BELDEN INC. - Quarter Report: 2021 April (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 April 4, 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 class

Trading Symbols

Name of each exchange on which registered

Common stock, $0.01 par value

BDC

New York Stock Exchange

As of May 5, 2021, the Registrant had 44,738,828 outstanding shares of common stock.

-1-

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

BELDEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	April 4, 2021		December 31, 2020
	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	370,552	$	501,994
Receivables, net	342,416		296,817
Inventories, net	275,405		247,298
Other current assets	59,741		52,289
Current assets held for sale	16,279		—
Total current assets	1,064,393		1,098,398
Property, plant and equipment, less accumulated depreciation	356,780		368,620
Operating lease right-of-use assets	54,660		54,787
Goodwill	1,284,913		1,251,938
Intangible assets, less accumulated amortization	309,618		287,071
Deferred income taxes	29,114		29,536
Other long-lived assets	48,190		49,384
	$	3,147,668	$	3,139,734

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	250,426	$	244,120
Accrued liabilities	252,025		276,641
Current liabilities held for sale	5,555		—
Total current liabilities	508,006		520,761
Long-term debt	1,509,708		1,573,726
Postretirement benefits	154,171		160,400
Deferred income taxes	43,101		38,400
Long-term operating lease liabilities	45,642		46,398
Other long-term liabilities	41,580		42,998
Stockholders’ equity:
Common stock	503		503
Additional paid-in capital	827,271		823,605
Retained earnings	477,279		450,876
Accumulated other comprehensive loss	(138,126)		(191,851)
Treasury stock	(327,835)		(332,552)
Total Belden stockholders’ equity	839,092		750,581
Noncontrolling interests	6,368		6,470
Total stockholders’ equity	845,460		757,051
	$	3,147,668	$	3,139,734

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

-1-

BELDEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands, except per share data)
Revenues	$	536,381	$	463,526
Cost of sales	(345,037)		(293,025)
Gross profit	191,344		170,501
Selling, general and administrative expenses	(98,449)		(98,389)
Research and development expenses	(31,500)		(26,219)
Amortization of intangibles	(9,947)		(16,185)

Operating income	51,448		29,708
Interest expense, net	(15,511)		(13,324)
Non-operating pension benefit	684		699
Income from continuing operations before taxes	36,621		17,083
Income tax expense	(7,880)		(2,192)
Income from continuing operations	28,741		14,891
Loss from discontinued operations, net of tax	—		(26,110)

Net income (loss)	28,741		(11,219)
Less: Net income (loss) attributable to noncontrolling interest	75		(30)
Net income (loss) attributable to Belden stockholders	$	28,666	$	(11,189)

Weighted average number of common shares and equivalents:
Basic	44,679		45,390
Diluted	45,045		45,538

Basic income (loss) per share attributable to Belden stockholders:
Continuing operations	$	0.64	$	0.33
Discontinued operations	—		(0.58)

Net income (loss)	$	0.64	$	(0.25)

Diluted income (loss) per share attributable to Belden stockholders:
Continuing operations	$	0.64	$	0.33
Discontinued operations	—		(0.58)

Net income (loss)	$	0.64	$	(0.25)

Comprehensive income attributable to Belden	$	82,391	$	11,134

Common stock dividends declared per share	$	0.05	$	0.05

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

-2-

BELDEN INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(Unaudited)


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	28,741	$	(11,219)
Adjustments to reconcile net income (loss) to net cash used for operating activities:
Depreciation and amortization	22,196		26,798
Share-based compensation	7,285		3,708
Asset impairment	6,995		23,197
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes, acquired businesses and disposals:
Receivables	(50,208)		43,627
Inventories	(19,313)		(29,054)
Accounts payable	3,269		(50,827)
Accrued liabilities	(30,765)		(38,425)
Income taxes	1,416		(16,500)
Other assets	(4,226)		6,144
Other liabilities	(6,885)		(9,501)
Net cash used for operating activities	(41,495)		(52,052)
Cash flows from investing activities:
Cash from (used for) business acquisitions, net of cash acquired	(72,232)		590
Capital expenditures	(11,223)		(20,935)
Proceeds from disposal of tangible assets	12		2,090
Proceeds from disposal of business, net of cash sold	1,106		—
Net cash used for investing activities	(82,337)		(18,255)
Cash flows from financing activities:

Cash dividends paid	(2,246)		(2,296)
Payments under borrowing arrangements	(1,841)		—
Withholding tax payments for share-based payment awards	(905)		(1,003)
Other	(43)		(58)
Payments under share repurchase program	—		(21,239)
Payment of earnout consideration	—		(29,300)
Net cash used for financing activities	(5,035)		(53,896)
Effect of foreign currency exchange rate changes on cash and cash equivalents	(2,277)		(7,947)
Decrease in cash and cash equivalents	(131,144)		(132,150)
Cash and cash equivalents, beginning of period	501,994		425,885
Cash and cash equivalents, end of period	$	370,850	$	293,735

The Condensed Consolidated Cash Flow Statement for the period ended March 29, 2020 includes the results of discontinued operations, which were sold on 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
				Additional							Accumulated Other		Non-controlling
	Common Stock			Paid-In		Retained		Treasury Stock			Comprehensive
	Shares	Amount		Capital		Earnings		Shares	Amount		Income (Loss)		Interests		Total

Balance at December 31, 2020	50,335	$	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)		—		9	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, 2021	50,335	$	503	$	827,271	$	477,279	(5,611)	$	(327,835)	$	(138,126)	$	6,368	$	845,460


		Belden Inc. Stockholders
			Additional							Accumulated Other		Non-controlling
	Common Stock		Paid-In		Retained		Treasury Stock			Comprehensive
		Shares	Amount		Capital		Earnings		Shares	Amount		Income (Loss)		Interests		Total
		(In thousands)
Balance at December 31, 2019		50,335	$	503	$	811,955	$	518,004	(4,877)	$	(307,197)	$	(63,418)	$	5,972	$	965,819
Cumulative effect of change in accounting principle		—	—		—		(2,916)		—	—		—		—		(2,916)
Net 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)		—		7	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, 2020		50,335	$	503	$	812,490	$	501,611	(5,433)	$	(326,266)	$	(41,095)	$	5,792	$	953,035

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

-4-

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 business platforms - 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 three months ended April 4, 2021 and March 29, 2020 included 94 and 89 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 months ended April 4, 2021 and March 29, 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 10). We did not have any transfers between Level 1 and Level 2 fair value measurements during the three months ended April 4, 2021 and March 29, 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 April 4, 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.

-5-

During the three months ended March 29, 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 April 4, 2021, we were party to bank guaranties, standby letters of credit, and surety bonds totaling $7.1 million, $6.0 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 April 4, 2021 and March 29, 2020.

Furthermore, certain subsidiaries of our Opterna and OTN Systems N.V. (OTN) 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 that include noncontrolling interests are not material to our Condensed Consolidated financial statements as of or for the periods ended April 4, 2021 and March 29, 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.

-6-

The following tables present our revenues disaggregated by major product category.


	Broadband & 5G		Cyber-security		Industrial Automation		Smart Buildings		Total Revenues

Three Months Ended April 4, 2021	(In thousands)
Enterprise Solutions	$	105,091	$	—	$	—	$	121,264	$	226,355
Industrial Solutions	—		27,705		282,321		—		310,026
Total	$	105,091	$	27,705	$	282,321	$	121,264	$	536,381

Three Months Ended March 29, 2020
Enterprise Solutions	$	96,103	$	—	$	—	$	116,110	$	212,213
Industrial Solutions	—		25,719		225,594		—		251,313
Total	$	96,103	$	25,719	$	225,594	$	116,110	$	463,526

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


	Americas		EMEA		APAC		Total Revenues

Three Months Ended April 4, 2021	(In thousands)
Enterprise Solutions	$	162,676	$	37,936	$	25,743	$	226,355
Industrial Solutions	185,148		81,280		43,598		310,026
Total	$	347,824	$	119,216	$	69,341	$	536,381

Three Months Ended March 29, 2020
Enterprise Solutions	$	155,429	$	35,862	$	20,922	$	212,213
Industrial Solutions	156,400		65,966		28,947		251,313
Total	$	311,829	$	101,828	$	49,869	$	463,526

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.

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 months ended April 4, 2021 nor March 29, 2020.

The following table presents estimated and accrued variable consideration:


	April 4, 2021		March 29, 2020

	(in thousands)
Accrued rebates	$	23,415	$	17,672
Accrued returns	13,155		10,491
Price adjustments recognized against gross accounts receivable	30,207		26,837

-7-

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 April 4, 2021, total deferred revenue was $83.8 million, and of this amount, $58.0 million is expected to be recognized within the next twelve months, and the remaining $25.8 million is long-term and is expected to be recognized over a period greater than twelve months.

The following table presents deferred revenue activity:


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Beginning balance	$	77,648	$	70,070
New deferrals	24,505		23,830
Acquisition of OTN	5,997		—
Revenue recognized	(24,387)		(24,415)
Ending balance	$	83,763	$	69,485

Service-type warranties represent $10.9 million of the deferred revenue balance at April 4, 2021, and of this amount $3.9 million is expected to be recognized in the next twelve months, and the remaining $7.0 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 $6.1 million as of April 4, 2021 and $3.0 million as of March 29, 2020. The following table presents sales commissions that are recorded within selling, general and administrative expenses:


	Three Months ended
	April 4, 2021		March 29, 2020

	(In thousands)
Sales commissions	$	3,877	$	4,175

Note 3: Acquisitions

OTN Systems N.V.

We acquired 100% of the shares of OTN on January 29, 2021 for a preliminary purchase price, net of cash acquired, of $73.3 million. OTN, 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 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 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's debt as part of the transaction, which was subsequently paid on the acquisition date. A subsidiary of OTN includes a noncontrolling interest. Because OTN 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.

-8-

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	$	7,617
Inventories	12,805
Other current assets	5,240
Property, plant and equipment	602
Intangible assets	33,500
Goodwill	39,337
Operating lease right-of-use assets	2,250
Other long-lived assets	706
Total assets acquired	$	102,057

Accounts payable	$	5,931
Accrued liabilities	9,991
Long-term debt	1,841
Post retirement benefits	2,917
Deferred income taxes	5,372
Long-term operating lease liabilities	1,870
Other long-term liabilities	771
Total liabilities assumed	$	28,693

Net assets	$	73,364
Noncontrolling interests	20

Net assets attributable to Belden	$	73,344

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.

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.

The preliminary fair value of acquired receivables is $7.6 million, which is equivalent to its gross contractual amount.

For purposes of the above allocation, we based our preliminary estimate of the fair values for the acquired inventory, intangible assets, 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 (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.

-9-

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


	Fair Value		Amortization Period
	(In thousands)		(In years)
Intangible assets subject to amortization:
Developed technologies	$	20,000	5.0
Customer relationships	7,500		12.0
Sales backlog	3,500		0.9
Trademarks	1,500		2.0
Non-compete agreements	1,000		2.0
Total intangible assets subject to amortization	$	33,500

Intangible assets not subject to amortization:
Goodwill	$	39,337	n/a
Total intangible assets not subject to amortization	$	39,337

Total intangible assets	$	72,837
Weighted average amortization period			5.9

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 April 4, 2021 included $4.1 million and ($3.4 million), respectively, from OTN. For the three months ended April 4, 2021, income before taxes included $0.3 million of severance and other restructuring costs, $1.6 million of amortization of intangible assets, and $0.8 million of cost of sales related to the adjustment of acquired inventory to fair value.

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


	Three Months Ended		Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands, except per share data)
	(Unaudited)
Revenues	$	536,780	$	468,700
Net income from continuing operations attributable to Belden common stockholders	28,216		9,697
Diluted income from continuing operations per share attributable to Belden common stockholders	$	0.63	$	0.21

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.

-10-

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. As of April 4, 2021, the financial targets tied to the earn-out were not expected to be achieved. We reduced the earn-out liability to zero and recognized a $5.8 million benefit in Selling, General and Administrative Expenses in the three months ended April 4, 2021. 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 an oil and gas cable business and determined that we met all of the criteria to classify the assets and liabilities of this business as held for sale. The business is part of the Industrial Solutions segment. 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 is excluded from Segment EBITDA of our Industrial Solutions segment. The following table provides the major classes of assets and liabilities classified as held for sale. In addition, the disposal group had $0.9 million of accumulated other comprehensive income at April 4, 2021.


Cash	$	298
Receivables	7,660
Inventories	2,033
Other current assets	3,189
Property, plant and equipment	2,487
Other long-lived assets	612
Total assets held for sale	$	16,279

Accounts payable	$	659
Accrued liabilities	4,896
Total liabilities held for sale	$	5,555

Net assets	$	10,724

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, we determined a divestiture of Grass Valley represented a strategic shift that is expected to have a major impact on our operations and financial results. As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, 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.

-11-

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 months ended April 4, 2021, the seller's note accrued interest of $3.7 million, 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 months ended March 29, 2020 (in thousands):


Revenues	$	51,049
Cost of sales	(35,202)
Gross profit	15,847
Selling, general and administrative expenses	(17,519)
Research and development expenses	(8,499)
Asset impairment of discontinued operations	(23,197)
Interest expense, net	(206)
Non-operating pension cost	(85)
Loss before taxes	$	(33,659)

We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $23.2 million in the three months ended March 29, 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 Grass Valley disposal group had capital expenditures of approximately $7.9 million and incurred stock-based compensation income of $0.9 million during the three months ended March 29, 2020. The disposal group did not have any significant non-cash charges for investing activities during the three months ended March 29, 2020.

Note 6: Reportable Segments

We are organized around two global business platforms: Enterprise Solutions and Industrial Solutions. Each of the global business platforms 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.

-12-


	Enterprise Solutions		Industrial Solutions		Total Segments

	(In thousands)
As of and for the three months ended April 4, 2021
Segment revenues	$	226,355	$	310,026	$	536,381
Affiliate revenues	331		23		354
Segment EBITDA	28,106		51,363		79,469
Depreciation expense	5,350		6,210		11,560
Amortization of intangibles	4,336		5,611		9,947
Amortization of software development intangible assets	32		657		689
Severance, restructuring, and acquisition integration costs	1,915		3,256		5,171
Adjustments related to acquisitions and divestitures	(6,286)		6,907		621
Segment assets	476,742		582,585		1,059,327

As of and for the three months ended March 29, 2020
Segment revenues	$	212,213	$	251,313	$	463,526
Affiliate revenues	224		6		230
Segment EBITDA	24,712		35,527		60,239
Depreciation expense	5,081		5,201		10,282
Amortization of intangibles	5,504		10,681		16,185
Amortization of software development intangible assets	55		275		330
Severance, restructuring, and acquisition integration costs	2,550		1,069		3,619
Adjustments related to acquisitions and divestitures	20		—		20
Segment assets	503,658		468,600		972,258

The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues and consolidated income from continuing operations before taxes, respectively.


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Total Segment and Consolidated Revenues	$	536,381	$	463,526



Total Segment EBITDA	$	79,469	$	60,239
Amortization of intangibles	(9,947)		(16,185)
Depreciation expense	(11,560)		(10,282)
Severance, restructuring, and acquisition integration costs (1)	(5,171)		(3,619)
Amortization of software development intangible assets	(689)		(330)
Adjustments related to acquisitions and divestitures (2)	(621)		(20)
Eliminations	(33)		(95)
Consolidated operating income	51,448		29,708
Interest expense, net	(15,511)		(13,324)
Total non-operating pension benefit	684		699
Consolidated income from continuing operations before taxes	$	36,621	$	17,083

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

(2) During the three months ended April 4, 2021, we reduced the Opterna earn-out liability by $5.8 million, recognized a $3.6 million impairment on assets held and used, recognized a $3.4 million impairment on assets held for sale, collected $1.4 million of receivables associated with the sale of Grass Valley that were previously written off, and recognized cost of sales of $0.8 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN acquisition. During the three months ended March 29, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition.

-13-

Note 7: Income (loss) per Share

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


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Numerator:
Income from continuing operations	$	28,741	$	14,891
Less: Net income (loss) attributable to noncontrolling interest	75		(30)
Income from continuing operations attributable to Belden stockholders	28,666		14,921
Add: Loss from discontinued operations, net of tax	—		(26,110)

Net income (loss) attributable to Belden stockholders	$	28,666	$	(11,189)

Denominator:
Weighted average shares outstanding, basic	44,679		45,390
Effect of dilutive common stock equivalents	366		148
Weighted average shares outstanding, diluted	45,045		45,538

For the three months ended April 4, 2021 and March 29, 2020, diluted weighted average shares outstanding exclude outstanding equity awards of 1.3 million and 1.4 million, respectively, which are anti-dilutive. In addition, for the three months ended April 4, 2021 and March 29, 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.4 million and 0.3 million, respectively, 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.

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.

-14-

Estimates are used to determine the allowance, which is based upon an assessment of anticipated payments as well as other historical, current and future information that is reasonably available. The following table presents the activity in the trade receivables allowance for doubtful accounts for our continuing operations for the three months ended April 4, 2021 and March 29, 2020, respectively:


	Three Months ended
	April 4, 2021		March 29, 2020

	(In thousands)
Beginning balance	$	5,150	$	2,569
Adoption adjustment	—		1,011
Current period provision	82		(172)
Write-offs	(57)		—
Recoveries collected	(23)		(9)
Fx impact	(17)		(213)
Ending balance	$	5,135	$	3,186

Note 9: Inventories

The following table presents the major classes of inventories as of April 4, 2021 and December 31, 2020, respectively:


	April 4, 2021		December 31, 2020

	(In thousands)
Raw materials	$	122,210	$	106,514
Work-in-process	38,204		32,011
Finished goods	149,860		141,042
Gross inventories	310,274		279,567
Excess and obsolete reserves	(34,869)		(32,269)
Net inventories	$	275,405	$	247,298

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 months ended April 4, 2021 and March 29, 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.

-15-

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 April 4, 2021, the SAM lease has approximately $21.5 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 Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Operating lease cost	$	3,848	$	3,597

Finance lease cost
Amortization of right-of-use asset	$	33	$	33
Interest on lease liabilities	3		5
Total finance lease cost	$	36	$	38

Supplemental cash flow information related to leases was as follows:


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,135	$	3,791
Operating cash flows from finance leases	3		5
Financing cash flows from finance leases	43		46

Supplemental balance sheet information related to leases was as follows:


	April 4, 2021		December 31, 2020

	(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets	$	54,660	$	54,787

Accrued liabilities	$	15,300	$	14,742
Long-term operating lease liabilities	45,642		46,398
Total operating lease liabilities	$	60,942	$	61,140

Finance leases:
Other long-lived assets, at cost	$	729	$	764
Accumulated depreciation	(481)		(483)
Other long-lived assets, net	$	248	$	281


Weighted Average Remaining Lease Term
Operating leases	5 years		5 years
Finance leases	3 years		3 years

Weighted Average Discount Rate
Operating leases	6.5	%	6.6	%
Finance leases	4.7	%	4.9	%

-16-

The following table summarizes maturities of lease liabilities as of April 4, 2021 and December 31, 2020, respectively:


	April 4, 2021		December 31, 2020

	(In thousands)
2021	$	15,011	$	19,250
2022	17,317		16,305
2023	13,299		12,552
2024	10,240		9,516
2025	9,158		8,718
Thereafter	9,062		8,901
Total	$	74,087	$	75,242

Note 11: Long-Lived Assets

Depreciation and Amortization Expense

We recognized depreciation expense of $11.6 million and $10.3 million in the three months ended April 4, 2021 and March 29, 2020, respectively. We recognized amortization expense related to our intangible assets of $10.6 million and $16.5 million in the three months ended April 4, 2021 and March 29, 2020, respectively.

Interim Impairment Test

During the first quarter of 2021, we committed to a plan to sell an oil and gas cable business, and recognized an impairment charge of $3.4 million. See Note 4.

During the first quarter of 2021, we also performed a recoverability test on certain held and used long-lived assets in our Industrial Solutions segment due to the presence of impairment indicators stemming from the increased probability of selling the assets. 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 is excluded from Segment EBITDA of our Industrial Solutions segment.

Note 12: Severance, Restructuring, and Acquisition Integration Activities

Cost Reduction Program

During the fourth quarter of 2019, we began a cost reduction program to improve performance and enhance margins by streamlining the organizational structure and investing in technology to drive productivity. We recognized $2.3 million of severance and other restructuring costs for this program during the three months ended April 4, 2021 and an immaterial amount during the three months ended March 29, 2020. These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments. The cost reduction program is expected to deliver an estimated $60 million reduction in selling, general, and administrative expenses on an annual basis. We expect to incur incremental costs of approximately $6 million for this program in 2021.

Acquisition Integration Program

We are integrating our recent acquisitions such as OTN, SPC, and Opterna with our existing businesses. The restructuring and integration activities were focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $1.8 million and $2.2 million of severance and other restructuring costs for this program during the three months ended April 4, 2021 and March 29, 2020, respectively. These costs were incurred by the Enterprise Solutions segment. We expect to incur incremental costs of approximately $2.4 million for this program in 2021.

-17-

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 months ended April 4, 2021 and March 29, 2020:


	Severance		Other Restructuring and Integration Costs		Total Costs

Three Months Ended April 4, 2021	(In thousands)
Enterprise Solutions	$	1,044	$	871	$	1,915
Industrial Solutions	1,367		1,889		3,256
Total	$	2,411	$	2,760	$	5,171

Three Months Ended March 29, 2020
Enterprise Solutions	$	(632)	$	3,182	$	2,550
Industrial Solutions	(955)		2,024		1,069
Total	$	(1,587)	$	5,206	$	3,619

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.

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 Ended
	April 4, 2021		March 29, 2020

	(In Thousands)
Cost of sales	$	260	$	45
Selling, general and administrative expenses	4,911		3,574

Total	$	5,171	$	3,619

Accrued Severance

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


	Three Months ended
	April 4, 2021		March 29, 2020

	(In thousands)
Beginning balance	$	7,085	$	19,575
New charges	2,060		2,529
Cash payments	(1,798)		(4,483)
Foreign currency translation	49		(89)
Other adjustments	—		(4,147)
Ending balance	$	7,396	$	13,385

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.

-18-

Note 13: Long-Term Debt and Other Borrowing Arrangements

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


	April 4, 2021		December 31, 2020

	(In thousands)
Revolving credit agreement due 2022	$	—	$	—
Senior subordinated notes:
3.875% Senior subordinated notes due 2028	410,865		428,295
3.375% Senior subordinated notes due 2027	528,255		550,665
4.125% Senior subordinated notes due 2026	234,780		244,740
2.875% Senior subordinated notes due 2025	352,170		367,110
Total senior subordinated notes	1,526,070		1,590,810

Less unamortized debt issuance costs	(16,362)		(17,084)
Long-term debt	$	1,509,708	$	1,573,726

Revolving Credit Agreement due 2022

Our Revolving Credit Agreement provides a $400.0 million multi-currency asset-based revolving credit facility (the Revolver). The borrowing base under the Revolver includes eligible accounts receivable; inventory; and property, plant and equipment of certain of our subsidiaries in the U.S., Canada, Germany, and the Netherlands. The maturity date of the Revolver is May 16, 2022. 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 pay a commitment fee on our available borrowing capacity of 0.25%. In the event we borrow more than 90% of our borrowing base, we are subject to a fixed charge coverage ratio covenant. As of April 4, 2021, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $269.2 million.

Senior Subordinated Notes

We have outstanding €350.0 million aggregate principal amount of 3.875% senior subordinated notes due 2028 (the 2028 Notes). The carrying value of the 2028 Notes as of April 4, 2021 is $410.9 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 2027, 2026, and 2025 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.

We have outstanding €450.0 million aggregate principal amount of 3.375% senior subordinated notes due 2027 (the 2027 Notes). The carrying value of the 2027 Notes as of April 4, 2021 is $528.3 million. The 2027 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2027 Notes rank equal in right of payment with our senior subordinated notes due 2028, 2026, and 2025 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 €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 April 4, 2021 is $234.8 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 2028, 2027, and 2025 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 €300.0 million aggregate principal amount of 2.875% senior subordinated notes due 2025 (the 2025 Notes). The carrying value of the 2025 Notes as of April 4, 2021 is $352.2 million. The 2025 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2025 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 March 15 and September 15 of each year.

-19-

Fair Value of Long-Term Debt

The fair value of our senior subordinated notes as of April 4, 2021 was approximately $1,558.5 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 $1,526.1 million as of April 4, 2021.

Note 14: Net Investment Hedge

All of our euro denominated notes were issued by Belden Inc., a USD functional currency entity. As of April 4, 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 three months ended April 4, 2021 and March 29, 2020, the transaction gain associated with the net investment hedge reported in other comprehensive income was $38.5 million and $54.7 million, respectively. During the three months ended March 29, 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 months ended April 4, 2021, we recognized income tax expense of $7.9 million, representing an effective tax rate of 21.5%. The effective tax rate was primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits. For the three months ended March 29, 2020, we recognized income tax expense of $2.2 million, representing an effective tax rate of 12.8%. The effective tax rate was impacted by a $1.1 million income tax benefit for certain foreign tax credits in the three months ended March 29, 2020.

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 Obligations				Other Postretirement Obligations
Three Months Ended	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020

	(In thousands)
Service cost	$	886	$	932	$	9	$	8
Interest cost	1,806		2,337		177		202
Expected return on plan assets	(3,668)		(3,940)		—		—
Amortization of prior service cost	28		44		—		—
Actuarial losses (gains)	979		677		(6)		(19)
Net periodic benefit cost	$	31	$	50	$	180	$	191

Note 17: Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The following table summarizes total comprehensive income (losses):

-20-


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Net income (loss)	$	28,741	$	(11,219)
Foreign currency translation adjustments, net of $0.0 million and $1.0 million tax, respectively	52,764		21,790
Adjustments to pension and postretirement liability, net of $0.2 million and $0.1 million tax, respectively	764		383
Total comprehensive income	82,269		10,954
Less: Comprehensive loss attributable to noncontrolling interests	(122)		(180)
Comprehensive income attributable to Belden	$	82,391	$	11,134

The accumulated balances related to each component of other comprehensive income (loss), net of tax, are as follows:


	Foreign Currency Translation Component		Pension 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 loss attributable to Belden before reclassifications	52,961		—		52,961
Amounts reclassified from accumulated other comprehensive income (loss)	—		764		764
Net current period other comprehensive gain (loss) attributable to Belden	52,961		764		53,725
Balance at April 4, 2021	$	(78,220)	$	(59,906)	$	(138,126)

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the three months ended April 4, 2021:


	Amount Reclassified from Accumulated Other Comprehensive Income		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	$	973	(1)
Prior service cost	28		(1)
Total before tax	1,001
Tax benefit	(237)
Total net of tax	$	764

(1) The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs (see Note 16).

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 three months ended April 4, 2021, we did not repurchase any stock. During the three months ended March 29, 2020, we repurchased 0.6 million shares of our common stock under the share repurchase program for an aggregate cost of $21.2 million at an average price per share of $35.85.

-21-

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 business platforms - 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.

Global 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. 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 continue. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by local or foreign governmental authorities, or that we determine are in the best interests of our employees and customers.

Foreign currency

Our exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the Euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee, and Brazilian real. 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 49% of our consolidated revenues during the quarter ended April 4, 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.

-22-

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.

OTN acquisition

We acquired 100% of the shares of OTN on January 29, 2021 for a purchase price, net of cash acquired, of $73.3 million. OTN, 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 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 have been included in our Condensed Consolidated Financial Statements from January 29, 2021, and are reported within the Industrial Solutions segment. See Note 3.

Long-lived asset impairment

-23-

Opterna earn-out

Cost Reduction Program

During the fourth quarter of 2019, we began a cost reduction program to improve performance and enhance margins by streamlining the organizational structure and investing in technology to drive productivity. We recognized $2.3 million of severance and other restructuring costs for this program during the three months ended April 4, 2021. The cost reduction program is expected to deliver an estimated $60.0 million reduction in selling, general, and administrative expenses on an annual basis. We expect to incur incremental costs of approximately $6 million for this program. See Note 12.

Acquisition Integration Program

We are integrating our recent acquisitions such as OTN, SPC, and Opterna with our existing businesses. The restructuring and integration activities were focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $1.8 million of severance and other restructuring costs for this program during the three months ended April 4, 2021. We expect to incur incremental costs of approximately $2.4 million 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.

Critical Accounting Policies

During the three months ended April 4, 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
	April 4, 2021		March 29, 2020		% Change

	(In thousands, except percentages)
Revenues	$	536,381	$	463,526	15.7	%
Gross profit	191,344		170,501		12.2	%
Selling, general and administrative expenses	(98,449)		(98,389)		0.1	%
Research and development expenses	(31,500)		(26,219)		20.1	%
Amortization of intangibles	(9,947)		(16,185)		(38.5)	%
Operating income	51,448		29,708		73.2	%
Interest expense, net	(15,511)		(13,324)		16.4	%
Non-operating pension benefit	684		699		(2.1)	%
Income from continuing operations before taxes	36,621		17,083		114.4	%

-24-

Revenues increased $72.9 million in the three months ended April 4, 2021 from the comparable period of 2020 due to the following factors:

•Higher sales volume primarily from industrial automation and broadband and 5G products resulted in a $35.9 million increase in revenues.

•Copper prices had a $23.8 million favorable impact on revenues.

•Currency translation had a $9.1 million favorable impact on revenues.

•Acquisitions contributed an estimated $4.1 million in revenues.

Gross profit increased $20.8 million in the three months ended April 4, 2021 from the comparable period of 2020 due to the increases in revenues discussed above.

Selling, general and administrative expenses increased $0.1 million in the three months ended April 4, 2021 from the comparable period of 2020. The impact of currency translation; acquisitions; and increases in severance, restructuring and acquisition integration costs offset the benefits realized from our Cost Reduction Program.

Research and development expenses increased $5.3 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives.

Amortization of intangibles decreased $6.2 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to certain intangible assets becoming fully amortized.

Operating income increased $21.7 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily as a result of the increase in gross profit discussed above.

Net interest expense increased $2.2 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to currency translation.

Income from continuing operations before taxes increased $19.5 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to the increase in operating income discussed above.

Income Taxes


	Three Months Ended						%
	April 4, 2021			March 29, 2020			Change

	(In thousands, except percentages)
Income before taxes	$	36,621		$	17,083		114.4	%
Income tax expense	7,880			2,192			259.5	%
Effective tax rate	21.5		%	12.8		%

Consolidated Adjusted Revenues and Adjusted EBITDA


	Three Months Ended						%
	April 4, 2021			March 29, 2020			Change

	(In thousands, except percentages)
Adjusted Revenues	$	536,381		$	463,526		15.7	%
Adjusted EBITDA	80,120			60,843			31.7	%
as a percent of adjusted revenues	14.9		%	13.1		%

-25-

Adjusted Revenues increased $72.9 million in the three months ended April 4, 2021 from the comparable period of 2020 due to the following factors:

•Higher sales volume primarily from industrial automation and broadband and 5G products resulted in a $35.9 million increase in revenues.

•Copper prices had a $23.8 million favorable impact on revenues.

•Currency translation had a $9.1 million favorable impact on revenues.

•Acquisitions contributed an estimated $4.1 million in revenues.

Adjusted EBITDA increased $19.3 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily due to leverage on higher sales volume, as discussed above. Accordingly, Adjusted EBITDA margin in the three months ended April 4, 2021 expanded to 14.9% from 13.1% in the comparable period of 2020.

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:

-26-


	Three Months Ended
	April 4, 2021			March 29, 2020

	(In thousands, except percentages)
GAAP and adjusted revenues	$	536,381		$	463,526



GAAP net income (loss)	$	28,741		$	(11,219)
Loss from discontinued operations, net of tax	—			26,110

Amortization of intangible assets	9,947			16,185
Interest expense, net	15,511			13,324
Depreciation expense	11,560			10,282
Severance, restructuring, and acquisition integration costs (1)	5,171			3,619
Income tax expense	7,880			2,192
Amortization of software development intangible assets	689			330
Adjustments related to acquisitions and divestitures (2)	621			20
Adjusted EBITDA	$	80,120		$	60,843

GAAP net income (loss) margin	5.4		%	(2.4)		%
Adjusted EBITDA margin	14.9		%	13.1		%

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

Segment Results of Operations

For additional information regarding our segment measures, see Note 6 to the Condensed Consolidated Financial Statements.

Enterprise Solutions


	Three Months Ended						%
	April 4, 2021			March 29, 2020			Change

	(In thousands, except percentages)
Segment Revenues	$	226,355		$	212,213		6.7	%
Segment EBITDA	28,106			24,712			13.7	%
as a percent of segment revenues	12.4		%	11.6		%

Enterprise Solutions revenues increased $14.1 million in the three months ended April 4, 2021 from the comparable period of 2020. The year-over-year increase in revenues was primarily due to higher copper prices, favorable currency translation, and increases in volume of $10.0 million, $2.5 million, and $1.6 million, respectively.

Enterprise Solutions EBITDA increased $3.4 million in the three months ended April 4, 2021 compared to the year ago period primarily as a result of the increase in revenues discussed above coupled with the benefits realized from our Cost Reduction Program.

-27-

Industrial Solutions


	Three Months Ended						%
	April 4, 2021			March 29, 2020			Change

	(In thousands, except percentages)
Segment Revenues	$	310,026		$	251,313		23.4	%
Segment EBITDA	51,363			35,527			44.6	%
as a percent of segment revenues	16.6		%	14.1		%

Industrial Solutions revenues increased $58.7 million in the three months ended April 4, 2021 from the comparable period of 2020. The increase in revenues in the three months ended April 4, 2021 was primarily due to increases in volume, higher copper prices, favorable currency translation, and acquisitions of $34.2 million, $13.8 million, $6.6 million, and $4.1 million, respectively.

Industrial Solutions EBITDA increased $15.8 million in the three months ended April 4, 2021 from the comparable period of 2020 primarily as a result of the increase in revenues discussed above coupled with the benefits realized from our Cost Reduction Program and partially offset by increased investments in R&D projects as we continue our commitment to growth initiatives.

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 includes the results and cash flow activity of Grass Valley for the period ended March 29, 2020 consistent with the Condensed Consolidated Cash Flow Statements:


	Three Months Ended
	April 4, 2021		March 29, 2020

	(In thousands)
Net cash used for:
Operating activities	$	(41,495)	$	(52,052)
Investing activities	(82,337)		(18,255)
Financing activities	(5,035)		(53,896)
Effects of currency exchange rate changes on cash and cash equivalents	(2,277)		(7,947)
Decrease in cash and cash equivalents	(131,144)		(132,150)
Cash and cash equivalents, beginning of period	501,994		425,885
Cash and cash equivalents, end of period	$	370,850	$	293,735

Operating cash flows were a use of cash of $41.5 million in the three months ended April 4, 2021. Operating cash flow improved $10.6 million compared to the prior year primarily due to the increase in net income and a favorable change in accounts payable partially offset by an unfavorable change in receivables. Accounts payable was a source of cash of $3.3 million compared to a use of cash of $50.8 million in the prior year and receivables were a use of cash of $50.2 million compared to a source of cash of $43.6 million in the prior year. Receivables increased during the three months ended April 4, 2021 primarily due to an increase in revenues.

-28-

Net cash used for investing activities totaled $82.3 million in the three months ended April 4, 2021, compared to $18.3 million in the prior year. Investing activities for the three months ended April 4, 2021 included capital expenditures of $11.2 million compared to $20.9 million in the comparable period of 2020. The three months ended April 4, 2021 also included payments of $72.2 million for the acquisition of OTN, partially offset by cash receipts of $1.1 million associated with the sale of Grass Valley. The three months ended March 29, 2020 also included $2.1 million of proceeds from the sale of tangible property and the receipt of $0.6 million related to a working capital adjustment for the acquisition of SPC.

Net cash used for financing activities totaled $5.0 million for the three months ended April 4, 2021, compared to $53.9 million in the prior year. Financing activities for the three months ended April 4, 2021 included cash dividend payments of $2.2 million, repayments of debt obligations of $1.8 million assumed as part of the OTN acquisition, and net payments related to share based compensation activities of $0.9 million. Financing activities for the three months ended March 29, 2020 included a payment of earn-out consideration of which $29.3 million is classified as a financing activity, payments under our share repurchase program of $21.2 million, cash dividend payments of $2.3 million, and net payments related to share based compensation activities of $1.0 million.

Our cash and cash equivalents balance was $370.9 million as of April 4, 2021. Of this amount, $157.4 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 April 4, 2021 consisted of $1,526.1 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” made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. 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 April 4, 2021.


	Principal Amount by Expected Maturity							Fair
	2021		Thereafter			Total		Value

	(In thousands, except interest rates)
€350.0 million fixed-rate senior subordinated notes due 2028	$	—	$	410,865		$	410,865	$	425,726
Average interest rate			3.875		%
€450.0 million fixed-rate senior subordinated notes due 2027	$	—	$	528,255		$	528,255	$	536,686
Average interest rate			3.375		%
€200.0 million fixed-rate senior subordinated notes due 2026	$	—	$	234,780		$	234,780	$	241,319
Average interest rate			4.125		%
€300.0 million fixed-rate senior subordinated notes due 2025	$	—	$	352,170		$	352,170	$	354,780
Average interest rate			2.875		%
Total						$	1,526,070	$	1,558,511

-29-

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, and our debt is fixed at an average interest rate of 3.5% with no maturities until 2025 through 2028. We have no maintenance covenants on our outstanding debt. Our only covenant is an incurrence covenant, which limits our ability to take on additional debt if EBITDA drops below a certain threshold.

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.

-30-

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. 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-K filed on February 16, 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						Certificate of the Chief Executive Officer pursuant to § 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2						Certificate of the Chief Financial Officer pursuant to § 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1						Certificate of the Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2						Certificate of the Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.DEF						Definition Linkbase Document

Exhibit 101.PRE						Presentation Linkbase Document

Exhibit 101.LAB						Labels Linkbase Document

Exhibit 101.CAL						Calculation Linkbase Document

Exhibit 101.SCH						Schema Document

Exhibit 101.INS						Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

-31-

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:

May 10, 2021

By:

/s/ Roel Vestjens

Roel Vestjens

President and Chief Executive Officer

Date:

May 10, 2021

By:

/s/ Jeremy Parks

Jeremy Parks

Senior Vice President, Finance, and Chief Financial Officer

Date:

May 10, 2021

By:

/s/ Douglas R. Zink

Douglas R. Zink

Vice President and Chief Accounting Officer

-32-