual meeting of stockholders, the successors to the directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting of stockholders following such election. The number of members on our Board of Directors may be modified from time to time exclusively by resolution of our Board of Directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable the Board of Directors to satisfy their oversight responsibilities effectively in light of our business and structure, the Board of Directors focused primarily on each person’s background and experience as reflected in the information discussed in each of the director’s individual biographies set forth above. We believe that our directors provide an appropriate diversity of experience and skills relevant to the size and nature of our business.

Each year, our Board and committees conduct self-evaluations to assess the qualifications, attributes, skills and experience represented on the Board; to assess their effectiveness and adherence to our Corporate Governance Guidelines and committee charters; and to identify opportunities to improve Board and committee performance.

The Board of Directors provides a process for stockholders to send communications to the Board of Directors or any of the directors. Stockholders may send written communications to the Board of Directors, or any of the individual directors, c/o our Corporate Secretary at CommScope Holding Company, Inc., 1100 CommScope Place, SE, Hickory, North Carolina 28602. All communications will be compiled by the Corporate Secretary of the Company and submitted to the Board of Directors or the individual directors, as applicable, on a periodic basis.

The Exchange Act requires our directors, executive officers and beneficial owners of more than 10% of our capital stock to file reports of ownership and changes of ownership with the Commission and Nasdaq. Based on our records and other information, we believe that during the year ended December 31, 2018 all applicable Section 16(a) filing requirements were met in a timely fashion.

This Compensation Discussion and Analysis (CD&A) describes our compensation philosophy, process, plans and practices for our NEOs. Our executive compensation program is intended to incent and reward our leadership to produce financial results that our Compensation Committee believes align with the interests of our stockholders.

~~Our NEOs for 2018, whose compensation is discussed in this CD&A, are as follows:~~

CommScope Holding Company, Inc. iswas incorporated in Delaware on October 22, 2010. We are a global provider of infrastructure solutions for communication and entertainment networks. ~~The Company’s~~Our solutions ~~and services~~ for wired and wireless networks enable ~~high-bandwidth~~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. Our solutions are complemented by a broad array of services including technical support, systems design and integration. We are a leader in digital video and IP television distribution systems, broadband access infrastructure platforms and equipment that delivers data and voice ~~applications. CommScope’s~~networks to homes. 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 have a team of approximately 30,000 people to serve our customers in over 150 countries through a network of world-class manufacturing and distribution facilities strategically located around the globe. Our customers include substantially all the leading global telecommunication operators, data center managers, leading multi-system operators (MSOs) and thousands of enterprise customers, including many Fortune 500 companies. We have long-standing, direct relationships with our customers and serve them through a direct sales force and a global network of channel partners.

~~Like others~~On April 4, 2019, we completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. The combined company is expected to drive profitable growth in new markets, shape the future of wired and wireless communications, and be in a position to benefit from key industry trends, including network ~~infrastructure industry, CommScope faced challenges~~convergence, fiber and mobility everywhere, 5G, Internet of Things (IoT) and rapidly changing network and technology architectures. The operations of ARRIS are included in ~~2018 due to difficult market conditions including pricing pressures and higher material costs. We missed~~ our ~~revenue guidance and experienced negative stockholder returns. Our team worked diligently throughout~~consolidated operating results for the year ended December 31, 2019 from the date of the Acquisition, April 4, 2019.

For the year ended December 31, 2019, our revenues were $8.35 billion and our net loss was $929.5 million, which included goodwill impairment charges of $376.1 million, acquisition accounting adjustments of $264.2 million and transaction and integration costs of $195.3 million. For further discussion of our current and prior year financial results, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Prior to ~~reduce~~the Acquisition, we operated and reported based on two operating segments: Connectivity Solutions (Connectivity) and Mobility Solutions (Mobility). Subsequent to the acquisition of ARRIS, we reported financial performance based on five operating segments: Connectivity, Mobility, Customer Premises Equipment (CPE), Network & Cloud (N&C) and Ruckus Networks (Ruckus).

In the discussion below regarding our CPE, N&C and Ruckus segments, 2019 full year net sales represent net sales for the segments including the period before the Acquisition, January 1, 2019 – April 3, 2019, which is not included in our reported consolidated results.

Our Connectivity segment provides innovative fiber optic and copper cable and connectivity solutions for use in data centers, business ~~costs~~enterprises, telecommunications, cable television and ~~remain profitable, while laying~~residential broadband networks. Our Connectivity portfolio includes innovative solutions for both indoor and outdoor network applications.

Our indoor connectivity solutions are sold primarily under the ~~groundwork~~SYSTIMAX, NETCONNECT and Uniprise brands and include optical fiber and twisted pair structured cable solutions, intelligent infrastructure management hardware and software and network rack and cabinet enclosures to create physical layer solutions that enable voice, video and data communication and building automation.

Our outdoor connectivity 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. These products primarily comprise hardened connector systems, fiber distribution hubs and management systems, couplers and splitters, plug-and-play multiport service terminals, hardened optical terminating enclosures, high density cable assemblies and splice closures.

The Mobility segment provides the integral building blocks for ~~future growth opportunities.~~cellular base station sites and related connectivity; indoor, small cell and distributed antenna wireless systems; and wireless network backhaul planning and optimization products and services. Our macro cell site solutions can be found at wireless tower sites and on rooftops. Our metro cell solutions can be found on street poles and on other urban structures. Macro and metro cell site applications represent approximately 85% of our Mobility segment net sales. Our distributed antenna system (DAS) and small cell solutions allow wireless operators to increase spectral efficiency and enhance cellular coverage and capacity in challenging network conditions such as commercial buildings, urban areas, stadiums and transportation systems.

Our solutions, marketed primarily under the Andrew brand, enable wireless operators to meet coverage and capacity requirements for next-generation networks. We focus on physical-layer solutions for all aspects of the radio access network from the macro through the metro, to the indoor layer. We believe our ~~position~~macro cell site, metro cell site, DAS and small cell solutions establish us as a global leader in RF infrastructure solutions for wireless operators and original equipment manufacturers (OEMs). We strive to provide a one-stop source for managing the technology lifecycle of a wireless network, including complete physical layer infrastructure solutions for 3G, 4G and 5G applications.

Customer Premises Equipment Segment (2019 post-Acquisition Net Sales of $2.5 billion and 2019 full year Net Sales of $3.4 billion)

The CPE segment includes subscriber-based solutions that support broadband and video applications connecting cable, telecommunications and satellite service providers to a customer’s home and adds wireless connectivity or other wired connections integrating in-home devices together to enable the consumption of internet-based services and the delivery of broadcast, streamed and stored video to televisions and other connected devices. Broadband offerings include devices that provide residential connectivity to a service provider’s network, such as digital subscriber line (DSL) and cable modems and telephony and data gateways which incorporate routing and Wi-Fi functionality. Video offerings include set top boxes that support cable, satellite and IPTV content delivery and include products such as digital video recorders (DVRs), high definition set top boxes and hybrid set top devices.

Network & Cloud Segment (2019 post-Acquisition Net Sales of $1.1 billion and 2019 full year Net Sales of $1.5 billion)

Our N&C 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 portfolio also includes a full suite of global services that offer technical support, professional services and system integration to enable solutions sales of our end-to-end product portfolio.

Ruckus Networks Segment (2019 post-Acquisition Net Sales of $0.4 billion and 2019 full year Net Sales of $0.6 billion)

Our Ruckus segment provides converged wired (local area network (LAN)) and wireless (WLAN) networks for enterprises and service providers. Product offerings include indoor and outdoor Wi-Fi and LTE access points, access and aggregation switches; an IoT suite, on-premises and cloud-based control and management systems; and software and software-as-a-service (SaaS) applications addressing security, location, reporting and analytics.

We participate in the ~~overall~~large and growing global market for connectivity and essential communications infrastructure. This market is ~~strong,~~being driven by the growth in bandwidth demand associated with the continued demand of smartphones, tablets and machine-to-machine (M2M) communication as well as the proliferation of data centers, Big Data, cloud-based services, streaming media content and IoT. In addition, video distribution over the broadband IP network is transforming how content is managed and consumed. IP facilitates new forms of video such as Over-the-Top (OTT) and interactive television. Specifically, we serve the following markets within the connectivity and communications infrastructure industry:

Enterprise Market – We offer equipment to provide licensed and unlicensed, wired and wireless, public and private indoor networks. This equipment includes Wi-Fi, DAS, stand-alone and distributed small cells, switching, fiber and twisted pair cabling and apparatus products for enterprise owned, third-party owned and carrier owned networks.

Outdoor Wireless Market – We deliver macro-cell tower antennas, metro-cell antennas, cabling, poles, power systems and other equipment to enable outdoor cellular coverage in rural, suburban and metro areas.

In-Home Networks Market – We sell gateways, modems, Wi-Fi access points (APs), Wi-Fi mesh extenders and set-top boxes that are deployed inside homes to connect end-users and devices to cable television, OTT content and the ~~need~~internet.

Broadband Access Market – We offer passive and active equipment, including cabling, connectivity, closures, cabinets, splitters and other passive equipment for television, internet and cellular backhaul networks. In cable networks we provide active equipment such as converged cable access platform (CCAP) hardware and software as well as network plant equipment which includes optical nodes and amplifiers. In fiber networks we provide the hardware and software components for gigabit-capable passive optical networks (GPON).

Data Center Market – We provide cabling, connectivity and other equipment for multi-tenant, enterprise and hyperscale data centers.

Video Systems & Security Market – We sell equipment to encode, encrypt, package and distribute video content for secure delivery over the network.

Network Services Market – We provide our customers with services focused on planning, deploying and maintaining their communications networks.

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

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

~~Key measures of our 2018 financial performance include~~Our customers are working to transition their networks to become faster, more responsive and more efficient. CommScope sees several key network trends that will continue to impact CommScope and the ~~following:~~industry during 2020 and beyond:

Although our 2018 results did not meet our expectations, we did achieve some noteworthy goals toward our business strategy with the announcement on November 8, 2018 of our agreement to acquire ARRIS for approximately $7.4 billion. CommScope and ARRIS will bring together a unique set of complementary assets and capabilities that enable end-to-end wired and wireless communication infrastructure solutions.

Our compensation program is designed to retain key executives with competitive levels of compensation based on our industry but also to provide a strong link between executive pay and the Company’s performance. A significant portion of our executives’ compensation for 2018 was tied to the achievement of performance goals that align management’s objectives with key drivers of long-term stockholder value, including free cash flow, increased profitability, revenue growth and stock price appreciation. Our 2018 financial performance was below expectations and we did not achieve our financial objectives, resulting in well below target incentive payouts and reduced equity value.

The following are highlights regarding the compensation of our NEOs for 2018, including key actions taken by the Compensation Committee and outcomes of incentive plans in place during the year. Overall, the Compensation Committee retained the core design of our executive compensation program for 2018, with an emphasis on short- and long-term incentive compensation that rewards our senior executives when they successfully implement our business plan and, in turn, deliver value for our stockholders.

The 2018 target compensation opportunities for our NEOs were generally maintained at the levels in place in 2017, with our NEOs receiving salary increases between 3% and 3.85% in early 2018 and no changes to either annual or long-term incentive target opportunities. Our Summary Compensation Table shows modest increases in total compensation for our NEOs (other than Mr. Pease, who was a newly hired executive, and Mr. Kurk, for whom only one year of pay is reported due to his promotion to an executive officer position during 2018) primarily due to an increase in the value of earned annual incentives in our 2018 Annual Incentive Plan relative to the result in 2017. The incentive earned by our NEOs in both years was significantly below target, which we believe is aligned with our results over time and reinforces our pay for performance approach. After consideration of the Company’s 2018 performance, the Compensation Committee held the base salaries for our NEOs flat for 2019.

As described below, our 2018 executive compensation program also incorporated modifications approved by our Compensation Committee to reinforce our pay for performance objectives and maintain a strong governance profile with respect to compensation decision-making and oversight. These modifications include:

Our executive compensation program is designed to align executive interests with those of our stockholders. During the year, we experienced negative stockholder return and missed our revenue guidance. As a result, and as described in more detail below, total compensation of our NEOs was meaningfully below target during 2018. The variable features of our compensation program are:

The Compensation Committee generally approves annual compensation decisions for our executive officers in the first quarter of each year. The Committee’s approvals in the first quarter address target annual incentives adjustments effective as of January 1, base salary effective as of April 1, as well as equity awards that are granted March 1. In the timeline leading up to the annual approval of compensation decisions, the Compensation Committee undertakes a review process that spans several meetings and is intended to evaluate our approach to setting executive pay from multiple perspectives. This review begins in the third quarter of the prior year and takes into consideration our strategic business plan, market data, trends in executive compensation, the input of the Committee’s independent compensation consultant, and input from stockholders, where applicable.

For 2018, this review process resulted in several changes to our compensation strategy and incentive plan design, as described in more detail below, intended to strengthen our pay for performance profile. In particular, the Committee put increased emphasis on revenue growth as a contributor to long-term stockholder value creation, our annual incentive plan and performance share design were modified to increase the prominence of corporate revenue in our performance measurement process, and the Committee introduced performance awards with a multi-year performance measurement period.

Our AIP bonus awards are paid in cash and are conditioned upon achievement of Board-established performance goals. AIP bonus awards for the NEOs in 2018 were based upon achievement of an AOI goal, which was weighted at 60%, an Adjusted Free Cash Flow goal, which was weighted at 30%, and a Corporate Revenue goal, which was weighted at 10%. The long-term equity awards granted to the NEOs in 2018 were a combination of stock options, RSUs and PSUs. All stock option and RSU awards vest evenly on the first, second and third anniversary of the grant date, subject to continuous service. Half of the PSU awards granted in 2018 are subject to achievement of an AOI goal for 2018 and they vest on the second anniversary of the grant date subject to continuous service. The other half of the PSU awards granted in 2018 are subject to achievement of cumulative revenue goals for a three-year performance period (2018-2020) and vest on the third anniversary of the grant date subject to continuous service. The AIP bonus awards and the long-term equity awards are designed to ensure that total compensation reflects the overall level of success of the Company, and AIP bonus awards and PSUs are also intended to motivate the NEOs to meet and exceed pre-established target levels of performance for each measure.

As shown on the following chart, a significant portion of target compensation for each of our NEOs in 2018 was at-risk as it could vary based on Company performance against pre-established goals and/or changes in our stock price.

Our Compensation Committee generally does not vary target incentives applicable to our executives based on short-term variability in our performance. Because of the prominence of variable, at-risk compensation in our executive compensation program, we emphasize alignment of pay-and-performance over a longer-term time horizon and based on the realized value under incentive programs. AIP bonus awards and long-term equity awards are designed to ensure that total compensation reflects the overall level of success of the Company. AIP bonus awards and PSUs are also intended to motivate the NEOs to meet and exceed pre-established target levels of performance for each measure.

In the case of our Chief Executive Officer, the short-term incentive target for 2018 was maintained at 125% of base salary while the target grant date value of equity granted in 2018 was equal to the value granted in 2017. The Compensation Committee determined to maintain these incentive targets for our Chief Executive Officer following analysis of market data and taking into consideration the opportunity for increased realized compensation conditioned on strong performance of our Company over time. As of the end of 2018:

Although our results for the year did not meet our expectations, the Compensation Committee believes that the outcomes of our incentive programs reflect a strong alignment of pay and performance in our compensation program and an emphasis on accountability for our financial performance and stockholder return for our executive team.

At the Annual Meeting of Stockholders on May 4, 2018, over 98% of the votes cast were in favor of the advisory vote to approve the executive compensation of the NEOs. The Compensation Committee acknowledged this positive result and concluded that our stockholders continue to support the compensation paid to our executive officers and the Company’s overall pay practices, given their direct alignment with the performance of the Company.

We endeavor to maintain sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our executive compensation philosophy. The following summarizes our executive compensation and related governance policies and practices during 2018:

We intend for our NEOs’ total compensation to reflect our pay for performance compensation philosophy. This philosophy includes both compensating our NEOs competitively when we meet or out-perform our goals as well as placing large portions of their compensation at-risk based on both the Company’s financial performance and our stock price performance. This assures that the financial incentives of our executives are in alignment with the interests of our stockholders. Furthermore, by delivering a significant portion of compensation in the form of at-risk incentives (including equity compensation), the compensation realized by our NEOs will be reduced if the Company does not achieve performance goals.

5G wireless is evolving from an industry vision toward a tangible, next generation wireless technology. Many operators have begun a transition to 5G networks and have announced trials and pre-standard deployments of 5G technology. The ~~following table summarizes the~~number of 5G-enabled devices is expected to continue to increase during 2020. The primary ~~elements~~benefits of ~~our executive compensation program for 2018.~~o5G are expected to include:

Our Compensation Committee has the primary authority to determine and approve the compensation of our NEOs. The Committee is charged with reviewing our executive compensation policies and practices annually to ensure that the total compensation paid to our NEOs is fair, reasonable, competitive to our peers and commensurate with the level of expertise and experience of our NEOs. To aid our Compensation Committee in making its determinations, our Chief Executive Officer provided recommendations to our Compensation Committee regarding the compensation of all officers who report directly to him.

Our Compensation Committee reviews and approves the total amount of compensation for our NEOs and the allocation of total compensation among each of the components of compensation based principally on the following factors:

We believe that direct ownership in CommScope provides our NEOs with a strong incentive to increase the value of the Company. We encourage equity ownership by our NEOs and other employees through direct stock holdings and the award of various equity-based awards. We believe that equity awards granted to our NEOs substantially align their interests with those of our stockholders. In addition, we maintain formal stock ownership guidelines. See the “Stock Ownership Guidelines” section below for more information.

The Compensation Committee relies on its independent compensation consultant to provide advice on matters relating to the compensation of our executives and non-employee directors. Compensia, a national compensation consulting firm, has served in this capacity since 2016.

~~A representative of Compensia attended all Compensation Committee meetings in 2018 and provided the following assistance to the Compensation Committee:~~

Compensia reports directly to the Compensation Committee and provided no services to us other than the consulting services to the Committee. The Compensation Committee reviews the objectivity and independence of the advice provided by Compensia. In 2018, the Committee considered the specific independence factors adopted by the SEC and the NASDAQ Global Select Market and determined that Compensia is independent and that its work did not raise any conflicts of interest.

In 2017, with the assistance of Compensia, the Compensation Committee developed and approved a compensation peer group as a source of competitive market data for evaluating the compensation of our executive officers and to support pay decisions for 2018.

~~The compensation peer group consisted of 16 companies deemed to be representative of the types of companies with which we compete for executive talent.~~

~~Companies included in our peer group were identified based primarily on the following target selection criteria:~~

Companies included in the peer group did not need to meet all of the selection criteria above. Our Compensation Committee evaluated each company against all selection criteria in order to identify a peer group that, as a whole, was considered to be a strong representation of our competitive market for talent.

We supplement information from the peer group public filings with the data from the Radford Global Technology Survey. The data from this research, which is provided annually by Compensia, is a factor in determining executive compensation, as described above. When evaluating executive compensation relative to practices among our peers, the Compensation Committee generally seeks to align with the market median. While peer group and other market research data provides the framework for our compensation decisions, adjustments are also made by the Compensation Committee on an individual basis to account for individual performance and each executive’s scope of responsibility and experience.

Base salaries for our NEOs are generally set at a level deemed necessary to attract and retain individuals with superior talent. In addition to considering industry and market practices, our Compensation Committee and Board of Directors annually review our NEOs’ performance. Adjustments in base salary are generally based on the factors noted above, including each NEO’s individual performance, scope of responsibility, experience and competitive pay practices.

After considering our Chief Executive Officer’s recommendations (other than with respect to his own compensation) and consistent with past practices, in early 2018 our Compensation Committee increased base salaries for each of our NEOs.

~~The base salaries for our NEOs as established as of April 1, 2017 and April 1, 2018 are set forth in the following table.~~

~~After consideration~~Wireless operators will need to both acquire and launch new spectrum for 5G, as well as continue their strategy of re-allocation of spectrum from one generation to another. Some of this spectrum will be at much higher frequencies and will use new technologies to deliver exceptional amounts of bandwidth to subscribers. 5G also requires significant fiber infrastructure to connect wireless access points to each other to improve the response time of the ~~Company’s performance in 2018,~~network. As wireless operators transition toward 5G, they must also manage the ~~Compensation Committee held~~fundamental network deployment issues of site acquisition, power, backhaul and in-building wireless proliferation.

In addition to investment required by wireless operators, the ~~base salaries for our NEOs flat for 2019.~~transition to 5G could also spark an investment cycle by cable operators as they upgrade their networks to compete with fixed wireless broadband, which could become a viable alternative to traditional broadband internet access.

~~Historically,~~Residential and business bandwidth consumption continues to grow substantially. The proliferation of OTT video, multiscreen viewing, cloud services and social media are prompting operators to accelerate fiber deployment. Operators can increase network capacity by installing fiber deeper into their networks. Although consumer devices are increasingly connected to the ~~Company’s consolidated financial performance has~~network via a wireless connection such as LTE or Wi-Fi, these wireless access points must have abundant backhaul capacity available to provide consumers the experience they expect. Operators around the globe are deploying fiber deep to build next generation networks. These networks use the capabilities of fiber to enable consumers access to content at higher speeds with improved network response time.

As networks improve and deliver higher speed and greater reliability, many operators are choosing to provide both residential and business services over a common physical layer infrastructure, saving them time and money. In addition, with the deployments of metro cells, outdoor small cells and fixed wireless broadband to the home, these same service providers are planning to utilize this common physical layer infrastructure to provide connectivity to these wireless access points.

Several trends in the enterprise market are expected to create opportunities and challenges. First, the shift toward mobility in business enterprises is expected to impact the amount and type of structured copper connectivity needed over the longer-term. As the bandwidth requirements for Wi-Fi, indoor cellular networks (private and public), and IoT devices increase, more access points will be needed throughout commercial buildings. As a result, enterprises are expected to adjust in-building cabling designs to deliver both power and high-speed data to those devices. Power-over-ethernet is expected to become increasingly important as the number of devices used for Wi-Fi and indoor cellular networks multiplies. While enterprises continue to need copper connectivity to power edge devices, enterprises are deploying fiber more extensively in data centers. Over the next several years, we expect the growing demand for fiber and Wi-Fi solutions to result in decelerating demand for copper solutions in networks.

Due to huge increases in data traffic and migration of applications to the cloud, enterprises are also shifting spending toward multi-tenant (co-located) data centers and hyperscale cloud service providers, which offer cloud data center services as a replacement for in-house corporate data centers. Multi-tenant and hyperscale data center managers are focused on ultra-low loss, high density, scalable fiber connectivity solutions.

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

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

As demand growth continues to outpace macro cell capacity growth, new solutions are required for densely populated areas. Metro cells and indoor networks have emerged as important layers of the network. Metro cells are smaller outdoor cell sites, located closer to the ground, having a lower power level than traditional macro cell sites. Metro cells blend into their environment and are often found integrated with traditional street furniture, which helps alleviate zoning restrictions that have made traditional deployments difficult.

Small cell and DAS solutions address the capacity and speed requirements from an indoor perspective. These systems provide coverage and capacity to the indoor environment and reduce the load from the macro and metro layers, which improves overall network performance. Small cell and DAS systems may range from small single operator, single-band, low-capacity systems for use in ~~determining payouts~~enterprise buildings to large multi-carrier, multi-technology, multi-band systems for use in high capacity public venues.

Wi-Fi 6 is the next generation standard in Wi-Fi technology that builds on and improves the current Wi-Fi standard. Until this point, all upgrades to Wi-Fi have been less than a gigabit, but Wi-Fi 6 breaks through this boundary and

will likely drive the upgrade of not only the access point but also the switch and cabling systems. Moreover, regulatory efforts are underway to free up the necessary spectrum in the 6GHz band which will enable many more use cases and, in combination with Wi-Fi 6, untether a whole host of equipment.

With the global rise in demand for consumer, business and device connectivity, we expect the need and reliance on communications networks to increase dramatically over the next ten years. Our strategy and 2020 priorities are to:

To support our ~~NEOs under~~goal of shaping the ~~AIP. As described~~most advanced networks of the future, we announced a realignment of our operating structure that became effective in ~~more detail below, payouts for 2018 performance were~~January 2020. Based on this new operating structure, our new segments are Venue and Campus Networks, Broadband Networks, Outdoor Wireless Networks and Home Networks. We will begin reporting based on the level of achievement of AOI, Adjusted Free Cash Flow and Corporate Revenue goals. The AIP performance measures and each of the NEO’s target awards, expressed as a percentage of base salary for the year, are approved by our Compensation Committee duringthese segments in the first quarter of 2020. We are positioned as a leader in each of these areas already and will endeavor to defend our leadership in the ~~relevant performance year.~~

~~Our Compensation Committee determined that AOI, Adjusted Free Cash Flow~~more mature parts of these markets, while also shifting resources towards our targeted growth choices within them. We believe this realignment will not only improve the execution of our strategy and ~~Corporate Revenue were meaningful measures~~help unlock the full potential of our end-to-end portfolio of networking equipment, but it will also help us take advantage of greater revenue and cost synergy potential within our current businesses to achieve the ~~Company’s financial performance. These financial measures exclude items that could have a disproportionately negative or positive impact on our results in a particular period.~~following:

In the discussion below, 2019 full year net sales represent net sales for the segments including the period before the Acquisition, January 1, 2019 – April 3, 2019, which is not included in our reported consolidated results.

Venue and Campus Networks - Targeting both public and private networks for campuses, venues, data centers, and buildings, this segment includes our Ruckus Networks, Enterprise and Distributed Coverage and Capacity Systems (DCCS) businesses. It includes Wi-Fi and switching, DAS, licensed and unlicensed small cells, and enterprise fiber and copper infrastructure. With 2019 full year net sales of approximately $2.1 billion, this segment has several product lines that are expected to grow rapidly and can provide a differentiated, integrated offering.

Broadband Networks - This segment, which combines our Network Cable and Connectivity and Network & Cloud businesses, will position CommScope as the leading North American access network equipment manufacturer with an end-to-end product portfolio serving the telco and cable provider broadband market. 2019 full year net sales for the new Broadband segment were approximately $2.8 billion.

Outdoor Wireless Networks - This segment brings together our RF Products and Integrated Solutions businesses, which represent 2019 full year net sales of approximately $1.5 billion. The Outdoor Wireless segment will focus on the macro and metro cell businesses. It consists of base station antennas, RF filters, tower connectivity, microwave antennas, metro cell and cabinets/steel, accessories and spectrum access system (SAS). As our wireless operator customers shift a portion of their 5G capital expenditures from the macro tower to the metro cell, CommScope’s differentiated offerings and portfolio can support a smooth and cost-effective transition for customers.

Home Networks - Comprising the former Consumer Premises Equipment business, this segment, which represents 2019 full year net sales of approximately $3.4 billion, will focus on the future of the ~~AIP, AOI consists of operating income~~connected home and devices inside the home. Anchored by CommScope’s broadband gateways (coaxial, fiber and wireless), video set-tops and in-home devices, this business continues to provide the industry-leading technologies for providing broadband services to and inside the home.

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

We plan to build on our legacy of innovation and on our worldwide portfolio of patents and patent applications by continuing to invest in research and development (R&D). We intend to drive profitable growth by enabling our service provider, enterprise, hyperscale and emerging cloud customers with the necessary broadband capacity to meet increased consumer demand. We also intend to utilize our deep industry expertise to offer unique perspectives to solve customers’ challenges. We intend to focus our investment on high-growth markets.

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

We continuously pursue strategic initiatives aimed at optimizing our utilization of resources by reducing manufacturing and distribution costs and optimizing our overall cost structure. We believe that we have a strong track record of improving operational efficiency and successfully executing on formalized annual profit improvement plans, cost-savings initiatives and working capital improvements to drive future profitability and cash flow. Related to the ~~extent that any such item is used~~acquisition of ARRIS, we are on track to ~~determine operating income:~~

~~Adjusted Free Cash Flow consists of net cash provided by operating activities, less additions to property, plant and equipment, both as reported~~deliver at least $75 million in cost synergies in the ~~Company’s Consolidated Statement~~first year post close and we expect to exceed our target annual run-rate savings of ~~Cash Flows, increased or reduced for unusual cash items as approved~~$150 million ahead of the third anniversary of the close of the ARRIS transaction. These synergies are being driven by the ~~Compensation Committee.~~elimination of redundancies, including within logistics and SG&A; leveraging global shared services; consolidation of our real estate footprint; and consolidation in procurement, including supply-chain related savings associated with consolidation of spend. We believe we will be able to increase overall cash flow from operations and we intend to use cash we generate to reduce our indebtedness and eventually return to making strategic acquisitions.

Corporate Revenue consists of net sales as reported on the Consolidated Statement of Operations and Comprehensive Income (Loss) subject to equitable adjustments related to acquisitions or divestitures as the Committee may approve.Customers

Our ~~Compensation Committee retains~~customers include substantially all the ~~authority to change target award percentages or performance measures,~~leading global telecommunications operators, data center managers, leading cable television, telecommunication and satellite multi-channel video service providers and MSOs, thousands of enterprise customers, including many Fortune 500 companies, and end customers in hospitality, venues, education, government and smart cities, which we serve both directly and indirectly. Major customers and distributors include companies such as appropriate, to account for extraordinary business circumstances that are out of the Company’s control. In addition, the Compensation Committee may, at its sole discretion, decrease the amount of an award that would otherwise be payable to the NEO. If a change in control of the Company occurs, we will pay each participant a cash award equal to the participant’s target award for the AIP plan cycle then underway (with the payout prorated to the date of the change in control). We believe this is appropriate since the impact of a change in control is unpredictableAmerica Movil, S.A.B. de C.V.; Anixter International Inc. (Anixter); AT&T Inc.; Charter Communications, Inc.; Comcast Corporation (Comcast); Cox Communications, Inc.; KGP Co.; Liberty Communications; Shaw Communications, Inc.; and ~~could potentially adversely affect participant awards under the AIP. The Compensation Committee did not exercise its discretion to reduce the payouts under the AIP.~~

The levels of performance required to achieve target payout were tied to our annual operating plan and represent goals that were considered achievable but difficult to accomplish. Although our targets for 2018 are reduced from the goals established under the terms of our 2017 AIP, the targets required improvement relative to our actual 2017 results. In particular, our 2018 $984.9 million AOI target performance goal, which accoun~~ts for a majority of the target annual incentive for our executives, represented 11.6% growth relative to our actual 2017 performance.~~

Our Compensation Committee also approved a stretch goal for the revenue component of the AIP bonus awards that included a 400% of target opportunity. This has the overall effect of increasing the maximum payout of the AIP from 210% to 229% of target. This feature was added to the AIP in correlation with the introduction of PSUs with a performance metric based on three-years of cumulative revenue, as described below. The Compensation Committee considered the opportunity for a meaningful increase in earned compensation based on one-year revenue performance to be an effective complement to the multi-year performance measurement of the newly introduced PSU.

The following charts shows the weighting of each performance metric, the levels of performance required to earn threshold, target and maximum payouts, and the actual performance achieved under our AIP forVerizon Communications Inc. For the year ended December 31, 2019, after giving effect to the Acquisition as if it happened on January 1, 2019, we would have derived approximately 21% of our consolidated net sales from our top two direct customers. Our largest customer would have been Comcast, accounting for 13% of our consolidated net sales, after giving effect to the Acquisition. Sales to Comcast are derived from our Connectivity, N&C and CPE segments. Net sales to Anixter accounted for 11% of our actual consolidated net sales for the years ended December 31, 2018 ~~(dollars~~and 2017. Net sales to Anixter primarily originate in ~~millions):~~

Products from our Connectivity segment are primarily sold through independent distributors or system integrators for large telecommunications operators. We also sell directly to cable television system operators, broadband operators and service providers that deploy broadband networks.

Products from our Mobility segment are primarily sold directly to wireless operators, OEMs that sell equipment to wireless operators and other service providers that deploy elements of wireless networks at the direction of wireless operators. Our customer service and engineering groups maintain close working relationships with these customers due to the significant amount of customization associated with some of these products. Although we sell to most wireless operators globally, we are dependent on a small number of large operators.

Products from our CPE segment are primarily sold directly to wireline network service providers, such as telephone companies and cable television network providers, to be deployed by them into their subscribers’ homes and businesses. We sell some products to satellite video distributors who also deploy our products into their subscribers’ premises as well. In some cases, we sell through specialized resellers and distributors who primarily provide logistics support and, in certain circumstances, post-sale service and support. Our customer service and engineering groups maintain close working relationships with these customers due to the significant amount of customization associated with some of these products. We sell these products to most of the wireline and satellite operators globally. In the United States (U.S.), we also sell certain products directly to consumers over the internet and through brick and mortar retailers.

Products from our N&C segment are primarily sold directly to wireline network service providers, such as telephone companies and cable television network providers, to be deployed by them into their service delivery networks. In some cases, we sell through specialized resellers and distributors who primarily provide logistics support and in certain circumstances post-sale service and support. Our customer service and engineering groups maintain close working relationships with these customers due to the significant amount of customization associated with some of these products. We sell these products to most of the wireline and satellite operators globally.

Products from our Ruckus segment are primarily sold to customers in a broad range of enterprise vertical markets, including hospitality, education, smart cities, government, venues and service providers indirectly through a large network of value-added resellers and distributors, which we collectively refer to as channel partners. Our channel partners provide lead generation, pre-sale support, product fulfillment and, in certain circumstances, post-sale customer service and support. In some instances, service providers may also act as a channel partner for sales of our solutions to enterprises. In certain circumstances, we do sell Ruckus segment products directly to end customers, but it is a relatively small part of the overall business.

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

The markets in which we participate are dynamic and highly competitive, requiring companies to react quickly to capitalize on opportunity. We retain skilled and experienced personnel and deploy substantial resources to meet the changing demands of the industry and to capitalize on change. We compete with global and regional manufacturers, distributors and wholesalers, including companies that are larger than we are. The market for our products is highly competitive and subject to rapid technological change. We encounter significant domestic and international competition across all segments of our business.

Our competitors include large, diversified companies — some of whom have substantially more assets and greater financial resources than we do. We also face competition from small to medium-sized companies and less diversified companies that have concentrated efforts in one or more areas of the markets we serve. Our major competitors include Advanced Digital Broadcast (ADB) S.A.; America Fujikura Ltd. (AFL) (a subsidiary of Fujikura, Ltd.,); Amphenol Corporation; Arcadyan Technology Corporation; Arista Networks, Inc.; ASUSTek Computer Inc. (Asus); ATX Networks Corporation; Belden Inc.; Belkin International, Inc.; Berk-Tek (a Company of Nexans S.A.); Calix, Inc.; Casa Systems Co.; Ciena Corporation; Cisco Systems, Inc.; Comba Telecom Systems Holding Ltd.; Corning Incorporated; Electroline Equipment, Inc.; Emcore Corporation; Emerson Electric Co.; Extreme Networks, Inc.; FiberHome Networks; Finisar Corporation; Genexis B.V.; Guavus, Inc. (a Thales Company); H3C Technologies Co., Ltd.; Harmonic, Inc.; Hewlett Packard Enterprise Development LP; Hitron Technologies Inc.; Hong Kong Skyworth Digital Holdings Co.; Huawei Technologies Co., Ltd.; Huber + Suhner BKTel GmbH; Humax Co., Ltd.; Imagine Communications Corp.; Infinera Corporation; International Business Machines (IBM) Corporation; JMA Wireless B.VV; Lindsay Broadband Inc.; Netgear Inc.; Netgem; NetScout Systems, Inc.; Nokia Corporation; Ortronics, Inc. (a brand of Legrand NA, LLC); Pacific Broadband Networks; Panduit Corp.; PCT International, Inc.; Radio Frequency Systems (RFS) Holding GmbH (a subsidiary of Nokia Corp); Sagemcom Broadband SAS; Samsung Electronics Co., Ltd.; SeaChange International, Inc.; SMC Networks, Inc.; SOLiD Gear, Inc.; Sumavision Technologies Co., Ltd.; Sumitomo Corp; Technetix; Technicolor S.A.; Telefonaktiebolaget LM Ericsson; Teleste Corporation; TiVo Corporation; TOA Technologies (Oracle); Ubee Interactive Corporation; Ubiquiti, Inc.; Vecima Networks, Inc.; Vector Networks; Veramatrix, Inc.; Wisi Communications; and ZTE Corporation.

We compete primarily on the basis of delivering solutions, product specifications, quality, price, customer service and delivery time. We believe that we differentiate ourselves in many of our markets based on our market leadership, global sales channels, intellectual property, strong reputation with our customer base, the scope of our product offering, the quality and performance of our solutions, and our service and technical support.

We are a global leader in connectivity and essential infrastructure solutions for communications and entertainment networks, and we believe we hold leading market positions in our segments. Since our founding in 1976, CommScope has been a leading brand in connectivity solutions for communications networks. In the cable television and video network equipment industry, both CommScope and ARRIS are longstanding market leaders, along with other brands we own such as Ruckus, Pace, Motorola Home, ADC and many smaller brands. In the wireless industry, Andrew is one of the world’s most recognized brands and a global leader in RF solutions for wireless networks. In the enterprise market, SYSTIMAX, NETCONNECT and Uniprise are recognized as global market leaders in enterprise connectivity solutions for business enterprise and data center applications.

We believe the following ~~table sets forth~~competitive strengths have been instrumental to our success and position us well for future

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

Our integrated solutions for building better networks are differentiated in the ~~threshold, target~~marketplace and ~~maximum annual incentive award potential (assuming minimum, target,~~are a significant global competitive advantage. We help our customers achieve better business outcomes, and ~~maximum performance~~serve their customers, employees, and shareholders. We invested $578.5 million in research and development during 2019 and $725.0 million, after giving effect to the Acquisition as if it happened on January 1, 2019, to advance product innovation and drive total cost of deployment and ownership down. Our ongoing innovation, supported by proprietary intellectual property and technology know-how, has allowed us to build and sustain a competitive advantage.

We serve customers in over 150 countries and have become a trusted advisor to many of them through our industry expertise, quality products, leading technology and long-term relationships. These factors enable us to provide mission-critical connectivity solutions that our customers need to build and maintain high-performing communication networks. Our customers include substantially all the leading global telecommunications operators, data center managers, cable television providers or MSOs and thousands of enterprise customers, including many Fortune 500 companies. We are a key supplier within the wireless infrastructure market and enjoy established sales channels across all geographies and technologies. Our long-standing relationships with telecommunication operators enable us to work closely with them in providing highly customized solutions aligned with their technology roadmaps. We have a global sales force with sales representatives based in North America, Europe, Latin America, Asia and other regions, and an extensive global network of channel partners, including independent distributors, system integrators and value-added resellers. Our sales force has direct relationships with our customers and end users which generates demand for ~~all three~~ ~~performance metrics)~~ our products, with a significant portion of our sales fulfilled through channel partners. Our direct sales force and channel partner relationships give us extensive reach and distribution capabilities to customers globally.

Our global manufacturing and distribution footprint and worldwide sales force give us significant scale within our addressable markets. We believe our scale, stability and quality make us an attractive strategic partner to our large

global customers, and we have been repeatedly recognized by key customers for these attributes. In addition, our ability to leverage our core competencies across our business, coupled with our successful track record of

operational efficiencies, has allowed us to improve our margins and cash flows over time while continuing to invest

in research and development and acquisitions targeting new products and markets.

Our manufacturing and distribution facilities are strategically located to optimize service levels and product delivery

times. We also utilize lower-cost geographies for high labor content products and largely automated plants in higher cost regions. Over half of our manufacturing employees are in lower-cost geographies such as Mexico, China, India

and the ~~actual payout amount for each~~Czech Republic. The combination of our ~~NEOs for 2018.~~dynamic manufacturing organization, our global network of third party manufacturers and our distribution organization allows us to:

The Compensation Committee believes that key employees who are in a position to make a substantial contribution to the long-term success of the Company and to build stockholder value should have a significant and on-going stake in the Company’s success. In determining equity incentive award grants, the Committee considered market practices among comparable companies as well as our compensation objectives and the desired role of equity compensation in the total compensation of our NEOs. Based on this review, the Compensation Committee decided to grant our NEOs an equally weighted mix of stock options, RSUs and PSUs. The key features of our 2018 NEO equity awards are described in greater detail below.

Our Compensation Committee believes that our approach to executive equity grants supports our compensation objectives and effectively aligns the interests of our executives with those of our stockholders. In particular, RSUs reinforce retention objectives and support a clear ownership mentality among executives, with long-term alignment with investors’ interests. In addition, PSUs granted in 2018 provide a targeted form of performance measurement over both a one-year time horizon (with an additional year of service required to vest) and a three-year time horizon, while stock options are tied to our performance over a longer-term time horizon. These performance equity vehicles reward executives for strong execution of our strategic plan as well as an ability to adapt to changing market conditions and generate sustained growth in stockholder value.

Our Compensation Committee generally approves the target value of executive equity grants in February of each year. Target grants are established as a dollar value, which is then converted into a number of stock options, RSUs and PSUs based on the closing price of our stock on the day prior to the grant date. In the case of stock options, the conversion of a target value into options relies on the Black Scholes value of our options as determined under ASC 718 accounting standards.

~~The target units granted to the NEOs by equity vehicle and the total grant date value are shown in the following table.~~

As illustrated below, the AOI threshold, target and maximum performance levels for the 2018 PSUs with the AOI performance metric were equal to the performance goals approved for the 2018 AIP. Based on 2018 AOI of $838.0 million, the performance factor was 62.7% for the 2018 PSU awards.

PSUs based on the three-year cumulative revenue achievement granted in 2018 will be earned based on our cumulative revenue during 2018, 2019 and 2020. Targets were established and approved by the Compensation Committee prior to the grant date and actual performance will be evaluated and disclosed following the end of 2020.

We maintain a nonqualified Supplemental Executive Retirement Plan (SERP) that is intended to provide retirement benefits to certain of our executive officers. This plan has been closed to new participants since 2005. Messrs. Edwards, Karlsson, Wyatt and Drendel participate in the SERP. For additional information regarding the SERP, see below under “Nonqualified Deferred Compensation Plans for 2018.”

Our NEOs are eligible to participate in the same plans as substantially all other of our U.S. employees which include medical, dental, vision and short-term and long-term disability insurance and a Health Savings Plan. We also maintain the CommScope, Inc. Retirement Savings Plan, or the 401(k) plan, in which substantially all our U.S. employees, including our NEOs, are eligible to participate. We currently contribute 2% of the participant’s base salary and bonus to the 401(k) plan and provide matching contributions of up to 4% of the participant’s base salary and bonus, which provides for up to a maximum of 6% of the participant’s base salary and bonus, subject to certain statutory limitations ($275,000 for 2018). In addition, we provide our NEOs with a supplemental term life insurance policy. We provide these benefits due to their relatively low cost and the high value they provide in attracting and retaining talented executives.

We offer a voluntary non-qualified deferred compensation plan (DCP) that permits a group of our management, including the NEOs, to defer up to 90% of their annual compensation (including base salary, AIP and Sales Incentive Plan (SIP) awards). For additional information regarding the DCP, see below under “Nonqualified Deferred Compensation.”

Each of Messrs. Edwards and Drendel has an employment agreement, and each of Messrs. Pease, Kurk, Karlsson and Wyatt has a severance protection agreement. The employment agreements entitle the executives to certain compensation and benefits, and both the employment agreements and severance protection agreements entitle the executives to receive certain payments and benefits upon a qualifying termination of employment, including a

~~qualifying termination of employment in connection with a change in control of the Company, as described below under “—Potential Payments upon Termination or Change in Control.”~~

We have a compensation recoupment policy that provides that, in the event of an accounting restatement due to material noncompliance with financial reporting requirements, the Company will, as directed by the Compensation Committee in its discretion, require executive officers to reimburse compensation in an amount deemed appropriate by the Compensation Committee. The policy applies to executive officers of the Company, including our NEOs, who, at any time during the three-year period preceding the accounting restatement, received payment of non-equity incentive compensation or realized compensation from equity incentive awards, based on the erroneous financial data.

We have an Insider Trading policy to guide our employees and directors in complying with securities laws and avoid the appearance of improper conduct. In 2018, we amended our Insider Trading policy to strengthen the restrictions on hedging and pledging activities. Our amended policy specifically prohibits all persons subject to the policy, including our NEOs and directors, from entering into hedging or monetization transactions involving CommScope securities such as covered calls, collars and forward sale contracts, and from purchasing CommScope securities on margin, holding CommScope securities in a margin account or pledging CommScope securities. In addition, all of our Section 16 officers and directors, and certain other designated employees, are prohibited from trading in exchange traded options of CommScope securities.

We maintain stock ownership guidelines for our executive officers and the non-employee members of our Board of Directors. These guidelines were established to align with industry practice and to affirm to stockholders that our executives and directors have a meaningful long-term position in the Company and a longer-term view of its performance. The following table summarizes our stock ownership guidelines, which were based on market and peer group data and were adopted following consultation with our independent compensation consultant.

The value of an executive’s or non-employee director’s stock ownership is measured as of December 31 of each year by reference to the 30-day average closing price of our stock on the Nasdaq Stock Market and using each individual’s base salary or base retainer then in effect.

Current and new executive officers and non-employee directors who are subject to these guidelines are expected to reach their target ownership level within five years of the date on which the guidelines were adopted or the date on which they became subject to the guidelines and to hold at least such minimum value in shares of our common stock, RSUs or vested stock options for so long as applicable. All our executive officers and directors have met or are on track to meet their ownership requirements within the five-year period.

~~The following table provides information regarding the compensation that we paid our NEOs for services rendered during the fiscal years ended December 31, 2018, 2017 and 2016.~~

(1) Amounts represent payments for service award and retiree gift in 2018 for Mr. Olson (25 years), service award in 2018 for Mr. Drendel (45 years) and service award in 2016 for Mr. Wyatt (20 years).

~~Note: Retiree Premiums reflects total cost to the Company assuming Mr. Olson continues coverage under a legacy retiree health benefit program for a maximum of five years.~~

Proven Management Team with Record of Operational Excellence and Successful Mergers and Acquisition Integration

~~Grants~~We have a strong track record of ~~Plan-Based Awards~~organically growing market share, establishing leadership positions in ~~2018~~new

~~Narrative Supplement to Summary Compensation Table for 2018~~markets, managing cash flows, delivering profitable growth across multiple economic cycles and ~~Grants of Plan Based Awards~~integrating large

and small acquisitions. Our senior management team has extensive experience in ~~2018 Table~~

The terms of our cash incentive plans and equity incentive awards are described under “—2018 Compensation Actions” above, our employment and severance agreements are described under “—Potential Payments upon Termination or Change in Control—Employment and Severance Protection Agreements” below, and our nonqualified deferred compensation plans are described under “—Nonqualified Deferred Compensation for 2018” below.

~~The following table provides information regarding outstanding stock options and stock awards held by our NEOs as of December 31, 2018.~~

~~The following table provides information concerning the exercise of stock options and vesting of stock awards during the year ended December 31, 2018.~~

~~The Nonqualified Deferred Compensation table reflects information about the SERP and the DCP for 2018.~~

~~The SERP is an unfunded defined contribution type retirement plan maintained~~connectivity solutions for the benefit of a select group of our management and/or highly compensated employees. The SERP provides for an annual credit by the Company to each participating NEO’s account in an amount equal to 5% of such participant’s base salary and AIP bonus for the respective year up to a cap (which in 2018 was $275,000), plus 15% of the amount in excess of the cap. Equity-based compensation is not taken into account for purposes of the SERP. In addition to annual contributions, participants’ accounts generally accrue interest each year. We review the interest rate annually and set the interest rate for 2018 at 5%. There have been no participants added to the SERP since 2005.

There are generally no payments to participants from the SERP until retirement at age 55 or older with at least 10 years of service, or at age 65 without regard to any service requirement. Pursuant to the terms of the SERP, a participant generally will receive the full value of his or her account balance upon the participant’s termination or resignation for any reason once eligible for retirement. However, participants (or participant’s beneficiaries, in the case of a participant’s death) may also receive benefits prior to retirement in the following situations: (1) if the participant dies before retirement; (2) if the participant experiences a disability (as defined in the SERP) before beginning to receive any SERP benefits; (3) if the participant’s employment is involuntarily terminated, for reasons other than for cause; or (4) if the participant terminates employment for any reason other than for cause within two years after a change in control of the Company. Payment to the SERP participants generally occurs the first day of the seventh month following separation from service, except that payments resulting from termination following a change in control or terminations due to disability are paid as soon as practicable following such termination.

~~Messrs. Edwards, Karlsson, Wyatt and Drendel are vested in their SERP accounts and eligible for retirement, so they would receive their account balance if their employment terminated for any reason.~~

The DCP permits a select group of our management, including the NEOs, to defer up to 90% of their compensation (including base salary and AIP or SIP bonus payments). Participants may invest the amounts credited to their accounts in one or more notional investments that are substantially the same as the investment offerings provided under our 401(k) plan. Participants’ accounts are 100% vested at all times and we do not provide matching or other Company contributions to the DCP. In general, a participant may elect to receive a distribution in a lump sum or annual installments over a period of two to ten years, which distribution will commence, per the participant’s election, as follows:

Upon a participant’s death or disability, or upon the occurrence of a change in control of the Company, the participant’s entire balance will be paid to him or her (or the participant’s estate or beneficiary, as applicable) in a lump sum.

~~The following table depicts the value of benefits accumulated by our NEOs under the SERP and the DCP as of December 31, 2018.~~

~~Each of our NEOs is party to an employment agreement or severance protection agreement that entitles him to receive certain payments upon a qualifying termination of employment.~~

We are party to an employment agreement with Mr. Edwards. His agreement is on a one-year term automatically renewing on December 31 of each year, unless the Company gives written notice of non-renewal at least 90 days prior to such date. Pursuant to the agreement, in the event Mr. Edwards’ employment is terminated by the Company by notice of non-renewal of the term of the agreement, by the Company for any reason other than for

cause or disability or by the executive for good reason, in each case regardless of whether a change in control has occurred. Mr. Edwards will be entitled to receive his accrued compensation and each of the following:

For purposes of Mr. Edwards’ agreement, “good reason” includes material breach of the agreement, a material diminution in duties, failure to continue in his role as sole President and CEO without his prior written consent, any reduction in salary or target bonus opportunity, relocation of his place of employment by more than twenty-five miles without his prior written consent and our failure to nominate him to our Board.

If Mr. Edwards’ employment is terminated by the Company for cause or disability, by reason of his death or by the executive other than for good reason, we will pay to the executive his accrued compensation. In addition, in the event of Mr. Edwards’ death, his estate will be entitled to receive a prorated bonus under the AIP for the fiscal year in which his death occurs, payable at the same time the Company pays bonuses to its other executive officers and based on actual performance.

We are also party to a severance protection agreement with each of Mr. Pease, Mr. Karlsson and Mr. Kurk. Each agreement is on a two-year term automatically renewing on January 1 of each year unless the Company or the executive gives notice of non-renewal at least ninety (90) days prior to such date, except that the term may not expire prior to 24 months following a change in control of the Company (as defined in the agreement). Pursuant to the agreement, in the event that the executive’s employment is terminated within 24 months after a change in control of the Company (i) by the Company for any reason other than for cause or disability or (ii) by the executive for good reason (which definition includes, among other things, an adverse change in status or duties and a reduction in salary), the executive will be entitled to receive accrued compensation and each of the following:

If the executive’s employment is terminated by the Company within 24 months after a change in control for disability or by reason of his death, he will receive a pro rata bonus for the year of termination, based on the actual bonus that would have been payable to him for the year in which the termination occurs.

Further, if the executive’s employment is terminated by the Company other than for cause at any time prior to the date of a change in control of the Company and such termination (i) occurred after we entered into a definitive agreement, the consummation of which would constitute a change in control of the Company or (ii) the executive reasonably demonstrates that such termination was at the request of a third party who has indicated an intention or has taken steps reasonably calculated to effect a change in control, such termination will be deemed to have occurred after a change in control.

We are also party to a severance protection agreement with Mr. Wyatt. This severance protection agreement is on a 1-year term automatically renewing on January 1 of each year unless the Company or Mr. Wyatt gives notice of non-renewal at least ninety (90) days prior to such date, except that the term may not expire prior to 24 months following a change in control of the Company (as defined in the agreement). Pursuant to the agreement, in the event Mr. Wyatt’s employment is terminated within 24 months after a change in control of the Company (i) by the Company for any reason other than for cause or disability or (ii) by Mr. Wyatt for good reason (which definition includes, among other things, an adverse change in status or duties, a reduction in salary or benefits, and a relocation of Mr. Wyatt’s place of employment by more than twenty-five miles), Mr. Wyatt will be entitled to receive accrued compensation and each of the following:

If Mr. Wyatt’s employment is terminated by the Company within 24 months after a change in control of the Company for cause or disability, by reason of his death or by Mr. Wyatt other than for good reason, we will pay to Mr. Wyatt his accrued compensation and any earned but unpaid bonus or incentive compensation. In addition, in the case of a termination of employment by the Company for disability or due to Mr. Wyatt’s death, he will receive a pro rata bonus for the year of termination based on the actual bonus paid or payable to Mr. Wyatt under the AIP in respect of the year immediately preceding the year of termination.

Further, if Mr. Wyatt’s employment is terminated by the Company other than for cause at any time prior to the date of a change in control of the Company and such termination (i) occurred after we entered into a definitive agreement, the consummation of which would constitute a change in control of the Company or (ii) Mr. Wyatt reasonably demonstrates that such termination was at the request of a third party who has indicated an intention or has taken steps reasonably calculated to effect a change in control of the Company, such termination will be deemed to have occurred after a change in control.

Mr. Drendel’s employment agreement is a one-year term automatically renewing on December 31 of each year unless the Company or Mr. Drendel gives written notice of non-renewal at least 90 days prior to such date. Pursuant to the agreement, in the event his employment is terminated by the Company by notice of non-renewal of the term of the agreement, by the Company for any reason other than for cause or by Mr. Drendel for any reason,

in each case regardless of whether a change in control has occurred, he will be entitled to receive his accrued compensation and each of the following: (i) an amount (the Severance Payment) equal to two times the sum of (X) his base salary and (Y) his base salary multiplied by 0.50, payable in a lump sum payment within thirty days following termination; and (ii) a cash payment equal to the cost the Company would have incurred had he continued group medical, dental, vision and/or prescription drug benefit coverage for himself for 24 months following his termination of employment, payable in periodic installments in accordance with our payroll practice.

If Mr. Drendel’s employment is terminated by the Company for cause or by reason of his death, we will pay to him his accrued compensation. In addition, in the event of Mr. Drendel’s death, his estate will be entitled to receive the Severance Payment payable in a lump sum payment within thirty days following his death.

The employment agreements with Messrs. Edwards and Drendel and the severance protection agreement with Mr. Wyatt provide for a gross-up payment by the Company in the event that the total payments the executive receives under the agreement, or otherwise (for example, due to accelerated vesting of equity), are subject to the excise tax under Section 4999 of the Internal Revenue Code. In such an event, we will pay an additional amount so that the executive is made whole on an after-tax basis from the effect of the excise tax. Messrs. Pease’s, Kurk’s and Karlsson’s severance protection agreements do not contain any provision with respect to gross-up payments or cut-backs in the event of such excise taxes.

Messrs. Edwards’ and Drendel’s employment agreements each contain cooperation and confidentiality covenants that apply during and following the executives’ respective employment with the Company. The agreements also contain certain non-compete and non-solicitation obligations that continue for a certain period following termination of employment, as follows: 24 months, in the case of Mr. Edwards and up to an additional six months if the Mr. Edwards continues to receive the benefits discussed above following the conclusion of his Termination Benefits Period), and 60 months, in the case of Mr. Drendel. Messrs. Pease’s, Kurk’s, Karlsson’s and Wyatt’s severance protection agreements do not contain any restrictive covenants.

We maintain a general severance policy that applies to all U.S. and Canada based employees. Pursuant to this policy, employees may receive severance benefits and a COBRA or Retirement Health supplement in the event of an involuntary separation due to a reduction in force, lack of work, closure of a facility, or position elimination. No severance benefits are paid in the event of a voluntary resignation, involuntary termination for cause, termination due to a sale of assets or operations if the employee is offered continued employment with the acquiror in the same general work location, or position elimination if the employee is offered a comparable or better position in the same general work location. The severance period varies based on job level and years of service and cannot exceed 52 weeks.

The following table sets forth the estimated amount of the payments and benefits each of our NEOs would receive under the termination of employment scenarios identified therein, in each case assuming a termination of employment on December 31, 2018. The payments and benefits described and quantified below are in addition to the compensation and benefits that would already be vested upon an NEO’s termination of employment, including accrued but unpaid salary, accrued but unused vacation pay, amounts previously earned and deferred under the DCP and payments and benefits accrued under the 401(k) plan and the SERP.

As noted above, Mr. Olson retired in April 2018. Mr. Olson did not receive any severance upon retirement. Mr. Olson is eligible to participate in a retiree health benefit program for legacy employees of Andrew Corporation. This is not an executive-only program and applies to all U.S. based legacy Andrew employees who as of August 31, 2004 were 45 years of age or older and had a minimum of 10 years of service. Under the program, Mr. Olson can continue medical, dental and vision benefits for him, his spouse and eligible dependents for up to age 65 or until covered by Medicare, whichever occurs first. The Company’s cost under the program is limited to the average cost of $10,000 per participant, and Mr. Olson is responsible for costs above this amount. The Company’s cost under the program, assuming that Mr. Olson continues to participate for five years, when he turns age 65, would be $50,000.

Pursuant to the terms of the SERP, a participant generally will receive the full value of his account balance upon his termination or resignation for any reason once he is eligible for retirement, subject to applicable 409(A) payment delay. Messrs. Edwards, Karlsson, Wyatt and Drendel are vested in their SERP accounts and eligible for retirement so they would receive the amounts shown in the column of the Nonqualified Deferred Compensation table entitled “Aggregate balance at last fiscal year end” were their employment terminated for any reason on December 31, 2018.

The value of their SERP accounts is based on an assumed effective date of December 31, 2018 shown in the column of the Nonqualified Deferred Compensation table entitled “Aggregate balance at last fiscal year end.”

Payment to the SERP participants generally occurs on the first day of the seventh month following termination, except that payments resulting from termination following a change in control of the Company or terminations due to death or disability are paid as soon as practicable following such termination.

The non-qualified option award agreements and the RSU award agreements under which the NEOs received awards in February 2016 or later provide that all awards granted pursuant to those award agreements will become immediately vested and, in the case of option awards, become fully exercisable, in the event of any of the following:

The PSU agreements under which the NEOs received grants in February 2016 or later provide for similar treatment as described above for the options and RSUs, provided that if the participant’s death or disability occurs during the performance period, the PSUs will be prorated and will vest based on actual achievement over the performance period. In the event of a change in control of the Company in which the awards are not assumed by the surviving entity or otherwise equitably converted or substituted in connection with the change in control, or a change in control of the Company in which the awards are assumed or equitably converted, but the participant’s employment is terminated without “cause” or the participant resigns for “good reason” within two years following the change in control, the PSUs will be prorated and will vest based on deemed performance of target level if the change of control falls within the first half of the performance period or based on the actual performance measured at the date of the change in control if the change in control falls within the second half of the performance period.

The following table presents the value (based on the Company’s closing stock price on December 31, 2018 of $16.39 or in the case of options, the excess of such closing stock price over the exercise price) of equity awards that would become vested upon a termination due to death or disability, a change in control in which the awards are not assumed by the surviving entity or otherwise equitably converted or substituted in connection with the change in control, or a change in control in which the awards are assumed or equitably converted but the participant’s employment is terminated without “cause” or the participant resigns for “good reason” within two years following the change in control of the Company, assuming that any such events had occurred on December 31, 2018. The amounts for PSUs granted in 2018 with the AOI performance metric are based on actual performance of 62.7%,

~~and the amounts for PSUs with the Cumulative Revenue metric are based on target performance. The achievement for 2016 and 2017 grants was 115.6% and 0%, respectively.~~

Our Compensation Committee, with the assistance of our management, through the human resources, finance and legal departments, has analyzed the potential risks arising from our compensation policies and practices and has determined that there are no such risks that are reasonably likely to have a material adverse effect on the Company.

~~Under Commission rules, we are required to calculate and disclose the ratio of our median employee’s annual total compensation to the total annual compensation of our Chief Executive Officer.~~

To identify our median employee for purposes of reporting the CEO pay ratio, we compiled a list of all worldwide full-time, part-time, seasonal and temporary employees employed by us and our consolidated subsidiaries as of October 31, 2017. The compensation measure we used to determine our median employee included annual base salary as of October 31, 2017; an estimate of overtime based on average overtime worked considering the job position and country of the employee; and incentive compensation based on targets. We believe this compensation measure is a reasonable measure that can be consistently applied to our over 20,000 employees across the world in order to yield an accurate representation of our median employee. There has been no change in our employee population or compensation arrangements that we believe would significantly impact our pay ratio disclosure. Accordingly, as permitted under Commission rules, we are using the same median employee.

Mr. Edwards had 2018 annual total compensation of $8,893,345 as reflected in the Summary Compensation Table. Our median employee’s annual total compensation for 2018, calculated in the same manner as Mr. Edwards’ annual total compensation, was $12,917. As a result, Mr. Edwards’ annual total compensation is 688 times that of our median employee.communications infrastructure industry.

We have a history of strong operating cash flow and have generated over $1.6 billion in cumulative operating cash

flow over the last three years. Our strong cash flow profile has allowed us to pay down debt, while also continuing to invest in research and development aimed at both driving profit expansion and revenue growth. We continuously pursue strategic initiatives aimed at optimizing our resources, reducing manufacturing and distribution costs and lowering our overall cost structure.

Throughout our history, we have successfully complemented our organic growth with strategic acquisitions. We are ahead of plan on our commitment around the ARRIS synergy capture. We completed the Broadband Network Systems (BNS) business integration and delivered substantial synergies while also completing significant system integrations and re-organizing the business. Our management team has effectively integrated other large acquisitions, such as Andrew Corporation in 2007 and Avaya Connectivity Solutions in 2004. We have also executed tuck-in acquisitions, such as Cable Exchange, Airvana, Argus and Alifabs, to help expand our market opportunities and continue to solve our customers’ business challenges in multiple growth areas.

We maintain a balance of ~~over 20,000 employees~~internal and external manufacturing providers to ~~serve~~continue offering our customers a competitive combination of quality, cost and flexibility in ~~over 100 countries through a network~~meeting their needs. We develop, design, fabricate, manufacture and assemble many of ~~more than 30~~our products and solutions in-house at our facilities located around the world. We have strategically located our manufacturing and distribution facilities ~~strategically located around the globe.~~to provide superior service levels to customers. We utilize lower-cost geographies for high labor content products while investing in largely automated plants in higher-cost regions close to customers. Most of our manufacturing employees are located in lower-cost geographies such as Mexico, China, India and the Czech ~~Republic~~Republic.

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

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

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

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

In addition, some of our products are assembled from specialized components and subassemblies manufactured by third-party suppliers. We depend upon sole suppliers for certain of these components, including memory and chip capacitors. If these sources cannot provide these components in sufficient quantity and quality on a timely and cost-efficient basis, it could materially impact our results of operations until another qualified supplier is found. We believe that our supply contracts and our supplier contingency plans mitigate some of this risk. Our supply agreements include technology licensing and component purchase contracts. Several of our competitors have similar supply agreements for these components. In addition, we license software for operating network and security systems or sub-systems and a variety of routing protocols from different suppliers.

We operate in an industry that is subject to rapid changes in technology, and our success is largely contingent upon anticipating and reacting to such changes. Accordingly, R&D is important to preserve and expand our position as a market leader and to provide the most technologically advanced solutions in the marketplace. We invested $578.5 million in research and development during 2019 and $725.0 million, after giving effect to the Acquisition as if it happened on January 1, 2019, and we expect to continue with substantial investments in future years. We intend to focus our major R&D activities on high-growth opportunities such as fiber optic connectivity for fiber-to-the-x (FTTX) and data centers, Wi-Fi 6 and 6GHz, CCAP, DAA, Data Over Cable Service Interface Specification (DOCSIS) 4.0, gigabit passive optical network (GPON), active and passive base-station antennas and metro cell and small cell wireless solutions. We are also developing solutions that support the convergence of wireline and wireless networks in preparation for 5G. Several of our professionals are leaders and active contributors in standards-setting organizations, which helps ensure that our products can be formulated to achieve broad market acceptance.

At December 31, 2019 and 2018 we had an order backlog of $1,243.2 million and $500.0 million, respectively. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions. Our backlog includes only orders that are believed to be firm. Sometimes, unfilled orders may be canceled prior to shipment of goods, but cancellations historically have not been material. However, our current order backlog may not guarantee future demand.

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

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

On a worldwide basis, we held approximately 15,000 patents and patent applications and approximately 3,000 registered trademarks and trademark applications. We consider our patents and trademarks to be valuable assets, and although no single patent is material to our overall operations, we believe the CommScope, Andrew, SYSTIMAX, HELIAX, NETCONNECT, ARRIS, SURFboard and Ruckus trade names and related trademarks are critical assets to our business. We intend to rely on ~~their geographic location~~our intellectual property rights, including our proprietary knowledge, trade secrets and ~~their job type. This~~continuing technological innovation, to develop and maintain our competitive position. From time to time there are disputes with respect to the ownership of the technology used in our industry and accusations of patent infringements. We will continue to protect our key intellectual property rights.

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

We understand how important it is to consider the larger impact of our actions beyond the balance sheet. We are proud of CommScope’s significant standing in one of the world’s most vital and dynamic industries. We push ourselves and our ~~Chief Executive Officer when compared to companies with primarily U.S. operations or those manufacturers that are not as labor intensive. We believe this pay ratio is~~thinking for the purpose of creating a ~~reasonable estimate calculated in a manner consistent with Commission rules.~~

~~During~~sustainable tomorrow. For the ~~year ended December 31, 2018, our Compensation Committee consisted of Messrs. Gray (Chair), Krause and Watts. None of the members~~sake of our ~~Compensation Committee are or have been officers or employees of the Company. During the year ended December 31, 2018, none of our executive officers served~~current and future generations, we will continue to grow as a ~~member of~~sustainable, environmentally conscious business that benefits the ~~Board of Directors or Compensation Committee, or other committee serving an equivalent function, of any entity~~whole planet.

In 2019, we are particularly proud that ~~has one or more executive officers who serve as members of~~we achieved our ~~Board of Directors or our Compensation Committee~~.

~~Directors who are employees of the Company receive no additional compensation for their service on our Board of Directors or its committees. Non-employee directors are each paid~~fourth consecutive Gold Corporate Social Responsibility (CSR) rating from EcoVadis, a basic cash retainer per year for service on our Board of Directors, payable quarterly, plus an additional amount for serving as a chair or member of a committee. The Lead Independent Director receives an additional cash retainer annually. We also reimburse non-employee directors for reasonable out-of-pocket expensesglobal leader in monitoring, benchmarking and enabling sustainability in global supply chains. This places CommScope in the ~~performance~~98th percentile of ~~their duties as directors. Non-employee directors received equity-based awards, in the form of stock options (if granted prior to~~all companies assessed by EcoVadis. For additional information, see our ~~IPO in 2013) or RSUs (if granted subsequent to our IPO) at the time of their election to our Board of Directors. In addition, our non-employee directors receive an annual grant of RSUs to be granted~~Corporate Responsibility & Sustainability pages on the date of the annual stockholders’ meeting. The RSUs vest on the first anniversary of the grant date. If a director joins the Board or changes roles between stockholders’ meetings, the director fees and stock retainer are prorated. The Non-Employee Director Compensation Plan was changed on February 20, 2019. The basic cash retainer was increased to $90,000, with no changes to supplemental cash retainers, and the annual stock retainer was increased to $180,000 effective February 20, 2019. When approving changes to the level and composition of the Directors’ compensation, the Compensation Committee considered market data from the compensation peer group and input from the independent consultant.CommScope website: https://www.commscope.com/About-Us/Corporate-Responsibility-and-Sustainability/.

The following ~~tables summarize~~is a cautionary discussion of risks, uncertainties and assumptions that we believe are significant to our ~~non-employee director compensation for 2018:~~

~~The Compensation Committee of~~ the ~~Board of Directors consists of the four directors named below, each of whom meets the independence standards of Nasdaq and the rules of the Commission.~~

~~The Compensation Committee of the Board of Directors has reviewed and~~factors discussed ~~with management the “Compensation Discussion and Analysis,” or CD&A, section of~~elsewhere in this ~~2018~~ Annual Report on Form 10-K, ~~required by Item 402(b)~~the following are some of ~~Regulation S-K promulgated by~~ the ~~Commission. Based on the Committee’s review and discussions with management, the Committee recommended to the Board of Directors~~important factors that, ~~the CD&A be included~~individually or in the ~~Company’s 2018 Annual Report on Form 10-K.~~

~~ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS~~

~~The following tables set forth information with respect~~aggregate, we believe could make our results differ materially from those described in any forward-looking statements. It is impossible to ~~the beneficial ownership of our common stock~~predict or identify all such factors and, ~~Series A Convertible Preferred Stock as of April 12, 2019 by:~~

We had 193,467,296 shares of common stock and 1,000,000 shares of Series A Convertible Preferred Stock outstanding as of April 12, 2019. None of the executive officers or directors named in the table below owned, beneficially or of record, any shares of the Company’s Series A Convertible Preferred Stock. The amounts and percentages of shares beneficially owned are reported based on Commission regulations governing the determination of beneficial ownership of securities. Under the Commission rules, an individual or entity is deemedfollowing factors to be a ~~“beneficial” owner~~complete discussion of risks, uncertainties and assumptions related to us or our business.

The integration of CommScope and ARRIS International plc (ARRIS) will be costly and time-consuming and the anticipated benefits and cost savings may take longer to realize than expected or may not be realized at all. If we are unable to integrate ARRIS effectively, we may not realize the anticipated benefits of the Acquisition.

We are on track to deliver at least $75.0 million in cost synergies in the first year post close and we expect to exceed our target annual run-rate savings of $150.0 million ahead of the third anniversary of the close of the ARRIS transaction. We have incurred significant integration and restructuring costs and expect to incur more to achieve these synergies. These synergies are expected to come from all areas of our company, including sales, marketing, general and administrative, operations and R&D. Our ability to realize the anticipated benefits is dependent, to a ~~security~~large extent, on our ability to complete the integration of the two businesses. The combination of two independent businesses is a complex, costly and time-consuming process and there can be no assurance that we will be able to successfully integrate CommScope and ARRIS, or if such integration is successfully accomplished, that ~~individual~~such integration will not be more costly or ~~entity has or shares voting power or investment power,~~take longer than presently contemplated. If we cannot successfully complete the integration within a reasonable time frame, we may not be able to realize the anticipated benefits of the Acquisition, which ~~includes~~could have a material adverse effect on our share price, business, financial position, results of operations and cash flows.

Our ability to realize the ~~power~~expected synergies and benefits of the Acquisition is subject to ~~dispose~~a number of ~~or to direct the disposition of such security. An individual or entity is also deemed to be a beneficial owner of any securities~~risks and uncertainties, many of which ~~that individual or entity has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired~~ are not deemed to be outstanding for purposes of computing the ownership percentage of any other individual or entity. Under these rules, more than one individual or entity may be deemed to be a beneficial owner of securities as to which such individual or entity has no economic interest. Except as otherwise indicated in the footnotes to the table below, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the shares of capital stock and the business address of each such beneficial owner, unless otherwise noted, is c/o CommScope Holding Company, Inc., 1100 CommScope Place, SE, Hickory, NC 28602.

~~The following table provides information as of December 31, 2018, with respect to the shares~~outside of our ~~common stock that may be issued under our existing equity compensation plans:~~

~~ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS AND DIRECTOR INDEPENDENCE~~

~~Our Board has adopted a written statement of policy for the evaluation of~~control. These risks and ~~the approval, disapproval and monitoring of transactions involving us and “related persons.” For the purposes of the policy, “related persons” will~~uncertainties include, our executive officers, directors and director nominees or their immediate family members, or stockholders owning five percent or more of our outstanding common stock and their immediate family members.

The policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, the amount involved exceeds $120,000, and a related person had or will have a direct or indirect material interest. Pursuant to this policy, our management will present to our Audit Committee each proposed related person transaction, including all relevant facts and circumstances relating thereto. Our Audit Committee will then:among other things:

As a result of the Acquisition, The Carlyle Group (Carlyle) owns a substantial portion of our equity and its interests may not be aligned with yours.

Funding for the Acquisition included an investment by Carlyle in our Series A Convertible Preferred Stock. As a result, Carlyle owns approximately 16% of our common stock on an if-converted basis and we have increased the size of our board of directors to eleven, giving Carlyle the right to designate up to two directors. In addition, certain of our existing directors are senior advisors to Carlyle. Circumstances may occur in which the interests of Carlyle could conflict with the interests of our other stockholders. For example, the existence of Carlyle as a significant stockholder and Carlyle’s board appointment rights may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our company.

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

Our performance is dependent on capital spending for constructing, rebuilding, maintaining or upgrading data, communication and entertainment networks, which can be volatile and difficult to forecast. Capital spending in the communications industry is cyclical and can be curtailed or deferred on short notice. A variety of factors affect the timing and amount of capital spending in the communications industry, including:

As a result of these factors, we may not be able to maintain or increase our sales in the future, and our business, financial condition, results of operations and cash flows could be materially and adversely affected.

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

Our customer base includes direct customers, original equipment manufacturers (OEMs) and channel partners, which include distributors, system integrators, value-added resellers and manufacturers’ representatives. For the year ended December 31, 2019, after giving effect to the Acquisition as if it happened on January 1, 2019, we would have derived approximately 21% of our consolidated net sales from our top two direct customers. Our largest customer would have been Comcast, accounting for approximately 13% of our consolidated net sales, after giving effect to the Acquisition. The concentration of our net sales with these key customers subjects us to a variety of risks including:

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

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

Competition in our industry depends on a number of factors, including: innovative product and service solution offerings; the ability to adapt to changing markets and customer preferences; product and service quality; timing of the introduction of new products and services; speed of delivery; pricing; and customer service, including the total customer experience.

In each of our major product groups, we compete with a substantial number of foreign and domestic companies, some of which have greater financial, technical, marketing and other resources or lower operating costs. They may also have broader product offerings and market focus. This gives many of these enterprises a competitive advantage to withstand any significant reduction in capital spending by customers in our markets over the long term. In some instances, our customers themselves may also be our competition in other business areas. Some of our customers may develop their own software requiring support within our products and/or may design and develop products of their own that are produced to their own specifications directly by a contract manufacturer. Further, our industry continues to consolidate, and the combination of any of our competitors could further increase these advantages and result in competitors with broader market presence.

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

Further, if we are unable to transform our business processes to support changing customer expectations and deliver a superior total customer experience, we may lose sales opportunities in the future.

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

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

Our ability to sell our products is highly dependent on the quality of our support and services offerings after the sale, and our failure to offer high-quality support and services after the sale would have a material adverse effect on our sales and results of operations.

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

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

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

The telecommunications and cable television industries are subject to significant and changing federal and state regulation, both in the U.S. and other countries. Many of our customers are subject to various rules and regulations as Internet service providers and changes to such rules and regulations could adversely impact our customers’ decisions regarding capital spending. Some of our customers include agencies of the U.S. federal government as well as educational institutions that receive funding from the U.S. federal government. We, as well as some of our customers, also participate in and benefit from government funded programs that encourage the development of network infrastructures. Examples include FirstNet, which is an independent authority within the U.S. Department of Commerce developing, building and operating the nationwide broadband network that equips first responders, and the E-rates program, which provides supplemental funding to school districts to fund upgrades to technical infrastructure, including Wi-Fi infrastructure. Changes in government programs in our industry or uncertainty regarding future changes could adversely impact our customers’ decisions regarding capital spending, which could decrease demand for our products. Decreased demand for our products could materially and adversely affect our business, financial condition, results of operations and cash flows.

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

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

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

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

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

To compete successfully, we must continue to innovate in anticipation of both our customers’ needs and developing industry trends, which require us to quickly design, develop, manufacture and sell new or enhanced products that provide increasingly higher levels of performance and reliability. The introduction of new or enhanced products requires that we carefully manage the transition from older products to minimize disruption in customer ordering practices and ensure that new products can be timely delivered to meet our customers’ demand.

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

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

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

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

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

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

Our business depends on delivering products and services of consistently high quality. Many of our solutions are highly complex, and testing procedures used by us and our customers are limited to evaluating them under likely and foreseeable failure scenarios. Many of our products include both hardware and software components. It is not unusual for software, especially in earlier versions, to contain bugs that can unexpectedly interfere with expected operations. For various reasons, once deployed, our products may fail to perform as expected. Performance issues could result from faulty design, defective raw materials or components purchased from suppliers, problems in manufacturing or installation errors. We have experienced such performance issues in the past and remain exposed to such performance issues in the future. In some cases, recall of some or all affected products, product redesigns or additional capital expenditures may be required to correct a defect; and depending on the number of products affected, the cost of fixing or replacing such products could have a material impact on our operating results.

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

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

We offer warranties on most products, the terms and conditions of which depend upon the product subject to the warranty. In many cases, we also indemnify our customers against damages or losses that might arise from certain claims relating to our products and services. Future claims may have a material adverse effect on our business, financial condition, results of operations and cash flows. Any significant or systemic product or service failure could also result in lost future sales as a result of reputational damage.

Although certain technical problems experienced by users may not be caused by our products, our business and reputation may be harmed if users perceive our products as the cause of a slow or unreliable network connection, or a high-profile network failure.

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

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

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

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

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

We also rely on management information systems to produce information for business decision-making and planning and to support e-commerce activities. Failure to maintain an adequate digital platform or to make additional investment in our digital platform to support e-commerce activities and improve our customer experience could have a material adverse impact on our business through lost sales opportunities.

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

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

We rely extensively on our management information technology systems and those of third parties to operate our business and store proprietary information about our products and intellectual property. Additionally, we and others acting on our behalf receive, process, store and transmit confidential data, including “personally identifiable information,” with respect to employees, vendors, customers and others. As the recent rise in cybersecurity incidents around the world indicates, all management information technology systems are vulnerable. Despite the security controls we have in place, our facilities, systems and procedures, and those of our third-party service providers, are at risk of security breaches, acts of vandalism, ransomware, software viruses, misplaced or lost data, programming and/or human errors or other similar events. In particular, unauthorized access to our computer systems or stored data could result in the theft or improper disclosure of proprietary, confidential or sensitive information, the deletion or modification of records or interruptions in our operations. These cybersecurity risks increase when we transmit information from one location to another, including transmissions over the Internet or other electronic networks. Any future significant compromise or breach of our data security, whether external or internal, or misuse of employee, vendor, customer, or Company data, could result in significant costs, lost sales, fines, lawsuits, and damage to our reputation. We employ a variety of security breach countermeasures and security controls designed to mitigate these risks, but we cannot guarantee that all breach attempts can be successfully thwarted by these measures as the sophistication of attacks increases. As cyber threats continue to evolve, we may be required to expend additional resources to mitigate new and emerging threats while continuing to enhance our information security capabilities or to investigate and remediate security vulnerabilities.

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

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

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

Foreign data protection, privacy and other laws and regulations can be more restrictive than those in the U.S. For example, the EU’s General Data Protection Regulation (GDPR), which became effective in May 2018, was designed to harmonize data privacy laws across Europe, to protect and empower all EU citizens’ data privacy and to reshape the way organizations across the region approach data privacy. Compliance with GDPR has required changes to products and service offerings, internal and external software systems, including our websites, and changes to many company processes and policies. Failure to comply with GDPR could cause significant penalties and loss of business.

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

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

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

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

Disruption of our ability to produce at or distribute from our manufacturing or contract manufacturing facilities could adversely affect our ability to manufacture products at our other manufacturing or contract manufacturing facilities in a cost-effective and timely manner. In particular, some of our manufacturing and contract manufacturing facilities rely on aging production equipment and information technology infrastructure, and if we fail or our contract manufacturers fail to properly maintain or update this equipment, it could affect our ability to manufacture or ship products. Other disruptions, including labor disturbances, fire, electrical outage, natural disaster, pandemics, acts of violence or terrorism, shipping interruptions or some other catastrophic event could adversely affect our ability to manufacture products at our other manufacturing or contract manufacturer facilities in a cost-effective and timely manner, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our industry has and will continue to demand products based on open standards. The move toward open standards is expected to increase the number of providers that will offer services to the market. This trend is also expected to increase the number of competitors who are able to supply products to service providers and the enterprise market. These factors may adversely impact our future revenues and margins. In addition, many of our customers participate in “technology pools” and increasingly request that we donate a portion of our source code used by customers to these pools, which may impact our ability to recapture the R&D investment made in developing such code.

We believe that we will be increasingly required to work with third-party technology providers. As a result, we expect the shift to more open standards may require us to license software and other components indirectly to third parties via various open-source or royalty-free licenses. In some circumstances, our use of such open-source technology may include technology or protocols developed by standards settings bodies, other industry forums or third-party companies. The terms of the open-source licenses granted by such parties, or the granting of royalty-free licenses, may limit our ability to commercialize products that utilize such technology, which could have a material adverse effect on our results.

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

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

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

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

We are dependent on a limited number of key suppliers for certain of our raw material and component purchases, including certain memory and chip capacitors, polymers, copper rod, copper and aluminum tapes, fine aluminum wire, steel wire, optical fiber, circuit boards and other electronic components, subassemblies and modules. Certain of our suppliers are sole source suppliers and a number of our agreements with suppliers are short-term in nature.

Our reliance on sole or limited suppliers, particularly foreign suppliers, and our reliance on subcontractors involves several risks, including a potential inability to obtain an adequate supply of required materials, components and other products, and reduced control over pricing, quality and timely delivery. Current limited supply of components in the memory and passives categories could impact our ability to deliver on a timely basis and increase overall product costs. Our key suppliers have experienced in the past, and could experience in the future, production, operational or financial difficulties, or there may be global shortages of certain raw materials or components we use. Our inability to find sufficient sources of supply on reasonable terms could impact our ability to manufacture products in a cost-effective manner, which could have a material adverse effect on our gross margin and results of operations. It could also affect our ability to ship products on a timely basis, which could damage relationships with current and prospective customers and potentially have a material adverse effect on our business.

We also source many of our components from international markets. Any changes in the laws and policies of the U.S. or other countries affecting trade is a risk to us. To the extent there are unfavorable changes imposed by the U.S. or other countries and/or retaliatory actions taken by trading partners, such as the addition of new tariffs or trade restrictions, we may experience material adverse impacts on earnings. For a more complete discussion of our risks related to tariffs and trade restrictions, see the risk factor, “Additional tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products” under our “International Risk Factors” in this Item 1A. Risk Factors section.

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

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

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

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

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

Additionally, with the current U.S. trade tariff environment, we are transitioning manufacturing for certain impacted products to non-tariff countries. It is time-consuming and costly, and changes in our contract manufacturers or manufacturing locations may cause significant interruptions in supply if the manufacturers have difficulty manufacturing products to our specifications. As a result, our ability to meet our scheduled product deliveries to our customers could be adversely affected, which could cause the loss of sales to existing or potential customers, delayed revenue or an increase in our costs.

Production interruptions for any reason, such as a natural disaster, epidemic, capacity shortages or quality problems, at one of our manufacturers would negatively affect sales of our products that are manufactured by that manufacturer or utilize components produced by that manufacturer. Such difficulties could adversely affect our business, financial condition, results of operations and cash flows.

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

For a discussion of the risks associated with the recent acquisition of ARRIS, see the “ARRIS Acquisition Risks” noted above under this Item 1A. Risk Factors section.

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

Any future acquisition could involve risks, including the assumption of additional liabilities and expenses, issuance of debt, incurrence of transaction and integration costs, diversion of management’s attention from other business concerns, assumption of unknown contingent liabilities and unanticipated litigation costs. Furthermore, such acquisition may be dilutive to our financial results. There are also significant challenges to integrating an acquired operation into our business, including, but not limited to successfully managing the operations, manufacturing facilities and technology; integrating the sales organizations; maintaining and increasing the customer base; retaining key employees, suppliers and distributors; integrating management information systems, including ERP systems; integrating inventory management and accounting activities; integrating R&D activities; navigating markets in which we potentially have limited or no prior experience; integrating and implementing effective disclosure controls and procedures and internal controls over financial reporting; addressing operating losses that may exist related to individual markets, facilities or product lines; and the impact of goodwill or other impairment charges, amortization costs for acquired intangible assets and acquisition accounting treatment, including the loss of deferred revenue and increases in the fair values of inventory and other acquired assets, on our GAAP financial condition and results of operations.

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

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

We periodically evaluate our various product lines and may consider the divestiture or discontinuance of one or more of those product lines. Any such divestiture or discontinuance could adversely affect our financial position, results of operations and cash flows. Divestitures of product lines have inherent risks, including the expense of selling the product line; the possibility that any anticipated sale will not occur; possible delays in closing any sale; the risk of lower-than-expected proceeds from the sale of the divested business; unexpected costs, including those associated with the separation of the business to be sold, from our management information and other operating systems; distracting employees; potential post-closing claims for indemnification; and potential loss of customers. Expected cost savings may also be difficult to achieve or maximize due to a fixed cost structure, and we may experience varying success in the timely reduction of fixed costs or transferring of liabilities previously associated with the divested or discontinued business.

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

We periodically realign manufacturing capacity among our global facilities and contract manufacturers in order to reduce costs by improving manufacturing efficiency and to strengthen our long-term competitive position. The implementation of these initiatives may include significant shifts of production capacity among facilities and contract manufacturers. For example, with the current U.S. trade tariff environment, we are transitioning manufacturing for certain impacted products to non-tariff countries. It is time-consuming and costly, and changes in our contract manufacturers or manufacturing locations may cause significant interruptions in supply if the manufacturers have difficulty manufacturing products to our specifications. There are significant risks inherent in the implementation of these initiatives, including our failure to ensure the following: adequate inventory on hand or production capacity to meet customer demand while capacity is being shifted among facilities; maintaining product quality as a result of shifting capacity; adequate raw material and other service providers to meet the needs at the new production locations; ability to successfully remove, transport and re-install equipment; and availability of adequate supervisory, production and support personnel to accommodate the shifted production. In the event manufacturing realignment initiatives are not successfully implemented, we could experience lost future sales and increased operating costs, as well as customer relations problems, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have previously recognized restructuring charges in response to slowdowns in demand for our products and in conjunction with the implementation of initiatives to reduce costs and improve efficiency of our operations. Most recently, we have undertaken a number of initiatives to support the integration of ARRIS, which include mostly workforce reductions, and in the past, we have undertaken initiatives to support the integration of other acquisitions, which included the closure of certain domestic and international manufacturing facilities and various other workforce reductions. As a result of the continued integration efforts related to the acquisition of ARRIS, changes in business conditions and other developments, we may need to initiate additional restructuring actions that could result in workforce reductions and restructuring charges, which could adversely and materially affect our cash flows.

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

See Note 8 in the Notes to Consolidated Financial Statements included in this Form 10-K for additional details of our indebtedness. As of December 31, 2019, we had approximately $10.0 billion of indebtedness. This includes indebtedness issued prior to the Acquisition and indebtedness issued in connection with the Acquisition. As of December 31, 2019, we had no outstanding loans under our new asset-based revolving credit facility and approximately $796.8 million in borrowing capacity. Our ability to borrow under our revolving credit facility depends, in part, on inventory, accounts receivable and other assets that fluctuate from time to time and may further depend on lenders’ discretionary ability to impose reserves and availability blocks. We have entered into certain hedging agreements to reduce our exposure to variable rate debt.

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

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

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

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

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

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

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

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

If we do not obtain the necessary stockholder approval, we may not be able to pay dividends in kind on our Series A Convertible Preferred Stock.

At the 2020 Annual Meeting, our stockholders will be asked to vote on a proposal to approve the issuance of shares of common stock to Carlyle in connection with any future conversion or redemption of the Series A Convertible Preferred Stock into common stock, any issuance of common stock to Carlyle as a dividend-in-kind, or pursuant to Carlyle’s participation rights, which, absent such approval, would be prohibited under Nasdaq Listing Rule 5635. If this approval is not obtained, we could be unable to issue shares of common stock to Carlyle in excess of the maximum amount permitted under the listing rules of NASDAQ and, as a result, we would have to settle certain obligations to Carlyle in cash. In addition, if this approval is not obtained, we will not be able to pay dividends-in-kind on the Series A Convertible Preferred Stock. To the extent that we are not able to pay dividends-in-kind, we will have to pay dividends in cash, which could have a material adverse impact on our cash flows and reduce the amount of cash available for working capital, debt reduction, capital expenditures, growth opportunities, acquisitions and other general corporate purposes.

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

We have substantial balances of goodwill and identified intangible assets. As of December 31, 2019, goodwill and identified intangible assets represented approximately 67% of our total assets. We are required to test goodwill for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment. In connection with our annual assessment for impairment of goodwill in 2019, we recorded an impairment charge to goodwill of $376.1 million in the fourth quarter of 2019. If we are unable to improve our results of operations and cash flows, or other indicators of impairment exist, such as a sustained significant decline in our share price and market capitalization, we may incur another, material charge against earnings relating to our remaining goodwill.

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

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

We have a large and complex international tax profile and a significant level of tax credit carryforwards in the U.S. and other carryforwards in various jurisdictions. Variability in the mix and profitability of domestic and international activities, identification and resolution of various tax uncertainties and the inability to realize tax credits and other carryforwards included in deferred tax assets, among other matters, have impacted our effective income tax rate in the past and may impact our effective income tax rate in the future. Tax law changes in the U.S. and certain other countries have also impacted our effective income tax rate in the past and may impact our effective tax rate in the future. A significant increase in our quarterly or annual effective income tax rate could have a material adverse impact on our results of operations.

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

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

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

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

Key employees include individuals in our sales force, operations management, engineers and skilled production workers at our operations around the world. Competition for skilled personnel and highly qualified managers in the industries in which we operate is intense. Our growth by acquisitions creates challenges in retaining employees as well. As the corporate culture evolves to incorporate new workforces, some employees may not find the new culture appealing. In addition, the pace of integration may cause retention issues with our workforce due to integration fatigue.

Furthermore, as our workforce ages, we are challenged to find and attract a younger population to replace them. Younger generations are motivated by progression and opportunity, which may be limited by our current employee population. In addition, many of our employees are highly experienced, skilled individuals who have extensive knowledge or relationships in our industry. As these employees leave CommScope, we may not be able to easily replicate their experience, knowledge and relationships. Difficulties in attracting or retaining employees with the necessary management, technical and financial skills needed to achieve our business objectives may limit our growth potential and may have a material adverse effect on our business, financial condition and results of operations.

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

Although none of our U.S. employees are represented by unions, a significant portion of our international employees are members of unions or subject to works’ councils or similar statutory arrangements. We are required to consult with, and seek the consent or advice of, various employee groups or works’ councils that represent our employees for any changes to our activities or employee benefits. This requirement could have a significant impact on our flexibility in managing costs and responding to market changes. In addition, many of our direct and indirect customers and vendors have unionized workforces. Strikes, work stoppages or slowdowns experienced by us at our international locations or experienced by our customers or vendors could have a negative impact on us. Organizations responsible for manufacturing or shipping our products may also be impacted by labor disruptions. Any interruption in the delivery of our products could harm our reputation with our customers, reduce demand for our products, increase costs and have a material adverse effect on us.

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

We have significant international sales, manufacturing, distribution and R&D operations. Our major international manufacturing, distribution and R&D facilities are located in Australia, Belgium, China, the Czech Republic, France, Germany, India, Ireland, Israel, Mexico, Singapore, Sweden and the United Kingdom. For the year ended December 31, 2019, international sales represented 41% of our consolidated net sales. In general, our international sales have lower gross margin percentages than our domestic sales. To the extent international sales increase as a percentage of our net sales, our overall gross margin percentages may decline.

Our international sales, manufacturing, distribution and R&D operations are subject to the risks inherent in operating abroad, including, but not limited to, coordinating communications among and managing international operations; currency exchange rate fluctuations; economic and political destabilization; restrictive actions by foreign governments; wage inflation; nationalizations; the laws and policies of the U.S. and other countries affecting trade, anti-bribery, foreign investment and loans; foreign tax laws, including the ability to recover amounts paid as value-added and similar taxes; potential restrictions on the repatriation of cash; reduced protection of intellectual property; longer customer payment cycles; compliance with local laws and regulations; volatile geopolitical turmoil, including popular uprisings, regional conflicts, terrorism, and war; shipping interruptions; major health concerns (such as infectious diseases); inflexible labor contracts or labor laws in the event of business downturns; and economic boycott for doing business in certain countries.

A significant portion of our products sold in the U.S. are manufactured outside the U.S. We utilize lower-cost geographies for high labor content products while investing in largely automated plants in higher-cost regions close to customers. Most of our manufacturing employees are located in lower-cost geographies such as Mexico, China, India and the Czech Republic. To the extent there are changes in U.S. trade policies, such as significant increases in tariffs or duties for goods brought into the U.S., our competitive position may be adversely impacted and the resulting effect on our earnings could be material. For a more complete discussion of our risks related to trade policies, see the risk factor “Additional tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products” under “International Risks” in this Item 1A. Risk Factors section.

In June 2016, the U.K. held a referendum in which voters approved an exit from the European Union (E.U.), commonly referred to as Brexit. As a result of the referendum, the British government began negotiating the terms of the U.K.’s future relationship with the E.U. in March 2017. The U.K. and E.U. entered into a withdrawal agreement whereby the U.K. left the E.U. as of January 31, 2020 but maintained access to the E.U. single market and to the global trade deals negotiated by the E.U. on behalf of its members and remained subject to E.U. law, for a transition period ending on December 31, 2020. The ongoing uncertainty within the U.K.’s government on the status of Brexit has negatively impacted the U.K.’s economy and will likely continue to have a negative impact until a definitive resolution is reached on the outstanding trade and legal matters. Even if the U.K. maintains access to the E.U. single market and trade deals following the transition period, Brexit could result in further economic downturn globally. If the U.K. ultimately loses access to the E.U. single market and trade deals, it is possible that there will be greater restrictions on imports and exports between the U.K. and E.U. countries and increased regulatory complexities. These changes could cause disruptions to and create uncertainty surrounding our business and the business of existing and future customers and suppliers as well as have an impact on our employees based in Europe, which could adversely impact our business, financial condition, results of operations and cash flows.

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

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

During 2018 and 2019, the U.S. administration announced tariffs on certain products imported into the U.S., which has resulted in reciprocal tariffs from other countries, including countries where we operate. For example, the U.S. has implemented tariffs on a variety of goods produced or manufactured in China, and China responded by imposing tariffs on various U.S. products. In January 2020, the two sides signed a preliminary deal, but many issues remain unresolved. Both sides have indicated that further revisions will be made during a second phase of negotiations, but the timing of any such negotiations and resolution remain uncertain. The U.S. has renegotiated the North American Free Trade Agreement with Mexico and Canada. The renegotiated agreement, called the United States Mexico Canada Agreement (USMCA), was recently ratified by Congress but remains subject to approval by the Canadian legislature, and the timing of approval is uncertain.

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

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

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

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

Certain of our products, including purchased components of such products, are subject to export controls and may be exported only with the required export license or through an export license exemption. In addition, we are required to comply with certain U.S. and foreign import and customs rules, sanctions and embargos. If we were to fail to comply with applicable export licensing, customs regulations, economic sanctions and other laws, we could be subject to substantial civil and criminal penalties, including fines, the incarceration of responsible employees and managers and the possible loss of export or import privileges. In addition, if our distributors fail to obtain appropriate import, export or re-export licenses or permits, we may also be adversely affected through reputational harm and penalties. Obtaining the necessary export license for a particular sale may be time-consuming and may result in a delay or loss of sales opportunities.

Furthermore, export control laws and economic sanctions prohibit the shipment of certain products to embargoed or sanctioned countries, governments and persons. While we train our employees to comply with these regulations, we cannot assure you that a violation will not occur, whether knowingly or inadvertently. Any such shipment could have negative consequences, including government investigations, penalties, fines, civil and criminal sanctions and reputational harm.

Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations or change in the countries, governments, persons or technologies targeted by such regulations could result in our decreased ability to export, import or sell our products to existing or potential customers, particularly those with international operations. Any decreased use of our products or limitation on our ability to export, import or sell our products could adversely affect our business, financial condition, results of operations and cash flows, and such effects could be material.

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

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

In the past, we have initiated litigation in order to enforce patents issued or licensed to us or to determine the scope and/or validity of a third party’s patent or other proprietary rights, and we may initiate similar litigation in the future. We also have been and may in the future be subject to lawsuits by third parties seeking to enforce their own intellectual property rights, including against certain of the products or intellectual property that we have acquired through acquisitions. Any such litigation, regardless of outcome, could be costly and could subject us to significant liabilities or require us to cease using proprietary third-party technology. In addition, the payment of any damages or any necessary licensing fees or indemnification costs associated with a patent infringement claim could be material and could also materially adversely affect our operating results. Such litigation can also be a significant distraction to management.

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

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

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

Efforts to regulate emissions of greenhouse gases (GHGs), such as carbon dioxide, are underway in the U.S. and other countries, which could increase the cost of raw materials, production processes and transportation of our products. If we are unable to comply with such regulations or sufficiently increase prices or otherwise reduce costs to offset the increased costs of compliance, GHG regulation could have a material adverse effect on our business, financial condition, results of operations and cash flow. Certain environmental laws impose strict and, in some circumstances, joint and several liability on current or former owners or operators of a contaminated property, as well as companies that generated, disposed of or arranged for the disposal of hazardous substances at a contaminated property, for the costs of investigation and remediation of the contaminated property. Our present and past facilities have been in operation for many years and over that time, in the course of those operations, hazardous substances and wastes have been used, generated and occasionally disposed of at such facilities, and we have disposed of waste products either directly or through third parties at numerous disposal sites. Consequently, it has been necessary to undertake investigation and remediation projects at certain sites and we have been, and may in the future be, held responsible for a portion of the investigation and clean-up costs at these sites and our share of those costs may be material.

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

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

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

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

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

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

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

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

Our facilities are used primarily for manufacturing, distribution and administration. Facilities primarily used for manufacturing may also be used for distribution, engineering, research and development, storage, administration, sales and customer service. Facilities primarily used for administration may also be used for research and development, sales and customer service. As of December 31, 2019, our principal facilities, grouped according to the facility’s primary use, were as follows:

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

The material set forth under “Commitments and Contingencies” in Note 16 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference. Management believes none of these legal matters will be material to our business or financial condition upon their final disposition.

Our common stock is traded on the Nasdaq Global Select Market under the symbol COMM. As of February 7, 2020, all of our outstanding shares of common stock are held by one stockholder of record, Cede & Co., as nominee for the Depository Trust Company. Many brokers, banks and other institutions hold shares of common stock as nominees for beneficial owners that deposit these shares of common stock in participant accounts at the Depository Trust Company.

The following table summarizes the stock purchase activity for the three months ended December 31, 2019:

The following graph compares cumulative total return on $100 invested on December 31, 2014 in each of CommScope’s Common Stock, the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the Standard & Poor’s 1500 Communications Equipment Index (S&P 1500 Communications Equipment). The return of the Standard & Poor’s indices is calculated assuming reinvestment of dividends. CommScope has not paid any dividends on its common stock over this period.

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

The following discussion and analysis of our financial condition and results of operations is for the year ended December 31, 2019 compared with the year ended December 31, 2018. This comparison should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" included in Part I, Item 1A or in other parts of this Annual Report on Form 10-K. For a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2018 compared to December 31, 2017, see Part II, Item 7, “Management��s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2018 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 21, 2019.

We are a global provider of infrastructure solutions for communication and entertainment networks. Our solutions for wired and wireless networks enable service providers including cable, telephone and digital broadcast satellite operators and media programmers to deliver media, voice, 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. Our solutions are complemented by a broad array of services including technical support, systems design and integration. We are a leader in digital video and IP television distribution systems, broadband access infrastructure platforms and equipment that delivers data and voice networks to homes. Our global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

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

Prior to the Acquisition, we operated and reported based on two operating segments: Connectivity Solutions (Connectivity) and Mobility Solutions (Mobility). Following the Acquisition, we have operated and managed CommScope in the following reportable segments: Connectivity, Mobility, Customer Premises Equipment (CPE), Network & Cloud (N&C) and Ruckus Networks (Ruckus). We recently announced a realignment of our operating structure that became effective in January 2020. Based on this new operating structure, our new segments are Venue and Campus Networks, Broadband Networks, Outdoor Wireless Networks and Home Networks. We will begin reporting based on these segments in the first quarter of 2020.

To fund the Acquisition, in February 2019, we issued $1.25 billion of 5.50% senior secured notes due 2024 (the 2024 Secured Notes), $1.5 billion of 6.00% senior secured notes due 2026 (the 2026 Secured Notes) and $1.0 billion of 8.25% senior unsecured notes due 2027 (the New Unsecured Notes and, together with the 2024 Secured Notes and the 2026 Secured Notes, the New Notes), the proceeds from which were released from escrow on the date of the Acquisition. On the date of the Acquisition, we borrowed $3.2 billion under a new senior secured term loan due 2026 (the 2026 Term Loan) with an interest rate of LIBOR plus 3.25% and entered into a new asset-based revolving credit facility in an amount up to $1.0 billion with availability of $796.8 million as of December 31, 2019, reflecting a borrowing base of $820.9 million reduced by $24.1 million of letters of credit under the facility. Also as of April 4, 2019, we issued $1.0 billion in Series A Convertible Preferred Stock (the Convertible Preferred Stock) to Carlyle Partners VII S1 Holdings, L.P. (Carlyle). During the year ended December 31, 2019, we recognized $195.3 million of transaction and integration costs primarily related to the Acquisition. We will continue to incur transaction and integration costs as well as restructuring costs to integrate the ARRIS business and those costs may be material.

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

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

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

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. As of January 1, 2019, we early adopted Accounting Standards Update (ASU) 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which eliminated Step 2 of the goodwill impairment test. Step 2 required an entity to determine the fair value at the impairment testing date of its assets and liabilities. The standard does not change the guidance on completing Step 1 of the goodwill impairment test. In accordance with the new standard, we compare the fair value of our reporting units with the carrying amount, including goodwill. We recognize an impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value.

We estimate the fair value of a reporting unit using a discounted cash flow (DCF) method or, as appropriate, a combination of the DCF method and a market approach known as the guideline public company method. Under the DCF method, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. The significant assumptions in the DCF model primarily include, but are not limited to, forecasts of annual revenue growth rates, annual operating income margin, the terminal growth rate and the discount rate used to determine the present value of the cash flow projections. When determining these assumptions and preparing these estimates, we consider historical performance trends, industry data, insight derived from customers, relevant changes in the reporting unit’s underlying business and other market trends that may affect the reporting unit. The discount rate is based on the estimated weighted average cost of capital as of the test date of market participants in the industry in which the reporting unit operates. Under the guideline public company method, we estimate the fair value based upon market multiples of revenue and earnings derived from publicly traded companies with similar operating and investment characteristics as the reporting unit. The weighting of the fair value derived from the market approach may vary depending on the level of comparability of these publicly-traded companies to the reporting unit. When comparable public companies are not meaningful or not available, we may estimate the fair value of a reporting unit using only the DCF method.

Estimating the fair value of a reporting unit involves uncertainties because it requires management to develop numerous assumptions, including assumptions about the future growth and potential volatility in revenues and costs, capital expenditures, industry economic factors and future business strategy. Changes in projected revenue growth rates, projected operating income margins or estimated discount rates due to uncertain market conditions, loss of one or more key customers, changes in our strategy, changes in technology or other factors could negatively affect the fair value in one or more of our reporting units and result in a material impairment charge in the future.

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

During the second quarter of 2019, management determined that indicators of possible goodwill impairment existed for the reporting units from the recently acquired ARRIS business. Since the closing of the Acquisition at the beginning of the second quarter of 2019, the ARRIS reporting units (CPE, N&C and Ruckus) had continued to experience challenges that impacted our performance. The challenges included declines in spending by our cable operator customers that resulted in declines in revenue and operating income for these reporting units and the loss of key leaders of these reporting units following the Acquisition. Certain of these challenges were expected to persist throughout the remainder of 2019 and impact management’s ability to grow these businesses at the rate that was originally estimated when we completed the acquisition of ARRIS. Based on these indicators, a goodwill impairment test was performed for these reporting units using a DCF valuation model. Given the proximity to the acquisition date, we did not use a market approach for the interim goodwill test. The discount rates used in the second quarter 2019 interim goodwill impairment test were 9.5%, 10.5% and 11.0% for the CPE, N&C and Ruckus reporting units. As a result, management developed a revised forecast for 2019 and updated the annual financial forecasts for the years beyond 2019 that consider these challenges. The projections assumed a recovery of spending by these customers would begin in 2020. The extent and timing of this recovery were key assumptions in the determination of the fair value of the reporting units. The second quarter 2019 impairment test showed no impairment.

The annual test of goodwill was performed for each of the reporting units with goodwill balances as of October 1, 2019. As a result of the annual test, we recorded goodwill impairment charges totaling $376.1 million, of which $192.8 million related to our CPE reporting unit, $142.1 million related to our N&C reporting unit and $41.2 million related to our Ruckus reporting unit. These reporting units were acquired in our ARRIS acquisition on April 4, 2019. Since the closing of the Acquisition, the ARRIS reporting units have experienced challenges that impacted our performance. These challenges included declines in spending by cable operator customers that resulted in declines in net sales and operating income for these reporting units and the loss of key leaders of these reporting units following the Acquisition. Initially, we anticipated a recovery in spending by certain customers starting in 2020. During our annual strategic planning process in the fourth quarter of 2019, a number of specific factors arose, including an assessment of historical and future operating results, key customer inputs, new assessments of market trends and anticipated expenditures required to support the changing market dynamics affecting each of the reporting units. As a result of these factors, we expect a more prolonged recovery and have concluded that the fair value of each of the ARRIS reporting units was less than its carrying value, which resulted in a partial write-off of goodwill for each of the reporting units as of October 1, 2019. The expense was recorded in the asset impairments line on the Consolidated Statement of Operations.

For the 2019 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.

As discussed, our CPE, N&C and Ruckus reporting units failed the annual goodwill impairment test and an impairment was recorded as of October 1, 2019. Our distributed coverage and capacity systems (DCCS) reporting unit was also at risk of failing the goodwill impairment test as the amount by which its fair value exceeded its carrying value was less than 10%. The DCCS reporting unit is in our Mobility segment. Considering the relatively low headroom going forward for the CPE, N&C, Ruckus and DCCS reporting units, there is a risk for future impairment in the event of decline in general economic, market or business conditions or any significant unfavorable change in the forecasted cash flows, weighted average cost of capital and growth rates. If current and long-term projections for our CPE, N&C, Ruckus and DCCS reporting units are not realized or decrease materially, we may be required to recognize additional goodwill impairment charges.

The following table sets forth summary information regarding our CPE, N&C, Ruckus and DCCS reporting units as of December 31, 2019, including key assumptions used in our annual goodwill analysis, along with sensitivity analysis showing the effect of a change in certain key assumptions, assuming all other assumptions remain constant, to the resulting fair value using an income approach, as of October 1, 2019:

Management reviews definite-lived intangible assets and other long-lived assets for impairment when events or changes in circumstances indicate that their carrying values may not be fully recoverable. This analysis differs from our goodwill impairment analysis in that an intangible or other long-lived asset impairment is only deemed to have occurred if the sum of the forecasted undiscounted future net cash flows related to the assets being evaluated is less than the carrying value of the assets. If the forecasted net cash flows are less than the carrying value, then the asset is written down to its estimated fair value. We did not identify any impairments of definite-lived intangible assets or other long-lived assets in 2019. Changes in the estimates of forecasted net cash flows may result in future asset impairments that could be material to our results of operations.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We establish deferred tax liabilities for the estimated tax cost associated with foreign earnings that we do not consider permanently reinvested (primarily foreign withholding and state income taxes). These liabilities are subject to adjustment if there is a change in the assertion of whether the foreign earnings are considered to be permanently reinvested.

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

Comparison of results of operations for the year ended December 31, 2019 with the year ended December 31, 2018

Net sales for the year ended December 31, 2019 included ARRIS net sales of $4.0 billion. Excluding the ARRIS business, CommScope’s net sales were lower for 2019 compared to the prior year. Approximately 50% of the decline related to lower volumes, approximately 35% related to pricing pressures and the remainder related to impacts of foreign exchange rate changes among other factors. From a regional perspective, we saw lower net sales across all regions for 2019. For 2019, the decrease in net sales excluding the ARRIS business was primarily driven by declines of $166.6 million in the Asia Pacific (APAC) region and $41.0 million in the Europe, Middle East and Africa (EMEA) region.

Net sales to customers located outside of the U.S. comprised 41.0% of total net sales for 2019 compared to 44.4% for 2018. For further details by segment, see the section titled “Segment Results” below.

Gross profit for 2019 was negatively affected by ARRIS acquisition accounting adjustments of $264.2 million primarily related to the markup of inventory to its estimated fair value less the estimated costs associated with its sale. Excluding the acquisition accounting adjustments recorded in 2019, gross profit for CommScope was $2.7 billion and gross profit as a percentage of sales was 32.0%. Excluding the ARRIS business in total, for 2019, CommScope’s gross profit was $1.5 billion and gross profit as a percentage of sales was 34.8%. For 2019, gross profit and gross profit as a percentage of sales for the legacy CommScope business decreased due to lower net sales and the $55.0 million settlement of patent infringement litigation as described in Note 16 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

The Connectivity segment experienced lower gross profit in 2019 compared to the prior year primarily as a result of the $255.3 million decrease in net sales. The Mobility segment’s gross profit was essentially unchanged compared to the prior year despite the $55.0 million patent infringement litigation settlement.

As discussed in Note 2 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, we changed our accounting principle to reclassify certain internal handling costs from selling, general and administrative (SG&A) expense to cost of sales. The impact of this change increased cost of sales and decreased gross profit by $55.0 million for 2018. All comparisons presented in this management’s discussion and analysis have been adjusted to reflect the impact of this change in accounting principle.

For 2019, SG&A expense increased primarily due to the inclusion of ARRIS SG&A expense (excluding transaction and integration costs) of $445.8 million and transaction and integration costs of $195.3 million. Excluding the ARRIS business as well as transaction and integration costs, SG&A expense decreased $18.5 million for 2019, compared to the prior year primarily due to benefits from cost savings initiatives. Excluding transaction and integration costs and the ARRIS business, SG&A expense as a percentage of sales was 14.8% for 2019.

Research and development (R&D) expense increased for 2019 compared to the prior year due to the inclusion of ARRIS R&D expenses of $385.7 million. Excluding ARRIS, R&D expense for CommScope increased by $7.1 million primarily due to our continuing investment in Mobility segment products. R&D activities generally relate to ensuring that our products are capable of meeting the evolving technological needs of our customers, bringing new products to market and modifying existing products to better serve our customers.

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

The amortization of purchased intangible assets was higher in 2019 compared to the prior year primarily due to the additional amortization resulting from the Acquisition. Excluding ARRIS, amortization related to CommScope was lower by $32.0 million for 2019 compared to the prior year because certain of our intangible assets became fully amortized.

The restructuring costs recorded in 2019 were primarily related to integrating the ARRIS business while the restructuring costs recognized in the prior year were primarily related to the integration of the BNS business. From a cash perspective, we paid $89.9 million to settle restructuring liabilities during 2019 and expect to pay an additional $23.9 million by the end of 2020 related to restructuring actions that have been initiated. In addition, we expect to pay $4.4 million between 2021 and 2022 related to restructuring actions that have been initiated. No significant restructuring charges are expected to be incurred to complete the previously announced BNS integration initiatives. Additional restructuring actions related to the acquisition of ARRIS are expected to be identified and the resulting charges and cash requirements are expected to be material.

During 2019 we recorded goodwill impairment charges of $192.8 million, $142.1 million and $41.2 million related to our CPE, N&C and Ruckus segments, respectively, as a result of our annual impairment test. During 2018, we recorded an impairment charge of $15.0 million allocated equally between the Connectivity and Mobility segments to fully impair an equity investment in a privately-held company.

Foreign currency loss includes the net foreign currency gains and losses resulting from the settlement of receivables and payables, foreign currency contracts and short-term intercompany advances in a currency other than the subsidiary’s functional currency. The decrease in 2019 was driven by a $14.0 million foreign currency loss in 2018 that was related to foreign currency translation adjustments previously reported in accumulated other comprehensive loss that were recognized in other expense, net due to the liquidation of a foreign subsidiary.

The decrease in other expense, net for 2019 compared to the prior year was primarily due the impact in 2018 of the termination of a U.S. defined benefit pension plan and the termination of benefits under certain of our U.S. postretirement medical plans. As a result of the pension plan terminations, we recognized a pretax charge of $34.5 million in 2018 related to unrecognized net actuarial losses previously recorded in accumulated other comprehensive loss. We also recognized a pretax gain of $9.7 million related to unrecognized prior service credits and unrecognized net actuarial gains previously recorded in accumulated other comprehensive loss for the postretirement medical plans. Other income, net for 2019 includes gains of $6.1 million related to the sale of certain investments.

Interest expense for 2019 increased compared to the prior year due to the financing of the Acquisition. In February 2019, we issued the New Notes, which were held in escrow until the Acquisition date, April 4, 2019. In February 2019, we also secured the borrowing of $3.2 billion, less $32.0 million of original issue discount, under the 2026 Term Loan which was funded on April 4, 2019 as well. We began accruing interest on the New Notes in February 2019 and accrued ticking fees related to the 2026 Term Loan from February 2019 to April 2019. We incurred $379.2 million of incremental interest expense during 2019 as a result of this acquisition-related debt.

We used the proceeds from the New Notes and a portion of the 2026 Term Loan, together with cash on hand and proceeds from the issuance of the Convertible Preferred Stock to finance the Acquisition. The remaining proceeds from the 2026 Term Loan were used to pay off the existing senior secured term loan due 2022 (the 2022 Term Loan). We also made voluntary payments on the 2022 Term Loan during 2019. In connection with the repayments of the 2022 Term Loan, $7.7 million of original issue discount and debt issuance costs were written off and included in interest expense in 2019. During 2019, we also redeemed $500.0 million aggregate principal amount of our 5.00% senior notes due 2021 (the 2021 Notes) and accelerated the recognition of $2.1 million of debt issuance costs in interest expense.

Our weighted average effective interest rate on outstanding borrowings, including the amortization of debt issuance costs and original issue discount, was 6.13% at December 31, 2019 and 5.73% at December 31, 2018.

Interest income increased during 2019 due to $10.9 million of interest earned on the proceeds of the New Notes that were held in an interest-bearing escrow account until the Acquisition date.

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

For 2019, our effective tax rate was 13.5% and we recognized a tax benefit of $144.5 million on a pretax loss of $1,074.0 million. The unfavorable impact to our tax benefit was driven primarily by $77.9 million related to goodwill impairment charges for which minimal tax benefits were recorded. The rate was also unfavorably impacted by U.S. anti-deferral provisions and foreign withholding taxes but these were partially offset by the favorable impact of federal tax credits and the expiration of statutes of limitations on various uncertain tax positions. The impact of excess tax costs related to equity-based compensation awards was not material in 2019. See Note 13 Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for more discussion of our income tax benefit.

The effective income tax rate of 17.9% for 2018 was lower than the statutory rate of 21.0% primarily due to a reduction in tax expense of $23.3 million related to the expiration of statutes of limitations on various uncertain tax positions, a $7.8 million benefit recorded for changes to provisional amounts related to the tax reform legislation enacted in 2017 and the favorable impact of $4.6 million of excess tax benefits related to equity-based compensation awards for 2018. These decreases to the effective tax rate were partially offset by an increase in tax expense due to the effect of the provision for state income taxes, the impact of earnings in foreign jurisdictions that are taxed at rates higher than the U.S., the impact of the new U.S. anti-deferral provisions and the impact of repatriation taxes.

Connectivity segment net sales were lower in 2019 compared to the prior year. Approximately 70% of the decline in net sales was due to lower sales volumes, approximately 20% was due to pricing pressure and the remaining decline related to the impacts of foreign exchange rate changes among other factors. From a regional perspective, the Connectivity segment saw declines of $88.6 million in the U.S., $77.4 million in the EMEA region and $70.2 million in the APAC region. Net sales in the U.S. were down due to declines in spending by our cable operator customers. Sales in the EMEA and APAC regions were lower due to decreases in sales of enterprise solutions and to a lesser extent, the impact of unfavorable foreign exchange rate changes.

Connectivity segment operating income and non-GAAP adjusted EBITDA decreased during 2019 compared to the prior year primarily due to lower net sales. For 2019, Connectivity segment operating income was favorably impacted by lower intangible amortization and restructuring costs, partially offset by higher transaction and integration costs, all of which are excluded from non-GAAP adjusted EBITDA. See “Reconciliation of Non-GAAP Measures” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.

Mobility segment net sales remained relatively unchanged during 2019 compared to the prior year as pricing pressures were almost fully offset by higher volumes. Foreign exchange rate changes negatively impacted Mobility segment net sales by approximately 1% for 2019 compared to the prior year. From a regional perspective, Mobility segment net sales increased by $71.8 million in the U.S. and $36.4 million in the EMEA region, but these increases were largely offset by a decline of $96.4 million in the APAC region. Sales of metro cell solutions drove the increase in the U.S. while higher sales of distributed antenna systems and macro cell products drove the increase in the EMEA region. Lower sales of macro cell solutions, primarily in India, drove the decrease in sales to the APAC region.

Mobility segment operating income increased slightly for 2019 despite a $55.0 million settlement of a patent infringement claim (see Note 16 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K) and a $15.7 million increase in transaction and integration costs. Mobility segment operating income for 2019 benefitted from lower intangible amortization expense, restructuring costs and asset impairments when compared to 2018. All of these costs are excluded from the calculation of non-GAAP adjusted EBITDA, which also increased for 2019 compared to the prior year. The increase in adjusted EBITDA for 2019 was primarily due to favorable geographic mix and lower input costs. See “Reconciliation of Segment adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.

Net sales to customers outside the U.S. comprised 40.3% of total CPE segment net sales for 2019. These sales to international customers were primarily to customers in the EMEA and Caribbean and Latin America (CALA) regions. CPE segment net sales were unfavorably impacted by acquisition accounting adjustments related to deferred revenue of $5.2 million for 2019.

Operating income for our CPE segment for 2019 was negatively impacted by a goodwill impairment charge of $192.8 million, $27.8 million of acquisition accounting adjustments related to deferred revenue and the mark-up of inventory to its fair value and $23.2 million of restructuring costs for 2019. Asset impairments, acquisition accounting adjustments and restructuring charges are not reflected in non-GAAP adjusted EBITDA.

Net sales to customers outside the U.S. comprised 39.5% of total N&C segment net sales for 2019. These sales to international customers were spread across all major geographic regions. N&C segment net sales were unfavorably impacted by acquisition accounting adjustments related to deferred revenue of $29.5 million for 2019.

~~consider~~Operating income for our N&C segment was negatively impacted by a goodwill impairment charge of $142.1 million, $135.8 million of acquisition accounting adjustments related to the mark-up of inventory to its estimated fair value and deferred revenue, $32.1 million of restructuring costs and $100.0 million of transaction and integration costs for 2019. All of these charges are excluded from our calculation of non-GAAP adjusted EBITDA.

Net sales to customers outside the U.S. comprised 44.0% of total Ruckus segment net sales for 2019. Sales to international customers were primarily to customers in the EMEA and APAC regions. Ruckus segment net sales were unfavorably impacted by acquisition accounting adjustments related to deferred revenue of $10.7 million for 2019.

Operating income for our Ruckus segment for 2019 was negatively impacted by $100.6 million of acquisition accounting adjustments related to the mark-up of inventory to its estimated fair value and deferred revenue, a goodwill impairment charge of $41.2 million and transaction and integration costs of $35.3 million. Acquisition accounting adjustments, asset impairments and transaction and integration costs are not included in non-GAAP adjusted EBITDA.

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

Our principal sources of liquidity on a short-term basis are cash and cash equivalents, cash flows provided by operations and availability under credit facilities. To fund the Acquisition, on February 19, 2019 we issued the New Notes, the proceeds from which were held in escrow until they were released on April 4, 2019, the Acquisition date. In February 2019, we also secured the borrowing of $3.2 billion under the 2026 Term Loan with an interest rate of LIBOR plus 3.25% that was funded on the Acquisition date. In addition, at the closing of the Acquisition, we entered into a new asset-based revolving credit facility. Availability under the new asset-based revolving credit facility was $796.8 million as of December 31, 2019, reflecting a borrowing base of $820.9 million reduced by $24.1 million of letters of credit under the facility. We did not borrow under the new asset-based revolving credit facility to fund the Acquisition, but we did borrow and repay $15.0 million under the facility in the second quarter of 2019. In addition to incremental new debt, we funded the Acquisition by issuing the Convertible Preferred Stock to Carlyle for an aggregate investment of $1.0 billion. The Convertible Preferred Stock pays dividends at an annual rate of 5.50%, with dividends payable quarterly and is convertible at the option of the holders at any time into shares of CommScope common stock at a price of $27.50 per share, subject to certain limits on the number of shares that may be issued unless we obtain shareholder approval. On a long-term basis, our potential sources of liquidity also include raising capital through the issuance of additional equity and/or debt.

The primary uses of liquidity include debt service requirements (including voluntary debt repayments or redemptions), funding working capital requirements, paying acquisition integration costs, capital expenditures, paying restructuring costs, paying dividends related to the Convertible Preferred Stock and income tax payments. We believe that our existing cash, cash equivalents and cash flows from operations, combined with availability under our new asset-based revolving credit facility and access to capital markets, will be sufficient to meet our presently anticipated future cash needs. We may experience volatility in cash flows between periods due to, among other reasons, variability in the timing of vendor payments and customer receipts. We may, from time to time, borrow under our revolving credit facility or issue securities, if market conditions are favorable, to meet future cash needs or to reduce our borrowing costs.

Although there are no financial maintenance covenants under the terms of our senior notes, there is a limitation, among other limitations, on certain future borrowings based on an adjusted leverage ratio or a fixed charge coverage ratio. These ratios are based on financial measures similar to non-GAAP adjusted EBITDA as presented in the “Reconciliation of Non-GAAP Measures” section below, but also give pro forma effect to certain events, including acquisitions, synergies and savings from cost reduction initiatives such as facility closures and headcount reductions. For the year ended December 31, 2019, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $1,481.6 million, which included increases to our non-GAAP adjusted EBITDA related to the ARRIS business from January 1, 2019 to the Acquisition date, calculated in accordance with CommScope’s definition ($70.8 million); annualized synergies expected to be realized in the three years following the close of the Acquisition ($105.0 million); and annualized savings expected from announced cost reduction initiatives ($8.3 million) so that the impact of the cost reduction initiatives is fully reflected in the twelve-month period used in the calculation of the ratios. In addition to limitations under these indentures, our senior secured credit facilities contain customary negative covenants based on similar financial measures. We believe we are in compliance with the covenants under our indentures and senior secured credit facilities at December 31, 2019.

Cash and cash equivalents increased during 2019 primarily due to the addition of the ARRIS business, partially offset by funding the Acquisition, settling assumed ARRIS debt, payments on the 2022 Term Loan, redemptions of the 2021 Notes, acquisition-related payments and restructuring payments. As of December 31, 2019, approximately 57% of our cash and cash equivalents were held outside the U.S.

Working capital, excluding cash and cash equivalents and the current portion of long-term debt, increased during 2019 due to the Acquisition. Excluding the ARRIS business, working capital, excluding cash and cash equivalents, decreased mainly due to higher accrued interest related to the debt incurred to finance the Acquisition coupled with lower accounts receivable balances. The increase in total capitalization during 2019 reflected the proceeds from the New Notes funded in the first quarter, the 2026 Term Loan, which was funded on the Acquisition date, and the Convertible Preferred Stock, all of which were utilized to fund a substantial portion of the Acquisition on April 4, 2019.

Comparison for the year ended December 31, 2019 with the year ended December 31, 2018

During 2019, cash generated from operating activities increased compared to the prior year period due to addition of the ARRIS business partially offset by the payment of $233.9 million more in interest as a result of the Acquisition-related debt and payments of $210.7 million of transaction and integration costs related to the Acquisition during 2019. We also paid $49.7 million more in restructuring costs for 2019 compared to the prior year. The change in inventory during 2019 reflects $218.8 million of acquisition accounting adjustments related to the mark-up of inventory to its estimated fair value.

During 2019, we paid $5.1 billion, net of cash acquired, to fund the Acquisition using a combination of cash on hand, proceeds from the issuance of long-term debt and proceeds from the issuance of the Convertible Preferred Stock. Our investment in property, plant and equipment during 2019 was $21.8 million higher than 2018, primarily as a result of the addition of ARRIS’ investment in property, plant and equipment since the Acquisition date. Our investments in property, plant and equipment were primarily related to supporting improvements in manufacturing operations, including expanding production capacity and investing in information technology, including software developed for internal use. During 2019, we also paid $11.0 million of the $14.5 million liability for remaining payments due related to the August 2017 acquisition of Cable Exchange. In addition, during 2019, we received proceeds of $9.3 million on the sale of certain investments. During 2019 and 2018, we sold property and equipment no longer being utilized for $1.6 million and $12.9 million, respectively. During 2019 and 2018, we received $2.7 million and $5.1 million, respectively, to settle net investment hedges that we entered into for the purpose of mitigating a portion of the foreign currency risk on the euro net investment in a foreign subsidiary.

During 2019, we received net proceeds from the issuance of the New Notes and the 2026 Term Loan of $6.9 billion to fund the Acquisition. On the date of the Acquisition, we also entered into a new asset-based revolving credit facility in an amount up to $1.0 billion, which had availability of $796.8 million as of December 31, 2019, reflecting a borrowing base of $820.9 billion reduced by $24.1 million of letters of credit issued under the facility. We borrowed and repaid $15.0 million under the new asset-based revolving credit facility during the second quarter of 2019. We had no outstanding borrowings under the new asset-based revolving credit facility as of December 31, 2019. In connection with these financing transactions, we paid $120.8 million of debt issuance costs during 2019.

We repaid $225.0 million of the 2022 Term Loan in the first quarter of 2019 and we repaid the remaining balance of $261.3 million on April 4, 2019 using proceeds from the 2026 Term Loan. As part of funding the Acquisition, we repaid ARRIS’ outstanding debt of $2.1 billion under its senior secured credit facilities. We redeemed $500.0 million aggregate principal amount of our 2021 Notes during 2019. We also paid an $8.0 million scheduled payment during December 2019 related to the 2026 Term Loan.We may repurchase more of our senior notes if market conditions are favorable and the applicable indenture and the credit agreements governing the senior secured credit facilities permit such repayment or repurchase. In addition, we may refinance portions of our existing debt to lower borrowing costs, extend the term or adjust the total amount of fixed or floating-rate debt.

In addition to the new debt, we funded the Acquisition by issuing the Convertible Preferred Stock to Carlyle for an aggregate investment of $1.0 billion. We paid $3.0 million in transaction fees on Carlyle’s behalf related to the Convertible Preferred Stock and we treated that as a deemed dividend during 2019. During 2019, we paid $40.7 million in authorized dividends for the Convertible Preferred Stock.

During 2019, we received proceeds of $4.6 million related to the exercise of stock options. Also during 2019, employees surrendered 0.7 million shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units and performance share units, which reduced cash flows by $13.2 million. During 2018, we received proceeds of $6.1 million related to the exercise of stock options and employees surrendered 0.4 million shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units, which reduced cash flows by $15.7 million.

We believe that presenting certain non-GAAP financial measures enhances an investor’s understanding of our financial performance. We further believe that these financial measures are useful in assessing our operating performance from period to period by excluding certain items that we believe are not representative of our core business. We also use certain of these financial measures for business planning purposes and in measuring our performance relative to that of our competitors.

We believe these financial measures are commonly used by investors to evaluate our performance and that of our competitors. However, our use of the terms non-GAAP adjusted operating income and non-GAAP adjusted EBITDA may vary from that of others in our industry. These financial measures should not be considered as alternatives to operating income (loss), net income (loss) or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance, operating cash flows or liquidity.

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

In February 2019, we issued the New Notes and repaid $225.0 million of the 2022 Term Loan. In April 2019, we completed the Acquisition, borrowed $3.2 billion under the 2026 Term Loan and repaid the remaining $261.3 million of the 2022 Term Loan. During the third and fourth quarters of 2019, we redeemed $500.0 million of the 2021 Notes. The following table summarizes our contractual obligations as of December 31, 2019. This table does not include the obligations related to our Series A convertible preferred stock discussed in Note 14 in our Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

See Note 1 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.

We were not a party to any significant off-balance sheet arrangements during the year ended December 31, 2019.

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

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

The table below summarizes the expected interest and principal payments associated with our variable rate debt outstanding at December 31, 2019 (mainly the $3.2 billion variable rate 2026 Term Loan and new asset-based revolving credit facility). The principal payments presented below are based on scheduled maturities and assume no borrowings under the new asset-based revolving credit facility. The interest payments presented below assume the interest rates in effect as of December 31, 2019 (see Note 8 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K). The impactof a 1% increasein the interestrate indexon projectedfutureinterestpayments on the variableratedebtisalsoincludedin thetablebelow.

We also have $6.8 billion aggregate principal amount of fixed rate senior notes. The table below summarizes our expected interest and principal payments related to our fixed rate debt at December 31, 2019.

As part of our hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting from the variable interest rate on the 2026 Term Loan, in March 2019, we entered into and designated pay-fixed, receive-variable interest rate swap derivatives as cash flow hedges of interest rate risk. The total notional amount of the interest rate swap derivatives as of December 31, 2019 was $600 million with outstanding maturities of up to fifty-one months. As of December 31, 2019, the combined fair value of the interest rate swaps was a $16.3 million loss. The table above excludes the impact of these interest rate swap derivatives.

Approximately 41% and 44% of net sales for 2019 and 2018, respectively, were to customers located outside the U.S. Significant changes in foreign currency exchange rates could adversely affect our international sales levels and the ~~actual~~related collection of amounts due. In addition, a significant decline in the value of currencies used in certain regions of the world as compared to the U.S. dollar could adversely affect product sales in those regions because our products may become more expensive for those customers to pay for in their local currency. Conversely, significant increases in the value of foreign currencies as compared to the U.S. dollar could adversely affect profitability as certain product costs increase relative to a U.S. dollar-denominated sales price. The foreign currencies to which we have the greatest exposure include the Chinese yuan, euro, Czech koruna, Australian dollar, Indian rupee, Mexican peso and Brazilian real. Local manufacturing provides a partial natural hedge and we continue to evaluate additional alternatives to help us reasonably manage the market risk related to foreign currency exposures.

We use derivative instruments such as forward exchange contracts to manage the risk of fluctuations in the value of certain foreign currencies. As of December 31, 2019, we had foreign exchange contracts with a net unrealized loss of $1.0 million, with maturities of up to ten months and aggregate notional value of $508 million (based on exchange rates as of December 31, 2019). These contracts are not designated as hedges for accounting purposes and are marked to market each period through earnings and, as such, there were no unrecognized gains or ~~apparent conflicts~~losses as of ~~interest.~~December 31, 2019 or 2018. In addition, we hold certain foreign exchange forward contracts and cross currency swaps designated as net investment hedges to mitigate a portion of the foreign currency risk on the Euro net investment in a foreign subsidiary. As of December 31, 2019, the notional value of these derivative contracts was $300 million, with outstanding maturities of up to eighteen months. The unrealized gain on the contracts was $5.8 million. Our derivative instruments are not leveraged and are not held for trading or speculation. See Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of these contracts. We continuously evaluate the amount and type of derivative instruments utilized to manage the market risk related to foreign currency exposures.

Materials account for a large portion of our cost of sales. These materials, such as copper, aluminum, steel, plastics and other polymers, bimetals and optical fiber, are subject to changes in market price as they are influenced by commodity markets and supply and demand levels, among other factors. Management attempts to mitigate these risks through effective requirements planning and by working closely with key suppliers to obtain the best possible pricing and delivery terms. We may also enter into agreements with certain suppliers to guarantee our access to certain key components. As of December 31, 2019, we had forward purchase commitments outstanding under take-or-pay contracts for certain metals of approximately $11.4 million that we expect to consume in the normal course of operations through the second quarter of 2020. We continuously evaluate the amount and type of derivative instruments utilized to manage commodity price risk.

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

We have audited the accompanying consolidated balance sheets of CommScope Holding Company, Inc. (the Company) as of December 31, 2019 and 2018, and the related ~~person transaction may only be consummated if~~consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our ~~Audit Committee has approved or ratified such transaction~~opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the ~~guidelines set forth~~standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, 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 20, 2020 expressed an unqualified opinion thereon.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leased assets previously classified as operating leases in 2019 due to the adoption of ASU No. 2016-02, Leases (Topic 842).

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

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

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidatedfinancial 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.

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

We have audited CommScope Holding Company, Inc.’sinternal control over financial reporting as of December 31, 2019, 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, 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and our report dated February 20, 2020 expressed an unqualified opinion thereon.

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

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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

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

CommScope Holding Company, Inc., along with its direct and indirect subsidiaries (CommScope or the Company), is a global provider of infrastructure solutions for communication and entertainment networks. The Company’s solutions for wired and wireless networks enable service providers including cable, telephone and digital broadcast satellite operators and media programmers to deliver media, voice, Internet Protocol (IP) data services and Wi-Fi to their subscribers and allow enterprises to experience constant, wireless and wired connectivity across complex and varied networking environments. The Company’s solutions are complemented by a broad array of services including technical support, systems design and integration. CommScope is a leader in digital video and IP television distribution systems, broadband access infrastructure platforms and equipment that delivers data and voice networks to homes. CommScope’s global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

On April 4, 2019, the Company completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. The results of operations of ARRIS’ products and services are reflected in the new reporting segments of Customer Premises Equipment (CPE), Network and Cloud (N&C) and Ruckus Networks (Ruckus). The Company borrowed approximately $7.0 billion, issued $1.0 billion in Series A Convertible Preferred Stock (the Convertible Preferred Stock) and used cash on hand to fund the Acquisition and related costs. See Note 3 for additional discussion of the Acquisition, Note 8 for additional discussion of the debt financing transactions and Note 14 for additional discussion of the Convertible Preferred Stock.

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

The Acquisition was accounted for using the acquisition method of accounting and the ARRIS results of operations are reported in the Company’s audited consolidated financial statements from April 4, 2019, the date of acquisition, through December 31, 2019.

Certain ~~types of transactions~~prior year amounts have been ~~pre-approved by our Audit Committee~~reclassified to conform to the current year presentation.

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

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

Accounts receivable are stated at the amount owed by the customer, net of allowances for estimated doubtful accounts, discounts, returns and rebates. The Company maintainsallowancesfordoubtfulaccountsforestimatedlossesexpected to resultfromtheinabilityof its customersto makerequiredpayments.These ~~pre-approved transactions include:~~estimatesarebasedon management’sevaluationof theabilityof customersto makepayments,focusingon historical experience, known customerfinancial difficultiesand the age of receivablebalances. Accounts receivable are charged to the allowance when determined to be no longer collectible. The Company does not offer extended payment terms to customers and as a result amounts owed are not adjusted for the effects of any significant financing component.

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

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

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

Goodwill is tested for impairment annually or at other times if events have occurred or circumstances exist that indicate the carrying value of the reporting unit may exceed its fair value. Property, plant and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable, based on the undiscounted cash flows expected to be derived from the use and ultimate disposition of the assets. Assets identified as impaired are carried at estimated fair value. Equity investments without readily determinable fair values are evaluated each reporting period for impairment based on a qualitative assessment and are then measured at fair value if an impairment is determined to exist. See Notes 4 and 10 for discussion of asset impairment charges.

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

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

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

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

~~certain employment~~Product sales represent over 90% of the Company’s revenue. For these sales, revenue is recognized when control of the product has transferred to the customer, which is generally at the point in time when products have been shipped, right to payment has been obtained and ~~compensation arrangements;~~

~~transactions where~~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 ~~person’s interest~~software are considered one performance obligation.

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

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

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

•

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

•

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

•

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

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

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

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

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Effective April 1, 2019, the Company made a voluntary change in accounting principle related to its classification of internal handling costs to prepare goods for shipment. Historically, the Company presented these handling costs within selling, general and administrative expense (SG&A). Under the new policy, the Company is presenting these expenses within cost of sales in the Consolidated Statements of Operations. The Company believes that this change is preferable as the classification in cost of sales better reflects the costs of generating the related revenue and results in more meaningful presentation of gross margin. Additionally, this presentation enhances the comparability of the Company’s financial statements with industry peers and provides more consistency in the treatment of all shipping and handling costs. The accounting policy change was applied retrospectively to all periods presented. There was no change to net income (loss), earnings (loss) per share, retained earnings (accumulated deficit) or cash flows; however, cost of sales increased by $55.0 million and $62.3 million and SG&A decreased by the same amounts for the years ended December 31, 2018 and 2017, respectively. The Company recorded handling costs as a component of cost of sales for the year ended December 31, 2019. The Consolidated Statements of Operations was adjusted to reflect this change; however, there was no other impact on the consolidated financial statements.

Leases

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

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

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

The Company accounts for lease agreements with contractually required lease and non-lease components on a combined basis. Lease payments made for cancellable leases, variable amounts that are not based on an observable index and lease agreements with an original duration of less than ~~ten percent (10%)~~twelve months are recorded directly to lease expense.

Tax Collected from Customers

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

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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 ~~equity~~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 ~~another entity;~~circumstances indicate that revisions may be necessary. Such revisions may be material.

Advertising Costs

Advertising costs are expensed in the period in which they are incurred. Advertising expense was $39.5 million, $17.3 million and $21.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Research and Development

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

Derivative Instruments and Hedging Activities

CommScope is exposed to risks resulting from adverse fluctuations in commodity prices, interest rates and foreign currency exchange rates. CommScope’s risk management strategy includes the use of derivative financial instruments whenever management determines their use to be reasonable and practical. This strategy does not permit the use of derivative financial instruments for trading or speculation.

The Company uses forward contracts to hedge a portion of its balance sheet foreign exchange re-measurement risk and to hedge certain planned foreign currency expenditures. Unrealized gains and losses resulting from these contracts are recognized in other expense, net and partially offset corresponding foreign exchange gains and losses on the balances and expenditures being hedged. These instruments are not designated as hedges for hedge accounting purposes and are marked to market each period through earnings.

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

During 2019, the Company implemented a hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting from variable interest rates on the senior secured term loan due 2026 which are based on the one-month LIBOR benchmark rate (see Note 8). Hedge effectiveness is assessed each quarter, and for hedges that meet the effectiveness requirements, changes in fair value are recorded as a component of other comprehensive income (loss), net of tax, and are reclassified to interest expense as interest payments are made on the Company’s variable rate debt.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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.

Foreign Currency Translation

For the years ended December 31, 2019, 2018 and 2017, approximately 41%, 44% and 46%, respectively, of the Company’s net sales were to customers located outside the U.S. A portion of these sales were denominated in currencies other than the U.S. dollar, particularly sales from the Company’s foreign subsidiaries. The financial position and results of operations of certain of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Revenues and expenses of these subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities of these subsidiaries have been translated at the exchange rates as of the balance sheet date. Translation gains and losses are recorded in accumulated other comprehensive loss. Upon sale or liquidation of an investment in a foreign subsidiary, the amount of net translation gains or losses that have been accumulated in other comprehensive loss attributable to that investment are reported as a gain or loss in earnings in the period in which the sale or liquidation occurs. During the year ended December 31, 2018, the Company liquidated a foreign subsidiary and recognized $14.0 million in translation losses in other expense, net that had been in accumulated other comprehensive loss.

Aggregate foreign currency gains and losses, such as those resulting from the settlement of receivables or payables, foreign currency contracts and short-term intercompany advances in a currency other than the subsidiary’s functional currency, are recorded currently in earnings (included in other expense, net) and resulted in losses of $11.8 million, $15.9 million and $8.7 million during the years ended December 31, 2019, 2018 and 2017, respectively. Foreign currency remeasurement gains and losses related to certain long-term intercompany loans that are not expected to be settled in the foreseeable future and the effective portion of foreign currency contracts designated as net investment hedges are recorded in accumulated other comprehensive loss. See Note 9 for disclosure of foreign currency gains and losses specifically related to foreign currency contracts.

Equity-Based Compensation

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

Earnings (Loss) Per Share

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

For the years ended December 31, 2019, 2018 and 2017, 11.2 million, 2.1 million and 1.5 million shares, respectively, of outstanding equity-based compensation awards were not included in the computation of diluted EPS because the effect was either antidilutive or the performance conditions were not met. Of those amounts, for the year ended December 31, 2019, 2.4 million shares would have been considered dilutive if the Company had not been in a net loss position.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

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

	Year Ended December 31,
	2019			2018		2017
Numerator:
Net income (loss) for basic and diluted earnings (loss) per share	$	(929.5	)	$	140.2	$	193.8
Dividends on Series A convertible preferred stock		(40.7	)		—		—
Deemed dividends on Series A convertible preferred stock		(3.0	)		—		—
Net income (loss) attributable to common stockholders	$	(973.2	)	$	140.2	$	193.8

Denominator:
Weighted average common shares outstanding - basic		193.7			192.0		192.4
Dilutive effect of as-if converted Series A convertible preferred stock		—			—		—
Dilutive effect of equity-based awards		—			3.3		4.4
Weighted average common shares outstanding - diluted		193.7			195.3		196.8

Earnings (loss) per share:
Basic	$	(5.02	)	$	0.73	$	1.01
Diluted	$	(5.02	)	$	0.72	$	0.98

~~transactions where~~

Business Combinations

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

Concentrations of Risk

Non-derivative financial instruments used by the Company in the normal course of business include letters of credit and commitments to extend credit, primarily accounts receivable. The Company generally does not require collateral on its accounts receivable. These financial instruments involve risk, including the credit risk of nonperformance by the counterparties to those instruments, and the actual loss may exceed the reserves provided in the Company’s Consolidated Balance Sheets. See Note 17 for further discussion of customer-related concentrations of risk.

The Company manages its exposures to credit risk associated with accounts receivable using such tools as credit approvals, credit limits and monitoring procedures. CommScope estimates the allowance for doubtful accounts based on the actual payment history and individual circumstances of significant customers as well as the age of receivables. In management’s opinion, as of December 31, 2019, the Company did not have significant unreserved risk of credit loss due to the non-performance of customers or other counterparties related to amounts receivable. However, an adverse change in financial condition of a significant customer or group of customers or in the telecommunications industry could materially affect the Company’s estimates related to doubtful accounts.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

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

Recent Accounting Pronouncements

Adopted in 2019

On January 1, 2019, the Company adopted ASU No. 2016-02, Leases, and all subsequently issued clarifying guidance. Under the new guidance, lessees are required to recognize assets and lease liabilities for the rights and obligations created by leased assets previously classified as operating leases. In July 2018, the FASB issued ASU No. 2018-11, which permitted entities to record the impact of adoption using a modified retrospective method with any cumulative-effect as an adjustment to retained earnings (accumulated deficit) as opposed to restating comparative periods for the effects of applying the new standard. The Company elected this transition approach; therefore, the Company’s prior period reported results are not restated to include the impact of this adoption. In addition, the Company elected the package of three transition practical expedients which alleviate the requirement to reassess embedded leases, lease classification and initial direct costs for leases commencing prior to the adoption date.

The adoption effect of the new guidance increased total assets and total liabilities in the Consolidated Balance Sheets by $98.8 million as of January 1, 2019 due to the addition of right-of-use assets and lease obligations for operating type leases, net of the elimination of existing prepaid rent, deferred rent and lease termination cost amounts. The adoption of the new standard did not materially affect the Consolidated Statements of Operations; and therefore, 0 cumulative effect adjustment was recorded. Adoption of the new standard also did not materially affect the Consolidated Statements of Cash Flows. See Note 5 for further discussion of the Company’s leasing activities.

On January 1, 2019, the Company adopted ASU No. 2017-04, Simplifying the Test of Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. Under the new guidance, the Company performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing a goodwill impairment charge for the excess of the reporting unit’s carrying amount over its fair value, up to the amount of goodwill allocated to that reporting unit. The new guidance was applied to the goodwill impairment tests performed in 2019.

On January 1, 2019, the Company adopted ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement (CCA) that is a Service Contract. The new guidance aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Adoption of the new standard did not materially impact the Company’s consolidated financial statements.

Issued but Not Adopted

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Accounting Standards Codification (ASC) Topic 740 and improves consistent application of and simplifies GAAP for other areas of ASC Topic 740 by clarifying and amending existing guidance. ASU No. 2019-12 is effective for the Company January 1, 2021 and early adoption is permitted. The Company is evaluating the impact of the new guidance on the consolidated financial statements.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11 (collectively, ASC Topic 326). The new guidance replaces the current incurred loss method used for determining credit losses on financial assets, including trade receivables, with an expected credit loss method. ASC Topic 326 is effective for the Company as of January 1, 2020. The Company is continuing to assess and evaluate assumptions and models to estimate losses. Upon adoption of the guidance, the Company will be required to record a cumulative effect adjustment to retained earnings (accumulated deficit) for the impact as of the date of adoption. As credit losses from the Company's trade receivables have not historically been significant, the Company anticipates that the adoption of ASC Topic 326 will not materially impact the consolidated financial statements.

3. ACQUISITIONS

ARRIS

On April 4, 2019, the Company acquired all of the issued ordinary shares of ARRIS in an all cash transaction with a total consideration of approximately $7.7 billion, including debt assumed. ARRIS is a global leader in entertainment, communications and networking technology. The combined company is expected to shape the future of wired and wireless communications and benefit from key industry trends, including network convergence, fiber and mobility everywhere, 5G, Internet of Things and rapidly changing network and technology architectures. For the year ended December 31, 2019, net sales of $4.0 billion and an operating loss of $863.6 million, was included in the Consolidated Statements of Operations related to the ARRIS business. For the year ended December 31, 2019, the Company recorded $195.3 million of transaction and integration costs related to the Acquisition and these costs were recognized in SG&A in the Consolidated Statements of Operations.

The following amounts represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the Acquisition. The final determination of the fair value of certain assets and liabilities will be completed within the one-year measurement period from the date of acquisition as required by ASC Topic 805, Business Combinations. As of December 31, 2019, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the validation of the underlying cash flows used to determine the fair value of the identified intangible assets. The size and breadth of the Acquisition necessitates use of the one-year measurement period to adequately analyze all the factors used in establishing the asset and liability fair values as of the acquisition date, including, but not limited to, intangible assets, inventory, real property, leases, deferred tax assets and liabilities, certain reserves and the related ~~person~~tax impacts of any adjustments. Any potential adjustments could be material in relation to the preliminary values presented below:

	Amounts Recognized as of Acquisition Date			Q3 Measurement Period Adjustments			Q4 Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (as adjusted)
Assets
Cash and cash equivalents	$	556.1		$	—		$	—		$	556.1
Accounts receivable		1,151.8			3.2			—			1,155.0
Inventory		1,063.4			—			(67.9	)		995.5
Other current assets		131.0			1.0			—			132.0
Property, plant and equipment		328.2			(4.5	)		(7.1	)		316.6
Goodwill		2,894.6			(9.0	)		105.6			2,991.2
Identifiable intangible assets		3,542.8			—			(33.2	)		3,509.6
Other noncurrent assets		463.6			(14.7	)		(1.2	)		447.7
Less: Liabilities assumed
Current liabilities		(1,505.9	)		17.1			(26.2	)		(1,515.0	)
Debt		(2,052.0	)		—			—			(2,052.0	)
Other noncurrent liabilities		(959.3	)		10.4			30.0			(918.9	)
Net acquisition cost	$	5,614.3		$	3.5		$	—		$	5,617.8

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The Company recorded measurement period adjustments on a prospective basis since the acquisition date. During the fourth quarter of 2019, the Company recorded measurement period adjustments decreasing intangible assets and inventory by $33.2 million and $67.9 million, respectively, with a corresponding offset to goodwill as a result of the progression of analysis regarding the fair value of the assets and estimated useful lives of the intangibles. Although these adjustments did not have an impact on the Consolidated Statements of Operations for the year ended December 31, 2019, had these adjustments been recorded as of the acquisition date, the interim period impacts on the Consolidated Statements of Operations for 2019 would have been as follows:

•

Amortization expense for the second, third and fourth quarters of 2019 would have increased (decreased) by $(23.8) million, $(23.7) million and $47.5 million, respectively.

•

Cost of sales for the second, third, and fourth quarters of 2019 would have increased (decreased) by $(14.5) million, $(9.9) million, and $24.4 million, respectively.

The impact of other measurement period adjustments to the Consolidated Statements of Operations was not material to the year ended December 31, 2019 or the interim periods within.

The fair value of net accounts receivable was $1,155.0 million with a gross contractual amount of $1,176.5 million. The Company expects $21.5 million to be uncollectible. The debt of $2,052.0 million was repaid on April 4, 2019. Total consideration excludes $131.1 million related to the cash settlement of outstanding unvested ARRIS equity compensation awards. These cash settled equity awards were recorded as transaction costs during the year ended December 31, 2019 and are included in SG&A in the Consolidated Statements of Operations.

The Company uses the acquisition method of accounting for business combinations which requires the tangible and intangible assets acquired and liabilities assumed to be recorded at their respective fair market value as of the acquisition date. For accounting and financial reporting purposes, fair value is defined under ASC Topic 820, Fair Value Measurements and Disclosures as the price that would be received upon sale of an ~~executive officer~~asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of ~~another company~~that asset by market participants. Use of different estimates and judgments could yield different results. In determining the fair value of identifiable assets acquired and liabilities assumed, a review was conducted for any significant contingent assets or liabilities existing as of the acquisition date.

The goodwill arising from the Acquisition is believed to result from ARRIS’ reputation in the marketplace and assembled workforce and is not expected to be deductible for income tax purposes.

Various valuation techniques were used to estimate the fair value of the assets acquired and the liabilities assumed which use significant unobservable inputs, or Level 3 inputs as defined by the fair value hierarchy. Using these valuation approaches requires the Company to make significant estimates and assumptions. The estimated fair values may change as the Company completes its valuation analyses of the assets acquired and liabilities assumed in the first quarter of 2020.

The table below summarizes the preliminary valuations of the intangible assets acquired that were determined by management to meet the criteria for recognition apart from goodwill and determined to have finite lives. The values presented below are preliminary estimates and are subject to change as management completes its valuation of the Acquisition.

	Estimated Fair Value		Weighted Average Estimated Useful Life (in years)
Customer contracts and relationships	$	1,595.0	17
Trademarks		414.0	13
Patents and technologies		1,442.6	5
Backlog		58.0	0.5
Total amortizable intangible assets	$	3,509.6

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

The following table presents the unaudited pro forma consolidated results of operations for CommScope for the years ended December 31, 2019 and 2018 as though the Acquisition had been completed as of January 1, 2018 (in millions, except per share amounts):

	Year Ended
	December 31,
	2019			2018
Net sales	$	9,782.1		$	11,260.3
Net loss attributable to common stockholders		(749.0	)		(486.7	)
Net loss per diluted share	$	(3.87	)	$	(2.53	)

These unaudited pro forma results reflect adjustments for net interest expense for the debt related to the Acquisition; depreciation expense for property, plant and equipment that has been marked up to its estimated fair value; amortization for intangible assets with finite lives identified separate from goodwill; equity-based compensation for equity awards issued to ARRIS employees; and the related income tax impacts of these adjustments.

The unaudited pro forma results for the year ended December 31, 2019 were adjusted to exclude certain non-recurring transaction and integration costs, acquisition accounting adjustments related to the markup of inventory to its estimated fair value and deferred revenue, and the related income tax impacts. The unaudited pro forma results for the year ended December 31, 2018 were adjusted to include the impact of these items. These adjustments in the aggregate on a pre-tax basis were $441.2 million and $(444.3) million and for the years ended December 31, 2019 and 2018, respectively.

Cable Exchange

On August 1, 2017, the Company acquired Cable Exchange in an all-cash transaction. The Company paid $108.7 million ($105.2 million net of cash acquired) in 2017 and $11.0 million in 2019. As of December 31, 2019, the Company had $3.5 million payable in 2020 to complete the transaction. Cable Exchange is a quick-turn supplier of fiber optic and copper assemblies for data, voice and video communications. Net sales of Cable Exchange products are included in the CCS segment for the years ended December 31, 2019, 2018 and 2017 and were not material.

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

	Estimated Fair Value
Assets
Cash and cash equivalents	$	3.5
Accounts receivable		6.4
Inventory		4.4
Property, plant and equipment		0.9
Goodwill		49.6
Identifiable intangible assets		61.1
Less: Liabilities assumed		(2.7	)
Net acquisition cost	$	123.2

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents details of the Company’s intangible assets other than goodwill as of December 31, 2019 and 2018:

	2019						2018
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer base	$	3,503.3	$	1,318.8	$	2,184.5	$	1,911.2	$	1,103.5	$	807.7
Trade names and trademarks		1,021.9		308.3		713.6		608.4		249.3		359.1
Patents and technologies		2,021.6		656.1		1,365.5		582.9		397.7		185.2
Other		58.3		58.3		—		0.3		0.3		—
Total intangible assets	$	6,605.1	$	2,341.5	$	4,263.6	$	3,102.8	$	1,750.8	$	1,352.0

There were 0 impairments of definite-lived intangible assets identified during the years ended December 31, 2019, 2018 or 2017.

The Company’s finite-lived intangible assets are being amortized on a straight-line basis over the weighted-average amortization periods in the following table. The aggregate weighted-average amortization period is 11.6 years.

	Weighted- Average Amortization Period
	(in years)
Customer base		13.8
Trade names and trademarks		16.3
Patents and technologies		5.9

Amortization expense for intangible assets was $593.2 million, $264.6 million and $271.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. Estimated amortization expense for the next five years is as follows:

	Estimated Amortization Expense
2020	$	630.1
2021		610.4
2022		544.2
2023		495.2
2024		438.6

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The following table presents goodwill by reportable segment:

	Connectivity			Mobility			CPE			N&C			Ruckus			Total
Goodwill, gross, as of December 31, 2016	$	2,077.5		$	901.8		$	—		$	—		$	—			2,979.3
Acquisitions		49.6			—			—			—			—			49.6
Foreign exchange		66.1			2.6			—			—			—			68.7
Goodwill, gross, as of December 31, 2017		2,193.2			904.4			—			—			—			3,097.6
Foreign exchange		(31.6	)		(2.7	)		—			—			—			(34.3	)
Goodwill, gross, as of December 31, 2018		2,161.6			901.7			—			—			—			3,063.3
Preliminary acquisition allocation		—			—			402.9			2,171.2			417.0			2,991.1
Foreign exchange and other		3.5			1.7			(0.8	)		—			—			4.4
Goodwill, gross, as of December 31, 2019		2,165.1			903.4			402.1			2,171.2			417.0			6,058.8
Accumulated impairment charges as of December 31, 2017 and 2018		(51.5	)		(159.5	)		—			—			—			(211.0	)
Impairment charges for year ended December 31, 2019		—			—			(192.8	)		(142.1	)		(41.2	)		(376.1	)
Accumulated impairment charges as of December 31, 2019		(51.5	)		(159.5	)		(192.8	)		(142.1	)		(41.2	)		(587.1	)
Goodwill, net, as of December 31, 2019	$	2,113.6		$	743.9		$	209.3		$	2,029.1		$	375.8		$	5,471.7

During the first quarter of 2019, the Company assessed goodwill for impairment due to a change in reporting units in the Connectivity segment. As a result, the Company performed impairment testing for goodwill under the Connectivity segment reporting unit structure immediately before the change and determined that 0 impairment existed. The Company reallocated goodwill to the new reporting units and performed impairment testing for goodwill immediately after the change and determined no impairment existed. During the second quarter of 2019, the Company determined that indicators of possible goodwill impairment existed for the reporting units from the acquired ARRIS business. Since the closing of the Acquisition on April 4, 2019, the ARRIS reporting units (CPE, N&C and Ruckus) had experienced challenges that impacted the Company’s performance. These challenges included declines in spending by cable operator customers that resulted in declines in net sales and operating income for these reporting units and the loss of key leaders of these reporting units following the Acquisition. Certain of these challenges were expected to persist throughout the remainder of 2019 and were expected to impact management’s ability to grow these businesses at the rate that was originally estimated when the Acquisition was closed. The Company performed goodwill impairment testing during the second quarter of 2019 and determined that 0 impairment existed. No indicators of goodwill impairment were identified in the third quarter of 2019.

As a result of the annual impairment test performed in the fourth quarter of 2019, the Company recorded goodwill impairment charges totaling $376.1 million, of which $192.8 million related to the CPE reporting unit, $142.1 million related to the N&C reporting unit and $41.2 million related to the Ruckus reporting unit. These reporting units were acquired in the ARRIS acquisition on April 4, 2019 (see Note 3). During the Company’s annual strategic planning process in the fourth quarter of 2019, several factors arose, including an assessment of historical and future operating results, key customer inputs, new assessments of market trends and anticipated expenditures required to support the changing market dynamics affecting each of the ARRIS reporting units. As a result of these factors, the Company concluded that the fair value of each of these reporting units was less than its carrying value. The goodwill impairment expense was recorded in the asset impairments line on the Consolidated Statement of Operations.

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)

5. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregated Net Sales

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

	Year Ended December 31, 2019
	Connectivity				Mobility				CPE				N&C				Ruckus				Total
	2019		2018		2019		2018		2019		2018		2019		2018		2019		2018		2019		2018
Contract type:
Product contracts	$	2,550.1	$	2,803.5	$	1,677.3	$	1,662.3	$	2,522.8	$	—	$	847.8	$	—	$	376.9	$	—	$	7,974.9	$	4,465.8
Project contracts		0.2		0.8		45.0		49.5		—		—		19.4		—		—		—		64.6		50.3
Other contracts		7.1		8.4		31.9		44.0		16.2		—		206.4		—		44.0		—		305.6		52.4
Consolidated net sales	$	2,557.4	$	2,812.7	$	1,754.2	$	1,755.8	$	2,539.0	$	—	$	1,073.6	$	—	$	420.9	$	—	$	8,345.1	$	4,568.5

Further information on net sales by reportable segment and geographic region is included in Note 17.

Allowance for Doubtful Accounts

	Year ended December 31,
	2019		2018			2017
Allowance for doubtful accounts, beginning of period	$	17.4	$	14.0		$	17.2
Charged to costs and expenses		10.6		6.0			1.3
Account write-offs and other		7.4		(2.6	)		(4.5	)
Allowance for doubtful accounts, end of period	$	35.4	$	17.4		$	14.0

Customer Contract Balances

The following table provides the balance sheet location and amounts of contract assets and liabilities from contracts with customers as of December 31, 2019 and December 31, 2018.

		December 31,
	Balance Sheet Location	2019		2018
Unbilled accounts receivable	Accounts receivable, less allowance for doubtful accounts	$	28.6	$	3.1
Deferred revenue	Accrued and other liabilities and Other noncurrent liabilities		122.2		7.6

There were no material changes to contract asset balances for the year ended December 31, 2019 as a result of changes in estimates or impairments. As of December 31, 2019, the aggregate amount ~~involved does~~of the transaction price allocated to performance obligations that are unsatisfied and that have a duration of one year or less was $82.6 million, with the remaining $39.5 million having a duration greater than one year.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Contract Liabilities

The following table presents the changes in deferred revenue for the year ended December 31, 2019:

	Year Ended
	December 31, 2019
Balance at beginning of period	$	7.6
Fair value of deferred revenue acquired in ARRIS acquisition		90.1
Deferral of revenue		124.8
Recognition of unearned revenue		(100.3	)
Balance at end of period	$	122.2

6. LEASES

The Company has operating type leases for real estate, equipment and vehicles both in the U.S. and internationally. As of December 31, 2019, the Company had 0 finance type leases. The Company’s leases have remaining lease terms of up to 10 years, some of which may include options to extend the leases for up to 5 years or options to terminate the leases within 1 year. Operating lease expense was $88.3 million for the year ended December 31, 2019, inclusive of period cost for short-term, cancellable and variable leases, not ~~exceed~~included in lease liabilities, of $26.7 million for the year ended December 31, 2019.

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

Supplemental cash flow information related to operating leases:

	Year Ended
	December 31, 2019
Operating cash paid to settle lease liabilities	$	68.4
Right of use asset additions in exchange for lease liabilities		33.7

Supplemental balance sheet information related to operating leases:

	Balance Sheet Location	December 31, 2019
Right of use assets	Other noncurrent assets	$	222.9

Lease liabilities	Accrued and other liabilities	$	61.7
Lease liabilities	Other noncurrent liabilities		160.4
Total lease liabilities		$	222.1

Weighted average remaining lease term (in years)		4.3
Weighted average discount rate		6.7	%

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, 2019 are as follows:

	Operating Leases
2020		74.7
2021		63.8
2022		43.2
2023		33.0
2024		22.2
Thereafter		22.7
Total minimum lease payments	$	259.6
Less: imputed interest		(37.5	)
Total	$	222.1

7. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Inventories

	December 31,
	2019		2018
Raw materials	$	240.1	$	146.8
Work in process		121.6		98.8
Finished goods		614.2		227.7
	$	975.9	$	473.3

Property, Plant and Equipment

	December 31,
	2019			2018
Land and land improvements	$	57.4		$	49.3
Buildings and improvements		333.3			212.2
Machinery and equipment		849.9			597.0
Construction in progress		37.0			30.1
		1,277.6			888.6
Accumulated depreciation		(553.8	)		(437.7	)
	$	723.8		$	450.9

Depreciation expense was $143.7 million, $75.6 million and $81.7 million during the years ended December 31, 2019, 2018 and 2017, respectively. NaN interest was capitalized during the years ended December 31, 2019, 2018 or 2017.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Accrued and Other Liabilities

	December 31,
	2019		2018
Compensation and employee benefit liabilities	$	187.3	$	94.3
Operating lease liabilities		61.7		—
Accrued interest		97.8		18.5
Deferred revenue		82.6		7.6
Accrued royalties		63.9		1.2
Product warranty accrual		61.0		15.6
Restructuring reserve		24.0		29.9
Income taxes payable		15.8		7.7
Value-added taxes payable		27.3		12.4
Accrued professional fees		32.4		19.3
Patent litigation settlement		55.0		—
Other		153.2		84.9
	$	862.0	$	291.4

Accumulated Other Comprehensive Loss

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

	Year Ended December 31,
	2019			2018
Foreign currency translation
Balance at beginning of period	$	(140.5	)	$	(52.8	)
Other comprehensive loss		(23.9	)		(102.5	)
Amounts reclassified from AOCL		1.7			14.8
Balance at end of period	$	(162.7	)	$	(140.5	)

Hedging instruments
Balance at beginning of period	$	(1.4	)	$	(4.9	)
Other comprehensive income (loss)		(7.5	)		3.5
Balance at end of period	$	(8.9	)	$	(1.4	)

Defined benefit plan activity
Balance at beginning of period	$	(17.3	)	$	(28.9	)
Other comprehensive loss		(8.4	)		(1.7	)
Amounts reclassified from AOCL		0.3			13.3
Balance at end of period	$	(25.4	)	$	(17.3	)
Net AOCL at end of period	$	(197.0	)	$	(159.2	)

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

Cash Flow Information

	Year Ended December 31,
	2019		2018		2017
Cash paid during the period for:
Income taxes, net of refunds	$	120.9	$	112.1	$	100.9
Interest		465.2		231.3		216.7

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

8. FINANCING

	December 31,
	2019			2018
5.00% senior notes due March 2027	$	750.0		$	750.0
8.25% senior notes due March 2027		1,000.0			—
6.00% senior notes due June 2025		1,500.0			1,500.0
5.50% senior notes due June 2024		650.0			650.0
5.00% senior notes due June 2021		150.0			650.0
6.00% senior secured notes due March 2026		1,500.0			—
5.50% senior secured notes due March 2024		1,250.0			—
Senior secured term loan due April 2026		3,192.0			—
Senior secured term loan due December 2022		—			486.3
Senior secured revolving credit facility		—			—
Total principal amount of debt	$	9,992.0		$	4,036.3
Less: Original issue discount, net of amortization		(29.2	)		(1.5	)
Less: Debt issuance costs, net of amortization		(130.4	)		(48.9	)
Less: Current portion		(32.0	)		—
Total long-term debt	$	9,800.4		$	3,985.9

Senior Notes

In connection with the Acquisition, in February 2019, CommScope Finance LLC, a wholly owned subsidiary of the Company and an unrestricted subsidiary as defined in the indentures governing the Company’s then-existing senior notes and the credit agreements governing the Company’s then-existing senior secured credit facilities, issued $1.0 billion of 8.25% senior notes due 2027 (the New Unsecured Notes), $1.5 billion of 6.00% senior secured notes due 2026 (the 2026 Secured Notes) and $1.25 billion of 5.50% senior secured notes due 2024 (the 2024 Secured Notes and, together with the 2026 Secured Notes, the Secured Notes; the Secured Notes together with the New Unsecured Notes, the New Notes). The proceeds from the issuance of the New Notes were held in escrow until the closing of the Acquisition on April 4, 2019 and were then used to fund the Acquisition, which also included the repayment of ARRIS’ outstanding debt of $2.1 billion under its senior secured credit facilities. Concurrent with the closing of the Acquisition, CommScope Finance LLC merged with and into CommScope, Inc., with CommScope, Inc., a wholly owned subsidiary of the Company, continuing as the surviving entity, upon which CommScope, Inc. became the issuer of the New Notes by operation of law.

As of December 31, 2019, the Company had outstanding four additional series of senior notes: (1) $750.0 million initial aggregate principal amount of 5.00% senior notes due March 15, 2027 issued by CommScope Technologies LLC (CommScope Technologies), a wholly owned subsidiary of the Company, in March 2017 (the 2027 Notes); (2) $1.5 billion initial aggregate principal amount of 6.00% senior notes due June 15, 2025 issued by CommScope Technologies in June 2015 (the 2025 Notes); (3) $650.0 million initial aggregate principal amount of 5.50% senior notes due 2024 issued by CommScope, Inc. in May 2014 (the 2024 Notes and, together with the 2027 Notes and the 2025 Notes, the CommScope Technologies Notes); and (4) $650.0 million initial aggregate principal amount of 5.00% senior notes due June 15, 2021 issued by CommScope, Inc. in May 2014 (the 2021 Notes and, together with the New Unsecured Notes, the CommScope, Inc. Notes; 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 New 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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

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

The 2024 Secured Notes mature on March 1, 2024 and the 2026 Secured Notes mature on March 1, 2026. Interest is payable on the Secured Notes semi-annually in arrears on March 1 and September 1 of each year. The Secured Notes are guaranteed on a senior secured basis by the Company and each of CommScope, Inc.’s existing and future wholly owned domestic restricted subsidiaries that is an obligor under the senior secured credit facilities or certain other debt, subject to certain exceptions. The Secured Notes and the related guarantees are secured on a first-priority basis by security interests in all of the assets that secure indebtedness under the 2026 Term Loan on a first-priority basis, and on a second-priority basis in all assets that secure the new asset-based revolving credit facility 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 new asset-based 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 may be redeemed prior to maturity under certain circumstances. Upon certain change of control events, the Secured Notes may be redeemed at the option of the holders at 101% of their face amount, plus accrued and unpaid interest. The 2024 Secured Notes may be redeemed on or after March 1, 2022 by CommScope, Inc. at the redemption prices specified in the indenture governing the Secured Notes. Prior to March 1, 2021, the Secured Notes may be redeemed by CommScope, Inc. at a redemption price equal to 100% of their principal amount, plus a make-whole premium (as specified in the indenture governing the Secured Notes), plus accrued and unpaid interest. Prior to March 1, 2021, under certain circumstances, CommScope, Inc. may also redeem up to 40% of the aggregate principal amount of the Secured Notes at a redemption price of 105.50%, with respect to the 2024 Secured Notes, and 106.00%, with respect to the 2026 Secured Notes, in each case plus accrued and unpaid interest, using the proceeds of certain equity offerings.

In connection with issuing the 2024 Secured Notes, the Company incurred costs of $18.4 million during the year ended December 31, 2019, which were recorded as a reduction of the carrying amount of the debt and are being amortized over the term of the 2024 Secured Notes. In connection with issuing the 2026 Secured Notes, the Company incurred costs of $22.0 million during the year ended December 31, 2019, which were recorded as a reduction of the carrying amount of the debt and are being amortized over the term of the 2026 Secured Notes.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

8.25% Senior Notes due 2027, 5.50% Senior Notes due 2024 and 5.00% Senior Notes due 2021 (the CommScope, Inc. Notes)

The New Unsecured Notes mature on March 1, 2027, the 2024 Notes mature on June 15, 2024 and the 2021 Notes mature on June 15, 2021. Interest is payable on the New Unsecured Notes semi-annually in arrears on March 1 and September 1 of each year and on the 2024 Notes and the 2021 Notes on June 15 and December 15 of each year. The CommScope, Inc. Notes are guaranteed on a senior unsecured basis by each of CommScope, Inc.’s existing and future wholly owned domestic restricted subsidiaries that is an obligor under the senior secured credit facilities or certain other capital markets debt, subject to certain exceptions. The CommScope, Inc. Notes and the related guarantees rank senior in right of payment to all of CommScope, Inc.’s and the guarantors’ subordinated indebtedness and equally in right of payment with all of CommScope, Inc.’s and the guarantors’ senior indebtedness (without giving effect to collateral arrangements), including the senior secured credit facilities and the other Senior Notes. The CommScope, Inc. Notes and the related guarantees are effectively junior to all of CommScope, Inc.’s and the guarantors’ existing and future secured indebtedness, including the Secured Notes and the senior secured credit facilities, to the extent of the value of the assets securing such secured indebtedness. In addition, the CommScope, Inc. Notes and related guarantees are structurally subordinated to all existing and future liabilities (including trade payables) of CommScope, Inc.’s subsidiaries that do not guarantee the CommScope, Inc. Notes.

The CommScope, Inc. Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control events, the CommScope, Inc. Notes may be redeemed at the option of the holders at 101% of their principal amount, plus accrued and unpaid interest. The 2021 Notes and the 2024 Notes may be redeemed at the redemption prices specified in the respective indentures governing the 2021 Notes and the 2024 Notes. The New Unsecured Notes may be redeemed by CommScope, Inc. on or after March 1, 2022 at the redemption prices specified in the indenture governing the New Unsecured Notes. Prior to March 1, 2022, the New Unsecured 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 New Unsecured Notes), plus accrued and unpaid interest. Prior to March 1, 2022, under certain circumstances, CommScope, Inc. may also redeem up to 40% of the aggregate principal amount of the New Unsecured Notes at a redemption price of 108.25%, plus accrued and unpaid interest, using the proceeds of certain equity offerings.

In connection with issuing the New Unsecured Notes, the Company incurred costs of $17.3 million during the year ended December 31, 2019, which were recorded as a reduction of the carrying amount of the debt and are being amortized over the term of the New Unsecured Notes.

During 2019, $500.0 million aggregate principal amount of the 2021 Notes was redeemed and resulted in the write-off of $2.1 million of debt issuance costs, which was reflected in interest expense.

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

The 2027 Notes mature on March 15, 2027 and the 2025 Notes mature on June 15, 2025. Interest is payable on the 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.

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The CommScope Technologies Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control events, the CommScope Technologies Notes may be redeemed at the option of the holders at 101% of their principal amount, plus accrued and unpaid interest. The 2027 Notes may be redeemed by CommScope Technologies on or after March 15, 2022 at the redemption prices specified in the indenture governing the 2027 Notes. Prior to March 15, 2022, the 2027 Notes may be redeemed by CommScope Technologies at a redemption price equal to 100% of the aggregate principal amount of the 2027 Notes to be redeemed, plus a make-whole premium (as specified in the indenture governing the 2027 Notes), plus accrued and unpaid interest. Prior to March 15, 2020, under certain circumstances, CommScope Technologies may also redeem up to 40% of the aggregate principal amount of the 2027 Notes at a redemption price of 105%, plus accrued and unpaid interest, using the proceeds of certain equity offerings. The 2025 Notes may be redeemed by CommScope Technologies on or after June 15, 2020 at the redemption prices specified in the indenture governing the 2025 Notes. Prior to June 15, 2020, the 2025 Notes may be redeemed by CommScope Technologies at a redemption price equal to 100% of the aggregate principal amount to be redeemed, plus a make-whole premium (as specified in the indenture governing the 2025 Notes), plus accrued and unpaid interest. Prior to June 15, 2020, under certain circumstances, CommScope Technologies may also redeem up to 40% of the aggregate principal amount of the 2027 Notes at a redemption price of 106%, plus accrued and unpaid interest, using the proceeds of certain equity offerings.

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

Senior Secured Credit Facilities

Senior Secured Term Loan Due 2026

In connection with the Acquisition, on April 4, 2019, CommScope, Inc. borrowed $3.2 billion, less $32.0 million of original issue discount, under a new senior secured term loan due 2026 (the 2026 Term Loan). The Company used a portion of the proceeds from the 2026 Term Loan to pay off the remaining $261.3 million on the 2022 Term Loan and the rest of the proceeds were used to finance the Acquisition. During the first quarter of 2019, the Company repaid $225.0 million of the 2022 Term Loan. In connection with the repayments of the 2022 Term Loan, $4.1 million and $7.7 million of original issue discount and debt issuance costs were written off and included in interest expense for the year ended December 31, 2019. The Company incurred costs of $50.0 million during the year ended December 31, 2019 related to the 2026 Term Loan that were recorded as a reduction of the carrying amount of the debt after closing of the Acquisition and will be amortized over the term of the 2026 Term Loan. The Company also incurred ticking fees related to the 2026 Term Loan of $12.3 million during the year ended December 31, 2019 that were included in interest expense.

The 2026 Term Loan has scheduled amortization payments of $32.0 million per year due in equal quarterly installments, beginning with the quarter ending December 31, 2019, with the balance due at maturity (April 2026). The current portion of long-term debt reflects $32.0 million of repayments due under the 2026 Term Loan. The interest rate is, at the Company’s option, either (1) the base rate (which is the highest of (w) the greater of ~~$200,000~~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 ~~five percent (5%~~(2) one-, two-, three- or six-month LIBOR or, if available from all lenders, 12-month LIBOR or any shorter period (selected at the option of CommScope, Inc.) plus an applicable margin of 3.25%. The 2026 Term Loan is subject to a LIBOR floor of 0.00%.

Subject to certain conditions, the 2026 Term Loan may be increased or a new incremental term loan facility may be added to increase the capacity by up to the sum of the ~~total annual~~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.

100

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

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

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

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

Senior Secured Revolving Credit Facility

On April 4, 2019, the Company replaced its asset-based revolving credit facility with a new asset-based revolving credit facility in an amount of up to $1.0 billion, subject to borrowing capacity, with a maturity in April 2024, available to CommScope, Inc. and its U.S. subsidiaries designated as co-borrowers (the Revolving Borrowers). The ability to draw under the new asset-based revolving credit facility or issue letters of credit is conditioned upon, among other things, delivery of prior written notice of a borrowing or issuance, as applicable, the ability of the borrowers to reaffirm the representations and warranties contained in the new asset-based revolving credit facility and the absence of any default or event of default. In connection with the new asset-based revolving credit facility, the Company incurred costs of approximately $13.2 million in the year ended December 31, 2019, which were recorded in other noncurrent assets and are being amortized over the term of the credit facility. The Company borrowed and repaid $15.0 million under the new asset-based revolving credit facility during the year ended December 31, 2019. As of December 31, 2019, the Company had 0 outstanding borrowings under the new asset-based revolving credit facility and had availability of $796.8 million, after giving effect to borrowing base limitations and outstanding letters of credit.

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

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

101

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

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

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

The Revolving Borrowers will be required to make prepayments under the new asset-based 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 new asset-based revolving credit facility exceeds the lesser of the aggregate amount of commitments in respect of the new asset-based revolving credit facility and the borrowing base.

The new asset-based 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 new asset-based revolving credit facility contains a Covenant Fixed Charge Coverage Ratio (as defined in the credit agreement governing the asset-based revolving credit facility) of 1.00 to 1.00. The credit agreement provides that, in the event excess availability under the asset-based revolving credit facility is less than the greater of $80 million and 10% of the borrowing base as of the end of any fiscal quarter, the Covenant Fixed Charge Coverage Ratio for that fiscal quarter must be tested and must exceed the level set forth above. As of December 31, 2019, the Company’s excess availability and Covenant Fixed Charge Coverage Ratio were in excess of the asset-based revolving credit facility’s requirements.

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

Other Matters

The following table summarizes scheduled maturities of long-term debt as of December 31, 2019:

	2020			2021			2022			2023			2024			Thereafter
Scheduled maturities of long-term debt	$	32.0		$	182.0		$	32.0		$	32.0		$	1,932.0		$	7,782.0

102

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The Company’s non-guarantor subsidiaries held $3,773 million, or 26%, of total assets and $714 million, or 6%, of total liabilities as of December 31, 2019 and accounted for $3,044 million, or 37%, of net sales for the year ended December 31, 2019. As of December 31, 2018, the non-guarantor subsidiaries held $2,354 million, or 36%, of total assets and $454 million, or 9%, of total liabilities. For the year ended December 31, 2018, the non-guarantor subsidiaries accounted for $1,835 million, or 40%, of net sales. All amounts presented exclude intercompany balances.

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

The weighted average effective interest rate on outstanding borrowings, including the amortization of debt issuance costs and original issue discount, was 6.13% at December 31, 2019 and 5.73% at December 31, 2018.

9. DERIVATIVES AND HEDGING ACTIVITIES

Derivatives Not Designated As Hedging Instruments

The Company uses forward contracts to hedge a portion of its balance sheet foreign exchange re-measurement risk and to hedge certain planned foreign currency expenditures. As of December 31, 2019, the Company had foreign exchange contracts outstanding with maturities of up to ten months and aggregate notional values of $508.0 million (based on exchange rates as of December 31, 2019). Unrealized gains and losses resulting from these contracts are recognized in other expense, net and partially offset corresponding foreign exchange gains and losses on the balances and expenditures being hedged.

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

		Fair Value of Asset (Liability)
		December 31,
	Balance Sheet Location	2019			2018
Foreign currency contracts	Prepaid expenses and other current assets	$	4.9		$	1.7
Foreign currency contracts	Accrued and other liabilities		(5.9	)		(3.0	)
Total derivatives not designated as hedging instruments		$	(1.0	)	$	(1.3	)

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

Foreign Currency Forward Contracts	Location of Gain (Loss)	Gain (Loss) Recognized
Year ended December 31, 2019	Other expense, net	$	(13.6	)
Year ended December 31, 2018	Other expense, net	$	(17.8	)
Year ended December 31, 2017	Other expense, net	$	28.6

Derivative Instruments Designated As Net Investment Hedges

The Company has a hedging strategy to designate certain foreign currency contracts as net investment hedges to mitigate a portion of the foreign currency risk on the euro net investment in a foreign subsidiary. As of December 31, 2019, the Company held designated foreign currency contracts with outstanding maturities of up to eighteen months and an aggregate notional value of $300 million. For the year ended December 31, 2019, the Company recognized $4.4 million of pre-tax income in interest expense as a result of amounts excluded from hedge effectiveness under the spot method. As of December 31, 2019 and 2018, there was no ineffectiveness on the instruments designated as net investment hedges.

103

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 net investment hedges:

		Fair Value of Asset (Liability)
		December 31,
	Balance Sheet Location	2019		2018
Foreign currency contracts	Prepaid expenses and other current assets	$	—	$	0.8
Foreign currency contracts	Other noncurrent assets		5.8		—
Total derivatives designated as hedging instruments		$	5.8	$	0.8

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

Foreign Currency Forward Contracts	Location of Gain (Loss)	Effective Portion of Gain (Loss) Recognized
Year ended December 31, 2019	Other comprehensive income (loss), net of tax	$	5.6
Year ended December 31, 2018	Other comprehensive income (loss), net of tax	$	3.5
Year ended December 31, 2017	Other comprehensive income (loss), net of tax	$	(5.0	)

Derivative Instruments Designated As Cash Flow Hedges of Interest Rate Risk

As part of the Company’s hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting from variable interest rates on the 2026 Term Loan which are based on the one-month LIBOR benchmark rate (see Note 8), during the first quarter of 2019, the Company entered into and designated pay-fixed, receive-variable interest rate swap derivatives as cash flow hedges of interest rate risk which effectively fixed the interest rate on a portion the variable-rate debt. Total notional amount of the interest rate swap derivatives as of December 31, 2019 was $600 million with outstanding maturities up to fifty-one months. There were no derivative instruments designated as cash flow hedges of interest rate risk during the years ended December 31, 2018 or 2017. As of December 31, 2019, there was no ineffectiveness on the instruments designated as cash flow hedges.

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

		Fair Value of Asset (Liability)
	Balance Sheet Location	December 31, 2019			December 31, 2018
Interest rate swap contracts	Other noncurrent liabilities	$	(16.3	)	$	—
Total derivatives designated as cash flow hedges of interest rate risk		$	(16.3	)	$	—

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

Interest Rate Derivatives

Location of Loss

Effective Portion

of Loss

Recognized

Year Ended December 31, 2019

Other comprehensive income (loss), net of tax

(12.2

)

104

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

10. FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables, debt instruments, interest rate derivatives and foreign currency contracts. For cash and cash equivalents, trade receivables and trade payables, the carrying amounts of these financial instruments as of December 31, 2019 and December 31, 2018 were considered representative of their fair values due to their short terms to maturity. The fair values of the Company’s debt instruments, interest rate derivatives and foreign currency contracts were based on indicative quotes.

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

The carrying amounts, estimated fair values and valuation input levels of the Company’s debt instruments, interest rate derivatives and foreign currency contracts as of December 31, 2019 and December 31, 2018, are as follows:

	December 31, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Valuation Inputs
Assets:
Foreign currency contracts	$	10.7	$	10.7	$	2.5	$	2.5	Level 2
Liabilities:
5.00% senior notes due 2027		750.0		696.4		750.0		608.0	Level 2
8.25% senior notes due 2027		1,000.0		1,052.5		—		—	Level 2
6.00% senior notes due 2025		1,500.0		1,501.7		1,500.0		1,355.6	Level 2
5.50% senior notes due 2024		650.0		656.0		650.0		591.8	Level 2
5.00% senior notes due 2021		150.0		149.9		650.0		641.9	Level 2
6.00% senior secured notes due 2026		1,500.0		1,595.6		—		—	Level 2
5.50% senior secured notes due 2024		1,250.0		1,302.1		—		—	Level 2
Senior secured term loan due 2026		3,192.0		3,219.9		—		—	Level 2
Senior secured term loan due 2022		—		—		486.3		461.9	Level 2
Foreign currency contracts		5.9		5.9		3.0		3.0	Level 2
Interest rate swap contracts		16.3		16.3		—		—	Level 2

Non-Recurring Fair Value Measurements

During the fourth quarter of 2019, the Company recorded a pretax goodwill impairment charge of $376.1 million related to the CPE, N&C and Ruckus segments (see Note 4). 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 market approach. Under the DCF method, the fair value of a reporting unit is based on the present value of estimated future cash flows. Under the guideline public company method, the fair value is based upon market multiples of revenue and earnings derived from publicly traded companies with similar operating and investment characteristics as the reporting unit. 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 fourth quarter of 2018, the Company recorded a pretax charge of $15.0 million that was allocated equally to the Connectivity and Mobility segments to fully impair an equity investment in a privately-held company. The determination of the impairment charge was based on Level 3 valuation inputs.

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

105

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

11. RESTRUCTURING COSTS

The Company incurs costs associated with restructuring initiatives intended to improve overall operating performance and profitability. The costs related to restructuring actions are generally composed of employee-related costs, fixed asset related costs and lease related costs. Employee-related costs include the expected severance costs and related benefits as well as one-time severance benefits that are accrued over the remaining period employees are required to work in order to receive such benefits. Fixed asset related costs include non-cash impairments or fixed asset disposals associated with restructuring actions in addition to the cash costs to uninstall, pack, ship and reinstall manufacturing equipment and the costs to prepare the receiving facility to accommodate relocated equipment. Fixed asset related costs are expensed as incurred. Cash paid is net of proceeds received from the sale of related assets. Effective January 1, 2019, with the adoption of ASU No. 2016-02, Leases, lease exit obligations related to unused leased facilities are reported as part of lease liabilities. Contract termination related costs include non-cash impairments of lease assets related to restructuring actions in addition to any one-time cash termination costs.

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

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

	Year Ended December 31,
	2019		2018		2017
Connectivity	$	12.4	$	24.2	$	36.6
Mobility		11.2		19.8		7.2
CPE		23.2		—		—
N&C		32.1		—		—
Ruckus		8.8		—		—
Total	$	87.7	$	44.0	$	43.8

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

	December 31,
	2019		2018
Accrued and other liabilities	$	24.0	$	29.9
Other noncurrent liabilities		4.4		5.1
Total liability	$	28.4	$	35.0

ARRIS Integration Restructuring Actions

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

	Employee- Related Costs			Contractual Termination Costs			Total
Balance at December 31, 2018	$	—		$	—		$	—
Obligation assumed in ARRIS acquisition		2.3			—			2.3
Additional charge recorded		81.8			4.3			86.1
Cash paid		(60.9	)		(1.0	)		(61.9	)
Foreign exchange and other non-cash items		(0.1	)		(1.3	)		(1.4	)
Balance at December 31, 2019	$	23.1		$	2.0		$	25.1

106

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

The ARRIS integration actions include headcount reductions in sales, engineering, marketing and administrative functions. The Company expects to make cash payments of $21.4 million during 2020 and additional cash payments of $3.7 million between 2021 and 2022 to settle the announced ARRIS integration initiatives. Additional restructuring actions related to the ARRIS integration are expected to be identified and the resulting charges and cash requirements are expected to be material.

Broadband Network Systems (BNS) Integration Restructuring Actions

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

	Employee- Related Costs			Contractual Termination Costs			Fixed Asset Related Costs			Total
Balance at December 31, 2016	$	32.7		$	0.4		$	—		$	33.1
Additional charge recorded		33.6			1.3			8.2			43.1
Cash paid		(41.1	)		(0.6	)		(0.6	)		(42.3	)
Consideration received		—			—			2.7			2.7
Foreign exchange and other non-cash items		0.4			—			(10.3	)		(9.9	)
Balance at December 31, 2017		25.6			1.1			—			26.7
Additional charge recorded		41.0			1.5			(0.8	)		41.7
Cash paid		(37.1	)		(2.3	)		(0.8	)		(40.2	)
Consideration received		—			—			11.1			11.1
Foreign exchange and other non-cash items		(0.3	)		—			(9.5	)		(9.8	)
Balance at December 31, 2018		29.2			0.3			—			29.5
Additional charge recorded		1.4			0.3			(0.2	)		1.5
Cash paid		(27.1	)		(0.6	)		(0.2	)		(27.9	)
Foreign exchange and other non-cash items		(0.2	)		—			0.4			0.2
Balance at December 31, 2019	$	3.3		$	—		$	—		$	3.3

The BNS integration actions include the announced closures or reduction in activities at various U.S. and international facilities as well as headcount reductions in sales, marketing and administrative functions. The Company has recognized restructuring charges of $153.0 million since the BNS acquisition for integration actions. No additional restructuring actions are expected in connection with the BNS integration initiatives. The Company expects to make cash payments of $2.5 million during 2020 and additional cash payments of $0.8 million between 2021 and 2022.

12. EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company and certain of its subsidiaries have defined contribution retirement savings plans, the most significant of which is a 401(k) plan in the U.S. With the acquisition of ARRIS, the Company assumed sponsorship of their U.S. 401(k) plan and various other domestic and international defined contribution retirement savings plans. These plans allow employees meeting certain requirements to contribute a portion of their compensation on a pretax and/or after-tax basis in accordance with guidelines established by the plans and the Internal Revenue Service or other tax authorities. The Company matches a percentage of the employee contributions up to certain limits. During the years ended December 31, 2019, 2018 and 2017, the Company made contributions to defined contribution retirement savings plans of $41.8 million, $24.0 million and $25.9 million, respectively.

The Company maintains noncontributory and contributory deferred compensation plans including some assumed with the acquisition of ARRIS. During the years ended December 31, 2019, 2018 and 2017, the Company recognized pretax costs of $3.5 million, $0.7 million and $2.9 million, respectively, related to these plans. The liability related to these plans was $43.8 million and $32.6 million as of December 31, 2019 and 2018, respectively.

107

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Pension Plans

The Company sponsors defined benefit pension plans covering certain former domestic employees and certain current and former foreign employees. With the acquisition of ARRIS, the Company assumed sponsorship of various other domestic and international defined benefit pension plans covering current and former employees. Included in the defined benefit pension plans are both funded and unfunded plans. The following table summarizes information for the defined benefit pension plans:

	December 31,
	U.S. Plans						Non-U.S. Plans
	2019			2018			2019			2018
Change in benefit obligation:
Benefit obligation, beginning	$	2.2		$	156.7		$	208.8		$	240.7
Obligation assumed in ARRIS acquisition		10.0			—			12.6			—
Service cost		—			—			4.0			4.1
Interest cost		0.3			4.2			5.2			5.2
Actuarial loss (gain)		0.9			(4.6	)		27.5			(18.0	)
Benefits paid		(0.6	)		(10.7	)		(4.6	)		(9.4	)
Settlements		—			(143.4	)		(6.4	)		(0.8	)
Foreign exchange and other		—			—			4.4			(13.0	)
Benefit obligation, ending	$	12.8		$	2.2		$	251.5		$	208.8

Change in plan assets:
Fair value of plan assets, beginning	$	—		$	161.0		$	203.4		$	226.5
Assets assumed in ARRIS acquisition		—			—			4.2			—
Employer and plan participant contributions		0.6			1.7			4.9			5.6
Return on plan assets		—			(8.6	)		25.0			(6.7	)
Benefits paid		(0.6	)		(10.7	)		(4.6	)		(9.4	)
Settlements		—			(143.4	)		(6.4	)		(0.8	)
Foreign exchange and other		—			—			4.3			(11.8	)
Fair value of plan assets, ending	$	—		$	—		$	230.8		$	203.4
Funded status, net liability or (net asset)	$	12.8		$	2.2		$	20.7		$	5.4

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

	December 31,
	U.S. Plans						Non-U.S. Plans
	2019			2018			2019			2018
Accrued and other liabilities	$	(0.8	)	$	(0.2	)	$	(0.5	)	$	(0.3	)
Other noncurrent liabilities		(12.0	)		(2.0	)		(23.2	)		(11.3	)
Other noncurrent assets		—			—			3.0			6.2

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

The accumulated benefit obligation for the Company’s U.S. defined benefit pension plans was $12.8 million and $2.2 million as of December 31, 2019 and 2018, respectively, and the accumulated benefit obligation for the Company’s non-U.S. defined benefit pension plans was $211.8 million and $174.6 million as of December 31, 2019 and 2018, respectively.

108

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:

	December 31,
	U.S. Plans				Non-U.S. Plans
	2019		2018		2019		2018
Projected benefit obligation	$	12.8	$	2.2	$	30.9	$	13.1
Accumulated benefit obligation		12.8		2.2		26.1		11.5
Fair value of plan assets		—		—		8.5		3.8

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

	December 31,
	U.S. Plans						Non-U.S. Plans
	2019			2018			2019			2018
Unrecognized net actuarial loss	$	(1.3	)	$	(0.4	)	$	(31.5	)	$	(22.8	)
Unrecognized prior service cost		—			—			(0.7	)		(0.7	)
Total	$	(1.3	)	$	(0.4	)	$	(32.2	)	$	(23.5	)

Actuarial gains and losses are amortized using a corridor approach. The corridor is equal to 10% of the greater of the benefit obligation and the fair value of the assets. Gains and losses in excess of the corridor are generally amortized over the average remaining life of the plan participants. Pretax amounts for net periodic benefit cost and other amounts included in other comprehensive income (loss) for the defined benefit pension plans consisted of the following components:

	Year Ended December 31,
	U.S. Plans								Non-U.S. Plans
	2019		2018			2017			2019			2018			2017
Service cost	$	—	$	—		$	—		$	4.0		$	4.1		$	4.9
Interest cost		0.3		4.2			5.9			5.2			5.2			5.3
Recognized actuarial loss		—		0.4			0.7			0.7			1.3			1.5
Expected return on plan assets		—		(5.1	)		(6.8	)		(6.8	)		(7.7	)		(7.6	)
Settlement loss		—		34.5			—			0.9			—			—
Net periodic benefit cost (income)		0.3		34.0			(0.2	)		4.0			2.9			4.1
Changes in plan assets and benefit obligations included in other comprehensive income (loss):
Change in unrecognized net actuarial loss (gain)		0.9		8.7			(4.7	)		8.7			(5.6	)		(4.0	)
Change in unrecognized prior service cost		—		—			—			—			0.3			0.4
Settlement		—		(34.5	)		—			—			—			—
Total included in other comprehensive income (loss)		0.9		(25.8	)		(4.7	)		8.7			(5.3	)		(3.6	)
Total recognized in net periodic benefit cost and included in other comprehensive income (loss)	$	1.2	$	8.2		$	(4.9	)	$	12.7		$	(2.4	)	$	0.5

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 ~~company;~~components of net periodic benefit cost in other expense, net.

~~charitable contributions~~109

CommScope Holding Company, Inc.

Notes to ~~an organization, foundation or university at which~~Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

Assumptions

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

	U.S. Plans									Non-U.S. Plans
	2019			2018			2017			2019			2018			2017
Benefit obligations:
Discount rate		2.95	%		3.70	%		3.50	%		1.65	%		2.50	%		2.23	%
Rate of compensation increase		—	%		—	%		—	%		3.74	%		3.92	%		3.92	%
Net periodic benefit cost:
Discount rate		3.70	%		3.50	%		3.94	%		2.50	%		2.23	%		2.38	%
Rate of return on plan assets		—	%		—	%		4.10	%		3.03	%		3.41	%		3.49	%
Rate of compensation increase		—	%		—	%		—	%		3.92	%		3.92	%		4.04	%

The Company considered the ~~related person’s only relationship is as an employee, trustee or director, if the contribution is made pursuant~~available yields on high-quality fixed-income investments with maturities corresponding to the Company’s ~~policies and approved by someone other than~~expected benefit obligations to determine the ~~related person;~~discount rates at each measurement date.

~~transactions where~~Plan Assets

In developing the ~~interest~~expected rate of return on plan assets, the Company considered the expected long-term rate of return on individual asset classes. Expected return on plan assets is based on the market value of the ~~related person arises solely~~assets. A portion of the non-U.S. pension assets are managed by independent investment advisors with an objective of transitioning to a portfolio of fixed income and absolute return investments that matches the durations of the obligations as the funded status of each plan improves. The absolute return investment fund is a diversified portfolio designed to achieve long-term total returns. The remainder of the non-U.S. pension assets is invested with the objective of maximizing return.

Mutual funds classified as Level 1 are valued at net asset value, which is based on the fair value of the funds’ underlying securities. Certain mutual funds are classified as Level 2 because a portion of the funds’ underlying assets are valued using significant other observable inputs. Other assets are primarily composed of fixed income investments (including insurance and real estate products) and are valued based on the investment’s stated rate of return, which approximates market interest rates.

The Company had 0 U.S. defined benefit pension plan assets as of December 31, 2019 or 2018. The estimated fair values and the valuation input levels of the Company’s non-U.S. defined benefit pension plan assets are as follows:

	December 31, 2019
	Non-U.S. Plans
	Level 1 Fair Value		Level 2 Fair Value
Mutual funds:
International equity	$	27.7	$	16.4
International debt		37.7		97.5
Absolute return		—		33.8
Other		8.3		9.4
Total	$	73.7	$	157.1

110

CommScope Holding Company, Inc.

Notes to Consolidated Financial Statements-(Continued)

(In millions, unless otherwise noted)

	December 31, 2018
	Non-U.S. Plans
	Level 1 Fair Value		Level 2 Fair Value
Mutual funds:
International equity	$	22.6	$	25.5
International debt		36.1		82.4
Absolute return		—		26.2
Other		2.9		7.7
Total	$	61.6	$	141.8

Expected Cash Flows

The Company expects to contribute $0.8 million to U.S defined benefit pension plans and $5.1 million to non-U.S. defined benefit pension plans during 2020.

The following table summarizes projected benefit payments from pension plans through 2029, including benefits attributable to estimated future service (in millions):

	U.S. Plans		Non-U.S. Plans
2020	$	0.8	$	7.4
2021		0.8		6.1
2022		0.8		6.8
2023		0.9		6.3
2024		0.9		9.0
2025-2029		4.6		52.7


Title of each class	Ticker symbol		Name of each exchange on which registered
Common Stock, par value $.01 per share	COMM	Nasdaq

Part I
Item 1. Business	3
Item 1A. Risk Factors	17
Item 1B. Unresolved Staff Comments	40
Item 2. Properties	40
Item 3. Legal Proceedings	41
Item 4. Mine Safety Disclosures	41
Part II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	41
Item 6. Selected Financial Data	43
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	66
Item 8. Financial Statements and Supplementary Data	68
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	125
Item 9A. Controls and Procedures	125
Item 9B. Other Information	126
Part III
Item 10. Directors, Executive Officers and Corporate Governance	126
Item 11. Executive Compensation	126
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	126
Item 13. Certain Relationships and Related Transactions, and Director Independence	127
Item 14. Principal Accountant Fees and Services	127
Part IV
Item 15. Exhibits and Financial Statement Schedule	127
Signatures	136

~~Name~~ITEM 1.	~~Age~~	~~Position~~
~~Marvin (Eddie) S. Edwards, Jr.~~	70	~~President, Chief Executive Officer and Director~~
~~Bruce W. McClelland~~	52	~~Executive Vice President and Chief Operating Officer~~
~~Alexander W. Pease~~	47	~~Executive Vice President and Chief Financial Officer~~
~~Morgan C.S. Kurk~~	49	~~Executive Vice President and Chief Technology Officer~~
~~Frank (Burk) B. Wyatt, II~~	56	~~Senior Vice President, Chief Legal Officer and Secretary~~
~~Brooke B. Clark~~	44	~~Senior Vice President and Chief Accounting Officer~~
~~Robyn T. Mingle~~	53	~~Senior Vice President and Chief Human Resources Officer~~BUSINESS

~~Class III Directors~~
~~Marvin (Eddie) S.~~ ~~Edwards, Jr.~~ ~~Age: 70~~ ~~Director Since:~~ ~~2011~~ ~~Committees:~~ ~~-None~~	~~Professional Experience~~ •~~President and CEO of CommScope (2011–present)~~ •~~President and COO of CommScope (2010–2011)~~ •~~EVP of Business Development and General Manager, CommScope Wireless Network Solutions of CommScope (2007–2010)~~ •~~EVP of Business Development of CommScope (2005–2007)~~ •~~President and CEO of OFS Fitel, LLC and OFS BrightWave, LLC, a joint venture between CommScope and The Furukawa Electric Co.~~ •~~Various capacities with Alcatel including President of Alcatel North America Cable Systems and President of Radio Frequency Systems~~ ~~Other Directorships~~ •~~OFS Fitel, LLC (Former director)~~ •~~OFS BrightWave, LLC (Former director)~~ ~~Skills and Qualifications:~~ •~~Leadership / Management~~ •~~Industry Experience~~ •~~Merger and Integration Experience~~ •~~Directorship~~ •~~Governance~~ •~~Strategic Planning~~

~~Claudius (Bud) E.~~ ~~Watts IV~~ ~~Age: 57~~ ~~Director Since:~~ ~~2011~~ ~~Lead Independent Director Since:~~ ~~2017~~ ~~Committees:~~ ~~-Compensation~~ ~~-Nominating and Corporate Governance~~	~~Professional Experience~~ •~~Private investor and Senior Advisor to The Carlyle Group (2017-present)~~ •~~Partner with The Carlyle Group (2000–2017)~~ •~~Founded and led Carlyle’s Technology Buyout business (2004–2014)~~ •~~Managing Director in the M&A group of First Union Securities, Inc. (1998-2000)~~ •~~Principal at Bowles Hollowell Conner & Co. (1994-1998)~~ •~~Fighter Pilot, United States Air Force (1984-1992)~~ ~~Other Directorships~~ •~~Carolina Financial Corporation – Chairman (NASDAQ: CARO) (2015-present)~~ •~~Former director on boards of numerous other public and private companies, including service as Chairman and Lead Independent Director~~ ~~Skills and Qualifications:~~ •~~Leadership / Management~~ •~~Industry Experience~~ •~~Finance / Accounting~~ •~~Directorship~~ •~~Governance~~ •~~Merger and Integration Experience~~

~~Name~~	~~Title~~
~~Marvin S. Edwards, Jr.~~	~~President and Chief Executive Officer (principal executive officer)~~
~~Alexander W. Pease~~	~~Executive Vice President and Chief Financial Officer (principal financial officer)~~⁽¹⁾
~~Mark A. Olson~~	~~Former Executive Vice President and Chief Financial Officer (principal financial officer)~~⁽²⁾
~~Morgan C.S. Kurk~~	~~Executive Vice President and Chief Operating Officer~~
~~Peter U. Karlsson~~	~~Senior Vice President, Global Sales~~⁽³⁾
~~Frank B. Wyatt, II~~	~~Senior Vice President, Chief Legal Officer and Secretary~~
~~Frank M. Drendel~~	~~Chairman of the Board~~

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

Market	Connectivity	Mobility	CPE	N&C	Ruckus
Enterprise	✓	✓			✓
Outdoor Wireless		✓
In-Home Networks			✓
Broadband Access	✓		✓	✓
Data Centers	✓			✓
Video Systems & Security				✓
Network Systems		✓		✓


~~What We Do~~	~~What We Don’t Do~~
✓~~Use a Pay for Performance philosophy~~	û~~Backdating or spring-loading of equity awards~~
✓~~Significant portion of executive pay is at-risk~~	û~~Hedging of shares~~
✓~~“Clawback” policy to recover cash and equity payments from executives in certain circumstances~~	û~~Pledging of shares~~
✓~~Multi-year vesting for equity awards~~	û~~Guaranteed bonuses~~
✓~~Regular stockholder engagement with annual Say-on-Pay vote~~	û~~Incentives that encourages excessive risk taking~~
✓~~Use of independent compensation consultant~~	û~~Excessive severance or change in control agreements~~
✓~~Meaningful equity ownership guidelines~~	û~~Excessive perquisite practices~~
✓~~Blend of equity awards, including some that are performance based~~	û~~Repricing of stock options or stock appreciation rights without stockholder approval~~

~~Compensation Element~~	~~Purpose~~
~~Base Salary~~•	~~Recognize performance of job responsibilities as well as attract~~Enhanced mobile broadband—to support significant improvement in data rates and ~~retain individuals with superior talent.~~
~~Annual Incentive Plan (AIP) Bonus Awards~~	~~Provide short-term incentives linked directly to achievement of financial objectives.~~
~~Stock Options~~	~~Directly link senior management’s~~user experience in both the uplink and ~~stockholders’ interests by tying long-term incentive to stock price appreciation.~~
~~Restricted Stock Units (RSUs)~~	~~Provide a strong retention element of compensation while providing alignment of executive and stockholders’ interests.~~
~~Performance Share Units (PSUs)~~	~~Provide a strong retention element along with aligning compensation with our business strategy and the long-term creation of stockholder value.~~


~~Peer Companies~~
~~Amphenol Corporation~~	~~Keysight Technologies~~
~~ARRIS International~~	~~Motorola Solutions, Inc.~~
~~Belden Inc.~~	~~NCR Corporation~~
~~Ciena Corporation~~	~~NetApp, Inc.~~
~~Corning Inc.~~	~~Rockwell Automation, Inc.~~
~~Harris Corporation~~	~~TE Connectivity Limited~~
~~Hubbell Inc.~~	~~Trimble Navigation Limited~~
~~Juniper Networks, Inc.~~	~~Zebra Technologies, Inc.~~

Name	2017 Base Salary	2018 Base Salary	Percent Increase
Marvin S. Edwards, Jr.	$1,065,000	$1,100,000	3.29%
Alexander W. Pease⁽¹⁾		$625,000
Mark A. Olson⁽²⁾	$640,000	$640,000	0.00%
Morgan C.S. Kurk⁽³⁾		$575,000
Peter U. Karlsson	$555,000	$575,000	3.60%
Frank B. Wyatt, II	$520,000	$540,000	3.85%
Frank M. Drendel	$595,000	$615,000	3.36%

	•	Position us to take advantage of our business, incorporating our ability to generate revenue and manage our expenses. AOI growth has historically been a key driver of long-term stockholder returns, and as a result, represents the greatest weightingleadership position in ~~our AIP.~~
~~Adjusted Free Cash Flow~~	~~30%~~	~~Measures our ability to translate earnings into cash, indicating the health of our business and allowing the Company to invest for the future.~~
~~Corporate Revenue~~	~~10%~~	Introduced to the AIP design in 2017 following an extensive review of our business strategy undertaken in 2016. In 2018, extended the upper payout maximum from 210% at 103% to 400% at 106% of target performance. In making this change, our Compensation Committee considered the importance of revenue as a driver of long-term stockholder return and reward for outstanding results.fast growing, strategic markets.


Performance Metric	Weighting	Level	Threshold	Target	Maximum	Stretch Goal
Adjusted Operating Income	60%
		Goal	$787.9	$984.9	$1,181.8	n/a
		% of Target Performance	80%	100%	120%	n/a
		% of Target Payout	50%	100%	210%	n/a


Adjusted Free Cash Flow	30%	Goal	$456.8	$571.0	$685.2	n/a
		% of Target Performance	80%	100%	120%	n/a
		% of Target Payout	50%	100%	210%	n/a


Corporate Revenue	10%	Goal	$4,696.2	$4,841.4	$4,986.7	$5,132.0
		% of Target Performance	97%	100%	103%	106%
		% of Target Payout	50%	100%	210%	400%


Performance Metric	Weighting	Actual Achievement ($M)	% of Target Actual Performance	% of Target Actual Payout
Adjusted Operating Income	60%	$838.0	85.09%	62.73%
Adjusted Free Cash Flow	30%	$411.8	72.12%	—
Corporate Revenue	10%	$4,568.5	94.36%	—
Total	100%			37.64%

	Threshold Award	Target Award	Maximum Award	Actual 2018 Award
Name	(% of 2018 Salary) (1)	(% of 2018 Salary)	(% of 2018 Salary) (2)	% of 2018 Salary	Payout Amount

Marvin S. Edwards, Jr.	62.5%	125.0%	286.3%	47.05%	$513,406

Alexander W. Pease	42.5%	85.0%	194.7%	31.99%	$149,964

Mark A. Olson	42.5%	85.0%	194.7%	31.99%	$68,250

Morgan C.S. Kurk	42.5%	85.0%	194.7%	31.99%	$183,956

Peter U. Karlsson	42.5%	85.0%	194.7%	31.99%	$182,356

Frank B. Wyatt, II	35.0%	70.0%	160.3%	26.35%	$140,954

Frank M. Drendel	25.0%	50.0%	114.5%	18.82%	$114,796

~~Vehicle~~•	Target Value as a Percent of Total Equity Awards	~~Overview of Key Terms~~
~~Stock Options~~	~~33.33%~~	• ~~Vest and become exercisable in equal installments annually over three years subject to continuous service of the NEO~~ • ~~Stock options have a 10-year term and an exercise price equal to the closing price of our common stock on the grant date~~ • ~~Pro rata vesting upon retirement~~
~~RSUs~~	~~33.33%~~	• ~~Vest in equal installments annually over three years, subject to the continuous service of the NEO~~ • ~~Convertible into shares of common stock upon vesting~~
~~AOI PSUs~~	~~16.67%~~	•~~NEOs can earn between 0% and 200% of the granted units based on 2018 AOI~~ •~~Earned PSUs will vest on the second anniversary of the grant date subject to the continuous service of the NEO~~ •~~Convertible into shares of common stock upon vesting~~
~~Revenue PSUs~~	~~16.67%~~	•~~NEOs can earn between 0% and 200% of the granted units based on cumulative revenue for 2018-2020~~ •~~Earned PSUs will vest in full on the third anniversary of the grant date subject to the continuous service of the NEO~~ •~~Convertible into shares of common stock upon vesting~~

Name	Options (#)	RSUs (#)	AOI PSUs (#)	Revenue PSUs (#)	Total Grant Date Value ($)
Marvin S. Edwards, Jr.	157,232	60,858	30,429	30,429	6,999,914
Alexander W. Pease	32,916	12,671	6,336	6,335	1,499,989
Mark A. Olson	—	—	—	—	—
Morgan C.S. Kurk	33,692	13,041	6,521	6,520	1,499,972
Peter U. Karlsson	28,077	10,867	5,434	5,433	1,249,945
Frank B. Wyatt, II	20,215	7,824	3,912	3,912	899,935
Frank M. Drendel	25,157	9,737	4,869	4,868	1,119,963


	~~Multiple of Salary Target~~
~~CEO~~	~~5x annual base salary~~
~~Chairman, CFO & COO~~	~~3x annual base salary~~
~~Designated Executive Officers~~	~~2x annual base salary~~
~~Non-Employee Directors~~	~~5x base retainer (excluding committee fees)~~


Name and Principal Position	Year	Salary ($)	Bonus ($)(1)	Stock Awards ($)(2)	Option Awards ($)(2)	Non-Equity Incentive Plan Compensation ($)(3)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4)	All Other Compensation ($)(5)	Total ($)


Marvin S. Edwards, Jr.	2018	1,091,250	—	4,666,591	2,333,323	513,406	58,843	229,932	8,893,345
President and Chief	2017	1,056,250	—	4,666,664	2,333,328	215,594	47,318	180,211	8,499,365
Executive Officer	2016	1,022,500	—	2,666,635	1,440,581	2,007,551	44,566	444,142	7,625,975


Alexander W. Pease	2018	468,750	—	999,995	499,994	149,964	—	5,838	2,124,541
Executive VP and
Chief Financial Officer


Mark A. Olson	2018	213,333	1,900	—	—	68,250	—	169,093	452,576
Former Executive VP and	2017	634,995	—	999,978	499,986	88,135	—	16,560	2,239,654
Chief Financial Officer (6)	2016	614,985	—	799,975	428,677	821,063	—	16,260	2,680,960


Morgan C.S. Kurk	2018	575,000	—	999,983	499,989	183,956	—	60,425	2,319,353
Executive VP and
Chief Operating Officer


Peter U. Karlsson	2018	570,000	—	833,282	416,663	182,356	20,004	95,793	2,118,098
Senior VP	2017	549,994	—	833,290	416,661	76,337	15,915	83,510	1,975,707
Global Sales (7)	2016	531,232	—	519,999	280,641	584,084	15,044	157,057	2,088,057


Frank B. Wyatt, II	2018	535,000	—	599,944	299,991	140,954	28,659	90,753	1,695,301
Senior VP, Chief Legal	2017	516,249	—	599,926	299,998	59,009	23,358	75,849	1,574,389
Officer and Secretary	2016	501,246	500	489,971	265,066	551,114	23,407	147,614	1,978,918


Frank M. Drendel	2018	610,000	1,100	746,633	373,330	114,796	101,366	97,863	2,045,088
Chairman of the Board	2017	590,000	—	746,642	373,332	48,171	84,765	85,070	1,927,980
of Directors	2016	571,250	—	746,654	404,874	448,631	91,115	142,526	2,405,050

	All Other Compensation
Name	Company Contribution to 401(k) Plan ($)	Company Contribution under SERP ($)	Life Insurance Premiums ($)	Relocation Reimbursement ($)	Retiree Premiums ($)	Vacation Payout ($)	Total ($)

Marvin S. Edwards, Jr.	16,500	213,198	234	—	—	—	229,932

Alexander W. Pease	5,500	—	338	—	—	—	5,838

Mark A. Olson	16,500	—	135	—	50,000	102,458	169,093

Morgan C.S. Kurk	16,500	—	360	43,565	—	—	60,425

Peter U. Karlsson	10,080	85,353	360	—	—	—	95,793

Frank B. Wyatt, II	16,500	73,893	360	—	—	—	90,753

Frank M. Drendel	16,500	81,219	144	—	—	—	97,863

		Estimated Possible Payouts Under Non-Equity Incentive Plan Awards			Estimated Future Payouts Under Equity Incentive Plan Awards			All Other Stock Awards: Number of Shares of	All Other Option Awards: Number of Securities	Exercise or Base Price of	Grant Date Fair Value of Stock and
Name	Grant Date (1)	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)	Stock or Units (#)	Underlying Options (#)	Option Awards ($/sh)	Option Awards ($)

Marvin S. Edwards, Jr.
2018 AIP(2)		682,031	1,364,063	3,123,703	—	—	—	—	—	—	—
2018 RSU(3)	3/1/2018	—	—	—	—	—	—	60,858	—	—	2,333,295
2018 PSU - AOI(4)	3/1/2018	—	—	—	15,215	30,429	60,858	—	—	—	1,166,648
2018 PSU - Revenue(5)	3/1/2018	—	—	—	15,215	30,429	60,858	—	—	—	1,166,648
2018 Stock Option(6)	3/1/2018	—	—	—	—	—	—	—	157,232	38.34	2,333,323


Alexander W. Pease
2018 AIP(2)		199,219	398,438	912,422	—	—	—	—	—	—	—
2018 RSU(3)	4/2/2018	—	—	—	—	—	—	12,671	—	—	499,997
2018 PSU - AOI(4)	4/2/2018	—	—	—	3,168	6,336	12,672	—	—	—	250,019
2018 PSU - Revenue(5)	4/2/2018	—	—	—	3,168	6,335	12,670	—	—	—	249,979
2018 Stock Option(6)	4/2/2018	—	—	—	—	—	—	—	32,916	39.46	499,994


Mark A. Olson
2018 AIP(2)		90,667	181,333	415,253	—	—	—		—	—	—


Morgan C.S. Kurk
2018 AIP(2)		244,375	488,750	1,119,238	—	—	—	—	—	—	—
2018 RSU(3)	3/1/2018	—	—	—	—	—	—	13,041	—	—	499,991
2018 PSU - AOI(4)	3/1/2018	—	—	—	3,261	6,521	13,042	—	—	—	250,015
2018 PSU - Revenue(5)	3/1/2018	—	—	—	3,260	6,520	13,040	—	—	—	249,977
2018 Stock Option(6)	3/1/2018	—	—	—	—	—	—	—	33,692	38.34	499,989


Peter U. Karlsson
2018 AIP(2)		242,250	484,500	1,109,505	—	—	—	—	—	—	—
2018 RSU(3)	3/1/2018	—	—	—	—	—	—	10,867	—	—	416,641
2018 PSU - AOI(4)	3/1/2018	—	—	—	2,717	5,434	10,868	—	—	—	208,340
2018 PSU - Revenue(5)	3/1/2018				2,717	5,433	10,866	—	—	—	208,301
2018 Stock Option(6)	3/1/2018	—	—	—	—	—	—	—	28,077	38.34	416,663


Frank B. Wyatt, II
2018 AIP(2)		187,250	374,500	857,605	—	—	—	—	—	—	—
2018 RSU(3)	3/1/2018	—	—	—	—	—	—	7,824	—	—	299,972
2018 PSU - AOI(4)	3/1/2018	—	—	—	1,956	3,912	7,824	—	—	—	149,986
2018 PSU - Revenue(5)	3/1/2018	—	—	—	1,956	3,912	7,824	—	—	—	149,986
2018 Stock Option(6)	3/1/2018	—	—	—	—	—	—	—	20,215	38.34	299,991


Frank M. Drendel
2018 AIP(2)		152,500	305,000	698,450	—	—	—	—	—	—	—
2018 RSU(3)	3/1/2018	—	—	—	—	—	—	9,737	—	—	373,317
2018 PSU - AOI(4)	3/1/2018	—	—	—	2,435	4,869	9,738	—	—	—	186,677
2018 PSU - Revenue(5)	3/1/2018	—	—	—	2,434	4,868	9,736	—	—	—	186,639
2018 Stock Option(6)	3/1/2018	—	—	—	—	—	—	—	25,157	38.34	373,330

	Option Awards							Stock Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable (2)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date (3)	Number of Shares or Units of Stock That Have Not Vested (#)(4)	Market Value of Shares or Units of Stock That Have Not Vested ($)(4)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(5)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5)

Marvin S. Edwards, Jr.	1/26/2010	29,147	(1)	—	—	8.55	1/20/2020	—	—	—	—
	1/26/2011	1,389,033	(1)	—	—	5.74	1/26/2021	—	—	—	—
	2/24/2015	94,088	(1)	—	—	30.76	2/24/2025	—	—	—	—
	2/23/2016	73,888	(2)	36,945	—	24.94	2/23/2026	48,722	798,554	—	—
	2/27/2017	49,508	(2)	99,017	—	37.97	2/27/2027	40,968	671,466	—	—
	3/1/2018	—		157,232	—	38.34	3/1/2028	79,937	1,310,167	30,429	498,731


Alexander W. Pease	4/2/2018	—		32,916	—	39.46	4/2/2028	16,644	272,795	6,335	103,831


Mark A. Olson	1/26/2011	8,141	(1)	—	—	5.74	5/1/2020	—	—	—	—
	2/24/2015	25,157	(1)	—	—	30.76	5/1/2020	—	—	—	—
	2/23/2016	24,937	(2)	—	—	24.94	5/1/2020	—	—	—	—
	2/27/2017	13,260	(2)	—	—	37.97	5/1/2020	—	—	—	—


Morgan C.S. Kurk	2/24/2015	12,409	(1)	—	—	30.76	2/24/2025	—	—	—	—
	2/23/2016	9,384	(2)	4,693	—	24.94	2/23/2026	6,189	101,438	—	—
	2/27/2017	5,658	(2)	11,316	—	37.97	2/27/2027	4,682	76,738	—	—
	3/1/2018	—		33,692	—	38.34	3/1/2028	17,130	280,761	6,520	106,863


Peter U. Karlsson	2/24/2015	18,113	(1)	—	—	30.76	2/24/2025	—	—	—	—
	2/23/2016	14,408	(2)	7,204	—	24.94	2/23/2026	9,501	155,721	—	—
	2/27/2017	8,840	(2)	17,682	—	37.97	2/27/2027	7,316	119,909	—	—
	3/1/2018	—		28,077	—	38.34	3/1/2028	14,275	233,967	5,433	89,047


Frank B. Wyatt, II	2/24/2015	17,610	(1)	—	—	30.76	2/24/2025	—	—	—	—
	2/23/2016	13,576	(2)	6,789	—	24.94	2/23/2026	8,953	146,740	—	—
	2/27/2017	6,365	(2)	12,731	—	37.97	2/27/2027	5,267	86,326	—	—
	3/1/2018	—		20,215	—	38.34	3/1/2028	10,277	168,440	3,912	64,118


Frank M. Drendel	3/24/2009	280,143	(1)	—	—	2.96	3/24/2019	—	—	—	—
	1/20/2010	410,811	(1)	—	—	8.55	1/20/2020	—	—	—	—
	1/26/2011	639,678	(1)	—	—	5.74	1/26/2021	—	—	—	—
	2/24/2015	27,673	(1)	—	—	30.76	2/24/2025	—	—	—	—
	2/23/2016	20,688	(2)	10,345	—	24.94	2/23/2026	13,643	223,609	—	—
	2/27/2017	7,921	(2)	15,843	—	37.97	2/27/2027	6,555	107,436	—	—
	3/1/2018	—		25,157	—	38.34	3/1/2028	12,790	209,628	4,868	79,787

Name	Plan	Executive contributions in last fiscal year(1)($)	Registrant contributions in last fiscal year(2)($)	Aggregate earnings (loss) in last fiscal year(3)($)	Aggregate withdrawals/ distributions ($)	Aggregate balance at last fiscal year end(4)($)


Marvin S. Edwards, Jr.	SERP	—	213,198	163,453	—	3,645,706
	DCP	—	—	(119,825)	—	2,841,679


Alexander W. Pease	DCP	—	—	—	—	—


Mark A. Olson	DCP	—	—	4,688	—	1,871,562


Morgan C.S. Kurk	DCP	274,832	—	(21,530)	—	253,302


Peter U. Karlsson	SERP	—	85,353	55,567	—	1,252,261
	DCP	658,559	—	(123,399)	—	2,104,316


Frank B. Wyatt, II	SERP	—	73,893	79,608	—	1,745,657
	DCP	—	—	—	—	—


Frank M. Drendel	SERP	—	81,219	281,573	—	5,994,257
	DCP	—	—	—	—	—



Name	Payment	Termination for Cause ($)	Resignation Without Good Reason ($)		Death or Disability ($)		Termination Without Cause or Resignation for Good Reason Prior to a Change in Control ($)		Termination Without Cause or Resignation for Good Reason After a Change in Control ($)

Marvin S. Edwards, Jr.	Cash severance⁽¹⁾	—	—		—		6,187,500		6,187,500
	Pro rata bonus	—	513,406	⁽²⁾	513,406	⁽³⁾	513,406	⁽²⁾	1,364,063	⁽⁴⁾
	Benefit continuation⁽¹⁾	—	—		—		30,363		30,363
	Gross-Up⁽⁵⁾	—	—		—		—		—
	Total	—	513,406		513,406		6,731,269		7,581,926


Alexander W. Pease	Cash severance	—	—		—		156,250	⁽⁶⁾	2,046,875
	Pro rata bonus	—	—		149,964	⁽²⁾	—		398,438	⁽⁴⁾
	Benefit continuation	—	—		—		3,954	⁽⁶⁾	15,817
	Total	—	—		149,964		160,204		2,461,130


Morgan C.S. Kurk	Cash severance	—	—		—		431,250	⁽⁶⁾	1,063,750
	Pro rata bonus		—		183,956	⁽²⁾	—		488,750	⁽⁴⁾
	Benefit continuation	—	—		—		4,153	⁽⁶⁾	5,537
	Total	—	—		183,956		435,403		1,558,037


Peter U. Karlsson	Cash severance	—	—		—		575,000	⁽⁶⁾	1,059,500
	Pro rata bonus	—	182,356	⁽²⁾	182,356	⁽²⁾	182,356	⁽²⁾	484,500	⁽⁴⁾
	Benefit continuation	—	—		—		16,067	⁽⁶⁾	16,067
	Total	—	182,356		182,356		773,423		1,560,067


Frank B. Wyatt, II	Cash severance	—	—		—		540,000	⁽⁶⁾	1,802,748	⁽¹⁾
	Pro rata bonus	—	140,954	⁽²⁾	140,954	⁽²⁾	140,954	⁽²⁾	374,500	⁽⁴⁾
	Benefit continuation	—	—		—		15,817	⁽⁶⁾	31,634	⁽¹⁾
	Other Benefits⁽⁷⁾	—	—		—		—		227,344
	Gross-Up⁽⁵⁾	—	—		—		—		—
	Total	—	140,954		140,954		696,771		2,436,226


Frank M. Drendel	Cash severance	—	1,845,000		1,845,000		1,845,000		1,845,000
	Pro rata bonus	—	114,796	⁽²⁾	114,796	⁽²⁾	114,796	⁽²⁾	305,000	⁽⁴⁾
	Benefit continuation	—	11,258		—		11,258		11,258
	Gross-Up⁽⁵⁾	—	—		—		—		—
	Total	—	1,971,054		1,959,796		1,971,054		2,161,258

	Change in Control			Death or Disability
	Options ($)	PSU ($)	RSU ($)	Options ($)	PSU ($)	RSU ($)


Marvin S. Edwards, Jr.	—	957,708	1,961,015	—	957,708	1,961,015

Alexander W. Pease	—	94,190	207,678	—	94,190	207,678

Morgan C.S. Kurk	—	161,272	327,587	—	161,272	327,587

Peter U. Karlsson	—	179,358	354,974	—	179,358	354,974

Frank B. Wyatt, II	—	151,077	268,238	—	151,077	268,238

Frank M. Drendel	—	214,008	348,827	—	214,008	348,827

~~Annual Non-Employee Director Compensation~~
~~Basic Cash Retainer~~	~~$ 80,000~~
~~Supplemental Cash Retainers:~~
~~Lead Independent Director~~	~~$ 30,000~~
~~Audit Committee Chair~~⁽¹⁾	~~$ 30,000~~
~~Audit Committee Member~~	~~$ 15,000~~
~~Compensation Committee Chair~~⁽¹⁾	~~$ 20,000~~
~~Compensation Committee Member~~	~~$ 10,000~~
~~Nominating and Corporate Governance Committee Chair~~⁽¹⁾	~~$ 15,000~~
~~Nominating and Corporate Governance Committee Member~~	~~$ 10,000~~
~~Annual Stock Retainer~~⁽²⁾	~~$ 160,000~~

Name	Fees Earned or Paid in Cash ($)(1)	Stock Awards ($)(2)	Total ($)

Austin A. Adams	95,000	159,993	254,993

Stephen C. Gray⁽¹⁾	98,760	159,993	258,753

L. William Krause	100,000	159,993	259,993

Joanne M. Maguire	95,000	159,993	254,993

Thomas J. Manning	95,000	159,993	254,993

Claudius E. Watts IV⁽¹⁾	131,240	159,993	291,233

Timothy T. Yates	110,000	159,993	269,993

Name of Beneficial Owner	Common Stock		Options to Purchase Common Stock (1)	RSUs (2)	Total Shares of Common Stock Beneficially Owned	Percentage of Class
Executive Officers and Directors:
Marvin S. Edwards, Jr. President, Chief Executive Officer and Director	258,857		1,774,527	—	2,033,384	1.04%
Bruce W. McClelland Executive Vice President and Chief Operating Officer	—		—	—	—	*
Alexander W. Pease Executive Vice President and Chief Financial Officer	53,659	(3)	10,972	—	64,631	*
Mark A. Olson Former Executive Vice President and Chief Financial Officer	39,253		71,495	—	110,748	*
Morgan C.S. Kurk Executive Vice President and Chief Technology Officer	35,823		49,032	—	84,855	*
Peter U. Karlsson Senior Vice President, Business Transformation	28,299		66,765	—	95,064	*
Frank B. Wyatt, II Senior Vice President, Chief Legal Officer and Secretary	72,030		57,443	—	129,473	*
Frank M. Drendel Chairman of the Board	2,525,444	(4)	1,133,422	—	3,658,866	1.88%
Austin A. Adams Director	22,146		—	5,712	27,858	*
Daniel F. Akerson Director	—		—	613	613	*
Campbell R. Dyer Director	—		—	—	—	*
Stephen C. Gray Director	14,064		—	5,712	19,776	*
L. William Krause Director	14,064		28,575	5,712	48,351	*
Joanne M. Maguire Director	10,809		—	5,712	16,521	*
Thomas J. Manning Director	14,306		—	5,712	20,018	*
Claudius E. Watts IV Director	60,623		—	5,712	66,335	*
Timothy T. Yates Director	39,067		—	5,712	44,779	*
Directors and executive officers as a group (19 persons)	3,216,072		3,219,821	40,597	6,476,490	3.29%

	Common Stock		Series A Convertible Preferred Stock
Name and Address of Beneficial Owner	Total Number of Shares	Percentage of Class	Total Number of Shares	Percentage of Class
Large Stockholders:
The Carlyle Group LP(1) 1001 Pennsylvania Avenue, NW Washington, DC 20004			1,000,000	100.00%
The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355	17,497,023	9.04%
Franklin Resources, Inc.(3) One Franklin Parkway San Mateo, CA 94403	14,767,744	7.63%
Wellington Management Company LLP(4) 280 Congress Street Boston, MA 02210	11,359,471	5.87%
FPR Partners, LLC(5) 199 Fremont Street, Suite 2500 San Francisco, CA 94105	11,177,830	5.78%
BlackRock, Inc.(6) 55 East 52nd Street New York, NY 10055	10,791,649	5.58%
Maverick Capital, Ltd. (7) 1900 N. Pearl Street, 20th Floor Dallas, TX 75201	9,752,234	5.04%
JPMorgan Chase & Co.(8) 270 Park Avenue New York, NY 10017	9,678,765	5.00%

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) (c)

Equity compensation plans approved by security holders	4,652,359	$15.51	10,624,472


Equity compensation plans not approved by security holders	—	—	—

Total	4,652,359	$15.51	10,624,472

Location	Approximate square feet		Principal segments	Owned or leased
Administrative facilities:
Hickory, NC (1)		84,000	Corporate headquarters	Owned
Joliet, IL (2)		690,000	Corporate	Leased
Horsham, PA		325,000	Corporate	Owned
Suwanee, GA		129,000	Corporate	Leased
San Diego, CA		187,000	N&C and CPE	Leased
Shakopee, MN		177,000	CCS	Leased
Bangalore, India		151,000	CPE and N&C	Leased
Saltaire, UK		147,000	CPE	Leased
Lowell, MA		144,000	N&C	Leased
Santa Clara, CA		132,000	N&C and CPE	Leased
Richardson, TX (1)		100,000	CMS	Owned
Manufacturing and distribution facilities:
Catawba, NC (1)		1,000,000	CCS	Owned
Claremont, NC (1)		589,000	CCS	Owned
Kessel-Lo, Belgium		431,000	CCS	Owned
Suzhou, China (3)		414,000	CMS	Owned
Suzhou, China (3)		363,000	CCS	Owned
Goa, India		353,000	CMS	Owned
Juarez, Mexico		344,000	CCS	Owned
Santa Teresa, NM		334,000	CCS	Leased
Brno, Czech Republic		281,000	CCS	Leased
Reynosa, Mexico		279,000	CMS	Owned
Veenendaal, Netherlands		215,000	CMS	Leased
Greensboro, NC (1)		196,000	CCS	Owned
Juarez, Mexico		189,000	CCS	Leased
Cary, NC		151,000	CPE & N&C	Owned
Mission, TX		150,000	CMS	Leased
Delicias, Mexico		139,000	CCS	Owned
Campbellfield, Australia		133,000	CMS	Leased
Bray, Ireland		130,000	CCS	Owned
Tijuana, Mexico		128,000	N&C	Leased
Buchdorf, Germany		109,000	CMS	Owned
Vacant facilities and properties:
Sorocaba, Brazil (4)		157,000	CMS	Owned
Orland Park, IL (1)(5)		—	CMS	Owned

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs
October 1, 2019 - October 31, 2019		7,153	$	11.88		—	$	—
November 1, 2019 - November 30, 2019		9,836	$	13.56		—	$	—
December 1, 2019 - December 31, 2019		48,599	$	13.42		—	$	—
Total		65,588	$	13.27		—

	Base	INDEXED RETURNS
	Period	Period Ending
Company / Index	12/31/2014	12/31/2015		12/31/2016		12/31/2017		12/31/2018		12/31/2019
CommScope Holding Company, Inc.	100		113.40		162.94		165.70		71.79		62.16
S&P 500 Index	100		101.38		113.51		138.29		132.23		173.86
S&P 1500 Communications Equipment Index	100		88.81		106.32		130.20		146.56		167.31

	Key Assumptions						Goodwill				Excess (Deficit) of Fair Value to Carrying Value
Reporting Unit	Discount Rate			Terminal Growth Rate			Balance at December 31, 2019		Percent of Total Assets		Result of Annual Goodwill Test as of October 1, 2019			Decrease of 10% in Cash Flows			Decrease of 0.5% in Long-term Growth Rate			Increase of 0.5% in Discount Rate
(dollars in millions)
CPE		9.0	%		0.0	%	$	209.3	1.5	%	$	(192.8	)	$	(354.9	)	$	(236.8	)	$	(283.1	)
N&C		10.0	%		2.0	%		2,029.1	14.1	%		(142.1	)		(433.5	)		(194.9	)		(289.1	)
Ruckus		11.0	%		3.0	%		375.8	2.6	%		(41.2	)		(117.4	)		(78.1	)		(107.1	)
DCCS		9.5	%		2.0	%		235.3	1.6	%		44.2			(24.8	)		(2.7	)		(17.2	)

			Amount of Payments Due per Period
Contractual Obligations	Total Payments Due		2020		2021-2022		2023-2024		Thereafter
	(in millions)
Long-term debt, including current maturities (a)	$	9,992.0	$	32.0	$	214.0	$	1,964.0	$	7,782.0
Interest on long-term debt (a)(b)		3,434.0		576.0		1,135.8		1,071.0		651.2
Operating leases		259.6		74.7		107.0		55.2		22.7
Purchase obligations and other supplier agreements (c)		347.2		347.2		—		—		—
Pension and other postretirement benefit liabilities (d)		9.0		6.3		0.8		0.7		1.2
Restructuring costs, net (e)		26.3		21.9		4.4		—		—
Patent litigation settlement (f)		55.0		55.0		—		—		—
Unrecognized tax benefits (g)		—		—		—		—		—
Total contractual obligations	$	14,123.1	$	1,113.1	$	1,462.0	$	3,090.9	$	8,457.1