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What changed in Vistance Networks, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vistance Networks, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+354 added−358 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-29)

Top changes in Vistance Networks, Inc.'s 2024 10-K

354 paragraphs added · 358 removed · 280 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+21 added−27 removed70 unchanged
Biggest changeWe may, therefore, encounter significant price increases and/or availability issues for the materials we obtain from these suppliers as we have seen in recent years. These supply chain constraints have limited our ability to manufacture and deliver products to our customers in the past and could have similar impacts in the future.
Biggest changeThese supply chain constraints have limited our ability to manufacture and deliver products to our customers in the past and could have similar impacts in the future. Our profitability has been and may continue to be materially affected by changes in the market price of our raw materials and components, most of which are linked to the commodity markets.
The funds from these programs and initiatives to build more equitable access—in particular, in the United States (U.S.), the Broadband Equity, Access, and Deployment (BEAD) Program, American Rescue Plan Act (ARPA) and Rural Digital Opportunity Fund (RDOF)—are expected to drive technology and device sales across the board.
The funds from these programs and initiatives to build more equitable access—in particular, in the United States (U.S.), the Broadband Equity, Access, and Deployment (BEAD) Program, American Rescue Plan Act (ARPA), Rural Digital Opportunity Fund (RDOF)—are expected to drive technology and device sales across the board.
We believe these efforts are critical to making us more competitive and allowing us to invest in growth, de-leverage our indebtedness and maximize stockholder and other stakeholder value in the future. In 2022, CommScope NEXT generated positive impacts on net sales, profitability and cash flow from our execution on pricing initiatives, capacity expansion and operational efficiencies.
We believe these efforts are critical to making us more competitive and allowing us to invest in growth, de-leverage our indebtedness and maximize stockholder and other stakeholder value in the future. In 2022, CommScope NEXT generated positive impacts on net sales, profitability and cash flow from our execution on pricing initiatives, capacity expansion and operational efficiencies.
Our plan to achieve our growth opportunities are driven by five themes: • Become more market and customer centric – work to truly understand the needs of our customers and applications for data and video networking solutions. • Expand to service providers outside of North America – expand market share with service providers in the rest of the world. • Expand enterprise sales coverage – enhance sales coverage in historically underpenetrated top metropolitan statistical areas and verticals in North America, as well as targeted country/vertical combinations around the world. • Introduce new products and scale software solutions – build and scale our differentiated products, software and technology. • Invest in capacity – expand capacity for products with high backlog, fast growth and long-term demand visibility.
Our plan to achieve our growth opportunities are driven by five themes: • Become more market and customer centric – work to truly understand the needs of our customers and applications for data and video networking solutions. 8 • Expand to service providers outside of North America – expand market share with service providers in the rest of the world. • Expand enterprise sales coverage – enhance sales coverage in historically underpenetrated top metropolitan statistical areas and verticals in North America, as well as targeted country/vertical combinations around the world. • Introduce new products and scale software solutions – build and scale our differentiated products, software and technology. • Invest in capacity – expand capacity for products with high backlog, fast growth and long-term demand visibility.
The results of our focused efforts make us stronger and pave a path for innovation, which drives business differentiation, talent engagement and retention. 15 Total Rewards We compensate employees equitably, relative to experience and performance, regardless of gender, nationality or disability. Globally, we embrace a pay-for-performance compensation philosophy, conducting pay equity assessments to determine the results of our pay practices.
The results of our focused efforts make us stronger and pave a path for innovation, which drives business differentiation, talent engagement and retention. Total Rewards We compensate employees equitably, relative to experience and performance, regardless of gender, nationality or disability. Globally, we embrace a pay-for-performance compensation philosophy, conducting pay equity assessments to determine the results of our pay practices.
In addition, we utilize contract manufacturers located throughout the world for many of our product groups, including certain products in our CCS, OWN and ANS segments and all of our Ruckus products. There can be no guarantee that the Company will be able to extend or renew agreements with contract manufacturers on similar terms, or at all.
In addition, we utilize contract manufacturers located throughout the world for many of our product groups, including certain products in our CCS and ANS segments and all of our Ruckus products. There can be no guarantee that the Company will be able to extend or renew agreements with contract manufacturers on similar terms, or at all.
Rather than building upon independent wireline and wireless networks, operators are utilizing networks that combine voice, video and data communications into a single converged data network for wired and wireless services. 5 2) Continued Disruption by OTT TV: Although content consumption continues to increase, subscriptions to pay TV continue declining.
Rather than building upon independent wireline and wireless networks, operators are utilizing networks that combine voice, video and data communications into a single converged data network for wired and wireless services. 2) Continued Disruption by OTT TV: Although content consumption continues to increase, subscriptions to pay TV continue declining.
We believe our scale, stability and quality make us an attractive strategic partner to our large global customers, and we have been repeatedly recognized by key customers for these attributes. Our manufacturing and distribution facilities are strategically located to optimize service levels and product delivery times.
We believe our scale, stability and quality make us an attractive strategic partner to our large global customers, and we have been repeatedly recognized by key customers for these attributes. 11 Our manufacturing and distribution facilities are strategically located to optimize service levels and product delivery times.
It may be more meaningful to focus on our annual rather than interim results. 13 Patents and Trademarks We pursue an active policy of seeking intellectual property protection, including patents and registered trademarks, for new products and designs.
It may be more meaningful to focus on our annual rather than interim results. Patents and Trademarks We pursue an active policy of seeking intellectual property protection, including patents and registered trademarks, for new products and designs.
Product offerings include indoor cellular solutions such as distributed antenna systems, public key infrastructure solutions, indoor and outdoor Wi-Fi and long-term evolution (LTE) access points, access and aggregation switches; an Internet of Things (IoT) suite, on-premises and cloud-based control and management systems; and software and software-as-a-service applications addressing security, location, reporting and analytics.
Product offerings include indoor cellular solutions such as public key infrastructure solutions, indoor and outdoor Wi-Fi and long-term evolution (LTE) access points, access and aggregation switches; an Internet of Things (IoT) suite, on-premises and cloud-based control and management systems; and software and software-as-a-service applications addressing security, location, reporting and analytics.
The majority of these manufacturing employees are located in low-cost labor countries such as Mexico, China, India and the Czech Republic. Our U.S. workforce includes approximately 4,400 employees, comprised of a mix of manufacturing and non-manufacturing employees. We are party to numerous works’ councils or similar statutory arrangements outside of the U.S.
The majority of these manufacturing employees are located in low-cost labor countries such as Mexico, China, India and the Czech Republic. Our U.S. workforce includes approximately 4,100 employees, comprised of a mix of manufacturing and non-manufacturing employees. We are party to numerous works’ councils or similar statutory arrangements outside of the U.S.
This moves some of the processing from the head end to the node and virtualizes the rest on traditional switches and servers. 5) Low Latency Services: To support the increased demands of a growing game-playing subscriber base, all operators are continuing to seek new ways to reduce the latency and jitter of the gaming packet streams.
This moves some of the processing from the head end to the node and virtualizes the rest on traditional switches and servers. 4) Low Latency Services: To support the increased demands of a growing game-playing subscriber base, all operators are continuing to seek new ways to reduce the latency and jitter of the gaming packet streams.
Small cell and DAS systems may range from small single-operator, single-band, low-capacity systems for use in enterprise buildings to large multi-carrier, multi-technology, multi-band systems for use in high-capacity public venues. Transition to Wi-Fi 7 Wi-Fi 7, the latest generation of tri-band (2.4/5/6GHz) Wi-Fi, is designed to deliver unparalleled performance.
Small cell systems may range from small single-operator, single-band, low-capacity systems for use in enterprise buildings to large multi-carrier, multi-technology, multi-band systems for use in high-capacity public venues. Transition to Wi-Fi 7 Wi-Fi 7, the latest generation of tri-band (2.4/5/6GHz) Wi-Fi, is designed to deliver unparalleled performance.
Profitable Growth Organic growth is fundamental to achieving the financial returns that investors expect from us. While acquisitions and inorganic growth can change the structure of a business and reset financial expectations resulting in short-term financial returns, the only reliable means for consistently producing long-term positive financial performance is strong organic growth.
Profitable Growth Organic growth is fundamental to achieving the financial returns that investors expect from us. While acquisitions and inorganic growth can change the structure of a business and reset financial expectations resulting in short-term financial returns, the most reliable means for consistently producing long-term positive financial performance is strong organic growth.
With CommScope NEXT, we are striving to achieve the following: • Deliver organic growth • Create a well-positioned comprehensive portfolio of products and services • Stimulate market leading innovation, delivering powerful software and services • Maintain world class operational efficiency and cost structures • Architect a simplified organization, with more accountability, responsibility and visibility With CommScope NEXT, we are transforming our organization into one that has better operational efficiency, speed and resilience and one that can better service our existing customers, as well as new ones.
With CommScope NEXT, we are striving to achieve the following: • Deliver organic growth • Create a well-positioned comprehensive portfolio of products and services • Stimulate market leading innovation, delivering powerful software and services • Maintain world class operational efficiency and cost structures • Architect a simplified organization, with more accountability, responsibility and visibility With CommScope NEXT, we are continuing to transform our organization into one that has better operational efficiency, speed and resilience and one that can better service our existing customers, as well as new ones.
Sometimes, unfilled orders may be canceled prior to shipment of goods, but cancellations historically have not been material. However, our current order backlog may not guarantee future demand. We expect a majority of our backlog as of December 31, 2023 to be recognized as revenue during 2024.
Sometimes, unfilled orders may be canceled prior to shipment of goods, but cancellations historically have not been material. However, our current order backlog may not guarantee future demand. We expect a majority of our backlog as of December 31, 2024 to be recognized as revenue during 2025.
We also offer classroom training as well as an online learning platform that offers a wealth of work-related employee development content (e.g., for managerial, technical and personal development). We focus heavily on interacting with our employees how, when and where it matters most. Employee Engagement CommScope prides itself on creating a collaborative, engaged and enabled workforce.
We also offer classroom training, virtual facilitated training, as well as an online learning platform that offers a wealth of work-related employee development content (e.g., for managerial, technical and personal development). We focus heavily on interacting with our employees how, when and where it matters most. 15 Employee Engagement CommScope prides itself on creating a collaborative, engaged and enabled workforce.
We consider our patents and trademarks to be valuable assets, and although no single patent is material to our overall operations, we believe the COMMSCOPE, ARRIS, RUCKUS, SYSTIMAX, NETCONNECT, NOVUX, ERA, ONECELL and HELIAX trade names and related trademarks are critical assets to our business.
We consider our patents and trademarks to be valuable assets, and although no single patent is material to our overall operations, we believe the COMMSCOPE, ARRIS, RUCKUS, SYSTIMAX, NETCONNECT, NOVUX and ONECELL trade names and related trademarks are critical assets to our business.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website at www.commscope.com under Company — Investor Relations as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Securities and Exchange Commission's website at www.sec.gov and are also available on our website at www.commscope.com under Company — Investor Relations as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.
We believe the following key network trends will continue to impact CommScope and the industry during 2024: 1) Network Convergence : Operators are continuing to move toward converged or multi-use network architectures.
We believe the following key network trends will continue to impact CommScope and the industry during 2025: 1) Network Convergence : Operators are continuing to move toward converged or multi-use network architectures.
(none in the U.S.) and believe that relations with our employees are generally good. Protecting the safety, health, and well-being of our associates around the world is CommScope’s top priority. We strive to achieve an injury-free work environment.
(none in the U.S.) and believe that relations with our employees are generally good. Protecting the safety, health, and well-being of our associates around the world is one of CommScope’s top priorities. We strive to achieve an injury-free work environment.
We expect to continue to incur such costs in 2024 as we continue executing on CommScope NEXT initiatives, and the resulting charges and cash requirements could be material.
We expect to continue to incur such costs in 2025 as we continue executing on CommScope NEXT initiatives, and the resulting charges and cash requirements could be material.
We intend to focus our major R&D activities on high-growth opportunities such as fiber optic connectivity for fiber-to-the-x (FTTX) and data centers, Wi-Fi 7 and 6GHz, CCAP, DAA, DOCSIS 4.0, gigabit passive optical network (GPON), active and passive base-station antennas and metro cell and small cell wireless solutions.
We intend to focus our major R&D activities on high-growth opportunities such as fiber optic connectivity for fiber-to-the-x (FTTX) and data centers, Wi-Fi 7 and 6GHz, CCAP, DAA, DOCSIS 4.0, gigabit passive optical network (GPON) and metro cell and small cell wireless solutions.
In addition, we have formed strategic relationships with leading technology companies to provide us with early access to technology that we believe will help keep us at the forefront of our industry. As of December 31, 2023, we held over 13,000 patents and patent applications and over 2,700 registered trademarks and trademark applications worldwide.
In addition, we have formed strategic relationships with leading technology companies to provide us with early access to technology that we believe will help keep us at the forefront of our industry. As of December 31, 2024, we held over 11,000 patents and patent applications and over 2,700 registered trademarks and trademark applications worldwide.
The densification of 5G networks also reduces congestion and decreases latency. 6) Capacity Expansion : Wired and wireless network providers continue to be cognizant of the need to stay ahead of the traffic growth that occurs every year. This traffic growth results from increases in average subscriber consumption levels and in maximum service level agreement (SLA) levels.
The densification of 5G networks also reduces congestion and decreases latency. 5) Network Capacity Expansion : Network providers continue to be cognizant of the need to stay ahead of the traffic growth that occurs every year. This traffic growth results from increases in average subscriber consumption levels and in maximum service level agreement (SLA) levels.
We intend to rely on our intellectual property rights, including our proprietary knowledge, trade secrets and continuing technological innovation, to develop and maintain our competitive position. From time to time there are disputes with respect to the ownership of the technology used in our industry and accusations of patent infringements. We will continue to protect our key intellectual property rights.
We intend to rely on our intellectual property rights, including our proprietary knowledge, trade secrets and continuing technological innovation, to develop and maintain our competitive position. From time to time there are disputes with respect to the ownership of the technology used in our industry and accusations of patent infringements.
ANS Segment (2023 Net Sales of $1.1 billion) Our ANS segment’s product solutions include cable modem termination systems (CMTS), 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. Industry Background We participate in the large and growing global market for connectivity and essential communications infrastructure.
ANS Segment (2024 Net Sales of $0.8 billion) Our ANS segment’s product solutions include cable modem termination systems (CMTS), 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. 5 Industry Background We participate in the large and growing global market for connectivity and essential communications infrastructure.
New antenna equipment is needed for this expansion. 7) Government-Sponsored Broadband Improvements : Several government-sponsored programs aimed at improving the Broadband infrastructure connecting to rural and other under-served areas launched in the second half of 2022.
New DOCSIS equipment is needed for this expansion. 6 6) Government-Sponsored Broadband Improvements : Several government-sponsored programs aimed at improving the Broadband infrastructure connecting to rural and other under-served areas launched in the second half of 2022.
For the year ended December 31, 2023, we derived approximately 17% of our consolidated net sales from our top two direct customers, however, for the years ended December 31, 2023, 2022 and 2021, no single direct customer accounted for 10% or more of our net sales.
For the year ended December 31, 2024, we derived approximately 19% of our consolidated net sales from our top two direct customers, however, for the years ended December 31, 2024, 2023 and 2022, no single direct customer accounted for 10% or more of our net sales.
Products from our CCS segment are primarily sold directly to cable television system operators, broadband operators and other service providers that deploy broadband networks. CCS segment products are also sold through independent distributors or system integrators for large telecommunications operators.
Products from our CCS segment are primarily sold directly to data center managers and cable television system operators, broadband operators and other service providers that deploy broadband networks. CCS segment products are also sold through independent distributors or system integrators for large telecommunications operators and enterprises.
Our global leadership position is built upon innovative technology, broad solution offerings, high-quality and cost-effective customer solutions, and global manufacturing and distribution scale. We have a team of over 20,000 people who serve our customers in over 150 countries through a network of world-class manufacturing and distribution facilities strategically located around the globe.
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. As of December 31, 2024, we have a team of over 20,000 people who serve our customers in over 100 countries through a network of world-class manufacturing and distribution facilities strategically located around the globe.
We define engagement as the strength of the emotional connection employees feel toward their work, their teams and the Company. We believe communication and feedback are integral to building engaged employees and driving a high-performance culture.
We define engagement as the strength of the emotional connection and discretionary effort employees put toward their work, their teams and the Company. We believe communication and feedback are integral to building engaged employees and driving a high-performance culture.
Major competitors by segment include the following: CCS segment – Amphenol Corporation, Belden Inc., Clearfield, Inc., Corning Incorporated and Sterlite Technologies Limited; OWN segment – Comba Telecom Systems Holdings Limited, Huawei Technologies Co., Ltd., Rosenberger North America and Telefonaktiebolaget LM Ericsson; NICS segment – Cisco Systems, Inc., Comba Telecom Systems Holdings Limited, Corning Incorporated, Extreme Networks, Inc., Hewlett Packard Enterprise Development LP, Huawei Technologies Co., Ltd., JMA Wireless, Juniper Networks, Inc., SOLiD, Inc. and Ubiquiti Inc.; and ANS segment – ATX Networks Corp., Casa Systems, Inc., Cisco Systems, Inc., Harmonic Inc., Technetix Group Limited, Teleste Oyj and Vecima Networks Inc.
Major competitors by segment include the following: CCS segment – Amphenol Corporation, Belden Inc., Clearfield, Inc., Corning Incorporated and Sterlite Technologies Limited; NICS segment – Cisco Systems, Inc., Comba Telecom Systems Holdings Limited, Corning Incorporated, Extreme Networks, Inc., Hewlett Packard Enterprise Development LP, Huawei Technologies Co., Ltd., JMA Wireless, Juniper Networks, Inc., SOLiD, Inc. and Ubiquiti Inc.; and ANS segment – ATX Networks Corp., Casa Systems, Inc., Cisco Systems, Inc., Harmonic Inc., Technetix Group Limited, Teleste Oyj and Vecima Networks Inc.
Capacity is also increasing via the increased use of the spectrally-efficient DOCSIS 3.1 orthogonal frequency-division multiplexing (OFDM) and orthogonal frequency-division multiple access (OFDMA) channels within the cable spectrum. Additionally, some operators are beginning their upgrade path to DOCSIS 4.0 in certain regions of their networks. New DOCSIS equipment is needed for this expansion.
Capacity is also increasing via the increased use of the spectrally-efficient DOCSIS 3.1 orthogonal frequency-division multiplexing (OFDM) and orthogonal frequency-division multiple access (OFDMA) channels within the cable spectrum. Additionally, some operators are beginning their upgrade path to DOCSIS 4.0 in certain regions of their networks.
Over the next five years, approximately 1,650, or about 18%, of our issued patents will expire, while at the same time we intend to seek patents protecting new innovations .
Over the next five years, approximately 1,500, or about 17%, of our issued patents will expire, while at the same time we intend to seek patents protecting new innovations .
CommScope continues to enhance employee engagement by leveraging technology, enabling managers, emphasizing communication, striving to become a destination for the best talent and providing competitive rewards, flexible work approaches and career development opportunities.
CommScope continues to enhance employee engagement by leveraging technology, enabling managers, emphasizing communication, providing competitive rewards, offering flexible work approaches, encouraging career development opportunities and striving to become a destination for the marketplace's top talent.
Small cell and DAS solutions address the capacity and speed requirements from an indoor perspective. These systems provide coverage and capacity to the indoor environment and reduce the load from the macro and metro layers, which improves overall network performance.
Small Cell Investment to Enhance and Expand Wireless Coverage and Capacity Small cell solutions address the capacity and speed requirements from an indoor perspective. These systems provide coverage and capacity to the indoor environment and reduce the load from the macro and metro layers, which improves overall network performance.
We sell these products to most of the wireline and satellite operators globally. 10 We generally have no minimum purchase commitments from any of our distributors, system integrators, channel partners, value-added resellers, wireless operators or OEM customers, and our contracts with these parties generally do not prohibit them from purchasing from our competitors or offering products or services that compete with ours.
We generally have no minimum purchase commitments from any of our distributors, system integrators, channel partners, value-added resellers, wireless operators or OEM customers, and our contracts with these parties generally do not prohibit them from purchasing from our competitors or offering products or services that compete with ours.
Backlog and Seasonality At December 31, 2023 and 2022, we had an order backlog of $1,151.5 million and $2,925.4 million, respectively. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions. Our backlog includes only orders that are believed to be firm.
Backlog and Seasonality At December 31, 2024 and 2023, we had an order backlog of $977.1 million and $860.1 million, respectively. Orders typically fluctuate from quarter to quarter based on customer demand and general business conditions. Our backlog includes only orders that are believed to be firm.
Government Regulation We are subject to various domestic and international government regulations. For example, our international operations expose us to increased challenges in complying with anti-corruption laws and regulations of the U.S. government and various other international jurisdictions.
We will continue to protect our key intellectual property rights. 13 Government Regulation We are subject to various domestic and international government regulations. For example, our international operations expose us to increased challenges in complying with anti-corruption laws and regulations of the U.S. government and various other international jurisdictions.
We are always seeking opportunities to protect the well-being of our employees, customers, suppliers, environment and communities. A commitment to business practices that are innovative, safe and sustainable is key to our success.
Employee Health, Safety and Well-being At CommScope, our employees’ health, safety and well-being are a top priority. We are always seeking opportunities to protect the well-being of our employees, customers, suppliers, environment and communities. A commitment to business practices that are innovative, safe and sustainable is key to our success.
We believe that our culture of diversity, equity and inclusion is a competitive advantage that fuels innovation, enhances our ability to attract and retain talent and strengthens our reputation.
We believe that our inclusive culture is a competitive advantage that fuels innovation, enhances our ability to attract and retain top talent and strengthens our reputation.
Our customer service and engineering groups maintain close working relationships with these customers due to the significant amount of customization associated with some of these products.
Our customer service and engineering groups maintain close working relationships with these customers due to the significant amount of customization associated with some of these products. We sell these products to most of the wireline and satellite operators globally.
Employee Diversity, Equity and Inclusion CommScope strives to create an equitable and inclusive environment that draws upon the strength of our diverse workforce to deliver exceptional results for our investors and all key stakeholders. CommScope’s global workforce is comprised of individuals of many races, cultures, backgrounds, geographies and experiences.
Culture CommScope strives to create an equitable and inclusive environment that draws upon the strength of our diverse workforce to deliver exceptional results for our investors and all key stakeholders. CommScope’s global workforce is comprised of individuals of many races, cultures, backgrounds, geographies and experiences. We focus on ensuring inclusion, belonging, equity and well-being in the workplace.
We are also committed to providing competitive rewards and the continued growth and development of our employees through a variety of global training and development opportunities that build and strengthen employees’ leadership and professional skills. Lastly, we aim to provide a positive employee experience and workplace environment that engages all employees.
We are also committed to providing competitive rewards and the continued growth and development of our employees through a variety of global training and development opportunities that build and strengthen employees’ leadership and professional skills.
The transaction closed on January 9, 2024. We determined the anticipated divestiture of our Home business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with accounting guidance. All prior period amounts in these consolidated financial statements have been recast to reflect the discontinuation of the Home business.
In the fourth quarter of 2023, we determined the sale of our Home business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with accounting guidance. All prior period amounts in these consolidated financial statements have been recast to reflect the discontinuation of the Home business.
To that end, we incurred $29.7 million, $63.0 million and $85.1 million of restructuring costs and $27.1 million, $35.1 million and $50.6 million of transaction, transformation and integration costs during the years ended December 31, 2023, 2022 and 2021, respectively, primarily related to CommScope NEXT.
To that end, we incurred $36.7 million, $25.1 million and $41.8 million of restructuring costs and $63.4 million, $27.1 million and $35.1 million of transaction, transformation and integration costs during the years ended December 31, 2024, 2023 and 2022, respectively, primarily related to CommScope NEXT initiatives.
Major customers and distributors include companies such as AT&T Inc.; Charter Communications, Inc.; Comcast Corporation (Comcast); Graybar Electric Company, Inc.; KGP Companies, Inc.; Power & Telephone Supply Company; Talley Inc.; TD SYNNEX Corporation; Verizon Communications Inc.; and Wesco International, Inc. (including Anixter International Inc.).
Major customers and distributors include companies such as Charter Communications, Inc.; Comcast Corporation (Comcast); Cox Communications, Inc.; Graybar Electric Company, Inc.; KGP Companies, Inc.; National Broadband Network Company Limited; Power & Telephone Supply Company; Rogers Communication Inc.; TD SYNNEX Corporation; and Wesco International, Inc. (including Anixter International Inc.).
Our Board of Directors and its Committees provide oversight on a broad range of human capital management topics, including corporate culture, diversity, equity and inclusion, pay equity, health and safety, training and development and compensation and benefits. We employed approximately 20,000 people worldwide as of December 31, 2023, with approximately 64% classified as manufacturing employees.
Our Board of Directors and its Committees provide oversight on a broad range of human capital management topics, including corporate culture, compensation and benefits, organizational development and succession planning, and employee health, safety and well-being, to name a few. We employed approximately 20,000 people worldwide as of December 31, 2024, with approximately 53% classified as manufacturing employees.
The U.S. initiatives aim to ensure that every person in the U.S. has access to reliable and affordable broadband by 2030. While we did not see money flowing under the BEAD Program in 2023, we expect a minimal amount of funds to begin being distributed in the second half of 2024.
The U.S. initiatives aim to ensure that every person in the U.S. has access to reliable and affordable broadband by 2030. While we saw minimal investment under the BEAD Program in 2024, we expect more funds to be distributed in the second half of 2025.
Outdoor network solutions are used in both local-area and wide-area networks and “last mile” fiber-to-the-home installations, including deployments of fiber-to-the-node, fiber-to-the-premises and fiber-to-the-distribution-point to homes, businesses and cell sites. OWN Segment (2023 Net Sales of $0.9 billion) Our OWN segment focuses on the macro and metro cell markets.
Outdoor network solutions are used in both local-area and wide-area networks and “last mile” fiber-to-the-home installations, including deployments of fiber-to-the-node, fiber-to-the-premises and fiber-to-the-distribution-point to homes, businesses and cell sites. NICS Segment (2024 Net Sales of $0.6 billion) Our NICS segment provides wireless networks for enterprises and service providers.
The distribution of net revenues among our four segments was as follows: Year Ended December 31, 2023 2022 2021 CCS 46.8 % 50.4 % 45.4 % OWN 15.2 19.5 21.0 NICS 19.3 12.5 12.8 ANS 18.7 17.6 20.8 Total 100.0 % 100.0 % 100.0 % 4 CCS Segment (2023 Net Sales of $2.7 billion) Our CCS segment provides fiber optic and copper connectivity and cable solutions for use in telecommunications, cable television, residential broadband networks, data centers and business enterprises.
The distribution of net revenues among our operating segments was as follows: Year Ended December 31, 2024 2023 2022 CCS 67.2 % 59.2 % 65.3 % NICS 13.1 16.9 11.6 ANS 19.7 23.9 23.1 Total 100.0 % 100.0 % 100.0 % CCS Segment (2024 Net Sales of $2.8 billion) Our CCS segment provides fiber optic and copper connectivity and cable solutions for use in telecommunications, cable television, residential broadband networks, data centers and business enterprises.
We are proud that employees all over the world continue to unite behind our common purpose to “Create Lasting Connections.” We collaborate and innovate to create the world’s most advanced networks driven by our passionate employees who deliver on this vision every day. Employee Health, Safety and Well-being At CommScope, our employees’ health, safety and well-being are our top priority.
Lastly, we aim to provide a positive employee experience and workplace environment that engages all employees. 14 We are proud that employees all over the world continue to unite behind our common purpose to “Create Lasting Connections.” We collaborate and innovate to create the world’s most advanced networks driven by our passionate employees who deliver on this vision every day.
In 2023, we experienced headwinds related to a slow-down in spending by our customers, but we continued to execute under CommScope NEXT by driving operational efficiencies and focusing on portfolio optimization that should enable us to take advantage of the expected recovery in demand in the second half of 2024.
In 2023, we experienced headwinds related to a slow-down in spending by our customers, but we continued to execute under CommScope NEXT to improve our profitability and cash flows by continuing to drive operational efficiencies and focusing on portfolio optimization, all of which is enabling us to take advantage of the recovery in demand that we began to see in 2024.
As discussed above, we believe we found the right opportunity for its future success and closed on a transaction to divest of our Home business on January 9, 2024. 9 The Future of CommScope We are positioned as a leader in most of our segments already and will work to defend our leadership in the more mature parts of these markets, while also shifting resources towards our targeted growth choices within them.
The Future of CommScope We are positioned as a leader in most of our segments already and will work to defend our leadership in the more mature parts of these markets, while also shifting resources towards our targeted growth choices within them.
We believe that we differentiate ourselves in many of our markets based on our market leadership, global sales channels, intellectual property, strong reputation with our customer base, the scope of our product offering, the quality and performance of our solutions, and our service and technical support.
We believe that we differentiate ourselves in many of our markets based on our market leadership, global sales channels, intellectual property, strong reputation with our customer base, the scope of our product offering, the quality and performance of our solutions, and our service and technical support. 10 Competitive Strengths We are a global leader in connectivity and essential infrastructure solutions for communications and entertainment networks, and we believe we hold leading market positions in most of our segments.
We have long-standing, direct relationships with our customers and serve them through a direct sales force and a global network of channel partners. 3 Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization.
Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization.
All of these transitions are expected to continue driving increased investment. Fiber Deep Deployments Residential and business bandwidth consumption continues to grow substantially. The proliferation of OTT video, multiscreen viewing, cloud services and social media are continuing to prompt operators to accelerate fiber deployment. Operators are increasing network capacity by installing fiber deeper into their networks.
The proliferation of OTT video, multiscreen viewing, cloud services and social media are continuing to prompt operators to accelerate fiber deployment. Operators are increasing network capacity by installing fiber deeper into their networks.
Customers Our customers include substantially all the leading global telecommunications operators, data center managers, cable television providers or MSOs and thousands of enterprise customers, including many Fortune 500 companies.
Our customers include substantially all the leading global telecommunications operators, data center managers, cable television providers or MSOs and thousands of enterprise customers, including many Fortune 500 companies. We are a key supplier within the wireless infrastructure market and enjoy established sales channels across all geographies and technologies.
We have a global sales force with sales representatives based in North America, Europe, Latin America, Asia and other regions, and an extensive global network of channel partners, including independent distributors, system integrators and value-added resellers.
Our long-standing relationships with telecommunications operators enable us to work closely with them in providing highly customized solutions aligned with their technology roadmaps. We have a global sales force with sales representatives based in North America, Europe, Latin America, Asia and other regions, and an extensive global network of channel partners, including independent distributors, system integrators and value-added resellers.
The discussions in these consolidated financial statements relate solely to our continuing operations, unless otherwise noted. For further discussion of the discontinued operations related to the Home business, see Note 3 in the Notes to Consolidated Financial Statements. For the year ended December 31, 2023, our revenues were $5.79 billion and our loss from continuing operations was $851.3 million.
For further discussion of the discontinued operations related to the OWN segment, DAS business unit and Home business, see Note 4 in the Notes to Consolidated Financial Statements. 4 For the year ended December 31, 2024, our revenues were $4.21 billion and our loss from continuing operations was $461.0 million.
In 2023, we experienced headwinds related to a slow-down in spending by our customers, but we continue to execute under CommScope NEXT by driving operational efficiencies and focusing on portfolio optimization so that we are in a better position to take advantage of the recovery later in 2024.
In 2023, we experienced headwinds related to a slow-down in spending by our customers, but we continued to execute under CommScope NEXT to improve our profitability and cash flows by continuing to drive operational efficiencies and focusing on portfolio optimization, all of which is enabling us to take advantage of the recovery in demand that we began to see in 2024.
In the cable television and video network equipment industry, CommScope and ARRIS are longstanding market leaders, along with other brands we own such as RUCKUS, ADC and many smaller brands. In the wireless industry, ANDREW is one of the world’s most recognized brands and a global leader in RF solutions for wireless networks.
Since our founding in 1976, CommScope has been a leading brand in connectivity solutions for communications networks. In the cable television and video network equipment industry, CommScope and ARRIS are longstanding market leaders, along with other brands we own such as RUCKUS, ADC and many smaller brands.
We have adjusted our prices for certain products and may have to adjust prices again. Delays in implementing price increases, failure to achieve market acceptance of price increases, or price reductions in response to a rapid decline in raw material costs, could have a material adverse impact on the results of our operations.
Delays in implementing price increases, failure to achieve market acceptance of price increases, or price reductions in response to a rapid decline in raw material costs, could have a material adverse impact on the results of our operations. 12 In addition, some of our products are assembled from specialized components and subassemblies manufactured by third-party suppliers.
For the past two years, as a step in optimizing our portfolio, we have been committed to finding the right strategic opportunity for our non-Core Home segment.
As a step in optimizing our portfolio, we were committed to finding the right strategic opportunity for our OWN segment, DAS business unit and Home business.
Our results of operations have been and may continue to be materially affected if these suppliers cannot provide these components in sufficient quantity and quality on a timely and cost-efficient basis. We believe that our supply contracts and our supplier contingency plans mitigate some of this risk.
We depend upon sole suppliers for certain of these components, including capacitors, memory devices and silicon chips. Our results of operations have been and may continue to be materially affected if these suppliers cannot provide these components in sufficient quantity and quality on a timely and cost-efficient basis.
We may occasionally enter forward purchase commitments or otherwise secure availability for specific commodities to mitigate our exposure to price changes for a portion of our anticipated purchases. Certain of the raw materials utilized in our products may only be available from a few suppliers, and we may enter into longer term agreements to secure access to certain key inputs.
Certain of the raw materials utilized in our products may only be available from a few suppliers, and we may enter into longer term agreements to secure access to certain key inputs. We may, therefore, encounter significant price increases and/or availability issues for the materials we obtain from these suppliers as we have seen in recent years.
Wi-Fi 7 is expected to deliver exceptional user experiences and empower an entirely new class of advanced connected devices and demanding applications through the most efficient use of spectrum. 8 Strategy Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization.
Strategy Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization.
On October 2, 2023, we entered into a Call Option Agreement with Vantiva SA, a société anonyme organized under the Laws of France (Vantiva), pursuant to which we granted Vantiva a binding call option to acquire our Home segment and substantially all of the associated segment assets and liabilities (Home business), which was subsequently exercised and a Purchase Agreement signed on December 7, 2023.
On January 9, 2024, we completed the sale of our Home Networks (Home) segment and substantially all of the associated segment assets and liabilities (Home business) to Vantiva SA (Vantiva) pursuant to the Call Option Agreement entered into on October 2, 2023 and the Purchase Agreement dated as of December 7, 2023.
As demand in our industry recovers, we expect CommScope NEXT to drive adjusted EBITDA expansion that will enable us to increase our cash flow to de-leverage our indebtedness and further invest in our growth.
As demand in our industry recovers, we expect CommScope NEXT to drive adjusted EBITDA expansion that will enable us to increase our cash flow to de-leverage our indebtedness and further invest in our growth. 9 Customers Our customers include substantially all the leading global telecommunications operators, data center managers, cable television providers or MSOs and thousands of enterprise customers, including many Fortune 500 companies.
While past data trends have been defined by rapid growth in the downlink, more interactive experiences and IoT are driving the need for major network change in the uplink. 3) Densification : As wireless operators work to meet consumer demand, cell splitting, in the form of densification, is a key driver for continuing to fulfill the promise of 5G networks.
While past data trends have been defined by rapid growth in the downlink, more interactive experiences and IoT are driving the need for major network change in the uplink. 3) Virtualization, Centralization and Disaggregation: Operators are continuing to virtualize and centralize their networks to make them more flexible and efficient.
We continuously evaluate and adjust operations to improve service, lower cost and improve the return on our capital investments, and we expect to continue modifying our global operations to adapt to changing product demand and business conditions. 12 Raw Materials and Components Our products are manufactured or assembled from both standard components and parts that are unique to our specifications.
Our global footprint allows us to mitigate macroeconomic headwinds in an everchanging environment. We continuously evaluate and adjust operations to improve service, lower cost and improve the return on our capital investments, and we expect to continue modifying our global operations to adapt to changing product demand and business conditions.
Our ongoing innovation, supported by proprietary intellectual property and technology know-how, has allowed us to build and sustain a competitive advantage. 11 Established Sales Channels and Customer Relationships We serve customers in over 150 countries and have become a trusted advisor to many of them through our industry expertise, quality products, leading technology and long-term relationships.
Established Sales Channels and Customer Relationships We serve customers in over 100 countries and have become a trusted advisor to many of them through our industry expertise, quality products, leading technology and long-term relationships. These factors enable us to provide mission-critical connectivity solutions that our customers need to build and maintain high-performing communication networks.
For additional information, which is not incorporated by reference in this Annual Report on Form 10-K, see our Corporate Responsibility & Sustainability pages on the CommScope website: https://www.commscope.com/corporate-responsibility-and-sustainability/ . 14 Human Capital Management CommScope believes that human capital management, including attracting, developing and retaining a high-quality workforce, is critical to our long-term success.
For the sake of our current and future generations, we will continue to grow as a sustainable, environmentally conscious business that benefits the whole planet. For additional information, which is not incorporated by reference in this Annual Report on Form 10-K, see our Corporate Responsibility & Sustainability pages on the CommScope website: https://www.commscope.com/corporate-responsibility-and-sustainability/ .
Our profitability has been and may continue to be materially affected by changes in the market price of our raw materials and components, most of which are linked to the commodity markets. Prices for aluminum, copper, plastics, silicon and certain other polymers derived from oil and natural gas have fluctuated substantially during the past several years.
Prices for aluminum, copper, plastics, silicon and certain other polymers derived from oil and natural gas have fluctuated substantially during the past several years. We have adjusted our prices for certain products and may have to adjust prices again.
Our internal manufacturing operations are largely process oriented and we use significant quantities of various raw materials, including aluminum, copper, steel, bimetals, optical fiber and plastics and other polymers, among others. Portions of the requirements for these materials are purchased under supply arrangements where some portion of the unit pricing may be indexed to commodity market prices for these metals.
Raw Materials and Components Our products are manufactured or assembled from both standard components and parts that are unique to our specifications. Our internal manufacturing operations are largely process oriented and we use significant quantities of various raw materials, including aluminum, copper, steel, bimetals, optical fiber and plastics and other polymers, among others.
Our supply agreements include technology licensing and component purchase contracts, and several of our competitors have similar supply agreements for these components. There can be no guarantee that the Company will be able to extend or renew these supply agreements on similar terms, or at all.
There can be no guarantee that the Company will be able to extend or renew these supply agreements on similar terms, or at all. In addition, we license software for operating network and security systems or sub-systems and a variety of routing protocols from different suppliers.
We focus on ensuring equity in the workplace and take pride in our diverse workforce and inclusive culture. CommScope has continued to strengthen its global Diversity & Inclusion Business Network that was established in 2020, providing over 1,600 employees with targeted opportunities to network, learn and lead, grow their careers and support their communities.
We take pride in our culture and support the activities of our global DIBN that was established in 2020. This broad-based network is open to all employees and provides its 1,400 members with opportunities to network, learn and lead, grow their careers, and support their communities.
Operating Segments As a result of the divestiture of the Home business, we are now reporting financial performance based on the following remaining four operating segments, which excludes our Home segment: Connectivity and Cable Solutions (CCS), Outdoor Wireless Networks (OWN), Networking, Intelligent Cellular and Security Solutions (NICS) and Access Network Solutions (ANS).
Operating Segments As a result of the divestitures described above, we are now reporting financial performance based on the following remaining three operating segments: CCS, NICS and ANS.
We invested $459.7 million in research and development (R&D) during 2023 to advance product innovation and decrease total cost of deployment and ownership.
We invested $316.2 million in research and development (R&D) during 2024 to advance product innovation and decrease total cost of deployment and ownership. Our ongoing innovation, supported by proprietary intellectual property and technology know-how, has allowed us to build and sustain a competitive advantage.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

69 edited+6 added−12 removed222 unchanged
Biggest changeTherefore, if ARRIS was treated as a U.S. corporation for U.S. federal income tax purposes, we could be liable for both U.S. and U.K. taxes in certain periods prior to the acquisition of ARRIS by CommScope, which could have a material adverse effect on our financial condition, results of operations and cash flows. 24 Supply Chain Risks We are dependent on certain raw materials and components linked to the commodity markets and utilize a limited number of key suppliers for logistics support of certain of these raw materials and components, subjecting us to cost volatility and supply shortages or delays that could limit our ability to manufacture products.
Biggest changeTherefore, if ARRIS was treated as a U.S. corporation for U.S. federal income tax purposes, we could be liable for both U.S. and U.K. taxes in certain periods prior to the acquisition of ARRIS by CommScope, which could have a material adverse effect on our financial condition, results of operations and cash flows.
For additional information, which is not incorporated by reference in this Annual Report on Form 10-K, see our Sustainability report on the CommScope website: https://www.commscope.com/corporate-responsibility-and-sustainability/ . Labor-Related Risks Failure to attract, develop and maintain a highly skilled and diverse workforce or effectively manage changes in our workforce can have an adverse effect on our business.
For additional information, which is not incorporated by reference in this Annual Report on Form 10-K, see our Sustainability report on the CommScope website: https://www.commscope.com/corporate-responsibility-and-sustainability/ . 31 Labor-Related Risks Failure to attract, develop and maintain a highly skilled and diverse workforce or effectively manage changes in our workforce can have an adverse effect on our business.
We could experience a material adverse effect on our business, financial condition, results of operations and cash flows if we are not successful in our ongoing innovation efforts. 28 As our products become more complex and customer preferences continue to change, we may encounter difficulties in meeting such preferences, including performance, service and delivery expectations.
We could experience a material adverse effect on our business, financial condition, results of operations and cash flows if we are not successful in our ongoing innovation efforts. As our products become more complex and customer preferences continue to change, we may encounter difficulties in meeting such preferences, including performance, service and delivery expectations.
In some cases, we guarantee a certain level of performance to our end customers, which could prove to be resource-intensive and expensive for us to fulfill if unforeseen technical problems arise. 21 Many of our service providers and large enterprise end customers have more complex networks and require higher levels of support than our smaller end customers.
In some cases, we guarantee a certain level of performance to our end customers, which could prove to be resource-intensive and expensive for us to fulfill if unforeseen technical problems arise. Many of our service providers and large enterprise end customers have more complex networks and require higher levels of support than our smaller end customers.
Additionally, these restrictions permit us to incur obligations that, although preferential to our common stock in terms of payment, do not constitute indebtedness. We may need to recognize additional impairment charges related to goodwill, identified intangible assets, fixed assets and right of use assets. We have substantial balances of goodwill and identified intangible assets.
Additionally, these restrictions permit us to incur obligations that, although preferential to our common stock in terms of payment, do not constitute indebtedness. 23 We may need to recognize additional impairment charges related to goodwill, identified intangible assets, fixed assets and right of use assets. We have substantial balances of goodwill and identified intangible assets.
Additional tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products. There is uncertainty about the future relationship between the U.S. and various other countries, most significantly China, with respect to trade policies and tariffs.
Additional tariffs or a global trade war could increase the cost of our products, which could adversely impact the competitiveness of our products. There is uncertainty about the future relationship between the U.S. and various other countries, most significantly China and Mexico, with respect to trade policies and tariffs.
Circumstances may occur in which the interests of Carlyle could conflict with the interests of our other stockholders. Business and Operational Risks Our future success depends on our ability to anticipate and adapt to changes in technology and customer preferences and develop, implement and market innovative solutions.
Circumstances may occur in which the interests of Carlyle could conflict with the interests of our other stockholders. 27 Business and Operational Risks Our future success depends on our ability to anticipate and adapt to changes in technology and customer preferences and develop, implement and market innovative solutions.
Interruptions in our services might adversely affect our reputation and operating results, cause us to issue refunds or service credits, subject us to potential liabilities or result in contract terminations. 30 Our business depends on effective management information systems.
Interruptions in our services might adversely affect our reputation and operating results, cause us to issue refunds or service credits, subject us to potential liabilities or result in contract terminations. Our business depends on effective management information systems.
Although the Company maintains insurance coverage for certain types of losses, such insurance coverage may be insufficient to cover all losses that may arise. A significant portion of our products sold in the U.S. are manufactured outside the U.S.
Although the Company maintains insurance coverage for certain types of losses, such insurance coverage may be insufficient to cover all losses that may arise. 32 A significant portion of our products sold in the U.S. are manufactured outside the U.S.
Any issuance of equity or debt may be for cash or in exchange for our outstanding securities or indebtedness, or a combination thereof. We are aware that our outstanding debt securities and debt under our credit facilities are currently trading at substantial discounts to their respective principal amounts.
Any issuance of equity or debt may be for cash or in exchange for our outstanding securities or indebtedness, or a combination thereof. We are aware that certain of our outstanding debt securities and debt under our credit facilities are currently trading at discounts to their respective principal amounts.
We experienced a significant decrease in customer capital spending in 2023, which negatively impacted our results of operations, and we may continue to experience significant fluctuations in sales and operating income due to the volatility in our industry.
We experienced a decrease in customer capital spending in 2024, which negatively impacted our results of operations, and we may continue to experience significant fluctuations in sales and operating income due to the volatility in our industry.
Our business strategy has historically relied, in part, on acquisitions to create growth, such as our acquisition of ARRIS in 2019 and our acquisition of TE Connectivity’s Broadband Network Solutions business (the BNS business) in 2015. We anticipate that a portion of our future growth may be accomplished by acquiring existing businesses, products or technologies.
Our business strategy has historically relied, in part, on acquisitions to create growth, such as our acquisitions of Casa in 2024, ARRIS in 2019 and TE Connectivity’s Broadband Network Solutions business (the BNS business) in 2015. We anticipate that a portion of our future growth may be accomplished by acquiring existing businesses, products or technologies.
We have been successful in the past in shifting the manufacturing locations for the impacted products, but this takes time and results in additional one-time costs and these alternative locations may have higher ongoing manufacturing costs.
We have been successful in the past in shifting the manufacturing locations for some of the impacted products, but this takes time and results in additional one-time costs and these alternative locations may have higher ongoing manufacturing costs.
A related trend that could affect us is the emerging interest in distributed access architecture (DAA), which disaggregates some of the functions of the c onverged cable access platform (CCAP) and the access and transport platforms to enable deployment of these functions in ways that could reduce traditional operator capital expenditures in hybrid fiber-coaxial.
A related trend that could affect us is the emerging interest in distributed access architecture (DAA), which disaggregates some of the functions of the converged cable access platform (CCAP) and the access and transport platforms to enable deployment of these functions in ways that could reduce traditional operator capital expenditures in hybrid fiber-coaxial.
Any such events could result in theft of personal information, trade secrets and intellectual property; give rise to legal proceedings; cause us to incur increased costs for insurance premiums, security, remediation and regulatory compliance; subject us to civil and criminal penalties; expose us to liabilities to our customers, employees, vendors, governmental authorities or other third parties; allow others to unfairly compete with us; disrupt our delivery of products and services; expose the confidential information of our clients and others; and have a negative impact on our reputation, all of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price. 31 Climate change may have a long-term impact on our business.
Any such events could result in theft of personal information, trade secrets and intellectual property; give rise to legal proceedings; cause us to incur increased costs for insurance premiums, security, remediation and regulatory compliance; subject us to civil and criminal penalties; expose us to liabilities to our customers, employees, vendors, governmental authorities or other third parties; allow others to unfairly compete with us; disrupt our delivery of products and services; expose the confidential information of our clients and others; and have a negative impact on our reputation, all of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price.
As the Federal Reserve has increased interest rates in 2023, we have seen increased interest cost which has adversely impacted our results of operations and cash flows. This may continue into 2024 if the Federal Reserve continues to maintain higher interest rates or chooses to raise interest rates further.
As the Federal Reserve maintained higher interest rates in 2024, we have seen increased interest cost which has adversely impacted our results of operations and cash flows. This may continue into 2025 if the Federal Reserve continues to maintain higher interest rates or chooses to raise interest rates further.
These upgrades and integrations do have risks and any future upgrades or integrations could disrupt our operations, divert management’s attention and have an adverse effect on our capital resources, financial condition, results of operations or cash flows. We also rely on management information systems to produce information for business decision-making and planning and to support digital platforms.
Upgrades and integrations of new software or systems have risks and any future upgrades or integrations could disrupt our operations, divert management’s attention and have an adverse effect on our capital resources, financial condition, results of operations or cash flows. We also rely on management information systems to produce information for business decision-making and planning and to support digital platforms.
To better optimize our portfolio of products, we have divested of the Home Networks business and we may in the future decide to separate, discontinue or divest of other businesses or product lines that we believe are not core to CommScope’s business, or where we believe the separation, discontinuation or divestiture will be accretive to stakeholders.
To better optimize our portfolio of products, we have recently divested the Home Networks segment, the OWN segment and the DAS business, and we may in the future decide to separate, discontinue or divest of other businesses or product lines that we believe are not core to CommScope’s business, or where we believe the separation, discontinuation or divestiture will be accretive to stakeholders.
Our customer base includes direct customers, original equipment manufacturers (OEMs) and channel partners, which include distributors, system integrators, value-added resellers and sales representatives. For the year ended December 31, 2023, we derived approximately 17% of our consolidated net sales from our top two direct customers.
Our customer base includes direct customers, original equipment manufacturers (OEMs) and channel partners, which include distributors, system integrators, value-added resellers and sales representatives. For the year ended December 31, 2024, we derived approximately 19% of our consolidated net sales from our top two direct customers.
As of December 31, 2023, goodwill and identified intangible assets represented approximately 55% of our total assets. We are required to test goodwill for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment.
As of December 31, 2024, goodwill and identified intangible assets represented approximately 47% of our total assets. We are required to test goodwill for possible impairment on the same date each year and on an interim basis if there are indicators of a possible impairment.
To the extent international sales increase as a percentage of our net sales, our overall gross profit percentages may decline. 32 Our international sales, manufacturing, distribution and R&D operations are subject to the risks inherent in operating abroad, including, but not limited to, coordinating communications among and managing international operations; currency exchange rate fluctuations; economic and political destabilization, including the current risk with China-Taiwan relations, China-U.S. relations and Russia-U.S. relations; restrictive actions by foreign governments; price inflation; volatile interest rates; wage inflation; nationalization of businesses and expropriation of assets; the laws and policies of the U.S. and other countries affecting trade and tariffs, anti-bribery, foreign investment and loans; foreign tax laws, including the ability to recover amounts paid as value-added and similar taxes; potential restrictions on the repatriation of cash; reduced protection of intellectual property; longer customer payment cycles; compliance with local laws and regulations, including the imposition of new data privacy and climate change regulations; volatile geopolitical turmoil, including popular uprisings, regional conflicts, terrorism, and war; shipping interruptions, including shortages of containers or port congestion; major public health or safety concerns, such as pandemics and infectious diseases; natural or man-made disasters; inflexible labor contracts or labor laws in the event of business downturns; and economic boycott for doing business in certain countries.
Our international sales, manufacturing, distribution and R&D operations are subject to the risks inherent in operating abroad, including, but not limited to, coordinating communications among and managing international operations; currency exchange rate fluctuations; economic and political destabilization, including the current risk with China-Taiwan relations, China-U.S. relations and Russia-U.S. relations; restrictive actions by foreign governments; price inflation; volatile interest rates; wage inflation; nationalization of businesses and expropriation of assets; the laws and policies of the U.S. and other countries affecting trade and tariffs, including additional tariffs implemented or proposed by the new administration (and counter tariffs from other countries that may be implemented in response): anti-bribery, foreign investment and loans; foreign tax laws, including the ability to recover amounts paid as value-added and similar taxes; potential restrictions on the repatriation of cash; reduced protection of intellectual property; longer customer payment cycles; compliance with local laws and regulations, including the imposition of new data privacy and climate change regulations; volatile geopolitical turmoil, including popular uprisings, regional conflicts, terrorism, and war; shipping interruptions, including shortages of containers or port congestion; major public health or safety concerns, such as pandemics and infectious diseases; natural or man-made disasters; inflexible labor contracts or labor laws in the event of business downturns; and economic boycott for doing business in certain countries.
Our interest cost on our senior secured term loan due 2026 (2026 Term Loan) and our Revolving Credit Facility, which make up about $3.1 billion of our indebtedness, is variable and subject to the risk of changes in interest rates.
Our interest cost on our new senior secured term loan due 2029 (2029 Term Loan) and our Revolving Credit Facility, which make up about $3.4 billion of our indebtedness, is variable and subject to the risk of changes in interest rates.
Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions and applicable regulatory, legal and accounting factors. Whether or not we engage in any such transactions will be determined at our discretion.
Any such transactions will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions and applicable regulatory, legal and accounting factors. Whether or not we engage in any such transactions will be determined at our discretion. The amounts involved in any such transactions, individually or in the aggregate, may be material.
To the extent there are changes in U.S. trade policies, such as significant increases in tariffs or duties for goods brought into the U.S., our competitive position may be adversely impacted and the resulting effect on our earnings could be material.
To the extent there are changes in U.S. trade policies, which have been implemented and/or proposed by the new administration, such as significant increases in tariffs or duties for goods brought into the U.S., our competitive position may be adversely impacted and the resulting effect on our earnings could be material.
Whether or not a separation plan is completed, our businesses may face risks and uncertainties, including, but not limited to: the diversion of senior management’s attention from ongoing business concerns; maintaining employee morale and retaining key management and other employees; retaining existing business and operational relationships, including with customers, suppliers and employees, and attracting new business and operational relationships; foreseen and unforeseen costs and expenses; and potential negative reactions from the financial markets if we fail to complete a separation plan as expected, within the anticipated time frame, or at all.
In addition, we will continue to incur certain ongoing costs, which will be shared across a smaller company and which may exceed our estimates. 26 Whether or not a separation plan is completed, our businesses may face risks and uncertainties, including, but not limited to: the diversion of senior management’s attention from ongoing business concerns; maintaining employee morale and retaining key management and other employees; retaining existing business and operational relationships, including with customers, suppliers and employees, and attracting new business and operational relationships; foreseen and unforeseen costs and expenses; and potential negative reactions from the financial markets if we fail to complete a separation plan as expected, within the anticipated time frame, or at all.
We currently believe that our existing cash and cash equivalents, combined with availability under our asset-based revolving credit facility (Revolving Credit Facility), will be sufficient to meet our presently anticipated future cash needs.
We currently believe that our existing cash and cash equivalents, combined with availability under our asset-based revolving credit facility (Revolving Credit Facility), will be sufficient to meet our presently anticipated future cash needs for at least the next twelve months.
Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our financial obligations.
As a result, we could be forced into bankruptcy or liquidation. 22 Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our financial obligations.
Any change in the laws and policies of the U.S. or other countries affecting trade is a risk to us. To the extent there are unfavorable changes imposed by the U.S. or other countries and/or retaliatory actions taken by trading partners, such as the addition of new tariffs or trade restrictions, we may experience material adverse impacts on earnings.
To the extent there are unfavorable changes imposed by the U.S. or other countries and/or retaliatory actions taken by trading partners, such as the addition of new tariffs or trade restrictions, we may experience material adverse impacts on earnings.
If we cannot ramp up capacity fast enough to meet customer demand in the future, we may experience lost sales opportunities, lose market share and experience customer relations problems, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 25 We rely on unaffiliated contract manufacturers, both domestically and internationally, to produce certain products or key components of products.
If we cannot ramp up capacity fast enough to meet customer demand in the future, we may experience lost sales opportunities, lose market share and experience customer relations problems, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Failure to maintain an adequate digital platform or to make additional investment in our digital platform to support e-commerce activities and improve our customer experience could have a material adverse impact on our business through lost sales opportunities.
Failure to maintain an adequate digital platform or to make additional investment in our digital platform to support e-commerce activities and improve our customer experience could have a material adverse impact on our business through lost sales opportunities. Many of our systems rely on software and other products provided by third-parties.
Similarly, a high-profile network failure may be caused by improper operation of the network or failure of a network component that we did not supply, but service providers may perceive that our products were implicated, which, even if incorrect, could harm our business, financial condition, results of operations and cash flows.
Similarly, a high-profile network failure may be caused by improper operation of the network or failure of a network component that we did not supply, but service providers may perceive that our products were implicated, which, even if incorrect, could harm our business, financial condition, results of operations and cash flows. 29 We depend on cloud computing infrastructure operated by third parties and any disruption in these operations could adversely affect our business.
We currently operate our cloud-dependent services using Amazon Web Service (AWS), Google Compute Engine (GCE) or Microsoft Azure (Azure). We cannot easily switch our AWS, GCE or Azure operations to another cloud provider. Any disruption of or interference with our use of these cloud services would impact our operations and our business could be adversely impacted.
We cannot easily switch our AWS, GCE or Azure operations to another cloud provider. Any disruption of or interference with our use of these cloud services would impact our operations and our business could be adversely impacted.
The lenders under our Revolving Credit Facility could elect to terminate their commitments and cease making further loans, and the holders of our secured indebtedness could institute foreclosure proceedings against our assets. As a result, we could be forced into bankruptcy or liquidation.
The lenders under our Revolving Credit Facility could elect to terminate their commitments and cease making further loans, and the holders of our secured indebtedness could institute foreclosure proceedings against our assets.
If our products are late in achieving or fail to achieve compliance with these certifications and standards, or our competitors first achieve compliance with these certifications and standards, such end customers may not purchase our products, which would harm our business, operating results, financial condition and cash flows. 29 If our product or service offerings, including material purchased from our suppliers, have quality or performance issues, our business may suffer.
If our products are late in achieving or fail to achieve compliance with these certifications and standards, or our competitors first achieve compliance with these certifications and standards, such end customers may not purchase our products, which would harm our business, operating results, financial condition and cash flows.
Our strategic alliances are generally based on business relationships that have not been the subject of written agreements expressly providing for the alliance to continue for a significant period of time, and the loss of any such strategic relationship could have a material adverse effect on our business and results of operations.
Our strategic alliances are generally based on business relationships that have not been the subject of written agreements expressly providing for the alliance to continue for a significant period of time, and the loss of any such strategic relationship could have a material adverse effect on our business and results of operations. 28 If our products do not effectively interoperate with cellular networks and mobile devices, future sales of our products could be negatively affected.
As a result, we must ensure that our products interoperate effectively with these existing and planned networks and devices. To meet these requirements, we must continue development and testing efforts that require significant capital and employee resources. We may not accomplish these development efforts quickly or cost-effectively, or at all.
To meet these requirements, we must continue development and testing efforts that require significant capital and employee resources. We may not accomplish these development efforts quickly or cost-effectively, or at all.
Some of our manufacturing and contract manufacturing facilities rely on aging production equipment and information technology infrastructure, and if we fail or our contract manufacturers fail to properly maintain or update this equipment, it could affect our ability to manufacture or ship products.
Some of our manufacturing and contract manufacturing facilities rely on aging production equipment and information technology infrastructure, and if we fail or our contract manufacturers fail to properly maintain or update this equipment, it could affect our ability to manufacture or ship products. 25 Strategic Risks The successful execution of our CommScope NEXT transformation plan is key to the long-term success of our business.
Competitors’ actions, such as price reductions, acceptance of high-risk contractual terms or the introduction of new, innovative products and services, and the use of exclusively price-driven auctions by customers, have caused lost sales opportunities in the past and may cause us to lose sales opportunities in the future. 20 The rapid technological changes occurring in the communications industry could also lead to the entry of new competitors against whom we may not be able to compete successfully.
Competitors’ actions, such as price reductions, acceptance of high-risk contractual terms or the introduction of new, innovative products and services, and the use of exclusively price-driven auctions by customers, have caused lost sales opportunities in the past and may cause us to lose sales opportunities in the future.
Coming out of the COVID-19 pandemic, we saw shortages in supply of memory devices, capacitors and silicon chips that negatively impacted our ability to deliver on a timely basis and increased our product costs, which unfavorably impacted our results of operations, financial condition and cash flows and increased our risk of excess and obsolescence component inventory.
Coming out of the COVID-19 pandemic, we saw shortages in supply of memory devices, capacitors and silicon chips that negatively impacted our ability to deliver on a timely basis and increased our product costs, which unfavorably impacted our results of operations, financial condition and cash flows and increased our risk of excess and obsolescence component inventory. 24 Our key suppliers have experienced in the past, and could experience in the future, production, operational or financial difficulties, or there may be global shortages and pricing inflation of certain raw materials or components we use.
The amounts involved in any such transactions, individually or in the aggregate, may be material. 22 To service our indebtedness and pay dividends on our preferred stock, we will require a significant amount of cash, and our ability to generate sufficient cash depends on many factors beyond our control.
To service our indebtedness and pay dividends on our preferred stock, we will require a significant amount of cash, and our ability to generate sufficient cash depends on many factors beyond our control.
Strategic Risks The successful execution of our CommScope NEXT transformation plan is key to the long-term success of our business. Over the last several years, we have been executing under a business transformation initiative called CommScope NEXT, designed to drive stakeholder value.
Over the last several years, we have been executing under a business transformation initiative called CommScope NEXT, designed to drive stakeholder value.
If we are unable to maintain our management information systems, including our IT infrastructure, to support critical business operations, produce information for business decision-making activities and support digital customer experience activities, we could experience a material adverse impact on our business or an inability to timely and accurately report our financial results.
If we are unable to maintain our management information systems, including our IT infrastructure, to support critical business operations, produce information for business decision-making activities and support digital customer experience activities, we could experience a material adverse impact on our business or an inability to timely and accurately report our financial results. 30 Cybersecurity incidents, including data security breaches, ransomware or computer viruses, could harm our business by exposing us to various liabilities, disrupting our delivery of products and services and damaging our reputation.
As there is technology evolution or transformation within the industry, whether it be DOCSIS 4.0, PON, Wi-Fi technology or the shift to 5G, there is a risk that our market position would be weakened. If any of our competitors’ products or technologies were to become the industry standard, our business would be negatively affected.
As there is technology evolution or transformation within the industry, whether it be DOCSIS 4.0, PON or Wi-Fi technology, there is a risk that our market position would be weakened.
There are inherent climate change risks wherever business is conducted. The potential physical impacts of climate change on our operations are highly uncertain and would be particular to the geographic areas in which we operate. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures.
Climate change may have a long-term impact on our business. There are inherent climate change risks wherever business is conducted. The potential physical impacts of climate change on our operations are highly uncertain and would be particular to the geographic areas in which we operate.
In addition, in response to intermittent shutdowns of our facilities during the COVID-19 pandemic, we transitioned certain manufacturing to less impacted facilities. These changes are time-consuming and costly, and changes in our contract manufacturers or manufacturing locations may cause significant interruptions in supply if the manufacturers have difficulty manufacturing products to our specifications.
These changes are time-consuming and costly, and changes in our contract manufacturers or manufacturing locations may cause significant interruptions in supply if the manufacturers have difficulty manufacturing products to our specifications.
We may spend time and money investigating and negotiating with potential acquisition or investment targets without completing the transaction, which may divert or waste resources. 27 All acquisitions involve risks, such as the assumption of additional liabilities and expenses, issuance of debt, incurrence of transaction and integration costs, diversion of management’s attention from other business concerns, assumption of unknown contingent liabilities, unanticipated litigation costs and falling short of growth expectations.
All acquisitions involve risks, such as the assumption of additional liabilities and expenses, issuance of debt, incurrence of transaction and integration costs, diversion of management’s attention from other business concerns, assumption of unknown contingent liabilities, unanticipated litigation costs and falling short of growth expectations.
For the year ended December 31, 2023, international sales represented 35% of our consolidated net sales. In general, our international sales have lower gross profit percentages than our domestic sales.
For the year ended December 31, 2024, international sales represented 34% of our consolidated net sales. In general, our international sales have lower gross profit percentages than our domestic sales. To the extent international sales increase as a percentage of our net sales, our overall gross profit percentages may decline.
Our business depends on delivering products and services of consistently high quality. Many of our solutions are highly complex, and testing procedures used by us and our customers are limited to evaluating them under likely and foreseeable failure scenarios. Many of our products include both hardware and software components.
If our product or service offerings, including material purchased from our suppliers, have quality or performance issues, our business may suffer. Our business depends on delivering products and services of consistently high quality. Many of our solutions are highly complex, and testing procedures used by us and our customers are limited to evaluating them under likely and foreseeable failure scenarios.
Any failure to realize benefits could have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price. 26 Difficulties may be encountered in the realignment of manufacturing capacity and capabilities among our global manufacturing facilities and our contract manufacturers that could adversely affect our ability to meet customer demand for our products.
Difficulties may be encountered in the realignment of manufacturing capacity and capabilities among our global manufacturing facilities and our contract manufacturers that could adversely affect our ability to meet customer demand for our products.
The continued industry shift toward open standards may result in an increase in competition for our products that may adversely impact our future revenues and margins.
If any of our competitors’ products or technologies were to become the industry standard, our business would be negatively affected. 20 The continued industry shift toward open standards may result in an increase in competition for our products that may adversely impact our future revenues and margins.
We experienced a cybersecurity incident in the first quarter of 2023, but it had limited impact on our business operations.
As the continued rise in cybersecurity incidents around the world indicates, all management information technology systems are vulnerable. We experienced a cybersecurity incident in the first quarter of 2023, but it had limited impact on our business operations.
It is not unusual for software, especially in earlier versions, to contain bugs that can unexpectedly interfere with expected operations. For various reasons, once deployed, our products may fail to perform as expected. Performance issues could result from faulty design, defective raw materials or components purchased from suppliers, problems in manufacturing or installation errors.
Many of our products include both hardware and software components. It is not unusual for software, especially in earlier versions, to contain bugs that can unexpectedly interfere with expected operations. For various reasons, once deployed, our products may fail to perform as expected.
Changes in government programs in our industry or uncertainty regarding future changes could adversely impact our customers’ decisions regarding capital spending, which could decrease demand for our products and could materially and adversely affect our business, financial condition, results of operations, cash flows and stock price.
Changes in government programs in our industry or uncertainty regarding future changes could adversely impact our customers’ decisions regarding capital spending, which could decrease demand for our products and could materially and adversely affect our business, financial condition, results of operations, cash flows and stock price. 21 Financial Risks We may be required to obtain additional financing in the future to address our liquidity needs, and subject to market conditions, we may seek to amend, refinance, restructure or repurchase our outstanding indebtedness and/or raise additional equity financing.
Our reliance on outsourced manufacturers also increases the potential for infringement or misappropriation of our intellectual property.
Any manufacturing disruption by our contract manufacturers could severely impair our ability to fulfill orders. Our reliance on outsourced manufacturers also increases the potential for infringement or misappropriation of our intellectual property.
We cannot guarantee that we will be able to identify suitable acquisition opportunities or obtain the necessary financing on acceptable terms to provide these future growth opportunities.
We cannot guarantee that we will be able to identify suitable acquisition opportunities or obtain the necessary financing on acceptable terms to provide these future growth opportunities. We may spend time and money investigating and negotiating with potential acquisition or investment targets without completing the transaction, which may divert or waste resources.
If our products do not effectively interoperate with cellular networks and mobile devices, future sales of our products could be negatively affected. Many of our products are designed to interoperate with cellular networks and mobile devices using Wi-Fi technology. These networks and devices have varied and complex specifications.
Many of our products are designed to interoperate with cellular networks and mobile devices using Wi-Fi technology. These networks and devices have varied and complex specifications. As a result, we must ensure that our products interoperate effectively with these existing and planned networks and devices.
While we do not expect the transition to SOFR to have a material adverse effect on our business, the full effects of the transition to SOFR remain uncertain. 23 In addition, the indentures and credit agreements governing our indebtedness contain affirmative and negative covenants that limit our ability to engage in activities that may be in our long-term best interests.
In addition, the indentures and credit agreements governing our indebtedness contain affirmative and negative covenants that limit our ability to engage in activities that may be in our long-term best interests.
The implementation of CommScope NEXT may take longer than anticipated, and once implemented, we may not realize, in full or in part, the anticipated benefits or such benefits may be realized more slowly than anticipated.
The implementation of CommScope NEXT may take longer than anticipated, and once implemented, we may not realize, in full or in part, the anticipated benefits or such benefits may be realized more slowly than anticipated. Any failure to realize benefits could have a material adverse effect on our business, financial condition, results of operations, cash flows and stock price.
These impacts may adversely impact the cost, production levels and financial performance of our operations.
These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, production levels and financial performance of our operations.
Past U.S. administrations have called for substantial changes to U.S. foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the U.S.
The new U.S. administration has implemented and/or proposed substantial changes to U.S. foreign trade policy with respect to China and other countries, including the possibility of imposing greater restrictions on international trade and significant increases in tariffs on goods imported into the U.S, but there remains uncertainty surrounding if and when all such changes may be implemented and the magnitude of any such changes.
For example, as networks become more virtualized, the functionality of our products is at risk of being subsumed by competitors who utilize software to provide the same functions as our products.
The rapid technological changes occurring in the communications industry could also lead to the entry of new competitors against whom we may not be able to compete successfully. For example, as networks become more virtualized, the functionality of our products is at risk of being subsumed by competitors who utilize software to provide the same functions as our products.
We depend on cloud computing infrastructure operated by third parties and any disruption in these operations could adversely affect our business. For certain of our service offerings, in particular our Wi-Fi-related cloud services, we rely on third parties to provide cloud computing infrastructure that offers storage capabilities, data processing and other services.
For certain of our service offerings, in particular our Wi-Fi-related cloud services, we rely on third parties to provide cloud computing infrastructure that offers storage capabilities, data processing and other services. We currently operate our cloud-dependent services using Amazon Web Service (AWS), Google Compute Engine (GCE) or Microsoft Azure (Azure).
Our reliance on these contract manufacturers reduces our control over the manufacturing process and exposes us to risks, including reduced control over quality assurance, product supply and costs and timing. Any manufacturing disruption by our contract manufacturers could severely impair our ability to fulfill orders.
We rely on unaffiliated contract manufacturers, both domestically and internationally, to produce certain products or key components of products. Our reliance on these contract manufacturers reduces our control over the manufacturing process and exposes us to risks, including reduced control over quality assurance, product supply and costs and timing.
Additionally, we and others acting on our behalf receive, process, store and transmit confidential data, including “personally identifiable information,” with respect to employees, vendors, customers and others. As the continued rise in cybersecurity incidents around the world indicates, all management information technology systems are vulnerable.
We rely extensively on our management information technology systems and those of third parties to operate our business and store proprietary information about our products and intellectual property. Additionally, we and others acting on our behalf receive, process, store and transmit confidential data, including “personally identifiable information,” with respect to employees, vendors, customers and others.
We have recognized substantial impairment charges related to goodwill, including $571.4 million in 2023 and $1,119.6 million in 2022. There were no asset impairment charges related to goodwill in 2021.
We have recognized substantial impairment charges related to goodwill, including $571.4 million in 2023 and $1,119.6 million in 2022. For the 2024 annual impairment test, we determined that the fair value of our reporting units exceeded the carrying value and that no impairment existed.
Our ability to borrow under our Revolving Credit Facility depends, in part, on inventory, accounts receivable and other assets that fluctuate from time to time and may further depend on lenders’ discretionary ability to impose reserves and availability blocks.
As of December 31, 2024, we had $200.0 million of outstanding loans under our Revolving Credit Facility and the remaining availability was $449.3 million, reflecting a borrowing base subject to maximum capacity of $719.2 million reduced by $69.9 million of outstanding letters of credit. 1 Our ability to borrow under our Revolving Credit Facility depends, in part, on inventory, accounts receivable and other assets that fluctuate from time to time and may further depend on lenders’ discretionary ability to impose reserves and availability blocks.
We have experienced such performance issues in the past and remain exposed to such performance issues in the future.
Performance issues could result from faulty design, defective raw materials or components purchased from suppliers, problems in manufacturing or installation errors. We have experienced such performance issues in the past and remain exposed to such performance issues in the future.
Our key suppliers have experienced in the past, and could experience in the future, production, operational or financial difficulties, or there may be global shortages and pricing inflation of certain raw materials or components we use. Our inability to find sufficient sources of supply on reasonable terms could impact our ability to manufacture products in a cost-effective manner.
Our inability to find sufficient sources of supply on reasonable terms could impact our ability to manufacture products in a cost-effective manner.
SOFR is calculated differently than LIBOR and they have inherent differences, which could give rise to uncertainties, including limited historical data and volatility.
Secured Overnight Financing Rate (SOFR) is currently the reference interest rate in our variable rate debt agreements and could give rise to uncertainties, including limited historical data and volatility.
Removed
In our mobile wireless markets, the shift to 5G includes the deployment of new spectrum in higher frequency bands where larger available bandwidths enable a significant increase in network capacity. In many cases, massive multiple-in-multiple-out (MIMO) technology (active antennas) is the most effective way to deliver coverage in these bands.
Added
As of December 31, 2024, we had approximately $9.4 billion of indebtedness.
Removed
Consequently, 5G deployments present an inherent headwind to our traditional passive base station antenna business. We are developing technologies and new products to address this shift from passive to active antennas, but we may not be able to completely offset this trend.
Added
While we do not expect the use of SOFR to have a material adverse effect on our business, the full effects remain uncertain. 1 In connection with the repayment of all outstanding amounts under our Revolving Credit Facility on January 31, 2025, the committed amount thereunder was reduced to $750.0 million, subject to borrowing base limitations.
Removed
Financial Risks We may be required to obtain additional financing in the future to address our liquidity needs, and subject to market conditions, we may seek to amend, refinance, restructure or repurchase our outstanding indebtedness and/or raise additional equity financing.
Added
Supply Chain Risks We are dependent on certain raw materials and components linked to the commodity markets and utilize a limited number of key suppliers for logistics support of certain of these raw materials and components, subjecting us to cost volatility and supply shortages or delays that could limit our ability to manufacture products.
Removed
For example, our $1.3 billion of 6.0% senior notes due June 15, 2025 will likely require us to seek refinancing or some other restructuring of our debt in 2024.
Added
Any change in the laws and policies of the U.S. or other countries affecting trade, including pursuant to policies of the new U.S. administration, is a risk to us.
Removed
As of December 31, 2023, we had approximately $9.3 billion of indebtedness. As of December 31, 2023, we had no outstanding loans under our Revolving Credit Facility and the remaining availability was $688.0 million, reflecting a borrowing base subject to maximum capacity of $1,000.0 million reduced by $97.9 million of outstanding letters of credit.
Added
For example, in the past, we have transitioned manufacturing for certain products in response to newly enacted tariffs. In addition, in response to intermittent shutdowns of our facilities during the COVID-19 pandemic, we transitioned certain manufacturing to less impacted facilities.
Removed
The London Interbank Offered Rate (LIBOR) had historically been the reference interest rate in our variable rate debt agreements, but we transitioned our Revolving Credit Facility to Secured Overnight Financing Rate (SOFR) as the reference rate in 2022 and we amended our 2026 Term Loan to replace LIBOR with SOFR in the first half of 2023.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe consider the present level of fixed assets along with planned capital expenditures to be suitable and adequate for operations in the current business environment. At December 31, 2023, we operated approximately 23 manufacturing facilities with approximately 4.8 million square feet, of which approximately 1.3 million square feet were leased.
Biggest changeWe consider the present level of fixed assets along with planned capital expenditures to be suitable and adequate for operations in the current business environment.
Manufacturing facilities located in the U.S. had approximately 1.7 million square feet, of which approximately 0.1 million square feet were leased. Manufacturing facilities located outside the U.S. had approximately 3.1 million square feet, of which approximately 1.2 million square feet were leased.
Manufacturing facilities located in the U.S. had approximately 1.5 million square feet, of which approximately 0.1 million square feet were leased. Manufacturing facilities located outside the U.S. had approximately 2.1 million square feet, of which approximately 0.7 million square feet were leased.
The square footage by segment related to our manufacturing facilities was approximately 3.7 million square feet, 0.8 million square feet, 0.2 million square feet and 0.1 million square feet for the CCS segment, OWN segment, NICS segment and ANS segment, respectively.
The square footage by segment related to these manufacturing facilities was approximately 3.3 million square feet, 0.2 million square feet and 0.1 million square feet for the CCS segment, NICS segment and ANS segment, respectively, as of December 31, 2024.
Added
As of December 31, 2024, excluding the properties related to the sale of the OWN segment and DAS business unit, we operated approximately 19 manufacturing facilities with approximately 3.6 million square feet, of which approximately 0.8 million square feet were leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCompliance 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. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 40 PART II
Biggest changeCompliance 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeBase INDEXED RETURNS Period Period Ending Company / Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 CommScope Holding Company, Inc. 100 86.58 81.76 67.36 44.84 17.21 S&P 500 Index 100 128.88 149.83 190.13 153.16 190.27 S&P 1500 Communications Equipment Index 100 111.62 109.80 159.85 124.37 142.07 ITEM 6. RESERVED 42
Biggest changeBase INDEXED RETURNS Period Period Ending Company / Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 CommScope Holding Company, Inc. 100 94.43 77.80 51.80 19.87 36.72 S&P 500 Index 100 118.40 152.39 124.79 157.59 197.02 S&P 1500 Communications Equipment Index 100 123.36 149.67 90.31 139.34 194.49
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Global Select Market under the symbol “COMM.” As of February 14, 2024, all of our outstanding shares of common stock are held by one stockholder of record, Cede & Co., as nominee for the Depository Trust Company.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Our common stock is traded on the Nasdaq Global Select Market under the symbol “COMM.” As of February 12, 2025, all of our outstanding shares of common stock are held by one stockholder of record, Cede & Co., as nominee for the Depository Trust Company.
Issuer Purchases of Equity Securities The following table summarizes the stock purchase activity for the three months ended December 31, 2023: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 67,935 $ 3.35 — $ — November 1, 2023 - November 30, 2023 7,471 $ 1.73 — $ — December 1, 2023 - December 31, 2023 2,881 $ 1.89 — $ — Total 78,287 $ 3.14 — 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. 41 Stock Performance Graph The following graph compares cumulative total return on $100 invested on December 31, 2018 in each of CommScope’s Common Stock, the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the Standard & Poor’s 1500 Communications Equipment Index (S&P 1500 Communications Equipment).
Issuer Purchases of Equity Securities The following table summarizes the stock purchase activity for the three months ended December 31, 2024: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Value of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2024 - October 31, 2024 2,515 $ 6.14 — $ — November 1, 2024 - November 30, 2024 1,054 $ 6.79 — $ — December 1, 2024 - December 31, 2024 7,219 $ 5.12 — $ — Total 10,788 $ 5.52 — 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. 41 Stock Performance Graph The following graph compares cumulative total return on $100 invested on December 31, 2019 in each of CommScope’s Common Stock, the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the Standard & Poor’s 1500 Communications Equipment Index (S&P 1500 Communications Equipment).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

109 edited+38 added−39 removed48 unchanged
Biggest changeConnectivity and Cable Solutions Segment Year Ended December 31, 2023 2022 2021 (in millions) Operating income $ 121.9 $ 438.3 $ 138.4 Adjustments: Amortization of purchased intangible assets 75.5 99.5 156.7 Restructuring costs, net 14.0 17.1 62.0 Equity-based compensation 15.6 14.9 19.5 Asset impairments 99.1 — — Transaction, transformation and integration costs 1.7 10.6 18.5 Patent claims and litigation settlements — 1.7 — Reserve (recovery) of Russian accounts receivable (2.0 ) 2.7 — Cyber incident costs 2.6 — — Depreciation 61.3 58.8 53.6 Adjusted EBITDA $ 389.6 $ 643.6 $ 448.8 Outdoor Wireless Networks Segment Year Ended December 31, 2023 2022 2021 (in millions) Operating income $ 130.5 $ 189.0 $ 197.3 Adjustments: Amortization of purchased intangible assets 20.4 32.4 33.5 Restructuring costs, net 6.6 22.4 3.6 Equity-based compensation 6.3 7.1 8.4 Transaction, transformation and integration costs 0.6 4.5 8.5 Cyber incident costs 1.1 — — Depreciation 12.6 14.3 15.4 Adjusted EBITDA $ 178.1 $ 269.7 $ 266.8 57 Networking, Intelligent Cellular and Security Solutions Segment Year Ended December 31, 2023 2022 2021 (in millions) Operating income (loss) $ 127.0 $ (51.2 ) $ (143.5 ) Adjustments: Amortization of purchased intangible assets 56.8 59.7 72.0 Restructuring costs, net 12.4 9.9 8.5 Equity-based compensation 10.6 13.5 17.4 Transaction, transformation and integration costs 7.0 3.0 6.2 Acquisition accounting adjustments 1.2 2.0 4.6 Patent claims and litigation settlements (3.5 ) — 0.3 Cyber incident costs 0.7 — — Depreciation 13.0 15.0 19.2 Adjusted EBITDA $ 225.2 $ 51.9 $ (15.3 ) Access Network Solutions Segment Year Ended December 31, 2023 2022 2021 (in millions) Operating income (loss) $ (462.5 ) $ (1,149.6 ) $ 71.2 Adjustments: Amortization of purchased intangible assets 173.9 247.2 247.0 Restructuring costs (credits), net (6.0 ) 12.2 9.2 Equity-based compensation 11.0 15.8 20.9 Asset impairments 472.3 1,119.6 — Transaction, transformation and integration costs 17.3 14.0 9.4 Acquisition accounting adjustments 0.2 3.3 4.8 Patent claims and litigation settlements — — 2.9 Cyber incident costs 1.0 — — Depreciation 22.1 22.5 25.8 Adjusted EBITDA $ 229.3 $ 285.2 $ 391.1 Note: Components may not sum to total due to rounding.
Biggest changeConnectivity and Cable Solutions Segment Year Ended December 31, 2024 2023 2022 (in millions) Operating income $ 466.1 $ 132.8 $ 453.5 Adjustments: Amortization of purchased intangible assets 72.3 75.5 99.5 Restructuring costs, net 1.2 13.8 17.0 Equity-based compensation 10.1 15.0 14.2 Asset impairments — 99.1 — Transaction, transformation and integration costs 15.6 1.7 10.6 Patent claims and litigation settlements (1.0 ) — 1.7 Recovery of Russian accounts receivable — (2.0 ) 2.7 Cyber incident costs — 2.6 — Depreciation 54.8 60.2 57.9 Adjusted EBITDA $ 619.1 $ 398.9 $ 657.1 Networking, Intelligent Cellular and Security Solutions Segment Year Ended December 31, 2024 2023 2022 (in millions) Operating income (loss) $ (44.7 ) $ 57.6 $ (70.6 ) Adjustments: Amortization of purchased intangible assets 50.7 50.7 51.0 Restructuring costs, net 3.1 7.7 6.4 Equity-based compensation 6.8 9.1 10.4 Transaction, transformation and integration costs 10.1 6.9 2.1 Acquisition accounting adjustments — 1.2 2.0 Patent claims and litigation settlements — (3.5 ) — Cyber incident costs — 0.7 — Depreciation 6.8 9.7 11.5 Adjusted EBITDA $ 32.8 $ 139.9 $ 12.8 56 Access Network Solutions Segment Year Ended December 31, 2024 2023 2022 (in millions) Operating loss $ (80.9 ) $ (476.0 ) $ (1,164.8 ) Adjustments: Amortization of purchased intangible assets 110.8 173.9 247.2 Restructuring costs (credits), net 31.8 (6.0 ) 12.2 Equity-based compensation 7.2 11.5 16.4 Asset impairments — 472.3 1,119.6 Transaction, transformation and integration costs 17.5 17.3 14.0 Acquisition accounting adjustments — 0.2 3.3 Cyber incident costs — 1.0 — Depreciation 18.1 23.3 23.6 Adjusted EBITDA $ 104.5 $ 217.6 $ 271.7 Note: Components may not sum to total due to rounding.
Variable consideration is primarily related to sales to our distributors, system integrators and value-added resellers. Contingencies and Litigation 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.
Variable consideration is primarily related to sales to our distributors, system integrators and value-added resellers. 59 Contingencies and Litigation 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.
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. 2023 Interim and Annual Goodwill Analysis Interim Test 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.
If the implied control premium is not reasonable, we will reevaluate the fair value estimates of the reporting units by adjusting the discount rates and/or other assumptions. 2024 Interim and Annual Goodwill Analysis Interim Test 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.
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 2023.
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 2024.
We have committed to purchases of raw material under this agreement beginning in 2023 and growing to a level of approximately $137 million per year by 2026 and continuing through 2032. We have $115.7 million in unrecognized tax benefits; however, the timing of the related tax payments is highly uncertain.
We have committed to purchases of raw material under this agreement beginning in 2023 and growing to a level of approximately $137 million per year by 2026 and continuing through 2032. We have $140.7 million in unrecognized tax benefits; however, the timing of the related tax payments is highly uncertain.
(2) Total capitalization includes long-term debt, including the current portion, Series A convertible preferred stock (Convertible Preferred Stock) and stockholders’ deficit. Our principal sources of liquidity on a short-term basis are cash and cash equivalents, cash flows provided by operations and availability under our credit facilities.
(3) Total capitalization includes long-term debt, including the current portion, Series A convertible preferred stock (Convertible Preferred Stock) and stockholders’ deficit. Our principal sources of liquidity on a short-term basis are cash and cash equivalents, cash flows provided by operations and availability under our credit facilities.
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, 2023.
In addition to limitations under these indentures, our senior secured credit facilities contain customary negative covenants based on similar financial measures. We believe we are in compliance with the covenants under our indentures and senior secured credit facilities at December 31, 2024.
For information on significant non-cash operating activities related to our discontinued operations, see Note 3 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
For information on significant non-cash operating activities related to our discontinued operations, see Note 4 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
For the 2023 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.
For the 2024 annual goodwill test, we determined the fair value of each reporting unit using a DCF model and a guideline public company approach, with 75% of the value determined using the DCF model and 25% of the value determined using the market approach.
We may, from time to time, seek to obtain alternative sources of financing, by borrowing additional amounts under our senior secured asset-based revolving credit facility (Revolving Credit Facility), issuing debt or equity securities or incurring other indebtedness, if market conditions are favorable, utilizing trade credit, selling assets (including businesses or business lines) or securitizing receivables to meet future cash needs or to reduce our borrowing costs.
We may, from time to time, seek to obtain alternative sources of financing, by borrowing additional amounts under our Revolving Credit Facility, issuing debt or equity securities or incurring other indebtedness, if market conditions are favorable, utilizing trade credit, selling assets (including businesses or business lines) or securitizing receivables to meet future cash needs or to reduce our borrowing costs.
(3) In 2023, primarily reflects costs of the identification, investigation, defense, recovery and litigation efforts related to a cyber incident that occurred in late March of 2023. 56 Reconciliation of Segment Adjusted EBITDA Segment adjusted EBITDA is provided as a performance measure in Note 17 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
(3) In 2023, primarily reflects costs of the identification, investigation, defense, recovery and litigation efforts related to a cyber incident that occurred in late March of 2023. 55 Reconciliation of Segment Adjusted EBITDA Segment adjusted EBITDA is provided as a performance measure in Note 18 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations is for the year ended December 31, 2023 compared with the year ended December 31, 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations is for the year ended December 31, 2024 compared with the year ended December 31, 2023.
For a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2022 compared to December 31, 2021, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2022 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 23, 2023.
For a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2023 compared to December 31, 2022, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2023 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 29, 2024.
We anticipate a reduction of up to $8.0 million of unrecognized tax benefits during the next twelve months. See Note 13 in the Notes to Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K for further discussion.
We anticipate a reduction of up to $22.0 million of unrecognized tax benefits during the next twelve months. See Note 14 in the Notes to Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K for further discussion.
Considering the low headroom going forward for each of the ANS and BDCC reporting units, there is a risk for future impairment in the event of further declines in general economic, market or business conditions or any significant unfavorable change in the forecasted cash flows, weighted average cost of capital or growth rates.
Considering the low headroom going forward for the ANS reporting unit, there is a risk for future impairment in the event of further declines in general economic, market or business conditions or any significant unfavorable change in the forecasted cash flows, weighted average cost of capital or growth rates.
Our continuing operations results include general corporate costs that were previously allocated to the Home segment. These indirect costs, reflected on the corporate and other line item within our segment information below, are classified as continuing operations, since they were not directly attributable to the discontinued operations of the Home segment.
Our continuing operations results include general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment. These indirect costs, reflected on the corporate and other line item within our segment information below, are classified as continuing operations, since they were not directly attributable to these discontinued operations.
The corporate and other line item as presented in Note 17 in the Notes to Consolidated Financial Statements represents general corporate costs that were previously allocated to the Home segment. These indirect costs are classified as continuing operations since they were not directly attributable to the discontinued operations of the Home business.
The corporate and other line item as presented in Note 18 in the Notes to Consolidated Financial Statements represents general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment. These indirect costs are classified as continuing operations since they were not directly attributable to these discontinued operations.
The change in foreign currency loss in 2023 compared to 2022 was primarily driven by certain unhedged currencies.
The change in foreign currency gain (loss) in 2024 compared to 2023 was primarily driven by certain unhedged currencies.
We determined the anticipated sale of our Home business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Accounting Standards Codification (ASC) No. 360-10, Impairment and Disposal of Long Lived Assets , and ASC No. 205-20, Presentation of Financial Statements: Discontinued Operations in the fourth quarter of 2023 due to its relative size and strategic rationale.
In the third quarter of 2024, we determined the sale of our OWN segment and DAS business unit met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Accounting Standards Codification (ASC) No. 360-10, Impairment and Disposal of Long–Lived Assets , and ASC No. 205-20, Presentation of Financial Statements: Discontinued Operations, due to its relative size and strategic rationale.
For the year ended December 31, 2023, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $1,101.2 million, which included annualized savings expected from cost reduction initiatives of $102.2 million so that the impact of cost reduction initiatives is fully reflected in the twelve-month period used in the calculation of the ratios.
For the year ended December 31, 2024, our non-GAAP pro forma adjusted EBITDA, as measured pursuant to the indentures governing our notes, was $717.6 million, which included annualized savings expected from cost reduction initiatives of $17.4 million so that the impact of cost reduction initiatives is fully reflected in the twelve-month period used in the calculation of the ratios.
Net sales to customers located outside of the U.S. comprised 35% of total net sales for 2023 compared to 33% for 2022. Foreign exchange rate changes did not have a material impact on our net sales during 2023.
Net sales to customers located outside of the U.S. comprised 34.3% of total net sales for 2024 compared to 34.1% for 2023. Foreign exchange rate changes did not have a material impact on our net sales during 2024.
Cash generated by other investing activities was favorably impacted in the current year by proceeds of $11.1 million related to the sale of an equity investment and proceeds of $9.3 million on the sale of certain nonfinancial assets.
Cash generated by other investing activities in the prior year period included proceeds of $11.1 million related to the sale of an equity investment and proceeds of $9.3 million on the sale of certain nonfinancial assets.
In 2023, we experienced headwinds related to a slow-down in spending by our customers as discussed further below, but we continued to execute under CommScope NEXT to improve our profitability and cash flows by continuing to drive operational efficiencies and focusing on portfolio optimization that should enable us to take advantage of the expected recovery in demand in the second half of 2024.
In 2023, we experienced headwinds related to a slow-down in spending by our customers as discussed further below, but we continued to execute under CommScope NEXT to improve our profitability and cash flows by continuing to drive operational efficiencies and focusing on portfolio optimization, all of which is enabling us to take advantage of the recovery in demand that we began to see in late 2024.
Cash and cash equivalents increased by $170.8 million during 2023 as described under the Cash Flow Overview section below. As of December 31, 2023, approximately 44% of our cash and cash equivalents were held outside the U.S.
Cash and cash equivalents increased by $119.5 million during 2024 as described under the Cash Flow Overview section below. As of December 31, 2024, approximately 42% of our cash and cash equivalents were held outside the U.S.
The reductions in SG&A costs impacting both operating income and adjusted EBITDA were primarily due to lower variable incentive compensation expense and cost savings initiatives, partially offset by higher bad debt expense.
The increases in SG&A costs were primarily due to higher variable incentive compensation expense, partially offset by lower bad debt expense and cost savings initiatives.
For all periods presented, amounts have been recast to reflect these operating segment changes. Impacts of Current Economic Conditions In 2023, macroeconomic factors such as higher interest rates and concerns about continued inflation and a global economic slow-down softened demand for our products, with certain customers reducing purchases as they right-sized their inventories and others pausing capital spending.
Impacts of Current Economic Conditions In 2023, macroeconomic factors such as higher interest rates, inflation and concerns about a global economic slow-down softened demand for our products, with certain customers reducing purchases as they right-sized their inventories and others pausing capital spending.
Other income (expense), net Year Ended December 31, % 2023 2022 Change Change (dollars in millions) Foreign currency loss $ (13.9 ) $ (4.6 ) $ (9.3 ) 202.2 % Other income, net 73.6 4.1 69.5 NM NM – Not meaningful Foreign currency loss Foreign currency loss includes the net foreign currency gains and losses resulting from the settlement of receivables and payables, foreign currency contracts and short-term intercompany advances in a currency other than the subsidiary’s functional currency.
Other income, net Year Ended December 31, % 2024 2023 Change Change (dollars in millions) Foreign currency gain (loss) $ 9.5 $ (7.6 ) $ 17.1 NM Other income, net 0.7 73.5 (72.8 ) NM NM – Not meaningful Foreign currency gain (loss) 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.
Foreign exchange rate changes did not have a material impact on OWN segment net sales during 2023. For 2023, OWN segment operating income and adjusted EBITDA decreased compared to the prior year primarily due to lower sales volumes and unfavorable product mix, partially offset by lower freight, material, SG&A and R&D costs.
Foreign exchange rate changes did not have a material impact on NICS segment net sales during 2024. For 2024, NICS segment operating income and adjusted EBITDA decreased compared to the prior year primarily due to lower sales volumes and E&O reserves recorded for excess inventory, partially offset by lower R&D costs and favorable product mix.
To that end, we incurred $29.7 million, $63.0 million and $85.1 million of net restructuring costs and $27.1 million, $35.1 million and $50.6 million of transaction, transformation and integration costs during the years ended December 31, 2023, 2022 and 2021, respectively, primarily related to CommScope NEXT initiatives.
To that end, we incurred $36.7 million, $25.1 million and $41.8 million of net restructuring costs and $63.4 million, $27.1 million and $35.1 million of transaction, transformation and integration costs during the years ended December 31, 2024, 2023 and 2022, respectively, primarily related to CommScope NEXT initiatives.
Our interest payments on long-term debt are expected to total $1,831.1 million over the duration of the debt, with $643.0 million due in 2024 (assuming interest rates in effect as of December 31, 2023 on our variable rate debt).
Our interest payments on long-term debt are expected to total $2,906.8 million over the duration of the debt, with $613.5 million due in 2025 (assuming interest rates in effect as of December 31, 2024 on our variable rate debt).
As of December 31, 2023, we had no outstanding borrowings under the Revolving Credit Facility and the remaining availability was $688.0 million, reflecting a borrowing base subject to maximum capacity of $785.9 million reduced by $97.9 million of letters of credit issued under the Revolving Credit Facility.
As of December 31, 2024, we had $200.0 million of outstanding borrowings and the remaining availability was $449.3 million, reflecting a borrowing base subject to maximum capacity of $719.2 million reduced by $69.9 million of letters of credit issued under our Revolving Credit Facility.
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.
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.
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.
Considerable judgment is required to evaluate the technical merits of various positions and to evaluate the likely amount of benefit to be realized.
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.
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.
Key Assumptions Goodwill Deficit of Fair Value to Carrying Value Reporting Unit Discount Rate Terminal Growth Rate Balance at December 31, 2023 % of Total Assets Result of Annual Goodwill Test as of October 1, 2023 Decrease of 10% in Cash Flows Decrease of 0.5% in Long-term Growth Rate Increase of 0.5% in Discount Rate ANS 15.0 % 1.0 % $ 261.4 2.8 % $ (46.3 ) $ (154.6 ) $ (62.5 ) $ (86.7 ) BDCC 12.0 % 1.5 % 881.5 9.4 % (99.1 ) (208.9 ) (126.0 ) (154.6 ) Definite-Lived 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.
Key Assumptions Goodwill Excess of Fair Value to Carrying Value (dollars in millions) Reporting Unit Discount Rate Terminal Growth Rate Balance as of December 31, 2024 % of Total Assets Result of Interim Goodwill Test as of October 1, 2024 Decrease of 10% in Cash Flows Decrease of 0.5% in Long-term Growth Rate Increase of 0.5% in Discount Rate ANS 12.5 % 1.0 % $ 266.0 3.0 % $ 119.9 $ 7.1 $ 97.5 $ 67.9 Definite-Lived 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.
We also paid four quarterly scheduled amortization payments totaling $32.0 million on our 2026 Term Loan during 2022. In connection with the refinancing of our Revolving Credit Facility in October 2022, we paid $7.2 million of debt issuance costs. In 2023, we paid dividends of $61.8 million in additional shares due under the Convertible Preferred Stock.
We also paid four quarterly scheduled amortization payments totaling $32.0 million on our 2026 Term Loan during 2023. We did not borrow under our Revolving Credit Facility during 2023. In 2024, we paid dividends of $65.2 million in additional shares due under the Convertible Preferred Stock.
From a regional perspective in 2023, net sales decreased in the U.S. by $783.2 million, the EMEA region by $169.9 million, the APAC region by $50.0 million, Canada by $43.4 million and the CALA region by $32.9 million compared to the prior year.
From a regional perspective in 2024, net sales decreased in the U.S. by $223.4 million, the EMEA region by $32.0 million and the CALA region by $30.8 million, but increased in the APAC region by $15.8 million and Canada by $9.9 million compared to the prior year.
For additional information on regional sales by segment, see discussion of Segment Results below and Note 17 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. 45 Gross profit, SG&A expense and R&D expense Year Ended December 31, % 2023 2022 Change Change (dollars in millions) Gross profit $ 2,148.3 $ 2,594.0 $ (445.7 ) (17.2 )% As a percent of sales 37.1 % 34.5 % SG&A expense 873.3 1,040.9 (167.6 ) (16.1 ) As a percent of sales 15.1 % 13.8 % R&D expense 459.7 543.6 (83.9 ) (15.4 ) As a percent of sales 7.9 % 7.2 % Gross profit (net sales less cost of sales) Gross profit decreased in 2023 compared to the prior year primarily due to lower net sales volumes, partially offset by lower freight and material costs and favorable product mix.
For additional information on regional sales by segment, see discussion of Segment Results below and Note 18 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. 45 Gross profit, TSA income, SG&A expense and R&D expense Year Ended December 31, % 2024 2023 Change Change (dollars in millions) Gross profit $ 1,576.9 $ 1,664.2 $ (87.3 ) (5.2 )% As a percent of sales 37.5 % 36.5 % TSA income 24.5 — 24.5 NM As a percent of sales 0.6 % NM SG&A expense 755.5 783.2 (27.7 ) (3.5 ) As a percent of sales 18.0 % 17.2 % R&D expense 316.2 383.1 (66.9 ) (17.5 ) As a percent of sales 7.5 % 8.4 % NM – Not meaningful Gross profit (net sales less cost of sales) Gross profit decreased in 2024 compared to the prior year primarily due to lower net sales volumes, lower pricing and higher input costs, partially offset by favorable product mix.
See the Segment Results section below for illustration of the aggregation of Core segment adjusted EBITDA. (2) See “Reconciliation of Non-GAAP Measures” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.
(2) See “Reconciliation of Non-GAAP Measures” in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.
The primary uses of liquidity include debt service requirements, voluntary debt repayments, redemptions or purchases on the open market, working capital requirements, capital expenditures, business separation transaction costs, transformation costs, restructuring costs, dividends related to the Convertible Preferred Stock if we elect to pay such dividends in cash, litigation settlements, income tax payments and other contractual obligations. 51 We currently believe that our existing cash, cash equivalents and cash flows from operations, combined with availability under our Revolving Credit Facility, will be sufficient to meet our presently anticipated future cash needs.
The primary uses of liquidity include debt service requirements, voluntary debt repayments, redemptions or purchases on the open market, working capital requirements, capital expenditures, business separation transaction costs, transformation costs, restructuring costs, dividends related to the Convertible Preferred Stock if we elect to pay such dividends in cash, litigation settlements, income tax payments and other contractual obligations.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 2 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.
See Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of the 2024 debt refinancing transactions.
Our weighted average effective interest rate on outstanding borrowings, including the impact of the interest rate swap contracts and the amortization of debt issuance costs and original issue discount, was 7.22% at December 31, 2023 and 6.91% at December 31, 2022. Our interest expense will continue to increase if the Federal Reserve raises interest rates.
Our weighted average effective interest rate on outstanding borrowings, including the impact of the interest rate swap contracts and the amortization of debt issuance costs and original issue discount, was 8.09% at December 31, 2024 and 7.22% at December 31, 2023.
Foreign exchange rate changes did not have a material impact on CCS segment net sales during 2023. 49 For 2023, CCS segment operating income and adjusted EBITDA were unfavorably impacted by lower sales volumes, partially offset by lower SG&A, material, freight and R&D costs, and favorable product mix.
Foreign exchange rate changes did not have a material impact on CCS segment net sales during 2024. 49 For 2024, CCS segment operating income and adjusted EBITDA increased compared to the prior year primarily due to higher sales volumes, favorable product mix and lower input costs, partially offset by higher SG&A costs.
From a regional perspective in 2023, net sales decreased in the U.S. by $96.0 million, the CALA region by $58.5 million, the APAC region by $54.1 million and the EMEA region by $38.9 million but increased in Canada by $1.3 million compared to the prior year.
From a regional perspective in 2024, net sales decreased in the U.S. by $140.2 million, the EMEA region by $47.8 million, the APAC region by $27.0 million and Canada by $8.7 million, but increased in the CALA region by $3.0 million compared to the prior year.
From a regional perspective in 2023, net sales decreased in the U.S. by $1,268.1 million, the Europe, Middle East and Africa (EMEA) region by $184.4 million, the Asia Pacific (APAC) region by $114.0 million, the Caribbean and Latin American (CALA) region by $106.9 million, and Canada by $62.1 million.
From a regional perspective in 2024, net sales decreased in the U.S. by $248.1 million, the Caribbean and Latin American (CALA) region by $78.0 million and the Europe, Middle East and Africa (EMEA) region by $43.1 million, and increased in Canada by $7.5 million and the Asia Pacific (APAC) region by $2.3 million.
There were no material amounts recorded in our consolidated financial statements related to third-party guarantee agreements as of December 31, 2023 or 2022. 52 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.
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.
For additional information regarding our long-term debt obligations, see Note 8 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.
Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this Annual Report on Form 10-K. For information on our obligations related to our Convertible Preferred Stock, see Note 15 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Income tax (expense) benefit For 2023, we recognized income tax expense of $133.4 million on a pretax loss of $717.9 million. Our tax expense on a pretax loss was less than the statutory rate of 21.0% in 2023 primarily due to the unfavorable impact related to a goodwill impairment charge of $571.4 million, for which minimal tax benefits were recorded.
Our tax expense was more than the statutory rate of 21.0% in 2023 primarily due to the unfavorable impact related to a net $165.4 million of valuation allowance recorded during the year and a goodwill impairment charge of $571.4 million, for which minimal tax benefits were recorded.
The decrease was driven by lower net sales in the CCS segment of $1,079.4 million, the OWN segment of $587.9 million and the ANS segment of $246.2 million, partially offset by higher net sales of $178.0 million in the NICS segment. For further details by segment, see the discussion of Segment Results below.
The decrease was driven by lower net sales in the ANS segment of $260.5 million and the NICS segment of $220.7 million, partially offset by higher net sales of $121.8 million in the CCS segment. For further details by segment, see the discussion of Segment Results below.
Research and development expense Research and development (R&D) expense for 2023 decreased by $83.9 million primarily due to lower spending across all segments. R&D activities generally involve ensuring that our products are capable of meeting the evolving technological needs of our customers, bringing new products to market and modifying existing products to better serve our customers.
R&D activities generally involve ensuring that our products are capable of meeting the evolving technological needs of our customers, bringing new products to market and modifying existing products to better serve our customers.
Net sales Year Ended December 31, % 2023 2022 Change Change (dollars in millions) Net sales $ 5,789.2 $ 7,524.7 $ (1,735.5 ) (23.1 )% Domestic 3,750.0 5,018.1 (1,268.1 ) (25.3 ) International 2,039.2 2,506.6 (467.4 ) (18.6 ) Net sales in 2023 decreased $1,735.5 million, or 23.1%, compared to the prior year primarily driven by decreased sales volumes as certain customers reduced purchases as they right-size their inventories and others paused capital spending, partially offset by higher pricing.
Net sales Year Ended December 31, % 2024 2023 Change Change (dollars in millions) Net sales $ 4,205.8 $ 4,565.2 $ (359.4 ) (7.9 )% Domestic 2,761.5 3,009.6 (248.1 ) (8.2 ) International 1,444.3 1,555.6 (111.3 ) (7.2 ) Net sales in 2024 decreased $359.4 million, or 7.9%, compared to the prior year primarily driven by decreased sales volumes as certain customers reduced purchases as they right-size their inventories and others paused capital spending and lower pricing.
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. CommScope NEXT Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization.
CommScope NEXT Since 2021, we have been engaged in a transformation initiative referred to as CommScope NEXT, which is designed to drive shareholder value through three pillars: profitable growth, operational efficiency and portfolio optimization.
There was no impairment identified in our BDCC reporting unit in the Q3 2023 interim goodwill impairment test. Annual Test The annual test of goodwill impairment was performed for each of the reporting units with goodwill balances as of October 1, 2023.
Annual Test The annual test of goodwill impairment was performed for each of the reporting units with goodwill balances as of October 1, 2024.
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.
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.
If current and long-term projections for the ANS and BDCC reporting units are not realized or decrease materially, we may be required to recognize additional goodwill impairment charges, and these charges could be material to our results of operations.
If current and long-term projections for the ANS reporting unit is not realized or decrease materially, we may be required to recognize additional goodwill impairment charges, and these charges could be material to our results of operations. 58 The following table provides summary information regarding our reporting units with goodwill balances as of December 31, 2024 that have the lowest level of headroom.
During 2023, 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 $9.1 million compared to $14.8 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.
In 2023, we paid dividends of $61.8 million in additional shares due under the Convertible Preferred Stock. During 2024, employees surrendered shares of our common stock to satisfy their tax withholding requirements on vested restricted stock units (RSUs) and performance share units (PSUs), which reduced cash flows by $1.9 million compared to $9.1 million in the prior year.
Investing Activities Year Ended December 31, 2023 2022 (in millions) Additions to property, plant and equipment $ (53.3 ) $ (101.3 ) Proceeds from sale of property, plant and equipment 71.2 0.1 Other 20.4 19.1 Net cash generated by (used in) investing activities $ 38.3 $ (82.1 ) During 2023, the increase in cash used generated by (used in) investing activities compared to the prior year was primarily driven by $71.2 million of proceeds from the sale of property, plant and equipment and a $48.0 decrease in capital expenditures.
Investing Activities Year Ended December 31, 2024 2023 (in millions) Additions to property, plant and equipment $ (25.3 ) $ (60.7 ) Proceeds from sale of property, plant and equipment 0.2 71.2 Acquisition of a business (45.1 ) — Other 13.0 20.4 Net cash generated by (used in) investing activities $ (57.2 ) $ 30.9 53 During 2024, the decrease in cash generated by investing activities compared to the prior year was primarily due to lower cash of $71.0 million driven by proceeds collected in the prior year on the sale of property, plant and equipment and cash paid of $45.1 million in the current year related to the Casa Transaction, partially offset by higher cash of $35.4 million driven by a reduction of capital expenditures in the current year.
For further discussion of the discontinued operation related to our Home business, see Note 3 in the Notes to Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K. 43 The results of our recast continuing operations do not align with our historical “Core” measures, which excluded the Home segment.
For further discussion of the discontinued operations related to our OWN segment, DAS business unit and Home business, see Note 4 in the Notes to Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.
(2) In 2023, 2022 and 2021, reflects ARRIS acquisition accounting adjustments related to reducing deferred revenue to its fair value.
In 2022, primarily reflects transformation costs related to certain CommScope NEXT initiatives and integration costs related to the ARRIS International plc (ARRIS) acquisition. (2) In 2023 and 2022, reflects ARRIS acquisition accounting adjustments related to reducing deferred revenue to its estimated fair value.
Amortization of purchased intangible assets, Restructuring costs, net and Asset impairments Year Ended December 31, % 2023 2022 Change Change (dollars in millions) Amortization of purchased intangible assets $ 327.1 $ 440.0 $ (112.9 ) (25.7 )% Restructuring costs, net 29.7 63.0 (33.3 ) (52.9 ) Asset impairments 571.4 1,119.6 (548.2 ) (49.0 ) Amortization of purchased intangible assets The amortization of purchased intangible assets was lower in 2023 compared to the prior year because certain of our intangible assets became fully amortized.
Amortization of purchased intangible assets, Restructuring costs, net and Asset impairments Year Ended December 31, % 2024 2023 Change Change (dollars in millions) Amortization of purchased intangible assets $ 236.5 $ 301.0 $ (64.5 ) (21.4 )% Restructuring costs, net 36.7 25.1 11.6 46.2 Asset impairments — 571.4 (571.4 ) (100.0 ) Amortization of purchased intangible assets The amortization of purchased intangible assets was lower in 2024 compared to the prior year because certain of our intangible assets became fully amortized. 46 Restructuring costs, net The net restructuring costs recorded in 2024 were primarily related to CommScope NEXT.
From a regional perspective in 2023, OWN segment net sales decreased in the U.S. by $513.0 million, the APAC region by $23.7 million, Canada by $24.5 million, the CALA region by $15.6 million and the EMEA region by $11.1 million compared to the prior year.
From a regional perspective in 2024, net sales increased in the U.S. by $115.5 million, the EMEA region by $36.7 million, the APAC region by $13.5 million and Canada by $6.3 million, but decreased in the CALA region by $50.2 million compared to the prior year.
For more discussion on risks related to our customers, see Part I, Item 1A, “Risk Factors” elsewhere in this Annual Report on Form 10-K. 44 RESULTS OF OPERATIONS Comparison of results of operations for the year ended December 31, 2023 with the year ended December 31, 2022 Year Ended December 31, 2023 2022 Amount % of Net Sales Amount % of Net Sales Change % Change (dollars in millions, except per share amounts) Net sales $ 5,789.2 100.0 % $ 7,524.7 100.0 % $ (1,735.5 ) (23.1 )% Gross profit 2,148.3 37.1 2,594.0 34.5 (445.7 ) (17.2 ) Operating loss (112.9 ) (2.0 ) (613.1 ) (8.1 ) 500.2 (81.6 ) Core segment adjusted EBITDA (1) 1,022.2 17.7 1,250.4 16.6 (228.2 ) (18.3 ) Non-GAAP adjusted EBITDA (2) 999.0 17.3 1,223.4 16.3 (224.4 ) (18.3 ) Loss from continuing operations (851.3 ) (14.7 ) (1,184.7 ) (15.7 ) 333.4 (28.1 ) Diluted loss from continuing operations per share $ (4.33 ) $ (6.00 ) $ 1.67 (27.8 ) (1) Core segment adjusted EBITDA reflects the results of our CCS, OWN, NICS and ANS segments, in the aggregate, and excludes general corporate costs that were previously allocated to the Home segment and are now classified as continuing operations, since the costs were not directly attributable to the discontinued operations of the Home segment.
For more discussion on risks related to our customers, see Part I, Item 1A, “Risk Factors” elsewhere in this Annual Report on Form 10-K. 44 RESULTS OF OPERATIONS Comparison of results of operations for the year ended December 31, 2024 with the year ended December 31, 2023 Year Ended December 31, 2024 2023 Amount % of Net Sales Amount % of Net Sales Change % Change (dollars in millions, except per share amounts) Net sales $ 4,205.8 100.0 % $ 4,565.2 100.0 % $ (359.4 ) (7.9 )% Gross profit 1,576.9 37.5 1,664.2 36.5 (87.3 ) (5.2 ) Operating income (loss) 256.5 6.1 (399.6 ) (8.8 ) 656.1 NM Core operating income (loss) (1) 340.5 8.1 (285.6 ) (6.3 ) 626.1 NM Non-GAAP adjusted EBITDA (2) 700.2 16.6 664.3 14.6 35.9 5.4 Core adjusted EBITDA (1) 756.4 18.0 756.4 16.6 — — Loss from continuing operations (461.0 ) (11.0 ) (1,095.8 ) (24.0 ) 634.8 (57.9 ) Diluted loss from continuing operations per share $ (2.46 ) $ (5.49 ) $ 3.03 NM NM – Not meaningful (1) Core financial measures reflect the results of the CCS, NICS and ANS segments, in the aggregate, and exclude general corporate costs that were previously allocated to the OWN segment, DAS business unit and Home segment, since these costs were not directly attributable to these discontinued operations.
Changes in the probability of recovery or in the estimates of the amount recoverable are recognized in the period such determination is made and may be material to our loss from continuing operations. 61 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.
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.
NICS segment operating income was unfavorably impacted by $4.0 million in higher transaction, transformation and integrations cost but was favorably impacted by a gain of $3.5 million related to the settlement of an intellectual property litigation claim. Transaction, transformation and integration costs and intellectual property litigation costs are not reflected in adjusted EBITDA.
In 2024, compared to the prior year, NICS segment operating income was unfavorably impacted by an increase of $3.2 million in transaction, transformation and integrations costs and a reduction of $3.5 million in gains related to the settlement of an intellectual property litigation claim received in the prior year.
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. 58 Asset Impairment Reviews Impairment Reviews of Goodwill 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.
Asset Impairment Reviews Impairment Reviews of Goodwill 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 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.
Under the DCF method, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows.
Any issuance of equity or debt may be for cash or in exchange for our outstanding securities or indebtedness, or a combination thereof. Our outstanding debt securities and debt under our credit facilities are currently trading at substantial discounts to their respective principal amounts.
Any issuance of equity or debt may be for cash or in exchange for our outstanding securities or indebtedness, or a combination thereof. 2 In connection with the repayment of all outstanding amounts under our Revolving Credit Facility on January 31, 2025, the committed amount thereunder was reduced to $750.0 million, subject to borrowing base limitations. 51 Certain of our outstanding debt securities and debt under our credit facilities are currently trading at discounts to their respective principal amounts.
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.
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. 60 RECENT ACCOUNTING PRONOUNCEMENTS See Note 2 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.
Additional restructuring actions related to CommScope NEXT are expected to be identified and the resulting charges and cash requirements could be material. 46 Asset impairments We recorded goodwill impairment charges of $472.3 million and $99.1 million in 2023 related to our ANS and Building Data Center Connectivity (BDCC) reporting units, respectively.
We recorded goodwill impairment charges of $472.3 million and $99.1 million in 2023 related to our ANS and Building Data Center Connectivity (BDCC) reporting units, respectively. The ANS reporting unit is the same as our ANS segment and the BDCC reporting unit is in our CCS segment.
On October 2, 2023, we entered into a Call Option Agreement with Vantiva SA, a société anonyme organized under the Laws of France (Vantiva), pursuant to which we granted Vantiva a binding call option to acquire our Home segment and substantially all of the associated segment assets and liabilities (Home business), which was subsequently exercised and a Purchase Agreement signed on December 7, 2023.
On January 9, 2024, we completed the sale of our Home Networks (Home) segment and substantially all of the associated segment assets and liabilities (Home business) to Vantiva SA (Vantiva) pursuant to the Call Option Agreement entered into on October 2, 2023 and the Purchase Agreement dated as of December 7, 2023.
See “Reconciliation of Segment Adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.
Goodwill impairment charges, restructuring costs, amortization expense and transaction, transformation and integration costs are not reflected in adjusted EBITDA. See “Reconciliation of Segment Adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.
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.
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.
As a result of the divestiture of the Home business, we are now reporting financial performance based on the following remaining four operating segments, which excludes our Home segment: Connectivity and Cable Solutions (CCS), Outdoor Wireless Networks (OWN), Networking, Intelligent Cellular and Security Solutions (NICS) and Access Network Solutions (ANS).
Unless otherwise noted, the following discussions relate solely to our continuing operations. As a result, we are reporting financial performance based on the following remaining three operating segments, which excludes the OWN segment, DAS business unit in NICS and Home business: Connectivity and Cable Solutions (CCS), NICS and ANS.
Working capital, net of assets and liabilities held for sale and excluding cash and cash equivalents and the current portion of long-term debt, decreased during 2023 primarily due to lower accounts receivable with unfavorable operating performance driving lower net sales and lower inventory due to inventory reduction initiatives.
Working capital, net of assets and liabilities held for sale and excluding cash and cash equivalents and the current portion of long-term debt, decreased during 2024 compared to the prior year primarily due to lower inventory driven by inventory reduction initiatives, higher accounts payable due to timing of payments and higher accrued expenses including a higher variable incentive compensation expense in 2024.
Year Ended December 31, $ % 2023 2022 Change Change (dollars in millions) Net cash generated by operating activities $ 289.9 $ 190.0 $ 99.9 52.6 % Net cash generated by (used in) investing activities 38.3 (82.1 ) 120.4 NM Net cash used in financing activities (181.7 ) (65.0 ) (116.7 ) 179.5 NM – Not meaningful 53 Operating Activities Year Ended December 31, 2023 2022 (in millions) Net loss $ (1,450.9 ) $ (1,286.9 ) Adjustments to reconcile net loss to net cash generated by operating activities: Depreciation and amortization 561.2 696.1 Equity-based compensation 47.3 61.1 Deferred income taxes (183.3 ) (118.4 ) Asset impairments 1,217.6 1,119.6 Changes in assets and liabilities: Accounts receivable 461.7 (16.0 ) Inventories 391.3 (178.8 ) Prepaid expenses and other current assets 45.1 30.9 Accounts payable and other accrued liabilities (723.6 ) (43.2 ) Other noncurrent assets (27.4 ) 8.2 Other noncurrent liabilities 55.0 (88.8 ) Other (104.1 ) 6.2 Net cash generated by operating activities $ 289.9 $ 190.0 During 2023, the increase in cash generated by operating activities compared to the prior year was primarily driven by reduced inventory purchases, the impacts of cost saving initiatives and lower cash paid for taxes, partially offset by higher interest payments.
Year Ended December 31, $ % 2024 2023 Change Change (dollars in millions) Net cash generated by operating activities $ 273.1 $ 297.3 $ (24.2 ) (8.1 )% Net cash generated by (used in) investing activities (57.2 ) 30.9 (88.1 ) (285.1 ) Net cash used in financing activities (83.0 ) (181.7 ) 98.7 (54.3 ) Operating Activities Year Ended December 31, 2024 2023 (in millions) Net loss $ (315.5 ) $ (1,506.8 ) Adjustments to reconcile net loss to net cash generated by operating activities: Depreciation and amortization 370.5 561.2 Equity-based compensation 29.1 47.3 Deferred income taxes 65.0 (180.5 ) Asset impairments 19.2 1,244.0 Changes in assets and liabilities: Accounts receivable (137.6 ) 471.9 Inventories 152.5 391.3 Prepaid expenses and other current assets (55.9 ) 45.1 Accounts payable and other accrued liabilities 143.5 (720.2 ) Other noncurrent assets (20.6 ) (27.4 ) Other noncurrent liabilities (18.1 ) 75.5 Other 41.0 (104.1 ) Net cash generated by operating activities $ 273.1 $ 297.3 During 2024, the decrease in cash generated by operating activities compared to the prior year was primarily driven by lower operating performance, partially offset by decreases in working capital in the current year due to a reduction in net sales driving lower inventory purchases and lower accounts receivable.
Selling, general and administrative expense For 2023, selling, general and administrative (SG&A) expense decreased by $167.6 million compared to 2022, primarily due to cost saving initiatives, lower variable incentive compensation expense of $59.3 million and lower bad debt expense. Bad debt expense in 2022 was driven by a $20.9 million reserve related to an OWN segment customer.
Selling, general and administrative expense For 2024, selling, general and administrative (SG&A) expense decreased by $27.7 million compared to 2023, primarily due to cost saving initiatives and lower bad debt expense of $11.6 million, partially offset by higher transaction, transformation, and integration costs of $36.2 million and higher variable incentive compensation expense of $14.3 million.
Liquidity and Capital Resources The following table summarizes certain key measures of our liquidity and capital resources: December 31, $ % 2023 2022 Change Change (dollars in millions) Cash and cash equivalents $ 543.8 $ 373.0 $ 170.8 45.8 % Working capital, net of assets and liabilities held for sale (1) and excluding cash and cash equivalents and current portion of long-term debt 970.1 1,178.4 (208.3 ) (17.7 ) Availability under Revolving Credit Facility 688.0 908.8 (220.8 ) (24.3 ) Long-term debt, including current portion 9,278.6 9,501.6 (223.0 ) (2.3 ) Total capitalization (2) 7,471.9 9,055.9 (1,584.0 ) (17.5 ) Long-term debt as a percentage of total capitalization 124.2 % 104.9 % (1) Working capital is net of assets and liabilities held for sale and consists of current assets of $2,584.1 million less current liabilities of $1,102.2 million as of December 31, 2023 and current assets of $3,104.3 million less current liabilities of $1,584.9 million as of December 31, 2022.
Also see “Reconciliation of Segment Adjusted EBITDA” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, below. 50 Liquidity and Capital Resources 2 The following table summarizes certain key measures of our liquidity and capital resources: December 31, $ % 2024 2023 Change Change (dollars in millions) Cash and cash equivalents (1) $ 663.3 $ 543.8 $ 119.5 22.0 % Working capital, net of assets and liabilities held for sale (2) and excluding cash and cash equivalents and current portion of long-term debt 577.7 724.1 (146.4 ) (20.2 ) Availability under Revolving Credit Facility 449.3 688.0 (238.7 ) (34.7 ) Long-term debt, including current portion 9,238.4 9,278.6 (40.2 ) (0.4 ) Total capitalization (3) 7,009.6 7,416.0 (406.4 ) (5.5 ) Long-term debt as a percentage of total capitalization 131.8 % 125.1 % (1) Includes cash and cash equivalents in assets held for sale of $98.4 million and $43.5 million as of December 31, 2024 and 2023, respectively.
This had an impact of approximately $44 million on working capital, excluding cash and cash equivalents and the current portion of long-term debt, as of December 31, 2023. 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.
These impacts were partially offset by higher accounts receivable due to timing of collections. During 2024, we sold accounts receivable under customer-sponsored supplier financing agreements. This had an impact of approximately $103 million on working capital, excluding cash and cash equivalents and the current portion of long-term debt, as of December 31, 2024.
However, if a contract is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling price. 60 Product sales, to end-customers or distributors, represent over 90% of our revenue and are generally recognized at the point in time when products have been shipped, right to payment has been obtained and risk of loss has been transferred.
Product sales, to end-customers or distributors, represent over 90% of our revenue and are generally recognized 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.
(2) See “Reconciliation of Non-GAAP Measures” within this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Connectivity and Cable Solutions Segment Net sales for the CCS segment decreased in 2023 compared to the prior year primarily due to lower sales volumes as certain customers paused spending as they right-size their inventory levels.
Connectivity and Cable Solutions Segment Net sales for the CCS segment increased in 2024 compared to the prior year primarily due to higher sales volumes in the Enterprise business, partially offset by lower outdoor network solutions sales volumes in the first half of the year as certain customers paused spending as they right-sized their inventory levels.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+8 added−0 removed7 unchanged
Biggest changeDuring the third quarter of 2023, and following the amendment to the 2026 Term Loan and settlement of the cash flow hedges, we again reenacted our hedging strategy to mitigate the interest rate risk from our variable rate debt, initially associated with our amended 2026 Term Loan and extending to future borrowings or debt issued, to fix a portion of the future interest cash flows by designating qualifying receive-variable and pay-fixed interest rate swaps as a cash flow hedge for accounting and financial reporting purposes.
Biggest changeThe hedging strategy extends to future borrowings or debt issued, to fix a portion of the future interest cash flows by designating qualifying receive-variable and pay-fixed interest rate swaps as a cash flow hedge for accounting and financial reporting purposes.
Management attempts to mitigate these risks through effective requirements planning and by working closely with key suppliers to obtain the best possible pricing and delivery terms. We may also enter into agreements with certain suppliers to guarantee our access to certain key components. As of December 31, 2023, we had no forward purchase commitments outstanding under take-or-pay contracts.
Management attempts to mitigate these risks through effective requirements planning and by working closely with key suppliers to obtain the best possible pricing and delivery terms. We may also enter into agreements with certain suppliers to guarantee our access to certain key components. As of December 31, 2024, we had no forward purchase commitments outstanding under take-or-pay contracts.
These contracts are not designated as hedges for accounting purposes and are marked to market each period through earnings and, as such, there were no unrecognized gains or losses as of December 31, 2023 or 2022. Our derivative instruments are not leveraged and are not held for trading or speculation.
These contracts are not designated as hedges for accounting purposes and are marked to market each period through earnings and, as such, there were no unrecognized gains or losses as of December 31, 2024 or 2023. Our derivative instruments are not leveraged and are not held for trading or speculation.
Interest Rate Risk The table below summarizes the expected interest and principal payments associated with our variable rate debt outstanding at December 31, 2023, primarily the 2026 Term Loan and the Revolving Credit Facility. The principal payments presented below are based on scheduled maturities and assume no borrowings under our Revolving Credit Facility.
Interest Rate Risk The table below summarizes the expected interest and principal payments associated with our variable rate debt outstanding at December 31, 2024, primarily the 2029 Term Loan and the Revolving Credit Facility. The principal payments presented below are based on scheduled maturities and assume no borrowings under our Revolving Credit Facility.
The interest payments presented below assume the interest rates in effect as of December 31, 2023 (see Note 8 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K).
The interest payments presented below assume the interest rates in effect as of December 31, 2024 (see Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K).
See Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of these contracts. Foreign Currency Risk Approximately 35% and 33% of net sales for 2023 and 2022, respectively, were to customers located outside the U.S.
See Note 10 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of these contracts. Foreign Currency Risk Approximately 34% and 34% of net sales for 2024 and 2023, respectively, were to customers located outside the U.S.
The total notional amount of the interest rate swap derivatives as of December 31, 2023 was $700.0 million with outstanding maturities up to thirty-one months. As of December 31, 2023, the combined fair value of the interest rate swaps was an $8.0 million loss. The table above excludes the impact of these interest rate swap derivatives.
The total notional amount of the interest rate swap derivatives as of December 31, 2024 was $700.0 million with outstanding maturities up to nineteen months. As of December 31, 2024, the combined fair value of the interest rate swaps was an $2.4 million loss. The table above excludes the impact of these interest rate swap derivatives.
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. 2024 2025 2026 2027 2028 Thereafter Principal and interest payments on variable rate debt $ 298.4 $ 292.2 $ 3,032.0 $ — $ — $ — Average cash interest rate 8.83 % 8.72 % 8.72 % — — — Impact of 1% increase in interest rate index $ 30.2 $ 29.8 $ 3.7 $ — $ — $ — We also have $6.3 billion aggregate principal amount of fixed rate senior notes.
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. 2025 2026 2027 2028 2029 Thereafter Principal and interest payments on variable rate debt $ 0.5 $ 0.3 $ 0.3 $ 0.3 $ 3.5 $ — Average cash interest rate 9.86 % 9.86 % 9.86 % 9.9 % 9.9 % — Impact of 1% increase in interest rate index $ 31.5 $ 31.5 $ 31.5 $ 31.5 $ 31.5 $ — We also have $6.0 billion aggregate principal amount of fixed rate senior notes.
As of December 31, 2023, we had foreign exchange contracts with a net unrealized gain of $5.1 million, with maturities of up to nine months and aggregate notional value of $630.1 million (based on exchange rates as of December 31, 2023).
As of December 31, 2024, we had foreign exchange contracts with a net unrealized loss of $3.4 million, with maturities of up to four months and aggregate notional value of $123.6 million (based on exchange rates as of December 31, 2024).
The table below summarizes our expected interest and principal payments related to our fixed rate debt at December 31, 2023. 2024 2025 2026 2027 2028 Thereafter Principal and interest payments on fixed rate debt $ 376.6 $ 1,616.9 $ 1,759.1 $ 1,776.5 $ 746.7 $ 1,279.7 Average cash interest rate 6.06 % 6.06 % 6.08 % 5.91 % 5.24 % 4.75 % 62 We utilize 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.
The table below summarizes our expected interest and principal payments related to our fixed rate debt at December 31, 2024. 2025 2026 2027 2028 2029 Thereafter Principal and interest payments on fixed rate debt $ 2.1 $ 0.3 $ 1.9 $ 0.8 $ 1.1 $ 1.2 Average cash interest rate 6.79 % 7.01 % 7.07 % 7.18 % 7.97 % 9.50 % 61 We have utilized 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.
See Note 9 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of these contracts. We continuously evaluate the amount and type of derivative instruments utilized to manage the market risk related to foreign currency exposures. Commodity Price Risk Materials account for a large portion of our cost of sales.
We continuously evaluate the amount and type of derivative instruments utilized to manage the market risk related to foreign currency exposures. 62 Commodity Price Risk Materials account for a large portion of our cost of sales.
In conjunction with the amendment to our 2026 Term Loan due to reference rate reform, on June 28, 2023, the Company settled its cash flow hedges with a notional value of $300.0 million that were outstanding.
In June 2023, and in conjunction with the amendment to its 2026 Term Loan due to reference rate reform, we settled and derecognized our cash flow hedges.
We continuously evaluate the amount and type of derivative instruments utilized to manage commodity price risk. 63
We continuously evaluate the amount and type of derivative instruments utilized to manage commodity price risk. In July 2023, the Company entered into a long-term supply contract with a third-party to secure the supply of certain raw materials.
Added
A gain of $6.1 million remaining as a component of accumulated comprehensive loss in the Consolidated Balance Sheets continued to be reclassified to earnings through interest expense as the interest payments continued to be made on the 2026 Term Loan through December 17, 2024, at which time as a result of the refinancing transactions, the forecasted hedge transaction was no longer probable of occurring which resulted in a gain of $3.1 million being reclassified to earnings.
Added
We reenacted our hedging strategy in the third quarter of 2023, by entering into new interest rate swap derivatives with a total notional amount of $700 million which terminate on July 31, 2026.
Added
As a result of the refinancing transaction and changes in the terms of the 2029 Term Loan, we dedesignated our interest rate swaps as of December 17, 2024 and redesignated $700 million of the swaps as hedging instruments on the same day.
Added
As a result of the dedesignation and redesignation, there was no charge to gain (loss) related to amounts previously recorded in accumulated other comprehensive loss.
Added
We believe the likelihood that floating rate debt in the amount of $700 million will exist through the interest rate swaps' maturity in July 2026 and therefore, will continue to apply hedge accounting to the interest rate swaps.
Added
See Note 10 in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for further discussion of these contracts.
Added
Under the terms of the contract, the Company will make advance payments through 2026 totaling $120.0 million (undiscounted) and based on meeting certain minimum purchase requirements through 2031, such advance payments will be credited and applied to future orders on a quarterly basis beginning in 2027 through 2031.
Added
Advance payments of $60.0 million and $30.0 million are recorded as other noncurrent assets in the Consolidated Balance Sheets as of December 31, 2024 and 2023. The Company has committed to growing purchases of raw materials under this agreement to a level of approximately $137 million per year by 2026 and continuing through 2032. 63

Other VISN 10-K year-over-year comparisons