What changed in this filing

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Item 1. Business

2021-02-16 compared with 2020-02-11 · 95 added, 76 removed, 176 unchanged (49% of the section changed)

(the Company, us, we, or our) is a global supplier of specialty networking solutions built around two global business platforms - Enterprise Solutions and Industrial Solutions.

(the Company, us, we, or our) connects and protects the world with the industry’s most complete suite of end-to-end specialty networking solutions.

Our comprehensive portfolio of solutions enables customers to transmit and secure data, sound, and video for mission critical applications across complex enterprise and industrial environments.

Our business is organized around two global business platforms, Enterprise Solutions and Industrial Solutions, both of which provide the opportunity to drive future growth due to favorable secular trends.

Each business platform represents a reportable segment.

Financial information about our segments appears in Note 6 to the Consolidated Financial Statements.

Our comprehensive portfolio of specialty networking solutions provides industry leading secure and reliable transmission of data, sound, and video for mission critical applications.

We sell our products to distributors, end-users, installers, and directly to original equipment manufacturers (OEMs).

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Strategy and Business Model

In 2020, we executed our strategy around three transformative actions.

First, we divested Grass Valley in order to simplify our portfolio and meet our strategic revenue growth goals.

Next, we streamlined our cost structure by reducing Selling, General, and Administrative expenses by approximately $40 million in the year ended December 31, 2020, with an annualized impact of approximately $60 million.

Finally, we initiated processes to divest up to approximately $200 million of low-margin cable product lines that do not meet our long-term revenue growth and profitability goals.

After the completion of these strategic actions, our portfolio of businesses will be well positioned to meet our long-term goals and deliver shareholder value.

Our portfolio and strategic priorities align with attractive end markets with favorable secular trends.

Within Industrial Solutions, the growing demand for automated production and the ever-increasing need for network security drive demand for our solutions.

Enterprise Solutions benefits from increasing consumer demand for more internet bandwidth and faster speeds, investment in 5G technology, and trends requiring integrated networks in smart buildings.

We are well positioned to benefit from these secular trends in the form of improved revenue growth and expanded Adjusted EBITDA margins in the future.

Our business model is designed to generate shareholder value:

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We generated cash flows from operating activities of $173.4 million, $276.9 million, and $289.2 million in 2020, 2019, and 2018, respectively.

Portfolio Improvement— We utilize the cash flow generated by our business to fuel our continued transformation and generate shareholder value.

• Portfolio Improvement— We utilize the cash f low generated by our business to fuel our continued transformation and generate shareholder value.

We continuously improve our portfolio to ensure we provide the most complete, end-to-end solutions to our customers.

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We operate our business under the two segments – Enterprise Solutions and Industrial Solutions.

Effective January 1, 2020, we transferred our West Penn Wire business and multi-conductor product lines from the Enterprise Solutions segment to the Industrial Solutions segment as a result of a shift in responsibilities among the segments.

We have recast the prior period segment information to conform to the change in the composition of reportable segments.

A synopsis of the segments is included below:

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The Enterprise Solutions (Enterprise) segment is a leading provider in network infrastructure solutions, as well as cabling and connectivity solutions for commercial audio/video and security applications.

We serve customers in markets such as healthcare, education, financial, government, and corporate enterprises, as well as end-markets, including sport venues and academia.

Enterprise product lines include copper cable and connectivity solutions, fiber cable and connectivity solutions, and racks and enclosures.

Our products are used in applications such as local area networks, data centers, access control, and building automation.

We serve customers in markets such as healthcare, education, financial, government, corporate enterprises and broadband service providers, as well as end-markets, including sport venues and academia.

Enterprise product lines include copper cable and connectivity solutions, fiber cable and connectivity solutions, racks and enclosures, and secure, high performance signal extension and matrix switching systems.

Our products are used in applications such as local area networks, data centers, access control, Fiber to the Home and building automation.

Enterprise provides true end-to-end copper and fiber network systems to include cable, assemblies, interconnect panels, and enclosures.

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Enterprise products also include intelligent power, cooling, and airflow management for mission-critical data center operations.

The Enterprise product portfolio is designed to support

Internet Protocol convergence, the increased use of wireless communications, and cloud-based data centers by our customers.

The Enterprise product portfolio is designed to support Internet Protocol convergence, the increased use of wireless communications, and cloud-based data centers by our customers.

Our systems are installed through a network of highly trained system integrators and are supplied through authorized distributors.

Industrial Solutions

The Industrial Solutions (Industrial) segment is a leading provider of high performance networking components and machine connectivity products.

Industrial products include physical network and fieldbus infrastructure components and on-machine connectivity systems customized to end user and OEM needs.

The Industrial Solutions (Industrial) segment is a leading provider of high performance networking and machine connectivity products.

Industrial products include physical network and fieldbus infrastructure components and on-machine connectivity systems to meet end user and OEM needs.

Products are designed to provide reliability and confidence of performance for a wide range of industrial automation applications.

Our products are used in applications such as network and fieldbus infrastructure;

The products are used in markets that include discrete automation, process automation, energy and mass transit.

Applications include network and fieldbus infrastructure;

sensor and actuator connectivity;

and power, control, and data transmission.

Industrial products include solutions such as industrial and input/output (I/O) connectors, industrial cables, IP and networking cables, I/O modules, distribution boxes, ruggedized controls and sensors, and customer specific wiring solutions.

Industrial products include solutions such as industrial Ethernet switches, network management software, routers, firewalls, gateways, input/output (I/O) connectors/systems, industrial Ethernet cables, optical fiber industrial Ethernet cables, Fieldbus cables, IP and networking cables, I/O modules, distribution boxes, and customer specific wiring solutions.

Our industrial cable products are used in discrete manufacturing and process operations involving the connection of computers, programmable controllers, robots, operator interfaces, motor drives, sensors, printers, and other devices.

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Industrial Solutions products are sold directly to industrial equipment OEMs and through a network of industrial distributors, value-added resellers, and system integrators.

See Note 5 to the Consolidated Financial Statements for additional information regarding our segments.

See Note 6 to the Consolidated Financial Stateme nts for additional information regarding our segments.

A key part of our business strategy includes acquiring companies to support our growth and enhance our product portfolio.

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We have completed a number of acquisitions in recent years as part of this strategy.

Most recently, in December 2019, we acquired substantially all of the assets of Special Product Company (SPC), a leading designer, manufacturer, and seller of outdoor cabinet products for optical fiber cable installations.

Most recently, in January 2021, we acquired OTN Systems N.V.

(OTN), a leading provider of automation networking infrastructure solutions - refer to Note 28, Subsequent Events , for further discussion.

I n December 2019, we acquired substantially all of the assets of Special Product Company (SPC), a leading designer, manufacturer, and seller of outdoor cabinet products for optical fiber cable installations.

In April 2019, we acquired the FutureLink business from Suttle Inc.

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In 2018, we acquired Net-Tech Technology, Inc.

(NT2), an integrator of optical passive components and network optimization products used within broadband network applications where optical backhaul is used.

(NT2), an integrator of optical passive components and network optimization products used within broadband network applications where

optical backhaul is used.

The results of NT2 have been included in our Consolidated Financial Statements from the acquisition date, and are reported within the Enterprise Solutions segment.

In 2017, we completed the acquisition of Thinklogical Holdings, LLC (Thinklogical), a leading provider of secure, centralized KVM video switches to the command and control market.

The results of Thinklogical have been included in our Consolidated Financial Statements from the acquisition date and are reported in the Enterprise Solutions segment.

For more information regarding these transactions, see Note 4 to the Consolidated Financial Statements.

We sell to distributors, OEMs, installers, and end-users.

Sales to the distributor Anixter International Inc.

(Anixter) represented approximately 13% of our consolidated revenues in 2019 .

On January 10, 2020, Anixter entered into a definitive agreement with WESCO International, Inc (WESCO) by which Anixter will be acquired WESCO.

Sales to both Anixter and WESCO combined,

represented approximately 15% of our consolidated revenues in 2019.

On June 22, 2020, WESCO International, Inc (WESCO) acquired Anixter International, Inc.

(Anixter), our largest distributor.

References to "WESCO" in the remainder of this report will be inclusive of Anixter.

For the year ended December 31, 2020, sales to WESCO represented approximately 15% of our consolidated revenues.

No other customer accounted for more than 10% of our revenues in 2020.

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International Operations

In addition to manufacturing facilities in the United States (U.S.), we have manufacturing and other operating facilities in Brazil, Canada, China, India, Japan, Mexico, and St.

In addition to manufacturing facilities in the United States (U.S.), we have manufacturing and other operating facilities in Brazil, Canada, China, India, Mexico, and St.

Kitts, as well as in various countries in Europe .

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Our primary channels to international markets include both distributors and direct sales to end users and OEMs.

Financial information for Belden by country is shown in Note 6 to the Consolidated Financial Statements.

We face substantial competition in our major markets.

The number and size of our competitors vary depending on the product line and segment.

Some multinational competitors have greater financial, engineering, manufacturing, and marketing resources than we have.

There are also many regional competitors that have more limited product offerings.

Financial information for Belden by country is shown in Note 6 to the Co nsolidated Financial Statements.

The markets in which we operate can be generally categorized as highly competitive with many players.

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In our Industrial Solutions segment, there is a compelling need among global enterprises, service providers and government agencies to detect, prevent and respond to cyber security threats.

This is a long-standing need within corporate networks, but we believe the rapid proliferation of new devices in the “internet of things” will cause this need to broaden and accelerate.

Additionally, cyber-attacks are moving beyond traditional targets into critical infrastructure, which will further amplify the importance of our

work in network security.

This is a long-standing need within corporate networks, but we believe the rapid proliferation of new devices in the “internet of things” will continue to cause this need to broaden and accelerate.

Additionally, cyber-attacks are moving beyond traditional targets into critical infrastructure, which will further amplify the importance of our work in network security.

Furthermore, there is a growing trend toward adoption of Industrial Ethernet technology, bringing to the critical infrastructure the advantages of digital communication and the ability to network devices made by different manufacturers and integrate them with enterprise systems.

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The chart below illustrates the high and low spot prices per pound of copper over the last three years.

2020 2019 2018

Copper spot prices per pound

$ 3.63 $ 2.98 $ 3.29

$ 2.12 $ 2.51 $ 2.56

Prices for materials such as PVC and other plastics derived from petrochemical feedstocks have also fluctuated.

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When the cost of raw materials increases, we are generally able to recover these costs through higher pricing of our finished products.

The majority of our products are sold through distribution, and we manage the pricing of these products through published price lists, which we update from time to time, with new prices typically taking effect a few weeks after they are announced.

The majority of our products are sold through distribution, and we manage the pricing of these

products through published price lists, which we update from time to time, with new prices typically taking effect a few weeks after they are announced.

Some OEM customer contracts have provisions for passing through raw material cost changes, generally with a lag of a few weeks to three months.

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Orders are generally subject to cancellation or rescheduling by the customer.

As of December 31, 2019 , our backlog of orders believed to be firm was $161.9 million.

Nearly all of the backlog at December 31, 2019 is scheduled to be shipped in 2020.

As of December 31, 2020, our backlog of orders believed to be firm wa s $223.0 million.

The majority of the backlog at December 31, 2020 is scheduled to ship in the first quarter of 2021.

Environmental Matters

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and similar laws in the other countries in which we operate.

We believe that our existing environmental control procedures and accrued liabilities are adequate, and we have no current plans for substantial capital expenditures in this area.

As of December 31, 2019 , for our continuing operations, we had approximately 7,000 employees worldwide.

We also utilized approximately 200 workers under contract manufacturing arrangements.

Approximately 1,800 employees are covered by collective bargaining agreements at various locations around the world.

While we believe that our existing environmental control procedures are adequate, we will continue to evaluate and update our procedures as needed to address new or changing aspects of environmental matters.

Human Capital Resources

As of December 31, 2020, we had approximately 6,200 and 200 full-time and contractor em ployees, respectively, worldwide, of which approximately 65%, 20% and 15% were in North and South America, EMEA, and APAC, respectively.

Approxima tely 1,700 e mployees are covered by collective bargaining agreements at various locations around the world.

We believe our relationship with our employees is generally positive, and we measure and monitor the workforce's sustainable engagement, among other metrics, to ensure this remains the case.

Our culture and principles enable us to attract, retain, motivate and develop our workforce as well as drive employee engagement.

We believe an engaged workforce leads to a more innovative, productive and profitable company.

Our employees around the world live our Belden Values every day and work to ensure that our products and services connect and protect our customers critical infrastructure.

Reflective of our corporate value "We Invest in Talent," our employees are highly engaged, scoring 88% positive in our most recent employee survey.

Furthermore, we were recognized by Great Place to Work in Germany, Brazil and India, where we were also recognized as a Great Place to Work for Women.

The ethnic and gender diversity of our senior leadership team has increased with new strategic hires from outside the Company alongside internal promotions.

The number of women serving as independent directors on our board of directors has further increased to 33%.

During 2020, we also appointed a new Director of Inclusive Culture and continue to partner with organizations as we look to identify further opportunities to improve diversity, inclusion and belonging across our company.

During 2020, we launched our Connect with Community program, which enables Belden employees to take a week’s paid time away from work to volunteer in their local communities.

As a result, a broad range of communities around the world have benefited from the efforts of our team members who have worked with food banks, environmental organizations, education establishments and community development charities across the world.

During the year ended December 31, 2020, we also introduced our voluntary flex-time program, which enables most of our employees outside of direct production to take time off to deal with personal and family matters, resulting from the COVID-19 pandemic or otherwise, and receive 25% of their pay during such period.

We continually evolve our Early Career Leadership program.

This 3-year rotational program enables talented graduates to work around the world in challenging roles within their chosen business function and prepares them to be the leaders of the future.

As of December 31, 2020, the Early Career Leadership program had an exceptional retention rate of 100% and comprised over 80 participants, of which 46% were female.

Available Information

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All executive officers are elected to terms that expire at the organizational meeting of the Board of Directors following the Annual Meeting of Shareholders.

President, Chief Executive Officer, and Chairman

Brian Anderson

Senior Vice President, Legal, General Counsel and Corporate Secretary

Executive Vice President, Industrial Automation

Senior Vice President, Finance, and Chief Financial Officer

Leo Kulmaczewski

Senior Vice President, Operations and Lean Enterprise

Senior Vice President, Human Resources

Senior Vice President, Sales

Roel Vestjens

Executive Vice President and Chief Operating Officer

Vice President and Chief Accounting Officer

John Stroup has been President, Chief Executive Officer and a member of the Board since October 2005.

He was elected as Chairman of the Board on November 30, 2016.

From 2000 to the date of his appointment with the Company, he was employed by Danaher Corporation, a manufacturer of professional instrumentation, industrial technologies, and tools and components.

Name Age Position

John Stroup 54 Executive Chairman

Roel Vestjens 46 President and Chief Executive Officer

Brian Anderson 46 Senior Vice President, Legal, General Counsel and Corporate Secretary

Ashish Chand 46 Executive Vice President, Industrial Automation

Henk Derksen 52 Senior Vice President, Finance, and Chief Financial Officer

Dean McKenna 52 Senior Vice President, Human Resources

Anshu Mehrotra 50 Senior Vice President, Sales and Marketing

Doug Zink 45 Vice President and Chief Accounting Officer

John Stroup was appointed Executive Chairman of the Company on May 21, 2020.

Prior to that, he served as President, Chief Executive Officer, and a member of the Board since October 2005.

He was also elected as Chairman of the Board on November 30, 2016.

From 2000 to October 2005, he was employed by Danaher Corporation, a manufacturer of professional instrumentation, industrial technologies, and tools and components.

At Danaher, he initially served as Vice President, Business Development.

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from the University of California at Berkeley Haas School of Business.

Brian Anderson has been Senior Vice President, Legal, General Counsel and Corporate Secretary since April 2015.

Roel Vestjens was appointed President and Chief Executive Officer on May 21, 2020.

Prior to that, he was the Chief Operating Officer since July 2019;

Executive Vice President, Industrial Solutions from February 2018 to July 2019;

Executive Vice President, Industrial Solutions and Broadcast IT Solutions from January 2017 to February 2018;

and the Executive Vice President, Broadcast Solutions from March 2014 to January 2017.

Vestjens joined Belden in 2006 as Director of Marketing for the EMEA region.

In April 2008, Mr.

Vestjens was promoted to Director of Sales and Marketing for the Industrial Solutions business, and in January 2009, he was appointed General Manager of Belden’s Wire and Cable Systems business in EMEA.

Vestjens relocated to Asia in November 2010, and became President of the APAC OEM business, followed by President of all APAC Operations in May 2012.

Vestjens joined Belden from Royal Philips Electronics where he held various European sales and marketing positions.

Vestjens holds a bachelor degree in Electrical Engineering and a Master of Science and Management degree from Nyenrode Business University in the Netherlands.

Brian Anderson has been Senior Vice President, Le gal, General Counsel and Corporate Secretary since April 2015.

Prior to that, he served as Corporate Attorney for the Company from May 2008 through March 2015.

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Prior to that, he served as Managing Director, Industrial Solutions, for the Company’s APAC division from August 2017 to June 2019.

Chand joined the Company in 2002 and has assumed positions of increasing responsibility in sales and marketing, operations, business development and general management since that time.

Chand joined the Company in 2002 and has assumed positions of increasing responsibility in sales and marketing, operations, business devel opment and general management since that time.

Prior to joining Belden, Mr.

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in Accounting from the University of Arnhem in the Netherlands and holds a doctoral degree in Business Economics in addition to an Executive Master of Finance & Control from Tias Business School in the Netherlands.

Leo Kulmaczewski was appointed Senior Vice President, Operations and Lean Enterprise in October 2018.

Prior to joining Belden, Mr.

Kulmaczewski was employed by Leica Biosystems, a division of Danaher Corporation, in various operations roles in the medical devices industry, the most recent of which was Vice President, Operations, Global Supply Chain and Danaher Business System.

Prior to joining Leica in 2014, he worked for Thermo Fisher Scientific, Honeywell and Motorola, among other companies.

Kulmaczewski has a B.S.

in Industrial Engineering from the University of Wisconsin and an M.B.A.

from DePaul University.

Dean McKenna has been Senior Vice President, Human Resources since May 2015.

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He received his degree in Strategic Human Resource Management at the Nottingham Business School in the United Kingdom.

Paul Turner has been Senior Vice President, Sales since February 2017.

Turner joined Belden in 2006, and has held a variety of roles of increasing responsibility within Belden’s sales organization since that time.

Before joining Belden, Mr.

Turner spent five years in the private sector in a subcontract manufacturing company based in the United Kingdom, ultimately serving in the post of Managing Director.

Prior to that experience, Mr.

Turner spent 13 years with the 3M Company in the United Kingdom, holding roles of increasing responsibility within 3M’s commercial organization across the EMEA region.

Roel Vestjens has been Executive Vice President, Industrial Solutions since February 2018 and was appointed as Chief Operating Officer in July 2019.

Prior to that, he was the Executive Vice President, Industrial Solutions and Broadcast IT Solutions from January 2017 to February 2018 and the Executive Vice President, Broadcast Solutions from March 2014 to January 2017.

Vestjens joined Belden in 2006 as Director of Marketing for the EMEA region.

In April 2008, Mr.

Vestjens relocated to Asia in November 2010, and became President of the APAC OEM business, followed by President of all APAC Operations in May 2012.

Vestjens joined Belden from Royal Philips Electronics where he held various European sales and marketing positions.

Vestjens holds a bachelor degree in Electrical Engineering and a Master of Science and Management degree from Nyenrode Business University in the Netherlands.

Anshu Mehrotra was appointed Senior Vice President, Sales and Marketing in January 2021.

Prior to joining Belden, he was Group President for Welding at Illinois Tool Works (ITW), leading the global Industrial Welding platform.

Prior to ITW, he has had a number of leadership roles in general management and sales at Ingersoll Rand, Allegion and Johnson Controls.

He has a B.S.

in Electronics Engineering from Delhi University, an M.S.

in Industrial Engineering from Northern Illinois University and an M.B.A.

from Northwestern University at Kellogg School of Management.

Doug Zink has been Vice President and Chief Accounting Officer since September 2013.

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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-K

Item 1. Business