What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-09 · 223 added, 127 removed, 569 unchanged (38% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

April 3, 2022 December 31, 2021

July 3, 2022 December 31, 2021

(In thousands)

36 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands, except per share data)

35 unchanged sentences

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

Three Months Ended

April 3, 2022 April 4, 2021

Six Months Ended

July 3, 2022 July 4, 2021

(In thousands)

14 unchanged sentences

Other liabilities ( 10,452 ) ( 13,853 )

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

Net cash provided by (used for) operating activities ( 8,581 ) 26,654

Cash flows from investing activities:

2 unchanged sentences

Capital expenditures ( 31,010 ) ( 30,866 )

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

Cash used for acquisitions and investments, net of cash acquired ( 104,123 ) ( 73,749 )

Purchase of intangible assets — ( 3,650 )

Net cash provided by (used for) investing activities 204,977 ( 94,218 )

5 unchanged sentences

Payments under financing lease obligations ( 83 ) ( 75 )

Debt issuance costs paid — ( 1,728 )

Proceeds from issuance of common stock 3,717 —

Net cash used for financing activities ( 303,251 ) ( 10,146 )

22 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 — — — 58,561 — — — 81 58,642

Other comprehensive income (loss), net of tax — — — — — — 52,151 ( 25 ) 52,126

Common stock issuance — — ( 2,775 ) — 82 6,492 — — 3,717

Retirement Savings Plan stock contributions — — ( 730 ) — 30 2,355 — — 1,625

Exercise of stock options, net of tax withholding forfeitures — — ( 173 ) — 2 133 — — ( 40 )

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 8,048 ) — 75 6,621 — — ( 1,427 )

Share repurchase program — — — — ( 320 ) ( 16,559 ) — — ( 16,559 )

Share-based compensation — — 5,646 — — — — — 5,646

Common stock dividends ($ 0.05 per share)

— — — ( 2,242 ) — — — — ( 2,242 )

Balance at July 3, 2022 50,335 $ 503 $ 820,602 $ 595,613 ( 6,224 ) $ ( 354,029 ) $ ( 14,487 ) $ 881 $ 1,049,083

Additional Accumulated

14 unchanged sentences

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

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

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

17 unchanged sentences

Our fiscal second and third quarters each have 91 days.

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

The six months ended July 3, 2022 and July 4, 2021 included 184 days and 185 days, respectively.

Fair Value Measurement

4 unchanged sentences

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

As of and during the three months ended 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.

As of and during the three and six months ended July 3, 2022 and July 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 six months ended July 3, 2022 and July 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 April 3, 2022, we did not have any such cash equivalents on hand.

As of July 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.

4 unchanged sentences

We are, from time to time, subject to routine litigation incidental to our business.

These lawsuits primarily involve claims for damages arising out of the use of our products, allegations of patent or trademark infringement, and litigation and administrative proceedings involving employment matters and commercial disputes.

Historically, these lawsuits have primarily involved claims for damages arising out of the use of our products, allegations of patent or trademark infringement, and litigation and administrative proceedings involving employment matters and commercial disputes.

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 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.

As of July 3, 2022, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $ 7.1 million, $ 5.2 million, and $ 3.8 million, respectively.

Revenue Recognition

3 unchanged sentences

We evaluated subsequent events after the balance sheet date through the financial statement issuance date for appropriate accounting and disclosure.

Equity Method Investment

During the second quarter of 2022, we invested $ 20.0 million in Litmus Automation, Inc.

(Litmus) for a noncontrolling ownership interest.

Litmus provides the critical data connectivity needed to monitor, visualize, analyze, and integrate industrial data.

We account for this investment using the equity method of accounting.

The carrying value of our investment is included in Other Long-Lived Assets in the Condensed Consolidated Balance Sheets.

The results of our investment in Litmus were not material to our consolidated financial statements for the three months ended July 3, 2022.

Noncontrolling Interest

7 unchanged sentences

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.

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

Certain Belden subsidiaries include a noncontrolling interest as of or for the periods ended July 3, 2022 and July 4, 2021 .

The results attributable to the noncontrolling interest holders are not material to our consolidated financial statements , and are presented as net income attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations.

During the fourth quarter of 2021, we purchased a noncontrolling interest for a purchase price of $ 2.3 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.

2 unchanged sentences

& 5G Industrial Automation Smart Buildings Total

Three Months Ended April 3, 2022 (In thousands)

Three Months Ended July 3, 2022 (In thousands)

Enterprise Solutions $ 146,771 $ — $ 160,673 $ 307,444

1 unchanged sentence

Total $ 146,771 $ 359,107 $ 160,673 $ 666,551

Three Months Ended April 4, 2021

Three Months Ended July 4, 2021

Enterprise Solutions $ 124,760 $ — $ 142,768 $ 267,528

1 unchanged sentence

Total $ 124,760 $ 308,329 $ 142,768 $ 575,857

Six Months Ended July 3, 2022

Enterprise Solutions $ 268,576 $ — $ 307,298 $ 575,874

Industrial Automation Solutions — 701,048 — 701,048

Total $ 268,576 $ 701,048 $ 307,298 $ 1,276,922

Six Months Ended July 4, 2021

Enterprise Solutions $ 229,851 $ — $ 264,032 $ 493,883

Industrial Automation Solutions — 590,657 — 590,657

Total $ 229,851 $ 590,657 $ 264,032 $ 1,084,540

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

Americas EMEA APAC Total Revenues

Three Months Ended April 3, 2022 (In thousands)

Three Months Ended July 3, 2022 (In thousands)

Enterprise Solutions $ 233,501 $ 36,497 $ 37,446 $ 307,444

1 unchanged sentence

Total $ 447,546 $ 128,262 $ 90,743 $ 666,551

Three Months Ended April 4, 2021

Three Months Ended July 4, 2021

Enterprise Solutions $ 192,138 $ 40,468 $ 34,922 $ 267,528

1 unchanged sentence

Total $ 368,402 $ 123,558 $ 83,897 $ 575,857

Six Months Ended July 3, 2022

Enterprise Solutions $ 437,887 $ 75,886 $ 62,101 $ 575,874

Industrial Automation Solutions 418,355 182,216 100,477 701,048

Total $ 856,242 $ 258,102 $ 162,578 $ 1,276,922

Six Months Ended July 4, 2021

Enterprise Solutions $ 354,813 $ 78,404 $ 60,666 $ 493,883

Industrial Automation Solutions 342,487 158,186 89,984 590,657

Total $ 697,300 $ 236,590 $ 150,650 $ 1,084,540

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

2 unchanged sentences

At times, we enter into arrangements that involve the delivery of multiple performance obligations.

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.

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

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.

Generally, we determine relative standalone selling price using the prices charged separately to a 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.

3 unchanged sentences

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

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

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

The following table presents estimated and accrued variable consideration:

April 3, 2022 December 31, 2021

July 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 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:

As of July 3, 2022, total deferred revenue was $ 26.8 million, and of this amount, $ 19.8 million is expected to be recognized within the next twelve months, and the remaining $ 7.0 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 six months ended July 3, 2022 and July 4, 2021, respectively:

(In thousands)

4 unchanged sentences

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

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.

New deferrals 4,265 4,127

Acquisitions — ( 2,740 )

Revenue recognized ( 8,880 ) ( 83 )

Balance at the end of Q2 $ 26,834 $ 20,910

Service-type warranties represent $ 8.2 million of the deferred revenue balance at July 3, 2022, and of this amount $ 3.7 million is expected to be recognized in the next twelve months, and the remaining $ 4.5 million is long-term and will be recognized over a period greater than twelve months.

As of July 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 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.

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

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

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

Sales commissions $ 6,131 $ 4,653 $ 11,354 $ 8,435

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):

During the six months ended July 3, 2022, we completed three acquisitions.

On January 17, 2022, we acquired macmon secure GmbH (Macmon) for $ 42.4 million, net of cash acquired.

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

On March 3, 2022, we acquired NetModule AG (NetModule) for $ 23.5 million, net of cash acquired.

NetModule, based in Bern, Switzerland, is a leading provider of reliable, 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.

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

(CAI) for $ 18.7 million, net of cash acquired.

CAI is headquartered in Anniston, Alabama and designs, manufactures, and sells a range of plug-in radio frequency filters used in outside plant hybrid fiber-coax nodes.

The results of operations of each acquisition have been included in our results of operations from their respective acquisition dates.

The three acquisitions were not material to our consolidated results of operations.

Macmon and NetModule are included in the Industrial Automation Solutions segment, and CAI is included in the Enterprise Solutions segment.

All three acquisitions were funded with cash on hand.

The following table summarizes the estimated, preliminary fair values of the assets acquired and liabilities assumed for all three acquisitions in total as of their respective acquisition dates (in thousands):

Receivables $ 6,527

Inventory 8,278

Other current assets 369

6 unchanged sentences

Accrued liabilities 6,716

Long-term debt 2,440

Deferred income taxes 9,610

12 unchanged sentences

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 the expansion of industrial automation product offerings in complete end-to-end solutions.

The goodwill is primarily attributable to the expansion of industrial automation and broadband & 5G product offerings in end-to-end solutions.

Our tax basis in the acquired goodwill is zero .

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

The intangible assets related to the three acquisitions consisted of the following:

Fair Value Amortization Period

4 unchanged sentences

Trademarks 2,806 2.0

Sales backlog 200 0.9

Non-compete agreements 300 4.0

Total intangible assets subject to amortization $ 38,709

13 unchanged sentences

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 three months ended April 4, 2021.

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

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

6 unchanged sentences

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.

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 Automation Solutions segment.

1 unchanged sentence

Discontinued Operations

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.

On February 22, 2022, we sold Tripwire for gross cash consideration of $ 350 million.

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

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

The following table summarizes the operating results of the Tripwire disposal group up to the February 22, 2022 disposal date:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

5 unchanged sentences

Amortization of intangible assets — ( 1,930 ) ( 638 ) ( 3,884 )

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 .

Loss before taxes $ — $ ( 2,392 ) $ ( 5,540 ) $ ( 1,892 )

During the six months ended July 3, 2022, th e Tripwire disposal group had capital expenditures of approximately $ 0.0 million and recognized share-based compensation expense of $ 0.2 million.

During the three and six months ended July 4, 2021, th e Tripwire disposal group had capital expenditu res of approximately $ 1.6 million and $ 2.3 million, respectively, and recognized share-based compensation expense of $ 0.7 million and $ 1.4 million, res pectively.

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

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

40 unchanged sentences

(In thousands)

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

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

Segment Revenues $ 307,444 $ 359,107 $ 666,551

4 unchanged sentences

Severance, restructuring, and acquisition integration costs 4,575 1,282 5,857

Adjustments related to acquisitions and divestitures ( 558 ) 1,134 576

Segment assets 607,386 649,595 1,256,981

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

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

Segment Revenues $ 267,528 $ 309,178 $ 576,706

5 unchanged sentences

Adjustments related to acquisitions and divestitures ( 32 ) 1,944 1,912

Segment assets 522,635 580,653 1,103,288

As of and for the six months ended July 3, 2022

Segment revenues $ 575,874 $ 701,048 $ 1,276,922

Segment EBITDA 72,708 135,588 208,296

Depreciation expense 11,194 11,402 22,596

Amortization of intangibles 8,539 9,455 17,994

Amortization of software development intangible assets 44 1,944 1,988

Severance, restructuring, and acquisition integration costs 4,903 4,677 9,580

Adjustments related to acquisitions and divestitures ( 558 ) 1,134 576

Segment assets 607,386 649,595 1,256,981

As of and for the six months ended July 4, 2021

Segment Revenues $ 493,883 $ 591,506 $ 1,085,389

Segment EBITDA 64,292 103,075 167,367

Depreciation expense 10,735 10,650 21,385

Amortization of intangibles 8,775 6,390 15,165

Amortization of software development intangible assets 52 679 731

Severance, restructuring, and acquisition integration costs 4,416 3,795 8,211

Adjustments related to acquisitions and divestitures ( 6,339 ) 1,877 ( 4,462 )

Asset impairments — 6,995 6,995

1 unchanged sentence

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

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

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

Total segment revenues $ 666,551 $ 576,706 $ 1,276,922 $ 1,085,389

Adjustments related to acquisitions — ( 849 ) — ( 849 )

Consolidated revenues $ 666,551 $ 575,857 $ 1,276,922 $ 1,084,540

Total Segment EBITDA $ 109,947 $ 91,465 $ 208,296 $ 167,367

3 unchanged sentences

Severance, restructuring, and acquisition integration costs (1) ( 5,857 ) ( 3,040 ) ( 9,580 ) ( 8,211 )

Asset impairments (2) — ( 6,995 )

Adjustments related to acquisitions and divestitures (2) ( 576 ) ( 1,912 ) ( 576 ) 4,462

Asset impairments (3) — — — ( 6,995 )

Eliminations ( 50 ) ( 12 ) ( 105 ) ( 45 )

4 unchanged sentences

Consolidated income from continuing operations before taxes $ 71,730 $ 54,924 $ 125,648 $ 91,045

(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.

(1) Severance, restructuring, and acquisition integration costs for the three and six months ended July 3, 2022 primarily related to our Manufacturing Footprint and Acquisition Integration programs.

Costs for the three and six months ended July 4, 2021 primarily related to our Acquisition Integration and completed Cost Reduction programs.

(2) During the three and six months ended July 3, 2022, we recognized cost of sales of $ 1.1 million related to purchase accounting adjustments of acquired inventory to fair value and collected $ 0.5 million of previously written off receivables associated with the sale of Grass Valley.

During the three months ended July 4, 2021, we recognized cost of sales of $ 1.2 million related to purchase accounting adjustments of acquired inventory to fair value, recognized $ 0.8 million for the purchase accounting effect of recording deferred revenue at fair value, and collected $ 0.1 million of previously written off receivables associated with the sale of Grass Valley.

During the six months ended July 4, 2021, we reduced the Opterna earn-out liability by $ 5.8 million , recognized cost of sales of $ 2.0 million related to purchase accounting adjustments of acquired inventory to fair value, collected $ 1.4 million of previously written off receivables associated with the sale of Grass Valley, and recognized $ 0.8 million for the purchase accounting effect of recording deferred revenue at fair value.

(3) During the six months ended July 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 .

Income (loss) per Share

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

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

8 unchanged sentences

Weighted average shares outstanding, diluted 44,782 45,262 45,179 45,162

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 both the three and six months ended July 3, 2022, diluted weighted average shares outstanding exclude outstanding equity awards of 1.1 million as they are anti-dilutive.

In addition, for the three and six months ended July 3, 2022, 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 both the three and six months ended July 4, 2021, diluted weighted average shares outstanding exclude outstanding equity awards of 1.3 million as they are anti-dilutive.

In addition, for both the three and six months ended July 4, 2021, diluted weighted average shares outstanding do not include outstanding equity a wards of 0.4 million 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.

11 unchanged sentences

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 months ended April 3, 2022 and April 4, 2021, respectively:

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

(In thousands)

6 unchanged sentences

Q1 ending balance $ 5,293 $ 5,050

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

Current period provision 656 224

Acquisitions — ( 192 )

Write-offs ( 64 ) —

Recoveries collected ( 12 ) ( 36 )

Fx impact ( 81 ) ( 24 )

Q2 ending balance $ 5,792 $ 5,022

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

July 3, 2022 December 31, 2021

(In thousands)

13 unchanged sentences

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

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

These leases are not recorded on our balance sheet, and for the three and six months ended July 3, 2022 and July 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.

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.

We are party to a lease guarantee, whereby Belden has covenanted the lease payments for one of Grass Valley's property leases through its 2035 expiration date.

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

As of July 3, 2022, the lease had approximately $ 17.3 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

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

5 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

1 unchanged sentence

Operating cash flows from operating leases $ 4,561 $ 3,731 $ 9,337 $ 7,402

Operating cash flows from finance leases 6 3

Financing cash flows from finance leases 43 41

Cash paid for finance leases was not material during the three and six months ended July 3, 2022 and July 4, 2021.

Supplemental balance sheet information related to leases was as follows:

April 3, 2022 December 31, 2021

July 3, 2022 December 31, 2021

(In thousands, except lease term and discount rate)

15 unchanged sentences

Finance leases 4.2 % 4.4 %

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

April 3, 2022 December 31, 2021

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

July 3, 2022 December 31, 2021

(In thousands)

8 unchanged sentences

Depreciation and Amortization Expense

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.

We recognized depreciation expense in income from continuing operations of $ 11.4 million and $ 22.6 million in the three and six months ended July 3, 2022, respectively.

We recognized depreciation expense in income from continuing operations of $ 10.7 million and $ 21.4 million in the three and six months ended July 4, 2021, respectively.

We recognized amortization expense in income from continuing operations of $ 10.2 million and $ 20.0 million in the three and six months ended July 3, 2022, respectively.

We recognized amortization expense in income from continuing operations of $ 7.5 million and $ 15.9 million in the three and six months ended July 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 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 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.

During the six months ended July 4, 2021, we sold our oil and gas cable business in Brazil and recognized an impairment charge of $ 3.4 million .

Also during the six months ended July 4, 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 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

Manufacturing Footprint Program

We are consolidating our manufacturing footprint in the Americas region.

We recognized $ 4.0 million and $ 5.9 million of severance and other restructuring costs for this program during the three and six months ended July 3, 2022 , respectively.

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

We expect to incur approximately $ 5 million of incremental costs for this program in 2022.

Acquisition Integration Program

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.

The Enterprise Solutions segment incurred $ 1.0 million of restructuring and integration co sts during the three and six months ended July 3, 2022 related to the CAI acquisition, and the Industrial Automation Solutions segment incurred $ 0.1 million and $ 3.1 million of restructuring and integration costs during the three and six months ended July 3, 2022, respectively, related to the Macmon, NetModule and OTN Systems acquisitions.

We expect to incur approximately $ 5 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 Enterprise Solutions and Industrial Automation Solutions segments recognized $ 0.6 million and $ 2.4 million of severance and other restructuring and integration costs during the three and six months ended July 4, 2021, respectively related to the OTN Systems and Opterna acquisitions.

The restructuring and integration costs incurred during 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

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

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

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

4 unchanged sentences

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

April 3, 2022 December 31, 2021

July 3, 2022 December 31, 2021

(In thousands)

22 unchanged sentences

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

As of July 3, 2022, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $ 292.8 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 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.

During the six months ended July 3, 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 April 3, 2022 is $ 502.5 million.

The carrying value of the 2027 Notes as of July 3, 2022 is $ 471.2 million.

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

2 unchanged sentences

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 April 3, 2022 is $ 390.8 million.

The carrying value of the 2028 Notes as of July 3, 2022 is $ 366.5 million.

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

2 unchanged sentences

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 carrying value of the 2031 Notes as of July 3, 2022 is $ 314.2 million.

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

2 unchanged sentences

Fair Value of Long-Term Debt

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.

The fair value of our senior subordinated notes as of July 3, 2022 was approximately $ 948.9 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 $ 1,151.9 million as of July 3, 2022.

Net Investment Hedge

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

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.

As of July 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 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.

For the six months ended July 3, 2022 and July 4, 2021, the transaction gain associated with the net investment hedge reported in other comprehensive income was $ 53.5 million and $ 28.8 million, respectively.

During the six months ended July 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 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.

For the three and six months ended July 3, 2022, we recognized income tax expense of $ 13.1 million and $ 22.9 million, respectively, representing an effective tax rate of 18.2 % 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 six months ended July 4, 2021 , we recognized income tax expense of $ 9.6 million and $ 16.6 million, respectively, representing an effective tax rate of 17.4 % and 18.3 %, respectively.

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

Pension and Other Postretirement Obligations

1 unchanged sentence

Pension Obligations Other Postretirement Obligations

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

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

Three Months Ended

Service cost $ 819 $ 1,155 $ 6 $ 9

4 unchanged sentences

Net periodic benefit cost (income) $ ( 424 ) $ ( 471 ) $ 179 $ 190

Six Months Ended

Service cost $ 1,730 $ 2,041 $ 12 $ 18

Interest cost 4,592 3,703 388 363

Expected return on plan assets ( 7,761 ) ( 8,195 ) — —

Amortization of prior service cost 91 56 — —

Actuarial losses (gains) 460 1,955 ( 40 ) ( 11 )

Net periodic benefit cost (income) $ ( 888 ) $ ( 440 ) $ 360 $ 370

Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The following table summarizes total comprehensive income (losses):

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(In thousands)

16 unchanged sentences

Net current period other comprehensive income attributable to Belden 55,705 374 56,079

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:

Balance at July 3, 2022 $ 14,237 $ ( 28,724 ) $ ( 14,487 )

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

Amount Reclassified from Accumulated Other

12 unchanged sentences

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

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.

During the three months ended July 3, 2022, we repurchased 0.3 million shares of our common stock for an aggregate cost of $ 16.6 million at an average price per share of $ 51.71 .

During the six months ended July 3, 2022, we repurchased 1.2 million shares of our common stock for an aggregate cost of $ 66.6 million at an average price per share of $ 55.23 .

Subsequent to July 3, 2022, we repurchased 0.6 million shares of our common stock for an aggregate cost of $ 33.4 million at an average price per share of $ 55.74 .

As of the date of this filing, we had $ 115.0 million of authorizations remaining under the program.

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

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