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BELDEN INC. - Quarter Report: 2021 October (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________________________
FORM 10-Q
_________________________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 3, 2021
Commission File No. 001-12561 
_________________________________________________ 
BELDEN INC.
(Exact name of registrant as specified in its charter)
_________________________________________________
 
Delaware 36-3601505
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1 North Brentwood Boulevard
15th Floor
St. Louis, Missouri 63105
(Address of principal executive offices)
(314) 854-8000
Registrant’s telephone number, including area code
_________________________________________________ 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act 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   No .
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    No .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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    Accelerated filer        Non-accelerated filer        Smaller reporting company     Emerging growth 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolsName of each exchange on which registered
Common stock, $0.01 par valueBDCNew York Stock Exchange
As of November 3, 2021, the Registrant had 44,898,477 outstanding shares of common stock.
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PART I    FINANCIAL INFORMATION
Item 1. Financial Statements
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
October 3, 2021December 31, 2020
 (Unaudited) 
 (In thousands)
ASSETS
Current assets:
Cash and cash equivalents$457,753 $501,994 
Receivables, net421,703 296,817 
Inventories, net312,088 247,298 
Other current assets48,890 52,289 
Assets held for sale27,559 — 
Total current assets1,267,993 1,098,398 
Property, plant and equipment, less accumulated depreciation334,407 368,620 
Operating lease right-of-use assets57,141 54,787 
Goodwill1,283,364 1,251,938 
Intangible assets, less accumulated amortization307,186 287,071 
Deferred income taxes29,057 29,536 
Other long-lived assets56,037 49,384 
$3,335,185 $3,139,734 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$321,253 $244,120 
Accrued liabilities301,174 276,641 
Total current liabilities622,427 520,761 
Long-term debt1,492,642 1,573,726 
Postretirement benefits144,526 160,400 
Deferred income taxes42,867 38,400 
Long-term operating lease liabilities47,054 46,398 
Other long-term liabilities39,898 42,998 
Stockholders’ equity:
Common stock503 503 
Additional paid-in capital830,368 823,605 
Retained earnings557,764 450,876 
Accumulated other comprehensive loss(131,265)(191,851)
Treasury stock(317,852)(332,552)
Total Belden stockholders’ equity939,518 750,581 
Noncontrolling interests6,253 6,470 
Total stockholders’ equity945,771 757,051 
$3,335,185 $3,139,734 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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BELDEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited) 
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020October 3, 2021September 29, 2020
 (In thousands, except per share data)
Revenues$630,835 $475,839 $1,769,190 $1,364,176 
Cost of sales(407,559)(308,247)(1,143,035)(876,143)
Gross profit223,276 167,592 626,155 488,033 
Selling, general and administrative expenses(109,963)(85,037)(313,966)(275,129)
Research and development expenses(32,451)(30,324)(94,873)(81,633)
Amortization of intangibles(9,696)(16,104)(28,745)(48,306)
Operating income71,166 36,127 188,571 82,965 
Interest expense, net(16,251)(15,607)(46,640)(43,188)
Loss on debt extinguishment(5,715)— (5,715)— 
Non-operating pension benefit992 680 3,121 2,079 
Income from continuing operations before taxes50,192 21,200 139,337 41,856 
Income tax expense(8,875)(631)(25,307)(3,223)
Income from continuing operations41,317 20,569 114,030 38,633 
Loss from discontinued operations, net of tax— (6,231)— (103,395)
Gain on disposal of discontinued operations, net of tax— 2,743 — 2,743 
Net income (loss)41,317 17,081 114,030 (62,019)
Less: Net income attributable to noncontrolling interest53 85 336 79 
Net income (loss) attributable to Belden stockholders$41,264 $16,996 $113,694 $(62,098)
Weighted average number of common shares and equivalents:
Basic44,851 44,567 44,762 44,834 
Diluted45,425 44,709 45,242 44,968 
Basic income (loss) per share attributable to Belden stockholders:
Continuing operations$0.92 $0.46 $2.54 $0.86 
Discontinued operations— (0.14)— (2.31)
Disposal of discontinued operations— 0.06 — 0.06 
Net income (loss)$0.92 $0.38 $2.54 $(1.39)
Diluted income (loss) per share attributable to Belden stockholders:
Continuing operations$0.91 $0.46 $2.51 $0.86 
Discontinued operations— (0.14)— (2.31)
Disposal of discontinued operations— 0.06 — 0.06 
Net income (loss)$0.91 $0.38 $2.51 $(1.39)
Comprehensive income (loss) attributable to Belden $69,390 $(34,921)$174,280 $(136,138)
Common stock dividends declared per share$0.05 $0.05 $0.15 $0.15 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
 
 Nine Months Ended
 October 3, 2021September 27, 2020
 (In thousands)
Cash flows from operating activities:
Net income (loss)114,030 $(62,019)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization65,028 80,620 
Share-based compensation18,242 13,650 
Asset impairment9,283 113,007 
Loss on debt extinguishment5,715 — 
Gain on disposal of business— (2,743)
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes, acquired businesses and disposals:
Receivables(128,997)35,645 
Inventories(58,900)(9,327)
Accounts payable73,740 (69,579)
Accrued liabilities17,796 (11,646)
Income taxes5,159 (30,416)
Other assets(1,794)1,860 
Other liabilities(17,383)(20,363)
Net cash provided by operating activities101,919 38,689 
Cash flows from investing activities:
Cash from (used for) business acquisitions, net of cash acquired(73,749)590 
Capital expenditures(55,569)(56,809)
Purchase of intangible assets(3,650)— 
Proceeds from disposal of tangible assets3,249 3,090 
Proceeds from disposal of businesses, net of cash sold10,798 50,051 
Net cash used for investing activities(118,921)(3,078)
Cash flows from financing activities:
Payments under borrowing arrangements(360,304)(190,000)
Debt issuance costs paid(7,785)— 
Cash dividends paid(6,740)(6,800)
Payments under financing lease obligations(3,116)(154)
Withholding tax payments for share-based payment awards(2,103)(1,331)
Payments under share repurchase program— (35,000)
Payment of earnout consideration— (29,300)
Borrowings under credit arrangements356,010 190,000 
Net cash used for financing activities(24,038)(72,585)
Effect of foreign currency exchange rate changes on cash and cash equivalents(3,201)2,586 
Decrease in cash and cash equivalents(44,241)(34,388)
Cash and cash equivalents, beginning of period501,994 425,885 
Cash and cash equivalents, end of period$457,753 $391,497 

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

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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BELDEN INC.
CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENTS
(Unaudited)

 Belden Inc. Stockholders  
AdditionalAccumulated
Other
Non-controlling
 Common StockPaid-InRetainedTreasury StockComprehensive 
 SharesAmountCapitalEarningsSharesAmountIncome (Loss)InterestsTotal
 (In thousands)
Balance at December 31, 202050,335 $503 $823,605 $450,876 (5,692)$(332,552)$(191,851)$6,470 $757,051 
Net income— — — 28,666 — — — 75 28,741 
Other comprehensive income (loss), net of tax— — — — — — 53,725 (197)53,528 
Acquisition of business with noncontrolling interests— — — — — — — 20 20 
Retirement Savings Plan stock contributions— — (493)— 45 2,496 — — 2,003 
Exercise of stock options, net of tax withholding forfeitures— — (723)— 541 — — (182)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures— — (2,403)— 27 1,680 — — (723)
Share-based compensation— — 7,285 — — — — — 7,285 
Common stock dividends ($0.05 per share)
— — — (2,263)— — — — (2,263)
Balance at April 4, 202150,335 $503 $827,271 $477,279 (5,611)$(327,835)$(138,126)$6,368 $845,460 
Net income— — — 43,764 — — — 20843,972 
Other comprehensive loss, net of tax— — — — — — (21,265)(229)(21,494)
Retirement Savings Plan stock contributions— — (418)— 34 3,723 — — 3,305 
Exercise of stock options, net of tax withholding forfeitures— — (147)— 100 — — (47)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures— — (5,795)— 83 4,738 — — (1,057)
Share-based compensation— — 6,228 — — — — — 6,228 
Common stock dividends ($0.05 per share)
— — — (2,269)— — — — (2,269)
Balance at July 4, 202150,335 $503 $827,139 $518,774 (5,492)$(319,274)$(159,391)$6,347 $874,098 
Net income— — — 41,264 — — — 5341,317 
Other comprehensive income (loss), net of tax— — — — — — 28,126 (147)27,979 
Retirement Savings Plan stock contributions— — 87 — 29 (71)— — 16 
Exercise of stock options, net of tax withholding forfeitures— — (59)— 20 — — (39)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures— — (1,528)— 16 1,473 — — (55)
Share-based compensation— — 4,729 — — — — — 4,729 
Common stock dividends ($0.05 per share)
— — — (2,274)— — — — (2,274)
Balance at October 3, 202150,335 $503 $830,368 $557,764 (5,446)$(317,852)$(131,265)$6,253 $945,771 

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 Belden Inc. Stockholders  
AdditionalAccumulated
Other
Non-controlling
 Common StockPaid-InRetainedTreasury StockComprehensive 
 SharesAmountCapitalEarningsSharesAmountIncome (Loss)InterestsTotal
 (In thousands)
Balance at December 31, 201950,335 $503 $811,955 $518,004 (4,877)$(307,197)$(63,418)$5,972 $965,819 
Cumulative effect of change in accounting principle— — — (2,916)— — — — (2,916)
Net loss— — — (11,189)— — — (30)(11,219)
Other comprehensive income (loss), net of tax— — — — — — 22,323 (150)22,173 
Exercise of stock options, net of tax withholding forfeitures— — (542)— 370 — — (172)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures— — (2,631)— 29 1,800 — — (831)
Share repurchase program— — — — (592)(21,239)— — (21,239)
Share-based compensation— — 3,708 — — — — — 3,708 
Common stock dividends ($0.05 per share)
— — — (2,288)— — — — (2,288)
Balance at March 29, 202050,335 $503 $812,490 $501,611 (5,433)$(326,266)$(41,095)$5,792 $953,035 
Net income (loss)— — — (67,905)— — — 24 (67,881)
Other comprehensive income (loss), net of tax— — — — — — (44,446)147 (44,299)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures— — (1,598)— 27 1,543 — — (55)
Share repurchase program— — — — (384)(13,761)— — (13,761)
Share-based compensation— — 5,090 — — — — — 5,090 
Common stock dividends ($0.05 per share)
— — — (2,247)— — — — (2,247)
Balance at June 28, 202050,335 $503 $815,982 $431,459 (5,790)$(338,484)$(85,541)$5,963 $829,882 
Net income — — — 16,996 — — — 85 17,081 
Other comprehensive income (loss), net of tax— — — — — — (51,917)143 (51,774)
Retirement Savings Plan stock contributions— — (747)— 33 1,823 — — 1,076 
Conversion of restricted stock units into common stock, net of tax withholding forfeitures— — (1,426)— 17 1,153 — — (273)
Share-based compensation— — 4,852 — — — — — 4,852 
Common stock dividends ($0.05 per share)
— — — (2,257)— — — — (2,257)
Balance at September 27, 202050,335 $503 $818,661 $446,198 (5,740)$(335,508)$(137,458)$6,191 $798,587 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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BELDEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1:  Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements include Belden Inc. and all of its subsidiaries (the Company, us, we, or our). We eliminate all significant affiliate accounts and transactions in consolidation.
The accompanying Condensed Consolidated Financial Statements presented as of any date other than December 31, 2020:
Are prepared from the books and records without audit, and
Are prepared in accordance with the instructions for Form 10-Q and do not include all of the information required by accounting principles generally accepted in the United States for complete statements, but
Include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial statements.
These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Supplementary Data contained in our 2020 Annual Report on Form 10-K.
Business Description
We are a global supplier of specialty networking solutions built around two global businesses - Enterprise Solutions and Industrial Solutions.  Our comprehensive portfolio of solutions enables customers to transmit and secure data, sound, and video for mission critical applications across complex enterprise and industrial environments.
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, which was April 4, 2021, the 94th day of our fiscal year 2021. Our fiscal second and third quarters each have 91 days. The nine months ended October 3, 2021 and September 27, 2020 included 276 days and 271 days, respectively.
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
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. 
As of and during the three and nine months ended October 3, 2021 and September 27, 2020, we utilized Level 1 inputs to determine the fair value of cash equivalents, and we utilized Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 3) and for impairment testing (see Notes 4 and 11). We did not have any transfers between Level 1 and Level 2 fair value measurements during the three and nine months ended October 3, 2021 and September 27, 2020.
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 October 3, 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.
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During the nine months ended September 27, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $31.4 million in cash in accordance with the purchase agreement. SAM was acquired on February 8, 2018 and was included in the Grass Valley disposal group.
Contingent Liabilities
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. We accrue environmental remediation costs based on estimates of known environmental remediation exposures developed in consultation with our environmental consultants and legal counsel. 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. Based on facts currently available, we believe the disposition of the claims that are pending or asserted will not have a material adverse effect on our financial position, results of operations, or cash flow.
As of October 3, 2021, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $8.4 million, $6.7 million, and $3.3 million, respectively.
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 2.
Subsequent Events
We evaluated subsequent events after the balance sheet date through the financial statement issuance date for appropriate accounting and disclosure.
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 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 Condensed Consolidated Statements of Operations. The joint venture is not material to our Condensed Consolidated financial statements as of or for the periods ended October 3, 2021 and September 27, 2020.
Furthermore, certain subsidiaries of our Opterna and OTN Systems N.V. (OTN Systems) businesses, which we acquired in April of 2019 and January 2021, respectively, include noncontrolling interests. Because we have a controlling financial interest in these subsidiaries, they are consolidated into our financial statements. The results of these subsidiaries were consolidated into our financial statements as of the respective acquisition dates. The results that are attributable to the noncontrolling interest holders are presented as net income (loss) attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations. An immaterial amount of Opterna's annual revenues are generated from transactions with the noncontrolling interests. The subsidiaries of Opterna and OTN Systems that include noncontrolling interests are not material to our Condensed Consolidated financial statements as of or for the periods ended October 3, 2021 and September 27, 2020.
Note 2:  Revenues
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.
The following tables present our revenues disaggregated by major product category.
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Broadband & 5GCyber-securityIndustrial AutomationSmart BuildingsTotal 
Revenues 
Three Months Ended October 3, 2021(In thousands)
Enterprise Solutions$124,330 $— $— $161,901 $286,231 
Industrial Solutions— 26,074 318,530 — 344,604 
Total$124,330 $26,074 $318,530 $161,901 $630,835 
Three Months Ended September 27, 2020 
Enterprise Solutions$115,149 $— $— $113,948 $229,097 
Industrial Solutions— 27,384 219,358 — 246,742 
Total$115,149 $27,384 $219,358 $113,948 $475,839 
Nine Months Ended October 3, 2021
Enterprise Solutions$354,181 $— $— $425,933 $780,114 
Industrial Solutions— 79,899 909,177 — 989,076 
Total$354,181 $79,899 $909,177 $425,933 $1,769,190 
Nine Months Ended September 27, 2020
Enterprise Solutions$318,765 $— $— $325,919 $644,684 
Industrial Solutions— 78,829 640,663 — 719,492 
Total$318,765 $78,829 $640,663 $325,919 $1,364,176 
The following tables present our revenues disaggregated by geography, based on the location of the customer purchasing the product.
AmericasEMEAAPACTotal Revenues
Three Months Ended October 3, 2021(In thousands)
Enterprise Solutions$216,565 $34,963 $34,703 $286,231 
Industrial Solutions203,138 90,082 51,384 344,604 
Total$419,703 $125,045 $86,087 $630,835 
Three Months Ended September 27, 2020   
Enterprise Solutions$170,734 $30,185 $28,178 $229,097 
Industrial Solutions148,421 59,180 39,141 246,742 
Total$319,155 $89,365 $67,319 $475,839 
Nine Months Ended October 3, 2021
Enterprise Solutions$571,379 $113,367 $95,368 $780,114 
Industrial Solutions584,853 258,124 146,099 989,076 
Total$1,156,232 $371,491 $241,467 $1,769,190 
Nine Months Ended September 27, 2020
Enterprise Solutions$481,007 $92,197 $71,480 $644,684 
Industrial Solutions429,461 182,406 107,625 719,492 
Total$910,468 $274,603 $179,105 $1,364,176 
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 selling price and recognized when or as each performance obligation is satisfied. Most of our performance obligations related to the sale of products are satisfied at a point in time when control of the product is transferred based on the shipping terms of the arrangement. Generally, we determine relative selling price using the prices charged to customers on a standalone basis.
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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. We adjust our estimate of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed. Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three and nine months ended October 3, 2021 and September 27, 2020.
The following table presents estimated and accrued variable consideration:
October 3, 2021December 31, 2020
(in thousands)
Accrued rebates included in accrued liabilities$43,627 $32,192 
Accrued returns included in accrued liabilities11,749 13,016 
Price adjustments recognized against gross accounts receivable28,372 25,244 
Depending on the terms of an arrangement, we may defer the recognition of some or all of the consideration received because we have to satisfy a future 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 services is typically recognized when or as the services are performed depending on the terms of the arrangement. As of October 3, 2021, total deferred revenue was $79.1 million, and of this amount, $53.9 million is expected to be recognized within the next twelve months, and the remaining $25.2 million is long-term and is expected to be recognized over a period greater than twelve months.
The following table presents deferred revenue activity during the three and nine months ended October 3, 2021 and September 27, 2020:
20212020
(In thousands)
Beginning balance at January 1$77,648 $70,070 
New deferrals24,505 23,830 
Acquisition of OTN Systems5,997 — 
Revenue recognized(24,387)(24,415)
Balance at the end of Q183,763 69,485 
New deferrals20,596 21,322 
Adjustments related to acquisitions(2,740)— 
Revenue recognized(19,542)(22,200)
Balance at the end of Q282,077 68,607 
New deferrals20,47222,243
Revenue recognized(23,481)(20,649)
Balance at the end of Q3$79,068$70,201
Service-type warranties represent $11.6 million of the deferred revenue balance at October 3, 2021, and of this amount $4.7 million is expected to be recognized in the next twelve months, and the remaining $6.9 million is long-term and will be recognized over a period greater than twelve months.
We expense sales commissions as incurred when the duration of the related revenue arrangement is one year or less. We capitalize sales commissions in other current and long-lived assets on our balance sheet when the original duration of the related revenue arrangement is longer than one year, and we amortize it over the related revenue arrangement period. Total capitalized sales commissions was $6.0 million and $4.6 million as of October 3, 2021 and September 27, 2020, respectively. The following table presents sales commissions that are recorded within selling, general and administrative expenses:
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Three Months endedNine Months ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
(In thousands)
Sales commissions$5,529 $4,240 $14,121$12,270
Note 3:  Acquisitions
OTN Systems N.V.
We acquired 100% of the shares of OTN Systems on January 29, 2021 for a preliminary purchase price, net of cash acquired, of $73.3 million, which was funded with cash on hand. OTN Systems, based in Olen, Belgium, is a leading provider of easy to use and highly-reliable network solutions tailored for specific applications in harsh, mission-critical environments. The acquisition of OTN Systems supports one of our key strategic priorities related to the growing demand for industrial automation by adding proprietary technology and mission-critical hardware and software products for more complete end-to-end solutions. The results of OTN Systems have been included in our Condensed Consolidated Financial Statements from January 29, 2021, and are reported within the Industrial Solutions segment. Belden assumed $1.8 million of OTN Systems' debt as part of the transaction, which was subsequently paid on the acquisition date. A subsidiary of OTN Systems includes a noncontrolling interest. Because OTN Systems has a controlling financial interest in the subsidiary, it is consolidated into our financial statements. The results that are attributable to the noncontrolling interest holder are presented as net income (loss) attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations.
The following table summarizes the estimated, preliminary fair values of the assets acquired and the liabilities assumed as of January 29, 2021 (in thousands):
Receivables$5,036 
Inventories10,700 
Other current assets1,361 
Property, plant and equipment602 
Intangible assets39,930 
Goodwill38,915 
Operating lease right-of-use assets4,144 
Other long-lived assets706 
   Total assets acquired$101,394 
Accounts payable$5,931 
Accrued liabilities4,485 
Deferred revenues3,260 
Long-term debt1,841 
Post retirement benefits3,581 
Deferred income taxes4,889 
Long-term operating lease liabilities3,271 
Other long-term liabilities771 
   Total liabilities assumed$28,029 
Net assets $73,365 
Noncontrolling interests20 
Net assets attributable to Belden$73,345 
The above purchase price allocation is preliminary, and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The preliminary measurement of receivables, inventories, intangible assets, goodwill, deferred income taxes, other assets and liabilities, and noncontrolling interests are subject to change. A change in the estimated fair value of the net assets acquired or noncontrolling interests will change the amount of the purchase price allocable to goodwill.
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The preliminary fair value of acquired receivables is $5.0 million, which is equivalent to its gross contractual amount. During the third quarter of 2021, we recorded measurement-period adjustments that decreased goodwill by $0.6 million. The impact of these adjustments to the Condensed Consolidated Statements of Operations was immaterial.
A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.
For purposes of the above allocation, we based our preliminary estimate of the fair values for the acquired inventory, intangible assets, deferred revenue, and noncontrolling interests on valuation studies performed by a third party valuation firm. We have estimated a preliminary fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets and deferred revenue (Level 3 valuation).
Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to the expansion of industrial automation product offerings in complete end-to-end solutions. Our tax basis in the acquired goodwill is zero.
The intangible assets related to the acquisition consisted of the following:
Fair ValueAmortization Period
(In thousands)(In years)
Intangible assets subject to amortization:
Developed technologies
$26,400 6.8
Customer relationships
6,200 15.0
Sales backlog
3,600 5.0
Trademarks
3,070 14.8
Non-compete agreements660 2
Total intangible assets subject to amortization$39,930 
Intangible assets not subject to amortization:
Goodwill$38,915 n/a
Total intangible assets not subject to amortization$38,915 
Total intangible assets$78,845 
Weighted average amortization period8.5
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 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 of the backlog intangible asset was based on our estimate of when the ordered items would ship and control of the items transfers. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks. The useful life of the non-compete agreements was based on the term of the agreements.

Our consolidated revenues and income before taxes for the three months ended October 3, 2021 included $7.6 million and $(2.9) million, respectively, from OTN Systems. For the three months ended October 3, 2021, income before taxes included $0.6 million of severance and other restructuring costs, $1.4 million of amortization of intangible assets, and $0.4 million of cost of sales related to the adjustment of acquired inventory to fair value for OTN Systems.

Our consolidated revenues and income before taxes for the nine months ended October 3, 2021 included $20.5 million and $(7.1) million, respectively, from OTN Systems. For the nine months ended October 3, 2021, income before taxes included $2.3 million of severance and other restructuring costs, $3.7 million of amortization of intangible assets, and $2.4 million of cost of sales related to the adjustment of acquired inventory to fair value for OTN Systems.
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The following table illustrates the unaudited pro forma effect on operating results as if the OTN Systems acquisition had been completed as of January 1, 2020.

Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
(In thousands, except per share data)
(Unaudited)
Revenues$631,338 $479,137 $1,770,941 $1,380,778 
Net income from continuing operations attributable to Belden common stockholders42,041 17,071 114,752 30,285 
Diluted income from continuing operations per share attributable to Belden common stockholders$0.93 $0.38 $2.54 $0.67 
The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.
Opterna International Corp.
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 in the nine months ended October 3, 2021. This benefit was excluded from Segment EBITDA of our Enterprise Solutions segment.
Note 4: Assets Held for Sale
We classify assets and liabilities as held for sale (disposal group) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. We also consider whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When we classify a disposal group as held for sale, we test for impairment. An impairment charge is recognized when the carrying value of the disposal group exceeds the estimated fair value, less costs to sell. We also cease depreciation and amortization for assets classified as held for sale.
During the first quarter of 2021, we committed to a plan to sell our oil and gas cable business in Brazil that met all of the criteria to classify the assets and liabilities of this business, formerly part of the Industrial Solutions segment, as held for sale. At such time, the carrying value of the disposal group exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $3.4 million. Therefore, we recognized an impairment charge in Selling, General and Administrative Expenses equal to this amount in the first quarter of 2021. The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment. We completed the sale of our oil and gas cable business in Brazil during the second quarter of 2021 for $10.9 million, net of cash delivered with the business.
During the third quarter of 2021, we entered into an agreement to sell and lease back certain Industrial Solutions segment real estate in Germany and met the criteria to classify the assets as held for sale. At such time, the carrying value of the assets exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $2.3 million. Therefore, we recognized an impairment charge in Selling, General and Administrative Expenses equal to this amount in the third quarter of 2021. The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment. We expect to close on the sale and lease back of the real estate in the fourth quarter of 2021.


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Note 5:  Discontinued Operations
During the fourth quarter of 2019, we committed to a plan to sell Grass Valley, and at such time, met all of the criteria to classify the assets and liabilities of this business as held for sale. Furthermore, the divestiture of Grass Valley represented a strategic shift that had a major impact on our operations and financial results. As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, was reported within discontinued operations. The Grass Valley disposal group excluded certain Grass Valley pension liabilities that we retained. We also ceased depreciating and amortizing the assets of the disposal group once they met the held for sale criteria during the fourth quarter of 2019.

We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 for gross cash consideration of $120.0 million, or approximately $56.2 million net of cash delivered with the business. The sale also included deferred consideration consisting of a $175.0 million seller’s note that is expected to mature in 2025, up to $88 million in PIK (payment-in-kind) interest on the seller’s note, and $178.0 million in potential earnout payments. The seller’s note accrues PIK interest at an annual rate of 8.5%. During the three and nine months ended October 3, 2021, the seller's note accrued interest of $3.9 million and $11.6 million, respectively, which we reserved for based on our expected loss allowance methodology. Based upon a third party valuation specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note is $34.9 million, which we recorded in Other Long-Lived Assets. We accounted for the earnout under a loss recovery approach and did not record an asset as of the disposal date. Any subsequent recognition of an earnout will be based on the gain contingency guidance.

As part of the transaction, we also invested $3.0 million for a 9% equity interest in Grass Valley with the right to put the equity back to Black Dragon Capital. We exercised our right during the fourth quarter of 2020 and sold our 9% equity interest in Grass Valley to Black Dragon Capital for $2.7 million. We deconsolidated Grass Valley as of July 2, 2020 and accounted for our equity interest under the cost method for the period that we owned a 9% interest in Grass Valley. Grass Valley's operating results for periods after July 2, 2020 are not included in our Consolidated Financial Statements.

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

Three Months EndedNine Months Ended
September 27, 2020September 27, 2020
(In Thousands)
Revenues$1,334 $109,195 
Cost of sales(1,008)(70,199)
Gross profit326 38,996 
Selling, general and administrative expenses(574)(37,435)
Research and development expenses(610)(15,083)
Asset impairment of discontinued operations— (113,007)
Interest expense, net(12)(432)
Non-operating pension cost27 (169)
Loss before taxes $(843)$(127,130)
We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $113.0 million in the nine months ended September 27, 2020. We determined the estimated fair values of the assets and of the reporting unit by calculating the present values of their estimated future cash flows.
The disposal group had capital expenditures of approximately $0.3 million and $16.7 million during the three and nine months ended September 27, 2020, respectively. The disposal group recognized credits to stock-based compensation of $0.0 million and $0.9 million during the three and nine months ended September 27, 2020, respectively. The disposal group did not have any significant non-cash charges for investing activities during the nine months ended September 27, 2020.


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Note 6:  Reportable Segments
We are organized around two global businesses: Enterprise Solutions and Industrial Solutions. Each of the global businesses represents a reportable segment.
The key measures of segment profit or loss are Segment Revenues and Segment EBITDA. Segment Revenues represent non-affiliate revenues and include revenues that would have otherwise been recorded by acquired businesses as independent entities but were not recognized in our Condensed Consolidated Statements of Operations and Comprehensive Income due to the effects of purchase accounting and the associated write-down of acquired deferred revenue to fair value. Segment EBITDA excludes certain items, including depreciation expense; amortization of intangibles; asset impairment; severance, restructuring, and acquisition integration costs; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory and deferred revenue to fair value; 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. Inter-company revenues between our segments is not material.
 
Enterprise SolutionsIndustrial SolutionsTotal Segments
 (In thousands)
As of and for the three months ended October 3, 2021   
Segment revenues$286,231 $345,107 $631,338 
Segment EBITDA40,156 59,582 99,738 
Depreciation expense5,270 6,000 11,270 
Amortization of intangibles4,427 5,269 9,696 
Amortization of software development intangible assets20 770 790 
Severance, restructuring, and acquisition integration costs3,381 947 4,328 
Adjustments related to acquisitions and divestitures(510)2,974 2,464 
Segment assets552,416 608,262 1,160,678 
As of and for the three months ended September 27, 2020   
Segment revenues$229,097 $246,742 $475,839 
Segment EBITDA26,250 38,391 64,641 
Depreciation expense5,005 5,450 10,455 
Amortization of intangibles5,408 10,696 16,104 
Amortization of software development intangible assets73 456 529 
Severance, restructuring, and acquisition integration costs1,337 20 1,357 
Segment assets519,142 486,110 1,005,252 
As of and for the nine months ended October 3, 2021   
Segment revenues$780,114 $990,428 $1,770,542 
Segment EBITDA103,531 167,676 271,207 
Depreciation expense15,985 18,212 34,197 
Amortization of intangibles13,202 15,543 28,745 
Amortization of software development intangible assets72 2,014 2,086 
Severance, restructuring, and acquisition integration costs7,756 4,783 12,539 
Adjustments related to acquisitions and divestitures(6,828)11,825 4,997 
Segment assets552,416 608,262 1,160,678 
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Enterprise SolutionsIndustrial SolutionsTotal Segments
(In thousands)
As of and for the nine months ended September 27, 2020   
Segment revenues$644,684 $719,492 $1,364,176 
Segment EBITDA73,193 100,367 173,560 
Depreciation expense15,208 15,861 31,069 
Amortization of intangibles16,266 32,040 48,306 
Amortization of software development intangible assets184 1,061 1,245 
Severance, restructuring, and acquisition integration costs6,310 3,138 9,448 
Adjustments related to acquisitions and divestitures125 — 125 
Segment assets519,142 486,110 1,005,252 
The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues and consolidated income from continuing operations before taxes, respectively. 
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020October 3, 2021September 27, 2020
 (In thousands)
Total Segment Revenues$631,338 $475,839 $1,770,542 $1,364,176 
Adjustments related to acquisitions(503)— (1,352)— 
Consolidated Revenues$630,835 $475,839 $1,769,190 $1,364,176 
Total Segment EBITDA$99,738 $64,641 $271,207 $173,560 
Amortization of intangibles(9,696)(16,104)(28,745)(48,306)
Depreciation expense(11,270)(10,455)(34,197)(31,069)
Severance, restructuring, and acquisition integration costs (1)(4,328)(1,357)(12,539)(9,448)
Amortization of software development intangible assets(790)(529)(2,086)(1,245)
Adjustments related to acquisitions and divestitures (2)(2,464)— (4,997)(125)
Eliminations(24)(69)(72)(402)
Consolidated operating income71,166 36,127 188,571 82,965 
Interest expense, net(16,251)(15,607)(46,640)(43,188)
Loss on debt extinguishment(5,715)— (5,715)— 
Total non-operating pension benefit992 680 3,121 2,079 
Consolidated income from continuing operations before taxes $50,192 $21,200 $139,337 $41,856 

(1) See Note 12, Severance, Restructuring, and Acquisition Integration Activities, for details.
(2) During the three months ended October 3, 2021, we recognized a $2.3 million impairment on assets held for sale, collected $0.7 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, included $0.5 million in Segment EBITDA for the purchase accounting effect of recording deferred revenue at fair value for the OTN Systems acquisition, and recognized cost of sales of $0.4 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition. During the nine months ended October 3, 2021, we reduced the Opterna earn-out liability by $5.8 million, recognized a $5.7 million impairment on assets held for sale, recognized a $3.6 million impairment on assets held and used, recognized cost of sales of $2.4 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition, collected $2.2 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, and included $1.3 million in Segment EBITDA for the purchase accounting effect of recording deferred revenue at fair value for the OTN Systems acquisition. During the nine months ended September 27, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.
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Note 7: Income (loss) per Share
The following table presents the basis for the income (loss) per share computations:
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020October 3, 2021September 27, 2020
 (In thousands)
Numerator:
Income from continuing operations$41,317 $20,569 $114,030 $38,633 
Less: Net income attributable to noncontrolling interest53 85 336 79 
Income from continuing operations attributable to Belden stockholders41,264 20,484 113,694 38,554 
Add: Loss from discontinued operations, net of tax— (6,231)— (103,395)
Add: Gain on disposal of discontinued operations, net of tax— 2,743 — 2,743 
Net income (loss) attributable to Belden stockholders$41,264 $16,996 $113,694 $(62,098)
Denominator:
Weighted average shares outstanding, basic44,851 44,567 44,762 44,834 
Effect of dilutive common stock equivalents574 142 480 134 
     Weighted average shares outstanding, diluted45,425 44,709 45,242 44,968 
For the three and nine months ended October 3, 2021, diluted weighted average shares outstanding exclude outstanding equity awards of 1.0 million and 1.2 million, respectively, as they are anti-dilutive. In addition, for the three and nine months ended October 3, 2021, diluted weighted average shares outstanding do not include outstanding equity awards of 0.2 million and 0.3 million, respectively, because the related performance conditions have not been satisfied.
For the three and nine months ended September 27, 2020, diluted weighted average shares outstanding exclude outstanding equity awards of 1.6 million and 1.5 million, respectively, as they are anti-dilutive. In addition, for both the three and nine months ended September 27, 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.4 million because the related performance conditions have not been satisfied.
For 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 8: Credit Losses
Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments prospectively. This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. Upon adoption, we recorded a noncash cumulative effect adjustment to retained earnings of $2.9 million. Of this amount, $1.0 million related to our continuing operations and $1.9 million related to our discontinued operations.
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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 estimated 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.
Estimates are used to determine the allowance, which is based upon an assessment of anticipated payments as well as other information that is reasonably available. The following table presents the activity in the trade receivables allowance for doubtful accounts for our continuing operations for the three and nine months ended October 3, 2021 and September 27, 2020, respectively:
20212020
(In thousands)
Beginning balance at January 1$5,150 $2,569 
    Adoption adjustment— 1,011 
    Current period provision82 (172)
    Write-offs(57)— 
    Recoveries collected(23)(9)
    Fx impact(17)(213)
Q1 ending balance5,135 3,186 
    Current period provision305 2,621 
    Disposals(192)— 
    Write-offs(20)(52)
    Recoveries collected(36)(100)
    Fx impact(25)37 
Q2 ending balance5,167 5,692 
   Current period provision86 (108)
   Write-offs(252)(76)
   Recoveries collected(107)— 
   Fx impact(17)29 
Q3 ending balance$4,877 $5,537 
Note 9:  Inventories
The following table presents the major classes of inventories as of October 3, 2021 and December 31, 2020, respectively:
October 3, 2021December 31, 2020
 (In thousands)
Raw materials$142,000 $106,514 
Work-in-process38,046 32,011 
Finished goods170,427 141,042 
Gross inventories350,473 279,567 
Excess and obsolete reserves(38,385)(32,269)
Net inventories$312,088 $247,298 

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Note 10:  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 extension and termination options for an additional 15 years or within 1 year, respectively. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain any material residual value guarantees or material variable lease payments.

We have entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on our balance sheet, and for the three and nine months ended October 3, 2021 and September 27, 2020, the rent expense for short-term leases was not material.

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

As the rate implicit in most of our leases is not readily determinable, we use the incremental borrowing rate to determine the present value of the lease payments, which is unique to each leased asset, and is based upon the term of the lease, commencement date of the lease, local currency of the leased asset, and the credit rating of the legal entity leasing the asset.

We are party to a lease guarantee, whereby Belden has covenanted the lease payments for one of Snell Advanced Media's (SAM) property leases through its 2035 expiration date. The lease guarantee was executed in 2018 following the acquisition of SAM, which we subsequently sold on July 2, 2020 as part of the Grass Valley disposal group (see Note 5). This lease guarantee was retained by Belden and not transferred to Black Dragon Capital as part of the sale of Grass Valley. Belden would be required to make lease payments only if the primary obligor, Black Dragon Capital, fails to make the payments. As of October 3, 2021, the SAM lease has approximately $20.2 million of lease payments remaining, but we do not believe that it is probable that we have incurred a liability from the guarantee.

The components of lease expense were as follows:

Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
(In thousands)
Operating lease cost$5,112 $3,571 $13,958 $10,512 
Finance lease cost
Amortization of right-of-use asset$196 $35 $251 $101 
Interest on lease liabilities13 
Total finance lease cost$200 $39 $260 $114 

Supplemental cash flow information related to leases was as follows:

Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$4,480 $3,891 $12,853 $11,352 
Operating cash flows from finance leases10 13 
Financing cash flows from finance leases3,041 43 3,116 130 



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Supplemental balance sheet information related to leases was as follows:
October 3, 2021December 31, 2020
(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets
$57,141 $54,787 
Accrued liabilities$16,292 $14,742 
Long-term operating lease liabilities47,054 46,398 
Total operating lease liabilities$63,346 $61,140 
Finance leases:
Other long-lived assets, at cost$3,662 $764 
Accumulated depreciation(332)(483)
Other long-lived assets, net$3,330 $281 
Weighted Average Remaining Lease Term
Operating leases5 years5 years
Finance leases4 years3 years
Weighted Average Discount Rate
Operating leases6.0 %6.6 %
Finance leases4.5 %4.9 %

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

October 3, 2021December 31, 2020
(In thousands)
2021$5,270 $19,250 
202219,736 16,305 
202315,624 12,552 
202412,251 9,516 
202511,022 8,718 
Thereafter11,910 8,901 
Total$75,813 $75,242 
Note 11:  Long-Lived Assets
Depreciation and Amortization Expense
We recognized depreciation expense of $11.3 million and $34.2 million in the three and nine months ended October 3, 2021, respectively. We recognized depreciation expense of $10.5 million and $31.1 million in the three and nine months ended September 27, 2020, respectively.
We recognized amortization expense related to our intangible assets of $10.5 million and $30.8 million in the three and nine months ended October 3, 2021, respectively. We recognized amortization expense related to our intangible assets of $16.6 million and $49.6 million in the three and nine months ended September 27, 2020, respectively.
Asset Impairment
During the first quarter of 2021, we committed to a plan to sell our oil and gas cable business in Brazil, and recognized an impairment charge of $3.4 million. During the second quarter of 2021, we completed the sale of this business. See Note 4.

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Also in the first quarter of 2021, we performed a recoverability test over certain held and used long-lived assets in our Industrial Solutions segment. We determined that the carrying values of the assets were not recoverable and recognized a $3.6 million impairment charge in Selling, General and Administrative Expenses during the nine months ended October 3, 2021 to write them down to fair value. This impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment.
During the third quarter of 2021, we entered into an agreement to sell and lease back certain real estate in Germany, and recognized an impairment charge of $2.3 million. See Note 4.
Note 12:  Severance, Restructuring, and Acquisition Integration Activities
Cost Reduction Program
We have executed a cost reduction program to streamline the organizational structure and invest in technology to drive productivity. We recognized $0.0 million and $3.5 million of severance and other restructuring costs for this program during the three and nine months ended October 3, 2021, respectively, and $0.2 million and $3.2 million during the three and nine months ended September 27, 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments. The cost reduction program is substantially complete and has delivered a reduction in selling, general, and administrative expenses of approximately $60 million on an annual basis. We expect to recognize costs of approximately $5 million for this program during the fourth quarter of 2021.
Acquisition Integration Program
We are integrating our recent acquisitions such as OTN Systems, SPC, and Opterna with our existing businesses. The restructuring and integration activities are focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $0.8 million and $3.2 million of severance and other restructuring costs for this program during the three and nine months ended October 3, 2021, respectively. We recognized $0.9 million and $4.0 million of severance and other restructuring costs for this program during the three and nine months ended September 27, 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments. We do not expect to incur significant incremental costs for this program in 2021.
The following table summarizes the costs by segment of the programs described above as well as other immaterial programs and acquisition integration activities during the three and nine months ended October 3, 2021 and September 27, 2020:
Severance     Other
Restructuring and
Integration Costs
Total Costs     
Three Months Ended October 3, 2021(In thousands)
Enterprise Solutions$(77)$3,458 $3,381 
Industrial Solutions(51)998 947 
Total$(128)$4,456 $4,328 
Three Months Ended September 27, 2020
Enterprise Solutions$327 $1,010 $1,337 
Industrial Solutions314 (294)20 
Total$641 $716 $1,357 
Nine Months Ended October 3, 2021
Enterprise Solutions$1,031 $6,725 $7,756 
Industrial Solutions1,651 3,132 4,783 
Total$2,682 $9,857 $12,539 
Nine Months Ended September 27, 2020
Enterprise Solutions$1,162 $5,148 $6,310 
Industrial Solutions1,132 2,006 3,138 
Total$2,294 $7,154 $9,448 
The other restructuring and integration costs primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs. The majority of the other restructuring and integration costs related to these actions were paid as incurred or are payable within the next 60 days.  
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The following table summarizes the costs of the various programs described above as well as other immaterial programs and acquisition integration activities by financial statement line item in the Condensed Consolidated Statement of Operations:
Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
(In thousands)
Cost of sales$2,943 $85 $4,306 $222 
Selling, general and administrative expenses1,385 1,272 8,233 9,226 
Total$4,328 $1,357 $12,539 $9,448 
Accrued Severance
The table below summarizes severance activity, included in accrued liabilities, for the Cost Reduction Program and the Acquisition Integration Program discussed above for the three and nine months ended October 3, 2021 and September 27, 2020, respectively.

20212020
(In thousands)
Beginning year balance$7,085 $19,575 
    New charges2,060 2,529 
    Cash payments(1,798)(4,483)
    Foreign currency translation49 (89)
    Other adjustments— (4,147)
Balance at the end of Q17,396 13,385 
    New charges 458 4,660 
    Cash payments(1,023)(4,795)
    Foreign currency translation(4)(132)
    Other adjustments(59)(1,420)
Balance at the end of Q2$6,768 $11,698 
    New charges63 2,060 
    Cash payments(941)(3,968)
    Foreign currency translation(2)(156)
    Other adjustments(197)(1,541)
Balance at the end of Q3$5,691 $8,093 
The other adjustments were the result of changes in estimates. We experienced higher than expected voluntary turnover, and as a result, certain approved severance actions were not taken.
Note 13:  Long-Term Debt and Other Borrowing Arrangements
The carrying values of our long-term debt were as follows:
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October 3, 2021December 31, 2020
 (In thousands)
Revolving credit agreement due 2026$— $— 
Senior subordinated notes:
2.875% Senior subordinated notes due 2025
— 367,110 
4.125% Senior subordinated notes due 2026
232,320 244,740 
3.375% Senior subordinated notes due 2027
522,720 550,665 
3.875% Senior subordinated notes due 2028
406,560 428,295 
3.375% Senior subordinated notes due 2031
348,480 — 
Total senior subordinated notes1,510,080 1,590,810 
   Less unamortized debt issuance costs(17,438)(17,084)
Long-term debt$1,492,642 $1,573,726 
Revolving Credit Agreement due 2026
On June 2, 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 the total commitments of 0.25%. In the event that we borrow more than 90% of our combined borrowing base or our borrowing base availability is less than $20.0 million, we are subject to a fixed charge coverage ratio covenant. We paid approximately $2.2 million of fees associated with the amended Revolver, which will be amortized over its term using the effective interest method. As of October 3, 2021, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $293.9 million.
Senior Subordinated Notes
We had outstanding €300.0 million aggregate principal amount of 2.875% senior subordinated notes due 2025 (the 2025 Notes). In September 2021, we repurchased the full €300.0 million 2025 Notes outstanding for cash consideration of €300.0 million ($358.5 million), including a prepayment penalty, and recognized a $5.7 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.
We have outstanding €200.0 million aggregate principal amount of 4.125% senior subordinated notes due 2026 (the 2026 Notes). The carrying value of the 2026 Notes as of October 3, 2021 is $232.3 million. The 2026 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2026 Notes rank equal in right of payment with our senior subordinated notes due 2031, 2028, and 2027 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on April 15 and October 15 of each year.
We have outstanding €450.0 million aggregate principal amount of 3.375% senior subordinated notes due 2027 (the 2027 Notes). The carrying value of the 2027 Notes as of October 3, 2021 is $522.7 million. The 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, 2028, and 2026 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.
We have outstanding €350.0 million aggregate principal amount of 3.875% senior subordinated notes due 2028 (the 2028 Notes). The carrying value of the 2028 Notes as of October 3, 2021 is $406.6 million. The 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, 2027, and 2026 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.
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In July 2021, we completed an offering for €300.0 million ($356.0 million at issuance) aggregate principal amount of 3.375% senior subordinated notes due 2031 (the 2031 Notes). The carrying value of the 2031 Notes as of October 3, 2021 is $348.5 million. 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, 2027, and 2026 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, commencing January 15, 2022. We paid approximately $5.6 million of fees associated with the issuance of the 2031 Notes, which will be amortized over the life of the 2031 Notes using the effective interest method. We used the net proceeds from this offering, along with cash on hand, to fund the full redemption of the 2025 Notes - see further discussion above.
Fair Value of Long-Term Debt
The fair value of our senior subordinated notes as of October 3, 2021 was approximately $1,556.8 million based on quoted prices of the debt instruments in inactive markets (Level 2 valuation). This amount represents the fair value of our senior subordinated notes with a carrying value of $1,510.1 million as of October 3, 2021.
Note 14:  Net Investment Hedge
All of our euro denominated notes were issued by Belden Inc., a USD functional currency entity. As of October 3, 2021, €767.8 million 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 nine months ended October 3, 2021 and September 27, 2020, the transaction gain/(loss) associated with the net investment hedge reported in other comprehensive income was $47.9 million and $(13.1) million, respectively. During the nine months ended September 27, 2020, we de-designated €532.2 million of our outstanding debt that was previously designated as a net investment hedge. After the de-designation, transaction gains or losses associated with this €532.2 million of debt are reported in income from continuing operations.
Note 15:  Income Taxes
For the three and nine months ended October 3, 2021, we recognized income tax expense of $8.9 million and $25.3 million, respectively, representing an effective tax rate of 17.7% and 18.2%, respectively. The effective tax rates were primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits.
For the three and nine months ended September 27, 2020, we recognized income tax expense of $0.6 million and $3.2 million, respectively, representing an effective tax rate of 3.0% and 7.7%, respectively. The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $0.9 million and $2.1 million in the three and nine months ended September 27, 2020, respectively.
Note 16:  Pension and Other Postretirement Obligations
The following table provides the components of net periodic benefit costs for our pension and other postretirement benefit plans: 
 Pension ObligationsOther Postretirement Obligations
Three Months EndedOctober 3, 2021September 27, 2020October 3, 2021September 27, 2020
 (In thousands)
Service cost$941 $885 $$
Interest cost1,914 2,493 182 202 
Expected return on plan assets(4,081)(4,091)— — 
Amortization of prior service cost 27 47 — — 
Actuarial losses (gains)971 688 (5)(19)
Net periodic benefit cost (income)$(228)$22 $185 $191 
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 Pension ObligationsOther Postretirement Obligations
Nine Months EndedOctober 3, 2021September 27, 2020October 3, 2021September 27, 2020
 (In thousands)
Service cost$2,982 $2,709 $26 $24 
Interest cost5,617 7,240 545 599 
Expected return on plan assets(12,276)(12,035)— — 
Amortization of prior service cost 83 136 — — 
Actuarial losses (gains)2,926 2,038 (16)(57)
Net periodic benefit cost (income)$(668)$88 $555 $566 
Note 17:  Comprehensive Income and Accumulated Other Comprehensive Income (Loss)
The following table summarizes total comprehensive income (losses): 
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020October 3, 2021September 27, 2020
 (In thousands)
Net income (loss)$41,317 $17,081 $114,030 $(62,019)
Foreign currency translation adjustments, net of tax27,221 (52,910)57,728 (75,791)
Adjustments to pension and postretirement liability, net of tax758 1,136 2,285 1,891 
Total comprehensive income (loss)69,296 (34,693)174,043 (135,919)
Less: Comprehensive income (loss) attributable to noncontrolling interests(94)228 (237)219 
Comprehensive income (loss) attributable to Belden $69,390 $(34,921)$174,280 $(136,138)
The tax impacts of the foreign currency translation adjustments and pension liability adjustments in the table above are not material.
The accumulated balances related to each component of other comprehensive income (loss), net of tax, are as follows: 
Foreign Currency Translation ComponentPension and Other
 Postretirement
Benefit Plans
Accumulated Other 
Comprehensive Income (Loss)
 (In thousands)
Balance at December 31, 2020$(131,181)$(60,670)$(191,851)
Other comprehensive income attributable to Belden before reclassifications59,278 — 59,278 
Amounts reclassified from accumulated other comprehensive income (loss)(977)2,285 1,308 
Net current period other comprehensive income attributable to Belden58,301 2,285 60,586 
Balance at October 3, 2021$(72,880)$(58,385)$(131,265)
The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the nine months ended October 3, 2021:
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Amount Reclassified from Accumulated Other
Comprehensive Income (2)
Affected Line Item in the Consolidated Statements of Operations and Comprehensive Income
 (In thousands) 
Amortization of pension and other postretirement benefit plan items:
Actuarial losses$2,910 (1)
Prior service cost83 (1)
Total before tax2,993 
Tax benefit(708)
Total net of tax$2,285 
(1) The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs (see Note 16).
(2) We reclassified $1.0 million of accumulated foreign currency translation gains associated with the sale of our oil and gas cable business in Brazil.
Note 18: Share Repurchase
On November 29, 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable securities laws and other restrictions. This program is funded with cash on hand and cash flows from operating activities. During the nine months ended October 3, 2021, we did not repurchase any stock. During the nine months ended September 27, 2020, we repurchased 1.0 million shares of our common stock under the share repurchase program for an aggregate cost of $35.0 million at an average price per share of $35.83.


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Item 2:        Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Belden Inc. (the Company, us, we, or our) is a global supplier of specialty networking solutions built around two global businesses - Enterprise Solutions and Industrial Solutions.  Our comprehensive portfolio of solutions enables customers to transmit and secure data, sound, and video for mission critical applications across complex enterprise and industrial environments.
We strive for operational excellence through the execution of our Belden Business System, which includes three areas of focus: Lean enterprise initiatives, our Market Delivery System, and our Talent Management System. Through operational excellence we generate free cash flow on an annual basis. We utilize the cash flow generated by our business to fuel our continued transformation and generate shareholder value. We believe our business system, balance across markets and geographies, systematic go-to-market approach, extensive portfolio of innovative solutions, commitment to Lean principles, and improving margins present a unique value proposition for shareholders.
We use a set of tools and processes that are designed to continuously improve business performance in the critical areas of quality, delivery, cost, and innovation. We consider revenue growth, Adjusted EBITDA margin, free cash flows, and return on invested capital to be our key operating performance indicators. We also seek to acquire businesses that we believe can help us achieve these objectives.

Trends and Events
The following trends and events during 2021 have had varying effects on our financial condition, results of operations, and cash flows.
Pandemic
On March 11, 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, and Indian rupee. 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. Approximately 45% of our consolidated revenues during the quarter ended October 3, 2021 were to customers outside of the U.S.
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.




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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. During periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline. We are mindful of ongoing inflationary pressures and as a result, proactively implement selling price increases and cost control measures. 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 the products they bought from us 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 products they buy from us and hold 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 use information provided to us by our channel partners and make certain assumptions based on our sales to them to determine the amount of products they bought from us 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. 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 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.
Amended Revolving Credit Agreement
During the second quarter of 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. We paid approximately $2.2 million of fees associated with the amended Revolver, which are being amortized over its term using the effective interest method. As of October 3, 2021, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $293.9 million. See Note 13.
Debt Refinancing
During the three and nine months ended October 3, 2021, we completed an offering for €300.0 million aggregate principal amount of 3.375% senior subordinated notes due 2031. With the proceeds from this offering and cash on hand, we repurchased all of the €300.0 million aggregate principal amount of 2.875% senior subordinated notes previously due 2025. We recognized a $5.7 million loss on debt extinguishment for the premiums 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 13.
OTN Systems Acquisition
We acquired 100% of the shares of OTN Systems on January 29, 2021 for a purchase price, net of cash acquired, of $73.3 million. OTN Systems, based in Olen, Belgium, is a leading provider of easy to use and highly-reliable network solutions tailored for specific applications in harsh, mission-critical environments. The acquisition of OTN Systems supports one of our key strategic priorities related to the growing demand for industrial automation by adding proprietary technology and mission-critical hardware and software products for more complete end-to-end solutions. The results of OTN Systems have been included in our Condensed Consolidated Financial Statements from January 29, 2021, and are reported within the Industrial Solutions segment. See Note 3.
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Sale-Leaseback
During the three and nine months ended October 3, 2021, we entered into an agreement to sell and lease back certain property in Germany. The closing of the sale and the commencement of the lease is expected to occur during the fourth quarter of 2021. During the third quarter of 2021, we performed a recoverability test on the assets and determined that the carrying values of the assets were not recoverable and recognized a $2.3 million impairment charge in Selling, General and Administrative Expenses to write them down to fair value. The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment. See Note 4.
Disposal
We completed the sale of our oil and gas cable business in Brazil during the second quarter of 2021 for $10.9 million, net of cash delivered with the business. During the first quarter of 2021, we committed to a plan to sell the business and determined that we met all of the criteria to classify the assets and liabilities of this business as held for sale. At such time, the carrying value of the disposal group exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $3.4 million. Therefore, we recognized an impairment charge in Selling, General and Administrative Expenses equal to this amount in the first quarter of 2021. The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment. See Note 4.
Long-Lived Asset Impairment
During the nine months ended October 3, 2021, we performed a recoverability test on certain held and used long-lived assets in our Industrial Solutions segment. We determined that the carrying values of the assets were not recoverable and recognized a $3.6 million impairment charge in Selling, General and Administrative Expenses to write them down to fair value. This impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment. See Note 11.
Opterna Earn-Out
Our acquisition of Opterna in 2019 included potential earn-out consideration, which as of the acquisition date, had an estimated fair value of $5.8 million. As the financial targets tied to the earn-out were not achieved within the contractual timeframe, we reduced the earn-out liability to zero and recognized a $5.8 million benefit in Selling, General and Administrative Expenses during the nine months ended October 3, 2021. This benefit was excluded from Segment EBITDA of our Enterprise Solutions segment. See Note 4.
Cost Reduction Program
We have executed a cost reduction program to streamline the organizational structure and invest in technology to drive productivity. We recognized $0.0 million and $3.5 million of severance and other restructuring costs for this program during the three and nine months ended October 3, 2021, respectively. The cost reduction program is substantially complete and has delivered a reduction in selling, general, and administrative expenses of approximately $60 million on an annual basis. We expect to recognize costs of approximately $5 million for this program during the fourth quarter of 2021. See Note 12.
Acquisition Integration Program
We are integrating our recent acquisitions such as OTN Systems, SPC, and Opterna with our existing businesses. The restructuring and integration activities are focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $0.8 million and $3.2 million of severance and other restructuring costs for this program during the three and nine months ended October 3, 2021, respectively. We do not expect to incur significant incremental costs for this program in 2021. See Note 12.
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.




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Critical Accounting Policies
During the nine months ended October 3, 2021:
We did not change any of our existing critical accounting policies from those listed in our 2020 Annual Report on Form 10-K;
No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and
There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed.
Results of Operations
Consolidated Income before Taxes
 
 Three Months Ended% Change  Nine Months Ended% Change
 October 3, 2021September 27, 2020October 3, 2021September 27, 2020
 (In thousands, except percentages)
Revenues$630,835 $475,839 32.6 %$1,769,190 $1,364,176 29.7 %
Gross profit223,276 167,592 33.2 %626,155 488,033 28.3 %
Selling, general and administrative expenses(109,963)(85,037)29.3 %(313,966)(275,129)14.1 %
Research and development expenses(32,451)(30,324)7.0 %(94,873)(81,633)16.2 %
Amortization of intangibles(9,696)(16,104)(39.8)%(28,745)(48,306)(40.5)%
Operating income71,166 36,127 97.0 %188,571 82,965 127.3 %
Interest expense, net(16,251)(15,607)4.1 %(46,640)(43,188)8.0 %
Loss on debt extinguishment(5,715)— n/a(5,715)— n/a
Non-operating pension benefit992 680 45.9 %3,121 2,079 50.1 %
Income from continuing operations before taxes50,192 21,200 136.8 %139,337 41,856 232.9 %
Revenues increased $155.0 million and $405.0 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 due to the following factors:
Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $115.7 million and $270.1 million increase in revenues, respectively.
Copper prices had a $30.4 million and $91.2 million favorable impact on revenues, respectively.
Currency translation had a $4.6 million and $27.5 million favorable impact on revenues, respectively.
Acquisitions contributed an estimated $8.2 million and $21.2 million in revenues, respectively.
Divestitures had a $3.9 million and $5.0 million unfavorable impact on revenues, respectively.

Gross profit increased $55.7 million and $138.1 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 due to the increases in revenues discussed above.

Selling, general and administrative expenses increased $24.9 million and $38.8 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020. The increase in selling, general and administrative expenses is primarily attributable to strategic investments to enhance our solution selling capabilities as well as increases from incentive compensation, acquisitions, and the impact of currency translation.
Research and development expenses increased $2.1 million and $13.2 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives.
Amortization of intangibles decreased $6.4 million and $19.6 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 primarily due to certain intangible assets becoming fully amortized.
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Operating income increased $35.0 million and $105.6 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 primarily as a result of the increase in gross profit discussed above.
Net interest expense increased $0.6 million and $3.5 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 primarily due to currency translation.
Loss on debt extinguishment increased $5.7 million in both the three and nine months ended October 3, 2021 from the comparable periods of 2020 due to the debt refinancing that took place during the third quarter of 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 13.
Income from continuing operations before taxes increased $29.0 million and $97.5 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 primarily due to the increase in operating income discussed above.
Income Taxes
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020% ChangeOctober 3, 2021September 27, 2020% Change
 (In thousands, except percentages)
Income before taxes$50,192 $21,200 136.8 %$139,337 $41,856 232.9 %
Income tax expense8,875 631 1,306.5 %25,307 3,223 685.2 %
     Effective tax rate17.7 %3.0 %18.2 %7.7 %
For the three and nine months ended October 3, 2021, we recognized income tax expense of $8.9 million and $25.3 million, representing an effective tax rate of 17.7% and 18.2%, respectively. The effective tax rates were primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits. For the three and nine months ended September 27, 2020, we recognized income tax expense of $0.6 million and $3.2 million, respectively, representing an effective tax rate of 3.0% and 7.7%, respectively. The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $0.9 million and $2.1 million in the three and nine months ended September 27, 2020, respectively.
Consolidated Adjusted Revenues and Adjusted EBITDA 
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020% ChangeOctober 3, 2021September 27, 2020% Change
 (In thousands, except percentages)
Adjusted Revenues$631,338 $475,839 32.7 %$1,770,542 $1,364,176 29.8 %
Adjusted EBITDA100,706 65,252 54.3 %274,256 175,237 56.5 %
as a percent of adjusted revenues16.0 %13.7 %15.5 %12.8 %
Adjusted Revenues increased $155.5 million and $406.4 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 due to the following factors:
Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $115.7 million and $270.1 million increase in revenues, respectively.
Copper prices had a $30.4 million and $91.2 million favorable impact on revenues, respectively.
Currency translation had a $4.6 million and $27.5 million favorable impact on revenues, respectively.
Acquisitions contributed an estimated $8.7 million and $22.6 million in revenues, respectively.
Divestitures had a $3.9 million and $5.0 million unfavorable impact on revenues, respectively.

Adjusted EBITDA increased $35.5 million and $99.0 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020 primarily due to leverage on higher sales volume, as discussed above. Accordingly, Adjusted EBITDA margins in the three and nine months ended October 3, 2021 expanded to 16.0% and 15.5% from 13.7% and 12.8% in the comparable periods of 2020, respectively.
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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; 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. The following tables reconcile our GAAP results to our non-GAAP financial measures:
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020October 3, 2021September 27, 2020
 (In thousands, except percentages)
GAAP revenues$630,835 $475,839 $1,769,190 $1,364,176 
Adjustments related to acquisitions503 — 1,352 — 
Adjusted revenues$631,338 $475,839 $1,770,542 $1,364,176 
GAAP income from continuing operations$41,317 $20,569 $114,030 $38,633 
Interest expense, net16,251 15,607 46,640 43,188 
Depreciation expense11,270 10,455 34,197 31,069 
Amortization of intangible assets9,696 16,104 28,745 48,306 
Income tax expense8,875 631 25,307 3,223 
Severance, restructuring, and acquisition integration costs (1)4,328 1,357 12,539 9,448 
Loss on debt extinguishment5,715 — 5,715 — 
Adjustments related to acquisitions and divestitures (2)2,464 — 4,997 125 
Amortization of software development intangible assets790 529 2,086 1,245 
Adjusted EBITDA$100,706 $65,252 $274,256 $175,237 
GAAP income from continuing operations margin6.5 %4.3 %6.4 %2.8 %
Adjusted EBITDA margin16.0 %13.7 %15.5 %12.8 %

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



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(2) During the three months ended October 3, 2021, we recognized a $2.3 million impairment on assets held for sale, collected $0.7 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, included $0.5 million in Segment EBITDA for the purchase accounting effect of recording deferred revenue at fair value for the OTN Systems acquisition, and recognized cost of sales of $0.4 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition. During the nine months ended October 3, 2021, we reduced the Opterna earn-out liability by $5.8 million, recognized a $5.7 million impairment on assets held for sale, recognized a $3.6 million impairment on assets held and used, recognized cost of sales of $2.4 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition, collected $2.2 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, and included $1.3 million in Segment EBITDA for the purchase accounting effect of recording deferred revenue at fair value for the OTN Systems acquisition. During the nine months ended September 27, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.
Segment Results of Operations
For additional information regarding our segment measures, see Note 6 to the Condensed Consolidated Financial Statements.
Enterprise Solutions
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020% ChangeOctober 3, 2021September 27, 2020% Change
 (In thousands, except percentages)
Segment Revenues$286,231 $229,097 24.9 %$780,114 $644,684 21.0 %
Segment EBITDA40,156 26,250 53.0 %103,531 73,193 41.4 %
  as a percent of segment revenues14.0 %11.5 %13.3 %11.4 %
Enterprise Solutions revenues increased $57.1 million and $135.4 million in the three and nine months ended October 3, 2021, respectively, from the comparable periods of 2020. As compared to the year ago period, for the three months ended October 3, 2021, increases in volume, higher copper prices, and favorable currency translation contributed $41.6 million, $13.9 million, and $1.6 million, respectively. As compared to the year ago period, for the nine months ended October 3, 2021, increases in volume, higher copper prices, and favorable currency translation contributed $90.5 million, $37.4 million, and $7.5 million, respectively.
Enterprise Solutions EBITDA increased $13.9 million and $30.3 million in the three and nine months ended October 3, 2021, respectively, compared to the year ago periods primarily as a result of the increase in revenues discussed above.
Industrial Solutions 
 Three Months EndedNine Months Ended
 October 3, 2021September 27, 2020% ChangeOctober 3, 2021September 27, 2020% Change
 (In thousands, except percentages)
Segment Revenues$345,107 $246,742 39.9 %$990,428 $719,492 37.7 %
Segment EBITDA59,582 38,391 55.2 %167,676 100,367 67.1 %
   as a percent of segment revenues17.3 %15.6 %16.9 %13.9 %
Industrial Solutions revenues increased $98.4 million and $270.9 million in the three and nine months ended October 3, 2021 from the comparable periods of 2020. The increase in revenues in the three months ended October 3, 2021 was primarily due to increases in volume; higher copper prices; favorable currency translation; and acquisitions, net of disposals of $74.6 million, $16.5 million, $3.0 million, and $4.3 million, respectively. The increase in revenues in the nine months ended October 3, 2021 was primarily due to increases in volume; higher copper prices; favorable currency translation; and acquisitions, net of disposals of $180.0 million, $53.8 million, $20.0 million, and $17.1 million, respectively.
Industrial Solutions EBITDA increased $21.2 million and $67.3 million in the three and nine months ended October 3, 2021 from the comparable periods of 2020 primarily as a result of the increase in revenues discussed above, partially offset by an increase in incentive compensation and increased investments in R&D projects as we continue our commitment to growth initiatives.
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Liquidity and Capital Resources
Significant factors affecting our cash liquidity include (1) cash from 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 2021 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 in the event we 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 mix, and commodities pricing.
The following table is derived from our Condensed Consolidated Cash Flow Statements, and for the period ended September 27, 2020, includes the results of discontinued operations up to the July 2, 2020 disposal date of Grass Valley:
 Nine Months Ended
 October 3, 2021September 27, 2020
 (In thousands)
Net cash provided by (used for):
Operating activities$101,919 $38,689 
Investing activities(118,921)(3,078)
Financing activities(24,038)(72,585)
Effects of currency exchange rate changes on cash and cash equivalents(3,201)2,586 
   Decrease in cash and cash equivalents(44,241)(34,388)
Cash and cash equivalents, beginning of period501,994 425,885 
   Cash and cash equivalents, end of period$457,753 $391,497 

Operating cash flows were a source of cash of $101.9 million in the nine months ended October 3, 2021 compared to $38.7 million in the nine months ended September 27, 2020. Operating cash flow improved $63.2 million compared to the prior year primarily due to an increase in earnings. In 2021, changes in operating assets and liabilities included an unfavorable change in receivables partially offset by a favorable change in accounts payable. For the nine months ended October 3, 2021, receivables were a use of cash of $129.0 million compared to a source of cash of $35.6 million in the year ago period. The increase in receivables was primarily due to the increase in revenues discussed above. Accounts payable was a source of cash of $73.7 million in the nine months ended October 3, 2021 compared to a use of cash of $69.6 million in the year ago period.

Net cash used for investing activities totaled $118.9 million in the nine months ended October 3, 2021, compared to $3.1 million in the prior year. Investing activities for the nine months ended October 3, 2021 included capital expenditures of $55.6 million compared to $56.8 million in the comparable period of 2020. The nine months ended October 3, 2021 also included payments of $73.7 million primarily for the acquisition of OTN Systems, partially offset by cash receipts of $10.8 million primarily for the sale of our oil and gas cable business in Brazil. The nine months ended September 27, 2020 also included proceeds of $50.1 million, $3.1 million, and $0.6 million from the sale of the Grass Valley disposal group, the sale of tangible property, and a working capital adjustment related to the SPC acquisition.
Net cash from financing activities was a use of cash of $24.0 million for the nine months ended October 3, 2021, compared to $72.6 million in the prior year. Financing activities for the nine months ended October 3, 2021 included repayments of debt obligations of $360.3 million, debt issuance costs of $7.8 million, cash dividend payments of $6.7 million, financing lease payments of $3.1 million, net payments related to share based compensation activities of $2.1 million, and borrowings under credit arrangements of $356.0 million. During the nine months ended October 3, 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 13. Financing activities for the nine months ended September 27, 2020 included borrowings on our revolver of $190.0 million, repayments of our revolver borrowings of $190.0 million, payments under our share repurchase program of $35.0 million, earnout consideration payments of $29.3 million, cash dividend payments of $6.8 million, and net payments related to share based compensation activities of $1.3 million.

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Our cash and cash equivalents balance was $457.8 million as of October 3, 2021. Of this amount, $188.1 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. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and accordingly, no provision for any withholding taxes has been recorded. Upon distribution of those earnings in the form of dividends or otherwise, we may be subject to withholding taxes payable to the respective foreign countries.
Our outstanding debt obligations as of October 3, 2021 consisted of $1,510.1 million of senior subordinated notes. Additional discussion regarding our various borrowing arrangements is included in Note 13 to the Condensed Consolidated Financial Statements. 
Forward-Looking Statements
Statements in this report other than historical facts are “forward-looking statements.” Forward-looking statements include statements regarding future financial performance (including revenues, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions. These forward-looking statements reflect management’s current beliefs and expectations and are not guarantees of future performance. Actual results may differ materially from those suggested by any forward-looking statements based on a number of factors. These factors include, among others, those set forth in Part II, Item 1A and in other documents that we file with the SEC.
We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Item 3:        Quantitative and Qualitative Disclosures about Market Risks
The following table provides information about our financial instruments that are sensitive to changes in interest rates. The table presents principal amounts by expected maturity dates and fair values as of October 3, 2021. 
 Principal Amount by Expected MaturityFair
 2021Thereafter  TotalValue
 (In thousands, except interest rates)
€200.0 million fixed-rate senior subordinated notes due 2026$— $232,320 $232,320 $237,301 
Average interest rate4.125 %
€450.0 million fixed-rate senior subordinated notes due 2027$— $522,720 $522,720 $535,856 
Average interest rate3.375 %
€350.0 million fixed-rate senior subordinated notes due 2028$— $406,560 $406,560 $422,416 
Average interest rate3.875 %
€300.0 million fixed-rate senior subordinated notes due 2031$— 348,480 $348,480 $361,276 
Average interest rate3.375 %
Total$1,510,080 $1,556,849 
Item 7A of our 2020 Annual Report on Form 10-K provides information as to the practices and instruments that we use to manage market risks. There were no material changes in our exposure to market risks since December 31, 2020.
Item 4:        Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1:        Legal Proceedings
On November 24, 2020, the Company announced a data incident involving unauthorized access and copying of some current and former employee data, as well as limited company information regarding some business partners. In January 2021, Anand Edke filed a putative class action lawsuit against the Company in the Circuit Court of Cook County, Illinois, Case No. 2021 CH 47. Jurisdiction for the matter has moved to federal court and the case has been transferred to the U.S. District Court for the Eastern District of Missouri. In February 2021, Kia Mackey filed a separate putative class action lawsuit against the Company in the U.S. District Court for the Eastern District of Missouri, Case No. 4:21-CV-00149. The plaintiffs have each asked for injunctive relief, unspecified damages, and unspecified legal fees. It is premature to estimate the potential exposure to the Company associated with the litigation. The Company intends to vigorously defend the lawsuits.
We are a party to various other 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 1A:      Risk Factors
There have been no material changes with respect to risk factors as previously disclosed in our Form 10-Q filed on August 9,
2021. 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.
Item 6:        Exhibits
Exhibits
 
Exhibit 31.1  
Exhibit 31.2  
Exhibit 32.1  
Exhibit 32.2  
Exhibit 101.SCH  Schema Document
Exhibit 101.CALCalculation Linkbase Document
Exhibit 101.DEFDefinition Linkbase Document
Exhibit 101.LABLabels Linkbase Document
Exhibit 101.PREPresentation Linkbase Document

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Pursuant to the requirements 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.
Date:    November 8, 2021By:     /s/ Roel Vestjens
 Roel Vestjens
 President and Chief Executive Officer
Date:November 8, 2021By: /s/ Jeremy Parks
 Jeremy Parks
 Senior Vice President, Finance, and Chief Financial Officer
Date:November 8, 2021By: /s/ Douglas R. Zink
 Douglas R. Zink
 Vice President and Chief Accounting Officer

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