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December 4, 2019
Alexander Pease
Chief Financial Officer
CommScope Holding Company, Inc.
1100 CommScope Place, SE
Hickory, NC 28602
Re: CommScope Holding Company, Inc.
Form 10-K for the Year Ended December 31, 2018
Form 10-Q for the Quarter Ended September 30, 2019
Form 8-K furnished November 7, 2019
File No. 1-36146
Dear Mr. Pease:
We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments. In some of our comments, we may
ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-K for the Year Ended December 31, 2018
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
Segment Results, page 47
1. Please revise to quantify the impact of each factor when multiple factors
contribute to
fluctuations in income from continuing operations. For example, in the
CommScope
Connectivity Solutions Segment discussion, you disclose that both
operating income and
non-GAAP adjusted operating income benefitted from higher sales volumes,
favorable
product and geographic mix and cost savings initiatives that were
partially offset by
selling price reductions, higher material costs and unfavorable foreign
exchange rate
changes impacting costs, however you do not quantify these changes or
provide the actual
cost figures necessary to put these changes in proper context.
Alexander Pease
FirstName LastNameAlexander Pease
CommScope Holding Company, Inc.
Comapany4, 2019
December NameCommScope Holding Company, Inc.
Page 2
December 4, 2019 Page 2
FirstName LastName
Reconciliation of Non-GAAP Measures, page 57
2. We note that you reconcile Non-GAAP Adjusted EBITDA to operating
income. Please
note that because it appears you use Adjusted EBITDA as a performance
measure, the
most comparable GAAP measure would be net income. Please revise your
reconciliation
accordingly. See Question 103.02 of the SEC Staff's Non-GAAP
Compliance and
Disclosure Interpretation. This revision should also be made in Form
10-Qs and earnings
releases, as applicable. Additionally, when you disclose Non-GAAP
Adjusted EBITDA,
please ensure that net income is disclosed prior to the Non-GAAP
financial measure. See
Item 10(e)(1)(i)(A) of Regulation S-K.
Form 10-Q for the Quarter Ended September 30, 2019
Statement of Operations , page 2
3. We note that your statement of operations discloses net sales as one
line item. Please note
that Rule 5-03.1 of Regulation S-X requires revenues to be separately
disclosed for sales
of products and sales of services on the fact of the statement of
operations if either is over
10% of the consolidated amount. In this regard, it appears from your
disclosures
throughout the filing that you have increased service offerings as a
result of your
acquisition of Arris. Please advise or revise your statements of
operations accordingly.
Management's Discussion and Analysis of Results of Operations and Financial
Condition
Reconciliation of Non-GAAP Measures, page 55
4. We note your disclosure of non-GAAP Adjusted EBITDA and Non-GAAP pro
forma
Adjusted EBITDA. Please note that we do not believe the adjustments
footnoted as (2),
(3) and (4) on page 55 are appropriate non-GAAP adjustments because
they create a
tailored performance measure. Please remove. See Item 100(b) of
Regulation G and by
analogy, the guidance in Question 100.04 of the SEC Staff's Compliance
and Disclosure
Interpretations on Non-GAAP Financial Measures, updated April 4, 2018.
Also, please
explain to us the nature of the amounts included in the purchase
accounting adjustment.
Finally, as it appears you are using these non-GAAP measures as
performance measures,
net income appears to be the most comparable measure for the
reconciliation, rather than
operating income. Please make similar revisions on your earnings
release furnished on
Form 8-K.
Form 8-K furnished November 7, 2019
Exhibit 99.1 Earnings Release, page 15
5. We note that in the section titled "Segment Information" you have a
column which
reflects pro forma Q3 2018. We also note from your disclosure in
footnote (1) that
periods prior to the acquisition date, April 4, 2019, are presented
pro forma to include
previously reported CommScope results plus previously disclosed
historical results of the
Alexander Pease
CommScope Holding Company, Inc.
December 4, 2019
Page 3
ARRIS segments. Please note that combining pre- and post transaction
periods should
include the appropriate Article 11 pro forma adjustments. Please
revise accordingly and
note that pro forma periods should be disclosed for only the most
recent fiscal year and
interim period prior to the transaction occurring, however we will not
object to pro forma
information for the corresponding prior interim period.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Charles Eastman, Staff Accountant at (202) 551-3794 or
Claire
Erlanger, Staff Accountant at (202) 551-3301 with any questions.
FirstName LastNameAlexander Pease Sincerely,
Comapany NameCommScope Holding Company, Inc.
Division of
Corporation Finance
December 4, 2019 Page 3 Office of
Manufacturing
FirstName LastName