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Item 8. Financial Statements and Supplementary Data

2023-02-24 compared with 2022-02-15 · 327 added, 407 removed, 1192 unchanged (38% of the section changed)

19 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

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

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

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

Goodwill Impairment related to Tripwire Reporting Unit

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

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

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

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

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

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

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

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

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

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

We compared the significant assumptions used by the Company to current industry and future economic trends, changes to the Company’s business model, customer base or product mix and other relevant factors.

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

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

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

Revenue recognition - allocating consideration to performance obligations and estimating variable consideration

Description of the Matter As described in Notes 2 and 3 to the consolidated financial statements, the Company has contractual arrangements that include software, support, and service revenues.

The Company estimated the selling prices of those contractual arrangements to determine the allocation of consideration to each of the performance obligations.

The objective was to determine the price at which the Company would transact a sale if the product, support or service was sold on a standalone basis.

Generally, the Company determines standalone selling price using the adjusted market assessment approach.

For software licenses with highly variable standalone selling prices sold with either support or professional services, the Company generally determines the standalone selling price of the software license using the residual approach.

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

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

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

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

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

Revenue recognition - estimating variable consideration

Description of the Matter As described in Notes 2 and 3 to the consolidated financial statements, the Company enters into sales contracts that provide certain customers with special price reductions and product return rights, resulting in variable consideration.

At the time of sale, the Company establishes a reserve for the estimate of adjustments to variable consideration and recognizes the reserve by reducing revenues.

Estimates are based on a percentage of revenues and the average time period between the original sale and the issuance of the adjustments.

As of December 31, 2021, the Company recorded $23.4 million in unprocessed changes that were recognized as a reduction of revenues and accounts receivable and $12.5 million in unprocessed changes recognized as accrued liabilities.

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

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

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

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's processes to determine the estimated standalone selling price of each of the performance obligations, the allocation of total consideration to be received over the contractual term to all performance obligations based on their relative standalone selling price and to calculate the variable consideration, including the process to determine and evaluate the underlying assumptions about estimates of expected unprocessed changes and pricing concessions.

We performed audit procedures related to the estimated standalone selling prices and allocation to the performance obligations over the term of the contractual arrangement, including the following, among others.

To test the calculation of the amount of consideration allocated to each performance obligation, we evaluated the accuracy and completeness of the underlying data used in the Company’s calculation of the ranges of each standalone selling price and recalculated the established range for the standalone selling price used.

We analyzed transaction level detail, such as invoices and price lists, to test that, if necessary, the transaction price was reallocated to bring the amount allocated to the performance obligation within the established range.

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

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

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

This included testing the Company's estimate of historical adjustments as a percentage of revenues and the average time period between the original sale and the issuance of the adjustment memo.

As of December 31, 2022, the Company recorded a reserve for estimated price adjustments of $24.3 million, which was recognized as a reduction of revenues and accounts receivable, and a reserve of $11.7 million for estimated returns, which was recognized as a reduction of revenues and included in accrued liabilities.

Auditing the Company's measurement of variable consideration for estimated pricing adjustments and returns involved especially challenging judgment because the estimates involved subjective management assumptions, including historical adjustments as a percentage of revenues and the estimated period of time between the original sale and the issuance of the adjustment.

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

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's processes to calculate the variable consideration, including the process to determine and evaluate the underlying assumptions about estimates of variable consideration related to expected pricing adjustments and returns.

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

This included testing the Company's estimate of historical adjustments as a percentage of revenues and the average time period between the original sale and the issuance of the adjustment.

In addition, we inspected the results of the Company's retrospective review of adjustments reserved compared to actual adjustments issued, evaluated the estimates made based on historical experience and performed sensitivity analyses to evaluate the changes in variable consideration that would result from changes in the Company's significant assumptions.

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Other current assets 66,866 58,283

Assets of discontinued operations — 449,152

Total current assets 1,536,207 1,877,645

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Accrued liabilities 289,861 278,108

Liabilities of discontinued operations — 96,993

Total current liabilities 639,919 752,866

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Amortization of intangibles ( 37,860 ) ( 30,630 ) ( 29,041 )

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

Asset impairments — ( 9,283 ) —

Gain on sale of asset 37,891 — —

Operating income 363,334 263,676 150,114

Interest expense, net ( 43,554 ) ( 62,693 ) ( 58,903 )

Loss on debt extinguishment ( 6,392 ) ( 5,715 ) —

Non-operating pension benefit (cost) 4,005 4,476 ( 395 )

Gain on sale of note receivable — 27,036 —

Loss on debt extinguishment ( 5,715 ) — —

Income from continuing operations before taxes 317,393 226,780 90,816

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Net income attributable to noncontrolling interest 159 392 104

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

Preferred stock dividends — — 18,437

Net income (loss) attributable to Belden common stockholders $ 254,663 $ 63,925 $ ( 55,162 )

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Depreciation and amortization 88,738 87,988 108,687

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

Share-based compensation 23,676 24,871 20,030

Loss on debt extinguishment 6,392 5,715 —

Asset impairments — 140,461 113,007

Deferred income tax expense (benefit) ( 627 ) 3,575 ( 19,410 )

Gain on sale of asset ( 37,891 ) — —

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

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Cash flows from investing activities:

Capital expenditures ( 90,982 ) ( 90,215 ) ( 110,002 )

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

Purchase of intangible assets ( 3,650 ) — —

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

Proceeds from disposal of businesses, net of cash sold 334,574 45,735 54,821

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

Proceeds from disposal of tangible assets 43,534 30,234 3,161

Purchase of intangible assets — ( 3,650 ) —

Cash from (used for) acquisitions and investments, net of cash acquired ( 104,603 ) ( 73,340 ) 590

Capital expenditures ( 105,094 ) ( 90,982 ) ( 90,215 )

Net cash provided by (used for) investing activities 168,411 ( 92,003 ) ( 31,643 )

Cash flows from financing activities:

Payments under borrowing arrangements ( 230,639 ) ( 360,304 ) ( 190,000 )

Payments under share repurchase program ( 150,000 ) — ( 35,000 )

Cash dividends paid ( 8,949 ) ( 9,056 ) ( 9,029 )

Debt issuance costs paid ( 8,173 ) — —

Withholding tax payments for share-based payment awards ( 7,186 ) ( 5,570 ) ( 1,388 )

Payments under financing lease obligations ( 157 ) ( 3,151 ) ( 194 )

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

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

Payment of earnout consideration — — ( 29,300 )

Debt issuance costs paid — ( 8,173 ) —

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

Proceeds from issuance of common stock 3,717 — —

Borrowings under credit arrangements — 356,010 190,000

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Cash and cash equivalents, end of year $ 687,676 $ 643,757 $ 501,994

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

The Consolidated Cash Flow Statement includes the results of our discontinued operations up to their disposal date - February 22, 2022 and July 2, 2020 for Tripwire and Grass Valley, respectively.

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

Consolidated Stockholders’ Equity Statements

Mandatory Convertible Preferred Stock Common Stock Additional

Common Stock Additional

Capital Retained Earnings Treasury Stock Accumulated

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Interest Total

Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount

(In thousands)

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

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

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

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

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

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

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

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

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

2 unchanged sentences

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

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

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

Common stock dividends ($ 0.20 per share)

1 unchanged sentence

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

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

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

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

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

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

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

1 unchanged sentence

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

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

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

4 unchanged sentences

Other comprehensive income (loss), net of tax — — — — — — 64,695 ( 15 ) 64,680

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

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

Retirement Savings Plan stock contributions — — ( 1,551 ) — 116 8,568 — — 7,017

1 unchanged sentence

Conversion of restricted stock units into common stock, net of tax withholding forfeitures — — ( 22,433 ) — 208 16,853 — — ( 5,580 )

Share repurchase program — — — — ( 2,588 ) ( 150,000 ) — — ( 150,000 )

Share-based compensation — — 23,676 — — — — — 23,676

6 unchanged sentences

Business Description

(the Company, us, we, or our) is a global supplier of specialty networking solutions built around two global businesses – Enterprise Solutions and Industrial Solutions.

Our comprehensive portfolio of solutions enables customers to transmit and secure data, sound, and video for mission critical applications across complex enterprise and industrial environments.

(the Company, us, we, or our) is a leading global supplier of network infrastructure solutions built around two global businesses – Enterprise Solutions and Industrial Automation Solutions.

We’re moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions.

We are aligned with attractive secular growth markets, positioned to provide comprehensive solutions that drive customer outcomes, focused on new product innovation and technology leadership, and committed to sustainable ESG practices.

Consolidation

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Future market conditions might require us to take actions to further reduce prices and increase customer return authorizations.

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

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

Unprocessed Changes recognized against our gross accounts receivable, such as price reductions, at December 31, 2022 and 2021 totale d $ 24.3 million and $ 23.4 million, respectively.

Unprocessed Changes recognized as accrued liabilities, such as product returns, at December 31, 2022 and 2021 totaled $ 11.7 million an d $ 12.5 million, respectively.

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

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As of December 31, 2022 and 2021, the allowance for doubtf ul accounts totaled $ 8.0 million and $ 4.9 million, respectively.

We also recognized bad debt expense, net of recoveries, of $ 1.8 million, $ 2.4 million, and $ 0.1 million in 2021 , 2020, and 2019, respectively.

We also recognized bad debt expense, net of recoveries, in selling, general and administrative expenses of $ 6.5 million, $ 0.4 million, and $ 2.3 million in 2022 , 2021, and 2020, respectively.

Inventories and Related Reserves

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We calculate depreciation on a straight-line basis over the estimated useful lives of the related assets ranging from 10 to 40 years for buildings, 5 to 12 years for machinery and equipment, and 5 to 10 years for computer equipment and software.

Construction in process reflects amounts incurred for the configuration and build-out of property, plant and equipment and for property, plant and equipment not yet placed into service.

Construction in process reflects amounts incurred for property, plant and equipment not yet placed into service.

We charge maintenance and repairs—both planned major activities and less-costly, ongoing activities—to expense as incurred.

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Goodwill and Intangible Assets

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

We record amortization of the definite-lived intangible assets over the estimated useful lives of the related assets, which generally range from one year or less for backlog to more than 20 years for certain of our customer relationships.

1 unchanged sentence

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

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

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

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

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Such an evaluation is made based on the weight of all available evidence and the significance of all identified events and circumstances that may influence the fair value of a reporting unit.

If it is more likely than not that the fair value is less than the carrying value, then a quantitative assessment is required for the reporting u nit, as described in the paragraph below.

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

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

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

If it is more likely than not that the fair value is less than the carrying value, then a quantitative assessment is required for the reporting unit, as described in the paragraph below.

In 2022, we performed a qualitative assessment over five of our reporting units.

For our annual impairment test in 2022, we performed a quantitative assessment for one of our reporting units.

Under a quantitative assessment for goodwill impairment, we determine the fair value using the income approach (using Level 3 inputs).

Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows.

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

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

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

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

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

See Note 13 for further discussion.

Based on our annual goodwill impairment test, the excess fair value over the carrying value for the reporting unit tested under the quantitative income approach was 48 %.

Using both an income approach and market approach, we determined that there was no impairment during 2022.

During 2021 and 2020, we did no t recognize any goodwill impairment from continuing operations other than a $ 1.7 million impairment in 2021 in connection with the sale of our oil and gas business in Brazil.

See Notes 5 and 13 for further discussion.

We also evaluate indefinite lived intangible assets for impairment annually or at other times if events have occurred or circumstances exist that indicate the carrying values of those assets may no longer be recoverable.

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

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

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

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

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

We did no t recognize any impairment charges for amortizable intangible assets from continuing operations in 2022, 2021, or 2020 other than a $ 1.0 million impairment in 2021 in connection with the sale of our oil and gas business in Brazil.

Discontinued operations includes an impairment charge in 2021 of $ 131.2 million related to the Tripwire divestiture and an impairment charge in 2020 of $ 113.0 million related to the Grass Valley divestiture.

See Notes 5 and 13.

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

Equity Method Investment

During 2022, we invested $ 20.0 million in 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 Consolidated Balance Sheets.

The results of our investment in Litmus were not material to our consolidated financial statements for the year ended December 31, 2022.

Acquisition Accounting

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

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

At December 31, 2022, the valuation allowance of $ 142.3 million was primarily related to net operating losses and capital losses that we do not currently expect to realize.

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

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

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.

None of the tax provisions of the Act are expected to have a material impact to our consolidated financial statements and related disclosures.

Current-Year Adoption of Accounting Pronouncements

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

ASU 2019-12 is effective for annual periods beginning after December 15, 2020, with early adoption permitted.

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

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

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

2021-08, Business Combinations (Topic 805):

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

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

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

The amendments should be applied prospectively;

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

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

None of the accounting pronouncements that became effective during 2022 had a material impact to our consolidated financial statements or disclosures.

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.

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The following table presents our revenues disaggregated by major product category (in thousands).

Broadband and 5G Cyber-Security Industrial Automation Smart Buildings Total

Broadband and 5G Industrial Automation Smart Buildings Total

Year Ended December 31, 2022

Enterprise Solutions $ 571,426 $ — $ 627,052 $ 1,198,478

Industrial Solutions — 106,850 1,226,824 — 1,333,674

Industrial Automation Solutions — 1,408,007 — 1,408,007

Total $ 571,426 $ 1,408,007 $ 627,052 $ 2,606,485

1 unchanged sentence

Enterprise Solutions $ 488,453 $ — $ 585,973 $ 1,074,426

Industrial Solutions — 110,524 879,775 — 990,299

Industrial Automation Solutions — 1,226,834 — 1,226,834

Total $ 488,453 $ 1,226,834 $ 585,973 $ 2,301,260

1 unchanged sentence

Enterprise Solutions $ 432,262 $ — $ 440,155 $ 872,417

Industrial Solutions — 133,039 1,052,198 — 1,185,237

Industrial Automation Solutions — 879,775 — 879,775

Total $ 432,262 $ 879,775 $ 440,155 $ 1,752,192

3 unchanged sentences

Enterprise Solutions $ 915,491 $ 149,327 $ 133,660 $ 1,198,478

Industrial Solutions 781,362 344,379 207,933 1,333,674

Industrial Automation Solutions 816,508 372,473 219,026 1,408,007

Total $ 1,731,999 $ 521,800 $ 352,686 $ 2,606,485

1 unchanged sentence

Enterprise Solutions $ 785,253 $ 150,790 $ 138,383 $ 1,074,426

Industrial Solutions 577,929 256,673 155,697 990,299

Industrial Automation Solutions 703,790 323,915 199,129 1,226,834

Total $ 1,489,043 $ 474,705 $ 337,512 $ 2,301,260

1 unchanged sentence

Enterprise Solutions $ 636,492 $ 130,982 $ 104,943 $ 872,417

Industrial Solutions 742,563 274,030 168,644 1,185,237

Industrial Automation Solutions 494,743 238,300 146,732 879,775

Total $ 1,131,235 $ 369,282 $ 251,675 $ 1,752,192

5 unchanged sentences

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

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

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

Typically, payments are due after control transfers.

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

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We estimate the expected rebates, returns, and price adjustments based on an analysis of historical experience, anticipated sales demand, and trends in product pricing.

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.

For example, our estimate of price adjustments is based on our historical price adjustments as a percentage of revenues and the average time period between the original sale and the issuance of the price adjustment.

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

We adjust other current assets and cost of sales for the estimated level of returns.

Adjustments to revenue for performance obligations satisfied in prior periods was not significant during the year ended December 31, 2022.

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

The typical use of a time-elapsed unit of measure for support and maintenance contracts reflects the benefit and same pattern of transfer the customer receives from our services under this arrangement over the term of the contract.

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

3 unchanged sentences

New deferrals 12,065

Acquisitions 7,172

Revenue recognized ( 10,977 )

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

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

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

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

OTN Systems N.V.

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

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

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

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

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

A subsidiary of OTN Systems includes a noncontrolling interest.

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

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

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

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.

Total capitalized sales commissions were not material for the years ended December 31, 2022 , 2021, and 2020.

We recogn iz ed $ 24.1 million , $ 20.6 million, and $ 16.0 million of sales commissions expense in selling, general, and administrative expenses during the years ended December 31, 2022 , 2021 and 2020 , respectively.

During 2022, we completed three acquisitions.

On January 17, 2022, we acquired Macmon for $ 41.9 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 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 CAI for $ 19.0 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 $ 6,537

Inventories 10,731

Inventory 8,278

Other current assets 345

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Operating lease right-of-use assets 6,167

Other long-lived assets 416

Total assets acquired $ 119,024

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Long-term debt 2,440

Postretirement benefits 3,581

Deferred income taxes 11,460

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Net assets $ 84,392

Noncontrolling interests 20

Net assets attributable to Belden $ 73,345

The fair value of acquired receivables is $ 6.0 million, which is equivalent to its gross contractual amount.

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

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

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

The preliminary fair value of acquired receivables is $ 6.5 million, which is equivalent to its gross contractual amount.

A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions.

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

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

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

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

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

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

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

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

The goodwill is primarily attributable to 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 acquisition consisted of the following:

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

Fair Value Amortization Period

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Customer relationships 13,427 18.5

Sales backlog 3,600 5.0

Trademarks 2,206 2.0

Sales backlog 2,300 0.9

Non-compete agreements 200 3.5

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Intangible assets not subject to amortization:

Goodwill $ 41,749

Goodwill $ 50,596 n/a

Total intangible assets not subject to amortization $ 50,596

Total intangible assets $ 95,355

Weighed average amortization period 8.5

Weighted average amortization period 8.1

The amortizable intangible assets reflected in the table above were determined by us to have finite lives.

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

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

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

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

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

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

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

Years Ended December 31,

(In thousands, except per share data)

Revenues $ 2,409,851 $ 1,900,646

Net income (loss) attributable to Belden common stockholders 65,377 ( 59,150 )

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

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

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

Opterna International Corp.

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

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

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

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

T he divestiture of Tripwire represented 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.

We recognized a loss on disposal of discontinued operations, net of tax of $ 9.2 million during 2022.

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

Years Ended December 31,

2022 2021 2020

(In thousands)

Revenues $ 12,067 $ 106,840 $ 110,524

Cost of sales ( 3,256 ) ( 24,321 ) ( 22,857 )

Gross profit 8,811 82,519 87,667

Selling, general and administrative expenses ( 8,185 ) ( 48,308 ) ( 42,741 )

Research and development expenses ( 5,528 ) ( 34,433 ) ( 34,276 )

Amortization of intangible assets ( 638 ) ( 7,716 ) ( 35,354 )

Asset impairments — ( 131,178 ) —

Loss before taxes $ ( 5,540 ) $ ( 139,116 ) $ ( 24,704 )

During the year ended December 31, 2022, th e Tripwire disposal group did not have any capital expenditures and recognized share-based compensation expense of $ 0.2 million.

During the year ended December 31, 2021, th e Tripwire disposal group had capital expenditu res of $ 6.1 million and recognized share-based compensation expense of $ 2.2 million .

During the year ended December 31, 2020, th e Tripwire disposal group had capital expenditu res of $ 7.7 million and recognized share-based compensation expense of $ 2.6 million .

The disposal group did not have any significant non-cash charges for investing activities during the years ended December 31 , 2022, 2021, and 2020 .

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

(In thousands)

Cash and cash equivalents $ 2,194

Receivables, net 28,773

Inventories, net 150

Other current assets 7,418

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

Operating lease right-of-use assets 3,893

Goodwill 331,024

Intangible assets, less accumulated amortization 63,541

Deferred income taxes 584

Other long-lived assets 5,325

Total assets of Tripwire disposal group $ 449,152

Accounts payable $ 6,458

Accrued liabilities 56,208

Deferred income taxes 8,878

Long-term operating lease liabilities 5,257

Other long-term liabilities 20,192

Total liabilities of Tripwire disposal group $ 96,993

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

Brazil Oil & Gas Cable Business

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

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

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

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

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

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

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

Furthermore, we determined a divestiture of Grass Valley represents a strategic shift that is expected to have a major impact on our operations and financial results.

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

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

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

We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 and recognized a loss of $ 9.9 million, net of $ 7.5 million income tax expense.

The terms of the sale included gross cash consideration of $ 120.0 million, or approximately $ 56.2 million net of cash delivered with the business.

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

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

Therefore, we recognized an impairment charge of $ 3.4 million (includes a goodwill impairment of $ 1.7 million and intangible asset impairment of $ 1.0 million) in 2021.

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 2021 for $ 10.9 million, net of cash delivered with the business.

During 2020, we sold Grass Valley to Black Dragon Capital for gross cash consideration of $ 120.0 million, or approximately $ 56.2 million net of cash delivered with the business.

We recognized a loss of $ 9.9 million, net of $ 7.5 million income tax expense and recognized asset impairments totaling $ 113.0 million during the year ended December 31, 2020.

The divestiture of Grass Valley represented a strategic shift impacting our operations and financial results.

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

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

Based upon a third party valuation specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note was $ 34.9 million.

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

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

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

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

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

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

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

Years Ended December 31,

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

Year Ended December 31,

(In thousands)

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Research and development expenses ( 15,083 )

Amortization of intangibles — ( 12,782 )

Asset impairment of discontinued operations ( 113,007 )

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Loss before taxes $ ( 129,642 )

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

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

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

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

During 2020, the disposal group did not recognize any depreciation and amortization expense, but incurred capital expenditures and share-based compensation credits of $ 16.7 million and $ 0.9 million, respectively.

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

Operating Segments and Geographic Information

We are organized around two global businesses:

Enterprise Solutions and Industrial Solutions.

Enterprise Solutions and Industrial Automation Solutions.

Each of the global businesses represents a reportable segment.

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

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

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

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severance, restructuring, and acquisition integration costs;

purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory to fair value;

adjustments related to acquisitions and divestitures;

and other costs.

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Segment assets 593,653 563,141 462,615

Industrial Solutions Years ended December 31,

Industrial Automation Solutions Years Ended December 31,

2022 2021 2020

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Severance, restructuring, and acquisition integration costs 7,485 10,067 3,944

Goodwill and other asset impairment 140,461 — —

Asset impairments — 9,283 —

Acquisition of property, plant and equipment 58,713 41,269 37,002

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Severance, restructuring, and acquisition integration costs 16,685 23,867 11,664

Goodwill and other asset impairment 140,461 — —

Asset impairments — 9,283 —

Acquisition of property, plant and equipment 92,248 77,995 62,225

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Total Segment EBITDA $ 438,596 $ 367,193 $ 231,635

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

Depreciation expense ( 46,669 ) ( 43,073 ) ( 39,339 )

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Severance, restructuring, and acquisition integration costs (1) ( 16,685 ) ( 23,867 ) ( 11,664 )

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

Adjustments related to acquisitions and divestitures (2) ( 7,833 ) 5,035 ( 125 )

Amortization of software development intangible assets ( 3,875 ) ( 1,579 ) ( 872 )

Asset impairments (3) — ( 9,283 ) —

Gain on sale of asset (4) 37,891 — —

Eliminations ( 231 ) ( 120 ) ( 480 )

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Interest expense, net ( 43,554 ) ( 62,693 ) ( 58,903 )

Loss on debt extinguishment ( 6,392 ) ( 5,715 ) —

Non-operating pension benefit (cost) 4,005 4,476 ( 395 )

Gain on sale of note receivable — 27,036 —

Loss on debt extinguishment ( 5,715 ) — —

Consolidated income from continuing operations before taxes $ 317,393 $ 226,780 $ 90,816

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

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

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

(2) In 2022, we incurred $ 10.1 million for lease guarantees associated with the Grass Valley disposal (see Note 12), $ 2.2 million related to fair value adjustments of acquired inventory and investments, and gains of $ 4.5 million on collections from previously written off receivables associated with the sale of Grass Valley.

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

In 2020, we recognized $ 0.1 million of cost of sales related to adjustments of acquired inventory to fair value.

(3) In 2021, we recognized a $ 3.6 million impairment on assets held and used and a $ 5.7 million impairment on assets held for sale .

See Note 11, Property, Plant, and Equipment , for details.

(4) During 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.

See Note 11, Property, Plant, and Equipment , for details.

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

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Assets of discontinued operations

— 449,152 583,626

Total assets $ 3,161,675 $ 3,417,677 $ 3,139,734

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The table below summarizes net sales and long-lived assets for the years ended December 31, 2022, 2021, and 2020 for the following countries:

the U.S., Canada, China, and Germany.

U.S., Canada, China, and Germany.

No other individual foreign country’s net sales or long-lived assets are material to the Company.

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Major Customer

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

Revenues generated in both the Enterprise Solutions and Industrial Automation Solutions segments from our largest customer were approximately $ 387.7 million ( 15 % of revenues), $ 374.8 million ( 16 % of revenues), and $ 271.6 million ( 16 % of revenues) for the years ended December 31, 2022, 2021, and 2020 , respectively.

At December 31, 2022 and 2021 , we had $ 28.8 million and $ 40.5 million in accounts receivable outstanding from this customer, which represented approximately 7 % and 11 % of our total accounts receivable balance as of December 31, 2022 and 2021 , respectively.

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

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

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

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

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The joint venture is not material to our consolidated financial statements as of or for the years ended December 31, 2022, 2021, or 2020.

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

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

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

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

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

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

A subsidiary of OTN Systems includes a noncontrolling interest.

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

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

Certain Belden subsidiaries include noncontrolling interests as of and for the years ended December 31, 2022, 2021 and 2020.

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 Consolidated Statements of Operations.

In 2021, we purchased certain noncontrolling interests for $ 2.7 million.

Income Per Share

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Net income attributable to noncontrolling interest 159 392 104

Preferred stock dividends — — 18,437

Income from continuing operations attributable to Belden common stockholders 267,589 198,449 70,614

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In addition, for the years ended December 31, 2022, 2021, and 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.2 million, 0.2 million, and 0.4 million, respectively, because the related performance conditions have not been satisfied.

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

For purposes of calculating basic earnings per share, unvested restricted stock units are not included in the calculation of basic weighted average shares outstanding until all necessary conditions have been satisfied and issuance of the shares underlying the restricted stock units is no longer contingent.

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Measurement of Credit Losses on Financial Instruments prospectively.

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

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

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

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

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

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

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Balances are written off when determined to be uncollectible.

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

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 allowance for doubtful accounts for the years ended December 31, 2022 and 2021 (in thousands).

Balance at December 31, 2020 $ 5,085

Adoption adjustment 1,011

Current period provision 597

Currency impact 39

Write-offs ( 326 )

Recoveries collected ( 227 )

Disposals ( 190 )

Currency impact ( 75 )

Balance at December 31, 2021 $ 4,864

Current period provision 6,615

Currency impact ( 74 )

Disposals ( 190 )

Recoveries collected ( 227 )

Write-offs ( 3,648 )

Recoveries collected ( 121 )

Acquisitions 319

Currency impact ( 75 )

Balance at December 31, 2022 $ 7,954

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We recognized depreciation expense in income from continuing operations of $ 46.7 million, $ 43.9 million, and $ 39.3 million in 2022, 2021, and 2020, respectively.

Gain on Sale of Asset

During 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.

Sale-Leaseback

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

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

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

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

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

The lease is for a term of 10 years and as of December 31, 2022 and 2021, had a total right-of-use asset balance of $ 21.7 million and $ 25.3 million, respectively.

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

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

Asset Impairment

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

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

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

During 2021, we sold our oil and gas business in Brazil and recognized an impairment charge of $ 3.4 million (includes a goodwill impairment of $ 1.7 million and intangible asset impairment of $ 1.0 million).

During 2021, we also 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 Solutions segment.

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

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

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We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease.

Our lease agreements do not contain any material residual value guarantees or material variable lease payments.

Our lease agreements do not contain material residual value guarantees, and our variable lease payments were $ 2.9 million and $ 2.4 million during the years ended December 31, 2022 and 2021, respectively.

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

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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 (see Note 5).

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

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

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

We have not recorded a liability associated with this guarantee.

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, commencement date, location, and local currency of the leased asset as well as the credit rating of the legal entity leasing the asset.

The components of lease expense were as follows:

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Operating cash flows from operating leases $ 18,338 $ 15,737 $ 13,629

Operating cash flows from finance leases 15 16 25

Financing cash flows from finance leases 3,151 158 258

Supplemental balance sheet information related to leases was as follows:

Operating and financing cash flows from finance leases were not material for the years ended December 31, 2022, 2021 and 2020.

S upplemental balance sheet information related to leases was as follows:

(In thousands, except lease term and discount rate)

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Other long-lived assets, net $ 5,590 $ 3,093

Accrued liabilities $ 391 $ 140

Other long-term liabilities 5,928 323

Total finance lease liabilities $ 6,319 $ 463

Weighted Average Remaining Lease Term

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Total $ 82,838

In addition to the supplemental lease information disclosed above, we are also party to two lease guarantees, whereby Belden has covenanted the lease payments for two Grass Valley property leases which expire in 2029 and 2035 and collectively have approximately $ 20 million of fixed lease payments remaining.

These lease guarantees were retained by Belden and not transferred to Black Dragon Capital as part of the Grass Valley sale in 2020 (see Note 5) .

Belden is required to make lease payments only if the primary obligor defaults.

During 2022, Grass Valley defaulted on both property leases.

In 2022, we recognized costs of $ 10.1 million related to the guarantees in selling, general and administrative expenses.

These costs were excluded from Segment EBITDA of our Enterprise Solutions segment.

As of December 31, 2022, $ 9.4 million of the $ 10.1 million remained as a liability for expected, future payments.

The liability is based on certain assumptions, such as receiving a level of sublease income, that we will reassess on an ongoing basis.

We will update the estimated liability balance for changes in assumptions as needed.

Intangible Assets

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The changes in the carrying amount of goodwill assigned to reporting units in our reportable segments are as follows:

Enterprise Solutions Industrial Solutions Consolidated

Enterprise Solutions Industrial Automation Solutions Consolidated

(In thousands)

Balance at December 31, 2020 $ 474,747 $ 314,988 $ 789,735

Acquisitions and purchase accounting adjustments

2,420 — 2,420

Acquisitions — 41,749 41,749

Impairment — ( 1,664 ) ( 1,664 )

Translation impact

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Balance at December 31, 2021 $ 473,241 $ 348,207 $ 821,448

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

Impairment — ( 132,843 ) ( 132,843 )

Acquisitions 6,528 44,068 50,596

Translation impact ( 1,935 ) ( 7,856 ) ( 9,791 )

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The changes in the carrying amount of indefinite-lived trademarks are as follows:

Enterprise Solutions Industrial Solutions Consolidated

Enterprise Solutions Industrial Automation Solutions Consolidated

(In thousands)

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Reclassify to definite-lived — ( 4,063 ) ( 4,063 )

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

Reclassify to definite-lived — ( 4,063 ) ( 4,063 )

Balance at December 31, 2021 $ 27,000 $ — $ 27,000

Balance at December 31, 2021 and 2022 $ 27,000 $ — $ 27,000

Annual Impairment Test

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

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

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

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

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

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

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

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

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

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

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

For our 2022 goodwill impairment test, we performed a quantitative assessment for one of our reporting units and determined the estimated fair value by calculating the present value of its estimated future cash flows using Level 3 inputs.

We determined that the fair value for the reporting unit was in excess of its carrying value.

We performed a qualitative assessment for the remaining five reporting units, and determined that it was more likely than not that the fair value of each reporting unit was greater than its respective carrying value.

Therefore, we did no t record any goodwill impairment in 2022.

We did no t recognize any goodwill impairment from continuing operations in 2021 or 2020 other than a $ 1.7 million impairment in 2021 in connection with the sale of our oil and gas business in Brazil.

For our quantitative impairment test in 2022, the excess of the fair value over the carrying value for the reporting unit was 48 %.

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

Significant assumptions included sales growth, profitability, and related cash flows, along with cash flows associated with taxes and capital spending.

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We also considered assumptions that market participants may use.

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

In our assessment, the discount rate was 13.1 %, the 2023 to 2032 compounded annual revenue growth rate was 4.9 %, and the revenue growth rate beyond 2032 was 2.5 %.

By their nature, these assumptions involve risks and uncertainties.

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

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

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

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

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

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

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

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

We tested our indefinite-lived intangible asset, a trademark, for impairment during the fourth quarter using a quantitative assessment.

We determined the fair value of the trademark using a relief from royalty methodology and compared the fair value to the carrying value.

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

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Disposal Group Impairment

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

Furthermore, we determined a divestiture of Grass Valley represents a strategic shift that is expected to have a major impact on our operations and financial results.

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

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

During 2019, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $ 521.4 million, which consisted of impairments to goodwill, customer relationships, and trademarks of $ 326.1 million, $ 14.4 million, and $ 1.6 million, respectively, as well as an impairment of the disposal group of $ 179.3 million ($ 180.4 million translated at year-end exchange rates).

During 2020, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $ 113.0 million.

We determined the estimated fair values of the assets and of the reporting unit by calculating the present values of their estimated future cash flows, which was based in part on the assumed proceeds from a divestiture of Grass Valley.

Prior to the Tripwire divestiture in 2022, we recognized a goodwill impairment charge of $ 131.2 million during 2021.

We also wrote down the carrying value of the Grass Valley disposal group and recognized asset impairments totaling $ 113.0 million during 2020.

Amortization Expense

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We expect to recognize annual amortization expense of $ 38.0 million in 2023, $ 34.2 million in 2024, $ 28.7 million in 2025, $ 18.2 million in 2026, and $ 16.3 million in 2027 related to our intangible assets balance as of December 31, 2022.

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

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

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

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

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

The weighted-average amortization period for our customer relationships, developed technology, trademarks, in-service research and development, non-compete agreements, and backlog is 19.0 years, 8.0 years, 6.6 years, 5.0 years, 3.5 years, and 0.9 years, respectively.

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

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

We began amortizing the trademark in 2021, which resulted in amortization expense of $ 0.8 million for each of the years ended December 31, 2022 and 2021.

As of December 31, 2022 and 2021, the net book value of this trademark was $ 2.5 million and $ 3.3 million, respectively.

Accrued Liabilities

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Wages, severance and related taxes $ 86,536 $ 95,728

Deferred revenue 60,946 53,371

Accrued rebates 55,559 55,520

Accrued interest 20,847 20,610

Employee benefits 26,421 25,102

Deferred revenue 26,215 12,256

Accrued interest 18,154 20,847

Lease liabilities 16,833 16,518

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Severance, Restructuring, and Acquisition Integration Activities

Cost Reduction Program

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

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

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

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

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

Manufacturing Footprint Program

We are consolidating our manufacturing footprint in the Americas region.

We recognized $ 8.3 million of severance and other restructuring costs for this program during the year ended December 31 , 2022 .

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

Acquisition Integration Program

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

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

We 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.

We recognized $ 8.2 million, $ 12.6 million, and $ 4.9 million of severance and other restructuring costs for this program during the years ended December 31, 2022, 2021, and 2020, respectively.

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

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

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

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

Cost Reduction Program

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

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

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

The following table summarizes the severance and other restructuring and integration costs of the Manufacturing Footprint Program, Acquisition Integration Program and Cost Reduction Program described above by segment:

Severance Other Restructuring

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Enterprise Solutions $ 1,070 $ 7,060 $ 8,130

Industrial Solutions 4,119 5,973 10,092

Industrial Automation Solutions 493 7,847 8,340

Total $ 1,563 $ 14,907 $ 16,470

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Enterprise Solutions $ 1,121 $ 11,062 $ 12,183

Industrial Solutions 1,706 2,833 4,539

Industrial Automation Solutions 2,555 3,629 6,184

Total $ 3,676 $ 14,691 $ 18,367

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Enterprise Solutions $ 1,263 $ 4,859 $ 6,122

Industrial Solutions 15,736 — 15,736

Industrial Automation Solutions 1,935 863 2,798

Total $ 3,198 $ 5,722 $ 8,920

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

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

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

The restructuring and integration costs incurred during 2022, 2021 and 2020 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.

There were no significant severance accrual balances as of December 31, 2022 or December 31, 2021.

Years Ended December 31,

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Total $ 16,470 $ 18,367 $ 8,920

Accrued Severance

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

Years ended December 31,

(In thousands)

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

New charges 2,060 2,529

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

Foreign currency translation 49 ( 89 )

Other adjustments — ( 4,147 )

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

New charges 458 4,660

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

Foreign currency translation ( 4 ) ( 132 )

Other adjustments ( 59 ) ( 1,420 )

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

New charges 63 2,060

Cash payments ( 941 ) ( 3,968 )

Foreign currency translation ( 2 ) ( 156 )

Other adjustments ( 197 ) ( 1,541 )

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

New charges 1,541 992

Cash payments ( 587 ) ( 1,823 )

Foreign currency translation 3 ( 95 )

Other adjustments ( 440 ) ( 82 )

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

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

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

Long-Term Debt and Other Borrowing Arrangements

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320,220 340,860

3.375 % Senior subordinated notes due 2031

Total senior subordinated notes 1,174,140 1,477,060

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Revolving Credit Agreement due 2026

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

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

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

The borrowing

base under the Revolver includes eligible accounts receivable;

The borrowing base under the Revolver includes eligible accounts receivable;

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

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

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

In 2021, we paid approximately $ 2.3 million of fees when we amended the Revolver, which are being amortized over the remaining term of the Revolver.

As of December 31, 2022, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $ 291.1 million.

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

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

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

We fully repaid the borrowings during 2020.

Senior Subordinated Notes

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

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

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

The carrying value of the 2026 Notes as of December 31, 2021 is $ 227.2 million.

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

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

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

In 2021, we repurchased the full € 300.0 million 2025 Notes outstanding for cash consideration of € 302.2 million ($ 358.5 million), including a redemption premium, and recognized a $ 5.7 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

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

In 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).

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

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

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

The carrying value of the 2031 Notes as of December 31, 2021 is $ 320.2 million.

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

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

In 2021, we paid approximately $ 5.9 million of fees associated with the issuance of the 2031 Notes, which are being amortized over the life of the 2031 Notes using the effective interest method.

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

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

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

Senior Subordinated Notes due

2027 2028 2031

Year Percentage Year Percentage Year Percentage Year Percentage

Year Percentage Year Percentage Year Percentage

2022 101.688 % 2023 101.938 % 2026 101.688 %

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2024 100.563 % 2025 100.646 % 2028 100.422 %

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

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

Fair Value of Long-Term Debt

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For the years ended December 31, 2022, 2021, and 2020, the transaction gain (loss) associated with the net investment hedge reported in other comprehensive income was $ 41.9 million, $ 67.6 million, and $( 56.2 ) million, respectively.

During 2020, we de-designated € 532.2 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 € 532.2 million of debt are reported in income from continuing operations.

During 2022 and 2020, we de-designated € 200.0 million and € 532.2 million, respectively, of our outstanding debt that was previously designated as a net investment hedge.

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

Years Ended December 31,

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In 2022, the most significant difference between the U.S.

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

and a pension deferred tax asset in a foreign jurisdiction.

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

Foreign tax rate differences resulted in an income tax expense (benefit) of $( 34.4 ) million, $ 1.5 million, and $( 25.4 ) million in 2022, 2021, and 2020, respectively.

An additional significant difference between the U.S.

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

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

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

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

The tax holiday in St.

Kitts is scheduled to expire in 2023.

We recognized a total income tax expense from domestic permanent differences and tax credits of $ 20.0 million in 2022, primarily associated with our foreign income inclusions.

In addition, we recognized a total income tax benefit from changes in deferred tax asset valuation allowances of $ 7.9 million in 2022, primarily due to the release of a valuation allowance against the capital loss for the sale of certain real estate in the U.S.

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

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growth opportunities.

The components of deferred income were as follows:

The components of deferred income taxes were as follows:

(In thousands)

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Net deferred income tax liability $ ( 43,940 ) $ ( 19,377 )

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

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

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

and net operating losses in foreign jurisdictions.

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

On February 22, 2022, we completed the divestiture of Tripwire.

The increase in deferred tax assets related to net operating loss, capital loss, and tax credit carryforwards primarily relates to the $ 72.8 million deferred tax asset associated with the capital loss that was derived on the sale.

A full valuation allowance has been placed against this deferred tax asset as we do not expect to be able to utilize it prior to its expiration.

As of December 31, 2022, we had $ 101.3 million of gross net operating loss carryforwards, $ 6.3 million of tax credit carryforwards, and $ 547.0 million of gross capital loss carryforwards.

Unless otherwise utilized, net operating loss carryforwards will expire upon the filing of the tax returns for the following respective years:

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A valuation allowance has been recorded on the remaining portion of the tax credit carryforwards.

As of December 31, 2021, we had $ 227.1 million of gross capital loss carryforwards in the U.S.

with a full valuation allowance as we do not expect to be able to utilize the capital loss prior to expiration.

The following tables summarize our net operating losses carryforwards and tax credit carryforwards as of December 31, 2021 by jurisdiction:

Unless otherwise utilized, of the $ 547.0 million in gross capital loss carryforwards, $ 502.8 million will expire between 2025 and 2027 and the remaining $ 44.2 million have an indefinite carryforward period.

A full valuation allowance has been recorded as we do not expect to be able to utilize the capital losses.

The following tables summarize our net operating loss carryforwards and tax credit carryforwards as of December 31, 2022 by jurisdiction:

Net Operating Loss Carryforwards

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Australia $ 8,551

Belgium 5,069

Germany 19,824

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Total $ 6,299

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

In 2022, we recognized a net $ 0.4 million increase to reserves for uncertain tax positions.

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

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

We have approximately $ 0.0 million and $ 0.2 million accrued for the payment of interest and penalties as of December 31, 2021 and 2020, respectively.

We have no accrual for the payment of interest and penalties as of December 31, 2022 and 2021.

Our federal tax return for the tax years 2014 and later remain subject to examination by the Internal Revenue Service.

Our state and foreign income tax returns for the tax years 2012 and later remain subject to examination by various state and foreign tax authorities.

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

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

None of the tax provisions of the Act are expected to have a material impact to our consolidated financial statements and related disclosures.

Pension and Other Postretirement Benefits

We sponsor defined benefit pension plans and defined contribution plans that cover substantially all employees in Canada, the Netherlands, the United Kingdom, the U.S., and certain employees in Germany.

We sponsor defined benefit pension plans and defined contribution plans that cover substantially all employees in Canada, the Netherlands, Switzerland, the United Kingdom, the U.S., and certain employees in Germany.

Certain defined benefit plans in the United Kingdom are frozen and additional benefits are not being earned by the participants.

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Defined contribution expense for 2022, 2021, and 2020 w as $ 13.4 million, $ 12.2 million, and $ 8.8 million, respectively.

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

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

The medical benefit portion of the U.S.

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Participant contributions ( 350 ) ( 143 ) ( 5 ) ( 4 )

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

Actuarial gain 123,851 19,778 5,690 1,391

Acquisitions and divestitures ( 9,257 ) ( 12,886 ) — —

Settlements 6,567 5,855 — —

Curtailments — 236 — —

Plan amendments — ( 226 ) — —

Other — — ( 21 ) —

Foreign currency exchange rate changes 33,316 7,226 1,409 ( 227 )

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Benefit obligation, end of year $ ( 317,424 ) $ ( 471,834 ) $ ( 19,944 ) $ ( 27,625 )

During 2022, the actuarial gain was primarily due to increases in discount rates.

Pension Benefits Other Benefits

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Net periodic benefit cost (income) $ ( 1,187 ) $ ( 1,207 ) $ 3,575 $ 712 $ 717 $ 783

We recorded settlement losses totaling $ 3.2 million during 2020.

We recorded settlement losses totaling $ 1.2 million and $ 3.2 million during 2022 and 2020, respectively.

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

29 unchanged sentences

The expected long-term rate of return on plan assets reflects the average rate of earnings expected on the invested assets and future assets to be invested to provide for the benefits included in the projected benefit obligation.

We use historic plan asset returns co mbined with current market conditions to estimate the rate of return.

We use historic plan asset returns combined with current market conditions to estimate the rate of return.

The expected rate of return on plan assets is a long-term assumption based on an analysis of historical and forward looking returns considering the plan’s actual and target asset mix.

58 unchanged sentences

Actuarial gain ( 123,851 ) ( 5,690 )

Asset gain ( 16,130 ) —

Settlement gain recognized 18 —

Other adjustments 191 —

Asset loss 100,618 —

Settlement loss recognized ( 1,189 ) —

Currency impact ( 3,144 ) 270

12 unchanged sentences

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

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

Other comprehensive income attributable to Belden before reclassifications 90,690 28,653 119,343

Amounts reclassified from accumulated other comprehensive income ( 977 ) 2,919 1,942

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

Net current period other comprehensive income attributable to Belden 89,713 31,572 121,285

Balance at December 31, 2021 $ ( 41,468 ) $ ( 29,098 ) $ ( 70,566 )

Other comprehensive loss attributable to Belden before reclassifications $ 90,690 $ 28,653 $ 119,343

Other comprehensive income attributable to Belden before reclassifications 42,531 23,629 66,160

Amounts reclassified from accumulated other comprehensive income ( 3,007 ) 1,542 ( 1,465 )

Net current period other comprehensive loss attributable to Belden 89,713 31,572 121,285

Net current period other comprehensive income attributable to Belden 39,524 25,171 64,695

Balance at December 31, 2022 $ ( 1,944 ) $ ( 3,927 ) $ ( 5,871 )

As of December 31, 2022, the tax balances included in accumulated other comprehensive income (loss) in the table above are not material.

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss):

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Amortization of pension and other postretirement benefit plan items:

Settlement losses $ 1,189 (2)

Actuarial losses 661 (2)

3 unchanged sentences

Total net of tax $ 1,542

(1) We also reclassified $ 3.0 million of accumulated foreign currency translation gains associated with the sale of Tripwire.

(2) The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs (see Note 19).

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

Share-Based Compensation

Compensation cost charged against income, primarily selling, general and administrative expense, and the income tax benefit recognized for our share-based compensation arrangements is included below:

Compensation cost included in income from continuing operations, primarily selling, general and administrative expense, and the income tax benefit recognized for our share-based compensation arrangements is included below:

Years Ended December 31,

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Share Repurchases

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

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

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

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

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

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

During 2020, we repurchased 1.0 million shares of our common stock for an aggregate cost of $ 35.0 million at an average price per share of $ 35.83 .

During 2021, we did no t repurchase shares of our common stock.

During 2022, we repurchased 2.6 million shares of our common stock for an aggregate cost of $ 150.0 million at an average price per share of $ 57.95 .

From inception of our program, we have repurchased 4.5 million shares of our common stock for an aggregate cost of $ 235.0 million and an average price of $ 52.75 .

As of Dec ember 31, 2022, we had $ 65.0 million of authorizations remaining under the program.

Market Concentrations and Risks

1 unchanged sentence

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

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

The ten largest customers, of which eight are distributors, constitute in aggregate approximately 45 %, 44 %, and 43 % of revenues in 2022, 2021, and 2020, respectively.

Unconditional Commodity Purchase Obligations

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Subsequent Events

Definitive Agreement to Divest Tripwire

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

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

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

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

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

December 31, 2021

December 31, 2020

(In thousands)

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

Receivables, net 28,773 26,001

Inventories, net 150 126

Other current assets 7,418 9,798

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

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

Goodwill 331,024 462,202

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

Deferred income taxes 834 800

Other long-lived assets 5,325 2,653

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

Accounts payable $ 6,458 $ 4,868

Accrued liabilities 56,208 61,769

Deferred income taxes 10,964 12,599

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

Other long-term liabilities 20,192 17,214

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

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

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

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

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

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

Acquisition of macmon secure GmbH

On January 17, 2022, we acquired macmon secure GmbH (Macmon), a leading provider of products and services that secure network infrastructures in a variety of mission critical industries , for approximately $ 43.3 million, net of cash acquired.

The acquisition was funded with cash on hand.

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

On January 18, 2023, we entered into an agreement to sell our property in Ontario, Canada as part of a sale and leaseback transaction for $ 17.4 million.

The sale is expected to close during 2023.

On February 22, 2023, Roel Vestjens resigned from the Company, and Ashish Chand was appointed President and Chief Executive Officer.

Chand joined the Company in 2002 and most recently served as Executive Vice President of Industrial Automation Solutions since July 2019, and Managing Director of Belden Asia Pacific from August 2017.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data