Industry Segments, Major Customers, Related Party Transactions and Geographic Information

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Industry Segments, Major Customers, Related Party Transactions and Geographic Information

16. INDUSTRY SEGMENTS, MAJOR CUSTOMERS, RELATED PARTY TRANSACTIONS AND GEOGRAPHIC INFORMATION

Segment Information

The Company has four reportable segments as described below.

The Broadband Networks (Broadband) segment provides an end-to-end product portfolio serving the telco and cable provider broadband market. The segment includes converged cable access platform, passive optical networking, video systems, access technologies, fiber and coaxial cable, fiber and copper connectivity and hardened closures.

The Outdoor Wireless Networks (OWN) segment focuses on the macro and metro cell markets. The segment includes base station antennas, RF filters, tower connectivity, microwave antennas, metro cell products, cabinets, steel towers, accessories, Spectrum Access Systems and Comsearch.

The Venue and Campus Networks (VCN) segment targets both public and private networks for campuses, venues, data centers and buildings. The segment combines Wi-Fi and switching, distributed antenna systems, licensed and unlicensed small cells and enterprise fiber and copper infrastructure.

The Home Networks (Home) segment includes subscriber-based solutions that support broadband and video applications. The broadband offerings in the Home segment include devices and related software and management solutions that provide residential connectivity and services to subscribers, such as digital subscriber line and cable modems and telephony and data gateways which incorporate routing and Wi-Fi functionality. Video offerings include set top boxes and services that support cable, satellite and IPTV content delivery and include products such as digital video recorders, high definition set top boxes and hybrid set top devices. The Home segment also sells broadband solutions through major retailers in the U.S.

In the second quarter of 2021, management shifted certain product lines from the Company’s Broadband segment to its Home segment to better align with how those businesses are being managed. All prior period amounts in these consolidated financial statements have been recast to reflect these operating segment changes.

The following table provides summary financial information by reportable segment:

	December 31,
	2021		2020
Identifiable segment-related assets:
Broadband	$	6,308.3	$	6,441.1
OWN		1,385.0		1,264.4
VCN		3,300.8		3,352.3
Home		1,478.0		1,709.0
Total identifiable segment-related assets		12,472.1		12,766.8
Reconciliation to total assets:
Cash and cash equivalents		360.3		521.9
Deferred income tax assets		427.1		288.1
Total assets	$	13,259.5	$	13,576.8

The Company’s measurement of segment performance is adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization). The Company defines adjusted EBITDA as operating income (loss), adjusted to exclude depreciation, amortization of intangible assets, restructuring costs, asset impairments, equity-based compensation, transaction, transformation and integration costs and other items that the Company believes are useful to exclude in the evaluation of operating performance from period to period because these items are not representative of the Company’s core business.

The following table provides net sales, adjusted EBITDA, depreciation expense and additions to property, plant and equipment by reportable segment:

	Year Ended December 31,
	2021			2020			2019
Net sales:
Broadband	$	3,148.8		$	2,848.2		$	2,324.0
OWN		1,410.2			1,243.7			1,475.0
VCN		2,178.4			1,936.5			1,967.3
Home		1,849.3			2,407.5			2,578.8
Consolidated net sales	$	8,586.7		$	8,435.9		$	8,345.1
Segment adjusted EBITDA:
Broadband	$	629.9		$	625.4		$	456.5
OWN		267.9			278.5			361.2
VCN		193.7			180.0			269.3
Home		25.5			131.3			210.5
Total segment adjusted EBITDA		1,117.0			1,215.2			1,297.5
Amortization of intangible assets		(613.0	)		(630.5	)		(593.2	)
Restructuring costs, net		(91.9	)		(88.4	)		(87.7	)
Equity-based compensation		(79.6	)		(115.0	)		(90.8	)
Asset impairments		(13.7	)		(206.7	)		(376.1	)
Transaction, transformation and integration costs		(90.3	)		(24.9	)		(195.3	)
Acquisition accounting adjustments		(11.5	)		(20.6	)		(264.2	)
Patent claims and litigation settlements		(31.7	)		(16.3	)		(55.0	)
Executive severance		—			(6.3	)		—
Depreciation		(136.7	)		(158.3	)		(143.7	)
Consolidated operating income (loss)	$	48.6		$	(51.8	)	$	(508.5	)
Depreciation expense:
Broadband	$	57.2		$	58.4		$	55.1
OWN		15.2			17.0			17.5
VCN		41.6			47.8			40.4
Home		22.7			35.1			30.7
Consolidated depreciation expense	$	136.7		$	158.3		$	143.7
Additions to property, plant and equipment:
Broadband	$	74.4		$	48.0		$	42.5
OWN		11.5			15.9			16.7
VCN		34.6			31.1			38.4
Home		10.9			26.2			6.5
Consolidated additions to property, plant and equipment	$	131.4		$	121.2		$	104.1

Customer and Supplier Information

No direct customer accounted for 10% or more of the Company's total net sales during the year ended December 31, 2021. Net sales to Comcast Corporation and affiliates (Comcast) accounted for 11% of the Company’s net sales during both of the years ended December 31, 2020 and 2019. Net sales to Comcast are derived from the Broadband, Home and VCN segments. Other than Comcast, no direct customer accounted for 10% or more of the Company’s total net sales during the years ended December 31, 2020 or 2019. No direct customers accounted for 10% or more of the Company’s accounts receivable as of December 31, 2021 or 2020.

The Company relies on sole suppliers or a limited group of suppliers for certain key components, subassemblies and modules and a limited group of contract manufacturers to manufacture a significant portion of its products. Any disruption or termination of these arrangements could have a material adverse impact on the Company’s results of operations.

Related Party Transactions

See Note 13 for a discussion of the Convertible Preferred Stock issued to Carlyle to finance the ARRIS acquisition. Other than transactions related to the Convertible Preferred Stock, there were no material related party transactions for the years ended December 31, 2021, 2020 or 2019.

Geographic Information

Sales to customers located outside of the U.S. comprised 42%, 39% and 41% of total net sales during the years ended December 31, 2021, 2020 and 2019, respectively. Sales by geographic region, based on the destination of product shipments or service provided, were as follows:

	Year Ended December 31,
	Broadband				OWN				VCN				Home				Total
	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020
Geographic Region:
United States	$	2,004.1	$	1,866.3	$	892.4	$	821.1	$	1,136.3	$	1,045.6	$	927.7	$	1,452.3	$	4,960.5	$	5,185.3
Europe, Middle East    and Africa    (EMEA)		464.5		401.9		267.4		242.3		473.4		421.6		415.3		464.4		1,620.6		1,530.2
Asia Pacific (APAC)		230.2		247.5		150.7		92.4		443.5		382.9		114.2		74.4		938.6		797.2
Caribbean and Latin    America (CALA)		350.3		239.1		44.6		54.2		83.9		56.6		220.2		260.4		699.0		610.3
Canada		99.7		93.4		55.1		33.7		41.3		29.8		171.9		156.0		368.0		312.9
Consolidated net    sales	$	3,148.8	$	2,848.2	$	1,410.2	$	1,243.7	$	2,178.4	$	1,936.5	$	1,849.3	$	2,407.5	$	8,586.7	$	8,435.9

Long-lived assets, excluding intangible assets, consist substantially of property, plant and equipment and right of use assets. The Company’s long-lived assets, excluding intangible assets, located in the U.S., EMEA, APAC and CALA regions represented the following percentages of such long-lived assets: 63%, 13%, 18% and 6%, respectively, as of December 31, 2021 and 62%, 15%, 17% and 6%, respectively, as of December 31, 2020.