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8-K - FORM 8-K - CommScope Holding Company, Inc.d211845d8k.htm

Exhibit 99.1

 

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CommScope Reports Third Quarter 2015 Results

 

    Completed transformational acquisition of TE Connectivity’s Broadband Network Solutions business

 

    Sales of $973 million

 

    Adjusted operating income of $201 million, or 21 percent of sales

 

    Net loss of $0.42 per share, reflects impairment charges, transaction and integration costs and other special items

 

    Adjusted net income, excluding special items, of $0.53 per diluted share

 

 

HICKORY, NC, November 9, 2015—CommScope Holding Company, Inc. (NASDAQ: COMM), a global leader in infrastructure solutions for communications networks, reported sales of $973 million and a net loss of $81 million, or $0.42 per share, for the quarter ended September 30, 2015. The reported net loss includes impairment charges, costs associated with the Broadband Network Solutions (BNS) acquisition and other special items. Excluding these items, non-GAAP adjusted net income for the third quarter of 2015 was $103 million, or $0.53 per diluted share. A reconciliation of reported GAAP results to non-GAAP results is attached.

For the quarter ended September 30, 2014, CommScope reported sales of $1.0 billion and net income of $96 million, or $0.50 per diluted share. Non-GAAP adjusted net income for the third quarter of 2014 was $119 million, or $0.62 per diluted share.

As previously announced, CommScope completed its acquisition of BNS from TE Connectivity on August 28, 2015. The results of the BNS business are included in CommScope’s results of operations from the date of the acquisition through September 25, 2015, its fiscal period end.

“We are pleased to welcome the talented BNS team to CommScope. This transformational acquisition broadens our leading position across diverse and growing markets, significantly expands our platform for innovative solutions and creates complementary market opportunities. Also, we continue to expect to realize significant synergy opportunities,” said President and Chief Executive Officer Eddie Edwards. “We are executing integration activities as planned and are excited about the market position of the new CommScope.

“Although slow spending from certain North American and European wireless operators is a near-term challenge, we expect longer-term demand for our Wireless solutions to be positively affected by wireless coverage and capacity expansion in emerging markets and the increasing demand for mobile broadband in developed markets. In addition, the strong fiber connectivity portfolio that BNS brings to CommScope positions us to benefit from the global shift toward fiber in next-generation communications networks.”


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Third Quarter 2015 Overview

Third quarter 2015 sales declined 3 percent year over year to $973 million, including BNS revenue of $141 million. Foreign exchange rate changes negatively impacted sales by 3 percent in the quarter compared to the prior year period. The addition of the BNS business along with growth in the Enterprise segment was more than offset by lower Wireless and Broadband sales.

Operating loss in the third quarter of 2015 was $43 million. This loss reflects a goodwill impairment charge related to the Wireless segment, costs associated with the BNS acquisition and an impairment charge on a note receivable related to a previous divestiture in the Broadband segment. Excluding BNS, operating income was $39 million compared to operating income of $151 million in the year-ago quarter. Adjusted operating income in the quarter, which excludes impairment charges, costs associated with the BNS acquisition and other special items, was $201 million, which includes BNS adjusted operating income of $26 million.

GAAP net loss of $81 million for the third quarter of 2015 compares to GAAP net income of $96 million for the year-ago quarter. Excluding amortization of purchased intangibles, restructuring costs, transaction and integration costs and other special items, third quarter adjusted net income decreased 14 percent year over year to $103 million. Adjusted earnings were $0.53 per diluted share, down 15 percent year over year.

Third Quarter 2015 Segment Overview

Wireless segment sales in the quarter declined 25 percent year over year to $475 million. The year-over-year decrease was due to lower spending by wireless operators in most major geographic regions of the world after robust spending in 2014. Additionally, foreign exchange rate changes had a negative impact of approximately 5 percent on Wireless segment sales in the third quarter compared to the prior year period. Despite lower sales volumes, Wireless adjusted operating income was $99 million, or 21 percent of Wireless sales, for the quarter.

Third quarter Enterprise segment sales increased 4 percent year over year to $228 million, primarily driven by strong sales of data center fiber solutions and growth in most major geographic regions of the world. Foreign exchange rate changes had a negative impact of approximately 2 percent on Enterprise segment sales in the third quarter of 2015 compared to the prior year period. Enterprise adjusted operating income for the quarter increased 31 percent year over year to $58 million, or 26 percent of Enterprise sales, primarily due to higher fiber sales to data centers.

Third quarter Broadband segment sales decreased 14 percent year over year to $128 million. Sales decreased year over year primarily due to lower investment in the Central and Latin America region, as well as reduced sales in North America. Foreign exchange rate changes had a negligible impact on Broadband segment sales in the third quarter of 2015 compared to the prior year period. Broadband adjusted operating income decreased to $18 million, or 14 percent of Broadband sales. The decrease was primarily due to lower sales, partially offset by lower material costs and the benefit of cost reduction initiatives.


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Broadband Network Solutions Acquisition

As previously stated, CommScope acquired TE Connectivity’s BNS business on August 28, 2015. BNS revenue of $141 million, GAAP operating loss of $82 million and adjusted operating income of $26 million were included in CommScope’s results of operations for the third quarter 2015. These results are from the acquisition date to September 25, 2015, the fiscal period end of BNS. BNS is being reported separately as a fourth segment.

“Integration teams are fully engaged across the company,” said Edwards. “We are establishing new business organizations, developing market strategies and executing on our three-year synergy plan. Overall, we have made solid progress in the first two months after the close of the acquisition.”

Outlook

CommScope management provided the following fourth quarter and full year 2015 guidance, which excludes the amortization of purchased intangibles, restructuring costs, transaction and integration costs, purchase accounting and other special items. The fourth quarter and full year outlook assume relatively stable business conditions.

Fourth Quarter 2015 Guidance:

 

    Revenue of $1.125 billion – $1.2 billion

 

    Adjusted operating income of $175 million – $205 million

 

    Adjusted earnings per diluted share of $0.39 – $0.44

Full Year 2015 Guidance:

 

    Revenue of $3.79 billion – $3.865 billion

 

    Adjusted operating income of $708 million – $738 million

 

    Adjusted earnings per diluted share of $1.83 – $1.88

Conference Call, Webcast and Investor Presentation

As previously announced, CommScope will host a conference call at 8:30 a.m. ET today in which management will discuss third quarter 2015 results. The conference call also will be webcast over the Internet.

To participate in the conference call, dial 866-394-7514 (US and Canada only) or +1 706-758-2714. The conference identification number is 56021810. Please plan to dial in 15 minutes before the start of the call to facilitate a timely connection. The live, listen-only audio of the call and corresponding presentation will be available through a link on the Investor Relations Events and Presentations page of CommScope’s website at www.commscope.com.

If you are unable to participate and would like to hear a replay, dial 855-859-2056 (US and Canada only) or +1 404-537-3406. The replay identification number is 56021810 and will be available through December 9, 2015. A webcast replay will also be archived on CommScope’s website for a limited period of time following the conference call.


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About CommScope

CommScope (NASDAQ: COMM) helps companies around the world design, build and manage their wired and wireless networks. Our vast portfolio of network infrastructure includes some of the world’s most robust and innovative wireless and fiber optic solutions. Our talented and experienced global team is driven to help customers increase bandwidth; maximize existing capacity; improve network performance and availability; increase energy efficiency; and simplify technology migration. You will find our solutions in the largest buildings, venues and outdoor spaces; in data centers and buildings of all shapes, sizes and complexity; at wireless cell sites; in telecom central offices and cable headends; in FTTx deployments; and in airports, trains, and tunnels. Vital networks around the world run on CommScope solutions.

Non-GAAP Financial Measures

CommScope management believes that presenting certain non-GAAP financial measures provides meaningful information to investors in understanding operating results and may enhance investors’ ability to analyze financial and business trends. Non-GAAP measures are not a substitute for GAAP measures and should be considered together with the GAAP financial measures. As calculated, our non-GAAP measures may not be comparable to other similarly titled measures of other companies. In addition, CommScope management believes that these non-GAAP financial measures allow investors to compare period to period more easily by excluding items that could have a disproportionately negative or positive impact on results in any particular period.

Forward Looking Statements

This press release or any other oral or written statements made by us or on our behalf may include forward-looking statements which reflect our current views with respect to future events and financial performance. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “estimate,” “expect,” “project,” “projections,” “plans,” “anticipate,” “should,” “could,” “designed to,” “foreseeable future,” “believe,” “think,” “scheduled,” “outlook,” “guidance” and similar expressions although not all forward-looking statements contain such terms. This list of indicative terms and phrases is not intended to be all-inclusive.

These statements are subject to various risks and uncertainties, many of which are outside our control, including, without limitation, our dependence on customers’ capital spending on communication systems; concentration of sales among a limited number of customers or distributors; changes in technology; our ability to fully realize anticipated benefits from prior or future acquisitions or equity investments; industry competition and the ability to retain customers through product innovation, introduction and marketing; risks associated with our sales through channel partners; possible production disruptions due to supplier or contract manufacturer bankruptcy, reorganization or restructuring; the risk our global manufacturing operations suffer production or shipping delays causing difficulty in meeting customer demands; the risk that internal production capacity and that of contract manufacturers may be insufficient to meet customer demand or quality standards for our products; our ability to maintain effective information management systems and to successfully implement major systems initiatives; cyber-security incidents, including data security breaches or computer viruses; product performance issues and associated warranty claims; significant international operations and the impact of variability in foreign exchange rates; our ability to comply with governmental anti-corruption laws and regulations and export and import controls worldwide; our ability to compete in international markets due to export and import controls to which we may be subject; potential difficulties in realigning global manufacturing capacity and capabilities among our global manufacturing facilities, including delays or challenges related to removing, transporting or reinstalling equipment, that may affect our ability to meet customer demands for products; possible future restructuring actions; possible future impairment charges for fixed or intangible assets, including goodwill; increased obligations under employee benefit plans; cost of protecting or defending intellectual property; changes in laws or regulations affecting us or the industries we serve; costs and challenges of compliance with domestic and foreign environmental laws and the effects of climate change; changes in cost and availability of key raw materials, components and commodities and the potential effect on customer pricing; risks associated with our dependence on a limited number of key suppliers; our ability to attract and retain qualified key employees; allegations of health risks from wireless equipment; availability and adequacy of


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insurance; natural or man-made disasters or other disruptions; income tax rate variability and ability to recover amounts recorded as value-added tax receivables; labor unrest; risks of not realizing benefits from research and development projects; substantial indebtedness and maintaining compliance with debt covenants; our ability to incur additional indebtedness; ability of our lenders to fund borrowings under their credit commitments; changes in capital availability or costs, such as changes in interest rates, security ratings and market perceptions of the businesses in which we operate, or the ability to obtain capital on commercially reasonable terms or at all; our ability to generate cash to service our indebtedness; our ability to integrate the BNS business on a timely and cost effective manner; our reliance on TE Connectivity for transition services for the BNS business; our ability to realize expected growth opportunities and cost savings from the BNS business; and other factors beyond our control. These and other factors are discussed in greater detail in our 2014 Annual Report on Form 10-K. Although the information contained in this press release represents our best judgment as of the date of this report based on information currently available and reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date made. We are not undertaking any duty or obligation to update this information to reflect developments or information obtained after the date of this report, except as otherwise may be required by law.

 

Investor Contact:   News Media Contact:

Jennifer Crawford, CommScope

  Rick Aspan, CommScope

+1 828-323-4970

  +1 708-236-6568
  publicrelations@commscope.com

Source: CommScope


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CommScope Holding Company, Inc.

Condensed Consolidated Statements of Operations

(Unaudited — In thousands, except per share amounts)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2015     2014     2015     2014  

Net sales

   $ 972,597      $ 1,000,427      $ 2,665,287      $ 3,001,719   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating costs and expenses:

        

Cost of sales

     633,706        637,940        1,718,497        1,889,870   

Selling, general and administrative

     203,820        121,417        460,288        355,515   

Research and development

     31,100        30,806        86,818        95,758   

Amortization of purchased intangible assets

     54,287        44,835        143,697        133,439   

Restructuring costs, net

     6,868        7,388        10,633        11,677   

Asset impairments

     85,334        7,000        85,334        14,229   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

     1,015,115        849,386        2,505,267        2,500,488   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (42,518     151,041        160,020        501,231   

Other income (expense), net

     (8,269     1,393        (5,556     (90,593

Interest expense

     (73,387     (36,504     (158,752     (142,409

Interest income

     1,276        1,394        3,336        3,609   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (122,898     117,324        (952     271,838   

Income tax (expense) benefit

     42,102        (20,893     5,224        (82,877
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (80,796   $ 96,431      $ 4,272      $ 188,961   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss) per share:

        

Basic

   $ (0.42   $ 0.51      $ 0.02      $ 1.01   

Diluted (a)

   $ (0.42   $ 0.50      $ 0.02      $ 0.99   

Weighted average shares outstanding:

        

Basic

     190,269        187,407        189,483        186,624   

Diluted (a)

     190,269        191,627        193,930        191,126   

(a) Calculation of diluted earnings per share:

        

Net income (loss) (basic)

   $ (80,796   $ 96,431      $ 4,272      $ 188,961   

Weighted average shares (basic)

     190,269        187,407        189,483        186,624   

Dilutive effect of stock options

     —          4,220        4,447        4,502   
  

 

 

   

 

 

   

 

 

   

 

 

 

Denominator (diluted)

     190,269        191,627        193,930        191,126   
  

 

 

   

 

 

   

 

 

   

 

 

 

See notes to unaudited condensed consolidated financial statements included in our Form 10-Q.


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CommScope Holding Company, Inc.

Condensed Consolidated Balance Sheets

(Unaudited — In thousands, except share amounts)

 

     September 30, 2015     December 31, 2014  
Assets     

Cash and cash equivalents

   $ 617,962      $ 729,321   

Accounts receivable, less allowance for doubtful accounts of $12,782 and $8,797, respectively

     958,214        612,007   

Inventories, net

     554,835        367,185   

Prepaid expenses and other current assets

     146,743        67,875   

Deferred income taxes

     72,726        51,230   
  

 

 

   

 

 

 

Total current assets

     2,350,480        1,827,618   

Property, plant and equipment, net of accumulated depreciation of $233,332 and $207,342, respectively

     530,070        289,371   

Goodwill

     2,616,400        1,451,887   

Other intangible assets, net

     2,266,192        1,260,927   

Other noncurrent assets

     98,064        87,255   
  

 

 

   

 

 

 

Total assets

   $ 7,861,206      $ 4,917,058   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Accounts payable

   $ 336,796      $ 177,806   

Other accrued liabilities

     414,552        289,006   

Current portion of long-term debt

     12,592        9,001   
  

 

 

   

 

 

 

Total current liabilities

     763,940        475,813   

Long-term debt

     5,342,910        2,659,897   

Deferred income taxes

     263,374        339,945   

Pension and postretirement benefit liabilities

     51,958        29,478   

Other noncurrent liabilities

     120,549        104,306   
  

 

 

   

 

 

 

Total liabilities

     6,542,731        3,609,439   

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock, $.01 par value: Authorized shares: 200,000,000; Issued and outstanding shares: None at September 30, 2015 or December 31, 2014

     —          —     

Common stock, $0.01 par value: Authorized shares: 1,300,000,000; Issued and outstanding shares: 190,590,496 and 187,831,389 at September 30, 2015 and December 31, 2014, respectively

     1,916        1,888   

Additional paid-in capital

     2,199,286        2,141,433   

Retained earnings (accumulated deficit)

     (737,247     (741,519

Accumulated other comprehensive loss

     (134,845     (83,548

Treasury stock, at cost: 961,566 shares at September 30, 2015 and December 31, 2014

     (10,635     (10,635
  

 

 

   

 

 

 

Total stockholders’ equity

     1,318,475        1,307,619   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 7,861,206      $ 4,917,058   
  

 

 

   

 

 

 

See notes to unaudited condensed consolidated financial statements included in our Form 10-Q.


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CommScope Holding Company, Inc.

Consolidated Statements of Cash Flows

(Unaudited — In thousands)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2015     2014     2015     2014  

Operating Activities:

        

Net income (loss)

   $ (80,796   $ 96,431      $ 4,272      $ 188,961   

Adjustments to reconcile net income (loss) to net cash generated by operating activities:

        

Depreciation and amortization

     73,762        60,385        199,485        198,866   

Equity-based compensation

     5,677        5,560        21,055        15,731   

Deferred income taxes

     (58,409     (20,036     (92,538     (31,531

Asset impairments

     85,334        7,000        85,334        14,229   

Excess tax benefits from equity-based compensation

     (5,030     (3,596     (19,194     (10,583

Changes in assets and liabilities:

        

Accounts receivable

     2,126        69,172        (116,131     (99,645

Inventories

     58,480        26,785        67,518        (49,671

Prepaid expenses and other assets

     (49,163     22,330        (43,286     2,904   

Accounts payable and other liabilities

     76,793        (52,913     74,524        (58,095

Other

     3,696        (609     4,697        (9,534
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated by operating activities

     112,470        210,509        185,736        161,632   

Investing Activities:

        

Additions to property, plant and equipment

     (15,341     (8,693     (39,422     (24,884

Proceeds from sale of property, plant and equipment

     46        166        219        1,612   

Cash paid for acquisitions, net of cash acquired

     (2,957,476     (44,919     (2,957,476     (40,174

Acquisition funds held in escrow

     2,746,875        —          —          —     

Other

     171        (13,250     3,268        (5,951
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (225,725     (66,696     (2,993,411     (69,397

Financing Activities:

        

Long-term debt repaid

     (49     (2,408     (502,566     (1,122,197

Long-term debt proceeds

     —          —          3,246,875        1,315,000   

Long-term debt financing costs

     (64,865     (519     (73,890     (23,257

Proceeds from the issuance of common shares under equity-based compensation plans

     4,322        2,805        21,273        10,747   

Excess tax benefits from equity-based compensation

     5,030        3,596        19,194        10,583   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash generated by (used in) financing activities

     (55,562     3,474        2,710,886        190,876   

Effect of exchange rate changes on cash and cash equivalents

     (6,180     (11,902     (14,570     (12,997
  

 

 

   

 

 

   

 

 

   

 

 

 

Change in cash and cash equivalents

     (174,997     135,385        (111,359     270,114   

Cash and cash equivalents, beginning of period

     792,959        481,049        729,321        346,320   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 617,962      $ 616,434      $ 617,962      $ 616,434   
  

 

 

   

 

 

   

 

 

   

 

 

 

See notes to unaudited condensed consolidated financial statements included in our Form 10-Q.


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CommScope Holding Company, Inc.

Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures

(Unaudited — In millions, except per share amounts)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2015     2014     2015     2014  

Operating income (loss), as reported

   $ (42.5   $ 151.0      $ 160.0      $ 501.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments:

        

Amortization of purchased intangible assets

     54.3        44.8        143.7        133.4   

Restructuring costs, net

     6.9        7.4        10.6        11.7   

Equity-based compensation

     5.7        5.6        21.1        15.7   

Asset impairments

     85.3        7.0        85.3        14.2   

Transaction and integration costs

     60.8        2.7        82.1        4.6   

Purchase accounting adjustments (1)

     30.5        —          30.6        (11.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments to operating income

     243.5        67.5        373.4        167.7   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted operating income

   $ 201.0      $ 218.5      $ 533.4      $ 669.0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes, as reported

   $ (122.9   $ 117.3      $ (1.0   $ 271.8   

Income tax (expense) benefit, as reported

     42.1        (20.9     5.2        (82.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss), as reported

   $ (80.8   $ 96.4      $ 4.3      $ 189.0   

Adjustments:

        

Total pretax adjustments to operating income

     243.5        67.5        373.4        167.7   

Pretax amortization of deferred financing costs & OID (2)

     3.9        3.1        17.1        29.2   

Pretax acquisition related interest (2)

     23.9        —          29.2        —     

Pretax loss on debt transactions (3)

     —          —          —          93.9   

Pretax gain on sale of equity investment (3)

     —          (2.1     (2.7     (8.8

Tax effects of adjustments and other tax items (4)

     (87.9     (45.6     (142.4     (117.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted net income

   $ 102.6      $ 119.5      $ 278.9      $ 354.0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted EPS, as reported

   $ (0.42   $ 0.50      $ 0.02      $ 0.99   

Non-GAAP adjusted diluted EPS

   $ 0.53      $ 0.62      $ 1.44      $ 1.85   

 

(1) For the nine months ended September 30, 2014, includes the reduction in the estimated fair value of contingent consideration payable related to the Redwood acquisition.
(2) Included in interest expense.
(3) Included in other income (expense), net.
(4) The tax rates applied to adjustments reflect the tax expense or benefit based on the tax jurisdiction of the entity generating the adjustment. There are certain items for which we expect little or no tax effect.

Note: Components may not sum to total due to rounding.

See Description of Non-GAAP Financial Measures


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CommScope Holding Company, Inc.

Segment Information

(Unaudited — In millions)

 

Sales by Segment                                    
                       % Change  
     Q3 2015     Q2 2015     Q3 2014     Sequential     YOY  

Wireless

   $ 475.3      $ 515.2      $ 633.0        (7.7 )%      (24.9 )% 

Enterprise

     227.8        221.9        218.0        2.7      4.5

Broadband

     128.5        130.6        149.5        (1.6 )%      (14.0 )% 

BNS

     141.1        —          —          NM        NM   

Inter-segment eliminations

     (0.1     (0.4     (0.1     NM        NM   
  

 

 

   

 

 

   

 

 

     

Total Net Sales

   $ 972.6      $ 867.3      $ 1,000.4        12.1      (2.8 )% 
  

 

 

   

 

 

   

 

 

     
Non-GAAP Adjusted Operating Income by Segment                                    
                       % Change  
     Q3 2015     Q2 2015     Q3 2014     Sequential     YOY  

Wireless

   $ 99.3      $ 103.5      $ 155.2        (4.1 )%      (36.0 )% 

Enterprise

     58.2        55.3        44.5        5.2      30.8

Broadband

     17.7        17.2        18.8        2.9      (5.9 )% 

BNS

     25.8        —          —          NM        NM   
  

 

 

   

 

 

   

 

 

     

Total Non-GAAP Adjusted Operating Income

   $ 201.0      $ 175.9      $ 218.5        14.3      (8.0 )% 
  

 

 

   

 

 

   

 

 

     

NM – Not meaningful

Components may not sum to total due to rounding

See Description of Non-GAAP Financial Measures


LOGO

 

CommScope Holding Company, Inc.

Reconciliation of GAAP to Non-GAAP Adjusted Operating Income by Segment

(Unaudited — In millions)

 

Third Quarter 2015 Non-GAAP Adjusted Operating Income Reconciliation by Segment  
     Wireless     Enterprise     Broadband     BNS     Total  

Operating income (loss), as reported

   $ (2.2   $ 39.3      $ 2.0      $ (81.6   $ (42.5

Amortization of purchased intangible assets

     23.1        17.4        3.8        10.0        54.3   

Restructuring costs, net

     1.3        —          0.2        5.3        6.9   

Equity-based compensation

     2.1        1.3        0.5        1.8        5.7   

Asset impairments

     74.4        —          10.9        —          85.3   

Transaction and integration costs

     0.6        0.3        0.2        59.8        60.8   

Purchase accounting adjustments

     —          —          —          30.5        30.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted operating income

   $ 99.3      $ 58.2      $ 17.7      $ 25.8      $ 201.0   

Non-GAAP adjusted operating margin %

     20.9     25.6     13.8     18.3     20.7
Second Quarter 2015 Non-GAAP Adjusted Operating Income Reconciliation by Segment  
     Wireless     Enterprise     Broadband     BNS     Total  

Operating income, as reported

   $ 70.2      $ 31.8      $ 7.4      $ —        $ 109.4   

Amortization of purchased intangible assets

     23.1        17.3        4.2        —          44.6   

Restructuring costs, net

     0.9        (0.1     1.0        —          1.9   

Equity-based compensation

     5.5        3.4        1.3        —          10.1   

Transaction and integration costs

     3.8        2.8        3.3        —          9.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted operating income

   $ 103.5      $ 55.3      $ 17.2      $ —        $ 175.9   

Non-GAAP adjusted operating margin %

     20.1     25.0     13.1     —          20.3
Third Quarter 2014 Non-GAAP Adjusted Operating Income Reconciliation by Segment  
     Wireless     Enterprise     Broadband     BNS     Total  

Operating income, as reported

   $ 113.8      $ 25.3      $ 11.9      $ —        $ 151.0   

Amortization of purchased intangible assets

     23.2        17.3        4.3        —          44.8   

Restructuring costs, net

     5.9        —          1.6        —          7.4   

Equity-based compensation

     3.1        1.8        0.7        —          5.6   

Asset impairments

     7.0        —          —          —          7.0   

Transaction costs

     1.7        0.7        0.3        —          2.7   

Purchase accounting adjustments

     0.6        (0.6     —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted operating income

   $ 155.2      $ 44.5      $ 18.8      $ —        $ 218.5   

Non-GAAP adjusted operating margin %

     24.5     20.4     12.6     —          21.8

Components may not sum to total due to rounding

See Description of Non-GAAP Financial Measures


LOGO

 

CommScope Holding Company, Inc.

Adjusted Free Cash Flow

(Unaudited — In millions)

 

Adjusted Free Cash Flow  
     Q3 2015      Q3 2014  

Cash flow from operations

   $ 112.5       $ 210.5   

Transaction and integration costs

     52.7         *   

Capital expenditures

     (15.3      (8.7

Capital spending for BNS acquisition integration

     3.8         —     
  

 

 

    

 

 

 

Adjusted Free Cash Flow

   $ 153.7       $ 201.8   
  

 

 

    

 

 

 

 

* Not significant

CommScope Holding Company, Inc.

Quarterly Adjusted Operating Income and Adjusted EBITDA

(Unaudited — In millions)

 

GAAP to Non-GAAP Adjusted Operating Income and Adjusted EBITDA Reconciliation  
     Q3 2015     Q2 2015     Q1 2015     Q4 2014     Q3 2014  

Operating income (loss), as reported

   $ (42.5   $ 109.4      $ 93.1      $ 76.2      $ 151.0   

Amortization of purchased intangible assets

     54.3        44.6        44.8        44.8        44.8   

Restructuring costs, net

     6.9        1.9        1.9        7.6        7.4   

Equity-based compensation

     5.7        10.1        5.3        5.4        5.6   

Asset impairments

     85.3        —          —          (2.1     7.0   

Transaction and integration costs

     60.8        9.9        11.4        7.5        2.7   

Purchase accounting adjustments

     30.5        —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted operating income

   $ 201.0      $ 175.9      $ 156.5      $ 139.4      $ 218.5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted operating margin %

     20.7     20.3     19.0     16.8     21.8

Depreciation

     15.6        11.5        11.6        12.7        12.4   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted EBITDA

   $ 216.6      $ 187.4      $ 168.1      $ 152.0      $ 230.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Components may not sum to total due to rounding

See Description of Non-GAAP Financial Measures