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 ~~October 25, 2019~~July 23, 2020 there were ~~194,239,567~~196,813,504 shares of Common Stock outstanding.

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net sales	$	2,380.2		$	1,150.4		$	6,046.4		$	3,510.8		$	2,102.8		$	2,566.7		$	4,136.0		$	3,666.3
Cost of sales		1,770.3			740.7			4,378.5			2,246.1			1,446.7			1,906.7			2,838.7			2,608.2
Gross profit		609.9			409.7			1,667.9			1,264.7			656.1			660.0			1,297.3			1,058.1
Operating expenses:
Selling, general and administrative		305.8			159.8			972.0			502.5			290.9			480.9			602.0			666.3
Research and development		171.5			44.8			399.5			142.4			176.1			177.8			356.5			228.0
Amortization of purchased intangible assets		163.9			65.8			387.3			199.5			157.6			164.1			315.4			223.5
Restructuring costs, net		19.5			7.1			78.3			19.7			19.6			46.4			43.3			58.8
Asset impairments														206.7			—			206.7			—
Total operating expenses		660.7			277.5			1,837.1			864.1			850.9			869.2			1,523.9			1,176.6
Operating income (loss)		(50.8	)		132.2			(169.2	)		400.6
Operating loss														(194.8	)		(209.2	)		(226.6	)		(118.5	)
Other income (expense), net		1.5			(2.4	)		(3.6	)		(4.4	)		(0.8	)		0.7			(13.3	)		(5.0	)
Interest expense		(160.7	)		(66.1	)		(423.5	)		(186.7	)		(141.4	)		(165.3	)		(290.5	)		(262.8	)
Interest income		1.8			1.9			15.9			5.4			0.8			2.3			2.9			14.1
Income (loss) before income taxes		(208.2	)		65.6			(580.4	)		214.9
Income tax (expense) benefit		51.7			(1.8	)		87.6			(51.4	)
Net income (loss)		(156.5	)		63.8			(492.8	)		163.5
Loss before income taxes														(336.2	)		(371.5	)		(527.5	)		(372.2	)
Income tax benefit														15.1			37.5			46.5			35.9
Net loss														(321.1	)		(334.0	)		(481.0	)		(336.3	)
Series A convertible preferred stock dividend		(13.8	)		—			(26.9	)		—			(13.9	)		(13.1	)		(27.7	)		(13.1	)
Deemed dividend on Series A convertible preferred stock		—			—			(3.0	)		—			—			(3.0	)		—			(3.0	)
Net income (loss) attributable to common stockholders	$	(170.3	)	$	63.8		$	(522.7	)	$	163.5
Net loss attributable to common stockholders													$	(335.0	)	$	(350.1	)	$	(508.7	)	$	(352.4	)

Earnings (loss) per share:
Loss per share:
Basic	$	(0.88	)	$	0.33		$	(2.70	)	$	0.85		$	(1.71	)	$	(1.81	)	$	(2.60	)	$	(1.82	)
Diluted	$	(0.88	)	$	0.33		$	(2.70	)	$	0.84		$	(1.71	)	$	(1.81	)	$	(2.60	)	$	(1.82	)

Weighted average shares outstanding:
Basic		194.1			192.2			193.5			191.9			195.9			193.6			195.4			193.2
Diluted		194.1			195.4			193.5			195.4			195.9			193.6			195.4			193.2

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Comprehensive income (loss):

Net income (loss)

$
(156.5
)

$
63.8

$
(492.8
)

$
163.5

Other comprehensive loss, net of tax:

Foreign currency translation loss

(76.6
)

(22.5
)

(76.5
)

(84.3
)
Pension and other postretirement benefit activity

(0.1
)

(1.1
)

(0.2
)

(3.8
)
Gain (loss) on hedging instruments

7.9

0.2

(4.0
)

2.7

Total other comprehensive loss, net of tax

(68.8
)

(23.4
)

(80.7
)

(85.4
)
Total comprehensive income (loss)

$
(225.3
)

$
40.4

$
(573.5
)

$
78.1

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Comprehensive loss:
Net loss	$	(321.1	)	$	(334.0	)	$	(481.0	)	$	(336.3	)
Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss)		34.6			9.9			(65.0	)		0.1
Pension and other postretirement benefit activity		—			(0.1	)		(0.5	)		(0.1	)
Loss on hedging instruments		(5.3	)		(10.4	)		(12.9	)		(11.9	)
Total other comprehensive income (loss), net of tax		29.3			(0.6	)		(78.4	)		(11.9	)
Total comprehensive loss	$	(291.8	)	$	(334.6	)	$	(559.4	)	$	(348.2	)

							Unaudited
	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Assets
Cash and cash equivalents	$	609.1		$	458.2		$	823.4		$	598.2
Accounts receivable, less allowance for doubtful accounts of $32.6 and $17.4, respectively		1,778.9			810.4
Accounts receivable, less allowance for doubtful accounts of $43.4 and $35.4, respectively								1,649.3			1,698.8
Inventories, net		1,169.2			473.3			1,038.4			975.9
Prepaid expenses and other current assets		245.5			135.9			236.7			238.9
Total current assets		3,802.7			1,877.8			3,747.8			3,511.8
Property, plant and equipment, net of accumulated depreciation of $510.1 and $437.7, respectively		737.0			450.9
Property, plant and equipment, net of accumulated depreciation of $624.3 and $553.8, respectively								681.4			723.8
Goodwill		5,722.7			2,852.3			5,231.2			5,471.7
Other intangible assets, net		4,493.5			1,352.0			3,944.6			4,263.6
Other noncurrent assets		417.9			97.5			533.2			460.7
Total assets	$	15,173.8		$	6,630.5		$	14,138.2		$	14,431.6
Liabilities and Stockholders' Equity
Accounts payable	$	1,226.4		$	399.2		$	1,222.1		$	1,148.0
Accrued and other liabilities		782.3			291.4			887.3			862.0
Current portion of long-term debt		32.0			—			32.0			32.0
Total current liabilities		2,040.7			690.6			2,141.4			2,042.0
Long-term debt		10,101.2			3,985.9			9,946.8			9,800.4
Deferred income taxes		268.7			83.3			196.2			215.1
Other noncurrent liabilities		552.1			113.9			526.3			537.8
Total liabilities		12,962.7			4,873.7			12,810.7			12,595.3
Commitments and contingencies
Series A convertible preferred stock, $0.01 par value		1,000.0			—			1,027.7			1,000.0
Stockholders' equity:
Preferred stock, $0.01 par value: Authorized shares: 200,000,000;
Issued and outstanding shares: 1,000,000 Series A convertible preferred stock		—			—
Issued and outstanding shares: 1,027,689 Series A convertible preferred stock								—			—
Common stock, $0.01 par value: Authorized shares: 1,300,000,000;
Issued and outstanding shares: 194,250,722 and 192,376,255,
Issued and outstanding shares: 195,997,230 and 194,563,530,
respectively		2.0			2.0			2.0			2.0
Additional paid-in capital		2,425.2			2,385.1			2,474.3			2,445.1
Retained earnings (accumulated deficit)		(742.6	)		(249.8	)		(1,660.3	)		(1,179.3	)
Accumulated other comprehensive loss		(239.9	)		(159.2	)		(275.4	)		(197.0	)
Treasury stock, at cost: 7,345,794 shares and 6,744,082 shares,
Treasury stock, at cost: 8,021,551 shares and 7,411,382 shares,
respectively		(233.6	)		(221.3	)		(240.8	)		(234.5	)
Total stockholders' equity		1,211.1			1,756.8			299.8			836.3
Total liabilities and stockholders' equity	$	15,173.8		$	6,630.5		$	14,138.2		$	14,431.6

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2019			2018			2020			2019
Operating Activities:
Net income (loss)	$	(492.8	)	$	163.5
Adjustments to reconcile net income (loss) to net cash generated by operating activities:
Net loss							$	(481.0	)	$	(336.3	)
Adjustments to reconcile net loss to net cash generated by (used in) operating activities:
Depreciation and amortization		514.5			272.6			408.9			301.0
Equity-based compensation		58.7			33.7			56.0			30.7
Deferred income taxes		(172.4	)		(32.6	)		(69.4	)		(105.4	)
Asset impairments								206.7			—
Changes in assets and liabilities:
Accounts receivable		165.3			(23.5	)		33.5			(304.0	)
Inventories		356.3			(65.8	)		(73.5	)		132.2
Prepaid expenses and other assets		63.8			(3.8	)		11.7			24.2
Accounts payable and other liabilities		(228.0	)		12.3			62.7			(1.0	)
Other		(5.0	)		5.5			10.7			(3.0	)
Net cash generated by operating activities		260.4			361.9
Net cash generated by (used in) operating activities								166.3			(261.6	)
Investing Activities:
Additions to property, plant and equipment		(72.3	)		(55.4	)		(47.7	)		(48.0	)
Proceeds from sale of property, plant and equipment		1.2			12.7			0.1			0.8
Proceeds from sale of long-term investments		9.3			—
Cash paid for current year acquisitions, net of cash acquired		(5,053.4	)		—
Cash paid for prior year acquisition		(11.0	)		—
Cash paid for ARRIS acquisition, net of cash acquired								—			(5,049.9	)
Cash paid for Cable Exchange acquisition								—			(11.0	)
Other		1.1			1.3			—			6.6
Net cash used in investing activities		(5,125.1	)		(41.4	)		(47.6	)		(5,101.5	)
Financing Activities:
Long-term debt repaid		(2,753.3	)		(550.0	)		(116.0	)		(2,553.3	)
Long-term debt proceeds		6,933.0			150.0			250.0			6,933.0
Debt issuance costs		(120.8	)		—			—			(118.1	)
Series A convertible preferred stock proceeds		1,000.0			—			—			1,000.0
Dividends paid on Series A convertible preferred stock		(29.9	)		—			—			(3.0	)
Proceeds from the issuance of common shares under equity-based compensation plans		3.0			5.0			0.9			2.7
Tax withholding payments for vested equity-based compensation awards		(12.3	)		(15.6	)		(6.3	)		(9.3	)
Net cash generated by (used in) financing activities		5,019.7			(410.6	)
Net cash generated by financing activities								128.6			5,252.0
Effect of exchange rate changes on cash and cash equivalents		(4.1	)		(11.5	)		(22.1	)		0.9
Change in cash and cash equivalents		150.9			(101.6	)		225.2			(110.2	)
Cash and cash equivalent at beginning of period		458.2			454.0			598.2			458.2
Cash and cash equivalents at end of period	$	609.1		$	352.4		$	823.4		$	348.0

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Number of common shares outstanding:
Balance at beginning of period		193,873,919			192,214,497			192,376,255			190,906,110			195,807,913			193,456,207			194,563,530			192,376,255
Issuance of shares under equity-based compensation plans		569,086			11,091			2,476,179			1,718,664			229,571			510,460			2,043,869			1,907,093
Shares surrendered under equity-based compensation plans		(192,283	)		(2,806	)		(601,712	)		(401,992	)		(40,254	)		(92,748	)		(610,169	)		(409,429	)
Balance at end of period		194,250,722			192,222,782			194,250,722			192,222,782			195,997,230			193,873,919			195,997,230			193,873,919
Common stock:
Balance at beginning and end of period	$	2.0		$	2.0		$	2.0		$	2.0		$	2.0		$	2.0		$	2.0		$	2.0
Additional paid-in capital:
Balance at beginning of period	$	2,410.7		$	2,361.4		$	2,385.1		$	2,334.1		$	2,455.7		$	2,393.9		$	2,445.1		$	2,385.1
Issuance of shares under equity-based compensation plans		0.3			0.1			3.0			5.0			—			1.5			0.9			2.7
Equity-based compensation		28.0			11.3			58.7			33.7			32.5			23.1			56.0			30.7
Equity-based compensation assumed		—			—			8.3			—			—			8.3			—			8.3
Dividend on Series A convertible preferred stock		(13.8	)		—			(26.9	)		—			(13.9	)		(13.1	)		(27.7	)		(13.1	)
Deemed dividend on Series A convertible preferred stock		—			—			(3.0	)		—			—			(3.0	)		—			(3.0	)
Balance at end of period	$	2,425.2		$	2,372.8		$	2,425.2		$	2,372.8		$	2,474.3		$	2,410.7		$	2,474.3		$	2,410.7
Retained earnings (accumulated deficit):
Balance at beginning of period	$	(586.1	)	$	(290.3	)	$	(249.8	)	$	(396.0	)	$	(1,339.2	)	$	(252.1	)	$	(1,179.3	)	$	(249.8	)
Net income (loss)		(156.5	)		63.8			(492.8	)		163.5
Cumulative effect of change in accounting principle		—			—			—			6.0
Net loss														(321.1	)		(334.0	)		(481.0	)		(336.3	)
Balance at end of period	$	(742.6	)	$	(226.5	)	$	(742.6	)	$	(226.5	)	$	(1,660.3	)	$	(586.1	)	$	(1,660.3	)	$	(586.1	)
Accumulated other comprehensive loss:
Balance at beginning of period	$	(171.1	)	$	(148.6	)	$	(159.2	)	$	(86.6	)	$	(304.7	)	$	(170.5	)	$	(197.0	)	$	(159.2	)
Other comprehensive loss, net of tax		(68.8	)		(23.4	)		(80.7	)		(85.4	)
Other comprehensive income (loss), net of tax														29.3			(0.6	)		(78.4	)		(11.9	)
Balance at end of period	$	(239.9	)	$	(172.0	)	$	(239.9	)	$	(172.0	)	$	(275.4	)	$	(171.1	)	$	(275.4	)	$	(171.1	)
Treasury stock, at cost:
Balance at beginning of period	$	(230.6	)	$	(221.1	)	$	(221.3	)	$	(205.6	)	$	(240.4	)	$	(228.8	)	$	(234.5	)	$	(221.3	)
Net shares surrendered under equity-based compensation plans		(3.0	)		(0.1	)		(12.3	)		(15.6	)		(0.4	)		(1.8	)		(6.3	)		(9.3	)
Balance at end of period	$	(233.6	)	$	(221.2	)	$	(233.6	)	$	(221.2	)	$	(240.8	)	$	(230.6	)	$	(240.8	)	$	(230.6	)
Total stockholders' equity	$	1,211.1		$	1,755.1		$	1,211.1		$	1,755.1		$	299.8		$	1,424.9		$	299.8		$	1,424.9

CommScope Holding Company, Inc., along with its direct and indirect subsidiaries (CommScope or the Company), is a global provider of infrastructure solutions for communication and entertainment networks. The Company’s solutions for wired and wireless networks enable service providers including cable, telephone and digital broadcast satellite operators and media programmers to deliver media, voice, IPInternet 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 ~~Internet Protocol Television~~IP television distribution systems, broadband access infrastructure platforms and ~~associated~~equipment that delivers data and voice ~~Customer Premises Equipment.~~networks to homes. CommScope’s global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

On April 4, 2019, the Company completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. The results of operations of ARRIS’ products and services are reflected in the new reporting segments of Customer Premises Equipment (CPE), Network and Cloud (N&C) and Ruckus Networks (Ruckus). The Company borrowed approximately $7.0 billion, issued $1.0 billion in Series A Convertible Preferred Stock (the Convertible Preferred Stock) and used cash on hand to fund the Acquisition and related costs. See Note 2 for additional discussion of the ~~Acquisition, Note 7 for additional discussion~~Acquisition.

As of January 1, 2020, the Company reorganized its internal management and reporting structure as part of the ~~debt financing transactions and Note 12 for additional discussion~~integration of the ~~Convertible Preferred Stock.~~Acquisition. The reorganization changed the information regularly reviewed by the Company’s chief operating decision maker for purposes of allocating resources and assessing performance. As a result, the Company now reports financial performance for the 2020 year based on four operating segments: Broadband Networks (Broadband), Home Networks (Home), Outdoor Wireless Networks (OWN) and Venue and Campus Networks (VCN). These four segments represent non-aggregated reportable operating segments. Prior to this change, the Company operated and reported five operating segments: Connectivity Solutions, Mobility Solutions, Customer Premises Equipment, Network and Cloud and Ruckus Networks. All prior period amounts in these 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 Acquisition was accounted for using the acquisition method of accounting and the ARRIS results of operations are reported in the Company’s unaudited condensed consolidated financial statements from April 4, 2019, the date of acquisition, through September 30, 2019.

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 2019 Annual Report. Other than the enhancements described below to the allowance for doubtful accounts policy as a result of the adoption of Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments, there were no material changes in the Company’s significant accounting policies during the three or six months ended June 30, 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 ~~Accounting Policy~~

~~Effective April 1, 2019,~~progress and have substantially the same risk characteristics as trade accounts receivable for the same types of contracts. Therefore, the Company ~~made~~has concluded that the expected loss rates for trade accounts receivables are a ~~voluntary change in accounting principle related to its classification~~reasonable approximation of ~~internal handling costs to prepare goods~~the loss rates for ~~shipment. Historically,~~the contract assets.

In calculating an allowance for doubtful accounts, the Company ~~presented these handling costs within selling, general~~uses its historical experience, external indicators and ~~administrative expense (SG&A). Under~~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 ~~new policy,~~days past due.

The expected loss rates are based on the ~~Company is presenting these expenses within cost~~payment profiles of sales inover the ~~Condensed Consolidated Statements of Operations.~~preceding thirty-six months and the corresponding historical credit losses experienced within this period. The Company believes that this change is preferable as the classification in cost of sales better reflects the costs of generating the related revenue and results in more meaningful presentation of gross margin. Additionally, this presentation enhances the comparability of the Company’s financial statements with industry peers and provides more consistency in the treatment of all shipping and handling costs. The accounting policy change was applied retrospectively to all periods presented. There was 0 change to net income (loss), earnings (loss) per share, retained earnings (accumulated deficit) or cash flows; however, cost of sales increased by $14.2 million and $41.9 million and SG&A decreased by the same amounts for the three and nine months ended September 30, 2018, respectively. The Company recorded handling costs as a component of cost of sales for the three and nine months ended September 30, 2019. The Condensed Consolidated Statements of Operations washistorical loss rates are adjusted to reflect ~~this change; however, there was 0 other impact~~current and forward-looking information on macroeconomic factors affecting the ~~condensed consolidated financial statements.~~

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 Annual Report. Other than the enhancements described below to revenue recognition policies as a resultability of the ~~Acquisition, the changes described below~~customers to ~~lease policies as a result of the adoption of Accounting Standards Update (ASU) No. 2016-02,~~ ~~Leases~~ ~~and the change in accounting principle related to the classification of internal handling costs described above~~, ~~there were no material changes in the Company’s significant accounting policies during the three or nine months ended September 30, 2019.~~

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

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

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

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

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

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

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

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

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

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

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

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

Net sales to Comcast Corporation and affiliates (Comcast) accounted for ~~15%~~12% and 10% of the Company’s total net sales during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. ~~Other than Comcast, no~~NaN other direct customer accounted for 10% or more of the Company’s total net sales. NaN direct customer accounted for 10% or more of the Company’s total net sales during the three or ~~nine~~six months ended ~~September~~June 30, 2019. NaN direct customer accounted for 10% or more of the Company’s accounts receivable as of ~~September~~June 30, ~~2019.~~

Net sales to Anixter International Inc. and its affiliates (Anixter) accounted for 11% of the Company’s total net sales during both the three and nine months ended September 30, 2018. Other than Anixter, 0 direct customer accounted for 10% or more of the Company’s total net sales for the three or nine months ended September 30, 2018.2020.

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 ~~September~~June 30, ~~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 ~~is approximately 16%~~was issued to Carlyle to fund the Acquisition. See Note 11 for further discussion of the ~~Company’s common stock on an if-converted basis.~~Convertible Preferred Stock. Other than transactions related to the Convertible Preferred Stock, there were 0 material related party transactions for the three or six months ended June 30, 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 liabilities and other noncurrent liabilities:

The Company is ~~either a plaintiff~~party to certain intellectual property claims and 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.

As of June 30, 2020, the Company had a liability of $39.8 million recorded in accrued and other liabilities on the Condensed Consolidated Balance Sheets related to certain intellectual property assertions that have been settled or are in process of settlement. Of that amount, $27.1 million was attributed to periods prior to the Acquisition and was previously recorded as a liability on the opening balance sheet. For the three and six months ended June 30, 2020, $7.5 million and $12.8 million, respectively, was recorded as a charge to cost of sales in the Condensed Consolidated Statements of Operations impacting the Broadband and Home segments. One matter, making up $19.0 million of the total recorded liability, was settled in July 2020 and the settlement is payable in the second half of 2020.

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.

On October 15, 2018, the Company intervened as a defendant in Fractus, S.A. (Fractus) v. CommScope Technologies LLC, T-Mobile U.S., Inc., T-Mobile USA, Inc., Verizon Communications, Inc. and Cello Partnership d/b/a Verizon Wireless, which is a consolidated patent infringement action brought by Fractus, in the United States (U.S.) District Court for the Eastern District of Texas alleging that the defendants infringed on Fractus’ patents on cellular base station antenna technologies (the Fractus Litigation). The jury trial began in October 2019. In order to minimize risk, and without admitting liability, on October 9, 2019, the Company reached an agreement with Fractus for $55.0 million, with $30.0 million payable in January 2020 and $25.0 million payable in June 2020 (the Settlement Payment). Fractus agreed, among other things, to dismiss the Fractus Litigation and release CommScope from all liabilities relating to any claims of infringement of any patents or patent applications owned by Fractus as of October 9, 2019 or within five years thereafter. The Settlement Payment is recorded in accrued and other liabilities in the Condensed Consolidated Balance Sheets as of September 30, 2019, and the expense is recorded in cost of sales for the three and nine months ended September 30, 2019 in the Condensed Consolidated Statements of Operations.

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 first quarter of 2019, the Company assessed goodwill~~See Notes 3 and 8 for impairment due to a change in reporting units in the Connectivity segment. As a result, the Company performed impairment testing for goodwill under the Connectivity segment reporting unit structure immediately before the change and determined that 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.

During the second quarter of 2019, the Company determined that indicators of possible goodwill impairment existed for the reporting units from the recently acquired ARRIS business. Since the closing of the Acquisition on April 4, 2019, the ARRIS reporting units (CPE, N&C and Ruckus) had experienced challenges that impacted the Company’s performance. These challenges included declines in spending by cable operator customers that resulted in declines in net sales and operating income for these reporting units and the loss of key leaders of these reporting units following the Acquisition. Certain of these challenges were expected to persist throughout the remainder of 2019 and were expected to impact management’s ability to grow these businesses at the rate that was originally estimated when the Acquisition was closed. The Company performed goodwill impairment testing during the second quarter of 2019 and determined that no impairment existed. NaN indicatorsdiscussion of goodwill impairment ~~were identified in~~charges during the ~~third quarter of 2019.~~three and six months ended June 30, 2020. There were 0 goodwill impairments identified during the three or ~~nine~~six months ended ~~September~~June 30, ~~2019 or 2018.~~

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 0 definite-lived intangible or other long-lived asset impairments identified during the three or ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 or ~~2018.~~2019.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company’s effective tax rate was ~~24.8%~~4.5% and ~~15.1%~~8.8%, respectively, and the Company recognized a tax benefit of ~~$51.7~~$15.1 million on a pretax loss of ~~$208.2~~$336.2 million and $46.5 million on a pretax loss of $527.5 million, respectively. The Company’s tax benefit was less than the statutory rate of 21.0% in both the three and six months ended June 30, 2020 primarily due to a goodwill impairment charge of $206.7 million for which minimal tax benefits were recorded and $20.3 million and $21.9 million, respectively, of tax expense related to state valuation allowances. Excess tax costs of $3.7 million and $7.8 million related to equity compensation awards also impacted the tax benefit unfavorably for the three and six months ended June 30, 2020, respectively.

For the three and six months ended June 30, 2019, the Company’s effective income tax rate was 10.1% and 9.6%, respectively, and the Company recognized a tax benefit of $37.5 million on a pretax loss of $371.5 million and a tax benefit of ~~$87.6~~$35.9 million on a pretax loss of ~~$580.4~~$372.2 million, respectively. ~~For the three and nine months ended September 30, 2019, the~~The Company’s tax benefit was unfavorably impacted favorably by the impact of federal tax credits, benefits recognized from adjustments related to the finalization of prior years’ tax returns and the expiration of statutes of limitations on various uncertain tax positions and impacted unfavorably by the impact of U.S. anti-deferral provisions and foreign withholding ~~taxes. Excess~~taxes, but this impact was partially offset by the favorable impact of federal tax credits for the three and six months ended June 30, 2019. The impact of excess tax costs related to equity-based compensation awards ~~had an unfavorable impact on the Company’s tax benefit of $1.1 million and $1.5 million~~was 0t material for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~

The effective income tax rate of 2.7% for the three months ended September 30, 2018 was lower than the statutory rate of 21.0% due to a reduction in tax expense of $24.1 million related to the expiration of statutes of limitations on various uncertain tax positions. The effective income tax rate of 23.9% for the nine months ended September 30, 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 new U.S. anti-deferral provisions and the impact of repatriation taxes. These increases to the effective tax rate were partially offset by a reduction due to the expiration of statutes of limitations on various uncertain tax positions discussed above and the favorable impact of $4.7 million of excess tax benefits related to equity-based compensation awards for the nine months ended September 30, 2018.2019.

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

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, 17.4~~2020, 17.0 million ~~shares~~ and ~~10.8~~16.6 million shares, respectively, of outstanding equity-based compensation awards were not included in the computation of diluted EPS because the effect was either antidilutive or the performance conditions were not met. Of those amounts, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, 1.4~~2020, 4.3 million ~~shares~~ and ~~2.3~~4.4 million shares, respectively, would have been considered dilutive if the Company had not been in a net loss position. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2018, 2.5~~2019, 12.2 million shares and ~~1.8~~8.9 million shares, respectively, were not included in the computation of diluted EPS because the effect was either antidilutive or the performance conditions were not met. Of those amounts, for the three and six months ended June 30, 2019, 2.2 million shares and 2.5 million shares, respectively, would have been considered dilutive if the Company had not been in a net loss position.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, 36.4~~2020, 36.9 million and ~~23.8~~36.6 million, respectively, of as-if converted shares related to the Convertible Preferred Stock were excluded from the diluted share count because they were ~~anti-dilutive,~~anti-dilutive; however, they would have been considered dilutive if the Company had not been in a net loss position.

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

	Three Months Ended					Nine Months Ended					Three Months Ended						Six Months Ended
	September 30,					September 30,					June 30,						June 30,
	2019			2018		2019			2018		2020			2019			2020			2019
Numerator:
Net income (loss)	$	(156.5	)	$	63.8	$	(492.8	)	$	163.5
Net loss											$	(321.1	)	$	(334.0	)	$	(481.0	)	$	(336.3	)
Dividends on Series A convertible preferred stock		(13.8	)		—		(26.9	)		—		(13.9	)		(13.1	)		(27.7	)		(13.1	)
Deemed dividends on Series A convertible preferred stock		—			—		(3.0	)		—		—			(3.0	)		—			(3.0	)
Net income (loss) attributable to common stockholders	$	(170.3	)	$	63.8	$	(522.7	)	$	163.5
Net loss attributable to common stockholders											$	(335.0	)	$	(350.1	)	$	(508.7	)	$	(352.4	)

Denominator:
Weighted average common shares outstanding - basic		194.1			192.2		193.5			191.9		195.9			193.6			195.4			193.2
Dilutive effect of as-if converted Series A convertible preferred stock		—			—		—			—		—			—			—			—
Dilutive effect of equity-based awards		—			3.2		—			3.5		—			—			—			—
Weighted average common shares outstanding - diluted		194.1			195.4		193.5			195.4		195.9			193.6			195.4			193.2

Earnings (loss) per share:
Loss per share:
Basic	$	(0.88	)	$	0.33	$	(2.70	)	$	0.85	$	(1.71	)	$	(1.81	)	$	(2.60	)	$	(1.82	)
Diluted	$	(0.88	)	$	0.33	$	(2.70	)	$	0.84	$	(1.71	)	$	(1.81	)	$	(2.60	)	$	(1.82	)

On January 1, ~~2019,~~2020, the Company adopted ASU No. ~~2016-02,~~2016-13, ~~Leases~~Measurement of Credit Losses on Financial Instruments, and ~~all subsequently issued clarifying guidance. Under~~subsequent amendments to the initial guidance: ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05 and ASU No. 2020-02 (collectively, Topic 326). The new guidance ~~lessees~~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 ~~required to recognize~~primarily trade accounts receivable and contract assets ~~and lease liabilities~~ for the ~~rights and obligations created by leased assets~~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 ~~classified~~applicable U.S. GAAP. The impact of adopting Topic 326 as ~~operating leases.~~ of January 1, 2020 was not material to the consolidated financial statements.

In ~~July 2018,~~March 2020, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ASU No. ~~2018-11,~~2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which ~~permitted entities~~provides temporary optional guidance to ~~record~~ease the ~~impact~~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 ~~adoption using a modified retrospective method with any cumulative-effect~~debt securities classified as ~~an adjustment to retained earnings (accumulated deficit) as opposed to restating comparative periods for the effects of applying the new standard.~~ held-to-maturity. The Company ~~elected this transition approach; therefore,~~can elect to apply the ~~Company’s prior period reported results are not restated to include~~amendments as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of this ~~adoption. In addition,~~guidance on 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, 0 cumulative effect adjustment was recorded. Adoption of the new standard also did not materially affect the Condensed Consolidated Statements of Cash Flows. See Note 5 for further discussion of the Company’s leasing activities.

~~On January 1, 2019, the Company adopted ASU No. 2017-04,~~ ~~Simplifying the Test of Goodwill Impairment~~, which eliminates Step 2 from the goodwill impairment test. Under the new guidance, the Company 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 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,~~January 2020, the FASB issued ASU No. ~~2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments~~2020-01, Investments - Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815).~~and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, Topic 326)~~. The new guidance ~~replaces~~is based on a consensus of the ~~current incurred loss~~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 ~~used~~of accounting in Topic 323 and the accounting for ~~determining credit losses on financial assets, including trade receivables, with an expected credit loss method.~~certain forward contracts and purchased options accounted for under Topic ~~326~~815. ASU No. 2020-01 is effective for the Company as of January 1, ~~2020~~2021 and early adoption is permitted. The Company ~~plans to adopt this guidance as of January 1, 2020 and~~ is ~~continuing to assess~~ ~~and evaluate assumptions and models to estimate losses. Upon adoption~~evaluating the impact of the new guidance the Company will be required to record a cumulative effect adjustment to retained earnings (accumulated deficit) for the impact as of the date of adoption. As credit losses from the Company's trade receivables have ~~not~~ ~~historically been significant, the Company anticipates that the adoption of Topic 326 will~~ ~~not~~ ~~materially impact~~on the consolidated financial statements.

In December 2019 the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements and disclosures.

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

During the ~~three~~first quarter of 2020, the Company completed its acquisition accounting and ~~nine months ended September 30, 2019, net sales of $1.3 billion and $2.7 billion and operating losses of $0.1 billion and $0.5 billion, respectively, were included in~~made the ~~Condensed Consolidated Statements of Operations related~~following adjustments to the ~~ARRIS business. For the three and nine months ended September 30, 2019,~~provisional amounts that were previously recorded:

The Company recorded ~~$2.2 million and $189.8 million, respectively, of transaction and integration costs related to the Acquisition and~~ these ~~costs were recognized in SG&A in the Condensed Consolidated Statements of Operations.~~

~~The following~~ amounts represent the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the ARRIS acquisition. The final determination of the fair value of certain assets and liabilities will be completed within the one- yearas measurement period ~~from~~adjustments because the ~~date of acquisition as required by Accounting Standards Codification (ASC) Topic 805,~~ ~~Business Combinations.~~ As of September 30, 2019, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the validation of the underlying cash flows used to determine the fair value of the identified intangible assets. The size and breadth of the ARRIS acquisition necessitates use of the one-year measurement period to adequately analyze all the factors used in establishing the asset and liability fair valuesinformation was known as of the acquisition date ~~including,~~ but ~~not limited to, intangible assets, inventory, real property, leases, deferred tax assets and liabilities, certain reserves and~~ the ~~related tax impacts~~analysis was finalized in the first quarter of ~~any adjustments. Any potential adjustments could be material~~2020.

As a result of the change in ~~relation~~segments as discussed in Note 1, goodwill was reallocated from the previous segments to the ~~preliminary values presented below:~~

14new segments. The following table presents goodwill after the reallocation by new reportable segment:

The Company has recorded measurement period adjustments on a prospective basis since the acquisition date primarily related to the valuation of property, plant and equipment. The impact of these measurement period adjustments to the Condensed Consolidated Statement of Operations was not material to the quarter or year-to-date periods ended June 30, 2019 and September 30, 2019.

The fair value of net accounts receivable is $1,155.0 million with a gross contractual amount of $1,170.0 million. The Company expects $15.0 million to be uncollectible. Total consideration excludes $131.1 million related to the cash settlement of outstanding unvested ARRIS equity compensation awards. These cash settled equity awards were recorded as transaction costs during the nine months ended September 30, 2019 and are included in SG&A in the Condensed Consolidated Statements of Operations.

In order to allocate the consideration transferred for ARRIS, the fair values of all identifiable assets and liabilities were established. For accounting and financial reporting purposes, fair value is defined under ASC Topic 820, ~~Fair Value Measurements and Disclosures~~ as the price that would be received upon sale of an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants. Use of different estimates and judgments could yield different results. In determining the fair value of identifiable assets acquired and liabilities assumed, a review was conducted for any significant contingent assets or liabilities existing as of the acquisition date.

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

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

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

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

The following table presents the unaudited pro forma consolidated results of operations for CommScope for the three and nine months ended September 30, 2019 and 2018 as though the acquisition of ARRIS had been completedCompany’s change in segments as of January 1, ~~2018 (in millions,~~2020 resulted in a realignment of its existing reporting units. Although the reporting units were realigned under the new segments, the Company’s reporting units remained the same except ~~per share amounts):~~

~~These unaudited pro forma results reflect adjustments~~ for ~~net interest expense~~where two reporting units have been combined into a new reporting unit. In this case, goodwill was simply combined in the new reporting units. Since the composition of the reporting units and the assignment of goodwill to the reporting units were unaffected, an interim goodwill impairment test due to the change in segments was not performed in the first quarter of 2020.

During the second quarter of 2020, the Company determined that indicators of goodwill impairment existed for the ~~debt related~~Home Networks reporting unit due to lower projected operating results, primarily from the accelerated decline in video devices. This trend is projected to continue as consumers adopt the use of other streaming applications and has been further impacted by the macro-economic effects caused by the new strain of coronavirus (COVID-19). The Company performed a quantitative goodwill impairment test during the second quarter of 2020 and recorded a $206.7 million goodwill impairment charge relating to the ~~acquisition; depreciation expense for property, plant~~Home Networks reporting unit in the asset impairments line on the Condensed Consolidated Statement of Operations. This reflects a full impairment of the remaining goodwill in the Home segment, and ~~equipment that~~as such, the Home segment has been marked up to its estimated fair value; amortization for intangible assets with finite lives identified separate from goodwill; equity-based compensation for equity awards issued to ARRIS employees; and0 remaining goodwill balance as of June 30, 2020.

The unaudited pro forma results for the three and nine months ended September 30, 2019 were adjusted to exclude certain non-recurring transaction and integration costs, acquisition accounting adjustments related to the markup of inventory to its estimated fair value of a reporting unit involves uncertainties because it requires management to develop numerous assumptions, including assumptions about the future growth and ~~deferred~~potential volatility in revenues and costs, capital expenditures, industry economic factors and future business strategy. Changes in projected revenue ~~and the related~~growth rates, projected operating income ~~tax impacts. The unaudited pro forma results for the three and nine months ended September 30, 2018 were adjusted~~margins or estimated discount rates due to ~~include the impact~~uncertain market conditions, loss of ~~these items. These adjustments~~one or more key customers, changes in the ~~aggregate on~~Company’s strategy, changes in technology or other factors could negatively affect the fair value in one or more of the Company’s reporting units and result in a ~~pre-tax basis were $106.0 million and $447.6 million for~~material impairment charge in the ~~three and nine months ended September 30, 2019, respectively and $(18.9) million and $(460.9) million for the three and nine months ended September 30, 2018, respectively.~~

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

	Three Months Ended
	September 30,																								Three Months Ended June 30,
	Connectivity				Mobility				CPE				N&C				Ruckus				Total				Broadband				Home				OWN				VCN				Total
	2019		2018		2019		2018		2019		2018		2019		2018		2019		2018		2019		2018		2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
Contract type:
Product contracts	$	632.7	$	728.6	$	387.3	$	395.6	$	821.1	$	—	$	313.9	$	—	$	122.0	$	—	$	2,277.0	$	1,124.2	$	631.9	$	666.5	$	623.1	$	889.0	$	322.1	$	451.9	$	411.7	$	536.9	$	1,988.8	$	2,544.3
Project contracts		—		0.3		9.9		13.1		—		—		1.0		—		—		—		10.9		13.4		2.0		2.6		—		—		—		0.1		33.7		9.1		35.7		11.8
Other contracts		1.8		2.8		8.7		10.0		5.3		—		62.0		—		14.5		—		92.3		12.8		38.0		0.4		0.9		—		6.3		6.1		33.1		4.1		78.3		10.6
Consolidated net sales	$	634.5	$	731.7	$	405.9	$	418.7	$	826.4	$	—	$	376.9	$	—	$	136.5	$	—	$	2,380.2	$	1,150.4	$	671.9	$	669.5	$	624.0	$	889.0	$	328.4	$	458.1	$	478.5	$	550.1	$	2,102.8	$	2,566.7

	Nine Months Ended
	September 30,																								Six Months Ended June 30,
	Connectivity				Mobility				CPE				N&C				Ruckus				Total				Broadband				Home				OWN				VCN				Total
	2019		2018		2019		2018		2019		2018		2019		2018		2019		2018		2019		2018		2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
Contract type:
Product contracts	$	1,946.4	$	2,138.6	$	1,330.8	$	1,295.4	$	1,706.3	$	—	$	552.0	$	—	$	255.4	$	—	$	5,790.9	$	3,434.0	$	1,203.9	$	990.2	$	1,223.7	$	889.0	$	666.2	$	837.5	$	837.1	$	907.0	$	3,930.9	$	3,623.7
Project contracts		—		0.4		33.1		37.1		—		—		17.7		—		—		—		50.8		37.5		3.8		5.3		—		—		—		0.2		44.0		17.6		47.8		23.1
Other contracts		5.1		6.8		24.8		32.5		9.1		—		137.8		—		27.9		—		204.7		39.3		77.7		0.4		1.7		—		11.0		11.3		66.9		7.8		157.3		19.5
Consolidated net sales	$	1,951.5	$	2,145.8	$	1,388.7	$	1,365.0	$	1,715.4	$	—	$	707.5	$	—	$	283.3	$	—	$	6,046.4	$	3,510.8	$	1,285.4	$	995.9	$	1,225.4	$	889.0	$	677.2	$	849.0	$	948.0	$	932.4	$	4,136.0	$	3,666.3

Further information on net sales by reportable segment and geographic region is included in Note ~~10.~~9.

The following table provides the balance sheet location and amounts of contract assets and liabilities from contracts with customers as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018.~~2019.

There were no material changes to contract asset balances for the three or ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 as a result of changes in estimates or impairments. As of ~~September~~June 30, ~~2019,~~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 ~~$80.2~~$122.0 million, with the remaining ~~$34.6~~$29.5 million having a duration greater than one year.

The following table presents the changes in deferred revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

The Company has operating type leases for real estate, equipment and vehicles in both the U.S. and internationally. As of ~~September~~June 30, ~~2019,~~2020, the Company had 0 finance type leases. The Company’s leases have remaining lease terms of 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 ~~$23.0~~$25.9 million and $~~61.3~~$52.2 million for the three and ~~nine~~six months ended ~~September~~June 30, 2020, respectively, inclusive of period cost for short-term, cancellable and variable leases, not included in lease liabilities, of $7.6 million and $15.4 millionfor the three and six months ended June 30, 2020, respectively. Operating lease expense was $25.5 million and $38.3 million for the three and six months ended June 30, 2019, respectively, inclusive of period cost for short-term, cancellable and variable leases, not included in lease liabilities, of ~~$9.2~~$5.8 million and ~~$18.6~~$9.4 million for the three and ~~nine~~six months ended ~~September~~June 30, 2019, respectively.

The Company occasionally subleases all or a portion of certain unutilized real estate facilities. As of ~~September~~June 30, 2020 and 2019, the Company’s sublease arrangements were classified as operating type leases and the income amounts were not material for the three or ~~nine~~six months ended ~~September~~June 30, 2020 and 2019.

18Future minimum lease payments under non-cancellable leases as of June 30, 2020:

~~Future minimum lease payments under non-cancellable leases as of~~ ~~September 30, 2019~~:

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

													Three Months Ended						Six Months Ended
	Three Months Ended September 30,						Nine Months Ended September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Foreign currency translation
Balance at beginning of period	$	(140.4	)	$	(114.5	)	$	(140.5	)	$	(52.7	)	$	(262.3	)	$	(150.3	)	$	(162.7	)	$	(140.5	)
Other comprehensive loss		(76.6	)		(22.5	)		(78.2	)		(84.3	)
Other comprehensive income (loss)														34.6			8.5			(65.0	)		(1.6	)
Amounts reclassified from AOCL		—			—			1.7			—			—			1.4			—			1.7
Balance at end of period	$	(217.0	)	$	(137.0	)	$	(217.0	)	$	(137.0	)	$	(227.7	)	$	(140.4	)	$	(227.7	)	$	(140.4	)

Hedging instruments
Balance at beginning of period	$	(13.3	)	$	(2.5	)	$	(1.4	)	$	(5.0	)	$	(16.5	)	$	(2.9	)	$	(8.9	)	$	(1.4	)
Other comprehensive income (loss)		7.9			0.2			(4.0	)		2.7
Other comprehensive loss														(5.3	)		(10.4	)		(12.9	)		(11.9	)
Balance at end of period	$	(5.4	)	$	(2.3	)	$	(5.4	)	$	(2.3	)	$	(21.8	)	$	(13.3	)	$	(21.8	)	$	(13.3	)

Defined benefit plan activity
Balance at beginning of period	$	(17.4	)	$	(31.6	)	$	(17.3	)	$	(28.9	)	$	(25.9	)	$	(17.3	)	$	(25.4	)	$	(17.3	)
Amounts reclassified from AOCL		(0.1	)		(1.1	)		(0.2	)		(3.8	)		—			(0.1	)		(0.5	)		(0.1	)
Balance at end of period	$	(17.5	)	$	(32.7	)	$	(17.5	)	$	(32.7	)	$	(25.9	)	$	(17.4	)	$	(25.9	)	$	(17.4	)
Net AOCL at end of period	$	(239.9	)	$	(172.0	)	$	(239.9	)	$	(172.0	)	$	(275.4	)	$	(171.1	)	$	(275.4	)	$	(171.1	)

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

See Note 68 in the Notes to Consolidated Financial Statements in the ~~2018~~2019 Annual Report for additional information on the terms and conditions of the Company’s debt obligations.

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~~Senior Notes due 2021 (the 2021 Notes) ~~(collectively, the Existing Notes) and the senior secured term loan due 2022 (the 2022 Term Loan).~~

In ~~August 2019, $200.0~~February 2020, $100.0 million aggregate principal amount of the 2021 Notes was redeemed and resulted in the write-off of ~~$0.9~~$0.3 million of debt issuance costs, which was reflected in interest ~~expense.~~expense during the six months ended June 30, 2020.

In ~~connection with the Acquisition, in February 2019, CommScope Finance LLC, a wholly owned subsidiary of~~April 2020, the Company ~~and an unrestricted subsidiary as defined in~~borrowed $250.0 million under the ~~indentures governing the Existing Notes and the credit agreements governing the Company’s then-existing~~ senior secured asset-based revolving credit ~~facilities, issued $1.0 billion~~facility (the Revolving Credit Facility). As of ~~8.25% senior notes due 2027 (the New Unsecured Notes), $1.5 billion~~June 30, 2020, the Company had $250.0 million outstanding borrowings under the Revolving Credit Facility and had availability of ~~6.00%~~$521.6 million, after giving effect to borrowing base limitations and outstanding letters of credit.

During the three and six months ended June 30, 2020, the Company made quarterly scheduled amortization payments of $8.0 million and $16.0 million, respectively, on the senior secured ~~notes~~term loan due in 2026 (the 2026 ~~Secured Notes) and $1.25 billion~~Term Loan). The current portion of ~~5.50% senior secured notes~~long-term debt reflects $32.0 million of repayments due ~~2024 (the 2024 Secured Notes and, together with the New Unsecured Notes and~~under the 2026 ~~Secured Notes, the New Notes). The proceeds from the issuance~~Term Loan.

NaN portion of the ~~New Notes were held in escrow until the closing~~2026 Term Loan was reflected as a current portion of ~~the Acquisition on April 4, 2019 and were then used to fund the Acquisition, which also included the repayment~~long-term debt as of ~~ARRIS’ outstanding debt of $2.1 billion under its senior secured credit facilities~~. Concurrent with the closing of the Acquisition, CommScope Finance LLC merged with and into CommScope, Inc., with CommScope, Inc. continuing as the surviving entity, upon which CommScope, Inc. became the issuer of the New Notes by operation of law.

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 (except with respectJune 30, 2020 related to the Convertible Preferred Stock) 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.potentially required excess cash flow payment because the amount that may be payable in 2021, if any, cannot currently be reliably estimated.

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 acceleration to material debt.

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. 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 capital markets 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 by CommScope, Inc. on or after March 1, 2022 at the redemption prices specified in the indenture governing the New Unsecured Notes. Prior to March 1, 2022, the New Unsecured Notes may be redeemed by CommScope, Inc. at a redemption price equal to 100% of their principal amount, plus a make-whole premium (as specified in the indenture governing the New Unsecured Notes), plus accrued and unpaid interest. Prior to March 1, 2022, under certain circumstances, CommScope, Inc. may also redeem up to 40% of the aggregate principal amount of the New Unsecured Notes at a redemption price of 108.25%, plus accrued and unpaid interest, using the proceeds of certain equity offerings.

In connection with issuing the New Unsecured Notes, the Company incurred costs of $17.3 million during the nine months ended September 30, 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. 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 capital markets 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 senior secured term loan due 2026 (the 2026 Term Loan) and the 2024 Secured Notes 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 and the 2024 Secured Notes 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 for the 2026 Secured Notes and effectively subordinated to any of CommScope, Inc.’s or the guarantors’ indebtedness that is secured by a senior-priority lien, including under the new asset-based revolving credit facility, in each case to the extent of the value of the assets securing such indebtedness. In addition, the 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.

The 2026 Secured Notes may be redeemed prior to maturity under certain circumstances. Upon certain change of control events, the 2026 Secured Notes may be redeemed at the option of the holders at 101% of their face amount, plus accrued and unpaid interest. The 2026 Secured Notes may be redeemed by CommScope, Inc. 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 by CommScope, Inc. at a redemption price equal to 100% of their principal amount, plus a make-whole premium (as specified in the indenture governing the 2026 Secured Notes), plus accrued and unpaid interest. Prior to March 1, 2022, under certain circumstances, CommScope, Inc. may also redeem up to 40% of the aggregate principal amount of the 2026 Secured Notes at a redemption price of 106.00%, plus accrued and unpaid interest, using the proceeds of certain equity offerings.

In connection with issuing the 2026 Secured Notes, the Company incurred costs of $22.0 million during the nine months ended September 30, 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. 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 and the 2026 Secured Notes 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 and the 2026 Secured Notes 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 for the 2024 Secured Notes and effectively subordinated to any of CommScope, Inc.’s or the guarantors’ indebtedness that is secured by a senior-priority lien, including under the new asset-based revolving credit facility, in each case to the extent of the value of the assets securing such indebtedness. In addition, the 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.

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 by CommScope, Inc. 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 by CommScope, Inc. at a redemption price equal to 100% of their principal amount, plus a make-whole premium (as specified in the indenture governing the 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 105.50%, 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 nine months ended September 30, 2019, which were recorded as a reduction of the carrying amount of the debt and are being amortized over the term of the 2024 Secured Notes.

In connection with the Acquisition, on April 4, 2019, CommScope, Inc. borrowed $3.2 billion, less $32.0 million of original issue discount, under a new senior secured term loan due 2026 (the 2026 Term Loan). The Company used a portion of the proceeds from the 2026 Term Loan to pay off the remaining $261.3 million on the 2022 Term Loan and the rest of the proceeds were used to finance the Acquisition. During the first quarter of 2019, the Company repaid $225.0 million of the 2022 Term Loan. In connection with the repayments of the 2022 Term Loan, $4.1 million and $7.7 million of original issue discount and debt issuance costs were written off and included in interest expense for the nine months ended September 30, 2019. The Company incurred costs of $50.0 million during the nine months ended September 30, 2019 related to the 2026 Term Loan that were recorded as a reduction of the carrying amount of the debt after closing of the Acquisition and will be amortized over the term of the 2026 Term Loan. The Company also incurred ticking fees related to the 2026 Term Loan of $12.3 million during the nine months ended September 30, 2019 that were included in interest expense.

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

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

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

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

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

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

On April 4, 2019, the Company replaced its asset-based revolving credit facility with a new asset-based revolving credit facility in an amount of up to $1.0 billion, subject to borrowing capacity, with a maturity in April 2024, available to CommScope, Inc. and its U.S. subsidiaries designated as co-borrowers (the Revolving Borrowers). The ability to draw under the new asset-based revolving credit facility or issue letters of credit is conditioned upon, among other things, delivery of prior written notice of a borrowing or issuance, as applicable, the ability of the borrowers to reaffirm the representations and warranties contained in the new asset-based revolving credit facility and the absence of any default or event of default. In connection with the new asset-based revolving credit facility, the Company incurred costs of approximately $13.2 million in the nine months ended September 30, 2019, which were recorded in other noncurrent assets and are being amortized over the term of the credit facility. The Company borrowed and repaid $15.0 million under the new asset-based revolving credit facility during the nine months ended September 30, 2019. As of ~~September 30, 2019~~, the Company had 0 outstanding borrowings under the new asset-based revolving credit facility and had availability of $881.7 million, after giving effect to borrowing base limitations and outstanding letters of credit.

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

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

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

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

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

The new asset-based revolving credit facility contains customary covenants, including, but not limited to, restrictions on the ability of CommScope, Inc. and its subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends (except with respect to the Convertible Preferred Stock), sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness, enter into certain transactions with affiliates or change lines of business. The new asset-based revolving credit facility contains a Covenant Fixed Charge Coverage Ratio (as defined in the credit agreement governing the asset-based revolving credit facility) of 1.00 to 1.00. The credit agreement provides that, in the event excess availability under the asset-based revolving credit facility is less than the greater of $80 million and 10% of the borrowing base as of the end of any fiscal quarter, the Covenant Fixed Charge Coverage Ratio for that fiscal quarter must be tested and must exceed the level set forth above. As of September 30, 2019, the Company’s excess availability and Covenant Fixed Charge Coverage Ratio were in excess of the asset-based revolving credit facility’s requirements.

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

~~The following table summarizes scheduled maturities of long-term debt as of September 30, 2019:~~

The Company’s non-guarantor subsidiaries held ~~$4,902~~$2,637 million, or ~~32%~~19%, of total assets and ~~$170~~$971 million, or 1%8%, of total liabilities as of ~~September~~June 30, ~~2019~~2020 and accounted for ~~$399~~$583 million, or ~~17%,~~28% and ~~$1,770~~$1,197 million, or 29%, of net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. 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 and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, the non-guarantor subsidiaries accounted for ~~$453~~$956 million, or ~~39%~~37%, and ~~$1,388~~$1,371 million, or ~~40%~~37%, of net sales, respectively. 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 ~~6.18%~~5.64% and ~~5.73%~~6.17% at ~~September~~June 30, ~~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 September 30, 2019, the Company had foreign currency contracts outstanding with maturities of up to ten months and aggregate notional values of $526 million (based on exchange rates as of September 30, 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 September 30, 2019, the Company held designated foreign currency contracts with outstanding maturities of up to twenty-one months and an aggregate notional value of $320.0 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 and nine months ended September 30, 2019, the Company recognized $2.6 million and $3.8 million, respectively, of pre-tax income in interest expense as a result of amounts excluded from hedge effectiveness under the spot method. As of September 30, 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 7). During the first quarter of 2019, the Company entered into and designated pay-fixed, receive-variable interest rate swap derivatives as cash flow hedges of interest rate risk which effectively fixed the interest rate on a portion the variable-rate debt. Total notional amount of the interest rate swap derivatives as of ~~September 30, 2019~~ ~~was $600 million with outstanding maturities up to fifty-four months. There were no derivative instruments designated as cash flow hedges of interest rate risk during the year ended December 31, 2018.~~

Hedge effectiveness is assessed each quarter, and for hedges that meet the effectiveness requirements, changes in fair value are recorded as a component of other comprehensive income (loss), net of tax, and are reclassified to interest expense as interest payments are made on the Company’s variable rate debt. As of ~~September 30, 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 ~~September~~June 30, ~~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 ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, are as follows:

	September 30, 2019				December 31, 2018					June 30, 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	$	20.6	$	20.6	$	2.5	$	2.5	Level 2	$	4.7	$	4.7	$	10.7	$	10.7	Level 2
Liabilities:
5.00% senior notes due 2027	$	750.0	$	618.8	$	750.0	$	608.0	Level 2	$	750.0		675.5	$	750.0	$	696.4	Level 2
8.25% senior notes due 2027		1,000.0		972.1		—		—	Level 2		1,000.0		1,027.7		1,000.0		1,052.5	Level 2
6.00% senior notes due 2025		1,500.0		1,357.5		1,500.0		1,355.6	Level 2		1,500.0		1,448.6		1,500.0		1,501.7	Level 2
5.50% senior notes due 2024		650.0		610.7		650.0		591.8	Level 2		650.0		661.7		650.0		656.0	Level 2
5.00% senior notes due 2021		450.0		450.0		650.0		641.9	Level 2		50.0		50.0		150.0		149.9	Level 2
6.00% senior secured notes due 2026		1,500.0		1,550.3		—		—	Level 2		1,500.0		1,537.5		1,500.0		1,595.6	Level 2
5.50% senior secured notes due 2024		1,250.0		1,280.8		—		—	Level 2		1,250.0		1,262.5		1,250.0		1,302.1	Level 2
Senior secured term loan due 2026		3,200.0		3,195.9		—		—	Level 2		3,176.0		3,025.1		3,192.0		3,219.9	Level 2
Senior secured term loan due 2022		—		—		486.3		461.9	Level 2
Senior secured revolving credit facility											250.0		246.9		—		—	Level 2
Foreign currency contracts		8.7		8.7		3.0		3.0	Level 2		3.5		3.5		5.9		5.9	Level 2
Interest rate swap contracts		20.4		20.4		—		—	Level 2		36.2		36.2		16.3		16.3	Level 2

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

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

~~Following the Acquisition,~~As of January 1, 2020, the Company has the following 5 reportable segments, which align with the manner in which the business is managed: Connectivity Solutions (Connectivity), Mobility Solutions (Mobility), Customer Premises Equipment (CPE), Network & Cloud (N&C)reorganized its internal management and ~~Ruckus Networks (Ruckus). Management intends to re-evaluate reportable segments once~~reporting structure as part of the integration of ~~ARRIS~~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 ~~substantially complete.~~reporting financial performance based on 4 reportable segments: Broadband, Home, OWN and VCN. These reportable segments are based upon the nature of the products and services they offer.

The ~~Connectivity~~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 and includes converged cable access platform, passive optical networking, video systems, access technologies, fiber ~~optic~~and coaxial cable, fiber and copper ~~cable~~connectivity and connectivity solutions for use in data centers and business enterprise, telecommunications, cable television and residential broadband networks. The Connectivity portfolio includes network solutions for indoor and outdoor network applications. Indoor network solutions are found in commercial buildings and data centers, while outdoor network solutions are found in both local-area and wide-area networks, central offices and headends, and “last-mile” fiber-to-the-x (FTTX) installations.hardened closures.

The ~~Mobility~~Home segment ~~provides~~comprises the ~~integral building blocks for cellular base station sites~~former Consumer Premises Equipment business and ~~related connectivity, while focusing~~focuses on ~~all aspects~~the future of the ~~radio access network (RAN) from~~connected home and connected devices inside the macro through the metro to the indoor layer. Macro cell solutions can be found at wireless tower sites and on rooftops. 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.

~~The CPE segment offers broadband and video products.~~home. The segment includes subscriber-based solutions that support broadband and video applications connecting cable, ~~telco~~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 Providers’~~service provider’s network, such as digital subscriber line ~~(DSL)~~ and cable modems and telephony and data gateways which incorporate routing and Wi-Fi functionality. Video offerings include set top boxes that support cable, satellite and IPTV content delivery and include products such as digital video recorders, ~~(DVRs),~~ high definition set top boxes and hybrid set top devices.

The N&C segment’s product solutions include cable modem termination system, video infrastructure, distribution and transmission equipment and cloud solutions that enable facility-based service providers to construct a state-of-the-art residentialOWN segment focuses on the macro and metro ~~distribution network.~~cell markets. The ~~portfolio also~~segment includes ~~a full suite of global services that offer technical support, professional services~~base station antennas, RF filters, tower connectivity, microwave antennas, metro cell products, cabinets, steel accessories, Spectrum Access System and ~~system integration to enable solutions sales of~~Comsearch. As the Company’s ~~end-to-end product portfolio.~~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 ~~Ruckus~~VCN segment ~~provides converged wired (LAN)~~targets both public and ~~wireless (WLAN, IoT)~~private networks for ~~enterprises~~campuses, venues, data centers and ~~service providers. Product offerings include indoor and outdoor~~buildings. The segment combines Wi-Fi and ~~LTE access points, access, aggregation~~switching, distributed antenna systems, licensed and ~~core switches; on-premises~~unlicensed small cells and ~~cloud-based control~~enterprise fiber and ~~management systems; and software and software-as-a-service (SaaS) applications addressing security, location, reporting and analytics.~~copper infrastructure.

The following table provides summary financial information by reportable segment:

~~In the first quarter of 2019, the Company changed its~~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, transaction and integration costs and other items that the Company believes are useful to exclude in the evaluation of operating performance from period to period because these items are not representative of the Company’s core business.

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net sales:

Connectivity

$
634.5

$
731.7

$
1,951.5

$
2,145.8

Mobility

405.9

418.7

1,388.7

1,365.0

CPE

826.4

—

1,715.4

—

N&C

376.9

—

707.5

—

Ruckus

136.5

—

283.3

—

   Consolidated net sales

$
2,380.2

$
1,150.4

$
6,046.4

$
3,510.8

Segment adjusted EBITDA:

Connectivity

$
121.0

$
160.8

$
370.8

$
440.6

Mobility

83.4

77.0

324.6

276.4

CPE

59.7

—

121.8

—

N&C

94.9

—

139.9

—

Ruckus

10.8

—

16.7

—

   Total segment adjusted EBITDA

369.8

237.8

973.8

717.0

Amortization of intangible assets

(163.9
)

(65.8
)

(387.3
)

(199.5
)
Restructuring costs, net

(19.5
)

(7.1
)

(78.3
)

(19.7
)
Equity-based compensation

(28.0
)

(11.3
)

(58.7
)

(33.7
)
Transaction and integration costs

(2.2
)

(2.7
)

(189.8
)

(5.3
)
Depreciation

(43.3
)

(18.7
)

(101.0
)

(58.2
)
Purchase accounting adjustments

(108.7
)

—

(272.9
)

—

Patent litigation settlement

(55.0
)

—

(55.0
)

—

   Consolidated operating income (loss)

$
(50.8
)

$
132.2

$
(169.2
)

$
400.6

Depreciation expense:

Connectivity

$
12.3

$
13.3

$
37.0

$
41.6

Mobility

5.5

5.4

16.7

16.6

CPE

10.7

—

20.1

—

N&C

11.5

—

20.7

—

Ruckus

3.3

—

6.5

—

   Consolidated depreciation expense

$
43.3

$
18.7

$
101.0

$
58.2

Additions to property, plant and equipment:

Connectivity

$
14.7

$
18.1

$
41.2

$
39.6

Mobility

5.3

6.4

17.4

15.8

CPE

1.5

—

3.9

—

N&C

2.1

—

8.8

—

Ruckus

0.7

—

1.0

—

   Consolidated additions to property, plant and equipment

$
24.3

$
24.5

$
72.3

$
55.4

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Net sales:
Broadband	$	671.9		$	669.5		$	1,285.4		$	995.9
Home		624.0			889.0			1,225.4			889.0
OWN		328.4			458.1			677.2			849.0
VCN		478.5			550.1			948.0			932.4
Consolidated net sales	$	2,102.8		$	2,566.7		$	4,136.0		$	3,666.3

Segment adjusted EBITDA:
Broadband	$	130.2		$	117.9		$	222.9		$	176.1
Home		35.4			62.1			47.3			62.1
OWN		76.0			136.3			164.9			237.3
VCN		38.2			79.3			75.9			128.6
Total segment adjusted EBITDA		279.8			395.6			511.0			604.1
Amortization of intangible assets		(157.6	)		(164.1	)		(315.4	)		(223.5	)
Restructuring costs, net		(19.6	)		(46.4	)		(43.3	)		(58.8	)
Equity-based compensation		(32.5	)		(23.1	)		(56.0	)		(30.7	)
Asset impairments		(206.7	)		—			(206.7	)		—
Transaction and integration costs		(7.6	)		(167.0	)		(13.0	)		(187.7	)
Purchase accounting adjustments		(5.2	)		(164.1	)		(10.7	)		(164.1	)
Patent claims and litigation		(7.5	)		—			(12.8	)		—
Depreciation		(37.9	)		(40.1	)		(79.7	)		(57.8	)
Consolidated operating loss	$	(194.8	)	$	(209.2	)	$	(226.6	)	$	(118.5	)

Depreciation expense:
Broadband	$	14.5		$	15.6		$	30.0		$	21.7
Home		8.0			9.5			18.0			9.5
OWN		4.0			4.5			8.5			8.9
VCN		11.4			10.5			23.2			17.7
Consolidated depreciation expense	$	37.9		$	40.1		$	79.7		$	57.8

Additions to property, plant and equipment:
Broadband	$	10.0		$	12.9		$	21.6		$	18.1
Home		3.9			2.4			7.0			2.4
OWN		4.3			3.6			6.8			9.4
VCN		5.6			7.7			12.3			18.1
Consolidated additions to property, plant and equipment	$	23.8		$	26.6		$	47.7		$	48.0

Sales to customers located outside of the U.S. comprised ~~39.8%~~35.6% and ~~40.9%~~37.8% of total net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to ~~43.2%~~41.5% and ~~43.7%~~41.6% of total net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018, respectively.~~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~~cash-based and primarily consist of employee-related costs, ~~fixed asset related costs~~which include severance and ~~lease related costs. Employee-related costs include the expected severance costs and related benefits as well as~~other one-time ~~severance benefits that are accrued over the remaining period employees are required to work in order to receive such~~termination benefits. ~~Fixed asset related costs include non-cash impairments or fixed asset disposals associated with restructuring actions in~~

In addition to the ~~cash~~employee-related costs, ~~to uninstall, pack, ship and reinstall manufacturing equipment and~~ the Company also records other costs to prepare the receiving facility to accommodate relocated equipment. Fixed asset related costs are expensed as incurred. Cash paid is net of proceeds received from the sale of related assets. Effective January 1, 2019, with the adoption of ASU No. 2016-02, ~~Leases, lease exit obligations related to unused leased facilities are reported as part of lease liabilities. Contract termination related costs include non-cash impairments of lease assets related~~associated to restructuring actions, ~~in addition to any one-time cash termination costs.~~

such as impairment costs arising from unutilized real estate or equipment. As a result of prior 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.~~assets, which are recorded as other associated costs.

The Company’s net ~~pre-tax~~pretax restructuring charges, by segment, were as follows:

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

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

The ARRIS integration actions include headcount reductions in sales, engineering, marketing and administrative functions. The Company expects to make cash payments of $20.5 million during the remainder of 2020 and additional cash payments of $6.7 million between 2021 and 2022 to settle the announced ARRIS integration initiatives. The Company has recognized restructuring charges of $129.4 million since the 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 ~~$151.6~~$153.0 million since the BNS acquisition for integration actions. NoNaN additional restructuring actions are expected in connection with the BNS integration initiatives. The Company expects to make cash payments of ~~$1.8~~$0.4 million during the remainder of ~~2019~~2020 and additional cash payments of ~~$2.2~~$0.7 million between ~~2020~~2021 and 2022.

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 $11.9 million during the remainder of 2019 and additional cash payments of $16.7 million between 2020 and 2022 to settle the announced ARRIS integration initiatives. Additional restructuring actions related to the ARRIS integration are expected to be identified and the resulting charges and cash requirements are expected to be material.

On April 4, 2019, the Company issued and sold 1,000,000 shares of the Convertible Preferred Stock to Carlyle ~~Partners VII S1 Holdings, L.P. (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 Investment Agreement). In connection with the issuance of the Convertible Preferred Stock, the Company incurred direct and incremental expenses of $3.0 million, including financial advisory fees, closing costs, legal expenses and other offering-related expenses on behalf of Carlyle, and therefore treated these incremental expenses as a deemed dividend during the nine months ended September 30, 2019.

The Convertible Preferred Stock ranks senior to the shares of the Company’s common stock, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Convertible Preferred Stock has a liquidation preference of $1,000 per share. Holders of the Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per year, payable quarterly in arrears. If CommScope does not declare and pay a dividend, the dividend rate will increase by 2.5% to 8.0% per year (and that rate will increase by an additional 0.50% every three months until such unpaid dividend is declared and paid, subject to a cap of 11.0% per year) until all accrued but unpaid dividends have been paid in full. Dividends can be paid in cash, in-kind through the issuance of additional shares of Convertible Preferred Stock or any combination of the two, at the Company’s option. During the three and nine months ended September 30, 2019, the Company authorized $13.8 million and $26.9 million, respectively, in dividends due for the dividend payment dates in the second and third quarters of 2019. The dividends were paid on July 1, 2019, the first business day following the initial payment date, and September 30, 2019, pursuant to the terms of the Certificate of Designations.

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. At any time after the third anniversary of the issuance of the Convertible Preferred Stock, if the volume weighted average price of CommScope’s common stock exceeds the conversion price of $49.50, as may be adjusted pursuant to the Certificate of Designations, for at least thirty trading days in any period of forty-five consecutive trading days (including the final five trading days of any such forty-five-trading day period) all of the Convertible Preferred Stock may be converted at the election of CommScope into the relevant number of shares of CommScope common stock. Pending shareholder approval, to the extent required under Nasdaq listing rules, the issuance of shares of CommScope common stock upon conversion of the Convertible Preferred Stock and the 2,100,000 shares of common stock issuable by CommScope from capacity assumed under the existing share plans of ARRIS in connection with the Acquisition is capped at 19.9% of the CommScope common stock outstanding immediately prior to the Acquisition. On any date during the three months following the eight year and six-month anniversary of the Investment Agreement closing date and the three months following each anniversary thereafter, holders of the Convertible Preferred Stock will have the right to require CommScope to redeem all or any portion of the Convertible Preferred Stock at 100% of the liquidation preference thereof plus all accrued and unpaid dividends. The redemption price is payable, at the Company’s option, in cash or a combination of cash and common stock, subject to certain restrictions.

Upon certain change of control events involving CommScope, CommScope has the right, subject to the holder’s right to convert prior to such redemption, to redeem all of the Convertible Preferred Stock for the greater of (i) an amount in cash equal to the sum of the liquidation preference of the Convertible Preferred Stock, all accrued but unpaid dividends and, if the applicable redemption date is prior to the fifth anniversary of the first dividend payment date, the present value, discounted at a rate of 10%, of any remaining scheduled dividends through the five year anniversary of the first dividend payment date, assuming CommScope chose to pay such dividends in cash and (ii) the consideration the holders would have received if they had converted their shares of the Convertible Preferred Stock into CommScope common stock immediately prior to the change of control event. To the extent that CommScope does not exercise the redemption right described in the foregoing sentence, following the effective date of any such change of control event, the holders of the Convertible Preferred Stock can require CommScope to repurchase the Convertible Preferred Stock at the greater of (i) an amount in cash equal to 100% of the liquidation preference thereof plus all accrued but unpaid dividends and (ii) the consideration the holders would have received if they had converted their shares of the Convertible Preferred Stock into CommScope common stock immediately prior to the change of control event.

~~Holders of the Convertible Preferred Stock are entitled to vote with the holders of the Company’s common stock on an as-converted basis.~~ Holders of the Convertible Preferred Stock are entitled to a ~~separate class vote with respect to, among other things, amendments to CommScope’s organizational documents that have an adverse effect on~~cumulative dividend at the ~~Convertible Preferred Stock, issuances by CommScope~~rate of ~~securities that are senior to, or equal~~5.5% per year, payable quarterly in ~~priority with,~~arrears. Dividends can be paid in cash, in-kind through the ~~Convertible Preferred Stock and issuances~~issuance of additional shares of the Convertible Preferred Stock ~~after the closing date~~or any combination of the ~~Acquisition, other than shares issued~~two, at the Company’s option. During the three and six months ended June 30, 2020, the Company paid dividends in-kind of $13.9 million and $27.7 million, respectively, which was recorded as ~~dividends with respect to shares of the~~additional Convertible Preferred ~~Stock.~~Stock on the Condensed Consolidated Balance Sheets.

Effective June 21, 2019, the Company’s stockholders approved the 2019 Long-Term Incentive Plan (the 2019 Plan) authorizing 8.0 million shares for issuance, plus additional shares underlying awards outstanding under the predecessor plans that are forfeited or cancelled after the effective date of the 2019 Plan. Awards under the 2019 Plan may include stock options, stock appreciation rights, restricted stock, stock units (including restricted stock units (RSUs) and deferred stock units), performance awards (represents any of the awards already listed with a performance-vesting component), other stock-based awards and cash-based awards. Shares remaining available for grant under the predecessor plans were carried over into the 2019 Plan and all future equity awards will be made from the 2019 Plan. Awards granted prior to June 21, 2019 remain subject to the provisions of the predecessor plans.

As of ~~September~~June 30, ~~2019, $178.2~~2020, $182.3 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 ~~1.7~~1.5 years. There were 0 significant capitalized equity-based compensation costs at ~~September~~June 30, ~~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. ~~In prior years, these~~These awards ~~have generally vested~~vest over three to five years following the grant date and have a contractual term of ten years.

During 2019, the Company granted 7.4 million stock options that vest over five years with a contractual term of ten years. The awards also contain an accelerated vesting term for a qualifying retirement during the period. Half of these These awards vest based on a time-based component or a combination of time and performance-based components.

The following table summarizes the other half vest based on a performance-based component which is defined for each year but also includes a catchup feature over the five years. The number of shares that is expected to be issued is adjusted based on the probable achievement of the performance target. The final number of shares issuedstock option activity (in millions, except per share data and ~~the related compensation will be based on the final performance metrics.~~years):

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

~~The~~ exercise prices of outstanding options at ~~September~~June 30, ~~2019~~2020 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 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 0 stock option awards granted during the three or six months ended June 30, 2020. The following table presents the weighted average assumptions used to estimate the fair value of stock option awards granted during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 and 2018.~~2019.

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.

Notes to ARRIS employees to replace a portion of their outstanding awards under ARRIS equity-compensation plans as of the Acquisition date. These awards assumed the same terms and vesting schedule as the ARRIS RSUs they replaced. Unaudited Condensed Consolidated Financial Statements

(In general, these awards are time-vesting over a four-year period, but they contain several provisions that are not in the standard CommScope awards, including restrictive covenants and special age-based provisions for some participants. These awards also contain a provision that accelerates vesting in the event of termination of employment without cause (and for executives, resignation for good reason) within one year following the closing of the Acquisition.millions, unless otherwise noted)

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

Performance share units (PSUs) are 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.

37The following table summarizes the PSU activity (in millions, except per share data):

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

On ~~October 10, 2019,~~July 1, 2020, the Company ~~informed holders~~issued $700 million of 7.125% senior unsecured notes due 2028 (the 2028 Notes). The Company will pay interest on the 2028 Notes semi-annually in arrears on July 1 and January 1 of each year, commencing on January 1, 2021. Unless repurchased or redeemed earlier, the 2028 Notes will mature on July 1, 2028. The 2028 Notes were offered in a private placement exempt from registration under the Securities Act of 1933, as amended (the Securities Act), to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons outside of the ~~2021 Notes that it would redeem $200.0 million aggregate principal amount~~United States in reliance on Regulation S under the Securities Act. The Company used the net proceeds from the offering of the 2028 Notes, together with cash on hand, to redeem and retire all of the outstanding 5.00% senior notes due 2021 ~~Notes on October 20, 2019. The redemption price included~~and the ~~accrued~~outstanding 5.50% senior notes due 2024 and ~~unpaid interest up~~pay fees and expenses related to the ~~date of redemption. Following~~transaction.

On July 8, 2020, the ~~redemption,~~Company repaid $250.0 million, ~~aggregate principal amount of~~plus accrued interest, borrowed under the ~~2021 Notes remained outstanding.~~Revolving Credit Facility.

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

The following narrative is an analysis of the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~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~~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 for wired and wireless networks enable service providers including cable, telephone and digital broadcast satellite operators and media programmers to deliver media, voice, IP data services and Wi-Fi to their subscribers and allow enterprises to experience constant wireless and wired connectivity across complex and varied networking environments. Our solutions are complemented by a broad array of services including technical support, systems design and integration. We are a leader in digital video and Internet Protocol Television distribution systems, broadband access infrastructure platforms, and associated data and voice Customer Premises Equipment. Our global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale.

On April 4, 2019, we completed the acquisition of ARRIS International plc (ARRIS) (the Acquisition) in an all-cash transaction with a total purchase price of approximately $7.7 billion, including debt assumed. The combined company is expected to drive profitable growth in new markets, shape the future of wired and wireless communications, and be in a position to benefit from key industry trends, including network convergence, fiber and mobility everywhere, 5G, Internet of Things (IoT) and rapidly changing network and technology architectures. The operations of the ARRIS business are included in our consolidated operating results for the three and ~~nine~~six months ended ~~September~~June 30, 2020 and 2019; however, for the comparative three and six months ended June 30, 2019, the operations of the ARRIS business are included from the date of the Acquisition, April 4, 2019. Following the Acquisition, we operated and managed CommScope in the following reportable segments: Connectivity Solutions (Connectivity), Mobility Solutions (Mobility), Customer Premises Equipment (CPE), Network & Cloud (N&C) and Ruckus Networks (Ruckus). We are re-evaluating our reportable segments as a result of the on-going integration of the Acquisition. ~~Prior to the Acquisition, we operated and reported based on two operating segments: Connectivity and Mobility.~~

To fund the Acquisition, in February 2019, we issued $1.25 billion of 5.50% senior secured notes due 2024 (the 2024 Secured Notes), $1.5 billion of 6.00% senior secured notes due 2026 (the 2026 Secured Notes) and $1.0 billion of 8.25% senior unsecured notes due 2027 (the New Unsecured Notes and, together with the 2024 Secured Notes and the 2026 Secured Notes, the New Notes), the proceeds from which were released from escrow on the date of the Acquisition. 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 $881.7 million as of September 30, 2019, reflecting a borrowing base of $906.9 million reduced by $25.2 million of letters of credit under the facility. Also as of April 4, 2019, we issued $1.0 billion in Series A Convertible Preferred Stock (the Convertible Preferred Stock) to ~~Carlyle Partners VII S1 Holdings, L.P. (Carlyle)~~. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we recognized ~~$2.2~~$7.6 million and ~~$189.8~~$13.0 million, respectively, of transaction and integration costs ~~primarily~~and $19.6 million and $43.3 million, respectively, of restructuring costs related to the ~~Acquisition.~~Acquisition and integration activities. During the three and six months ended June 30, 2019, we recognized $167.0 million and $187.7 million, respectively, of transaction and integration costs and $46.4 million and $58.8 million, respectively, of restructuring costs related to the Acquisition and integration activities. We will continue to incur ~~transaction~~integration and ~~integration costs as well as~~ restructuring costs ~~to integrate the ARRIS business~~ and ~~those~~such costs may be material.

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

In March 2020, the World Health Organization declared the new strain of coronavirus (COVID-19) a pandemic and the United States (U.S.) declared a national emergency with respect to COVID-19. The COVID-19 pandemic has negatively impacted regional and global economies, disrupted global supply chains and created significant volatility and disruption of financial markets. 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 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 (including implementing new and increased cleaning procedures, health screenings, safety protocols and social distancing requirements where appropriate), work with our customers and vendors to minimize potential disruptions and support our community in addressing the challenges posed by this global pandemic.

The COVID-19 outbreak impacted our financial performance during the three and six months ended June 30, 2020, as discussed more below, particularly in our VCN and Home segments. While the impact in the first quarter 2020 was primarily related to supply constraints due to the shutdown of our factories in Suzhou, China, the impact in the second quarter included a combination of supply constraints, business continuity costs and demand impacts. Currently, most CommScope factories are fully operational,but we have experienced periodic, temporary factory closures in certain jurisdictions due to health concerns. From a demand standpoint, the impact has been mixed with network strain driving increased demand for our Broadband products, while VCN has been negatively impacted due to social distancing measures and the general economic slowdown. We currently expect the decline in revenue caused by the economic slowdown due to COVID-19 to persist through 2020. Additionally, we took a number of actions to reduce our operating costs and manage our balance sheet in light of the COVID-19 pandemic, including headcount reductions, improved working capital management, lower capital spending and suspension of certain discretionary spending.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by domestic and international jurisdictions to prevent disease spread, all of which are uncertain and cannot be predicted. We considered the impact of the economic slowdown on our evaluation of our significant estimates, including goodwill impairment indicators and credit losses, as of June 30, 2020. See the discussion below under “Critical Accounting Policies” for more information regarding the interim goodwill impairment test performed during the second quarter of 2020. Although no significant changes in credit risk were identified, it is possible credit losses could emerge as the impact of the crisis becomes clearer and those losses could be material.

We test goodwill for impairment at the reporting unit level on an interim basis when events occur or circumstances exist that indicate the carrying value may no longer be recoverable. The goodwill impairment test consists of the comparison of the carrying value of a reporting unit to its estimated fair value. We estimate the fair value of a reporting unit using a discounted cash flow (DCF) ~~valuation model.~~method or, as appropriate, a combination of the DCF method and a market approach known as the guideline public company method. Under the DCF method, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. The significant assumptions in the DCF model primarily include, but are not limited to, forecasts of annual revenue growth rates, annual operating income margin, the terminal growth rate and the discount rate used to determine the present value of the cash flow projections. When determining these assumptions and preparing these estimates, we consider historical performance trends, industry data, insight derived from customers, relevant changes in the reporting unit’s underlying business and other market trends that may affect the reporting unit. The discount rate is based on the estimated weighted average cost of capital as of the test date of market participants in the industry in which the reporting unit operates. ~~The assumptions used in~~Under the DCF model are subject to significant judgment and uncertainty. Changes in projected revenue growth rates, projected operating income margins or estimated discount rates due to uncertain market conditions, loss of one or more key customers, changes in technology or other factors could negatively affectguideline public company method, we estimate the fair value ~~in one~~based upon market multiples of revenue and earnings derived from publicly traded companies with similar operating and investment characteristics as the reporting unit. The weighting of the fair value derived from the market approach may vary depending on the level of comparability of these publicly-traded companies to the reporting unit. When comparable public companies are not meaningful or ~~more~~not available, we may estimate the fair value of ~~our~~a reporting ~~units and result in an impairment charge in~~unit using only the ~~future.~~DCF method.

During the second quarter of ~~2019, management~~2020, we determined that indicators of ~~possible goodwill~~ impairment existed for our Home Networks reporting unit due to lower projected operating results, primarily driven by the ~~reporting units from~~accelerated decline in demand for video devices. This trend is projected to continue as consumers adopt the ~~recently acquired ARRIS business. Since~~use of other streaming applications and has been further impacted negatively by the ~~closing~~macro-economic effects of COVID-19. Accordingly, we assessed the fair value of our ~~acquisition~~Home Networks reporting unit as of ~~ARRIS at the beginning of the second quarter of 2019, the ARRIS reporting units (CPE, N&C~~May 31, 2020 and Ruckus) had continued to experience challenges that impacted our performance. The challenges included declines in spending by our cable operator customers that resulted in declines in revenue and operating income for these reporting units and the loss of key leaders of these reporting units following the Acquisition. Certain of these challenges were expected to persist throughout the remainder of 2019 and impact management’s ability to grow these businesses at the rate that was originally estimated when we completed the acquisition of ARRIS. Based on these indicators,recorded a goodwill impairment charge of $206.7 million in the Home segment. This reflects a full impairment of the remaining goodwill in the Home segment, and as such, the Home segment has no remaining goodwill balance as of June 30, 2020.

To determine the fair value of our Home Networks reporting unit and test ~~was performed~~ for ~~these reporting units using a DCF valuation model. As a result, management~~goodwill impairment, we developed a revised forecast for ~~2019~~2020 and updated the annual financial forecasts for the years beyond ~~2019 that consider these challenges. The projections assume a recovery of spending by these customers that begins in~~ 2020. ~~The extent~~We used an income approach (DCF method) because we believe this is the most direct approach to incorporate the specific economic attributes and ~~timing of this recovery are key assumptions in the determination of the fair value~~risk profile of the reporting ~~units. Though~~unit into our valuation model. Consistent with our 2019 annual impairment test, we used a 9.0% discount rate for the interim goodwill impairment test for the Home Networks reporting unit. We determined that the utilization of a market approach for the interim goodwill impairment test would not impact the conclusion.

While no indicators of impairment existed for our other reporting units during the second quarter of 2020, we believe ~~the financial projections used in the DCF valuation model were reasonable~~our Enterprise and ~~achievable, these~~Network and Cloud (N&C) reporting units ~~may continue~~could be at risk due to ~~face~~continued challenges ~~that may affect~~in operating results and our ability to grow these ~~businesses at the rate we estimated~~businesses. The Enterprise reporting unit is in our ~~revised~~VCN segment and the N&C reporting unit is in our Broadband segment. If assumed net sales and cash flow projections ~~that were used to perform the goodwill impairment test. If we do~~are not ~~achieve our forecast,~~achieved in future periods, it is ~~reasonably~~ possible ~~in the near term~~ that the goodwill of ~~the ARRIS~~these or other reporting units could be deemed to be ~~impaired.~~

~~Management did not identify indicators of goodwill impairment in~~impaired and the third quarter of 2019. However, planning activities for 2020 and beyond are expected to be completed during the fourth quarter. The projections that result from those activities could indicate a goodwill impairment and that impairment could be material.

During the second quarter of 2019, we made an accounting principle change to reclassify certain internal handling costs from selling, general and administrative (SG&A) expense to cost of sales. We also enhanced our revenue recognition policy as a result of the Acquisition. Effective January 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, ~~Leases, which changed our policy related to leases. Other than the changes to our internal handling costs policy, the enhancements to our revenue recognition policy and changes to our leases policy, 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 our change in accounting principle related to certain internal handling costs, our enhancements of our revenue recognition policy and the impact~~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 and while the adoption of this new guidance impacted our allowance for doubtful accounts policy, ~~related to leases.~~it 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 AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020 WITH THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2018~~2019

Three Months Ended

September 30,

2019

2018

Amount

% of Net
Sales

Amount

% of Net
Sales

$
Change

%
Change

(dollars in millions, except per share amounts)

Net sales

$
2,380.2

100.0
%

$
1,150.4

100.0
%

$
1,229.8

106.9
%
Gross profit

609.9

25.6

409.7

35.6

200.2

48.9

Operating income (loss)

(50.8
)

(2.1
)

132.2

11.5

(183.0
)

(138.5
)
Non-GAAP adjusted operating income ⁽¹⁾

326.6

13.7

219.0

19.0

107.6

49.1

Non-GAAP adjusted EBITDA ⁽¹⁾

369.8

15.5

237.8

20.7

132.0

55.5

Net income (loss)

(156.5
)

(6.6
)%

63.8

5.5
%

(220.3
)

(345.3
)
Diluted earnings (loss) per share

$
(0.88
)

$
0.33

$
(1.21
)

(366.7
)%

Nine Months Ended

September 30,

2019

2018

Amount

% of Net
Sales

Amount

% of Net
Sales

$
Change

%
Change

(dollars in millions, except per share amounts)

Net sales

$
6,046.4

100.0
%

$
3,510.8

100.0
%

$
2,535.6

72.2
%
Gross profit

1,667.9

27.6

1,264.7

36.0

403.2

31.9

Operating income (loss)

(169.2
)

(2.8
)

400.6

11.4

(569.8
)

(142.2
)
Non-GAAP adjusted operating income ⁽¹⁾

872.9

14.4

658.8

18.8

214.1

32.5

Non-GAAP adjusted EBITDA ⁽¹⁾

973.8

16.1

717.0

20.4

256.8

35.8

Net income (loss)

(492.8
)

(8.2
)%

163.5

4.7
%

(656.3
)

(401.4
)
Diluted earnings (loss) per share

$
(2.70
)

$
0.84

$
(3.54
)

(421.4
)%

	Three Months Ended
	June 30,
	2020						2019
	Amount			% of Net Sales			Amount			% of Net Sales			$ Change			% Change
	(dollars in millions, except per share amounts)
Net sales	$	2,102.8			100.0	%	$	2,566.7			100.0	%	$	(463.9	)		(18.1	)%
Gross profit		656.1			31.2			660.0			25.7			(3.9	)		(0.6	)
Operating loss		(194.8	)		(9.3	)	��	(209.2	)		(8.2	)		14.4		NM
Non-GAAP adjusted EBITDA ⁽¹⁾		279.8			13.3			395.6			15.4			(115.8	)		(29.3	)
Net loss		(321.1	)		(15.3	)%		(334.0	)		(13.0	)%		12.9		NM
Diluted loss per share	$	(1.71	)				$	(1.81	)				$	0.10		NM

	Six Months Ended
	June 30,
	2020						2019
	Amount			% of Net Sales			Amount			% of Net Sales			$ Change			% Change
	(dollars in millions, except per share amounts)
Net sales	$	4,136.0			100.0	%	$	3,666.3			100.0	%	$	469.7			12.8	%
Gross profit		1,297.3			31.4			1,058.1			28.9			239.2			22.6
Operating loss		(226.6	)		(5.5	)		(118.5	)		(3.2	)		(108.1	)	NM
Non-GAAP adjusted EBITDA ⁽¹⁾		511.0			12.4			604.1			16.5			(93.1	)		(15.4	)
Net loss		(481.0	)		(11.6	)%		(336.3	)		(9.2	)%		(144.7	)	NM
Diluted loss per share	$	(2.60	)				$	(1.82	)				$	(0.78	)	NM

Net sales for the three ~~and nine~~ months ended ~~September~~June 30, ~~2019 included ARRIS net~~2020 decreased compared to the prior year period by $265.0 million in the Home segment, $129.7 million in the OWN segment and $71.6 million in the VCN segment. The declines in the Home and OWN segments were driven primarily by a slowdown in sales to both U.S. and international service provider customers as demand for video products and wireless network equipment decreased. The decline in the VCN segment was driven by decreases in sales of ~~$1.3 billion~~enterprise and ~~$2.7 billion, respectively. Excluding~~Wi-Fi products. Net sales in the ~~ARRIS business, CommScope’s~~Broadband segment increased $2.4 million for the three months ended June 30, 2020. Net sales for the six months ended June 30, 2020 increased by approximately $750 million compared to the prior year period due to the Acquisition but this increase was partially offset by declines in the existing CommScope businesses primarily due to lower sales to wireless service providers and enterprise customers.

From a regional perspective, for the three months ended June 30, 2020, net sales were lower ~~for the three and nine months ended September 30, 2019~~ compared to the ~~same~~ prior year periods primarily due to lower volumes, pricing pressure and unfavorable impacts of foreign exchange rate changes of approximately 1% and 2%, respectively. From a regional perspective, we saw lower net salesperiod across all regions, ~~for the three and nine months ended September 30, 2019. For the quarter, the decrease was driven by the United States (U.S.) and the Asia Pacific (APAC) region. The decrease~~including decreases of $147.2 million in the U.S. ~~was driven by declines~~, $112.3 million in spending by our cable operator customers as well as reductions in selling prices and the decrease in APAC was driven by projects in 2018 that did not recur in 2019. For the nine months ended September 30, 2019, the decrease was driven by the APAC region, again due to projects in 2018 that did not recur in 2019, and the Europe, Middle East and Africa (EMEA) region, $101.4 million in the Caribbean and Latin American (CALA) region, $65.4 million in the Asia Pacific (APAC) region and $37.6 million in Canada. From a regional perspective, for the six months ended June 30, 2020, net sales were higher across all regions except for the APAC and CALA regions due to the Acquisition. Excluding the ARRIS business, for the six months ended June 30, 2020, net sales were lower compared to the prior year period across all regions, including decreases of approximately $95 million in the APAC region, $80 million in the EMEA region, $54 million in the U.S., $44 million in the CALA region and $7 million in Canada.

We believe supply constraints and lower demand caused by COVID-19 reduced our net sales ofduring the three and six months ended June 30, 2020. While it is difficult to quantify the demand impacts, we believe the most significant reductions in demand related to COVID-19 for both the three and six months ended June 30, 2020 were in our ~~enterprise solutions~~VCN segment. We estimate that COVID-19 supply chain disruptions reduced revenue by $50 million and ~~unfavorable impacts of foreign exchange rate changes.~~$90 million in the three and six months ended June 30, 2020, respectively. Management currently expects the decline in net sales caused by the economic slowdown to persist through 2020.

Net sales to customers located outside of the U.S. comprised ~~39.8%~~35.6% and ~~40.9%~~37.8% of total net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to ~~43.2%~~41.5% and ~~43.7%~~41.6% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively. For further details by segment, see the section titled “Segment Results” below.

	Three Months Ended											Nine Months Ended											Three Months Ended												Six Months Ended
	September 30,						$		%			September 30,						$		%			June 30,						$			%			June 30,						$			%
	2019			2018			Change		Change			2019			2018			Change		Change			2020			2019			Change			Change			2020			2019			Change			Change
Gross profit	$	609.9		$	409.7		$	200.2		48.9	%	$	1,667.9		$	1,264.7		$	403.2		31.9	%	$	656.1		$	660.0		$	(3.9	)		(0.6	)%	$	1,297.3		$	1,058.1		$	239.2			22.6	%
As a percent of sales		25.6	%		35.6	%							27.6	%		36.0	%							31.2	%		25.7	%								31.4	%		28.9	%
SG&A expense		305.8			159.8			146.0		91.4			972.0			502.5			469.5		93.4			290.9			480.9			(190.0	)		(39.5	)		602.0			666.3			(64.3	)		(9.7	)
As a percent of sales		12.8	%		13.9	%							16.1	%		14.3	%							13.8	%		18.7	%								14.6	%		18.2	%
R&D expense		171.5			44.8			126.7		282.8			399.5			142.4			257.1		180.5			176.1			177.8			(1.7	)		(1.0	)		356.5			228.0			128.5			56.4
As a percent of sales		7.2	%		3.9	%							6.6	%		4.1	%							8.4	%		6.9	%								8.6	%		6.2	%

~~Gross~~Despite lower sales, gross profit was relatively unchanged for the three ~~and nine~~ months ended ~~September~~June 30, ~~2019 was negatively affected by ARRIS~~2020 compared to the prior year period primarily due to $164.1 million of acquisition accounting adjustments ~~of $108.7 million and $272.9 million, respectively, primarily~~in the prior year related mostly to the ~~markup~~mark-up of inventory to its estimated fair ~~value less the estimated costs associated with its sale.~~value. Excluding this ~~additional cost,~~adjustment, gross profit was $824.1 million, or 32.1% of sales, for the three ~~and nine~~ months ended ~~September~~June 30, 2019, gross profit for CommScope was $718.6 million and $1.9 billion, respectively, and gross profit as a percentage of sales was 30.2% and 32.1%, respectively. Excluding the ARRIS business in total, for the three and nine months ended September 30, 2019, CommScope’s gross profit was $318.1 million and $1.2 billion, respectively, and gross profit as a percentage of sales was 30.6% and 35.0%, respectively. For the three and nine months ended September 30, 2019, gross profit andwhich is relatively flat when compared to gross profit as a percentage of sales for the ~~legacy CommScope business decreased~~three months ended June 30, 2020. Gross profit increased for the six months ended June 30, 2020 compared to the prior year period due to ~~lower net sales and~~ the ~~settlement~~addition of ~~patent infringement litigation as described in Note 1 in~~ the ~~Notes to Unaudited Condensed Consolidated Financial Statements included in this Form 10-Q. These unfavorable impacts were offset partially by lower material costs and favorable product mix.~~

~~The Connectivity segment experienced lower gross profit for~~ARRIS business. Excluding the three and nine months ended September 30, 2019 compared to prior year periods primarily as a result of lower volumes and reductions in certain selling prices. For the nine months ended September 30, 2019, the Connectivity segment’s gross profit was also impacted by unfavorable impacts of foreign exchange rate changes on costs, partially offset by favorable product mix. The Mobility segment’sARRIS business, gross profit decreased for the ~~three and nine~~six months ended ~~September~~June 30, ~~2019 compared~~2020 to $717.2 million, or 35.5% of sales, from $846.5 million, or 36.8% of sales, in the prior year ~~periods as a result of the patent infringement litigation settlement and lower net sales~~primarily due to ~~reductions~~lower sales volumes in ~~certain selling prices, partially offset~~the existing CommScope businesses. We estimate that supply chain disruptions and incremental costs related to COVID-19 reduced gross profit by ~~favorable product mix~~$30 million and ~~lower material costs.~~ $45 million for the three and six months ended June 30, 2020, respectively.

For the ~~nine~~three months ended ~~September~~June 30, ~~2019, gross profit for the Mobility segment was also favorably impacted by higher sales volumes and favorable impacts of foreign exchange rate changes on costs.~~

As discussed in Note 1 in the Notes to Unaudited Condensed Consolidated Financial Statements included in this Form 10-Q, we changed our accounting principle to reclassify certain internal handling costs from2020, selling, general and administrative (SG&A) expense decreased primarily due to a reduction of $159.4 million in transaction and integration costs related to the Acquisition and, to a lesser extent, benefits from acquisition synergies and cost ~~of sales. The impact of this change increased cost of sales and decreased gross profit by $14.2 million and $41.9 million for~~savings initiatives. For the ~~three and nine~~six months ended ~~September~~June 30, ~~2018, respectively. All comparisons presented in this management’s discussion and analysis have been adjusted to reflect the impact of this change in accounting principle.~~

2020, SG&A expense ~~for the three months ended September 30, 2019 increased~~decreased compared to the prior year period ~~primarily~~ due to ~~the inclusion~~a reduction of ~~ARRIS SG&A expense (excluding transaction and integration costs) of $152.4~~$174.7 million ~~and~~in transaction and integration costs ~~of $2.2 million.~~related to the Acquisition. Excluding ~~the ARRIS business and~~ transaction and integration costs, SG&A expense ~~decreased $6.0 million~~for the six months ended June 30, 2020 increased due to the addition of SG&A expense of $130.8 million related to the ARRIS business. When compared to the prior year period, SG&A expense for the six months ended June 30, 2020 benefited from acquisition synergies and other cost savings ~~initiatives realized in~~initiatives.

For the ~~third quarter of 2019~~three months ended June 30, 2020, research and development (R&D) expense remained relatively unchanged compared to the prior year period but increased as a ~~percentage~~percent of ~~net~~ sales due to ~~14.5% as a result of lower net~~the decline in current year sales. ~~For~~R&D expense increased for the ~~nine~~six months ended ~~September~~June 30, 2019, SG&A expense increased primarily due to transaction and integration costs of $189.8 million and the inclusion of ARRIS SG&A expense (excluding transaction and integration costs) of $312.5 million. Excluding transaction and integration costs as well as the ARRIS business, SG&A expense decreased $27.5 million for the nine months ended September 30, 2019,2020 compared to the prior year period ~~primarily~~ due to ~~lower incentive compensation and cost savings initiatives.~~the addition of R&D expenses of $121.4 million related to the ARRIS business. Excluding ~~transaction and integration costs and~~ the ARRIS business, ~~SG&A~~R&D expense and R&D expense as a percentage of sales ~~was 14.1% for the nine months ended September 30, 2019.~~

~~Research and development (R&D) expense~~ increased for the ~~three and nine~~six months ended ~~September~~June 30, ~~2019 compared to the prior year periods~~2020 due to the inclusion of ARRIS R&D expenses of $125.1 million and $256.7 million, respectively. Excluding ARRIS, R&D expense for CommScope was relatively unchanged for the three and nine months ended September 30, 2019.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.

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

For the three months ended June 30, 2020, amortization of purchased intangible assets was lower compared to the prior year period because certain of our intangible assets became fully amortized. The amortization of purchased intangible assets was higher in the ~~three and nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the prior year ~~periods~~period primarily due to the ~~additional amortization resulting from the Acquisition. Excluding ARRIS,~~addition of $95.5 million amortization related to ~~CommScope was lower by $8.1 million and $24.4 million~~the ARRIS business. Excluding the ARRIS business, amortization decreased for the ~~three and nine~~six months ended ~~September~~June 30, ~~2019, respectively,~~2020 by $3.6 million compared to the prior year ~~periods~~period because certain of our intangible assets became fully amortized.

The restructuring costs recorded in the three and ~~nine~~six months ended ~~September~~June 30, 2020 and 2019 were primarily related to integrating and preparing to integrate the ARRIS business. ~~The~~From a cash perspective, we paid $23.3 million and $43.1 million to settle restructuring ~~costs recognized in~~liabilities during the ~~prior year periods were primarily~~three and six months ended June 30, 2020, respectively, and expect to pay an additional $21.0 million by the end of 2020 related to ~~the integration of the BNS business.~~

~~No significant~~ restructuring ~~charges are expected~~actions that have been initiated. In addition, we expect to ~~be incurred~~pay $7.3 million between 2021 and 2022 related to ~~complete the previously announced BNS integration initiatives.~~restructuring actions that have been initiated. Additional restructuring actions related to the ~~acquisition of ARRIS~~Acquisition are expected to be identified and the resulting charges and cash requirements are expected to be material. ~~From~~

For the three and six months ended June 30, 2020, we recorded a ~~cash perspective, we paid $26.8~~goodwill impairment charge of $206.7 million ~~and $76.6 million~~related to ~~settle restructuring liabilities~~our Home Networks reporting unit within our Home segment. See the discussion above under “Critical Accounting Policies” for more information regarding the interim goodwill impairment test performed during the second quarter of 2020. We did not record any asset impairment charges during the three ~~and nine~~or six months ended ~~September~~June 30, 2019, respectively, and expect to pay an additional $13.7 million by the end of 2019 related to restructuring actions that have been initiated. In addition, we expect to pay $18.9 million between 2020 and 2022 related to restructuring actions that have been initiated.2019.

Foreign currency gain (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 and six months ended June 30, 2020 compared to the prior year periods was primarily driven by certain unhedged currencies.

The increase in other income, net for the three months ended ~~September~~June 30, ~~2019~~2020 compared to the prior year period was primarily due to gains ~~of $6.1 million related to the sale of~~on certain investments in the current year period partially offset by the decrease in non-service related net periodic benefit income of $1.5 million. The decrease in other income, net for the nine months ended September 30, 2019 was due to a decrease in non-service related net periodic benefit income of $5.5 million and other miscellaneous income partially offset by the gains on investments during the third quarter of 2019 described above.investments.

Interest expense for the three ~~and nine~~ months ended ~~September~~June 30, ~~2019 increased~~2020 decreased compared to the prior year ~~periods~~period due primarily to lower variable interest rates on our senior secured term loan due 2026 (the 2026 Term Loan) which reduced interest expense by approximately $16 million. Also contributing to the ~~financing~~decrease was the prior year period write off of ~~the Acquisition. In February 2019, we issued the New Notes, which were held~~$4.1 million in ~~escrow until the acquisition date, April 4, 2019. In February 2019, we also secured the borrowing of $3.2 billion, less $32.0 million of~~ original ~~issue~~issuance discount ~~under the 2026 Term Loan which was funded on April 4, 2019 as well. We began accruing interest on the New Notes~~ and ~~ticking fees~~debt issuance costs related to the ~~2026 Term Loan in February 2019. We incurred $110.8 million and $259.9 million~~repayment of ~~incremental interest expense during the three and nine months ended September 30, 2019, respectively, as a result of this acquisition-related debt.~~

We used the proceeds from the New Notes and a portion of the 2026 Term Loan, together with cash on hand and proceeds from the issuance of the Convertible Preferred Stock to finance the acquisition of ARRIS. The remaining proceeds from the 2026 Term Loan were used to pay off the existingour senior secured term loan due 2022 (the 2022 Term Loan)~~. We also made a voluntary payment on~~, which occurred when we obtained the ~~2022~~2026 Term Loan ~~in the first quarter of 2019. In connection~~ with the ~~repayment~~financing of the ~~2022 Term Loan, $7.7 million of original issue discount~~Acquisition, and lower debt ~~issuance costs were written off and included in interest expense in the nine months ended September 30, 2019.~~

~~In August 2019, we redeemed $200.0 million aggregate principal amount of~~balances on our 5.00% senior notes due 2021 (the 2021 Notes) ~~and accelerated~~due to the ~~recognition of $0.9 million of debt issuance costs~~voluntary repayments in ~~interest expense.~~

~~Our weighted average effective interest rate on outstanding borrowings, including~~2019. Interest expense for the ~~amortization of debt issuance costs and original issue discount, was 6.18% at September 30, 2019, 5.73% at December 31, 2018 and 5.70% at September 30, 2018.~~

~~Interest income increased during the nine~~six months ended ~~September~~June 30, ~~2019~~2020 increased compared to the prior year period due to ~~$10.9 million~~the financing of the Acquisition that occurred in February 2019. The increase was partially offset by lower variable interest ~~earned~~rates and lower debt balances on the ~~proceeds of~~2021 Notes due to the ~~New Notes that were held~~voluntary repayments in ~~an interest-bearing escrow account until the Acquisition date.~~2019.

In March 2019, we entered into pay-fixed, receive-variable interest rate swap derivatives and designated them as cash flow hedges of interest rate risk. These swaps effectively fixed the interest rate on a portion the 2026 Term Loan. The total notional amount of the interest rate swap derivatives as of ~~September~~June 30, ~~2019~~2020 was $600 million with outstanding maturities of up to ~~fifty-four~~forty-five 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 5.64% at June 30, 2020, 6.17% at December 31, 2019 and 6.26% at June 30, 2019.

Interest income decreased during the three and six months ended June 30, 2020 primarily due to $0.8 million and $10.9 million, respectively, of interest earned on the proceeds of the acquisition-related debt that were held in an interest-bearing escrow account in the prior year period until the Acquisition date.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, our effective tax rate was ~~24.8%~~4.5% and ~~15.1%~~8.8%, respectively, and we recognized a tax benefit of ~~$51.7~~$15.1 million on a pretax loss of ~~$208.2~~$336.2 million and a tax benefit of ~~$87.6~~$46.5 million on a pretax loss of ~~$580.4~~$527.5 million, respectively. ~~For~~Our tax benefit was less than the statutory rate of 21.0% in both the three and ~~nine~~six months ended ~~September~~June 30, 2020 primarily due to a goodwill impairment charge of $206.7 million, for which minimal tax benefits were recorded, and $20.3 million and $21.9 million, respectively, of tax expense related to state valuation allowances. Excess tax costs of $3.7 million and $7.8 million related to equity compensation awards also impacted the tax benefit unfavorably for the three and six months ended June 30, 2020, respectively.

Our effective income tax rate was 10.1% and 9.6% for the three and six months ended June 30, 2019, ~~our~~respectively. We recognized a tax benefit of $37.5 million on a pretax loss of $371.5 million and a tax benefit of $35.9 million on a pretax loss of $372.2 million, respectively. Our tax benefit was unfavorably impacted favorably by the impact of federal tax credits, benefits recognized from adjustments related to prior years’ tax returns and the expiration of statutes of limitations on various uncertain tax positions and impacted unfavorably by the impact of U.S. anti-deferral provisions and foreign withholding ~~taxes. Excess~~taxes, but this impact was partially offset by the favorable impact of federal tax credits for the three and six months ended June 30, 2019. The impact of excess tax costs related to equity-based compensation awards ~~had an unfavorable impact on our tax benefit of $1.1 million and $1.5 million~~was not material for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~

The effective income tax rate of 2.7% for the three months ended September 30, 2018 was lower than the statutory rate of 21.0% due to a reduction in tax expense of $24.1 million related to the expiration of statutes of limitations on various uncertain tax positions. The effective income tax rate of 23.9% for the nine months ended September 30, 2018 was higher than the statutory rate of 21% 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 new U.S. anti-deferral provisions and the impact of repatriation taxes. These increases to the effective tax rate were partially offset by a reduction due to the expiration of statutes of limitations on various uncertain tax positions discussed above and the favorable impact of $4.7 million of excess tax benefits related to equity-based compensation awards for the nine months ended September 30, 2018.

Three Months Ended

September 30,

2019

2018

Amount

% of Net
Sales

Amount

% of Net
Sales

$
Change

%
Change

(dollars in millions)
Net sales by segment:

Connectivity

$
634.5

26.7

%

$
731.7

63.6

%

$
(97.2
)

(13.3
)
%
Mobility

405.9

17.1

418.7

36.4

(12.8
)

(3.1
)

CPE

826.4

34.7

—

—

826.4

NM

N&C

376.9

15.8

—

—

376.9

NM

Ruckus

136.5

5.7

—

—

136.5

NM

Consolidated net sales

$
2,380.2

100.0

%

$
1,150.4

100.0

%

$
1,229.8

106.9

%

Operating income (loss) by segment:

Connectivity

$
55.1

8.7

%

$
94.9

13.0

%

$
(39.8
)

(41.9
)
%
Mobility

(2.0
)

(0.5
)

37.3

8.9

(39.3
)

(105.4
)

CPE

3.8

0.5

—

—

3.8

NM

N&C

(45.5
)

(12.1
)

—

—

(45.5
)

NM

Ruckus

(62.1
)

(45.5
)

—

—

(62.1
)

NM

Consolidated operating income (loss)

$
(50.8
)

(2.1
)
%

$
132.2

11.5

%

$
(182.9
)

(138.4
)
%

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

Connectivity

$
108.6

17.1

%

$
147.4

20.1

$
(38.8
)

(26.3
)
%
Mobility

78.0

19.2

71.6

17.1

6.4

8.9

CPE

49.1

5.9

—

—

49.1

NM

N&C

83.4

22.1

—

—

83.4

NM

Ruckus

7.5

5.5

—

—

7.5

NM

Non-GAAP consolidated adjusted operating
   income ⁽¹⁾

$
326.6

13.7

%

$
219.0

19.0

$
107.6

49.1

%

Non-GAAP adjusted EBITDA by
   segment: ⁽¹⁾

Connectivity

$
121.0

19.1

%

$
160.8

22.0

%

$
(39.8
)

(24.8
)
%
Mobility

83.4

20.5

77.0

18.4

6.4

8.3

CPE

59.7

7.2

—

—

59.7

NM

N&C

94.9

25.2

—

—

94.9

NM

Ruckus

10.8

7.9

—

—

10.8

NM

Non-GAAP consolidated adjusted EBITDA ⁽¹⁾

$
369.8

15.5

%

$
237.8

20.7

%

$
132.0

55.5

%

	Three Months Ended
	June 30,
	2020							2019
	Amount			% of Net Sales				Amount			% of Net Sales				$ Change			% Change
	(dollars in millions)
Net sales by segment:
Broadband	$	671.9			32.0		%	$	669.5			26.1		%	$	2.4			0.4		%
Home		624.0			29.7				889.0			34.6				(265.0	)		(29.8	)
OWN		328.4			15.6				458.1			17.8				(129.7	)		(28.3	)
VCN		478.5			22.8				550.1			21.4				(71.6	)		(13.0	)
Consolidated net sales	$	2,102.8			100.0		%	$	2,566.7			100.0		%	$	(463.9	)		(18.1	)	%

Operating income (loss) by segment:
Broadband	$	8.9			1.3		%	$	(192.2	)		(28.7	)	%	$	201.1		NM
Home		(222.9	)		(35.7	)			(25.0	)		(2.8	)			(197.9	)	NM
OWN		51.4			15.7				104.5			22.8				(53.1	)		(50.8	)	%
VCN		(32.2	)		(6.7	)			(96.5	)		(17.5	)			64.3		NM
Consolidated operating loss	$	(194.8	)		(9.3	)	%	$	(209.2	)		(8.2	)	%	$	14.4		NM

Adjusted EBITDA by segment:
Broadband	$	130.2			19.4		%	$	117.9			17.6		%	$	12.3			10.4		%
Home		35.4			5.7				62.1			7.0				(26.7	)		(43.0	)
OWN		76.0			23.1				136.3			29.8				(60.3	)		(44.2	)
VCN		38.2			8.0				79.3			14.4				(41.1	)		(51.8	)
Non-GAAP consolidated adjusted EBITDA ⁽¹⁾	$	279.8			13.3		%	$	395.6			15.4		%	$	(115.8	)		(29.3	)	%

Nine Months Ended

September 30,

2019

2018

Amount

% of Net
Sales

Amount

% of Net
Sales

$
Change

%
Change

(dollars in millions)
Net sales by segment:

Connectivity

$
1,951.5

32.3

%

$
2,145.8

61.1

%

$
(194.3
)

(9.1
)
%
Mobility

1,388.7

23.0

1,365.0

38.9

23.7

1.7

CPE

1,715.4

28.4

—

—

1,715.4

NM

N&C

707.5

11.7

—

—

707.5

NM

Ruckus

283.3

4.7

—

—

283.3

NM

Consolidated net sales

$
6,046.4

100.0

%

$
3,510.8

100.0

%

$
2,535.6

72.2

%

Operating income (loss) by segment:

Connectivity

$
145.5

7.5

%

$
233.4

10.9

%

$
(87.9
)

(37.7
)
%
Mobility

157.2

11.3

167.2

12.2

(10.0
)

(6.0
)

CPE

(21.2
)

(1.2
)

—

—

(21.2
)

NM

N&C

(275.1
)

(38.9
)

—

—

(275.1
)

NM

Ruckus

(175.6
)

(62.0
)

—

—

(175.6
)

NM

Consolidated operating income (loss)

$
(169.2
)

(2.8
)
%

$
400.6

11.4

%

$
(569.8
)

(142.2
)
%

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

Connectivity

$
333.8

17.1

%

$
399.0

18.6

%

$
(65.2
)

(16.3
)
%
Mobility

308.0

22.2

259.8

19.0

48.2

18.6

CPE

101.7

5.9

—

—

101.7

NM

N&C

119.2

16.8

—

—

119.2

NM

Ruckus

10.2

3.6

—

—

10.2

NM

Non-GAAP consolidated adjusted operating
   income ⁽¹⁾

$
872.9

14.4

%

$
658.8

18.8

%

$
214.1

32.5

%

Non-GAAP adjusted EBITDA by
   segment: ⁽¹⁾

Connectivity

$
370.8

19.0

%

$
440.6

20.5

%

$
(69.8
)

(15.8
)
%
Mobility

324.6

23.4

276.4

20.2

48.2

17.4

CPE

121.8

7.1

—

—

121.8

NM

N&C

139.9

19.8

—

—

139.9

NM

Ruckus

16.7

5.9

—

—

16.7

NM

Non-GAAP consolidated adjusted EBITDA ⁽¹⁾

$
973.8

16.1

%

$
717.0

20.4

%

$
256.8

35.8

%

	Six Months Ended
	June 30,
	2020							2019
	Amount			% of Net Sales				Amount			% of Net Sales				$ Change			% Change
	(dollars in millions)
Net sales by segment:
Broadband	$	1,285.4			31.1		%	$	995.9			27.2		%	$	289.5			29.1		%
Home		1,225.4			29.6				889.0			24.2				336.4			37.8
OWN		677.2			16.4				849.0			23.2				(171.8	)		(20.2	)
VCN		948.0			22.9				932.4			25.4				15.6			1.7
Consolidated net sales	$	4,136.0			100.0		%	$	3,666.3			100.0		%	$	469.7			12.8		%

Operating income (loss) by segment:
Broadband	$	(9.7	)		(0.8	)	%	$	(167.3	)		(16.8	)	%	$	157.6		NM
Home		(260.5	)		(21.3	)			(25.0	)		(2.8	)			(235.5	)	NM
OWN		116.4			17.2				175.4			20.7				(59.0	)		(33.6	)	%
VCN		(72.8	)		(7.7	)			(101.6	)		(10.9	)			28.8		NM
Consolidated operating loss	$	(226.6	)		(5.5	)	%	$	(118.5	)		(3.2	)	%	$	(108.1	)	NM

Adjusted EBITDA by segment:
Broadband	$	222.9			17.3		%	$	176.1			17.7		%	$	46.8			26.6		%
Home		47.3			3.9				62.1			7.0				(14.8	)		(23.8	)
OWN		164.9			24.4				237.3			28.0				(72.4	)		(30.5	)
VCN		75.9			8.0				128.6			13.8				(52.7	)		(41.0	)
Non-GAAP consolidated adjusted EBITDA ⁽¹⁾	$	511.0			12.4		%	$	604.1			16.5		%	$	(93.1	)		(15.4	)	%

Our ~~Connectivity~~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 N&C 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 and ~~connectivity solutions~~hardened closures.

Net sales for ~~use in data centers and business enterprise, telecommunications, cable television and residential broadband networks. The Connectivity portfolio includes network solutions~~the Broadband segment were relatively unchanged for indoor and outdoor network applications. Indoor network solutions are found in commercial buildings and data centers, while outdoor network solutions are found in both local-area and wide-area networks, central offices and headends, and “last-mile” fiber-to-the-x (FTTX) installations.

~~Connectivity segment net sales were lower in~~ the three ~~and nine~~ months ended ~~September~~June 30, ~~2019~~2020 compared to the prior year periods primarily due to lower sales volumes and pricing pressure. Foreign exchange rate changes negatively impacted net sales by approximately 1% and 2% for the three and nine months ended September 30, 2019, respectively. From a regional perspective, the Connectivity segment saw lower net sales across all regions especially in the U.S. and the EMEA and APAC regions. Net sales in the U.S. were down due to declines in spending by our cable operator customers. Sales in the EMEA region were lower due to decreases in sales of enterprise solutions and to a lesser extent the impact of unfavorable foreign exchange rate changes. The APAC region experienced lower net sales primarily due to lower sales of our enterprise solutions but these declines were partially offset by increases in our other connectivity solutions.

Connectivity segment operating income and non-GAAP adjusted EBITDA decreased during the three and nine months ended September 30, 2019 compared to the prior year periods primarily due to lower sales volumes and reductions in certain selling prices. For the nine months ended September 30, 2019, Connectivity segment operating income and non-GAAP adjusted EBITDA were also negatively impacted by unfavorable foreign exchange rate changes on costs but this was offset by lower incentive compensation and favorable product mix. Connectivity segment operating income also decreased due to higher transaction and integration costs and restructuring costs offset partially by lower intangible amortization, all of which are excluded from non-GAAP adjusted EBITDA. See “Reconciliation of Non-GAAP Measures.”

We expect demand for our enterprise Connectivity 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 Connectivity products to be driven by global deployment of fiber-optic solutions for FTTX 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 Connectivity segment to decline modestly.

Our Mobility segment provides the integral building blocks for cellular base station sites and related connectivity, while focusing 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. 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.

Mobility segment net sales decreased during the three months ended September 30, 2019 compared to the prior year period driven by lower sales volumes and pricing pressures, partially offset by favorable mix.period. From a regional perspective, for the three months ended ~~September~~June 30, ~~2019,~~2020, net sales increased in the ~~Mobility segment saw lower sales~~U.S. by $47.3 million but this increase was mostly offset by decreases across the other major regions including $26.1 million in the CALA region, $7.8 million in the EMEA region, $6.6 million in the APAC region and ~~the Caribbean and Latin American (CALA) region. These decreases~~$4.4 million in Canada. Broadband segment net sales were ~~offset partially by stronger sales~~higher in the ~~EMEA region and the U.S. Our Mobility segment experienced a modest increase in net sales during the nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the prior year period ~~driven by stronger~~primarily as a result of the Acquisition. For the six months ended June 30, 2020 and 2019, incremental net sales ~~volumes~~from the ARRIS business were approximately $653 million and $331 million, respectively. From a regional perspective, for the six months ended June 30, 2020, excluding the ARRIS business, Broadband segment net sales increased approximately $19 million in the U.S. ~~due to~~but decreased across all other major regions, including decreases of approximately $18 million in the ~~continued build out of next generation 4G networks that support commercial and public safety markets, partially offset by pricing pressures. Mobility segment net sales also saw an increase~~CALA region, $16 million in the APAC region, $14 million in the EMEA region ~~but~~and $4 million in Canada. Supply constraints related to the ~~increases in the U.S. and the EMEA region were partially offset by a decrease in the APAC region during the nine months ended September 30, 2019. Foreign exchange rate changes~~COVID-19 pandemic negatively ~~impacted Mobility~~affected Broadband segment net sales ~~by approximately 1% for both the three and nine months ended September 30, 2019 compared to the prior year periods.~~

~~Mobility segment operating income decreased~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 primarily~~2020. However, we believe the segment also benefitted from increased demand for certain of its Broadband segment products. Management currently expects that the impact from COVID-19 will not significantly affect the Broadband segment for the remainder of 2020.

For the three and six months ended June 30, 2020, Broadband segment operating income increased mainly due to reductions in transaction and integration costs of $107.1 million and $111.9 million, respectively, reductions in acquisition accounting adjustments related to the mark-up of inventory to its estimated fair value and deferred revenue of $77.0 million and $74.2 million, respectively, and reductions in restructuring costs of $14.1 million and $12.2 million, respectively. Transaction and integration costs, acquisition accounting adjustments and restructuring costs are not reflected in adjusted EBITDA. For the three and six months ended June 30, 2020, Broadband segment adjusted EBITDA increased due to the ~~$55.0 million settlement~~impact of ~~a patent infringement claim (see Note 1 in~~cost savings initiatives offset partially by unfavorable product mix. Since the ~~Notes to Unaudited Condensed Consolidated Financial Statements included in this Form 10-Q). This settlement was excluded from~~Broadband segment includes the ~~calculation of non-GAAP~~acquired N&C business, both operating income and adjusted EBITDA for the ~~Mobility segment, which increased for the three and nine~~six months ended ~~September~~June 30, ~~2019 compared to~~2020 are higher than the prior year ~~periods. The increase in adjusted EBITDA for the three months ended September 30, 2019 was primarily~~period due to ~~cost savings initiatives and favorable product mix, partially offset by pricing pressures. The increase~~the incremental period of ARRIS results included in ~~adjusted EBITDA for~~ the nine months ended September 30, 2019 was primarily due to increases in sales volumes, cost savings initiatives, favorable impacts of foreign exchange rate changes on cost and favorable product mix, partially offset by pricing pressures. In addition to the litigation settlement, operating income was also negatively impacted by higher transaction and integration costs offset partially by lower restructuring costs and intangible amortization, all of which are excluded from non-GAAP adjusted EBITDA.current year. See “Reconciliation of ~~Non-GAAP Measures.”~~Segment Adjusted EBITDA” below.

Our sales to wireless operators can be project-based and volatile. We expect longer-term demand for our Mobility 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 Mobility 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 Mobility 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 near-term net sales in our Mobility segment to decline modestly. In addition, 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.

Our ~~CPE~~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’~~service providers’ network, such as digital subscriber line ~~(DSL)~~ and cable modems and telephony and data gateways which incorporate routing and Wi-Fi functionality. Video offerings include set top boxes that support cable, satellite and IPTV content delivery and include products such as digital video recorders, ~~(DVRs),~~ high definition set top boxes and hybrid set top devices.

Net sales for the Home segment decreased for the three months ended June 30, 2020 primarily due to ~~customers outside~~lower sales volumes of video products to both U.S. and international service provider customers. From a regional perspective, for the three months ended June 30, 2020, sales were down across all major regions including decreases of $96.2 million in the U.S. ~~comprised 38.2%~~, $61.1 million in the CALA region, $56.6 million in the EMEA region, $26.4 million in the APAC region and ~~40.2% of total CPE~~$24.7 million in Canada. Net sales for the Home segment increased for the six months ended June 30, 2020 because the prior year period only included net sales since the April 4, 2019 acquisition date. We believe supply chain disruptions and lower demand caused by the COVID-19 pandemic contributed to the decline in Home segment net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively. These sales to international customers were primarily to customers~~2020. We anticipate ongoing softness in the ~~EMEA and CALA regions. CPE~~Home segment ~~net sales were unfavorably impacted by acquisition accounting adjustments related~~for the remainder of 2020 partially due to ~~deferred revenue~~the impacts of ~~$3.3 million and $4.0 million~~COVID-19 but also due to the continuing declines in demand for video products.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~

~~Operating income for our CPE~~2020, the Home segment ~~for~~operating loss increased compared to the prior year period primarily due to the goodwill impairment charge of $206.7 million in the current year period. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020, Home segment operating income was ~~negatively~~favorably impacted by $3.3 million and $27.3 million, respectively, of acquisition accounting adjustments related to deferred revenue and the mark-up of inventory to its fair value. Operating income was also negatively impacted by $6.8 million and $21.9 million of restructuring costs for the three and nine months ended September 30, 2019, respectively. Acquisition accounting adjustments and restructuring charges are not reflectedreductions in ~~non-GAAP adjusted EBITDA.~~

We expect near-term sales in our CPE segment to remain flat or to decline primarily due to a continued reduction in the U.S. PayTV market as it continues to be impacted by the growth in over-the-top streaming and net video subscriber reductions and slower international video deployments. We expect these dynamics to be partially offset by a slightly increasing broadband market.

Our N&C segment’s product solutions include cable modem termination systems, video infrastructure, distribution and transmission equipment and cloud solutions that enable facility-based service providers to construct a state-of-the-art residential and metro distribution network. The portfolio also includes a full suite of global services that offer technical support, professional services and system integration to enable solutions sales of our end-to-end product portfolio.

Net sales to customers outside the U.S. comprised 35.2% and 40.2% of total N&C segment net sales for the three and nine months ended September 30, 2019, respectively. These sales to international customers were spread across all major geographic regions. N&C segment net sales were unfavorably impacted by acquisition accounting adjustments related to deferred revenue of $7.0 million and $20.4 million, respectively, for the three and nine months ended September 30, 2019.

~~Operating income for our N&C segment was negatively impacted by $57.7 million and $137.7 million related to~~ acquisition accounting adjustments related to the mark-up of inventory to its estimated fair value and deferred revenue of $20.0 million and $15.0 million, respectively, and reductions in restructuring costs of $10.2 million and $7.7 million, respectively, but these were partially offset by the unfavorable impacts of higher patent and litigation settlements of $4.5 million and $9.8 million, respectively. Asset impairments, acquisition accounting adjustments, restructuring costs and patent and litigation settlements are not reflected in adjusted EBITDA. For the three and six months ended June 30, 2020, Home segment adjusted EBITDA decreased primarily due to lower sales. See “Reconciliation of Segment Adjusted EBITDA” below.

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 and six months ended June 30, 2020 compared to the prior year periods primarily due to a slowdown in sales of wireless network equipment to both U.S. and international service provider customers. From a regional perspective, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively. Operating income was also negatively impacted~~2020, OWN segment net sales were lower across all regions and were primarily driven by ~~$5.5~~decreases in the U.S. of $88.0 million and ~~$27.0~~$90.4 million, respectively, the EMEA region of ~~restructuring costs for~~$20.4 million and $35.6 million, respectively, and the ~~three~~APAC region of $13.6 million and ~~nine months ended September 30, 2019,~~$29.7 million, respectively. For the nine months ended September 30, 2019, operating income for our N&C segment was also negatively impacted by $99.9 million of transaction and integration costs. Acquisition accounting adjustments, restructuring charges and transaction and integration costs are not reflected in non-GAAP adjusted EBITDA.

We expect near-term sales for the N&C segment to remain relatively flat. We anticipate that the reduced network spend we have seen so far this year will continue in the short term and a return to higher level of capital spend by cable operators will push farther out than we had originally anticipated. The cable industry is going through a process of transformation and evaluating a variety of new network architectures to further expand plant capacity. Distributed Access Architecture (DAA) is complex and there are a variety of approaches. As different models for plant upgrades are assessed, cable operators are spending cautiously to keep inventories in check during the transition. We benefit from a large footprint of outside plant electronics as well as of field upgradeable nodes which makes a move to DAA as simple as plugging in a module. The fundamental drivers for investing in the broadband network remain unchanged. Increased subscriber count, capacity utilization and increased access speeds continue to grow. We believe ~~we are positioned to capture our share~~a portion of ~~this market demand given our advantaged product portfolio and deep customer relationship, and we expect better N&C segment performance~~the decline in ~~2020.~~

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

~~Net sales to customers outside the U.S. comprised 43.6% and 44.2% of total Ruckus~~OWN segment net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively. Sales~~2020 was caused by lower demand as a result of the macroeconomic slowdown caused by the COVID-19 pandemic. We currently believe the impact from COVID-19 could continue to ~~international customers were~~negatively affect the OWN segment for the remainder of 2020.

OWN segment operating income and adjusted EBITDA decreased for the three and six months ended June 30, 2020 compared to the prior year periods primarily due to ~~customers~~the decrease in net sales. See “Reconciliation of Segment Adjusted EBITDA” below.

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.

For the three months ended June 30, 2020, net sales decreased in the VCN segment primarily due to the impact of the COVID-19 pandemic. From a regional perspective, for the three months ended June 30, 2020, net sales decreased across all major regions including decreases of $27.5 million in the EMEA region, $19.0 million in the APAC region, $10.3 million in the U.S., $7.9 million in Canada and ~~APAC regions. Ruckus~~$6.9 million in the CALA region. VCN segment net sales were ~~unfavorably impacted by acquisition accounting adjustments~~higher in the six months ended June 30, 2020 compared to the prior year period primarily as a result of the Acquisition. For the six months ended June 30, 2020 and 2019, incremental net sales related to ~~deferred revenue of $3.6~~the ARRIS business were $237.5 million and ~~$7.9~~$147.6 million. From a regional perspective, for the six months ended June 30, 2020, excluding the ARRIS business, VCN segment net sales increased approximately $17 million in the U.S. but decreased across all other major regions, including decreases of approximately $49 million in the APAC region, $29 million in the EMEA region, $9 million in the CALA region and $3 million in Canada. We believe the primary driver for lower VCN segment net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~

~~Operating income for our Ruckus~~2020 was lower demand resulting from the COVID-19 pandemic. Management currently expects the impact of COVID-19 to continue to negatively affect the VCN segment for the remainder of 2020.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 was negatively impacted by $47.8 million and $107.8 million, respectively, of~~2020, VCN segment operating loss decreased primarily due to reductions in acquisition accounting adjustments related to the mark-up of inventory to its estimated fair value of $58.4 million and ~~deferred revenue. In addition, for the nine months ended September 30, 2019, the Ruckus segment was negatively impacted by~~$56.1 million, respectively, and reductions in transaction and integration costs of ~~$35.2 million.~~$44.3 million and $50.0 million, respectively. These improvements were offset partially by the impacts of lower VCN segment net sales. VCN segment operating results for the six months ended June 30, 2019 only include the acquired Ruckus business after the April 4, 2019 acquisition date, which affects the segment’s comparability to the current year period. For the three and six months ended June 30, 2020, adjusted EBITDA decreased primarily due to lower sales and to a lesser extent, unfavorable product mix, offset partially by the impacts of cost savings initiatives. Acquisition accounting adjustments and transaction and integration costs are not reflected in ~~non-GAAP~~ adjusted EBITDA.

~~We expect near-term net sales to be flat for our Ruckus segment. While we remain confident in the long-term growth~~ See “Reconciliation of ~~this business, we are focused on optimizing the cost structure to align to current sales trends to preserve profitability.~~Segment Adjusted EBITDA” below.

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 our credit facilities. ~~To fund the Acquisition, on February 19, 2019~~In April 2020, we ~~issued the New Notes, the proceeds from which were held in escrow until they were released on April 4, 2019, the Acquisition date. In February 2019, we also~~borrowed $250.0 million under our senior secured the borrowing of $3.2 billion under the 2026 Term Loan with an interest rate of LIBOR plus 3.25% that was funded as of the Acquisition date. In addition, at the closing of the Acquisition, we entered into a new asset-based revolving credit facility. Availability under the new asset-based revolving credit facility ~~was $881.7 million~~(the Revolving Credit Facility) as a precautionary measure to reinforce our cash position and preserve financial flexibility in light of ~~September 30, 2019, reflecting a borrowing base of $906.9 billion reduced by $25.2 million of letters of credit issued under~~ the ~~facility.~~uncertainty in the global economy at that time resulting from the COVID-19 pandemic. We subsequently repaid the full amount in July 2020 because we did not ~~borrow under~~believe the ~~new asset-based revolving credit facility~~proceeds were needed for future liquidity as our cash flow generation has continued to ~~fund~~improve and the ~~Acquisition, but we did borrow and repay $15.0 million under the facility in the second quarter of 2019. In addition~~broader financial markets have continued to incremental new debt, we funded the Acquisition by issuing the Convertible Preferred Stock to Carlyle for an aggregate investment of $1.0 billion. The Convertible Preferred Stock pays dividends at an annual rate of 5.50%, with dividends payable quarterly, and is convertible at the option of the holders at any time into shares of CommScope common stock at a price of $27.50 per share, subject to certain limits on the number of shares that may be issued unless we obtain shareholder approval.stabilize. On a long-term basis, our potential sources of liquidity also include raising capital through the issuance of additional equity and/or debt.

The primary uses of liquidity include debt service requirements (including voluntary debt repayments or redemptions), funding working capital requirements, paying acquisition integration costs, 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 new asset-based revolving credit facility,~~the Revolving Credit Facility, will be sufficient to meet our presently anticipated future cash needs. We may experience volatility in cash flows between periods due to, among other reasons, variability in the timing of vendor payments and customer receipts. We may, from time to time, borrow additional amounts under ~~our revolving credit facility~~the Revolving Credit Facility or issue securities, if market conditions are favorable, to meet future cash needs or to reduce our borrowing costs.

Although there are no financial maintenance covenants under the terms of our senior notes, there is a limitation, among other limitations, on certain future borrowings based on an adjusted leverage ratio or a fixed charge coverage ratio. These ratios are based on financial measures similar to ~~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 ofto certain events, including acquisitions, synergies and savings from cost reduction initiatives such as facility closures and headcount reductions. For the twelve months ended June 30, 2020, our pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $1,311.7 million, which included annualized synergies expected to be realized in the next two years ($65.9 million) and annualized savings expected from announced cost reduction initiatives ($41.4 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 ~~September~~June 30, ~~2019.~~2020.

Cash and cash equivalents ~~decreased~~increased during the ~~first nine~~six months ~~of 2019 primarily~~ended June 30, 2020 due to ~~funding~~ the ~~Acquisition, settling assumed ARRIS debt, payments on~~borrowing of $250.0 million under the ~~2022 Term Loan, redemptions~~Revolving Credit Facility and cash generated from operating activities of $166.3 million, partially offset by the redemption of $100.0 million of the 2021 Notes ~~acquisition-related payments~~ and ~~restructuring payments all partially offset by the addition of cash and cash equivalents from the ARRIS business.~~$47.7 million in capital expenditures. As of ~~September~~June 30, ~~2019,~~2020, approximately ~~47.0%~~33% of our cash and cash equivalents were held outside the U.S.

Working capital, excluding cash and cash equivalents and the current portion of long-term debt, ~~increased~~decreased during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 due to ~~the Acquisition. Excluding the ARRIS business, working capital, excluding cash and cash equivalents, did not change significantly, with higher~~a decrease in accounts receivable and inventory balances being offset by higher accrued interest related to the debt incurred to finance the Acquisition. The higher accounts receivable balances relate to modestly slower collections. Inventory balances have increased this year due to ~~the timing of sales.~~favorable collections and increases in accounts payable and other liabilities, but these were offset partially by an increase in inventory. The ~~increase~~net reduction in total capitalization during the ~~nine~~three and six months ended ~~September~~June 30, ~~2019~~2020 reflected the ~~proceeds from~~net loss for the ~~New Notes funded in~~period and the ~~first quarter, the 2026 Term Loan, which was funded as~~redemption of $100.0 million of the ~~Acquisition date, and~~2021 Notes, offset partially by the ~~Convertible Preferred Stock, all of which were utilized to fund a substantial portion of~~$250.0 million borrowing under the ~~Acquisition on April 4, 2019.~~Revolving Credit Facility.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, operating cash ~~generated from operating activities decreased~~flows increased compared to the prior year period ~~despite the addition of the ARRIS business~~ primarily due to ~~the payment~~more favorable collections of ~~$206.9 million more in interest~~accounts receivable as well as a ~~result~~reduction of ~~the acquisition-related debt and payments of $205.1~~$185.0 million ofin cash paid for transaction and integration costs related to the ~~Acquisition during~~Acquisition. These increases in cash generation were offset partially by $120.0 million in additional interest paid in the ~~nine months ended September 30, 2019. We also~~current year period as a result of the Acquisition-related debt as well as $55.0 million paid ~~$45.5 million more~~ in ~~restructuring costs for~~ the ~~nine months ended September 30, 2019 compared~~current year period related to ~~the prior year period.~~patent claims and litigation.

During the ~~nine~~six months ended ~~September~~June 30, 2020, our investment in property, plant and equipment was relatively unchanged despite the incremental time the ARRIS business was owned in the current year, as management intentionally slowed capital spending in light of the economic uncertainty caused by the COVID-19 pandemic. Our investments in property, plant and equipment were primarily related to supporting improvements in manufacturing operations, including expanding production capacity and investing in information technology, including software developed for internal use. During the six months ended June 30, 2019, we paid $5.0 billion, net of cash acquired, using a combination of cash on hand, proceeds from the issuance of long-term debt and proceeds from the issuance of the Convertible Preferred Stock to fund the Acquisition. Our investment in property, plant and equipment during the nine months ended September 30, 2019 was $16.9 million higher than the nine months ended September 30, 2018, primarily as a result of the addition of ARRIS’ investment in property, plant and equipment since the Acquisition date. Our investments in property, plant and equipment were primarily related to supporting improvements in manufacturing operations, including expanding production capacity and investing in information technology, including software developed for internal use. During the nine months ended September 30, 2019, weWe also paid $11.0 million ~~of the $14.5 million liability for remaining payments due~~ related to the August 2017 acquisition of Cable ~~Exchange. Also~~Exchange during the ~~nine~~prior year period. The final Cable Exchange payment of $3.6 million will be paid in the third quarter of 2020.

During the six months ended ~~September~~June 30, 2020, we borrowed $250.0 million under the Revolving Credit Facility, redeemed $100.0 million aggregate principal amount of the 2021 Notes and paid the first and second quarter scheduled amortization payments totaling $16.0 million on the 2026 Term Loan. The borrowing under the Revolving Credit Facility was a precautionary measure to reinforce our cash position and preserve financial flexibility in light of the uncertainty in the global economy at that time resulting from the COVID-19 pandemic and we subsequently repaid the amount in July 2020. Also in July 2020, we issued $700.0 million of 7.125% senior unsecured notes due 2028 and used the net proceeds from the offering to redeem and retire all outstanding amounts of the 2021 Notes and 5.50% senior notes due 2024. We may continue to look for favorable opportunities to refinance portions of our existing debt to lower borrowing costs, extend the term or adjust the total amount of fixed or floating-rate debt.

During the six months ended June 30, 2019, we received proceeds of $9.3 million on the sale of certain investments. During the nine months ended September 30, 2019 and 2018, we sold property and equipment no longer being utilized for $1.2 million and $12.7 million, respectively.

~~During the nine months ended September 30, 2019, we received net proceeds~~ from the ~~issuance of the New Notes and the 2026 Term Loan~~acquisition-related debt of approximately ~~$6.9~~$7.0 billion to fund the Acquisition. As of the date of the Acquisition, we also entered into a new asset-based revolving credit facility, which had availability of $881.7 million as of September 30, 2019, reflecting a borrowing base of $906.9 billion reduced by $25.2 million of letters of credit issued under the facility. We borrowed and repaid $15.0 million under the new asset-based revolving credit facility during the second quarter of 2019. We had no outstanding borrowings under the new asset-based revolving credit facility as of September 30, 2019. In connection with these financing transactions, we paid $120.8 million of debt issuance costs during the nine months ended September 30, 2019.

We repaid $225.0 million of the 2022 Term Loan in the first quarter of 2019 and we repaid the remaining balance of $261.3 million ~~on April 4, 2019~~ using proceeds from the 2026 Term Loan. As part of funding the Acquisition, we repaid ARRIS’ outstanding debt of $2.1 billion under its senior secured credit facilities. We also borrowed and repaid $15.0 million under the Revolving Credit Facility. In ~~addition to~~connection with the ~~new~~acquisition-related debt, we ~~funded the Acquisition by issuing the Convertible Preferred Stock to Carlyle for an aggregate investment~~paid $118.1 million of ~~$1.0 billion. We paid $3.0 million in transaction fees on Carlyle’s behalf related to the Convertible Preferred Stock and we treated that as a deemed dividend~~debt issuance costs during the ~~nine~~six months ended ~~September~~June 30, 2019. ~~During~~

As of June 30, 2020, we had remaining availability under the ~~nine months ended September 30, 2019, the Company paid $26.9~~Revolving Credit Facility of $521.6 million, ~~in authorized dividends for the Convertible Preferred Stock for the second and third quarters’ dividend payments.~~

~~We redeemed $200.0~~reflecting a borrowing base of $797.6 million ~~aggregate principal amount of our 2021 Notes in August 2019. After the end of the third quarter of 2019, on October 20, 2019, we redeemed an additional $200.0~~reduced by $250.0 million of ~~our 2021 Notes~~outstanding borrowings and ~~we expect to continue voluntarily repaying debt in the future. We may repurchase more~~$26.0 million 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 portionsletters of ~~our existing debt to lower borrowing costs, extend the term or adjust the total amount of fixed or floating-rate debt.~~credit.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we received proceeds of ~~$3.1~~$0.9 million related to the exercise of stock options. Also during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~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 ~~$12.3~~$6.3 million. During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we received proceeds of ~~$5.0~~$2.7 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 and performance share units, which reduced cash flows by ~~$15.6~~$9.3 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 ~~nine~~six months ended ~~September~~June 30, ~~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 ~~September~~June 30, ~~2019~~2020 provides an additional tool for assessing our recent performance. Such amounts are unaudited and are derived by subtracting the data for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 from the data for the year ended December 31, ~~2018~~2019 and then adding the data for the ~~nine~~six months ended ~~September~~June 30, ~~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					Nine Months					Year		Twelve Months			Three Months						Six Months						Year			Twelve Months
	Ended					Ended					Ended		Ended			Ended						Ended						Ended			Ended
	September 30,					September 30,					December 31,		September 30,			June 30,						June 30,						December 31,			June 30,
	2019			2018		2019			2018		2018		2019			2020			2019			2020			2019			2019			2020
Operating income (loss)	$	(50.8	)	$	132.2	$	(169.2	)	$	400.6	$	450.0	$	(119.8	)
Net loss																$	(321.1	)	$	(334.0	)	$	(481.0	)	$	(336.3	)	$	(929.5	)	$	(1,074.2	)
Income tax benefit																	(15.1	)		(37.5	)		(46.5	)		(35.9	)		(144.5	)		(155.1	)
Interest income																	(0.8	)		(2.3	)		(2.9	)		(14.1	)		(18.1	)		(6.9	)
Interest expense																	141.4			165.3			290.5			262.8			577.2			604.9
Other expense, net																	0.8			(0.7	)		13.3			5.0			6.4			14.7
Operating loss																$	(194.8	)	$	(209.2	)	$	(226.6	)	$	(118.5	)	$	(508.5	)	$	(616.6	)
Adjustments:
Amortization of purchased intangible assets		163.9			65.8		387.3			199.5		264.6		452.4			157.6			164.1			315.4			223.5			593.2			685.1
Restructuring costs, net		19.5			7.1		78.3			19.7		44.0		102.6			19.6			46.4			43.3			58.8			87.7			72.2
Equity-based compensation		28.0			11.3		58.7			33.7		44.9		69.9			32.5			23.1			56.0			30.7			90.8			116.1
Asset impairments		—			—		—			—		15.0		15.0			206.7			—			206.7			—			376.1			582.8
Transaction and integration costs ⁽¹⁾		2.2			2.7		189.8			5.3		19.5		204.0			7.6			167.0			13.0			187.7			195.3			20.6
Purchase accounting adjustments		108.7			—		272.9			—		—		272.9
Patent litigation settlement		55.0			—		55.0			—		—		55.0
Non-GAAP adjusted operating income	$	326.6		$	219.0	$	872.9		$	658.8	$	838.0	$	1,052.1
Acquisition accounting adjustments ⁽²⁾																	5.2			164.1			10.7			164.1			264.2			110.8
Patent claims and litigation																	7.5			—			12.8			—			55.0			67.8
Depreciation		43.3			18.7		101.0			58.2		75.6		118.4			37.9			40.1			79.7			57.8			143.7			165.6
Non-GAAP adjusted EBITDA	$	369.8		$	237.8	$	973.8		$	717.0	$	913.6	$	1,170.4		$	279.8		$	395.6		$	511.0		$	604.1		$	1,297.5		$	1,204.4
ARRIS acquisition ⁽²⁾														284.1
ARRIS synergies ⁽³⁾														120.0
Cost reduction initiatives ⁽⁴⁾														20.0
Non-GAAP pro forma adjusted EBITDA													$	1,594.5

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 completed the Acquisition, borrowed $3.2 billion under the 2026 Term Loan and we repaid the remaining $261.3 million of the 2022 Term Loan. In August 2019, we redeemed $200.0 million of the 2021 Notes. The following table summarizes our contractual obligations at September 30, 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;~~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 successfully;~~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 ~~maintaining compliance with~~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; ~~costs~~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,~~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. Such forward-looking statements are also subject to additional risks and uncertainties related to the recently acquired ARRIS business, many of which are outside of our control, including, without limitation: the risk that we will not successfully integrate ARRIS or that we will not realize estimated cost savings, synergies, growth or other anticipated benefits, or that such benefits may take longer to realize than expected; risks relating to unanticipated costs of integration; the potential impact of the acquisition on relationships with third parties, including customers, employees and competitors; failure to manage potential conflicts of interest between or among customers; integration of information technology systems; and other factors beyond our control. These and other factors are discussed in greater detail in our ~~2018~~2019 Annual Report on Form 10-K and in our Quarterly Report on Form 10-Q for the ~~three months~~quarter ended March 31, ~~2019.~~2020 and may be updated from time to time in our annual reports, quarterly reports, current reports and other filings we make with the 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 this information to reflect developments or information obtained after the date of this report, except 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.~~20, 2020.

The table below summarizes the expected interest and principal payments associated with our variable rate debt outstanding at September 30, 2019 (mainly the $3.2 billion variable rate term loan and new asset-based revolving credit facility). The principal payments presented below are based on scheduled maturities and assume no borrowings under the existing revolving credit facility. The interest payments presented below assume the interest rate in effect at September 30, 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 $7.1 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 September 30, 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 September 30, 2019 was $600.0 million with outstanding maturities of up to fifty-four months. As of September 30, 2019, the combined fair value of the interest rate swaps was a $20.4 million loss. The table above excludes the impact of these interest rate swap derivatives.

During the nine months ended September 30, 2019, we entered into foreign exchange forward contracts and cross currency swaps, with outstanding maturities of up to twenty-one 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 September 30, 2019, the notional value of these derivative contracts was $320.0 million and the unrealized gain on the contracts was $18.0 million.

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.

In conjunction with the integration of ARRIS, the Company is making changes to processes, policies and other components of its internal control over financial reporting, including the consolidation of such operations into the Company’s financial statements. Management continues to make changes to the design of the control procedures relating to ARRIS and assess their effectiveness. Except for the activities described above, thereThere have been no changes in the Company’s internal control over financial reporting during the quarter ended ~~September~~June 30, ~~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 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.

~~There have been no material changes~~The Company's business, financial condition, results of operations and cash flows are subject to various risks which could cause actual results to vary from ~~our~~recent results or from anticipated future results. Other than the supplemental risk ~~factors as~~factor previously reported in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2019~~2020., which risk factor is incorporated herein by this reference, there have been no material changes to our risk factors disclosed in Item 1A, Risk Factors, of our Form 10-K for the year ended December 31, 2019.

The following table summarizes the stock purchase activity for the three months ended ~~September~~June 30, ~~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		3927

Item 3. Quantitative and Qualitative Disclosures About Market Risk		5944

Item 4. Controls and Procedures		6045

Part II—Other Information:

Item 1. Legal Proceedings		6146

Item 1A. Risk Factors		6146

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		6146

Item 3. Defaults Upon Senior Securities		6146

Item 4. Mine Safety Disclosures		6147

Item 5. Other Information		6147

Item 6. Exhibits		6248

Signatures		6349

	Amounts Recognized as of Acquisition Date			Q3 Measurement Period Adjustments			Amounts Recognized as of Acquisition Date (as adjusted)
Assets
Cash and cash equivalents	$	556.1		$	—		$	556.1
Accounts receivable		1,151.8			3.2			1,155.0
Inventory		1,063.4			—			1,063.4
Other current assets		131.0			1.0			132.0
Property, plant and equipment		328.2			(4.5	)		323.7
Goodwill		2,894.6			(9.0	)		2,885.6
Identifiable intangible assets		3,542.8			—			3,542.8
Other noncurrent assets		463.6			(14.7	)		448.9
Less: Liabilities assumed
Current liabilities		(1,505.9	)		17.1			(1,488.8	)
Debt		(2,052.0	)		—			(2,052.0	)
Other noncurrent liabilities		(959.3	)		10.4			(948.9	)
Net acquisition cost	$	5,614.3		$	3.5		$	5,617.8

	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		(11.5	)		(1.3	)		(2.2	)		(9.0	)		(24.0	)
Goodwill, gross at June 30, 2020		3,336.5			399.5			663.8			1,625.2			6,025.0
Accumulated impairment charges at December 31, 2019		(193.6	)		(192.8	)		(159.5	)		(41.2	)		(587.1	)
Impairment charges for the six months ended June 30, 2020		—			(206.7	)		—			—			(206.7	)
Accumulated impairment at June 30, 2020		(193.6	)		(399.5	)		(159.5	)		(41.2	)		(793.8	)
Goodwill, net at June 30, 2020	$	3,142.9		$	—		$	504.3		$	1,584.0		$	5,231.2

	Estimated Fair Value		Weighted Average Estimated Useful Life (in years)
Customer contracts and relationships	$	1,605.0	18
Trademarks		457.0	13
Patents and technologies		1,437.8	7
Backlog		43.0	0.5
Total amortizable intangible assets	$	3,542.8

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
Net sales	$	2,389.1		$	2,788.4	$	7,473.5		$	8,420.9
Net income (loss) attributable to common stockholders		(74.9	)		13.8		(245.7	)		(375.8	)
Net income (loss) per diluted share	$	(0.39	)	$	0.07	$	(1.27	)	$	(1.96	)


	Balance Sheet Location	September 30, 2019		Balance Sheet Location	June 30, 2020		December 31, 2019
Right of use assets	Other noncurrent assets	$	227.1	Other noncurrent assets	$	218.4	$	222.9

Lease liabilities	Accrued and other liabilities	$	60.6	Accrued and other liabilities	$	62.1	$	61.7
Lease liabilities	Other noncurrent liabilities		170.3	Other noncurrent liabilities		141.6		160.4
Total lease liabilities		$	230.9		$	203.7	$	222.1

Weighted average remaining lease term (in years)		~~4.5~~4.1
Weighted average discount rate		~~6.6~~6.8	%

	Operating Leases
Remainder of 2020	$	38.2
2021		67.7
2022		46.3
2023		35.8
2024		24.7
Thereafter		24.4
Total minimum lease payments	$	237.1
Less: imputed interest		(33.4	)
Total	$	203.7

	June 30, 2020		December 31, 2019
Raw materials	$	298.1	$	240.1
Work in process		145.3		121.6
Finished goods		595.0		614.2
	$	1,038.4	$	975.9

	Operating Leases
Remainder of 2019	$	19.5
2020		71.8
2021		62.8
2022		42.3
2023		32.0
Thereafter		44.4
Total minimum lease payments	$	272.8
Less: imputed interest		(41.9	)
Total	$	230.9

	September 30, 2019		December 31, 2018
Raw materials	$	256.9	$	146.8
Work in process		122.2		98.8
Finished goods		790.1		227.7
	$	1,169.2	$	473.3

		Fair Value of Asset (Liability)
	Balance Sheet Location	September 30, 2019			December 31, 2018
Foreign currency contracts	Prepaid expenses and other current assets	$	2.6		$	1.7
Foreign currency contracts	Accrued and other liabilities		(8.7	)		(3.0	)
Total derivatives not designated as hedging instruments		$	(6.1	)	$	(1.3	)

Foreign Currency Forward Contracts	Location of Loss	Loss Recognized
Three Months Ended September 30, 2019	Other income (expense), net	$	(11.3	)
Three Months Ended September 30, 2018	Other income (expense), net	$	(4.9	)
Nine Months Ended September 30, 2019	Other income (expense), net	$	(16.3	)
Nine Months Ended September 30, 2018	Other income (expense), net	$	(12.5	)

Foreign Currency Forward Contracts	Location of Gain	Effective Portion of Gain Recognized
Three Months Ended September 30, 2019	Other comprehensive loss, net of tax	$	13.4
Three Months Ended September 30, 2018	Other comprehensive loss, net of tax	$	0.2
Nine Months Ended September 30, 2019	Other comprehensive loss, net of tax	$	14.4
Nine Months Ended September 30, 2018	Other comprehensive loss, net of tax	$	2.6

	Employee- Related Costs			Other Associated Costs			Total
Balance at March 31, 2020	$	28.1		$	1.7		$	29.8
Additional charge recorded		19.6			—			19.6
Cash paid		(22.2	)		—			(22.2	)
Balance at June 30, 2020	$	25.5		$	1.7		$	27.2

Balance at December 31, 2019	$	23.1		$	2.0		$	25.1
Additional charge recorded		43.0			0.3			43.3
Cash paid		(40.6	)		(0.3	)		(40.9	)
Non-cash items		—			(0.3	)		(0.3	)
Balance at June 30, 2020	$	25.5		$	1.7		$	27.2

	Employee- Related Costs			Contractual Termination Costs			Fixed Asset Related Costs			Total
Balance at June 30, 2019	$	7.4		$	—		$	—		$	7.4
Additional charge recorded		0.2			0.2			(0.1	)	$	0.3
Cash paid		(3.6	)		(0.2	)		—		$	(3.8	)
Foreign exchange and other non-cash items		(0.1	)		—			0.1		$	—
Balance at September 30, 2019	$	3.9		$	—		$	—		$	3.9

Balance at December 31, 2018	$	29.2		$	0.3		$	—		$	29.5
Additional charge recorded		—			0.3			0.1		$	0.4
Cash paid		(25.2	)		(0.3	)		(0.2	)	$	(25.7	)
Foreign exchange and other non-cash items		(0.1	)		(0.3	)		0.1		$	(0.3	)
Balance at September 30, 2019	$	3.9		$	—		$	—		$	3.9

	Shares			Weighted Average Option Exercise Price Per Share		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at March 31, 2020		9.4		$	17.71
Expired		(0.1	)		29.43
Forfeited		(0.1	)	$	22.77
Options outstanding at June 30, 2020		9.2		$	17.57		6.6	$	5.5

Options outstanding at December 31, 2019		9.6		$	17.70
Exercised		(0.1	)	$	8.29
Expired		(0.1	)	$	30.15
Forfeited		(0.2	)	$	20.52
Options outstanding at June 30, 2020		9.2		$	17.57		6.6	$	5.5
Options vested at June 30, 2020		3.9		$	15.84		3.5	$	5.5
Options unvested at June 30, 2020		5.3		$	18.86		8.9	$	—

	Shares			Weighted Average Option Exercise Price Per Share		Weighted Average Remaining Contractual Term in Years		Aggregate Intrinsic Value
Options outstanding at June 30, 2019		11.2		$	17.76
Granted		0.1		$	12.20
Forfeited		(1.3	)	$	18.75
Options outstanding at September 30, 2019		10.0		$	17.57		7.2	$	13.8

Options outstanding at December 31, 2018		4.7		$	15.51
Granted		7.4		$	18.47
Exercised		(0.6	)	$	5.44
Expired		(0.1	)	$	31.07
Forfeited		(1.4	)	$	19.62
Options outstanding at September 30, 2019		10.0		$	17.57		7.2	$	13.8

Options vested at September 30, 2019		3.5		$	13.86		2.9	$	13.8
Options unvested at September 30, 2019		6.5		$	19.60		9.5	$	—

	Options Outstanding						Options Exercisable				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		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		1.3	$	5.74		2.1	$	5.74		2.1		0.6	$	5.74		2.1	$	5.74
$5.75 to $22.99		6.4		9.2	$	17.94		0.3	$	8.62		5.8		8.8	$	18.34		0.6	$	17.72
$23.00 to $42.32		1.5		6.9	$	33.06		1.1	$	31.26		1.3		6.2	$	33.38		1.2	$	32.88
$2.96 to $42.32		10.0		7.2	$	17.57		3.5	$	13.86		9.2		6.6	$	17.57		3.9	$	15.84

	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 June 30, 2019		5.6		$	26.16
Non-vested share units at March 31, 2020							9.0		$	17.24
Granted		3.3		$	16.16		6.4		$	10.34
Vested and shares issued		(0.6	)	$	24.51		(0.1	)	$	16.76
Forfeited		(0.2	)	$	22.80		(0.3	)	$	17.59
Non-vested RSUs at September 30, 2019		8.1		$	22.34
Non-vested share units at June 30, 2020							15.0		$	14.28

Non-vested RSUs at December 31, 2018		2.0		$	35.43
Non-vested share units at December 31, 2019							7.7		$	22.30
Granted		8.4		$	20.43		9.6		$	10.57
Vested and shares issued		(1.7	)	$	29.33		(1.8	)	$	27.62
Forfeited		(0.6	)	$	27.62		(0.5	)	$	18.48
Non-vested RSUs at September 30, 2019		8.1		$	22.34
Non-vested share units at June 30, 2020							15.0		$	14.28

	Performance Share Units			Weighted Average Grant Date Fair Value Per Share
Non-vested share units at March 31, 2020		2.6		$	7.60
Granted		0.2		$	10.32
Vested and shares issued		(0.1	)	$	6.67
Forfeited		—
Non-vested share units at June 30, 2020		2.7		$	7.73

Non-vested share units at December 31, 2019		2.7		$	12.47
Granted		0.2		$	10.32
Vested and shares issued		(0.1	)	$	19.86
Forfeited		(0.1	)	$	8.98
Non-vested share units at June 30, 2020		2.7		$	7.73

	Performance Share Units			Weighted Average Grant Date Fair Value Per Share
Non-vested PSUs at June 30, 2019		0.1		$	38.23
Granted		—		$	—
Vested and shares issued		—		$	—
Non-vested PSUs at September 30, 2019		0.1		$	38.23

Non-vested PSUs at December 31, 2018		0.3		$	33.52
Granted		—		$	—
Vested and shares issued		(0.2	)	$	25.10
Non-vested PSUs at September 30, 2019		0.1		$	38.23

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019
Operating income (loss)	$	8.9	$	(192.2	)	$	(9.7	)	$	(167.3	)
Adjustments:
Amortization of purchased intangible assets		76.8		72.3			153.8			87.9
Restructuring costs, net		8.9		23.1			14.0			26.2
Equity-based compensation		12.5		9.4			21.6			11.3
Transaction and integration costs		2.7		109.8			4.4			116.3
Acquisition accounting adjustments		3.0		80.0			5.8			80.0
Patent claims and litigation		3.0		—			3.0			—
Depreciation		14.5		15.6			30.0			21.7
Adjusted EBITDA	$	130.2	$	117.9		$	222.9		$	176.1

			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)	$	10,300.0	$	8.0	$	514.0	$	64.0	$	9,714.0
Interest on long-term debt (a)(b)		3,651.1		117.4		1,184.8		1,145.9		1,203.0
Operating leases		272.8		19.5		134.6		74.3		44.4
Purchase obligations and other supplier agreements (c)		284.0		280.4		3.6		—		—
Pension and other postretirement benefit liabilities (d)		4.0		0.9		1.0		0.8		1.3
Restructuring costs, net (e)		30.9		13.7		15.0		2.2		—
Patent litigation settlement (f)		55.0		—		55.0		—		—
Unrecognized tax benefits (g)		—		—		—		—		—
Total contractual obligations	$	14,597.8	$	439.9	$	1,908.0	$	1,287.2	$	10,962.7

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
July 1, 2019 - July 31, 2019		138,870	$	15.66		—	$	—
August 1, 2019 - August 31, 2019		36,724	$	12.14		—	$	—
September 1, 2019 - September 30, 2019		16,689	$	15.08		—	$	—
Total		192,283	$	14.94		—

10.1 ***	CommScope Holding Company, Inc. 2019 Long-Term Incentive Plan (Incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (File No. 333-232354), filed with the Commission on June 26, 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 – 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.

~~November 6, 2019~~August 5, 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