BELDEN INC. [BDC] Filings

10-Q 1 bdc-20240630.htm 10-Q bdc-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________

FORM 10-Q

_________________________________________________

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission File No. 001-12561

____________________________________

BELDEN INC.

(Exact name of registrant as specified in its charter)

_____________________________________________


Delaware						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 July 26, 2024, the Registrant had 40,805,496 outstanding shares of common stock.

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

BELDEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2024		December 31, 2023

	(Unaudited)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	564,751	$	597,044
Receivables, net	396,850		413,806
Inventories, net	374,991		366,987
Other current assets	75,951		79,142

Total current assets	1,412,543		1,456,979
Property, plant and equipment, less accumulated depreciation	460,949		451,069
Operating lease right-of-use assets	127,824		89,686
Goodwill	1,031,119		907,331
Intangible assets, less accumulated amortization	423,781		269,144
Deferred income taxes	16,318		15,739
Other long-lived assets	50,062		50,243
	$	3,522,596	$	3,240,191

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	260,857	$	343,215
Accrued liabilities	277,290		290,289
Payable to sellers of Precision Optical Technologies	291,508		—
Total current liabilities	829,655		633,504
Long-term debt	1,164,840		1,204,211
Postretirement benefits	70,250		74,573
Deferred income taxes	90,411		49,472
Long-term operating lease liabilities	110,148		74,941
Other long-term liabilities	37,415		37,188
Stockholders’ equity:
Common stock	503		503
Additional paid-in capital	823,205		818,663
Retained earnings	1,068,052		985,807
Accumulated other comprehensive loss	(25,219)		(41,279)
Treasury stock	(646,695)		(597,437)
Total Belden stockholders’ equity	1,219,846		1,166,257
Noncontrolling interests	31		45
Total stockholders’ equity	1,219,877		1,166,302
	$	3,522,596	$	3,240,191

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				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023

	(In thousands, except per share data)
Revenues	$	604,336	$	692,245	$	1,140,011	$	1,334,034
Cost of sales	(377,530)		(430,917)		(711,609)		(826,601)
Gross profit	226,806		261,328		428,402		507,433
Selling, general and administrative expenses	(119,497)		(126,635)		(230,265)		(248,209)
Research and development expenses	(28,457)		(30,970)		(55,456)		(60,354)
Amortization of intangibles	(9,940)		(11,126)		(20,749)		(20,736)


Operating income	68,912		92,597		121,932		178,134
Interest expense, net	(9,017)		(8,812)		(16,599)		(17,013)
Non-operating pension benefit	230		646		461		1,134

Income before taxes	60,125		84,431		105,794		162,255
Income tax expense	(11,091)		(15,656)		(19,451)		(30,535)



Net income	49,034		68,775		86,343		131,720
Less: Net income (loss) attributable to noncontrolling interest	(10)		22		(14)		(225)
Net income attributable to Belden stockholders	$	49,044	$	68,753	$	86,357	$	131,945

Weighted average number of common shares and equivalents:
Basic	40,690		42,497		40,838		42,663
Diluted	41,204		43,088		41,348		43,380





Basic income per share attributable to Belden stockholders	$	1.21	$	1.62	$	2.11	$	3.09





Diluted income per share attributable to Belden stockholders	$	1.19	$	1.60	$	2.09	$	3.04

Comprehensive income attributable to Belden	$	55,956	$	63,890	$	102,417	$	109,782

Common stock dividends declared per share	$	0.05	$	0.05	$	0.10	$	0.10

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

-2-

BELDEN INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(Unaudited)


	Six Months Ended
	June 30, 2024		July 2, 2023

	(In thousands)
Cash flows from operating activities:
Net income	$	86,343	$	131,720
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	52,968		49,044
Share-based compensation	14,643		12,154




Changes in operating assets and liabilities, net of the effects of currency exchange rate changes, acquired businesses and disposals:
Receivables	30,880		(71,212)
Inventories	204		10,347
Accounts payable	(90,025)		(59,295)
Accrued liabilities	(16,788)		(22,855)
Income taxes	2,097		5,204
Other assets	1,728		(4,197)
Other liabilities	3,630		3,805
Net cash provided by operating activities	85,680		54,715
Cash flows from investing activities:
Capital expenditures	(46,246)		(32,729)
Cash from (used for) business acquisitions, net of cash acquired	526		(97,585)
Proceeds from disposal of tangible assets	60		9
Proceeds from disposal of businesses, net of cash sold	—		9,300

Net cash used for investing activities	(45,660)		(121,005)
Cash flows from financing activities:
Payments under share repurchase program	(57,865)		(86,224)
Withholding tax payments for share-based payment awards	(8,110)		(16,940)
Cash dividends paid	(4,119)		(4,285)
Payments under financing lease obligations	(455)		(115)


Proceeds from issuance of common stock	3,152		1,679

Net cash used for financing activities	(67,397)		(105,885)
Effect of foreign currency exchange rate changes on cash and cash equivalents	(4,916)		(734)
Decrease in cash and cash equivalents	(32,293)		(172,909)
Cash and cash equivalents, beginning of period	597,044		687,676
Cash and cash equivalents, end of period	$	564,751	$	514,767

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

-3-

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
	(In thousands)
Balance at December 31, 2023	50,335	$	503	$	818,663	$	985,807	(9,208)	$	(597,437)	$	(41,279)	$	45	$	1,166,302
Net income (loss)	—	—		—		37,313		—	—		—		(4)		37,309
Other comprehensive income, net of tax	—	—		—		—		—	—		9,148		—		9,148
Common stock issuance	—	—		477		—		48	2,675		—		—		3,152
Retirement Savings Plan stock contributions	—	—		641		—		22	1,187		—		—		1,828
Exercise of stock options, net of tax withholding forfeitures	—	—		(483)		—		8	99		—		—		(384)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures	—	—		(10,991)		—		138	3,454		—		—		(7,537)
Share repurchase program, net of excise tax	—	—		—		—		(675)	(58,270)		—		—		(58,270)
Share-based compensation	—	—		6,397		—		—	—		—		—		6,397
Common stock dividends ($0.05 per share)	—	—		—		(2,059)		—	—		—		—		(2,059)
Balance at March 31, 2024	50,335	$	503	$	814,704	$	1,021,061	(9,667)	$	(648,292)	$	(32,131)	$	41	$	1,155,886

Net income (loss)	—	—		—		49,044		—	—		—		(10)		49,034
Other comprehensive income, net of tax	—	—		—		—		—	—		6,912		—		6,912

Retirement Savings Plan stock contributions	—	—		1,206		—		22	793		—		—		1,999
Exercise of stock options, net of tax withholding forfeitures	—	—		(194)		—		4	97		—		—		(97)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures	—	—		(757)		—		20	665		—		—		(92)
Adjustment to share repurchase excise tax	—	—		—		—		—	42		—		—		42
Share-based compensation	—	—		8,246		—		—	—		—		—		8,246
Common stock dividends ($0.05 per share)	—	—		—		(2,053)		—	—		—		—		(2,053)
Balance at June 30, 2024	50,335	$	503	$	823,205	$	1,068,052	(9,621)	$	(646,695)	$	(25,219)	$	31	$	1,219,877

-4-


	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, 2022	50,335	$	503	$	825,669	$	751,522	(7,502)	$	(428,812)	$	(5,871)	$	939	$	1,143,950
Net income (loss)	—	—		—		63,192		—	—		—		(247)		62,945
Other comprehensive income (loss), net of tax	—	—		—		—		—	—		(17,300)		2		(17,298)
Common stock issuance	—	—		(420)		—		37	2,099		—		—		1,679
Retirement Savings Plan stock contributions	—	—		638		—		28	1,758		—		—		2,396
Exercise of stock options, net of tax withholding forfeitures	—	—		(4,547)		—		47	1,951		—		—		(2,596)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures	—	—		(17,997)		—		196	7,301		—		—		(10,696)
Share repurchase program, net of excise tax	—	—		—		—		(594)	(50,266)		—		—		(50,266)
Share-based compensation	—	—		6,253		—		—	—		—		—		6,253
Common stock dividends ($0.05 per share)	—	—		—		(2,150)		—	—		—		—		(2,150)
Balance at April 2, 2023	50,335	$	503	$	809,596	$	812,564	(7,788)	$	(465,969)	$	(23,171)	$	694	$	1,134,217
Net income	—	—		—		68,753		—	—		—		22		68,775
Other comprehensive income (loss), net of tax	—	—		—		—		—	—		(4,863)		2		(4,861)
Sale and deconsolidation of subsidiary	—	—		—		—		—	—		(139)		(695)		(834)
Retirement Savings Plan stock contributions	—	—		663		—		24	1,379		—		—		2,042
Exercise of stock options, net of tax withholding forfeitures	—	—		(2,698)		—		27	767		—		—		(1,931)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures	—	—		(4,130)		—		55	2,413		—		—		(1,717)
Share repurchase program, net of excise tax	—	—		—		—		(394)	(36,463)		—		—		(36,463)
Share-based compensation	—	—		5,901		—		—	—		—		—		5,901
Common stock dividends ($0.05 per share)	—	—		—		(2,138)		—	—		—		—		(2,138)
Balance at July 2, 2023	50,335	$	503	$	809,332	$	879,179	(8,076)	$	(497,873)	$	(28,173)	$	23	$	1,162,991

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

-5-

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, 2023:

•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 2023 Annual Report on Form 10-K.

Business Description

We are a leading global supplier of network infrastructure and digitization solutions built around two global businesses - Enterprise Solutions and Industrial Automation Solutions. Our mission is to build the foundation for a digital world that makes the digital journey simpler, smarter and secure.

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 March 31, 2024, the 91st day of our fiscal year 2024. Our fiscal second and third quarters each have 91 days. The six months ended June 30, 2024 and July 2, 2023 included 182 and 183 days, respectively.

Fair Value Measurement

Accounting guidance for fair value measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources or reflect our own assumptions of market participant valuation. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

•Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

•Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets, or financial instruments for which significant inputs are observable, either directly or indirectly; and

•Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

As of and during the three and six months ended June 30, 2024 and July 2, 2023, we utilized Level 1 inputs to determine the fair value of cash equivalents. We did not have any transfers between Level 1 and Level 2 fair value measurements during the six months ended June 30, 2024 and July 2, 2023.

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 June 30, 2024, 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.

-6-

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. Historically, these lawsuits have primarily involved 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 June 30, 2024, we were party to standby letters of credit, surety bonds, and bank guaranties totaling $6.9 million, $6.0 million, and $5.2 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

A Belden subsidiary includes a noncontrolling interest as of and for the periods ended June 30, 2024 and July 2, 2023. The results attributable to the noncontrolling interest holders are not material to our condensed consolidated financial statements, and are presented as net income (loss) attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations.

Current Year Adoption of Accounting Pronouncements

None of the accounting pronouncements that became effective during 2024 had a material impact to our condensed consolidated financial statements or disclosures.

Pending Adoption of Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) amended the guidance in Accounting Standards Codification (ASC) 280, Segment Reporting, to require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. We did not early adopt this pronouncement, and we expect the amended guidance to have a minimal impact on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures (ASU 2023-09) enhancing the transparency and decision usefulness of income tax disclosures. ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-09 are applied on a prospective basis, though retrospective application is permitted. We did not early adopt this pronouncement and are in the process of evaluating its impact on our consolidated financial statements and related disclosures.

In March 2024, the SEC issued a final climate disclosure rule, which requires registrants to disclose climate-related information in registration statements and annual reports. The final rule also requires certain disclosures related to risk management and governance over climate-related risks, material climate targets and goals, and material Scope 1 and Scope 2 greenhouse gas emissions. For calendar year companies, the ruling requires certain disclosures in annual reports for the year ending December 31, 2025. On April 4, 2024, the SEC voluntarily stayed the final rule pending the completion of judicial review of cases pending in the Eighth Circuit. We are continuing to evaluate the impact of the final rule on our consolidated financial statements and disclosures.

-7-

Note 2: Revenues

Revenues are recognized when control of the promised goods or services is transferred to our customers and in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Taxes collected from customers and remitted to governmental authorities are not included in our revenues. The following tables present our revenues disaggregated by major product category.


	Broadband Solutions		Industrial Automation Solutions		Smart Buildings Solutions		Total Revenues

Three Months Ended June 30, 2024	(In thousands)
Enterprise Solutions	$	136,020	$	—	$	134,453	$	270,473
Industrial Automation Solutions	—		333,863		—		333,863
Total	$	136,020	$	333,863	$	134,453	$	604,336

Three Months Ended July 2, 2023
Enterprise Solutions	$	159,332	$	—	$	153,197	$	312,529
Industrial Automation Solutions	—		379,716		—		379,716
Total	$	159,332	$	379,716	$	153,197	$	692,245

Six Months Ended June 30, 2024
Enterprise Solutions	$	248,120	$	—	$	256,442	$	504,562
Industrial Automation Solutions	—		635,449		—		635,449
Total	$	248,120	$	635,449	$	256,442	$	1,140,011

Six Months Ended July 2, 2023
Enterprise Solutions	$	290,887	$	—	$	296,985	$	587,872
Industrial Automation Solutions	—		746,162		—		746,162
Total	$	290,887	$	746,162	$	296,985	$	1,334,034

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 June 30, 2024	(In thousands)
Enterprise Solutions	$	200,904	$	42,379	$	27,190	$	270,473
Industrial Automation Solutions	198,884		83,017		51,962		333,863
Total	$	399,788	$	125,396	$	79,152	$	604,336

Three Months Ended July 2, 2023
Enterprise Solutions	$	246,471	$	36,671	$	29,387	$	312,529
Industrial Automation Solutions	213,852		109,055		56,809		379,716
Total	$	460,323	$	145,726	$	86,196	$	692,245

Six Months Ended June 30, 2024
Enterprise Solutions	$	367,233	$	88,067	$	49,262	$	504,562
Industrial Automation Solutions	381,774		160,873		92,802		635,449
Total	$	749,007	$	248,940	$	142,064	$	1,140,011

Six Months Ended July 2, 2023
Enterprise Solutions	$	460,358	$	74,119	$	53,395	$	587,872
Industrial Automation Solutions	429,065		210,976		106,121		746,162
Total	$	889,423	$	285,095	$	159,516	$	1,334,034

-8-

We generate revenues primarily by selling products that support communication, infrastructure, and deliver solutions that make the digital journey simpler, smarter, and secure. We also generate revenues from providing support and professional services. We sell our products to distributors, end-users, installers, and directly to original equipment manufacturers. At times, we enter into arrangements that involve the delivery of multiple performance obligations. For these arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price and recognized when or as each performance obligation is satisfied. Generally, we determine relative standalone selling price using the prices charged separately to customers on a standalone basis. Typically, payments are due after control transfers.

Most of our performance obligations related to the sale of products are satisfied at a point in time when control of the product is transferred to the customer, which generally occurs when the product has been shipped or delivered from our facility to our customers, the customer has legal title to the product, and we have a present right to payment for the product. We also consider any customer acceptance clauses in determining when control has transferred to the customer and typically, these clauses are not substantive.

The amount of consideration we receive and revenue we recognize varies due to rebates, returns, and price adjustments. We estimate the expected rebates, returns, and price adjustments based on an analysis of historical experience, anticipated sales demand, and trends in product pricing. For example, our estimate of price adjustments is based on our historical price adjustments as a percentage of revenues and the average time period between the original sale and the issuance of the price adjustment. We adjust our estimate of revenue for variable consideration at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed. We adjust other current assets and cost of sales for the estimated level of returns. Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three and six months ended June 30, 2024 and July 2, 2023.

The following table presents estimated and accrued variable consideration:


	June 30, 2024		December 31, 2023

	(in thousands)
Accrued rebates included in accrued liabilities	$	45,788	$	49,255
Accrued returns included in accrued liabilities	15,417		15,570
Price adjustments recognized against gross accounts receivable	26,603		26,005

Depending on the terms of an arrangement, we may defer the recognition of a portion of the consideration received because we have to satisfy a future performance obligation. Consideration allocated to support services under a support and maintenance contract is typically paid in advance and recognized ratably over the term of the service. Consideration allocated to professional services is recognized when or as the services are performed depending on the terms of the arrangement. Our contract terms for support, maintenance, and professional services typically require payment within one year or less of when the services will be provided. As of June 30, 2024, total deferred revenue was $29.6 million, and of this amount, $22.1 million is expected to be recognized within the next twelve months, and the remaining $7.5 million is long-term and is expected to be recognized over a period greater than twelve months. The following table presents deferred revenue activity during the three and six months ended June 30, 2024 and July 2, 2023, respectively:


	2024		2023

	(In thousands)
Beginning balance at January 1	$	31,062	$	33,243
New deferrals	6,280		4,359

Revenue recognized	(7,392)		(8,307)
Balance at the end of Q1	$	29,950	$	29,295
New deferrals	11,058		6,900
Revenue recognized	(11,395)		(6,528)
Balance at the end of Q2	$	29,613	$	29,667

Service-type warranties represent $9.7 million of the deferred revenue balance at June 30, 2024, and of this amount $4.5 million is expected to be recognized in the next twelve months, and the remaining $5.2 million is long-term and will be recognized over a period greater than twelve months. As of June 30, 2024 and December 31, 2023, we did not have any material contract assets recorded in the Condensed Consolidated Balance Sheets.

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We expense sales commissions as incurred when the duration of the related revenue arrangement is one year or less. We capitalize sales commissions when the original duration of the related revenue arrangement is longer than one year, and we amortize it over the related revenue arrangement period. We did not have any capitalized sales commissions as of June 30, 2024 and December 31, 2023. The following table presents sales commissions that are recorded within selling, general and administrative expenses:


	Three Months Ended				Six Months ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023

	(In thousands)
Sales commissions	$	5,848	$	6,316	$	11,171	$	12,089

Note 3: Acquisitions

On June 30, 2024, we acquired Precision Optical Technologies, Inc. (“Precision”) for $289.6 million, net of cash acquired. Precision, based in New York, is a leading supplier of value-added optical transceivers with proprietary software, firmware configurations, and related components. Precision is reported within the Enterprise Solutions segment. The Precision acquisition was not material to our results of operations. Consideration for the acquisition was funded with cash on hand in July and is included in current liabilities in the June 30, 2024 condensed consolidated balance sheet. The following table summarizes the estimated, preliminary fair values of the assets acquired and liabilities assumed for Precision as of the acquisition date (in thousands):


Receivables	$	18,386
Inventory	11,680
Other current assets	2,391
Property, plant and equipment	5,109
Intangible assets	176,500
Goodwill	131,402
Operating lease right-of-use assets	3,272
Total assets acquired	$	348,740

Accounts payable	$	11,350
Accrued liabilities	3,485
Deferred income taxes	41,379
Long-term operating lease liabilities	2,936
Total liabilities assumed	$	59,150

Net assets	$	289,590

The above purchase price allocation is preliminary and subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The preliminary measurement of receivables, inventory, intangible assets, goodwill, deferred income taxes, and other assets and liabilities are subject to change. A change in the estimated fair value of the net assets acquired will change the amount of the purchase price allocated to goodwill.

The preliminary fair value of acquired receivables is $18.4 million, which is equivalent to its gross contractual amount. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.

For purposes of the above allocation, we based our preliminary estimate of the fair values for intangible assets on valuation studies performed by a third party valuation firm. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets (Level 3 valuation). Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to the expansion of Belden’s solution selling capabilities, particularly the ability to offer more complete fiber infrastructure solutions. Our tax basis in the acquired goodwill is zero.

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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	$	21,000	5.0
Customer relationships	145,000		20.0
Trademarks	6,000		5.0
Non-compete agreements	4,500		5.0
Total intangible assets subject to amortization	$	176,500

Intangible assets not subject to amortization:
Goodwill	$	131,402	n/a
Total intangible assets not subject to amortization	$	131,402

Total intangible assets	$	307,902
Weighted average amortization period			17.3

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

Note 4: Reportable Segments

We are organized around two global businesses: Enterprise Solutions and Industrial Automation Solutions. Each of the global businesses represents a reportable segment. The key measures of segment profit or loss are Segment Revenues and Segment EBITDA. Segment Revenues represent non-affiliate revenues. Segment EBITDA excludes certain items, including depreciation expense; amortization of intangibles; asset impairment; severance, restructuring, and acquisition integration costs; adjustments related to acquisitions and divestitures; and other costs. We allocate corporate expenses to the segments for purposes of measuring Segment EBITDA. Corporate expenses are allocated on the basis of each segment’s relative EBITDA prior to the allocation.

Our measure of segment assets does not include cash, goodwill, intangible assets, deferred tax assets, or corporate assets. All goodwill is allocated to reporting units of our segments for purposes of impairment testing. Inter-company revenues between our segments is not material.


	Enterprise Solutions		Industrial Automation Solutions		Total Segments

	(In thousands)
As of and for the three months ended June 30, 2024
Segment Revenues	$	270,473	$	333,863	$	604,336
Segment EBITDA	31,456		67,737		99,193
Depreciation expense	6,214		7,363		13,577
Amortization of intangibles	5,022		4,918		9,940
Amortization of software development intangible assets	—		2,464		2,464
Severance, restructuring, and acquisition integration costs	2,309		1,684		3,993
Adjustments related to acquisitions and divestitures	—		298		298
Segment assets	671,250		762,736		1,433,986

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As of and for the three months ended July 2, 2023
Segment Revenues	$	312,529	$	379,716	$	692,245
Segment EBITDA	43,956		78,631		122,587
Depreciation expense	6,193		6,489		12,682
Amortization of intangibles	6,208		4,918		11,126
Amortization of software development intangible assets	—		1,820		1,820
Severance, restructuring, and acquisition integration costs	1,669		2,390		4,059
Adjustments related to acquisitions and divestitures	325		(76)		249
Segment assets	648,344		699,092		1,347,436

As of and for the six months ended June 30, 2024
Segment revenues	$	504,562	$	635,449	$	1,140,011
Segment EBITDA	57,244		126,482		183,726
Depreciation expense	12,519		14,523		27,042
Amortization of intangibles	10,741		10,008		20,749
Amortization of software development intangible assets	—		5,177		5,177
Severance, restructuring, and acquisition integration costs	3,899		4,306		8,205
Adjustments related to acquisitions and divestitures	—		596		596
Segment assets	671,250		762,736		1,433,986

As of and for the six months ended July 2, 2023
Segment Revenues	$	587,872	$	746,162	$	1,334,034
Segment EBITDA	81,161		152,418		233,579
Depreciation expense	12,147		12,889		25,036
Amortization of intangibles	10,703		10,033		20,736
Amortization of software development intangible assets	—		3,272		3,272
Severance, restructuring, and acquisition integration costs	1,694		4,077		5,771
Adjustments related to acquisitions and divestitures	325		222		547
Segment assets	648,344		699,092		1,347,436

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


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023

	(In thousands)
Total Segment and Consolidated Revenues	$	604,336	$	692,245	$	1,140,011	$	1,334,034



Total Segment EBITDA	$	99,193	$	122,587	$	183,726	$	233,579


Depreciation expense	(13,577)		(12,682)		(27,042)		(25,036)
Amortization of intangibles	(9,940)		(11,126)		(20,749)		(20,736)
Severance, restructuring, and acquisition integration costs (1)	(3,993)		(4,059)		(8,205)		(5,771)
Amortization of software development intangible assets	(2,464)		(1,820)		(5,177)		(3,272)
Adjustments related to acquisitions and divestitures (2)	(298)		(249)		(596)		(547)
Eliminations	(9)		(54)		(25)		(83)
Consolidated operating income	68,912		92,597		121,932		178,134
Interest expense, net	(9,017)		(8,812)		(16,599)		(17,013)

Total non-operating pension benefit	230		646		461		1,134
Consolidated income before taxes	$	60,125	$	84,431	$	105,794	$	162,255

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(1) Includes restructuring and integration costs associated with acquisitions and costs associated with certain manufacturing footprint actions.

(2) Adjustments related to acquisitions and divestitures include fair value adjustments of acquired assets and gains associated with the sales of businesses.

Note 5: Income per Share

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


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023

	(In thousands)
Numerator:
Net income	$	49,034	$	68,775	$	86,343	$	131,720
Less: Net income (loss) attributable to noncontrolling interest	(10)		22		(14)		(225)



Net income attributable to Belden stockholders	$	49,044	$	68,753	$	86,357	$	131,945
Denominator:
Weighted average shares outstanding, basic	40,690		42,497		40,838		42,663
Effect of dilutive common stock equivalents	514		591		510		717
Weighted average shares outstanding, diluted	41,204		43,088		41,348		43,380

For both the three and six months ended June 30, 2024 and July 2, 2023, diluted weighted average shares outstanding do not include outstanding equity awards of 0.1 million and 0.2 million, respectively, because they are anti-dilutive. In addition, for the three and six months ended June 30, 2024, diluted weighted average shares outstanding do not include outstanding equity awards of 0.2 million and 0.3 million, respectively, because the related performance conditions have not been satisfied. For the three and six months ended July 2, 2023, diluted weighted average shares outstanding do not include outstanding equity awards of 0.2 million because the related performance conditions have not been satisfied.

For purposes of calculating basic earnings per share, unvested restricted stock units are not included in the calculation of basic weighted average shares outstanding until all necessary conditions have been satisfied and issuance of the shares underlying the restricted stock units is no longer contingent. Necessary conditions are not satisfied until the vesting date, at which time holders of our restricted stock units receive shares of our common stock. For purposes of calculating diluted earnings per share, unvested restricted stock units are included to the extent that they are dilutive. In determining whether unvested restricted stock units are dilutive, each issuance of restricted stock units is considered separately. Once a restricted stock unit has vested, it is included in the calculation of both basic and diluted weighted average shares outstanding.

Note 6: Credit Losses

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. Provisions and recoveries are included in selling, general and administrative expenses.

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The following table presents the activity in the trade receivables allowance for doubtful accounts for the three and six months ended June 30, 2024 and July 2, 2023, respectively:


	2024		2023

	(In thousands)
Beginning balance at January 1	$	23,114	$	7,954
Current period provision	459		4,004

Recoveries collected	(6)		—
Write-offs	(96)		(3)
Fx impact	(51)		(25)
Q1 ending balance	$	23,420	$	11,930
Current period provision	606		4,194
Acquisitions	50		19
Fx impact	(44)		11
Write-offs	(5)		—
Recoveries collected	32		(8)
Q2 ending balance	$	24,059	$	16,146

Note 7: Inventories

The following table presents the major classes of inventories as of June 30, 2024 and December 31, 2023, respectively:


	June 30, 2024		December 31, 2023

	(In thousands)
Raw materials	$	193,872	$	185,233
Work-in-process	40,016		41,197
Finished goods	210,478		208,425
Gross inventories	444,366		434,855
Excess and obsolete reserves	(69,375)		(67,868)
Net inventories	$	374,991	$	366,987

Note 8: Leases

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well as vehicles and 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 within 1 to 20 years; some of which include extension and termination options. 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. We have a few short-term operating leases with terms less than twelve months - these leases are not recorded on our balance sheet and the overall rent expense is not material.

We also have certain lease contracts that contain both lease and non-lease components. We have elected the practical expedient to account for these components together as a single, combined lease component. The rate implicit in most of our leases is not readily determinable. As a result, we utilize 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.

Our lease agreements do not contain material residual value guarantees. Our variable lease expense was approximately $0.9 million and $1.8 million for the three and six months ended June 30, 2024, respectively, and $0.8 million and $1.6 million for the three and six months ended July 2, 2023, respectively.

-14-

The components of lease expense were as follows:


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023

	(In thousands)
Operating lease cost	$	6,918	$	5,415	$	13,793	$	10,932

Finance lease cost
Amortization of right-of-use asset	$	190	$	190	$	384	$	391
Interest on lease liabilities	109		77		218		157
Total finance lease cost	$	299	$	267	$	602	$	548

Supplemental cash flow information related to leases was as follows:


	Three Months Ended				Six Months Ended
	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,776	$	4,625	$	11,503	$	9,290

Operating cash flows from finance leases were not material during the three and six months ended June 30, 2024 and July 2, 2023.

Supplemental balance sheet information related to leases was as follows:


	June 30, 2024		December 31, 2023

	(In thousands)
Operating leases:
Total operating lease right-of-use assets	$	127,824	$	89,686

Accrued liabilities	$	19,192	$	18,226
Long-term operating lease liabilities	110,148		74,941
Total operating lease liabilities	$	129,340	$	93,167





Finance leases:
Other long-lived assets, at cost	$	8,270	$	6,560
Accumulated depreciation	(1,734)		(1,347)
Other long-lived assets, net	$	6,536	$	5,213

Accrued liabilities	$	1,037	$	719
Other long-term liabilities	6,944		6,084
Total finance lease liabilities	$	7,981	$	6,803

The increases in operating lease right-of-use assets and lease liabilities are primarily due to the recognition of a new lease that had balances of $34.0 million and $33.4 million, respectively, as of June 30, 2024.

-15-


	June 30, 2024		December 31, 2023

Weighted Average Remaining Lease Term
Operating leases	10 years		6 years
Finance leases	8 years		9 years

Weighted Average Discount Rate
Operating leases	5.8	%	5.0	%
Finance leases	4.6	%	4.3	%

In addition, we guaranteed the lease payments for certain property leases of a former subsidiary with expiration dates extending up to 2035. These lease guarantees were retained by Belden and not transferred to the buyer of the former subsidiary. As of June 30, 2024, the fixed, remaining base rent payments were approximately $21 million. As of June 30, 2024 and December 31, 2023, we had a liability for expected, future payments of $10.0 million and $11.3 million, respectively. The liability is based on certain assumptions, such as receiving a level of sublease income, that we continually reassess on an ongoing basis. We will update the estimated liability balance for changes in assumptions as needed.

Note 9: Long-Lived Assets

Depreciation and Amortization Expense

We recognized depreciation expense of $13.6 million and $27.0 million in the three and six months ended June 30, 2024, respectively, and $12.7 million and $25.0 million in the three and six months ended July 2, 2023, respectively.

We recognized amortization expense of $12.4 million and $25.9 million in the three and six months ended June 30, 2024, respectively, and $12.9 million and $24.0 million in the three and six months ended July 2, 2023, respectively.

Note 10: Long-Term Debt and Other Borrowing Arrangements

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


	June 30, 2024		December 31, 2023

	(In thousands)
Revolving credit agreement due 2026	$	—	$	—
Senior subordinated notes:
3.375% Senior subordinated notes due 2027	480,465		497,025
3.875% Senior subordinated notes due 2028	373,695		386,575
3.375% Senior subordinated notes due 2031	320,310		331,350
Total senior subordinated notes	1,174,470		1,214,950

Less unamortized debt issuance costs	(9,630)		(10,739)
Long-term debt	$	1,164,840	$	1,204,211

Revolving Credit Agreement due 2026

We have a $300.0 million multi-currency asset-based revolving credit facility (the Revolver). The maturity date of the Revolver is June 2, 2026. The borrowing base under the Revolver includes eligible accounts receivable; inventory; and property, plant and equipment of certain of our subsidiaries in the United States, Canada, Germany, the United Kingdom and the Netherlands. Interest on outstanding borrowings is variable, based upon SOFR or other similar indices in foreign jurisdictions, plus a spread that ranges from 1.25%-1.75%, depending upon our leverage position. Outstanding borrowings in the U.S. and Canada may also, at our election, be priced on a base rate plus a spread that ranges from 0.25% — 0.75%, depending on our leverage position. We pay a commitment fee on the total commitments of 0.25%. In the event that we borrow more than 90% of our combined borrowing base or our borrowing base availability is less than $20.0 million, we are subject to a fixed charge coverage ratio covenant. As of June 30, 2024, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $293.3 million.

-16-

Senior Subordinated Notes

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 June 30, 2024 is $480.5 million. The 2027 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2027 Notes rank equal in right of payment with our senior subordinated notes due 2031 and 2028 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on January 15 and July 15 of each year.

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 June 30, 2024 is $373.7 million. The 2028 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2028 Notes rank equal in right of payment with our senior subordinated notes due 2031 and 2027 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on March 15 and September 15 of each year.

We have outstanding €300.0 million aggregate principal amount of 3.375% senior subordinated notes due 2031 (the 2031 Notes). The carrying value of the 2031 Notes as of June 30, 2024 is $320.3 million. The 2031 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2031 Notes rank equal in right of payment with our senior subordinated notes due 2028 and 2027 and with any future 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.

Fair Value of Long-Term Debt

The fair value of our senior subordinated notes as of June 30, 2024 was approximately $1,120.4 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 $1,174.5 million as of June 30, 2024.

Note 11: Net Investment Hedge

All of our euro denominated notes were issued by Belden Inc., a USD functional currency entity. As of June 30, 2024, €567.8 million of our outstanding foreign denominated debt is designated as a net investment hedge on the foreign currency risk of our net investment in our euro foreign operations. The objective of the hedge is to protect the net investment in the foreign operation against adverse changes in the euro exchange rate. The transaction gain or loss is reported in the translation adjustment section of other comprehensive income. For the six months ended June 30, 2024 and July 2, 2023, the transaction gain (loss) associated with the net investment hedge reported in other comprehensive income was $21.0 million and $(13.0) million, respectively.

Note 12: Income Taxes

For the three and six months ended June 30, 2024, we recognized income tax expense of $11.1 million and $19.5 million, respectively, representing effective tax rates of 18.4% and 18.4%, respectively. For the three and six months ended July 2, 2023, we recognized income tax expense of $15.7 million and $30.5 million, respectively, representing effective tax rates of 18.5% and 18.8%, respectively. The effective tax rates were primarily impacted by the effect of our foreign operations, including statutory tax rates differences and foreign tax credits.

The Organization for Economic Cooperation and Development is actively implementing changes to existing tax laws, including a global minimum tax of 15% which went into effect in 2024. This legislation has not materially impacted our provision for income taxes, but we will continually monitor and evaluate the potential impact on the countries in which we do business in future periods.

-17-

Note 13: 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