LET’S BUILD THE FUTURE
2022 ANNUAL REPORT
To Our Shareholders, Employees, and Business Partners,
Belden’s performance in 2022 was exceptional and highlights our continued success transforming Belden from a
provider of best in class products, to a provider of value-added solutions. The world is changing with ever increasing
needs for data and solutions providers like Belden who can gather and package data to improve customer outcomes.
Our business continued to perform well in 2022, with strong organic growth, record EPS, and robust free cash flow.
Our team members at Belden rose to the occasion once again to support our customers, execute our strategic plans,
and deliver extraordinary financial results1, which included:
Revenues of $2.607 billion, increasing 13% overall and 16% organically;
EBITDA of $444 million, increasing 19%;
Record EPS of $6.41, increasing 35%; and
Free cash flow of $220 million, increasing 4%.
2022 was also a year of strong equity performance. Belden delivered total shareholder returns of 10% for the year,
which outpaced the gains in the U.S. equity markets.
We conintued to execute against our capital allocation priorities. Highlights in 2022 included launching innovative
new products, enhancing our solution delivery capabilities, completing strategic acquisitions, and further
strengthening the balance sheet.
These efforts enhance our ability to deliver sustainable and profitable growth with robust shareholder returns, and I
would like to share some additional details with you now.
New product innovation
We increased our R&D efforts in recent years to drive accelerating organic growth, which led to a number of
innovative new product launches during the year. This includes our launch of the Hirschmann OpEdge-8D device to
improve Industrial Internet of Things (IIoT) connectivity in large, complex industrial networks. This advanced
solution helps organizations run applications that manage and analyze large amounts of data, creating actionable
insights that optimize production processes and improve efficiency. OpEdge-8D simplifies application deployment
across edge devices, enables scalability, and ensures a protected link to the cloud with secure remote access capability.
We also launched Belden Horizon, a new industrial edge solution, to combine edge orchestration, data monitoring,
and anomaly detection capabilities using short interval data. The Belden Horizon console features Virtual Lockout-
1 Consolidated adjusted results are referenced in this letter. See appendix for reconciliations to comparable GAAP results. All
references to EPS refer to adjusted income from continuing operations per diluted share attributable to Belden common
stockholders. Organic growth is calculated as the change in revenues excluding the impacts of changes in currency exchange
rates and copper prices, as well as acquisitions and divestitures.
1
Tagout (vLOTO™) security and adds value to applications because vLOTO requires permission before making a
secure connection to a network. Belden’s IIoT automation hardware portfolio has inherent capabilities such as
networking, routing, and stateful firewall capabilities. Belden’s Edge solutions provide critical infrastructure for the
efficient integration of local operational data into various applications, improving efficiency, maximizing uptime, and
enabling continuous process improvement. We will continue developing innovative new products and complete
networking solutions to support our customers and drive sustainable and profitable growth.
Enhanced solution delivery capabilities
We are still early in our journey towards enhanced solutions, however I am happy to report that our progress is
accelerating. Belden is uniquely positioned to offer complete and differentiated solutions,
including cable,
connectivity, networking, and data products and services. Given our product breadth and application expertise,
customers are increasingly turning to Belden to solve their complex networking issues and enable them to collect and
analyze vast amounts of data. Our sales and engineering teams are engaging with customers in new ways to solve
important problems including: optimizing operations, increasing productivity, and improving safety.
To support our value-added solution selling capabilities, we are opening our fifth Customer Innovation Center, or
CIC, with locations across the United States, Europe, and Asia. CICs enable our global team of experts to harness a
culture of collaboration, transforming challenges into effective digital solutions that ensure successful outcomes for
our customers. Our experts co-innovate with our customers by validating solutions in live proof of concept scenarios
to ensure efficacy before implementing at customer locations. The CIC model at Belden is unique in the marketplace,
and we are happy to report that we have over 120 expert consultants with deep experience aligned by industry vertical.
Strategic acquisitions
Second to organic growth investments, a key part of our business strategy includes acquiring companies to support
our growth and enhance our product portfolio. Our acquisition strategy is based on targeting leading companies that
offer innovative products that complement our existing solutions and strong brands. I am happy to report that in 2022
we completed three acquisitions as part of this strategy.
In January 2022, we acquired Macmon for $42 million, net of cash acquired. Based in Berlin, Germany, Macmon is
a leading provider of products and services that secure network infrastructure in a variety of mission critical industries.
In March 2022, we acquired NetModule for $24 million, net of cash acquired. Based in Bern, Switzerland,
NetModule, 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.
2
In April 2022, we acquired CAI for $19 million, net of cash acquired. Headquartered in Anniston, Alabama, CAI
designs, manufactures, and sells a range of plug-in radio frequency filters used in outside plant hybrid fiber-coax
nodes. With the addition of these businesses, our product line is enhanced further supporting our enhanced solutions
delivery capabilities.
Strengthened balance sheet
The Company continued to generate strong cash flows in 2022, which were partially used to reduce our leverage.
During 2022, we repurchased all of the €200.0 million aggregate principal amount of 4.125% senior subordinated
notes previously due 2026. As a result, we reduced our net leverage2 level meaningfully during the year from 2.1x
net debt to EBITDA at the end of 2021, to 1.0x at year end 2022. The Company’s financial position is strong, which
provides ample flexibility as we navigate an uncertain economic environment and pursue our strategic growth plans.
To summarize, I am extremely proud of the Company’s strong financial performance and significant accomplishments
during the year. I would now like to share some of the details of our 2022 performance by segment.
Industrial Automation Solutions – Revenues in our Industrial Automation Solutions segment increased 15% in
2022 to $1.4 billion. Segment EBITDA margins increased 150 basis points to 19.7%. Demand increased steadily
during the year, with broad-based strength in each of our industrial markets – discrete manufacturing, process
facilities, energy, and mass transit. We continue to see a number of compelling longer-term demand drivers for
automation solutions as industrial customers respond to increasing labor costs, increasing capacity and productivity
requirements, and other factors. Belden is highly differentiated in the marketplace, and we expect to deliver solid
growth in this market going forward.
Enterprise Solutions – Revenues in our Enterprise Solutions segment increased 12% in 2022 to $1.2 billion. Segment
EBITDA margins increased 10 basis points to 13.5%. In the smart buildings market, integrated building networks
with more connected devices are driving demand for our connectivity solutions, including our innovative fiber and
power-over-Ethernet products. We see long-term secular tailwinds involving more connected devices and bandwidth
demand in buildings as well as applications requiring fiber connectivity products. We are also benefitting from our
commercial focus on high-growth verticals such as data centers, e-commerce warehouses and healthcare facilities. In
addition, we continue to capture market share as a result of our operational excellence and superior lead times.
In the broadband & 5G market, the ever-increasing demand for more bandwidth and faster speeds is driving increasing
investments in network infrastructure by our customers. With our market-leading connectivity solutions, we are well-
positioned to support our MSO cable customers as they upgrade existing networks and our telecom customers as they
build out new 5G infrastructure. Demand for our fiber optic products is robust, and we are significantly expanding
2 Net leverage is calculated as (A) total debt less cash and cash equivalents divided by (B) the sum of trailing twelve months
Adjusted EBITDA plus trailing twelve months stock-based compensation expense.
3
our product offering and capturing additional market share following the successful integration of our recent
acquisitions.
Value Creation Framework
Our commitment to delivering for our shareholders is unwavering. We believe that Belden is extremely well
positioned for success and we have the right portfolio, strategy, and management team in place. An update on our
value creation framework is provided below.
• Revenue Growth
We delivered strong revenue growth of 13% in 2022, with organic revenue growth of 16%, as our markets
managed inflationary pressures and our organic growth initiatives gained traction. To support sustainable
organic growth that exceeds global GDP, we have aligned our businesses around attractive growth markets
with strong secular trends. We continue to cultivate potential inorganic opportunities in our core markets to
augment our organic growth.
•
Increasing Profitability
Revenue growth is critically important, but it must be profitable growth. Belden has a long track record of
margin expansion, and EBITDA margins increased 90 basis points to 17.0% in 2022 despite significant
inflationary pressures. We are committed to increasing our profit margins and believe the business can
achieve 30% incremental EBITDA margins as we leverage the expected revenue growth and our teams
execute a number of meaningful productivity initiatives.
• Free Cash Flow Generation
We generated free cash flow of $220 million in 2022, compared to $211 million in 2021. Free cash flow
growth reflects the high quality of earnings and working capital improvements, and we expect to deliver solid
free cash flow going forward. This should result in ample cash to be used for strategic deployment or returned
to our shareholders.
• Disciplined Capital Allocation
The Company maintains a disciplined and balanced approach to capital allocation. Organic growth
investments are a top priority, followed by strategic M&A, and finally share repurchases when it makes sense.
In 2022, we repurchased 2.6 million shares, or approximately 6% of shares outstanding, for $150 million. We
believe that we can deploy significant capital
toward value-creating initiatives while maintaining a
conservative net leverage level.
4
Environmental, Social and Governance (ESG) at Belden
Activities to advance environmental, social and governance programs have been present in Belden’s beliefs and
operations for many years. We formalized these activities on Earth Day of 2022, as we proudly announced our 2025
Environmental, Social and Governance (ESG) goals to the world. By defining specific, measurable targets, we’ve
made clear that we are continuing the journey that’s always been core to who we are as an organization. These goals
highlighted how we plan to impact the world around us, by supporting the people of Belden personally and
professionally, advancing our position as a highly ethical business, and serving the communities where we work and
live.
I am happy to report that our progress from 2022 continues. Solar power is becoming a leading source of renewable
energy in Belden facilities around the world, most notably in our largest manufacturing plant in Nogales, Mexico.
R&D teams are introducing new ways to make Belden products and packaging more energy efficient and eco-friendly.
One example is the redevelopment of our Unreel cable packaging which eliminates plastic components and replaces
them with recyclable paper components. Additionally, we’re continuing to implement energy savings projects across
our facilities and locations, from Indianapolis to Budapest to Suzhou.
All things are possible because of the hard work, creative thinking, and commitment of Belden employees. Belden
associates around the world are receiving personalized support through locally tailored Be Well events. We’re creating
new opportunities for people to grow their careers as we intentionally work to fill Belden’s top positions with talent
developed from within. The Early Career Leadership Program is giving budding professionals the opportunity to start
their careers on an accelerated track for success. Further, teams and individuals throughout the company are
volunteering their time and talents to causes in their communities that benefit the most.
As it relates to our ESG priorities, we’ve accomplished much in 2022, and so many possibilities lie ahead. We are a
team of believers, driving advancements and embracing our responsibility to always be better and do better. Going
forward, we’ll continue to learn and grow from our experiences and will evolve each day into an even more
sustainable, ethical, and socially responsible company. We believe it takes everyone to be part of the solution and we
look forward to facilitating positive change and achieving these ambitious and meaningful goals, together with our
stakeholders.
5
Outlook
The macro environment is very dynamic with ongoing uncertainties, however I am extremely optimistic about our
future and confident in our team’s ability to execute. We had an exceptional 2022, and we entered 2023 with
meaningful momentum. Our strategic growth initiatives continue to gain traction, and our teams are executing at a
very high level. Our transformed portfolio is aligned with favorable secular trends in the industrial automation, smart
buildings, and broadband & 5G markets. I am confident in our ability to drive solid and sustainable organic growth,
improve margins, produce robust cash flow, and deliver compelling returns for our shareholders.
We are thankful for the loyalty of our customers, shareholders, and talented associates who make Belden a world-
class company. We are grateful for your support, and we look forward to sharing in Belden’s continued success
together.
Sincerely,
Ashish Chand
President and Chief Executive Officer
6
BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
In addition to reporting financial results in accordance with accounting principles generally accepted in the United
States, we provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated
depreciation expense due to plant consolidation activities; purchase accounting effects related to acquisitions, such as
the adjustment of acquired inventory and deferred revenue to fair value and transaction costs; severance, restructuring,
and acquisition integration costs; gains (losses) recognized on the disposal of businesses and tangible assets;
amortization of intangible assets; gains (losses) on debt extinguishment; certain revenues and gains (losses) from
patent settlements; discontinued operations; and other costs. We adjust for the items listed above in all periods
presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the
adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-
tax profitability.
We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for
comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help
them compare our results to previous periods and provide important insights into underlying trends in the business
and how management oversees our business operations on a day-to-day basis. As an example, we adjust for the
purchase accounting effect of recording deferred revenue at fair value in order to reflect the revenues that would have
otherwise been recorded by acquired businesses had they remained as independent entities. We believe this
presentation is useful in evaluating the underlying performance of acquired companies. Similarly, we adjust for other
acquisition-related expenses, such as amortization of intangibles and other impacts of fair value adjustments because
they generally are not related to the acquired business' core business performance. As an additional example, we
exclude the costs of restructuring programs, which can occur from time to time for our current businesses and/or
recently acquired businesses. We exclude the costs in calculating adjusted results to allow us and investors to evaluate
the performance of the business based upon its expected ongoing operating structure. We believe the adjusted
measures, accompanied by the disclosure of the costs of these programs, provides valuable insight.
Adjusted results should be considered only in conjunction with results reported according to accounting principles
generally accepted in the United States.
7
GAAP revenues
Adjustments related to acquisitions
Adjusted revenues
GAAP gross profit
Severance, restructuring, and acquisition integration costs
Amortization of software development intangible assets
Adjustments related to acquisitions and divestitures
Adjusted gross profit
GAAP gross profit margin
Adjusted gross profit margin
GAAP selling, general and administrative expenses
Severance, restructuring, and acquisition integration costs
Adjustments related to acquisitions and divestitures
Adjusted selling, general and administrative expenses
GAAP and adjusted research and development expenses
GAAP income from continuing operations
Interest expense, net
Income tax expense
Loss on debt extinguishment
Non-operating pension settlement loss
Gain on sale of note receivable
Total non-operating adjustments
Asset impairments
Severance, restructuring, and acquisition integration costs
Amortization of intangible assets
Amortization of software development intangible assets
Adjustments related to acquisitions and divestitures
Gain on sale of asset
Total operating income adjustments
Depreciation expense
Adjusted EBITDA
GAAP income from continuing operations margin
Adjusted EBITDA margin
GAAP income from continuing operations
Less: Net income attributable to noncontrolling interest
GAAP net income from continuing operations attributable to Belden
stockholders
GAAP income from continuing operations
Plus: Operating income adjustments from above
Plus: Loss on debt extinguishment
Plus: Non-operating pension settlement loss
Less: Gain on sale of note receivable
Less: Net income attributable to noncontrolling interest
Less: Tax effect of adjustments above
Adjusted net income from continuing operations attributable to Belden
stockholders
GAAP income from continuing operations per diluted share attributable
to
Adjusted income from continuing operations per diluted share attributable
to Belden stockholders (Adjusted EPS)
GAAP and adjusted diluted weighted average shares
8
Twelve Months Ended
December 31, 2022
December 31, 2021
(In thousands, except percentages and per share amounts)
$
$
$
2,606,485
—
2,606,485
916,289
10,088
3,875
1,648
$
$
$
2,301,260
—
2,301,260
771,843
11,308
1,579
2,349
$
931,900
$
787,079
35.2 %
35.8 %
33.5 %
34.2 %
$
$
$
$
(448,637)
6,597
7,833
(434,207)
(104,350)
267,748
43,554
49,645
6,392
1,189
—
100,780
—
16,685
37,860
3,875
7,833
(37,891)
28,362
46,669
$
$
$
$
(378,027)
12,559
(7,384)
(372,852)
(90,227)
198,841
62,693
27,939
5,715
—
(27,036)
69,311
9,283
23,867
30,630
1,579
(5,035)
—
60,324
43,073
$
443,559
$
371,549
10.3 %
17.0 %
8.6 %
16.1 %
$
$
$
$
$
$
267,748
159
267,589
267,748
28,362
6,392
1,189
—
159
18,169
285,363
6.01
6.41
44,537
$
$
$
$
$
$
198,841
392
198,449
198,841
60,324
5,715
—
27,036
392
21,957
215,495
4.37
4.75
45,361
BELDEN INC.
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
We define free cash flow, which is a non-GAAP financial measure, as net cash from operating activities adjusted for
capital expenditures net of the proceeds from the disposal of tangible assets. We believe free cash flow provides useful
information to investors regarding our ability to generate cash from business operations that is available for
acquisitions and other investments, service of debt principal, dividends and share repurchases. We use free cash flow,
as defined, as one financial measure to monitor and evaluate performance and liquidity. Non-GAAP financial
measures should be considered only in conjunction with financial measures reported according to accounting
principles generally accepted in the United States. Our definition of free cash flow may differ from definitions used
by other companies.
GAAP net cash provided by operating activities
Capital expenditures
Proceeds from disposal of assets
Non-GAAP free cash flow
Twelve Months Ended
December 31, 2022
December 31, 2021
(In thousands)
$
$
281,296
(105,094)
43,534
219,736
$
$
272,055
(90,982)
30,234
211,307
9
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2022
or
☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
Commission File No. 001-12561
BELDEN INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
36-3601505
(IRS Employer Identification No.)
1 North Brentwood Boulevard
15th Floor
St. Louis, Missouri 63105
(Address of Principal Executive Offices and Zip Code)
(314) 854-8000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value per share
Trading Symbol
BDC
Name of each exchange on which registered
The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No þ.
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ.
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o.
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every
interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes þ No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Non-accelerated filer ☐
Emerging growth company ☐
Accelerated filer ☐
Smaller reporting company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements
of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant
to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑.
At July 3, 2022, the aggregate market value of Common Stock of Belden Inc. held by non-affiliates was $1,822,673,869 based
on the closing price ($53.00) of such stock on such date.
As of February 17, 2023, there were 42,895,630 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant intends to file a definitive proxy statement for its annual meeting of stockholders within 120 days of the end of
the fiscal year ended December 31, 2022 (the “Proxy Statement”). Portions of such proxy statement are incorporated by
reference into Part III.
Name of Item
Page
Business
Form 10-K
Item No.
Part I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4. Mine Safety Disclosures
Properties
Legal Proceedings
Selected Financial Data
Part II
Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accountant Fees and Services
Part IV.
Item 15. Exhibits and Financial Statement Schedules
Signatures
2
8
17
18
18
18
19
20
21
34
36
78
79
81
81
82
82
82
82
82
83
86
Part I
Item 1. Business
General
Belden Inc. (the Company, us, we, or our) is a leading global supplier of network infrastructure solutions that makes the digital
journey simpler, smarter and secure. 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. With a legacy of quality and
reliability spanning 120-plus years, we have a strong foundation to continue building the future. Our business is organized
around two global businesses, Enterprise Solutions and Industrial Automation Solutions, both of which benefit from favorable
secular trends which we expect to drive future growth. Each business represents a reportable segment. Financial information
about our segments appears in Note 6 to the Consolidated Financial Statements. We sell our products to distributors, end-users,
installers, and directly to original equipment manufacturers (OEMs). Belden Inc. is a Delaware corporation incorporated in
1988, but the Company’s roots date back to its founding by Joseph Belden in 1902.
As used herein, unless an operating segment is identified or the context otherwise requires, “Belden,” the “Company”, and “we”
refer to Belden Inc. and its subsidiaries as a whole.
Strategy and Business Model
Our purpose is to build the foundation for a digital world. Within Enterprise Solutions, our Smart Buildings products offer in-
building wired and wireless infrastructures, fiber technology innovation, and design collaboration & customization to connect
people with facilities through innovative solutions for enhanced human engagement, productivity, and security. Also within
Enterprise Solutions, our Broadband & 5G products offer a broad portfolio of end-to-end solutions, industry-leading innovation
& technology, and worldwide technical service & support to enable a connected, digital world through broadband and wireless
innovation. Within Industrial Automation Solutions, we are uniquely positioned to support digital transformation by providing
end-to-end digitization infrastructure focused on robust network infrastructure, secure remote access, accelerated IT/OT
convergence, and edge & data analytics. Our customers are building the future, and we build the network that makes it possible.
Segments
We operate our business under the two segments – Enterprise Solutions and Industrial Automation Solutions. A synopsis of the
segments is included below:
Enterprise Solutions
The Enterprise Solutions (Enterprise) segment is a leading provider in network infrastructure and broadband solutions, as well
as cabling and connectivity solutions for commercial audio/video and security applications. We serve customers in markets
such as hospitality, healthcare, education, financial, government, commercial real estate, and broadband and wireless service
providers, as well as end-markets, including data centers, sport venues, stadiums, military installations, and academia.
Enterprise product lines include copper cable and connectivity solutions, fiber cable and connectivity solutions, interconnect
panels, racks and enclosures, and secure, high performance signal extension and matrix switching systems.
Enterprise provides true end-to-end fiber and copper network systems, which are used in applications such as local area
networks, data centers, access control, 5G, Fiber to the Home and building automation. Our high-performance solutions support
all networking protocols up to and including 100G+ Ethernet technologies. Enterprise’s innovative products can deliver data in
addition to power over Ethernet, which meets the higher performance requirements driven by the increasing number of
connections in smart buildings. Enterprise products also include intelligent power, cooling, and airflow management for
mission-critical data center operations. The Enterprise product portfolio is designed to support Internet Protocol convergence,
the increased use of wireless communications, and cloud-based data centers by our customers.
2
Industrial Automation Solutions
The Industrial Automation Solutions (Industrial Automation) segment is a leading provider of high performance networking
and machine connectivity products. Industrial Automation products include physical network and fieldbus infrastructure
components and on-machine connectivity systems to meet end user and OEM needs. Products are designed to provide
reliability and confidence of performance for a wide range of industrial automation applications. The products are used in
markets that include discrete automation, process automation, energy and mass transit. Applications include network and
fieldbus infrastructure; sensor and actuator connectivity; and power, control, and data transmission. Industrial Automation
products include solutions such as industrial Ethernet switches, network management software, routers, firewalls, gateways,
input/output (I/O) connectors/systems, industrial Ethernet cables, optical fiber industrial Ethernet cables, Fieldbus cables, IP
and networking cables, I/O modules, distribution boxes, and customer specific wiring solutions.
Our industrial cable products are used in discrete manufacturing and process operations involving the connection of computers,
programmable controllers, robots, operator interfaces, motor drives, sensors, printers, and other devices. Many industrial
environments, such as petrochemical and other harsh-environment operations, require cables with exterior armor or jacketing
that can endure physical abuse and exposure to chemicals, extreme temperatures, and outside elements. Other applications
require conductors, insulation, and jacketing materials that can withstand repeated flexing. In addition to cable product
configurations for these applications, we supply heat-shrinkable tubing and wire management products to protect and organize
wire and cable assemblies. Our industrial connector products are primarily used as sensor and actuator connections in factory
automation supporting various fieldbus protocols as well as power connections in building automation. These products are used
both as components of manufacturing equipment and in the installation and networking of such equipment. Industrial
Automation products are sold directly to industrial equipment OEMs and through a network of industrial distributors, value-
added resellers, and system integrators. See Note 6 to the Consolidated Financial Statements for additional information
regarding our segments.
Acquisitions
A key part of our business strategy includes acquiring companies to support our growth and enhance our product portfolio. Our
acquisition strategy is based on targeting leading companies that offer innovative products that complement our existing
solutions and strong brands. We utilize a disciplined approach to acquisitions based on product and market opportunities. When
we identify acquisition candidates, we conduct rigorous financial and cultural analyses to make certain that they meet both our
strategic plan targets and our goal for return on invested capital.
We have completed a number of acquisitions in recent years as part of this strategy. Most recently, in April 2022, we acquired
Communication Associates, Inc. (CAI), a leading designer and manufacturer of various plug-in radio frequency filters used in
outside plant hybrid fiber-coax nodes. In March 2022, we acquired NetModule AG (NetModule), a leading provider of reliable,
fast, and secure wireless network infrastructures, with advanced capabilities in 5G and WiFi6 technologies used in a variety of
mission critical industries, but most notably, the mass transit and intelligent traffic systems within the transportation vertical. In
January 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. In January 2021, we acquired OTN Systems N.V. (OTN Systems), a
leading provider of automation networking infrastructure solutions. The results of CAI have been included in our Consolidated
Financial Statements as of the acquisition date and are reported within the Enterprise Solutions segment. The results of
NetModule, Macmon and OTN Systems have been included in our Consolidated Financial Statements from their respective
acquisition dates and are reported within the Industrial Automation Solutions segment. For more information regarding these
transactions, see Note 4 to the Consolidated Financial Statements.
Customers
We sell to distributors, OEMs, installers, and end-users. For the year ended December 31, 2022, sales to our largest distributor
represented approximately 15% of our consolidated revenues. No other customer accounted for more than 10% of our revenues
in 2022.
We have supply agreements with distributors and OEM customers. In general, our customers are not contractually obligated to
buy our products exclusively, in minimum amounts, or for a significant period of time. We believe that our relationships with
our customers and distributors are good and that they are loyal to Belden products as a result of our reputation, the breadth of
our product portfolio, the quality and performance characteristics of our products, and our customer service and technical
support, among other reasons.
3
International Operations
In addition to manufacturing facilities in the United States (U.S.), we have manufacturing and other operating facilities in
Canada, China, India, Mexico, and Tunisia, as well as various countries in Europe. During 2022, approximately 44% of
Belden’s sales were to customers outside the U.S. Our primary channels to international markets include both distributors and
direct sales to end users and OEMs. Financial information for Belden by country is shown in Note 6 to the Consolidated
Financial Statements.
Competition
The markets in which we operate can be generally categorized as highly competitive with many players. In order to maximize
our competitive advantages, we manage our product portfolio to capitalize on secular trends and high-growth applications in
those markets. Based on available data for our served markets, we estimate that our market share across our segments is
significant, ranging from approximately 5% to 15%. A substantial acquisition in one of our served markets would be necessary
to meaningfully change our estimated market share percentage.
The principal competitive factors in all our product markets are technical features, quality, availability, price, customer support,
and distribution coverage. The relative importance of each of these factors varies depending on the customer. Some products
are manufactured to meet published industry specifications and are less differentiated on the basis of product characteristics.
We believe that Belden stands out in many of our markets on the basis of the breadth of our product portfolio, the quality and
performance characteristics of our products, our customer service, and our technical support.
Research and Development
We conduct research and development on an ongoing basis, including new and existing hardware and software product
development, testing and analysis, and process and equipment development and testing. See the Consolidated Statements of
Operations for amounts incurred for research and development. Many of the markets we serve are characterized by advances in
information processing and communications capabilities, including advances driven by the expansion of digital technology,
which require increased transmission speeds and greater bandwidth. Our markets are also subject to increasing requirements for
mobility, information security, and transmission reliability. We believe that our future success will depend in part upon our
ability to enhance existing products and to develop, manufacture and deliver new products that meet or anticipate such changes
in our served markets.
In our
Industrial Automation Solutions segment, customers are rapidly adopting new technology to enable digital
transformations and improve their environmental impact. This includes deploying Industry 4.0 to increase visibility of their
digitized assets and adopting Artificial Intelligence (AI) to increase analytics and autonomous decision-making in their systems.
These approaches need users to refine workflows by collecting data from disparate sources, transmitting it to points of
consolidation and decision making, and converting it to standard formats that application software can use. This overall process
can be referred to as "digitization" and a key part of our research and development is focused on supporting these customer
journeys with technology that adds value at multiple steps in the digitization process, during data acquisition, data transmission,
and data orchestration and management. Our research and development enables customized enhanced solutions to support
customers' innovative methods surrounding the collection, analysis, and transmission of data.
There is a growing trend toward adoption of Industrial Ethernet technology, bringing to the critical infrastructure the advantages
of digital communication and the ability to network devices made by different manufacturers and integrate them with enterprise
systems. While the adoption of this technology is at a more advanced stage in certain regions of the world, we believe that the
trend will globalize.
Enterprise Solutions R&D efforts are aligned to the secular trends in our markets for increased communication at faster speeds
of transmission. This phenomenon is visible across all of our markets. We continue to invest in R&D to support the continuing
growth in capacity and bandwidth between the data center and the consumer to enhance their experience in their living, working
and recreational interactions.
To support the demand for additional bandwidth and to improve service integrity, broadband service providers will continue to
invest in their networks to enhance delivery capabilities to customers for the foreseeable future. The growing bandwidth
demand exposes bottlenecks in the network and leads broadband service operators to improve and upgrade residential networks
with higher performance connectivity products. Broadband service providers are also investing in the deployment of 5G
technology. Our R&D efforts are focused on the development of fiber connectivity and 5G solutions that support the investment
plans of the broadband service providers.
4
The ability to integrate across the multitude of applications within service providers and on-premise networks requires a deep
understanding of the unique challenges posed by heavier and faster transmission of data. Common across the Enterprise
Solutions segment, our R&D efforts are focused on ensuring continuously evolving solutions, be it copper and coax cable or
fiber optic cable and connectivity as it becomes more pervasive across all networks including wireless. We anticipate the need
to develop the ability to customize networks in the various systems in close collaboration with our partners to advise our mutual
end customers.
Our research and development has a strong focus on improving the performance of fiber optic technology, making it easier to
handle and install, more robust for technicians and end users, leading to networks that can be deployed more quickly, with
higher performance and reliability. Even with the explosive growth in fiber, connections to the end devices that consumers
utilize to live, work and play, be it wireless access points or IoT devices, are still going to strongly benefit from the remaining
advantages of copper-based connectivity, with a heavy focus on powering the ever-increasing collection of data consuming and
generating devices connected to our increasingly digitized world. Building automation and the rapid rise of IoT has catalyzed
the need to add more devices on the network. This is turn necessitates the distribution of power across the network. There will
be a need for solutions offering power to these distributed devices and the Enterprise Solutions segment continues to innovate
in this area in preparation for a world with a need to upgrade legacy systems as we build greenfield installations.
Patents and Trademarks
We have a practice of seeking patents when appropriate on inventions concerning new products, product improvements, and
advances in equipment and processes as part of our ongoing research, development, and manufacturing activities. We own
many patents and registered trademarks worldwide that are used by our operating segments, with pending applications for
numerous others. We consider our patents and trademarks to be valuable assets. Our most prominent trademarks are: Belden®,
Alpha Wire™, GarrettCom®, Hirschmann®, Lumberg Automation™, Mohawk®, OTN Systems™, PPC®, ProSoft
Technology®, Thinklogical®, Tofino®, and West Penn Wire™.
Raw Materials
i
The principal raw material used in many of our cable products is copper. Other materials we purchase in large quantities include
fluorinated ethylene-propylene (FEP), polyvinyl chloride (PVC), polyethylene, aluminum-clad steel and copper-clad steel
conductors, aluminum, brass, other metals, optical fiber, printed circuit boards, and electronic components. With respect to all
major raw materials used by us, we generally have either alternative sources of supply or access to alternative materials.
Over the past three years, the prices of metals, particularly copper, have been highly volatile. The chart below illustrates the
high and low spot prices per pound of copper over the last three years.
Copper spot prices per pound
High
Low
2022
2021
2020
$
$
$
4.93
3.21
$
4.78
4.78
3.54
3.63
2.12
Prices for materials such as PVC and other plastics derived from petrochemical feedstocks have also fluctuated. Since Belden
utilizes the first in, first out (FIFO) inventory costing methodology, the impact of copper and other raw material cost changes on
our cost of goods sold is delayed by approximately two months based on our rate of inventory turnover.
While we generally are able to adjust our pricing for fluctuations in commodity prices, we can experience short-term favorable
or unfavorable variances. When the cost of raw materials increases, we are generally able to recover these costs through higher
pricing of our finished products. The majority of our products are sold through distribution, and we manage the pricing of these
products through published price lists, which we update from time to time, with new prices typically taking effect a few weeks
after they are announced. Some OEM customer contracts have provisions for passing through raw material cost changes,
generally with a lag of a few weeks to three months.
5
Backlog
Our business is characterized generally by short-term order and shipment schedules. Our backlog consists of product orders for
which we have received a customer purchase order or purchase commitment and which have not yet been shipped. As of
December 31, 2022 and 2021, our backlog was $800.4 million and $665.2 million, respectively. The majority of the backlog at
December 31, 2022 is scheduled to ship in 2023.
Environmental Matters
We are subject to numerous federal, state, provincial, local, and foreign laws and regulations relating to the storage, handling,
emission, and discharge of materials into the environment,
including the Comprehensive Environmental Response,
Compensation, and Liability Act; the Clean Water Act; the Clean Air Act; the Emergency Planning and Community Right-To-
Know Act; the Resource Conservation and Recovery Act; and similar laws in the other countries in which we operate. While
we believe that our existing environmental control procedures are adequate, we will continue to evaluate and update our
procedures as needed to address new or changing aspects of environmental matters.
Environmental, Social, and Governance (ESG) at Belden
Belden believes in creating shared value for all our stakeholders, including our employees, customers, the communities we
touch across our value chain, and the planet. Responsible stewardship, managing our climate impacts, and driving sustainability
through innovation is core to our business strategy.
We are dedicated to making progress towards our 2025 goals for the topics most material to our business and are working
across our operations to further integrate ESG matters into how we operate. As part of our efforts towards stakeholder
transparency, we look forward to sharing our progress and work under way in our inaugural ESG Report, which we expect to
publish during 2023.
Our ESG matters are overseen by our Board of Directors through the Nominating and Corporate Governance Committee.
Belden’s ESG Steering Committee manages our global ESG strategy and implementation. For more information on our
approach to ESG, visit https://www.belden.com/resources/sustainability.
Human Capital Resources
Our employees’ well-being is directly associated with our success. We prioritize fostering an equitable and supportive culture
that incorporates diversity and inclusion across our entire value chain. Priority areas for our Human Capital Management
strategy are Diversity, Equity, and Inclusion (DEI), Employee Growth & Development, and Employee Well-Being &
Engagement.
As of December 31, 2022, our global team members totaled 8,000 employees of which 25% are in the United States, 4% in
Canada, 11% in China, 3% in India, 23% in Mexico, and 28% in the European Union. Of our workforce, 38% identify as
women and they represent 22% of the senior management and 33% of our Board of Directors. Individuals of ethnically diverse
backgrounds make up 24% of our U.S. workforce and 11% of our Board of Directors.
Diversity, Equity, and Inclusion (DEI)
At Belden, we are dedicated to creating a culture of equity, inclusivity and diversity for the people that we employ. Under the
guidance of our Vice President of Diversity, Equity & Inclusion, the Authentic Voices for Inclusion and Diversity (AVID)
Council supports our workplace culture and diversity initiatives across the company. Our Human Resources, Talent Acquisition
teams and Business Units also hold meetings throughout the year to ensure alignment with our DEI strategy to practice and
uphold our commitment to diversity throughout the Company. We are also a proud signatory of the CEO Action for Diversity
& Inclusion pledge.
Employee Growth & Development
We believe in the potential of our employees and the importance of providing career development opportunities within our
Company for those who wish to learn and grow with us. We continue to live our value of “We Invest in Talent” with 74% of
our top 150 positions being filled with people that have been promoted from within. Moreover, our Early Career Leadership
Program (ECLP) gives us the ability to recruit and retain high caliber candidates at an early stage with 22 graduates in 2022.
We also extend offers to high performing interns from our internship program to participate in our ECLP.
6
Employee Well-Being & Engagement
To ensure we are working towards the betterment of our employees’ well-being, we conduct a bi-annual employee engagement
survey, for which we saw a 83% participation rate in 2022 with an overall sustainable engagement score of 88%. Voluntary
turnover of management and professional staff remained low at 10% while the overall company Lost Time Incident Rate
(LTIR) and Total Recordable Incident Rate (TRIR) were 0.41 and 0.55, respectively.
The Be Well program that formally launched in the United States now encompasses our entire operational footprint to support
our workforce’s physical, emotional, social, and financial wellbeing with almost 50% of our workforce participating. Once
again, we are recognized as a Great Place to Work® in various global locations, including Canada, Denmark, France, Germany,
Hong Kong, Hungary, India, Mexico, Singapore, Spain, United Kingdom, and the United States – a testament of Belden’s
commitment to our employees.
Available Information
We file annual, quarterly, and current reports, proxy statements, and other information with the Securities and Exchange
Commission (SEC). These reports, proxy statements, and other information contain additional information about us. These
.
electronic SEC filings are available on the SEC's web site at www.sec.govg
Belden maintains an Internet web site at www.belden.com where our Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, proxy statements, and all amendments to those reports and statements are available
without charge, as soon as reasonably practicable following the time they are filed with or furnished to the SEC. We will
provide upon written request and without charge a printed copy of our Annual Report on Form 10-K. To obtain such a copy,
please write to the Corporate Secretary, Belden Inc., 1 North Brentwood Boulevard, 15th Floor, St. Louis, MO 63105.
Information about our Executive Officers
The following table sets forth certain information with respect to the persons who were Belden executive officers as of
February 24, 2023. All executive officers are elected to terms that expire at the organizational meeting of the Board of Directors
following the Annual Meeting of Shareholders.
Name
Ashish Chand
Brian Anderson
Brian Lieser
Anshu Mehrotra
Jeremy Parks
Leah Tate
Doug Zink
Age Position
President and Chief Executive Officer
48
Senior Vice President, Legal, General Counsel and Corporate Secretary
48
Executive Vice President, Industrial Automation Solutions
57
Executive Vice President, Broadband & 5G
52
Senior Vice President, Finance, and Chief Financial Officer
47
46
Senior Vice President, Human Resources
47 Vice President and Chief Accounting Officer
Ashish Chand was appointed President and Chief Executive Officer on February 22, 2023. Dr. Chand joined Belden in 2002,
and most recently served as the Company's Executive Vice President of Industrial Automation Solutions since July 2019, and
Managing Director of Belden Asia Pacific from August 2017. Over the course of his tenure with Belden, he has held roles
across several functions, including sales and marketing and operations in both Asia and North America. Dr. Chand has played a
pivotal role in developing and executing Belden's long-term growth agenda, solutions and product strategy, and go-to-market
efforts. He made key contributions towards establishing and growing Belden throughout the Asia Pacific region, including
setting up manufacturing in China and India. Dr. Chand holds a BA in Economics from Loyola College, Chennai, India, an
MBA from XLRI Jamshedpur, India, and a Doctorate of Business Administration from the City University of Hong Kong.
Brian Anderson has been Senior Vice President, Le
Brian Anderson has been Senior Vice President, Legal, General Counsel and Corporate Secretary since April 2015. Prior to
that, he served as Corporate Attorney for the Company from May 2008 through March 2015. Prior to joining Belden, Mr.
Anderson was in private practice at the law firm Lewis Rice in St. Louis. Mr. Anderson has a B.S.B. degree in Accounting and
an M.B.A. from Eastern Illinois University and holds a J.D. from Washington University in St. Louis School of Law.
7
Brian Lieser was appointed Executive Vice President, Industrial Automation Solutions on February 22, 2023. Prior to that, he
served as Vice President of Global Products of Industrial Automation Solutions where he was responsible for product strategy,
roadmap, and development as well as domestic and international growth, particularly within Asia and Europe. Mr. Lieser joined
the Company in 2009 and has assumed positions of increasing responsibility primarily within the Industrial Automation
Solutions segment. Previously, Mr. Lieser held positions at Rockwell Automation, Rosemount, and MTS Systems. Mr. Lieser
holds a Bachelor of Science in Aerospace Engineering from the University of Minnesota and an MBA in Marketing from the
University of St. Thomas.
Anshu Mehrotra was appointed Executive Vice President, Broadband & 5G in August 2022. Prior to that, he served as Senior
Vice President, Sales and Marketing since January 2021. Prior to joining Belden, he was Group President for Welding at
Illinois Tool Works (ITW), leading the global Industrial Welding platform. Prior to ITW, he has had a number of leadership
roles in general management and sales at Ingersoll Rand, Allegion and Johnson Controls. He has a B.S. in Electronics
Engineering from Delhi University, an M.S. in Industrial Engineering from Northern Illinois University and an M.B.A. from
Northwestern University at Kellogg School of Management.
Jeremy Parks was appointed Senior Vice President, Finance, and Chief Financial Officer in February 2021. Prior to re-joining
Belden in 2021, Mr. Parks worked as the Chief Financial Officer of International Wire Corp. From 2008 through August of
2020, Mr. Parks worked for the Company in various financial roles, most recently as Vice President of Finance of the
Company’s Industrial Solutions segment. Mr. Parks has a B.A. and M.A. in economics from State University of New York –
Buffalo, and an M.B.A from Xavier University.
Leah Tate was appointed Senior Vice President, Human Resources in March 2022. Prior to that, she served as the Vice
President, Human Resources for the Company’s Industrial Automation platform as well as in other roles in the human resources
organization. Prior to joining Belden, Ms. Tate held human resource roles in the Pulte Group and Ingersoll Rand. Ms. Tate
holds a Bachelor of Science degree in Management and a Master of Science degree in Human Resource Management from
Purdue University.
Doug Zink has been Vice President and Chief Accounting Officer since September 2013. Prior to that, he has served as the
Company’s Vice President, Internal Audit; Corporate Controller; and Director of Financial Reporting, after joining Belden in
May 2007. Prior to joining the Company, he was a Financial Reporting Manager at TLC Vision Corporation, an eye care
service company, from 2004 to 2007, and has five years of experience in public accounting with KPMG LLP and Arthur
Andersen LLP. He holds Bachelor’s and Master’s Degrees in Accounting from Texas Christian University and is a Certified
Public Accountant.
Cautionary Information Regarding Forward-Looking Statements
We make forward-looking statements in this Annual Report on Form 10-K, in other materials we file with the SEC or otherwise
release to the public, and on our website. In addition, our senior management might make forward-looking statements orally to
investors, analysts,
the media, and others. Statements concerning our future operations, prospects, strategies, financial
condition, future economic performance (including growth and earnings) and demand for our products and services, and other
statements of our plans, beliefs, or expectations, including the statements contained in Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” that are not historical facts, are forward-looking statements. In
some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “forecast,”
“guide,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” and similar
expressions. The forward-looking statements we make are not guarantees of future performance and are subject to various
assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-
looking statements. These factors include, among others, those set forth in the following section and in the other documents that
we file with the SEC.
We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
Item 1A. Risk Factors
Following is a discussion of some of the more significant risks that could materially impact our business. There may be
additional risks that impact our business that we currently do not recognize as, or that are not currently, material to our business.
8
Business and Operational Risks
A challenging global economic environment or a downturn in the markets we serve could adversely affect our operating
results and stock price in a material manner.
A challenging global economic environment could cause substantial reductions in our revenue and results of operations as a
result of weaker demand by the end users of our products and price erosion. Price erosion may occur through competitors
becoming more aggressive in pricing practices. A challenging global economy could also make it difficult for our customers,
our vendors, and us to accurately forecast and plan future business activities. Our customers could also face issues gaining
timely access to sufficient credit, which could have an adverse effect on our results if such events cause reductions in revenues,
delays in collection, or write-offs of receivables. Further, the demand for many of our products is economically sensitive and
will vary with general economic activity, trends in nonresidential construction, investment in manufacturing facilities and
automation, demand for information technology equipment, and other economic factors.
Global economic uncertainty could result in a significant decline in the value of foreign currencies relative to the U.S. dollar,
which could result in a significant adverse effect on our revenues and results of operations; could make it difficult for our
customers and us to accurately forecast and plan future business activities; and could cause our customers to slow or reduce
spending on our products and services. Economic uncertainty could also arise from fiscal policy changes in the countries in
which we operate.
Changes in foreign currency rates and commodity prices can impact the buying power of our customers. For example, a
strengthened U.S. dollar can result in relative price increases for our products for customers outside of the U.S., which can have
a negative impact on our revenues and results of operations. Furthermore, customers’ ability to invest in capital expenditures,
such as our products, can depend upon proceeds from commodities, such as oil and gas markets. A decline in energy prices,
therefore, can have a negative impact on our revenues and results of operations.
The global markets in which we operate are highly competitive.
We face competition from other manufacturers for each of our global business platforms and in each of our geographic regions.
These companies compete on technical features, quality, availability, price, customer support, and distribution coverage. Some
multinational competitors have greater engineering, financial, manufacturing, and marketing resources than we have. Actions
that may be taken by competitors, including pricing, business alliances, new product introductions, intellectual property
advantages, market penetration, and other actions, could have a negative effect on our revenues and profitability. Moreover,
some competitors that are highly leveraged both financially and operationally could become more aggressive in their pricing of
products.
Our future success depends in part on our ability to develop and introduce new products and respond to changes in
customer preferences.
Our markets are characterized by the introduction of products with increasing technological capabilities. Our success depends in
part on our ability to anticipate and offer products that appeal to the changing needs and preferences of our customers in the
various markets we serve. Developing new products and adapting existing products to meet evolving customer expectations
requires high levels of innovation, and the development process may be lengthy and costly. If we are not able to timely
anticipate, identify, develop and market products that respond to rapidly changing customer preferences, demand for our
products could decline.
The relative costs and merits of our solutions could change in the future as various competing technologies address the market
opportunities. We believe that our future success will depend in part upon our ability to enhance existing products and to
develop and manufacture new products that meet or anticipate technological changes, which will require continued investment
in engineering, research and development, capital equipment, marketing, customer service, and technical support. We have long
been successful in introducing successive generations of more capable products, but if we were to fail to keep pace with
technology or with the products of competitors, we might lose market share and harm our reputation and position as a
technology leader in our markets. See the discussion above in Part I, Item 1, under Research and Development.
9
We may be unable to achieve our goals related to revenue growth.
In order to meet the goals in our strategic plan, we must execute our Market Delivery System ("MDS") and grow our business,
both organically and through acquisitions. We may be unable to achieve our goals due to a failure to identify growth
opportunities, such as trends and technological changes in our end markets. The enterprise and industrial end markets we serve
may not experience the growth we expect. Further, those markets may be unable to sustain growth on a long-term basis,
particularly in emerging markets. If we are unable to achieve our goals related to revenue growth, it could have a material
adverse effect on our results of operations, financial position, and cash flows.
We may be unable to implement our strategic plan successfully.
Our strategic plan is designed to continually enhance shareholder value by improving revenues and profitability, reducing costs,
and improving working capital management. To achieve these goals, our strategic priorities are reliant on our Belden Business
System, which includes continuing deployment of our MDS to capture market share through end-user engagement, channel
management, outbound marketing, and careful vertical market selection; improving our recruitment and development of
talented associates; developing strong global business platforms; acquiring businesses that fit our strategic plan; and continuing
to be a leading Lean company. We have a disciplined process for deploying this strategic plan through our associates. There is a
risk that we may not be successful in developing or executing these measures to achieve the expected results for a variety of
reasons, including market developments, economic conditions, shortcomings in establishing appropriate action plans, or
challenges with executing multiple initiatives simultaneously. For example, our MDS initiative may not succeed or we may lose
market share due to challenges in choosing the right products to market or the right customers for these products, integrating
products of acquired companies into our sales and marketing strategy, or strategically bidding against OEM partners. We may
fail to identify growth opportunities. We may not be able to acquire businesses that fit our strategic plan on acceptable business
terms, and we may not achieve our other strategic priorities.
Our results of operations are subject to foreign and domestic political, social, economic, and other uncertainties and are
affected by changes in currency exchange rates.
In addition to manufacturing and other operating facilities in the U.S., we have manufacturing and other operating facilities in
Canada, China, India, Mexico, and several European countries. We rely on suppliers in many countries, including China. Our
foreign operations are subject to economic, social, and political risks inherent in maintaining operations abroad such as
economic and political destabilization, land use risks, international conflicts, pandemics and other health-related crises,
restrictive actions by foreign governments, and adverse foreign tax laws. In addition to economic and political risk, a risk
associated with our European manufacturing operations is the higher relative expense and length of time required to adjust
manufacturing employment capacity. We also face political risks in the U.S., including tax or regulatory risks or potential
adverse impacts from legislative impasses over, or significant legislative, regulatory or executive changes in fiscal or monetary
policy and other foreign and domestic government policies, including, but not limited to, trade policies and import/export
policies.
Approximately 44% of our sales are outside the U.S. Other than the U.S. dollar, the principal currencies to which we are
exposed through our manufacturing operations, sales, and related cash holdings are the euro, the Canadian dollar, the Hong
Kong dollar, the Chinese yuan, the Mexican peso, the Australian dollar, the British pound and Indian rupee. Generally, we have
revenues and costs in the same currency, thereby reducing our overall currency risk, although any realignment of our
manufacturing capacity among our global facilities could alter this balance. When the U.S. dollar strengthens against other
currencies, the results of our non-U.S. operations are translated at a lower exchange rate and thus into lower reported revenues
and earnings.
Supply chain issues, including scarcity of raw materials or other components necessary to produce the products we
manufacture, could increase costs or cause a delay in our ability to fulfill orders, and could adversely affect our future
results of operations and our overall financial performance.
The Company relies on an extended supply chain and the availability of certain raw materials, including but not limited to
copper, to produce a significant amount of our products. A reduction or interruption in supply, including interruptions due to
COVID-19 or geopolitical unrest beyond the Company’s control, an inability to procure quality raw materials in a cost effective
manner and constrain volatile materials costs, a failure to monitor contract compliance to ensure and sustain sourcing savings, a
failure to procure adequate inventory or raw materials from our suppliers, or regulatory changes may lead to delays in
manufacturing and increases in costs.
10
Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages that
could materially adversely affect the Company’s financial condition and operating results. While the Company has entered into
agreements for the supply of many components, there can be no assurance that the Company will be able to extend or renew
these agreements on similar terms, or at all. Component suppliers may suffer from poor financial conditions, which can lead to
business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain
sufficient quantities of components on commercially reasonable terms. Health crises, like the COVID-19 pandemic, could lead
to quarantines or labor shortages, thus impacting the output of key suppliers. If the Company’s supply of components for a new
or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed products to the
Company, the Company’s financial condition and operating results could be materially adversely affected. The Company’s
business and financial performance could also be materially adversely affected depending on the time required to obtain
sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source. Similarly,
if the Company’s customers experience production challenges due to the inability to obtain certain components, this may
negatively impact the customers’ ordering patterns from the Company.
The presence of substitute products in the marketplace may reduce demand for our products and negatively impact our
business.
Fiber optic systems are increasingly substitutable for copper-based cable systems. Customers may shift demand to fiber optic
systems with greater capabilities than copper-based cable systems, leading to a reduction in demand for copper-based cable. We
may not be able to offset the effects of a reduction in demand for our copper-based cable systems with an increase in demand
for our existing fiber optic systems. Further, the supply chain in the fiber market is highly constrained, with a small number of
vertically integrated firms controlling critical inputs and the related intellectual property. Similarly, in our non-cable businesses,
customers could rapidly shift the methods by which they capture and transmit signals in ways that could lead to decreased
demand for our current or future products. These factors, either together or in isolation, may negatively impact revenue and
profitability.
Cyber security incidents have and could in the future interfere with our business and operations.
Computer hacking, malware, phishing, and spamming attacks against online networking platforms have become more
prevalent. Though it is difficult to determine what, if any, harm may directly result from any specific attack or interruption,
such events could also be expensive to remedy, harm our reputation or brands, and/or lead users to lose trust and confidence in
our business. We, and others on our behalf, also store “personally identifiable information” (“PII”) with respect to employees,
vendors, customers, and others. While we have implemented safeguards to protect the privacy of this information, it is possible
that hackers or others might obtain this information in the future, as occurred in 2020. Based on this occurrence or any future
occurrence, in addition to having to take potentially costly remedial action, we may also be subject to fines, penalties, lawsuits,
and reputational damage.
Furthermore, we rely on our information systems and those of third parties for storing proprietary company information about
our products and intellectual property, as well as for processing customer orders, manufacturing and shipping products, billing
our customers, tracking inventory, supporting accounting functions and financial statement preparation, paying our employees,
and otherwise running our business. In addition, we may need to enhance our information systems to provide additional
capabilities and functionality. The implementation of new information systems and enhancements is frequently disruptive to the
underlying business of an enterprise. Any disruptions affecting our ability to accurately report our financial performance on a
timely basis could adversely affect our business in a number of respects. If we are unable to successfully implement potential
future information systems enhancements, our financial position, results of operations, and cash flows could be negatively
impacted.
Our revenue for any particular period can be difficult to forecast.
Our revenue for any particular period can be difficult to forecast, especially in light of the challenging and inconsistent global
macroeconomic environment and related market uncertainty. Our revenue may grow at a slower rate than in past periods or
even decline on a year-over-year basis. Changes in market growth rates can have a significant effect on our operating results.
11
The timing of orders for customer projects can also have a significant effect on our operating results in the period in which the
products are shipped and recognized as revenue. The timing of such projects is difficult to predict, and the timing of revenue
recognition from such projects may affect period to period changes in revenue. As a result, our operating results could vary
materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as revenue. Similarly, we
are often informed by our customers well in advance that such customer intends to place an order related to a specific project in
a given quarter. Such a customer’s timeline for execution of the project, and the resulting purchase order, may be unexpectedly
delayed to a future quarter, or cancelled. The frequency of such delays can be difficult to predict. As a result, it is difficult to
precisely forecast revenue and operating results for future quarters.
In addition, our revenue can be difficult to forecast due to unexpected changes in the level of our products held as inventory by
our channel partners and customers. Our channel partners and customers purchase and hold our products in their inventory in
order to meet the service and on-time delivery requirements of their customers. As our channel partners and customers change
the level of Belden products owned and held in their inventory, our revenue is impacted. As we are dependent upon our channel
partners and customers to provide us with information regarding the amount of our products that they own and hold in their
inventory, unexpected changes can occur and impact our revenue forecast.
We may experience significant variability in our quarterly and annual effective tax rate which would affect our reported net
income.
We have a complex tax profile due to the global nature of our operations, which encompass multiple taxing jurisdictions.
Variability in the mix and profitability of domestic and international activities, identification and resolution of various tax
uncertainties, changes in tax laws and rates, and the extent to which we are able to realize net operating loss and other
carryforwards included in deferred tax assets and avoid potential adverse outcomes included in deferred tax liabilities, among
other matters, may significantly affect our effective income tax rate in the future.
Our effective income tax rate is the result of the income tax rates in the various countries in which we do business. Our mix of
income and losses in these jurisdictions affects our effective tax rate. For example, relatively more income in higher tax rate
jurisdictions would increase our effective tax rate and thus lower our net income. Similarly, if we generate losses in tax
jurisdictions for which no benefits are available our effective income tax rate will increase. Our effective income tax rate may
also be impacted by the recognition of discrete income tax items, such as required adjustments to our liabilities for uncertain tax
positions or our deferred tax asset valuation allowance. A significant increase in our effective income tax rate could have a
material adverse impact on our earnings.
The increased prevalence of cloud computing and other disruptive business models may negatively impact certain aspects of
our business.
The nature in which many of our products are purchased or used is evolving with the increasing prevalence of cloud computing
and other methods of off-premises computing and data storage. This may negatively impact one or more of our businesses in a
number of ways, including:
•
•
•
•
Consolidation of procurement power leading to the commoditization of IT products;
Reduction in the demand for infrastructure products previously used to support on-site data centers;
Lowering barriers to entry for certain markets, leading to new market entrants and enhanced competition; and
Preferences for software as a service billing and pricing models may reduce demand for non-cloud “packaged”
software.
We may have difficulty integrating the operations of acquired businesses, which could negatively affect our results of
operations, profitability, and achievement of our strategic plan.
As part of our strategic plan initiatives, we periodically execute acquisitions and divestitures. The extent to which appropriate
acquisitions are made will affect our overall growth, operating results, financial condition, and cash flows. Our ability to
acquire businesses successfully will decline if we are unable to identify appropriate acquisition targets, competition among
potential buyers increases, the cost of acquiring suitable businesses becomes too expensive, or we lack sufficient sources of
capital. As a result, we may be unable to make acquisitions or be forced to pay more or agree to less advantageous acquisition
terms for companies we would like to acquire.
12
We may also have difficulty integrating acquired businesses or future acquisitions may be unable to meet our performance
expectations. Some of the integration challenges we might face include differences in corporate culture and management styles,
additional or conflicting governmental regulations, compliance with the Sarbanes-Oxley Act of 2002, financial reporting that is
not in compliance with U.S. generally accepted accounting principles, disparate company policies and practices, customer
relationship issues, and retention of key personnel. Furthermore, we may be unable to integrate operations successfully or cost-
effectively, which could have an adverse impact on our results of operations or our profitability.
If we are unable to retain key employees, our business operations could be adversely affected.
The loss of key employees could have an adverse effect on us. We may not be able to find qualified replacements for these
individuals and the integration of potential replacements may be disruptive to our business. More broadly, a key determinant of
our success is our ability to attract, develop, and retain talented associates. While this is one of our strategic priorities, we may
not be able to succeed in this regard.
The increased influence of chief information officers and similar high-level executives may negatively impact demand for
our products.
As a result of the increasing interconnectivity of a wide variety of systems, chief information officers and similar executives are
more heavily involved in operation areas that have not historically been associated with information technology. As a result,
CIOs and IT departments are exercising influence over the procurement and purchasing process at the expense of engineers,
plant managers and operation personnel that have historically driven demand for many of our products. When making
purchasing decisions, CIO’s often value interoperability, standardization, cloud-readiness and security over domain expertise
and niche application knowledge. As a result of the influences of CIOs and IT departments, we may face increased competition
from IT-industry companies that have not traditionally had major presences in the markets in which we operate. Further, the
variance in considerations that drive purchasing decisions between CIOs and those with niche application expertise may result
in increased competition based on price and a reduction in demand for our products.
Alterations to our product mix and go-to-market strategies designed to respond to the changes in the marketplace presented by
cloud computing may be disruptive to our business and lead to increase expenses, which may result in lower revenues and
profitability. Further, if a competitor is able to more quickly or efficiently adapt, or if cloud computing results in significantly
lower barriers to entry and new competitors enter our markets, demand for our products may be reduced.
Our revenue and profits would likely decline, at least temporarily, if we were to lose a key distributor.
We rely on several key distributors in marketing our products. Distributors purchase the products of our competitors along with
our products. Our largest distributor, WESCO, accounted for approximately 15% of our revenue in 2022 and our top eight
distributors, including WESCO, accounted for a total of 34% of our revenue in 2022. If we were to lose one of these key
distributors, our revenue and profits would likely decline, at least temporarily. Changes in the inventory levels of our products
owned and held by our distributors can result in significant variability in our revenues. Further, certain distributors are allowed
to return certain inventory in exchange for an order of equal or greater value. We have recorded reserves for the estimated
impact of these inventory policies.
Consolidation of our distributors could adversely impact our revenues and earnings. It could also result in consolidation of
distributor inventory, which would temporarily depress our revenues. We have also experienced financial failure of distributors
from time to time, resulting in our inability to collect accounts receivable in full. A global economic downturn could cause
financial difficulties (including bankruptcy) for our distributors and other customers, which could adversely affect our results of
operations.
13
Actions of activists could cause us to incur substantial costs, divert management’s attention and resources, and have an
adverse effect on our business.
From time to time, we may be subject to proposals by activists urging us to take certain actions. If activist activities ensue, our
business could be adversely affected because responding and reacting to actions by activists can be costly and time-consuming,
disrupt our operations and divert the attention of management and our employees. For example, we may be required to retain
the services of various professionals to advise us on activist matters, including legal, financial and communications advisors,
In addition, perceived uncertainties as to our future
the costs of which may negatively impact our future financial results.
direction, strategy or leadership created as a consequence of activist initiatives may result in the loss of potential business
opportunities, harm our ability to attract new investors, customers, employees, and joint venture partners, and cause our stock
price to experience periods of volatility.
Perceived failure of our signal transmission solutions to provide expected results may result in negative publicity and harm
our business and operating results.
Our customers use our signal transmission solutions in a wide variety of IT systems and application environments in order to
help reduce security vulnerabilities and demonstrate compliance. Despite our efforts to make clear in our marketing materials
and customer agreements the capabilities and limitations of these products, some customers may incorrectly view the
deployment of such products in their IT infrastructure as a guarantee that there will be no security incident or policy non-
compliance event. As a result, the occurrence of a high profile security incident, or a failure by one of our customers to pass a
regulatory compliance IT audit, could result in public and customer perception that our solutions are not effective and harm our
business and operating results, even if the occurrence is unrelated to the use of such products or if the failure is the result of
actions or inactions on the part of the customer.
General Industry and Economic Risks
The effects of the COVID-19 pandemic continued to materially affect how we and our customers operated our businesses in
2022, and the duration and extent to which this or future epidemics, pandemics or other major disasters will impact our
future results of operations and overall financial performance remains uncertain.
In December 2019, a novel coronavirus disease (“COVID-19”) was first reported and on March 11, 2020, the World Health
Organization characterized COVID-19 as a pandemic that has yet to fully recede. The widespread health crisis is adversely
affecting the broader economies, financial markets and may adversely affect the overall demand environment for many of our
products.
Our operations and the operations of our suppliers, channel partners and customers were and continue to be disrupted to varying
degrees by a range of external factors related to the COVID-19 pandemic, some of which are not within our control. Many
governments imposed, and may yet impose or may re-impose, a wide range of restrictions on the physical movement or
congregation of people in order to limit the spread of COVID-19. The COVID-19 pandemic has had, and likely will continue to
have, an impact on the attendance and productivity of our employees, and those of our channel partners or customers, resulting
in negative impacts to our results of operations and overall financial performance. Additionally, COVID-19 has resulted, and
may result in future periods, in delays in non-residential construction, non-crisis-related IT purchases and project completion
schedules in general, all of which can negatively impact our results in both current and future periods.
The duration and extent of the impact from the COVID-19 pandemic or any future epidemic, pandemic or major disaster
depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of
the virus (including variant mutations of the virus), the extent and effectiveness of containment actions, treatments and
vaccinations, the effects of measures enacted by policy makers and central banks around the globe, and the impact of these and
other factors on our employees, customers, channel partners and suppliers. If we are not able to respond to and manage the
impact of such events effectively, our business will be affected.
14
Inflation and changes in the price and availability of raw materials may lead to higher input and labor costs in a way that
could be detrimental to our profitability.
As a result of increased inflation, costs of raw materials and labor may increase in a way that we are unable to offset in a timely
manner through higher prices for finished goods.
Copper is a significant component of the cost of most of our cable products. Over the past few years, and in particular in 2021
and 2022, the prices of metals, particularly copper, have been volatile. Prices of other materials we use, such as PVC and other
plastics derived from petrochemical feedstocks, have also been volatile. Generally, we have recovered much of the higher cost
of raw materials through higher pricing of our finished products. The majority of our products are sold through distribution, and
we manage the pricing of these products through published price lists which we update from time to time, with new prices
typically taking effect a few weeks after they are announced. Some OEM contracts have provisions for passing through raw
material cost changes, generally with a lag of a few weeks to three months. Especially during periods of inflation, if we are
unable to raise prices timely and sufficiently to recover our material costs or increases in the cost of internal or external labor,
our earnings and margins could decline. If we raise our prices but competitors raise their prices less, we may lose sales, and our
earnings could decline. If the price of copper were to decline, we may be compelled to reduce prices to remain competitive,
which could have a negative effect on revenues. While we generally believe the supply of raw materials (copper, plastics, and
other materials) is adequate, we have experienced instances of limited supply of certain raw materials, resulting in extended
lead times and higher prices. If a supply interruption or shortage of materials were to occur (including due to labor or political
disputes), this could have a negative effect on revenues and earnings.
Similarly, if we raise employee wages in a manner sufficient to offset inflation, it may erode our profitability. Conversely, if we
fail to raise employee wages in a manner sufficient to offset inflation, associates could leave the Company resulting in capacity
constraints which could have a negative effect on revenues and earnings.
Volatility of credit markets and rising interest rates could adversely affect our business.
Uncertainty in U.S. and global financial and equity markets could make it more expensive for us to conduct our operations and
more difficult for our customers to buy our products. Additionally, market volatility or uncertainty may cause us to be unable to
pursue or complete acquisitions. Our ability to implement our business strategy and grow our business, particularly through
acquisitions, may depend on our ability to raise capital by selling equity or debt securities or obtaining additional debt
financing. Market conditions including changes in interest rates may prevent us from obtaining financing when we need it or on
terms acceptable to us.
We may be unable to achieve our strategic priorities in emerging markets.
Emerging markets are a significant focus of our strategic plan. The developing nature of these markets presents a number of
risks. We may be unable to attract, develop, and retain appropriate talent to manage our businesses in emerging markets.
Deterioration of social, political, labor, or economic conditions in a specific country or region may adversely affect our
operations or financial results. Emerging markets may not meet our growth expectations, and we may be unable to maintain
such growth or to balance such growth with financial goals and compliance requirements. Among the risks in emerging market
countries are bureaucratic intrusions and delays, contract compliance failures, engrained business partners that do not comply
with local or U.S. law, such as the Foreign Corrupt Practices Act, fluctuating currencies and interest rates, limitations on the
amount and nature of investments, restrictions on permissible forms and structures of investment, unreliable legal and financial
infrastructure, regime disruption and political unrest, uncontrolled inflation and commodity prices, fierce local competition by
companies with better political connections, and corruption. In addition, the costs of compliance with local laws and regulations
in emerging markets may negatively impact our competitive position as compared to locally owned manufacturers.
Legal and Regulatory Risks
Changes in tax laws may adversely affect our financial position.
We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is
required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax
positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which
we conduct our business, it is possible that these positions may be contested or overturned by jurisdictional tax authorities,
which may have a significant impact on our global provision for income taxes.
15
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied.
Governmental
tax authorities are increasingly scrutinizing the tax positions of companies. The U.S. federal and state
governments, countries in the European Union, as well as a number of other countries and organizations such as the
Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws, including a
corporate minimum tax. Certain changes in tax laws and related regulations may materially impact our financial results. Given
the unpredictability of these possible changes and their potential interdependency, it is possible such changes could adversely
impact our financial results.
Changes in global tariffs and trade agreements may have a negative impact on global economic conditions, markets and our
business.
Like most multinational companies, we have supply chains and sales channels that extend beyond national borders. Purchasing
and production decisions in some cases are largely influenced by the trade agreements and the tax and tariff structures in place.
Disruption in those structures can create significant market uncertainty. While the impact of Brexit and the U.S. and Chinese
tariff actions have not been material to us, unanticipated complications in the free movement of goods in Europe, an escalation
of tariff activity anywhere in the world or changes to existing free trade agreements could materially impact our financial
results. In addition to the potential direct impacts of free trade restrictions, longer term macroeconomic consequences could
result, including slower growth, inflation, higher interest rates and unfavorable impacts to currency exchange rates. Any of
these factors could have a material adverse effect on our business, financial condition and results of operations.
We are subject to laws and regulations worldwide, changes to which could increase our costs and individually or in the
aggregate adversely affect our business.
We are subject to laws and regulations affecting our domestic and international operations in a number of areas. These U.S. and
foreign laws and regulations affect our activities including, but not limited to, in areas of labor, advertising, real estate, billing,
e-commerce, promotions, quality of services, property ownership and infringement, tax, import and export requirements, anti-
foreign exchange controls and cash repatriation restrictions, data privacy requirements, anti-competition,
corruption,
environmental, health and safety.
Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent
from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such costs, which may rise
in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate
make our products and services less attractive to our customers, delay the introduction of new products in one or more regions,
or cause us to change or limit our business practices. We have implemented policies and procedures designed to ensure
compliance with applicable laws and regulations, but there can be no assurance that our employees, contractors, or agents will
not violate such laws and regulations or our policies and procedures.
Specifically with respect to data privacy, new and evolving data protection regulations have been adopted or are being
considered or refined for most of the developed world. many of these data privacy regulations contain operational requirements
for companies that receive or process personal data of residents of their respective jurisdictions and include significant penalties
for non-compliance. In addition, some countries are considering or have passed legislation implementing data protection
requirements or requiring local storage and processing of data or similar requirements that could increase the cost and
complexity of delivering our services.
16
Increasing expectations with respect to Environmental, Social and Governance (ESG) matters by our various stakeholders
could adversely affect our business and operating results.
As a response to growing customer, investor, employee, governmental, and other stakeholder interest in our ESG practices, we
have increased reporting of our ESG programs and performance and have established and announced our aspirational goals or
targets, including those regarding greenhouse gas emissions and diversity, equity and inclusion. Our ability to achieve such
goals and aspirations is subject to numerous risks and uncertainties, many of which rely on the collective efforts of others or
may be outside of our control. Such risks include, among others, the availability and adoption of new or additional technologies
that reduce carbon or eliminate energy sources on a commercially reasonable basis, competing and evolving economic, policy
and regulatory factors, the availability of qualified candidates in our labor markets and our ability to recruit and retain diverse
talent, and customer engagement in our goals. There may be times where actual outcomes vary from those aimed for or
expected and sometimes challenges may delay or block progress. As a result, we cannot offer assurances that the results
reflected or implied by any such statements will be realized or achieved. Moreover, standards and expectations for ESG matters
continue to evolve and may be subject to varying interpretations, which may result in significant revisions to our goals or
progress. A failure or perceived failure to meet our aspirational goals or targets within the timelines we announce, or at all, or a
failure or perceived failure to meet evolving stakeholders expectations and standards, could damage our reputation, adversely
affect employee retention or engagement or support from our various stakeholders and could subject us to government
enforcement actions or penalties and private litigation. Such outcomes could negatively impact the Company’s business, capital
expenditures, results of operations, financial condition and competitive position.
We might have difficulty protecting our intellectual property from use by competitors, or competitors might accuse us of
violating their intellectual property rights.
Disagreements about patents and other intellectual property rights occur in the markets we serve. Third parties have asserted
and may in the future assert claims of infringement of intellectual property rights against us or against our customers or channel
partners for which we may be liable. Furthermore, a successful claimant could secure a judgment that requires us to pay
substantial damages or prevents us from distributing certain products or performing certain services. We may encounter
difficulty enforcing our own intellectual property rights against third parties, which could result in price erosion or loss of
market share.
Our use of open source software could negatively impact our ability to sell our products and may subject us to unanticipated
obligations.
The products, services, or technologies we acquire, license, provide, or develop may incorporate or use open source software.
We monitor and restrict our use of open source software in an effort to avoid unintended consequences, such as reciprocal
license grants, patent retaliation clauses, and the requirement to license our products at no cost. Nevertheless, we may be subject
to unanticipated obligations regarding our products which incorporate or use open source software.
If our goodwill or other intangible assets become impaired, we would be required to recognize charges that would reduce
our income.
Under accounting principles generally accepted in the U.S., goodwill and certain other intangible assets are not amortized but
must be reviewed for possible impairment annually or more often in certain circumstances if events indicate that the asset
values may not be recoverable. Asset impairment charges would reduce our income without any change to our underlying cash
flows.
Some of our employees are members of collective bargaining groups, and we might be subject to labor actions that would
interrupt our business.
Some of our employees, primarily outside the U.S., are members of collective bargaining groups. We believe that our relations
with employees are generally good. However, if there were a dispute with one of these bargaining groups, the affected
operations could be interrupted, resulting in lost revenues, lost profit contribution, and customer dissatisfaction.
Item 1B. Unresolved Staff Comments
None.
17
Item 2. Properties
i
Belden owns and leases manufacturing, warehousing, sales, and administrative space in locations around the world. We also
2037
.
have a corporate office that we lease in St. Louis, Missouri. The leases are of varying terms, expiring from 2023 through
The table below summarizes the geographic locations of our manufacturing and other operating facilities utilized by our
The table below summarizes the geographic locations of our manufacturing and other operating facilities utilized by our
gsegments as of
December 31, 2022.
b
Belgium
Canada
China
Czech Republic
Denmark
Germany
Hungary
India
Italy
Mexico
Netherlands
Tunisia
United Kingdom
United States
Total
Enterprise
Solutions
Industrial
Solutions
Both
Segments
Total
—
—
1
—
2
1
—
—
—
—
—
1
1
4
10
1
1
—
1
—
1
—
—
—
—
—
—
—
3
7
—
—
1
—
—
—
1
1
1
2
1
—
—
2
9
1
1
2
1
2
2
1
1
1
2
1
1
1
9
26
In addition to the manufacturing and other operating facilities summarized above, our business operations also utilize
In addition to the manufacturing and other operating facilities summarized above, our business operations also utilize
approximately 9 warehouses worldwide. As of
, we owned or leased a total of approximately 6 million
December 31, 2022, we owned or leased a total of approximately 6 million
approximately 9 warehouses worldwide. As of
square feet of facility space worldwide. We believe that our production facilities are suitable for their present and intended
square feet of facility space worldwide. We believe that our production facilities are suitable for their present and intended
purposes and adequate for our current level of operations.
purposes and adequate for our current level of operations.
b
Item 3. Legal Proceedings
We are a party to various legal proceedings and administrative actions that are incidental to our operations. In our opinion, the
proceedings and actions in which we are involved should not, individually or in the aggregate, have a material adverse effect on
our financial condition, operating results, or cash flows. However, since the trends and outcome of this litigation are inherently
uncertain, we cannot give absolute assurance regarding the future resolution of such litigation, or that such litigation may not
become material in the future.
Item 4. Mine Safety Disclosures
Not applicable.
18
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities
Our common stock is traded on the New York Stock Exchange under the symbol “BDC.” As of
Our common stock is traded on the New York Stock Exchange under the symbol “BDC.” As of February 17, 2023
216 recor
216 record holders of common stock of Belden Inc.
February 17, 2023 h, there were
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
security laws and other regulations. This program is funded with cash on hand and cash flows from operating activities. The
From inception
i
program does not have an expiration date and may be suspended at any time at the discretion of the Company.
of our program, we have repurchased 4.5 million shares of our common stock for an aggregate cost of $235.0 million and an
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. During 2022, we repurchased 2.6 million shares of our common stock for an aggregate cost of $150.0
average price of $52.75. 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. As of December 31, 2022, we had $65.0 million of authorizations remaining
million at an average price per share of $57.95. As of Dec
under the program. Set forth below is information regarding our stock repurchases for the three months ended December 31,
2022 (in thousands, except per share amounts).
i
Period
Balance at October 3, 2022
October 3, 2022 through November 6, 2022
217
$
62.85
November 7, 2022 through December 4, 2022
December 5, 2022 through December 31, 2022
Total
—
—
—
—
217
$
62.85
Stock Performance Graph
Total
Number
of Shares
Purchased
Average
Price
Paid per
Share
Total Number of shares
Repurchased as Part of
Publicly Announced
Plans or Programs
Approximate Dollar
Value of Shares that May
Yet be Purchased Under
the Plans or Programs
$
217
—
—
217
$
78,664
65,000
65,000
65,000
65,000
The following graph compares the cumulative total shareholder return on Belden’s common stock over the five-year period
ended December 31, 2022, with the cumulative total return during such period of the Standard and Poor’s 500 Stock Index and
the Standard and Poor’s 1500 Industrials Index. The comparison assumes $100 was invested on December 31, 2017, in
Belden’s common stock and in each of the foregoing indices and assumes reinvestment of dividends. The stock performance
shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price
performance.
19
(1) The chart above and the accompanying data are “furnished,” not “filed,” with the SEC.
Total Return To Shareholders
(Includes reinvestment of dividends)
Company Name / Index
p y
Belden Inc.
S&P 500 Index
S&P 1500 Industrials Index
2018
(45.7)%
(4.4)%
(13.4)%
ANNUAL RETURN PERCENTAGE
Years Ended December 31,
2020
2019
2021
32.1 %32.1 %
31.5 %
29.8 %
(23.4)%
18.4 %
11.7 %
11.7 %
57.5 %
28.7 %
22.2 %
22.2 %
INDEXED RETURNS
Years Ended December 31,
2022
9.7 %
(18.1)%
(6.4)%
Company Name / Index
p y
Belden Inc.
S&P 500 Index
S&P 1500 Industrials Index
Base Period
2017
$
100.00
$
100.00
100.00
2018
2019
2020
2021
2022
54.30
95.62
86.82
$
71.76
$
54.97
$
86.56
$
94.99
125.72
112.43
148.85
125.58
191.58
153.43
156.88
143.57
Item 6. Selected Financial Data
Not applicable.
20
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Belden is a leading global supplier of network infrastructure solutions that makes the digital journey simpler, smarter and
secure. 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,
innovation and
positioned to provide comprehensive solutions that drive customer outcomes, focused on new product
technology leadership, and committed to sustainable ESG practices.
Our current business goals are to:
•
•
•
•
•
Drive organic revenue growth in excess of GDP;
Deliver incremental Adjusted EBITDA margins of approximately 30%;
Generate free cash flows of approximately $1 billion cumulatively from 2022 through 2025;
Execute a disciplined capital allocation strategy while maintaining net leverage of approximately 1.5x; and
Drive Adjusted EPS to $8.00 by 2025.
Significant Trends and Events in 2022
The following trends and events during 2022 had varying effects on our financial condition, results of operations, and cash
flows.
Pandemic
In 2020, the World Health Organization (WHO) declared the outbreak of the novel coronavirus (COVID-19) a pandemic. Since
the beginning of the pandemic, our foremost focus has been on the health and safety of our employees and customers. In
response to the outbreak, to protect the health and safety of our employees, we modified practices at our manufacturing
locations and offices to adhere to guidance from the WHO, the U.S. Centers for Disease Control and Prevention and other local
health and governmental authorities with respect to social distancing, physical separation, personal protective equipment and
sanitization. In light of variant mutations of the virus, even as vaccinations become more prevalent and more employees return
to our offices, many of these safeguards will continue.
Our suppliers, distributors, and other partners have similarly had their operations disrupted, and in regions of the world where
infection rates have remained high, human suffering and market disruptions have persisted. We will continue to actively
monitor the situation and may take further actions that alter our business operations as may be required by local or foreign
governmental authorities, or that we determine are in the best interests of our employees and customers.
Foreign currency
Our exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the euro,
Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee, and Swiss
franc. Generally, as the U.S. dollar strengthens against these foreign currencies, our revenues and earnings are negatively
impacted as our foreign denominated revenues and earnings are translated into U.S. dollars at a lower rate. Conversely, as the
U.S. dollar weakens against foreign currencies, our revenues and earnings are positively impacted. Because all of our senior
subordinated notes are denominated in euros, interest expense on the notes is affected by exchange rate movements between the
U.S. dollar and the euro.
In addition to the translation impact described above, currency rate fluctuations have an economic impact on our financial
results. As the U.S. dollar strengthens or weakens against foreign currencies, it results in a relative price increase or decrease for
certain of our products that are priced in U.S. dollars in a foreign location.
Inflation
During periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings
could decline. Furthermore, inflation may impact labor, energy, and other costs. We are mindful of ongoing inflationary
pressures and as a result, proactively implement selling price increases and cost control measures.
21
Commodity Prices
Our operating results can be affected by changes in prices of commodities, primarily copper and compounds, which are
components in some of the products we sell. Generally, as the costs of inventory purchases increase due to higher commodity
prices, we raise selling prices to customers to cover the increase in costs, resulting in higher sales revenue but a lower gross
profit percentage. Conversely, a decrease in commodity prices would result in lower sales revenue but a higher gross profit
percentage. Selling prices of our products are affected by many factors, including end market demand, capacity utilization,
overall economic conditions, and commodity prices. Importantly, however, there is no exact measure of the effect of changing
commodity prices, as there are thousands of transactions in any given quarter, each of which has various factors involved in the
individual pricing decisions. Therefore, all references to the effect of copper prices or other commodity prices are estimates.
Channel Inventory
Our operating results also can be affected by the levels of Belden products purchased and held as inventory by our channel
partners and customers. Our channel partners and customers purchase and hold our products in their inventory in order to meet
the service and on-time delivery requirements of their customers. Generally, as our channel partners and customers change the
level of Belden products owned and held in their inventory, it impacts our revenues. Comparisons of our results between
periods can be impacted by changes in the levels of channel inventory. We are dependent upon our channel partners to provide
us with information regarding the amount of our products that they own and hold in their inventory. As such, all references to
the effect of channel inventory changes are estimates.
Market Growth and Market Share
The markets in which we operate can generally be characterized as highly competitive and highly fragmented, with many
players. Based on available data for our served markets, we estimate that our market share across our segments is significant,
ranging from approximately 5% – 15%. A substantial acquisition in one of our served markets would be necessary to
meaningfully change our estimated market share percentage. We monitor available data regarding market growth, including
independent market research reports, publicly available indices, and the financial results of our direct and indirect peer
companies, in order to estimate the extent to which our served markets grew or contracted during a particular period. We
generally expect that our unit sales volume will increase or decrease consistently with the market growth rate. Our strategic goal
is to utilize our Market Delivery System to target faster growing geographies, applications, and trends within our end markets,
in order to achieve growth that is higher than the general market growth rate. To the extent that we exceed the market growth
rates, we consider it to be the result of capturing market share.
Tripwire Divestiture
During 2022, we sold Tripwire for gross cash consideration of $350 million and recognized a loss on disposal of discontinued
operations, net of tax of $9.2 million. See Note 5.
Debt Repurchase
During 2022, we repurchased all of the €200.0 million aggregate principal amount of 4.125% senior subordinated notes
previously due 2026. We recognized a $6.4 million loss on debt extinguishment for the premiums paid to the bond holders to
retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off. See
Note 16.
Acquisitions
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
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. See Note 4.
22
Share Repurchase Program
During 2022, we repurchased 2.6 million shares of our common stock under the share repurchase program for an aggregate cost
of $150.0 million at an average price per share of $57.95. See Note 22.
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. See Note 11.
Equity Method Investment
During 2022, we invested $20.0 million in Litmus for a noncontrolling ownership interest. Litmus provides critical data
connectivity needed to monitor, visualize, analyze, and integrate industrial data. We account for this investment using the equity
method of accounting. See Note 2.
23
Results of Operations
Consolidated Income from Continuing Operations before Taxes
g p
Years Ended December 31,
2021
2020
2022
Percentage Change
2022 vs. 2021
2021 vs. 2020
(In thousands, except percentages)
$ 2,606,485
$ 2,301,260
$ 1,752,192
Revenues
Gross profit
Selling, general and administrative expenses
Research and development expenses
Amortization of intangibles
Asset impairments
Gain on sale of asset
Operating income
Interest expense, net
Non-operating pension benefit (cost)
Gain on sale of note receivable
Loss on debt extinguishment
Income from continuing operations before
taxes
916,289
448,636
104,350
37,860
—
37,891
363,334
43,554
4,005
—
6,392
771,843
378,027
90,227
30,630
9,283
—
263,676
62,693
4,476
27,036
5,715
575,622
323,447
73,020
29,041
—
—
150,114
58,903
13.3 %
18.7 %
18.7 %
15.7 %
23.6 %
100.0 %
n/a
37.8 %
(30.5)%
31.3 %
34.1 %
16.9 %
23.6 %
5.5 %
n/a
n/a
75.7 %
6.4 %
(395)
10.5 %
(1,233.2)%
—
—
100.0 %
(11.8)%
n/a
n/a
317,393
226,780
90,816
40.0 %
149.7 %
2022 Compared to 2021
Revenues increased $305.2 million from 2021 to 2022 due to the following factors:
Revenues increased $305.2 million from 2021 to 2022 due to the following factors:
d
•
•
•
•
Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G
Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G
products resulted in a $365.0 million increase in revenues.
products resulted in a $365.0 million increase in revenues.
Acquisitions, net of disposals contributed an estimated $19.3 million in revenues.
d
i i i
f di
d $
illi
ib
l
i
i
Currency translation had a $65.3 million unfavorable impact on revenues.
Currency translation had a $65.3 million unfavorable impact on revenues.
Copper prices had a $13.8 million unfavorable impact on revenues.
h d $
illi
bl
f
i
i
Gross profit increased $144.4 million from 2021 to 2022 due to the increases in revenues discussed above. Accordingly, gross
Gross profit increased $144.4 million from 2021 to 2022 due to the increases in revenues discussed above. Accordingly, gross
profit margins expanded nearly 200 basis points year over year.
profit margins expanded nearly 200 basis points year over year.
Selling, general and administrative expenses increased $70.6 million from 2021 to 2022. The increase in selling, general and
Selling, general and administrative expenses increased $70.6 million from 2021 to 2022. The increase in selling, general and
administrative expenses is primarily attributable to strategic investments to enhance our solution selling capabilities, expenses
administrative expenses is primarily attributable to strategic investments to enhance our solution selling capabilities, expenses
from our acquired businesses and costs associated with lease guarantees as discussed in Note 12.
from our acquired businesses and costs associated with lease guarantees as discussed in Note 12.
Research and development expenses increased $14.1 million from 2021 to 2022 primarily due to increased investments as we
Research and development expenses increased $14.1 million from 2021 to 2022 primarily due to increased investments as we
further strengthen our product offering and continue our commitment to growth initiatives.
further strengthen our product offering and continue our commitment to growth initiatives.
Amortization of intangibles increased $7.2 million from 2021 to 2022 primarily due to acquisitions. See Note 4.
Amortization of intangibles increased $7.2 million from 2021 to 2022 primarily due to acquisitions. See Note 4.
Asset impairments decreased $9.3 million from 2021 to 2022 as a result of the following impairment charges during 2021:
Asset impairments decreased $9.3 million from 2021 to 2022 as a result of the following impairment charges during 2021:
$3.6 million to write down certain held and used long-lived assets in our Industrial Automation Solutions segment to fair value,
$3.6 million to write down certain held and used long-lived assets in our Industrial Automation Solutions segment to fair value,
$3.4 million for our former oil and gas business in Brazil sold during 2021, and a $2.3 million charge to write down certain real
$3.4 million for our former oil and gas business in Brazil sold during 2021, and a $2.3 million charge to write down certain real
estate in Germany to its fair value and sold as part of a sale and leaseback transaction during 2021. See Notes 5, 11 and 12.
estate in Germany to its fair value and sold as part of a sale and leaseback transaction during 2021. See Notes 5, 11 and 12.
Gain on sale of asset increased $37.9 million from 2021 to 2022. During 2022, we sold certain real estate in the United
States and recognized a $37.9 million pre-tax gain on sale. See Note 11.
$
Operating income increased $99.7 million from 2021 to 2022 primarily as a result of the increase in gross profit, the gain on
Operating income increased $99.7 million from 2021 to 2022 primarily as a result of the increase in gross profit, the gain on
sale of asset in 2022, and lack of asset impairment charges as compared to 2021, partially offset by the increase in selling,
sale of asset in 2022, and lack of asset impairment charges as compared to 2021, partially offset by the increase in selling,
general and administrative expenses; research and development expenses; and amortization of intangibles expense discussed
general and administrative expenses; research and development expenses; and amortization of intangibles expense discussed
babove.
24
Net interest expense decreased $19.1 million from 2021 to 2022 primarily due to the repurchase of senior subordinated notes
previously due 2026 and currency translation. See Note 16.
Gain on sale of note receivable decreased $27.0 million from 2021 to 2022 as a result of the sale of the Seller’s Note in 2021
related to the 2020 divestiture of Grass Valley. See Note 5.
Loss on debt extinguishment increased $0.7 million from 2021 to 2022. The loss on debt extinguishment in 2022 represents the
premium paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that
we were required to write-off. The loss on debt extinguishment in 2021 represents the premium paid to the bond holders to
retire the 2025 Notes and for the unamortized debt issuance costs on the 2025 Notes that we were required to write-off. See
Note 16.
Income from continuing operations before taxes increased $90.6 million from 2021 to 2022 primarily due to the increase in
operating income discussed above.
2021 Compared to 2020
Revenues increased $549.1 million from 2020 to 2021 due to the following factors:
•
•
•
•
•
Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a
$376.8 million increase in revenues.
Copper prices had a $117.2 million favorable impact on revenues.
Currency translation had a $26.7 million favorable impact on revenues.
Acquisitions contributed an estimated $37.7 million in revenues.
Divestitures had a $9.3 million unfavorable impact on revenues.
Gross profit increased $196.2 million from 2020 to 2021 due to the increases in revenues discussed above while gross profit
margins expanded 70 basis points. Excluding the impact of higher copper pass through pricing and changes in foreign currency
rates, gross profit margins increased more than 200 basis points.
Selling, general and administrative expenses increased $54.6 million from 2020 to 2021. Strategic investments to enhance our
solution selling capabilities (e.g., customer innovation centers), higher incentive compensation, and acquisitions contributed to
the increase in selling, general and administrative expenses.
Research and development expenses increased $17.2 million from 2020 to 2021 primarily due to increased investments in R&D
projects as we continue our commitment to growth initiatives.
Amortization of intangibles increased $1.6 million from 2020 to 2021 primarily due to currency translation.
Asset impairments increased $9.3 million from 2020 to 2021 as a result of impairment charges of $3.6 million to write down
certain held and used long-lived assets in our Industrial Automation Solutions segment to fair value, impairment charges of $3.4
million for our former oil and gas business in Brazil sold during 2021, and impairment charges of $2.3 million to write down
certain real estate in Neckartenzlingen, Germany sold as part of a sale and leaseback transaction during 2021 to its fair value.
See Notes 5, 11 and 12.
Operating income increase $113.6 million from 2020 to 2021 primarily due to the increase in gross profit discussed above,
partially offset by the increase in selling, general and administrative expenses; research and development expenses;
amortization of intangibles expense; and asset impairments.
Net interest expense increased $3.8 million from 2020 to 2021 primarily due to currency translation.
Gain on sale of note receivable increased $27.0 million from 2020 to 2021 as a result of the sale of the Seller’s Note in 2021
related to the 2020 divestiture of Grass Valley. See Note 5.
Loss on debt extinguishment increased $5.7 million from 2020 to 2021 due to the debt refinancing that took place during 2021.
The $5.7 million loss on debt extinguishment represents the premium paid to the bond holders to retire the 2025 Notes and for
the unamortized debt issuance costs on the 2025 Notes that we were required to write-off. See Note 16.
25
Income from continuing operations before taxes increased $136.0 million from 2020 to 2021 primarily due to the increase in
Income from continuing operations before taxes increased $136.0 million from 2020 to 2021 primarily due to the increase in
operating income discussed above.
operating income discussed above.
Income Taxes
2022
Year Ended December 31,
2021
2020
(In thousands, except percentages)
Percentage Change
2022 vs. 2021
2021 vs. 2020
Income from continuing operations before taxes
$ 317,393
$ 226,780
$ 90,816
Income tax expense
Effective tax rate
2022
(49,645)
(27,939)
(20,098)
15.6%
12.3%
22.1 %
40.0 %
77.7 %
149.7 %
39.0 %
We recognized income tax expense of $49.6 million in 2022, representing an effective tax rate of 15.6%. The effective tax rate
was primarily impacted by foreign tax rate differences, and domestic permanent differences and tax credits primarily associated
with our foreign income inclusions. See Note 18.
2021
We recognized income tax expense of $27.9 million in 2021, representing an effective tax rate of 12.3%. The effective tax rate
was primarily impacted by a change in the deferred tax asset valuation allowance 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.
2020
We recognized income tax expense of $20.1 million in 2020, representing an effective tax rate of 22.1%. The effective tax rate
was impacted by foreign tax rate differences, and domestic permanent differences and tax credits primarily associated with our
foreign income inclusions.
Our income tax expense and effective tax rate in future periods may be impacted by many factors, including our geographic
mix of income and changes in tax laws.
j
Consolidated Adjusted EBITDA
GAAP and Adjusted Revenues
GAAP income from continuing operations
Income tax expense
Depreciation expense
Interest expense, net
Amortization of intangibles
Loss on debt extinguishment
Severance, restructuring, and acquisition integration costs (1)
Adjustments related to acquisitions and divestitures (2)
Amortization of software development intangible assets
Non-operating pension settlement loss
Asset impairments(3)
Gain on sale of asset(4)
Gain on note receivable(5)
Adjusted EBITDA
GAAP income from continuing operations margin
Adjusted EBITDA margin
26
2022
2021
(In thousands, except percentages)
$2,301,260
2020
$1,752,192
$2,606,485
$ 267,748
49,645
46,669
43,554
37,860
6,392
16,685
7,833
3,875
1,189
—
(37,891)
—
$ 443,559
$ 198,841
27,939
43,073
62,693
30,630
5,715
23,867
(5,035)
1,579
—
9,283
—
(27,036)
$ 371,549
$
70,718
20,098
39,413
58,903
29,041
—
11,555
125
872
3,153
—
—
—
$ 233,878
10.3 %
17.0 %
8.6 %
16.1 %
4.0 %
13.3 %
(1)
(2)
(2)
( )(3)
(4)
(4)
(5)
(5)
See Note 15, Severance, Restructuring, and Acquisiti
on Integration Activities,
g
for details.
d
il
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
of receivables associated with the sale of Grass
ll
receivables associated with the sale of Grass Valley.
$5.8 million, recognized cost
, recognized cost
Valley and acquisition of SPC that were previously written off, reduced the Opterna earn-out liability by
Valley and acquisition of SPC that were previously written off, reduced the Opterna earn-out liability by $
f
loss on the sale of
f
h
related to adjustments of acquired inventory to fair value, and recognized a $
illi
of sales of $
l
of cost of sales related to adjustments of acquired inventory to fair value.
$0.1 million of cost of sales related to adjustments of acquired inventory to fair value.
tangible assets. In 2020, we recognized $
tangible assets. In 2020, we recognized
$2.3 million related to adjustments of acquired inventory to fair value, and recognized a
In 2021, we collected $
$2.2 million f
illi
$0.6 million l
d i h h
i bl
illi
illi
illi
d
f
f
l
l
i
In 2021, we recognized a $
In 2021, we recognized a
Note 11, Property, Plant, and Equipment, for details.
$3.6 million i
illi
i
impairment on assets held and used and a $
h ld
d
$5.7 million impairment on assets held for sale. See
impairment on assets held for sale
illi
d
d
In 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.
In 2021, we
lsale of $
DDisposals.
$27.0 million. See Note 5, Disposals
illi
sold the seller's note associated with the Grass Valley disposal to a third party for $
sold the seller's note associated with the Grass Valley disposal to a third party for
and recognized a gain on
$62.0 million and recognized a gain on
illi
Use of Non-GAAP Financial Information
Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow are non-GAAP financial measures. In
addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we
provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated depreciation expense
due to plant consolidation activities; fair value adjustments and transaction costs related to acquisitions; severance,
restructuring, and acquisition integration costs; gains (losses) recognized on the disposal of businesses and tangible assets;
amortization of intangible assets; gains (losses) on debt extinguishment; certain revenues and gains (losses) from patent
settlements; discontinued operations; and other costs. We adjust for the items listed above in all periods presented, unless the
impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all
current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.
We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to
budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to
previous periods and provide important insights into underlying trends in the business and how management oversees our
business operations on a day-to-day basis. As an example, we adjust for acquisition-related expenses, such as amortization of
intangibles and impacts of fair value adjustments because they generally are not related to the acquired businesses' core
business performance. As an additional example, we exclude the costs of restructuring programs, which can occur from time to
time for our current businesses and/or recently acquired businesses. We exclude the costs in calculating adjusted results to allow
us and investors to evaluate the performance of the business based upon its expected ongoing operating structure. We believe
the adjusted measures, accompanied by the disclosure of the costs of these programs, provides valuable insight. Adjusted
results should be considered only in conjunction with results reported according to accounting principles generally accepted in
the United States.
GAAP and Adjusted Revenues
Adjusted EBITDA
Year Ended December 31,
2021
2020
(In thousands, except percentages)
$1,752,192
233,878
$2,301,260
$2,301,260
371,549
13.3 %
19.4 %
2022 vs. 2021
2022
$2,606,485
443,559
2021 vs. 2020
31.3 %
58.9 %
Percentage Change
as a percent of adjusted revenues
17.0 %
16.1 %
13.3 %
2022 Compared to 2021
Revenues increased $305.2 million from 2021 to 2022 due to the following factors:
Revenues increased $305.2 million from 2021 to 2022 due to the following factors:
d
•
•
•
•
Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G
Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G
products resulted in a $365.0 million increase in revenues.
products resulted in a $365.0 million increase in revenues.
Acquisitions, net of disposals contributed an estimated $19.3 million in revenues.
d
i i i
f di
d $
illi
ib
l
i
i
Currency translation had a $65.3 million unfavorable impact on revenues.
Currency translation had a $65.3 million unfavorable impact on revenues.
Copper prices had a $13.8 million unfavorable impact on revenues.
h d $
illi
bl
f
i
i
Adjusted EBITDA increased $72.0 million in 2022 from 2021 primarily due to the leverage on higher sales volume, as
Adjusted EBITDA increased $72.0 million in 2022 from 2021 primarily due to the leverage on higher sales volume, as
discussed above. Accordingly, adjusted EBITDA margins expanded to 17.0% from 16.1% in the year ago period.
discussed above. Accordingly, adjusted EBITDA margins expanded to 17.0% from 16.1% in the year ago period.
27
2021 Compared to 2020
Revenues increased $549.1 million from 2020 to 2021 due to the following factors:
Revenues increased $549.1 million from 2020 to 2021 due to the following factors:
d
•
•
•
•
•
Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a
Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a
$376.8 million increase in revenues.
$
illi
i
i
Copper prices had a $117.2 million favorable impact on revenues.
h d $
illi
bl
f
i
i
Currency translation had a $26.7 million favorable impact on revenues.
Currency translation had a $26.7 million favorable impact on revenues.
Acquisitions contributed an estimated $37.7 million in revenues.
i
i i i
d $
illi
ib
d
i
Divestitures had a $9.3 million unfavorable impact on revenues.
h d $
illi
bl
f
i
i
i
Adjusted EBITDA increased $137.7 million in 2021 from 2020 primarily due to the leverage on higher sales volume, as
Adjusted EBITDA increased $137.7 million in 2021 from 2020 primarily due to the leverage on higher sales volume, as
discussed above. Accordingly, Adjusted EBITDA margins expanded to 16.1% from 13.3% in the year ago period.
discussed above. Accordingly, Adjusted EBITDA margins expanded to 16.1% from 13.3% in the year ago period.
Segment Results of Operations
g
p
For additional information regarding our segment measures, see Note 6 to the Consolidated Financial Statements.
Enterprise Solutions
p
Segment Revenues
Segment EBITDA
Year Ended December 31,
2021
2020
(In thousands, except percentages)
$ 872,417
99,333
$1,074,426
$1,074,426
144,509
11.5 %
11.8 %
2022 vs. 2021
2022
$1,198,478
161,517
2021 vs. 2020
23.2 %
45.5 %
Percentage Change
as a percent of segment revenues
13.5 %
13.4 %
11.4 %
2022 Compared to 2021
d
Enterprise revenues increased $124.1 million in 2022 as compared to 2021. The increase in revenues was primarily due to
Enterprise revenues increased $124.1 million in 2022 as compared to 2021. The increase in revenues was primarily due to
increases in volume and favorable pricing of $135.0 million and acquisitions of $5.4 million, partially offset by unfavorable
increases in volume and favorable pricing of $135.0 million and acquisitions of $5.4 million, partially offset by unfavorable
currency translation and lower copper pass-through pricing of $13.3 million and $3.0 million, respectively.
currency translation and lower copper pass-through pricing of $13.3 million and $3.0 million, respectively.
Enterprise EBITDA increased $17.0 million in 2022 as compared to 2021 primarily due to the increase in revenues discussed
Enterprise EBITDA increased $17.0 million in 2022 as compared to 2021 primarily due to the increase in revenues discussed
above. Accordingly, Adjusted EBITDA margins expanded to 13.5% from 13.4% in the year ago period.
above. Accordingly, Adjusted EBITDA margins expanded to 13.5% from 13.4% in the year ago period.
2021 Compared to 2020
d
Enterprise revenues increased $202.0 million in 2021 as compared to 2020. Increases in volume, higher copper prices, and
Enterprise revenues increased $202.0 million in 2021 as compared to 2020. Increases in volume, higher copper prices, and
favorable currency translation contributed $143.6 million, $50.4 million, and $8.0 million, respectively, to the increase in
favorable currency translation contributed $143.6 million, $50.4 million, and $8.0 million, respectively, to the increase in
revenues year over year.
y
y
Enterprise EBITDA increased $45.2 million in 2021 as compared to 2020 primarily due to the leverage on higher sales volume,
Enterprise EBITDA increased $45.2 million in 2021 as compared to 2020 primarily due to the leverage on higher sales volume,
as discussed above. Accordingly, Adjusted EBITDA margins expanded to 13.4% from 11.4% in the year ago period.
as discussed above. Accordingly, Adjusted EBITDA margins expanded to 13.4% from 11.4% in the year ago period.
Industrial Automation Solutions
Segment Revenues
Segment EBITDA
Year Ended December 31,
2021
2020
(In thousands, except percentages)
$ 879,775
132,302
$1,226,834
$1,226,834
222,684
14.8 %
24.4 %
2022 vs. 2021
2022
$1,408,007
277,079
2021 vs. 2020
39.4 %
68.3 %
Percentage Change
as a percent of segment revenues
19.7 %
18.2 %
15.0 %
2022 Compared to 2021
d
Industrial Automation revenues increased $181.2 million in 2022 as compared to 2021 primarily due to increases in volume and
Industrial Automation revenues increased $181.2 million in 2022 as compared to 2021 primarily due to increases in volume and
favorable pricing of $230.1 million and acquisitions, net of disposals of $13.9 million, partially offset by unfavorable currency
favorable pricing of $230.1 million and acquisitions, net of disposals of $13.9 million, partially offset by unfavorable currency
translation and lower copper pass-through pricing of $52.0 million and $10.8 million, respectively.
translation and lower copper pass-through pricing of $52.0 million and $10.8 million, respectively.
28
Industrial Automation EBITDA increased $54.4 million in 2022 as compared to 2021 primarily as a result of the increase in
Industrial Automation EBITDA increased $54.4 million in 2022 as compared to 2021 primarily as a result of the increase in
revenues discussed above. Accordingly, Adjusted EBITDA margins expanded to 19.7% from 18.2% in the year ago period.
revenues discussed above. Accordingly, Adjusted EBITDA margins expanded to 19.7% from 18.2% in the year ago period.
2021 Compared to 2020
d
Industrial Automation revenues increased $347.1 million in 2021 as compared to 2020 primarily due to increases in volume;
Industrial Automation revenues increased $347.1 million in 2021 as compared to 2020 primarily due to increases in volume;
higher copper prices; acquisitions, net of disposals; and favorable currency translation of $233.2 million, $66.8 million, $28.4
higher copper prices; acquisitions, net of disposals; and favorable currency translation of $233.2 million, $66.8 million, $28.4
million, and $18.7 million, respectively.
million, and $18.7 million, respectively.
Industrial Automation EBITDA increased $90.4 million in 2021 as compared to 2020 primarily as a result of the increase in
Industrial Automation EBITDA increased $90.4 million in 2021 as compared to 2020 primarily as a result of the increase in
revenues discussed above. Accordingly, Adjusted EBITDA margins expanded to 18.2% from 15.0% in the year ago period.
revenues discussed above. Accordingly, Adjusted EBITDA margins expanded to 18.2% from 15.0% in the year ago period.
Liquidity and Capital Resources
Significant factors affecting our cash liquidity include (1) cash provided by operating activities, (2) disposals of businesses and
tangible assets, (3) cash used for acquisitions, restructuring actions, capital expenditures, share repurchases, dividends, and
senior subordinated note repurchases, and (4) our available credit facilities and other borrowing arrangements. We expect our
operating activities to generate cash in 2023 and believe our sources of liquidity are sufficient to fund current working capital
requirements, capital expenditures, contributions to our retirement plans, share repurchases, senior subordinated note
repurchases, quarterly dividend payments, and our short-term operating strategies. However, we may require external financing
were we to complete a significant acquisition. Our ability to continue to fund our future needs from business operations could
be affected by many factors, including, but not limited to: economic conditions worldwide, customer demand, competitive
market forces, customer acceptance of our product offerings, and commodities pricing.
The following table is derived from our Consolidated Cash Flow Statements and includes the results and cash flow activity of
discontinued operations up to the February 22, 2022 disposal date consistent with the Consolidated Cash Flow Statements:
Net cash provided by (used for):
Operating activities
Investing activities
Financing activities
Effects of currency exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Years Ended December 31,
2022
2021
(In thousands)
$
$
281,296
168,411
(393,214)
(12,574)
43,919
643,757
687,676
$
$
272,055
(92,003)
(32,926)
(5,363)
141,763
501,994
643,757
. The increase is
i
Net cash provided by operating activities totaled $
Net cash provided by operating activities totaled
primarily due to higher net income and favorable changes in inventory. Inventory was a source of cash of $5.6 million
primarily due to higher net income and favorable changes in inventory. Inventory was a source of cash of $5.6 million
compared to a use of cash of $93.0 million in the prior year. The use of cash for inventory in the prior year was due to
compared to a use of cash of $93.0 million in the prior year. The use of cash for inventory in the prior year was due to
investments in inventory to satisfy the increasing demand.
investments in inventory to satisfy the increasing demand.
$281.3 million for 2022
illi
$272.1 million for 2021
illi
compared to $
h i
d
$168.4 million for 2022
illi
Net cash provided by investing activities totaled
$92.0 million for 2021.
Net cash provided by investing activities totaled $
Investing activities for 2022 included proceeds of $334.6 million and $43.5 million from the sale of the Tripwire disposal group
Investing activities for 2022 included proceeds of $334.6 million and $43.5 million from the sale of the Tripwire disposal group
and tangible property, respectively, as well as $105.1 million for capital expenditures and $104.6 million for the investment in
and tangible property, respectively, as well as $105.1 million for capital expenditures and $104.6 million for the investment in
Litmus and acquisitions of Macmon, NetModule and CAI. Investing activities for 2021 included capital expenditures of $91.0
Litmus and acquisitions of Macmon, NetModule and CAI. Investing activities for 2021 included capital expenditures of $91.0
million, payments primarily for the acquisition of OTN Systems of $73.3 million, purchases of intangible assets of $3.6 million,
million, payments primarily for the acquisition of OTN Systems of $73.3 million, purchases of intangible assets of $3.6 million,
cash receipts for the carrying value of the seller's note and sale of the oil and gas cable business in Brazil of $45.7 million, and
cash receipts for the carrying value of the seller's note and sale of the oil and gas cable business in Brazil of $45.7 million, and
cash receipts for the sale of real estate in Germany of $30.2 million.
cash receipts for the sale of real estate in Germany of $30.2 million.
compared to a use of cash of $
h f
illi
d
f
29
Net cash flows used for financing activities totaled $393.2 million for 2022 compared to $32.9 million for 2021. Financing
activities for 2022 included repayments of debt obligations of $230.6 million, payments under our share repurchase program of
$150.0 million, cash dividend payments of $8.9 million, net payments related to share based compensation activities of $7.2
million, financing lease payments of $0.2 million, and proceeds from the issuance of common stock of $3.7 million. Financing
activities for 2021 included repayments of debt obligations of $360.3 million, cash dividend payments of $9.0 million, debt
issuance costs of $8.2 million, net payments related to share based compensation activities of $5.6 million, financing lease
payments of $3.1 million, payments to noncontrolling interests of $2.7 million, and borrowings under credit arrangements of
$356.0 million. During 2021, we completed an offering for €300.0 million aggregate principal amount of 3.375% senior
subordinated notes due 2031, repurchased the €300.0 million 2025 Notes, and refinanced the Revolver - see Note 16.
Our cash and cash equivalents balance was $687.7 million as of December 31, 2022. Of this amount, $198.9 million was held
outside of the U.S. in our foreign operations. Substantially all of the foreign cash and cash equivalents are readily convertible
into U.S. dollars or other foreign currencies. Our strategic plan does not require the repatriation of foreign cash in order to fund
our operations in the U.S., and it is our current intention to permanently reinvest the foreign cash and cash equivalents outside
of the U.S. If we were to repatriate the foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance
with applicable U.S. tax rules and regulations as a result of the repatriation. See Note 18, Income Taxes in the accompanying
notes to our consolidated financial statements.
Our outstanding debt obligations as of December 31, 2022 consisted of $1.2 billion of senior subordinated notes. As of
December 31, 2022, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $291.1
million. Additional discussion regarding our various borrowing arrangements is included in Note 16 to the Consolidated
Financial Statements.
At December 31, 2022, the following contractual obligations and commercial commitments were outstanding:
a. Principal payments on long-term debt of $1.2 billion, none of which is due in 2023 (see Note 16). Depending on the
conditions in the credit markets, we may refinance this debt, or we may use cash from operations, including
temporarily accessing our Revolving Credit Agreement, to repay this debt.
b.
Interest payments on long-term debt of $309.1 million, of which $44.2 million is due in 2023.
c. Operating lease obligations of $77.2 million, of which $15.5 million is due in 2023 (see Note 12).
d. Pension and other postemployment obligations of $84.3 million, of which $9.6 million is due in 2023 (see Note 19).
e. Obligations to purchase goods or services that are enforceable and legally binding of $26.7 million. All of these
obligations are due in 2023.
f.
Standby financial letters of credit, bank guarantees, and surety bonds totaling $17.3 million, of which $15.3 million are
scheduled to expire or mature in 2023. These commitments are generally issued to secure obligations we have for a
variety of commercial reasons such as workers compensation self-insurance programs in several states and the
importation and exportation of product. We expect to replace most of these when they expire or mature.
g. Obligations for uncertain tax positions of $6.2 million, none of which is due in 2023 (see Note 18).
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, results of operations, or cash flows that are or would be considered material to investors.
Current-Year Adoption of Recent Accounting Pronouncements
Discussion regarding our adoption of accounting pronouncements is included in Note 2 to the Consolidated Financial
Statements.
30
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the U.S.
(GAAP). In connection with the preparation of our financial statements, we are required to make assumptions and estimates
about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the
related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends, and other
factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular
basis, we review the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are
presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with
certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Our significant accounting policies are discussed in Note 2 of our Consolidated Financial Statements. We believe that the
following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results,
and they require our most difficult, subjective, or complex judgments, resulting from the need to make estimates about the
effect of matters that are inherently uncertain.
Revenue Recognition
We recognize revenue consistent with the principles as outlined in the following five step model: (1) identify the contract with
the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the
transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) each performance
obligation is satisfied. See Note 3.
At the time of sale, we establish an estimated reserve for trade, promotion, and other special price reductions such as contract
pricing, discounts to meet competitor pricing, and on-time payment discounts. We also reserve for, among other things,
correction of billing errors, incorrect shipments, and settlement of customer disputes. Customers are allowed to return inventory
if and when certain conditions regarding the functionality of the inventory and our approval of the return are met. Certain
distribution customers are allowed to return inventory at original cost, in an amount not to exceed three percent of the prior
year’s purchases, in exchange for an order of equal or greater value. Until we can process these reductions, corrections, and
returns (together, the Changes) through individual customer records, we estimate the amount of outstanding Changes and
recognize them by reducing revenues. We determine our estimate based on our historical Changes as a percentage of revenues
and the average time period between the original sale and the issuance of the Changes. We adjust other current assets and cost
of sales for the estimated level of returns.
We base these estimates on historical and anticipated sales demand, trends in product pricing, and historical and anticipated
Changes patterns. We make revisions to these estimates in the period in which the facts that give rise to each revision become
known. Future market conditions and product transitions might require us to take actions to further reduce prices and increase
customer return authorizations. We do not believe there is a reasonable likelihood that there will be a material change in the
future estimates or assumptions we use to measure the Changes. However, if actual results are not consistent with our estimates
or assumptions, we may be exposed to losses or gains that could be material. A 10% change in our sales reserve for such
Changes as of December 31, 2022 would have affected net income by approximately $2.0 million in 2022.
At times, we enter into arrangements that involve the delivery of multiple promised goods or services. For these arrangements,
when the promised goods or services can be separated, the revenue is allocated to each distinct good or service based on that
performance obligation’s relative standalone selling price and recognized based upon transfer of control for each performance
obligation. Generally, we determine standalone selling price using the adjusted market assessment approach.
Revenue allocated to support services under our support contracts is typically recognized ratably over the term of the service.
Revenue allocated to distinct professional services is recognized when (or as) the performance obligation is satisfied depending
on the terms of the arrangement. When professional services are not distinct from goods, the professional services and goods
are combined into one performance obligation, and revenue allocated to that performance obligation is recognized when (or as)
the performance obligation is satisfied.
31
Income Taxes
We recognize deferred tax assets resulting from tax credit carryforwards, net operating loss carryforwards, and deductible
temporary differences between taxable income on our income tax returns and income before taxes under GAAP. Deferred tax
assets generally represent future tax benefits to be received when these carryforwards can be applied against future taxable
income or when expenses previously reported in our Consolidated Financial Statements become deductible for income tax
purposes. A deferred tax asset valuation allowance is required when some portion or all of the deferred tax assets may not be
realized. We are required to estimate taxable income in future years or develop tax strategies that would enable tax asset
realization in each taxing jurisdiction and use judgment to determine whether to record a deferred tax asset valuation allowance
for part or all of a deferred tax asset.
We consider the weight of all available evidence, both positive and negative, in assessing the realizability of the deferred tax
assets associated with net operating losses. We consider the reversals of existing taxable temporary differences as well as
projections of future taxable income. We consider the future reversals of existing taxable temporary differences to the extent
they were of the same character as the temporary differences giving rise to the deferred tax assets. We also consider whether the
future reversals of existing taxable temporary differences will occur in the same period and jurisdiction as the temporary
differences giving rise to the deferred tax assets. The assumptions utilized to estimate our future taxable income are consistent
with those assumptions utilized for purposes of testing goodwill for impairment, as well as with our budgeting and strategic
planning processes.
Significant judgment is required in evaluating our uncertain tax positions. We establish accruals for uncertain tax positions
when we believe that the full amount of the associated tax benefit may not be realized. In the future, if we prevail in matters for
which accruals have been established previously or 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.
See Note 18, Income Taxes, to the consolidated financial statements for further information regarding income taxes.
Goodwill and Indefinite-Lived Intangible Assets
We test our goodwill and other indefinite-lived intangible assets not subject to amortization for impairment on an annual basis
during the fourth quarter 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. Actual future results could differ
from these estimates.
We test goodwill annually for impairment at the reporting unit level. A reporting unit is an operating segment, or a business unit
one level below an operating segment if discrete financial information for that business is prepared and regularly reviewed by
segment management. However, components within an operating segment are aggregated as a single reporting unit if they have
similar economic characteristics. We determined that each of our reportable segments (Enterprise Solutions and Industrial
Automation Solutions) represents an operating segment. Within those operating segments, we have identified reporting units
based on whether there is discrete financial information prepared that is regularly reviewed by segment management. As a
result of this evaluation, we have identified three reporting units within Enterprise Solutions and three reporting units within
Industrial Automation Solutions for purposes of goodwill impairment testing.
The accounting guidance related to goodwill impairment testing allows for the performance of an optional qualitative
assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. 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 unit, as described in the paragraph below. In 2022, we performed a
qualitative assessment over five of our reporting units.
32
When we evaluate goodwill for impairment using a quantitative assessment, we compare the fair value of each reporting unit to
its carrying value. We determine the fair value using an income approach. Under the income approach, we calculate the fair
value of a reporting unit based on the present value of estimated future cash flows using growth rates and discount rates that are
consistent with current market conditions in our industry. If the fair value of the reporting unit exceeds the carrying value of the
net assets including goodwill assigned to that unit, goodwill is not impaired. If the carrying value of the reporting unit’s net
assets including goodwill exceeds the fair value of the reporting unit, then we record an impairment charge based on that
difference. In addition to the income approach, we calculate the fair value of our reporting units under a market approach. The
market approach measures the fair value of a reporting unit through analysis of financial multiples of comparable businesses.
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.
For our annual impairment test in 2022, we performed a quantitative assessment over one of our reporting units. The excess of
the fair value over the carrying value under the income approach was 48%. 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. Significant
assumptions included sales growth, profitability, and related cash flows, along with cash flows associated with taxes and capital
spending. The discount rate used to estimate fair value was risk adjusted in consideration of the economic conditions in effect at
the time of the impairment test. We also considered assumptions that market participants may use. In our quantitative
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 impairment charges that could be material.
We also test our indefinite-lived intangible asset, a trademark, for impairment on an annual basis during the fourth quarter. The
accounting guidance allows for the performance of an optional qualitative assessment, similar to that described above for
goodwill, but we did not perform a qualitative assessment as part of our indefinite-lived intangible asset impairment testing for
2022. Rather, we performed a quantitative assessment for our indefinite-lived trademark in 2022. Under the 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. We determined that our trademark was not impaired during 2022. Significant assumptions to determine
fair value included sales growth, royalty rates, and discount rates.
Pension and Other Postretirement Benefits
Our pension and other postretirement benefit costs and obligations are dependent on the various actuarial assumptions used in
calculating such amounts. These assumptions relate to discount rates, salary growth, long-term return on plan assets, health care
cost trend rates, mortality tables, and other factors. We base the discount rate assumptions on current investment yields on high-
quality corporate long-term bonds. The salary growth assumptions reflect our long-term actual experience and future or near-
term outlook. Long-term return on plan assets is determined based on historical portfolio results and management’s expectation
of the future economic environment. Our health care cost trend assumptions are developed based on historical cost data, the
near-term outlook, and an assessment of likely long-term trends. Our key assumptions are described in further detail in Note 18
to the Consolidated Financial Statements. Actual results that differ from our assumptions are accumulated and, if in excess of
the lesser of 10% of the projected benefit obligation or the fair market value of plan assets, amortized over the estimated future
working life of the plan participants.
As a sensitivity measure, the effect of a 50 basis point decline in the assumed discount rate would have resulted in a decrease in
the 2022 net periodic benefit cost of less than $0.1 million and an increase in the projected benefit obligations of approximately
$17.8 million as of December 31, 2022. A 50 basis point decline in the expected return on plan assets would have resulted in an
increase in the 2022 net periodic benefit cost of approximately $1.8 million.
Conversely, the effect of a 50 basis point increase in the assumed discount rate would have resulted in an increase in the 2022
net periodic benefit cost of approximately $0.6 million and a decrease in the projected benefit obligation of approximately
$16.3 million as of December 31, 2022. A 50 basis point increase in the expected return on plan assets would have resulted in a
decrease in the 2022 net periodic benefit cost of approximately $1.8 million.
33
Acquisition Accounting
We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values. The
excess of the consideration over the amount allocated to the assets and liabilities, if any, is recorded to goodwill. We use all
available information to estimate fair values. We typically engage third party valuation specialists to assist in the fair value
determination of inventories, tangible long-lived assets, and intangible assets other than goodwill. The carrying values of
acquired receivables and accounts payable have historically approximated their fair values as of the acquisition date. As
necessary, we may engage third party specialists to assist in the estimation of fair value for certain liabilities. We adjust the
preliminary acquisition accounting, as necessary, typically up to one year after the acquisition closing date as we obtain more
information regarding asset valuations and liabilities assumed.
Our acquisition accounting methodology contains uncertainties because it requires management to make assumptions and to
apply judgment to estimate the fair value of acquired assets and liabilities. Management estimates the fair value of assets and
liabilities based upon quoted market prices, the carrying value of the acquired assets and widely accepted valuation techniques,
including discounted cash flows and market multiple analyses. Unanticipated events or circumstances may occur which could
affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business
strategies.
If actual results are materially different than the assumptions we used to determine fair value of the assets and liabilities
acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will
have an impact on our net earnings. See Note 4.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risks relating to our operations result primarily from currency exchange rates, certain commodity prices, interest rates,
and credit extended to customers. Each of these risks is discussed below.
Currency Exchange Rate Risk
We are exposed to foreign currency risks that arise from normal business operations. These risks include the translation of local
currency balances of foreign subsidiaries and transactions denominated in currencies other than a location’s functional
currency.
Our investments in certain foreign subsidiaries are recorded in currencies other than the U.S. dollar. As these foreign currency
denominated investments are translated at the end of each period during consolidation using period-end exchange rates,
fluctuations of exchange rates between the foreign currency and the U.S. dollar increase or decrease the value of those
investments. These fluctuations and the results of operations for foreign subsidiaries, where the functional currency is not the
U.S. dollar, are translated into U.S. dollars using the average exchange rates during the year, while the assets and liabilities are
translated using period end exchange rates. The assets and liabilities-related translation adjustments are recorded as a separate
component of accumulated other comprehensive income (loss) in our Consolidated Balance Sheets. We generally view our
investments in international subsidiaries with functional currencies other than the U.S. dollar as long-term. As a result, we do
not generally use derivatives to manage these net investments. However, we designated euro debt issued by Belden Inc., a USD
functional currency entity, as a net investment hedge of certain international subsidiaries. See Note 16 for further discussion.
Transactions denominated in currencies other than a location’s functional currency may produce receivables or payables that
are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the
functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of
functional currency cash flows upon settlement of the transaction. That increase or decrease in expected functional currency
cash flows is a foreign exchange transaction gain or loss that is included in our operating income in the Consolidated
Statements of Operations. In 2022 and 2021, we recorded approximately $2.8 million and $1.7 million, respectively, of net
foreign currency transaction losses.
Generally, the currency in which we sell our products is the same as the currency in which we incur the costs to manufacture
our products, resulting in a natural hedge. Our currency exchange rate management strategy primarily involves the use of
natural techniques, where possible, such as the offsetting or netting of like-currency cash flows. However, we re-evaluate our
strategy as the foreign currency environment changes, and it is possible that we could utilize derivative financial instruments to
manage this risk in the future. We did not have any foreign currency derivatives outstanding as of December 31, 2022. Our
exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the euro,
Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee, and Swiss
franc.
34
y
Commodity Price Risk
Certain raw materials used by us are subject to price volatility caused by supply conditions, political and economic variables,
and other unpredictable factors. The primary purpose of our commodity price management activities is to manage the volatility
associated with purchases of commodities in the normal course of business. We do not speculate on commodity prices.
We are exposed to price risk related to our purchase of copper used in our products, although we are generally able to raise
selling prices to customers to cover the increase in copper costs. Our copper price management strategy involves the use of
natural techniques, where possible, such as purchasing copper for future delivery at fixed prices. We do not generally use
commodity price derivatives and did not have any outstanding at December 31, 2022 or 2021. The following table presents
unconditional commodity purchase obligations outstanding as of December 31, 2022. The unconditional purchase obligations
will settle during 2023.
Unconditional copper purchase obligations:
Commitment volume in pounds
Weighted average price per pound
Commitment amounts
Purchase
Amount
Fair
Value
(In thousands, except average price)
4,177
3.73
15,564
$
15,894
$
$
We are also exposed to price risk related to our purchase of selected commodities derived from petrochemical feedstocks used
in our products. We generally purchase these commodities based upon market prices established with the vendors as part of the
purchase process. Pricing of these commodities is volatile as they tend to fluctuate with the price of oil. Historically, we have
not used commodity financial instruments to hedge prices for commodities derived from petrochemical feedstocks.
Interest Rate Risk
We have occasionally managed our debt portfolio by using interest rate derivative instruments, such as swap agreements, to
achieve an overall desired position of fixed and floating rates. We were not a party to any interest rate derivative instruments as
of or for the years ended December 31, 2022 or 2021. The following table provides information about our financial instruments
that are sensitive to changes in interest rates. The following table presents principal amounts by expected maturity date and fair
value as of December 31, 2022.
€450.0 million fixed-rate senior subordinated notes due 2027
Average interest rate
€350.0 million fixed-rate senior subordinated notes due 2028
Average interest rate
€300.0 million fixed-rate senior subordinated notes due 2031
$
$
$
Average interest rate
Total
Concentrations of Credit Risk
Principal Amount by Expected Maturity
Total
Thereafter
2023
Fair
Value
(In thousands, except interest rates)
$ 480,330
— $ 480,330
3.375 %
— $ 373,590
3.875 %
—
320,220
3.375 %
$
$
$
$
480,330
480,330
373,590
320,220
$
$
$
438,301
341,368
266,583
$ 1,174,140
$ 1,046,252
Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and cash equivalents
and accounts receivable. We are exposed to credit losses in the event of nonperformance by counterparties to these financial
instruments. We place cash and cash equivalents with various high-quality financial institutions throughout the world, and
sh equivalents with various high-quality financial institutions throughout the world, and
exposure is limited at any one financial institution. Although we do not obtain collateral or other security to support these
exposure is limited at any one financial institution. Although we do not obtain collateral or other security to support these
financial instruments, we evaluate the credit standing of the counterparty financial institutions. As of
December 31, 2022, we
financial instruments, we evaluate the credit standing of the counterparty financial institutions. As of
had $28.8 million in accounts receivable outstanding from our largest customer. This represented approximately 7% of our total
had $28.8 million in accounts receivable outstanding from our largest customer. This represented approximately 7% of our total
accounts receivable outstanding at
. Outstanding receivables are generally paid within thirty to sixty days of
December 31, 2022. Outstanding receivables are generally paid within thirty to sixty days of
accounts receivable outstanding at
invoice receipt.
i
b
b
i
i
35
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Belden Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Belden Inc. (the Company) as of December 31, 2022 and
2021, and the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed
in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and
2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 24, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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.
36
Description of
the Matter
Revenue recognition - estimating variable consideration
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, 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.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1993.
St. Louis, Missouri
February 24, 2023
37
Belden Inc.
Consolidated Balance Sheets
ASSETS
Current assets:
Cash and cash equivalents
Receivables, net
Inventories, net
Other current assets
Assets of discontinued operations
Total current assets
Property, plant and equipment, less accumulated depreciation
Operating lease right-of-use assets
Goodwill
Intangible assets, less accumulated amortization
Deferred income taxes
Other long-lived assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued liabilities
Liabilities of discontinued operations
Total current liabilities
Long-term debt
Postretirement benefits
Deferred income taxes
Long-term operating lease liabilities
Other long-term liabilities
Stockholders’ equity:
Common stock, par value $0.01 per share— 200,000 shares authorized; 50,335
shares issued; 42,833 and 44,975 shares outstanding at 2022 and 2021,
respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost— 7,502 and 5,360 shares at 2022 and 2021, respectively
Total Belden stockholders’ equity
Noncontrolling interest
Total stockholders’ equity
2022
2021
(In thousands, except par value)
$
687,676 $
440,102
341,563
66,866
—
641,563
383,444
345,203
58,283
449,152
1,536,207
1,877,645
381,864
73,376
862,253
246,830
14,642
46,503
343,564
75,571
821,448
238,155
31,736
29,558
$
3,161,675 $
3,417,677
$
350,058 $
289,861
—
639,919
1,161,176
67,828
58,582
59,250
30,970
503
825,669
751,522
(5,871)
(428,812)
1,143,011
939
1,143,950
377,765
278,108
96,993
752,866
1,459,991
120,997
51,113
61,967
14,661
503
833,627
505,717
(70,566)
(313,994)
955,287
795
956,082
$
3,161,675 $
3,417,677
The accompanying notes are an integral part of these Consolidated Financial Statements.
38
Belden Inc.
Consolidated Statements of Operations
$
Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development expenses
Amortization of intangibles
Asset impairments
Gain on sale of asset
Operating income
Interest expense, net
Loss on debt extinguishment
Non-operating pension benefit (cost)
Gain on sale of note receivable
Income from continuing operations before taxes
Income tax expense
Income from continuing operations
Loss from discontinued operations, net of tax
Gain (loss) from disposal of discontinued operations, net of tax
Net income (loss)
Less: Net income attributable to noncontrolling interest
Net income (loss) attributable to Belden common stockholders
$
Weighted average number of common shares and equivalents:
$
$
Years Ended December 31,
2022
2020
2021
(In thousands, except per share amounts)
2,606,485
(1,690,196)
916,289
(448,636)
(104,350)
(37,860)
—
37,891
363,334
(43,554)
(6,392)
4,005
—
317,393
(49,645)
267,748
(3,685)
(9,241)
254,822
159
254,663
2,301,260
(1,529,417)
771,843
(378,027)
(90,227)
(30,630)
(9,283)
—
263,676
(62,693)
(5,715)
4,476
27,036
226,780
(27,939)
198,841
(136,384)
1,860
64,317
392
63,925
1,752,192
(1,176,570)
575,622
(323,447)
(73,020)
(29,041)
—
—
150,114
(58,903)
—
(395)
—
90,816
(20,098)
70,718
(115,828)
(9,948)
(55,058)
104
(55,162)
$
$
Basic
Diluted
43,845
44,537
44,802
45,361
44,778
44,937
Basic income (loss) per share attributable to Belden common
stockholders:
Continuing operations
Discontinued operations
Disposal of discontinued operations
Net income (loss)
Diluted income (loss) per share attributable to Belden common
stockholders:
Continuing operations
Discontinued operations
Disposal of discontinued operations
Net income (loss)
$
$
$
$
6.10
$
4.43
$
(0.08)
(0.21)
5.81
$
(3.04)
0.04
1.43
$
6.01
$
4.37
$
(0.08)
(0.21)
5.72
$
(3.04)
0.04
1.41
$
1.58
(2.59)
(0.22)
(1.23)
1.57
(2.59)
(0.22)
(1.23)
The accompanying notes are an integral part of these Consolidated Financial Statements.
39
Belden Inc.
Consolidated Statements of Comprehensive Income
Net income (loss)
Foreign currency translation, net of tax
Adjustments to pension and postretirement liability, net of tax
Other comprehensive income (loss), net of tax
Comprehensive income (loss)
2022
Years Ended December 31,
2021
(In thousands)
2020
$
254,822
$
64,317
$
(55,058)
39,509
25,171
64,680
319,502
88,290
31,572
119,862
184,179
(112,562)
(15,477)
(128,039)
(183,097)
Less: Comprehensive income (loss) attributable to noncontrolling
interest
144
(1,031)
498
Comprehensive income (loss) attributable to Belden
$
319,358
$
185,210
$
(183,595)
The accompanying notes are an integral part of these Consolidated Financial Statements.
40
Belden Inc.
Consolidated Cash Flow Statements
Years Ended December 31,
2021
2020
2022
(In thousands)
$
254,822
$
64,317
$
(55,058)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization
Share-based compensation
Loss on debt extinguishment
Asset impairments
Deferred income tax expense (benefit)
Gain on sale of asset
Changes in operating assets and liabilities, net of the effects of exchange
rate changes, acquired businesses, and disposals:
Receivables
Inventories
Accounts payable
Accrued liabilities
Income taxes
Other assets
Other liabilities
Cash flows from investing activities:
Net cash provided by operating activities
Proceeds from disposal of businesses, net of cash sold
Proceeds from disposal of tangible assets
Purchase of intangible assets
Cash from (used for) acquisitions and investments, net of cash acquired
Capital expenditures
Net cash provided by (used for) investing activities
Cash flows from financing activities:
Payments under borrowing arrangements
Payments under share repurchase program
Cash dividends paid
Withholding tax payments for share-based payment awards
Payments under financing lease obligations
Payment of earnout consideration
Debt issuance costs paid
Payments to noncontrolling interest holders
Proceeds from issuance of common stock
Borrowings under credit arrangements
Net cash used for financing activities
Effect of foreign currency exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
$
88,738
23,676
6,392
—
(627)
(37,891)
(33,605)
5,558
(20,595)
(5,416)
2,335
2,881
(4,972)
281,296
334,574
43,534
—
(104,603)
(105,094)
168,411
(230,639)
(150,000)
(8,949)
(7,186)
(157)
—
—
—
3,717
—
(393,214)
(12,574)
43,919
643,757
687,676
$
87,988
24,871
5,715
140,461
3,575
—
(119,012)
(92,984)
135,666
61,241
(6,448)
(12,693)
(20,642)
272,055
45,735
30,234
(3,650)
(73,340)
(90,982)
(92,003)
(360,304)
—
(9,056)
(5,570)
(3,151)
—
(8,173)
(2,682)
—
356,010
(32,926)
(5,363)
141,763
501,994
643,757
$
108,687
20,030
—
113,007
(19,410)
—
70,707
(8,507)
(43,567)
7,374
(22,823)
2,018
906
173,364
54,821
3,161
—
590
(90,215)
(31,643)
(190,000)
(35,000)
(9,029)
(1,388)
(194)
(29,300)
—
—
—
190,000
(74,911)
9,299
76,109
425,885
501,994
The Consolidated Cash Flow Statement includes the results of our discontinued operations up to their disposal date - February
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
22, 2022 and July 2, 2020 for Tripwire and Grass Valley, respectively. The accompanying notes are an integral part of these
Consolidated Financial Statements.
d i
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4
Notes to Consolidated Financial Statements
Note 1: Basis of Presentation
Business Description
Belden Inc. (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
The accompanying Consolidated Financial Statements include Belden Inc. and all of its subsidiaries, including variable interest
entities for which we are the primary beneficiary. We eliminate all significant affiliate accounts and transactions in
consolidation.
Foreign Currency
For international operations with functional currencies other than the United States (U.S.) dollar, we translate assets and
liabilities at current exchange rates; we translate income and expenses using average exchange rates. We report the resulting
translation adjustments, as well as gains and losses from certain affiliate transactions, in accumulated other comprehensive
income (loss), a separate component of stockholders’ equity. We include exchange gains and losses on transactions in operating
income.
We determine the functional currency of our foreign subsidiaries based upon the currency of the primary economic
environment in which each subsidiary operates. Typically, that is determined by the currency in which the subsidiary primarily
generates and expends cash. We have concluded that the local currency is the functional currency for all of our material
subsidiaries.
Reporting Periods
Our fiscal year and fiscal fourth quarter both end on December 31. Our fiscal first quarter ends on the Sunday falling closest to
91 days after December 31. Our fiscal second and third quarters each have 91 days.
Use of Estimates in the Preparation of the Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to
make estimates and assumptions that affect the reported amounts of assets, liabilities, and operating results and the disclosure of
contingencies. Actual results could differ from those estimates. We make significant estimates with respect to the collectability
and valuation of receivables, the valuation of inventory, the realization of deferred tax assets, the valuation of goodwill and
indefinite-lived intangible assets, the valuation of contingent liabilities, the calculation of share-based compensation, the
calculation of pension and other postretirement benefits expense, and the valuation of acquired businesses.
Note 2: Summary of Significant Accounting Policies
Fair Value Measurement
Accounting guidance for fair value measurements specifies a hierarchy of valuation techniques based upon whether the inputs
to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from
independent sources or reflect our own assumptions of market participant valuation. The hierarchy is broken down into three
levels based on the reliability of the inputs as follows:
•
•
Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical,
unrestricted assets or liabilities;
Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar
assets and liabilities in active markets, or financial instruments for which significant inputs are observable, either
directly or indirectly; and
43
•
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and
unobservable.
During 2022, 2021, and 2020 we utilized Level 1 inputs to determine the fair value of cash equivalents and Level 2 and Level 3
inputs to determine the fair value of net assets acquired in business combinations (see Note 4) and for impairment testing (see
Note 13). We did not have any transfers between Level 1 and Level 2 fair value measurements during 2022.
Cash and Cash Equivalents
We classify cash on hand and deposits in banks, including commercial paper, money market accounts, and other investments
with an original maturity of three months or less, that we hold from time to time, as cash and cash equivalents. We periodically
have cash equivalents consisting of short-term money market funds and other investments. As of December 31, 2022 and 2021,
we did not have any such cash equivalents on hand. The primary objective of our investment activities is to preserve our capital
for the purpose of funding operations. We do not enter into investments for trading or speculative purposes.
Accounts Receivable and Revenue Reserves
We classify amounts owed to us and due within twelve months, arising from the sale of goods or services and from other
business activities, as current receivables. We classify receivables due after twelve months as other long-lived assets.
At the time of sale, we establish an estimated reserve for trade, promotion, and other special price reductions such as contract
pricing, discounts to meet competitor pricing, and on-time payment discounts. We also adjust receivable balances for, among
other things, correction of billing errors, incorrect shipments, and settlement of customer disputes. Customers are allowed to
return inventory if and when certain conditions regarding the physical state of the inventory and our approval of the return are
met. Certain distribution customers are allowed to return inventory at original cost, in an amount not to exceed three percent of
the prior year’s purchases, in exchange for an order of equal or greater value. Until we can process these reductions,
corrections, and returns (together, the Changes) through individual customer records, we estimate the amount of outstanding
Changes and recognize them by reducing revenues. We base these estimates on historical and anticipated sales demand, trends
in product pricing, and historical and anticipated Changes patterns. We make revisions to these estimates in the period in which
the facts that give rise to each revision become known. 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, such as price reductions, at December 31, 2022 and 2021 totaled $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 and $12.5 million, respectively.
We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for
accounts receivable is developed using historical collection experience, current and future economic and market conditions and
a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the
estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and
the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate
provision for customers that have a higher probability of default. Our monitoring activities include timely account
reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic
conditions. Balances are written off when determined to be uncollectible. As of December 31, 2022 and 2021, the allowance for
doubtful accounts totaled $8.0 million and $4.9 million, 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.
44
Inventories and Related Reserves
Inventories are stated at the lower of cost or net realizable value. We determine the cost of all raw materials, work-in-process,
and finished goods inventories by the first in, first out method. Cost components of inventories include direct labor, applicable
production overhead, and amounts paid to suppliers of materials and products as well as freight costs and, when applicable,
duty costs to import the materials and products.
We evaluate the realizability of our inventory on a product-by-product basis in light of historical and anticipated sales demand,
technological changes, product life cycle, component cost trends, product pricing, and inventory condition. In circumstances
where inventory levels are in excess of anticipated market demand, where inventory is deemed technologically obsolete or not
saleable due to condition, or where inventory cost exceeds net realizable value, we record a charge to cost of sales and reduce
the inventory to its net realizable value. The allowances for excess and obsolete inventories at December 31, 2022 and 2021
totaled $45.9 million and $45.7 million, respectively.
Property, Plant and Equipment
We record property, plant and equipment at cost. 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 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. We capitalize interest costs associated with the construction of capital assets and
amortize the costs over the assets’ useful lives. Depreciation expense is included in costs of sales; selling, general and
administrative expenses; and research and development expenses in the Consolidated Statements of Operations based on the
specific categorization and use of the underlying assets being depreciated.
We review property, plant and equipment to determine whether an event or change in circumstances indicates the carrying
values of the assets may not be recoverable. We base our evaluation on the nature of the assets, the future economic benefit of
the assets, and any historical or future profitability measurements, as well as other external market conditions or factors that
may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of an asset
may not be recoverable, we determine whether impairment has occurred through the use of an undiscounted cash flow analysis.
If impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset.
For purposes of impairment testing of long-lived assets, we have identified asset groups at the lowest level for which
identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Generally, our asset groups are
based on an individual plant or operating facility level. In some circumstances, however, a combination of plants or operating
facilities may be considered the asset group due to interdependence of operational activities and cash flows.
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 and certain trademarks. 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. We determine the amortization method for our
definite-lived intangible assets based on the pattern in which the economic benefits of the intangible asset are consumed. In the
event we cannot reliably determine that pattern, we utilize a straight-line amortization method.
We test our goodwill and other indefinite-lived intangible assets not subject to amortization for impairment on an annual basis
as of our fiscal November month-end or when indicators of impairment exist. We base our estimates on assumptions we believe
to be reasonable, but which are not predictable with precision and therefore are inherently uncertain. Actual future results could
differ from these estimates.
The accounting guidance related to goodwill impairment testing allows for the performance of an optional qualitative
assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. 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 unit, as described in the paragraph below. In 2022, we performed a
qualitative assessment over five of our reporting units.
45
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. If the fair value of the reporting unit exceeds the carrying value of the net assets including goodwill assigned to that unit,
goodwill is not impaired. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the
reporting unit, then we record an impairment charge based on that difference. In addition to the income approach, we calculate
the fair value of our reporting units under a market approach. The market approach measures the fair value of a reporting unit
through analysis of financial multiples of comparable businesses. 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 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 not 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. We compare the fair value of
the asset with its carrying amount. If the carrying amount of the asset exceeds its fair value, we recognize an impairment loss in
an amount equal to that excess. We did not recognize impairment charges for our indefinite lived intangible assets from
continuing operations in 2022, 2021, or 2020. See Note 13 for further discussion.
We review intangible assets subject to amortization whenever an event or change in circumstances indicates the carrying values
of the assets may not be recoverable. We test intangible assets subject to amortization for impairment and estimate their fair
values using the same assumptions and techniques we employ on property, plant and equipment. We did not recognize any
impairment charges for amortizable intangible assets from continuing operations in 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. See Note 5. 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.
Pension and Other Postretirement Benefits
Our pension and other postretirement benefit costs and obligations are dependent on the various actuarial assumptions used in
calculating such amounts. These assumptions relate to discount rates, salary growth, long-term return on plan assets, health care
cost trend rates, mortality tables, and other factors. We base the discount rate assumptions on current investment yields on high-
quality corporate long-term bonds. The salary growth assumptions reflect our long-term actual experience and future or near-
term outlook. We determine the long-term return on plan assets based on historical portfolio results and management’s
expectation of the future economic environment. Our health care cost trend assumptions are developed based on historical cost
data, the near-term outlook, and an assessment of likely long-term trends. Actual results that differ from our assumptions are
accumulated and, if in excess of the lesser of 10% of the projected benefit obligation or the fair market value of plan assets, are
amortized over the estimated future working life of the plan participants.
Accrued Sales Rebates
We grant incentive rebates to participating customers as part of our sales programs. The rebates are determined based on certain
targeted sales volumes. Rebates are paid quarterly or annually in either cash or receivables credits. Until we can process these
rebates through individual customer records, we estimate the amount of outstanding rebates and recognize them as accrued
liabilities and reductions in our gross revenues. We base our estimates on both historical and anticipated sales demand and
rebate program participation. We charge revisions to these estimates back to accrued liabilities and revenues in the period in
which the facts that give rise to each revision become known. Future market conditions and product transitions might require us
to take actions to increase sales rebates offered, possibly resulting in an incremental increase in accrued liabilities and an
incremental reduction in revenues at the time the rebate is offered. Accrued sales rebates at December 31, 2022 and 2021
totaled $55.6 million and $55.5 million, respectively.
Contingent Liabilities
We have established liabilities for environmental and legal contingencies that are probable of occurrence and reasonably
estimable, the amounts of which are currently not material. A significant amount of judgment and use of estimates is required to
quantify our ultimate exposure in these matters. We review the valuation of these liabilities on a quarterly basis, and we adjust
the balances to account for changes in circumstances for ongoing and emerging issues.
46
We accrue environmental remediation costs based on estimates of known environmental remediation exposures developed in
consultation with our environmental consultants and legal counsel, the amounts of which are not currently material. We expense
environmental compliance costs, which include maintenance and operating costs with respect to ongoing monitoring programs,
as incurred. We evaluate the range of potential costs to remediate environmental sites. The ultimate cost of site clean-up is
difficult to predict given the uncertainties of our involvement in certain sites, uncertainties regarding the extent of the required
clean-up, the availability of alternative clean-up methods, variations in the interpretation of applicable laws and regulations, the
possibility of insurance recoveries with respect to certain sites, and other factors.
We are, from time to time, subject to routine litigation incidental to our business. These lawsuits primarily involve claims for
damages arising out of the use of our products, allegations of patent or trademark infringement, and litigation and
administrative proceedings involving employment matters and commercial disputes. Assessments regarding the ultimate cost of
lawsuits require judgments concerning matters such as the anticipated outcome of negotiations, the number and cost of pending
and future claims, and the impact of evidentiary requirements. 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
We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values. The
excess of the consideration over the amount allocated to the assets and liabilities, if any, is recorded to goodwill. We use all
available information to estimate fair values. We typically engage third party valuation specialists to assist in the fair value
determination of inventories, tangible long-lived assets, and intangible assets other than goodwill. The carrying values of
acquired receivables and accounts payable have historically approximated their fair values as of the acquisition date. As
necessary, we may engage third party specialists to assist in the estimation of fair value for certain liabilities, such as
postretirement benefit liabilities. We adjust the preliminary acquisition accounting, as necessary, typically up to one year after
the acquisition closing date as we obtain more information regarding asset valuations and liabilities assumed.
Revenue Recognition
We recognize revenue consistent with the principles as outlined in the following five step model: (1) identify the contract with
the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the
transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) each performance
obligation is satisfied. See Note 3.
Cost of Sales
Cost of sales includes our total cost of inventory sold during the period, including material, labor, production overhead costs,
variable manufacturing costs, and fixed manufacturing costs. Production overhead costs include operating supplies, applicable
utility expenses, maintenance costs, and scrap. Variable manufacturing costs include inbound, interplant, and outbound freight,
inventory shrinkage, and charges for excess and obsolete inventory. Fixed manufacturing costs include the costs associated with
our purchasing, receiving, inspection, warehousing, distribution centers, production and inventory control, and manufacturing
management. Cost of sales also includes the costs to provide maintenance and support and other professional services.
Shipping and Handling Costs
We recognize fees earned on the shipment of product to customers as revenues and recognize costs incurred on the shipment of
product to customers as a cost of sales.
47
Selling, General and Administrative Expenses
Selling, general and administrative expenses include expenses not directly related to the production of inventory. They include
all expenses related to selling and marketing our products, as well as the salary and benefit costs of associates performing the
selling and marketing functions. Selling, general and administrative expenses also include salary and benefit costs, purchased
services, and other costs related to our executive and administrative functions.
Research and Development Costs
Research and development costs are expensed as incurred.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs were $13.7 million, $10.3 million, and $9.9 million for 2022,
2021, and 2020, respectively.
Share-Based Compensation
We compensate certain employees and non-employee directors with various forms of share-based payment awards and
recognize compensation costs for these awards based on their fair values. We estimate the fair values of certain awards,
primarily stock appreciation rights (SARs), on the grant date using the Black-Scholes-Merton option-pricing formula, which
incorporates certain assumptions regarding the expected term of an award and expected stock price volatility. We develop the
expected term assumption based on the vesting period and contractual term of an award, our historical exercise and cancellation
experience, our stock price history, plan provisions that require exercise or cancellation of awards after employees terminate,
and the extent to which currently available information indicates that the future is reasonably expected to differ from past
experience. We develop the expected volatility assumption based on historical price data for our common stock. We estimate
the fair value of certain restricted stock units with service vesting conditions and performance vesting conditions based on the
grant date stock price. We estimate the fair value of certain restricted stock units with market conditions using a Monte Carlo
simulation valuation model with the assistance of a third party valuation firm.
After calculating the aggregate fair value of an award, we use an estimated forfeiture rate to discount the amount of share-based
compensation cost expected to be recognized in our operating results over the service period of the award. We develop the
forfeiture assumption based on our historical pre-vesting cancellation experience.
Income Taxes
Income taxes are provided based on earnings reported for financial statement purposes. The provision for income taxes differs
from the amounts currently payable to taxing authorities due to the temporary or permanent timing differences with respect to
the recognition of revenues, expenses, and tax attributes for income tax purposes compared to financial statement purposes.
Income taxes are provided as if operations in all countries, including the U.S., were stand-alone businesses filing separate tax
returns.
Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating
loss and tax credit carryforwards. Deferred tax assets generally represent future tax benefits to be received when these
carryforwards can be applied against future taxable income or when expenses previously reported in our Consolidated Financial
Statements become deductible for income tax purposes. A deferred tax asset valuation allowance is required when some portion
or all of the deferred tax assets may not be realized. At December 31, 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. Significant judgment is required in determining our effective tax rate and in
evaluating our tax positions. We establish accruals for uncertain tax positions when we believe that the full amount of the
associated tax benefit may not be realized. 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.
48
Current-Year Adoption of Accounting Pronouncements
Current-Year Adoption of Accounting Pronouncements
p
g
None of the accounting pronouncements that became effective during 2022 had a material impact to our consolidated financial
None of the accounting pronouncements that became effective during 2022 had a material impact to our consolidated financial
statements or disclosures.
l
Note 3: Revenues
di
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. Taxes collected from customers
and remitted to governmental authorities are not included in our revenues. We do not evaluate a contract for a significant
financing component when the time between cash collection and performance is less than one year. The following table
presents our revenues disaggregated by major product category (in thousands).
Year Ended December 31, 2022
Enterprise Solutions
Industrial Automation Solutions
Total
Year Ended December 31, 2021
Enterprise Solutions
Industrial Automation Solutions
Total
Year Ended December 31, 2020
Enterprise Solutions
Industrial Automation Solutions
Total
Broadband
and 5G
Industrial
Automation
Smart
Buildings
Total
Revenues
$
$
$
$
$
$
571,426
—
571,426
488,453
—
488,453
432,262
—
432,262
$
$
$
$
$
$
— $
1,408,007
1,408,007
$
— $
1,226,834
1,226,834
—
879,775
879,775
$
$
$
627,052
—
627,052
585,973
—
585,973
440,155
—
440,155
$
$
$
$
$
$
1,198,478
1,408,007
2,606,485
1,074,426
1,226,834
2,301,260
872,417
879,775
1,752,192
The following tables present our revenues disaggregated by geography, based on the location of the customer purchasing the
product (in thousands).
Year Ended December 31, 2022
Enterprise Solutions
Industrial Automation Solutions
Total
Year Ended December 31, 2021
Enterprise Solutions
Industrial Automation Solutions
Total
Year Ended December 31, 2020
Enterprise Solutions
Industrial Automation Solutions
Total
Americas
EMEA
APAC
Total Revenues
$
$
$
$
$
$
915,491
816,508
1,731,999
785,253
703,790
1,489,043
636,492
494,743
1,131,235
$
$
$
$
$
$
149,327
372,473
521,800
150,790
323,915
474,705
130,982
238,300
238,300
369,282
$
$
$
$
$
$
133,660
219,026
352,686
138,383
199,129
337,512
104,943
146,732
251,675
$
$
$
$
$
$
1,198,478
1,408,007
2,606,485
1,074,426
1,226,834
2,301,260
872,417
879,775
1,752,192
We generate revenues primarily by selling products that provide secure and reliable transmission of data, sound, and video for
mission critical applications. We also generate revenues from providing support and professional services. We sell our products
to distributors, end-users, installers, and directly to original equipment manufacturers. At times, we enter into arrangements that
involve the delivery of multiple performance obligations. For these arrangements, revenue is allocated to each performance
obligation based on its relative standalone selling price and recognized when or as each performance obligation is satisfied.
Generally, we determine standalone selling price using the prices charged to customers on a standalone basis. Typically,
payments are due after control transfers.
49
Most of our performance obligations related to the sale of products are satisfied at a point in time when control of the product is
transferred to the customer, which generally occurs when the product has been shipped or delivered from our facility to our
customers, the customer has legal title to the product, and we have a present right to payment for the product. We also consider
any customer acceptance clauses in determining when control has transferred to the customer and typically, these clauses are
not substantive.
The amount of consideration we receive and revenue we recognize varies due to rebates, returns, and price adjustments. We
estimate the expected rebates, returns, and price adjustments based on an analysis of historical experience, anticipated sales
demand, and trends in product pricing. 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.
The following table presents estimated and accrued variable consideration:
Accrued rebates included in accrued liabilities
Accrued returns included in accrued liabilities
Price adjustment recognized against gross accounts receivable
$
December 31, 2022
December 31, 2021
(in thousands)
55,559
$
11,700
24,304
55,520
12,500
23,366
Depending on the terms of an arrangement, we may defer the recognition of a portion of the consideration received because we
must satisfy a future performance obligation. Consideration allocated to support services under a support and maintenance
contract is typically paid in advance and recognized ratably over the term of the service. Consideration allocated to professional
the services are performed depending on the terms of the arrangement. As of December 31,
services is recognized when or as the services are performed depending on the terms of the arrangement. As of December 31,
$33.2 million
2022
is expected to be recognized within the next
$26.2 million is expected to be recognized within the next
illi
, total deferred revenue was $
d
$7.0 million is long-term and will be recognized over a period greater than twelve months.
twelve months, and the remaining $
twelve months, and the remaining
, and of this amount, $
illi
illi
d f hi
l d f
The following table presents deferred revenue activity (in thousands):
Balance at December 31, 2020
New deferrals
Acquisitions
Revenue recognized
Balance at December 31, 2021
New deferrals
Acquisitions
Revenue recognized
Balance at December 31, 2022
$
$
$
11,130
12,065
7,172
(10,977)
19,390
30,472
6,567
(23,186)
33,243
ervice-type warranties represent $
Service-type warranties represent
illi
$
$4.2 million is expected to be recognized in the next twelve months, and the remaining
recognized over a period greater than twelve months.
recognized over a period greater than twelve months.
is expected to be recognized in the next twelve months, and the remaining $
$8.9 million of the deferred revenue balance at December 31, 2022
of the deferred revenue balance at
d f hi
, and of this amount
is long-term and will be
$4.7 million is long-term and will be
illi
illi
At December 31, 2022, we did not have any material contract assets recorded in the consolidated balance sheets.
We expense sales commissions as incurred when the duration of the related revenue arrangement is one year or less. 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
commissions were not material for the years
ded $24.1 million, $20.6 million, and $16.0 million of sales
ended December 31, 2022
ended
, 2021 and
d
commissions expense in selling, general, and administrative expenses during the years ended December 31, 2022
2020
2020, respectively.
, 2021, and 2020. We recogniz
the years ended
$24.1 million
e recogn
d
50
Note 4: Acquisitions
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
Inventory
Other current assets
Property, plant and equipment
Intangible assets
Goodwill
Operating lease right-of-use assets
Total assets acquired
Accounts payable
Accrued liabilities
Long-term debt
Deferred income taxes
Long-term operating lease liabilities
Other long-term liabilities
Total liabilities assumed
Net assets
$
$
$
$
$
6,537
8,278
345
2,342
44,759
50,596
6,167
119,024
2,497
6,888
2,440
11,460
2,926
8,421
34,632
84,392
The above purchase price allocation is preliminary and subject to revision as additional information about the fair value of
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,
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
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.
assets acquired will change the amount of the purchase price allocable to goodwill.
The preliminary fair value of acquired receivables is
, which is equivalent to its gross contractual amount. A single
$6.5 million, which is equivalent to its gross contractual amount. A single
The preliminary fair value of acquired receivables is $
estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on
estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on
estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of
estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of
acquired assets and assumed liabilities could materially affect the results of our operations.
acquired assets and assumed liabilities could materially affect the results of our operations.
illi
For purposes of the above allocation, we based our preliminary estimate of the fair values for intangible assets on valuation
For purposes of the above allocation, we based our preliminary estimate of the fair values for intangible assets on valuation
studies performed by a third party valuation firm. We used various valuation methods including discounted cash flows, lost
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
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
(Level 3 valuation).
apart from tangible assets acquired and liabilities assumed. 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 three acquisitions consisted of the following:
51
Intangible assets subject to amortization:
Developed technologies
Customer relationships
Trademarks
Sales backlog
Non-compete agreements
Total intangible assets subject to amortization
Intangible assets not subject to amortization:
Goodwill
Total intangible assets not subject to amortization
Total intangible assets
Weighted average amortization period
Fair Value
(In thousands)
Amortization Period
(In years)
$
$
$
$
$
26,626
13,427
2,206
2,300
200
44,759
50,596
50,596
95,355
4.0
18.5
2.0
0.9
3.5
n/a
8.1
The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the
The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the
developed technology intangible asset was based on the estimated time that the technology provides us with a competitive
developed technology intangible asset was based on the estimated time that the technology provides us with a competitive
advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life for the customer
advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life for the customer
relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life for the
relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life for the
trademarks was based on the period of time we expect to continue to go to market using the trademarks.
trademarks was based on the period of time we expect to continue to go to market using the trademarks.
Opterna International Corp.
Our acquisition of Opterna International Corp. (Opterna) in 2019 included potential earn-out consideration. As of the
acquisition date, we estimated the fair value of the earn-out to be $5.8 million. The earn-out period ended in 2021, and the
financial targets tied to the earn-out were not achieved. We reduced the earn-out liability to zero and recognized a $5.8 million
benefit in Selling, General and Administrative Expenses during the year ended December 31, 2021. This benefit was excluded
from Segment EBITDA of our Enterprise Solutions segment.
Note 5:
iDisposals
Tripwire
$350 million. The divestiture of Tripwire represented a
On February 22, 2022, we sold Tripwire for gross cash consideration of $
On February 22, 2022, we sold Tripwire for gross cash consideration of
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
We recognized a loss on disposal of
di
The following table summarizes the operating results of the
during 2022. The following table summarizes the operating results of the
$9.2 million during 2022.
discontinued operations, net of tax of $
i
Tripwire disposal group up to the February 22, 2022 disposal date:
Tripwire disposal group up to the February 22, 2022 disposal date:
. T
illi
illi
d
f
f
i
Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development expenses
Amortization of intangible assets
Asset impairments
Loss before taxes
Years Ended December 31,
2021
2022
2020
(In thousands)
$
12,067
$
106,840
$
110,524
(3,256)
8,811
(8,185)
(5,528)
(638)
—
(24,321)
(24,321)
82,519
82,519
(48,308)
(48,308)
(34,433)
(7,716)
(7,716)
(131,178)
(22,857)
87,667
(42,741)
(34,276)
(35,354)
—
$
(5,540) $
(139,116) $
(24,704)
52
b
d
ended December 31, 2022, th
During the year ended December 31, 2022, the Tripwire
disposal group did not have any capital expenditures and recognized
disposal group did not have any capital expenditures and recognized
i
h
share-based compensation expense of $
ended December 31, 2021, the Tripwire disposal group had
ended December 31, 2021, th
capital expenditures of $
$6.1 million and recognized share-based compensation expense of
$2.2 million
ended
d d
and recognized share-based
$7.7 million and recognized share-based
December 31, 2020, th
December 31, 2020, the Tripwire disposal group had capital expenditu
illi
compensation expense of $2.6 million. The disposal group did not have any significant non-cash charges for investing activities
f
, 2022, 2021, and 2020
during the years ended December 31, 2022, 2021, and 2020.
f
and recognized share-based compensation expense of $2.2 million. During the year
$0.2 million. During the year
$2.6 million
res of $
illi
illi
i
.
The following table provides the major classes of assets and liabilities of the Tripwire disposal group:
Assets:
Cash and cash equivalents
Receivables, net
Inventories, net
Other current assets
Property, plant and equipment, less accumulated depreciation
Operating lease right-of-use assets
Goodwill
Intangible assets, less accumulated amortization
Deferred income taxes
Other long-lived assets
Total assets of Tripwire disposal group
Liabilities:
Accounts payable
Accrued liabilities
Deferred income taxes
Long-term operating lease liabilities
Other long-term liabilities
Total liabilities of Tripwire disposal group
December 31,
2021
(In thousands)
2,194
28,773
150
7,418
6,250
3,893
331,024
63,541
584
5,325
449,152
6,458
56,208
8,878
5,257
20,192
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
Brazil Oil & Gas Cable Business
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
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
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
the disposal group exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by
$
$1.7 million
$3.4 million. Therefore, we recognized an impairment charge of
and intangible asset impairment of
) in 2021. The impairment charge was excluded from Segment EBITDA of our
$1.0 million) in 2021. The impairment charge was excluded from Segment EBITDA of our
and intangible asset impairment of $
Industrial Automation Solutions segment. We completed the sale of our oil and gas cable business in Brazil during 2021 for
Industrial Automation Solutions segment. We completed the sale of our oil and gas cable business in Brazil during 2021 for
$10.9 million
$
. Therefore, we recognized an impairment charge of $
$3.4 million (includes a goodwill impairment of
, net of cash delivered with the business.
(includes a goodwill impairment of $
d i h h b i
h d li
illi
illi
illi
illi
illi
f
Grass Valley
Grass Valley
illi
net of cash delivered with the business. We recognized a loss of $
illi
$120.0 million, or approximately
, or approximately
During 2020, we sold Grass Valley to Black Dragon Capital for gross cash consideration of
During 2020, we sold Grass Valley to Black Dragon Capital for gross cash consideration of $
$7.5 million iincome tax
illi
$
$56.2 million net of cash delivered with the business. We recognized a loss of
expense and recognized asset impairments totaling
during the year ended December 31, 2020. The divestiture of
$113.0 million during the year ended December 31, 2020. The divestiture of
expense and recognized asset impairments totaling $
Grass Valley represented a strategic shift impacting our operations and financial results. As a result, the Grass Valley disposal
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.
group, which was included in our Enterprise Solutions segment, is reported in discontinued operations.
$9.9 million, net of $
illi
illi
53
h
ll
in PIK (payment-in-
$88 million in PIK (payment-in-
The sale also included deferred consideration consisting of a
The sale also included deferred consideration consisting of a $
$178.0 million in potential earnout payments. Based upon a third party valuation
in potential earnout payments. Based upon a third party valuation
ki d) i
kind) interest on the seller’s note, and $
$34.9 million.
specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note was $
specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note was
During 2021, we sold the seller's note to a third party for
$27.0 million. We
illi
During 2021, we sold the seller's note to a third party for $
accounted for the earnout under a loss recovery approach and did not record an asset as of the disposal date. Any subsequent
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.
recognition of an earnout will be based on the gain contingency guidance.
$62.0 million and recognized a gain on sale of
and recognized a gain on sale of $
llseller’s note, up to $
$175.0 million
illi
illi
illi
illi
illi
d
The following table summarizes the operating results of the disposal group up to the July 2, 2020 disposal date for the year
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:
b
d d
Revenues
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development expenses
Asset impairment of discontinued operations
Interest expense, net
Non-operating pension cost
Loss before taxes
Year Ended December 31,
2020
(In thousands)
$
$
109,195
(70,199)
38,996
(39,947)
(15,083)
(113,007)
(432)
(169)
(129,642)
During 2020, the disposal group did not recognize any depreciation and amortization expense, but incurred capital expenditures
During 2020, the disposal group did not recognize any depreciation and amortization expense, but incurred capital expenditures
, respectively. The disposal group did not have any
$0.9 million, respectively. The disposal group did not have any
and share-based compensation credits of $
significant non-cash charges for investing activities during the year ended December 31, 2020.
significant non-cash charges for investing activities during the year ended December 31, 2020.
$16.7 million
dand $
d h
illi
illi
di
b
d
f
i
Note 6: Operating Segments and Geographic Information
We are organized around two global businesses: 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. We sell the products manufactured by our segments through
distributors or directly to systems integrators, original equipment manufacturers (OEMs), end-users, and installers.
The key measures of segment profit or loss reviewed by our chief operating decision maker are Segment Revenues and
Segment EBITDA. Segment Revenues represent non-affiliate revenues. Segment EBITDA excludes certain items, including
depreciation expense; amortization of intangibles; asset impairment; severance, restructuring, and acquisition integration costs;
adjustments related to acquisitions and divestitures; and other costs. We allocate corporate expenses to the segments for
purposes of measuring Segment EBITDA. Corporate expenses are allocated on the basis of each segment’s relative EBITDA
prior to the allocation.
Our measure of segment assets does not include cash, goodwill, intangible assets, deferred tax assets, or corporate assets. All
goodwill is allocated to reporting units of our segments for purposes of impairment testing.
54
Operating Segment Information
g
g
pp
Enterprise Solutions
Segment revenues
Segment EBITDA
Depreciation expense
Amortization of intangibles
Amortization of software development intangible assets
Adjustments related to acquisitions and divestitures
Severance, restructuring, and acquisition integration costs
Acquisition of property, plant and equipment
Segment assets
Industrial Automation Solutions
2022
$
$
Segment revenues
Segment EBITDA
Depreciation expense
Amortization of intangibles
Amortization of software development intangible assets
Adjustments related to acquisitions and divestitures
Severance, restructuring, and acquisition integration costs
Asset impairments
Acquisition of property, plant and equipment
Segment assets
Total Segments
Segment revenues
Segment EBITDA
Depreciation expense
Amortization of intangibles
Amortization of software development intangible assets
Adjustments related to acquisitions and divestitures
Severance, restructuring, and acquisition integration costs
Asset impairments
Acquisition of property, plant and equipment
Segment assets
Years Ended December 31,
2022
2021
2020
(In thousands)
$
1,198,478
$
1,074,426
$
872,417
161,517
23,387
17,595
54
5,589
9,200
33,535
593,653
144,509
21,627
17,595
94
(7,052)
13,800
36,726
563,141
$
Years Ended December 31,
2021
(In thousands)
1,226,834
$
222,684
21,446
13,035
1,485
2,017
10,067
9,283
41,269
600,380
1,408,007
277,079
23,282
20,265
3,821
2,244
7,485
—
58,713
677,235
$
2022
Years Ended December 31,
2021
(In thousands)
2,301,260
$
367,193
43,073
30,630
1,579
(5,035)
23,867
2,606,485
438,596
46,669
37,860
3,875
7,833
16,685
99,333
20,655
21,662
245
125
7,720
25,223
462,615
2020
879,775
132,302
18,684
7,379
627
—
3,944
—
37,002
471,320
2020
1,752,192
231,635
39,339
29,041
872
125
11,664
—
92,248
1,270,888
9,283
77,995
1,163,521
—
62,225
933,935
The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues
The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues
and consolidated income from continuing operations before taxes, respectively.
and consolidated income from continuing operations before taxes, respectively.
55
Segment Revenues and Consolidated Revenues
Total Segment EBITDA
$
$
Depreciation expense
Amortization of intangibles
Severance, restructuring, and acquisition integration costs (1)
Adjustments related to acquisitions and divestitures (2)
Amortization of software development intangible assets
Asset impairments (3)
Gain on sale of asset (4)
Eliminations
Consolidated operating income
Interest expense, net
Loss on debt extinguishment
Non-operating pension benefit (cost)
Gain on sale of note receivable
Consolidated income from continuing operations before taxes
$
2022
Years Ended December 31,
2021
(In thousands)
2,301,260
$
$
2,606,485
2020
1,752,192
438,596
(46,669)
(37,860)
(16,685)
(7,833)
(3,875)
—
37,891
(231)
363,334
(43,554)
(6,392)
4,005
—
317,393
$
$
367,193
(43,073)
(30,630)
(23,867)
5,035
(1,579)
(9,283)
—
(120)
263,676
(62,693)
(5,715)
4,476
27,036
226,780
$
$
231,635
(39,339)
(29,041)
(11,664)
(125)
(872)
—
—
(480)
150,114
(58,903)
—
(395)
—
90,816
for details.
d
il
(1)
(2)
(2)
( )(3)
(4)
(4)
See Note 15, Severance, Restructuring, and Acquisiti
on Integration Activities,
g
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
of receivables associated with the sale of Grass
ll
receivables associated with the sale of Grass Valley.
$5.8 million, recognized cost
, recognized cost
Valley and acquisition of SPC that were previously written off, reduced the Opterna earn-out liability by
Valley and acquisition of SPC that were previously written off, reduced the Opterna earn-out liability by $
f
loss on the sale of
f
h
related to adjustments of acquired inventory to fair value, and recognized a $
illi
of sales of $
l
of cost of sales related to adjustments of acquired inventory to fair value.
$0.1 million of cost of sales related to adjustments of acquired inventory to fair value.
tangible assets. In 2020, we recognized $
tangible assets. In 2020, we recognized
$2.3 million related to adjustments of acquired inventory to fair value, and recognized a
In 2021, we collected $
$2.2 million f
illi
$0.6 million l
d i h h
i bl
illi
illi
illi
d
f
f
l
l
i
In 2021, we recognized a
In 2021, we recognized a $
Note 11, Property, Plant, and Equipment, for details.
illi
impairment on assets held and used
$3.6 million impairment on assets held and used
dand a $
$5.7 million impairment on assets held for sale. See
impairment on assets held for sale
illi
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.
2022
Total segment assets
Cash and cash equivalents
Goodwill
Intangible assets, less accumulated amortization
Deferred income taxes
Corporate assets
Assets of discontinued operations
Total assets
Total segment acquisition of property, plant and equipment
Corporate acquisition of property, plant and equipment
Discontinued operations acquisition of property, plant and equipment
Total acquisition of property, plant and equipment
$
$
$
$
56
$
Years Ended December 31,
2021
(In thousands)
1,163,521
$
641,563
821,448
821,448
238,155
31,736
72,102
449,152
3,417,677
1,270,888
687,676
862,253
246,830
14,642
79,386
—
3,161,675
$
$
2020
933,935
500,666
789,736
219,092
28,736
83,943
583,626
3,139,734
92,248
12,846
—
105,094
$
$
77,995
6,855
6,132
90,982
$
$
62,225
3,605
24,385
90,215
Geographic Information
g p
The Company attributes foreign sales based on the location of the customer purchasing the product. The table below
summarizes net sales and long-lived assets for the years ended December 31, 2022, 2021, and 2020 for the following countries:
U.S., Canada, China, and Germany. No other individual foreign country’s net sales or long-lived assets are material to the
Company.
Year ended December 31, 2022
Revenues
Percent of total revenues
Long-lived assets
Year ended December 31, 2021
Revenues
Percent of total revenues
Long-lived assets
Year ended December 31, 2020
United
States
Canada
China
Germany
All Other
Total
(In thousands, except percentages)
$1,448,247
$ 188,013
$ 126,904
$ 131,485
$ 711,836
$2,606,485
56 %
7 %
5 %
5 %
27 %
100 %
$ 203,070
$
12,805
$
45,866
$
44,061
$ 122,565
$ 428,367
$1,201,540
$ 186,834
$ 149,036
$ 112,710
$ 651,140
$2,301,260
52 %
8 %
7 %
5 %
28 %
100 %
$ 170,420
$
12,578
$
46,776
$
$
$
37,208
$ 106,140
$ 373,122
90,374
$ 497,011
$1,752,192
5 %
28 %
100 %
63,100
$ 113,836
$ 407,763
Revenues
$ 939,339
$ 113,642
$ 111,826
Percent of total revenues
54 %
7 %
6 %
Long-lived assets
$ 154,078
$
31,925
$
44,824
Major Customer
j
Revenues generated in both the Enterprise Solutions and Industrial Automation Solutions segments from our largest customer
Revenues generated in both the Enterprise Solutions and Industrial Automation Solutions segments from our largest customer
illi
were approximately
$271.6 million ((16% of
$387.7 million ((15% f
illi
were approximately $
revenues) for the years ended December 31, 2022, 2021, and 2020
, we had $$28.8
h d
revenues) for the years ended
illimillion
in accounts receivable outstanding from this customer, which represented approximately 7% dand 11%
illi
of our total accounts receivable balance as of
f
i bl b l
f
of revenues), and $
December 31, 2022 and 2021
$40.5 million in accounts receivable outstanding from this customer, which represented approximately
December 31, 2022 and 2021
$374.8 million ((16% f
illi
, respectively. At
, respectively. At
of revenues), $
, respectively.
, respectively.
dand $
l
and
and
b
d
b
)
)
Note 7: Noncontrolling Interest
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 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. The joint venture is determined to not have sufficient equity at risk; therefore, it is considered a variable interest
entity. We have determined that Belden is the primary beneficiary of the joint venture, due to both our ownership percentage
and our control over the activities of the joint venture that most significantly impact its economic performance based on the
terms of the joint venture agreement with Hite. Because Belden is the primary beneficiary of the joint venture, we have
consolidated the joint venture in our financial statements. The results of the joint venture attributable to Hite’s ownership are
presented as net income (loss) attributable to noncontrolling interest in the Consolidated Statements of Operations. 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 Belden subsidiaries include noncontrolling interests as of and for the years ended December 31, 2022, 2021 and 2020.
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
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
presented as net income attributable to noncontrolling interests in the Consolidated Statements of Operations. In 2021, we
purchased certain noncontrolling interests for $
purchased certain noncontrolling interests for
$2.7 million.
illi
57
Note 8: Income Per Share
The following table presents the basis of the income per share computations:
Numerator:
Income from continuing operations
Less: Net income attributable to noncontrolling interest
Income from continuing operations attributable to Belden
common stockholders
Add: Loss from discontinued operations, net of tax
Add: Gain (loss) on disposal of discontinued operations, net of tax
2022
Years Ended December 31,
2021
(In thousands)
2020
$
267,748
$
198,841
$
70,718
159
392
104
267,589
(3,685)
(9,241)
198,449
(136,384)
1,860
Net income (loss) attributable to Belden common stockholders
$
254,663
$
63,925
$
Denominator:
Weighted average shares outstanding, basic
Effect of dilutive common stock equivalents
Weighted average shares outstanding, diluted
43,845
692
44,537
44,802
559
45,361
70,614
(115,828)
(9,948)
(55,162)
44,778
159
44,937
Basic weighted average shares outstanding is used to calculate diluted loss per share when the numerator is a loss because using
diluted weighted average shares outstanding would be anti-dilutive.
For the years ended December 31, 2022, 2021, and 2020, diluted weighted average shares outstanding exclude outstanding
equity awards of 0.8 million, 1.1 million, and 1.5 million, respectively, which are anti-dilutive. 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,
, respectively, because the related performance conditions have not been satisfied.
0.4 million, respectively, because the related performance conditions have not been satisfied.
0.8 million
0.2 million
, and
d
illi
illi
illi
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. Necessary conditions are not satisfied until the vesting date, at which time holders
of our restricted stock units receive shares of our common stock.
For purposes of calculating diluted earnings per share, unvested restricted stock units are included to the extent that they are
dilutive. In determining whether unvested restricted stock units are dilutive, each issuance of restricted stock units is considered
separately.
Once a restricted stock unit has vested, it is included in the calculation of both basic and diluted weighted average shares
outstanding.
Note 9: Credit Losses
Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments prospectively. This ASU 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. Our expected loss allowance methodology for
accounts receivable is developed using historical collection experience, current and future economic and market conditions and
a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the
estimate of accounts receivable that may not be collected is based upon the aging of accounts receivable balances and the
financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision
for customers that have a higher probability of default. Our monitoring activities include timely account reconciliation, dispute
resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are
written off when determined to be uncollectible.
58
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).
Current period provision
Write-offs
Recoveries collected
Disposals
Currency impact
Balance at December 31, 2021
Current period provision
Write-offs
Recoveries collected
Acquisitions
Currency impact
Balance at December 31, 2022
Note 10: Inventories
The major classes of inventories were as follows:
Raw materials
Work-in-process
Finished goods
Gross inventories
Excess and obsolete reserves
Net inventories
Note 11: Property, Plant and Equipment
The carrying values of property, plant and equipment were as follows:
Land and land improvements
Buildings and leasehold improvements
Machinery and equipment
Computer equipment and software
Construction in process
Gross property, plant and equipment
Accumulated depreciation
Net property, plant and equipment
$
$
$
5,085
597
(326)
(227)
(190)
(75)
4,864
6,615
(3,648)
(121)
319
(75)
7,954
December 31,
2022
2021
(In thousands)
162,154
35,011
190,311
387,476
(45,913)
341,563
$
$
157,315
43,644
189,907
390,866
(45,663)
345,203
December 31,
2022
2021
(In thousands)
25,547
102,451
631,680
127,434
106,361
993,473
(611,609)
381,864
$
$
27,579
109,578
620,646
128,153
65,319
951,275
(607,711)
343,564
$
$
$
$
Depreciation Expense
p
p
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.
$39.3 million
59
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.
Solutions segment.
Sale-Leaseback
illi
) and recognized a $
(approximately
€€24.5 million (approximately
During 2021, we sold certain real estate in Germany as part of a sale and leaseback transaction for €24.5 million
During 2021, we sold certain real estate in Germany as part of a sale and leaseback transaction for
and as of December 31, 2022
f
$
y10 years
h
$27.8 million) and recognized a
and 2021, had a total right-of-use asset balance of
, respectively. When the assets met the held
$25.3 million, respectively. When the assets met the held
and 2021, had a total right-of-use asset balance of $
for sale criteria during 2021, we performed a recoverability test and determined that the carrying values of the assets were not
for sale criteria during 2021, we performed a recoverability test and determined that the carrying values of the assets were not
impairment charge to write them down to fair value. The impairment
$2.3 million impairment charge to write them down to fair value. The impairment
recoverable and as a result, recognized a $
recoverable and as a result, recognized a
charge was excluded from Segment EBITDA of our Industrial Automation Solutions segment.
charge was excluded from Segment EBITDA of our Industrial Automation Solutions segment.
loss on the sale. The lease is for a term of
f
h l
$0.6 million l
$21.7 million
l
illi
dand $
illi
illi
illi
b
d
f
i
p
Asset Impairment
Asset Impairment
During 2021, we sold our oil and gas business in Brazil and recognized an impairment charge of $
During 2021, we sold our oil and gas business in Brazil and recognized an impairment charge of
goodwill impairment of $
goodwill impairment of
$1.7 million and intangible asset impairment of
and intangible asset impairment of $
$1.0 million)). See Note 5.
illi
illi
$3.4 million (i
illi
(includes a
l d
During 2021, we also performed a recoverability test over certain held and used long-lived assets in our Industrial Automation
During 2021, we also performed a recoverability test over certain held and used long-lived assets in our Industrial Automation
$3.6 million
Solutions segment. We determined that the carrying values of the assets were not recoverable and recognized a $
Solutions segment. We determined that the carrying values of the assets were not recoverable and recognized a
impairment charge to write them down to fair value. This impairment charge was excluded from Segment EBITDA of our
impairment charge to write them down to fair value. This impairment charge was excluded from Segment EBITDA of our
Industrial Automation Solutions segment.
Industrial Automation Solutions segment.
illi
Note 12: Leases
We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well
as vehicles and certain equipment. We make certain judgments in determining whether a contract contains a lease in accordance
with ASU 2016-02. Our leases have remaining lease terms of less than 1 year to 15 years, some of which include options to
extend the lease for a period of up to 15 years and some include options to terminate the leases within 1 year. 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 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. These leases are not
recorded on our balance sheet as of December 31, 2022 or 2021, and the rent expense for short-term leases was not material.
We have certain property and equipment lease contracts that may contain lease and non-lease components, and we have elected
to utilize the practical expedient to account for these components together as a single combined lease component.
As the rate implicit in most of our leases is not readily determinable, we use the incremental borrowing rate to determine the
present value of the lease payments, which is unique to each leased asset and is based upon the term, 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:
Operating lease cost
Finance lease cost
Amortization of right-of-use asset
Interest on lease liabilities
Total finance lease cost
Years Ended December 31,
2022
2021
2020
(In thousands)
21,420
$
18,607
$
17,009
878
258
1,136
$
$
528
14
542
$
$
124
16
140
$
$
$
60
Supplemental cash flow information related to leases was as follows:
Years Ended December 31,
2022
2021
2020
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
18,338
$
15,737 $
13,629
Operating and financing cash flows from finance leases were not material for the years ended December 31, 2022, 2021 and
2020.
Supplemental balance sheet information related to leases was as follows:
December 31,
2022
2021
(In thousands, except lease term
and discount rate)
Operating leases:
Total operating lease right-of-use assets
Accrued liabilities
Long-term operating lease liabilities
Total operating lease liabilities
Finance leases:
Other long-lived assets, at cost
Accumulated depreciation
Other long-lived assets, net
Accrued liabilities
Other long-term liabilities
Total finance lease liabilities
Weighted Average Remaining Lease Term
Operating leases
Finance leases
Weighted Average Discount Rate
Operating leases
Finance leases
$
$
$
$
$
$
$
73,376
16,442
59,250
75,692
6,323
(733)
5,590
391
5,928
6,319
$
$
$
$
$
$
$
6 years
10 years
5.2%
4.2%
The following table summarizes maturities of lease liabilities as of December 31, 2022 (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total
$
$
61
75,571
16,377
61,967
78,344
3,650
(557)
3,093
140
323
463
6 years
4 years
4.8 %
4.3 %
15,815
14,809
13,472
11,964
6,464
20,907
83,431
The following table summarizes maturities of lease liabilities as of December 31, 2021 (in thousands):
2022
2023
2024
2025
2026
Thereafter
Total
$
$
17,630
15,129
12,342
11,040
9,725
16,972
82,838
In addition to the supplemental lease information disclosed above, we are also party to
lease guarantees, whereby Belden
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
has covenanted the lease payments for two Grass Valley property leases which expire in 2029 and 2035 and collectively have
$20 million of fixed lease payments remaining. These lease guarantees were retained by Belden and not
approximately
of fixed lease payments remaining. These lease guarantees were retained by Belden and not
illi
approximately $
the Grass Valley sale in 2020 (see Note 5)
the Grass Valley sale in 2020 (see Note 5). Belden is required to make lease
transferred to Black Dragon Capital
transferred to Black Dragon Capital as part of
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.
Note 13: Intangible Assets
The carrying values of intangible assets were as follows:
December 31, 2022
December 31, 2021
Gross
Carrying
Amount
Accumulated
Amortization
(In thousands)
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
(In thousands)
Net
Carrying
Amount
Goodwill
$
862,253
$
— $
862,253
$
$
821,448
821,448
$
— $
821,448
Definite-lived intangible assets subject to
amortization:
Developed technology
Customer relationships
Trademarks
Backlog
In-service research and development
Non-compete agreements
Total intangible assets subject to
amortization
Indefinite-lived intangible assets not subject
to amortization:
Trademarks
Total intangible assets not subject
to amortization
Intangible assets
$
273,524
$
(190,808) $
82,716
$
241,499
$
(171,455) $
70,044
253,275
(129,730)
123,545
241,395
(117,064)
124,331
40,951
13,554
5,507
780
(30,077)
(11,192)
(5,342)
(612)
(612)
10,874
2,362
165
168
168
39,618
11,580
5,551
618
(26,271)
(8,827)
(5,206)
(283)
(283)
13,347
2,753
345
335
$
587,591
$
(367,761) $
219,830
$
540,261
$
(329,106) $
211,155
$
$
$
27,000
27,000
614,591
$
$
$
— $
27,000
— $
27,000
(367,761) $
246,830
$
$
$
27,000
27,000
567,261
$
$
$
— $
27,000
— $
27,000
(329,106) $
238,155
62
Segment Allocation of Goodwill and Trademarks
g
The changes in the carrying amount of goodwill assigned to reporting units in our reportable segments are as follows:
Balance at December 31, 2020
Acquisitions
Impairment
Translation impact
Balance at December 31, 2021
Acquisitions
Translation impact
Balance at December 31, 2022
Enterprise Solutions
Industrial
Automation Solutions
(In thousands)
Consolidated
$
$
$
474,747
$
314,988
$
—
—
(1,506)
473,241
$
6,528
(1,935)
41,749
(1,664)
(6,866)
348,207
$
44,068
(7,856)
477,834
$
384,419
$
789,735
41,749
(1,664)
(8,372)
821,448
50,596
(9,791)
862,253
The changes in the carrying amount of indefinite-lived trademarks are as follows:
Balance at December 31, 2020
Reclassify to definite-lived
Balance at December 31, 2021 and 2022
p
Annual Impairment Test
Annual Impairment Test
Enterprise Solutions
Industrial
Automation Solutions
(In thousands)
Consolidated
$
$
27,000
$
—
27,000
$
4,063
$
(4,063)
— $
31,063
(4,063)
27,000
h
d
The annual measurement date for our goodwill and indefinite-lived intangible assets impairment test is our fiscal November
The annual measurement date for our goodwill and indefinite-lived intangible assets impairment test is our fiscal November
month-end. For our 2022 goodwill impairment test, we performed a quantitative assessment for
of our reporting units and
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 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
determined that the fair value for the reporting unit was in excess of its carrying value. We performed a qualitative assessment
for the remaining fifive reporting units, and determined that it was more likely than not that the fair value of each reporting unit
for the remaining
reporting units, and determined that it was more likely than not that the fair value of each reporting unit
t record any goodwill impairment in 2022. We did not
was greater than its respective carrying value. Therefore, we did
was greater than its respective carrying value. Therefore, we did not record any goodwill impairment in 2022. We did
recognize any goodwill impairment from continuing operations in
impairment in 2021 in
i
$1.7 million i
recognize any goodwill impairment from continuing operations in 2021 or 2020
connection with the sale of our oil and gas business in Brazil. See Note 5.
connection with the sale of our oil and gas business in Brazil. See Note 5.
other than a $
h
illi
h
i
i
i
i
i
i
i
For our quantitative impairment test in 2022, the excess of the fair value over the carrying value for the reporting unit was
, 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
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
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. The discount rate used to estimate fair value was risk adjusted in
with cash flows associated with taxes and capital spending. The discount rate used to estimate fair value was risk adjusted in
consideration of the economic conditions in effect at the time of the impairment test. We also considered assumptions that
market participants may use. In our assessment, the discount rate was
, the 2023 to 2032 compounded annual revenue
market participants may use. In our assessment, the discount rate was 13.1% h
. By their nature, these assumptions involve risks and
, and the revenue growth rate beyond 2032 was 2.5%. By their nature, these assumptions involve risks and
growth rate was 4.9%, and the revenue growth rate beyond 2032 was
growth rate was
uncertainties. There is inherent risk associated with using an income approach to estimate fair values. If actual results are
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 impairment charges that could be material.
significantly different from our estimates or assumptions, we may have to recognize impairment charges that could be material.
d
d d
f h i
f h
di i
i
l
id
id
ff
h
h
i
i
i
i
l
i
We tested our indefinite-lived intangible asset, a trademark, for impairment during the fourth quarter using a quantitative
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
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.
to the carrying value. Significant assumptions to determine fair value included sales growth, royalty rates, and discount rates.
didWe did not recognize any indefinite-lived intangible asset impairment charges in
t recognize any indefinite-lived intangible asset impairment charges in 2022, 2021, or 2020.
p
Disposal Group Impairment
Disposal Group Impairment
p
p
Prior to the Tripwire divestiture in 2022, we recognized a goodwill impairment charge of
Prior to the Tripwire divestiture in 2022, we recognized a goodwill impairment charge of $
wrote down the carrying value of the Grass Valley disposal group and recognized asset impairments totaling
wrote down the carrying value of the Grass Valley disposal group and recognized asset impairments totaling $
during 2020. See Note 5.
during 2020. See Note 5.
$131.2 million during 2021. We also
during 2021. We also
$113.0 million
illi
illi
63
Amortization Expense
i
p
i
We recognized amortization expense in income from continuing operations of
We recognized amortization expense in income from continuing operations of $
iin 2022, 2021
illimillion iin 2024, $
as of
, respectively. We expect to recognize annual amortization expense of $
illi
, and 2020, respectively. We expect to recognize annual amortization expense of
$29.9 million
, and $
d
$32.2 million
$38.0 million iin 2023, $$34.2
illi
related to our intangible assets balance
$16.3 million iin 2027 related to our intangible assets balance
$28.7 million iin 2025, $
$18.2 million iin 2026
December 31, 2022.
$41.7 million, $
, and $
d
illi
illi
illi
illi
illi
b
d
The weighted-average amortization period for our customer relationships, developed technology, trademarks, in-service
The weighted-average amortization period for our customer relationships, developed technology, trademarks, in-service
, and
d
research and development, non-compete agreements, and backlog is
research and development, non-compete agreements, and backlog is
, respectively.
0.9 years, respectively.
19.0 years,
y
5.0 years,
y
8.0 years,
y
6.6 years,
y
3.5 years
y
y
At the beginning of 2021, we re-evaluated the useful life of a certain trademark in our Industrial Automation Solutions segment
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
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 and will re-evaluate this estimate if and when our expected use of the trademark changes. We began amortizing
$0.8 million for each of the years ended December 31, 2022
for each of the years ended December 31, 2022
h
the trademark in 2021, which resulted in amortization expense of $
i
and 2021. As of December 31, 2022 and 2021, the net book value of this trademark was $
$3.3 million,
illi
respectively.
respectively.
$2.5 million
illi
f hi
hi h
b
dand $
l d i
illi
k i
k
k
d
h
b
d
d
d
f
f
i
l
Note 14: Accrued Liabilities
The carrying values of accrued liabilities were as follows:
December 31,
2022
2021
(In thousands)
Wages, severance and related taxes
$
86,536
$
Accrued rebates
Employee benefits
Deferred revenue
Accrued interest
Lease liabilities
Other (individual items less than 5% of total current liabilities)
Accrued liabilities
Note 15: Severance, Restructuring, and Acquisition Integration Activities
Manufacturing Footprint Program
55,559
26,421
26,215
18,154
16,833
60,143
95,728
55,520
25,102
12,256
20,847
16,518
52,137
$
289,861
$
278,108
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
dustrial Automation Solutions segments.
Solutions and Industrial Automation Solutions segments.
, 2022
Acquisition Integration Program
We are integrating our recent acquisitions with our existing businesses to achieve desired cost savings, which are primarily
focused on consolidating existing and acquired facilities as well as other support functions. We recognized
$8.2 million,
$
of severance and other restructuring costs for this program during the years ended December 31,
$4.9 million of severance and other restructuring costs for this program during the years ended December 31,
, and $
d
$12.6 million
2022, 2021, and 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Automation
2022, 2021, and 2020, respectively.
Solutions segments.
We recognized $
illi
illi
illi
Cost Reduction Program
Cost Reduction Program
We executed a cost reduction program to streamline the organizational structure and invest in technology to drive productivity.
of severance and other restructuring costs for this program during the years ended
$4.0 million of severance and other restructuring costs for this program during the years ended
We recognized $
We recognized
December 31, 2021 and 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial
December 31, 2021 and 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial
Automation Solutions segments.
Automation Solutions segments.
$5.8 million
dand $
illi
illi
64
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:
Year Ended December 31, 2022
Enterprise Solutions
Industrial Automation Solutions
Total
Year Ended December 31, 2021
Enterprise Solutions
Industrial Automation Solutions
Total
Year Ended December 31, 2020
Enterprise Solutions
Industrial Automation Solutions
Total
Severance
Other Restructuring
and Integration Costs
(In thousands)
Total Costs
$
$
$
$
$
$
1,070
493
1,563
1,121
2,555
3,676
1,263
1,935
3,198
$
$
$
$
$
$
7,060
7,847
14,907
11,062
3,629
14,691
4,859
863
5,722
$
$
$
$
$
$
8,130
8,340
16,470
12,183
6,184
18,367
6,122
2,798
8,920
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 hthe
restructuring and integration costs related to these actions were paid as incurred or are payable within the next
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.
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 financial statement line item in the
Consolidated Statement of Operations:
Cost of sales
Selling, general and administrative expenses
Total
Years Ended December 31,
2021
2020
2022
(In thousands)
$
$
10,060
6,410
16,470
$
$
8,493
9,874
18,367
$
$
585
8,335
8,920
65
Note 16: Long-Term Debt and Other Borrowing Arrangements
The carrying values of our long-term debt and other borrowing arrangements were as follows:
Revolving credit agreement due 2026
Senior subordinated notes:
4.125% Senior subordinated notes due 2026
3.375% Senior subordinated notes due 2027
3.875% Senior subordinated notes due 2028
3.375% Senior subordinated notes due 2031
Total senior subordinated notes
Less unamortized debt issuance costs
Long-term debt
g
Revolving Credit Agreement due 2026
g
December 31,
2022
2021
(In thousands)
$
—
$
—
—
480,330
373,590
320,220
1,174,140
(12,964)
1,161,176
$
227,240
511,290
397,670
340,860
1,477,060
(17,069)
1,459,991
$
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; inventory; and property, plant and equipment of certain of our
subsidiaries in the United States, Canada, Germany, the United Kingdom and the Netherlands. Interest on outstanding
borrowings is variable, based upon LIBOR or other similar indices in foreign jurisdictions, plus a spread that ranges from
1.25%-1.75%, depending upon our leverage position. Outstanding borrowings in the U.S. and Canada may also, at our election,
be priced on a base rate plus a spread that ranges from 0.25% — 0.75%, depending on our leverage position. We pay a
commitment fee on our available borrowing capacity of 0.25%. In the event we borrow more than 90% of our combined
borrowing base or our borrowing base availability is less than $20.0 million, we are subject to a fixed charge coverage ratio
covenant. 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.
$2.3 million
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
In 2021, we repurchased the full €300.0 million
We had outstanding €300.0 million aggregate principal amount of 2.875% senior subordinated notes due 2025 (the 2025
2025 Notes outstanding for cash consideration of €302.2 million
Notes).
€€302.2 million
loss on debt extinguishment including the
$5.7 million loss on debt extinguishment including the
$358.5 million), including a redemption premium, and recognized a
(($
write-off of unamortized debt issuance costs.
€€300.0 million 2025 Notes outstanding for cash consideration of
), including a redemption premium, and recognized a $
i d d b i
d h f ll
illi
f
illi
ff
h
i
In 2022, we repurchased the full €200.0 million
We had outstanding €200.0 million aggregate principal amount of 4.125% senior subordinated notes due 2026 (the 2026
€€204.1 million
2026 Notes outstanding for cash consideration of €204.1 million
Notes).
(($
loss on debt extinguishment including the
$6.4 million loss on debt extinguishment including the
$227.9 million), including a redemption premium, and recognized a
write-off of unamortized debt issuance costs.
€€200.0 million 2026 Notes outstanding for cash consideration of
), including a redemption premium, and recognized a $
i d d b i
d h f ll
illi
f
illi
ff
h
i
We have outstanding €450.0 million aggregate principal amount of 3.375% senior subordinated notes due 2027 (the 2027
Notes). The carrying value of the 2027 Notes as of December 31, 2022 is $480.3 million. The 2027 Notes are guaranteed on a
senior subordinated basis by our current and future domestic subsidiaries. The 2027 Notes rank equal in right of payment with
our senior subordinated notes due 2031 and 2028 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
January 15 and July 15 of each year.
66
We have outstanding €350.0 million aggregate principal amount of 3.875% senior subordinated notes due 2028 (the 2028
Notes). The carrying value of the 2028 Notes as of December 31, 2022 iis $
$373.6 million. The 2028 Notes are guaranteed on a
senior subordinated basis by our current and future domestic subsidiaries. The 2028 Notes rank equal in right of payment with
our senior subordinated notes due 2031 and 2027 and with any future subordinated debt, and they are subordinated to all of our
senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on
March 15 and September 15 of each year.
. The 2
illi
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. The 2031 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The
2031 Notes rank equal in right of payment with our senior subordinated notes due 2028 and 2027 and with any future
s, including
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 January 15 and July 15 of each year, commencing January 15, 2022. In 2021,
our Revolver. Interest is payable semiannually on January 15 and July 15 of each year, commencing January 15, 2022.
we paid approximately $5.9 million of fees associated with the issuance of the 2031 Notes, which are being amortized over the
life of the 2031 Notes using the effective interest method. We used the net proceeds from this offering, along with cash on
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.
h
h d
f d h f ll
f h
di
b
d
f
i
i
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:
2027
Senior Subordinated Notes due
2028
2031
Year
Percentage
Year
Percentage
Year
Percentage
2022
2023
2024
101.688 % 2023
101.125 % 2024
100.563 %
2025
2025 and thereafter
100.000 % 2026 and thereafter
Fair Value of Long-Term Debt
g
101.938 % 2026
101.292 % 2027
2028
100.646 %
100.000 % 2029 and thereafter
101.688 %
100.844 %
100.422 %
100.000 %
The fair value of our senior subordinated notes as of December 31, 2022 was approximately $
based on quoted
d
prices of the debt instruments in inactive markets (Level 2 valuation). This amount represents the fair values of our senior
prices of the debt instruments in inactive markets (Level 2 valuation). This amount represents the fair values of our senior
subordinated notes with a carrying value of $
subordinated notes with a carrying value of $
1,174.1 million as of
illi
December 31, 2022.
$1,046.3 million b
illi
d
b
Maturities
i i
Maturities on outstanding long-term debt and other borrowings during each of the five years subsequent to December 31, 2022
are as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Note 17: Net Investment Hedge
$
$
—
—
—
—
480,330
693,810
1,174,140
All of our euro denominated notes were issued by Belden Inc., a USD functional currency entity. As of December 31, 2022,
€567.8 million of our outstanding foreign denominated debt is designated as a net investment hedge on the foreign currency risk
of our net investment in our euro foreign operations. The objective of the hedge is to protect the net investment in the foreign
operation against adverse changes in the euro exchange rate. The transaction gain or loss is reported in the translation
adjustment section of other comprehensive income. For the years ended December 31, 2022, 2021, and 2020, the transaction
adjustment section of other comprehensive income. For the years ended December 31, 2022, 2021, and 2020, the transaction
$67.6 million,
gain (loss) associated with the net investment hedge reported in other comprehensive income was
gain (loss) associated with the net investment hedge reported in other comprehensive income was $
dand $(
, respectively, of
€€532.2 million, respectively, of
our outstanding debt that was previously designated as a net investment hedge. After the de-designation, transaction gains or
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.
losses associated with this debt are reported in income from continuing operations.
€€200.0 million
, respectively. During 2022 and 2020, we de-designated €200.0 million
$(56.2) million, respectively. During 2022 and 2020, we de-designated
illi
dand €532.2 million
$41.9 million, $
illi
illi
)
67
Note 18: Income Taxes
Income (loss) before taxes:
United States operations
Foreign operations
Income before taxes
Income tax expense (benefit):
Currently payable
United States federal
United States state and local
Foreign
Deferred
United States federal
United States state and local
Foreign
Income tax expense
2022
Years Ended December 31,
2021
(in thousands)
2020
$
$
$
$
97,900
219,493
317,393
34,310
4,801
6,677
45,788
(446)
(50)
4,353
3,857
49,645
$
$
$
$
188,650 $
38,130
226,780 $
(102,300)
193,116
90,816
1,649 $
2,453
15,984
20,086
16,354
5,988
(14,489)
7,853
27,939 $
3,488
906
13,346
17,740
372
(1,923)
3,909
2,358
20,098
In addition to the above income tax expense associated with continuing operations, we also recorded an income tax benefit
in 2022, 2021,
in 2022, 2021, and 2020, respectively.
associated with discontinued operations of $
$2.5 million, $2.7 million, and $31.0 million,
illi
,
Effective income tax rate reconciliation from continuing operations:
United States federal statutory rate
State and local income taxes
Impact of change in tax contingencies
Foreign income tax rate differences
Impact of change in deferred tax asset valuation allowance
Domestic permanent differences and tax credits
Impact of share-based compensation
Impact of CARES act
Years Ended December 31,
2021
2022
2020
21.0%
1.2%
0.1%
(10.9)%
(2.5)%
6.3%
0.4%
—%
15.6%
21.0%
3.4%
(0.7)%
0.7%
(19.1)%
6.0%
1.0%
—%
12.3%
21.0%
(0.7)%
1.5%
(27.9)%
3.0%
25.5%
1.0%
(1.3)%
22.1%
In 2022, the most significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of
foreign tax rate differences. Foreign tax rate differences resulted in an income tax 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 $20.0 million in 2022, primarily associated with our foreign income inclusions.
$20.0 million
In addition, we recognized a total income tax benefit from changes in deferred tax asset valuation allowances of $
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.
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.
$7.9 million iin
illi
If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable
U.S. tax rules and regulations as a result of the repatriation. However, it is our intent to permanently reinvest the earnings of our
non-U.S. subsidiaries in those operations and for continued non-U.S. growth opportunities.
68
The components of deferred income taxes were as follows:
Components of deferred income tax balances:
Deferred income tax liabilities:
Plant, equipment, and intangibles
Right of use asset
Deferred income tax assets:
Postretirement, pensions, and stock compensation
Reserves and accruals
Net operating loss, capital loss, and tax credit carryforwards
Lease liability
Valuation allowances
Net deferred income tax liability
December 31,
2022
2021
(In thousands)
$
$
$
(94,189)
(19,853)
(114,042)
(89,632)
(18,254)
(107,886)
17,368
25,519
149,607
19,938
(142,330)
70,102
(43,940)
$
32,201
20,362
84,285
18,255
(66,594)
88,509
(19,377)
On February 22, 2022, we completed the divestiture of Tripwire. The increase in deferred tax assets related to net operating
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
deferred tax asset associated with the capital
l
loss, capital loss, and tax credit carryforwards primarily relates to the $
loss that was derived on the sale. A full valuation allowance has been placed against this deferred tax asset as we do not expect
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.
$72.8 million d f
illi
d i h h
ili
bl
b
d
i
i
i
i
i
i
i
f
b
illi
illi
h d
of gross net operating loss carryforwards, $
of tax credit
di
$101.3 million of gross net operating loss carryforwards,
As of December 31, 2022, we had $
loss carryforwards. Unless otherwise utilized, net operating loss
loss carryforwards. Unless otherwise utilized, net operating loss
of gross capital
$547.0 million of gross capital
carryforwards, and $
carryforwards, and
$6.6 million
carryforwards will expire upon the filing of the tax returns for the following respective years:
carryforwards will expire upon the filing of the tax returns for the following respective years: $
$50.5 million between 2026 and 2041. Net operating loss with an indefinite carryforward period
between 2026 and 2041. Net operating loss with an indefinite carryforward period
between 2023 and 2025, and
between 2023 and 2025, and $
$101.3 million in net operating loss carryforwards, we have determined, based on the weight of all
in net operating loss carryforwards, we have determined, based on the weight of all
total $
. Of the $
f h
illi
l
of these net operating loss carryforwards
$42.1 million of these net operating loss carryforwards
available evidence, both positive and negative, that we will utilize $
available evidence, both positive and negative, that we will utilize
within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the net
within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the net
operating loss carryforwards.
operating loss carryforwards.
$1.5 million iin 2022, $
$6.3 million f
illi
$42.7 million
illi
illi
illi
illi
illi
Unless otherwise utilized, tax credit carryforwards of $
Unless otherwise utilized, tax credit carryforwards of
between 2023 and 2025, and
between 2023 and 2025, and $
period total
period total $
we will utilize $
ili
ill
has been recorded on the remaining portion of the tax credit carryforwards.
has been recorded on the remaining portion of the tax credit carryforwards.
$0.7 million
f ll
between 2026 and 2041. Tax credit carryforwards with an indefinite carryforward
$3.3 million between 2026 and 2041. Tax credit carryforwards with an indefinite carryforward
$1.7 million. We have determined, based on the weight of all available evidence, both positive and negative, that
. We have determined, based on the weight of all available evidence, both positive and negative, that
of these tax credit carryforwards within their respective expiration periods. A valuation allowance
$3.5 million of these tax credit carryforwards within their respective expiration periods. A valuation allowance
will expire as follows: $
$0.6 million iin 2022, $
$6.3 million
illi
illi
illi
illi
illi
illi
ill
i
l
h
Unless otherwise utilized, of the $
i
and 2027 and the remaining
and 2027 and the remaining $
as we do not expect to be able to utilize the capital losses.
bl
ili d
ili
l l
b
h
d
i
$547.0 million in gross capital loss carryforwards,
illi
f h
will expire between 2025
b
have an indefinite carryforward period. A full valuation allowance has been recorded
$44.2 million have an indefinite carryforward period. A full valuation allowance has been recorded
in gross capital loss carryforwards, $
$502.8 million
illi
illi
ill
i
The following tables summarize our net operating loss carryforwards and tax credit carryforwards as of December 31, 2022 by
jurisdiction:
69
Australia
Germany
Netherlands
Other
United Kingdom
United States - Federal and various states
Total
Belgium
United States
Total
Net Operating Loss
Carryforwards
(In thousands)
8,551
19,824
1,071
10,502
11,428
49,955
101,331
Tax Credit Carryforwards
(In thousands)
1,227
5,072
6,299
$
$
$
$
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:
$0.4 million
2022
2021
Balance at beginning of year
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years - Settlement
Reduction for tax positions of prior years - Statute of limitations
Balance at end of year
$
$
$
(In thousands)
5,821
359
—
—
—
6,180
$
8,573
422
168
(3,264)
(78)
5,821
The balance of $6.2 million at December 31, 2022 reflects tax positions that, if recognized, would impact our effective tax rate.
$6.2 million
Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses,
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.
Note 19: Pension and Other Postretirement Benefits
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. The U.S. defined benefit
pension plan is closed to new entrants. Annual contributions to retirement plans equal or exceed the minimum funding
requirements of applicable local regulations. The assets of the funded pension plans we sponsor are maintained in various trusts
and are invested primarily in equity and fixed income securities.
Benefits provided to employees under defined contribution plans include cash and stock contributions by the Company based
on either hours worked by the employee or a percentage of the employee’s compensation. Defined contribution expense for
2022, 2021, and 2020 was $
$13.4 million, $12.2 million, and $8.8 million, respectively.
illi
,
70
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. plan is only for employees who retired prior to 1989 as well as certain other employees who
were near retirement and elected to receive certain benefits.
The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets as well as a
statement of the funded status and balance sheet reporting for these plans.
Years Ended December 31,
Change in benefit obligation:
Pension Benefits
2022
2021
Other Benefits
2022
2021
(In thousands)
Benefit obligation, beginning of year
$
(471,834) $
(492,925) $
(27,625) $
(29,498)
Service cost
Interest cost
Participant contributions
Actuarial gain
Acquisitions and divestitures
Settlements
Other
Foreign currency exchange rate changes
Benefits paid
(3,491)
(9,248)
(350)
123,851
(9,257)
6,567
—
33,316
13,022
(3,953)
(7,512)
(143)
19,778
(12,886)
5,855
—
7,226
12,726
(24)
(761)
(5)
5,690
—
—
(21)
1,409
1,393
(33)
(727)
(4)
1,391
—
—
—
(227)
1,473
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.
Years Ended December 31,
Change in plan assets:
Pension Benefits
2022
2021
Other Benefits
2022
2021
(In thousands)
Fair value of plan assets, beginning of year
$
394,026
$
361,802
$
$—
Actual return on plan assets
Employer contributions
Plan participant contributions
Acquisitions and divestitures
Settlements
Foreign currency exchange rate changes
Benefits paid
Fair value of plan assets, end of year
Funded status, end of year
Amounts recognized in the balance sheets:
Prepaid benefit cost
Accrued benefit liability, current
Accrued benefit liability, noncurrent
Net funded status
$
$
$
$
(84,595)
12,080
350
6,772
(6,567)
(27,712)
(13,022)
32,467
11,618
143
9,339
(5,790)
(2,827)
(12,726)
—
1,388
5
—
—
—
(1,393)
281,332
$
394,026
$
— $
—
—
1,469
4
—
—
—
(1,473)
—
(36,092) $
(77,808) $
(19,944) $
(27,625)
16,251
$
20,177
$
— $
(3,106)
(49,237)
(3,173)
(94,812)
(1,353)
(18,591)
(36,092) $
(77,808) $
(19,944) $
—
(1,440)
(26,185)
(27,625)
The accumulated benefit obligation for all defined benefit pension plans was $
31, 2022 and 2021, respectively.
$305.7 million and $494.7 million at December
illi
71
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with a
projected benefit obligation in excess of plan assets were $
, re
$210.4 million, respectively, as of
December 31, 2022 and $265.5 million, $261.3 million, and $167.5 million, respectively, as of December 31, 2021.
$262.7 million, $
$251.0 million
, and $
d
illi
illi
illi
The accumulated benefit obligation and fair value of plan assets for other postretirement benefit plans with an accumulated
benefit obligation in excess of plan assets were $
$0.0 million, respectively, as of December 31, 2022 and were
dand $
$27.6 million and $0.0 million, respectively, as of December 31, 2021. The following table provides the components of net
periodic benefit costs for the plans.
$19.9 million
illi
illi
,
Years Ended December 31,
Components of net periodic benefit cost:
Service cost
Interest cost
Pension Benefits
2021
2022
2020
2022
(In thousands)
Other Benefits
2021
2020
$
3,491
$
3,953
$
3,930
$
24
$
33
$
9,248
7,512
9,729
9,729
761761
—
—
—
—
(73)
727
727
—
—
—
—
(43)
33
809
—
—
—
—
(59)
783
Expected return on plan assets
(16,023)
(16,337)
(16,357)
Amortization of prior service cost
Settlement loss (gain)
Other adjustments
Net loss (gain) recognition
174
1,189
—
734
110
(18)
(191)
3,764
190
3,153
—
2,930
Net periodic benefit cost (income)
$
(1,187) $
(1,207) $
3,575
$
712
$
717
$
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.
The following table presents the assumptions used in determining the benefit obligations and the net periodic benefit cost
amounts.
Weighted average assumptions for benefit obligations at year end:
Discount rate
Salary increase
Cash balance interest credit rate
Weighted average assumptions for net periodic cost for the year:
Discount rate
Salary increase
Cash balance interest credit rate
Expected return on assets
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year
Rate that the cost trend rate gradually declines to
Year that the rate reaches the rate it is assumed to remain at
Years Ended December 31,
Other Benefits
Years Ended December 31,
2022
2021
2022
2021
4.9 %
3.2 %
4.5 %
2.0 %
3.3 %
4.7 %
4.4 %
N/A
N/A
N/A
2.0 %
3.3 %
4.7 %
1.5 %
3.2 %
4.6 %
4.6 %
N/A
N/A
N/A
5.2 %
N/A
N/A
2.9 %
N/A
N/A
N/A
5.3 %
5.0 %
2023
2.9 %
N/A
N/A
2.5 %
N/A
N/A
N/A
5.4 %
5.0 %
2027
Plan assets are invested using a total return investment approach whereby a mix of equity securities and fixed income securities
are used to preserve asset values, diversify risk, and achieve our target investment return benchmark. Investment strategies and
asset allocations are based on consideration of the plan liabilities, the plan’s funded status, and our financial condition.
Investment performance and asset allocation are measured and monitored on an ongoing basis. Plan assets are managed in a
balanced portfolio comprised of two major components: an asset growth portion and an asset protection portion. The expected
role of asset growth investments is to maximize the long-term real growth of assets, while the role of asset protection
72
investments is to generate current income, provide for more stable periodic returns, and provide some protection against a
permanent loss of capital.
i
Absent regulatory or statutory limitations, the target asset allocation for the investment of the assets for our ongoing pension
Absent regulatory or statutory limitations, the target asset allocation for the investment of the assets for our ongoing pension
in asset protection investments and 40-50% in asset growth investments and for our pension plans where the
plans is
in asset growth investments and for our pension plans where the
i
plans is 50-60% i
majority of the participants are in payment or terminated vested status is
in asset protection investments and 10-40% iin
majority of the participants are in payment or terminated vested status is 60-90% i
asset growth investments. Asset growth investments include a diversified mix of U.S. and international equity, primarily
asset growth investments. Asset growth investments include a diversified mix of U.S. and international equity, primarily
invested through investment funds. Asset protection investments include government securities and investment grade corporate
invested through investment funds. Asset protection investments include government securities and investment grade corporate
bonds, primarily invested through investment funds and group insurance contracts. We develop our expected long-term rate of
bonds, primarily invested through investment funds and group insurance contracts. We develop our expected long-term rate of
return assumptions based on the historical rates of returns for securities and instruments of the type in which our plans invest.
return assumptions based on the historical rates of returns for securities and instruments of the type in which our plans invest.
d
d
i
i
The expected long-term rate of return on plan assets reflects the average rate of earnings expected on the invested assets and
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
future assets to be invested to provide for the benefits included in the projected benefit obligation. 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
h
long-term assumption based on an analysis of historical and forward looking returns considering the plan’s actual and target
long-term assumption based on an analysis of historical and forward looking returns considering the plan’s actual and target
asset mix.
bi d
di i
i h
h
k
d
f
f
i
i
l
i
The following table presents the fair values of the pension plan assets by asset category.
December 31, 2022
December 31, 2021
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Fair Market
Value at
December
31, 2022
Significant
Observable
Inputs
(Level 2)
Investments
Measured at
Net Asset
Value
Fair Market
Value at
December
31, 2021
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Investments
Measured at
Net Asset
Value
(In thousands)
(In thousands)
$
49,153
$
4,384
$
— $
44,769
$
77,687
$
2,913
$
— $
83,047
51,227
5,393
—
45,834
77,299
6,267
—
56,028
56,318
67,406
22,680
14,629
10,531
—
—
—
—
—
2,011
7,175
—
—
—
9,388
$ 281,332
$
3,242
13,019
$
—
9,186
$
54,307
64,255
60,231
108,729
22,680
16,939
14,629
22,713
15,103
10,531
6,146
259,127
—
—
—
—
—
731
97,646
11,507
70,284
—
—
—
7,320
22,713
17,367
5,344
359,749
11,301
$ 394,026
$
5,271
14,451
$
—
12,238
$
Asset Category:
Equity securities(a)
U.S. equities fund
Non-U.S. equities
fund
Debt securities(b)
Government bond
fund
Corporate bond
fund
Fixed income
fund(c)
Liability driven
investment fund(d)
Other
investments(e)
Cash & equivalents
Total
(a) This category includes investments in actively managed and indexed investment funds that invest in a diversified pool of equity securities of
companies located in the U.S., Canada, Western Europe and other developed countries throughout the world. The funds are valued using the
net asset value method in which an average of the market prices for the underlying investments is used to value the fund. Equity securities
held in separate accounts are valued based on observable quoted prices on active exchanges.
(b) This category includes investments in investment funds that invest in U.S. treasuries; other national, state and local government bonds; and
corporate bonds of highly rated companies from diversified industries. The funds are valued using the net asset value method in which an
average of the market prices for the underlying investments is used to value the fund.
(c) This category includes guaranteed insurance contracts and annuity policies.
(d) This category includes investments in funds that are designed to provide leveraged exposure to changes in interest rates. The fund purchases
shares of funds that invest in government bonds, debt repurchase agreements, total return swaps and interest rate swaps.
(e) This category includes investments in hedge funds that pursue multiple strategies in order to provide diversification and balance risk/return
objectives, real estate funds, and private equity funds.
73
The plans do not invest in individual securities. All investments are through well diversified investment funds. As a result, there
are no significant concentrations of risk within the plan assets.
The following table reflects the benefits as of December 31, 2022 expected to be paid in each of the next five years and in the
aggregate for the five years thereafter from our pension and other postretirement plans. Because our other postretirement plans
are unfunded, the anticipated benefits with respect to these plans will come from our own assets. Because our pension plans are
primarily funded plans, the anticipated benefits with respect to these plans will come primarily from the trusts established for
these plans.
2023
2024
2025
2026
2027
2027-2031
Total
Pension
Plans
Other
Plans
(In thousands)
$
20,837
$
22,218
20,155
21,101
20,756
97,066
1,388
1,392
1,395
1,397
1,403
7,062
$
202,133
$
14,037
We anticipate contributing
2023.
te contributing $
$8.2 million
illi
dand $
to our pension and other postretirement plans, respectively, during
$1.4 million to our pension and other postretirement plans, respectively, during
illi
The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic
benefit cost at December 31, 2022 and the changes in these amounts during the year ended December 31, 2022 are as follows.
Components of accumulated other comprehensive loss:
Net actuarial loss (gain)
Net prior service cost
Changes in accumulated other comprehensive loss:
Net actuarial loss (gain), beginning of year
Amortization of actuarial gain (loss)
Actuarial gain
Asset loss
Settlement loss recognized
Currency impact
Net actuarial loss (gain), end of year
Prior service cost, beginning of year
Amortization of prior service cost
Currency impact
Prior service cost, end of year
74
Pension
Benefits
Other
Benefits
(In thousands)
11,695
2,197
13,892
$
$
(7,117)
—
(7,117)
Pension
Benefits
Other
Benefits
(In thousands)
39,995
$
(734)
(123,851)
100,618
(1,189)
(3,144)
11,695
2,661
(174)
(290)
$
$
2,197
$
(1,770)
73
(5,690)
—
—
270
(7,117)
—
—
—
—
$
$
$
$
$
$
Note 20: Comprehensive Income and Accumulated Other Comprehensive Income (Loss)
The accumulated balances related to each component of other comprehensive income (loss), net of tax, are as follows:
Balance at December 31, 2020
Other comprehensive income attributable to
Belden before reclassifications
Amounts reclassified from accumulated other
comprehensive income
Net current period other comprehensive
income attributable to Belden
Balance at December 31, 2021
Other comprehensive income attributable to
Belden before reclassifications
Amounts reclassified from accumulated other
comprehensive income
Net current period other comprehensive
income attributable to Belden
Balance at December 31, 2022
$
$
$
Foreign Currency
Translation
Component
Pension and Other
Postretirement
Benefit Plans
(In thousands)
Accumulated
Other Comprehensive
Income (Loss)
(131,181) $
(60,670) $
(191,851)
90,690
(977)
89,713
(41,468) $
42,531
(3,007)
39,524
(1,944) $
28,653
2,919
31,572
(29,098) $
23,629
1,542
25,171
(3,927) $
119,343
1,942
121,285
(70,566)
66,160
(1,465)
64,695
(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):
Amortization of pension and other postretirement benefit plan items:
Settlement losses
Actuarial losses
Prior service cost
Total before tax
Tax benefit
Total net of tax
Accumulated Other
Comprehensive Income
(Loss) (1)
(In thousands)
Consolidated Statements
of Operations and
Comprehensive Income
(Loss)
$
$
1,189
661
174
2,024
(482)
1,542
(2)
(2)
(2)
(1) We also reclassified $3.0 million
(1)
(2)
(2) The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic
of accumulated foreign currency translation gains associated with the sale of Tripwire.
of accumulated foreign currency translation gains associated with the sale of Tripwire.
benefit costs (see Note 19).
Note 21: Share-Based Compensation
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:
Total share-based compensation cost
Income tax benefit
$
75
2022
Years Ended December 31,
2021
(In thousands)
22,627
$
5,385
23,454
5,582
$
2020
17,405
4,142
We currently have outstanding stock appreciation rights (SARs), restricted stock units with service vesting conditions, restricted
stock units with performance vesting conditions, and restricted stock units with market conditions. We grant SARs with an
exercise price equal to the closing market price of our common stock on the grant date. Generally, SARs may be converted into
shares of our common stock in equal amounts on each of the first three anniversaries of the grant date and expire 10 years from
the grant date. Certain awards provide for accelerated vesting in certain circumstances, including following a change in control
of the Company. Restricted stock units with service conditions generally vest 3-5 years from the grant date. Restricted stock
units issued based on the attainment of the performance conditions generally vest on the second or third anniversary of their
grant date. Restricted stock units issued based on the attainment of market conditions generally vest on the third anniversary of
their grant date.
We recognize compensation cost for all awards based on their fair values. The fair values for SARs are estimated on the grant
date using the Black-Scholes-Merton option-pricing formula which incorporates the assumptions noted in the following table.
Expected volatility is based on historical volatility, and expected term is based on historical exercise patterns of SAR holders.
The fair value of restricted stock units with service vesting conditions or performance vesting conditions is the closing market
price of our common stock on the date of grant. We estimate the fair value of certain restricted stock units with market
conditions using a Monte Carlo simulation valuation model with the assistance of a third party valuation firm. Compensation
costs for awards with service conditions are amortized to expense using the straight-line method. Compensation costs for
awards with performance conditions and graded vesting are amortized to expense using the graded attribution method.
During the year ended December 31, 2020, certain restricted stock units with performance vesting conditions were modified as
a result of approved changes to the performance targets. There were no other changes to the terms of the restricted stock units.
The modification was applicable to all employees who were previously granted the affected restricted stock units. Prior to the
modification, the performance targets were not expected to be achieved. Therefore, we had not recognized any expense for
these restricted stock units on a cumulative basis. As of the modification date, we expected to recognize total incremental
compensation expense as a result of the modification of $4.4 million. The expense will be recognized over the applicable
service periods, which extend to 2023.
Weighted-average fair value of SARs granted
Total intrinsic value of SARs exercised
Tax benefit from SARs exercised
Weighted-average fair value of restricted stock units granted
Total fair value of restricted stock units vested
Expected volatility
Expected term (in years)
Risk-free rate
Dividend yield
Years Ended December 31,
2020
2021
2022
(In thousands, except weighted average fair
value and assumptions)
$
$
21.85
4,384
678
61.61
16,830
43.00 %
5.6
1.89 %
0.37 %
18.30
1,581
327
51.76
12,623
45.34 %
5.7
0.70 %
0.44 %
$
18.29
545
26
41.75
6,600
37.55 %
5.7
1.44 %
0.39 %
SARs
Restricted Stock Units
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Number
Aggregate
Intrinsic
Value
Number
Weighted-
Average
Grant-Date
Fair Value
(In thousands, except exercise prices, fair values, and contractual terms)
1,244
$
165
(340)
(111)
958
282
676
$
$
$
63.18
53.83
56.18
62.64
64.13
50.19
69.95
n/a
n/a
n/a
n/a
4.8
8.5
3.3
$
$
$
n/a
n/a
n/a
n/a
$
964
395
(307)
(155)
10,017
897
$
50.08
61.61
54.70
51.37
54.59
6,132
3,885
Outstanding at January 1, 2022
Granted
Exercised or converted
Forfeited or expired
Outstanding at December 31, 2022
Vested or expected to vest at December 31, 2022
Exercisable or convertible at December 31, 2022
76
At December 31, 2022, the total unrecognized compensation cost related to all nonvested awards was $34.9 million. That cost
is expected to be recognized over a weighted-average period of 2.0 years. Historically, we have issued treasury shares, if
available, to satisfy award conversions and exercises.
Note 22: Share Repurchases
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 not 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 December 31, 2022, we had $65.0 million of authorizations remaining under the program.
Note 23: Market Concentrations and Risks
Concentrations of Credit
We sell our products to many customers in several markets across multiple geographic areas. 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
At December 31, 2022, we were committed to purchase approximately 4.2 million pounds of copper at an aggregate fixed cost
of $15.6 million. At December 31, 2022, this fixed cost was $0.3 million less than the market cost that would be incurred on a
spot purchase of the same amount of copper. The aggregate market cost was based on the current market price of copper
obtained from the New York Mercantile Exchange.
Labor
Approximately 27% of our labor force is covered by collective bargaining agreements at various locations around the world.
Approximately 25% of our labor force is covered by collective bargaining agreements that we expect to renegotiate during
2023.
Fair Value of Financial Instruments
instruments consist primarily of cash and cash equivalents,
trade payables, and debt
Our financial
instruments. The carrying amounts of cash and cash equivalents, trade receivables, and trade payables at December 31, 2022 are
considered representative of their respective fair values. The fair value of our senior subordinated notes at December 31, 2022
and 2021 was approximately $1,046.3 million and $1,509.2 million, respectively, based on quoted prices of the debt
instruments in inactive markets (Level 2 valuation). This amount represents the fair values of our senior subordinated notes
with a carrying value of $1,174.1 million and $1,477.1 million as of December 31, 2022 and 2021, respectively.
trade receivables,
Note 24: Contingent Liabilities
General
Various claims are asserted against us in the ordinary course of business including those pertaining to income tax examinations,
product liability, customer, employment, vendor, and patent matters. Based on facts currently available, management believes
that the disposition of the claims that are pending or asserted will not have a materially adverse effect on our financial position,
operating results, or cash flow.
Letters of Credit, Guarantees and Bonds
At December 31, 2022, we were party to unused standby letters of credit, bank guarantees, and surety bonds totaling $7.9
million, $5.6 million, and $3.8 million, respectively. These commitments are generally issued to secure obligations we have for
a variety of commercial reasons, such as workers compensation self-insurance programs in several states and the importation
and exportation of product.
77
Note 25: Supplemental Cash Flow Information
Supplemental cash flow information is as follows:
2022
Income tax refunds received
Income taxes paid
Interest paid
Note 25: Subsequent Events
$
Years Ended December 31,
2021
(In thousands)
6,120
$
(40,139)
(54,176)
16,480
(71,255)
(45,168)
$
2020
4,460
(25,259)
(53,029)
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. Dr. 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.
78
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Securities Exchange Act Rules 13a-15(e) and 15d-15(e), our management, under the supervision of our
Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. As permitted,
that evaluation excluded the business operations of Macmon, NetModule, and CAI which were acquired in 2022. The acquired
business operations excluded from our evaluation collectively constituted approximately 4% and 7% of our total assets and net
assets as of December 31, 2022, respectively, and 1% and (2)% of our revenues and operating income for the year ended
December 31, 2022, respectively. The operations of the acquired business will be included in our 2023 evaluation. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of December 31, 2022.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal controls over financial reporting for the
Company. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities
Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the company’s principal executive
and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
•
•
•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the
company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent
internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
limitations,
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because
of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance
and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can
also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these
inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk.
The Company’s management assessed the effectiveness of the Company’s internal controls over financial reporting as of
December 31, 2022. In making this assessment, the Company’s management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO) in Internal Control-Integrated Framework.
Based on that assessment, the Chief Executive Officer and Chief Financial Officer concluded as of December 31, 2022, the
Company’s internal control over financial reporting was effective.
Our internal controls over financial reporting as of December 31, 2022 have been audited by Ernst & Young LLP, an
independent registered public accounting firm, as stated in their report that follows.
Changes to Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during the year ended December 31, 2022
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
79
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Belden Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Belden Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission 2013 framework (the COSO criteria). In our opinion, Belden Inc. (the Company) maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Macmon secure GmbH (“Macmon”), NetModule AG (“NetModule”), and Communication Associates, Inc. (“CAI”),
which are included in the 2022 consolidated financial statements of the Company and constituted 4% and 7% of total and net
assets, respectively, as of December 31, 2022 and 1% and (2)% of revenues and operating income for the year then ended. Our
audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over
financial reporting of Macmon, NetModule, and CAI.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of Belden Inc. as of December 31, 2022 and 2021, and the related consolidated
statements of operations, comprehensive income, stockholders' equity and cash flows for each of the three years in the period
ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a) and our
report dated February 24, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
St. Louis, Missouri
February 24, 2023
80
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
81
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information regarding directors is incorporated herein by reference to “Item I-Election of Directors,” as described in the Proxy
Statement. Information regarding executive officers is set forth in Part I herein under the heading “Executive Officers.” The
additional information required by this Item is incorporated herein by reference to “Corporate Governance” (opening paragraph
and table), “Corporate Governance-Audit Committee,” “Ownership Information-Delinquent Section 16(a) Reports,” “Corporate
Governance-Corporate Governance Documents” and “Other Matters-Stockholder Proposals for the 2024 Annual Meeting,” as
described in the Proxy Statement.
Item 11. Executive Compensation
Incorporated herein by reference to “Executive Compensation,” “Corporate Governance-Director Compensation,” “Corporate
Governance-Related Party Transactions and Compensation Committee Interlocks” and “Corporate Governance-Board
Leadership Structure and Role in Risk Oversight” as described in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Incorporated herein by reference to “Ownership Information-Equity Compensation Plan Information on December 31, 2022”
and “Ownership Information-Stock Ownership of Certain Beneficial Owners and Management” as described in the Proxy
Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Incorporated herein by reference to “Corporate Governance-Related Party Transactions and Compensation Committee
Interlocks” and “Corporate Governance” (paragraph following the table) as described in the Proxy Statement.
Item 14. Principal Accountant Fees and Services
Incorporated herein by reference to “Public Accounting Firm Information-Fees to Independent Registered Public Accountants
for 2022 and 2021” and “Public Accounting Firm Information-Audit Committee’s Pre-Approval Policies and Procedures” as
described in the Proxy Statement.
Our independent registered public accounting firm is Ernst & Young LLP, St. Louis, MO, Auditor Firm ID: 42.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Documents filed as part of this Report:
1.
Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021
Consolidated Statements of Operations for Each of the Three Years in the Period Ended December 31, 2022
Consolidated Statement
December 31, 2022
b
s of Comprehensive Income for Each of the Three Years in the Period Ended
d d
f h
i d
h
h
h
h
f
f
i
i
Consolidated Cash Flow Statements for Each of the Three Years in the Period Ended
d d
h f h
h l
i d
lid
h
d
h
f
i
December 31, 2022
b
Consolidated Stockholders’ Equity Statements for Each of the Three Years in the Period Ended
Consolidated Stockholders’ Equity Statements for Each of the Three Years in the Period Ended
2022
December 31,
b
Notes to Consolidated Financial Statements
d i
lid
i l
2.
Financial Statement Schedule
Schedule II – Valuation and Qualifying Accounts
Schedule II – Valuation and Qualifying Accounts
ASU
2016-13
Adoption
Adjustment
Charged to
Costs and
Expenses
Balance
Divestitures/
Acquisitions
Charge
Offs
Recoveries
Currency
Movement
Ending
Balance
(In thousands)
Accounts Receivable —
Allowance for Doubtful
Accounts:
2022
2021
2020
Inventories —
Excess and Obsolete
Allowances:
$
4,864
$
— $
6,615
$
319
$
$
(3,648)
(3,648) $
$
(121) $
(121) $
(75) $
(75)
5,085
2,539
—
981
597
2,264
(190)
—
(326)
(101)
(227)
(637)
(75)
39
7,954
4,864
5,085
2022
2021
2020
$
45,663
$
32,248
21,245
—
—
—
$
8,349
$
$
813
813
$
$
(4,116) $
(4,116) $
(4,102)
(4,102) $
$
(694)
(694) $
45,913
10,673
15,889
3,927
—
—
—
(4,535)
(915)
(597)
(270)
246
45,663
32,248
Deferred Income Tax Asset —
Valuation Allowance:
2022
2021
2020
$
66,960
$
— $
12,861
$
73,432
$
— $
(10,333) $
(590) $ 142,330
82,549
46,493
—
—
865
3,142
25,664
33,002
(406)
(303)
(41,463)
(114)
(249)
329
66,960
82,549
All other financial statement schedules not included in this Annual Report on Form 10-K are omitted because they
are not applicable.
83
3.
Exhibits
The following exhibits are filed herewith or incorporated herein by reference, as indicated. Documents indicated by an asterisk
(*) identify each management contract or compensatory plan.
Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
10.1
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16
10.17
14.1
Description of Exhibit
The filings referenced for incorporation by
reference are Company (Belden Inc.) filings unless
noted to be those of Belden 1993 Inc.
Certificate of Incorporation, as amended
February 29, 2008 Form 10-K, Exhibit 3.1
Bylaws
December 6, 2022 Form 8-K, Exhibit 3.1
Indenture relating to 3.375% Senior Subordinated
Notes due 2027
Indenture relating to 3.875% Senior Subordinated
Notes due 2028
Indenture relating to 3.375% Senior Subordinated
Notes due 2031
Description of the Registrant's Securities
Registered Under Section 12 of the Securities
Exchange Act of 1934
July 10, 2017 Form 8-K, Exhibit 4.1
March 16, 2018 Form 8-K, Exhibit 4.1
August 3, 2021 Form 8-K, Exhibit 4.1
August 3, 2020 Form 10-Q, Exhibit 4.1
Trademark License Agreement
February 15, 2022 Form 10-K, Exhibit 10.1
Belden Inc. 2011 Long Term Incentive Plan, as
amended
April 6,2016 Proxy Statement, Appendix II
Belden Inc. 2021 Long Term Incentive Plan
April 8, 2021 Proxy Statement, Appendix II
Form of Stock Appreciation Rights Award
February 15, 2022 Form 10-K, Exhibit 10.4
Form of Performance Stock Units Award
February 15, 2022 Form 10-K, Exhibit 10.5
Form of Restricted Stock Units Award
February 15, 2022 Form 10-K, Exhibit 10.6
Form of Stretch Achievement Stock Award
August 8, 2022 Form 10-Q, Exhibit 10.1
Belden Inc. Annual Cash Incentive Plan, as
amended and restated
2004 Belden CDT Inc. Non-Employee Director
Deferred Compensation Plan
February 16, 2021 Form 10-K, Exhibit 10.7
December 21, 2004 Form 8-K, Exhibit 10.1
Belden Supplemental Excess Defined Benefit Plan
February 16, 2021 Form 10-K, Exhibit 10.9
Belden Supplemental Excess Defined Contribution
Plan
February 16, 2021 Form 10-K, Exhibit 10.10
Executive Severance Plan
July 31, 2020 Form 8-K, Exhibit 10.1
Form of Business Protection Agreement with each
of the Executive Officers
July 31, 2020 Form 8-K, Exhibit 10.3
Belden Inc. 2021 Employee Stock Purchase Plan
April 8, 2021 Proxy Statement, Appendix III
Form of Indemnification Agreement with each of
the Directors and Officers
March 1, 2007 Form 10-K, Exhibit 10.39
Second Amended and Restated Credit Agreement
June 2, 2021, Form 8-K, Exhibit 10.1
Amendment No. 1 to Second Amended and
Restated Credit Agreement
January 5, 2023 Form 8-K, Exhibit 10.1
Code of Ethics
August 25, 2020 Form 8-K, Exhibit 14.1
84
The filings referenced for incorporation by
reference are Company (Belden Inc.) filings unless
noted to be those of Belden 1993 Inc.
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Exhibit
Number
21.1
23.1
31.1
31.2
32.1
32.2
101
104
Description of Exhibit
List of Subsidiaries of Belden Inc.
Consent of Independent Registered Accounting
Firm
Rule 13a-14(a)/15d-14(a) Certification of the Chief
Executive Officer
Rule 13a-14(a)/15d-14(a) Certification of the Chief
Financial Officer
Section 1350 Certification of the Chief Executive
Officer
Section 1350 Certification of the Chief Financial
Officer
The following financial statements from the
Company's Annual Report on Form 10-K for the
year ended December 31, 2022, formatted in Inline
XBRL: (i) Consolidated Balance Sheets, (ii)
Consolidated Statements of Operations, (iii)
Consolidated Statements of Comprehensive
Income, (iv) Consolidated Cash Flow Statements,
(v) Consolidated Statements of Stockholders'
Equity and (vi) Notes to Consolidated Financial
Statements, tagged as blocks of text and including
detailed
The cover page from the Company's Annual Report
on Form 10-K for the year ended December 31,
2022, formatted in Inline XBRL
* Management contract or compensatory plan
Copies of the above Exhibits are available to shareholders at a charge of $0.25 per page, minimum order of $10.00. Direct
requests to:
Belden Inc., Attention: Corporate Secretary
1 North Brentwood Boulevard, 15th Floor
St. Louis, Missouri 63105
85
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
BELDEN INC.
By
/s/ ASHISH CHAND
Ashish Chand
Date: February 24, 2023
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the date indicated.
President and Chief Executive Officer
February 24, 2023
Senior Vice President, Finance, and Chief Financial Officer
February 24, 2023
Vice President and Chief Accounting Officer
February 24, 2023
Lead Independent Director and Chairman
February 24, 2023
/s/ ASHISH CHAND
Ashish Chand
/s/ JEREMY PARKS
Jeremy Parks
/s/ DOUGLAS R. ZINK
Douglas R. Zink
/s/ DAVID ALDRICH
David Aldrich
/s/ LANCE C. BALK
Lance C. Balk
Director
/s/ STEVEN W. BERGLUND
Director
Steven W. Berglund
/s/ DIANE D. BRINK
Diane D. Brink
/s/ JUDY L. BROWN
Judy L. Brown
/s/ NANCY CALDERON
Nancy Calderon
/s/ JONATHAN KLEIN
Jonathan Klein
/s/ GREGORY J. MCCRAY
Gregory J. McCray
Director
Director
Director
Director
Director
86
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
1 N BRENTWOOD BLVD. 15TH FLOOR,
ST. LOUIS, MO 63105
315.854.8000 • BELDEN.COM