What changed in this filing

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Item 1. Business

2022-02-15 compared with 2021-02-16 · 94 added, 88 removed, 183 unchanged (50% of the section changed)

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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.

Our business is organized around two global businesses, Enterprise Solutions and Industrial Solutions, both of which benefit from favorable secular trends which we expect to drive future growth.

Each business represents a reportable segment.

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

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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.

Within Industrial Solutions, the growing demand for automated production drives 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.

We are well positioned to benefit from these secular trends in the form of improved revenue growth which in turn will drive Adjusted EBITDA (as defined in Part II, Item 7) growth in the future.

Our business model is designed to generate shareholder value:

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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:

Enterprise Solutions

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, 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.

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

We serve customers in markets such as commercial real estate, hospitality, healthcare, education, financial, government, and broadband and wireless service providers, as well as end-markets, including sport venues, stadiums, data centers, military installations, and academia.

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

Enterprise provides true end-to-end copper and fiber network systems, which are used in applications such as local area networks, data centers, access control, 5G, Fiber to the Home and building automation.

Our high-performance solutions support all networking protocols up to and including 100G+ Ethernet technologies.

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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

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We utilize a disciplined approach to acquisitions based on product and market opportunities.

When we identify acquisition candidates, we conduct rigorous financial and cultural analyses to make certain that they meet both our strategic plan targets and our goal for return on invested capital of 13-15%.

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

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.

Most recently, in January 2022, we acquired macmon secure GmbH (Macmon), a leading provider of products and services that secure network infrastructures in a variety of mission critical industries - refer to Note 26, Subsequent Events , for further discussion.

I n January 2021, we acquired OTN Systems N.V.

(OTN Systems), a leading provider of automation networking infrastructure solutions.

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.

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as well as Opterna International Corp.

(Opterna), which designs and manufactures complementary fiber connectivity, cabinet, and enclosure products used in optical networks.The results of SPC, FutureLink, and Opterna have been included in our Consolidated Financial Statements as of their acquisition dates, and are reported within the Enterprise Solutions segment.

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.

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

(Opterna), which designs and manufactures complementary fiber connectivity, cabinet, and enclosure products used in optical networks.

The results of OTN Systems have been included in our Consolidated Financial Statements as of its acquisition date and are reported within the Industrial Solutions segment.

The results of SPC, FutureLink, and Opterna have been included in our Consolidated Financial Statements as of their respective acquisition dates and are reported within 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.

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.

For the year ended December 31, 2021, sales to our largest distributor represented approximately 16% of our consolidated revenues.

No other customer accounted for more than 10% of our revenues in 2021.

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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, Mexico, and St.

Kitts, as well as in various countries in Europe .

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

Kitts, as well as various countries in Europe .

During 2021, approximately 47% of Belden’s sales were to customers outside the U.S.

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Our markets are also subject to increasing requirements for mobility, information security, and transmission reliability.

Some of our markets are using workflows and resources in public and private cloud and showing preference for software products delivered as services.

We believe that our future success will depend in part upon our ability to enhance existing products and to develop, manufacture and deliver new products that meet or anticipate such changes in our served markets.

In our Enterprise Solutions segment, in order to support the demand for additional bandwidth and to improve service integrity, broadband service providers are investing in their networks to enhance delivery capabilities to customers for the foreseeable future.

Additional bandwidth requirements resulting from increased traffic expose weak points in the network, which are often connectivity related, causing broadband service operators to improve and upgrade residential networks with higher performing connectivity products.

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 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.

In our Industrial Solutions segment, customers are rapidly adopting new technology to enable digital transformations and improve their Environmental, Social & Governance (ESG) impact.

This includes deploying Industry 4.0 to increase visibility of their digitized assets and adopting Artificial Intelligence (AI) to increase analytics and autonomous decision-making in their systems.

These approaches need users to refine workflows by collecting data from disparate sources, transmitting it to points of consolidation and decision making, and converting it to standard formats that application software can use.

This overall process can be referred to as "digitization" and a key part of our research and development is focused on supporting these customer journeys with technology that add value at multiple steps in the digitization process, during data acquisition, data transmission, and data orchestration and management.

Our research and development enables customized enhanced solutions to support customers' innovative methods surrounding the collection, analysis, and transmission of data.

Additionally, in our Industrial Solutions segment, there is a compelling need among customers to detect, prevent and respond to cyber security threats.

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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Part of our research and development is focused on creating scalable, efficient technologies to provide real-time instrumentation and analytics across entire networks.

This includes delivering high-fidelity visibility and deep intelligence about networked systems, their vulnerabilities, and providing actionable information about how to effectively secure them.

Additionally, we have highly-skilled and active research teams who analyze current and anticipated threats, and provide offerings to the market to enable customers to quickly detect and resolve cybersecurity threats.

Our research and development efforts are also focused on fiber optic technology, which presents a potential substitute for certain of the copper-based products that comprise a portion of our revenues.

Fiber optic cables have certain advantages over copper-based cables in applications where large amounts of information must travel significant distances and where high levels of information security are required.

While the cost to interface electronic and optical light signals and to terminate and connect optical fiber remains comparatively high, we expect that in future years the cost difference versus traditional copper networks will diminish.

We sell fiber optic infrastructure, and many customers specify these products in combination with copper-based infrastructure.

The final stage of most networks remains almost exclusively copper-based, and we expect that it will continue to be copper for the foreseeable future.

However, if a significant decrease in the cost of fiber optic systems relative to the cost of copper-based systems were to occur, such systems could become superior on a price/performance basis to copper-based systems.

Part of our research and development efforts focus on expanding our fiber-optic based product portfolio.

This includes delivering high-

fidelity visibility and deep intelligence about networked systems, their vulnerabilities, and providing actionable information about how to effectively secure them.

Enterprise Solutions R&D efforts are aligned to the secular trends in our markets for increased communication at faster speeds of transmission.

This phenomenon is visible across all of our markets.

We continue to invest in R&D to support the continuing growth in capacity and bandwidth between the data center and the consumer to enhance their experience in their living, work and play interactions.

To support the demand for additional bandwidth and to improve service integrity, broadband service providers will continue to invest in their networks to enhance delivery capabilities to customers for the foreseeable future.

The growing bandwidth demand exposes bottlenecks in the network and leads broadband service operators to improve and upgrade residential networks with higher performance connectivity products.

Broadband service providers are also investing in the deployment of 5G technology.

Our R&D efforts are focused on the development of fiber connectivity and 5G solutions that support the investment plans of the broadband service providers.

The ability to integrate across the multitude of applications within service providers and on-premise networks requires a deep understanding of the unique challenges posed by heavier and faster transmission of data.

Common across the Enterprise Solutions segment, our R&D efforts are focused on ensuring continuously evolving solutions, be it copper and coax cable or fiber optic cable and connectivity as it becomes more pervasive across all networks including wireless.

We anticipate the need to develop the ability to customize networks in the various systems in close collaboration with our partners to advise our mutual end customers.

Our research and development has a strong focus on improving the performance of fiber optic technology, making it easier to handle and install, more robust for technicians and end users, leading to networks that can be deployed more quickly, with higher performance and reliability.

Even with the explosive growth in fiber, connections to the end devices that consumers utilize to live, work and play, be it wireless access points or IoT devices, are still going to strongly benefit from the remaining advantages of copper-based connectivity, with a heavy focus on powering the ever-increasing collection of data consuming and generating devices connected to our increasingly digitized world.

Building automation and the rapid rise of IoT has catalyzed the need to add more devices on the network.

This is turn necessitates the distribution of power across the network.

There will be a need for solutions offering power to these distributed devices and the Enterprise Solutions segment continues to innovate in this area in preparation for a world with a need to upgrade legacy systems as we build greenfield installations.

Patents and Trademarks

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Our most prominent trademarks are:

Belden®, Alpha Wire™, GarrettCom®, Hirschmann®, Lumberg Automation™, Mohawk®, Poliron™, PPC®, ProSoft Technology®, Thinklogical®, Tofino®, Tripwire® and West Penn Wire™.

Belden®, Alpha Wire™, GarrettCom®, Hirschmann®, Lumberg Automation™, Mohawk®, OTN Systems™, PPC®, ProSoft Technology®, Thinklogical®, Tofino®, Tripwire® and West Penn Wire™.

The Tripwire® trademark will be sold as part of the Tripwire divestiture in the first quarter of 2022 - see Note 26.

Raw Materials

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With respect to all major raw materials used by us, we generally have either alternative sources of supply or access to alternative materials.

Supplies of these materials are generally adequate and are expected to remain so for the foreseeable future.

Over the past three years, the prices of metals, particularly copper, have been highly volatile.

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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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Our backlog consists of product orders for which we have received a customer purchase order or purchase commitment and which have not yet been shipped.

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

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.

As of December 31, 2021 and 2020, our backlog wa s $705.7 million and $223.0 million, respectively.

The majority of the backlog at December 31, 2021 is scheduled to ship in 2022.

Environmental Matters

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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.

Environmental, Social, and Governance (ESG) at Belden

At Belden, we believe that we have a responsibility to make a positive impact in our industry, in the communities in which we operate, and to all affected by our business operations.

Our ESG journey is guided by our shared values, and we are dedicated to continuously improving our impact through establishing visible and measurable progress.

We acknowledge our role in protecting the environment and are currently assessing our impacts.

Our strong desire is to identify and prioritize areas of improvement and we are committed to doing our part for future generations and for the planet.

In 2021, under the oversight of our ESG Steering Committee, we engaged a third party to conduct our first materiality assessment to identify the ESG topics that are most relevant to our stakeholders and to our business.

By engaging both internal and external stakeholders, we have developed a framework for our management of the identified material priority topics and to guide our strategy in making measurable progress.

To put our ambitions into action, we have established goals for our material topics, including carbon reduction goals for 2025, and look forward to communicating our continuous improvements.

Upholding transparency and open communication, we launched our dedicated ESG website on Earth Day 2021, which includes key data across a range of current ESG initiatives.

Our ESG website includes our first formal greenhouse gas inventory for direct emissions (Scope 1 and 2).

We are working to validate further historical information to serve as a verified baseline for improvements to our carbon footprint.

We are committed to building a workforce centered on our values and promoting the well-being of people across our entire value chain—employees, customers, partners and suppliers.

We believe in the potential of our workforce and the importance of providing career development for those who want to learn and grow with us.

We celebrate diversity and embrace differences to broaden our perspectives and strengthen the work we do.

Our focus is to foster a culture of teamwork that is diverse and inclusive, and we are dedicated to creating an equitable environment for our employees.

Under the leadership of our director of Inclusive Culture, we are building out a diversity, equity, and inclusion (DEI) strategy and look forward to sharing our progress with this initiative.

For further details on our ESG program and progress, please visit https://www.belden.com/resources/sustainability.

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.

During 2021, our employees continued to experience disruptions and challenges stemming from the continuing COVID-19 pandemic.

Across our locations, we have also experienced changes in working practices as well as health and safety protocols as we work together to keep each other safe and our customers supplied.

Throughout 2021, many of our employees continued to work remotely as they navigated through varying degrees of the crisis.

We have implemented improved technologies that better enable collaboration, connection and teamwork wherever team members are based.

Some employees work with equipment and machinery that are fixed at locations, and thus were unable to work remotely.

However, mask protocols, hygiene guidelines and social distancing kept people safe.

The engagement of our team members, as measured in our twice-a-year employee survey, remained high at 89%.

We were also very pleased to once again be recognized as a Great Place to Work® in Germany and India, with our facilities in Denmark and Netherlands also receiving Great Place to Work® recognition.

Voluntary turnover of management and professional staff remained low at 8% worldwide, in line with the historically low turnover in prior years.

We continue to live our value of We Invest in Talent with 70% of vacancies in our top 165 positions being filled with people that have been promoted from within, continuing our strong balance of external hiring to introduce new ideas and perspectives with career development practices that enable internal promotions.

As part of our work on Inclusive Culture, we launched our new AVID council (Authentic Voices for Inclusion and Diversity).

Its purpose is to advise, guide and support our colleagues around the world as we seek to become an even more diverse and inclusive organization.

The council is made up of team members from a wide variety of backgrounds across the company.

We also completed a worldwide Workplace Inclusion survey with our DEI partners at Kaleidescope Group.

The survey had a response rate of 75% and highlighted areas of strength and opportunities as we continue to evolve our culture.

We learned that our team members have strong feelings of belonging and mutual respect in a culture which is honest and authentic.

However, we also identified opportunities to improve equity and employee “voice” in certain locations.

We have incorporated this feedback into our DEI action plans.

While our senior leadership reflects both ethnic and gender diversity, we remain committed to further increasing diversity throughout all levels of the organization, including our Board of Directors.

We launched our Be Well program in the USA and have commenced plans to expand this internationally.

The program supports our team members as they strive to achieve their own physical, financial, social and emotional well-being.

The program consists of events, challenges, active learning and incentives that help our team members reflect upon and improve their overall well-being.

Available Information

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Name Age Position

John Stroup 54 Executive Chairman

Roel Vestjens 47 President and Chief Executive Officer

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Ashish Chand 47 Executive Vice President, Industrial Automation

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

Dean McKenna 53 Senior Vice President, Human Resources

Anshu Mehrotra 51 Senior Vice President, Sales and Marketing

Jeremy Parks 46 Senior Vice President, Finance, and Chief Financial Officer

Doug Zink 46 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.

He was promoted to President of a division of Danaher’s Motion Group and later to Group Executive of the Motion Group.

Earlier, he was Vice President of Marketing and General Manager with Scientific Technologies Inc.

He has a B.S.

in Mechanical Engineering from Northwestern University and an M.B.A.

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

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

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from Loyola College Chennai, India.

Henk Derksen has been Senior Vice President, Finance, and Chief Financial Officer since January 2012.

Prior to that, he served as Vice President, Corporate Finance from July 2011 to December 2011 and Treasurer and Vice President, Financial Planning and Analysis of the Company from January 2010 to July 2011.

In August of 2003, he became Vice President, Finance for the Company’s EMEA division, after joining the Company at the end of 2000.

Prior to joining the Company, he was Vice President and Controller of Plukon Poultry, a food processing company from 1998 to 2000, and has 5 years’ experience in public accounting with Price Waterhouse and Baker Tilly.

Derksen has a M.A.

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.

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

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from Northwestern University at Kellogg School of Management.

Jeremy Parks was appointed Senior Vice President, Finance, and Chief Financial Officer on February 16, 2021.

Prior to re-joining Belden in 2021, Mr.

Parks worked as the Chief Financial Officer of International Wire Corp.

From 2008 through August of 2020, Mr.

Parks worked for the Company in various financial roles, most recently as Vice President of Finance of the Company’s Industrial Solutions segment.

Parks has a B.A.

in economics from State University of New York – Buffalo, and an M.B.A from Xavier University.

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