What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-15 compared with 2021-02-16 · 351 added, 372 removed, 1248 unchanged (37% of the section changed)

20 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill for Certain Reporting Units

Goodwill Impairment related to Tripwire Reporting Unit

Description of the Matter At December 31, 2021, the Company had goodwill on its balance sheet aggregating $1.2 billion.

As more fully described in Notes 2 and 13 to the Company’s consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level.

The Company’s goodwill is initially assigned to reporting units as of the respective acquisition dates.

The Company performed a quantitative assessment for all of its reporting units and determined that the fair values of these reporting units were in excess of the carrying values.

Therefore, the Company did not record any goodwill impairment for any of its reporting units.

Auditing the Company’s annual goodwill impairment test for certain reporting units under the quantitative assessment was complex due to the judgments and estimation required in determining the fair values of the reporting units.

In particular, the fair value estimates are sensitive to significant assumptions such as discount rates, revenue growth rates, projected operating margins, and terminal growth rates, which are sensitive to and affected by expectations about future market or economic conditions and company-specific qualitative factors.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s preparation and review of the goodwill impairment tests, significant assumptions discussed above, as used in each of the models, and the completeness and accuracy of the data used in the models.

Goodwill is assigned to reporting units on the respective acquisition dates.

The Company performed a quantitative impairment assessment for all of its reporting units to determine if the fair values of these reporting units were in excess of the carrying values.

An impairment charge should be recognized for the amount by which the carrying amount of goodwill exceeds the reporting unit’s fair value with a charge not to exceed the total amount of goodwill allocated to that reporting unit.

As a result of these assessments, the Company recognized an impairment of $131.2 million related to the Tripwire reporting unit during the year ended December 31, 2021.

Auditing the Company’s annual goodwill impairment test for the Tripwire reporting unit under the quantitative assessment was complex due to the judgments and estimation required in determining the fair value of the reporting unit.

In particular, the fair value estimate is sensitive to significant assumptions such as the discount rate, revenue growth rate, projected operating margin, and terminal growth rate, which are sensitive to and affected by expectations about future market or economic conditions and company-specific qualitative factors.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s preparation and review of the goodwill impairment test, significant assumptions discussed above, as used in the model, and the completeness and accuracy of the data used in the model.

Our audit procedures included, among others, involving our specialists to assist us in assessing methodologies, and testing the significant assumptions discussed above and the underlying data used by the Company in its analyses, and reviewing the methodology and market support used to determine the discount rate.

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We assessed the historical accuracy of the Company’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair values of the reporting units that would result from changes in the assumptions.

We tested the Company’s reconciliation of the aggregate fair value of the reporting units to the market capitalization of the Company.

We also reconciled the fair value of the reporting unit to the carrying amount, testing the Company’s determination of the assets and liabilities used within the reporting unit that are the basis for the carrying amount.

We also evaluated whether any changes in the composition of the reporting units reflected significant changes in the organizational structure or segments.

6 unchanged sentences

The Company estimated the standalone selling prices of each of the performance obligations and projected cash flows over the term of each contractual arrangement to determine the amount of total consideration allocated to each of the performance obligations.

The Company also enters into sales contracts that provide certain distributors with price concessions, product return rights, refunds, and stock rotations, which all result in variable consideration.

The Company also enters into sales contracts that provide certain distributors with unprocessed changes in the form of price concessions, product return rights, refunds, and stock rotations, which all result in variable consideration.

At the time of sale, the Company establishes an estimated reserve for the variable consideration and recognizes it by reducing revenues.

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Auditing the Company’s allocation of consideration expected to be received under its contractual arrangements was complex and involved a high degree of subjective auditor judgment because of the management judgment required to develop the estimates of standalone selling prices for the highly variable pricing of software licenses.

Auditing the Company's measurement of variable consideration under the distributor contracts involved especially challenging judgment because the calculation involves subjective management assumptions, including historical adjustments as a percentage of revenues and the estimated period of time between the original sale and the issuance of the adjustment, all used in the estimates of unprocessed changes and pricing concessions.

The estimates developed by the Company are also dependent on anticipated sales demand, trends in product pricing, and historical and anticipated adjustment patterns.

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We evaluated the appropriateness of the methodology used to determine the standalone selling price by comparing such prices to historical analysis and practices observed in the industry.

In addition, we performed detailed testing of the underlying transactions in the calculation by agreeing the amounts recognized to source documents and performed an analysis to recalculate the allocation of revenue between performance obligations as part of our overall testing of revenue transactions.

In addition, we performed detailed testing of the underlying transactions in the calculation by comparing the amounts recognized to source documents and performed an analysis to recalculate the allocation of revenue between performance obligations as part of our overall testing of revenue transactions.

Our audit procedures related to the Company’s estimates of variable consideration included, among others, evaluating the significant assumptions and the accuracy and completeness of the underlying data used in the Company's calculation.

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Other current assets 65,700 52,289

Current assets of discontinued operations — 375,135

Total current assets 1,467,028 1,098,398

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Accrued liabilities 334,316 276,641

Current liabilities of discontinued operations — 170,279

Total current liabilities 718,539 520,761

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Amortization of intangibles ( 38,346 ) ( 64,395 ) ( 74,609 )

Gain from patent litigation — — 62,141

Goodwill and other asset impairment ( 140,461 ) — —

Operating income 124,560 125,410 207,207

1 unchanged sentence

Non-operating pension benefit (cost) 4,476 ( 395 ) 1,017

Gain on sale of note receivable 27,036 — —

Loss on debt extinguishment ( 5,715 ) — —

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Loss from discontinued operations, net of tax — ( 99,513 ) ( 486,667 )

Loss from disposal of discontinued operations, net of tax ( 9,948 ) — —

Gain (loss) from disposal of discontinued operations, net of tax 1,860 ( 9,948 ) —

Net income (loss) 64,317 ( 55,058 ) ( 376,776 )

Net income (loss) attributable to noncontrolling interest 104 239 ( 183 )

Net income attributable to noncontrolling interest 392 104 239

Net income (loss) attributable to Belden 63,925 ( 55,162 ) ( 377,015 )

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Basic income (loss) per share attributable to Belden common stockholders:

Continuing operations attributable to Belden common stockholders $ 1.21 $ 2.16 $ 3.25

Discontinued operations attributable to Belden common stockholders ( 2.22 ) ( 11.53 ) ( 0.16 )

Disposal of discontinued operations attributable to Belden common stockholders ( 0.22 ) — —

Net income (loss) attributable to Belden common stockholders $ ( 1.23 ) $ ( 9.37 ) $ 3.10

Continuing operations $ 1.39 $ 1.21 $ 2.16

Discontinued operations — ( 2.22 ) ( 11.53 )

Disposal of discontinued operations 0.04 ( 0.22 ) —

Net income (loss) $ 1.43 $ ( 1.23 ) $ ( 9.37 )

Diluted income (loss) per share attributable to Belden common stockholders:

Continuing operations attributable to Belden common stockholders $ 1.21 $ 2.15 $ 3.23

Discontinued operations attributable to Belden common stockholders ( 2.22 ) ( 11.53 ) ( 0.16 )

Disposal of discontinued operations attributable to Belden common stockholders ( 0.22 ) — —

Net income (loss) attributable to Belden common stockholders $ ( 1.23 ) $ ( 9.37 ) $ 3.08

Continuing operations $ 1.37 $ 1.21 $ 2.15

Discontinued operations — ( 2.22 ) ( 11.53 )

Disposal of discontinued operations 0.04 ( 0.22 ) —

Net income (loss) $ 1.41 $ ( 1.23 ) $ ( 9.37 )

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

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Net income (loss) 64,317 $ ( 55,058 ) $ ( 376,776 )

Foreign currency translation, net of tax of $ 1.0 million, $ 1.0 million, and $ 1.7 million, respectively

( 112,562 ) 24,121 27,802

Adjustments to pension and postretirement liability, net of tax of $ 1.7 million, $ 1.1 million, and $ 1.0 million, respectively

( 15,477 ) ( 12,168 ) ( 4,690 )

Foreign currency translation, net of tax 88,290 ( 112,562 ) 24,121

Adjustments to pension and postretirement liability, net of tax 31,572 ( 15,477 ) ( 12,168 )

Other comprehensive income (loss), net of tax 119,862 ( 128,039 ) 11,953

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

Asset impairment of discontinued operations 113,007 521,441 —

Depreciation and amortization 87,988 108,687 139,259

Goodwill and other asset impairment 140,461 113,007 521,441

Share-based compensation 24,871 20,030 17,751

Loss on disposal of business 946 — —

Loss on debt extinguishment 5,715 — —

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Cash from (used for) business acquisitions, net of cash acquired ( 73,340 ) 590 ( 74,392 )

Purchase of intangible assets ( 3,650 ) — —

Proceeds from disposal of tangible assets 30,234 3,161 25

Proceeds from disposal of business, net of cash sold 54,821 — 40,171

Proceeds from disposal of businesses, net of cash sold 45,735 54,821 —

Net cash used for investing activities ( 92,003 ) ( 31,643 ) ( 184,369 )

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Payments under borrowing arrangements ( 360,304 ) ( 190,000 ) —

Payments under share repurchase program ( 35,000 ) ( 50,000 ) ( 175,000 )

Payment of earnout consideration ( 29,300 ) — —

Cash dividends paid ( 9,056 ) ( 9,029 ) ( 34,439 )

Withholding tax payments for share based-payment awards ( 1,388 ) ( 2,149 ) ( 2,094 )

Other ( 194 ) ( 360 ) —

Debt issuance costs paid ( 8,173 ) — —

Redemption of stockholders' rights agreement — — ( 411 )

Withholding tax payments for share based-payment awards ( 5,570 ) ( 1,388 ) ( 2,149 )

Payments under financing lease obligations ( 3,151 ) ( 194 ) ( 360 )

Payments to noncontrolling interest holders ( 2,682 ) — —

Payments under share repurchase program — ( 35,000 ) ( 50,000 )

Payment of earnout consideration — ( 29,300 ) —

Borrowings under credit arrangements 356,010 190,000 —

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Effect of foreign currency exchange rate changes on cash and cash equivalents ( 5,363 ) 9,299 ( 301 )

Increase (decrease) in cash and cash equivalents 76,109 5,275 ( 140,498 )

Increase in cash and cash equivalents 141,763 76,109 5,275

Cash and cash equivalents, beginning of year 501,994 425,885 420,610

Cash and cash equivalents, end of year $ 643,757 $ 501,994 $ 425,885

For all periods presented, the Consolidated Cash Flow Statement includes the results of the Grass Valley disposal group up to the disposal date, July 2, 2020.

The Consolidated Cash Flow Statement includes the results of discontinued operations up to the disposal date, July 2, 2020.

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

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Balance at December 31, 2018 52 $ 1 50,335 $ 503 $ 1,139,395 $ 922,000 ( 10,939 ) $ ( 599,845 ) $ ( 74,907 ) $ 441 $ 1,387,588

Cumulative effect of change in accounting principles — — — — — ( 29,041 ) — — — — ( 29,041 )

Net income (loss) — — — — — ( 377,015 ) — — — 239 ( 376,776 )

Other comprehensive income (loss), net of tax — — — — — — — — 23,119 ( 7 ) 23,112

Other comprehensive income, net of tax — — — — — — — — 11,489 464 11,953

Acquisition of business with noncontrolling interests — — — — — — — — — 5,195 5,195

Acquisition of noncontrolling interests — — — — ( 398 ) — — — — ( 367 ) ( 765 )

Exercise of stock options, net of tax withholding forfeitures — — — — ( 291 ) — 4 180 — — ( 111 )

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Share-based compensation — — — — 17,751 — — — — — 17,751

Redemption of stockholders' rights agreement — — — — — ( 411 ) — — — — ( 411 )

Preferred stock conversion ( 52 ) ( 1 ) — — ( 340,788 ) — 6,857 340,789 — — —

Preferred stock dividends — — — — — ( 18,437 ) — — — — ( 18,437 )

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Balance at December 31, 2019 — $ — 50,335 $ 503 $ 811,955 $ 518,004 ( 4,877 ) $ ( 307,197 ) $ ( 63,418 ) $ 5,972 $ 965,819

Cumulative effect of change in accounting principle — — — — — ( 2,916 ) — — — — ( 2,916 )

Net income (loss) — — — — — ( 55,162 ) — — — 104 ( 55,058 )

Other comprehensive income, net of tax — — — — — — — — 11,489 464 11,953

Acquisition of business with noncontrolling interests — — — — — — — — — 5,195 5,195

Acquisition of noncontrolling interests — — — — ( 398 ) — — — — ( 367 ) ( 765 )

Other comprehensive income (loss), net of tax — — — — — — — — ( 128,433 ) 394 ( 128,039 )

Retirement Savings Plan stock contributions — — — — ( 1,622 ) — 76 4,276 — — 2,654

Exercise of stock options, net of tax withholding forfeitures — — — — ( 791 ) — 7 610 — — ( 181 )

2 unchanged sentences

Share-based compensation — — — — 20,030 — — — — — 20,030

Preferred stock conversion ( 52 ) ( 1 ) — — ( 340,788 ) — 6,857 340,789 — — —

Preferred stock dividends — — — — — ( 18,437 ) — — — — ( 18,437 )

Common stock dividends ($ 0.20 per share)

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Balance at December 31, 2020 $ — $ — 50,335 $ 503 $ 823,605 $ 450,876 ( 5,692 ) $ ( 332,552 ) $ ( 191,851 ) $ 6,470 $ 757,051

Cumulative effect of change in accounting principle — — — — — ( 2,916 ) — — — — ( 2,916 )

Net income (loss) — — — — — ( 55,162 ) — — — 104 ( 55,058 )

Net income — — — — — 63,925 — — — 392 64,317

Other comprehensive income (loss), net of tax — — — — — — — — 121,285 ( 1,423 ) 119,862

Acquisition of noncontrolling interests — — — — 2,391 — — — — ( 4,644 ) ( 2,253 )

Retirement Savings Plan stock contributions — — — — ( 652 ) — 134 7,540 — — 6,888

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Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — — — ( 14,973 ) — 178 9,890 — — ( 5,083 )

Share repurchase program — — — — — — ( 976 ) ( 35,000 ) — — ( 35,000 )

Share-based compensation — — — — 24,871 — — — — — 24,871

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Business Description

(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) is a global supplier of specialty networking solutions built around two global businesses – Enterprise Solutions and Industrial 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.

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We make significant estimates with respect to the collectability and valuation of receivables, the valuation of inventory, the realization of deferred tax assets, the valuation of goodwill and indefinite-lived intangible assets, the valuation of contingent liabilities, the calculation of share-based compensation, the calculation of pension and other postretirement benefits expense, and the valuation of acquired businesses.

Reclassifications

We have made certain reclassifications to the 2019 and 2018 Consolidated Financial Statements, primarily as a result of the West Penn Wire business and multi-conductor product line transfer from the Enterprise Solutions segment to the Industrial Solutions segment in 2020.

Summary of Significant Accounting Policies

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

During 2020, 2019, and 2018 we utilized Level 1 inputs to determine the fair value of cash equivalents and Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 4) and for impairment testing (see Notes 5 and 13).

During 2021, 2020, and 2019 we utilized Level 1 inputs to determine the fair value of cash equivalents and Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 4) and for impairment testing (see Note 13).

We did not have any transfers between Level 1 and Level 2 fair value measurements during 2021.

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Unprocessed Changes recognized against our gross accounts receivable balance at December 31, 2021 and 2020 totale d $ 23.4 million and $ 25.5 million, respectively.

Unprocessed Changes recognized as accrued liabilities at December 31, 2020 and 2019 totaled $ 13.0 million and $ 11.0 million, respectively.

Unprocessed Changes recognized as accrued liabilities at December 31, 2021 and 2020 totaled $ 12.5 million an d $ 13.0 million, respectively.

We are exposed to credit losses primarily through sales of products and services.

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In circumstances where inventory levels are in excess of anticipated market demand, where inventory is deemed technologically obsolete or not saleable due to condition, or where inventory cost exceeds net realizable value, we record a charge to cost of sales and reduce the inventory to its net realizable value.

The allowances for excess and obsolete inventories at December 31, 2020 and 2019 totaled $ 32.3 million and $ 21.2 million, respectively.

The allowances for excess and obsolete inventories at December 31, 2021 and 2020 totaled $ 45.7 million and $ 32.3 million, respe ctively.

Property, Plant and Equipment

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Goodwill and Intangible Assets

Our intangible assets consist of (a) definite-lived assets subject to amortization such as developed technology, customer relationships, certain in-service research and development, certain trademarks, backlog, and capitalized software intangible assets, and (b) indefinite-lived assets not subject to amortization such as goodwill, certain trademarks, and certain in-process research and development intangible assets.

Our intangible assets consist of (a) definite-lived assets subject to amortization such as developed technology, customer relationships, in-service research and development, certain trademarks, backlog, and capitalized software intangible assets, and (b) indefinite-lived assets not subject to amortization such as goodwill, certain trademarks, and in-process research and development intangible assets.

We record amortization of the definite-lived intangible assets over the estimated useful lives of the related assets, which generally range from one year or less for backlog to more than 25 years for certain of our customer relationships.

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In the event we cannot reliably determine that pattern, we utilize a straight-line amortization method.

We test our goodwill and other indefinite-lived intangible assets not subject to amortization for impairment on an annual basis as of our fiscal November month-end or when indicators of impairment exist.

We test our goodwill and other indefinite-lived intangible asset not subject to amortization for impairment on an annual basis as of our fiscal November month-end or when indicators of impairment exist.

We base our estimates on assumptions we believe to be reasonable, but which are not predictable with precision and therefore are inherently uncertain.

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In 2021, we did not perform a qualitative assessment over any of our reporting units.

For our annual impairment test in 2020, we performed a quantitative assessment for all ten of our reporting units included in continuing operations.

For our annual impairment test in 2021, we performed a quantitative assessment for all six of our reporting units.

Under a quantitative assessment for goodwill impairment, we determine the fair value using the income approach (using Level 3 inputs) as reconciled to our aggregate market capitalization.

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Consideration is given to the financial conditions and operating performance of the reporting unit being valued relative to those publicly-traded companies operating in the same or similar lines of business.

Based on our annual goodwill impairment test, the excess of the fair values over the carrying values of our ten reporting units tested under a quantitative income approach ranged from 4% - 345%.

As a result, the goodwill balances for our continuing operations reporting units were no t impaired in 2020.

Furthermore, we did not recognize any goodwill impairment from continuing operations in 2019 or 2018.

Based on our annual goodwill impairment test, the excess of the fair values over the carrying values for five of the six reporting units tested under a quantitative income approach ranged from 51% - 436%.

The estimated fair value for the Tripwire reporting unit was $ 131.2 million less than its carrying value, and as such, we recognized a goodwill impairment charge of $ 131.2 million during the fourth quarter of 2021.

For the other five reporting units, using both an income approach and market approach, we determined that there was no impairment

During 2020 and 2019, we did no t recognize any goodwill impairment from continuing operations.

See Note 13 for further discussion.

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We test intangible assets subject to amortization for impairment and estimate their fair values using the same assumptions and techniques we employ on property, plant and equipment.

We did not recognize any impairment charges for amortizable intangible assets from continuing operations in 2020, 2019, or 2018.

Due to its overall financial performance and discontinued operations classification, we performed impairment tests on the Grass Valley disposal group, which resulted in total asset impairments of $ 113.0 million and $ 521.4 million in 2020 and 2019, respectively.

We did no t recognize any impairment charges for amortizable intangible assets from continuing operations in 2021, 2020, or 2019.

During the years ended December 31, 2020 and 2019, we performed impairment tests on the Grass Valley disposal group due to its overall financial performance and discontinued operations classification, which resulted in total asset impairments of $ 113.0 million and $ 521.4 million, respectively.

The 2019 impairment charge consisted of impairments to goodwill, customer relationships, and trademarks of $ 326.1 million, $ 14.4 million, and $ 1.6 million, respectively, as well as an impairment of the disposal group of $ 179.3 million ($ 180.4 million translated at year-end exchange rates).

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.

During 2020, we sold a previously closed operating facility for net proceeds of $ 2.1 million and recognized a $ 0.4 million gain on the sale as well as completed the sale of Grass Valley to Black Dragon Capital - See Note 5.

During 2018, we sold a previously closed operating facility for net proceeds of $ 1.5 million and recognized a $ 0.6 million gain on the sale.

During 2017, we sold our MCS business and a 50 % ownership interest in Xuzhou Hirschmann Electronics Co.

Ltd (the Hirschmann JV) for a total purchase price of $ 40.2 million.

The $ 40.2 million of proceeds from the sale was collected during 2018.

See Notes 5 and 13.

Pension and Other Postretirement Benefits

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We charge revisions to these estimates back to accrued liabilities and revenues in the period in which the facts that give rise to each revision become known.

Future market conditions and product transitions might require us to take actions to increase sales rebates offered, possibly resulting in an incremental increase in accrued liabilities and an incremental reduction in revenues at the time the rebate is offered.

Accrued sales rebates at December 31, 2020 and 2019 totaled $ 32.2 million and $ 37.2 million, respectively.

Future market conditions and product transitions might require us to take actions to increase sales rebates offered, possibly resulting in an incremental increase in accrued liabilities and an i ncremental reduction in revenues at the time the rebate is offered.

Accrued sales rebates at December 31, 2021 and 2020 totaled $ 55.5 million and $ 32.2 million, respecti vely.

Contingent Liabilities

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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.

Business Combination Accounting

Acquisition Accounting

We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values.

2 unchanged sentences

We typically engage third party valuation specialists to assist in the fair value determination of inventories, tangible long-lived assets, and intangible assets other than goodwill.

The carrying values of acquired receivables and accounts payable have historically approximated their fair values as of the business combination date.

As necessary, we may engage third party specialists to assist in the estimation of fair value for certain liabilities, such as deferred revenue or postretirement benefit liabilities.

The carrying values of acquired receivables and accounts payable have historically approximated their fair values as of the acquisition date.

As necessary, we may engage third party specialists to assist in the estimation of fair value for certain liabilities, such as postretirement benefit liabilities.

We adjust the preliminary acquisition accounting, as necessary, typically up to one year after the acquisition closing date as we obtain more information regarding asset valuations and liabilities assumed.

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(1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) each performance obligation is satisfied.

Gain from Patent Litigation

In 2011, the Company’s wholly-owned subsidiary, PPC, filed an action for patent infringement against Corning alleging that Corning infringed two of PPC’s patents.

In 2015, a jury found that Corning willfully infringed both patents.

Following a series of appeals, we received a pre-tax amount of approximately $ 62.1 million from Corning in 2018.

We recorded the $ 62.1 million of cash received as a pre-tax gain from patent litigation during 2018.

Cost of Sales

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Advertising costs are expensed as incurred.

Advertising costs w ere $ 11.6 million , $ 14.7 million, and $ 17.0 million for 2020, 2019, and 2018, respectively.

Advertising costs were $ 12.8 million, $ 11.6 million, and $ 14.7 million for 2021, 2020, and 2019, respectively.

Share-Based Compensation

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Income taxes are provided based on earnings reported for financial statement purposes.

The provision for income taxes differs from the amounts currently payable to taxing authorities because of the recognition of revenues and expenses in different periods for income tax purposes than for financial statement purposes.

The provision for income taxes differs from the amounts currently payable to taxing authorities due to the temporary or permanent timing differences with respect to the recognition of revenues, expenses, and tax attributes for income tax purposes compared to financial statement purposes.

Income taxes are provided as if operations in all countries, including the U.S., were stand-alone businesses filing separate tax returns.

We recognize deferred tax assets resulting from tax credit carryforwards, net operating loss carryforwards, and deductible temporary differences between taxable income on our income tax returns and pretax income on our financial statements.

Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards.

Deferred tax assets generally represent future tax benefits to be received when these carryforwards can be applied against future taxable income or when expenses previously reported in our Consolidated Financial Statements become deductible for income tax purposes.

A deferred tax asset valuation allowance is required when some portion or all of the deferred tax assets may not be realized.

At December 31, 2020 the valuation allowance of $ 84.3 million was primarily related to net operating losses, capital losses and foreign tax credits that we do not expect to realize.

At December 31, 2021, the valuation allowance of $ 68.7 million was primarily related to net operating losses and capital losses that we do not expect to realize.

Our effective tax rate is based on expected income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate.

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To the extent we were to prevail in matters for which accruals have been established or would be required to pay amounts in excess of reserves, there could be a material effect on our income tax provisions in the period in which such determination is made.

Current-Year Adoption of Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (“ASU 2019-12”) which removes certain exceptions for investments, intra-period allocations and interim tax calculations, and adds guidance to reduce the complexity in accounting for income taxes.

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The various amendments in ASU 2019-12 are applied on a retrospective basis, modified retrospective basis and prospective basis, depending upon the amendment.

The Company did not early adopt this pronouncement and is in the process of evaluating the impact of this amendment on our consolidated financial statements;

however, it is not anticipated to be material.

See Note 18, Income Taxes, in the accompanying notes to our consolidated financial statements.

Current-Year Adoption of Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update No.

2016-13 (“ASU 2016-13”), Financial Instruments - Credit Losses .

Under the new standard, we are required to recognize estimated credit losses expected to occur over the estimated life or remaining contractual life of an asset (which includes losses that may be incurred in future periods) using a broader range of information including past events, current conditions, and reasonable and supportable forecasts about future economic conditions.

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.

See further discussion as well as adjustments to the allowance for doubtful accounts under the new credit loss model in Note 9.

On January 1, 2018, we adopted Accounting Standards Update No.

2014-09, Revenue from Contracts with Customers (Topic 606) using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018.

We recorded a net increase to retained earnings of $ 2.6 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to sales commissions and software revenues within our Industrial Solutions segment.

The impact of adopting ASU 2019-12 on our consolidated financial statements was not material.

In October 2021, the FASB issued Accounting Standards Update No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The new standard eliminates the complexity of determining the fair value of contract liabilities and delivers revenue recognition consistency for contract assets and liabilities between the acquirer and acquiree in a business combination.

The ASU is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

The amendments should be applied prospectively;

however, an entity that elects to early adopt in an interim period should apply the amendments to all business combinations that occurred during the fiscal year that includes that interim period.

We adopted ASU 2021-08 during the fourth quarter of 2021, which resulted in an increase in consolidated revenues of $ 1.4 million.

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.

34 unchanged sentences

For these arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price and recognized when or as each performance obligation is satisfied.

Most of our performance obligations related to the sale of products are satisfied at a point in time when control of the product is transferred based on the shipping terms of the arrangement.

Generally, we determine standalone selling price using the prices charged to customers on a standalone basis.

In arrangements where software licenses with highly variable standalone selling prices are sold with either support or professional services, we generally determine the standalone selling price of the software license using the residual approach.

Typically, payments are due after control transfers, which is less than one year from satisfaction of the performance obligation.

Most of our performance obligations related to the sale of products are satisfied at a point in time when control of the product is transferred to the customer, which generally occurs when the product has been shipped or delivered from our facility to our customers, the customer has legal title to the product, and we have a present right to payment for the product.

We also consider any customer acceptance clauses in determining when control has transferred to the customer and typically, these clauses are not substantive.

The amount of consideration we receive and revenue we recognize varies due to rebates, returns, and price adjustments.

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(in thousands)

Accrued rebates $ 32,192 $ 37,170

Accrued returns 13,016 10,974

Accrued rebates included in accrued liabilities $ 55,525 $ 32,192

Accrued returns included in accrued liabilities 12,530 13,016

Price adjustment recognized against gross accounts receivable 23,035 25,244

Depending on the terms of an arrangement, we may defer the recognition of a portion of the consideration received because we have to satisfy a future obligation.

Depending on the terms of an arrangement, we may defer the recognition of a portion of the consideration received because we must satisfy a future performance obligation.

Consideration allocated to support services under a support and maintenance contract is typically paid in advance and recognized ratably over the term of the service.

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New deferrals 97,940

Acquisitions 7,172

Revenue recognized ( 95,915 )

Balance at December 31, 2021 $ 86,845

Service-type warranties represent $ 10.4 million of the deferred revenue balance at December 31, 2020, and of this amount $ 3.6 million is expected to be recognized in the next twelve months, and the remaining $ 6.8 million is long-term and will be recognized over a period greater than twelve months.

S ervice-type warranties represent $ 9.6 million of the deferred revenue balance at December 31, 2021, and of this amount $ 4.1 million is expected to be recognized in the next twelve months, and the remaining $ 5.5 million is long-term and will be recognized over a period greater than twelve months.

At December 31, 2021, we did not have any material contract assets recorded in the consolidated balance sheets.

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

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Total capitalized sales commissions were $ 7.1 million, $ 5.8 million, and $ 3.4 million as of December 31, 2021, 2020, and 2019, respectively.

For the years ended December 31, 2020, 2019 and 2018, we recogn ized $ 16.3 million, $ 19.0 million, and $ 20.3 million of sales commissions expense in selling, general, and administrative expenses, respectively.

Special Product Company

On December 6, 2019, we purchased and assumed substantially all the assets, and certain specified liabilities of Special Product Company (SPC) for a purchase price of $ 22.5 million.

SPC, based in Kansas City, Kansas, is a leading designer, manufacturer, and seller of outdoor cabinet products for optical fiber cable installations.

The results of SPC have been included in our Consolidated Financial Statements from December 6, 2019, and are reported within the Enterprise Solutions segment.

The acquisition of SPC was not material to our financial position or results of operations.

We acquired 100 % of the shares of Opterna International Corp.

(Opterna) on April 15, 2019 for a purchase price, net of cash acquired, of $ 51.7 million.

Of the $ 51.7 million purchase price, $ 45.9 million was paid in 2019 with cash on hand.

The acquisition included a potential earnout, which is based upon future Opterna financial targets through April 15, 2021.

The maximum earnout consideration is $ 25.0 million, but based upon a third party valuation specialist using certain assumptions in a discounted cash flow model, the estimated fair value of the earnout included in the purchase price is $ 5.8 million.

Opterna is an international fiber optics solution business formerly based in Sterling, Virginia which designs and manufactures a range of

complementary fiber connectivity, cabinet, and enclosure products used in optical networks.

The results of Opterna have been included in our Consolidated Financial Statements from April 15, 2019, and are reported within the Enterprise Solutions segment.

Certain subsidiaries of Opterna include noncontrolling interests.

Because Opterna has a controlling financial interest in these subsidiaries, they are consolidated into our financial statements.

The results that are attributable to the noncontrolling interest holders are presented as net income attributable to noncontrolling interests in the Consolidated Statements of Operations.

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

On October 25, 2019, we purchased the noncontrolling interest of one subsidiary for a purchase price of $ 0.8 million;

of which $ 0.4 million was paid at closing and the remaining $ 0.4 million is to be paid in 2021.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of April 15, 2019 (in thousands):

For the years ended December 31, 2021, 2020 and 2019, we recogn iz ed $ 20.9 million , $ 16.3 million, and $ 19.0 million of sales commissions expense in selling, general, and administrative expenses, respectively.

OTN Systems N.V.

We acquired 100 % of the shares of OTN Systems on January 29, 2021 for a purchase price, net of cash acquired, of $ 73.3 million, which was funded with cash on hand.

OTN Systems, based in Olen, Belgium, is a leading provider of easy to use and highly-reliable network solutions tailored for specific applications in harsh, mission-critical environments.

The acquisition of OTN Systems supports one of our key strategic priorities related to the growing demand for industrial automation by adding proprietary technology and mission-critical hardware and software products for more complete end-to-end solutions.

The results of OTN Systems have been included in our Consolidated Financial Statements from January 29, 2021, and are reported within the Industrial Solutions segment.

Belden assumed $ 1.8 million of OTN Systems' debt as part of the transaction, which was subsequently paid on the acquisition date.

A subsidiary of OTN Systems includes a noncontrolling interest.

Because OTN Systems has a controlling financial interest in the subsidiary, it is consolidated into our financial statements.

The results that are attributable to the noncontrolling interest holder are presented as net income (loss) attributable to noncontrolling interests in the Consolidated Statements of Operations.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of January 29, 2021 (in thousands):

Receivables $ 6,009

Inventory 7,359

Prepaid and other current assets 566

Inventories 10,731

Other current assets 768

Property, plant, and equipment 602

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Goodwill 41,749

Deferred income taxes 80

Operating lease right-of-use assets 4,144

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Accrued liabilities 8,735

Long-term deferred tax liability 6,813

Long-term operating lease liability 1,923

Long-term debt 1,841

Postretirement benefits 3,581

Deferred income taxes 2,980

Long-term operating lease liabilities 3,271

Other long-term liabilities 3,692

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Net assets 73,365

Noncontrolling interest 5,195

Noncontrolling interests 20

Net assets attributable to Belden $ 73,345

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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.

The judgments we have used in estimating the preliminary fair value assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.

We did not record any material measurement-period adjustments during 2020.

For the purpose of the above allocation, we based our estimate of fair value for the acquired inventory, intangible assets, and noncontrolling interests on valuation studies performed by a third party valuation firm.

We have estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for post acquisition selling efforts.

The judgments we have used in estimating the fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.

For purposes of the above allocation, we based our estimate of the fair values for the acquired inventory, intangible assets, and postretirement benefits on valuation studies performed by a third party valuation firm.

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).

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

The goodwill is primarily attributable to expansion of product offerings in the optical fiber market.

The goodwill is primarily attributable to the expansion of industrial automation product offerings in complete end-to-end solutions.

Our tax basis in the acquired goodwill is zero .

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Trademarks 3,070 14.8

Non-compete agreements 660 2.0

Total intangible assets subject to amortization $ 39,930

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The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks.

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

The useful life of the non-compete agreements was based on the term of the agreements.

Our consolidated revenues and income (loss) before taxes for the year ended December 31, 2021 included $ 37.6 million and $( 1.8 ) million, respectively, from OTN Systems.

For the year ended December 31, 2021, loss before taxes included $ 5.1 million of amortization of intangible assets, $ 3.0 million of severance and other restructuring costs, and $ 2.4 million of cost of sales related to the adjustment of acquired inventory to fair value for OTN Systems.

The following table illustrates the unaudited pro forma effect on operating results as if the OTN Systems acquisition had been completed January 1, 2020.

Years Ended December 31,

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Diluted income (loss) per share attributable to Belden common stockholders $ 1.44 $ ( 1.32 )

For purposes of the pro forma disclosures, the year ended December 31, 2018 includes expenses related to the acquisition, including severance, restructuring, and acquisition costs;

amortization of intangible assets;

and cost of sales arising from the adjustment of inventory to fair value of $ 5.5 million, $ 3.8 million, and $ 0.5 million, respectively.

The above unaudited pro forma information is presented for information purposes only and does not purport to represent what our results of operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods.

The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods.

Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.

We acquired the FutureLink product line and related assets from Suttle, Inc.

on April 5, 2019 for a purchase price of $ 5.0 million, which was funded with cash on hand.

The acquisition of FutureLink allows us to offer a more complete set of fiber product offerings.

The results from the acquisition of FutureLink have been included in our Condensed Consolidated Financial Statements from April 5, 2019, and are reported within the Enterprise Solutions segment.

The acquisition of FutureLink was not material to our financial position or results of operations.

Discontinued Operations

Opterna International Corp.

Our acquisition of Opterna International Corp.

(Opterna) in 2019 included potential earn-out consideration.

As of the acquisition date, we estimated the fair value of the earn-out to be $ 5.8 million.

The earn-out period ended in 2021, and the financial targets tied to the earn-out were not achieved.

We reduced the earn-out liability to zero and recognized a $ 5.8 million benefit in Selling, General and Administrative Expenses during the year ended December 31, 2021.

This benefit was excluded from Segment EBITDA of our Enterprise Solutions segment.

We classify assets and liabilities as held for sale (disposal group) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition.

We also consider whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Brazil Oil & Gas Cable Business

During the first quarter of 2021, we committed to a plan to sell our oil and gas cable business in Brazil that met all of the criteria to classify the assets and liabilities of this business, formerly part of the Industrial Solutions segment, as held for sale.

At such time, the carrying value of the disposal group exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $ 3.4 million.

Therefore, we recognized an impairment charge equal to this amount in the first quarter of 2021.

The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment.

We completed the sale of our oil and gas cable business in Brazil during the second quarter of 2021 for $ 10.9 million, net of cash delivered with the business.

During the fourth quarter of 2019, we committed to a plan to sell Grass Valley, and at such time, met all of the criteria to classify the assets and liabilities of this business as held for sale.

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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 Belden retained.

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

We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $ 113.0 million and $ 521.4 million in 2020 and 2019, 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.

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Any subsequent recognition of an earnout will be based on the gain contingency guidance.

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.

We exercised our right during the fourth quarter of 2020 and sold our 9 % equity interest in Grass Valley to Black Dragon Capital for $ 2.7 million.

We deconsolidated Grass Valley as of July 2, 2020 and accounted for our equity interest under the cost method for the period that we owned a 9 % interest in Grass Valley.

As of December 31, 2020, we do not own any interest in Grass Valley.

Grass Valley's operating results for periods after July 2, 2020 are not included in our Consolidated Financial Statements.

The seller’s note accrues PIK interest at an annual rate of 8.5 %.

During the year ended December 31, 2021, the seller’s note accrued interest of $ 13.9 million, which we reserved for based on our expected loss allowance methodology.

We are performing certain services for Grass Valley under a transition services agreement.

During 2020, the amount of transition services totaled $ 2.0 million, which we expect to collect in 2021.

During 2021, we sold the seller's note to a third party for $ 62.0 million and recognized a gain on sale of approximately $ 27.0 million.

The following table summarizes the operating results of the disposal group up to the July 2, 2020 disposal date for the years ended December 31, 2020 and 2019, respectively:

Years Ended December 31,

2020 2019 2018

(In thousands)

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Loss before taxes $ ( 129,642 ) $ ( 513,908 )

The disposal group recognized depreciation and amortization expense of approximately $ 0.0 million, $ 23.7 million, and $ 35.1 million during the years ended December 31, 2020, 2019, and 2018, respectively.

The disposal group also had capital expenditures of approximately $ 16.7 million, $ 29.4 million, and $ 22.6 million during the years ended December 31, 2020, 2019, and 2018, respectively.

Furthermore, the disposal group incurred stock-based compensation expense/(credits) of $( 0.9 ) million, $ 0.9 million, and $ 1.4 million during the years ended December 31, 2020, 2019, and 2018, respectively.

The disposal group recognized depreciation and amortization expense of approximately $ 0.0 million and $ 23.7 million during the years ended December 31, 2020 and 2019, respectively.

The disposal group also had capital expenditures of approximately $ 16.7 million and $ 29.4 million during the years ended December 31, 2020 and 2019, respectively.

Furthermore, the disposal group incurred stock-based compensation expense/(credits) of $( 0.9 ) million and $ 0.9 million during the years ended December 31, 2020 and 2019, respectively.

The disposal group did not have any significant non-cash charges for investing activities during the years ended December 31, 2020 and 2019.

The following table provides the major classes of assets and liabilities of the disposal group as of December 31, 2019 (in thousands):

Cash and cash equivalents $ 18,405

Receivables, net 117,386

Inventories, net 55,002

Other current assets 35,187

Property, plant and equipment, less accumulated depreciation 61,233

Operating lease right-of-use assets 16,902

Goodwill 26,707

Intangible assets, less accumulated amortization 143,459

Deferred income taxes 59,560

Other long-lived assets 21,652

Impairment of disposal group ( 180,358 )

Total assets of discontinued operations $ 375,135

Accounts payable $ 52,425

Accrued liabilities 83,349

Postretirement benefits 6,224

Deferred income taxes 2,740

Long-term operating lease liabilities 20,459

Other long-term liabilities 5,082

Total liabilities of discontinued operations $ 170,279

The disposal group also had $ 42.3 million of accumulated other comprehensive losses as of December 31, 2019.

Operating Segments and Geographic Information

We are organized around two global business platforms:

We are organized around two global businesses:

Enterprise Solutions and Industrial Solutions.

Each of the global business platforms represents a reportable segment.

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.

Each of the global businesses represents a reportable segment.

The segments design, manufacture, and market a portfolio of signal transmission solutions for mission critical applications used in a variety of end markets.

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The key measures of segment profit or loss reviewed by our chief operating decision maker are Segment Revenues and Segment EBITDA.

Segment Revenues represent non-affiliate revenues and include revenues that would have otherwise been recorded by acquired businesses as independent entities but were not recognized in our Consolidated Statements of Operations due to the effects of purchase accounting and the associated write-down of acquired deferred revenue to fair value.

Segment Revenues represent non-affiliate revenues.

Segment EBITDA excludes certain items, including depreciation expense;

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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 to fair value;

and other costs.

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Segment revenues $ 1,074,426 $ 872,415 $ 946,041

Affiliate revenues 1,289 4,162 6,105

Segment EBITDA 143,236 99,333 126,925

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Amortization of software development intangible assets 94 245 175

Adjustments related to acquisitions and divestitures ( 6,828 ) 125 592

Severance, restructuring, and acquisition integration costs 13,800 7,720 10,808

Purchase accounting effects of acquisitions 125 592 1,690

Acquisition of property, plant and equipment 36,726 25,223 42,289

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Segment revenues $ 1,333,674 $ 990,301 $ 1,185,237

Affiliate revenues 60 11 80

Segment EBITDA 227,946 147,626 226,110

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Amortization of software development intangible assets 2,806 1,576 350

Adjustments related to acquisitions and divestitures 1,792 — —

Severance, restructuring, and acquisition integration costs 10,092 4,538 15,736

Goodwill and other asset impairment 140,461 — —

Acquisition of property, plant and equipment 47,401 44,675 35,189

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Segment revenues $ 2,408,100 $ 1,862,716 $ 2,131,278

Affiliate revenues 1,349 4,173 6,185

Segment EBITDA 371,182 246,959 353,035

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Amortization of software development intangible assets 2,900 1,821 525

Adjustments related to acquisitions and divestitures ( 5,036 ) 125 592

Severance, restructuring, and acquisition integration costs 23,892 12,258 26,544

Purchase accounting effects of acquisitions 125 592 1,690

Goodwill and other asset impairment 140,461 — —

Acquisition of property, plant and equipment 84,127 69,898 77,478

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(In thousands)

Total Segment Revenues $ 1,862,716 $ 2,131,278 $ 2,165,702

Deferred revenue adjustments — — —

Consolidated Revenues $ 1,862,716 $ 2,131,278 $ 2,165,702

Segment Revenues and Consolidated Revenues $ 2,408,100 $ 1,862,716 $ 2,131,278

Total Segment EBITDA $ 371,182 $ 246,959 $ 353,035

Amortization of intangibles ( 64,395 ) ( 74,609 ) ( 75,140 )

Goodwill and other asset impairment ( 140,461 ) — —

Depreciation expense ( 45,940 ) ( 42,470 ) ( 40,409 )

Amortization of intangibles ( 38,346 ) ( 64,395 ) ( 74,609 )

Severance, restructuring, and acquisition integration costs (1) ( 23,892 ) ( 12,258 ) ( 26,544 )

Purchase accounting effects related to acquisitions (2) ( 125 ) ( 592 ) ( 1,690 )

Amortization of software development intangible assets ( 2,900 ) ( 1,821 ) ( 525 )

Loss on sale of assets (3) — — ( 94 )

Costs related to patent litigation — — ( 2,634 )

Gain from patent litigation — — 62,141

Adjustments related to acquisitions and divestitures (2) 5,036 ( 125 ) ( 592 )

Eliminations ( 119 ) ( 480 ) ( 3,149 )

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Non-operating pension benefit (cost) 4,476 ( 395 ) 1,017

Gain on sale of note receivable 27,036 — —

Loss on debt extinguishment ( 5,715 ) — —

Consolidated income from continuing operations before taxes $ 87,662 $ 66,127 $ 152,410

(1) See Note 15, Severance, Restructuring, and Acquisition Integration Activities, for details .

(2) In 2020 and 2019, we collectively recognized $ 0.1 million and $ 0.6 million, respectively, of cost of sales related to purchase accounting adjustments of acquired inventory to fair value for both our SPC and Opterna acquisitions.

In 2018, we made a $ 1.7 million adjustment to increase the earn-out liability associated with an acquisition.

(3) In 2018, we recognized a $ 0.1 million loss on sale of assets for the sale of our MCS business and Hirschmann JV.

(1) See Note 15, Severance, Restructuring, and Acquisiti on Integration Activities, for details .

(2) In 2021, we collected $ 2.2 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, reduced the Opterna earn-out liability by $ 5.8 million, recognized cost of sales of $ 2.3 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition, and recognized a $ 0.6 million loss on the sale of tangible assets.

In 2020 and 2019, we collectively recognized $ 0.1 million and $ 0.6 million, respectively, of cost of sales related to acquisition accounting adjustments of acquired inventory to fair value for both our SPC and Opterna acquisitions.

Below are reconciliations of other segment measures to the consolidated totals.

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Assets of discontinued operations

— 375,135 822,843

Total assets $ 3,417,677 $ 3,139,734 $ 3,406,759

Total segment acquisition of property, plant and equipment $ 84,127 $ 69,898 $ 77,478

Discontinued operations acquisition of property, plant and equipment 16,712 29,414 22,681

Corporate acquisition of property, plant and equipment 6,855 3,605 3,110

Discontinued operations acquisition of property, plant and equipment — 16,712 29,414

Total acquisition of property, plant and equipment $ 90,982 $ 90,215 $ 110,002

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Major Customer

Revenues generated in both the Enterprise Solutions and Industrial Solutions segments from sales to WESCO were approximately $ 271.6 million ( 15 % of revenues), $ 328.2 million ( 15 % of revenues), and $ 361.7 million ( 17 % of revenues) for 2020, 2019, and 2018, respectively.

At December 31, 2020, we had $ 17.5 million in accounts receivable outstanding from WESCO, which represented approximately 6 % of our total accounts receivable outstanding at December 31, 2020.

Revenues generated in both the Enterprise Solutions and Industrial Solutions segments from our largest customer were approximately $ 374.8 million ( 16 % of revenues), $ 271.6 million ( 15 % of revenues), and $ 328.2 million ( 15 % of revenues) for the years ended December 31, 2021, 2020, and 2019, respectively.

At December 31, 2021 and 2020, we had $ 40.5 million and $ 17.5 million in accounts receivable outstanding from this customer, which represented approximately 10 % and 6 % of our total accounts receivable balance as of December 31, 2021 and 2020, respectively.

Noncontrolling Interest

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The joint venture is not material to our consolidated financial statements as of or for the years ended December 31, 2021, 2020, or 2019.

We acquired Opterna in April 2019.

Certain subsidiaries of Opterna include noncontrolling interests.

Because we have a controlling financial interest in these subsidiaries, they are consolidated into our financial statements.

The results of these subsidiaries were consolidated into our financial statements as of the acquisition date.

The results that are attributable to the noncontrolling interest holders are presented as net income (loss) attributable to noncontrolling interests in the Consolidated Statements of Operations.

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

On October 25, 2019, we purchased the noncontrolling interest of one subsidiary for a purchase price of $ 0.8 million;

of which $ 0.4 million was paid at closing and the remaining $ 0.4 million will be paid in 2021.

The subsidiaries of Opterna that include noncontrolling interests are not material to our consolidated financial statements as of or for the years ended December 31, 2020, 2019 or 2018.

Certain subsidiaries of Opterna included noncontrolling interests, which generated an immaterial amount of Opterna's annual revenues.

Because we had a controlling financial interest in these subsidiaries, they were consolidated into our financial statements, and the results that were attributable to the noncontrolling interest holders were presented as net income (loss) attributable to noncontrolling interests in the Consolidated Statements of Operations.

In 2019, we purchased the noncontrolling interest of one subsidiary for a purchase price of $ 0.8 million;

of which $ 0.4 million was paid at closing and the remaining $ 0.4 million was paid in 2021.

In November 2021, we purchased the remaining noncontrolling interests for a purchase price of $ 2.3 million.

As of December 31, 2021, Opterna does not include any noncontrolling interests.

A subsidiary of OTN Systems includes a noncontrolling interest.

Because we have a controlling financial interest in the subsidiary, it is consolidated into our financial statements.

This subsidiary that includes a noncontrolling interest is not material to our consolidated financial statements as of or for the years ended December 31, 2021, 2020 or 2019.

Income Per Share

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Income from continuing operations $ 62,457 $ 54,403 $ 109,891

Net income (loss) attributable to noncontrolling interest 104 239 ( 183 )

Net income attributable to noncontrolling interest 392 104 239

Preferred stock dividends — — 18,437

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Loss from discontinued operations, net of tax — ( 99,513 ) ( 486,667 )

Loss on disposal of discontinued operations, net of tax ( 9,948 ) — —

Gain (loss) on disposal of discontinued operations, net of tax 1,860 ( 9,948 ) —

Net income (loss) attributable to Belden common stockholders $ 63,925 $ ( 55,162 ) $ ( 395,452 )

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In addition, for the years ended December 31, 2021, 2020, and 2019, diluted weighted average shares outstanding do not include outstanding equity awards of 0.2 million, 0.4 million, and 0.3 million, respectively, because the related performance conditions have not been satisfied.

Furthermore, for t he years ended December 31, 2019, and 2018, diluted weighted average shares outstanding do not include the weighted average impact of preferred shares that were convertible into 3.7 million and 6.9 million common shares, respectively, because deducting the preferred stock dividends from net income was more dilutive.

Furthermore, for t he year ended December 31, 2019, diluted weighted average shares outstanding do not include the weighted average impact of preferred shares that were convertible into 3.7 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.

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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 year ended December 31, 2020 (in thousands).

The following table presents the activity in the allowance for doubtful accounts for the years ended December 31, 2021 and 2020 (in thousands).

Balance at December 31, 2019 $ 2,569

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Current period provision 2,282

Recoveries collected ( 637 )

Currency impact 39

Write-offs ( 114 )

Recoveries collected ( 637 )

Balance at December 31, 2020 $ 5,150

Current period provision 1,960

Currency impact ( 74 )

Disposals ( 190 )

Recoveries collected ( 227 )

Write-offs ( 367 )

Balance at December 31, 2021 $ 6,252

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We recognized depreciation expense in income from continuing operations of $ 45.9 million, $ 42.5 million, and $ 40.4 million in 2021, 2020, and 2019, respectively.

Sale-Leaseback

During the fourth quarter of 2021, we sold certain real estate in Germany as part of a sale and leaseback transaction for € 24.5 million (approximately $ 27.8 million) and recognized a $ 0.6 million loss on the sale.

The lease is for a term of 10 years and as of December 31, 2021, had a total right-of-use asset balance of $ 25.3 million.

When the assets met the held for sale criteria during the third quarter of 2021, we performed a recoverability test and determined that the carrying values of the assets were not recoverable and as a result, recognized a $ 2.3 million impairment charge to write them down to fair value.

The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment.

Asset Impairment

During the first quarter of 2021, we committed to a plan to sell our oil and gas business in Brazil and recognized an impairment charge of $ 3.4 million (includes a goodwill impairment of $ 1.7 million).

During the second quarter of 2021, we completed the sale of this business.

During the first quarter of 2021, we also performed a recoverability test over certain held and used long-lived assets in our Industrial Solutions segment.

We determined that the carrying values of the assets were not recoverable and recognized a $ 3.6 million impairment charge to write them down to fair value.

This impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment.

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space;

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As the rate implicit in most of our leases is not readily determinable, we use the incremental borrowing rate to determine the present value of the lease payments, which is unique to each leased asset, and is based upon the term of the lease, commencement date of the lease, local currency of the leased asset, and the credit rating of the legal entity leasing the asset.

We are party to a lease guarantee, whereby Belden has covenanted the lease payments for one of Snell Advanced Media's (SAM) property leases through its 2035 expiration date.

The lease guarantee was executed in 2018 following the acquisition of SAM, which we subsequently sold on July 2, 2020 as part of the Grass Valley disposal group (see Note 5).

This lease guarantee was retained by Belden and not transferred to Black Dragon Capital as part of the sale of Grass Valley .

Belden would be required to make lease payments only if the primary obligor, Black Dragon Capital, fails to make the payments.

As of December 31, 2021, the SAM lease has approximately $ 20.0 million of lease payments remaining.

We have not recorded a liability associated with this guarantee.

The components of lease expense were as follows:

Years Ended December 31,

2021 2020 2019

(In thousands)

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Years Ended December 31,

2021 2020 2019

(In thousands)

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Trademarks 70,619 ( 41,771 ) 28,848 65,861 ( 36,539 ) 29,322

In-service research and development 11,536 ( 9,774 ) 1,762 10,702 ( 7,160 ) 3,542

Backlog 14,580 ( 11,827 ) 2,753 11,421 ( 11,421 ) —

In-service research and development 11,550 ( 10,997 ) 553 11,536 ( 9,774 ) 1,762

Non-compete agreements 618 ( 283 ) 335 — — —

Total intangible assets subject to amortization $ 866,693 $ ( 591,997 ) $ 274,696 $ 812,387 $ ( 556,379 ) $ 256,008

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Trademarks $ 27,000 $ — $ 27,000 $ 31,063 $ — $ 31,063

In-process research and development — — — 800 — 800

Total intangible assets not subject to amortization $ 27,000 $ — $ 27,000 $ 31,063 $ — $ 31,063

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Acquisitions and purchase accounting adjustments — 41,749 41,749

2,420 — 2,420

Impairment — ( 132,843 ) ( 132,843 )

Translation impact ( 1,506 ) ( 6,866 ) ( 8,372 )

2,296 3,553 5,849

Balance at December 31, 2021 $ 473,241 $ 679,231 $ 1,152,472

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Balance at December 31, 2019 $ 27,000 $ 13,106 $ 40,106

Translation impact — ( 164 ) ( 164 )

Reclassify to definite-lived — ( 9,043 ) ( 9,043 )

Balance at December 31, 2020 $ 27,000 $ 4,063 $ 31,063

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The annual measurement date for our goodwill and indefinite-lived intangible assets impairment test is our fiscal November month-end.

For our 2020 goodwill impairment test, we performed a quantitative assessment for all ten of our reporting units and determined the estimated fair values of our reporting units by calculating the present values of their estimated future cash flows using Level 3 inputs.

For our 2021 goodwill impairment test, we performed a quantitative assessment for all six of our reporting units and determined the estimated fair values of our reporting units by calculating the present values of their estimated future cash flows using Level 3 inputs.

We did not perform a qualitative assessment over our reporting units.

We determined that the fair values of the reporting units were in excess of the carrying values;

therefore, we did no t record any goodwill impairment for the ten reporting units.

We also did no t recognize any goodwill impairment from continuing operations in 2019 or 2018 based upon the results of our annual goodwill impairment testing.

For our annual impairment test in 2020, the excess of the fair values over the carrying values of our ten reporting units tested under a quantitative income approach ranged from 4% - 345%.

We determined that the fair values for five of the six reporting units were in excess of their carrying values;

therefore, we did not record any goodwill impairment for these reporting units.

The estimated fair value for the Tripwire reporting unit in our Industrial Solutions segment was $ 131.2 million less than its carrying value, and as such, we recognized a goodwill impairment charge of $ 131.2 million during the fourth quarter of 2021.

For the Tripwire reporting unit, we determined the estimated fair value by calculating the present value of estimated future cash flows, which was based in part on the assumed proceeds from a divestiture of Tripwire.

On February 7, 2022, we signed an agreement to sell Tripwire.

We did no t recognize any goodwill impairment from continuing operations in 2020 or 2019 based upon the results of our annual goodwill impairment testing.

For our annual impairment test in 2021, the excess of the fair values over the carrying values for the reporting units other than Tripwire ranged from 51 % - 436 %.

The assumptions used to estimate fair values were based on the past performance of the reporting unit as well as the projections incorporated in our strategic plan.

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We also considered assumptions that market participants may use.

In our quantitative assessments, the discount rates ranged from 10.0% to 12.2%, the 2021 to 2030 compounded annual revenue growth rates ranged from 2.5% to 5.8%, and the revenue growth rates beyond 2030 ranged from 2.0% to 3.0%.

In our assessments, the discount rates ranged from 11.3 % to 13.7 %, the 2022 to 2031 compounded annual revenue growth rates ranged from 3.8 % to 9.7 %, and the revenue growth rates beyond 2031 ranged from 2.0 % to 3.0 %.

By their nature, these assumptions involve risks and uncertainties.

Furthermore, uncertainties associated with current market conditions increase the inherent risk associated with using an income approach to estimate fair values.

While we have adjusted our key assumptions to reflect the current economic conditions, we have also assumed that economic conditions will improve.

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 test our indefinite-lived intangible assets, which consist pri marily of trademarks, for impairment on an annual basis during the fourth quarter.

There is inherent risk associated with using an income approach to estimate fair values.

If actual results are significantly different from our estimates or assumptions, we may have to recognize additional impairment charges that could be material.

We test our indefinite-lived intangible asset, a trademark, for impairment on an annual basis during the fourth quarter.

The accounting guidance related to impairment testing for such intangible assets allows for the performance of an optional qualitative assessment, similar to that described above for goodwill.

We did not perform any qualitative assessments as part of our indefinite-lived intangible asset impairment testing for 2021.

Rather, we performed a quantitative assessment for each of our indefinite-lived trademarks in 2020.

Under the quantitative assessments, we determined the fair value of each trademark using a relief from royalty methodology and compared the fair value to the carrying value.

Rather, we performed a quantitative assessment over our indefinite-lived trademark in 2021.

Under the quantitative assessments, we determined the fair value of the trademark using a relief from royalty methodology and compared the fair value to the carrying value.

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

We did no t recognize any trademark impairment charges from continuing operations in 2020, 2019, or 2018.

We did no t recognize any indefinite-lived intangible asset impairment charges in 2021, 2020, or 2019.

Disposal Group Impairment

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We expect to recognize annual amortization expense of $ 38.1 million in 2022, $ 36.1 million in 2023, $ 34.0 million in 2024, $ 29.5 million in 2025, and $ 24.9 million in 2026 related to our intangible assets balance as of December 31, 2021.

The weighted-average amortization period for our customer relationships, trademarks, developed technology, and in-service research and development is 18.2 years, 8.3 years, 6.8 years, and 5.0 years, respectively.

At the beginning of 2020, we re-evaluated the useful lives of certain trademarks in our Industrial Solutions segment and concluded that indefinite lives for these trademarks was no longer appropriate.

We have estimated a useful life of five years and will re-evaluate this estimate if and when our expected use of the trademarks changes.

We began amortizing the trademarks in the first quarter of 2020, which resulted in amortization expense of $ 1.8 million for the year ended December 31, 2020.

As of December 31, 2020, the net book value of these trademarks totaled $ 7.8 million.

The weighted-average amortization period for our customer relationships, developed technology, trademarks, and in-service research and development is 18.2 years, 9.0 years, 8.8 years, and 5.0 years, respectively.

At the beginning of 2021, we re-evaluated the useful life of a certain trademark in our Industrial Solutions segment and concluded that an indefinite life for this trademark was no longer appropriate.

We have estimated a useful life of five years for the trademark and will re-evaluate this estimate if and when our expected use of the trademark changes.

We began amortizing the trademark in the first quarter of 2021, which resulted in amortization expense of $ 0.8 million for the year ended December 31, 2021.

As of December 31, 2021, the net book value of this trademark was $ 3.3 million.

Accrued Liabilities

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Wages, severance and related taxes $ 100,324 $ 65,892

Current deferred revenue 53,371 54,255

Deferred revenue 60,946 53,371

Accrued rebates 55,525 32,192

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Accrued liabilities $ 334,316 $ 276,641

At December 31, 2019, our other accrued liabilities balance included earnout consideration of $ 31.4 million in accordance with the purchase agreement for SAM, which was acquired on February 8, 2018 and included in the Grass Valley disposal group.

During our fiscal first quarter of 2020, prior to the Grass Valley disposal, we paid the sellers of SAM the full earnout consideration .

The acquisition-date fair value of the earnout liability was $ 29.3 million and is reflected as a financing activity in the Consolidated Cash Flow Statement with the remaining $ 2.1 million reflected as an operating activity.

Severance, Restructuring, and Acquisition Integration Activities

Cost Reduction Program

During 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 $ 4.0 million and $ 19.6 million of severance and other restructuring costs for this program during 2020 and 2019, respectively.

We have executed a cost reduction program to streamline the organizational structure and invest in technology to drive productivity.

We recognized $ 5.8 million, $ 4.0 million, and $ 19.6 million of severance and other restructuring costs for this program during the years ended December 31, 2021, 2020, and 2019, respectively.

These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments.

The cost reduction program is expected to deliver an estimated $ 60 million reduction in selling, general, and administrative expenses on an annual basis;

approximately $ 40 million of which was realized in 2020, and the full benefit is expected to be materialized in 2021.

We also expect to incur incremental costs of approximately $ 8 million for this program in 2021.

FutureLink, Opterna, and SPC Integration Program

In 2019, we began a restructuring program to integrate FutureLink, Opterna, and SPC with our existing businesses.

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

We recognized $ 4.9 million and $ 6.1 million of severance and other restructuring costs for this program during 2020 and 2019, respectively.

These costs were incurred by the Enterprise Solutions segment.

We expect to incur incremental costs of approximately $ 1 million for this program in 2021.

Industrial Manufacturing Footprint Program

In 2016, we began a program to consolidate our manufacturing footprint, which was later completed in 2018.

We recognized severance and other restructuring costs of $ 17.7 million and $ 66.1 million for this program during 2018 and cumulatively, respectively.

The costs were incurred by the Enterprise Solutions and Industrial Solutions segments, as the manufacturing locations involved in the program serve both platforms.

The cost reduction program is substantially complete and has delivered a reduction in selling, general, and administrative expenses of approximately $ 60 million on an annual basis.

We expect to recognize costs of approximately $ 3 million for this program in 2022.

Acquisition Integration Program

We are integrating our recent acquisitions such as OTN Systems, SPC, and Opterna with our existing businesses.

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

We recognized $ 12.6 million, $ 4.9 million, and $ 6.1 million of severance and other restructuring costs for this program during the years ended December 31, 2021, 2020, and 2019, respectively.

These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments.

We do not expect to incur significant incremental costs for this program in 2022.

The following table summarizes the costs by segment of the programs described above as well as other immaterial programs and acquisition integration activities:

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Selling, general and administrative expenses 12,584 11,554 23,119

Research and development expenses — — 117

Total $ 23,892 $ 12,258 $ 26,544

Accrued Severance

The table below sets forth severance activity that occurred for the Cost Reduction Program and 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

The table below sets forth severance activity included in accrued liabilities that occurred for the Cost Reduction Program as well as the Acquisition Integration Program described above.

Years ended December 31,

(In thousands)

Balance at beginning of year $ 7,085 $ 19,575

New charges 2,060 2,529

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Other adjustments — ( 4,147 )

Balance at March 29, 2020 $ 13,385

Balance at the end of Q1 7,396 $ 13,385

New charges 458 4,660

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Other adjustments ( 59 ) ( 1,420 )

Balance at June 28, 2020 $ 11,698

Balance at the end of Q2 $ 6,768 $ 11,698

New charges 63 2,060

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Other adjustments ( 197 ) ( 1,541 )

Balance at September 27, 2020 $ 8,093

Balance at the end of Q3 $ 5,691 $ 8,093

New charges 1,541 992

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Other adjustments ( 440 ) ( 82 )

Balance at December 31, 2020 $ 7,085

The other adjustments were the result of changes in estimates.

We experienced higher than expected voluntary turnover during 2020, and as a result, certain previously approved severance actions were not taken.

Balance at year-end $ 6,208 $ 7,085

The other adjustments above were the result of changes in estimates.

The company has experienced higher than expected voluntary turnover and as a result, certain previously approved severance actions were not taken.

Long-Term Debt and Other Borrowing Arrangements

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2.875 % Senior subordinated notes due 2025

428,295 392,910

4.125 % Senior subordinated notes due 2026

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397,670 428,295

3.375 % Senior subordinated notes due 2031

Total senior subordinated notes 1,477,060 1,590,810

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Revolving Credit Agreement due 2026

In 2017, we entered into an Amended and Restated Credit Agreement (the Revolver) to amend and restate our prior Revolving Credit Agreement.

The Revolver provides a $ 400.0 million multi-currency asset-based revolving credit facility.

The borrowing base under the Revolver includes eligible accounts receivable;

and property, plant and equipment of certain of our subsidiaries in the U.S., Canada, Germany, and the Netherlands.

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

In June 2021, we entered into an amended and restated Revolving Credit Agreement that provides a $ 300.0 million multi-currency asset-based revolving credit facility (the Revolver).

The maturity date of the Revolver is June 2, 2026.

The borrowing

base under the Revolver includes eligible accounts receivable;

and property, plant and equipment of certain of our subsidiaries in the United States, Canada, Germany, the United Kingdom and the Netherlands.

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.

Outstanding borrowings in the U.S.

and Canada may also, at our election,

be priced on a base rate plus a spread that ranges from 0.25 % — 0.75 %, depending on our leverage position.

We pay a commitment fee on our available borrowing capacity of 0.25 %.

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

In the event we borrow more than 90 % of our combined borrowing base or our borrowing base availability is less than $ 20.0 million, we are subject to a fixed charge coverage ratio covenant.

We paid approximately $ 2.3 million of fees when we amended the Revolver, which are being amortized over the remaining term of the Revolver.

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, in April 2020 we borrowed $ 190.0 million on our Revolver, which we fully repaid by December 31, 2020 as a result of improved and sufficient liquidity and cash flow.

As of December 31, 2021, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $ 274.2 million.

In April 2020, we borrowed $ 190.0 million on our Revolver out of an abundance of caution due to the initial uncertainties arising from the COVID-19 pandemic.

As a result of improved and sufficient liquidity and cash flow, we fully repaid the borrowings during 2020 and as of December 31, 2020, we had no borrowings outstanding on the Revolver.

Senior Subordinated Notes

In March 2018, we completed an offering for € 350.0 million ($ 431.3 million at issuance) aggregate principal amount of 3.875 % senior subordinated notes due 2028 (the 2028 Notes).

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

In September 2021, we repurchased the full € 300.0 million 2025 Notes outstanding for cash consideration of € 300.0 million ($ 358.5 million), including a prepayment penalty, and recognized a $ 5.7 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

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 December 31, 2021 is $ 227.2 million.

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The notes rank equal in right of payment with our senior subordinated notes due 2031, 2028, and 2027 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver.

Interest is payable semiannually on March 15 and September 15 of each year, which commenced on September 15, 2018.

We paid approximately $ 7.5 million of fees associated with the issuance of the 2028 Notes, which are being amortized over the life of the 2028 Notes using the effective interest method.

We used the net proceeds from this offering and cash on hand to repurchase the 2023 and 2024 Notes - see further discussion below.

Interest is payable semiannually on April 15 and October 15 of each year.

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

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The 2028 Notes rank equal in right of payment with our senior subordinated notes due 2031, 2027, and 2026 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver.

Interest is payable semiannually on April 15 and October 15 of each year.

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

Interest is payable semiannually on March 15 and September 15 of each year.

In July 2021, we completed an offering for € 300.0 million ($ 356.0 million at issuance) aggregate principal amount of 3.375 % senior subordinated notes due 2031 (the 2031 Notes).

The carrying value of the 2031 Notes as of December 31, 2021 is $ 340.9 million.

The 2031 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries.

The 2025 Notes rank equal in right of payment with our senior subordinated notes due 2028, 2027, and 2026 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver.

Interest is payable semiannually on March 15 and September 15 of each year.

We had outstanding $ 200 million aggregate principal amount of 5.25 % senior subordinated notes due 2024 (the 2024 Notes).

In March 2018, we repurchased $ 188.7 million of the 2024 Notes outstanding for cash consideration of $ 199.8 million, including a prepayment penalty and recognized a $ 13.8 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

In April 2018, we repurchased the remaining 2024 Notes outstanding for cash consideration of $ 11.9 million, including a prepayment penalty, and recognized a $ 0.8 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

We had outstanding € 200.0 million aggregate principal amount of 5.5 % senior subordinated notes due 2023 (the 2023 Notes).

In March 2018, we repurchased € 143.1 million of the € 200.0 million 2023 Notes outstanding for cash consideration of € 147.8 million ($ 182.1 million), including a prepayment penalty and recognized a $ 6.2 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

In April 2018, we repurchased the remaining 2023 Notes outstanding for cash consideration of € 58.5 million ($ 71.6 million), including a prepayment penalty, and recognized a $ 2.2 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

The senior subordinated notes due 2025, 2026, 2027 and 2028 are redeemable after September 15, 2020, October 15, 2021, July 15, 2022, and March 15, 2023, respectively, at the following redemption prices as a percentage of the face amount of the notes:

The 2031 Notes rank equal in right of payment with our senior subordinated notes due 2028, 2027, and 2026 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantor s, including our Revolver.

Interest is payable semiannually on January 15 and July 15 of each year, commencing January 15, 2022.

We paid approximately $ 5.9 million of fees associated with the issuance of the 2031 Notes, which are being amortized over the life of the 2031 Notes using the effective interest method.

We used the net proceeds from this offering, along with cash on hand, to fund the full redemption of the 2025 Notes - see further discussion above.

The senior subordinated notes due 2026, 2027, 2028, and 2031 are redeemable after October 15, 2021, July 15, 2022, March 15, 2023, and July 15, 2026 respectively, at the following redemption prices as a percentage of the face amount of the notes:

Senior Subordinated Notes due

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2022 101.375 % 2023 101.125 % 2024 101.292 % 2027 100.844 %

2022 and thereafter 100.000 % 2023 100.688 % 2024 100.563 % 2025 100.646 %

2024 and thereafter 100.000 % 2025 and thereafter 100.000 % 2026 and thereafter 100.000 %

2023 100.688 % 2024 100.563 % 2025 100.646 % 2028 100.422 %

2024 and thereafter 100.000 % 2025 and thereafter 100.000 % 2026 and thereafter 100.000 % 2029 and thereafter 100.000 %

Fair Value of Long-Term Debt

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Income tax expense $ 25,205 $ 11,724 $ 42,519

In addition to the above income tax expense associated with continuing operations, we also recorded an income tax benefit associated with discontinued operations of $ 22.6 million, $ 27.2 million, an d $ 3.3 million in 2020, 2019, and 2018, respectively.

In addition to the above income tax expense associated with continuing operations, we also recorded an income tax benefit associated with discontinued operations of $ 1.9 million, $ 22.6 million, and $ 27.2 million, in 2021, 2020, and 2019, respectively.

Years Ended December 31,

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Domestic permanent differences and tax credits 45.6 % 33.3 % 4.7 %

Impact of tax reform — % — % 4.4 %

Impact of share-based compensation 2.5 % 1.4 % 0.1 %

Impact of CARES act — % ( 1.8 )% — %

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In 2021, the most significant difference between the U.S.

federal statutory tax rate and our effective tax rate was the impact of foreign tax rate differences.

Foreign tax rate differences resulted in an income tax benefit of $ 25.3 million, $ 13.1 million, and $ 2.4 million in 2020, 2019, and 2018, respectively.

federal statutory tax rate and our effective tax rate was the impact of a change in the deferred tax asset valuation allowance, primarily due to the release of a valuation allowance against the foreign tax credits in the U.S.

and a pension deferred tax asset in a foreign jurisdiction.

An additional significant difference between the U.S.

federal statutory tax rate and our effective tax rate was the impact of domestic permanent differences and tax credits.

We recognized a total income tax expense from domestic permanent differences and tax credits of $ 39.8 million in 2021, primarily associated with a goodwill impairment in the U.S., and our foreign income inclusions.

Foreign tax rate differences resulted in an income tax expense (benefit) of $ 1.7 million, $( 25.3 ) million, and $( 13.1 ) million in 2021, 2020, and 2019, respectively.

Additionally, in 2021, 2020, and 2019, our income tax expense was reduced by $ 3.1 million, $ 4.0 million, and $ 3.9 million, respectively, due to a tax holiday for our operations in St.

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Kitts is scheduled to expire in 2023.

An additional significant difference between the U.S.

federal statutory tax rate and our effective tax rate was the impact of domestic permanent differences and tax credits.

We recognized a total income tax expense from domestic permanent differences and tax credits of $ 22.4 million in 2020, primarily associated with our foreign income inclusions.

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

The Company generated a loss in the U.S.

which will be carried back to prior years, as permitted by the CARES Act.

The net impact to the tax provision as a result of the net operating loss carry back was a benefit of $ 1.2 million, primarily associated with the re-rate of the net operating loss carry back period.

If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S.

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growth opportunities.

As a result, as of December 31, 2020, we have not made a provision for U.S.

or additional foreign withholding taxes.

The components of deferred income were as follows:

(In thousands)

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Net deferred income tax liability $ ( 27,670 ) $ ( 8,864 )

On July 2, 2020, we completed the divestiture of Grass Valley to Black Dragon Capital.

The increase in pensions and reserves is primarily due to the divestiture of Grass Valley.

We derived $ 23.8 million of deferred tax assets in relation to a capital loss in the U.S.

for the divestiture of Grass Valley.

The increase in deferred tax valuation allowances is primarily due to the valuation allowance against the capital loss of $ 23.8 million that we do not expect to be able to realize prior to expiration and the valuation allowance against the seller’s note allowance.

The net decrease in deferred tax assets related to net operating loss, capital loss, and tax credit carryforwards is primarily due to the utilization of foreign tax credits during the year.

The net decrease in deferred tax valuation allowances is primarily due to the release of the valuation allowance against the foreign tax credit as we expect we will have sufficient foreign source income to utilize the foreign tax credits as a result of tax planning strategies.

The remaining valuation allowances are primarily related to the capital losses in the U.S.

and net operating losses in foreign jurisdictions.

As of December 31, 2021, we had $ 163.9 million of gross net operating loss carryforwards and $ 17.2 million of tax credit carryforwards.

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Unless otherwise utilized, tax credit carryforwards of $ 17.2 million will expire as follows:

$ 2.1 million between 2020 and 2024 and $ 49.6 million between 2025 and 2040.

$ 0.6 million in 2021, $ 1.1 million between 2022 and 2024, and $ 11.1 million between 2025 and 2041.

Tax credit carryforwards with an indefinite carryforward period total $ 4.4 million.

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Australia $ 10,134

Belgium 5,069

Germany 14,718

Luxembourg 163

Netherlands 3,975

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(In thousands)

Belgium $ 1,088

United States 15,416

Total $ 17,167

In 2020, we recognized a net $ 1.8 million increase to reserves for uncertain tax positions.

In 2021, we recognized a net $ 2.8 million decrease to reserves for uncertain tax positions.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

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Reductions for tax positions of prior years - Settlement ( 3,264 ) ( 328 )

Reduction for tax positions of prior years - Statute of limitations ( 78 ) —

Balance at end of year $ 5,821 $ 8,573

The balance of $ 5.8 million at December 31, 2021 reflects tax positions that, if recognized, would impact our effective tax rate.

As of December 31, 2020, we believe it is reasonably possible that $ 1.7 million of unrecognized tax benefits will change within the next twelve months primarily attributable to the expected completion of tax audits in foreign jurisdictions.

Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses, respectively.

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The assets of the funded pension plans we sponsor are maintained in various trusts and are invested primarily in equity and fixed income securities.

Benefits provided to employees under defined contribution plans include cash contributions by the Company based on either hours worked by the employee or a percentage of the employee’s compensation.

Defined contribution expense for 2020, 2019, and 2018 was $ 10.0 million, $ 12.1 million, and $ 11.8 million, respectively.

Benefits provided to employees under defined contribution plans include cash and stock contributions by the Company based on either hours worked by the employee or a percentage of the employee’s compensation.

Defined contribution expense for 2021, 2020, and 2019 w as $ 13.6 million, $ 10.0 million, and $ 12.1 million, respectively.

We sponsor unfunded postretirement medical and life insurance benefit plans for certain of our employees in Canada and the U.S.

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Participant contributions ( 143 ) ( 73 ) ( 4 ) ( 5 )

Actuarial loss ( 42,284 ) ( 39,329 ) ( 110 ) ( 2,374 )

Divestitures and acquisitions ( 910 ) — — —

Actuarial gain (loss) 19,778 ( 42,284 ) 1,391 ( 110 )

Acquisitions and divestitures ( 12,886 ) ( 910 ) — —

Settlements 5,855 26,970 — —

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Plan participant contributions 143 73 4 5

Acquisitions and divestitures 9,339 — — —

Settlements ( 5,790 ) ( 26,945 ) — —

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The accumulated benefit obligation for all defined benefit pension plans was $ 494.7 million and $ 518.4 million at December 31, 2021 and 2020, respectively.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with a projected benefit obligation in excess of plan assets were $ 463.2 million, $ 459.2 million, and $ 297.8 million, respectively, as of December 31, 2020 and were $ 404.9 million, $ 400.4 million, and $ 293.7 million, respectively, as of December 31, 2019.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with a projected benefit obligation in excess of plan assets were $ 265.5 million, $ 261.3 million, and $ 167.5 million, re spectively, as of December 31, 2021 and $ 463.2 million, $ 459.2 million, and $ 297.8 million, respectively, as of December 31, 2020.

The accumulated benefit obligation and fair value of plan assets for other postretirement benefit plans with an accumulated benefit obligation in excess of plan assets were $ 27.6 million and $ 0.0 million , respectively, as of December 31, 2021 and were $ 29.5 million and $ 0.0 million , respectively, as of December 31, 2020.

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Expected return on plan assets ( 16,337 ) ( 16,357 ) ( 15,699 ) — — —

Amortization of prior service cost (credit) 190 169 ( 42 ) — — —

Amortization of prior service cost 110 190 169 — — —

Settlement loss (gain) ( 18 ) 3,153 ( 7 ) — — —

Other adjustments ( 191 ) — — — — —

Net loss (gain) recognition 3,764 2,930 1,432 ( 43 ) ( 59 ) ( 133 )

Net periodic benefit cost $ 3,575 $ 1,824 $ 3,745 $ 783 $ 862 $ 980

We recorded settlement losses totaling $ 3.2 million during 2020 and $ 1.3 million during 2018.

Net periodic benefit cost (income) $ ( 1,207 ) $ 3,575 $ 1,824 $ 717 $ 783 $ 862

We recorded settlement losses totaling $ 3.2 million during 2020.

The settlement losses were the result of lump-sum payments to participants that exceeded the sum of the pension plan's respective annual service cost and interest cost amounts.

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an asset growth portion and an asset protection portion.

The expected role of asset growth investments is to maximize the long-term real growth of assets, while the role of asset protection investments is to generate current income, provide for more stable periodic returns, and provide some protection against a permanent loss of capital.

The expected role of asset growth investments is to maximize the long-term real growth of assets, while the role of asset protection

investments is to generate current income, provide for more stable periodic returns, and provide some protection against a permanent loss of capital.

Absent regulatory or statutory limitations, the target asset allocation for the investment of the assets for our ongoing pension plans is 30 - 50 % in asset protection investments and 50 - 70 % in asset growth investments and for our pension plans where the majority of the participants are in payment or terminated vested status is 50 - 90 % in asset protection investments and 10 - 50 % in asset growth investments.

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(Level 1) Significant

(Level 2) Investments Measured at NAV Fair Market Value at December 31, 2019 Quoted Prices

(Level 2) Investments Measured at Net Asset Value Fair Market Value at December 31, 2020 Quoted Prices

(Level 1) Significant

(Level 2) Investments Measured at NAV

(Level 2) Investments Measured at Net Asset Value

(In thousands) (In thousands)

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Fixed income fund(c) 16,939 — — 16,939 7,320 — — 7,320

Other investments(d) 17,367 — — 17,367 9,462 — — 9,462

Liability driven investment fund(d) 22,713 — — 22,713 — — — —

Other investments(e) 15,103 — — 15,103 17,367 — — 17,367

Cash & equivalents 11,301 5,271 — 6,030 8,574 3,230 — 5,344

3 unchanged sentences

Equity securities held in separate accounts are valued based on observable quoted prices on active exchanges.

Funds which are valued using the net asset value method are not included in the fair value hierarchy.

(b) This category includes investments in investment funds that invest in U.S.

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The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

Funds valued using the net asset value method are not included in the fair value hierarchy.

(d) This category includes investments in hedge funds that pursue multiple strategies in order to provide diversification and balance risk/return objectives, real estate funds, and private equity funds.

Funds valued using the net asset method are not included in the fair value hierarchy.

(d) This category includes investments in funds that are designed to provide leveraged exposure to changes in interest rates.

The fund purchases shares of funds that invest in government bonds, debt repurchase agreements, total return swaps and interest rate swaps.

(e) This category includes investments in hedge funds that pursue multiple strategies in order to provide diversification and balance risk/return objectives, real estate funds, and private equity funds.

The plans do not invest in individual securities.

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Total $ 213,837 $ 14,784

We anticipate c ontributing $ 11.4 million and $ 1.5 million to our pension and other postretirement plans, respectively, during 2021.

We anticipa te contributing $ 11.8 million and $ 1.5 million to our pension and other postretirement plans, respectively, during 2022.

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at December 31, 2021 and the changes in these amounts during the year ended December 31, 2021 are as follows.

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Amortization of actuarial gain (loss) ( 3,764 ) 43

Actuarial loss 42,048 110

Actuarial gain ( 19,778 ) ( 1,391 )

Asset gain ( 16,130 ) —

Settlement loss recognized ( 3,153 ) —

Divestitures and acquisitions 335 —

Settlement gain recognized 18 —

Other adjustments 191 —

Currency impact ( 1,213 ) 14

2 unchanged sentences

Amortization of prior service cost ( 110 ) —

Prior service cost occurring during the year 226 —

Currency impact ( 27 ) —

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

Other comprehensive gain (loss) attributable to Belden before reclassifications 23,657 ( 13,281 ) 10,376

Other comprehensive loss attributable to Belden before reclassifications ( 123,101 ) ( 20,800 ) ( 143,901 )

Amounts reclassified from accumulated other comprehensive income 10,145 5,323 15,468

Net current period other comprehensive gain (loss) attributable to Belden 23,657 ( 12,168 ) 11,489

Net current period other comprehensive loss attributable to Belden ( 112,956 ) ( 15,477 ) ( 128,433 )

Balance at December 31, 2020 $ ( 131,181 ) $ ( 60,670 ) $ ( 191,851 )

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Amortization of pension and other postretirement benefit plan items:

Settlement loss $ 3,153 (1)

Accumulated losses of Grass Valley disposal group 771 (2)

Actuarial losses $ 3,721 (1)

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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 19).

(2) In addition, we reclassified $ 10.1 million of accumulated foreign currency translation losses associated with the Grass Valley disposal group that are included in the calculation of the loss on disposal of discontinued operations.

(2) In addition, we reclassified $ 1.0 million of accumulated foreign currency translation gains associated with the sale of our oil and gas cable business in Brazil.

Share-Based Compensation

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Therefore, we had not recognized any expense for these restricted stock units on a cumulative basis.

As of the modification date, we expect to recognize total incremental compensation expense as a result of the modification of $ 4.4 million, of which $ 1.4 million was recognized in 2020.

The remaining expense will be recognized over the applicable service periods, which extend to 2023.

As of the modification date, we expected to recognize total incremental compensation expense as a result of the modification of $ 4.4 million.

The expense will be recognized over the applicable service periods, which extend to 2023.

Years Ended December 31,

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value and assumptions)

Weighted-average fair value of SARs and options granted $ 18.29 $ 22.31 $ 25.19

Total intrinsic value of SARs converted and options exercised 545 354 2,263

Tax benefit (expense) related to share-based compensation ( 560 ) ( 101 ) 113

Weighted-average fair value of restricted stock shares and units granted 41.75 64.61 72.54

Total fair value of restricted stock shares and units vested 6,600 10,325 5,740

Weighted-average fair value of SARs granted $ 18.30 $ 18.29 $ 22.31

Total intrinsic value of SARs exercised 1,581 545 354

Tax benefit from SARs exercised 327 26 176

Weighted-average fair value of restricted stock units granted 51.76 41.75 64.61

Total fair value of restricted stock units vested 12,623 6,600 10,325

Expected volatility 45.34 % 37.55 % 35.05 %

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Dividend yield 0.44 % 0.39 % 0.32 %

SARs and Stock Options Restricted Shares and Units

SARs Restricted Stock Units

Number Weighted-

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Historically, we have issued treasury shares, if available, to satisfy award c onversions and exercises.

Preferred Stock

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.

On July 15, 2019, all outstanding Preferred Stock was automatically converted into shares of Belden common stock at the conversion rate of 132.50 , resulting in the issuance of approximately 6.9 million shares of Belden common stock.

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.

For the years ended December 31, 2020, 2019, and 2018, dividends on the Preferred Stock were $ 0.0 million, $ 18.4 million, and $ 34.9 million, respectively.

Stockholder Rights Plan

On March 27, 2018, our Board of Directors authorized the redemption of all outstanding preferred share purchase rights issued pursuant to the then existing Rights Agreement.

Under the former Rights Agreement, one right was attached to each outstanding share of common stock.

The rights were redeemed at a redemption price of $ 0.01 per right, resulting in a total payment of $ 0.4 million to the holders of the rights as of the close of business on March 27, 2018.

Share Repurchases

On May 25, 2017, our Board of Directors authorized a share repurchase program, which allowed us to purchase up to $ 200.0 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 was funded with cash on hand and cash flows from operating activities.

During 2018, we repurchased 2.7 million shares of our common stock under the program for an aggregate cost of $ 175.0 million and an average price per share of $ 64.94 ;

exhausting the $ 200.0 million authorized under this share repurchase program.

On November 29, 2018, our Board of Directors authorized another 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.

During 2018, we did no t repurchase any shares of our common stock under this program.

Our Board of Directors previously 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.

During 2019, we repurchased 0.9 million shares of our common stock under the program for an aggregate cost of $ 50.0 million and an average price per share of $ 56.19 .

During 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 2021, we did no t repurchase shares of our common stock under the share repurchase program.

Market Concentrations and Risks

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We sell our products to many customers in several markets across multiple geographic areas.

The ten largest customers, of which six are distributors, constitute in aggregate approximately 40 %, 39 %, and 40 % of revenues in 2020, 2019, and 2018, respectively.

The ten largest customers, of which seven are distributors, constitute in aggregate approximately 42 %, 40 %, and 39 % of revenues in 2021, 2020, and 2019, respectively.

Unconditional Commodity Purchase Obligations

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Subsequent Events

On January 29, 2021, we acquired privately held OTN Systems N.V., a leading provider of automation networking infrastructure solutions, for approximately $ 71 million, net of cash acquired.

Definitive Agreement to Divest Tripwire

On February 7, 2022, we signed a definitive agreement to divest Tripwire for $ 350 million in cash.

The transaction is expected to close in the first quarter of 2022.

During the fourth quarter of 2021, we recognized a goodwill impairment charge for the Tripwire reporting unit of $ 131.2 million, representing the reporting unit's excess carrying value over its present value of estimated future cash flows, which was based in part on the assumed proceeds from the divestiture.

The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment.

The following table provides the major classes of assets and liabilities of the Tripwire disposal group:

December 31, 2021

December 31, 2020

(In thousands)

Cash and cash equivalents $ 2,194 $ 1,328

Receivables, net 28,773 26,001

Inventories, net 150 126

Other current assets 7,418 9,798

Property, plant and equipment, less accumulated depreciation 6,250 7,588

Operating lease right-of-use assets 3,893 5,151

Goodwill 331,024 462,202

Intangible assets, less accumulated amortization 63,541 67,979

Deferred income taxes 834 800

Other long-lived assets 5,325 2,653

Total assets of Tripwire disposal group $ 449,402 $ 583,626

Accounts payable $ 6,458 $ 4,868

Accrued liabilities 56,208 61,769

Deferred income taxes 10,964 12,599

Long-term operating lease liabilities 5,257 7,019

Other long-term liabilities 20,192 17,214

Total liabilities of Tripwire disposal group $ 99,079 $ 103,469

The Tripwire disposal group also had $ 3.4 million and $ 3.5 million of accumulated other comprehensive income as of December 31, 2021 and 2020, respectively.

The Tripwire disposal group had revenues of $ 106.8 million, $ 110.5 million, and $ 133.0 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The Tripwire disposal group had losses before taxes of $( 139.1 ) million, $( 24.8 ) million and $( 16.0 ) million for the years ended December 31, 2021, 2020, and 2019, respectively.

In 2021, loss before taxes includes a goodwill impairment charge of $ 131.2 million.

In addition, the Tripwire disposal group recognized depreciation and amortization expense of $ 11.9 million, $ 39.4 million, and $ 47.9 million during the years ended December 31, 2021, 2020, and 2019, respectively.

Acquisition of macmon secure GmbH

On January 17, 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 , for approximately $ 43.3 million, net of cash acquired.

The acquisition was funded with cash on hand.

Headquartered in Olen, Belgium, OTN Systems is a leading provider of easy to use and highly-reliable network solutions tailored for specific applications in harsh, mission-critical environments.

OTN Systems’ value-added technology allows customers to easily build, maintain, and monitor complex networks in growing industrial markets, such as Process, Power Transmission, and Mass Transit.

Headquartered in Berlin, Germany, Macmon brings proven products and technologies that protect network infrastructure and extend our offerings in the areas of segmentation, zoning and access control.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data