What changed in this filing

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Item 1. Financial Statements

2022-11-07 compared with 2022-08-08 · 168 added, 116 removed, 676 unchanged (30% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

(In thousands)

28 unchanged sentences

Retained earnings 691,722 505,717

Accumulated other comprehensive loss ( 14,487 ) ( 70,566 )

Accumulated other comprehensive income (loss) 37,126 ( 70,566 )

Treasury stock ( 418,029 ) ( 313,994 )

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands, except per share data)

6 unchanged sentences

Asset impairments — ( 2,288 ) — ( 9,283 )

Gain on sale of asset 37,891 — 37,891 —

Operating income 129,648 74,737 285,105 194,034

27 unchanged sentences

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

Six Months Ended

July 3, 2022 July 4, 2021

Nine Months Ended

October 2, 2022 October 3, 2021

(In thousands)

3 unchanged sentences

Depreciation and amortization 65,730 65,028

Loss on debt extinguishment 6,392 —

Share-based compensation 18,438 18,242

Loss on disposal of discontinued operations 9,933 —

Loss on debt extinguishment 6,392 5,715

Asset impairments — 9,283

Gain on sale of asset ( 37,891 ) —

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

6 unchanged sentences

Other liabilities ( 17,500 ) ( 17,383 )

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

Net cash provided by operating activities 78,800 101,919

Cash flows from investing activities:

Proceeds from disposal of businesses, net of cash sold 334,574 10,798

Proceeds from disposal of tangible assets 1,424 3,249

Proceeds from disposal of assets 43,534 3,249

Purchase of intangible assets — ( 3,650 )

Capital expenditures ( 50,250 ) ( 55,569 )

Cash used for acquisitions and investments, net of cash acquired ( 104,481 ) ( 73,749 )

Purchase of intangible assets — ( 3,650 )

Net cash provided by (used for) investing activities 223,377 ( 118,921 )

2 unchanged sentences

Payments under share repurchase program ( 136,336 ) —

Withholding tax payments for share-based payment awards ( 5,167 ) ( 2,009 )

Cash dividends paid ( 6,762 ) ( 6,740 )

Withholding tax payments for share-based payment awards ( 6,534 ) ( 2,103 )

Payments under financing lease obligations ( 123 ) ( 3,116 )

1 unchanged sentence

Proceeds from issuance of common stock 3,717 —

Borrowings under credit arrangements — 356,010

Net cash used for financing activities ( 376,677 ) ( 24,038 )

33 unchanged sentences

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

Net income — — — 98,294 — — — 27 98,321

Other comprehensive income (loss), net of tax — — — — — — 51,613 ( 44 ) 51,569

Retirement Savings Plan stock contributions — — ( 339 ) — 23 1,802 — — 1,463

Exercise of stock options, net of tax withholding forfeitures — — ( 2,492 ) — 19 1,649 — — ( 843 )

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 2,851 ) — 28 2,326 — — ( 525 )

Share repurchase program — — — — ( 1,166 ) ( 69,777 ) — — ( 69,777 )

Share-based compensation — — 7,568 — — — — — 7,568

Common stock dividends ($ 0.05 per share)

— — — ( 2,185 ) — — — — ( 2,185 )

Balance at October 2, 2022 50,335 $ 503 $ 822,488 $ 691,722 ( 7,320 ) $ ( 418,029 ) $ 37,126 $ 864 $ 1,134,674

Additional Accumulated

23 unchanged sentences

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

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

The nine months ended October 2, 2022 and October 3, 2021 included 275 days and 276 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 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.

As of and during the three and nine months ended October 2, 2022 and October 3, 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 nine months ended October 2, 2022 and October 3, 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 July 3, 2022, we did not have any such cash equivalents on hand.

As of October 2, 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.

6 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 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.

As of October 2, 2022, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $ 7.2 million, $ 5.1 million, and $ 3.8 million, respectively.

Revenue Recognition

9 unchanged sentences

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.

The results of our investment in Litmus were not material to our consolidated financial statements for the three or nine months ended October 2, 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 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 joint venture is not material to our consolidated financial statements as of or for the periods ended October 2, 2022 and October 3, 2021.

Certain Belden subsidiaries include a noncontrolling interest as of and for the periods ended October 2, 2022 and October 3, 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.

During the fourth quarter of 2021, we purchased a noncontrolling interest for $ 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 July 3, 2022 (In thousands)

Three Months Ended October 2, 2022 (In thousands)

Enterprise Solutions $ 155,865 $ — $ 163,336 $ 319,201

1 unchanged sentence

Total $ 155,865 $ 351,290 $ 163,336 $ 670,491

Three Months Ended July 4, 2021

Three Months Ended October 3, 2021

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

1 unchanged sentence

Total $ 124,330 $ 318,530 $ 161,901 $ 604,761

Six Months Ended July 3, 2022

Nine Months Ended October 2, 2022

Enterprise Solutions $ 424,441 $ — $ 470,634 $ 895,075

1 unchanged sentence

Total $ 424,441 $ 1,052,338 $ 470,634 $ 1,947,413

Six Months Ended July 4, 2021

Nine Months Ended October 3, 2021

Enterprise Solutions $ 354,181 $ — $ 425,933 $ 780,114

3 unchanged sentences

Americas EMEA APAC Total Revenues

Three Months Ended July 3, 2022 (In thousands)

Three Months Ended October 2, 2022 (In thousands)

Enterprise Solutions $ 247,322 $ 35,045 $ 36,834 $ 319,201

1 unchanged sentence

Total $ 449,954 $ 122,873 $ 97,664 $ 670,491

Three Months Ended July 4, 2021

Three Months Ended October 3, 2021

Enterprise Solutions $ 216,566 $ 34,963 $ 34,702 $ 286,231

1 unchanged sentence

Total $ 400,599 $ 119,831 $ 84,331 $ 604,761

Six Months Ended July 3, 2022

Nine Months Ended October 2, 2022

Enterprise Solutions $ 685,209 $ 110,931 $ 98,935 $ 895,075

1 unchanged sentence

Total $ 1,306,196 $ 380,975 $ 260,242 $ 1,947,413

Six Months Ended July 4, 2021

Nine Months Ended October 3, 2021

Enterprise Solutions $ 571,379 $ 113,367 $ 95,368 $ 780,114

6 unchanged sentences

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

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

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

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 and six months ended July 3, 2022 and July 4, 2021 .

Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three and nine months ended October 2, 2022 and October 3, 2021 .

The following table presents estimated and accrued variable consideration:

July 3, 2022 December 31, 2021

October 2, 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 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:

As of October 2, 2022, total deferred revenue was $ 29.0 million, and of this amount, $ 21.6 million is expected to be recognized within the next twelve months, and the remaining $ 7.4 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 2, 2022 and October 3, 2021, respectively:

(In thousands)

8 unchanged sentences

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.

New deferrals 7,137 1,665

Revenue recognized ( 4,960 ) ( 3,070 )

Balance at the end of Q3 $ 29,011 $ 19,505

Service-type warranties represent $ 9.1 million of the deferred revenue balance at October 2, 2022, and of this amount $ 4.0 million is expected to be recognized in the next twelve months, and the remaining $ 5.1 million is long-term and will be recognized over a period greater than twelve months.

As of October 2, 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 July 3, 2022 and December 31, 2021.

We did not have any capitalized sales commissions on our balance sheet as of October 2, 2022 and December 31, 2021.

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

Three Months Ended Six Months ended

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

Three Months Ended Nine Months ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

Sales commissions $ 6,372 $ 5,492 $ 17,721 $ 13,928

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

During the nine months ended October 2, 2022, we completed three acquisitions.

On January 17, 2022, we acquired macmon secure GmbH (Macmon) for $ 41.9 million, net of cash acquired.

61 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 six months ended July 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 nine months ended October 3, 2021.

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

8 unchanged sentences

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.

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 and recognized an immaterial loss on sale.

Discontinued Operations

2 unchanged sentences

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

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

We recognized a loss on disposal of discontinued operations, net of tax of $ 5.4 million and $ 9.9 million during the three and nine months ended October 2, 2022, respectively.

The $ 5.4 million loss recognized in the three months ended October 2, 2022 was the result of a sales price adjustment tied to working capital.

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

6 unchanged sentences

Loss before taxes $ — $ ( 3,571 ) $ ( 5,540 ) $ ( 5,463 )

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 .

During the nine months ended October 2, 2022, th e Tripwire disposal group did not have any capital expenditures and recognized share-based compensation expense of $ 0.2 million.

During the three and nine months ended October 3, 2021, th e Tripwire disposal group had capital expenditu res of approximately $ 1.5 million and $ 3.8 million, respectively, and recognized share-based compensation expense of $ 0.6 million and $ 2.0 million, res pectively.

The disposal group did not have any significant non-cash charges for investing activities during the three and nine months ended October 2 , 2022 and October 3, 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 July 3, 2022

As of and for the three months ended October 2, 2022

Segment Revenues $ 319,201 $ 351,290 $ 670,491

6 unchanged sentences

Segment assets 575,829 632,997 1,208,826

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

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

Segment Revenues $ 286,231 $ 319,032 $ 605,263

5 unchanged sentences

Adjustments related to acquisitions and divestitures ( 713 ) 890 177

Asset impairments — 2,288 2,288

Segment assets 552,403 563,433 1,115,836

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

As of and for the nine months ended October 2, 2022

Segment revenues $ 895,075 $ 1,052,338 $ 1,947,413

6 unchanged sentences

Segment assets 575,829 632,997 1,208,826

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

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

Segment Revenues $ 780,114 $ 910,538 $ 1,690,652

8 unchanged sentences

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 Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

3 unchanged sentences

Total Segment EBITDA $ 117,165 $ 100,358 $ 325,461 $ 267,725

Gain on sale of asset 37,891 — 37,891 —

Adjustments related to acquisitions and divestitures (1) 2,023 ( 177 ) 1,447 4,285

Asset impairments (2) — ( 2,288 ) — ( 9,283 )

Depreciation expense ( 11,847 ) ( 10,586 ) ( 34,443 ) ( 31,971 )

Amortization of intangibles ( 10,105 ) ( 7,780 ) ( 28,099 ) ( 22,945 )

Amortization of software development intangible assets ( 981 ) ( 322 ) ( 1,988 ) ( 731 )

Severance, restructuring, and acquisition integration costs (3) ( 4,560 ) ( 4,328 ) ( 14,140 ) ( 12,539 )

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

Asset impairments (3) — — — ( 6,995 )

Amortization of software development intangible assets ( 868 ) ( 434 ) ( 2,856 ) ( 1,165 )

Eliminations ( 51 ) ( 28 ) ( 156 ) ( 73 )

4 unchanged sentences

Consolidated income from continuing operations before taxes $ 119,791 $ 53,763 $ 245,439 $ 144,808

(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 .

(1) During the three and nine months ended October 2, 2022, we recognized cost of sales of $ 0.5 million and $ 1.6 million related to purchase accounting adjustments of acquired inventory to fair value and recognized gains of $ 2.5 million and $ 3.0 million on collections from previously written off receivables associated with the sale of Grass Valley.

During the three months ended October 3, 2021, we recognized cost of sales of $ 0.4 million related to purchase accounting adjustments of acquired inventory to fair value, recognized $ 0.5 million for the purchase accounting effect of recording deferred revenue at fair value, and collected $ 0.7 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off.

During the nine months ended October 3, 2021, we reduced the Opterna earn-out liability by $ 5.8 million , recognized cost of sales of $ 2.4 million related to purchase accounting adjustments of acquired inventory to fair value, collected $ 2.1 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, and recognized $ 1.3 million for the purchase accounting effect of recording deferred revenue at fair value.

(2) During the three months ended October 3, 2021, we recognized a $ 2.3 million impairment on assets held for sale.

During the nine months ended October 3, 2021, we recognized a $ 3.6 million impairment on assets held and used and a $ 5.7 million impairment on assets held for sale .

(3) Severance, restructuring, and acquisition integration costs for the three and nine months ended October 2, 2022 primarily related to our Manufacturing Footprint and Acquisition Integration programs.

Costs for the three and nine months ended October 3, 2021 primarily related to our Acquisition Integration and completed Cost Reduction programs.

Income (loss) per Share

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

8 unchanged sentences

Weighted average shares outstanding, diluted 44,063 45,425 44,810 45,242

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 the three and nine months ended October 2, 2022, diluted weighted average shares outstanding exclude outstanding equity awards of 0.7 million and 0.9 million as they are anti-dilutive.

In addition, for the three and nine months ended October 2, 2022, diluted weighted average shares outstanding do not include outstanding equity a wards of 0.0 million and 0.1 million, respectively, becau se the related performance conditions have not been satisfied.

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 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 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 and six months ended July 3, 2022 and July 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 nine months ended October 2, 2022 and October 3, 2021, respectively:

(In thousands)

12 unchanged sentences

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

Current period provision 92 94

Write-offs ( 2,717 ) ( 246 )

Recoveries collected ( 23 ) ( 107 )

Fx impact ( 104 ) ( 19 )

Q3 ending balance $ 3,040 $ 4,744

The following table presents the major classes of inventories as of October 2, 2022 and December 31, 2021, respectively:

October 2, 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 and six months ended July 3, 2022 and July 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 nine months ended October 2, 2022 and October 3, 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.

3 unchanged sentences

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

As of July 3, 2022, the lease had approximately $ 17.3 million of lease payments remaining.

As of October 2, 2022, the lease had approximately $ 15.1 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 Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

5 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

1 unchanged sentence

Operating cash flows from operating leases $ 4,488 $ 4,042 $ 13,825 $ 11,444

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

Operating cash flows from finance leases were not material during the three and nine months ended October 2, 2022 and October 3, 2021.

Supplemental balance sheet information related to leases was as follows:

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

(In thousands, except lease term and discount rate)

9 unchanged sentences

Other long-lived assets, net $ 5,680 $ 3,093

October 2, 2022 December 31, 2021

(In thousands, except lease term and discount rate)

Weighted Average Remaining Lease Term

4 unchanged sentences

Finance leases 4.2 % 4.4 %

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

July 3, 2022 December 31, 2021

The following table summarizes maturities of lease liabilities as of October 2, 2022 and December 31, 2021, respectively:

October 2, 2022 December 31, 2021

(In thousands)

7 unchanged sentences

Long-Lived Assets

Gain on Sale of Asset

During the three and nine months ended October 2, 2022, we sold certain real estate in the United States for $ 42.2 million, net of transaction costs and recognized a $ 37.9 million pre-tax gain on sale.

This gain on sale was excluded from Segment EBITDA of our Industrial Automation Solutions segment.

Depreciation and Amortization Expense

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.

We recognized depreciation expense in income from continuing operations of $ 11.8 million and $ 34.4 million in the three and nine months ended October 2, 2022, respectively.

We recognized depreciation expense in income from continuing operations of $ 10.6 million and $ 32.0 million in the three and nine months ended October 3, 2021, respectively.

We recognized amortization expense in income from continuing operations of $ 11.0 million and $ 31.0 million in the three and nine months ended October 2, 2022, respectively.

We recognized amortization expense in income from continuing operations of $ 8.2 million and $ 24.1 million in the three and nine months ended October 3, 2021, respectively.

Sale-Leaseback

During the fourth quarter of 2021, we sold certain real estate in Germany as part of a sale and leaseback transaction.

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

This $ 2.3 million impairment charge recognized during the three and nine months ended October 3, 2021 was excluded from Segment EBITDA of our Industrial Automation Solutions segment.

Asset Impairment

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.

During the nine months ended October 3, 2021, we sold our oil and gas cable business in Brazil and recognized an impairment charge of $ 3.4 million .

Also during the nine months ended October 3, 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.

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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.

We recognized $ 0.8 million and $ 6.7 million of severance and other restructuring costs for this program during the three and nine months ended October 2, 2022 , respectively.

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

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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 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.

The Enterprise Solutions segment incurred $ 3.7 million and $ 4.7 million of restructuring and integration co sts during the three and nine months ended October 2, 2022, respectively, related to the CAI acquisition, and the Industrial Automation Solutions segment incurred $ 0.1 million and $ 3.2 million of restructuring and integration costs during the three and nine months ended October 2, 2022, respectively, related to the Macmon, NetModule and OTN Systems acquisitions.

We expect to incur approximately $ 2 million of incremental costs for this program in 2022.

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 Enterprise Solutions and Industrial Automation Solutions segments recognized $ 0.8 million and $ 3.2 million of severance and other restructuring and integration costs during the three and nine months ended October 3, 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 July 3, 2022 or December 31, 2021.

Furthermore, t here were no significant severance accrual balances as of October 2, 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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

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

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

(In thousands)

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

As of October 2, 2022, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $ 292.9 million.

Senior Subordinated Notes

We had outstanding € 200.0 million aggregate principal amount of 4.125 % senior subordinated notes due 2026 (the 2026 Notes).

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.

During the nine months ended October 2, 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 July 3, 2022 is $ 471.2 million.

The carrying value of the 2027 Notes as of October 2, 2022 is $ 433.2 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 July 3, 2022 is $ 366.5 million.

The carrying value of the 2028 Notes as of October 2, 2022 is $ 336.9 million.

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

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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 July 3, 2022 is $ 314.2 million.

The carrying value of the 2031 Notes as of October 2, 2022 is $ 288.8 million.

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

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Fair Value of Long-Term Debt

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.

The fair value of our senior subordinated notes as of October 2, 2022 was approximately $ 880.6 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 $ 1,058.9 million as of October 2, 2022.

Net Investment Hedge

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

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.

As of October 2, 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 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.

For the nine months ended October 2, 2022 and October 3, 2021, the transaction gain associated with the net investment hedge reported in other comprehensive income was $ 102.1 million and $ 47.9 million, respectively.

During the nine months ended October 2, 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 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.

For the three and nine months ended October 2, 2022, we recognized income tax expense of $ 16.1 million and $ 39.0 million, respectively, representing an effective tax rate of 13.4 % and 15.9 %, 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.

On August 16, 2022, the Inflation Reduction Act of 2022 (the Act) was signed into law.

We are evaluating the effect that the Act will have on our consolidated financial statements and related disclosures.

At this time, none of the tax provisions of the Act are expected to have a material impact to our tax provision.

For the three and nine months ended October 3, 2021 , we recognized income tax expense of $ 9.8 million and $ 26.4 million, respectively, representing an effective tax rate of 18.2 % 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.

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Pension Obligations Other Postretirement Obligations

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

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

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Actuarial losses (gains) 212 971 ( 20 ) ( 5 )

Settlement loss 954 — — —

Net periodic benefit cost (income) $ 562 $ ( 228 ) $ 176 $ 185

Six Months Ended

Nine Months Ended

Service cost $ 2,488 $ 2,982 $ 18 $ 26

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Actuarial losses (gains) 672 2,926 ( 60 ) ( 16 )

Settlement loss 954 — — —

Net periodic benefit cost (income) $ ( 326 ) $ ( 668 ) $ 536 $ 555

We recorded a settlement loss of $ 1.0 million during the three and nine months ended October 2, 2022.

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

Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The following table summarizes total comprehensive income (losses):

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

(In thousands)

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Net current period other comprehensive income attributable to Belden 106,430 1,262 107,692

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:

Balance at October 2, 2022 $ 64,962 $ ( 27,836 ) $ 37,126

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the nine months ended October 2, 2022:

Amount Reclassified from Accumulated Other

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Amortization of pension and other postretirement benefit plan items:

Settlement loss $ 954 (1)

Actuarial losses 612 (1)

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

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 .

During the three months ended October 2, 2022 , we repurchased 1.2 million shares of our common stock for an aggregate cost of $ 69.8 million at an average price per share of $ 59.84 .

During the nine months ended October 2, 2022 , we repurchased 2.4 million shares of our common stock for an aggregate cost of $ 136.4 million at an average price per share of $ 57.50 .

Subsequent to October 2, 2022, we repurchased 0.2 million shares of our common stock for an aggregate cost of $ 13.6 million at an average price per share of $ 62.85 .

As of the date of this filing, we had $ 65.0 million of authorizations remaining under the program.

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

During the three and nine months ended October 3, 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