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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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

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

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

As of ~~May 2, 2019~~April 27, 2020 there were ~~193,523,693~~195,874,638 shares of Common Stock outstanding.

	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Net sales	$	1,099.5		$	1,120.5		$	2,033.2		$	1,099.5
Cost of sales		687.7			709.1			1,392.0			701.5
Gross profit		411.8			411.4			641.2			398.0
Operating expenses:
Selling, general and administrative		199.2			185.1			311.1			185.4
Research and development		50.2			49.9			180.4			50.2
Amortization of purchased intangible assets		59.3			67.2			157.8			59.3
Restructuring costs, net		12.4			5.5			23.7			12.4
Total operating expenses		321.1			307.7			673.0			307.3
Operating income		90.7			103.7
Other income (expense), net		(5.7	)		1.0
Operating income (loss)								(31.8	)		90.7
Other expense, net								(12.5	)		(5.7	)
Interest expense		(97.5	)		(59.8	)		(149.1	)		(97.5	)
Interest income		11.8			1.4			2.1			11.8
Income (loss) before income taxes		(0.7	)		46.3
Income tax expense		(1.6	)		(12.6	)
Net income (loss)	$	(2.3	)	$	33.7
Loss before income taxes								(191.3	)		(0.7	)
Income tax (expense) benefit								31.4			(1.6	)
Net loss								(159.9	)		(2.3	)
Series A convertible preferred stock dividend								(13.8	)		—
Net loss attributable to common stockholders							$	(173.7	)	$	(2.3	)

Earnings (loss) per share:
Loss per share:
Basic	$	(0.01	)	$	0.18		$	(0.89	)	$	(0.01	)
Diluted	$	(0.01	)	$	0.17		$	(0.89	)	$	(0.01	)

Weighted average shares outstanding:
Basic		192.8			191.4			194.9			192.8
Diluted		192.8			195.5			194.9			192.8

							Unaudited
	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Cash and cash equivalents	$	176.4		$	458.2		$	394.3		$	598.2
Accounts receivable, less allowance for doubtful accounts of $19.5 and $17.4, respectively		957.6			810.4
Accounts receivable, less allowance for doubtful accounts of $40.0 and $35.4, respectively								1,604.0			1,698.8
Inventories, net		535.5			473.3			909.4			975.9
Prepaid expenses and other current assets		151.5			135.9			238.1			238.9
Total current assets		1,821.0			1,877.8			3,145.8			3,511.8
Property, plant and equipment, net of accumulated depreciation of $449.2 and $437.7, respectively		453.8			450.9
Property, plant and equipment, net of accumulated depreciation of $585.0 and $553.8, respectively								693.5			723.8
Goodwill		2,859.9			2,852.3			5,424.6			5,471.7
Other intangible assets, net		1,290.0			1,352.0			4,096.4			4,263.6
Funds restricted for acquisition		3,760.1			—
Other noncurrent assets		189.5			97.5			512.5			460.7
Total assets	$	10,374.3		$	6,630.5		$	13,872.8		$	14,431.6
Liabilities and Stockholders' Equity
Accounts payable	$	475.3		$	399.2		$	974.0		$	1,148.0
Accrued and other liabilities		429.6			291.4			846.9			862.0
Current portion of long-term debt								32.0			32.0
Total current liabilities		904.9			690.6			1,852.9			2,042.0
Long-term debt		7,459.6			3,985.9			9,698.7			9,800.4
Deferred income taxes		79.9			83.3			206.9			215.1
Other noncurrent liabilities		185.4			113.9			527.1			537.8
Total liabilities		8,629.8			4,873.7			12,285.6			12,595.3
Commitments and contingencies
Series A convertible preferred stock, $0.01 par value								1,013.8			1,000.0
Stockholders' equity:
Preferred stock, $0.01 par value: Authorized shares: 200,000,000;
Issued and outstanding shares: None		—			—
Issued and outstanding shares: 1,013,750 Series A convertible preferred stock								—			—
Common stock, $0.01 par value: Authorized shares: 1,300,000,000;
Issued and outstanding shares: 193,456,207 and 192,376,255,
Issued and outstanding shares: 195,807,913 and 194,563,530,
respectively		2.0			2.0			2.0			2.0
Additional paid-in capital		2,393.9			2,385.1			2,455.7			2,445.1
Retained earnings (accumulated deficit)		(252.1	)		(249.8	)		(1,339.2	)		(1,179.3	)
Accumulated other comprehensive loss		(170.5	)		(159.2	)		(304.7	)		(197.0	)
Treasury stock, at cost: 7,060,763 shares and 6,744,082 shares,
Treasury stock, at cost: 7,981,297 shares and 7,411,382 shares,
respectively		(228.8	)		(221.3	)		(240.4	)		(234.5	)
Total stockholders' equity		1,744.5			1,756.8			573.4			836.3
Total liabilities and stockholders' equity	$	10,374.3		$	6,630.5		$	13,872.8		$	14,431.6

	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Operating Activities:
Net income (loss)	$	(2.3	)	$	33.7
Adjustments to reconcile net income (loss) to net cash generated by (used in) operating activities:
Net loss							$	(159.9	)	$	(2.3	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		83.7			89.4			205.4			83.7
Equity-based compensation		7.5			10.5			23.5			7.5
Deferred income taxes		(1.4	)		(5.4	)		(38.3	)		(1.4	)
Changes in assets and liabilities:
Accounts receivable		(150.7	)		(71.1	)		69.0			(150.7	)
Inventories		(62.4	)		(25.2	)		50.6			(62.4	)
Prepaid expenses and other assets		(24.5	)		(24.5	)		15.2			(24.5	)
Accounts payable and other liabilities		136.8			15.4			(217.2	)		136.8
Other		3.3			12.4			9.0			3.3
Net cash generated by (used in) operating activities		(10.0	)		35.2
Net cash used in operating activities								(42.7	)		(10.0	)
Investing Activities:
Additions to property, plant and equipment		(21.4	)		(13.6	)		(23.9	)		(21.4	)
Proceeds from sale of property, plant and equipment		0.6			3.0			0.1			0.6
Acquisition funds held in escrow		(3,750.0	)		—			—			(3,750.0	)
Cash paid for acquisitions, including purchase price adjustments, net of cash acquired		(11.0	)		—
Cash paid for Cable Exchange acquisition								—			(11.0	)
Net cash used in investing activities		(3,781.8	)		(10.6	)		(23.8	)		(3,781.8	)
Financing Activities:
Long-term debt repaid		(225.0	)		—			(108.0	)		(225.0	)
Long-term debt proceeds		3,750.0			—			—			3,750.0
Debt issuance costs		(9.3	)		—			—			(9.3	)
Proceeds from the issuance of common shares under equity-based compensation plans		1.3			3.9			0.9			1.3
Tax withholding payments for vested equity-based compensation awards		(7.5	)		(15.4	)		(5.9	)		(7.5	)
Net cash generated by (used in) financing activities		3,509.5			(11.5	)		(113.0	)		3,509.5
Effect of exchange rate changes on cash and cash equivalents		0.5			5.6			(24.4	)		0.5
Change in cash and cash equivalents		(281.8	)		18.7			(203.9	)		(281.8	)
Cash and cash equivalent at beginning of period		458.2			454.0			598.2			458.2
Cash and cash equivalents at end of period	$	176.4		$	472.7		$	394.3		$	176.4

	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Number of common shares outstanding:
Balance at beginning of period		192,376,255			190,906,110			194,563,530			192,376,255
Issuance of shares under equity-based compensation plans		1,396,633			1,568,709			1,814,298			1,396,633
Shares surrendered under equity-based compensation plans		(316,681	)		(397,141	)		(569,915	)		(316,681	)
Balance at end of period		193,456,207			192,077,678			195,807,913			193,456,207
Common stock:
Balance at beginning and end of period	$	2.0		$	2.0		$	2.0		$	2.0
Additional paid-in capital:
Balance at beginning of period	$	2,385.1		$	2,334.1		$	2,445.1		$	2,385.1
Issuance of shares under equity-based compensation plans		1.3			3.9			0.9			1.3
Equity-based compensation		7.5			10.5			23.5			7.5
Dividend on Series A convertible preferred stock								(13.8	)		—
Balance at end of period	$	2,393.9		$	2,348.5		$	2,455.7		$	2,393.9
Retained earnings (accumulated deficit):
Balance at beginning of period	$	(249.8	)	$	(396.0	)	$	(1,179.3	)	$	(249.8	)
Net income (loss)		(2.3	)		33.7
Cumulative effect of change in accounting principle		—			6.0
Net loss								(159.9	)		(2.3	)
Balance at end of period	$	(252.1	)	$	(356.3	)	$	(1,339.2	)	$	(252.1	)
Accumulated other comprehensive income (loss):
Accumulated other comprehensive loss:
Balance at beginning of period	$	(159.2	)	$	(86.6	)	$	(197.0	)	$	(159.2	)
Other comprehensive income (loss), net of tax		(11.3	)		44.8
Other comprehensive loss, net of tax								(107.7	)		(11.3	)
Balance at end of period	$	(170.5	)	$	(41.8	)	$	(304.7	)	$	(170.5	)
Treasury stock, at cost:
Balance at beginning of period	$	(221.3	)	$	(205.6	)	$	(234.5	)	$	(221.3	)
Net shares surrendered under equity-based compensation plans		(7.5	)		(15.4	)		(5.9	)		(7.5	)
Balance at end of period	$	(228.8	)	$	(221.0	)	$	(240.4	)	$	(228.8	)
Total stockholders' equity	$	1,744.5		$	1,731.4		$	573.4		$	1,744.5

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 ~~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. 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 ~~applications.~~networks to homes. CommScope’s global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

On April 4, 2019, the Company completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. See Note 2 for additional discussion of the Acquisition.

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

The accompanying condensed consolidated financial statements are unaudited and reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair presentation of the interim period financial statements. The results of operations for these interim periods are not necessarily indicative of the results of operations to be expected for any future period or the full fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation.

The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and are presented in accordance with the applicable requirements of Regulation S-X. Accordingly, these financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the ~~2018~~2019 Annual Report).

The significant accounting policies followed by the Company are set forth in Note 2 within the Company’s audited consolidated financial statements included in the ~~2018~~2019 Annual Report. Other than the ~~changes~~enhancements described below to ~~lease policies~~the allowance for doubtful accounts policy as a result of the adoption of Accounting Standards Update (ASU) No. ~~2016-02,~~2016-13, ~~Leases,~~Measurement of Credit Losses on Financial Instruments, there were no material changes in the Company’s significant accounting policies during the three months ended March 31, ~~2019.~~

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

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

The Company accounts for lease agreements with contractually required lease and non-lease components on a combined basis. Lease payments made for cancellable leases, variable amounts that are not based on an observable index and lease agreements with an original duration of less than twelve months are recorded directly to lease expense.2020.

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

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

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

No direct customer accounted for 10% or more of the Company’s total net sales during the three months ended March 31, 2020. NaN direct customer accounted for 10% or more of the Company’s accounts receivable as of March 31, 2020.

Net sales to Anixter International Inc. and its affiliates (Anixter) accounted for 10% of the Company’s total net sales during ~~both~~ the three months ended March 31, ~~2019 and 2018. Sales to~~2019. Other than Anixter, ~~primarily originate within the CommScope Connectivity Solutions (CCS) segment. No~~0 direct customer accounted for 10% or more of the Company’s ~~accounts receivable as~~total net sales for the three months ended March 31, 2019.

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

As of March 31, ~~2019.~~2020, funds affiliated with Carlyle Partners VII S1 Holdings, L.P. (Carlyle) owned 100% of the Series A Convertible Preferred Stock (the Convertible Preferred Stock), which was issued to Carlyle to fund the Acquisition. See Note 11 for further discussion of the Convertible Preferred Stock. Other than transactions related to the Convertible Preferred Stock, there were 0 material related party transactions for the three months ended March 31, 2020.

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

The following table summarizes the activity in the product warranty accrual, included in accrued and other ~~accrued~~liabilities and other noncurrent liabilities:

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

During the three months ended March 31, 2020, the Company recorded an estimated liability of $17.5 million, which is reflected in accrued and other liabilities, related to certain intellectual property assertions that existed at the Acquisition date. Of the total estimated liability recorded, $12.25 million was attributed to periods prior to the Acquisition and was recorded as a liability on the opening balance sheet. The remaining $5.25 million was recorded as a charge to cost of sales in the Home segment during the three months ended March 31, 2020. 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 these estimates may ultimately differ materially from actual results.

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

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

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. During the three months ended March 31, 2019, the Company assessed goodwill for impairment due to a change in reporting units in the CCS segment. As a result, the Company performed impairment testing for goodwill under the CCS segment reporting unit structure immediately before the change and determined that no 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. There were no0 goodwill impairments identified during the three months ended March 31, ~~2019~~2020 or ~~2018.~~2019.

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~~adjusted to 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. Other than certain assets impaired as a result of restructuring actions, there were no0 definite-lived intangible or other long-lived asset impairments identified during the three months ended March 31, ~~2019~~2020 or ~~2018.~~2019.

For the three months ended March 31, 2020, the Company’s effective tax rate was 16.4%, and the Company recognized a tax benefit of $31.4 million on a pretax loss of $191.3 million. The Company’s tax benefit was less than the statutory rate of 21.0% primarily due to the impacts of U.S. anti-deferral provisions, changes in uncertain tax positions, withholding taxes and earnings in foreign jurisdictions that are taxed at rates higher than the U.S. This unfavorable impact was offset partially by the favorable impacts of certain federal tax credits.

The Company’s effective income tax rate was (242.6)% for the three months ended March 31, 2019. The Company recorded $1.6 million of income tax expense related to a $0.7 million pre-tax net loss for the period. The pre-tax net loss was driven by interest expense, restructuring costs and transaction and integration costs related to the ~~acquisition of ARRIS International plc (ARRIS) (the Acquisition).~~Acquisition. Additional income tax expense was recorded as a result of final transition tax regulations issued in the United States (U.S.) during the quarter. The effective income tax rate was also unfavorably affected by losses in certain jurisdictions where the Company did not recognize tax benefits due to the likelihood of those benefits not being realizable. See Notes 2 and 12 for further discussion of the Acquisition and Note 6 for further discussion of the related financing. The impact of excess tax costs related to equity-based compensation awards was not material for the three months ended March 31, 2019.

The effective income tax rate of 27.2% for the three months ended March 31, 2018 was higher than the statutory rate of 21.0% primarily 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. statutory rate, the impact of the U.S. anti-deferral provisions and the impact of repatriation taxes. These increases to the effective tax rate were partially offset by the favorable impact of $4.3 million of excess tax benefits related to equity-based compensation awards.

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. ~~Diluted earnings (loss) per share~~The numerator in diluted EPS is based on ~~net income (loss) divided by~~ the ~~weighted average number of common shares outstanding~~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 ~~using~~related to the ~~treasury stock method. Potentially dilutive common~~Convertible Preferred Stock and equity-based compensation plans, subject to antidilution requirements.

For the three months ended March 31, 2020, 16.1 million shares ~~include outstanding equity-based awards (stock options, restricted stock units and performance share units). Certain~~of outstanding equity-based compensation awards were not included in the computation of diluted ~~earnings (loss) per share~~EPS because the effect was either antidilutive or the performance conditions were not ~~met (5.7 million shares and 0.5 million shares~~met. Of those amounts, for the three months ended March 31, ~~2019 and 2018, respectively). Antidilutive securities for the three months ended March 31, 2019 included 2.7~~2020, 4.3 million shares ~~of equity-based awards which~~ would have been considered dilutive if the Company had not been in a net loss position.

~~The following table presents~~ For the ~~basis for the earnings (loss) per share computations (in millions, except per share data):~~

~~Adopted During the Three Months Ended~~three months ended March 31, 2019, 5.7 million shares were not included in the computation of diluted EPS because the effect was either antidilutive or the performance conditions were not met.

~~On January 1, 2019,~~For the three months ended March 31, 2020, 36.4 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 ~~adopted ASU No. 2016-02,~~ ~~Leases~~, and all subsequently issued clarifying guidance. The Company finalized the necessary changes to its accounting policies, processes, internal controls and information systems that were required to meet the new standard’s reporting and disclosure requirements. 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 arehad 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 Condensed 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 Condensed Consolidated Statements of Operations; and therefore, no cumulative effect adjustment was recorded. Adoption of the new standard also did not materially affect the Condensed Consolidated Statements of Cash Flows. See Note 4 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 will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize a goodwill impairment charge for the excess of the reporting unit’s carrying amount over its fair value, up to the amount of goodwill allocated to that reporting unit. Adoption of the new standard did not materially affect the Company’s consolidated financial statements.

~~On January 1, 2019, the Company adopted ASU No. 2018-15,~~ ~~Customer’s Accounting for Implementation Costs Incurred~~been 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.

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

~~2. ACQUISITIONS~~The following table presents the basis for the EPS computations (in millions, except per share data):

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

The Company adopted Topic 326 using the modified retrospective method for all financial assets measured at amortized cost, which are primarily trade accounts receivable and contract assets for the Company. Results for reporting periods beginning after January 1, 2020 are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP.

Prior to the adoption of Topic 326, the Company utilized an expected loss model for assessing its allowance for doubtful accounts receivable. Upon adoption, the Company considered and applied the new guidance provided under Topic 326. The impact of adopting Topic 326 as of January 1, 2020 was not material to the consolidated financial statements.

In March 2020, theFinancial Accounting Standards Board (FASB) issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. The Company can elect to apply the amendments as of March 12, 2020 through December 31, ~~2019~~2022. The Company is currently evaluating the impact of this guidance on the consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The new guidance is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. The amendments in this guidance clarify the interaction of accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. ASU No. 2020-01 is effective for the Company as of January 1, 2021 and early adoption is permitted. The Company is evaluating the impact of the new guidance on the consolidated financial statements.

On ~~November 8, 2018,~~April 4, 2019, the Company ~~announced an agreement to acquire~~acquired all of the issued ordinary shares of ARRIS in an all cash transaction ~~for $31.75 per share. To fund~~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 drive profitable growth in new markets, shape the ~~Acquisition, on February 19, 2019, CommScope Finance LLC, a wholly owned subsidiary~~future of wired and wireless communications, and position the Company to benefit from key industry trends, including network convergence, fiber and mobility everywhere, 5G, Internet of Things and rapidly changing network and technology architectures. For the three months ended March 31, 2020, net sales of $1,030.1 million and operating losses of $(100.0) million were included in the Condensed Consolidated Statements of Operations related to the ARRIS business.

During the three months ended March 31, 2020, the Company completed its acquisition accounting and made the following adjustments to the provisional amounts that were previously recorded:

The Company recorded these amounts as measurement period adjustments because the information was known as of the acquisition date but the analysis was finalized in the first quarter of 2020.

As a result of the change in segments as discussed in Note 1, goodwill was reallocated from the previous segments to the new segments. The following table presents goodwill after the reallocation by new reportable segment:

The Company’s change in segments as of ~~5.50% senior secured notes due 2024 (the 2024 Secured Notes), $1.5 billion~~January 1, 2020 resulted in a realignment of ~~6.00% senior secured notes due 2026 (the 2026 Secured Notes) and $1.0 billion~~its existing reporting units. Although the reporting units were realigned, the Company’s reporting units remained the same except for where two reporting units have been combined into a new reporting unit. In this case, goodwill was simply combined in the new reporting units. Since the composition of ~~8.25% senior unsecured notes due 2027 (the New Unsecured Notes and, together with~~ the ~~2024 Secured Notes~~reporting units and the ~~2026 Secured Notes,~~assignment of goodwill to the ~~New Notes) and priced~~reporting units were unaffected, an interim goodwill impairment test was not performed during the ~~borrowing of $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%. The proceeds of the New Notes were held in escrow as of~~three months ended March 31, ~~2019. See Note 12 for further update on the Acquisition.~~2020.

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

	Three Months Ended March 31,
	Broadband				Home				OWN				VCN				Total
	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
Contract type:
Product contracts	$	571.9	$	323.8	$	600.6	$	—	$	344.2	$	385.5	$	425.4	$	369.9	$	1,942.1	$	1,079.2
Project contracts		1.8		2.7		—		—		—		0.1		10.3		8.6		12.1		11.4
Other contracts		39.7		—		0.8		—		4.7		5.2		33.8		3.7		79.0		8.9
Consolidated net sales	$	613.4	$	326.5	$	601.4	$	—	$	348.9	$	390.8	$	469.5	$	382.2	$	2,033.2	$	1,099.5

Further information on net sales by reportable ~~segment:~~segment and geographic region is included in Note 9.

The following table provides the balance sheet location and amounts of contract assets and liabilities from contracts with customers as of March 31, 2020 and December 31, 2019.

There were no material changes to contract asset balances for the three months ended March 31, 2020 as a result of changes in estimates or impairments. As of March 31, 2020, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied and that have a duration of one year or less was $119.2 million, with the remaining $31.9 million having a duration greater than one year.

The following table presents the changes in deferred revenue for the three months ended March 31, 2020:

Contract liabilities were not material to the Company as of and for the three months ended March 31, 2019.

The Company has operating type leases for real estate, equipment and vehicles in both the U.S. and internationally. As of March 31, ~~2019,~~2020, the Company had no0 finance type leases. The Company’s leases have remaining lease terms of ~~1 year~~up to 109 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 $26.3 million and $12.8 million for the three months ended March 31, 2020 and 2019, respectively, inclusive of period cost for short-term, cancellable and variable leases, not included in lease liabilities, of $7.8 million and $3.6 ~~million.~~millionfor the three months ended March 31, 2020 and 2019, respectively.

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

Future minimum lease payments under non-cancellable leases as of March 31, 2020:

~~Future minimum lease payments under non-cancellable leases as of March 31, 2019:~~

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

~~Further information on net sales by reportable segment and geographic region is included in Note 9.~~

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

There were no material changes to contract asset balances for the three months ended March 31, 2019 as a result of changes in estimates or impairments. The full amount of the deferred revenue balance as of March 31, 2019 was classified as a current liability as the Company expects to recognize these amounts over the next twelve months.

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

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

See Note 6 in the Notes to Consolidated Financial Statements in the 2018 Annual Report for additional information on the terms and conditions of the 5.00% senior notes due 2027, the 6.00% senior notes due 2025, the 5.50% senior notes due 2024, the 5.00% senior notes due 2021 (collectively, the Existing Notes) and the senior secured term loan due 2022 (the 2022 Term Loan).

In connection with the anticipated 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 Existing Notes and the credit agreements governing the Company’s existing senior secured credit facilities, issued $1.0 billion of the New Unsecured Notes, $1.5 billion of the 2026 Secured Notes and $1.25 billion of the 2024 Secured Notes. The proceeds from the issuance of the New Notes were held in escrow until the closing of the Acquisition on April 4, 2019. Concurrent with the closing of the Acquisition, CommScope Finance LLC merged with and into CommScope, Inc., with CommScope, Inc. continuing as the surviving entity, upon which CommScope, Inc. became the issuer of the Notes by operation of law. See Note 12 for further update of the status of the Acquisition.

The indentures governing the New 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 or repurchases of equity interests of CommScope, Inc., make loans or acquisitions or capital contributions and certain investments, incur certain liens, sell assets, merge or consolidate or liquidate other entities and enter into certain transactions with affiliates.

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

The New Unsecured Notes mature on March 1, 2027. Interest is payable on the New Unsecured Notes semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2019. Prior to the closing of the Acquisition, the New Unsecured Notes were not guaranteed and were secured by a first-priority security interest in the funds held in the applicable escrow account. After the closing of the Acquisition, the New Unsecured 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 debt, subject to certain exceptions. The New Unsecured 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, the 2026 Secured Notes, the 2024 Secured Notes and the Existing Notes. The New Unsecured Notes and the related guarantees are effectively junior to all of CommScope, Inc.’s and the guarantors’ existing and future secured debt, including the 2026 Secured Notes and 2024 Secured Notes (discussed below) and the senior secured credit facilities, to the extent of the value of the assets securing such secured debt. In addition, the New Unsecured 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 New Unsecured Notes.

The New Unsecured Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control events, the New Unsecured Notes may be redeemed at the option of the holders at 101% of their face amount, plus accrued and unpaid interest. The New Unsecured Notes may be redeemed 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 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 108.250%, 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 three months ended March 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.

The 2026 Secured Notes mature on March 1, 2026. Interest is payable on the 2026 Secured Notes semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2019. Prior to the closing of the Acquisition, the 2026 Secured Notes were not guaranteed and were secured by a first-priority security interest in the funds held in the applicable escrow account. After the closing of the Acquisition, the 2026 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 2026 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 2026 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, the New Unsecured Notes, the 2024 Secured Notes and the Existing Notes. The 2026 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 2026 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 2026 Secured Notes, including the 2026 Term Loan and the 2024 Secured Notes. The 2026 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 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 2026 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 2026 Secured Notes.

See Note 8 in the Notes ~~may be redeemed prior~~ to ~~maturity under certain circumstances. Upon certain change of control events,~~Consolidated Financial Statements in the ~~2026 Secured Notes may be redeemed at~~2019 Annual Report for additional information on the ~~option~~terms and conditions of the ~~holders at 101% of their face amount, plus accrued and unpaid interest. The 2026 Secured~~Company’s debt obligations.

5.00% Senior Notes may be redeemed on or after March 1, 2022 at the redemption prices specified in the indenture governing the 2026 Secured Notes. Prior to March 1, 2022, the 2026 Secured Notes may be redeemed at a redemption price equal to 100% of their principal amount, plus a make-whole premium (as specified in the indenture governing the 2026 Secureddue 2021 (the 2021 Notes)~~, plus accrued and unpaid interest. Prior to March 1, 2022, under certain circumstances, CommScope, Inc. may also redeem up to 40% of the~~

In February 2020, $100.0 million aggregate principal amount of the ~~2026 Secured~~2021 Notes ~~at a redemption price of 106.000%, plus accrued~~was redeemed and ~~unpaid interest, using the proceeds of certain equity offerings.~~

In connection with issuing the 2026 Secured Notes, the Company incurred costs of $22.1 million during the three months ended March 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.

The 2024 Secured Notes mature on March 1, 2024. Interest is payable on the 2024 Secured Notes semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2019. Prior to the closing of the Acquisition, the 2024 Secured Notes were not guaranteed and were secured by a first-priority security interestresulted in the ~~funds held~~write-off of $0.3 million of debt issuance costs, which was reflected in the applicable escrow account. After the closing of the Acquisition, the 2024 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 2024 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 2024 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, the New Unsecured Notes, the 2026 Secured Notes and the Existing Notes. The 2024 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 2024 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 2024 Secured Notes, including the 2026 Term Loan and the 2026 Secured Notes. The 2024 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 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 2024 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 2024 Secured Notes.interest expense.

The 2024 Secured Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control events, the 2024 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 at the redemption prices specified in the indenture governing the 2024 Secured Notes. Prior to March 1, 2021, the 2024 Secured Notes may be redeemed at a redemption price equal to 100% of their principal amount, plus a make-whole premium (as specified in the indenture governing the 2024 Secured Notes), plus accrued and unpaid interest. Prior to March 1, 2021, under certain circumstances, CommScope, Inc. may also redeem up to 40% of the aggregate principal amount of the 2024 Secured Notes at a redemption price of 105.500%, 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 three months ended March 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.

During the three months ended March 31, 2019, the Company repaid $225.0 million of the 2022 Term Loan. In connection with the repayment, $3.6 million of original issue discount and debt issuance costs were written off and included in interest expense.

In connection with the anticipated Acquisition, in February 2019, CommScope, Inc. obtained syndicated commitments of $3.2 billion, less $32.0 million of original issue discount, in the 2026 Term Loan with an interest rate of LIBOR plus 3.25%. The 2026 Term Loan was not funded until closing of the Acquisition on April 4, 2019; therefore, there was no balance outstanding under the 2026 Term Loan as of March 31, 2019. The Company used a portion of the proceeds from the 2026 Term Loan to pay off the remaining balance on the 2022 Term Loan and the remaining proceeds were used to finance the Acquisition. The Company incurred costs of $6.2 million during the three months ended March 31, 2019 related to the 2026 Term Loan that were recorded in other noncurrent assets as of March 31, 2019 but will be reclassified as a reduction of the carrying amount of the debt after closing of the Acquisition and amortized over the term of the 2026 Term Loan. The Company also incurred ticking fees related to the 2026 Term Loan of $10.7 million during the three months ended March 31, 2019 that were included in interest expense. See Note 12 for further update on the status of the Acquisition.

~~As of March 31, 2019, the Company had no outstanding borrowings under its existing asset-based revolving credit facility and~~2020, the Company did not borrow under ~~its existing~~the asset-based revolving credit facility. As of March 31, 2020, the Company had 0 outstanding borrowings under the asset-based revolving credit facility ~~to fund the Acquisition. As of March 31, 2019, the Company~~and had availability of ~~$490.7~~$735.1 million, ~~under the existing asset-based revolving credit facility,~~ after giving effect to borrowing base limitations and outstanding letters of credit.

NoDuring the three months ended March 31, 2020, the Company made the quarterly scheduled amortization payment of $8.0 million of the senior secured term loan. The current portion of long-term debt reflects $32.0 million of repayments due under the senior secured term loan.

NaN portion of the ~~2022 Term Loan~~senior secured term loan was reflected as a current portion of long-term debt as of March 31, ~~2019~~2020 related to the potentially required excess cash flow payment because the amount that may be payable in ~~2020,~~2021, if any, cannot currently be reliably estimated. ~~There was no excess cash flow payment required in 2019 related to 2018.~~

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

The Company’s non-guarantor subsidiaries held ~~$2,208~~$2,871 million, or 21%, of total assets and ~~$517~~$919 million, or 6%7%, of total liabilities as of March 31, ~~2019~~2020 and accounted for ~~$415~~$614 million, or ~~38%~~30% of net sales for the three months ended March 31, ~~2019.~~2020. As of December 31, ~~2018,~~2019, the non-guarantor subsidiaries held ~~$2,354~~$3,773 million, or ~~36%~~26%, of total assets and ~~$454~~$714 million, or 9%6%, of total liabilities. For the three months ended March 31, ~~2018,~~2019, the non-guarantor subsidiaries accounted for ~~$464~~$415 million, or ~~41%~~38%, of net sales. All amounts presented exclude intercompany balances.

The weighted average effective interest rate on outstanding borrowings, including the impact of the interest rate swap, and the amortization of debt issuance costs and original issue discount, was ~~6.26%~~5.97% and ~~5.73%~~6.17% at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

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 March 31, 2019, the Company had foreign currency contracts outstanding with maturities of up to ten months and aggregate notional values of $430 million (based on exchange rates as of March 31, 2019). Unrealized gains and losses resulting from these contracts are recognized in other income (expense), net and partially offset corresponding foreign exchange gains and losses on the balances and expenditures being hedged. These instruments are not held for speculative or trading purposes, are not designated as hedges for hedge accounting purposes and are marked to market each period through earnings.

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

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

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 March 31, 2019, the Company held designated foreign currency contracts with outstanding maturities of up to twenty-seven months and an aggregate notional value of $340.0 million.

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. For the three months ended March 31, 2019, the Company recognized $0.6 million of pre-tax income in interest expense as a result of amounts excluded from hedge effectiveness under the spot method. As of March 31, 2019, there was no ineffectiveness on the instruments designated as net investment hedges.

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

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

The Company has implemented a hedging strategy to mitigate a portion of the exposure to changes in cash flows resulting from variable interest rates on the 2026 Term Loan which are based on the one-month LIBOR benchmark rate (see Note 6). During the three months ended March 31, 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 March 31, 2019 was $600 million with outstanding maturities up to sixty months.

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 will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. As of March 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:~~

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

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 March 31, ~~2019~~2020 and December 31, ~~2018~~2019 were considered representative of their fair values due to their short terms to maturity. The fair values of the Company’s debt instruments, interest rate derivatives and foreign currency contracts were based on indicative quotes.

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

The carrying amounts, estimated fair values and valuation input levels of the Company’s debt instruments, interest rate derivatives and foreign currency contracts as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, are as follows:

	March 31, 2019				December 31, 2018					March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Valuation Inputs	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Valuation Inputs
Assets:
Foreign currency contracts	$	6.4	$	6.4	$	2.5	$	2.5	Level 2	$	25.9	$	25.9	$	10.7	$	10.7	Level 2
Liabilities:
5.00% senior notes due 2027	$	750.0	$	661.3	$	750.0	$	608.0	Level 2	$	750.0		650.6	$	750.0	$	696.4	Level 2
8.25% senior notes due 2027		1,000.0		1,037.5		—		—	Level 2		1,000.0		970.0		1,000.0		1,052.5	Level 2
6.00% senior notes due 2025		1,500.0		1,458.3		1,500.0		1,355.6	Level 2		1,500.0		1,372.8		1,500.0		1,501.7	Level 2
5.50% senior notes due 2024		650.0		636.4		650.0		591.8	Level 2		650.0		599.8		650.0		656.0	Level 2
5.00% senior notes due 2021		650.0		651.6		650.0		641.9	Level 2		50.0		49.5		150.0		149.9	Level 2
6.00% senior secured notes due 2026		1,500.0		1,549.7		—		—	Level 2		1,500.0		1,494.0		1,500.0		1,595.6	Level 2
5.50% senior secured notes due 2024		1,250.0		1,276.9		—		—	Level 2		1,250.0		1,259.4		1,250.0		1,302.1	Level 2
Senior secured term loan due 2022, at par		261.3		261.3		486.3		461.9	Level 2
Senior secured term loan due 2026											3,184.0		3,024.8		3,192.0		3,219.9	Level 2
Foreign currency contracts		1.5		1.5		3.0		3.0	Level 2		9.6		9.6		5.9		5.9	Level 2
Interest rate swap contracts		5.5		5.5		—		—	Level 2		36.1		36.1		16.3		16.3	Level 2

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.

As of January 1, 2020, the Company reorganized its internal management and reporting structure as part of the integration of the Acquisition. The ~~CommScope Connectivity Solutions (CCS) segment provides innovative fiber optic~~reorganization changed the information regularly reviewed by the Company’s chief operating decision maker for purposes of allocating resources and ~~copper cable~~assessing performance. As a result, the Company is reporting financial performance based on 4 reportable segments: Broadband, Home, OWN and connectivity solutions for use in data center, business enterprise, telecommunication, cable television and residential broadband networks. The CCS portfolio includes solutions for indoor and outdoor network applications. Indoor network solutionsVCN. These reportable segments are ~~found in commercial buildings and in~~based upon the network core, which includes data centers, central offices and cable television headends. These solutions include optical fiber and twisted pair structured cabling solutions, intelligent infrastructure management hardware and software, high-density fiber optic connectivity, fiber management systems, patch cords, panels, pre-terminated fiber connectivity, and cable assemblies for use in offices and data centers. Outdoor network solutions are found in both local-area and wide-area networks and “last-mile” architectures that include fiber-to-the-node (FTTN), fiber-to-the-premises (FTTP) and fiber-to-the-distribution point (FTTdP). These architectures and our solutions support homes, businesses and cell sites and provide multichannel video, voice and high-speed data services sold by telecommunication and multi-system operators. The Company’s fiber optic connectivity solutions are primarily comprisednature of hardened connector systems, fiber distribution hubs and management systems, couplers and splitters, plug and play multiport service terminals, hardened optical terminating enclosures, high density cable assemblies, splices and splice closures.

~~The CommScope Mobility Solutions (CMS) segment provides~~ the ~~integral building blocks for cellular base station sites and related connectivity; indoor, small cell and distributed antenna wireless systems; and wireless network backhaul planning and optimization~~ products and services. These solutions enable wireless operators to increase their networks’ spectral efficiency and to enhance cellular coverage and capacity in challenging network conditions such as commercial buildings, urban areas, stadiums and transportation systems. The CMS segment focuses on all aspects of the radio access network (RAN) from the macro through the metro, to the indoor layer. Macro cell solutions can be found at wireless tower sites and on rooftops and include base station antennas, microwave antennas, hybrid fiber-feeder and power cables, coaxial cables, connectors and filters. Metro cell solutions can be found on street poles and on other urban, outdoor structures and include radio frequency (RF) delivery and connectivity solutions, equipment housing and concealment. Distributed antenna systems and small cell indoor solutions allow wireless operators to increase spectral efficiency and thereby extend and enhance cellular coverage and capacity in challenging network conditions.services they offer.

~~The following table provides summary financial information by reportable segment:~~

The Broadband segment provides an end-to-end product portfolio serving the telco and cable provider broadband market. The segment brings together the Network Cable and Connectivity business with the Network & Cloud business. Broadband includes converged cable access platform, passive optical networking, video systems, access technologies, fiber and coaxial cable, fiber and copper connectivity and hardened closures.

The Home segment comprises the former Consumer Premises Equipment business and focuses on the future of the connected home and connected devices inside the home. The 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 and cable modems and telephony and data gateways which incorporate routing and Wi-Fi functionality. Video offerings include set top boxes that support cable, satellite and IPTV content delivery and include products such as digital video recorders, high definition set top boxes and hybrid set top devices.

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

The VCN segment targets both public and private networks for campuses, venues, data centers and buildings. The segment combines Wi-Fi and switching, distributed antenna systems, licensed and unlicensed small cells and enterprise fiber and copper infrastructure.

The following table provides summary financial information by reportable segment:

(In ~~the first quarter of 2019, the Company changed its~~millions, unless otherwise noted)

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

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

	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Net sales:
CCS	$	646.1		$	673.6
CMS		453.4			446.9
Broadband							$	613.4		$	326.5
Home								601.4			—
OWN								348.9			390.8
VCN								469.5			382.2
Consolidated net sales	$	1,099.5		$	1,120.5		$	2,033.2		$	1,099.5

Segment adjusted EBITDA:
CCS	$	107.7		$	122.7
CMS		100.7			85.4
Broadband							$	92.7		$	58.2
Home								11.9			—
OWN								88.9			101.0
VCN								37.7			49.2
Total segment adjusted EBITDA		208.4			208.1			231.2			208.4
Amortization of intangible assets		(59.3	)		(67.2	)		(157.8	)		(59.3	)
Restructuring costs, net		(12.4	)		(5.5	)		(23.7	)		(12.4	)
Equity-based compensation		(7.5	)		(10.5	)		(23.5	)		(7.5	)
Integration and transaction costs		(20.8	)		(1.6	)
Transaction and integration costs								(5.4	)		(20.8	)
Purchase accounting adjustments								(5.5	)		—
Patent claims and litigation								(5.3	)		—
Depreciation		(17.7	)		(19.6	)		(41.8	)		(17.7	)
Consolidated operating income	$	90.7		$	103.7
Consolidated operating income (loss)							$	(31.8	)	$	90.7

Depreciation expense:
CCS	$	12.2		$	14.1
CMS		5.5			5.5
Broadband							$	15.6		$	6.2
Home								10.0			—
OWN								4.5			4.3
VCN								11.7			7.2
Consolidated depreciation expense	$	17.7		$	19.6		$	41.8		$	17.7

Additions to property, plant and equipment:
CCS	$	14.6		$	8.8
CMS		6.8			4.8
Broadband							$	11.6		$	5.2
Home								3.1			—
OWN								2.5			5.8
VCN								6.7			10.4
Consolidated additions to property, plant and equipment	$	21.4		$	13.6		$	23.9		$	21.4

Sales to customers located outside of the U.S. comprised 41.9% and 45.8% of total net sales for the three months ended March 31, 2019 and 2018, respectively. Sales by geographic region, based on the destination of product shipments, were as follows:

Sales to customers located outside of the U.S. comprised 40.0% of total net sales for the three months ended March 31, 2020, compared to 41.9% of total net sales for the three months ended March 31, 2019. Sales by geographic region, based on the destination of product shipments, were as follows:

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~~Lease exit obligations related to unused leased facilities are reported as part of lease liabilities. ~~Future lease~~Contract termination related costs ~~will~~ 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.

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

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:

The ARRIS integration actions include headcount reductions in sales, engineering, marketing and administrative functions. The Company expects to make cash payments of $19.4 million during the remainder of 2020 and additional cash payments of $10.4 million between 2021 and 2022 to settle the announced ARRIS integration initiatives. The Company has recognized restructuring charges of $109.8 million since the ARRIS acquisition for integration and synergy actions. 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.

Following the acquisition of the Broadband Network Solutions (BNS) business in 2015, the Company initiated a series of restructuring actions to integrate and streamline operations and achieve cost synergies. The activity within the liability established for the BNS integration restructuring actions was as follows:

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 ~~$151.7~~$153.0 million since the BNS acquisition for integration actions. NoNaN additional restructuring actions ~~or charges~~ are expected in connection with the BNS integration initiatives. The Company expects to make cash payments of ~~$10.1~~$1.5 million during the remainder of ~~2019~~2020 and additional cash payments of ~~$1.6~~$0.7 million between ~~2020~~2021 and 2022.

On April 4, 2019, the Company issued and sold 1,000,000 shares of the Convertible Preferred Stock to Carlyle for $1.0 billion, or $1,000 per share, pursuant to an Investment Agreement between the Company and Carlyle, dated November 8, 2018. The Convertible Preferred Stock is convertible at the option of the holders at any time into shares of CommScope common stock at an initial conversion rate of 36.3636 shares of common stock per share of the Convertible Preferred Stock (equivalent to $27.50 per common share). The conversion rate is subject to customary anti-dilution and other adjustments.

Holders of the Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per year, payable quarterly in arrears. Dividends can be paid in cash, in-kind through the issuance of additional shares of the Convertible Preferred Stock or any combination of the two, at the Company’s option. During the three months ended March 31, 2020, the Company paid dividends in-kind of $13.8 million, which was recorded as additional Convertible Preferred Stock on the Condensed Consolidated Balance Sheets.

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

The ARRIS integration actions include headcount reductions in sales, marketing and administrative functions. The Company expects to make cash payments of $3.9 million during the remainder of 2019 and additional cash payments of $0.1 million in 2020 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.

As of March 31, ~~2019, $71.6~~2020, $154.2 million of total unrecognized compensation ~~costs~~expense related to unvested stock options, restricted stock units (RSUs) and performance share units (PSUs) ~~are~~is expected to be recognized over a remaining weighted average period of ~~1.6~~1.4 years. There were no0 significant capitalized equity-based compensation costs at March 31, ~~2019.~~2020.

The following table shows a summary of the ~~location of~~ equity-based compensation expense onincluded in the ~~statement~~Condensed Consolidated Statements of ~~operations:~~Operations:

Stock options are awards that allow the recipient to purchase shares of the Company’s common stock at a fixed price. Stock options are granted at an exercise price equal to the Company’s stock price at the date of grant. These awards ~~generally~~ vest over three to five years following the grant date and have a contractual term of ten years. These awards vest based on a time-based component or a combination of time and performance-based components.

25The following table summarizes the stock option activity (in millions, except per share data and years):

The exercise prices of outstanding options at March 31, 2020 were in the following ranges (in millions, except per share data and years):

~~The following table summarizes the stock option activity (in millions, except per share data and years):~~

~~The exercise prices of outstanding options at March 31, 2019 were in the following ranges (in millions, except per share data and years):~~

The Company uses the Black-Scholes model to estimate the fair value of stock option awards at the date of grant. Key inputs and assumptions used in the model include the grant date fair value of common stock, exercise price of the award, the expected option term, the risk-free interest rate, stock price volatility and the Company’s projected dividend yield. The expected term represents the period over which the Company’s employees are expected to hold their options. The risk-free interest rate reflects the yield on zero-coupon U.S. treasury securities with a term equal to the option’s expected term. Expected volatility is derived based on the historical volatility of the Company’s stock. The Company’s projected dividend yield is ~~zero.~~0. The Company believes the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in estimating the fair values of its stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards. Subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company.

There were no0 stock ~~option awards~~options granted during the three months ended March 31, 2020 or 2019. ~~The following table presents the weighted average assumptions used to estimate the fair value of stock option awards granted during the three months ended March 31, 2018.~~

RSUs entitle the holder to shares of common stock after a vesting period that generally ranges from one to three years. The fair value of the awards is determined on the grant date based on the Company’s stock price.

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

~~PSUs~~Performance share units (PSUs) are ~~stock~~stock-based awards in which the number of shares ultimately received by the employee depends on Company performance against specified targets. Such awards typically vest over three years and the number of shares issued can vary from 0% to 200% of the number of PSUs granted, depending on performance. The fair value of each PSU is determined on the date of grant based on the Company’s stock price. The ultimate number of shares issued and the related compensation cost recognized is based on the final performance metrics compared to the targets specified in the grants.

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

On April ~~4, 2019, the Company completed the Acquisition in an all cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. At closing of the Acquisition,~~6, 2020, the Company borrowed ~~$3.2 billion~~$250.0 million under its senior secured revolving credit facility. This action was a precautionary measure to reinforce the Company’s cash position and preserve financial flexibility in light of the current uncertainty in the global economy resulting from the new strain of coronavirus (COVID-19). The current interest rate for borrowings under the ~~2026 Term Loan with an interest rate of~~senior secured revolving credit facility is LIBOR plus ~~3.25%~~1.25%. The ~~Company used a portion of the borrowings to repay the 2022 Term Loan and the remaining borrowings were used to fund the Acquisition. The Company also funded the Acquisition using~~ proceeds from the ~~offerings in February 2019 of $1.25 billion of the 2024 Secured Notes, $1.5 billion of the 2026 Secured Notes and $1.0 billion of the New Unsecured Notes, along with cash on hand.~~

In addition, to fund the Acquisition, on April 4, 2019, the Company issued 1,000,000 shares of Series A Convertible Preferred Stock (the Convertible Preferred Stock) to Carlyle Partners VII S1 Holdings, L.P. (Carlyle) for an aggregate purchase price of $1.0 billion, or $1,000 per share, pursuant to the Investment Agreement between the Company and Carlyle, dated November 8, 2018. The Convertible Preferred Stock will pay dividends at an annual rate of 5.50%, with dividendsborrowing are expected to be ~~paid quarterly, and will be 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~~held on the ~~number of shares that may be issued unless the Company obtains shareholder approval.~~

~~As of the acquisition date, the Company also entered into a new asset-based revolving credit facility with availability of $972.2 million~~Company’s balance sheet or used for future liquidity, as of April 4, 2019, reflecting a borrowing base of $1.0 billion reduced by $27.7 million of letters of credit issued under the facility. The Company did not borrow under the new asset-based revolving credit facility to fund the Acquisition.needed.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following narrative is an analysis of the three months ended March 31, ~~2019~~2020 compared to the three months ended March 31, ~~2018.~~2019. The discussion is provided to increase the understanding of, and should be read in conjunction with, the unaudited condensed consolidated financial statements and accompanying notes included in this report as well as the audited consolidated financial statements, related notes thereto and management’s discussion and analysis of financial condition and results of operations, including management’s discussion and analysis regarding the application of critical accounting policies as well as the risk factors, included in our ~~2018~~2019 Annual Report on Form 10-K.

We discuss certain financial measures in management’s discussion and analysis of financial condition and results of operations, including ~~Adjusted Operating Income and~~ Adjusted EBITDA, that differ from measures calculated in accordance with generally accepted accounting principles in the United States (GAAP). See "Reconciliation of Non-GAAP Measures" included elsewhere in this quarterly report for more information about these non-GAAP financial measures, including our reasons for including the measures and material limitations with respect to the usefulness of the measures.

We are a global provider of infrastructure solutions for communication and entertainment networks. 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, IP data services and Wi-Fi to their subscribers and allow enterprises to experience constant wireless and wired connectivity across complex and varied networking environments. Our solutions are complemented by a broad array of services including technical support, systems design and integration. We are a leader in digital video and Internet Protocol Television distribution systems, broadband access infrastructure platforms, and associated data and voice ~~applications.~~Customer Premises Equipment. Our global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

On April 4, 2019, we completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. The 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 and rapidly changing network and technology architectures. The operations of the ARRIS ~~were not~~business are included in our consolidated operating results for the three months ended March 31, ~~2019. To fund~~2020 but not for 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 still in escrow as ofcomparative three months ended March 31, 2019 and were released from escrow on the date of the Acquisition. As of 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 with availability of $972.2 million as of April 4, 2019, reflecting a borrowing base of $1.0 billion reduced by $27.7 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)~~ ~~and used cash on hand to fund the Acquisition.~~2019. During the three months ended March 31, ~~2019,~~2020, we recognized ~~$20.8~~$5.4 million of integration and transaction costs and ~~integration~~$23.7 million of restructuring costs ~~primarily~~ related to the Acquisition and integration activities. We will continue to incur ~~transaction~~integration and ~~integration~~restructuring costs and such costs ~~are expected to be material. In addition, we expect to incur restructuring costs to integrate ARRIS and those costs~~ may be material.

As of January 1, 2020, we reorganized our internal management and reporting structure as part of the integration of the Acquisition. The ~~following is~~reorganization changed the information regularly reviewed by our chief operating decision maker for purposes of allocating resources and assessing performance. As a ~~summary~~result, we are reporting financial performance based on four new operating segments: Broadband Networks (Broadband), Home Networks (Home), Outdoor Wireless Networks (OWN) and Venue and Campus Networks (VCN). These four segments represent non-aggregated reportable operating segments. Prior to this change, we operated and reported five operating segments: Connectivity Solutions, Mobility Solutions, Customer Premises Equipment, Network and Cloud and Ruckus Networks. Our change in segments as of January 1, 2020 resulted in a realignment of our ~~results~~existing reporting units. Although the reporting units were realigned, our reporting units remained the same except for where two reporting units have been combined into a new reporting unit. In this case, goodwill was simply combined in the new reporting units. Since the composition of the reporting units and the assignment of goodwill to the reporting units were unaffected, an interim goodwill impairment test was not performed during the three months ended March 31, 2020.

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

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by domestic and international jurisdictions to prevent disease spread, all of which are uncertain and cannot be predicted. The outbreak impacted our performance for the three months ended March 31, ~~2019 compared~~2020, as discussed more below, particularly in our Home and VCN segments. We currently expect the decline caused by the economic slowdown to persist through 2020. We considered the ~~prior year period:~~impact of the economic slowdown on our evaluation of goodwill impairment indicators and credit losses as of March 31, 2020. Although no goodwill impairment indicators or significant changes in credit risk were identified, it is possible that impairments or credit losses could emerge as the impact of the crisis becomes clearer and those losses could be material.

~~Other than the changes as a result of the adoption of Accounting Standards Update (ASU) No. 2016-02,~~ ~~Leases, as of January 1, 2019, there~~There have been no ~~material~~ changes in our critical accounting policies ~~or significant accounting estimates~~ as disclosed in our ~~2018~~2019 Annual Report on Form 10-K. See ~~the discussion in~~ Note 1 in the Notes to Unaudited Condensed Consolidated Financial Statements ~~included in this Form 10-Q~~ for ~~further information regarding the~~discussion of our adoption of ~~ASU~~Accounting Standards Update (ASU) No. ~~2016-02.~~2016-13, Measurement of Credit Losses on Financial Instruments, as of January 1, 2020. Our allowance for doubtful accounts is a significant accounting estimate. The adoption of this new guidance impacted our allowance for doubtful accounts policy but did not materially impact the estimate of our allowance for doubtful accounts. There were no other changes in our significant accounting estimates as disclosed in our 2019 Annual Report on Form 10-K.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, ~~2019~~2020 WITH THE THREE MONTHS ENDED MARCH 31, ~~2018~~2019

Three Months Ended

March 31,

2019

2018

Amount

% of Net
Sales

Amount

% of Net
Sales

$
Change

%
Change

(dollars in millions, except per share amounts)

Net sales

$
1,099.5

100.0
%

$
1,120.5

100.0
%

$
(21.0
)

(1.9
)%
Gross profit

411.8

37.5

411.4

36.7

0.4

0.1

Operating income

90.7

8.2

103.7

9.3

(13.0
)

(12.6
)
Non-GAAP adjusted operating income ⁽¹⁾

190.7

17.3

188.6

16.8

2.1

1.1

Non-GAAP adjusted EBITDA ⁽¹⁾

208.4

19.0

208.1

18.6

0.3

0.1

Net income (loss)

(2.3
)

(0.2
)%

33.7

3.0
%

(36.0
)

(106.8
)
Diluted earnings (loss) per share

$
(0.01
)

$
0.17

$
(0.18
)

(105.9
)%

	Three Months Ended
	March 31,
	2020						2019
	Amount			% of Net Sales			Amount			% of Net Sales			$ Change			% Change
	(dollars in millions, except per share amounts)
Net sales	$	2,033.2			100.0	%	$	1,099.5			100.0	%	$	933.7			84.9	%
Gross profit		641.2			31.5			398.0			36.2			243.2			61.1
Operating income (loss)		(31.8	)		(1.6	)		90.7			8.2			(122.5	)		(135.1	)
Non-GAAP adjusted EBITDA ⁽¹⁾		231.2			11.4			208.4			19.0			22.8			10.9
Net loss		(159.9	)		(7.9	)%		(2.3	)		(0.2	)%		(157.6	)	NM
Diluted loss per share	$	(0.89	)				$	(0.01	)				$	(0.88	)	NM

~~The decrease in net~~Net sales for the three months ended March 31, ~~2019~~2020 increased compared to the prior year period due to the Acquisition. The three months ended March 31, 2020 included ARRIS net sales of $1,030.1 million while the prior year period did not include the ARRIS business. Excluding the ARRIS business, CommScope’s net sales were lower compared to the same prior year period ~~was~~ primarily ~~driven by unfavorable impacts of foreign exchange rate changes of approximately 2% and continued pricing pressure.~~due to lower sales volumes. From a regional perspective, excluding the ARRIS business, we saw lower net sales compared to the prior year period across all regions except the U.S., driven by a decrease ~~was driven mostly by lower sales~~of approximately $50 million in the Asia Pacific (APAC) region, ~~and~~$40 million in the Europe, Middle East and Africa (EMEA) ~~region. The decrease in net sales in the APAC~~ region ~~was driven by projects in 2018 that did not recur in 2019. The decrease in the EMEA region was driven by unfavorable impacts of foreign exchange rate changes~~ and ~~lower sales of our enterprise solutions. These decreases in net sales were partially offset by increases in the United States (U.S.) and to a lesser extent~~$24 million in the Caribbean and Latin ~~America~~American (CALA) region. ~~The increase~~Net sales increased by approximately $20 million in the U.S. ~~was driven mainly~~

While net sales increased for the three months ended March 31, 2020 due to the Acquisition, they were approximately $70 million lower than expected due to the impact of supply constraints as a result of the economic slowdown caused by COVID-19. Although the slowdown affected all of our segments, it had the most significant impact on our Home and VCN segments. Management currently expects the decline in net sales caused by the ~~continued build out of next generation 4G networks that support commercial and public safety markets but was partially offset by reductions in certain selling prices.~~ economic slowdown to persist through 2020.

Net sales to customers located outside of the U.S. comprised ~~41.9%~~40.0% of total net sales for the three months ended March 31, ~~2019~~2020, compared to ~~45.8%~~41.9% for the three months ended March 31, ~~2018.~~2019. For further details by segment, see the section titled “Segment Results” below.

~~Despite lower sales, gross~~Gross profit increased for the three months ended March 31, ~~2019 remained relatively unchanged~~2020 compared to the prior year period due to the addition of the ARRIS business. Excluding the ARRIS business, gross profit was $361.8 million and gross profit as a percentage of sales ~~increased 80 basis points from the prior year period,~~was 36.1% and both decreased primarily due to ~~favorable geographic mix and~~ lower ~~material costs.~~sales volumes.

~~Selling, general and administrative (SG&A)~~SG&A expense for the three months ended March 31, ~~2019~~2020 increased compared to the prior year period ~~mainly~~primarily due to ~~$20.8~~the addition of SG&A expense related to the ARRIS business. Excluding the ARRIS business, SG&A expense decreased primarily due to a decrease of $18.1 million ofin transaction and integration costs ~~related~~during the three months ended March 31, 2020 compared to the ~~anticipated acquisition of ARRIS. This increase~~prior year period. Also contributing to the decline in SG&A expense ~~coupled with~~are the ~~decrease in net sales, resulted in a 160 basis point increase in SG&A~~impacts of cost savings initiatives but these were mostly offset by higher bad debt expense ~~as a percentage of net sales~~ for the three months ended March 31, ~~2019 compared to the prior year period.~~ 2020.

Research and development (R&D) expense ~~was relatively unchanged~~increased for the three months ended March 31, ~~2019~~2020 compared to the prior year ~~period.~~period due to the addition of R&D expenses of $127.5 million related to the ARRIS business. Excluding the ARRIS business, R&D expense and R&D expense as a percentage of sales increased slightly for the three months ended March 31, 2020 due to our continuing investment in certain VCN 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.

The amortization of purchased intangible assets ~~decreased~~was higher in the three months ended March 31, 2020 compared to the prior year period primarily due to $100.9 million of amortization related to the ARRIS business. Excluding the ARRIS business, amortization was lower by $2.4 million for the three months ended March 31, ~~2019~~2020 compared to the prior year period because certain of our intangible assets became fully amortized.

The restructuring costs recorded in the three months ended March 31, 2020 and 2019 were primarily related to integrating and preparing to integrate the ~~anticipated integration of ARRIS. The restructuring costs recognized in the prior year period were primarily related to the integration of the Broadband Network Solutions (BNS)~~ARRIS business.

~~No additional restructuring charges are expected to be incurred to complete the previously announced BNS integration initiatives.~~ Additional restructuring actions related to the ~~ARRIS integration~~Acquisition are expected to be identified and the resulting charges and cash requirements are expected to be material. From a cash perspective, we paid ~~$25.9~~$20.1 million to settle restructuring liabilities during the three months ended March 31, ~~2019~~2020 and expect to pay an additional ~~$14.0~~$20.9 million by the end of ~~2019~~2020 related to restructuring actions that have been initiated. In addition, we expect to pay ~~$1.7~~$11.1 million between ~~2020~~2021 and 2022 related to restructuring actions that have been initiated.

Foreign ~~exchange losses of $5.7 million and $2.3 million were included in other income (expense), net for the three months ended March 31, 2019 and 2018, respectively. This~~currency loss includes the net foreign currency gains and losses resulting from the settlement of receivables and payables, foreign currency contracts and short-term intercompany advances in a currency other than the subsidiary’s functional currency. The increase in foreign currency loss for the three months ended March 31, 2020 compared to the prior year period was primarily driven by certain unhedged currencies in the CALA region.

The ~~change~~increase in other ~~income,~~expense, net for the three months ended March 31, ~~2019~~2020 compared to the prior year period was primarily due to ~~non-service~~the addition of miscellaneous other expenses related ~~net periodic benefit income of $2.3 million for~~to the ~~three months ended March 31, 2018. Non-service net periodic benefit cost was not material for the three months ended March 31, 2019.~~ARRIS business.

Interest expense for the three months ended March 31, ~~2019~~2020 increased compared to the prior year period due to the financing put in place in anticipation of the Acquisition. In February 2019, we issued $1.0 billion of the New Unsecured Notes, $1.5 billion of the 2026 Secured Notes and $1.25 billion of the 2024 Secured Notes. The proceeds from the New Notes were held in escrow as of March 31, 2019. In February 2019, we also secured the borrowing of $3.2 billion, less $32.0 million of original issue discount, in the 2026 Term Loan to be funded as of the Acquisition ~~date. We began accruing interest on the New Notes and ticking fees related to the 2026 Term Loan~~that occurred in February ~~2019, and as such, we~~2019. We incurred ~~$38.3~~$57.7 million of incremental ~~cost recorded in~~ interest expense during the three months ended March 31, ~~2019~~2020 as a result of this ~~Acquisition-related~~acquisition-related debt. ~~Our weighted average effective interest rate~~The increase was partially offset by lower debt balances on ~~outstanding borrowings, including~~our 5.00% senior notes due 2021 (the 2021 Notes) due to the ~~amortization~~voluntary repayments in 2019. In February 2020, we redeemed an additional $100.0 million aggregate principal amount of the 2021 Notes and accelerated the recognition of $0.3 million of debt issuance costs ~~and original issue discount, was 6.26% at~~in interest expense. During the three months ended March 31, ~~2019, 5.73% at December 31, 2018 and 5.54% at March 31, 2018.~~2020, we made the quarterly scheduled repayment of $8.0 million on the senior secured term loan. The current portion of long-term debt reflects $32.0 million of repayments due within a year under the senior secured term loan.

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.~~senior secured term loan. The total notional amount of the interest rate swap derivatives as of March 31, ~~2019~~2020 was $600 million with outstanding maturities of up to ~~sixty~~forty-eight months.

Our weighted average effective interest rate on outstanding borrowings, including the impact of the interest rate swap and the amortization of debt issuance costs and original issue discount, was 5.97% at March 31, 2020, 6.17% at December 31, 2019 and 6.26% at March 31, 2019.

Interest income ~~increased~~decreased during the three months ended March 31, ~~2019~~2020 due to $10.1 million of interest earned on the proceeds of the ~~New Notes~~acquisition-related debt that were held in an interest-bearing escrow account ~~as of March 31, 2019.~~in the prior year period until the Acquisition date.

For the three months ended March 31, 2020, our effective tax rate was 16.4% and we recognized a tax benefit of $31.4 million on a pretax loss of $191.3 million. For the three months ended March 31, 2020, our tax benefit was reduced by approximately 13% related to the impacts of U.S. anti-deferral provisions, changes in uncertain tax positions, withholding taxes and earnings in foreign jurisdictions that are taxed at rates higher than the U.S. These unfavorable impacts to our tax benefit were offset partially by the favorable impacts of approximately 8% related to certain federal tax credits.

Our effective income tax rate was (242.6)% for the three months ended March 31, 2019. We recorded $1.6 million of income tax expense related to a $0.7 million pre-tax net loss. The pre-tax net loss was driven by interest expense, restructuring costs and transaction and integration costs related to the Acquisition. Additional income tax expense was recorded as a result of final transition tax regulations issued in the U.S. during the first quarter. The effective income tax rate was also unfavorably affected by losses in certain jurisdictions where we did not recognize tax benefits due to the likelihood of the benefits not being realizable. See Notes 2 and 12 for further discussion of the Acquisition and Note 6 for further discussion of the related financing in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Form 10-Q. The impact of excess tax costs related to equity-based compensation awards was not material for the three months ended March 31, 2019.

The effective income tax rate of 27.2% for the three months ended March 31, 2018 was higher than the statutory rate of 21.0% primarily 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 U.S. anti-deferral provisions and the impact of repatriation taxes. These increases to the effective tax rate were partially offset by the favorable impact of $4.3 million of excess tax benefits related to equity-based compensation awards.

Three Months Ended

March 31,

2019

2018

Amount

% of Net
Sales

Amount

% of Net
Sales

$
Change

%
Change

Net sales by segment:

CCS

$
646.1

58.8

%

$
673.6

60.1

%

$
(27.5
)

(4.1
)
%
CMS

453.4

41.2

446.9

39.9

6.5

1.5

Consolidated net sales

$
1,099.5

100.0

%

$
1,120.5

100.0

%

$
(21.0
)

(1.9
)
%

Operating income by segment:

CCS

$
29.9

4.6

%

$
53.2

7.9

%

$
(23.3
)

(43.8
)
%
CMS

60.7

13.4

50.5

11.3

10.2

20.2

Consolidated operating income

$
90.7

8.2

%

$
103.7

9.3

%

$
(13.1
)

(12.6
)
%

Non-GAAP adjusted operating income by segment: ⁽¹⁾

CCS

$
95.5

14.8

%

$
108.7

16.1

%

$
(13.2
)

(12.1
)
%
CMS

95.2

21.0

79.9

17.9

15.3

19.1

Non-GAAP consolidated adjusted operating income ⁽¹⁾

$
190.7

17.3

%

$
188.6

16.8

%

$
2.1

1.1

%

Non-GAAP adjusted EBITDA by segment: ⁽¹⁾

CCS

$
107.7

16.7

%

$
122.7

18.2

%

$
(15.0
)

(12.2
)
%
CMS

100.7

22.2

85.4

19.1

15.3

17.9

Non-GAAP consolidated adjusted EBITDA ⁽¹⁾

$
208.4

19.0

%

$
208.1

18.6

%

$
0.3

0.1

%

	Three Months Ended
	March 31,
	2020							2019
	Amount			% of Net Sales				Amount			% of Net Sales				$ Change			% Change
	(dollars in millions)
Net sales by segment:
Broadband	$	613.4			30.2		%	$	326.5			29.7		%	$	286.9			87.9		%
Home		601.4			29.6				—			—				601.4		NM
OWN		348.9			17.2				390.8			35.5				(41.9	)		(10.7	)
VCN		469.5			23.1				382.2			34.8				87.3			22.8
Consolidated net sales	$	2,033.2			100.0		%	$	1,099.5			100.0		%	$	933.7			84.9		%

Operating income (loss) by segment:
Broadband	$	(18.6	)		(3.0	)	%	$	24.9			7.6		%	$	(43.5	)		(174.7	)	%
Home		(37.6	)		(6.3	)			—		NM					(37.6	)	NM
OWN		65.0			18.6				70.9			18.1				(5.9	)		(8.3	)
VCN		(40.6	)		(8.6	)			(5.1	)		(1.3	)			(35.5	)		696.1
Consolidated operating income (loss)	$	(31.8	)		(1.6	)	%	$	90.7			8.2		%	$	(122.5	)		(135.1	)	%

Non-GAAP adjusted EBITDA by segment: ⁽¹⁾
Broadband	$	92.7			15.1		%	$	58.2			17.8		%	$	34.5			59.3		%
Home		11.9			2.0				—		NM					11.9		NM
OWN		88.9			25.5				101.0			25.8				(12.1	)		(12.0	)
VCN		37.7			8.0				49.2			12.9				(11.5	)		(23.4	)
Non-GAAP consolidated adjusted EBITDA ⁽¹⁾	$	231.2			11.4		%	$	208.4			19.0		%	$	22.8			10.9		%

~~CommScope Connectivity Solutions~~Note: Components may not sum to total due to rounding.

Our ~~CCS~~Broadband segment provides ~~innovative~~an end-to-end product portfolio serving the telco and cable provider broadband market. The segment brings together the Network Cable and Connectivity business with the Network and Cloud business. The Broadband segment includes converged cable access platform, passive optical networking, video systems, access technologies, fiber ~~optic~~and coaxial cable, fiber and copper ~~cable~~ connectivity ~~solutions for use in data center, business enterprise, telecommunication, cable television~~ and residential broadband networks. Our CCS portfolio includes enterprise and service provider solutions. Our enterprise solutions, including hyperscale and cloud data centers, are found in commercial buildings. They are primarily delivered through our SYSTIMAX, NETCONNECT and Uniprise brands and offer a complete end-to-end physical layer solution, including optical fiber and twisted pair structured cable solutions, intelligent infrastructure management hardware and software and network rack and cabinet enclosures. Our service provider solutions include a broad portfolio of fiber-to-the-home equipment and headend solutions. Our fiber optic connectivity solutions are primarily comprised of hardened connector systems, fiber distribution hubs and management systems, couplers and splitters, plug and play multiport service terminals, hardened optical terminating enclosures, high density cable assemblies, splices and splice closures.

~~CCS~~Net sales to customers outside the U.S. comprised 40.5% of total Broadband segment net sales for the three months ended March 31, 2020. These sales to international customers were primarily to customers in the EMEA and CALA regions. Broadband segment net sales were ~~lower~~higher in the three months ended March 31, ~~2019~~2020 compared to the prior year period primarily as a result of the Acquisition. Excluding incremental net sales from the ARRIS business of $315.4 million, Broadband segment net sales decreased primarily due to lower sales volumes. From a regional perspective, excluding the ARRIS business, Broadband segment net sales decreased across all major regions except the U.S. which increased only slightly. The decreases were primarily driven by lower net sales in the CALA region of approximately $12 million and the EMEA region of approximately $11 million. While we did not experience a significant net sales decline in the Broadband segment related to COVID-19, supply constraints and/or reductions in demand could negatively affect the remainder of 2020.

As a percentage of segment net sales, Broadband operating income decreased from 7.6% in the prior year period to an operating loss of (3.0)% for the three months ended March 31, 2020. The decrease in operating income compared to the prior year period was primarily due to the addition of an operating loss attributable to the ARRIS business of approximately $(36) million. The increase in non-GAAP adjusted EBITDA was due to the addition of non-GAAP adjusted EBITDA of approximately $49 million related to the ARRIS business. The ARRIS business operating loss was negatively impacted by $71.9 million of amortization of intangible assets and depreciation, which is excluded from non-GAAP adjusted EBITDA. Excluding the ARRIS business, operating income decreased approximately $7 million mainly due to lower sales volumes partially offset by the impact of lower transaction and integration costs in the current year compared to the prior year. Transaction and integration costs are not reflected in non-GAAP adjusted EBITDA. Excluding the ARRIS business, non-GAAP adjusted EBITDA decreased approximately $14 million mainly due to lower sales volumes. See “Reconciliation of Non-GAAP Measures.”

Our Home segment offers broadband and video products. The segment includes subscriber-based solutions that support broadband and video applications connecting cable, telco 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 providers’ network, such as digital subscriber line and cable modems and telephony and data gateways which incorporate routing and Wi-Fi functionality. Video offerings include set top boxes that support cable, satellite and IPTV content delivery and include products such as digital video recorders, high definition set top boxes and hybrid set top devices.

Net sales to customers outside the U.S. comprised 43.6% of total Home segment net sales for the three months ended March 31, 2020. These sales to international customers were primarily to customers in the EMEA and CALA regions. Home segment net sales for the three months ended March 31, 2020 were negatively affected by the COVID-19 pandemic, primarily due to supply constraints in certain regions. We anticipate ongoing softness in the Home segment for the remainder of 2020.

Operating loss for our Home segment for the three months ended March 31, 2020 was (6.3)% of segment net sales and was negatively impacted by $36.0 million of amortization of intangible assets and depreciation expense as well as a $5.3 million charge related to a patent claim (see Note 1 in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q). These costs were not reflected in non-GAAP adjusted EBITDA, which was 2.0% of segment net sales for the three months ended March 31, 2020. See “Reconciliation of Non-GAAP Measures.”

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

OWN segment net sales decreased during the three months ended March 31, 2020 compared to the prior year period primarily due to lower volumes. From a regional perspective, OWN segment net sales were lower across all regions and were primarily driven by decreases of $16.2 million in the APAC region and $15.2 million in the EMEA region. While we did not experience a significant net sales decline in the OWN segment related to COVID-19, supply constraints and/or reductions in demand could negatively affect the remainder of 2020.

OWN segment operating income and non-GAAP adjusted EBITDA decreased for the three months ended March 31, 2020 compared to the prior year period primarily due to the ~~impacts~~decrease in net sales. However, as a percentage of ~~unfavorable foreign exchange rate changes of approximately 3% and lower selling prices. From a regional perspective,~~ net sales, operating income and non-GAAP adjusted EBITDA were relatively flat in the ~~EMEA region were lower due~~current year as compared to ~~decreases in~~the prior year. See “Reconciliation of Non-GAAP Measures.”

Our VCN segment targets both public and private networks for campuses, venues, data centers and buildings. The segment combines Wi-Fi and switching, distributed antenna systems, licensed and unlicensed small cells, and enterprise fiber and copper infrastructure.

Net sales to customers outside the U.S. comprised 45.2% of ~~enterprise solutions and to a lesser extent the impact of unfavorable foreign exchange rate changes. The APAC region experienced lower~~total VCN segment net sales driven by projects in 2018 that did not recur in 2019 and also by the impact of unfavorable foreign exchange rate changes. These decreases were partially offset by modest increases in the U.S., Canada and the CALA region for the three months ended March 31, ~~2019. The CALA region experienced increased~~2020. These sales ~~volumes for~~to international customers were primarily to customers in the ~~period but these increases~~EMEA and APAC regions. VCN segment net sales were ~~largely offset by the impacts of unfavorable foreign exchange rate changes.~~

~~CCS segment operating income and non-GAAP adjusted EBITDA decreased during~~higher in the three months ended March 31, ~~2019~~2020 compared to the prior year period primarily as a result of the Acquisition; however, they were lower than expected largely due to ~~reductions~~the economic slowdown caused by the COVID-19 pandemic. Excluding incremental net sales related to the ARRIS business of approximately $113 million, VCN segment net sales decreased mainly due to the impact of COVID-19. Management expects the VCN segment to continue to be challenged by current economic conditions for the remainder of 2020.

The increase in ~~certain selling prices and unfavorable foreign exchange rate changes. CCS~~operating loss for the VCN segment for the three months ended March 31, 2020 compared to the prior year period was primarily due to the addition of an operating loss attributable to the ARRIS business of approximately $(27) million. As a percentage of segment net sales, VCN segment operating ~~income~~loss increased from (1.3)% in the prior year to (8.6)% in the current year and non-GAAP adjusted EBITDA decreased from 12.9% in the prior year to 8.0% in the current year. Non-GAAP adjusted EBITDA was ~~also~~reduced in the current year period due to the inclusion of approximately $(3) million related to the ARRIS business. The ARRIS business operating loss was negatively impacted by amortization of intangible assets and depreciation of approximately $14 million which is excluded from non-GAAP adjusted EBITDA. Excluding the ARRIS business, operating income decreased approximately $8 million mainly due to lower sales volumes and higher restructuring costs, partially offset by the impact of lower transaction and integration costs in the current year compared to the prior year. Excluding the ARRIS business, non-GAAP adjusted EBITDA decreased approximately $8 million mainly due to lower sales volumes. Restructuring, transaction and ~~restructuring~~integration costs ~~which~~ are ~~excluded from~~not reflected in non-GAAP adjusted EBITDA. See “Reconciliation of Non-GAAP Measures.”

We expect demand for our enterprise CCS products to be driven by global information technology spending, particularly for hyperscale and cloud data center networks, as the ongoing need for bandwidth and intelligence in the network continues to create demand for high-performance connectivity solutions. We expect demand for our service provider CCS products to be driven by global deployment of fiber-optic solutions for fiber-to-the-X applications, fiber deployments that support wireless distribution and backhaul, new services, competitive dynamics in the access market, ongoing maintenance requirements of cable networks and residential construction market activity in North America. The increasing demand for fiber solutions is expected to be somewhat offset by decelerating demand for copper solutions in networks. Uncertain global economic conditions, variability in the levels of commercial and residential construction activity, consolidation among service providers, uncertain levels of information technology spending and reductions in the levels of distributor inventories may negatively affect demand for our products. As a result of these business dynamics and ongoing pricing pressure, we expect near-term net sales in the CCS segment to decline modestly.

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

CMS segment net sales increased during the three months ended March 31, 2019 compared to the prior year period, driven by stronger sales volumes in the U.S. due to the continued build out of next generation 4G networks that support commercial and public safety markets. These stronger volumes were offset by reductions in certain selling prices. CMS segment net sales also saw increases, though less pronounced, in the CALA and EMEA regions during the three months ended March 31, 2019. The EMEA region experienced increased sales volumes for the period but these increases were largely offset by the impacts of unfavorable foreign exchange rate changes. The increases in CMS segment net sales were partially offset by a decrease in APAC region net sales during the three months ended March 31, 2019 compared to the prior year period due to projects in 2018 that did not recur in 2019. Foreign exchange rate changes negatively impacted CMS segment net sales by approximately 2% for the three months ended March 31, 2019 compared to the prior year period.

CMS segment operating income and non-GAAP adjusted EBITDA increased for the three months ended March 31, 2019 compared to the prior year period primarily due to higher sales volumes, favorable geographic mix and the impact of favorable foreign exchange rate changes on costs offset partially by reductions in certain selling prices. CMS segment operating income was also negatively impacted by higher transaction and integration costs and restructuring costs, which are excluded from non-GAAP adjusted EBITDA. See “Reconciliation of Non-GAAP Measures.”

Our sales to wireless operators can be project-based and volatile. We expect longer-term demand for our CMS products to be positively affected by wireless coverage and capacity expansion and growth in mobile data services and network capacity requirements. In addition, we expect demand for our CMS products to continue to be favorably affected by initiatives to promote the expansion of wireless networks, new spectrum deployments and a venue refresh cycle over the next couple of years. We also expect longer-term demand for our CMS products to be positively affected by the introduction of 5G technology. In preparation for 5G networks, we continue to invest heavily in R&D, support customer trials and participate in industry forums to help shape 5G standards. We expect modest near-term net sales growth in our CMS segment. However, pricing pressure, uncertainty in the global economy or a particular region or consolidation among operators or other investments by wireless operators may slow the growth or cause a decline in capital spending by wireless operators and negatively impact our net sales.

The following table summarizes certain key measures of our liquidity and capital resources (in millions, except percentage data).

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~~On April 6, 2020, we borrowed $250.0 million under our senior secured revolving credit facility. This action was a precautionary measure to reinforce our cash position and preserve financial flexibility in light of the ~~Acquisition, on February 19, 2019 we issued~~current uncertainty in the ~~New Notes,~~global economy resulting from the COVID-19 pandemic. The proceeds from ~~which were held in escrow as of March 31, 2019 and were released as on April 4, 2019 to fund the Acquisition. 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%. At the closing of the Acquisition, we entered into a new asset-based revolving credit facility with availability of $972.2 million as of April 4, 2019, reflecting a borrowing base of $1.0 billion reduced by $27.7 million of letters of credit issued under the facility. We did not borrow under our new asset-based revolving credit facility to fund the Acquisition. In addition to this 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 will pay dividends at an annual rate of 5.50%, with dividendsare expected to be ~~paid quarterly, and will be 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~~held on ~~the number of shares that may be issued unless we obtain shareholder approval.~~our balance sheet or used for future liquidity, as needed. 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, paying litigation claims and settlements and income tax payments. We believe that our existing cash, cash equivalents and cash flows from operations, combined with availability under our asset-based revolving credit facility, will be sufficient to meet our presently anticipated future cash needs. We may experience volatility in cash flows between periods due to, among other reasons, variability in the timing of vendor payments and customer receipts. We may, from time to time, borrow additional amounts under 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 ~~those~~non-GAAP adjusted EBITDA as presented in the “Reconciliation of Non-GAAP Measures” section below, ~~including adjusted EBITDA and adjusted pro forma EBITDA as measured pursuant to the indentures governing our senior notes, and reflecting the~~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 twelve months ended March 31, 2020, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $1,395.4 million, which included increases to our non-GAAP adjusted EBITDA related to the ARRIS business from April 1, 2019 to the Acquisition date, calculated in accordance with CommScope’s definition (a loss of $15.6 million); annualized synergies expected to be realized in the three years following the close of the Acquisition ($90.0 million); and annualized savings expected from announced cost reduction initiatives ($0.7 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.~~covenants based on similar financial measures. We believe we are in compliance with the covenants under our indentures and senior secured credit facilities at March 31, ~~2019.~~2020.

Cash and cash equivalents decreased during the first three months of ~~2019 compared~~2020 primarily due to the ~~prior year period primarily driven by~~redemption of $100.0 million of the ~~repayment~~2021 Notes and interest payments of $225.0 million under the 2022 Term Loan. We also saw lower levels of cash generated by operations and higher capital expenditures during the three months ended March 31, 2019 compared to the prior year period.$182.1 million. As of March 31, ~~2019,~~2020, approximately ~~68%~~74% of our cash and cash equivalents were held outside the U.S.

Working capital, excluding cash and cash equivalents ~~increased in~~and the ~~quarter due to higher accounts receivable balances due to higher sales and modestly slower collections. In addition, inventory balances~~current portion of long-term debt, increased during the ~~quarter in anticipation of sales expected in the second quarter of 2019. The increase was partially offset by higher accrued interest balances as of~~three months ended March 31, ~~2019 compared~~2020 due to ~~December 31, 2018 due~~a $174.0 million reduction in accounts payable related to the timing of ~~interest~~vendor payments but the impact of the reduction was largely offset by lower accounts receivable and interest related to the debt incurred to finance the anticipated Acquisition. We also saw higher accrued expenses as of March 31, 2019 compared to December 31, 2018 due to accrued debt issuance fees as well accrued transaction and integration costs, all related to the anticipated Acquisition. Accounts payable balances also increased primarily due to the higher inventory ~~purchases.~~balances. The ~~increase~~net reduction in total capitalization during the ~~quarter~~three months ended March 31, 2020 reflected the ~~proceeds from~~net loss for the ~~New Notes that were utilized to fund a substantial portion~~period, foreign currency translation losses and the redemption of $100.0 million of the ~~Acquisition on April 4, 2019. This increase was partially offset by the $225.0 million repayment of the 2022 Term Loan.~~2021 Notes.

During the three months ended March 31, 2020, operating cash flows decreased compared to the prior year period despite the addition of the ARRIS business primarily due to the payment of $160.5 million more in interest as a result of the acquisition-related debt. We also paid $5.8 million more in restructuring costs for the three months ended March 31, 2020 compared to the prior year period.

During the three months ended March 31, 2019, we used a net $10.0 million of cash in operating activities compared to generating a net $35.2 million during the three months ended March 31, 2018. The lower level of cash generated was primarily due to lower cash flows from accounts receivable due to modestly slower collections. The negative cash flow impact of higher inventory balances was partially offset by an increase in accounts payable.

~~During the three months ended March 31, 2019, we received proceeds from issuance of the New Notes to fund the anticipated Acquisition that were held in escrow as of March 31, 2019. Our~~2020, our investment in property, plant and equipment ~~during~~was relatively unchanged despite the ~~three months ended March 31, 2019 was $7.8 million higher than~~addition of the ~~three months ended March 31, 2018. The investment~~ARRIS business. Our investments in property, plant and equipment ~~was~~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 the three months ended March 31, 2019, we ~~also~~received proceeds from acquisition-related debt that were held in escrow as of March 31, 2019, and we paid $11.0 million of the $14.5 million liability ~~for remaining payments~~ due related to the August 2017 acquisition of Cable Exchange. ~~During~~The remaining liability will be paid in the ~~three months ended March 31, 2019 and 2018, we sold property and equipment no longer being utilized for $0.6 million and $3.0 million, respectively.~~third quarter of 2020.

During the three months ended March 31, ~~2019,~~2020, we ~~received proceeds from issuance~~made the quarterly scheduled amortization payment of $8.0 million on the ~~New~~senior secured term loan. We also redeemed $100.0 million aggregate principal amount of our 2021 Notes ~~to fund the anticipated Acquisition. The proceeds were held~~ in ~~escrow as of March 31, 2019 and were released on April 4, 2019 to fund the Acquisition. 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%, which was funded as of April 4, 2019. As of the date of the Acquisition, we also entered into a new asset-based revolving credit facility with availability of $972.2 million as of April 4, 2019, reflecting a borrowing base of $1.0 billion reduced by $27.7 million of letters of credit issued under the facility. In connection with these financing transactions, we incurred $64.0 million of debt issuance costs, of which $9.3 million was paid during the three months ended March 31, 2019.

2020. We repaid $225.0 million of the 2022 Term Loan in the first quarter of 2019. We repaid the remaining balance on April 4, 2019 using proceeds from the 2026 Term Loan. 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.

As of March 31, 2019, we had no outstanding borrowings under our existing revolving credit facility and the remaining availability was $490.7 million, reflecting a borrowing base of $518.3 million reduced by $27.7 million of letters of credit issued under the existing revolving credit facility.

~~We expect to voluntarily repay debt in the future and~~ may repurchase ~~certain~~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.

During the three months ended March 31, 2019, we received proceeds from the acquisition-related debt to fund the Acquisition. The proceeds were held in escrow as of March 31, 2019 and were released on April 4, 2019 to fund the Acquisition. In connection with the acquisition-related debt, we paid $9.3 million of debt issuance costs during the three months ended March 31, 2019. We also repaid $225.0 million of our previous senior secured term loan in the first quarter of 2019.

As of March 31, 2020, we had no outstanding borrowings under our existing revolving credit facility and the remaining availability was $735.1 million, reflecting a borrowing base of $763.0 million reduced by $27.9 million of letters of credit issued under the existing revolving credit facility.

During the three months ended March 31, 2020, we received proceeds of $0.9 million related to the exercise of stock options. Also during the three months ended March 31, 2020, employees surrendered 0.6 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 $5.9 million. During the three months ended March 31, 2019, we received proceeds of $1.3 million related to the exercise of stock ~~options. Also during the three months ended March 31, 2019,~~options and employees surrendered 0.3 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 $7.5 million. During the three months ended March 31, 2018, we received proceeds of $3.9 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 $15.4 million.

We ~~are~~were not party to any significant off-balance sheet arrangements. Other than the adoption of the new leasing guidance as of January 1, 2019 that requires all leases to be recorded on the balance sheet, there have not been any material changes to our off-balance sheet arrangements during the three months ended March 31, ~~2019.~~

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~~term non-GAAP ~~adjusted operating income, non-GAAP adjusted EBITDA and non-GAAP pro forma~~ 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.

We also believe presenting these non-GAAP results for the twelve months ended March 31, ~~2019~~2020 provides an additional tool for assessing our recent performance. Such amounts are unaudited and are derived by subtracting the data for the three months ended March 31, ~~2018~~2019 from the data for the year ended December 31, ~~2018~~2019 and then adding the data for the three months ended March 31, ~~2019.~~2020.

~~In addition, we have~~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 ~~and other actions~~ based on an adjusted leverage ratio or a fixed charge coverage ratio. These ratios ~~that use~~are based on financial measures similar to non-GAAP adjusted EBITDA as presented in this section, but also give pro forma effect to certain events, including ~~acquisitions, anticipated synergies from~~ acquisitions and savings from cost reduction initiatives such as facility closures and headcount reductions. ~~The impacts of certain material pro forma adjustments are reflected below in the twelve-month period used in the calculation of the ratios.~~

	Three Months				Year		Twelve Months		Three Months						Year			Twelve Months
	Ended				Ended		Ended		Ended						Ended			Ended
	March 31,				December 31,		March 31,		March 31,						December 31,			March 31,
	2019		2018		2018		2019		2020			2019			2019			2020
Operating income	$	90.7	$	103.7	$	450.0	$	437.0
Net loss									$	(159.9	)	$	(2.3	)	$	(929.5	)	$	(1,087.1	)
Income tax expense (benefit)										(31.4	)		1.6			(144.5	)		(177.5	)
Interest income										(2.1	)		(11.8	)		(18.1	)		(8.4	)
Interest expense										149.1			97.5			577.2			628.8
Other expense, net										12.7			5.7			6.4			13.4
Operating income (loss)									$	(31.8	)	$	90.7		$	(508.5	)	$	(631.0	)
Adjustments:
Amortization of purchased intangible assets		59.3		67.2		264.6		256.7		157.8			59.3			593.2			691.7
Restructuring costs, net		12.4		5.5		44.0		50.9		23.7			12.4			87.7			99.0
Equity-based compensation		7.5		10.5		44.9		41.9		23.5			7.5			90.8			106.8
Asset impairments		—		—		15.0		15.0		—			—			376.1			376.1
Integration and transaction costs ⁽¹⁾		20.8		1.6		19.5		38.7
Non-GAAP adjusted operating income	$	190.7	$	188.6	$	838.0	$	840.1
Transaction and integration costs ⁽¹⁾										5.4			20.7			195.3			180.0
Purchase accounting adjustments ⁽²⁾										5.5			—			264.2			269.7
Patent claims and litigation										5.3			—			55.0			60.3
Depreciation		17.7		19.6		75.6		73.7		41.8			17.7			143.7			167.8
Non-GAAP adjusted EBITDA	$	208.4	$	208.1	$	913.6	$	913.9	$	231.2		$	208.4		$	1,297.5		$	1,320.3
ARRIS acquisition ⁽²⁾								694.3
ARRIS synergies ⁽³⁾								150.0
Cost reduction initiatives ⁽⁴⁾								45.0
Non-GAAP pro forma adjusted EBITDA							$	1,803.2

Segment adjusted EBITDA is provided as a performance measure in Note 9 in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. 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 Unsecured Notes, the 2026 Secured Notes and the 2024 Secured Notes and repaid $225.0 million of the 2022 Term Loan. In April 2019, we borrowed $3.2 billion under the 2026 Term Loan. The following table summarizes our contractual obligations at March 31, 2019:

This Quarterly Report on Form 10-Q or any other oral or written statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. These statements may discuss goals, intentions or expectations as to future plans, trends, events, results of operations or financial condition or otherwise, in each case, based on current beliefs of management, as well as assumptions made by, and information currently available to, such management. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “potential,” “anticipate,” “should,” “could,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,” “outlook,” “target,” “guidance” and similar expressions, although not all forward-looking statements contain such terms. This list of indicative terms and phrases is not intended to be all-inclusive.

These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control, including, without limitation, risks related to the ARRIS acquisition (including risks associated with the integration of the business and systems and that we may not realize estimated cost savings, synergies, growth or other anticipated benefits); our dependence on customers’ capital spending on data and communication systems; concentration of sales among a limited number of customers and channel partners; changes in technology; the scope, duration and impact of disease outbreaks and pandemics, such as COVID-19, on our business including employees, sites, operations, customers and supply chain; industry competition and the ability to retain customers through product innovation, introduction, and marketing; risks associated with our sales through channel partners; changes to the regulatory environment in which our customers operate; product quality or performance issues and associated warranty claims; our ability to maintain effective management information technology systems and to successfully implement major systems initiatives; cyber-security incidents, including data security breaches, ransomware or computer viruses; the risk our global manufacturing operations suffer production or shipping delays, causing difficulty in meeting customer demands; the risk that internal production capacity or that of contract manufacturers may be insufficient to meet customer demand or quality standards; the use of open standards; the long-term impact of climate change; changes in cost and availability of key raw materials, components and commodities and the potential effect on customer pricing; risks associated with our dependence on a limited number of key suppliers for certain raw materials and components; the risk that contract manufacturers we rely on encounter production, quality, financial or other difficulties; our ability to integrate and fully realize anticipated benefits from prior or future divestitures, acquisitions or equity investments; potential difficulties in realigning global manufacturing capacity and capabilities among our global manufacturing facilities or those of our contract manufacturers that may affect our ability to meet customer demands for products; possible future restructuring actions; substantial indebtedness and restrictive debt covenants; our ability to incur additional indebtedness; our ability to generate cash to service our indebtedness; possible future impairment charges for fixed or intangible assets, including goodwill; income tax rate variability and ability to recover amounts recorded as deferred tax assets; our ability to attract and retain qualified key employees; labor unrest; obligations under our defined benefit employee benefit plans requiring plan contributions in excess of current estimates; significant international operations exposing us to economic, political and other risks, including the impact of variability in foreign exchange rates; our ability to comply with governmental anti-corruption laws and regulations and export and import controls worldwide; our ability to compete in international markets due to export and import controls to which we may be subject; the impact of Brexit; changes in the laws and policies in the United States affecting trade, including the risk and uncertainty related to tariffs or a potential global trade war that may impact our products; cost of protecting or defending intellectual property; costs and challenges of compliance with domestic and foreign environmental laws; the impact of litigation and similar regulatory proceedings that we are involved in or may become involved in, including the costs of such litigation; risks associated with stockholder activism, which could cause us to incur significant expense, hinder execution of our business strategy and impact the trading value of our securities; and other factors beyond our control. These and other factors are discussed in greater detail in our 2019 Annual Report on Form 10-K and in Part II, Item 1A, “Risk ~~Factors,” of~~Factors” in this Quarterly Report on Form 10-Q, ~~sets forth more detailed information about~~and may be updated from time to time in our annual reports, quarterly reports, current reports and other filings we make with the ~~factors that may cause our actual results to differ, perhaps materially, from the views stated in such forward-looking statements.~~Securities and Exchange Commission. Although the information contained in this Quarterly Report on Form 10-Q represents our best judgment as of the date of this report based on information currently available and reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date made. We are not undertaking any duty or obligation to update ~~any forward-looking statements~~this information to reflect developments or information obtained after the date of this ~~Quarterly Report on Form 10-Q,~~report, except ~~to the extent~~as otherwise may be required by law.

~~Other than the changes disclosed below, there~~There have been no material changes in the interest rate risk, commodity price risk or foreign currency exchange rate risk information previously reported under Item 7A of our ~~2018~~2019 Annual Report on Form 10-K, as filed with the SEC on February ~~21, 2019.~~

The table below summarizes the expected interest and principal payments associated with our variable rate debt outstanding at March 31, 2019 (the $261.3 million 2022 Term Loan and existing revolving credit facility). The principal payments presented below are based on scheduled maturities and assume no borrowings under the existing revolving credit facility. The interest payments presented below assume the interest rate in effect at March 31, 2019. The impact of a 1% increase in the interest rate index on projected future interest payments on the variable rate debt is also included in the table below.

We also have $7.3 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 March 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 March 31, 2019 was $600 million with outstanding maturities of up to sixty months. As of March 31, 2019, the combined fair value of the interest rate swaps was a $5.5 million loss.20, 2020.

During the three months ended March 31, 2019, we entered into foreign exchange forward contracts and cross currency swaps, with outstanding maturities of up to twenty-seven months, that are designated as net investment hedges and are intended to mitigate a portion of the foreign currency risk on the Euro net investment in a foreign subsidiary. As of March 31, 2019, the notional value of the derivative contracts was $430 million and the combined fair value of the contracts was a $4.9 million gain.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, ~~2019~~ 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The ~~material set forth under “Commitments~~Company is party to certain intellectual property claims and ~~Contingencies” in Note 1~~also periodically receives notices asserting that its products infringe on another party’s patents and other intellectual property rights. These claims and assertions, whether against the Company directly or against its customers, could require the Company to pay damages, royalties, stop offering the relevant products and/or cease other activities. The Company may also be called upon to indemnify certain customers for costs related to products sold to such customers. While the outcome of the ~~Notes~~claims and notices is uncertain and a reasonable estimate of the loss from unfavorable outcomes in certain of these matters cannot be determined, an adverse outcome could result in a material loss.

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

In addition, the Company is subject to various federal, state, local and foreign laws and regulations governing the ~~Condensed Consolidated Financial Statements in Part 1, Item 1~~use, discharge, disposal and remediation of ~~this Quarterly Report~~hazardous materials. Compliance with current laws and regulations has not had, and is not expected to have, a materially adverse effect on ~~Form 10-Q is incorporated herein by reference.~~the Company’s financial condition or results of operations.

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

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 currently expect annual synergies and cost savings of approximately $150.0 million to be fully achieved within three years post-closing the Acquisition, with approximately $60.0 million in the first full year. We also expect to incur integration and restructuring costs of approximately $150.0 million to achieve these synergies. These synergies are expected to come from all areas of our company, including sales, marketing, general and administrative, operations and research and development (R&D). Our ability to realize the anticipated benefits is dependent, to a 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 such integration will not be more costly or 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 could have a material adverse effect on our share price,Company's business, financial ~~position,~~condition, results of operations and cash ~~flows.~~flows are subject to various risks which could cause actual results to vary from recent results or from anticipated future results. Other than the supplemental risk factor set forth below, there have been no material changes to the risk factors disclosed in Part I – Item 1A, Risk Factors of our Form 10-K for the year ended December 31, 2019.

~~Our~~The current pandemic of the novel coronavirus, or COVID-19, and the future widespread outbreak of other highly infectious or communicable diseases, or any other public health crisis, could adversely affect our business, financial condition, cash flows and results of operations.

In December 2019, an outbreak of a new strain of coronavirus (COVID-19) began in Wuhan, Hubei Province, China, and since then it has spread globally. In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has negatively impacted regional and global economies, disrupted global supply chains and created significant volatility and disruption of financial markets, and another pandemic in the future could have similar negative consequences. The global impact of the outbreak has been rapidly evolving and, as cases of COVID-19 have continued to be identified in additional countries, many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. Certain jurisdictions, including those where we have operations, have also reacted by instituting quarantines, restrictions on travel, “shelter in place” rules, social distancing protocols and restrictions on types of business that may continue to operate. We expect that additional jurisdictions will implement similar restrictions. While we have been deemed an “essential” (or equivalent) business in many jurisdictions, and therefore we have been permitted to continue most of our operations in those jurisdictions, the impact of the COVID-19 pandemic on our operational and financial performance has included temporary closures of our facilities and the facilities of certain of our customers, suppliers and other vendors in our supply chain as well as disruptions and restrictions on our employees’ ability to ~~realize~~travel.

The COVID-19 pandemic is negatively impacting almost every industry directly or indirectly. As a result, many experts predict that the ~~expected synergies and benefits of the Acquisition~~coronavirus is ~~subject~~leading to a ~~number~~period of ~~risks~~global economic downturn or a global recession that is likely to affect demand for our products, could affect our customers’ ability to make payments when due and ~~uncertainties, many~~could negatively impact our ability to obtain future financing, if needed.

The COVID-19 pandemic, or a future pandemic, could have material and adverse effects on our ability to successfully operate and on our financial condition, results of ~~which are outside of our control. These risks~~operations and ~~uncertainties include,~~cash flows due to, among other ~~things:~~factors:

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

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

~~As a result of these factors, we may not be able~~The extent to ~~maintain or increase~~which COVID-19 impacts 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~~those of our ~~business is derived from a limited number of key~~ customers and ~~channel partners.~~

~~Our customer base includes~~suppliers will depend on future developments, including the scope, severity, duration and spread of the COVID-19 pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct ~~customers, original equipment manufacturers (OEMs)~~ and ~~channel partners,~~indirect economic effects of the pandemic and containment measures, among others, all of which ~~include distributors, system integrators, value-added resellers~~are uncertain and ~~manufacturers’ representatives. For the twelve month period ended March 31, 2019, on a~~ ~~pro forma~~ ~~basis after giving effect~~cannot be predicted with confidence. The rapid development and fluidity of this situation precludes any prediction as to the Acquisition, we would have derived approximately 19% of our consolidated net sales from our top two direct customers. Our largest customer would have been Comcast, accounting for approximately 11% of our consolidated net sales. The concentration of our net sales with these key customers subjects us to a variety of risks including:

~~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 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 resultfull adverse impact of the ~~inability or unwillingness~~COVID-19 pandemic. Nevertheless, the COVID-19 pandemic presents material uncertainty and risk. An extended period of ~~these customers to continue purchasing our products,~~global supply chain and economic disruption could materially ~~and adversely~~ affect our business, financial condition, results of operations, ~~and cash flows.~~

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

Competition in our industry depends on a number of factors, including: innovative product and service solution offerings; the ability to adapt to changing markets and customer 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 be our competition. 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. 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 while 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 operating results, financial condition 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, and our failure to offer high-quality support and services would have a material adverse effect on our sales and results of operations.

Once 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, succeed in helping our end customers quickly resolve 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 were to 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 the rules and regulations and changes to the way in which Internet service providers are regulated 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. CommScope, 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 authorized by Congress to develop, build and operate 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 operating results, financial condition 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 innovations.

We may not be successful in our ongoing innovation efforts if, among other things, our products and services are not cost effective, brought to market in a timely manner, compliant with evolving industry standards, accepted in the market or recognized as meeting customer requirements. We could experience a material adverse effect on our results of operations, financial condition 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 3G and 4G wireless communications equipment and products. If we are not able to support our customers in an effective and cost-efficient manner as they advance from older generation networks or as they expand the capacity of their networks, our business will suffer. If we do not have competitively priced, market-accepted products available to meet our customers’ planned roll-out of 5G wireless communications systems, we may miss a significant opportunity and our business, financial condition, 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 results of operations, financial condition 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 Enterprise segment products do not interoperate with cellular networks and mobile devices, future sales of our products could be negatively affected.~~

Our Enterprise segment 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 attempt to ensure that our products interoperate effectively with these existing and planned networks and devices. To meet these requirements, we must continue to undertake 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 have the effect of negatively impacting 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 generally 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 well as 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 the underlying cause to be a result 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 other 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 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. Our acquired ARRIS business initiated the process of upgrading its ERP software solution to a newer, cloud-based version. We expect the upgrade to be completed in 2019. Implementation of the upgraded solution will have a significant impact on our business processes and information systems. The transition will require significant change management, meaningful investment in capital and personnel resources and coordination of numerous software and system providers and internal business teams. We may experience difficulties as we manage these changes and 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 revenues. Difficulties in implementing the upgraded solution or significant system failures could disrupt our operations, divert management’s attention from key strategic initiatives and have an adverse effect on our capital resources, financial condition, results of operations or cash flows. In addition, any delays in completing the upgrade process could exacerbate these transition risks as well as expose us to additional risks in the event that the support for our existing ERP software solution is reduced or eliminated.

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. 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. For example, 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 in the future. Foreign data protection, privacy and other laws and regulations can be more restrictive than those in the U.S. For example, in 2016, the EU Parliament approved the EU General Data Protection Regulation (GDPR), which became effective in May 2018. GDPR 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 existing products, designs of future products, 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 will become 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 country to country and with our current policies and practices 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, increase our operating costs 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.

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

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

~~The continued industry move to open standards may impact our future results.~~

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 and drive down the capital costs. These factors may adversely impact both 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 the customer 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.

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

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

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

We are dependent on a limited number of key suppliers for certain of our raw material and component purchases, including certain polymers, copper rod, copper and aluminum tapes, fine aluminum wire, steel wire, optical fiber, circuit boards and other electronic components, 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 supply of components in the memory and passives categories could impact our ability to deliver on a timely basis and 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 yields 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 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. Any 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 product lines that are, or require the component, manufactured by that manufacturer and 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 current 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, Broadband Network Systems (BNS) business. We anticipate that a portion of any future growth of our business may be accomplished by acquiring existing businesses, products or technologies.

However, we may not be able to identify suitable acquisition opportunities or obtain 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, issuances 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. 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 in-process R&D 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 current 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. For example, in 2016 ARRIS sold its whole-home solutions business. 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. 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 BNS and ARRIS has undertaken similar initiatives to integrate Pace and Ruckus Networks, which included the closure of certain domestic and international manufacturing facilities and various other workforce reductions. As a result of the integration of the current 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 be material.

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 6 in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Form 10-Q for additional details of our indebtedness as of March 31, 2019. As of March 31, 2019, we had approximately $7.6 billion of indebtedness on a consolidated basis. This includes our existing debt before closing of the Acquisition and the following debt issued on February 19, 2019 as a result of the Acquisition, which was held in escrow as of March 31, 2019: $1.25 billion the 2024 Secured Notes, $1.5 billion of the 2026 Secured Notes and $1.0 billion of the New Unsecured Notes. The proceeds were released from escrow upon completion of the Acquisition on April 4, 2019. At the close of the Acquisition, we also borrowed $3.2 billion under the 2026 Term Loan with an interest rate of LIBOR plus 3.25%. We used a portion of the 2026 Term Loan to pay off the 2022 Term Loan. In addition, we entered into a new asset-based revolving credit facility of up to $1.0 billion, subject to borrowing base capacity. As such, as of March 31, 2019, on a pro forma basis after giving effect to the Acquisition, we would have had approximately $10.5 billion of indebtedness on a consolidated basis. We have entered into certain hedging agreements to reduce our exposure to variable rate debt.

As of March 31, 2019, we had no outstanding loans under our existing revolving credit facility and approximately $463.1 million in borrowing capacity. As of April 4, 2019, we had no borrowings outstanding under the new revolving credit facility and availability of $972.2 million. Our ability to borrow under our revolving credit facility depends, in part, on inventory, accounts receivable and other assets that fluctuate from time to time and may further depend on lenders’ discretionary ability to impose reserves and availability blocks.

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

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. 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.

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 current indebtedness and our future indebtedness as a result of the Acquisition contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of thresholds, qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. Additionally, these restrictions permit us to incur obligations that, although preferential to our common stock in terms of payment, do not constitute indebtedness.

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

Our operations are conducted through our global subsidiaries and our ability to make cash payments on our indebtedness and pay cash dividends on our preferred stock will depend on the earnings and the distribution of funds from our subsidiaries. Certain of our subsidiaries may have limitations or restrictions on paying dividends and otherwise transferring 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 maintain a level of cash flows from operating activities or transfer sufficient funds from our subsidiaries to permit us to pay the principal, premium, if any, and interest on our indebtedness 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 of our stockholders, we will include in our proxy statement 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, 2018, on a pro forma basis after giving effect to the Acquisition, goodwill and identified intangible assets would have represented approximately 68% 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. We are also required to evaluate identified intangible assets and fixed assets for impairment if there are indicators of a possible impairment.

In the past, due to revisions in financial performance outlooks or deterioration in certain markets, we have recognized significant impairment charges on our goodwill, identified intangible assets and fixed assets. In the future, we may 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 pre-acquisition periods and we could be subject to substantial additional U.S. taxes. For U.K. tax purposes, ARRIS is expected to be treated as a U.K. tax resident, regardless of how they are treated in the U.S. Therefore, if ARRIS were 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 pre-acquisition periods, 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 the company we may not be able to easily replicate their experience, knowledge and relationships. Difficulties in obtaining 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 workers’ councils or similar statutory arrangements. In addition, many of our direct and indirect customers and vendors have unionized workforces. Strikes, work stoppages or slowdowns experienced by us at our international locations or experienced by our customers or vendors could have a negative impact on us. Organizations responsible for 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, Brazil, Canada, China, the Czech Republic, France, Germany, India, Ireland, Israel, Mexico, Singapore, Sweden and the United Kingdom. For the last twelve month period ended March 31, 2019, on a pro forma basis after giving effect to the Acquisition, international sales would have represented approximately 42.6% of our consolidated net sales. In general, our international sales have lower gross margin percentages than our domestic sales. To the extent international sales represent a greater percentage of our 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.

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 with a deadline of March 29, 2019 to complete the negotiations. The deadline was subsequently extended to October 31, 2019. Although it is still unclear what those terms will be or even if a deal will be reached, 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, Czech koruna, Australian dollar, Indian rupee, Mexican peso and Brazilian real. 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, 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. The U.S. has renegotiated the North American Free Trade Agreement with Mexico and Canada. The renegotiated agreement remains subject to ratification by the U.S. Congress and by the governments of Mexico and Canada, and the prospects for and timing of approval are uncertain.

These developments have created uncertainty about the future relationship between the U.S. and certain of its trading partners and may reduce global trade and 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. We have significant international manufacturing operations, particularly in China and Mexico. We also import a significant amount~~sources of our products and components from our contract manufacturers operating in China. 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.liquidity.

~~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 exception. 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 the delay or loss of sales opportunities.

Furthermore, export control laws and economic sanctions prohibit the shipment of certain products to embargoed or sanctioned countries, governments and persons. While we train our employees to comply with these regulations, we cannot assure 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 incur costs and may not be successful in protecting our intellectual property and in defending claims that we are infringing on the intellectual property of others.~~

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

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

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

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

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

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

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 recent decline in our stock price. 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.

The following table summarizes the stock purchase activity for the three months ended March 31, ~~2019:~~2020:

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Part I—Financial Information (Unaudited):

Item 1. Condensed Consolidated Financial Statements:

Condensed Consolidated Statements of Operations		2

Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss		3

Condensed Consolidated Balance Sheets		4

Condensed Consolidated Statements of Cash Flows		5

Condensed Consolidated Statements of Stockholders’ Equity		6

Notes to Unaudited Condensed Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2926

Item 3. Quantitative and Qualitative Disclosures About Market Risk		4240

Item 4. Controls and Procedures		4341

Part II—Other Information:

Item 1. Legal Proceedings		4442

Item 1A. Risk Factors		4442

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		6243

Item 3. Defaults Upon Senior Securities		6243

Item 4. Mine Safety Disclosures		6343

Item 5. Other Information		6344

Item 6. Exhibits		6445

Signatures		6546

	Three Months Ended
	March 31,
	2020			2019
Comprehensive loss:
Net loss	$	(159.9	)	$	(2.3	)
Other comprehensive loss, net of tax:
Foreign currency translation loss		(99.6	)		(9.7	)
Pension and other postretirement benefit activity		(0.5	)		(0.1	)
Loss on hedging instruments		(7.6	)		(1.5	)
Total other comprehensive loss, net of tax		(107.7	)		(11.3	)
Total comprehensive loss	$	(267.6	)	$	(13.6	)

	Broadband			Home			OWN			VCN			Total
Goodwill, gross at December 31, 2019	$	3,355.1		$	402.1		$	666.0		$	1,635.6		$	6,058.8
Adjustments to preliminary purchase price		(7.1	)		(1.3	)		—			(1.4	)		(9.8	)
Foreign exchange and other		(21.6	)		(1.4	)		(3.5	)		(10.8	)		(37.3	)
Goodwill, gross at March 31, 2020		3,326.4			399.4			662.5			1,623.4			6,011.7
Accumulated impairment charges at December 31, 2019 and March 31, 2020		(193.6	)		(192.8	)		(159.5	)		(41.2	)		(587.1	)
Goodwill, net at March 31, 2020	$	3,132.8		$	206.6		$	503.0		$	1,582.2		$	5,424.6

	CCS			CMS			Total
Goodwill, gross at December 31, 2018	$	2,161.6		$	901.7		$	3,063.3
Foreign exchange and other		5.8			1.8			7.6
Goodwill, gross at March 31, 2019		2,167.4			903.5			3,070.9
Accumulated impairment charges at December 31, 2018 and March 31, 2019		(51.5	)		(159.5	)		(211.0	)
Goodwill, net at March 31, 2019	$	2,115.9		$	744.0		$	2,859.9

		March 31, 2020
Balance at beginning of period	��	$	122.2
Deferral of revenue			61.2
Recognition of unearned revenue			(32.3	)
Balance at end of period		$	151.1


	Balance Sheet Location	March 31, 2019		Balance Sheet Location	March 31, 2020		December 31, 2019
Right of use assets	Other noncurrent assets	$	97.4	Other noncurrent assets	$	214.0	$	222.9

Lease liabilities	Accrued and other liabilities	$	29.3	Accrued and other liabilities	$	60.3	$	61.7
Lease liabilities	Other noncurrent liabilities		75.2	Other noncurrent liabilities		145.7		160.4
Total lease liabilities		$	104.5		$	206.0	$	222.1

Weighted average remaining lease term (in years)		4.2
Weighted average discount rate		6.6	%

	Operating Leases
Remainder of 2020	$	55.3
2021		63.8
2022		43.3
2023		33.2
2024		22.3
Thereafter		22.6
Total minimum lease payments	$	240.5
Less: imputed interest		(34.5	)
Total	$	206.0

	March 31, 2020		December 31, 2019
Raw materials	$	264.5	$	240.1
Work in process		133.5		121.6
Finished goods		511.4		614.2
	$	909.4	$	975.9

	March 31, 2020		December 31, 2019
Compensation and employee benefit liabilities	$	164.0	$	187.3
Operating lease liabilities		60.3		61.7
Accrued interest		59.9		97.8
Deferred revenue		119.2		82.6
Accrued royalties		62.9		63.9
Product warranty accrual		40.8		42.8
Restructuring reserve		26.5		24.0
Income taxes payable		20.0		15.8
Value-added taxes payable		28.4		27.3
Accrued professional fees		41.2		32.4
Patent claims and litigation		42.5		55.0
Other		181.2		171.4
	$	846.9	$	862.0

~~Weighted average remaining lease term (in years)~~		~~4.4~~
~~Weighted average discount rate~~		~~5.8~~	%

	Operating Leases
Remainder of 2019	$	27.0
2020		31.2
2021		26.5
2022		14.4
2023		9.0
Thereafter		15.1
Total minimum lease payments	$	123.2
Less: imputed interest		(18.7	)
Total	$	104.5

	March 31, 2019		December 31, 2018
Raw materials	$	147.0	$	146.8
Work in process		115.9		98.8
Finished goods		272.6		227.7
	$	535.5	$	473.3

	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
Foreign currency translation
Balance at beginning of period	$	(140.6	)	$	(52.7	)	$	(162.7	)	$	(140.6	)
Other comprehensive income (loss)		(10.0	)		46.8
Other comprehensive loss								(99.6	)		(10.0	)
Amounts reclassified from AOCL		0.3			—			—			0.3
Balance at end of period	$	(150.3	)	$	(5.9	)	$	(262.3	)	$	(150.3	)

Hedging instruments
Balance at beginning of period	$	(1.4	)	$	(5.0	)	$	(8.9	)	$	(1.4	)
Other comprehensive loss		(1.5	)		(0.6	)		(7.6	)		(1.5	)
Balance at end of period	$	(2.9	)	$	(5.6	)	$	(16.5	)	$	(2.9	)

Defined benefit plan activity
Balance at beginning of period	$	(17.2	)	$	(28.9	)	$	(25.4	)	$	(17.2	)
Amounts reclassified from AOCL		(0.1	)		(1.4	)
Other comprehensive loss								(0.5	)		(0.1	)
Balance at end of period	$	(17.3	)	$	(30.3	)	$	(25.9	)	$	(17.3	)
Net AOCL at end of period	$	(170.5	)	$	(41.8	)	$	(304.7	)	$	(170.5	)

	March 31, 2019			December 31, 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		650.0			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 December 2022		261.3			486.3
Senior secured revolving credit facility		—			—
Total principal amount of debt	$	7,561.3		$	4,036.3
Less: Original issue discount, net of amortization		(0.8	)		(1.5	)
Less: Debt issuance costs, net of amortization		(100.9	)		(48.9	)
Total long-term debt	$	7,459.6		$	3,985.9

		Fair Value of Asset (Liability)
	Balance Sheet Location	March 31, 2019			December 31, 2018
Foreign currency contracts	Prepaid expenses and other current assets	$	1.6		$	1.7
Foreign currency contracts	Accrued and other liabilities		(1.5	)		(3.0	)
Total derivatives not designated as hedging instruments		$	0.1		$	(1.3	)

	March 31, 2019		December 31, 2018
Identifiable segment-related assets:
CCS	$	4,365.4	$	4,258.1
CMS		2,042.5		1,871.3
Total identifiable segment-related assets		6,407.9		6,129.4
Reconciliation to total assets:
Cash and cash equivalents		176.4		458.2
Deferred income tax assets		29.9		42.9
Funds restricted for acquisition		3,760.1		—
Total assets	$	10,374.3	$	6,630.5

	Employee- Related Costs			Contractual Termination Costs			Fixed Asset Related Costs			Total
Balance at December 31, 2019	$	23.1		$	2.0		$	—		$	25.1
Additional charge recorded		23.4			—			0.3			23.7
Cash paid		(18.4	)		(0.3	)		(0.3	)		(19.0	)
Balance at March 31, 2020	$	28.1		$	1.7		$	—		$	29.8

	Employee- Related Costs			Lease Termination Costs			Fixed Asset Related Costs			Total
Balance at December 31, 2018	$	29.2		$	0.3		$	—		$	29.5
Additional charge recorded		0.1			—			0.2			0.3
Cash paid		(17.6	)		—			(0.2	)		(17.8	)
Foreign exchange and other non-cash items		—			(0.3	)		—			(0.3	)
Balance at March 31, 2019	$	11.7		$	—		$	—		$	11.7

	Shares			Weighted Average Option Exercise Price Per Share		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at December 31, 2019		9.6		$	17.70
Exercised		(0.1	)		8.50
Forfeited		(0.1	)	$	18.60
Options outstanding at March 31, 2020		9.4		$	17.71		6.8	$	7.2
Options vested at March 31, 2020		4.0		$	16.10		3.8	$	7.2
Options unvested at March 31, 2020		5.4		$	18.92		9.1	$	—

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Shares		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price Per Share		Shares		Weighted Average Exercise Price Per Share
$2.96 to $5.74		2.1		0.8	$	5.74		2.1	$	5.74
$5.75 to $22.99		5.9		9.1	$	18.34		0.6	$	17.72
$23.00 to $42.32		1.4		6.5	$	33.18		1.3	$	32.62
$2.96 to $42.32		9.4		6.8	$	17.71		4.0	$	16.10

	Shares			Weighted Average Option Exercise Price Per Share		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at December 31, 2018		4.7		$	15.51
Granted		—			—
Exercised		(0.3	)	$	3.68
Expired		(0.1	)	$	30.50
Forfeited		(0.1	)	$	38.21
Options outstanding at March 31, 2019		4.2		$	16.10		3.8	$	41.3
Options vested at March 31, 2019		3.8		$	13.72		3.3	$	41.3
Options unvested at March 31, 2019		0.4		$	38.25		8.6	$	—

	Restricted Stock Units			Weighted Average Grant Date Fair Value Per Share		Restricted Stock Units			Weighted Average Grant Date Fair Value Per Share
Non-vested RSUs at December 31, 2018		2.0		$	35.43
Non-vested share units at December 31, 2019							7.7		$	22.30
Granted		1.4		$	23.42		3.2		$	11.03
Vested and shares issued		(0.9	)	$	33.15		(1.7	)	$	28.46
Forfeited		(0.2	)	$	35.25		(0.2	)	$	20.17
Non-vested RSUs at March 31, 2019		2.3		$	29.27
Non-vested share units at March 31, 2020							9.0		$	17.24

	Performance Share Units			Weighted Average Grant Date Fair Value Per Share
Non-vested PSUs at December 31, 2018		0.3		$	33.52
Granted		—		$	—
Vested and shares issued		(0.2	)	$	29.43
Non-vested PSUs at March 31, 2019		0.1		$	38.23

			Amount of Payments Due per Period
Contractual Obligations	Total Payments Due		Remainder of 2019		2020-2021		2022-2023		Thereafter
	(in millions)
Long-term debt, including current maturities (a)	$	7,561.3	$	—	$	650.0	$	261.3	$	6,650.0
Interest on long-term debt (a)(b)		2,849.1		314.2		881.9		820.8		832.2
Operating leases		123.2		27.0		57.7		23.4		15.1
Purchase obligations and other supplier agreements (c)		14.4		14.4		—		—		—
Pension and other postretirement benefit liabilities (d)		8.6		5.5		1.0		0.8		1.3
Restructuring costs, net (e)		15.7		14.0		1.5		0.2		—
Unrecognized tax benefits (f)		—		—		—		—		—
Total contractual obligations	$	10,572.3	$	375.1	$	1,592.1	$	1,106.5	$	7,498.6

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
January 1, 2019 - January 31, 2019		477	$	16.80		—	$	—
February 1, 2019 - February 28, 2019		221,515	$	23.90		—	$	—
March 1, 2019 - March 31, 2019		94,689	$	23.42		—	$	—
Total		316,681	$	23.75		—

~~2.1~~	First Amendment to Bid Conduct Agreement, dated as of January 2, 2019, between ARRIS International plc and CommScope Holding Company, Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 3, 2019).
~~4.1~~	Indenture, dated as of February 19, 2019, by and between the Escrow Issuer and Wilmington Trust, National Association, as trustee, including the form of 8.25% Senior Note due 2027 (Incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (File No. 001-36146), filed with the SEC on February 19, 2019).
~~4.2~~	Indenture, dated as of February 19, 2019, by and between the Escrow Issuer and Wilmington Trust, National Association, as trustee and collateral agent, including the form of 5.50% Senior Secured Note due 2024 and form of 6.00% Senior Secured Note due 2026 (Incorporated by reference to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K (File No. 001-36146), filed with the SEC on February 19, 2019).
31.1 **	Certification of Principal Executive Officer pursuant to Rule 13a-14(a).
31.2 **	Certification of Principal Financial Officer pursuant to Rule 13a-14(a).
32.1 **	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32)(ii) of Regulation S-K).
101.INS	Inline XBRL Instance Document ~~furnished herewith.~~– The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH	Inline XBRL Schema Document, furnished herewith.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).
**	Filed herewith.
***	Management contract or compensatory plan or arrangement.

	COMMSCOPE HOLDING COMPANY, INC.

May ~~8, 2019~~6, 2020	/s/ Alexander W. Pease
Date	Alexander W. Pease
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer and duly authorized officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company