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Item 1. Financial Statements

2022-05-09 compared with 2021-11-08 · 210 added, 398 removed, 486 unchanged (56% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

October 3, 2021 December 31, 2020

April 3, 2022 December 31, 2021

(In thousands)

4 unchanged sentences

Other current assets 61,980 58,283

Assets held for sale 27,559 —

Current assets of discontinued operations — 449,402

Total current assets 1,393,685 1,877,895

10 unchanged sentences

Accrued liabilities 223,737 278,108

Current liabilities of discontinued operations — 99,079

Total current liabilities 583,548 754,952

16 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 29, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands, except per share data)

5 unchanged sentences

Amortization of intangibles ( 8,817 ) ( 7,993 )

Asset impairments — ( 6,995 )

Operating income 73,521 50,948

6 unchanged sentences

Loss from discontinued operations, net of tax ( 3,685 ) ( 324 )

Gain on disposal of discontinued operations, net of tax — 2,743 — 2,743

Net income (loss) 41,317 17,081 114,030 ( 62,019 )

Loss on disposal of discontinued operations, net of tax ( 4,567 ) —

Net income 35,844 28,741

Net income attributable to noncontrolling interest 3 75

Net income (loss) attributable to Belden stockholders $ 41,264 $ 16,996 $ 113,694 $ ( 62,098 )

Net income attributable to Belden stockholders $ 35,841 $ 28,666

Weighted average number of common shares and equivalents:

5 unchanged sentences

Disposal of discontinued operations ( 0.10 ) —

Net income (loss) $ 0.92 $ 0.38 $ 2.54 $ ( 1.39 )

Net income $ 0.80 $ 0.64

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

2 unchanged sentences

Disposal of discontinued operations ( 0.10 ) —

Net income (loss) $ 0.91 $ 0.38 $ 2.51 $ ( 1.39 )

Comprehensive income (loss) attributable to Belden $ 69,390 $ ( 34,921 ) $ 174,280 $ ( 136,138 )

Net income $ 0.79 $ 0.64

Comprehensive income attributable to Belden $ 39,769 $ 82,391

Common stock dividends declared per share $ 0.05 $ 0.05

1 unchanged sentence

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

Nine Months Ended

October 3, 2021 September 27, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

Cash flows from operating activities:

Net income (loss) 114,030 $ ( 62,019 )

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

Net income $ 35,844 $ 28,741

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization 21,083 22,196

Share-based compensation 18,242 13,650

Asset impairment 9,283 113,007

Loss on debt extinguishment 6,392 —

Gain on disposal of business — ( 2,743 )

Share-based compensation 5,224 7,285

Asset impairments — 6,995

Changes in operating assets and liabilities, net of the effects of currency exchange rate changes, acquired businesses and disposals:

6 unchanged sentences

Other liabilities ( 11,550 ) ( 6,885 )

Net cash provided by operating activities 101,919 38,689

Net cash used for operating activities ( 57,955 ) ( 41,495 )

Cash flows from investing activities:

Cash from (used for) business acquisitions, net of cash acquired ( 73,749 ) 590

Capital expenditures ( 55,569 ) ( 56,809 )

Purchase of intangible assets ( 3,650 ) —

Proceeds from disposal of tangible assets 3,249 3,090

Proceeds from disposal of businesses, net of cash sold 338,686 1,106

Net cash used for investing activities ( 118,921 ) ( 3,078 )

Proceeds from disposal of tangible assets 56 12

Capital expenditures ( 10,963 ) ( 11,223 )

Cash used for business acquisitions, net of cash acquired ( 65,990 ) ( 72,232 )

Net cash provided by (used for) investing activities 261,789 ( 82,337 )

Cash flows from financing activities:

Payments under borrowing arrangements ( 230,639 ) ( 1,841 )

Debt issuance costs paid ( 7,785 ) —

Payments under share repurchase program ( 50,000 ) —

Withholding tax payments for share-based payment awards ( 3,700 ) ( 905 )

Cash dividends paid ( 2,276 ) ( 2,246 )

Payments under financing lease obligations ( 45 ) ( 43 )

Withholding tax payments for share-based payment awards ( 2,103 ) ( 1,331 )

Payments under share repurchase program — ( 35,000 )

Payment of earnout consideration — ( 29,300 )

Borrowings under credit arrangements 356,010 190,000

Net cash used for financing activities ( 286,660 ) ( 5,035 )

3 unchanged sentences

Cash and cash equivalents, end of period $ 559,582 $ 370,850

For the period ended September 27, 2020, the Condensed Consolidated Cash Flow Statement includes the results of discontinued operations up to the disposal date, July 2, 2020.

The Condensed Consolidated Cash Flow Statement includes the results of discontinued operations up to the disposal date, February 22, 2022.

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

7 unchanged sentences

Net income — — — 35,841 — — — 3 35,844

Other comprehensive income (loss), net of tax — — — — — — 53,725 ( 197 ) 53,528

Acquisition of business with noncontrolling interests — — — — — — — 20 20

Other comprehensive income, net of tax — — — — — — 3,928 27 3,955

Retirement Savings Plan stock contributions — — ( 356 ) — 43 2,809 — — 2,453

1 unchanged sentence

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 11,287 ) — 103 7,739 — — ( 3,548 )

Share repurchase program — — — — ( 885 ) ( 50,000 ) — — ( 50,000 )

Share-based compensation — — 5,224 — — — — — 5,224

2 unchanged sentences

Balance at April 3, 2022 50,335 $ 503 $ 826,682 $ 539,294 ( 6,093 ) $ ( 353,071 ) $ ( 66,638 ) $ 825 $ 947,595

Net income — — — 43,764 — — — 208 43,972

Other comprehensive loss, net of tax — — — — — — ( 21,265 ) ( 229 ) ( 21,494 )

Retirement Savings Plan stock contributions — — ( 418 ) — 34 3,723 — — 3,305

Exercise of stock options, net of tax withholding forfeitures — — ( 147 ) — 2 100 — — ( 47 )

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 5,795 ) — 83 4,738 — — ( 1,057 )

Share-based compensation — — 6,228 — — — — — 6,228

Common stock dividends ($ 0.05 per share)

— — — ( 2,269 ) — — — — ( 2,269 )

Balance at July 4, 2021 50,335 $ 503 $ 827,139 $ 518,774 ( 5,492 ) $ ( 319,274 ) $ ( 159,391 ) $ 6,347 $ 874,098

Net income — — — 41,264 — — — 53 41,317

Other comprehensive income (loss), net of tax — — — — — — 28,126 ( 147 ) 27,979

Retirement Savings Plan stock contributions — — 87 — 29 ( 71 ) — — 16

Exercise of stock options, net of tax withholding forfeitures — — ( 59 ) — 1 20 — — ( 39 )

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 1,528 ) — 16 1,473 — — ( 55 )

Share-based compensation — — 4,729 — — — — — 4,729

Common stock dividends ($ 0.05 per share)

— — — ( 2,274 ) — — — — ( 2,274 )

Balance at October 3, 2021 50,335 $ 503 $ 830,368 $ 557,764 ( 5,446 ) $ ( 317,852 ) $ ( 131,265 ) $ 6,253 $ 945,771

Additional Accumulated

4 unchanged sentences

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 loss — — — ( 11,189 ) — — — ( 30 ) ( 11,219 )

Other comprehensive income (loss), net of tax — — — — — — 22,323 ( 150 ) 22,173

Exercise of stock options, net of tax withholding forfeitures — — ( 542 ) — 7 370 — — ( 172 )

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 2,631 ) — 29 1,800 — — ( 831 )

Share repurchase program — — — — ( 592 ) ( 21,239 ) — — ( 21,239 )

Share-based compensation — — 3,708 — — — — — 3,708

Common stock dividends ($ 0.05 per share)

— — — ( 2,288 ) — — — — ( 2,288 )

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

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

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

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

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

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

Common stock dividends ($ 0.05 per share)

— — — ( 2,247 ) — — — — ( 2,247 )

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

Net income — — — 28,666 — — — 75 28,741

Other comprehensive income (loss), net of tax — — — — — — 53,725 ( 197 ) 53,528

Acquisition of business with noncontrolling interests — — — — — — — 20 20

Retirement Savings Plan stock contributions — — ( 493 ) — 45 2,496 — — 2,003

Exercise of stock options, net of tax withholding forfeitures — — ( 723 ) — 9 541 — — ( 182 )

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 2,403 ) — 27 1,680 — — ( 723 )

2 unchanged sentences

— — — ( 2,263 ) — — — — ( 2,263 )

Balance at September 27, 2020 50,335 $ 503 $ 818,661 $ 446,198 ( 5,740 ) $ ( 335,508 ) $ ( 137,458 ) $ 6,191 $ 798,587

Balance at April 4, 2021 50,335 $ 503 $ 827,271 $ 477,279 ( 5,611 ) $ ( 327,835 ) $ ( 138,126 ) $ 6,368 $ 845,460

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

11 unchanged sentences

Business Description

We are a global supplier of specialty networking solutions built around two global businesses - Enterprise Solutions and Industrial Solutions.

We are a global supplier of specialty networking solutions built around two global businesses - Enterprise Solutions and Industrial Automation 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.

1 unchanged sentence

Our fiscal year and fiscal fourth quarter both end on December 31.

Our fiscal first quarter ends on the Sunday falling closest to 91 days after December 31, which was April 4, 2021, the 94th day of our fiscal year 2021.

Our fiscal first quarter ends on the Sunday falling closest to 91 days after December 31, which was April 3, 2022, the 93rd day of our fiscal year 2022.

Our fiscal second and third quarters each have 91 days.

The nine months ended October 3, 2021 and September 27, 2020 included 276 days and 271 days, respectively.

The three months ended April 3, 2022 and April 4, 2021 included 93 days and 94 days, respectively.

Fair Value Measurement

4 unchanged sentences

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

As of and during the three and nine months ended October 3, 2021 and September 27, 2020, we utilized Level 1 inputs to determine the fair value of cash equivalents, and we utilized Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 3) and for impairment testing (see Notes 4 and 11).

We did not have any transfers between Level 1 and Level 2 fair value measurements during the three and nine months ended October 3, 2021 and September 27, 2020.

As of and during the three months ended April 3, 2022 and April 4, 2021, we utilized Level 1 inputs to determine the fair value of cash equivalents, and we utilized Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 3) and for impairment testing (see Notes 4 and 11).

We did not have any transfers between Level 1 and Level 2 fair value measurements during the three months ended April 3, 2022 and April 4, 2021.

Cash and Cash Equivalents

1 unchanged sentence

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

As of October 3, 2021, we did not have any such cash equivalents on hand.

As of April 3, 2022, we did not have any such cash equivalents on hand.

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

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

During the nine months ended September 27, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $ 31.4 million in cash in accordance with the purchase agreement.

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

Contingent Liabilities

4 unchanged sentences

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

As of October 3, 2021, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $ 8.4 million, $ 6.7 million, and $ 3.3 million, respectively.

As of April 3, 2022, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $ 7.4 million, $ 6.2 million, and $ 3.3 million, respectively.

Revenue Recognition

5 unchanged sentences

We have a 51 % ownership percentage in a joint venture with Shanghai Hi-Tech Control System Co, Ltd (Hite).

The purpose of the joint venture is to develop and provide certain Industrial Solutions products and integrated solutions to customers in China.

The purpose of the joint venture is to develop and provide certain Industrial Automation Solutions products and integrated solutions to customers in China.

Belden and Hite are committed to fund $ 1.53 million and $ 1.47 million, respectively, to the joint venture in the future.

3 unchanged sentences

Because Belden is the primary beneficiary of the joint venture, we have consolidated the joint venture in our financial statements.

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

The joint venture is not material to our Condensed Consolidated financial statements as of or for the periods ended October 3, 2021 and September 27, 2020.

Furthermore, certain subsidiaries of our Opterna and OTN Systems N.V.

(OTN Systems) businesses, which we acquired in April of 2019 and January 2021, respectively, 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 respective acquisition dates.

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

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

The subsidiaries of Opterna and OTN Systems that include noncontrolling interests are not material to our Condensed Consolidated financial statements as of or for the periods ended October 3, 2021 and September 27, 2020.

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

The joint venture is not material to our consolidated financial statements as of or for the periods ended April 3, 2022 and April 4, 2021.

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 attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations.

During the fourth quarter of 2021, we purchased Opterna's noncontrolling interests for a purchase price of $ 2.3 million.

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 periods ended April 3, 2022 and April 4, 2021.

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.

1 unchanged sentence

The following tables present our revenues disaggregated by major product category.

Broadband & 5G Cyber-security Industrial Automation Smart Buildings Total

Three Months Ended October 3, 2021 (In thousands)

Enterprise Solutions $ 124,330 $ — $ — $ 161,901 $ 286,231

Industrial Solutions — 26,074 318,530 — 344,604

Total $ 124,330 $ 26,074 $ 318,530 $ 161,901 $ 630,835

Three Months Ended September 27, 2020

Enterprise Solutions $ 115,149 $ — $ — $ 113,948 $ 229,097

Industrial Solutions — 27,384 219,358 — 246,742

Total $ 115,149 $ 27,384 $ 219,358 $ 113,948 $ 475,839

Nine Months Ended October 3, 2021

& 5G Industrial Automation Smart Buildings Total

Three Months Ended April 3, 2022 (In thousands)

Enterprise Solutions $ 121,805 $ — $ 146,625 $ 268,430

Industrial Solutions — 79,899 909,177 — 989,076

Industrial Automation Solutions — 341,941 — 341,941

Total $ 121,805 $ 341,941 $ 146,625 $ 610,371

Nine Months Ended September 27, 2020

Three Months Ended April 4, 2021

Enterprise Solutions $ 105,091 $ — $ 121,264 $ 226,355

Industrial Solutions — 78,829 640,663 — 719,492

Industrial Automation Solutions — 282,328 — 282,328

Total $ 105,091 $ 282,328 $ 121,264 $ 508,683

1 unchanged sentence

Americas EMEA APAC Total Revenues

Three Months Ended October 3, 2021 (In thousands)

Enterprise Solutions $ 216,565 $ 34,963 $ 34,703 $ 286,231

Industrial Solutions 203,138 90,082 51,384 344,604

Total $ 419,703 $ 125,045 $ 86,087 $ 630,835

Three Months Ended September 27, 2020

Enterprise Solutions $ 170,734 $ 30,185 $ 28,178 $ 229,097

Industrial Solutions 148,421 59,180 39,141 246,742

Total $ 319,155 $ 89,365 $ 67,319 $ 475,839

Nine Months Ended October 3, 2021

Three Months Ended April 3, 2022 (In thousands)

Enterprise Solutions $ 204,386 $ 39,389 $ 24,655 $ 268,430

Industrial Solutions 584,853 258,124 146,099 989,076

Industrial Automation Solutions 204,310 90,451 47,180 341,941

Total $ 408,696 $ 129,840 $ 71,835 $ 610,371

Nine Months Ended September 27, 2020

Three Months Ended April 4, 2021

Enterprise Solutions $ 162,675 $ 37,936 $ 25,744 $ 226,355

Industrial Solutions 429,461 182,406 107,625 719,492

Industrial Automation Solutions 166,223 75,096 41,009 282,328

Total $ 328,898 $ 113,032 $ 66,753 $ 508,683

4 unchanged sentences

For these arrangements, revenue is allocated to each performance obligation based on its relative 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 relative selling price using the prices charged to customers on a standalone basis.

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.

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

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

1 unchanged sentence

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

Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three and nine months ended October 3, 2021 and September 27, 2020.

Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three months ended April 3, 2022 and April 4, 2021.

The following table presents estimated and accrued variable consideration:

October 3, 2021 December 31, 2020

April 3, 2022 December 31, 2021

(in thousands)

5 unchanged sentences

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

As of October 3, 2021, total deferred revenue was $ 79.1 million, and of this amount, $ 53.9 million is expected to be recognized within the next twelve months, and the remaining $ 25.2 million is long- term and is expected to be recognized over a period greater than twelve months.

The following table presents deferred revenue activity during the three and nine months ended October 3, 2021 and September 27, 2020:

As of April 3, 2022, total deferred revenue was $ 31.4 million, and of this amount, $ 23.9 million is expected to be recognized within the next twelve months, and the remaining $ 7.5 million is long- term and is expected to be recognized over a period greater than twelve months.

The following table presents deferred revenue activity during the three months ended April 3, 2022 and April 4, 2021:

(In thousands)

1 unchanged sentence

New deferrals 8,857 3,751

Acquisition of OTN Systems 5,997 —

Revenue recognized ( 24,387 ) ( 24,415 )

Balance at the end of Q1 83,763 69,485

New deferrals 20,596 21,322

Adjustments related to acquisitions ( 2,740 ) —

Revenue recognized ( 19,542 ) ( 22,200 )

Balance at the end of Q2 82,077 68,607

New deferrals 20,472 22,243

Acquisitions 6,567 5,997

Revenue recognized ( 3,365 ) ( 1,272 )

Balance at the end of Q1 $ 31,449 $ 19,606

Service-type warr anties represent $ 11.6 million of the deferred revenue balance at October 3, 2021, and of this amount $ 4.7 million is expected to be recognized in the next twelve months, and the remaining $ 6.9 million is long-term and will be recognized over a period greater than twelve months.

Service-type warranties represent $ 9.0 million of the deferred revenue balance at April 3, 2022, and of this amount $ 4.2 million is expected to be recognized in the next twelve months, and the remaining $ 4.8 million is long-term and will be recognized over a period greater than twelve months.

As of April 3, 2022 and December 31, 2021, we did not have any material contract assets recorded in the Condensed Consolidated Balance Sheets.

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

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

Total capitalized sales commissions was $ 6.0 million and $ 4.6 million as of October 3, 2021 and September 27, 2020, respectively.

We capitalize sales commissions when the original duration of the related revenue arrangement is longer than one year, and we amortize it over the related revenue arrangement period.

We did not have any capitalized sales commissions on our balance sheet as of April 3, 2022 and December 31, 2021.

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

Three Months ended Nine Months ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

Sales commissions $ 5,223 $ 3,782

OTN Systems N.V.

We acquired 100 % of the shares of OTN Systems on January 29, 2021 for a preliminary 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 Condensed 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 Condensed Consolidated Statements of Operations.

We acquired NetModule AG (NetModule) on March 3, 2022 for a preliminary purchase price, net of cash acquired of $ 23.5 million, which was funded with cash on hand.

NetModule, based in Bern, Switzerland, is a leading provider of reli able, fast and secure wireless network infrastructures through advanced capabilities in 5G and WiFi6 technologies in a variety of mission critical industries with a strong focus on mass transit and intelligent traffic systems within the transportation vertical.

The results of NetModule have been included in our Condensed Consolidated Financial Statements from March 3, 2022, and are reported within the Industrial Automation Solutions segment.

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

macmon secure GmbH

We acquired macmon secure GmbH (Macmon) on January 17, 2022, for a preliminary purchase price, net of cash acquired of $ 42.4 million, which was funded with cash on hand.

Macmon, based in Berlin, Germany, is a leading provider of products and services that secure network infrastructures in a variety of mission critical industries.

The results of Macmon have been included in our Condensed Consolidated Financial Statements from January 17, 2022, and are reported within the Industrial Automation Solutions segment.

The Macmon acquisition was not material to our results of operations.

The following table summarizes the estimated, preliminary fair values of the assets acquired and the liabilities assumed as of January 17, 2022 (in thousands):

Receivables $ 1,836

Inventories 10,700

Other current assets 173

3 unchanged sentences

Operating lease right-of-use assets 2,979

Other long-lived assets 706

Total assets acquired $ 58,654

1 unchanged sentence

Accrued liabilities 4,079

Deferred revenues 3,260

Long-term debt 1,841

Post retirement benefits 3,581

Deferred income taxes 5,828

3 unchanged sentences

Net assets $ 42,441

Noncontrolling interests 20

Net assets attributable to Belden $ 73,345

The above purchase price allocation is preliminary, and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available.

The preliminary measurement of receivables, inventories, intangible assets, goodwill, deferred income taxes, other assets and liabilities, and noncontrolling interests are subject to change.

A change in the estimated fair value of the net assets acquired or noncontrolling interests will change the amount of the purchase price allocable to goodwill.

The above purchase price allocation is preliminary and subject to revision as additional information about the fair value of individual assets and liabilities becomes available.

The preliminary measurement of receivables, intangible assets, goodwill, deferred income taxes, and other assets and liabilities are subject to change.

A change in the estimated fair value of the net assets acquired will change the amount of the purchase price allocable to goodwill.

The preliminary fair value of acquired receivables is $ 1.8 million, which is equivalent to its gross contractual amount.

During the third quarter of 2021, we recorded measurement-period adjustments that decreased goodwill by $ 0.6 million.

The impact of these adjustments to the Condensed Consolidated Statements of Operations was immaterial.

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 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 preliminary estimate of the fair values for the acquired inventory, intangible assets, deferred revenue, and noncontrolling interests on valuation studies performed by a third party valuation firm.

We have estimated a preliminary 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 our post acquisition selling efforts.

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

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

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

1 unchanged sentence

Our tax basis in the acquired goodwill is zero .

The intangible assets related to the acquisition consisted of the following:

The intangible assets related to the Macmon acquisition consisted of the following:

Fair Value Amortization Period

3 unchanged sentences

Customer relationships 2,282 15.0

Sales backlog

Non-compete agreements 660 2

Trademarks 1,141 2.0

Total intangible assets subject to amortization $ 22,248

7 unchanged sentences

The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers.

The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship and control of the items transfers.

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

Our consolidated revenues and income before taxes for the three months ended October 3, 2021 included $ 7.6 million and $( 2.9 ) million, respectively, from OTN Systems.

For the three months ended October 3, 2021, income before taxes included $ 0.6 million of severance and other restructuring costs, $ 1.4 million of amortization of intangible assets, and $ 0.4 million of cost of sales related to the adjustment of acquired inventory to fair value for OTN Systems.

Our consolidated revenues and income before taxes for the nine months ended October 3, 2021 included $ 20.5 million and $( 7.1 ) million, respectively, from OTN Systems.

For the nine months ended October 3, 2021, income before taxes included $ 2.3 million of severance and other restructuring costs, $ 3.7 million of amortization of intangible assets, 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 as of January 1, 2020.

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

(In thousands, except per share data)

Revenues $ 631,338 $ 479,137 $ 1,770,941 $ 1,380,778

Net income from continuing operations attributable to Belden common stockholders 42,041 17,071 114,752 30,285

Diluted income from continuing operations per share attributable to Belden common stockholders $ 0.93 $ 0.38 $ 2.54 $ 0.67

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.

Opterna International Corp.

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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 in the nine months ended October 3, 2021.

We reduced the earn-out liability to zero and recognized a $ 5.8 million benefit in Selling, General and Administrative Expenses in the three months ended April 4, 2021.

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

Assets Held for Sale

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.

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We also cease depreciation and amortization for assets classified as held for sale.

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 in Selling, General and Administrative Expenses equal to this amount in the first quarter of 2021.

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

The impairment charge was excluded from Segment EBITDA of our Industrial Automation 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 third quarter of 2021, we entered into an agreement to sell and lease back certain Industrial Solutions segment real estate in Germany and met the criteria to classify the assets as held for sale.

At such time, the carrying value of the assets exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $ 2.3 million.

Therefore, we recognized an impairment charge in Selling, General and Administrative Expenses equal to this amount in the third quarter of 2021.

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

We expect to close on the sale and lease back of the real estate in the fourth quarter of 2021.

Discontinued Operations

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.

Furthermore, the divestiture of Grass Valley represented a strategic shift that had a major impact on our operations and financial results.

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

The Grass Valley disposal group excluded certain Grass Valley pension liabilities that we retained.

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

We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 for gross cash consideration of $ 120.0 million, or approximately $ 56.2 million net of cash delivered with the business.

The sale also included deferred consideration consisting of a $ 175.0 million seller’s note that is expected to mature in 2025, up to $ 88 million in PIK (payment-in-kind) interest on the seller’s note, and $ 178.0 million in potential earnout payments.

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

During the three and nine months ended October 3, 2021, the seller's note accrued interest of $ 3.9 million and $ 11.6 million, respectively, which we reserved for based on our expected loss allowance methodology.

Based upon a third party valuation specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note is $ 34.9 million, which we recorded in Other Long-Lived Assets.

We accounted for the earnout under a loss recovery approach and did not record an asset as of the disposal date.

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.

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

The following table summarizes the operating results of the disposal group for the three and nine months ended September 27, 2020 (in thousands):

Three Months Ended Nine Months Ended

September 27, 2020 September 27, 2020

On February 7, 2022, we signed a definitive agreement to divest Tripwire for $ 350 million in cash, and completed the transaction on February 22, 2022.

We recognized a loss on disposal of discontinued operations, net of tax of $ 4.6 million during the three months ended April 3, 2022.

T he divestiture of Tripwire represents a strategic shift impacting our operations and financial results.

As a result, the Tripwire disposal group, which was included in our Industrial Automation Solutions segment, is reported within discontinued operations.

The following table summarizes the operating results of the Tripwire disposal group up to the February 22, 2022 disposal date during the first quarter of 2022 and 2021, respectively :

January 1, 2022 - February 22, 2022 January 1, 2021 - April 4, 2021

(In thousands)

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Research and development expenses ( 5,528 ) ( 8,888 )

Asset impairment of discontinued operations — ( 113,007 )

Interest expense, net ( 12 ) ( 432 )

Non-operating pension cost 27 ( 169 )

Loss before taxes $ ( 843 ) $ ( 127,130 )

We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $ 113.0 million in the nine months ended September 27, 2020.

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

The disposal group had capital expenditures of approximately $ 0.3 million and $ 16.7 million during the three and nine months ended September 27, 2020, respectively.

The disposal group recognized credits to stock-based compensation of $ 0.0 million and $ 0.9 million during the three and nine months ended September 27, 2020, respectively.

The disposal group did not have any significant non-cash charges for investing activities during the nine months ended September 27, 2020 .

Amortization of intangible assets ( 638 ) ( 1,954 )

Income (loss) before taxes $ ( 5,540 ) $ 780

During the three months ended April 3, 2022 and April 4, 2021, th e Tripwire disposal group had capital expenditu res of approximately $ 0.0 million and $ 0.7 million, respectively, and recognized share-based compensation expense of $ 0.2 million and $ 0.7 million, res pectively.

The disposal group did not have any significant non-cash charges for investing activities during the three months ended April 3, 2022 and April 4, 2021 .

The following table provides the major classes of assets and liabilities of the disposal group as of December 31, 2021:

December 31, 2021

(In thousands)

Cash and cash equivalents $ 2,194

Receivables, net 28,773

Inventories, net 150

Other current assets 7,418

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

Operating lease right-of-use assets 3,893

Goodwill 331,024

Intangible assets, less accumulated amortization 63,541

Deferred income taxes 834

Other long-lived assets 5,325

Total assets of Tripwire disposal group $ 449,402

Accounts payable $ 6,458

Accrued liabilities 56,208

Deferred income taxes 10,964

Long-term operating lease liabilities 5,257

Other long-term liabilities 20,192

Total liabilities of Tripwire disposal group $ 99,079

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

Reportable Segments

We are organized around two global businesses:

Enterprise Solutions and Industrial Solutions.

Enterprise Solutions and Industrial Automation Solutions.

Each of the global businesses represents a reportable segment.

In conjunction with the Tripwire divestiture during the first quarter of 2022, we changed the name of our former Industrial Solutions segment to Industrial Automation Solutions.

The composition of the segment did not change as a result of this name change.

The key measures of segment profit or loss 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 Condensed Consolidated Statements of Operations and Comprehensive Income 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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Inter-company revenues between our segments is not material.

Enterprise Solutions Industrial Solutions Total Segments

Enterprise Solutions Industrial Automation Solutions Total Segments

(In thousands)

As of and for the three months ended October 3, 2021

Segment revenues $ 286,231 $ 345,107 $ 631,338

Segment EBITDA 40,156 59,582 99,738

Depreciation expense 5,270 6,000 11,270

Amortization of intangibles 4,427 5,269 9,696

Amortization of software development intangible assets 20 770 790

Severance, restructuring, and acquisition integration costs 3,381 947 4,328

Adjustments related to acquisitions and divestitures ( 510 ) 2,974 2,464

Segment assets 552,416 608,262 1,160,678

As of and for the three months ended September 27, 2020

Segment revenues $ 229,097 $ 246,742 $ 475,839

Segment EBITDA 26,250 38,391 64,641

Depreciation expense 5,005 5,450 10,455

Amortization of intangibles 5,408 10,696 16,104

Amortization of software development intangible assets 73 456 529

Severance, restructuring, and acquisition integration costs 1,337 20 1,357

Segment assets 519,142 486,110 1,005,252

As of and for the nine months ended October 3, 2021

As of and for the three months ended April 3, 2022

Segment Revenues $ 268,430 $ 341,941 $ 610,371

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Severance, restructuring, and acquisition integration costs 328 3,395 3,723

Adjustments related to acquisitions and divestitures ( 6,828 ) 11,825 4,997

Segment assets 574,494 628,290 1,202,784

Enterprise Solutions Industrial Solutions Total Segments

(In thousands)

As of and for the nine months ended September 27, 2020

As of and for the three months ended April 4, 2021

Segment Revenues $ 226,355 $ 282,328 $ 508,683

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Adjustments related to acquisitions and divestitures ( 6,307 ) ( 67 ) ( 6,374 )

Asset impairments — 6,995 6,995

Segment assets 476,217 560,351 1,036,568

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

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

Total Segment Revenues $ 631,338 $ 475,839 $ 1,770,542 $ 1,364,176

Adjustments related to acquisitions ( 503 ) — ( 1,352 ) —

Consolidated Revenues $ 630,835 $ 475,839 $ 1,769,190 $ 1,364,176

Total Segment and Consolidated Revenues $ 610,371 $ 508,683

Total Segment EBITDA $ 98,349 $ 75,902

Amortization of intangibles ( 9,696 ) ( 16,104 ) ( 28,745 ) ( 48,306 )

Depreciation expense ( 11,226 ) ( 10,727 )

Severance, restructuring, and acquisition integration costs (1) ( 4,328 ) ( 1,357 ) ( 12,539 ) ( 9,448 )

Amortization of intangibles ( 8,817 ) ( 7,993 )

Amortization of software development intangible assets ( 1,007 ) ( 409 )

Severance, restructuring, and acquisition integration costs (1) ( 3,723 ) ( 5,171 )

Asset impairments (2) — ( 6,995 )

Adjustments related to acquisitions and divestitures (3) — 6,374

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Consolidated income from continuing operations before taxes $ 53,918 $ 36,121

(1) See Note 12, Severance, Restructuring, and Acquisition Integration Activities, for details.

(2) During the three months ended October 3, 2021, we recognized a $ 2.3 million impairment on assets held for sale, collected $ 0.7 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, included $ 0.5 million in Segment EBITDA for the purchase accounting effect of recording deferred revenue at fair value for the OTN Systems acquisition, and recognized cost of sales of $ 0.4 million related to purchase accounting ad justments of acquired inventory to fair value for the OTN Systems acquisition.

During the nine months ended October 3, 2021, we reduced the Opterna earn-out liability by $ 5.8 million, recognized a $ 5.7 million impairment on assets held for sale, recognized a $ 3.6 million impairment on assets held and used, recognized cost of sales of $ 2.4 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition, collected $ 2.2 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, and included $ 1.3 million in Segment EBITDA for the purchase accounting effect of recording deferred revenue at fair value for the OTN Systems acquisition.

During the nine months ended September 27, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.

(1) Severance, restructuring, and acquisition integration costs for the three months ended April 3, 2022 primarily relate to our Acquisition Integration Program.

Costs for the three months ended April 4, 2021 primarily relate to our Acquisition Integration Program and completed Cost Reduction Program.

(2) During the three months ended April 4, 2021, we recognized a $ 3.6 million impairment on assets held and used and a $ 3.4 million impairment on assets held for sale .

(3) During the three months ended April 4, 2021, we reduced the Opterna earn-out liability by $ 5.8 million , collected $ 1.4 million of receivables associated with the sale of Grass Valley that were previously written off, and recognized cost of sales of $ 0.8 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition.

Income (loss) per Share

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

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

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Loss from discontinued operations, net of tax ( 3,685 ) ( 324 )

Gain on disposal of discontinued operations, net of tax — 2,743 — 2,743

Net income (loss) attributable to Belden stockholders $ 41,264 $ 16,996 $ 113,694 $ ( 62,098 )

Loss on disposal of discontinued operations, net of tax ( 4,567 ) —

Net income attributable to Belden stockholders $ 35,841 $ 28,666

Weighted average shares outstanding, basic 44,811 44,679

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Weighted average shares outstanding, diluted 45,567 45,045

For the three and nine months ended October 3, 2021, diluted weighted average shares outstanding exclude outstanding equity awards of 1.0 million and 1.2 million, respectively, as they are anti-dilutive.

In addition, for the three and nine months ended October 3, 2021, diluted weighted average shares outstanding do not include outstanding equity a wards of 0.2 million and 0.3 million, respectively, becau se the related performance conditions have not been satisfied.

For the three and nine months ended September 27, 2020, diluted weighted average shares outstanding exclude outstanding equity awards of 1.6 million and 1.5 million, respectively, as they are anti-dilutive.

In addition, for both the three and nine months ended September 27, 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.4 million because the related performance conditions have not been satisfied.

For the three months ended April 3, 2022 and April 4, 2021, diluted weighted average shares outstanding exclude outstanding equity awards of 1.1 million and 1.3 million, respectively, as they are anti-dilutive.

In addition, for the three months ended April 3, 2022 and April 4, 2021, diluted weighted average shares outstanding do not include outstanding equity a wards of 0.1 million and 0.4 million , respectively, becau se the related performance conditions have not been satisfied.

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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Credit Losses

Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments prospectively.

This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables.

The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance.

Upon adoption, we recorded a noncash cumulative effect adjustment to retained earnings of $ 2.9 million.

Of this amount, $ 1.0 million related to our continuing operations and $ 1.9 million related to our discontinued operations.

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

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

The following table presents the activity in the trade receivables allowance for doubtful accounts for our continuing operations for the three and nine months ended October 3, 2021 and September 27, 2020, respectively:

The following table presents the activity in the trade receivables allowance for doubtful accounts for our continuing operations for the three months ended April 3, 2022 and April 4, 2021, respectively:

(In thousands)

Beginning balance at January 1 $ 4,864 $ 5,085

Adoption adjustment — 1,011

Current period provision 846 52

Write-offs ( 57 ) —

Recoveries collected ( 23 ) ( 9 )

Fx impact ( 17 ) ( 213 )

Q1 ending balance 5,135 3,186

Current period provision 305 2,621

Disposals ( 192 ) —

Write-offs ( 20 ) ( 52 )

Recoveries collected ( 36 ) ( 100 )

Fx impact ( 25 ) 37

Q2 ending balance 5,167 5,692

Current period provision 86 ( 108 )

Acquisitions 319 —

Write-offs ( 667 ) ( 47 )

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Q1 ending balance $ 5,293 $ 5,050

The following table presents the major classes of inventories as of October 3, 2021 and December 31, 2020, respectively:

October 3, 2021 December 31, 2020

The following table presents the major classes of inventories as of April 3, 2022 and December 31, 2021, respectively:

April 3, 2022 December 31, 2021

(In thousands)

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

These leases are not recorded on our balance sheet, and for the three and nine months ended October 3, 2021 and September 27, 2020, the rent expense for short-term leases was not material.

These leases are not recorded on our balance sheet, and for the three months ended April 3, 2022 and April 4, 2021, the rent expense for short-term leases was not material.

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

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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).

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.

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 October 3, 2021, the SAM lease has approximately $ 20.2 million of lease payments remaining, but we do not believe that it is probable that we have incurred a liability from the guarantee.

As of April 3, 2022, the SAM lease has approximately $ 19.2 million of lease payments remaining.

We have not recorded a liability associated with this guarantee.

The components of lease expense were as follows:

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

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Supplemental cash flow information related to leases was as follows:

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

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Supplemental balance sheet information related to leases was as follows:

October 3, 2021 December 31, 2020

April 3, 2022 December 31, 2021

(In thousands, except lease term and discount rate)

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Finance leases 4.3 % 4.4 %

The following table summarizes maturities of lease liabilities as of October 3, 2021 and December 31, 2020, respectively:

October 3, 2021 December 31, 2020

The following table summarizes maturities of lease liabilities as of April 3, 2022 and December 31, 2021, respectively:

April 3, 2022 December 31, 2021

(In thousands)

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Depreciation and Amortization Expense

We recognized depreciation expense of $ 11.3 million and $ 34.2 million in the three and nine months ended October 3, 2021, respectively.

We recognized depreciation expense of $ 10.5 million and $ 31.1 million in the three and nine months ended September 27, 2020, respectively.

We recognized amortization expense related to our intangible assets of $ 10.5 million and $ 30.8 million in the three and nine months ended October 3, 2021, respectively.

We recognized amortization expense related to our intangible assets of $ 16.6 million and $ 49.6 million in the three and nine months ended September 27, 2020, respectively.

We recognized depreciation expense in income from continuing operations of $ 11.2 million and $ 10.7 million in the three months ended April 3, 2022 and April 4, 2021, respectively.

We recognized amortization expense in income from continuing operations of $ 9.8 million and $ 8.4 million in the three months ended April 3, 2022 and April 4, 2021, respectively.

Asset Impairment

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

During the first quarter of 2021, we committed to a plan to sell our oil and gas cable business in Brazil, and recognized an impairment charge of $ 3.4 million during the three months ended April 4, 2021.

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

Also in the first quarter of 2021, we 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 in Selling, General and Administrative Expenses during the nine months ended October 3, 2021 to write them down to fair value.

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

During the third quarter of 2021, we entered into an agreement to sell and lease back certain real estate in Germany, and recognized an impairment charge of $ 2.3 million.

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

We determined that the carrying values of the assets were not recoverable and recognized a $ 3.6 million impairment charge during the three months ended April 4, 2021 to write them down to fair value.

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

Severance, Restructuring, and Acquisition Integration Activities

Cost Reduction Program

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

We recognized $ 0.0 million and $ 3.5 million of severance and other restructuring costs for this program during the three and nine months ended October 3, 2021, respectively, and $ 0.2 million and $ 3.2 million during the three and nine months ended September 27, 2020, respectively.

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

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 $ 5 million for this program during the fourth quarter of 2021.

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 $ 0.8 million and $ 3.2 million of severance and other restructuring costs for this program during the three and nine months ended October 3, 2021, respectively.

We recognized $ 0.9 million and $ 4.0 million of severance and other restructuring costs for this program during the three and nine months ended September 27, 2020, 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 2021.

The following table summarizes the costs by segment of the programs described above as well as other immaterial programs and acquisition integration activities during the three and nine months ended October 3, 2021 and September 27, 2020:

Severance Other

Restructuring and

Integration Costs Total Costs

Three Months Ended October 3, 2021 (In thousands)

Enterprise Solutions $ ( 77 ) $ 3,458 $ 3,381

Industrial Solutions ( 51 ) 998 947

Total $ ( 128 ) $ 4,456 $ 4,328

Three Months Ended September 27, 2020

Enterprise Solutions $ 327 $ 1,010 $ 1,337

Industrial Solutions 314 ( 294 ) 20

Total $ 641 $ 716 $ 1,357

Nine Months Ended October 3, 2021

Enterprise Solutions $ 1,031 $ 6,725 $ 7,756

Industrial Solutions 1,651 3,132 4,783

Total $ 2,682 $ 9,857 $ 12,539

Nine Months Ended September 27, 2020

Enterprise Solutions $ 1,162 $ 5,148 $ 6,310

Industrial Solutions 1,132 2,006 3,138

Total $ 2,294 $ 7,154 $ 9,448

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

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

The following table summarizes the costs of the various programs described above as well as other immaterial programs and acquisition integration activities by financial statement line item in the Condensed Consolidated Statement of Operations:

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

We are integrating our recent acquisitions with our existing businesses to achieve desired cost savings, which are primarily focused on consolidating existing and acquired facilities as well as other support functions.

The Industrial Automation Solutions segment incurred $ 3.0 million of restructuring and integration costs during the three months ended April 3, 2022 related to the Macmon, NetModule and OTN Systems acquisitions.

We expect to incur approximately $ 7 million of incremental costs for this program in 2022.

The Enterprise Solutions and Industrial Automation Solutions segments recognized $ 1.8 million of severance and other restructuring and integration costs during the three months ended April 4, 2021 related to the OTN Systems and Opterna acquisitions.

The restructuring and integration costs incurred during the first quarter of 2022 and 2021 primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs.

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

Furthermore, t here were no significant severance accrual balances as of April 3, 2022 or December 31, 2021.

The following table summarizes the severance and other restructuring and integration costs of the Acquisition Integration Program described above by financial statement line item in the Condensed Consolidated Statement of Operations:

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

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Total $ 2,983 $ 1,768

Accrued Severance

The table below summarizes severance activity, included in accrued liabilities, for the Cost Reduction Program and the Acquisition Integration Program discussed above for the three and nine months ended October 3, 2021 and September 27, 2020, respectively.

(In thousands)

Beginning year balance $ 7,085 $ 19,575

New charges 2,060 2,529

Cash payments ( 1,798 ) ( 4,483 )

Foreign currency translation 49 ( 89 )

Other adjustments — ( 4,147 )

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

New charges 458 4,660

Cash payments ( 1,023 ) ( 4,795 )

Foreign currency translation ( 4 ) ( 132 )

Other adjustments ( 59 ) ( 1,420 )

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

New charges 63 2,060

Cash payments ( 941 ) ( 3,968 )

Foreign currency translation ( 2 ) ( 156 )

Other adjustments ( 197 ) ( 1,541 )

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

The other adjustments were the result of changes in estimates.

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

Long-Term Debt and Other Borrowing Arrangements

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

October 3, 2021 December 31, 2020

April 3, 2022 December 31, 2021

(In thousands)

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334,980 340,860

3.375 % Senior subordinated notes due 2031

Total senior subordinated notes 1,228,260 1,477,060

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We paid approximately $ 2.3 million of fees associated with the amended Revolver, which will be amortized over its term using the effective interest method.

As of October 3, 2021, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $ 293.9 million.

As of April 3, 2022, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $ 292.5 million.

Senior Subordinated Notes

We had outstanding € 200.0 million aggregate principal amount of 4.125 % senior subordinated notes due 2026 (the 2026 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 October 3, 2021 is $ 232.3 million.

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

The 2026 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 April 15 and October 15 of each year.

In March 2022, we repurchased the full € 200.0 million 2026 Notes outstanding for cash consideration of € 204.1 million ($ 227.9 million), including a redemption premium, and recognized a $ 6.4 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

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

The carrying value of the 2027 Notes as of October 3, 2021 is $ 522.7 million.

The carrying value of the 2027 Notes as of April 3, 2022 is $ 502.5 million.

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

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

The carrying value of the 2028 Notes as of October 3, 2021 is $ 406.6 million.

The carrying value of the 2028 Notes as of April 3, 2022 is $ 390.8 million.

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

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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 October 3, 2021 is $ 348.5 million.

We have outstanding € 300.0 million aggregate principal amount of 3.375 % senior subordinated notes due 2031 (the 2031 Notes).

The carrying value of the 2031 Notes as of April 3, 2022 is $ 335.0 million.

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

The 2031 Notes rank equal in right of payment with our senior subordinated notes due 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 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 $ 5.6 million of fees associated with the issuance of the 2031 Notes, which will be 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.

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

Fair Value of Long-Term Debt

The fair value of our senior subordinated notes as of October 3, 2021 was approximately $ 1,556.8 million based on quoted prices of the debt instruments in inactive markets (Level 2 valuation).

This amount represents the fair value of our senior subordinated notes with a carrying value of $ 1,510.1 million as of October 3, 2021.

The fair value of our senior subordinated notes as of April 3, 2022 was approximately $ 1,185.6 million based on quoted prices of the debt instruments in inactive markets (Level 2 valuation).

This amount represents the fair value of our senior subordinated notes with a carrying value of $ 1,228.3 million as of April 3, 2022.

Net Investment Hedge

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

As of October 3, 2021, € 767.8 million o f our outstanding foreign denominated debt is designated as a net investment hedge on the foreign currency risk of our net investment in our euro foreign operations.

As of April 3, 2022, € 567.8 million o f our outstanding foreign denominated debt is designated as a net investment hedge on the foreign currency risk of our net investment in our euro foreign operations.

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

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

For the nine months ended October 3, 2021 and September 27, 2020, the transaction gain/(loss) associated with the net investment hedge reported in other comprehensive income was $ 47.9 million and $( 13.1 ) million, respectively.

During the nine months ended September 27, 2020, we de-designated € 532.2 million of our outstanding debt that was previously designated as a net investment hedge.

For the three months ended April 3, 2022 and April 4, 2021, the transaction gain associated with the net investment hedge reported in other comprehensive income was $ 13.7 million and $ 38.5 million, respectively.

During the three months ended April 3, 2022, we de-designated € 200.0 million of our outstanding debt that was previously designated as a net investment hedge.

After the de-designation, transaction gains or losses associated with this € 200.0 million of debt are reported in income from continuing operations.

For the three and nine months ended October 3, 2021, we recognized income tax expense of $ 8.9 million and $ 25.3 million, respectively, representing an effective tax rate of 17.7 % and 18.2 %, respectively.

The effective tax rates were primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits.

For the three and nine months ended September 27, 2020, we recognized income tax expense of $ 0.6 million and $ 3.2 million, respectively, representing an effective tax rate of 3.0 % and 7.7 %, respectively.

The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $ 0.9 million and $ 2.1 million in the three and nine months ended September 27, 2020, respectively.

For the three months ended April 3, 2022, we recognized income tax expense of $ 9.8 million representing an effective tax rate of 18.2 %.

The effective tax rate was primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits.

For the three months ended April 4, 2021, we recognized income tax expense of $ 7.1 million representing an effective tax rate of 19.5 %.

The effective tax rate was primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits.

Pension and Other Postretirement Obligations

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Pension Obligations Other Postretirement Obligations

Three Months Ended October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

(In thousands)

Service cost $ 941 $ 885 $ 8 $ 8

Interest cost 1,914 2,493 182 202

Expected return on plan assets ( 4,081 ) ( 4,091 ) — —

Amortization of prior service cost 27 47 — —

Actuarial losses (gains) 971 688 ( 5 ) ( 19 )

Net periodic benefit cost (income) $ ( 228 ) $ 22 $ 185 $ 191

Pension Obligations Other Postretirement Obligations

Nine Months Ended October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Three Months Ended April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

(In thousands)

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The following table summarizes total comprehensive income (losses):

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Three Months Ended

April 3, 2022 April 4, 2021

(In thousands)

Net income (loss) $ 41,317 $ 17,081 $ 114,030 $ ( 62,019 )

Net income $ 35,844 $ 28,741

Foreign currency translation adjustments, net of tax 3,762 52,764

Adjustments to pension and postretirement liability, net of tax 193 764

Total comprehensive income (loss) 69,296 ( 34,693 ) 174,043 ( 135,919 )

Total comprehensive income 39,799 82,269

Comprehensive income (loss) attributable to noncontrolling interests 30 ( 122 )

Comprehensive income (loss) attributable to Belden $ 69,390 $ ( 34,921 ) $ 174,280 $ ( 136,138 )

Comprehensive income attributable to Belden $ 39,769 $ 82,391

The tax impacts of the foreign currency translation adjustments and pension liability adjustments in the table above are not material.

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Net current period other comprehensive income attributable to Belden 3,735 193 3,928

Balance at October 3, 2021 $ ( 72,880 ) $ ( 58,385 ) $ ( 131,265 )

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the nine months ended October 3, 2021:

Balance at April 3, 2022 $ ( 37,733 ) $ ( 28,905 ) $ ( 66,638 )

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the three months ended April 3, 2022:

Amount Reclassified from Accumulated Other

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(1) The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs (see Note 16).

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

(2) In addition, we reclassified $ 3.0 million of accumulated foreign currency translation gains associated with the sale of Tripwire.

Share Repurchase

On November 29, 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $ 300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable securities laws and other restrictions.

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

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

During the nine months ended October 3, 2021, we did not repurchase any stock.

During the nine months ended September 27, 2020, we repurchased 1.0 million shares of our common stock under the share repurchase program for an aggregate cost of $ 35.0 million at an average price per share of $ 35.83 .

During the three months ended April 3, 2022, we repurchased 0.9 million shares of our common stock under the share repurchase program for an aggregate cost of $ 50.0 million at an average price per share of $ 56.51 .

During the three months ended April 4, 2021, we did no t repurchase any stock.

Subsequent Event

On April 15, 2022, we acquired Communication Associates, Inc.

(Communication Associates) for approximately $ 19 million, net of cash acquired.

The acquisition was funded with cash on hand.

Communication Associates is headquartered in Anniston, Alabama and designs, manufactures, and sells a range of plug-in RF filters used in outside plant HFC nodes.

The results of Communication Associates will be reported within our Enterprise Solutions segment from the acquisition date.

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

What changed 10-Q

Item 1. Financial Statements