[July 28, 2015] |
|
CommScope Reports Second Quarter 2015 Results Consistent with Guidance
CommScope Holding Company, Inc. (NASDAQ: COMM), a global provider of
connectivity and essential infrastructure solutions for wireless,
business enterprise and residential broadband networks, reported sales
of $867 million and net income of $46 million, or $0.24 per diluted
share, for the quarter ended June 30, 2015. Non-GAAP adjusted net income
for the second quarter of 2015 was $95 million, or $0.49 per diluted
share. A reconciliation of reported GAAP results to non-GAAP results is
attached.
For the quarter ended June 30, 2014, CommScope reported sales of $1.1
billion and net income of $28 million or $0.15 per diluted share.
Non-GAAP adjusted net income for the second quarter of 2014 was $139
million, or $0.73 per diluted share.
"We delivered stronger sequential performance in all of our businesses,
which was consistent with our outlook," said President and Chief
Executive Officer Eddie Edwards. "We executed despite slow spending by
certain North American wireless operators and foreign exchange rate
headwinds.
"Meanwhile, we continue to make progress toward our planned acquisition
of TE Connectivity's Telecom, Enterprise and Wireless businesses. During
the quarter, we established a foundational capital structure, cleared
more regulatory hurdles and completed additional integration planning.
Both companies are working hard to close the acquisition, which we
expect to complete within the next few months. The acquisition positions
us to solve more customer challenges, deliver more innovative solutions
and increase our global scale. We will become a leader in fiber-optic
connectivity for wired and wireless networks."
On January 28, 2015, CommScope announced an agreement to acquire TE
Connectivity's Telecom, Enterprise and Wireless businesses (Broadband
Network Solutions or the BNS business). The BNS business is a global
leader in fiber-optic connectivity for wireline and wireless networks,
and the transaction is expected to be in excess of 20 percent accretive
to CommScope's adjusted earnings per share by the end of the first full
year after closing, excluding purchase accounting charges, integration
costs and other special items.
Second Quarter 2015 Overview
Second quarter 2015 sales were $867 million, up 5 percent sequentially
but down 19 percent year over year from the atypically robust second
quarter of 2014. Growth in the Broadband and Enterprise segments was
offset by lower Wireless sales. Foreign exchange rate changes negatively
impacted sales by 3 percent in the quarter compared to the prior year
period.
Operating income in the second quarter increased 18 percent sequentially
but declined 46 percent year over year to $109 million. Adjusted
operating income in the second quarter, which excludes amortization of
purchased intangibles, costs associated with the BNS acquisition,
restructuring costs and other special items, was $176 million, up 12
percent sequentially but down 32 percent year over year.
GAAP net income increased 63 percent year over year to $46 million.
Excluding amortization of purchased intangibles, restructuring costs and
other special items, second quarter adjusted net income increased 16
percent sequentially but decreased 32 percent year over year to $95
million. Adjusted earnings were $0.49 per diluted share, up 17 percent
sequentially but down 33 percent year over year.
Second Quarter 2015 Segment Overview
Wireless segment sales in the second quarter rose modestly sequentially
to $515 million, but declined 29 percent year over year from the
unusually strong second quarter of 2014. The year-over-year decrease was
primarily due to a slowdown in spending by certain North American
wireless operators, which was partially offset by growth in the Central
and Latin America region. Additionally, foreign exchange rate changes
had a negative impact of approximately 5 percent on Wireless segment
sales in the second quarter compared to the prior year period. The
company's acquisition of two businesses of United Kingdom-based Alifabs
Group, completed in July 2014, provided incremental net sales to the
Wireless segment of $9 million during the second quarter of 2015.
Wireless adjusted operating income was $103 million, or 20 percent of
sales, for the quarter. The decrease from prior year was primarily due
to lower sales.
Second quarter Enterprise segment sales increased 5 percent sequentially
and 2 percent year over year to $222 million. Sales increased year over
year primarily driven by strong sales of data center fiber solutions and
growth in the Asia Pacific and Europe, Middle East and Africa regions,
partially offset by declines in North America. Foreign exchange rates
had a negative impact of approximately 1 percent on Enterprise segment
sales in the second quarter of 2015 compared to the prior year period.
Enterprise adjusted operating income for the quarter increased 27
percent year over year to $55 million, or 25 percent of sales, primarily
due to higher fiber sales to data centers.
Second quarter Broadband segment sales increased 11 percent sequentially
and 6 percent year over year to $131 million. Sales increased year over
year primarily due to increased investment in North America as cable
operators continue to expand fiber technology further into their
networks and invest to enhance the quality of video and broadband
offerings, partially offset by lower sales in the Central and Latin
America region. Foreign exchange rates had a negative impact of
approximately 1 percent on Broadband segment sales in the second quarter
of 2015 compared to the prior year period. Broadband adjusted operating
income improved to $17 million, or 13 percent of sales. The increase was
primarily due to higher sales, lower material costs, a favorable mix of
products sold and the benefit of cost reduction initiatives.
Update on Proposed TE Connectivity Transaction
During the second quarter, CommScope raised an incremental $2.75 billion
to finance, with cash on hand, its proposed acquisition of TE
Connectivity's BNS business. The incremental debt is made up of a $1.25
billion 7.5-year term loan and $1.5 billion of 10-year senior unsecured
notes. In addition, the company refinanced a portion of its existing
term loans with new $500 million 5-year senior secured notes.
CommScope has been informed that the European Commission has granted
unconditional clearance to the proposed acquisition of TE Connectivity's
BNS business. The Anti-monopoly Bureau of the Ministry of Commerce of
the People's Republic of China has also unconditionally approved the
proposed acquisition of the BNS business. While the company is still in
the midst of the anti-trust regulatory process in several other
jurisdictions around the world, it currently expects that the BNS
acquisition will close in the next few months, subject to regulatory
approvals and other customary closing conditions.
Outlook
CommScope management provided the following third quarter guidance,
which excludes the impact of the planned acquisition, amortization of
purchased intangibles, restructuring costs, transaction and integration
costs and other special items.
Third Quarter 2015 Guidance:
-
Revenue of $850 million - $900 million
-
Adjusted operating income of $160 million - $180 million
-
Adjusted earnings per diluted share of $0.45 - $0.50
On a standalone basis, CommScope management expects full year 2015
earnings of $1.80 to $1.90 per diluted share, assuming stable business
conditions. Additionally, the company intends to provide combined
company guidance for the fourth quarter of 2015 following the close of
the acquisition, which is expected within the next few months.
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 second 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
81174529. 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 81174529 and will be available through August
28, 2015. A webcast replay will also be archived on CommScope's website
for a limited period of time following the conference call.
About CommScope
CommScope
(NASDAQ: COMM) helps companies around the world design, build and manage
their wired and wireless networks. Our network infrastructure solutions
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
and in cable headends; 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 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 consummate the proposed acquisition of the BNS business on a
timely basis or at all; risks associated with antitrust approval of the
acquisition of the BNS business; our ability to integrate the BNS
business on a timely and cost effective manner; our reliance on TE
Connectivity for transition services for some period of time after
closing of the acquisition of the BNS business; our ability to realize
expected growth opportunities and cost savings from the acquisition of
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 press release, except as
otherwise may be required by law.
CommScope Holding Company, Inc.
|
Condensed Consolidated Statements of Operations
|
(Unaudited -- In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
867,290
|
|
|
$
|
1,066,256
|
|
|
$
|
1,692,690
|
|
|
$
|
2,001,292
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
552,595
|
|
|
|
654,605
|
|
|
|
1,084,791
|
|
|
|
1,251,930
|
|
Selling, general and administrative
|
|
|
130,797
|
|
|
|
121,070
|
|
|
|
256,468
|
|
|
|
234,098
|
|
Research and development
|
|
|
27,982
|
|
|
|
33,082
|
|
|
|
55,718
|
|
|
|
64,952
|
|
Amortization of purchased intangible assets
|
|
|
44,624
|
|
|
|
44,306
|
|
|
|
89,410
|
|
|
|
88,604
|
|
Restructuring costs, net
|
|
|
1,894
|
|
|
|
2,309
|
|
|
|
3,765
|
|
|
|
4,289
|
|
Asset impairments
|
|
|
-
|
|
|
|
7,229
|
|
|
|
-
|
|
|
|
7,229
|
|
Total operating costs and expenses
|
|
|
757,892
|
|
|
|
862,601
|
|
|
|
1,490,152
|
|
|
|
1,651,102
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
109,398
|
|
|
|
203,655
|
|
|
|
202,538
|
|
|
|
350,190
|
|
Other income (expense), net
|
|
|
86
|
|
|
|
(88,791
|
)
|
|
|
2,713
|
|
|
|
(91,986
|
)
|
Interest expense
|
|
|
(49,036
|
)
|
|
|
(63,625
|
)
|
|
|
(85,365
|
)
|
|
|
(105,905
|
)
|
Interest income
|
|
|
1,031
|
|
|
|
1,111
|
|
|
|
2,060
|
|
|
|
2,215
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
61,479
|
|
|
|
52,350
|
|
|
|
121,946
|
|
|
|
154,514
|
|
Income tax expense
|
|
|
(15,887
|
)
|
|
|
(24,307
|
)
|
|
|
(36,878
|
)
|
|
|
(61,984
|
)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
45,592
|
|
|
$
|
28,043
|
|
|
$
|
85,068
|
|
|
$
|
92,530
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
|
$
|
0.15
|
|
|
$
|
0.45
|
|
|
$
|
0.50
|
|
Diluted (a)
|
|
$
|
0.24
|
|
|
$
|
0.15
|
|
|
$
|
0.44
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
189,682
|
|
|
|
186,509
|
|
|
|
189,084
|
|
|
|
186,226
|
|
Diluted (a)
|
|
|
194,004
|
|
|
|
190,984
|
|
|
|
193,570
|
|
|
|
190,694
|
|
|
|
|
|
|
|
|
|
|
(a) Calculation of diluted earnings per share:
|
|
|
|
|
|
|
|
|
Net income (basic)
|
|
$
|
45,592
|
|
|
$
|
28,043
|
|
|
$
|
85,068
|
|
|
$
|
92,530
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares (basic)
|
|
|
189,682
|
|
|
|
186,509
|
|
|
|
189,084
|
|
|
|
186,226
|
|
Dilutive effect of stock options
|
|
|
4,322
|
|
|
|
4,475
|
|
|
|
4,486
|
|
|
|
4,468
|
|
Denominator (diluted)
|
|
|
194,004
|
|
|
|
190,984
|
|
|
|
193,570
|
|
|
|
190,694
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements
included in our Form 10-Q.
|
|
|
|
|
|
CommScope Holding Company, Inc.
|
Condensed Consolidated Balance Sheets
|
(Unaudited -- In thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
792,959
|
|
|
$
|
729,321
|
|
Accounts receivable, less allowance for doubtful accounts of
|
|
|
|
|
$10,544 and $8,797, respectively
|
|
|
718,333
|
|
|
|
612,007
|
|
Inventories, net
|
|
|
352,777
|
|
|
|
367,185
|
|
Prepaid expenses and other current assets
|
|
|
59,180
|
|
|
|
67,875
|
|
Deferred income taxes
|
|
|
49,627
|
|
|
|
51,230
|
|
Total current assets
|
|
|
1,972,876
|
|
|
|
1,827,618
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated depreciation
|
|
|
|
|
of $225,599 and $207,342, respectively
|
|
|
286,134
|
|
|
|
289,371
|
|
Goodwill
|
|
|
1,450,847
|
|
|
|
1,451,887
|
|
Other intangible assets, net
|
|
|
1,171,496
|
|
|
|
1,260,927
|
|
Funds restricted for acquisition
|
|
|
2,746,875
|
|
|
|
-
|
|
Other noncurrent assets
|
|
|
83,875
|
|
|
|
87,255
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,712,103
|
|
|
$
|
4,917,058
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
248,473
|
|
|
$
|
177,806
|
|
Other accrued liabilities
|
|
|
269,414
|
|
|
|
289,006
|
|
Current portion of long-term debt
|
|
|
12,554
|
|
|
|
9,001
|
|
Total current liabilities
|
|
|
530,441
|
|
|
|
475,813
|
|
|
|
|
|
|
Long-term debt
|
|
|
5,346,340
|
|
|
|
2,659,897
|
|
Deferred income taxes
|
|
|
303,093
|
|
|
|
339,945
|
|
Pension and other postretirement benefit liabilities
|
|
|
19,869
|
|
|
|
29,478
|
|
Other noncurrent liabilities
|
|
|
102,088
|
|
|
|
104,306
|
|
Total liabilities
|
|
|
6,301,831
|
|
|
|
3,609,439
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, $.01 par value: Authorized shares: 200,000,000;
|
|
|
|
|
Issued and outstanding shares: None at June 30, 2015
|
|
|
|
|
or December 31, 2014
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.01 par value: Authorized shares: 1,300,000,000;
|
|
|
|
|
Issued and outstanding shares: 189,953,618 and 187,831,389 at
|
|
|
|
|
June 30, 2015 and December 31, 2014, respectively
|
|
|
1,909
|
|
|
|
1,888
|
|
Additional paid-in capital
|
|
|
2,184,156
|
|
|
|
2,141,433
|
|
Retained earnings (accumulated deficit)
|
|
|
(656,451
|
)
|
|
|
(741,519
|
)
|
Accumulated other comprehensive loss
|
|
|
(108,707
|
)
|
|
|
(83,548
|
)
|
Treasury stock, at cost: 961,566 shares at June 30, 2015
|
|
|
|
|
and December 31, 2014
|
|
|
(10,635
|
)
|
|
|
(10,635
|
)
|
Total stockholders' equity
|
|
|
1,410,272
|
|
|
|
1,307,619
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
7,712,103
|
|
|
$
|
4,917,058
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements
included in our Form 10-Q.
|
|
|
|
|
|
|
|
|
|
CommScope Holding Company, Inc.
|
Consolidated Statements of Cash Flows
|
(Unaudited -- In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
45,592
|
|
|
$
|
28,043
|
|
|
$
|
85,068
|
|
|
$
|
92,530
|
|
Adjustments to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
generated by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
66,269
|
|
|
|
79,020
|
|
|
|
125,723
|
|
|
|
138,481
|
|
Equity-based compensation
|
|
|
10,125
|
|
|
|
6,495
|
|
|
|
15,378
|
|
|
|
10,171
|
|
Deferred income taxes
|
|
|
(20,506
|
)
|
|
|
(18,838
|
)
|
|
|
(34,129
|
)
|
|
|
(11,495
|
)
|
Asset impairments
|
|
|
-
|
|
|
|
7,229
|
|
|
|
-
|
|
|
|
7,229
|
|
Excess tax benefits from equity-based compensation
|
|
|
(3,750
|
)
|
|
|
(5,445
|
)
|
|
|
(14,164
|
)
|
|
|
(6,987
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(22,940
|
)
|
|
|
(67,024
|
)
|
|
|
(118,257
|
)
|
|
|
(168,817
|
)
|
Inventories
|
|
|
3,246
|
|
|
|
(37,820
|
)
|
|
|
9,038
|
|
|
|
(76,456
|
)
|
Prepaid expenses and other assets
|
|
|
7,011
|
|
|
|
(23,767
|
)
|
|
|
5,877
|
|
|
|
(19,426
|
)
|
Accounts payable and other liabilities
|
|
|
(14,951
|
)
|
|
|
25,881
|
|
|
|
(2,269
|
)
|
|
|
(5,182
|
)
|
Other
|
|
|
1,930
|
|
|
|
(7,162
|
)
|
|
|
1,001
|
|
|
|
(8,925
|
)
|
Net cash generated by (used in) operating activities
|
|
|
72,026
|
|
|
|
(13,388
|
)
|
|
|
73,266
|
|
|
|
(48,877
|
)
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
(15,868
|
)
|
|
|
(9,516
|
)
|
|
|
(24,081
|
)
|
|
|
(16,191
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
48
|
|
|
|
263
|
|
|
|
173
|
|
|
|
1,446
|
|
Cash refunded from acquisitions
|
|
|
-
|
|
|
|
4,745
|
|
|
|
-
|
|
|
|
4,745
|
|
Acquisition funds held in escrow
|
|
|
(2,746,875
|
)
|
|
|
-
|
|
|
|
(2,746,875
|
)
|
|
|
-
|
|
Other
|
|
|
464
|
|
|
|
7,253
|
|
|
|
3,097
|
|
|
|
7,299
|
|
Net cash generated by (used in) investing activities
|
|
|
(2,762,231
|
)
|
|
|
2,745
|
|
|
|
(2,767,686
|
)
|
|
|
(2,701
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
Long-term debt repaid
|
|
|
(500,318
|
)
|
|
|
(1,102,231
|
)
|
|
|
(502,517
|
)
|
|
|
(1,119,789
|
)
|
Long-term debt proceeds
|
|
|
3,246,875
|
|
|
|
1,300,000
|
|
|
|
3,246,875
|
|
|
|
1,315,000
|
|
Long-term debt financing costs
|
|
|
(9,025
|
)
|
|
|
(22,738
|
)
|
|
|
(9,025
|
)
|
|
|
(22,738
|
)
|
Proceeds from the issuance of common shares under
|
|
|
|
|
|
|
|
|
equity-based compensation plans
|
|
|
4,952
|
|
|
|
5,985
|
|
|
|
16,951
|
|
|
|
7,942
|
|
Excess tax benefits from equity-based compensation
|
|
|
3,750
|
|
|
|
5,445
|
|
|
|
14,164
|
|
|
|
6,987
|
|
Net cash generated by financing activities
|
|
|
2,746,234
|
|
|
|
186,461
|
|
|
|
2,766,448
|
|
|
|
187,402
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
1,788
|
|
|
|
43
|
|
|
|
(8,390
|
)
|
|
|
(1,095
|
)
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
57,817
|
|
|
|
175,861
|
|
|
|
63,638
|
|
|
|
134,729
|
|
Cash and cash equivalents, beginning of period
|
|
|
735,142
|
|
|
|
305,188
|
|
|
|
729,321
|
|
|
|
346,320
|
|
Cash and cash equivalents, end of period
|
|
$
|
792,959
|
|
|
$
|
481,049
|
|
|
$
|
792,959
|
|
|
$
|
481,049
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements
included in our Form 10-Q.
|
|
|
|
|
|
|
|
|
|
CommScope Holding Company, Inc.
|
Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures
|
(Unaudited -- In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Operating income, as reported
|
|
$
|
109.4
|
|
|
$
|
203.7
|
|
|
$
|
202.5
|
|
|
$
|
350.2
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Amortization of purchased intangible assets
|
|
|
44.6
|
|
|
|
44.3
|
|
|
|
89.4
|
|
|
|
88.6
|
|
Restructuring costs, net
|
|
|
1.9
|
|
|
|
2.3
|
|
|
|
3.8
|
|
|
|
4.3
|
|
Equity-based compensation
|
|
|
10.1
|
|
|
|
6.5
|
|
|
|
15.4
|
|
|
|
10.2
|
|
Asset impairments
|
|
|
-
|
|
|
|
7.2
|
|
|
|
-
|
|
|
|
7.2
|
|
Transaction and integration costs
|
|
|
9.9
|
|
|
|
1.0
|
|
|
|
21.3
|
|
|
|
1.9
|
|
Purchase accounting adjustments
|
|
|
-
|
|
|
|
(6.4
|
)
|
|
|
0.1
|
|
|
|
(11.9
|
)
|
Total adjustments to operating income
|
|
|
66.5
|
|
|
|
54.9
|
|
|
|
130.0
|
|
|
|
100.3
|
|
Non-GAAP adjusted operating income
|
|
$
|
175.9
|
|
|
$
|
258.5
|
|
|
$
|
332.4
|
|
|
$
|
450.5
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes, as reported
|
|
$
|
61.5
|
|
|
$
|
52.4
|
|
|
$
|
121.9
|
|
|
$
|
154.5
|
|
Income tax expense, as reported
|
|
|
(15.9
|
)
|
|
|
(24.3
|
)
|
|
|
(36.9
|
)
|
|
|
(62.0
|
)
|
Net income, as reported
|
|
$
|
45.6
|
|
|
$
|
28.0
|
|
|
$
|
85.1
|
|
|
$
|
92.5
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Total pretax adjustments to operating income
|
|
|
66.5
|
|
|
|
54.9
|
|
|
|
130.0
|
|
|
|
100.3
|
|
Pretax amortization of deferred financing costs & OID(1)
|
|
10.1
|
|
|
|
22.6
|
|
|
|
13.2
|
|
|
|
26.1
|
|
Pretax acquisition related interest (1)
|
|
|
5.3
|
|
|
|
-
|
|
|
|
5.3
|
|
|
|
-
|
|
Pretax loss on debt transactions (2)
|
|
|
-
|
|
|
|
93.9
|
|
|
|
-
|
|
|
|
93.9
|
|
Pretax gain on sale of equity investment (2)
|
|
|
(0.3
|
)
|
|
|
(6.7
|
)
|
|
|
(2.7
|
)
|
|
|
(6.7
|
)
|
Tax effects of adjustments and other tax items(3)
|
|
|
(32.4
|
)
|
|
|
(53.3
|
)
|
|
|
(54.5
|
)
|
|
|
(71.5
|
)
|
Non-GAAP adjusted net income
|
|
$
|
94.8
|
|
|
$
|
139.4
|
|
|
$
|
176.3
|
|
|
$
|
234.6
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS, as reported
|
|
$
|
0.24
|
|
|
$
|
0.15
|
|
|
$
|
0.44
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted diluted EPS
|
|
$
|
0.49
|
|
|
$
|
0.73
|
|
|
$
|
0.91
|
|
|
$
|
1.23
|
|
|
|
|
|
|
|
|
|
|
(1) Included in interest expense.
|
(2) Included in other income (expense), net.
|
(3) 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CommScope Holding Company, Inc.
|
Segment Information
|
(Unaudited -- In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
Q2 2015
|
|
Q1 2015
|
|
Q2 2014
|
|
Sequential
|
|
YOY
|
Wireless
|
|
$
|
515.2
|
|
|
$
|
496.3
|
|
|
$
|
724.9
|
|
|
3.8
|
%
|
|
(28.9
|
)
|
%
|
Enterprise
|
|
|
221.9
|
|
|
|
211.3
|
|
|
|
218.4
|
|
|
5.0
|
%
|
|
1.6
|
|
%
|
Broadband
|
|
|
130.6
|
|
|
|
118.0
|
|
|
|
123.4
|
|
|
10.7
|
%
|
|
5.8
|
|
%
|
Inter-segment eliminations
|
|
|
(0.4
|
)
|
|
|
(0.2
|
)
|
|
|
(0.4
|
)
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Sales
|
|
$
|
867.3
|
|
|
$
|
825.4
|
|
|
$
|
1,066.3
|
|
|
5.1
|
%
|
|
(18.7
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted Operating Income by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
Q2 2015
|
|
Q1 2015
|
|
Q2 2014
|
|
Sequential
|
|
YOY
|
Wireless
|
|
$
|
103.5
|
|
|
$
|
98.1
|
|
|
$
|
207.2
|
|
|
5.5
|
%
|
|
(50.0
|
)
|
%
|
Enterprise
|
|
|
55.3
|
|
|
|
49.0
|
|
|
|
43.5
|
|
|
12.9
|
%
|
|
27.1
|
|
%
|
Broadband
|
|
|
17.2
|
|
|
|
9.4
|
|
|
|
7.8
|
|
|
83.0
|
%
|
|
120.5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-GAAP Adjusted Operating Income
|
|
$
|
175.9
|
|
|
$
|
156.5
|
|
|
$
|
258.5
|
|
|
12.4
|
%
|
|
(32.0
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components may not sum to total due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Description of Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
CommScope Holding Company, Inc.
|
Reconciliation of GAAP to Non-GAAP Adjusted Operating Income by
Segment
|
(Unaudited -- In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2015 Non-GAAP Adjusted Operating Income
Reconciliation by Segment
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
Enterprise
|
|
Broadband
|
|
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
|
%
|
|
|
|
|
|
|
|
|
|
First Quarter 2015 Non-GAAP Adjusted Operating Income
Reconciliation by Segment
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
Enterprise
|
|
Broadband
|
|
Total
|
Operating income, as reported
|
|
$
|
64.4
|
|
|
$
|
26.9
|
|
|
$
|
1.8
|
|
|
$
|
93.1
|
|
Amortization of purchased intangible assets
|
|
|
23.1
|
|
|
|
17.4
|
|
|
|
4.3
|
|
|
|
44.8
|
|
Restructuring costs, net
|
|
|
1.8
|
|
|
|
-
|
|
|
|
0.1
|
|
|
|
1.9
|
|
Equity-based compensation
|
|
|
2.9
|
|
|
|
1.7
|
|
|
|
0.6
|
|
|
|
5.3
|
|
Transaction and integration costs
|
|
|
6.0
|
|
|
|
3.0
|
|
|
|
2.4
|
|
|
|
11.4
|
|
Non-GAAP adjusted operating income
|
|
$
|
98.1
|
|
|
$
|
49.0
|
|
|
$
|
9.4
|
|
|
$
|
156.5
|
|
Non-GAAP adjusted operating margin %
|
|
|
19.8
|
%
|
|
|
23.2
|
%
|
|
|
8.0
|
%
|
|
|
19.0
|
%
|
|
|
|
|
|
|
|
|
|
Second Quarter 2014 Non-GAAP Adjusted Operating Income
Reconciliation by Segment
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
Enterprise
|
|
Broadband
|
|
Total
|
Operating income (loss), as reported
|
|
$
|
178.9
|
|
|
$
|
30.3
|
|
|
$
|
(5.5
|
)
|
|
$
|
203.7
|
|
Amortization of purchased intangible assets
|
|
|
22.5
|
|
|
|
17.4
|
|
|
|
4.4
|
|
|
|
44.3
|
|
Restructuring costs, net
|
|
|
1.6
|
|
|
|
(0.1
|
)
|
|
|
0.8
|
|
|
|
2.3
|
|
Equity-based compensation
|
|
|
3.6
|
|
|
|
2.1
|
|
|
|
0.8
|
|
|
|
6.5
|
|
Asset impairments
|
|
|
-
|
|
|
|
-
|
|
|
|
7.2
|
|
|
|
7.2
|
|
Transaction and integration costs
|
|
|
0.6
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
1.0
|
|
Purchase accounting adjustments
|
|
|
-
|
|
|
|
(6.4
|
)
|
|
|
-
|
|
|
|
(6.4
|
)
|
Non-GAAP adjusted operating income
|
|
$
|
207.2
|
|
|
$
|
43.5
|
|
|
$
|
7.8
|
|
|
$
|
258.5
|
|
Non-GAAP adjusted operating margin %
|
|
|
28.6
|
%
|
|
|
19.9
|
%
|
|
|
6.3
|
%
|
|
|
24.2
|
%
|
|
|
|
|
|
|
|
|
|
Components may not sum to total due to rounding
|
|
|
|
|
|
|
|
|
|
See Description of Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
CommScope Holding Company, Inc.
|
Adjusted Free Cash Flow
|
(Unaudited -- In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2015
|
|
Q2 2014
|
|
|
|
|
|
|
|
Cash flow from operations
|
|
$
|
72.0
|
|
|
$
|
(13.4
|
)
|
|
|
|
|
|
|
Redemption premium
|
|
|
-
|
|
|
|
93.9
|
|
|
|
|
|
|
|
Transaction and integration costs
|
|
|
12.3
|
|
|
*
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(15.9
|
)
|
|
|
(9.5
|
)
|
|
|
|
|
|
|
Capital spending for BNS acquisition integration
|
|
|
7.3
|
|
|
|
-
|
|
|
|
|
|
|
|
Adjusted Free Cash Flow
|
|
$
|
75.7
|
|
|
$
|
71.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2015
|
|
Q1 2015
|
|
|
Q4 2014
|
|
Q3 2014
|
|
Q2 2014
|
Operating income, as reported
|
|
$
|
109.4
|
|
|
$
|
93.1
|
|
|
$
|
76.2
|
|
|
$
|
151.0
|
|
|
$
|
203.7
|
|
Amortization of purchased intangible assets
|
|
|
44.6
|
|
|
|
44.8
|
|
|
|
44.8
|
|
|
|
44.8
|
|
|
|
44.3
|
|
Restructuring costs, net
|
|
|
1.9
|
|
|
|
1.9
|
|
|
|
7.6
|
|
|
|
7.4
|
|
|
|
2.3
|
|
Equity-based compensation
|
|
|
10.1
|
|
|
|
5.3
|
|
|
|
5.4
|
|
|
|
5.6
|
|
|
|
6.5
|
|
Asset impairments
|
|
|
-
|
|
|
|
-
|
|
|
|
(2.1
|
)
|
|
|
7.0
|
|
|
|
7.2
|
|
Transaction and integration costs
|
|
|
9.9
|
|
|
|
11.4
|
|
|
|
7.5
|
|
|
|
2.7
|
|
|
|
1.0
|
|
Purchase accounting adjustments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6.4
|
)
|
Non-GAAP adjusted operating income
|
|
$
|
175.9
|
|
|
$
|
156.5
|
|
|
$
|
139.4
|
|
|
$
|
218.5
|
|
|
$
|
258.5
|
|
Non-GAAP adjusted operating margin %
|
|
|
20.3
|
%
|
|
|
19.0
|
%
|
|
|
16.8
|
%
|
|
|
21.8
|
%
|
|
|
24.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
11.5
|
|
|
|
11.6
|
|
|
|
12.7
|
|
|
|
12.4
|
|
|
|
12.1
|
|
Non-GAAP adjusted EBITDA
|
|
$
|
187.4
|
|
|
$
|
168.1
|
|
|
$
|
152.0
|
|
|
$
|
230.9
|
|
|
$
|
270.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components may not sum to total due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
See Description of Non-GAAP Financial Measures
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150728005464/en/
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