COMMSCOPE HOLDING COMPANY, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

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The following discussion and analysis of our financial condition and results of
operations is for the year ended December 31, 2021 compared with the year ended
December 31, 2020. This comparison should be read in conjunction with our
consolidated financial statements and related notes appearing elsewhere in this
Annual Report on Form 10-K. This discussion contains forward-looking statements
based upon current expectations that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of various factors, including those set forth under "Risk
Factors" included in Part I, Item 1A or in other parts of this Annual Report on
Form 10-K. For a discussion and analysis of our financial condition and results
of operations for the year ended December 31, 2020 compared to December 31,
2019, see Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in the 2020 Annual Report on Form
10-K, filed with the Securities and Exchange Commission on February 17, 2021.

PREVIEW


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

In the first quarter of 2021, we announced a transformation initiative referred
to as CommScope NEXT designed to drive shareholder value through three pillars:
profitable growth, operational efficiency and portfolio optimization. We believe
these efforts are critical to making us more competitive and allowing us to
invest in growth and maximize stockholder and stakeholder value. We have
incurred $91.9 million of restructuring costs and $90.3 million of transaction,
transformation and integration costs during the year ended December 31, 2021,
both primarily related to CommScope NEXT. We expect to continue to incur
restructuring costs and transaction, transformation and integration costs
related to CommScope NEXT and such costs could be material.

As a step in the CommScope NEXT transformation plan, in April 2021, we announced
a plan to spin-off the Home Networks business in 2022. After thorough
consideration of the current supply chain environment and its impact on the Home
Networks business, we have decided to delay the execution of the spin-off. We
remain committed to the spin-off of the Home Networks business from CommScope,
but we currently do not have a firm timeline for restarting the plan.
Accordingly, management now analyzes the financial results of our "Core"
business separately from Home Networks. These supplementary Core financial
measures reflect the results of our Broadband Networks (Broadband), Outdoor
Wireless Networks (OWN) and Venue and Campus Networks (VCN) segments, in the
aggregate. Our Core financial measures exclude the results and performance of
our Home Networks (Home) segment. See the Segment Results section below for
illustration of the aggregation of our Core financial measures. These metrics
represent the business segments as we have reported them. However, the ultimate
definition of the Home Networks business that we expect to separate may vary,
and future results may differ materially.

In the second quarter of 2021, we shifted certain product lines from our
Broadband segment to our Home segment to better align with how those businesses
are being managed. All prior period amounts have been recast to reflect these
operating segment changes.

COVID-19 Update

The COVID-19 outbreak had an adverse impact on our financial performance in 2020
primarily related to decreased demand, supply constraints due to the temporary
shutdown of certain of our facilities and increased business continuity costs.
We took a variety of actions in 2020 to help mitigate the financial impacts such
as headcount reductions, lower capital spending and lower discretionary
spending. The negative impact of COVID-19 on our financial performance has eased
during 2021, with network strain driving increased demand for our Broadband
segment products in particular. The recovery in demand has also indirectly had
unfavorable business impacts, including commodity inflation (primarily copper
and resins), logistics cost increases, extended lead times and certain component
part shortages. We expect certain of these unfavorable impacts to continue into
2022.

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The extent of the negative 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, including new variants, the effectiveness
and adoption of vaccines and related actions taken by domestic and international
jurisdictions to maintain and prevent disease spread, and the extent of any
financial recession resulting from the pandemic, all of which are uncertain and
cannot be predicted.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


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

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

Asset impairment reviews

Impairment reviews of Good will


We test goodwill at the reporting unit level for impairment annually as of
October 1 and on an interim basis when events occur or circumstances exist that
indicate the carrying value may no longer be recoverable. We compare the fair
value of our reporting units with the carrying amount, including goodwill. We
recognize an impairment charge for the amount by which the reporting unit's
carrying amount exceeds its fair value.

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

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

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

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Interim and annual analysis of goodwill 2021


During the second quarter of 2021, we realigned certain of our product lines
that changed the composition of our reporting units and resulted in the
reallocation of $13.7 million of goodwill from the Network and Cloud (N&C)
reporting unit to the Home Networks reporting unit. Goodwill was assessed for
impairment due to a change in the composition of reporting units. We performed
impairment testing immediately before and after the change and determined that
no goodwill impairment existed.

The annual test of goodwill impairment was performed for each of the reporting
units with goodwill balances as of October 1, 2021. For the 2021 annual goodwill
test, we determined the fair value of each reporting unit using a DCF model and
a guideline public company approach, with 75% of the value determined using the
DCF model and 25% of the value determined using the market approach. The range
of discount rates used in our annual tests were 9.0% to 12.0% for 2021. During
the annual impairment test performed in the fourth quarter of 2021 and in
conjunction with the development of our 2022 and long range plans, we identified
further weakness in our Home Networks reporting unit forecast resulting from a
continuing decline in demand for video products from both U.S. and international
service providers as well as the negative impact of supply shortages and delays
on our ability to meet customer demand for video products. As a result, we
determined the goodwill balance in the Home Networks reporting unit was impaired
and recorded a $13.7 million impairment charge. See Note 3 in the Notes to
Consolidated Financial Statements included elsewhere in this Annual Report on
Form 10-K for further discussion.

The following table provides summary information regarding our reporting units
with goodwill balances as of December 31, 2021 that have the lowest level of
headroom. The table presents key assumptions used in our annual goodwill
analysis, along with sensitivity analysis showing the effect of a change in
certain key assumptions, assuming all other assumptions remain constant, to the
resulting fair value using an income approach. Accordingly, if performance is
worse than anticipated for these reporting units, future impairment tests could
result in impairment charges that could be material to our results of
operations. The Enterprise reporting unit is in our VCN segment and the N&C
reporting unit is in our Broadband segment.

                  Key Assumptions                    Goodwill                                 Excess of Fair Value to Carrying Value
                                                                             Result of
                                                                               Annual                                                      Increase of
                              Terminal       Balance at         % of       Goodwill Test                              Decrease of 0.5%         0.5%

Report discount growth the 31st of DecemberTotal in October 10% long-term reduction in discount

   Unit         Rate            Rate            2021           Assets         1, 2021             in Cash Flows         Growth Rate            Rate
Enterprise         10.5 %           1.5 %   $       979.6          7.4 %   $        519.0       $           377.2     $          475.6     $      440.9
N&C                 9.5 %           2.0 %         2,007.1         15.1 %            436.1                   156.8                312.7            239.9

Definite life intangible assets and other long-lived assets


Management reviews definite-lived intangible assets and other long-lived assets
for impairment when events or changes in circumstances indicate that their
carrying values may not be fully recoverable. This analysis differs from our
goodwill impairment analysis in that an intangible or other long-lived asset
impairment is only deemed to have occurred if the sum of the forecasted
undiscounted future net cash flows related to the assets being evaluated is less
than the carrying value of the assets. If the forecasted net cash flows are less
than the carrying value, then the asset is written down to its estimated fair
value. Other than certain assets impaired as a result of restructuring actions,
we did not identify any impairments of definite-lived intangible assets or other
long-lived assets in 2021, including the finite lived assets in our Home Network
reporting unit for which a goodwill impairment was recognized in the fourth
quarter of 2021. Changes in the estimates of forecasted net cash flows may
result in future asset impairments that could be material to our results of
operations.

Revenue recognition


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

Identify the contract with the customer. A variety of arrangements are considered contracts; however, contracts typically take the form of a master purchase agreement or customer purchase orders.

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Identify performance obligations in the contract. Performance obligations are identified as promised goods or services that are distinct within an agreement.

Determine the transaction price. The transaction price is the amount of
consideration we expect to receive in exchange for transferring the promised
goods or services. The consideration may include fixed or variable amounts or
both.

Allocate the transaction price to the performance obligations. The transaction price is allocated to the performance obligations based on a stand-alone relative sale price.

Recognize revenue as performance obligations are met. Revenue is recognized when the transfer of control of the promised goods or services has occurred. It is either at a given moment or in time.


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

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

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

Other customer contract types include a variety of post-contract support service
offerings, which are generally recognized over time as the services are
provided, including the following: maintenance and support services provided
under annual service-level agreements; "Day 2" professional services to help
customers maximize their utilization of deployed systems; and installation
services related to the routine installation of equipment ordered by the
customer at the customer's site.

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 loss
is recognized in the period the loss becomes known. The cumulative effects on
revenue from revisions to total estimated costs are recorded in the period in
which the revisions to estimates are identified and the amounts can be
reasonably estimated.

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

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

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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 performance obligations related to
project contracts. These assets are presented on a combined basis with accounts
receivable and are converted to accounts receivable once our right to the
consideration becomes unconditional, which varies by contract but is generally
based on achieving certain acceptance milestones. We recognize the incremental
costs of obtaining a contract as an expense when incurred if the amortization
period of the asset would be one year or less.

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

Contingencies and Disputes


We are a party to lawsuits, claims and proceedings incident to the operation of
our business, including intellectual property infringement matters, those
pertaining to labor and employment contracts and other matters, some of which
allege substantial monetary damages. We assess these matters in order to
determine if a contingent liability should be recorded. In making this
determination, management may, depending on the nature of the matter, consult
with internal and external legal counsel and technical experts. We expense legal
fees associated with consultations and defense of lawsuits as incurred. We
accrue for loss contingencies when losses become probable and are reasonably
estimable. If the reasonable estimate of the loss is a range and no amount
within the range is a better estimate, the minimum amount of the range is
recorded as a liability.

Litigation outcomes are difficult to predict and are often resolved over long
periods of time, making our estimates highly judgmental. Estimating probable
losses requires the analysis of multiple possible outcomes that often depend on
judgments about potential actions by third parties, such as future changes in
facts and circumstances, differing interpretations of the law, assessments of
the amount of damages and other factors beyond our control. There is the
potential for a material adverse effect on our results of operation and cash
flows if one or more matters are resolved in a particular period in an amount
materially in excess of what we anticipated. Alternatively, if the judgments and
estimates made by management are incorrect and a particular contingent loss does
not occur, the contingent loss recorded would be reversed, thereby favorably
impacting our results of operations.

Inventory reserves


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

Product warranty reservations


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

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Provisions for tax assessment and liabilities for unrecognized tax benefits


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

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

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

We also establish provisions for value added taxes and similar recoverable taxes when it is deemed probable that these assets will not be recoverable. Changes in the probability of collection or in the estimates of the recoverable amount are recognized in the period in which this determination is made and may have a material impact on our net income (loss).

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                             RESULTS OF OPERATIONS

Comparison of operating results for the year ended December 31, 2021 with the year over December 31, 2020


                                              Year Ended December 31,
                                         2021                          2020
                                              % of Net                      % of Net          $            %
                                Amount         Sales          Amount         Sales          Change      Change
                                               (dollars in millions, except per share amounts)
Net sales                      $ 8,586.7          100.0 %    $ 8,435.9          100.0 %    $  150.8         1.8 %
Core net sales (1)               6,737.4           78.5        6,028.4           71.5         709.0        11.8
Gross profit                     2,684.3           31.3        2,747.8           32.6         (63.5 )      (2.3 )
Operating income (loss)             48.6            0.6          (51.8 )         (0.6 )       100.4          NM
Core operating income (1)          263.5            3.9          223.6            2.7          39.9        17.8
Non-GAAP adjusted EBITDA (2)     1,117.0           13.0        1,215.2           14.4         (98.2 )      (8.1 )
Core adjusted EBITDA (1)         1,091.5           16.2        1,083.9           12.8           7.6         0.7
Net loss                          (462.6 )         (5.4 )       (573.4 )         (6.8 )       110.8       (19.3 )
Diluted loss per share         $   (2.55 )                   $   (3.20 )                   $   0.65       (20.3 )




NM - Not meaningful

(1)

Key financial measures reflect the results of our Broadband, OWN and VCN segments as a whole. Core financial measures exclude results from our Home segment. See the Segment results section below for an illustration of the aggregation of our core financial measures.

(2)

See “Reconciliation of Non-GAAP Measures” in this MD&A of Financial Condition and Results of Operations below.

Net sales


                  Year Ended December 31,           $            %
                    2021             2020         Change      Change
                                (dollars in millions)
Net sales       $    8,586.7       $ 8,435.9     $  150.8         1.8 %
Domestic             4,960.5         5,185.3       (224.8 )      (4.3 )
International        3,626.2         3,250.6        375.6        11.6


Net sales in 2021 increased $150.8 million, or 1.8%, compared to the prior year.
Core net sales in 2021 increased $709.0 million, or 11.8%, compared to the prior
year with increases in the Broadband segment of $300.6 million, the VCN segment
of $241.9 million and the OWN segment of $166.5 million. Net sales in 2021 in
the Home segment decreased $558.2 million compared to the prior year. In 2021,
all of our segments experienced supply shortages and extended lead times for
certain materials that negatively affected our ability to meet customer demand
for our products. We expect these shortages and delays to persist into 2022. In
addition, our Broadband segment faced capacity constraints that negatively
affected net sales in 2021. For further details by segment, see the discussion
of Segment Results below.

From a regional perspective, net sales increased in 2021 in the Asia Pacific
(APAC) region by $141.4 million, the Europe, Middle East and Africa (EMEA)
region by $90.4 million, the Caribbean and Latin America (CALA) region by $88.7
million and Canada by $55.1 million. The increases in international net sales in
2021 were partially offset by a decrease of $224.8 million in the U.S. Net sales
to customers located outside of the U.S. comprised 42.2% for 2021 compared to
38.5% for 2020. Foreign exchange rate changes impacted net sales favorably by
approximately 1% for 2021 compared to the prior year. For additional information
on regional sales by segment, see discussion of Segment Results below and Note
16 in the Notes to Consolidated Financial Statements included elsewhere in this
Annual Report on Form 10-K.

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Gross profit, SG&A fees and R&D fees

                          Year Ended December 31,           $           %
                            2021             2020        Change      Change
                                       (dollars in millions)
Gross profit            $    2,684.3       $ 2,747.8     $ (63.5 )      (2.3 )%
As a percent of sales           31.3 %          32.6 %
SG&A expense                 1,233.9         1,170.7        63.2         5.4
As a percent of sales           14.4 %          13.9 %
R&D expense                    683.2           703.3       (20.1 )      (2.9 )
As a percent of sales            8.0 %           8.3 %

Gross profit (net sales minus cost of sales)


Despite higher consolidated net sales, gross profit decreased in 2021 compared
to the prior year primarily due to significantly higher material and freight
costs. We also experienced substantial sales volume declines in our Home segment
and pricing pressures related to certain of our OWN segment products. Increased
pricing on certain of our VCN segment products more than offset the OWN segment
pricing pressures. In addition, we recorded charges of $48.6 million that
reduced gross profit in 2021 related to the settlement of intellectual property
assertions, but these charges were partially offset by the recovery of $17.1
million related to a warranty indemnification litigation matter of ARRIS
International plc (ARRIS), which was acquired by CommScope in 2019.



Selling, general and administrative expenses


In the first quarter of 2021, we announced a transformation initiative called
CommScope NEXT, and as a step in our transformation, we announced our commitment
to spin-off our Home Networks business from CommScope. As a result of these
transformation and separation efforts, we incurred $90.3 million of transaction,
transformation and integration costs during 2021 that were recorded in selling,
general and administrative (SG&A) expense. During 2020, we incurred $24.9
million of transaction, transformation and integration costs that were mainly
focused on the integration of the ARRIS business. We continue to focus on
integrating the ARRIS business, including our work to combine our enterprise
resource planning systems. We expect to continue to incur transaction,
transformation and integration costs related to CommScope NEXT, the spin-off of
the Home Networks business from CommScope, and the integration of the ARRIS
business, and such costs could be material.

For 2021, excluding transaction, transformation and integration costs, SG&A
expense decreased by $2.4 million compared to 2020. The decrease was primarily
due to cost savings initiatives, but the favorable impact of cost savings
initiatives was partially offset by higher variable incentive compensation
expense of $13.5 million and higher bad debt expense, which was driven by a
$30.3 million charge related to a certain value-added reseller customer in the
Home segment. We reserved the entire balance due from this customer due to
changes in their risk profile, and we are pursuing legal action. Excluding
transaction, transformation and integration costs, SG&A as a percentage of net
sales was 13.3% and 13.6% for 2021 and 2020, respectively.

Research and development costs


Research and development (R&D) expense for 2021 decreased due to lower spending
on Home segment products that was partially offset by increased spending on Core
segment products. R&D activities generally relate to ensuring that our products
are capable of meeting the evolving technological needs of our customers,
bringing new products to market and modifying existing products to better serve
our customers.

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


                                            Year Ended December 31,             $              %
                                            2021               2020           Change        Change
                                                           (dollars in millions)
Amortization of purchased intangible
assets                                  $      613.0       $      630.5     $    (17.5 )        (2.8 %)
Restructuring costs, net                        91.9               88.4            3.5           4.0
Asset impairments                               13.7              206.7         (193.0 )       (93.4 )




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Amortization of purchased intangible assets

The amortization of purchased intangible assets was lower in 2021 compared to the prior year, as some of our intangible assets were fully amortized.

Restructuring costs, net


The restructuring costs recorded in 2021 reflected actions initiated during 2021
and included $90.7 million related to CommScope NEXT and $1.2 million related to
integrating the ARRIS business. The restructuring costs recorded during 2020
were primarily related to integrating the ARRIS business. From a cash
perspective, we paid $31.6 million to settle restructuring liabilities during
2021 and expect to pay an additional $69.0 million between 2022 and 2023 related
to restructuring actions that have been initiated. Additional restructuring
actions related to CommScope NEXT are expected to be identified and the
resulting charges and cash requirements could be material. The Company does not
expect to identify significant additional restructuring actions related to the
ARRIS integration.

Asset impairments

We recorded goodwill impairment charges of $13.7 million and $206.7 million
during 2021 and 2020, respectively, related to our Home Networks reporting unit
within our Home segment. See the discussion above under "Critical Accounting
Policies" for more information regarding the annual goodwill impairment test
performed during 2021.

Other expense, net

                            Year Ended December 31,            $           %
                            2021               2020         Change      Change
                                         (dollars in millions)
Foreign currency loss   $       (4.4 )     $      (19.2 )   $  14.8       (77.1 )%
Other expense, net             (19.4 )            (10.1 )      (9.3 )      92.1


Foreign currency loss

Foreign exchange loss includes net foreign exchange gains and losses resulting from the settlement of receivables and payables, foreign exchange contracts and short-term intercompany advances in a currency other than the functional currency of the subsidiary. The foreign exchange loss in 2020 was mainly due to certain unhedged currencies.

Other expenses, net


For 2021, other expense, net was driven by the redemption fee of $34.4 million
related to the refinancing of our 5.50% senior secured notes due March 2024 (the
2024 Secured Notes) as further described in Note 7 in the Notes to Consolidated
Financial Statements included elsewhere in this Annual Report on Form 10-K. The
redemption fee was partially offset by income of $8.1 million on equity method
investments and other miscellaneous investments. We also recognized a gain of
$2.9 million during the year ended December 31, 2021 related to the sale of an
investment accounted for under the cost method. In addition, we recognized a
curtailment gain in other expense, net of $2.5 million reflecting the impacts of
a restructuring action on an international defined benefit plan. For 2020, other
expense, net was driven by redemption fees of $17.9 million related to the
refinancing of our 5.00% senior notes due 2021 (the 2021 Notes) and 5.50% senior
notes due June 2024 (the 2024 Notes) and the redemption of $100.0 million of our
6.00% senior notes due 2025 (the 2025 Notes), offset partially by income on
equity method investments and other miscellaneous investments.

Interest expense, interest income and income taxes

                       Year Ended December 31,           $           %
                         2021             2020        Change      Change
                                    (dollars in millions)
Interest expense     $     (561.2 )     $  (577.8 )   $  16.6        (2.9 %)
Interest income               1.9             4.4        (2.5 )     (56.8 )
Income tax benefit           71.9            81.1        (9.2 )     (11.3 )




                                       51
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Interest expense and interest income


In 2021, we wrote off $9.9 million of debt issuance costs related to the
refinancing of the 2024 Secured Notes as further described in Note 7 in the
Notes to Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K. For 2020, we wrote off $7.6 million related to the
refinancing of the 2021 Notes and 2024 Notes and the partial redemption of the
2025 Notes. Excluding the write-off of debt issuance costs, interest expense
decreased in 2021 due to lower variable interest rates on our senior secured
term loan due 2026 (the 2026 Term Loan). Our weighted average effective interest
rate on outstanding borrowings, including the impact of interest rate swaps and
the amortization of debt issuance costs and original issue discount, was 5.74%
at December 31, 2021 and 5.86% at December 31, 2020.

Tax benefit


For 2021, our effective tax rate was 13.5% and we recognized a tax benefit of
$71.9 million on a pretax loss of $534.5 million. Our tax benefit was lower than
the statutory rate of 21.0% in 2021 primarily due to the impact of $37.4 million
of tax expense related to a foreign tax rate change. See Note 12 in the Notes to
Consolidated Financial Statements included elsewhere in this Annual Report on
Form 10-K for more discussion of our income tax benefit.

For 2020, our effective tax rate was 12.4% and we recognized a tax benefit of
$81.1 million on a pretax loss of $654.5 million. Our tax benefit was less than
the statutory rate primarily due to a goodwill impairment charge of $206.7
million, for which minimal tax benefits were recorded. Our tax rate was also
impacted unfavorably by excess tax costs of $14.0 million related to equity
compensation awards as well as U.S. anti-deferral provisions and foreign
withholding taxes. These unfavorable impacts were offset partially by favorable
impacts related to federal tax credits and foreign tax rate changes.

                                       52
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Segment Results
                                         Year Ended December 31,
                                   2021                           2020
                                        % of Net                       % of Net            $             %
                          Amount         Sales           Amount         Sales           Change        Change
Net sales by segment:
Broadband                $ 3,148.8           36.7   %   $ 2,848.2           33.8   %   $   300.6          10.6   %
OWN                        1,410.2           16.4         1,243.7           14.7           166.5          13.4
VCN                        2,178.4           25.4         1,936.5           23.0           241.9          12.5
  Core net sales (1)       6,737.4           78.5         6,028.4           71.5           709.0          11.8
Home                       1,849.3           21.5         2,407.5           

28.5 (558.2) (23.2) Consolidated net sales $8,586.7 100.0% $8,435.9 100.0% $150.8

           1.8   %

Operating income
(loss) by
  segment:
Broadband                $   120.1            3.8   %   $   157.2            5.5   %   $   (37.1 )       (23.6 ) %
OWN                          199.0           14.1           181.1           14.6            17.9           9.9
VCN                          (55.6 )         (2.6 )        (114.7 )         (5.9 )          59.1         (51.5 )
  Core operating
income (1)                   263.5            3.9           223.6            3.7            39.9          17.8
Home                        (214.9 )        (11.6 )        (275.4 )        (11.4 )          60.5         (22.0 ) %
Consolidated operating
income (loss)            $    48.6            0.6   %   $   (51.8 )         (0.6 ) %   $   100.4            NM

Adjusted EBITDA by
segment:
Broadband                $   629.9           20.0   %   $   625.4           22.0   %   $     4.5           0.7   %
OWN                          267.9           19.0           278.5           22.4           (10.6 )        (3.8 )
VCN                          193.7            8.9           180.0            9.3            13.7           7.6
  Core adjusted EBITDA
(1)                        1,091.5           16.2         1,083.9           18.0             7.6           0.7
Home                          25.5            1.4           131.3            5.5          (105.8 )       (80.6 )
Non-GAAP consolidated
  adjusted EBITDA (2)    $ 1,117.0           13.0   %   $ 1,215.2           14.4   %   $   (98.2 )        (8.1 ) %




NM - Not meaningful

(1)

Key financial measures reflect the results of our Broadband, OWN and VCN segments as a whole. Core financial measures exclude results from our Home segment.

(2)

See “Reconciliation of Non-GAAP Measures” in this MD&A and Discussion of Financial Condition and Results of Operations.

Broadband networks segment


Net sales increased in 2021 compared to the prior year due to increased demand
for our products and services as service providers enhanced their networks to
keep pace with broadband demand. We are experiencing capacity constraints and
supply shortages with certain of our network cable products, which hindered our
ability to meet customer demand for our Broadband segment products in 2021. We
are investing to alleviate our capacity constraints and began to see benefits
from the expanded capacity in the fourth quarter of 2021. We expect the supply
shortages to extend into 2022. From a regional perspective, in 2021, net sales
increased in the U.S. by $137.8 million, the CALA region by $111.2 million, the
EMEA region by $62.6 million and Canada by $6.3 million but decreased in the
APAC region by $17.3 million. Foreign exchange rate changes impacted Broadband
segment net sales favorably by approximately 1% during 2021 compared to the
prior year.

                                       53
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For 2021, Broadband segment operating income and adjusted EBITDA both benefitted
from increased sales volumes and favorable geographic and product mix. However,
these benefits were largely offset by higher material and freight costs and
increased expenses to expand capacity to meet demand. Compared to 2020,
Broadband segment operating income in 2021 was unfavorably impacted by a $52.0
million increase in restructuring expense related to the planned closure of an
international manufacturing facility and an intellectual property litigation
settlement charge of $20.0 million. The intellectual property litigation
settlement was partially offset by the recovery of $17.1 million related to a
warranty indemnification litigation matter. Restructuring expense and litigation
settlements are not reflected in adjusted EBITDA. See "Reconciliation of Segment
Adjusted EBITDA" within this Management's Discussion and Analysis of Financial
Condition and Results of Operations, below.

Outdoor Wireless Networks Segment


For 2021, OWN segment net sales increased compared to the prior year primarily
due to an increase in customer spending on both macro and metro cell solutions.
Although OWN segment net sales increased year over year for 2021, net sales were
negatively affected by supply shortages of certain materials that hindered our
ability to meet customer demand. From a regional perspective, in 2021, OWN
segment net sales increased in the U.S. by $71.3 million, the APAC region by
$58.3 million, the EMEA region by $25.1 million and Canada by $21.4 million but
decreased in the CALA region by $9.6 million. Foreign exchange rate changes
impacted OWN segment net sales favorably by approximately 1% during 2021
compared to the prior year.

For 2021, OWN segment operating income increased by $17.9 million but adjusted
EBITDA decreased by $10.6 million compared to the prior year. Both operating
income and adjusted EBITDA for the OWN segment benefitted from increased sales
volumes, but this favorable impact was more than offset by pricing pressures on
certain products and higher freight and material costs. In addition, OWN segment
operating income for 2021 increased as a result of a $12.3 million reduction in
amortization expense and a $12.2 million reduction in restructuring expense
compared to the prior year. Amortization expense and restructuring expense are
not reflected in adjusted EBITDA. See "Reconciliation of Segment Adjusted
EBITDA" within this Management's Discussion and Analysis of Financial Condition
and Results of Operations, below.

Site and Campus Networks Segment


For 2021, VCN segment net sales increased compared to the prior year as higher
net sales of our Building and Data Center Connectivity and Ruckus products were
partially offset by lower net sales of our Indoor Cellular Networks products.
Net sales of Ruckus products were unfavorably impacted in 2021 due to shortages
of certain materials that negatively affected our ability to meet customer
demand. We expect this supply shortage to continue into 2022. From a regional
perspective, in 2021, net sales for the VCN segment were higher across all
regions with increases in the U.S. of $90.7 million, the APAC region of $60.6
million, the EMEA region of $51.8 million, the CALA region of $27.3 million and
Canada of $11.5 million. Foreign exchange rate changes impacted VCN segment net
sales favorably by approximately 1% during 2021 compared to the prior year.

For 2021, VCN segment operating loss decreased and adjusted EBITDA increased
compared to the prior year primarily due to favorable pricing impacts on certain
products and higher sales volumes. These benefits were partially offset by
higher material and freight costs and higher selling expenses. In addition, VCN
segment operating loss for 2021 benefitted from a $14.9 million reduction in
restructuring expense and a $13.4 million reduction in intellectual property
litigation charges compared to the prior year. Restructuring expense and
intellectual property litigation charges are not reflected in adjusted EBITDA.
See "Reconciliation of Segment Adjusted EBITDA" within this Management's
Discussion and Analysis of Financial Condition and Results of Operations, below.

Home Networks Segment


Net sales for the Home segment decreased in 2021 primarily due to the continuing
decline in demand for video products from both U.S. and international service
providers as well as the negative impact of supply shortages and delays on our
ability to meet customer demand. From a regional perspective, in 2021, net sales
decreased in the U.S. by $524.6 million, the EMEA region by $49.1 million and
the CALA region by $40.2 million and increased in the APAC region by $39.8
million and Canada by $15.9 million. Foreign exchange rate changes impacted Home
segment net sales favorably by approximately 1% during 2021 compared to the
prior year.

                                       54
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Excluding goodwill impairment charges in 2021 and 2020 of $13.7 million and
$206.7 million, respectively, Home segment operating loss increased and adjusted
EBITDA decreased in 2021 compared to the prior year primarily due to lower sales
volumes. The Home segment also experienced higher material costs and higher bad
debt expense, driven by a $30.3 million reserve related to a certain value-added
reseller customer. These higher costs were partially offset by favorable pricing
impacts on certain products and benefits from cost savings initiatives in R&D.
Home segment operating loss was also unfavorably impacted in 2021 by increases
of $41.6 million in transaction, transformation and integration costs and $28.8
million in intellectual property litigation charges, but these were partially
offset by a decrease of $21.4 in restructuring expense compared to the prior
year. During 2020, the Home segment benefitted from the release of a $23.6
million accrual related to an intellectual property royalty matter that was
settled for less than anticipated. Of the $23.6 million accrual release in the
prior year, $15.1 million related to pre-acquisition sales and was excluded from
the calculation of adjusted EBITDA; the remaining $8.5 million release provided
a benefit to Home segment adjusted EBITDA in 2020. Home segment transaction,
transformation and integration costs were primarily related to the announced
commitment to separate the Home Networks business from CommScope. Transaction,
transformation and integration costs, restructuring expense and intellectual
property settlements are not reflected in adjusted EBITDA. See "Reconciliation
of Segment Adjusted EBITDA" within this Management's Discussion and Analysis of
Financial Condition and Results of Operations, below.

Cash and capital resources


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

                                                December 31,
                                             2021           2020        $ Change       % Change
                                                          (dollars in millions)
Cash and cash equivalents                 $    360.3     $    521.9     $  (161.6 )        (31.0 ) %
Working capital (1), excluding cash and
cash
  equivalents and current portion of
long-term debt                               1,068.9          911.2         157.7           17.3
Availability under revolving credit
facility                                       684.1          735.1         (51.0 )         (6.9 )
Long-term debt, including current
portion                                      9,510.5        9,520.6         (10.1 )         (0.1 )
Total capitalization (2)                    10,410.0       10,917.4        (507.4 )         (4.6 )
Long-term debt as a percentage of total
capitalization                                  91.4 %         87.2 %




(1)
Working capital consists of current assets of $3,579.7 million less current
liabilities of $2,182.5 million as of December 31, 2021 and current assets of
$3,354.5 million less current liabilities of $1,953.4 million as of December 31,
2020.

(2)

Total capitalization includes long-term debt including the current portion, Series A Convertible Preferred Shares (the Convertible Preferred Shares) and equity (deficit).

Our primary sources of short-term liquidity are cash and cash equivalents, cash flow generated from operations and availability under our credit facilities. In the long term, our potential sources of cash also include raising capital through the issuance of additional equity and/or debt securities.


The primary uses of liquidity include debt service requirements, voluntary debt
repayments or redemptions, working capital requirements, capital expenditures,
business separation transaction costs, transformation costs, acquisition
integration costs, dividends related to the Convertible Preferred Stock if we
elect to pay such dividends in cash, litigation settlements, income tax payments
and other contractual obligations. Our interest payments on long-term debt are
expected to total $2,564.2 million over the duration of the debt, with $505.1
million due in 2022. For additional information regarding our long-term debt
obligations, see Note 7 in the Notes to Consolidated Financial Statements and
our discussion of our interest rate risk in Item 7A. Quantitative and
Qualitative Disclosures About Market Risk included elsewhere in this Annual
Report on Form 10-K. For additional information regarding our obligations under
our operating lease and restructuring agreements, see Notes 5 and 10,
respectively, in the Notes to Consolidated Financial Statements included
elsewhere in this Annual Report on Form 10-K.

During the normal course of business, to manage manufacturing lead times and
help ensure adequate component supply, we enter into agreements with our
contract manufacturers and suppliers that allow them to produce and procure
inventory based upon our forecasted requirements. We estimate our obligations
under these agreements to be $415.7 million due in 2022.

                                       55
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We have $140.5 million in unrecognized tax benefits; however, the timing of the
related tax payments is highly uncertain. We anticipate a reduction of up to
$6.0 million of unrecognized tax benefits during the next twelve months. See
Note 12 in the Notes to Consolidated Financial Statements included elsewhere in
the Annual Report on Form 10-K for further discussion.

We are contingently liable under open standby letters of credit issued by our
banks in favor of third parties that totaled $50.0 million as of December 31,
2021. These letters of credit primarily support performance obligations of a
third-party contractor. These amounts represent our estimate of the maximum
amounts we would expect to incur upon the contractual non-performance of the
contractor, but we also have cross-indemnities in place that may enable us to
recover some or all of our losses in the event of the contractor's
non-performance. We believe the likelihood of having to perform under these
guarantees is remote. There were no material amounts recorded in our
consolidated financial statements related to third-party guarantee agreements as
of December 31, 2021 or 2020.

We believe that our existing cash, cash equivalents and cash flows from
operations, combined with availability under our senior secured revolving credit
facilities (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 the Revolving Credit Facility or issue debt or equity
securities, if market conditions are favorable, to meet future cash needs or to
reduce our borrowing costs.

Although there are no financial maintenance covenants under the terms of our
senior notes, there is a limitation, among other limitations, on certain future
borrowings based on an adjusted leverage ratio or a fixed charge coverage ratio.
These ratios are based on financial measures similar to non-GAAP adjusted EBITDA
as presented in the "Reconciliation of Non-GAAP Measures" section below, but
also give pro forma effect to certain events, including acquisitions, synergies
and savings from cost reduction initiatives such as facility closures and
headcount reductions. For the year ended December 31, 2021, our non-GAAP pro
forma adjusted EBITDA, as measured pursuant to the indentures governing our
notes, was $1,182.6 million, which included annualized synergies expected to be
realized within the next year ($2.6 million) and annualized savings expected
from cost reduction initiatives ($63.0 million) so that the impact of the
synergies and cost reduction initiatives is fully reflected in the twelve-month
period used in the calculation of the ratios. In addition to limitations under
these indentures, our senior secured credit facilities contain customary
negative covenants based on similar financial measures. We believe we are in
compliance with the covenants under our indentures and senior secured credit
facilities at December 31, 2021.

Cash and cash equivalents decreased during 2021 primarily driven by cash paid
for capital expenditures of $131.4 million, costs related to the debt
refinancing of $46.4 million, cash dividends paid for the Convertible Preferred
Stock of $43.0 million, tax withholding payments for vested equity-based
compensation awards of $26.4 million and a payment to settle a net investment
hedge of $18.0 million, partially offset by cash generated from operating
activities of $122.3 million. As of December 31, 2021, approximately 72% of our
cash and cash equivalents were held outside the U.S.

Working capital, excluding cash and cash equivalents and the current portion of
long-term debt, increased during 2021 primarily due to higher inventory balances
as a result of rising material costs and increases in stock as we build
inventory waiting for certain materials or components to complete our products
for sale. Partially offsetting the increase in inventory was an increase in
accounts payable mainly driven by higher inventory balances. During 2021, we
sold approximately $45 million of accounts receivable under customer-sponsored
supplier financing agreements; however, only $14.0 million of that amount
impacted working capital, excluding cash and cash equivalents and the current
portion of long-term debt, as of December 31, 2021. Under these agreements, we
are able to sell accounts receivable to a bank, and we retain no interest in and
have no servicing responsibilities for the accounts receivable sold.

The net reduction in total capitalization in 2021 reflects the net loss for the year and foreign exchange losses.

Cash Flow Overview

                                    Year Ended December 31,             $               %
                                     2021              2020           Change         Change
                                                     (dollars in millions)
Net cash generated by
operating activities             $      122.3       $     436.2     $   (313.9 )         (72.0 )%
Net cash used in investing
activities                             (136.8 )          (120.2 )        (16.6 )          13.8
Net cash used in financing
activities                             (139.5 )          (383.8 )        244.3           (63.7 )




                                       56
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Operating Activities
                                                                 Year Ended December 31,
                                                                  2021              2020
                                                                      (in millions)
Net loss                                                      $     (462.6 )     $   (573.4 )
Adjustments to reconcile net loss to net cash generated by
operating activities:
Depreciation and amortization                                        786.3            823.3
Equity-based compensation                                             79.6            115.0
Deferred income taxes                                               (147.5 )         (154.7 )
Asset impairments                                                     13.7            206.7
Changes in assets and liabilities:
Accounts receivable                                                  (59.6 )          228.4
Inventories                                                         (359.8 )         (100.5 )
Prepaid expenses and other current assets                              3.2            (17.2 )
Accounts payable and other accrued liabilities                       256.0           (175.2 )
Other noncurrent liabilities                                           8.4             (4.0 )
Other noncurrent assets                                              (45.5 )           28.8
Other                                                                 50.1             59.0
Net cash generated by operating activities                    $      122.3  

$436.2



During 2021, operating cash flows decreased compared to the prior year primarily
as a result of lower operating performance and increases in working capital in
the current year due to improved net sales, higher inventory costs and the
building of inventory as we wait for certain materials or components to complete
our products for sale.

Investing Activities
                                                        Year Ended December 31,
                                                          2021             2020
                                                             (in millions)
Additions to property, plant and equipment            $     (131.4 )     $  (121.2 )
Proceeds from sale of property, plant and equipment           13.1          

5.0

Cash paid for Cable Exchange acquisition                         -            (3.5 )
Payments upon settlement of net investment hedge             (18.0 )        

Other                                                         (0.5 )          (0.5 )
Net cash used in investing activities                 $     (136.8 )     $  

(120.2)



During 2021, the increase in cash used in investing activities was driven by a
payment made to settle a net investment hedge of $18.0 million and an increase
of $10.2 million in our investment in property, plant and equipment that
primarily related to supporting improvements in manufacturing operations,
including expanding production capacity and investing in information technology,
including software developed for internal use. These were partially offset by an
increase in proceeds from the sale of property, plant and equipment mainly
driven by proceeds of $10.5 million related to the sale of a manufacturing
location.

Financing Activities
                                                                Year Ended December 31,
                                                                  2021             2020
                                                                     (in millions)
Long-term debt repaid                                         $    (1,282.0 )   $ (1,282.0 )
Long-term debt proceeds                                             1,250.0          950.0
Debt issuance costs                                                   (12.0 )        (11.7 )
Debt extinguishment costs                                             (34.4 )        (17.9 )
Dividends paid on Series A convertible preferred stock                (43.0 )        (14.3 )
Proceeds from the issuance of common shares under
equity-based compensation plans                                         5.6            9.0
Tax withholding payments for vested equity-based
compensation awards                                                   (26.4 )        (16.9 )
Other                                                                   2.7              -
Net cash used in financing activities                         $      (139.5 )   $   (383.8 )




                                       57
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In 2021, we issued $1,250.0 million of 4.75% senior secured notes due 2029 (the
2029 Secured Notes) and used the net proceeds from the offering, together with
cash on hand, to redeem and retire $1,250.0 million outstanding under the 2024
Secured Notes. In connection with the issuance of the 2029 Secured Notes, we
paid $12.0 million of debt issuance costs. We paid a redemption premium of $34.4
million to retire the 2024 Secured Notes. We also paid four quarterly scheduled
amortization payments totaling $32.0 million on the senior secured term loan due
in 2026 (the 2026 Term Loan). 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-rate or floating-rate
debt.

In 2020, we issued $700.0 million of 7.125% senior notes due 2028 (the 2028
Notes) and used the net proceeds from the offering to redeem and retire the
$700.0 million outstanding under the 2021 Notes and the 2024 Notes. We incurred
$11.7 million of debt issuance costs in connection with the issuance of the 2028
Notes. In addition, we redeemed $100.0 million aggregate principal amount of the
2021 Notes, redeemed $100.0 million aggregate principal amount of the 2025 Notes
and paid four quarterly scheduled amortization payments totaling $32.0 million
on the 2026 Term Loan. We paid redemption premiums of $11.9 million to retire
the 2024 Notes and $6.0 million to partially redeem the 2025 Notes. Also during
2020, we borrowed and repaid $250.0 million under our senior secured asset-based
revolving credit facility (the Revolving Credit Facility).

As of December 31, 2021, we had no outstanding borrowings under the Revolving
Credit Facility and the remaining availability was $684.1 million, reflecting a
borrowing base of $777.6 million reduced by $93.5 million of letters of credit
issued under the Revolving Credit Facility.

Also impacting cash used in financing activities for the year ended December 31,
2021 was the increase of $28.7 million in cash dividends paid for the
Convertible Preferred Stock. In 2021, the dividends for the Convertible
Preferred Stock were paid in cash for three of the four quarters, while in the
prior year, the dividends were paid in additional shares of the Convertible
Preferred Stock for three of the four quarters. During 2021, we received
proceeds of $5.6 million related to the exercise of stock options compared to
$9.0 million in the prior year. During 2021, employees surrendered 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 $26.4
million compared to $16.9 million in the prior year.

Reconciliation of Non-GAAP Measures


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 term
non-GAAP adjusted EBITDA may vary from that of others in our industry. This
financial measure should not be considered as an alternative 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.

Although there are no financial maintenance covenants under the terms of our
senior notes, there is a limitation, among other limitations, on certain future
borrowings based on an adjusted leverage ratio or a fixed charge coverage ratio.
These ratios are based on financial measures similar to non-GAAP adjusted EBITDA
as presented in this section, but also give pro forma effect to certain events,
including acquisitions and savings from cost reduction initiatives such as
facility closures and headcount reductions.

                                       58
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Consolidated


                                                         Year Ended December 31,
                                                  2021            2020            2019
                                                              (in millions)
Net loss                                       $    (462.6 )   $    (573.4 )   $    (929.5 )
Income tax benefit                                   (71.9 )         (81.1 )        (144.5 )
Interest income                                       (1.9 )          (4.4 )         (18.1 )
Interest expense                                     561.2           577.8           577.2
Other expense, net                                    23.8            29.3             6.4
Operating income (loss)                        $      48.6     $     (51.8 )   $    (508.5 )
Adjustments:
Amortization of purchased intangible assets          613.0           630.5           593.2
Restructuring costs, net                              91.9            88.4            87.7
Equity-based compensation                             79.6           115.0            90.8
Asset impairments                                     13.7           206.7           376.1
Transaction, transformation and integration
costs (1)                                             90.3            24.9  

195.3

Acquisition accounting adjustments (2)                11.5            20.6  

264.2

Patent claims and litigation settlements              31.7            16.3            55.0
Executive severance                                      -             6.3               -
Depreciation                                         136.7           158.3           143.7
Non-GAAP adjusted EBITDA                       $   1,117.0     $   1,215.2     $   1,297.5




(1)
In 2021, primarily reflects transaction separation costs related to the planned
spin-off of the Home Networks business from CommScope, transformation costs
related to CommScope NEXT and integration costs related to the ARRIS
acquisition. In 2020, primarily reflects integration costs related to the ARRIS
acquisition and in 2019, primarily reflects transaction and integration costs
related to the ARRIS acquisition.

(2)

In 2021 and 2020, reflects acquisition accounting adjustments related to
reducing deferred revenue to its estimated fair value. In 2019, reflects
acquisition accounting adjustments of $218.8 million related to the mark up of
inventory to its estimated fair value and acquisition accounting adjustments of
$45.4 million related to reducing deferred revenue to its estimated fair value.

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Segment adjusted EBITDA reconciliation


Segment adjusted EBITDA is provided as a performance measure in Note 16 in the
Notes to Consolidated Financial Statements included elsewhere in this Annual
Report on Form 10-K. Below we reconcile segment adjusted EBITDA for each segment
individually to operating income (loss) for that segment to supplement the
reconciliation of the total segment adjusted EBITDA to consolidated operating
(loss) in that footnote.


Broadband Networks Segment
                                                        Year Ended December 31,
                                                     2021        2020         2019
                                                             (in millions)
Operating income (loss)                             $ 120.1     $ 157.2     $ (341.7 )
Adjustments:
Amortization of purchased intangible assets           322.1       323.1        273.2
Restructuring costs, net                               69.8        17.8         36.9
Equity-based compensation                              32.6        44.4         34.8
Asset impairments                                         -           -        142.1

Transaction, transformation and integration costs 20.4 7.9

120.2

Acquisition accounting adjustments                      4.8        11.4     

135.8

Patent claims and litigation settlements                2.9         3.0            -
Executive severance                                       -         2.2            -
Depreciation                                           57.2        58.4         55.1
Adjusted EBITDA                                     $ 629.9     $ 625.4     $  456.5

Outdoor Wireless Networks Segment

                                                        Year Ended December 31,
                                                      2021        2020        2019
                                                             (in millions)
Operating income                                    $  199.0     $ 181.1     $ 200.3
Adjustments:
Amortization of purchased intangible assets             33.5        45.8        49.5
Restructuring costs, net                                 3.5        15.7         6.9
Equity-based compensation                                8.3        13.6        12.9

Transaction, transformation and integration costs 8.4 4.2

19.1

Patent claims and litigation settlements                   -           -        55.0
Executive severance                                        -         1.2           -
Depreciation                                            15.2        17.0        17.5
Adjusted EBITDA                                     $  267.9     $ 278.5     $ 361.2

Site and Campus Networks Segment

                                                         Year Ended December 31,
                                                     2021         2020         2019
                                                              (in millions)
Operating loss                                      $ (55.6 )   $ (114.7 )   $ (186.7 )
Adjustments:
Amortization of purchased intangible assets           153.6        157.7        166.6
Restructuring costs, net                               10.0         24.9         20.7
Equity-based compensation                              25.4         34.9         28.3
Asset impairments                                         -            -         41.2

Transaction, transformation and integration costs 13.8 6.7

58.3

Acquisition accounting adjustments                      4.6          7.3    

100.6

Patent claims and litigation settlements                0.3         13.7            -
Executive severance                                       -          1.7            -
Depreciation                                           41.6         47.8         40.4
Adjusted EBITDA                                     $ 193.7     $  180.0     $  269.3




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Home Networks Segment

                                                         Year Ended December 31,
                                                      2021         2020         2019
                                                              (in millions)
Operating loss                                      $ (214.9 )   $ (275.4 )   $ (180.4 )
Adjustments:
Amortization of purchased intangible assets            103.9        103.9        103.9
Restructuring costs, net                                 8.6         30.0         23.2
Equity-based compensation                               13.4         22.1         14.8
Asset impairments                                       13.7        206.7        192.8

Transaction, transformation and integration costs 47.8 6.2

       (2.3 )
Acquisition accounting adjustments                       1.9          1.9   

27.8

Patent claims and litigation settlements                28.5         (0.3 )          -
Executive severance                                        -          1.2            -
Depreciation                                            22.7         35.1         30.7
Adjusted EBITDA                                     $   25.5     $  131.3     $  210.5

Note: Components may not add to total due to rounding

Recent accounting pronouncements

See Note 2 in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.

Effects of inflation and price change


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

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