Company Quick10K Filing
Quick10K
Belden
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$60.82 39 $2,400
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-07-01 Quarter: 2018-07-01
10-Q 2018-04-01 Quarter: 2018-04-01
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-10-01 Quarter: 2017-10-01
10-Q 2017-07-02 Quarter: 2017-07-02
10-Q 2017-04-02 Quarter: 2017-04-02
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-10-02 Quarter: 2016-10-02
10-Q 2016-07-03 Quarter: 2016-07-03
10-Q 2016-04-03 Quarter: 2016-04-03
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-27 Quarter: 2015-09-27
10-Q 2015-06-28 Quarter: 2015-06-28
10-Q 2015-03-29 Quarter: 2015-03-29
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-28 Quarter: 2014-09-28
10-Q 2014-06-29 Quarter: 2014-06-29
10-Q 2014-03-30 Quarter: 2014-03-30
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-07-03 Officers, Exhibits, Officers, Exhibits
8-K 2019-05-24 Officers, Shareholder Vote
8-K 2019-05-01 Earnings, Exhibits, Earnings, Exhibits
8-K 2019-02-20 Earnings, Exhibits, Earnings, Exhibits
8-K 2018-12-03 Other Events
8-K 2018-10-31 Earnings, Exhibits, Earnings, Exhibits
8-K 2018-08-01 Earnings, Exhibits, Earnings, Exhibits
8-K 2018-05-24 Shareholder Vote, Other Events, Shareholder Vote, Other Events
8-K 2018-05-02 Earnings, Exhibits, Earnings, Exhibits
8-K 2018-03-23 Shareholder Rights, Exhibits
8-K 2018-03-13 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-03-06 Enter Agreement, Enter Agreement, Other Events, Exhibits
8-K 2018-02-01 Earnings, Exhibits, Earnings, Exhibits
NEM Newmont Mining 24,620
ICUI ICU Medical 4,750
LX Lexinfintech Holdings 2,190
PRFT Perficient 1,010
CVEO Civeo 325
VTNR Vertex Energy 62
MOST Mobilesmith 0
SADDP Saddlebrook Resorts 0
DBV Invesco DB G10 Currency Harvest Fund 0
IPB Merrill Lynch 0
BDC 2019-03-31
Part I Financial Information
Item 1. Financial Statements
Note 1: Summary of Significant Accounting Policies
Note 2: Revenues
Note 3: Acquisitions
Note 4: Reportable Segments
Note 5: Income per Share
Note 6: Inventories
Note 7: Leases
Note 8: Long-Lived Assets
Note 9: Severance, Restructuring, and Acquisition Integration Activities
Note 10: Long-Term Debt and Other Borrowing Arrangements
Note 11: Net Investment Hedge
Note 12: Income Taxes
Note 13: Pension and Other Postretirement Obligations
Note 14: Comprehensive Income and Accumulated Other Comprehensive Income (Loss)
Note 15: Preferred Stock
Note 16: Subsequent Events
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risks
Item 4: Controls and Procedures
Part II Other Information
Item 1: Legal Proceedings
Item 1A: Risk Factors
Item 6: Exhibits
EX-31.1 ex311.htm
EX-31.2 ex312.htm
EX-32.1 ex321.htm
EX-32.2 ex322.htm

Belden Earnings 2019-03-31

BDC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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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 March 31, 2019
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 þ  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  þ  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 þ   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  þ
As of May 1, 2019, the Registrant had 39,454,981 outstanding shares of common stock.




PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 
March 31, 2019
 
December 31, 2018
 
(Unaudited)
 
 
 
(In thousands)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
338,982

 
$
420,610

Receivables, net
404,609

 
465,939

Inventories, net
326,770

 
316,418

Other current assets
59,381

 
55,757

Total current assets
1,129,742

 
1,258,724

Property, plant and equipment, less accumulated depreciation
371,881

 
365,970

Operating lease right-of-use assets
85,327

 

Goodwill
1,563,827

 
1,557,653

Intangible assets, less accumulated amortization
495,322

 
511,093

Deferred income taxes
79,254

 
56,018

Other long-lived assets
32,605

 
29,863

 
$
3,757,958

 
$
3,779,321

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Accounts payable
$
256,939

 
$
352,646

Accrued liabilities
315,117

 
364,276

Total current liabilities
572,056

 
716,922

Long-term debt
1,440,492

 
1,463,200

Postretirement benefits
131,607

 
132,791

Deferred income taxes
63,385

 
39,943

Long-term operating lease liabilities
79,091

 

Other long-term liabilities
39,998

 
38,877

Stockholders’ equity:
 
 
 
Preferred stock
1

 
1

Common stock
503

 
503

Additional paid-in capital
1,138,987

 
1,139,395

Retained earnings
936,479

 
922,000

Accumulated other comprehensive loss
(45,898
)
 
(74,907
)
Treasury stock
(599,161
)
 
(599,845
)
Total Belden stockholders’ equity
1,430,911

 
1,387,147

Noncontrolling interest
418

 
441

Total stockholders’ equity
1,431,329

 
1,387,588

 
$
3,757,958

 
$
3,779,321

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
 
March 31, 2019

April 1, 2018
 
 
 
 
 
(In thousands, except per share data)
Revenues
$
587,175

 
$
605,565

Cost of sales
(362,447
)
 
(374,971
)
Gross profit
224,728

 
230,594

Selling, general and administrative expenses
(122,788
)
 
(124,872
)
Research and development expenses
(34,154
)
 
(37,101
)
Amortization of intangibles
(23,341
)
 
(24,418
)
Operating income
44,445

 
44,203

Interest expense, net
(14,193
)
 
(16,978
)
Non-operating pension benefit (cost)
547

 
(275
)
Loss on debt extinguishment

 
(19,960
)
Income before taxes
30,799

 
6,990

Income tax expense
(5,621
)
 
(4,420
)
Net income
25,178

 
2,570

Less: Net loss attributable to noncontrolling interest
(24
)
 
(48
)
Net income attributable to Belden
25,202

 
2,618

Less: Preferred stock dividends
8,733

 
8,733

Net income (loss) attributable to Belden common stockholders
$
16,469

 
$
(6,115
)
 
 
 
 
Weighted average number of common shares and equivalents:
 
 
 
Basic
39,420

 
41,633

Diluted
39,660

 
41,633

 
 
 
 
Basic income (loss) per share attributable to Belden common stockholders
$
0.42

 
$
(0.15
)
 
 
 
 
Diluted income (loss) per share attributable to Belden common stockholders
$
0.42

 
$
(0.15
)
 
 
 
 
Comprehensive income (loss) attributable to Belden
$
54,211

 
$
(28,790
)
 
 
 
 
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
 
March 31, 2019
 
April 1, 2018
 
 
 
 
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net income
$
25,178

 
$
2,570

Adjustments to reconcile net income to net cash used for operating activities:
 
 
 
Depreciation and amortization
37,001

 
36,519

Share-based compensation
2,216

 
3,126

Loss on debt extinguishment

 
19,960

Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses:
 
 
 
Receivables
61,388

 
18,921

Inventories
(9,485
)
 
(16,737
)
Accounts payable
(97,450
)
 
(90,662
)
Accrued liabilities
(70,925
)
 
(48,611
)
Income taxes
609

 
(785
)
Other assets
650

 
(10,602
)
Other liabilities
4,758

 
2,441

Net cash used for operating activities
(46,060
)
 
(83,860
)
Cash flows from investing activities:
 
 
 
Capital expenditures
(23,595
)
 
(15,900
)
Cash used to acquire businesses, net of cash acquired

 
(76,084
)
Proceeds from disposal of tangible assets
10

 
25

Proceeds from disposal of business

 
39,100

Net cash used for investing activities
(23,585
)
 
(52,859
)
Cash flows from financing activities:
 
 
 
Cash dividends paid
(10,725
)
 
(10,790
)
Withholding tax payments for share-based payment awards
(1,940
)
 
(1,503
)
Other
(70
)
 

Payments under borrowing arrangements

 
(401,234
)
Payments under share repurchase program

 
(75,270
)
Debt issuance costs paid

 
(7,059
)
Borrowings under credit arrangements

 
431,270

Net cash used for financing activities
(12,735
)
 
(64,586
)
Effect of foreign currency exchange rate changes on cash and cash equivalents
752

 
3,060

Decrease in cash and cash equivalents
(81,628
)
 
(198,245
)
Cash and cash equivalents, beginning of period
420,610

 
561,108

Cash and cash equivalents, end of period
$
338,982

 
$
362,863

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

- 3-



BELDEN INC.
CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENT
THREE MONTHS ENDED MARCH 31, 2019 AND APRIL 1, 2018
(Unaudited)
 
 
Belden Inc. Stockholders
 
 
 
 
 
 
 
Mandatory Convertible
 
 
 
 
 
Additional
 
 
 
 
 
Accumulated
Other
 
Non-controlling
 
 
 
Preferred Stock
 
Common Stock
 
Paid-In
 
Retained
 
Treasury Stock
 
Comprehensive
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Capital
 
Earnings
 
Shares
 
Amount
 
Income (Loss)
 
Interest
 
Total
 
 
(In thousands)
 
 
Balance at December 31, 2018
52

 
$
1

 
50,335

 
$
503

 
$
1,139,395

 
$
922,000

 
(10,939
)
 
$
(599,845
)
 
$
(74,907
)
 
$
441

 
$
1,387,588

Net income (loss)

 

 

 

 

 
25,202

 

 

 

 
(24
)
 
25,178

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 
29,009

 
1

 
29,010

Exercise of stock options, net of tax withholding forfeitures

 

 

 

 
(54
)
 

 
1

 
16

 

 

 
(38
)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures

 

 

 

 
(2,570
)
 

 
58

 
668

 

 

 
(1,902
)
Share-based compensation

 

 

 

 
2,216

 

 

 

 

 

 
2,216

Preferred stock dividends

 

 

 

 

 
(8,733
)
 

 

 

 

 
(8,733
)
Common stock dividends ($0.05 per share)

 

 

 

 

 
(1,990
)
 

 

 

 

 
(1,990
)
Balance at March 31, 2019
52

 
$
1

 
50,335

 
$
503

 
$
1,138,987

 
$
936,479

 
(10,880
)
 
$
(599,161
)
 
$
(45,898
)
 
$
418

 
$
1,431,329

 
 
Belden Inc. Stockholders
 
 
 
 
 
 
 
Mandatory Convertible
 
 
 
 
 
Additional
 
 
 
 
 
Accumulated
Other
 
Non-controlling
 
 
 
Preferred Stock
 
Common Stock
 
Paid-In
 
Retained
 
Treasury Stock
 
Comprehensive
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Capital
 
Earnings
 
Shares
 
Amount
 
Income (Loss)
 
Interest
 
Total
 
 
(In thousands)
 
 
Balance at December 31, 2017
52

 
$
1

 
50,335

 
$
503

 
$
1,123,832

 
$
833,610

 
(8,316
)
 
$
(425,685
)
 
$
(98,026
)
 
$
631

 
$
1,434,866

Cumulative effect of change in accounting principles

 

 

 

 

 
(29,041
)
 

 

 

 

 
(29,041
)
Net income (loss)

 

 

 

 

 
2,618

 

 

 

 
(48
)
 
2,570

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 
(31,408
)
 
16

 
(31,392
)
Exercise of stock options, net of tax withholding forfeitures

 

 

 

 
(352
)
 

 
7

 
(9
)
 

 

 
(361
)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures

 

 

 

 
(1,242
)
 

 
27

 
100

 

 

 
(1,142
)
Share repurchase program

 

 

 

 

 

 
(1,050
)
 
(75,270
)
 

 

 
(75,270
)
Share-based compensation

 

 

 

 
3,126

 

 

 

 

 

 
3,126

Redemption of stockholders' rights agreement

 

 

 

 

 
(411
)
 

 

 

 

 
(411
)
Preferred stock dividends

 

 

 

 

 
(8,733
)
 

 

 

 

 
(8,733
)
Common stock dividends ($0.05 per share)

 

 

 

 

 
(2,066
)
 

 

 

 

 
(2,066
)
Balance at April 1, 2018
52

 
$
1

 
50,335

 
$
503

 
$
1,125,364

 
$
795,977

 
(9,332
)
 
$
(500,864
)
 
$
(129,434
)
 
$
599

 
$
1,292,146

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, 2018:
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 2018 Annual Report on Form 10-K.
Business Description
We are a signal transmission solutions provider built around two global business platforms – Enterprise Solutions and Industrial Solutions. Our comprehensive portfolio of signal transmission solutions provides industry leading secure and reliable transmission of data, sound, and video for mission critical applications.
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, 2019, the 90th day of our fiscal year 2019. Our fiscal second and third quarters each have 91 days. The three months ended April 1, 2018 included 91 days.
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 March 31, 2019 and April 1, 2018, 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). We did not have any transfers between Level 1 and Level 2 fair value measurements during the three months ended March 31, 2019 and April 1, 2018.
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 March 31, 2019, 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-



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 materially adverse effect on our financial position, results of operations, or cash flow.
As of March 31, 2019, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $7.3 million, $3.6 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. See Note 16.
Current-Year Adoption of Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases ("ASU 2016-02"), a leasing standard for both lessees and lessors that supersedes the lease requirements in Accounting Standards Codification (ASC) Topic 840, "Leases." Under its core principle, a lessee will recognize a right-of-use (ROU) asset and lease liability on the balance sheet for nearly all leased assets, and additional disclosures are required to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. Lessor accounting remains largely consistent with existing U.S. generally accepted accounting principles. We adopted ASU 2016-02 on January 1, 2019 using the newly permitted transition method issued in July 2018, under ASU No. 2018-11 (“ASU 2018-11”), Leases: Targeted Improvements, which provides an additional (and optional) transition method for adopting the new lease standard. Furthermore, we elected the following practical expedients and accounting policy elections upon adoption: (i) the package of practical expedients as defined in ASU 2016-02, (ii) the short-term lease accounting policy election, (iii) the practical expedient to not separate non-lease components from lease components, and (iv) the easement practical expedient, which permits an entity to continue applying its current policy for accounting for land easements that existed as of the effective date of ASU 2016-02. The adoption of ASU 2016-02 on January 1, 2019 resulted in the recognition of right-of-use assets of approximately $90.5 million and lease liabilities for operating leases of approximately$103.4 million on the Condensed Consolidated Balance Sheet, with no material impact to the Condensed Consolidated Statements of Operations or Condensed Consolidated Cash Flow Statement. The difference between the initial lease liabilities and the ROU assets is related primarily to previously existing lease liabilities. See Note 7 for further information regarding the impact of the adoption of ASU 2016-02 on the Company's financial statements.
In August 2017, the FASB issued Accounting Standards Update No. ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). The new guidance better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The new guidance also makes certain targeted improvements to simplify the application of hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. The standard is effective for fiscal years beginning after December 15, 2018. We adopted ASU 2017-12 effective January 1, 2019. The adoption had no impact on our results of operations.
In February 2018, the FASB issued ASU No. 2018-02 (“ASU 2018-02”), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 provides an option to allow reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The new guidance is effective for annual and interim periods beginning after December 15, 2018. We adopted ASU 2018-02 effective January 1, 2019, and elected to not reclassify the income tax effects of the Act from accumulated other comprehensive income to retained earnings. The adoption had no impact on our results of operations.

- 6-



In June 2018, the FASB issued ASU No. 2018-07 (“ASU 2018-07”), Improvements to Nonemployee Share-Based Payment Accounting. The amendments in ASU 2018-07 expand the scope of Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees, and provide that non-employee share-based payment awards be measured at their grant-date fair value and the probability of satisfying performance conditions be taken into account when non-employee share-based payment awards contain such conditions. The standard is effective for fiscal years beginning after December 15, 2018. We adopted ASU 2018-07 effective January 1, 2019. The adoption had no impact on our results of operations.
In August 2018, the Securities and Exchange Commission (“SEC”) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. Additionally, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period presented. This final rule was effective on November 5, 2018. We implemented SEC Release No. 33-10532 effective January 1, 2019, which had no impact on our results of operations.
Pending Adoption of Recent Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (“ASU 2016-13”), Financial Instruments - Credit Losses. The main provisions of ASU 2016-13 provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date, and require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new standard will be effective for us beginning January 1, 2020. Early adoption is permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and related disclosures.
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.
 
 
Cable & Connectivity
 
Networking, Software & Security
 
Total Revenues 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
(In thousands)
Enterprise Solutions
 
$
233,671

 
$
92,856

 
$
326,527

Industrial Solutions
 
158,508

 
102,140

 
260,648

Total
 
$
392,179

 
$
194,996

 
$
587,175

 
 
 
 
 
 
 
Three Months Ended April 1, 2018
 
 
 
 
 
 
Enterprise Solutions
 
$
234,467

 
$
114,657

 
$
349,124

Industrial Solutions
 
162,730

 
93,711

 
256,441

Total
 
$
397,197

 
$
208,368

 
$
605,565

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

- 7-



 
 
Americas
 
EMEA
 
APAC
 
Total Revenues
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
(In thousands)
Enterprise Solutions
 
$
211,264

 
$
67,320

 
$
47,943

 
$
326,527

Industrial Solutions
 
152,574

 
73,315

 
34,759

 
260,648

Total
 
$
363,838

 
$
140,635

 
$
82,702

 
$
587,175

 
 
 
 
 
 
 
 
 
Three Months Ended April 1, 2018
 
 
 
 
 
 
 
 
Enterprise Solutions
 
$
225,279

 
$
73,329

 
$
50,516

 
$
349,124

Industrial Solutions
 
149,812

 
72,592

 
34,037

 
256,441

Total
 
$
375,091

 
$
145,921

 
$
84,553

 
$
605,565

The following tables present our revenues disaggregated by products, including software products, and support and services.
 
 
Products
 
Support & Services
 
Total Revenues 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
(In thousands)
Enterprise Solutions
 
$
307,859

 
$
18,668

 
$
326,527

Industrial Solutions
 
238,704

 
21,944

 
260,648

Total
 
$
546,563

 
$
40,612

 
$
587,175

 
 
 
 
 
 
 
Three Months Ended April 1, 2018
 
 
 
 
 
 
Enterprise Solutions
 
$
332,737

 
$
16,387

 
$
349,124

Industrial Solutions
 
232,061

 
24,380

 
256,441

Total
 
$
564,798

 
$
40,767

 
$
605,565


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 was not significant during the three months ended March 31, 2019. Accrued rebates and accrued returns as of March 31, 2019 totaled $17.7 million and $11.7 million, respectively. Estimated price adjustments recognized against our gross accounts receivable balance as of March 31, 2019 totaled $25.8 million.
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 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. As of January 1, 2019, total deferred revenue was $113.3 million, and during the three months ended March 31, 2019, $47.8 million of revenue was deferred, `and $53.3 million of revenue was recognized. As of March 31, 2019, total deferred revenue was $107.8 million, and of this amount, $92.5 million will be recognized within the next twelve months, and the remaining $15.3 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 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 $3.4 million as of March 31, 2019. Total sales commissions costs were $5.6 million during the three months ended March 31, 2019. Sales commissions are recorded within selling, general and administrative expenses.

- 8-



Note 3:  Acquisitions
Net-Tech Technology, Inc.
We acquired 100% of the shares of Net-Tech Technology, Inc. (NT2) on April 25, 2018 for a purchase price of $8.5 million that was funded with cash on hand. NT2 is an integrator of optical passive components and network optimization products used within broadband network applications where optical backhaul is used. NT2 is located in the United States. The results of NT2 have been included in our Consolidated Financial Statements from April 25, 2018, and are reported within the Enterprise Solutions segment. The NT2 acquisition was not material to our financial position or results of operations.
Snell Advanced Media
We acquired 100% of the outstanding ownership interest in Snell Advanced Media (SAM) on February 8, 2018 for a purchase price, net of cash acquired, of $104.5 million. Of the $104.5 million purchase price, $75.2 million was paid on February 8, 2018 and was funded with cash on hand. The acquisition included a potential earnout, which is based upon future combined earnings of SAM and Grass Valley through December 31, 2019. The maximum earnout consideration is $31.4 million, but based upon a third party valuation specialist using certain assumptions in a discounted cash flow model, the estimated fair value of the earnout included in the purchase price was $29.3 million. We assumed debt of $19.3 million and paid it off during the first quarter of 2018. During the first quarter of 2019, we signed a settlement agreement with the sellers of SAM for claims arising over the timing of the earnout consideration outlined in the purchase agreement, and as part of the settlement, the parties agreed that the maximum earnout consideration of $31.4 million would be payable during the first quarter 2020, unless earlier payment is required as per the terms of the purchase agreement. SAM designs, manufactures, and sells innovative content production and distribution systems for the broadcast and media markets. SAM is located in the United Kingdom. The results of SAM have been included in our Consolidated Financial Statements from February 8, 2018, and are reported within the Enterprise Solutions segment. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of February 8, 2018 (in thousands):
Receivables
 
$
16,551

Inventory
 
15,084

Prepaid and other current assets
 
3,799

Property, plant, and equipment
 
7,716

Intangible assets
 
51,000

Goodwill
 
103,466

Deferred income taxes
 
1,388

Other long-lived assets
 
3,046

   Total assets acquired
 
$
202,050

 
 
 
Accounts payable
 
$
11,825

Accrued liabilities
 
25,135

Deferred revenue
 
8,860

Long-term debt
 
19,315

Postretirement benefits
 
31,774

Other long-term liabilities
 
591

   Total liabilities assumed
 
$
97,500

 
 
 
Net assets
 
$
104,550


During the first quarter 2019, we did not record any significant measurement-period adjustments.
A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.
The fair value of acquired receivables is $16.6 million, which is equivalent to its gross contractual amount.
For purposes of the above allocation, we based our estimate of the fair values for the acquired inventory; property, plant, and equipment; intangible assets; and deferred revenue on valuation studies performed by a third party valuation firm. We have

- 9-



estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. To determine the value of the acquired property, plant, and equipment, we used various valuation methods, including both the market approach, which considers sales prices of similar assets in similar conditions (Level 2 valuation), and the cost approach, which considers the cost to replace the asset adjusted for depreciation (Level 3 valuation). We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the fair value of the identifiable intangible assets and deferred revenue (Level 3 valuation).
Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to expected synergies and the assembled workforce. The expected synergies for the SAM acquisition may be gained from helping broadcast and media content creators, aggregators and distributors significantly improve their effectiveness and efficiency during a period of rapid change in technology, viewer and advertiser behavior and business models. Our tax basis in the acquired goodwill is zero. 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
 
$
36,500

 
5.0
Customer relationships
 
11,000

 
12.0
Sales backlog
 
1,900

 
0.3
Trademarks
 
1,600

 
0.9
Total intangible assets subject to amortization
 
$
51,000

 
 
 
 
 
 
 
Intangible assets not subject to amortization:
 
 
 
 
Goodwill
 
$
103,466

 
n/a
Total intangible assets not subject to amortization
 
$
103,466

 
 
 
 
 
 
 
Total intangible assets
 
$
154,466

 
 
Weighted average amortization period
 
 
 
6.2 years

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

Our consolidated revenues and consolidated income before taxes for the three months ended April 1, 2018 included $20.8 million and $(2.8) million, respectively, from SAM. The loss before taxes from SAM included $2.2 million of amortization of intangible assets and $0.5 million of cost of sales related to the adjustment of acquired inventory to fair value.







- 10-



The following table illustrates the unaudited pro forma effect on operating results as if the SAM acquisition had been completed as of January 1, 2017.
 
 
Three Months Ended
 
 
April 1, 2018
 
 
 
 
 
(In thousands, except per share data)
 
 
(Unaudited)
Revenues
 
$
614,184

Net loss attributable to Belden common stockholders
 
(1,072
)
Diluted loss per share attributable to Belden common stockholders
 
$
(0.03
)

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.
Note 4:  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 reviewed by our chief operating decision maker 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. 

- 11-



 
 
Enterprise
Solutions    
 
Industrial
Solutions     
 
Total
Segments     
 
 
 
 
 
 
 
 
 
(In thousands)
As of and for the three months ended March 31, 2019
 
 
 
 
 
 
Segment revenues
 
$
326,527

 
$
260,648

 
$
587,175

Affiliate revenues
 
1,369

 
17

 
1,386

Segment EBITDA
 
39,558

 
47,459

 
87,017

Depreciation expense
 
7,734

 
4,989

 
12,723

Amortization of intangibles
 
10,170

 
13,171

 
23,341

Amortization of software development intangible assets
 
914

 
23

 
937

Severance, restructuring, and acquisition integration costs
 
3,775

 

 
3,775

Purchase accounting effects of acquisitions
 
1,313

 

 
1,313

Segment assets
 
782,517

 
477,206

 
1,259,723

As of and for the three months ended April 1, 2018
 
 
 
 
 
 
Segment revenues
 
$
350,990

 
$
256,433

 
$
607,423

Affiliate revenues
 
846

 
29

 
875

Segment EBITDA
 
57,452

 
46,426

 
103,878

Depreciation expense
 
7,220

 
4,645

 
11,865

Amortization of intangibles
 
11,170

 
13,248

 
24,418

Amortization of software development intangible assets
 
236

 

 
236

Severance, restructuring, and acquisition integration costs
 
14,534

 
5,860

 
20,394

Purchase accounting effects of acquisitions
 
502

 

 
502

Deferred revenue adjustments
 
1,858

 

 
1,858

Segment assets
 
747,971

 
432,473

 
1,180,444


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
 
March 31, 2019
 
April 1, 2018
 
 
 
 
 
(In thousands)
Total Segment Revenues
$
587,175

 
$
607,423

Deferred revenue adjustments (1)

 
(1,858
)
Consolidated Revenues
$
587,175

 
$
605,565

 
 
 
 
Total Segment EBITDA
$
87,017

 
$
103,878

Amortization of intangibles
(23,341
)
 
(24,418
)
Depreciation expense
(12,723
)
 
(11,865
)
Severance, restructuring, and acquisition integration costs (2)
(3,775
)
 
(20,394
)
Purchase accounting effects related to acquisitions (3)
(1,313
)
 
(502
)
Amortization of software development intangible assets
(937
)
 
(236
)
Deferred revenue adjustments (1)

 
(1,858
)
Loss on sale of assets

 
(94
)
Eliminations
(483
)
 
(308
)
Consolidated operating income
44,445

 
44,203

Interest expense, net
(14,193
)
 
(16,978
)
Non-operating pension benefit (cost)
547

 
(275
)
Loss on debt extinguishment

 
(19,960
)
Consolidated income before taxes
$
30,799

 
$
6,990



- 12-



(1) Our segment results include revenues that would have been recorded by acquired businesses had they remained as independent entities. Our consolidated results do not include these revenues due to the purchase accounting effect of recording deferred revenue at fair value. See Note 3, Acquisitions, for details.
(2) See Note 9, Severance, Restructuring, and Acquisition Integration Activities, for details.
(3) For the three months ended March 31, 2019, we recognized $1.3 million in selling, general and administrative expenses related to the earnout consideration for the SAM acquisition. For the three months ended April 1, 2018, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the SAM acquisition.
Note 5: Income per Share
The following table presents the basis for the income per share computations:
 
Three Months Ended
 
March 31, 2019
 
April 1, 2018
 
 
 
 
 
(In thousands)
Numerator:
 
 
 
Net income
$
25,178

 
$
2,570

Less: Net loss attributable to noncontrolling interest
(24
)
 
(48
)
Less: Preferred stock dividends
8,733

 
8,733

Net income (loss) attributable to Belden common stockholders
$
16,469

 
$
(6,115
)
 
 
 
 
Denominator:
 
 
 
Weighted average shares outstanding, basic
39,420

 
41,633

Effect of dilutive common stock equivalents
240

 

     Weighted average shares outstanding, diluted
39,660

 
41,633

For the three months ended March 31, 2019 and April 1, 2018, diluted weighted average shares outstanding do not include outstanding equity awards of 1.0 million and 0.5 million, respectively, because to do so would have been anti-dilutive. In addition, for the three months ended March 31, 2019 and April 1, 2018, diluted weighted average shares outstanding do not include outstanding equity awards of 0.3 million and 0.2 million, respectively, because the related performance conditions have not been satisfied. Furthermore, for both the three months ended March 31, 2019 and April 1, 2018, diluted weighted average shares outstanding do not include the impact of preferred shares that are convertible into 6.9 million common shares, because deducting the preferred stock dividends from net income was more dilutive.
For purposes of calculating basic earnings per share, unvested restricted stock units are not included in the calculation of basic weighted average shares outstanding until all necessary conditions have been satisfied and issuance of the shares underlying the restricted stock units is no longer contingent. 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.








- 13-



Note 6:  Inventories
The major classes of inventories were as follows:
 
March 31, 2019
 
December 31, 2018
 
 
 
 
 
(In thousands)
Raw materials
$
140,162

 
$
146,803

Work-in-process
50,560

 
45,939

Finished goods
166,584

 
152,572

Gross inventories
357,306

 
345,314

Excess and obsolete reserves
(30,536
)
 
(28,896
)
Net inventories
$
326,770

 
$
316,418


Note 7:  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 16 years, some of which include options to extend the lease for a period of up to 15 years and some include options to terminate the leases within 1 year. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain 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 March 31, 2019, 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 have elected to utilize the practical expedient to account for these components together as a single combined lease component.

As the rate implicit in each lease 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.

The components of lease expense were as follows:
 
 
Three Months Ended
 
 
March 31, 2019
 
 
 
 
 
(In thousands)
Operating lease cost
 
$
4,873

 
 
 
Finance lease cost
 
 
Amortization of right-of-use asset
 
$
26

Interest on lease liabilities
 
4

Total finance lease cost
 
$
30














- 14-



Supplemental cash flow information related to leases was as follows:
 
 
Three Months Ended
 
 
March 31, 2019
 
 
 
 
 
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows from operating leases
 
$
5,088

Operating cash flows from finance leases
 
9

Financing cash flows from finance leases
 
70



Supplemental balance sheet information related to leases was as follows:
 
 
March 31, 2019
 
 
 
 
 
(In thousands, except lease term and discount rate)
Operating leases:
 
 
Total operating lease right-of-use assets
 
$
85,327

 
 
 
Accrued liabilities
 
$
17,923

Long-term operating lease liabilities
 
79,091

Total operating lease liabilities
 
$
97,014

 
 
 
Finance leases:
 
 
Other long-lived assets, at cost
 
$
848

Accumulated depreciation
 
(443
)
Other long-lived assets, net
 
$
405


Weighted Average Remaining Lease Term
 
 
Operating leases
 
7 years

Finance leases
 
3 years

 
 
 
Weighted Average Discount Rate
 
 
Operating leases
 
6.9
%
Finance leases
 
6.2
%


Maturities of lease liabilities were as follows:
 
 
Operating Leases
 
Finance Leases
 
 
 
 
 
 
 
(In thousands)
2019
 
$
20,175

 
$
288

2020
 
21,797

 
183

2021
 
18,366

 
68

2022
 
15,054

 
37

2023
 
13,053