What changed in this filing

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Item 1. Financial Statements

2020-08-03 compared with 2020-05-04 · 260 added, 149 removed, 640 unchanged (39% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

March 29, 2020 December 31, 2019

June 28, 2020 December 31, 2019

(In thousands)

36 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended

March 29, 2020 March 31, 2019

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands, except per share data)

11 unchanged sentences

Income from continuing operations 3,173 41,395 18,064 69,330

Loss from discontinued operations, net of tax ( 26,110 ) ( 2,757 )

Income (loss) from discontinued operations, net of tax ( 71,054 ) 895 ( 97,164 ) ( 1,862 )

Net income (loss) ( 67,881 ) 42,290 ( 79,100 ) 67,468

Net loss attributable to noncontrolling interests ( 30 ) ( 24 )

Net income (loss) attributable to noncontrolling interest 24 90 ( 6 ) 66

Net income (loss) attributable to Belden ( 67,905 ) 42,200 ( 79,094 ) 67,402

12 unchanged sentences

Net income (loss) per share attributable to Belden common stockholders $ ( 1.52 ) $ 0.84 $ ( 1.76 ) $ 1.26

Comprehensive income attributable to Belden $ 11,134 $ 54,211

Comprehensive income (loss) attributable to Belden $ ( 112,351 ) $ 25,507 $ ( 101,217 ) $ 79,718

Common stock dividends declared per share $ 0.05 $ 0.05 $ 0.10 $ 0.10

1 unchanged sentence

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

Three Months Ended

March 29, 2020 March 31, 2019

Six Months Ended

June 28, 2020 June 30, 2019

(In thousands)

1 unchanged sentence

Net income (loss) $ ( 79,100 ) $ 67,468

Adjustments to reconcile net income (loss) to net cash used for operating activities:

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

Depreciation and amortization 53,533 72,739

9 unchanged sentences

Other liabilities ( 18,819 ) ( 5,615 )

Net cash used for operating activities ( 52,052 ) ( 46,060 )

Net cash provided by (used for) operating activities ( 12,130 ) 21,645

Cash flows from investing activities:

4 unchanged sentences

Cash flows from financing activities:

Payment of earnout consideration ( 29,300 ) —

Borrowings on revolver 190,000 —

Payments under borrowing arrangements ( 100,000 ) —

Payments under share repurchase program ( 35,000 ) ( 22,815 )

Payment of earnout consideration ( 29,300 ) —

Cash dividends paid ( 4,572 ) ( 21,448 )

1 unchanged sentence

Other ( 111 ) ( 173 )

Net cash used for financing activities ( 53,896 ) ( 12,735 )

Net cash provided by (used for) financing activities 19,959 ( 46,438 )

Effect of foreign currency exchange rate changes on cash and cash equivalents ( 2,620 ) 693

21 unchanged sentences

Balance at March 29, 2020 50,335 $ 503 $ 812,490 $ 501,611 ( 5,433 ) $ ( 326,266 ) $ ( 41,095 ) $ 5,792 $ 953,035

Net income (loss) — — — ( 67,905 ) — — — 24 ( 67,881 )

Other comprehensive income (loss), net of tax — — — — — — ( 44,446 ) 147 ( 44,299 )

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 1,598 ) — 27 1,543 — — ( 55 )

Share repurchase program — — — — ( 384 ) ( 13,761 ) — — ( 13,761 )

Share-based compensation — — 5,090 — — — — — 5,090

Common stock dividends ($ 0.05 per share)

— — — ( 2,247 ) — — — — ( 2,247 )

Balance at June 28, 2020 50,335 $ 503 $ 815,982 $ 431,459 ( 5,790 ) $ ( 338,484 ) $ ( 85,541 ) $ 5,963 $ 829,882

Mandatory Convertible Additional Accumulated

9 unchanged sentences

Share-based compensation — — — — 2,216 — — — — — 2,216

Preferred stock dividends — — — — — ( 8,733 ) — — — — ( 8,733 )

Preferred stock dividends ($168.75 per share) — — — — — ( 8,733 ) — — — — ( 8,733 )

Common stock dividends ($ 0.05 per share)

1 unchanged sentence

Balance at March 31, 2019 52 $ 1 50,335 $ 503 $ 1,138,987 $ 936,479 ( 10,880 ) $ ( 599,161 ) $ ( 45,898 ) $ 418 $ 1,431,329

Net income — — — — — 42,200 — — — 90 42,290

Other comprehensive income (loss), net of tax — — — — — — — — ( 16,693 ) 40 ( 16,653 )

Acquisition of business with noncontrolling interest — — — — — — — — — 4,775 4,775

Exercise of stock options, net of tax witholding forfeitures — — — — ( 10 ) — — 2 — — ( 8 )

Conversion of restricted stock units into common stock, net of tax witholding forfeitures — — — — ( 861 ) — 29 807 — — ( 54 )

Share repurchase program — — — — — — ( 397 ) ( 22,815 ) — — ( 22,815 )

Share-based compensation — — — — 5,378 — — — — — 5,378

Preferred stock dividends ($168.75 per share) — — — — — ( 8,733 ) — — — — ( 8,733 )

Common stock dividends ($0.05 per share) — — — — — ( 1,976 ) — — — — ( 1,976 )

Balance at June 30, 2019 52 $ 1 50,335 $ 503 $ 1,143,494 $ 967,970 ( 11,248 ) $ ( 621,167 ) $ ( 62,591 ) $ 5,323 $ 1,433,533

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

19 unchanged sentences

Our fiscal second and third quarters each have 91 days.

The three months ended March 29, 2020 and March 31, 2019 included 89 and 90 days, respectively.

The six months ended June 28, 2020 and June 30, 2019 included 180 and 181 days, respectively.

Fair Value Measurement

4 unchanged sentences

• Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

As of and during the three months ended March 29, 2020 and March 31, 2019, we utilized Level 1 inputs to determine the fair value of cash equivalents, and we utilized Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 3) and for impairment testing (see Notes 4 and 10).

We did not have any transfers between Level 1 and Level 2 fair value measurements during the three months ended March 29, 2020 and March 31, 2019.

As of and during the three and six months ended June 28, 2020 and June 30, 2019, we utilized Level 1 inputs to determine the fair value of cash equivalents, and we utilized Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 3) and for impairment testing (see Notes 4 and 10).

We did not have any transfers between Level 1 and Level 2 fair value measurements during the six months ended June 28, 2020 and June 30, 2019.

Cash and Cash Equivalents

1 unchanged sentence

We periodically have cash equivalents consisting of short-term money market funds and other investments.

As of March 29, 2020, we did not have any such cash equivalents on hand.

As of June 28, 2020, we did not have any such cash equivalents on hand.

The primary objective of our investment activities is to preserve our capital for the purpose of funding operations.

We do not enter into investments for trading or speculative purposes.

During the three months ended March 29, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $ 31.4 million in cash as per the purchase agreement.

During the six months ended June 28, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $ 31.4 million in cash as per the purchase agreement.

SAM was acquired on February 8, 2018 and is included in the Grass Valley disposal group.

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, we borrowed $ 190.0 million and subsequently repaid $ 100.0 million under our Revolving Credit Agreement during the second quarter.

Contingent Liabilities

4 unchanged sentences

Based on facts currently available, we believe the disposition of the claims that are pending or asserted will not have a materially adverse effect on our financial position, results of operations, or cash flow.

As of March 29, 2020, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $ 7.2 million, $ 4.2 million, and $ 3.3 million, respectively.

As of June 28, 2020, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $ 7.7 million, $ 4.1 million, and $ 3.3 million, respectively.

Revenue Recognition

12 unchanged sentences

The results of the joint venture attributable to Hite’s ownership are presented as net income (loss) attributable to noncontrolling interest in the Condensed Consolidated Statements of Operations.

The joint venture is not material to our Condensed Consolidated financial statements as of or for the periods ended March 29, 2020 and March 31, 2019.

The joint venture is not material to our Condensed Consolidated financial statements as of or for the periods ended June 28, 2020 and June 30, 2019.

Furthermore, certain subsidiaries of our Opterna business, which we acquired in April of 2019 include noncontrolling interests.

3 unchanged sentences

An immaterial amount of Opterna's annual revenues are generated from transactions with the noncontrolling interests.

The subsidiaries of Opterna that include noncontrolling interests are not material to our Condensed Consolidated financial statements as of or for the period ended March 29, 2020.

The subsidiaries of Opterna that include noncontrolling interests are not material to our Condensed Consolidated financial statements as of or for the periods ended June 28, 2020 and June 30, 2019.

Current-Year Adoption of Accounting Pronouncements

3 unchanged sentences

We adopted ASU 2016-13 on January 1, 2020, which resulted in an increase to our allowance for doubtful accounts for continuing operations of $ 1.0 million, and an increase for discontinued operations of $ 1.9 million.

As of March 29, 2020, there have been no material adjustments, individually or in the aggregate, to the allowance for doubtful accounts under the new credit loss model other than the $ 2.9 million transition adjustment.

See further discussion as well as adjustments to the allowance for doubtful accounts under the new credit loss model in Note 7.

Revenues are recognized when control of the promised goods or services is transferred to our customers and in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

2 unchanged sentences

Cable & Connectivity Networking, Software & Security Total Revenues

Three Months Ended March 29, 2020 (In thousands)

Three Months Ended June 28, 2020 (In thousands)

Enterprise Solutions $ 193,542 $ 9,832 $ 203,374

1 unchanged sentence

Total $ 331,109 $ 93,702 $ 424,811

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

Enterprise Solutions $ 233,024 $ 12,301 $ 245,325

1 unchanged sentence

Total $ 435,503 $ 112,849 $ 548,352

Six Months Ended June 28, 2020

Enterprise Solutions $ 398,378 $ 17,209 $ 415,587

Industrial Solutions 304,619 168,131 472,750

Total $ 702,997 $ 185,340 $ 888,337

Six Months Ended June 30, 2019

Enterprise Solutions $ 434,286 $ 18,122 $ 452,408

Industrial Solutions 393,396 202,688 596,084

Total $ 827,682 $ 220,810 $ 1,048,492

The following tables present our revenues disaggregated by geography, based on the location of the customer purchasing the product.

Americas EMEA APAC Total Revenues

Three Months Ended March 29, 2020 (In thousands)

Three Months Ended June 28, 2020 (In thousands)

Enterprise Solutions $ 154,844 $ 26,150 $ 22,380 $ 203,374

1 unchanged sentence

Total $ 279,484 $ 83,410 $ 61,917 $ 424,811

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

Enterprise Solutions $ 178,612 $ 36,622 $ 30,091 $ 245,325

1 unchanged sentence

Total $ 362,540 $ 114,026 $ 71,786 $ 548,352

Six Months Ended June 28, 2020

Enterprise Solutions $ 310,273 $ 62,012 $ 43,302 $ 415,587

Industrial Solutions 281,040 123,226 68,484 472,750

Total $ 591,313 $ 185,238 $ 111,786 $ 888,337

Six Months Ended June 30, 2019

Enterprise Solutions $ 325,433 $ 70,758 $ 56,217 $ 452,408

Industrial Solutions 368,911 150,719 76,454 596,084

Total $ 694,344 $ 221,477 $ 132,671 $ 1,048,492

The following tables present our revenues disaggregated by products, including software products, and support and services.

Products Support & Services Total Revenues

Three Months Ended March 29, 2020 (In thousands)

Three Months Ended June 28, 2020 (In thousands)

Enterprise Solutions $ 203,374 $ — $ 203,374

1 unchanged sentence

Total $ 406,290 $ 18,521 $ 424,811

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

Enterprise Solutions $ 245,325 $ — $ 245,325

1 unchanged sentence

Total $ 526,125 $ 22,227 $ 548,352

Six Months Ended June 28, 2020

Enterprise Solutions $ 415,587 $ — $ 415,587

Industrial Solutions 435,019 37,731 472,750

Total $ 850,606 $ 37,731 $ 888,337

Six Months Ended June 30, 2019

Enterprise Solutions $ 452,408 $ — $ 452,408

Industrial Solutions 551,913 44,171 596,084

Total $ 1,004,321 $ 44,171 $ 1,048,492

We generate revenues primarily by selling products that provide secure and reliable transmission of data, sound, and video for mission critical applications.

8 unchanged sentences

We adjust our estimate of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed.

Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three months ended March 29, 2020 and March 31, 2019.

Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three and six months ended June 28, 2020 and June 30, 2019.

The following table presents estimated and accrued variable consideration:

March 29, 2020 March 31, 2019

June 28, 2020 June 30, 2019

(in thousands)

5 unchanged sentences

Consideration allocated to professional services is typically recognized when or as the services are performed depending on the terms of the arrangement.

As of March 29, 2020, total deferred revenue was $ 69.5 million, and of this amount, $ 51.0 million is expected to be recognized within the next twelve months, and the remaining $ 18.5 million is long-term and is expected to be recognized over a period greater than twelve months.

As of June 28, 2020, total deferred revenue was $ 68.6 million, and of this amount, $ 49.9 million is expected to be recognized within the next twelve months, and the remaining $ 18.7 million is long-term and is expected to be recognized over a period greater than twelve months.

The following table presents deferred revenue activity:

Three Months Ended

March 29, 2020 March 31, 2019

(In thousands)

2 unchanged sentences

Revenue recognized ( 24,415 ) ( 32,168 )

Ending balance $ 69,485 $ 66,223

Balance at the end of the first quarter 69,485 66,223

New deferrals 21,322 21,892

Revenue recognized ( 22,200 ) ( 24,807 )

Balance at the end of the second quarter $ 68,607 $ 63,308

We expense sales commissions as incurred when the duration of the related revenue arrangement is one year or less.

We capitalize sales commissions in other current and long-lived assets on our balance sheet when the original duration of the related revenue arrangement is longer than one year, and we amortize it over the related revenue arrangement period.

Total capitalized sales commissions was $ 3.0 million as of March 29, 2020 and $ 3.4 million as of March 31, 2019.

Total capitalized sales commissions was $ 4.6 million as of June 28, 2020 and $ 3.3 million as of June 30, 2019.

The following table presents sales commissions that are recorded within selling, general and administrative expenses:

Three Months ended

March 29, 2020 March 31, 2019

Three Months ended Six Months ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

39 unchanged sentences

Net assets attributable to Belden $ 51,741

We did not record any material measurement-period adjustments in the first quarter of 2020.

We did not record any material measurement-period adjustments in the three and six months ended June 28, 2020.

A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions.

4 unchanged sentences

We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the fair value of the identifiable intangible assets (Level 3 valuation).

Our preliminary estimate of the fair values for the noncontrolling interests were based on the comparable EBITDA multiple valuation technique (Level 3 valuation).

Our estimate of the fair values for the noncontrolling interests were based on the comparable EBITDA multiple valuation technique (Level 3 valuation).

Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed.

19 unchanged sentences

The following table illustrates the unaudited pro forma effect on operating results as if the Opterna acquisition had been completed as of January 1, 2018.

Three Months Ended

March 31, 2019

(In thousands,

except per share data)

Three Months Ended Six Months Ended

June 30, 2019 June 30, 2019

(In thousands, except per share data)

Revenues $ 548,352 $ 1,057,108

14 unchanged sentences

As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, is reported within discontinued operations.

The Grass Valley disposal group excludes certain Grass Valley pension liabilities that we expect to retain.

The Grass Valley disposal group excludes certain Grass Valley pension liabilities that we are retaining.

We also ceased depreciating and amortizing the assets of the disposal group once they met the held for sale criteria during the fourth quarter of 2019.

We intend to complete the sale of the Grass Valley disposal group during 2020.

We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $ 23.2 million in the three months e nded March 29, 2020.

We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $ 89.8 million and $ 113.0 million in the three and six months e nded June 28, 2020, respectively.

We determined the estimated fair values of the assets and of the reporting unit by calculating the present values of their estimated future cash flows.

The following table summarizes the operating results of the disposal group for the three months ended ended March 29, 2020 and March 31, 2019:

Three Months Ended

March 29, 2020 March 31, 2019

On July 2, 2020, we completed the sale of Grass Valley - see further discussion in Note 19.

The following table summarizes the operating results of the disposal group for the three and six months ended June 28, 2020 and June 30, 2019, respectively:

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

7 unchanged sentences

Interest expense, net ( 214 ) ( 207 ) ( 420 ) ( 413 )

Non-operating pension income (cost) ( 85 ) ( 56 )

Loss before taxes $ ( 33,659 ) $ ( 3,306 )

The disposal group also had capital expenditures of approximately $ 7.9 million a nd $ 5.8 m illion during the three months ended March 29, 2020 and March 31, 2019, respectively.

Furthermore, the disposal group incurred stock-based compensation expense (income) of ($ 0.9 million) and $ 0.3 million during the three months ended March 29, 2020 and March 31, 2019, respectively.

The disposal group did not have any significant non-cash charges for investing activities during the three months ended March 29, 2020 or March 31, 2019.

The following table provides the major classes of assets and liabilities of the disposal group as of March 29, 2020 and December 31, 2019:

March 29, 2020 December 31, 2019

Non-operating pension cost ( 111 ) ( 55 ) ( 196 ) ( 111 )

Income (loss) before taxes $ ( 92,628 ) $ 2,101 $ ( 126,287 ) $ ( 1,205 )

The disposal group had capital expenditures of approximately $ 8.5 million a nd $ 16.4 million during the three and six months ended June 28, 2020, respectively;

and $ 8.7 million and $ 14.5 million during the three and six months ended June 30, 2019, respectively.

The disposal group recognized credits to stock-based compensation of $ 0.0 million and $ 0.9 million during the three and six months ended June 28, 2020, respectively.

The disposal group incurred stock based compensation expense of $ 0.3 million and $ 0.6 million during the three and six months ended June 30, 2019, respectively.

The disposal group did not have any significant non-cash charges for investing activities during the three and six months ended June 28, 2020 or June 30, 2019.

The following table provides the major classes of assets and liabilities of the disposal group as of June 28, 2020 and December 31, 2019, respectively:

June 28, 2020 December 31, 2019

(In thousands)

18 unchanged sentences

Total Liabilities of discontinued operations $ 109,673 $ 170,279

The disposal group also had $ 30.3 million and $ 42.3 million of accumulated other comprehensive losses as of March 29, 2020 and December 31, 2019, respectively.

The disposal group also had $ 11.5 million and $ 42.3 million of accumulated other comprehensive losses as of June 28, 2020 and December 31, 2019, respectively.

Reportable Segments

10 unchanged sentences

severance, restructuring, and acquisition integration costs;

purchase accounting effects related to acquisitions, such as the adjustment of acquired

inventory and deferred revenue to fair value;

purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory and deferred revenue to fair value;

and other costs.

5 unchanged sentences

(In thousands)

As of and for the three months ended March 29, 2020

As of and for the three months ended June 28, 2020

Segment revenues $ 203,374 $ 221,437 $ 424,811

7 unchanged sentences

Segment assets 502,767 464,862 967,629

As of and for the three months ended March 31, 2019

As of and for the three months ended June 30, 2019

Segment revenues $ 245,325 $ 303,027 $ 548,352

4 unchanged sentences

Amortization of software development intangible assets 35 28 63

Severance, restructuring, and acquisition integration costs 2,519 — 2,519

Purchase accounting effects of acquisitions 718 — 718

Segment assets 490,847 533,697 1,024,544

As of and for the six months ended June 28, 2020

Segment revenues $ 415,587 $ 472,750 $ 888,337

Affiliate revenues 709 20 729

Segment EBITDA 46,943 61,976 108,919

Depreciation expense 10,203 10,411 20,614

Amortization of intangibles 10,858 21,344 32,202

Amortization of software development intangible assets 111 605 716

Severance, restructuring, and acquisition integration costs 4,973 3,118 8,091

Purchase accounting effects of acquisitions 125 — 125

Segment assets 502,767 464,862 967,629

As of and for the six months ended June 30, 2019

Segment revenues $ 452,408 $ 596,084 $ 1,048,492

Affiliate revenues 2,437 17 2,454

Segment EBITDA 57,206 110,408 167,614

Depreciation expense 9,657 10,354 20,011

Amortization of intangibles 10,425 26,807 37,232

Amortization of software development intangible assets 71 51 122

Severance, restructuring, and acquisition integration costs 2,519 — 2,519

Purchase accounting effects of acquisitions 718 — 718

Segment assets 490,847 533,697 1,024,544

The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues and consolidated income from continuing operations before taxes, respectively.

Three Months Ended

March 29, 2020 March 31, 2019

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

12 unchanged sentences

(1) See Note 11, Severance, Restructuring, and Acquisition Integration Activities, for details.

(2) During the three months ended March 29, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.

Income per Share

The following table presents the basis for the income per share computations:

Three Months Ended

March 29, 2020 March 31, 2019

(2) During the three and six months ended June 28, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.

During the three and six months ended June 30, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition as well as cost of sales for the adjustment of acquired inventory to fair value for the Opterna and FutureLink acquisitions.

Income (loss) per Share

The following table presents the basis for the income (loss) per share computations:

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

Income from continuing operations $ 3,173 $ 41,395 $ 18,064 $ 69,330

Net loss attributable to noncontrolling interest ( 30 ) ( 24 )

Net income (loss) attributable to noncontrolling interest 24 90 ( 6 ) 66

Preferred stock dividends — 8,733 — 17,466

Income from continuing operations attributable to Belden common stockholders 3,149 32,572 18,070 51,798

Loss from discontinued operations, net of tax ( 26,110 ) ( 2,757 )

Income (loss) from discontinued operations, net of tax ( 71,054 ) 895 ( 97,164 ) ( 1,862 )

Net income (loss) attributable to Belden common stockholders $ ( 67,905 ) $ 33,467 $ ( 79,094 ) $ 49,936

2 unchanged sentences

Weighted average shares outstanding, diluted 44,665 39,611 45,097 39,635

For the three months ended March 29, 2020, diluted weighted average shares outstanding exclude outstanding equity awards of 1.4 million which are anti-dilutive.

In addition, for the three months ended March 29, 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.3 million because the related performance conditions have not been satisfied.

For the three months ended March 31, 2019, diluted weighted average shares outstanding exclude outstanding equity awards of 1.0 million which are anti-dilutive.

In addition, for the three months ended March 31, 2019, diluted weighted average shares outstanding do not include outstanding equity awards of 0.3 million because the related performance conditions have not been satisfied.

Furthermore, for the three months ended March 31, 2019, diluted weighted average shares outstanding do not include the impact of preferred shares that were converted into 6.9 million common shares, because deducting the preferred stock dividends from net income was more dilutive.

For the three and six months ended June 28, 2020, diluted weighted average shares outstanding exclude outstanding equity awards of 1.7 million and 1.5 million, respectively, which are anti-dilutive.

In addition, for both the three and six months ended June 28, 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.4 million because the related performance conditions have not been satisfied.

For the three and six months ended June 30, 2019, diluted weighted average shares outstanding exclude outstanding equity awards of 1.2 million and 1.1 million, respectively, which are anti-dilutive.

In addition, for both the three and six months ended June 30, 2019, diluted weighted average shares outstanding do not include outstanding equity awards of 0.3 million because the related performance conditions have not been satisfied.

Furthermore, for both the three and six months ended June 30, 2019, diluted weighted average shares outstanding do not include the impact of preferred shares that were converted into 6.9 million common shares, because deducting the preferred stock dividends from net income was more dilutive.

For purposes of calculating basic earnings per share, unvested restricted stock units are not included in the calculation of basic weighted average shares outstanding until all necessary conditions have been satisfied and issuance of the shares underlying the restricted stock units is no longer contingent.

16 unchanged sentences

Balances are written off when determined to be uncollectible.

Estimates are used to determine the allowance, which is based on an assessment of anticipated payment and all other historical, current and future information that is reasonably available.

The allowance for doubtful accounts for our continuing operations was $ 3.5 million and $ 2.6 million as of March 29, 2020 and December 31, 2019, respectively.

There were no material adjustments to the allowance for doubtful accounts during the three months ended March 29, 2020 other than the transition adjustment from adopting ASU 2016-13.

Estimates are used to determine the allowance, which is based upon an assessment of anticipated payments as well as other historical, current and future information that is reasonably available.

The following table presents the activity in the allowance for doubtful accounts for our continuing operations for the three and six months ended June 28, 2020 (in thousands).

Balance at December 31, 2019 $ 2,569

Adoption adjustment 1,011

Current period provision ( 172 )

Recoveries collected ( 9 )

Fx impact ( 213 )

Balance at March 29, 2020 $ 3,186

Current period provision 2,621

Writeoffs ( 52 )

Recoveries collected ( 100 )

Balance at June 28, 2020 $ 5,692

The major classes of inventories were as follows:

March 29, 2020 December 31, 2019

June 28, 2020 December 31, 2019

(In thousands)

8 unchanged sentences

We make certain judgments in determining whether a contract contains a lease in accordance with ASU 2016-02.

Our leases have remaining lease terms of less than 1 year to 16 years, some of which include options to extend the lease for a period of up to 15 years and some include options to terminate the leases within 1 year.

Our leases have remaining lease terms of less than 1 year to 16 years;

some of which include extension and termination options for an additional 15 years or within 1 year, respectively.

We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease.

1 unchanged sentence

We have entered into various short-term operating leases with an initial term of twelve months or less.

These leases are not recorded on our balance sheet, and for the three months ended March 29, 2020, the rent expense for short-term leases was not material.

These leases are not recorded on our balance sheet, and for the three and six months ended June 28, 2020 and June 30, 2019, the rent expense for short-term leases was not material.

We have certain property and equipment lease contracts that may contain lease and non-lease components, and we have elected to utilize the practical expedient to account for these components together as a single combined lease component.

1 unchanged sentence

The components of lease expense were as follows:

Three Months Ended

March 29, 2020 March 31, 2019

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

5 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended

March 29, 2020 March 31, 2019

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

4 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

March 29, 2020 December 31, 2019

June 28, 2020 December 31, 2019

(In thousands, except lease term and discount rate)

15 unchanged sentences

Finance leases 6.2 % 6.2 %

The following table summarizes maturities of lease liabilities as of March 29, 2020 (in thousands):

2020 $ 14,579

The following table summarizes maturities of lease liabilities as of June 28, 2020 (in thousands):

Thereafter 17,016

6 unchanged sentences

Depreciation and Amortization Expense

We recognized depreciation expense of $ 10.3 million and $ 10.1 million in the three months ended March 29, 2020 and March 31, 2019, respectively.

We recognized amortization expense related to our intangible assets of $ 16.5 million and $ 18.2 million in the three months ended March 29, 2020 and March 31, 2019, respectively.

We recognized depreciation expense of $ 10.3 million and $ 20.6 million in the three and six months ended June 28, 2020, respectively.

We recognized depreciation expense of $ 9.9 million and $ 20.0 million in the three and six ended June 30, 2019, respectively.

We recognized amortization expense related to our intangible assets of $ 16.4 million and $ 32.9 million in the three and six months ended June 28, 2020, respectively.

We recognized amortization expense related to our intangible assets of $ 19.1 million and $ 37.4 million in the three and six ended June 30, 2019, respectively.

Interim Impairment Test

Due to equity market conditions during the three months ended March 29, 2020, we conducted an interim impairment test.

Due to equity market conditions during the three and six months ended June 28, 2020, we conducted an interim impairment test.

We determined that the carrying values of our definite-lived assets were recoverable;

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We also considered assumptions that market participants may use.

In our quantitative assessments, the discount rates ranged from 9.0 % to 17.0 %, the 2020 to 2029 compounded annual revenue growth rates ranged from 2.0 % to 8.0 %, and the long-term revenue growth rates ranged from 2.0 % to 3.0 %.

In our quantitative assessments, the discount rates ranged from 10.0 % to 17.0 %, the 2020 to 2029 compounded annual revenue growth rates ranged from 2.0 % to 8.3 %, and the revenue growth rates beyond 2029 ranged from 2.0 % to 3.0 %.

By their nature, these assumptions involve risks and uncertainties.

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If current conditions persist and actual results are different from our estimates or assumptions, we may have to recognize an impairment charge that could be material.

We also tested our indefinite-lived intangible assets, which consist primarily of trademarks, for impairment during the quarter ended March 29, 2020.

We also tested our indefinite-lived intangible assets, which consist primarily of trademarks, for impairment during the quarter ended June 28, 2020.

We performed a quantitative assessment for each of our indefinite-lived trademarks using a relief from royalty methodology and compared the fair value to the carrying value.

We determined that none of our trademarks were impaired as of March 29, 2020.

We determined that none of our trademarks were impaired as of June 28, 2020.

Significant assumptions to determine fair value included sales growth, royalty rates, and discount rates.

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During the fourth quarter of 2019, we began a cost reduction program to improve performance and enhance margins by streamlining the organizational structure and investing in technology to drive productivity.

We recognized an immaterial amount associated with this program during the three months ended March 29, 2020.

We recognized $3.5 million and $3.0 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively.

The cost reduction program is expected to deliver an estimated $ 60.0 million reduction in selling, general, and administrative expenses on an annual basis, of which $ 40.0 million is expected to be realized in 2020, with the full benefit materializing in 2021.

We expect to incur incremental costs of approximately $ 20.0 million of costs for this program in 2020.

We expect to incur incremental costs of approximately $ 22.0 million for this program.

SPC, Opterna and FutureLink Integration Program:

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The restructuring and integration activities were focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions.

We recognized $ 2.2 million of severance and other restructuring costs for this program during the three months ended March 29, 2020.

We recognized $ 0.9 million and $ 3.1 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively.

We recognized $2.5 million of severance and other restructuring costs for this program during the three and six months ended June 30, 2019.

These costs were incurred by the Enterprise Solutions segment.

We expect to incur incremental costs of approximately $ 2.5 million for this program in 2020.

The following table summarizes the costs by segment of the programs described above as well as other immaterial programs and acquisition integration activities during the three months ended March 29, 2020:

We expect to incur incremental costs of approximately $ 1.5 million for this program.

Severance Other

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Integration Costs Total Costs

Three Months Ended March 29, 2020 (In thousands)

Three Months Ended June 28, 2020 (In thousands)

Enterprise Solutions $ 1,467 $ 956 $ 2,423

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Total $ 3,240 $ 1,232 $ 4,472

The severance costs incurred during the three months ended March 29, 2020 were offset by adjustments made during the quarter for changes in estimates primarily stemming from voluntary turnover.

Three Months Ended June 30, 2019

Enterprise Solutions $ — $ 2,519 $ 2,519

Industrial Solutions — — —

Total $ — $ 2,519 $ 2,519

Six Months Ended June 28, 2020

Enterprise Solutions $ 835 $ 4,138 $ 4,973

Industrial Solutions 818 2,300 3,118

Total $ 1,653 $ 6,438 $ 8,091

Six Months Ended June 30, 2019

Enterprise Solutions $ — $ 2,519 $ 2,519

Industrial Solutions — — —

Total $ — $ 2,519 $ 2,519

The other restructuring and integration costs primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs.

The majority of the other restructuring and integration costs related to these actions were paid as incurred or are payable within the next 60 days.

There were no material severance and restructuring costs incurred during the three months ended March 31, 2019.

The following table summarizes the costs of the various programs described above as well as other immaterial programs and acquisition integration activities by financial statement line item in the Condensed Consolidated Statement of Operations for the three months ended March 29, 2020 (in thousands):

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In Thousands)

Cost of sales $ 92 $ 300 $ 137 $ 300

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Accrued Severance

The table below sets forth severance activity that occurred for the Cost Reduction Program described above.

We did not incur any significant severance costs for the SPC, Opterna and FutureLink Integration Program.

The balances below are included in accrued liabilities.

Cost Reduction Program

(In thousands)

The table below sets forth severance activity that occurred for the Cost Reduction Program as well as the SPC, Opterna and FutureLink Integration Program described above.

The balances below are included in accrued liabilities (in thousands).

Balance at December 31, 2019 $ 19,575

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Balance at March 29, 2020 $ 13,385

New charges 4,660

Cash payments ( 4,795 )

Foreign currency translation ( 132 )

Other adjustments ( 1,420 )

Balance at June 28, 2020 $ 11,698

The other adjustments were the result of changes in estimates.

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The carrying values of our long-term debt were as follows:

March 29, 2020 December 31, 2019

June 28, 2020 December 31, 2019

(In thousands)

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Total senior subordinated notes 1,465,880 1,459,380

Total gross long-term debt 1,555,880 1,459,380

Less unamortized debt issuance costs ( 18,513 ) ( 19,896 )

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In the event we borrow more than 90 % of our borrowing base, we are subject to a fixed charge coverage ratio covenant.

As of March 29, 2020, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $ 303.4 million, but at the beginning of the second quarter, we borrowed $ 190.0 million under our Revolver out of an abundance of caution due to the uncertainties arising from the COVID-19 pandemic.

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, we borrowed $ 190.0 million and subsequently repaid $ 100.0 million on our Revolver during the second quarter.

We also paid approximately $0.2 million of fees associated with the draw down on our Revolver, which is being amortized over the contractual term of the Revolver Credit Agreement using the effective interest method.

A s of June 28, 2020, we had $ 90.0 million of borrowings outstanding on the Revolver, and our available borrowing capacity was $ 177.8 million.

Senior Subordinated Notes

We have outstanding € 350.0 million aggregate principal amount of 3.875 % senior subordinated notes due 2028 (the 2028 Notes).

The carrying value of the 2028 Notes as of March 29, 2020 is $ 378.2 million.

The carrying value of the 2028 Notes as of June 28, 2020 is $ 394.7 million.

The 2028 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries.

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We have outstanding € 450.0 million aggregate principal amount of 3.375 % senior subordinated notes due 2027 (the 2027 Notes).

The carrying value of the 2027 Notes as of March 29, 2020 is $ 486.2 million.

The carrying value of the 2027 Notes as of June 28, 2020 is $ 507.4 million.

The 2027 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries.

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We have outstanding € 200.0 million aggregate principal amount of 4.125 % senior subordinated notes due 2026 (the 2026 Notes).

The carrying value of the 2026 Notes as of March 29, 2020 is $ 216.1 million.

The carrying value of the 2026 Notes as of June 28, 2020 is $ 225.5 million.

The 2026 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries.

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We have outstanding € 300.0 million aggregate principal amount of 2.875 % senior subordinated notes due 2025 (the 2025 Notes).

The carrying value of the 2025 Notes as of March 29, 2020 is $ 324.2 million.

The carrying value of the 2025 Notes as of June 28, 2020 is $ 338.3 million.

The 2025 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries.

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Fair Value of Long-Term Debt

The fair value of our senior subordinated notes as of March 29, 2020 was approximately $ 1,227.6 million based on quoted prices of the debt instruments in inactive markets (Level 2 valuation).

This amount represents the fair value of our senior subordinated notes with a carrying value of $ 1,404.7 million as of March 29, 2020.

The fair value of our senior subordinated notes as of June 28, 2020 was approximately $ 1,414.2 million based on quoted prices of the debt instruments in inactive markets (Level 2 valuation).

This amount represents the fair value of our senior subordinated notes with a carrying value of $ 1,465.9 million as of June 28, 2020.

The carrying value of our revolver borrowings approximates fair value.

Net Investment Hedge

All of our euro denominated notes were issued by Belden Inc., a USD functional currency entity.

As of March 29, 2020, € 767.8 million of our outstanding foreign denominated debt is designated as a net investment hedge on the foreign currency risk of our net investment in our euro foreign operations.

The objective of the hedge is to protect the net investment in the foreign operation against adverse changes in the euro exchange rate.

As of June 28, 2020, € 767.8 million of our outstanding foreign denominated debt is designated as a net investment hedge on the foreign currency risk of our net investment in our euro foreign operations.

The objective of the hedge is to protect the net investment in the foreign operation again st adverse changes in the euro exchange rate.

The transaction gain or loss is reported in the translation adjustment section of other comprehensive income.

For the three months ended March 29, 2020 and March 31, 2019, the transaction gain associated with the net investment hedge that was reported in other comprehensive income was $ 54.7 million and $ 23.6 million, respectively.

During the three months ended March 29, 2020, we de-designated € 532.2 million of our outstanding debt that was previously designated as a net investment hedge.

For the six months ended June 28, 2020 and June 30, 2019, the transaction gain associated with the net investment hedge reported in other comprehensive income was $ 18.2 million and $ 6.9 million, respectively.

During the six months ended June 28, 2020, we de-designated € 532.2 million of our outstanding debt that was previously designated as a net investment hedge.

After the de-designation, transaction gains or losses associated with this € 532.2 million of debt are reported in income from continuing operations.

For the three months ended March 29, 2020, we recognized income tax expense of $ 2.2 million, representing an effective tax rate of 12.8 %.

The effective tax rate was impacted by a $ 1.1 million income tax benefit for certain foreign tax credits.

For the three and six months ended June 28, 2020, we recognized income tax expense of $ 0.4 million and $ 2.6 million, respectively, representing an effective tax rate of 11.2 % and 12.5 %, respectively.

The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $ 0.1 million and $ 1.2 million in the three and six months ended June 28, 2020, respectively.

In March 2020, the Coronavirus Relief and Economic Security Act (CARES Act) was signed into law in the United States.

We are still analyzing the provisions of the CARES Act to determine if there will be any impact to our income tax provision for the year.

For the three months ended March 31, 2019, we recognized income tax expense of $ 6.2 million, representing an effective tax rate of 18.1 %.

The effective tax rate was impacted by an $ 0.8 million income tax benefit resulting from a change in our valuation allowance on foreign tax credits due to the restructuring of certain foreign operations.

For the three and six months ended June 30, 2019, we recognized income tax expense of $ 4.0 million and $ 10.1 million, respectively, representing an effective tax rate of 8.7 % and 12.7 %, respectively.

The effective tax rates were impacted by an income tax benefit of $ 6.4 million as a result of changes in our estimated valuation allowance requirement related to foreign tax credits due to the restructuring of certain foreign operations.

These effective rates are also reflective of the impact of more favorable statutory tax rates applied to the earnings of these foreign operations due to the restructuring efforts.

Pension and Other Postretirement Obligations

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Pension Obligations Other Postretirement Obligations

March 29, 2020 March 31, 2019 March 29, 2020 March 31, 2019

Three Months Ended June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

Three Months Ended

Service cost $ 892 $ 967 $ 8 $ 10

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Expected return on plan assets ( 4,004 ) ( 4,020 ) — —

Amortization of prior service cost (credit) 44 ( 14 ) — —

Amortization of prior service cost 45 40 — —

Actuarial losses (gains) 673 281 ( 19 ) ( 26 )

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$ 16 $ 186 $ 184 $ 254

Six Months Ended

Service cost $ 1,824 $ 1,974 $ 16 $ 19

Interest cost 4,747 5,878 397 542

Expected return on plan assets ( 7,944 ) ( 8,137 ) — —

Amortization of prior service cost 89 26 — —

Actuarial losses (gains) 1,350 602 ( 38 ) ( 51 )

Net periodic benefit cost

$ 66 $ 343 $ 375 $ 510

Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The following table summarizes total comprehensive income:

Three Months Ended

March 29, 2020 March 31, 2019

The following table summarizes total comprehensive income (loss):

Three Months Ended Six Months Ended

June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019

(In thousands)

Net income (loss) $ ( 67,881 ) $ 42,290 $ ( 79,100 ) $ 67,468

Foreign currency translation gain, net of $ 1.0 million and $ 0.4 million tax, respectively

Foreign currency translation adjustments, net of $0.0 million, $ 0.4 million, $1.0 million, and $0.8 million tax, respectively

( 44,671 ) ( 16,904 ) ( 22,881 ) 11,887

Adjustments to pension and postretirement liability, net of $ 0.1 million and $ 0.1 million tax, respectively

Total comprehensive income 10,954 54,188

Comprehensive loss attributable to noncontrolling interests ( 180 ) ( 23 )

Comprehensive income attributable to Belden $ 11,134 $ 54,211

Adjustments to pension and postretirement liability, net of $0.1 million, $0.1 million, $0.2 million, and $0.1 million tax, respectively

372 251 755 470

Total comprehensive income (loss) ( 112,180 ) 25,637 ( 101,226 ) 79,825

Comprehensive income (loss) attributable to noncontrolling interests 171 130 ( 9 ) 107

Comprehensive income (loss) attributable to Belden $ ( 112,351 ) $ 25,507 $ ( 101,217 ) $ 79,718

The accumulated balances related to each component of other comprehensive income (loss), net of tax, are as follows:

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Balance at December 31, 2019 $ ( 18,225 ) $ ( 45,193 ) $ ( 63,418 )

Other comprehensive income attributable to Belden before reclassifications 21,940 — 21,940

Amounts reclassified from accumulated other comprehensive income — 383 383

Net current period other comprehensive gain attributable to Belden 21,940 383 22,323

Balance at March 29, 2020 $ 3,715 $ ( 44,810 ) $ ( 41,095 )

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the three months ended March 29, 2020:

Other comprehensive loss attributable to Belden before reclassifications ( 22,878 ) — ( 22,878 )

Amounts reclassified from accumulated other comprehensive income (loss) — 755 755

Net current period other comprehensive gain (loss) attributable to Belden ( 22,878 ) 755 ( 22,123 )

Balance at June 28, 2020 $ ( 41,103 ) $ ( 44,438 ) $ ( 85,541 )

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the six months ended June 28, 2020:

Amount Reclassified from Accumulated Other

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(1) The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs (see Note 15).

The amounts in the table above include both continuing and discontinued operations.

Preferred Stock

In 2016, we issued 5.2 million depositary shares, each of which represents 1/100th interest in a share of 6.75 % Series B Mandatory Convertible Preferred Stock (the Preferred Stock), for an offering price of $ 100 per depositary share.

In 2016, we issued 5.2 million depositary shares, each of which represented 1/100th interest in a share of 6.75 % Series B Mandatory Convertible Preferred Stock (the Preferred Stock), for an offering price of $ 100 per depositary share.

We received approximately $ 501 million of net proceeds from this offering, which were used for general corporate purposes.

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Upon conversion, the Preferred Stock was automatically extinguished and discharged, is no longer deemed outstanding for all purposes, and delisted from trading on the New York Stock Exchange.

During the three months ended March 31, 2019, dividends on the Preferred Stock were $ 8.7 million.

During the three and six months ended June 30, 2019, dividends on the Preferred Stock were $ 8.7 million and $ 17.5 million, respectively.

Share Repurchase

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This program is funded with cash on hand and cash flows from operating activities.

During the three months ended March 29, 2020, we repurchased 0.6 million shares of our common stock under the share repurchase program for an aggregate cost of $ 21.2 million and an average price per share of $ 35.85 .

During the three months ended June 28, 2020, we repurchased 0.4 million shares of our common stock under the share repurchase program for an aggregate cost of $ 13.8 million and an average price per share of $ 35.80 .

During the six months ended June 28, 2020, we repurchased 1.0 million shares of our common stock under the share repurchase program for an aggregate cost of $ 35.0 million at an average price per share of $ 35.83 .

During the three and six months ended June 30, 2019, we repurchased 0.4 million shares of our common stock under the share repurchase program for an aggregate cost of $ 22.8 million at an average price per share of $ 57.47 .

Subsequent Events

Due to the uncertainties arising from the COVID-19 pandemic, out of an abundance of caution, at the beginning of the second quarter we borrowed $ 190.0 million under our Revolving Credit Agreement, which provides a $ 400.0 million multi-currency asset-based revolving credit facility.

The maturity date of the Revolver is May 16, 2022.

Interest on outstanding borrowings is variable, based upon LIBOR or other similar indices in foreign jurisdictions, plus a spread that ranges from 1.25 %- 1.75 %, depending upon our leverage position.

During 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $ 300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable securities laws and other restrictions.

This program is funded with cash on hand and cash flows from operating activities.

During the fiscal second quarter, we repurchased 0.4 million shares of our common stock under the share repurchase program for an aggregate cost of $ 13.8 million and an average price per share of $ 35.80 .

We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 for gross cash consideration of $ 120.0 million, or approximately $ 67.0 million net of cash delivered with the business.

The cash consideration is subject to certain working capital adjustments.

The sale also included deferred consideration consisting of a $ 175.0 million five-year seller’s note, up to $ 88 million in PIK (payment-in-kind) interest on the seller’s note over its five-year term, and $ 178.0 million in potential earn-out payments.

As part of the transaction, we also invested $ 3.0 million for a 9 % equity interest in Grass Valley with the right to put the equity back to Black Dragon Capital at any time on or before October 31, 2020.

We deconsolidated Grass Valley as of July 2, 2020 and are accounting for our equity interest under the cost method.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements