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 June ~~30, 2019~~28, 2020

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,, Missouri63105

(Address of principal executive offices)

(~~314~~) (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~~

BDC

New York Stock Exchange

As of July ~~31, 2019,~~29, 2020, the Registrant ~~had 45,452,492 outstanding~~had 44,553,449 outstanding shares of common stock.

PART I FINANCIAL INFORMATION


~~PART I~~	~~FINANCIAL INFORMATION~~

Item 1. Financial Statements

BELDEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2019			December 31, 2018				June 28, 2020		December 31, 2019
	(Unaudited)							(Unaudited)
	(In thousands)							(In thousands)
ASSETS	ASSETS						ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	295,243		$	420,610		Cash and cash equivalents	$	359,702	$	407,480
Receivables, net	451,487			465,939			Receivables, net	302,303		334,634
Inventories, net	309,711			316,418			Inventories, net	242,677		231,333
Other current assets	60,017			55,757			Other current assets	36,112		29,172
Current assets of discontinued operations							Current assets of discontinued operations	250,322		375,135
Total current assets	1,116,458			1,258,724			Total current assets	1,191,116		1,377,754
Property, plant and equipment, less accumulated depreciation	383,067			365,970			Property, plant and equipment, less accumulated depreciation	340,000		345,918
Operating lease right-of-use assets	84,099			—			Operating lease right-of-use assets	56,613		62,251
Goodwill	1,607,848			1,557,653			Goodwill	1,244,895		1,243,669
Intangible assets, less accumulated amortization	506,706			511,093			Intangible assets, less accumulated amortization	308,529		339,505
Deferred income taxes	90,112			56,018			Deferred income taxes	22,412		25,216
Other long-lived assets	34,690			29,863			Other long-lived assets	13,465		12,446
	$	3,822,980		$	3,779,321			$	3,177,030	$	3,406,759

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY						LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	266,897		$	352,646		Accounts payable	$	188,970	$	268,466
Accrued liabilities	323,124			364,276			Accrued liabilities	240,419		283,799
Current liabilities of discontinued operations							Current liabilities of discontinued operations	109,673		170,279
Total current liabilities	590,021			716,922			Total current liabilities	539,062		722,544
Long-term debt	1,457,571			1,463,200			Long-term debt	1,537,367		1,439,484
Postretirement benefits	131,023			132,791			Postretirement benefits	130,427		136,227
Deferred income taxes	79,224			39,943			Deferred income taxes	46,960		48,725
Long-term operating lease liabilities	77,679			—			Long-term operating lease liabilities	49,772		55,652
Other long-term liabilities	53,929			38,877			Other long-term liabilities	43,560		38,308
Stockholders’ equity:							Stockholders’ equity:
Preferred stock	1			1
Common stock	503			503			Common stock	503		503
Additional paid-in capital	1,143,494			1,139,395			Additional paid-in capital	815,982		811,955
Retained earnings	967,970			922,000			Retained earnings	431,459		518,004
Accumulated other comprehensive loss	(62,591		)	(74,907		)	Accumulated other comprehensive loss	(85,541)		(63,418)
Treasury stock	(621,167		)	(599,845		)	Treasury stock	(338,484)		(307,197)
Total Belden stockholders’ equity	1,428,210			1,387,147			Total Belden stockholders’ equity	823,919		959,847
Noncontrolling interests	5,323			441			Noncontrolling interests	5,963		5,972
Total stockholders’ equity	1,433,533			1,387,588			Total stockholders’ equity	829,882		965,819
	$	3,822,980		$	3,779,321			$	3,177,030	$	3,406,759

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							Three Months Ended						Six Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018				June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands, except per share data)													(In thousands, except per share data)
Revenues	$	637,530		$	668,639		$	1,224,705		$	1,274,204		Revenues	$	424,811	$	548,352	$	888,337	$	1,048,492
Cost of sales	(396,507		)	(411,043		)	(758,954		)	(786,014		)	Cost of sales	(274,871)		(343,280)		(567,896)		(656,564)
Gross profit	241,023			257,596			465,751			488,190			Gross profit	149,940		205,072		320,441		391,928
Selling, general and administrative expenses	(122,482		)	(138,842		)	(245,270		)	(263,714		)	Selling, general and administrative expenses	(91,703)		(102,454)		(190,092)		(200,409)
Research and development expenses	(35,034		)	(37,209		)	(69,188		)	(74,310		)	Research and development expenses	(25,090)		(24,775)		(51,309)		(48,022)
Amortization of intangibles	(22,368		)	(25,039		)	(45,709		)	(49,457		)	Amortization of intangibles	(16,017)		(19,068)		(32,202)		(37,232)

Operating income	61,139			56,506			105,584			100,709			Operating income	17,130		58,775		46,838		106,265
Interest expense, net	(14,168		)	(15,088		)	(28,361		)	(32,066		)	Interest expense, net	(14,257)		(13,961)		(27,581)		(27,949)
Non-operating pension benefit (cost)	481			(257		)	1,028			(532		)
Loss on debt extinguishment	—			(3,030		)	—			(22,990		)
Income before taxes	47,452			38,131			78,251			45,121
Non-operating pension benefit													Non-operating pension benefit	700		537		1,399		1,140
Income from continuing operations before taxes													Income from continuing operations before taxes	3,573		45,351		20,656		79,456
Income tax expense	(5,162		)	(9,339		)	(10,783		)	(13,759		)	Income tax expense	(400)		(3,956)		(2,592)		(10,126)
Net income	42,290			28,792			67,468			31,362
Less: Net income (loss) attributable to noncontrolling interests	90			(77		)	66			(125		)
Net income attributable to Belden	42,200			28,869			67,402			31,487
Income from continuing operations													Income from continuing operations	3,173		41,395		18,064		69,330
Income (loss) from discontinued operations, net of tax													Income (loss) from discontinued operations, net of tax	(71,054)		895		(97,164)		(1,862)
Net income (loss)													Net income (loss)	(67,881)		42,290		(79,100)		67,468
Less: Net income (loss) attributable to noncontrolling interest													Less: Net income (loss) attributable to noncontrolling interest	24		90		(6)		66
Net income (loss) attributable to Belden													Net income (loss) attributable to Belden	(67,905)		42,200		(79,094)		67,402
Less: Preferred stock dividends	8,733			8,733			17,466			17,466			Less: Preferred stock dividends	—		8,733		—		17,466
Net income attributable to Belden common stockholders	$	33,467		$	20,136		$	49,936		$	14,021
Net income (loss) attributable to Belden common stockholders													Net income (loss) attributable to Belden common stockholders	$	(67,905)	$	33,467	$	(79,094)	$	49,936

Weighted average number of common shares and equivalents:													Weighted average number of common shares and equivalents:
Basic	39,389			40,735			39,405			41,184			Basic	44,557		39,389		44,969		39,405
Diluted	39,611			40,974			39,635			41,492			Diluted	44,665		39,611		45,097		39,635

Basic income per share attributable to Belden common stockholders	$	0.85		$	0.49		$	1.27		$	0.34
Basic income (loss) per share attributable to Belden common stockholders:													Basic income (loss) per share attributable to Belden common stockholders:
Continuing operations attributable to Belden common stockholders													Continuing operations attributable to Belden common stockholders	$	0.07	$	0.83	$	0.40	$	1.31
Discontinued operations attributable to Belden common stockholders													Discontinued operations attributable to Belden common stockholders	(1.59)		0.02		(2.16)		(0.05)
Net income (loss) per share attributable to Belden common stockholders													Net income (loss) per share attributable to Belden common stockholders	$	(1.52)	$	0.85	$	(1.76)	$	1.27

Diluted income per share attributable to Belden common stockholders	$	0.84		$	0.49		$	1.26		$	0.34
Diluted income (loss) per share attributable to Belden common stockholders:													Diluted income (loss) per share attributable to Belden common stockholders:
Continuing operations attributable to Belden common stockholders													Continuing operations attributable to Belden common stockholders	$	0.07	$	0.82	$	0.40	$	1.31
Discontinued operations attributable to Belden common stockholders													Discontinued operations attributable to Belden common stockholders	(1.59)		0.02		(2.16)		(0.05)
Net income (loss) per share attributable to Belden common stockholders													Net income (loss) per share attributable to Belden common stockholders	$	(1.52)	$	0.84	$	(1.76)	$	1.26

Comprehensive income attributable to Belden	$	25,507		$	89,897		$	79,718		$	61,107
Comprehensive income (loss) attributable to Belden													Comprehensive income (loss) attributable to Belden	$	(112,351)	$	25,507	$	(101,217)	$	79,718

Common stock dividends declared per share	$	0.05		$	0.05		$	0.10		$	0.10		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							Six Months Ended
	June 30, 2019			July 1, 2018				June 28, 2020		June 30, 2019

	(In thousands)							(In thousands)
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	67,468		$	31,362
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Net income (loss)							Net income (loss)	$	(79,100)	$	67,468
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:							Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization	72,739			74,072			Depreciation and amortization	53,533		72,739
Asset impairment of discontinued operations							Asset impairment of discontinued operations	113,007		—
Share-based compensation	7,594			7,868			Share-based compensation	8,798		7,594
Loss on debt extinguishment	—			22,990
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses:							Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses:
Receivables	20,329			(12,370		)	Receivables	52,602		20,329
Inventories	17,351			(14,486		)	Inventories	(9,769)		17,351
Accounts payable	(91,542		)	(84,689		)	Accounts payable	(86,382)		(91,542)
Accrued liabilities	(59,410		)	(30,351		)	Accrued liabilities	(13,697)		(59,410)
Income taxes	(12,361		)	(4,142		)	Income taxes	(46,274)		(12,361)
Other assets	5,092			(17,275		)	Other assets	13,971		5,092
Other liabilities	(5,615		)	(2,341		)	Other liabilities	(18,819)		(5,615)
Net cash provided by (used for) operating activities	21,645			(29,362		)	Net cash provided by (used for) operating activities	(12,130)		21,645
Cash flows from investing activities:							Cash flows from investing activities:
Capital expenditures	(50,769		)	(39,493		)	Capital expenditures	(41,734)		(50,769)
Cash used to acquire businesses, net of cash acquired	(50,517		)	(84,580		)
Cash from business acquisitions, net of cash acquired							Cash from business acquisitions, net of cash acquired	590		(50,517)
Proceeds from disposal of tangible assets	19			1,517			Proceeds from disposal of tangible assets	3,090		19
Proceeds from disposal of business	—			40,171
Net cash used for investing activities	(101,267		)	(82,385		)	Net cash used for investing activities	(38,054)		(101,267)
Cash flows from financing activities:							Cash flows from financing activities:
Borrowings on revolver							Borrowings on revolver	190,000		—
Payments under borrowing arrangements							Payments under borrowing arrangements	(100,000)		—
Payments under share repurchase program	(22,815		)	(100,000		)	Payments under share repurchase program	(35,000)		(22,815)
Payment of earnout consideration							Payment of earnout consideration	(29,300)		—
Cash dividends paid	(21,448		)	(22,034		)	Cash dividends paid	(4,572)		(21,448)
Withholding tax payments for share-based payment awards	(2,002		)	(1,579		)	Withholding tax payments for share-based payment awards	(1,058)		(2,002)
Other	(173		)	—			Other	(111)		(173)
Payments under borrowing arrangements	—			(484,757		)
Debt issuance costs paid	—			(7,469		)
Redemption of stockholders' rights agreement	—			(411		)
Borrowings under credit arrangements	—			431,270
Net cash used for financing activities	(46,438		)	(184,980		)
Net cash provided by (used for) financing activities							Net cash provided by (used for) financing activities	19,959		(46,438)
Effect of foreign currency exchange rate changes on cash and cash equivalents	693			(2,932		)	Effect of foreign currency exchange rate changes on cash and cash equivalents	(2,620)		693
Decrease in cash and cash equivalents	(125,367		)	(299,659		)	Decrease in cash and cash equivalents	(32,845)		(125,367)
Cash and cash equivalents, beginning of period	420,610			561,108			Cash and cash equivalents, beginning of period	425,885		420,610
Cash and cash equivalents, end of period	$	295,243		$	261,449		Cash and cash equivalents, end of period	$	393,040	$	295,243

For all periods presented, the Condensed Consolidated Cash Flow Statement includes the results of the Grass Valley disposal group.

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, 2019	50,335	$	503	$	811,955	$	518,004	(4,877)	$	(307,197)	$	(63,418)	$	5,972	$	965,819
Cumulative effect of change in accounting principle	—	—		—		(2,916)		—	—		—		—		(2,916)
Net loss	—	—		—		(11,189)		—	—		—		(30)		(11,219)
Other comprehensive income (loss), net of tax	—	—		—		—		—	—		22,323		(150)		22,173
Exercise of stock options, net of tax withholding forfeitures	—	—		(542)		—		7	370		—		—		(172)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures	—	—		(2,631)		—		29	1,800		—		—		(831)
Share repurchase program	—	—		—		—		(592)	(21,239)		—		—		(21,239)
Share-based compensation	—	—		3,708		—		—	—		—		—		3,708
Common stock dividends ($0.05 per share)	—	—		—		(2,288)		—	—		—		—		(2,288)
Balance at March 29, 2020	50,335	$	503	$	812,490	$	501,611	(5,433)	$	(326,266)	$	(41,095)	$	5,792	$	953,035
Net income (loss)	—	—		—		(67,905)		—	—		—		24		(67,881)
Other comprehensive income (loss), net of tax	—	—		—		—		—	—		(44,446)		147		(44,299)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures	—	—		(1,598)		—		27	1,543		—		—		(55)
Share repurchase program	—	—		—		—		(384)	(13,761)		—		—		(13,761)
Share-based compensation	—	—		5,090		—		—	—		—		—		5,090
Common stock dividends ($0.05 per share)	—	—		—		(2,247)		—	—		—		—		(2,247)
Balance at June 28, 2020	50,335	$	503	$	815,982	$	431,459	(5,790)	$	(338,484)	$	(85,541)	$	5,963	$	829,882

-4-


		Belden Inc. Stockholders																														Belden Inc. Stockholders
	Mandatory Convertible							Additional											Accumulated Other			Non-controlling								Mandatory Convertible												Additional													Accumulated Other			Non-controlling
	Preferred Stock				Common Stock			Paid-In			Retained			Treasury Stock					Comprehensive										Preferred Stock								Common Stock							Paid-In			Retained			Treasury Stock							Comprehensive
	Shares		Amount		Shares	Amount		Capital			Earnings			Shares		Amount			Income (Loss)				Interests			Total					Shares			Amount		Shares			Amount		Capital		Earnings			Shares			Amount			Income (Loss)		Interests		Total
		(In thousands)																														(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		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			Net income (loss)		—			—		—			—		—		25,202			—			—			—		(24)		25,178
Other comprehensive income, net of tax	—		—		—	—		—			—			—		—			29,009			1			29,010			Other comprehensive income, net of tax		—			—		—			—		—		—			—			—			29,009		1		29,010
Exercise of stock options, net of tax withholding forfeitures	—		—		—	—		(54		)	—			1		16			—			—			(38		)	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		)	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			Share-based compensation		—			—		—			—		2,216		—			—			—			—		—		2,216
Preferred stock dividends ($168.75 per share)	—		—		—	—		—			(8,733		)	—		—			—			—			(8,733		)	Preferred stock dividends ($168.75 per share)		—			—		—			—		—		(8,733)			—			—			—		—		(8,733)
Common stock dividends ($0.05 per share)	—		—		—	—		—			(1,990		)	—		—			—			—			(1,990		)	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		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
Net income	—		—		—	—		—			42,200			—		—			—			90			42,290			Net income		—			—		—			—		—		42,200			—			—			—		90		42,290
Other comprehensive income (loss), net of tax	—		—		—	—		—			—			—		—			(16,693		)	40			(16,653		)	Other comprehensive income (loss), net of tax		—			—		—			—		—		—			—			—			(16,693)		40		(16,653)
Acquisition of business with noncontrolling interests	—		—		—	—		—			—			—		—			—			4,775			4,775
Exercise of stock options, net of tax withholding forfeitures	—		—		—	—		(10		)	—			—		2			—			—			(8		)
Conversion of restricted stock units into common stock, net of tax withholding forfeitures	—		—		—	—		(861		)	—			29		807			—			—			(54		)
Acquisition of business with noncontrolling interest																												Acquisition of business with noncontrolling interest		—			—		—			—		—		—			—			—			—		4,775		4,775
Exercise of stock options, net of tax witholding forfeitures																												Exercise of stock options, net of tax witholding forfeitures		—			—		—			—		(10)		—			—			2			—		—		(8)
Conversion of restricted stock units into common stock, net of tax witholding forfeitures																												Conversion of restricted stock units into common stock, net of tax witholding forfeitures		—			—		—			—		(861)		—			29			807			—		—		(54)
Share repurchase program	—		—		—	—		—			—			(397	)	(22,815		)	—			—			(22,815		)	Share repurchase program		—			—		—			—		—		—			(397)			(22,815)			—		—		(22,815)
Share-based compensation	—		—		—	—		5,378			—			—		—			—			—			5,378			Share-based compensation		—			—		—			—		5,378		—			—			—			—		—		5,378
Preferred stock dividends ($168.75 per share)	—		—		—	—		—			(8,733		)	—		—			—			—			(8,733		)	Preferred stock dividends ($168.75 per share)		—			—		—			—		—		(8,733)			—			—			—		—		(8,733)
Common stock dividends ($0.05 per share)	—		—		—	—		—			(1,976		)	—		—			—			—			(1,976		)	Common stock dividends ($0.05 per share)		—			—		—			—		—		(1,976)			—			—			—		—		(1,976)
Balance at June 30, 2019	52		$	1	50,335	$	503	$	1,143,494		$	967,970		(11,248	)	$	(621,167	)	$	(62,591	)	$	5,323		$	1,433,533		Balance at June 30, 2019		52			$	1	50,335			$	503	$	1,143,494	$	967,970		(11,248)			$	(621,167)		$	(62,591)	$	5,323	$	1,433,533

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) Interests 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 income (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 ($168.75 per share) —
—
—
—
—
(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
Cumulative effect of change in accounting principles —
—
—
—
—
—
—
—
—
—
—
Net income (loss) —
—
—
—
—
28,869
—
—
—
(77 ) 28,792
Other comprehensive income (loss), net of tax —
—
—
—
—
—
—
—
61,028
(17 ) 61,011
Exercise of stock options, net of tax withholding forfeitures —
—
—
—
(64 ) —
2
20
—
—
(44 )
Conversion of restricted stock units into common stock, net of tax withholding forfeitures —
—
—
—
(552 ) —
19
520
—
—
(32 )
Share repurchase program —
—
—
—
—
—
(388 ) (24,730 ) —
—
(24,730 )
Share-based compensation —
—
—
—
4,742
—
—
—
—
—
4,742
Preferred stock dividends ($168.75 per share) —
—
—
—
—
(8,733 ) —
—
—
—
(8,733 )
Common stock dividends ($0.05 per share) —
—
—
—
—
(2,042 ) —
—
—
—
(2,042 )
Balance at July 1, 2018 52
$ 1
50,335
$ 503
$ 1,129,490
$ 814,071
(9,699 ) $ (525,054 ) $ (68,406 ) $ 505
$ 1,351,110

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, ~~2018:~~2019:

•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~~2019 Annual Report on Form 10-K.

Business Description

We are a ~~signal transmission~~global supplier of specialty networking solutions ~~provider~~ built around ~~two~~2 global business platforms –- Enterprise Solutions and Industrial Solutions. Our comprehensive portfolio of ~~signal transmission~~ solutions ~~provides industry leading~~enables customers to transmit and secure ~~and reliable transmission of~~ data, sound, and video for mission critical ~~applications.~~applications across complex enterprise and industrial environments.

Effective January 1, 2020, we transferred our West Penn Wire business and multi-conductor product lines from the Enterprise Solutions segment to the Industrial Solutions segment as a result of a shift in responsibilities among the segments. We have recast the prior period segment information to conform to the change in the composition of reportable segments.

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,~~29, 2020, the ~~90th~~89th day of our fiscal year ~~2019.~~2020. Our fiscal second and third quarters each have 91 days. The six months ended June 28, 2020 and June 30, 2019 included 180 and ~~July 1, 2018 included~~ 181 ~~and 182~~ 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 28, 2020 and June 30, 2019, ~~and July 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) and for impairment testing (see Notes 4 and 10). We did not have any transfers between Level 1 and Level 2 fair value measurements during the six months ended June 28, 2020 and June 30, ~~2019 and July 1, 2018.~~2019.

-6-

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, 2019,~~28, 2020, 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.

During the six months ended June 28, 2020, we paid the sellers of Snell Advanced Media (SAM) the full earnout consideration of $31.4 million in cash as per the purchase agreement. SAM was acquired on February 8, 2018 and is included in the Grass Valley disposal group.

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, we borrowed $190.0 million and subsequently repaid $100.0 million under our Revolving Credit Agreement during the second quarter. See Note 12.

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 June ~~30, 2019,~~28, 2020, we were party to standby letters of credit, bank guaranties, and surety bonds totaling ~~$7.4~~$7.7 million, ~~$3.6~~$4.1 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 ~~17.~~19.

~~Current-Year Adoption~~Noncontrolling Interest

We have a 51% ownership percentage in a joint venture with Shanghai Hi-Tech Control System Co, Ltd (Hite). The purpose of ~~Accounting Pronouncements~~

~~In February 2016,~~ the ~~FASB issued Accounting Standards Update No. 2016-02,~~ ~~Leases~~ ~~("ASU 2016-02"),~~joint venture is to develop and provide certain Industrial Solutions products and integrated solutions to customers in China. Belden and Hite are committed to fund $1.53 million and $1.47 million, respectively, to the joint venture in the future. The joint venture is determined to not have sufficient equity at risk; therefore, it is considered a ~~leasing standard for~~variable interest entity. We have determined that Belden is the primary beneficiary of the joint venture, due to both ~~lessees~~our ownership percentage and ~~lessors~~our control over the activities of the joint venture that ~~supersedes the lease requirements in Accounting Standards Codification (ASC) Topic 840, "Leases." Under~~most significantly impact its ~~core principle, a lessee will recognize a right-of-use (ROU) asset and lease liability~~economic performance based 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 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 asterms of the ~~effective date~~joint venture agreement with Hite. Because Belden is the primary beneficiary of ~~ASU 2016-02.~~the joint venture, we have consolidated the joint venture in our financial statements. The ~~adoption~~results of ~~ASU 2016-02 on January 1, 2019 resulted~~the joint venture attributable to Hite’s ownership are presented as net income (loss) attributable to noncontrolling interest 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~~Operations. The joint venture is not material to our Condensed Consolidated ~~Cash Flow Statement.~~financial statements as of or for the periods ended June 28, 2020 and June 30, 2019.

-7-

Furthermore, certain subsidiaries of our Opterna business, which we acquired in April of 2019 include noncontrolling interests. Because we have a controlling financial interest in these subsidiaries, they are consolidated into our financial statements. 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~~results of these subsidiaries were consolidated into our financial statements as of the ~~adoption of ASU 2016-02 on~~acquisition date. The results that are attributable to 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~~noncontrolling interest holders are presented as net income attributable 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.

~~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 presentednoncontrolling interests in the ~~balance sheet must be provided in a note~~Condensed Consolidated Statements of Operations. An immaterial amount of Opterna's annual revenues are generated from transactions with the noncontrolling interests. The subsidiaries of Opterna that include noncontrolling interests are not material to our Condensed Consolidated financial statements as of or ~~separate statement. The analysis should present a reconciliation of~~for 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.periods ended June 28, 2020 and June 30, 2019.

~~Pending~~Current-Year 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~~Under the new standard, we are required to recognize estimated credit losses expected to occur over the estimated life or remaining contractual life of an asset (which includes losses that may be incurred in future periods) using a broader range of information including past events, current conditions, and reasonable and supportable forecasts about future economic conditions. We adopted 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~~2020, which resulted in an increase to our allowance for doubtful accounts for continuing operations of $1.0 million, and an increase for discontinued operations of $1.9 million. See further discussion as well as adjustments to the ~~impact this update will have on our consolidated financial statements and related disclosures.~~allowance for doubtful accounts under the new credit loss model in Note 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.


	Cable & Connectivity		Networking, Software & Security		Total Revenues

Three Months Ended June 28, 2020	(In thousands)
Enterprise Solutions	$	193,542	$	9,832	$	203,374
Industrial Solutions	137,567		83,870		221,437
Total	$	331,109	$	93,702	$	424,811

Three Months Ended June 30, 2019
Enterprise Solutions	$	233,024	$	12,301	$	245,325
Industrial Solutions	202,479		100,548		303,027
Total	$	435,503	$	112,849	$	548,352

Six Months Ended June 28, 2020
Enterprise Solutions	$	398,378	$	17,209	$	415,587
Industrial Solutions	304,619		168,131		472,750
Total	$	702,997	$	185,340	$	888,337

Six Months Ended June 30, 2019
Enterprise Solutions	$	434,286	$	18,122	$	452,408
Industrial Solutions	393,396		202,688		596,084
Total	$	827,682	$	220,810	$	1,048,492

-8-

Cable & Connectivity Networking, Software & Security Total Revenues

Three Months Ended June 30, 2019 (In thousands)
Enterprise Solutions $ 268,382
$ 101,480
$ 369,862
Industrial Solutions 167,121
100,547
267,668
Total $ 435,503
$ 202,027
$ 637,530

Three Months Ended July 1, 2018
Enterprise Solutions $ 279,567
$ 117,326
$ 396,893
Industrial Solutions 172,880
98,866
271,746
Total $ 452,447
$ 216,192
$ 668,639

Six Months Ended June 30, 2019
Enterprise Solutions $ 502,053
$ 194,336
$ 696,389
Industrial Solutions 325,629
202,687
528,316
Total $ 827,682
$ 397,023
$ 1,224,705

Six Months Ended July 1, 2018
Enterprise Solutions $ 514,042
$ 231,983
$ 746,025
Industrial Solutions 335,602
192,577
528,179
Total $ 849,644
$ 424,560
$ 1,274,204

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


										Americas		EMEA		APAC		Total Revenues
	Americas		EMEA		APAC		Total Revenues
Three Months Ended June 28, 2020									Three Months Ended June 28, 2020	(In thousands)
Enterprise Solutions									Enterprise Solutions	$	154,844	$	26,150	$	22,380	$	203,374
Industrial Solutions									Industrial Solutions	124,640		57,260		39,537		221,437
Total									Total	$	279,484	$	83,410	$	61,917	$	424,811

Three Months Ended June 30, 2019	(In thousands)								Three Months Ended June 30, 2019
Enterprise Solutions	$	244,670	$	72,932	$	52,260	$	369,862	Enterprise Solutions	$	178,612	$	36,622	$	30,091	$	245,325
Industrial Solutions	154,261		71,722		41,685		267,668		Industrial Solutions	183,928		77,404		41,695		303,027
Total	$	398,931	$	144,654	$	93,945	$	637,530	Total	$	362,540	$	114,026	$	71,786	$	548,352

Three Months Ended July 1, 2018
Six Months Ended June 28, 2020									Six Months Ended June 28, 2020
Enterprise Solutions	$	256,191	$	82,595	$	58,107	$	396,893	Enterprise Solutions	$	310,273	$	62,012	$	43,302	$	415,587
Industrial Solutions	155,529		73,979		42,238		271,746		Industrial Solutions	281,040		123,226		68,484		472,750
Total	$	411,720	$	156,574	$	100,345	$	668,639	Total	$	591,313	$	185,238	$	111,786	$	888,337

Six Months Ended June 30, 2019									Six Months Ended June 30, 2019
Enterprise Solutions	$	455,934	$	140,252	$	100,203	$	696,389	Enterprise Solutions	$	325,433	$	70,758	$	56,217	$	452,408
Industrial Solutions	306,835		145,037		76,444		528,316		Industrial Solutions	368,911		150,719		76,454		596,084
Total	$	762,769	$	285,289	$	176,647	$	1,224,705	Total	$	694,344	$	221,477	$	132,671	$	1,048,492

Six Months Ended July 1, 2018
Enterprise Solutions	$	481,474	$	155,927	$	108,624	$	746,025
Industrial Solutions	305,333		146,571		76,275		528,179
Total	$	786,807	$	302,498	$	184,899	$	1,274,204

The following tables present our revenues disaggregated by products, including software products, and support and services.

Products Support & Services Total Revenues

Three Months Ended June 30, 2019 (In thousands)
Enterprise Solutions $ 350,270
$ 19,592
$ 369,862
Industrial Solutions 245,440
22,228
267,668
Total $ 595,710
$ 41,820
$ 637,530

Three Months Ended July 1, 2018
Enterprise Solutions $ 379,416
$ 17,477
$ 396,893
Industrial Solutions 248,022
23,724
271,746
Total $ 627,438
$ 41,201
$ 668,639

Six Months Ended June 30, 2019
Enterprise Solutions $ 658,129
$ 38,260
$ 696,389
Industrial Solutions 484,144
44,172
528,316
Total $ 1,142,273
$ 82,432
$ 1,224,705

Six Months Ended July 1, 2018
Enterprise Solutions $ 712,160
$ 33,865
$ 746,025
Industrial Solutions 480,075
48,104
528,179
Total $ 1,192,235
$ 81,969
$ 1,274,204


	Products		Support & Services		Total Revenues

Three Months Ended June 28, 2020	(In thousands)
Enterprise Solutions	$	203,374	$	—	$	203,374
Industrial Solutions	202,916		18,521		221,437
Total	$	406,290	$	18,521	$	424,811

Three Months Ended June 30, 2019
Enterprise Solutions	$	245,325	$	—	$	245,325
Industrial Solutions	280,800		22,227		303,027
Total	$	526,125	$	22,227	$	548,352

Six Months Ended June 28, 2020
Enterprise Solutions	$	415,587	$	—	$	415,587
Industrial Solutions	435,019		37,731		472,750
Total	$	850,606	$	37,731	$	888,337

Six Months Ended June 30, 2019
Enterprise Solutions	$	452,408	$	—	$	452,408
Industrial Solutions	551,913		44,171		596,084
Total	$	1,004,321	$	44,171	$	1,048,492

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.

-9-

The amount of consideration we receive and revenue we recognize varies due to rebates, returns, and price adjustments. We estimate the expected rebates, returns, and price adjustments based on an analysis of historical experience, anticipated sales demand, and trends in product pricing. We adjust our estimate of revenue at the earlier of when the most likely amount of consideration

we expect to receive changes or when the consideration becomes fixed. Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three and six months ended June 28, 2020 and June 30, ~~2019 and July 1, 2018.~~2019.

The following table presents estimated and accrued variable consideration:

June 30, 2019 July 1, 2018

(in thousands)
Accrued rebates $ 24,178
$ 23,586
Accrued returns 13,249
8,676
Price adjustments recognized against gross accounts receivable 29,762
26,581


	June 28, 2020		June 30, 2019

	(in thousands)
Accrued rebates	$	20,261	$	24,152
Accrued returns	18,529		9,071
Price adjustments recognized against gross accounts receivable	19,371		29,709

Depending on the terms of an arrangement, we may defer the recognition of ~~a portion~~some or all of the consideration received because we have to satisfy a future obligation. Consideration allocated to support services under a support and maintenance contract is typically paid in advance and recognized ratably over the term of the service. Consideration allocated to professional services is typically recognized when or as the services are performed depending on the terms of the arrangement. As of June ~~30, 2019,~~28, 2020, total deferred revenue was ~~$107.4~~$68.6 million, and of this amount, ~~$94.2~~$49.9 million is expected to be recognized within the next twelve months, and the remaining ~~$13.2~~$18.7 million is long-term and is expected to be recognized over a period greater than twelve months.

The following table presents deferred revenue activity:

Six Months Ended
June 30, 2019 July 1, 2018

(In thousands)
Beginning balance $ 113,300
$ 104,400
New deferrals 92,213
90,583
Revenue recognized (98,100 ) (98,600 )
Ending balance $ 107,413
$ 96,383


	2020		2019

	(In thousands)
Beginning balance	$	70,070	$	72,358
New deferrals	23,830		26,033
Revenue recognized	(24,415)		(32,168)
Balance at the end of the first quarter	69,485		66,223
New deferrals	21,322		21,892
Revenue recognized	(22,200)		(24,807)
Balance at the end of the second quarter	$	68,607	$	63,308

We expense sales commissions as incurred when the duration of the related revenue arrangement is one year or less. We capitalize sales commissions in other current and long-lived assets on our balance sheet when the original duration of the related revenue arrangement is longer than one year, and we amortize it over the related revenue arrangement period.

Total capitalized sales commissions was $4.6 million as of June 28, 2020 and $3.3 million as of June 30, ~~2019 and $2.3 million as of July 1, 2018.~~2019. The following table presents sales commissions that are recorded within selling, general and administrative expenses:


	Three Months ended								Six Months ended
	June 28, 2020		June 30, 2019		June 28, 2020				June 30, 2019

	(In thousands)
Sales commissions	$	3,856	$	4,512	$	8,030	$	9,544	$	9,544

Three Months ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(in thousands)
Sales commissions $ 5,185
$ 6,332
$ 10,769
$ 12,461

-10-

Note 3: Acquisitions

Special Product Company

On December 6, 2019, we purchased substantially all the assets, and assumed certain specified liabilities of Special Product Company (SPC) for a preliminary purchase price of $22.5 million. SPC, based in Kansas City, Kansas, is a leading designer, manufacturer, and seller of outdoor cabinet products for optical fiber cable installations. The results of SPC have been included in our Condensed Consolidated Financial Statements from December 6, 2019, and are reported within the Enterprise Solutions segment. The acquisition of SPC was not material to our financial position or results of operations.

Opterna International Corp.

We acquired 100% of the shares of Opterna International Corp. (Opterna) on April 15, 2019 for a ~~preliminary~~ purchase price, net of cash acquired, of ~~$61.5~~$51.7 million. Of the ~~$61.5~~$51.7 million purchase price, ~~$45.5~~$45.9 million was paid ~~on April 15, 2019 and was funded~~ with cash on hand. The acquisition included a potential earnout, which is based upon future Opterna financial targets through April 15, 2021. The maximum earnout consideration is $25.0 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 $16.0~~is $5.8 million. Opterna is an international fiber optics solutions business based in Sterling, Virginia, which designs and manufactures a range of complementary fiber connectivity, cabinet, and enclosure products used in optical networks. The results of Opterna have been included in our Condensed Consolidated Financial Statements from April 15, 2019, and are reported within the Enterprise Solutions segment. Certain subsidiaries of Opterna include noncontrolling interests. Because Opterna has a controlling financial interest in

these subsidiaries, they are consolidated into our financial statements. The results that are attributable to the noncontrolling interest holders are presented as net income attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations. An immaterial amount of Opterna's annual revenues are generated from transactions with the noncontrolling interests. On October 25, 2019, we purchased the noncontrolling interest of one subsidiary for a purchase price of $0.8 million; of which $0.4 million was paid at closing and the remaining $0.4 million will be paid in 2021.

The following table summarizes the estimated ~~preliminary~~ fair values of the assets acquired and the liabilities assumed as of April 15, 2019 (in thousands):


Receivables	$	5,308
Inventory	7,359
Prepaid and other current assets	566
Property, plant, and equipment	1,328
Intangible assets	28,000
Goodwill	35,057
Deferred income taxes	80
Operating lease right-to-use assets	2,204
Other long-lived assets	2,070
Total assets acquired	$	81,972

Accounts payable	$	4,847
Accrued liabilities	4,301
Long-term deferred tax liability	6,813
Long-term operating lease liability	1,923
Other long-term liabilities	7,152
Total liabilities assumed	$	25,036
Net assets	56,936

Noncontrolling interests	5,195

Net assets attributable to Belden	$	51,741

Receivables $ 5,308
Inventory 8,491
Prepaid and other current assets 566
Property, plant, and equipment 1,328
Intangible assets 26,900
Goodwill 44,973
Deferred income taxes 36
Operating lease right-to-use assets 2,204
Other long-lived assets 2,070
Total assets acquired $ 91,876

Accounts payable $ 4,847
Accrued liabilities 4,346
Long-term deferred tax liability 7,316
Long-term operating lease liability 1,923
Other long-term liabilities 7,153
Total liabilities assumed $ 25,585
Net assets $ 66,291

Noncontrolling interests 4,775

Net assets attributable to Belden $ 61,516

The above purchase price allocation is preliminary, and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The preliminary measurement of receivables, inventories, intangible assets, goodwill, deferred income taxes, other assets and liabilities, and noncontrolling interests are subject to change. A changeWe did not record any material measurement-period adjustments in the ~~estimated fair value of the net assets acquired or noncontrolling interests will change the amount of the purchase price allocable to goodwill.~~three and six months ended June 28, 2020.

-11-

A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the ~~preliminary~~ fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.

The ~~preliminary~~ fair value of acquired receivables is $5.3 million, which is equivalent to its gross contractual amount.

For purposes of the above allocation, we based our ~~preliminary~~ estimate of the fair values for the acquired inventory, intangible assets, and noncontrolling interests on valuation studies performed by a third party valuation firm. We have estimated a ~~preliminary~~ fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the ~~preliminary~~ fair value of the identifiable intangible assets (Level 3 valuation). Our ~~preliminary~~ estimate of the fair values for the noncontrolling interests were based on the comparable EBITDA multiple valuation technique (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 expansion of product offerings in the optical fiber market. Our tax basis in the acquired goodwill is ~~zero.~~0. 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 $ 3,500
5.0
Customer relationships 22,000
15.0
Sales backlog 900
0.5
Trademarks 500
2.0
Total intangible assets subject to amortization $ 26,900

Intangible assets not subject to amortization:
Goodwill $ 44,973
n/a
Total intangible assets not subject to amortization $ 44,973

Total intangible assets $ 71,873

Weighted average amortization period 13.0 years


	Fair Value		Amortization Period
	(In thousands)		(In years)
Intangible assets subject to amortization:
Developed technologies	$	3,400	5.0
Customer relationships	22,800		15.0
Sales backlog	1,300		0.5
Trademarks	500		2.0
Total intangible assets subject to amortization	$	28,000

Intangible assets not subject to amortization:
Goodwill	$	35,057	n/a
Total intangible assets not subject to amortization	$	35,057

Total intangible assets	$	63,057
Weighted average amortization period			12.9

The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technology intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship and control of the items transfers. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks.

Our consolidated revenues and consolidated income before taxes for the three and six months ended June 30, 2019 included $8.8 million and $(0.1) million, respectively, from Opterna. The income before taxes from Opterna included $0.9 million of amortization of intangible assets and $0.6 million of cost of sales related to the adjustment of acquired inventory to fair value. Consolidated net income for the three and six months ended June 30, 2019 included $0.1 million of net income attributable to noncontrolling interests of Opterna.

-12-

The following table illustrates the unaudited pro forma effect on operating results as if the Opterna acquisition had been completed as of January 1, 2018.

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(In thousands, except per share data)
(Unaudited)
Revenues $ 637,530
$ 675,343
$ 1,233,321
$ 1,287,431
Net income attributable to Belden common stockholders 36,045
19,977
52,531
11,664
Diluted income per share attributable to Belden common stockholders $ 0.91
$ 0.49
$ 1.33
$ 0.28


	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019

	(In thousands, except per share data)
	(Unaudited)
Revenues	$	548,352	$	1,057,108
Net income from continuing operations attributable to Belden common stockholders	35,150		54,393
Diluted income from continuing operations per share attributable to Belden common stockholders	$	0.89	$	1.38

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.

FutureLink

We acquired the FutureLink product line and related assets from Suttle, Inc. on April 5, 2019 for a ~~preliminary~~ purchase price of $5$5.0 million, ~~that~~which was funded with cash on hand. The acquisition of FutureLink allows us to offer a more complete set of fiber product offerings. The results from the acquisition of FutureLink have been included in our Condensed Consolidated Financial Statements from April 5, 2019, and are reported within the Enterprise Solutions segment. The acquisition of FutureLink was not material to our financial position or results of operations.

~~Net-Tech Technology, Inc.~~Note 4: Discontinued Operations

We ~~acquired 100% of~~classify assets and liabilities as held for sale (disposal group) when management, having the ~~shares of Net-Tech Technology, Inc. (NT2) on April 25, 2018~~authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. We also consider whether an active program to locate a ~~purchase~~buyer has been initiated, whether the disposal group is marketed actively for sale at a 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~~reasonable 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 materialrelation 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 $104.6 million. Of the $104.6 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 estimatedits current fair value, ofand whether actions required to complete the ~~earnout included in~~plan indicate that it is unlikely that significant changes to the ~~purchase price was $29.3 million. We assumed debt of $19.3 million and paid it off during~~plan will be made or that the ~~first quarter of 2018.~~ plan will be withdrawn.

During the ~~first~~fourth quarter of 2019, we ~~signed~~committed to a ~~settlement agreement with the sellers of SAM for claims arising over the timing~~plan to sell Grass Valley, and at such time, met all of the ~~earnout consideration outlined in~~criteria to classify the ~~purchase agreement,~~assets and liabilities of this business as ~~part~~held for sale. Furthermore, we determined a divestiture of Grass Valley represents a strategic shift that is expected to have a major impact on our operations and financial results. As a result, 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 beenGrass Valley disposal group, which was included in our ~~Consolidated Financial Statements from February 8, 2018, and are~~Enterprise Solutions segment, is reported within discontinued operations. The Grass Valley disposal group excludes certain Grass Valley pension liabilities that we are retaining. We also ceased depreciating and amortizing the ~~Enterprise Solutions segment.~~ assets of the disposal group once they met the held for sale criteria during the fourth quarter of 2019.

We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $89.8 million and $113.0 million in the three and six months ended June 28, 2020, respectively. We determined the estimated fair values of the assets and of the reporting unit by calculating the present values of their estimated future cash flows.

On July 2, 2020, we completed the sale of Grass Valley - see further discussion in Note 19.

-13-

The following table summarizes the ~~estimated fair value~~operating results of the ~~assets acquired~~disposal group for the three and ~~the liabilities assumed as of February 8, 2018 (in thousands):~~six months ended June 28, 2020 and June 30, 2019, respectively:

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~~


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands)
Revenues	$	56,812	$	89,178	$	107,861	$	176,213
Cost of sales	(33,989)		(53,227)		(69,191)		(102,390)
Gross profit	22,823		35,951		38,670		73,823
Selling, general and administrative expenses	(19,342)		(20,030)		(36,861)		(44,861)
Research and development expenses	(5,974)		(10,259)		(14,473)		(21,166)
Amortization of intangibles	—		(3,299)		—		(8,477)
Asset impairment of discontinued operations	(89,810)		—		(113,007)		—
Interest expense, net	(214)		(207)		(420)		(413)
Non-operating pension cost	(111)		(55)		(196)		(111)
Income (loss) before taxes	$	(92,628)	$	2,101	$	(126,287)	$	(1,205)

The disposal group had capital expenditures of approximately $8.5 million and $16.4 million during the three and six months ended June 28, 2020, respectively; and $8.7 million and $14.5 million during the three and six months ended June 30, 2019, ~~we did not record any significant measurement-period adjustments.~~respectively.

~~A single estimate~~

The disposal group recognized credits to stock-based compensation of ~~fair value results from a complex series~~$0.0 million and $0.9 million during the three and six months ended June 28, 2020, respectively. The disposal group incurred stock based compensation expense of ~~judgments about future events~~$0.3 million and ~~uncertainties~~$0.6 million during the three 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.six months ended June 30, 2019, respectively.

~~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 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~~disposal group did not have ~~finite lives. The useful life~~any significant non-cash charges 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~~investing activities during the three ~~months ended July 1, 2018 include $31.1 million~~ and $(6.6) million, respectively, from SAM. The loss before taxes from SAM included $20.3 million of severance and other restructuring costs, $2.8 million of amortization of intangible assets, and $0.7 million of cost of sales related to the adjustment of acquired inventory to fair value. Our consolidated revenues and consolidated income before taxes for the six months ended July 1, 2018 included $51.9 million and $(9.4) million, respectively, from SAM. The loss before taxes from SAM included $29.5 million of severance and other restructuring costs, $5.0 million of amortization of intangible assets, and $1.2 million of cost of sales related to the adjustment of acquired inventory to fair value.June 28, 2020 or June 30, 2019.

The following table ~~illustrates~~provides the ~~unaudited pro forma effect on operating results as if~~major classes of assets and liabilities of the ~~SAM acquisition had been completed~~disposal group as of ~~January 1, 2017.~~June 28, 2020 and December 31, 2019, respectively:

Three Months Ended Six Months Ended
July 1, 2018 July 1, 2018

(In thousands, except per share data)
(Unaudited)
Revenues $ 671,441
$ 1,285,625
Net income attributable to Belden common stockholders 35,241
34,169
Diluted loss per share attributable to Belden common stockholders $ 0.86
$ 0.82


	June 28, 2020		December 31, 2019

	(In thousands)
Assets:
Cash and cash equivalents	$	33,337	$	18,405
Receivables, net	90,492		117,386
Inventories, net	49,997		55,002
Other current assets	38,626		35,187
Plant, property, and equipment, less accumulated depreciation	65,056		61,233
Operating lease right-of-use assets	15,631		16,902
Goodwill	26,067		26,707
Intangible assets, less accumulated depreciation	150,214		143,459
Deferred income taxes	58,148		59,560
Other long-lived assets	12,201		21,652
Impairment of disposal group	(289,447)		(180,358)
Total Assets of discontinued operations	$	250,322	$	375,135
Liabilities:
Accounts payable	$	42,482	$	52,425
Accrued liabilities	38,816		83,349
Postretirement benefits	4,976		6,224
Deferred income taxes	2,404		2,740
Long-term operating lease liabilities	18,745		20,459
Other long-term liabilities	2,250		5,082
Total Liabilities of discontinued operations	$	109,673	$	170,279

The ~~above unaudited pro forma financial information is presented for informational purposes only~~disposal group also had $11.5 million and ~~does not purport to represent what our results~~$42.3 million of ~~operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative~~accumulated other comprehensive losses as of ~~the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.~~June 28, 2020 and December 31, 2019, respectively.

Note 4:5: Reportable Segments

We are organized around ~~two~~2 global business platforms: Enterprise Solutions and Industrial Solutions. Each of the global business platforms represents a reportable segment.

The key measures of segment profit or loss are Segment Revenues and Segment EBITDA. Segment Revenues represent non-affiliate revenues and include revenues that would have otherwise been recorded by acquired businesses as independent entities but were not recognized in our Condensed Consolidated Statements of Operations and Comprehensive Income due to the effects of purchase accounting and the associated write-down of acquired deferred revenue to fair value. Segment EBITDA excludes certain items, including depreciation expense; amortization of intangibles; asset impairment; severance, restructuring, and acquisition integration costs; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory and deferred revenue to fair value; and other costs. We allocate corporate expenses to the segments for purposes of measuring Segment EBITDA. Corporate expenses are allocated on the basis of each segment’s relative EBITDA prior to the allocation.

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

Enterprise
Solutions

Industrial
Solutions

Total
Segments

(In thousands)
As of and for the three months ended June 30, 2019
Segment revenues $ 369,862
$ 267,668
$ 637,530
Affiliate revenues 893
—
893
Segment EBITDA 53,483
47,458
100,941
Depreciation expense 7,540
4,761
12,301
Amortization of intangibles 9,320
13,048
22,368
Amortization of software development intangible assets 1,044
28
1,072
Severance, restructuring, and acquisition integration costs 3,082
—
3,082
Purchase accounting effects of acquisitions 718
—
718
Segment assets 822,402
478,894
1,301,296
As of and for the three months ended July 1, 2018
Segment revenues $ 399,695
$ 271,746
$ 671,441
Affiliate revenues 1,496
17
1,513
Segment EBITDA 70,281
53,225
123,506
Depreciation expense 7,153
4,873
12,026
Amortization of intangibles 11,809
13,230
25,039
Amortization of software development intangible assets 488
—
488
Severance, restructuring, and acquisition integration costs 22,887
2,041
24,928
Purchase accounting effects of acquisitions 1,036
—
1,036
Deferred revenue adjustments 2,802
—
2,802
Segment assets 759,334
436,885
1,196,219
As of and for the six months ended June 30, 2019
Segment revenues $ 696,389
$ 528,316
$ 1,224,705
Affiliate revenues 2,263
17
2,280
Segment EBITDA 93,041
94,917
187,958
Depreciation expense 15,273
9,748
25,021
Amortization of intangibles 19,490
26,219
45,709
Amortization of software development intangible assets 1,958
51
2,009
Severance, restructuring, and acquisition integration costs 6,860
—
6,860
Purchase accounting effects of acquisitions 2,031
—
2,031
Segment assets 822,402
478,894
1,301,296
As of and for the six months ended July 1, 2018
Segment revenues $ 750,685
$ 528,179
$ 1,278,864
Affiliate revenues 2,542
46
2,588
Segment EBITDA 127,733
99,651
227,384
Depreciation expense 14,373
9,518
23,891
Amortization of intangibles 22,979
26,478
49,457
Amortization of software development intangible assets 724
—
724
Severance, restructuring, and acquisition integration costs 37,421
7,901
45,322
Purchase accounting effects of acquisitions 1,538
—
1,538
Deferred revenue adjustments 4,660
—
4,660
Segment assets 759,334
436,885
1,196,219


	Enterprise Solutions		Industrial Solutions		Total Segments

	(In thousands)
As of and for the three months ended June 28, 2020
Segment revenues	$	203,374	$	221,437	$	424,811
Affiliate revenues	485		14		499
Segment EBITDA	22,231		26,449		48,680
Depreciation expense	5,122		5,210		10,332
Amortization of intangibles	5,354		10,663		16,017
Amortization of software development intangible assets	56		330		386
Severance, restructuring, and acquisition integration costs	2,423		2,049		4,472
Purchase accounting effects of acquisitions	105		—		105


Segment assets	502,767		464,862		967,629
As of and for the three months ended June 30, 2019
Segment revenues	$	245,325	$	303,027	$	548,352
Affiliate revenues	893		—		893
Segment EBITDA	35,571		55,744		91,315
Depreciation expense	4,852		5,056		9,908
Amortization of intangibles	5,726		13,342		19,068
Amortization of software development intangible assets	35		28		63
Severance, restructuring, and acquisition integration costs	2,519		—		2,519
Purchase accounting effects of acquisitions	718		—		718
Segment assets	490,847		533,697		1,024,544
As of and for the six months ended June 28, 2020
Segment revenues	$	415,587	$	472,750	$	888,337
Affiliate revenues	709		20		729
Segment EBITDA	46,943		61,976		108,919
Depreciation expense	10,203		10,411		20,614
Amortization of intangibles	10,858		21,344		32,202
Amortization of software development intangible assets	111		605		716
Severance, restructuring, and acquisition integration costs	4,973		3,118		8,091
Purchase accounting effects of acquisitions	125		—		125
Segment assets	502,767		464,862		967,629
As of and for the six months ended June 30, 2019
Segment revenues	$	452,408	$	596,084	$	1,048,492
Affiliate revenues	2,437		17		2,454
Segment EBITDA	57,206		110,408		167,614
Depreciation expense	9,657		10,354		20,011
Amortization of intangibles	10,425		26,807		37,232
Amortization of software development intangible assets	71		51		122
Severance, restructuring, and acquisition integration costs	2,519		—		2,519
Purchase accounting effects of acquisitions	718		—		718
Segment assets	490,847		533,697		1,024,544

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

-16-

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(In thousands)
Total Segment Revenues $ 637,530
$ 671,441
$ 1,224,705
$ 1,278,864
Deferred revenue adjustments (1) —
(2,802 ) —
(4,660 )
Consolidated Revenues $ 637,530
$ 668,639
$ 1,224,705
$ 1,274,204

Total Segment EBITDA $ 100,941
$ 123,506
$ 187,958
$ 227,384
Amortization of intangibles (22,368 ) (25,039 ) (45,709 ) (49,457 )
Depreciation expense (12,301 ) (12,026 ) (25,021 ) (23,891 )
Severance, restructuring, and acquisition integration costs (2) (3,082 ) (24,928 ) (6,860 ) (45,322 )
Purchase accounting effects related to acquisitions (3) (718 ) (1,036 ) (2,031 ) (1,538 )
Amortization of software development intangible assets (1,072 ) (488 ) (2,009 ) (724 )
Deferred revenue adjustments (1) —
(2,802 ) —
(4,660 )
Loss on sale of assets —
—
—
(94 )
Eliminations (261 ) (681 ) (744 ) (989 )
Consolidated operating income 61,139
56,506
105,584
100,709
Interest expense, net (14,168 ) (15,088 ) (28,361 ) (32,066 )
Non-operating pension benefit (cost) 481
(257 ) 1,028
(532 )
Loss on debt extinguishment —
(3,030 ) —
(22,990 )
Consolidated income before taxes $ 47,452
$ 38,131
$ 78,251
$ 45,121


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands)
Total Segment and Consolidated Revenues	$	424,811	$	548,352	$	888,337	$	1,048,492



Total Segment EBITDA	$	48,680	$	91,315	$	108,919	$	167,614
Amortization of intangibles	(16,017)		(19,068)		(32,202)		(37,232)
Depreciation expense	(10,332)		(9,908)		(20,614)		(20,011)
Severance, restructuring, and acquisition integration costs (1)	(4,472)		(2,519)		(8,091)		(2,519)
Amortization of software development intangible assets	(386)		(63)		(716)		(122)
Purchase accounting effects related to acquisitions (2)	(105)		(718)		(125)		(718)
Eliminations	(238)		(264)		(333)		(747)
Consolidated operating income	17,130		58,775		46,838		106,265
Interest expense, net	(14,257)		(13,961)		(27,581)		(27,949)
Total non-operating pension benefit	700		537		1,399		1,140
Consolidated income from continuing operations before taxes	$	3,573	$	45,351	$	20,656	$	79,456

(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,~~ 11, Severance, Restructuring, and Acquisition Integration Activities, for details.

(2) During the three and six months ended June 28, 2020, we recognized cost of sales related to purchase accounting adjustments of acquired inventory to fair value for the SPC acquisition. During ~~for details~~the .

~~(3) For the~~ three and six months ended June 30, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition ~~and we recognized~~as well as cost of sales for the adjustment of acquired inventory to fair value ~~related to~~for the Opterna and FutureLink acquisitions. ~~For the three and six months ended July 1, 2018, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the SAM and NT2 acquisitions.~~

Note 5:6: Income (loss) per Share

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


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands)
Numerator:
Income from continuing operations	$	3,173	$	41,395	$	18,064	$	69,330
Less: Net income (loss) attributable to noncontrolling interest	24		90		(6)		66
Less: Preferred stock dividends	—		8,733		—		17,466
Income from continuing operations attributable to Belden common stockholders	3,149		32,572		18,070		51,798
Add: Income (loss) from discontinued operations, net of tax	(71,054)		895		(97,164)		(1,862)
Net income (loss) attributable to Belden common stockholders	$	(67,905)	$	33,467	$	(79,094)	$	49,936

Denominator:
Weighted average shares outstanding, basic	44,557		39,389		44,969		39,405
Effect of dilutive common stock equivalents	108		222		128		230
Weighted average shares outstanding, diluted	44,665		39,611		45,097		39,635

For the three and six months ended June 28, 2020, diluted weighted average shares outstanding exclude outstanding equity awards of 1.7 million and 1.5 million, respectively, which are anti-dilutive. In addition, for both the three and six months ended June 28, 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.4 million because the related performance conditions have not been satisfied.

-17-

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(In thousands)
Numerator:
Net income $ 42,290
$ 28,792
$ 67,468
$ 31,362
Less: Net income (loss) attributable to noncontrolling interests 90
(77 ) 66
(125 )
Less: Preferred stock dividends 8,733
8,733
17,466
17,466
Net income attributable to Belden common stockholders $ 33,467
$ 20,136
$ 49,936
$ 14,021

Denominator:
Weighted average shares outstanding, basic 39,389
40,735
39,405
41,184
Effect of dilutive common stock equivalents 222
239
230
308
Weighted average shares outstanding, diluted 39,611
40,974
39,635
41,492

For the three and six months ended June 30, 2019, diluted weighted average shares outstanding ~~do not include~~exclude outstanding equity awards of 1.2 million and 1.1 million, respectively, ~~because to do so would have been~~which are anti-dilutive. In addition, for both the three and six months ended June 30, 2019, diluted weighted average shares outstanding do not include outstanding equity awards of 0.3 million ~~and 0.3 million, respectively,~~ because the related performance conditions have not been satisfied. Furthermore, for both

the three and six months ended June 30, 2019, 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 the three and six months ended July 1, 2018, diluted weighted average shares outstanding do not include outstanding equity awards of 0.9 million and 0.7 million, respectively, because to do so would have been anti-dilutive. In addition, for the three and six months ended July 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 and six months ended July 1, 2018, diluted weighted average shares outstanding do not include the impact of preferred shares that are convertiblewere converted 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.

Note 6:7: Credit Losses

Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments prospectively. This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. Upon adoption, we recorded a noncash cumulative effect adjustment to retained earnings of $2.9 million. Of this amount, $1.0 million related to our continuing operations and $1.9 million related to our discontinued operations.

We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Our monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.

Estimates are used to determine the allowance, which is based upon an assessment of anticipated payments as well as other historical, current and future information that is reasonably available. The following table presents the activity in the allowance for doubtful accounts for our continuing operations for the three and six months ended June 28, 2020 (in thousands).


Balance at December 31, 2019	$	2,569
Adoption adjustment	1,011
Current period provision	(172)
Recoveries collected	(9)
Fx impact	(213)
Balance at March 29, 2020	$	3,186
Current period provision	2,621
Writeoffs	(52)
Recoveries collected	(100)
Fx impact	37
Balance at June 28, 2020	$	5,692

-18-

Note 8: Inventories

The major classes of inventories were as follows:


	June 28, 2020		December 31, 2019

	(In thousands)
Raw materials	$	109,599	$	98,530
Work-in-process	30,243		34,717
Finished goods	129,473		119,331
Gross inventories	269,315		252,578
Excess and obsolete reserves	(26,638)		(21,245)
Net inventories	$	242,677	$	231,333

June 30, 2019 December 31, 2018

(In thousands)
Raw materials $ 136,433
$ 146,803
Work-in-process 49,017
45,939
Finished goods 154,179
152,572
Gross inventories 339,629
345,314
Excess and obsolete reserves (29,918 ) (28,896 )
Net inventories $ 309,711
$ 316,418

Note 7:9: 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,~~years; some of which include extension and termination options ~~to extend the lease~~ for ~~a period of up to~~an additional 15 years ~~and some include options to terminate the leases~~or within 1 ~~year.~~year, respectively. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain any material residual value guarantees or material variable lease payments.

We have entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on our balance sheet, and for the three and six months ended June 28, 2020 and June 30, 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 we have elected to utilize the practical expedient to account for these components together as a single combined lease component.

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

The components of lease expense were as follows:


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands)
Operating lease cost	$	3,344	$	2,567	$	6,941	$	7,440

Finance lease cost
Amortization of right-of-use asset	$	33	$	41	$	66	$	67
Interest on lease liabilities	4		6		9		10
Total finance lease cost	$	37	$	47	$	75	$	77

Three Months Ended Six Months Ended
June 30, 2019

(In thousands)
Operating lease cost $ 4,756
$ 9,742

Finance lease cost
Amortization of right-of-use asset $ 43
$ 68
Interest on lease liabilities 6
10
Total finance lease cost $ 49
$ 78

-19-

Supplemental cash flow information related to leases was as follows:


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,670	$	2,154	$	7,461	$	7,242
Operating cash flows from finance leases	4		5		9		14
Financing cash flows from finance leases	41		76		87		146

Three Months Ended Six Months Ended
June 30, 2019

(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 5,048
$ 10,136
Operating cash flows from finance leases 7
16
Financing cash flows from finance leases 100
173

Supplemental balance sheet information related to leases was as follows:


	June 28, 2020		December 31, 2019

	(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets	$	56,613	$	62,251

Accrued liabilities	$	13,528	$	13,900
Long-term operating lease liabilities	49,772		55,652
Total operating lease liabilities	$	63,300	$	69,552

Finance leases:
Other long-lived assets, at cost	$	757	$	823
Accumulated depreciation	(427)		(391)
Other long-lived assets, net	$	330	$	432

June 30, 2019

(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets $ 84,099

Accrued liabilities $ 18,127
Long-term operating lease liabilities 77,679
Total operating lease liabilities $ 95,806

Finance leases:
Other long-lived assets, at cost $ 938
Accumulated depreciation (576 )
Other long-lived assets, net $ 362


Weighted Average Remaining Lease Term
Operating leases	5 years		6 years
Finance leases	2 years		3 years

Weighted Average Discount Rate
Operating leases	6.8	%	6.9	%
Finance leases	6.2	%	6.2	%

The following table summarizes maturities of lease liabilities as of June 28, 2020 (in thousands):


2020	$	9,371
2021	17,373
2022	14,764
2023	11,854
2024	9,107
Thereafter	17,016
Total	$	79,485

The following table summarizes maturities of lease liabilities as of December 31, 2019 (in thousands):



~~Weighted Average Remaining Lease Term~~
~~Operating leases~~	~~7 years~~
~~Finance leases~~	~~3 years~~

~~Weighted Average Discount Rate~~
~~Operating leases~~	~~6.9~~	%
~~Finance leases~~	~~6.1~~	%

-20-


2020	$	19,086
2021	16,988
2022	14,128
2023	11,598
2024	9,032
Thereafter	16,655
Total	$	87,487

~~Maturities of lease liabilities were as follows:~~

Operating Leases Finance Leases

(In thousands)
2019 $ 23,731
$ 280
2020 21,046
200
2021 17,345
86
2022 14,762
36
2023 12,062
7
Thereafter 37,937
—
Total $ 126,883
$ 609

Note 8:10: Long-Lived Assets

Depreciation and Amortization Expense

We recognized depreciation expense of ~~$12.3~~$10.3 million and ~~$25.0~~$20.6 million in the three and six months ended June ~~30, 2019,~~28, 2020, respectively. We recognized depreciation expense of ~~$12.0~~$9.9 million and ~~$23.9~~$20.0 million in the three and six ~~months~~ ended ~~July 1, 2018,~~June 30, 2019, respectively.

We recognized amortization expense related to our intangible assets of ~~$23.4~~$16.4 million and ~~$47.7~~$32.9 million in the three and six months ended June ~~30, 2019.~~28, 2020, respectively. We recognized amortization expense related to our intangible assets of ~~$25.5~~$19.1 million and ~~$50.2~~$37.4 million in the three and six ended June 30, 2019, respectively.

Interim Impairment Test

Due to equity market conditions during the three and six months ended ~~July 1, 2018, respectively.~~June 28, 2020, we conducted an interim impairment test. We determined that the carrying values of our definite-lived assets were recoverable; therefore, we did not record any impairment charges related to these assets. Goodwill is tested for impairment at the reporting unit level, and we conducted an interim impairment test for all of our reporting units. A reporting unit is an operating segment, or a business unit one level below an operating segment if discrete financial information for that business is prepared and regularly reviewed by segment management. However, components within an operating segment are aggregated as a single reporting unit if they have similar economic characteristics. We determined that each of our reportable segments (Enterprise Solutions and Industrial Solutions) represents an operating segment. Within those operating segments, we have identified reporting units based on whether there is discrete financial information prepared that is regularly reviewed by segment management.

When we evaluate goodwill for impairment using a quantitative assessment, we compare the fair value of each reporting unit to its carrying value. We determine the fair value using an income approach. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows using growth rates and discount rates that are consistent with current market conditions in our industry. If the fair value of the reporting unit exceeds the carrying value of the net assets including goodwill assigned to that unit, goodwill is not impaired. If the carrying value of the reporting unit’s net assets including goodwill exceeds the fair value of the reporting unit, then we record an impairment charge based on that difference. In addition to the income approach, we calculate the fair value of our reporting units under a market approach. The market approach measures the fair value of a reporting unit through analysis of financial multiples of comparable businesses. Consideration is given to the financial conditions and operating performance of the reporting unit being valued relative to those publicly-traded companies operating in the same or similar lines of business. Significant judgment is required when applying the market approach as there is a range of financial multiples of comparable businesses.

Based on our interim goodwill impairment test, we determined that the fair values of the reporting units were in excess of the carrying values; therefore, we did not record any goodwill impairment. The excess of the fair values over the carrying values of our reporting units ranged from 2% - 206%. The significant assumptions used to estimate fair values included sales growth, profitability, and related cash flows, along with cash flows associated with taxes and capital spending. The discount rate used to estimate fair value was risk adjusted in consideration of the economic conditions in effect at the time of the impairment test. We also considered assumptions that market participants may use. In our quantitative assessments, the discount rates ranged from 10.0% to 17.0%, the 2020 to 2029 compounded annual revenue growth rates ranged from 2.0% to 8.3%, and the revenue growth rates beyond 2029 ranged from 2.0% to 3.0%. By their nature, these assumptions involve risks and uncertainties. Furthermore, uncertainties associated with current market conditions increase the inherent risk associated with using an income approach to estimate fair values. While we have adjusted our key assumptions to reflect the current economic conditions, we have also assumed that economic conditions will improve beyond 2020. If current conditions persist and actual results are different from our estimates or assumptions, we may have to recognize an impairment charge that could be material.

-21-

We also tested our indefinite-lived intangible assets, which consist primarily of trademarks, for impairment during the quarter ended June 28, 2020. We performed a quantitative assessment for each of our indefinite-lived trademarks using a relief from royalty methodology and compared the fair value to the carrying value. We determined that none of our trademarks were impaired as of June 28, 2020. Significant assumptions to determine fair value included sales growth, royalty rates, and discount rates.

Note 9:11: Severance, Restructuring, and Acquisition Integration Activities

Cost Reduction Program: 2019

During the fourth quarter of 2019, we began a cost reduction program to improve performance and enhance margins by streamlining the organizational structure and investing in technology to drive productivity. We recognized $3.5 million and $3.0 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively. The cost reduction program is expected to deliver an estimated $60.0 million reduction in selling, general, and administrative expenses on an annual basis, of which $40.0 million is expected to be realized in 2020, with the full benefit materializing in 2021. We expect to incur incremental costs of approximately $22.0 million for this program.

SPC, Opterna and FutureLink Integration ~~program:~~Program: 2019

In 2019, we began a restructuring program to integrate SPC, Opterna and FutureLink with our existing businesses. The restructuring and integration activities ~~are~~were focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $0.9 million and $3.1 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively. We recognized $2.5 million of severance and other restructuring costs for this program during the three and six months ended June 30, 2019. These costs were incurred by the Enterprise Solutions segment. We expect to incur incremental costs of approximately ~~$3.0~~$1.5 million ~~of additional severance and restructuring costs~~ for this ~~program, most of which will be incurred by the end of 2019.~~

~~Grass Valley and SAM Integration Program: 2018 - 2019~~

In 2018, we began a restructuring program to integrate SAM with Grass Valley. The restructuring and integration activities are focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We did not recognize severance and other restructuring costs for this program during the three months ended June 30, 2019 and we recognized $3.0 million of severance and other restructuring costs for this program during the six months ended June 30, 2019. We recognized $20.3 million and $29.5 million of severance and other restructuring costs for this program during the three and six months ended July 1, 2018, respectively. The costs were incurred by the Enterprise Solutions segment. We do not expect to incur any more costs for this program.

~~Industrial Manufacturing Footprint Program: 2016 - 2018~~

In 2016, we began a program to consolidate our manufacturing footprint. The manufacturing consolidation was complete as of December 31, 2018. We recognized $3.9 million and $11.4 million of severance and other restructuring costs for this program during the three and six months ended July 1, 2018. The costs were incurred by the Enterprise Solutions and Industrial Solutions segments, as the manufacturing locations involved in the program serve both platforms.

The following table summarizes the costs by segment of the ~~various~~ programs described above as well as other immaterial programs and acquisition integration ~~activities:~~activities during the three and six months ended June 28, 2020 and June 30, 2019:


	Severance		Other Restructuring and Integration Costs		Total Costs

Three Months Ended June 28, 2020	(In thousands)
Enterprise Solutions	$	1,467	$	956	$	2,423
Industrial Solutions	1,773		276		2,049
Total	$	3,240	$	1,232	$	4,472

Three Months Ended June 30, 2019
Enterprise Solutions	$	—	$	2,519	$	2,519
Industrial Solutions	—		—		—
Total	$	—	$	2,519	$	2,519

Six Months Ended June 28, 2020
Enterprise Solutions	$	835	$	4,138	$	4,973
Industrial Solutions	818		2,300		3,118
Total	$	1,653	$	6,438	$	8,091

Six Months Ended June 30, 2019
Enterprise Solutions	$	—	$	2,519	$	2,519
Industrial Solutions	—		—		—
Total	$	—	$	2,519	$	2,519

The other restructuring and integration costs primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs. The majority of the other restructuring and integration costs related to these actions were paid as incurred or are payable within the next 60 days.

Severance
Other
Restructuring and
Integration Costs
Total Costs

Three Months Ended June 30, 2019 (In thousands)
Enterprise Solutions $ —
$ 3,082
$ 3,082
Industrial Solutions —
—
—
Total $ —
$ 3,082
$ 3,082

Three Months Ended July 1, 2018
Enterprise Solutions $ 10,872
$ 12,015
$ 22,887
Industrial Solutions 190
1,851
2,041
Total $ 11,062
$ 13,866
$ 24,928

Six Months Ended June 30, 2019
Enterprise Solutions $ 220
$ 6,640
$ 6,860
Industrial Solutions —
—
—
Total $ 220
$ 6,640
$ 6,860

Six Months Ended July 1, 2018
Enterprise Solutions $ 11,380
$ 26,041
$ 37,421
Industrial Solutions 242
7,659
7,901
Total $ 11,622
$ 33,700
$ 45,322

-22-

The following table summarizes the costs of the various programs described above as well as other immaterial programs and acquisition integration activities by financial statement line item in the Condensed Consolidated Statement of Operations:


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In Thousands)
Cost of sales	$	92	$	300	$	137	$	300
Selling, general and administrative expenses	4,380		2,219		7,954		2,219

Total	$	4,472	$	2,519	$	8,091	$	2,519

Three Months ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(In thousands)
Cost of sales $ 423
$ 7,231
$ 985
$ 16,662
Selling, general and administrative expenses 2,333
14,544
5,112
23,946
Research and development expenses 326
3,153
763
4,714
Total $ 3,082
$ 24,928
$ 6,860
$ 45,322
Accrued Severance

The table below sets forth severance activity that occurred for the Cost Reduction Program as well as the SPC, Opterna and FutureLink Integration Program described above. The balances below are included in accrued liabilities (in thousands).


Balance at December 31, 2019	$	19,575
New charges	2,529
Cash payments	(4,483)
Foreign currency translation	(89)
Other adjustments	(4,147)
Balance at March 29, 2020	$	13,385
New charges	4,660
Cash payments	(4,795)
Foreign currency translation	(132)
Other adjustments	(1,420)
Balance at June 28, 2020	$	11,698

The other ~~restructuring~~adjustments were the result of changes in estimates. We experienced higher than expected voluntary turnover, and integration costs primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs. The majority of the other restructuring and integration costs related to theseas a result, certain approved severance actions were ~~paid as incurred or are payable within the next 60 days.~~ not taken.

~~There were no significant severance accrual balances as of June 30, 2019 or December 31, 2018.~~

Note ~~10:~~12: Long-Term Debt and Other Borrowing Arrangements

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


	June 28, 2020		December 31, 2019

	(In thousands)
Revolving credit agreement due 2022	$	90,000	$	—
Senior subordinated notes:
3.875% Senior subordinated notes due 2028	394,660		392,910
3.375% Senior subordinated notes due 2027	507,420		505,170
4.125% Senior subordinated notes due 2026	225,520		224,520
2.875% Senior subordinated notes due 2025	338,280		336,780
Total senior subordinated notes	1,465,880		1,459,380

Total gross long-term debt	1,555,880		1,459,380
Less unamortized debt issuance costs	(18,513)		(19,896)
Long-term debt	$	1,537,367	$	1,439,484

June 30, 2019 December 31, 2018

(In thousands)
Revolving credit agreement due 2022 $ —
$ —
Senior subordinated notes:
3.875% Senior subordinated notes due 2028 398,160
400,050
3.375% Senior subordinated notes due 2027 511,920
514,350
4.125% Senior subordinated notes due 2026 227,520
228,600
2.875% Senior subordinated notes due 2025 341,280
342,900
Total senior subordinated notes 1,478,880
1,485,900
Less unamortized debt issuance costs (21,309 ) (22,700 )
Long-term debt $ 1,457,571
$ 1,463,200

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Revolving Credit Agreement due 2022

Our Revolving Credit Agreement provides a $400.0 million multi-currency asset-based revolving credit facility (the Revolver). The borrowing base under the Revolver includes eligible accounts receivable; inventory; and property, plant and equipment of certain of our subsidiaries in the U.S., Canada, Germany, and the Netherlands. The maturity date of the Revolver is May 16, 2022. Interest on outstanding borrowings is variable, based upon LIBOR or other similar indices in foreign jurisdictions, plus a spread that ranges from 1.25%-1.75%, depending upon our leverage position. We pay a commitment fee on our available borrowing capacity of 0.25%. In the event we borrow more than 90% of our borrowing base, we are subject to a fixed charge coverage ratio covenant. As

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, we borrowed $190.0 million and subsequently repaid $100.0 million on our Revolver during the second quarter. We also paid approximately $0.2 million of fees associated with the draw down on our Revolver, which is being amortized over the contractual term of the Revolver Credit Agreement using the effective interest method. As of June ~~30, 2019,~~28, 2020, we had no$90.0 million of borrowings outstanding on the Revolver, and our available borrowing capacity was ~~$320.9~~$177.8 million.

Senior Subordinated Notes

We have outstanding €350.0 million aggregate principal amount of 3.875% senior subordinated notes due 2028 (the 2028 Notes). The carrying value of the 2028 Notes as of June ~~30, 2019~~28, 2020 is ~~$398.2~~$394.7 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 2027, 2026, and 2025 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on March 15 and September 15 of each year.

We have outstanding €450.0 million aggregate principal amount of 3.375% senior subordinated notes due 2027 (the 2027 Notes). The carrying value of the 2027 Notes as of June ~~30, 2019~~28, 2020 is ~~$511.9~~$507.4 million. The 2027 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2027 Notes rank equal in right of payment with our senior subordinated notes due 2028, 2026, and 2025 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on January 15 and July 15 of each year.

We have outstanding €200.0 million aggregate principal amount of 4.125% senior subordinated notes due 2026 (the 2026 Notes). The carrying value of the 2026 Notes as of June ~~30, 2019~~28, 2020 is ~~$227.5~~$225.5 million. The 2026 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2026 Notes rank equal in right of payment with our senior subordinated notes due 2028, 2027, and 2025 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on April 15 and October 15 of each year.

We have outstanding €300.0 million aggregate principal amount of 2.875% senior subordinated notes due 2025 (the 2025 Notes). The carrying value of the 2025 Notes as of June ~~30, 2019~~28, 2020 is ~~$341.3~~$338.3 million. The 2025 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2025 Notes rank equal in right of payment with our senior subordinated notes due 2028, 2027, and 2026 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on March 15 and September 15 of each year.

Fair Value of Long-Term Debt

The fair value of our senior subordinated notes as of June ~~30, 2019~~28, 2020 was approximately ~~$1,549.0~~$1,414.2 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 ~~$1,478.9~~$1,465.9 million as of June ~~30, 2019.~~28, 2020. The carrying value of our revolver borrowings approximates fair value.

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Note ~~11:~~13: Net Investment Hedge

All of our euro denominated notes were issued by Belden Inc., a USD functional currency entity. As of June ~~30, 2019, all~~28, 2020, €767.8 million of our outstanding foreign denominated debt is designated as a net investment hedge on the foreign currency risk of our net investment in our euro foreign operations. The objective of the hedge is to protect the net investment in the foreign operation ~~against~~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 28, 2020 and June 30, 2019, ~~and July 1, 2018,~~ the transaction gain associated with ~~these notes that was~~the net investment hedge reported in other comprehensive income was $18.2 million and $6.9 million, ~~and $66.5~~respectively. During the six months ended June 28, 2020, we de-designated €532.2 million ~~respectively.~~of our outstanding debt that was previously designated as a net investment hedge. After the de-designation, transaction gains or losses associated with this €532.2 million of debt are reported in income from continuing operations.

Note ~~12:~~14: Income Taxes

For the three and six months ended June 28, 2020, we recognized income tax expense of $0.4 million and $2.6 million, respectively, representing an effective tax rate of 11.2% and 12.5%, respectively. The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $0.1 million and $1.2 million in the three and six months ended June 28, 2020, respectively. In March 2020, the Coronavirus Relief and Economic Security Act (CARES Act) was signed into law in the United States. We are still analyzing the provisions of the CARES Act to determine if there will be any impact to our income tax provision for the year.

For the three and six months ended June 30, 2019, we recognized income tax expense of ~~$5.2~~$4.0 million and ~~$10.8~~$10.1 million, respectively, representing an effective tax rate of ~~10.9%~~8.7% and ~~13.8%~~12.7%, respectively. The effective tax rates were impacted by an income tax benefit of $6.4 million as a result of changes in our estimated valuation allowance requirement related to foreign tax credits due to the restructuring of certain foreign operations. These effective rates are also reflective of the impact of more favorable statutory tax rates applied to the earnings of these foreign operations due to the restructuring efforts.

For the three and six months ended July 1, 2018, we recognized income tax expense of $9.3 million and $13.8 million, respectively, representing an effective tax rate of 24.5% and 30.5%, respectively. The effective tax rate was impacted by the following significant factors:

~~We recognized income tax benefit of $1.2 million in the three and six months ended July 1, 2018 due to a decrease in reserves for uncertain tax positions of prior years.~~

We recognized income tax expense of $1.8 million in the six months ended July 1, 2018 as a result of a change in our valuation allowance on foreign tax credits associated with our euro debt refinancing.

~~We also recognized income tax expense of $0.5 million in the six months ended July 1, 2018 as a result of changes in our valuation allowance for the Tax Cuts and Jobs Act (the Act).~~

~~Our income tax expense and effective tax rate in future periods may be impacted by many factors, including our geographic mix of income and changes in tax laws.~~

Note ~~13:~~15: Pension and Other Postretirement Obligations

The following table provides the components of net periodic benefit costs for our pension and other postretirement benefit plans:


	Pension Obligations						Other Postretirement Obligations
Three Months Ended	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands)
Service cost	$	892	$	967	$	8	$	10
Interest cost	2,410		2,918		195		270
Expected return on plan assets	(4,004)		(4,020)		—		—
Amortization of prior service cost	45		40		—		—
Actuarial losses (gains)	673		281		(19)		(26)
Net periodic benefit cost	$	16	$	186	$	184	$	254

Six Months Ended
Service cost	$	1,824	$	1,974	$	16	$	19
Interest cost	4,747		5,878		397		542
Expected return on plan assets	(7,944)		(8,137)		—		—
Amortization of prior service cost	89		26		—		—
Actuarial losses (gains)	1,350		602		(38)		(51)
Net periodic benefit cost	$	66	$	343	$	375	$	510

Pension Obligations Other Postretirement Obligations
Three Months Ended June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(In thousands)
Service cost $ 1,047
$ 942
$ 10
$ 13
Interest cost 2,939
1,905
270
260
Expected return on plan assets (4,020 ) (2,508 ) —
—
Amortization of prior service cost (credit) 40
(12 ) —
—
Actuarial losses (gains) 316
612
(26 ) —
Net periodic benefit cost $ 322
$ 939
$ 254
$ 273

Six Months Ended
Service cost $ 2,106
$ 2,075
$ 19
$ 26
Interest cost 5,948
3,781
542
524
Expected return on plan assets (8,135 ) (5,028 ) —
—
Amortization of prior service cost (credit) 26
(22 ) —
—
Actuarial losses (gains) 642
1,277
(51 ) —
Net periodic benefit cost $ 587
$ 2,083
$ 510
$ 550

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Note ~~14:~~16: Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The following table summarizes total comprehensive ~~income:~~income (loss):

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(In thousands)
Net income $ 42,290
$ 28,792
$ 67,468
$ 31,362
Foreign currency translation gain (loss), net of $0.4 million, $0.6 million, $0.8 million, and $1.1 million tax, respectively (16,904 ) 60,642
11,887
28,847
Adjustments to pension and postretirement liability, net of $0.1 million, $0.2 million, $0.1 million, and $0.5 million tax, respectively 251
369
470
772
Total comprehensive income 25,637
89,803
79,825
60,981
Less: Comprehensive income (loss) attributable to noncontrolling interests 130
(94 ) 107
(126 )
Comprehensive income attributable to Belden $ 25,507
$ 89,897
$ 79,718
$ 61,107


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019

	(In thousands)
Net income (loss)	$	(67,881)	$	42,290	$	(79,100)	$	67,468
Foreign currency translation adjustments, net of $0.0 million, $0.4 million, $1.0 million, and $0.8 million tax, respectively	(44,671)		(16,904)		(22,881)		11,887
Adjustments to pension and postretirement liability, net of $0.1 million, $0.1 million, $0.2 million, and $0.1 million tax, respectively	372		251		755		470
Total comprehensive income (loss)	(112,180)		25,637		(101,226)		79,825
Less: Comprehensive income (loss) attributable to noncontrolling interests	171		130		(9)		107
Comprehensive income (loss) attributable to Belden	$	(112,351)	$	25,507	$	(101,217)	$	79,718

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

Foreign
Currency
Translation
Component

Pension and
Other
Postretirement
Benefit Plans

Accumulated
Other
Comprehensive
Income (Loss)

(In thousands)
Balance at December 31, 2018 $ (41,882 ) $ (33,025 ) $ (74,907 )
Other comprehensive income attributable to Belden before reclassifications 11,846
—
11,846
Amounts reclassified from accumulated other comprehensive income —
470
470
Net current period other comprehensive gain attributable to Belden 11,846
470
12,316
Balance at June 30, 2019 $ (30,036 ) $ (32,555 ) $ (62,591 )


	Foreign Currency Translation Component		Pension and Other Postretirement Benefit Plans		Accumulated Other Comprehensive Income (Loss)

	(In thousands)
Balance at December 31, 2019	$	(18,225)	$	(45,193)	$	(63,418)
Other comprehensive loss attributable to Belden before reclassifications	(22,878)		—		(22,878)
Amounts reclassified from accumulated other comprehensive income (loss)	—		755		755
Net current period other comprehensive gain (loss) attributable to Belden	(22,878)		755		(22,123)
Balance at June 28, 2020	$	(41,103)	$	(44,438)	$	(85,541)

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss) for the six months ended June ~~30, 2019:~~28, 2020:


	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statements of Operations and Comprehensive Income		Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Consolidated Statements of Operations and Comprehensive Income

	(In thousands)					(In thousands)
Amortization of pension and other postretirement benefit plan items:					Amortization of pension and other postretirement benefit plan items:
Actuarial losses	$	591		(1)	Actuarial losses	$	942	(1)
Prior service cost	26			(1)	Prior service cost	49		(1)
Total before tax	617				Total before tax	991
Tax benefit	(147		)		Tax benefit	(236)
Total net of tax	$	470			Total net of tax	$	755

(1) The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs (see Note ~~13)~~15). The amounts in the table above include both continuing and discontinued operations.

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Note ~~15:~~17: Preferred Stock

In 2016, we issued 5.2 million depositary shares, each of which ~~represents~~represented 1/100th interest in a share of 6.75% Series B Mandatory Convertible Preferred Stock (the Preferred Stock), for an offering price of $100 per depositary share. ~~Holders~~We received approximately $501 million of the Preferred Stock may elect to convert their shares into common stock at any time prior to the mandatory conversion date. Unless earlier converted, each share of Preferred Stock will automatically convert into common stock onnet proceeds from this offering, which were used for general corporate purposes. On July 15, 2019, all outstanding Preferred Stock was automatically converted into ~~between 120.46 and 132.50~~ shares of Belden common stock ~~subject to customary anti-dilution adjustments. This represents a range~~at the conversion rate of ~~6.2 million to~~132.50, resulting in the issuance of approximately 6.9 million shares of Belden common ~~stock to be issued upon conversion. The number of shares of Belden common stock issuable upon the mandatory~~stock. Upon conversion, of the Preferred Stock ~~will be determined based upon~~was automatically extinguished and discharged, is no longer deemed outstanding for all purposes, and delisted from trading on the volume-weighted average price of Belden’s common stock over the 20 day trading period beginning on, and including, the 22nd scheduled trading day prior to July 15, 2019. The net proceeds from this offering were approximately $501 million. The net proceeds are for general corporate purposes. With respect to dividend and liquidation rights, the PreferredNew York Stock ~~ranks senior to our common stock and junior to all of our existing and future indebtedness.~~Exchange. During the three and six months ended June 30, 2019, dividends on the Preferred Stock were $8.7 million and $17.5 million, respectively. ~~During the three and six months ended July 1, 2018, dividends on the Preferred Stock were $8.7 million and $17.5 million, respectively.~~

Note ~~16:~~18: Share Repurchase

On November 29, 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable securities laws and other restrictions. This program is funded with cash on hand and cash flows from operating activities. ~~The~~During the three months ended June 28, 2020, we repurchased 0.4 million shares of our common stock under the share repurchase program ~~does not have~~for an ~~expiration date~~aggregate cost of $13.8 million and ~~may be suspended~~an average price per share of $35.80. During the six months ended June 28, 2020, we repurchased 1.0 million shares of our common stock under the share repurchase program for an aggregate cost of $35.0 million at ~~any time at the discretion~~an average price per share of ~~the Company.~~$35.83. During the three and six months ended June 30, 2019, we repurchased 0.4 million shares of our common stock under the share repurchase program for an aggregate cost of $22.8 million ~~and~~at an average price per share of $57.47. During the three months ended July 1, 2018, we repurchased 0.4 million shares of our common stock under a previous share repurchase program for an aggregate cost of $24.7 million and an average price per share of $63.75. During the six months ended July 1, 2018, we repurchased 1.4 million shares of our common stock under a previous share repurchase program for an aggregate cost of $100.0 million and an average price per share of $69.53.

Note ~~17:~~19: Subsequent Events

We completed the sale of Grass Valley to Black Dragon Capital on July ~~15, 2019, all outstanding 6.75% Series B Mandatory Convertible Preferred Stock (the Preferred Stock) automatically converted into shares~~2, 2020 for gross cash consideration of ~~Belden common stock at~~$120.0 million, or approximately $67.0 million net of cash delivered with the ~~conversion rate~~business. The cash consideration is subject to certain working capital adjustments. The sale also included deferred consideration consisting of ~~132.50 shares of common stock per share of Preferred Stock. The conversion~~a $175.0 million five-year seller’s note, up to $88 million in PIK (payment-in-kind) interest on the seller’s note over its five-year term, and $178.0 million in potential earn-out payments. As part of the ~~Preferred Stock resulted~~transaction, we also invested $3.0 million for a 9% equity interest in Grass Valley with the ~~issuance~~right to put the equity back to Black Dragon Capital at any time on or before October 31, 2020. We deconsolidated Grass Valley as of ~~approximately 6.9 million shares of Belden common stock on the conversion date. Upon conversion, the Preferred Stock were automatically extinguished~~July 2, 2020 and ~~discharged,~~ are ~~no longer deemed outstanding~~accounting for ~~all purposes, and delisted from trading on the New York Stock Exchange.~~

~~In July 2019, we repurchased 0.5 million shares of~~ our ~~common stock~~equity interest under the ~~share repurchase program authorized on November 29, 2018 by our Board or Directors for an aggregate~~ cost ~~of $27.2 million and an average price per share of $55.17.~~method.

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Belden Inc. (the Company, us, we, or our) is a ~~signal transmission~~global supplier of specialty networking solutions ~~company~~ built around two global business platforms –- Enterprise Solutions and Industrial Solutions. Our comprehensive portfolio of ~~signal transmission~~ solutions ~~provides industry leading~~enables customers to transmit and secure ~~and reliable transmission of~~ data, sound, and video for mission critical ~~applications.~~applications across complex enterprise and industrial environments.

We strive for operational excellence through the execution of our Belden Business System, which includes three areas of focus: Lean enterprise initiatives, our Market Delivery System, and our Talent Management System. Through operational excellence we generate free cash flow on an annual basis. We utilize the cash flow generated by our business to fuel our continued transformation and generate shareholder value. We believe our business system, balance across markets and geographies, systematic go-to-market approach, extensive portfolio of innovative solutions, commitment to Lean principles, and improving margins present a unique value proposition for shareholders.

We use a set of tools and processes that are designed to continuously improve business performance in the critical areas of quality, delivery, cost, and innovation. We consider revenue growth, Adjusted EBITDA margin, free cash flows, and return on invested capital to be our key operating performance indicators. We also seek to acquire businesses that we believe can help us achieve these objectives.

Trends and Events

The following trends and events during ~~2019~~2020 have had varying effects on our financial condition, results of operations, and cash flows.

Global Pandemic

On March 11, 2020, the World Health Organization (WHO) declared the outbreak of the novel coronavirus (COVID-19) a pandemic. The outbreak of COVID-19 has resulted and will continue to result in significant economic disruption and has affected and will adversely affect our business in the future. We have experienced and expect to continue to experience reductions in customer demand in several of our end-markets. We expect that the social distancing measures, the reduced operational status of some of our suppliers and reductions in production at certain facilities will continue to have an adverse impact on our operations, and general business uncertainty will continue to negatively impact demand in several of our end-markets in the near future.

Our foremost focus has been on the health and safety of our employees and customers. In response to the outbreak, we have modified practices at our manufacturing locations and offices to adhere to guidance from the WHO, the U.S. Centers for Disease Control and Prevention and other local health and governmental authorities with respect to social distancing, physical separation, personal protective equipment and sanitization. We are approaching our response to this outbreak with a recognition that we provide essential and important products and services upon which our customers rely upon daily to support critical functions. Therefore, most, but not all, of our U.S. and global facilities have remained substantially operational during the outbreak while implementing enhanced safety protocols designed to protect the well-being of our employees.

The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and suppliers and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time. Unlike typical seasonal patterns in our business, revenues were down in the second quarter compared to the first quarter 2020. We will continue to proactively respond to the situation and may take further actions that alter our business operations as may be required by governmental authorities, or that we determine are in the best interests of our employees and customers.

Foreign currency

Our exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Japanese yen, Mexican peso, Australian dollar, British pound, Indian rupee, and Brazilian real. Generally, as the U.S. dollar strengthens against these foreign currencies, our revenues and earnings are negatively impacted as our foreign denominated revenues and earnings are translated into U.S. dollars at a lower rate. Conversely, as the U.S. dollar weakens against foreign currencies, our revenues and earnings are positively impacted. ~~During~~For both the three and six months ended June ~~30, 2019,~~28, 2020, approximately ~~50%~~44% of our consolidated revenues were to customers outside of the U.S.

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In addition to the translation impact described above, currency rate fluctuations have an economic impact on our financial results. As the U.S. dollar strengthens or weakens against foreign currencies, it results in a relative price increase or decrease for certain of our products that are priced in U.S. dollars in a foreign location.

Commodity prices

Our operating results can be affected by changes in prices of commodities, primarily copper and compounds, which are components in some of the products we sell. Generally, as the costs of inventory purchases increase due to higher commodity prices, we raise selling prices to customers to cover the increase in costs, resulting in higher sales revenue but a lower gross profit percentage. Conversely, a decrease in commodity prices would result in lower sales revenue but a higher gross profit percentage. Selling prices of our products are affected by many factors, including end market demand, capacity utilization, overall economic conditions, and commodity prices. Importantly, however, there is no exact measure of the effect of changing commodity prices, as there are thousands of transactions in any given quarter, each of which has various factors involved in the individual pricing decisions. Therefore, all references to the effect of copper prices or other commodity prices are estimates.

Channel Inventory

Our operating results also can be affected by the levels of Belden products purchased and held as inventory by our channel partners and customers. Our channel partners and customers purchase and hold the products they bought from us in their inventory in order to meet the service and on-time delivery requirements of their customers. Generally, as our channel partners and customers change the level of products they buy from us and hold in their inventory, it impacts our revenues. Comparisons of our results between periods can be impacted by changes in the levels of channel inventory. We use information provided to us by our channel partners and make certain assumptions based on our sales to them to determine the amount of products they bought from us and hold in their inventory. As such, all references to the effect of channel inventory changes are estimates.

Market Growth and Market Share

The markets in which we operate can generally be characterized as highly competitive and highly fragmented, with many players. We monitor available data regarding market growth, including independent market research reports, publicly available indices, and the financial results of our direct and indirect peer companies, in order to estimate the extent to which our served markets grew or contracted during a particular period. We expect that our unit sales volume will increase or decrease consistently with the market growth rate. Our strategic goal is to utilize our Market Delivery System to target faster growing geographies, applications, and trends within our end markets, in order to achieve growth that is higher than the general market growth rate. To the extent that we exceed the market growth rates, we consider it to be the result of capturing market share.

~~Acquisitions~~Earnout Consideration Payment

Grass Valley: Discontinued Operations Treatment, Impairment Charges, and Subsequent Q3 Sale

During the fourth quarter of 2019, we committed to a plan to sell Grass Valley, and at such time, met all of the criteria to classify the assets and liabilities of this business as held for sale. Furthermore, we determined a divestiture of Grass Valley represents a strategic shift that is expected to have a major impact on our operations and financial results. As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, has been reported within discontinued operations as of such time. As a result, the comparable prior period information has been recast to exclude the Grass Valley disposal group from continuing operations, with the exception of the Condensed Consolidated Cash Flow Statements. The Grass Valley disposal group excludes certain Grass Valley pension plans retained by Belden. During the three and six months ended June 28, 2020, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $89.8 million and $113.0 million, respectively. See Note 4.

We completed the ~~acquisitions~~sale of ~~Opterna International Corp. (Opterna)~~Grass Valley to Black Dragon Capital on ~~April 15, 2019~~July 2, 2020 for gross cash consideration of $120.0 million, or approximately $67.0 million net of cash delivered with the business, plus various forms of deferred consideration. The cash consideration is subject to certain working capital adjustments. As part of the transaction, we also invested $3.0 million for a 9% equity interest in Grass Valley with the right to put the equity back to Black Dragon Capital at any time on or before October 31, 2020. We deconsolidated Grass Valley as of July 2, 2020 accordingly. See Note 19.

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Segment Transfer

Effective January 1, 2020, we transferred our West Penn Wire business and ~~FutureLink on April 5, 2019. The results of Opterna and FutureLink have been included in our Consolidated Financial Statements~~multi-conductor product lines from ~~the acquisition dates and are reported in~~ the Enterprise Solutions ~~segment.~~segment to the Industrial Solutions segment as a result of a shift in responsibilities among the segments. We have recast the prior period segment information to conform to the change in the composition of reportable segments. See Note 3.5.

~~Grass Valley and SAM Integration~~

Cost Reduction Program

~~In 2018,~~During the fourth quarter of 2019, we began a ~~restructuring~~cost reduction program to ~~integrate SAM with Grass Valley. The restructuring~~improve performance and ~~integration activities are focused on achieving desired cost savings~~enhance margins by ~~consolidating existing~~streamlining the organizational structure and ~~acquired facilities and other support functions.~~investing in technology to drive productivity. We recognized $3.5 million and $3.0 million of severance and other restructuring costs for this program during the three and six months ended June ~~30, 2019.~~28, 2020, respectively. The ~~costs were incurred by~~cost reduction program is expected to deliver an estimated $60.0 million reduction in selling, general, and administrative expenses on an annual basis, of which $40.0 million is expected to be realized in 2020, with the ~~Enterprise Solutions segment.~~full benefit materializing in 2021. We ~~do not~~ expect to incur ~~any more~~incremental costs of approximately $22.0 million for this program. See Note 11.

SPC, Opterna and FutureLink Integration Program

In 2019, we began a restructuring program to integrate SPC, Opterna and FutureLink with our existing businesses. The restructuring and integration activities are focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized ~~$2.5~~$0.9 million and $3.1 million of severance and other restructuring costs for this program during the three and six months ended June ~~30, 2019. The~~28, 2020, respectively. These costs were incurred by the Enterprise Solutions segment. We expect to incur incremental costs of approximately $3$1.5 million for this program. See Note 11.

Revolving Credit Agreement

Due to the initial uncertainties arising from the COVID-19 pandemic and out of an abundance of caution, we drew down $190.0 million and subsequently repaid $100.0 million under our Revolving Credit Agreement during the second quarter. Our Revolving Credit Agreement provides a $400.0 million multi-currency asset-based revolving credit facility and matures on May 16, 2022. Interest on outstanding borrowings is variable, based upon LIBOR or other similar indices in foreign jurisdictions, plus a spread that ranges from 1.25%-1.75%, depending upon our leverage position. As of June 28, 2020, we had $177.8 million of ~~additional severance~~available borrowing capacity on the Revolver. See Note 12.

Share Repurchase Program

In 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable securities laws and ~~restructuring costs~~other restrictions. This program is funded with cash on hand and cash flows from operating activities. During the three months ended June 28, 2020, we repurchased 0.4 million shares of our common stock under the share repurchase program for ~~this~~an aggregate cost of $13.8 million and an average price per share of $35.80. During the six months ended June 28, 2020, we repurchased 1.0 million shares of our common stock under the share repurchase program ~~most~~for an aggregate cost of ~~which will be incurred by the end~~$35.0 million at an average price per share of ~~2019.~~$35.83. See Note 18.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows that are or would be considered material to investors.

Critical Accounting Policies

During the six months ended June ~~30, 2019:~~28, 2020:

•We did not change any of our existing critical accounting policies from those listed in our ~~2018~~2019 Annual Report on Form 10-K other than updating our ~~lease~~ accounting policies for the adoption of ASU ~~2016-02;~~2016-13;

•No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and

•There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed.

-30-

Results of Operations

Consolidated Income before Taxes


	Three Months Ended								Six Months Ended									Three Months Ended								Six Months Ended
	June 30, 2019			July 1, 2018			% Change		June 30, 2019			July 1, 2018			% Change			June 28, 2020		June 30, 2019		% Change		June 28, 2020		June 30, 2019		% Change

	(In thousands, except percentages)																	(In thousands, except percentages)
Revenues	$	637,530		$	668,639		(4.7	)%	$	1,224,705		$	1,274,204		(3.9	)%	Revenues	$	424,811	$	548,352	(22.5)	%	$	888,337	$	1,048,492	(15.3)	%
Gross profit	241,023			257,596			(6.4	)%	465,751			488,190			(4.6	)%	Gross profit	149,940		205,072		(26.9)	%	320,441		391,928		(18.2)	%
Selling, general and administrative expenses	(122,482		)	(138,842		)	(11.8	)%	(245,270		)	(263,714		)	(7.0	)%	Selling, general and administrative expenses	(91,703)		(102,454)		(10.5)	%	(190,092)		(200,409)		(5.1)	%
Research and development expenses	(35,034		)	(37,209		)	(5.8	)%	(69,188		)	(74,310		)	(6.9	)%	Research and development expenses	(25,090)		(24,775)		1.3	%	(51,309)		(48,022)		6.8	%
Amortization of intangibles	(22,368		)	(25,039		)	(10.7	)%	(45,709		)	(49,457		)	(7.6	)%	Amortization of intangibles	(16,017)		(19,068)		(16.0)	%	(32,202)		(37,232)		(13.5)	%
Operating income	61,139			56,506			8.2	%	105,584			100,709			4.8	%	Operating income	17,130		58,775		(70.9)	%	46,838		106,265		(55.9)	%
Interest expense, net	(14,168		)	(15,088		)	(6.1	)%	(28,361		)	(32,066		)	(11.6	)%	Interest expense, net	(14,257)		(13,961)		2.1	%	(27,581)		(27,949)		(1.3)	%
Non-operating pension benefit (cost)	481			(257		)	(287.2	)%	1,028			(532		)	(293.2	)%
Loss on debt extinguishment	—			(3,030		)	(100.0	)%	—			(22,990		)	(100.0	)%
Income before taxes	47,452			38,131			24.4	%	78,251			45,121			73.4	%
Non-operating pension benefit																	Non-operating pension benefit	700		537		30.4	%	1,399		1,140		22.7	%
Income from continuing operations before taxes																	Income from continuing operations before taxes	3,573		45,351		(92.1)	%	20,656		79,456		(74.0)	%

Revenues decreased ~~$31.1~~$123.5 million and ~~$49.5~~$160.2 million in the three and six months ended June ~~30, 2019,~~28, 2020, respectively, from the comparable periods of ~~2018~~2019 due to the following factors:

•Lower sales volume due in part to changes in channel inventory levels resulted in a ~~$24.6~~$119.2 million and ~~$33.1~~$164.7 million decrease in revenues in the three and six months ended June ~~30, 2019,~~28, 2020, respectively.

~~Currency translation~~•Copper prices had a ~~$11.1~~$6.4 million and ~~$24.8~~$10.8 million unfavorable impact on revenues in the three and six months ended June ~~30, 2019,~~28, 2020, respectively.

~~Copper prices~~•Currency translation had a $4.8 million and ~~$9.9~~$8.6 million unfavorable impact on revenues in the three and six months ended June ~~30, 2019,~~28, 2020, respectively.

•Acquisitions contributed an estimated ~~$9.4~~$6.9 million and ~~$18.3~~$23.9 million in revenues in the three and six months ended June 28, 2020, respectively.

Gross profit decreased $55.1 million and $71.5 million in the three and six months ended June ~~30,~~28, 2020, respectively, from the comparable periods of 2019 ~~respectively.~~

~~The decrease~~due to the decreases in ~~volume was primarily experienced in our Enterprise solutions segment,~~revenues discussed above as well as unfavorable mix; partially offset by ~~an increase in volume in our Industrial solutions segment.~~the impact of acquisitions.

~~Gross profit~~Selling, general and administrative expenses decreased ~~$16.6~~$10.8 million and ~~$22.4~~$10.3 million ~~respectively,~~ in the three and six months ended June ~~30, 2019~~28, 2020, respectively, from the comparable periods of ~~2018. Gross profit for~~2019. For the three months ended June ~~30, 2019 decreased due to the decreases~~28, 2020, benefits realized from our Cost Reduction Program as well as productivity improvement initiatives and currency translation contributed an estimated $13.7 million and $0.8 million decline in ~~revenue discussed above~~selling, general and ~~was further impacted from unfavorable mix which was~~administrative expenses, respectively; partially offset by ~~decreases in severance,~~a $2.2 million and $1.5 million increase from restructuring charges and ~~acquisition integration costs of $6.8 million from the comparable period of 2018. Gross profit for~~acquisitions, respectively. For the six months ended June ~~30, 2019 decreased due to the decreases~~28, 2020, benefits realized from our Cost Reduction Program as well as productivity improvement initiatives and currency translation contributed an estimated $19.9 million and $1.3 million decline in revenue discussed above and was further impacted from unfavorable mix which was partially offset by decreases in severance, restructuring, and acquisition integration costs of $15.7 million from the comparable period of 2018.

~~Selling,~~selling, general and administrative expenses, ~~decreased $16.4~~respectively; partially offset by a $5.8 million and ~~$18.4~~$5.1 million ~~respectively,~~increase from restructuring charges and acquisitions, respectively.

Research and development expenses increased $0.3 million and $3.3 million in the three and six months ended June ~~30, 2019~~28, 2020, respectively, from the comparable periods of ~~2018~~2019 primarily due to ~~a decrease~~increased investments in ~~severance, restructuring, and acquisition integration costs~~R&D projects as well as acquisitions.

Amortization of ~~$12.2~~intangibles decreased $3.1 million and ~~$18.8~~$5.0 million ~~respectively.~~

~~Research and development expenses decreased $2.2 million and $5.1 million, respectively,~~ in the three and six months ended June ~~30, 2019~~28, 2020, respectively, from the comparable periods of ~~2018 primarily due to a decrease in severance, restructuring, and acquisition integration costs of $2.8 million and $4.0 million, respectively.~~

~~Amortization of intangibles decreased $2.7 million and $3.7 million, respectively, in the three and six months ended June 30,~~ 2019 ~~from the comparable periods of 2018~~ primarily due to certain intangible assets becoming fully amortized.

Operating income ~~increased $4.6~~decreased $41.6 million and $4.9 million, respectively, in the three and six months ended June 30, 2019 from the comparable periods of 2018 as the decreases in operating expenses were greater than the decreases in gross profit discussed above.

Net interest expense decreased $0.9 million and $3.7 million, respectively, in the three and six months ended June 30, 2019 from the comparable periods of 2018 as a result of our debt transactions during 2018. In March 2018, we issued €350.0 million aggregate principal amount of new senior subordinated notes due 2028 at an interest rate of 3.875%, and used the net proceeds of this offering and cash on hand to repurchase all of our outstanding €200.0 million 5.5% senior subordinated notes due 2023 as well as all of our outstanding $200.0 million 5.25% senior subordinated notes due 2024.

~~The loss on debt extinguishment recognized in 2018 represents the premium paid to the bond holders to retire a portion of the 2023 and 2024 notes and the unamortized debt issuance costs written-off.~~

~~Income before taxes increased $9.3 million and $33.1~~$59.4 million in the three and six months ended June ~~30, 2019~~28, 2020, respectively, from the comparable periods of ~~2018. This increase is~~2019 primarily as a result of the ~~loss on debt extinguishment~~decline in gross profit discussed above.

Net interest expense remained relatively flat year-over-year, with an increase of $0.3 million and a decrease of $0.4 million in the ~~prior year as well as~~three and six months ended June 28, 2020, respectively, from the comparable periods of 2019. The increase is the result of interest accrued on the Revolver borrowings during the second quarter of 2020, partially offset by currency translation. During the second quarter, we borrowed $190.0 million and subsequently repaid $100.0 million on our Revolver. See Note 12.

-31-

Income from continuing operations before taxes decreased $41.8 million and $58.8 million in the three and six months ended June 28, 2020, respectively, from the comparable periods of 2019 primarily due to the decline in ~~net interest expense and increase in~~ operating income ~~over the year ago periods~~ discussed above.

Income Taxes


	Three Months Ended								%			Six Months Ended					%
	June 28, 2020			June 30, 2019			Change		June 28, 2020			June 30, 2019			Change

	(In thousands, except percentages)
Income before taxes	$	3,573		$	45,351		(92.1)	%	$	20,656		$	79,456		(74.0)	%
Income tax expense	400			3,956			(89.9)	%	2,592			10,126			(74.4)	%
Effective tax rate	11.2		%	8.7		%			12.5		%	12.7		%

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018
%
Change
June 30, 2019 July 1, 2018
%
Change

(In thousands, except percentages)
Income before taxes $ 47,452
$ 38,131
24.4 % $ 78,251
$ 45,121
73.4 %
Income tax expense 5,162
9,339
(44.7 )% 10,783
13,759
(21.6 )%
Effective tax rate 10.9 % 24.5 % 13.8 % 30.5 %
For the three and six months ended June 28, 2020, we recognized income tax expense of $0.4 million and $2.6 million, respectively, representing an effective tax rate of 11.2% and 12.5%, respectively. The effective tax rates were impacted by income tax benefits for certain foreign tax credits of $0.1 million and $1.2 million in the three and six months ended June 28, 2020, respectively. In March 2020, the Coronavirus Relief and Economic Security Act (CARES Act) was signed into law in the United States. We are still analyzing the provisions of the CARES Act to determine if there will be any impact to our income tax provision for the year.

~~We recognized income tax benefit of $1.2 million in the three and six months ended July 1, 2018 due to a decrease in reserves for uncertain tax positions of prior years.~~

~~We also recognized income tax expense of $0.5 million in the six months ended July 1, 2018 as a result of changes in our valuation allowance for the Tax Cuts and Jobs Act (the Act).~~

~~Our income tax expense and effective tax rate in future periods may be impacted by many factors, including our geographic mix of income and changes in tax laws.~~

Consolidated Adjusted Revenues and Adjusted EBITDA


	Three Months Ended								Six Months Ended									Three Months Ended								%			Six Months Ended					%
	June 30, 2019			July 1, 2018			% Change		June 30, 2019			July 1, 2018			% Change			June 28, 2020			June 30, 2019			Change		June 28, 2020			June 30, 2019			Change

	(In thousands, except percentages)																	(In thousands, except percentages)
Adjusted Revenues	$	637,530		$	671,441		(5.1	)%	$	1,224,705		$	1,278,864		(4.2	)%	Adjusted Revenues	$	424,811		$	548,352		(22.5)	%	$	888,337		$	1,048,492		(15.3)	%
Adjusted EBITDA	101,161			122,568			(17.5	)%	188,242			225,863			(16.7	)%	Adjusted EBITDA	49,142			91,588			(46.3)	%	109,985			168,007			(34.5)	%
as a percent of adjusted revenues	15.9		%	18.3		%			15.4		%	17.7		%			as a percent of adjusted revenues	11.6		%	16.7		%			12.4		%	16.0		%

Adjusted Revenues decreased ~~$33.9~~$123.5 million and ~~$54.2~~$160.2 million in the three and six months ended June ~~30, 2019, respectively,~~28, 2020 from the comparable ~~period~~periods of ~~2018~~2019 due to the following factors:

•Lower sales volume due in part to changes in channel inventory levels resulted in a ~~$27.4~~$119.2 million and ~~$37.8~~$164.7 million decrease in revenues in the three and six months ended June ~~30, 2019, respectively~~28, 2020, respectively.

~~Copper prices~~•Currency translation had a $4.8 million and ~~$9.9~~$8.6 million unfavorable impact on revenues in the three and six months ended June ~~30, 2019,~~28, 2020, respectively.

•Acquisitions contributed an estimated ~~$9.4~~$6.9 million and ~~$18.3~~$23.9 million in revenues in the three and six months ended June 28, 2020, respectively.

Adjusted EBITDA decreased $42.4 million and $58.0 million in the three and six months ended June ~~30, 2019, respectively.~~

~~The decrease in volume was primarily experienced in our Enterprise solutions segment, partially offset by an increase in volume in our Industrial solutions segment.~~

~~Adjusted EBITDA decreased $21.4 million and $37.6 million in the three and six months ended June 30, 2019,~~28, 2020, respectively, from the comparable periods of ~~2018. Adjusted EBITDA for~~2019 primarily as a result of the ~~three months ended June 30, 2019 decreased due to the decreases~~decrease in Adjusted Revenues discussed above and was further impacted by unfavorable mix as compared to the comparable period of 2018. Adjusted EBITDA for the six months ended June 30, 2019 decreased due to the decreases in Adjusted Revenues discussed above and was further impacted by unfavorable mix.above.

-32-

Use of Non-GAAP Financial Information

Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow are non-GAAP financial measures. In addition to reporting financial results in accordance with accounting principles generally accepted in the United States, we provide non-GAAP operating results adjusted for certain items, including: asset impairments; accelerated depreciation expense due to plant consolidation activities; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory and deferred revenue to fair value, and transaction costs; severance, restructuring, and acquisition integration costs; gains (losses) recognized on the disposal of businesses and tangible assets; amortization of intangible assets; gains (losses) on debt extinguishment; certain revenues and gains (losses) from patent settlements; discontinued operations; and other costs. We adjust for the items listed above in all periods presented, unless the impact is clearly immaterial to our financial statements. When we calculate the tax effect of the adjustments, we include all current and deferred income tax expense commensurate with the adjusted measure of pre-tax profitability.

We utilize the adjusted results to review our ongoing operations without the effect of these adjustments and for comparison to budgeted operating results. We believe the adjusted results are useful to investors because they help them compare our results to previous periods and provide important insights into underlying trends in the business and how management oversees our business operations on a day-to-day basis. As an example, we adjust for the purchase accounting effect of recording deferred revenue at fair value in order to reflect the revenues that would have otherwise been recorded by acquired businesses had they remained as independent entities. We believe this presentation is useful in evaluating the underlying performance of acquired companies. Similarly, we adjust for other acquisition-related expenses, such as amortization of intangibles and other impacts of fair value

adjustments because they generally are not related to the acquired business' core business performance. As an additional example, we exclude the costs of restructuring programs, which can occur from time to time for our current businesses and/or recently acquired businesses. We exclude the costs in calculating adjusted results to allow us and investors to evaluate the performance of the business based upon its expected ongoing operating structure. We believe the adjusted measures, accompanied by the disclosure of the costs of these programs, provides valuable insight.

Adjusted results should be considered only in conjunction with results reported according to accounting principles generally accepted in the United States. The following tables reconcile our GAAP results to our non-GAAP financial measures:

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 June 30, 2019 July 1, 2018

(In thousands, except percentages)
GAAP revenues $ 637,530
$ 668,639
$ 1,224,705
$ 1,274,204
Deferred revenue adjustments (1) —
2,802
—
4,660
Adjusted revenues $ 637,530
$ 671,441
$ 1,224,705
$ 1,278,864

GAAP net income $ 42,290
$ 28,792
$ 67,468
$ 31,362
Amortization of intangible assets 22,368
25,039
45,709
49,457
Interest expense, net 14,168
15,088
28,361
32,066
Depreciation expense 12,301
12,026
25,021
23,891
Income tax expense 5,162
9,339
10,783
13,759
Severance, restructuring, and acquisition integration costs (2) 3,082
24,928
6,860
45,322
Purchase accounting effects related to acquisitions (3) 718
1,036
2,031
1,538
Amortization of software development intangible assets 1,072
488
2,009
724
Loss on debt extinguishment —
3,030
—
22,990
Deferred revenue adjustments (1) —
2,802
—
4,660
Loss on sale of assets —
—
—
94
Adjusted EBITDA $ 101,161
$ 122,568
$ 188,242
$ 225,863

GAAP net income margin 6.6 % 4.3 % 5.5 % 2.5 %
Adjusted EBITDA margin 15.9 % 18.3 % 15.4 % 17.7 %


	Three Months Ended									Six Months Ended
	June 28, 2020			June 30, 2019			June 28, 2020			June 30, 2019

	(In thousands, except percentages)
GAAP and adjusted revenues	$	424,811		$	548,352		$	888,337		$	1,048,492



GAAP net income (loss)	$	(67,881)		$	42,290		$	(79,100)		$	67,468
Loss (income) from discontinued operations, net of tax	71,054			(895)			97,164			1,862
Amortization of intangible assets	16,017			19,068			32,202			37,232
Interest expense, net	14,257			13,961			27,581			27,949
Depreciation expense	10,332			9,908			20,614			20,011
Severance, restructuring, and acquisition integration costs (1)	4,472			2,519			8,091			2,519
Income tax expense	400			3,956			2,592			10,126
Amortization of software development intangible assets	386			63			716			122
Purchase accounting effects related to acquisitions (2)	105			718			125			718
Adjusted EBITDA	$	49,142		$	91,588		$	109,985		$	168,007

GAAP net income (loss) margin	(16.0)		%	7.7		%	(8.9)		%	6.4		%
Adjusted EBITDA margin	11.6		%	16.7		%	12.4		%	16.0		%

~~(2) See Note 9,~~ 11, Severance, Restructuring, and Acquisition Integration Activities, for details.

~~(3) For the~~three and six months ended June 30, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition ~~and we recognized~~as well as cost of sales for the adjustment of acquired inventory to fair value ~~related to~~for the Opterna and FutureLink acquisitions. ~~For the three and six months ended July 1, 2018, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the SAM and NT2 acquisitions.~~

-33-

Segment Results of Operations

For additional information regarding our segment measures, see Note 45 to the Condensed Consolidated Financial Statements.

Enterprise Solutions

Three Months Ended Six Months Ended
June 30, 2019 July 1, 2018 % Change June 30, 2019 July 1, 2018 % Change

(In thousands, except percentages)
Segment Revenues $ 369,862
$ 399,695
(7.5 )% $ 696,389
$ 750,685
(7.2 )%
Segment EBITDA 53,483
70,281
(23.9 )% 93,041
127,733
(27.2 )%
as a percent of segment revenues 14.5 % 17.6 % 13.4 % 17.0 %


	Three Months Ended								%			Six Months Ended					%
	June 28, 2020			June 30, 2019			Change		June 28, 2020			June 30, 2019			Change

	(In thousands, except percentages)
Segment Revenues	$	203,374		$	245,325		(17.1)	%	$	415,587		$	452,408		(8.1)	%
Segment EBITDA	22,231			35,571			(37.5)	%	46,943			57,206			(17.9)	%
as a percent of segment revenues	10.9		%	14.5		%			11.3		%	12.6		%

Enterprise Solutions revenues decreased ~~$29.8~~$42.0 million and ~~$54.3~~$36.8 million in the three and six months ended June ~~30, 2019,~~28, 2020, respectively, from the comparable periods of ~~2018. For~~2019. As compared to the year ago period, for the three months ended June ~~30, 2019,~~28, 2020, decreases in volume, lower copper prices, and unfavorable currency translation ~~and lower copper prices~~ contributed ~~an estimated $32.5~~$45.2 million, ~~$4.9~~$2.4 million, and ~~$1.8~~$1.3 million, respectively, to the decline in ~~revenues, respectively,~~revenues; partially offset by ~~the impact of~~ acquisitions which ~~contributed an estimated $9.4 million increase in revenues.~~grew revenues by $6.9 million. For the six months ended June ~~30, 2019,~~28, 2020, decreases in volume, lower copper prices, and unfavorable currency translation ~~and lower copper prices~~ contributed ~~an estimated $58.3~~$54.2 million, ~~$10.4~~$4.4 million, and ~~$3.9~~$2.1 million, respectively, to the decline in ~~revenues, respectively,~~revenues; partially offset by ~~the impact of~~ acquisitions which ~~contributed an estimated $18.3~~grew revenues by $23.9 million ~~increase in revenues. The decrease in volume was primarily due to softer demand in~~over the ~~final mile broadband and live media production markets.~~year ago period.

Enterprise Solutions EBITDA decreased ~~$16.8~~$13.3 million and ~~$34.7~~$10.3 million ~~respectively,~~ in the three and six months ended June ~~30, 2019~~28, 2020, respectively, compared to the year ago periods primarily as a result of the ~~decline~~decrease in revenues discussed above.

Industrial Solutions


	Three Months Ended								Six Months Ended									Three Months Ended								%			Six Months Ended					%
	June 30, 2019			July 1, 2018			% Change		June 30, 2019			July 1, 2018			% Change			June 28, 2020			June 30, 2019			Change		June 28, 2020			June 30, 2019			Change

	(In thousands, except percentages)																	(In thousands, except percentages)
Segment Revenues	$	267,668		$	271,746		(1.5	)%	$	528,316		$	528,179		—	%	Segment Revenues	$	221,437		$	303,027		(26.9)	%	$	472,750		$	596,084		(20.7)	%
Segment EBITDA	47,458			53,225			(10.8	)%	94,917			99,651			(4.8	)%	Segment EBITDA	26,449			55,744			(52.6)	%	61,976			110,408			(43.9)	%
as a percent of segment revenues	17.7		%	19.6		%			18.0		%	18.9		%			as a percent of segment revenues	11.9		%	18.4		%			13.1		%	18.5		%

Industrial Solutions revenues decreased ~~$4.1~~$81.6 million and $123.3 million in the three ~~months ended June 30, 2019 from the comparable period of 2018,~~ and ~~remained flat in the~~ six months ended June ~~30, 2019~~28, 2020, respectively, from the comparable ~~period~~periods of ~~2018.~~2019. The decrease in revenues in the three months ended June ~~30, 2019~~28, 2020 from the comparable period of ~~2018~~2019 was primarily due to decreases in volume, lower copper prices, and unfavorable currency translation, which had an estimated impact of $74.1 million, $4.0 million, and $3.5 million, respectively. The decrease in revenues in the six months ended June 28, 2020 from the comparable period of 2019 was primarily due to decreases in volume, unfavorable currency translation, and lower copper prices, which had an estimated impact of ~~$6.2~~$110.4 million, $6.5 million, and ~~$3.0~~$6.4 million, ~~respectively, and was partially offset by an increase~~respectively. The decrease in volume ~~which had an estimated impact~~was due in part to declines in the levels of ~~$5.1 million. Revenues in~~inventory at our channel partners during the six months ended June 30, 2019 from the comparable period of 2018 remained flat as the increase in volume of $20.5 million, was offset by the decrease from unfavorable currency translation and lower copper prices, which had an estimated impact of $14.4 million and $6.0 million, respectively.28, 2020.

Industrial Solutions EBITDA decreased ~~$5.8~~$29.3 million and ~~$4.7~~$48.4 million in the three and six months ended June ~~30, 2019~~28, 2020, respectively, from the comparable periods of ~~2018~~2019 primarily as a result of the ~~changes~~decline in revenues discussed ~~above and investments in product development.~~above.

Liquidity and Capital Resources

Significant factors affecting our cash liquidity include (1) cash from operating activities, (2) disposals of businesses and tangible assets, (3) cash used for acquisitions, restructuring actions, capital expenditures, share repurchases, dividends, and senior subordinated note repurchases, and (4) our available credit facilities and other borrowing ~~arrangements, and (5) cash proceeds from equity offerings.~~arrangements. We expect our operating activities to generate cash in ~~2019~~2020 and believe our sources of liquidity are sufficient to fund current working capital requirements, capital expenditures, contributions to our retirement plans, share repurchases, senior subordinated note repurchases, quarterly dividend payments, and our short-term operating strategies. However, we may require external financing in the event we complete a significant acquisition. Our ability to continue to fund our future needs from business operations could be affected by many factors, including, but not limited to: economic conditions worldwide, customer demand, competitive market forces, customer acceptance of our product mix, and commodities pricing.

-34-

The following table is derived from our Condensed Consolidated Cash Flow Statements and includes the results and cash flow activity of Grass Valley consistent with the Condensed Consolidated Cash Flow Statements:


	Six Months Ended
	June 28, 2020		June 30, 2019

	(In thousands)
Net cash provided by (used for):
Operating activities	$	(12,130)	$	21,645
Investing activities	(38,054)		(101,267)
Financing activities	19,959		(46,438)
Effects of currency exchange rate changes on cash and cash equivalents	(2,620)		693
Decrease in cash and cash equivalents	(32,845)		(125,367)
Cash and cash equivalents, beginning of period	425,885		420,610
Cash and cash equivalents, end of period	$	393,040	$	295,243

Six Months Ended
June 30, 2019 July 1, 2018

(In thousands)
Net cash provided by (used for):
Operating activities $ 21,645
$ (29,362 )
Investing activities (101,267 ) (82,385 )
Financing activities (46,438 ) (184,980 )
Effects of currency exchange rate changes on cash and cash equivalents 693
(2,932 )
Decrease in cash and cash equivalents (125,367 ) (299,659 )
Cash and cash equivalents, beginning of period 420,610
561,108
Cash and cash equivalents, end of period $ 295,243
$ 261,449

Operating cash flows were a use of cash of $12.1 million in the six months ended June 28, 2020 as compared to a source of cash of $21.6 million in ~~2019 and a use of~~the six months ended June 30, 2019. Operating cash ~~of $29.4~~flows declined $33.8 million in ~~2018 representing an improvement of $51.0 million. The improvement in operating cash flows~~the six months ended June 28, 2020 as compared to ~~prior~~the year isago period primarily due to ~~an increase~~the decreases in ~~net~~revenues and income of $36.1 million, and effective working capital management that resulted in an increase in cash received from receivables and inventory of $32.7 million and $31.8 million, respectively, over the year ago period.discussed above.

Net cash used for investing activities totaled $38.1 million in the six months ended June 28, 2020, compared to $101.3 million in ~~2019, compared to $82.4 million for~~ the ~~comparable period of 2018.~~six months ended June 30, 2019. Investing activities for the six months ended June ~~30, 2019~~28, 2020 included capital expenditures of ~~$50.8~~$41.7 million compared to ~~$39.5~~$50.8 million in the comparable period of ~~2018.~~2019. The ~~increase in~~six months ended June 28, 2020 also included $3.1 million of proceeds from the sale of tangible property and the receipt of $0.6 million related to a working capital ~~expenditures~~adjustment for the acquisition of ~~$11.3 million is due in part to the investments we are making in India and software development.~~SPC. The six months ended June 30, 2019 included payments, net of cash acquired for acquisitions of $50.5 million primarily for the acquisition of ~~Opterna, and~~Opterna.

Net cash provided by financing activities totaled $20.0 million for the six months ended ~~July 1, 2018 included payments, net~~June 28, 2020, compared to a use of cash ~~acquired for acquisitions~~ of ~~$84.6~~$46.4 million for ~~SAM and NT2. Additionally,~~ the six months ended ~~July 1, 2018 included proceeds from the disposal of the MCS business and Hirshmann JV of $40.2 million, which closed on December 31, 2017.~~

~~Net cash used for financing~~June 30, 2019. Financing activities for the six months ended June ~~30, 2019 totaled $46.4~~28, 2020 included borrowings on our revolver of $190.0 million, ~~compared~~repayments of our revolver borrowings of $100.0 million, payments under our share repurchase program of $35.0 million, earnout consideration payments of $29.3 million, cash dividend payments of $4.6 million, and net payments related to ~~$185.0 million for the comparable period~~share based compensation activities of ~~2018.~~$1.1 million. Financing activities for the six months ended June 30, 2019 included payments under our share repurchase program of $22.8 million, cash dividend payments of $21.4 million, and net payments related to share based compensation activities of $2.0 million. Financing activities for the six months ended July 1, 2018 included payments under borrowing arrangements of $484.8 million, payments under our share repurchase program of $100.0 million, cash dividend payments of $22.0 million, debt issuance costs of $7.5 million, net payments related to share based compensation activities of $1.6 million, and $431.3 million of cash proceeds from the issuance of the €350.0 million 3.875% Notes due 2028.

Our cash and cash equivalents balance, including discontinued operations, was ~~$295.2~~$393.0 million as of June ~~30, 2019.~~28, 2020. Of this amount, ~~$173.9~~$195.0 million was held outside of the U.S. in our foreign operations. Substantially all of the foreign cash and cash equivalents are readily convertible into U.S. dollars or other foreign currencies. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and accordingly, no provision for any withholding taxes has been recorded. Upon distribution of those earnings in the form of dividends or otherwise, we may be subject to withholding taxes payable to the respective foreign countries.

Our outstanding debt obligations as of June ~~30, 2019~~28, 2020 consisted of ~~$1,478.9~~$1,465.9 million of senior subordinated notes. Furthermore, as of June 28, 2020, we also had borrowings of $90.0 million outstanding on our Revolver, with an additional $177.8 million of available borrowing capacity under our Revolver. Additional discussion regarding our various borrowing arrangements is included in Note 1012 to the Condensed Consolidated Financial Statements. ~~As of June 30, 2019, we had $320.9 million in available borrowing capacity under our Revolver.~~

-35-

Forward-Looking Statements

Statements in this report other than historical facts are “forward-looking statements” made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding future financial performance (including revenues, expenses, earnings, margins, cash flows, dividends, capital expenditures and financial condition), plans and objectives, and related assumptions. These forward-looking statements reflect management’s current beliefs and expectations and are not guarantees of future performance. Actual results may differ materially from those suggested by any forward-looking statements based on a number of factors. These factors include, among others, those set forth in Part II, Item 1A and in other documents that we file with the SEC.

We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Item 3: Quantitative and Qualitative Disclosures about Market Risks

The following table provides information about our financial instruments that are sensitive to changes in interest rates. The table presents principal amounts by expected maturity dates and fair values as of June ~~30, 2019.~~28, 2020.


	Principal Amount by Expected Maturity							Fair			Principal Amount by Expected Maturity									Fair
	2019		Thereafter			Total		Value			2020		Thereafter			Total		Value

	(In thousands, except interest rates)										(In thousands, except interest rates)
€350.0 million fixed-rate senior subordinated notes due 2028	$	—	$	398,160		$	398,160	$	421,142	€350.0 million fixed-rate senior subordinated notes due 2028	$	—	$	394,660		$	394,660	$	384,174
Average interest rate			3.875		%					Average interest rate			3.875		%
€450.0 million fixed-rate senior subordinated notes due 2027	$	—	$	511,920		$	511,920	$	533,226	€450.0 million fixed-rate senior subordinated notes due 2027	$	—	$	507,420		$	507,420	$	487,402
Average interest rate			3.375		%					Average interest rate			3.375		%
€200.0 million fixed-rate senior subordinated notes due 2026	$	—	$	227,520		$	227,520	$	242,111	€200.0 million fixed-rate senior subordinated notes due 2026	$	—	$	225,520		$	225,520	$	224,636
Average interest rate			4.125		%					Average interest rate			4.125		%
€300.0 million fixed-rate senior subordinated notes due 2025	$	—	$	341,280		$	341,280	$	352,542	€300.0 million fixed-rate senior subordinated notes due 2025	$	—	$	338,280		$	338,280	$	318,007
Average interest rate			2.875		%					Average interest rate			2.875		%
Total						$	1,478,880	$	1,549,021	Total						$	1,465,880	$	1,414,219

Item 7A of our ~~2018~~2019 Annual Report on Form 10-K provides information as to the practices and instruments that we use to manage market risks. There were no material changes in our exposure to market risks since December 31, ~~2018.~~2019, and our debt, excluding the Revolver, is fixed at an average interest rate of 3.5% with no maturities until 2025 to 2028. We have no maintenance covenants on our outstanding debt. Our only covenant is an incurrence covenant, which limits our ability to take on additional debt if EBITDA drops below a certain threshold.

Item 4: Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-36-

PART II OTHER INFORMATION

Item 1: Legal Proceedings

SEC Investigation - As disclosed in our Current Report on Form 8-K filed with the SEC on December 3, 2018, we are fully cooperating with an SEC investigation related to the material weakness in internal controls over financial reporting as of December 31, 2017 disclosed in our 2017 Form 10-K. We continue to believe that the outcome of the investigation will not have a material adverse effect on the Company.

We are a party to various other legal proceedings and administrative actions that are incidental to our operations. In our opinion, the proceedings and actions in which we are involved should not, individually or in the aggregate, have a material adverse effect on our financial condition, operating results, or cash flows. However, since the trends and outcome of this litigation are inherently uncertain, we cannot give absolute assurance regarding the future resolution of such litigation, or that such litigation may not become material in the future.

Item 1A: Risk Factors

There have been no material changes with respect to risk factors as previously disclosed in our ~~2018 Annual Report~~Form 8-K filed on ~~Form 10-K.~~June 12, 2020. There may be additional risks that impact our business that we currently do not recognize as, or that are not currently, material to our business.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Set forth below is information regarding our stock repurchases for the three months ended June ~~30, 2019~~28, 2020 (in thousands, except per share amounts).


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs

Balance at March 29, 2020					$	228,761
March 30, 2020 through May 3, 2020	384	$	35.80	384	215,000
May 4, 2020 through May 31, 2020	—	—		—	215,000
June 1, 2020 through June 28, 2020	—	—		—	215,000
Total	384	$	35.80	384	$	215,000

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs

April 1, 2019 through May 5, 2019 —
$ —
—
$ 300,000
May 6, 2019 through June 2, 2019 —
—
—
300,000
June 3, 2019 through June 30, 2019 397
57.47
397
277,185
Total 397
$ 57.47
397
$ 277,185

(1) In November 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable security laws and other regulations. This program is funded with cash on hand and cash flows from operating activities. ~~The program does not have an expiration date and may be suspended at any time at~~

During the ~~discretion of the Company. From inception of our program to June 30, 2019 and during the~~ three ~~and six~~ months ended June ~~30, 2019,~~28, 2020, we ~~have~~ repurchased 0.4 million shares of our common stock under the share repurchase program for an aggregate cost of ~~$22.8~~$13.8 million and an average price per share of ~~$57.47.~~$35.80. During the six months ended June 28, 2020, we repurchased 1.0 million shares of our common stock under the share repurchase program for an aggregate cost of $35.0 million at an average price per share of $35.83.

-37-

Item 6: Exhibits

Exhibits


Exhibit 4.1		Description of the Registrant’s Securities Registered Under Section 12 of the Securities Exchange Act of 1934

Exhibit ~~10.1~~31.1		~~Executive Employment Agreement with Ashish Chand.~~

~~Exhibit 31.1~~	Certificate of the Chief Executive Officer pursuant to § 302 of the Sarbanes-Oxley Act of 2002.

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

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

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

Exhibit 101.DEF		Definition Linkbase Document

Exhibit 101.PRE		Presentation Linkbase Document

Exhibit 101.LAB		Labels Linkbase Document

Exhibit 101.CAL		Calculation Linkbase Document

Exhibit 101.SCH		Schema Document

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

-38-

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BELDEN INC.

Date:

August 3, 2020

~~BELDEN INC.~~By:

/s/ Roel Vestjens

~~Date:~~

~~August 5, 2019~~

~~By:~~

~~/s/ John S. Stroup~~Roel Vestjens

~~John S. Stroup~~

President and Chief Executive Officer ~~and Chairman~~

Date:

August ~~5, 2019~~3, 2020

By:

/s/ Henk Derksen

Henk Derksen

Senior Vice President, Finance, and Chief Financial Officer

Date:

August ~~5, 2019~~3, 2020

By:

/s/ Douglas R. Zink

Douglas R. Zink

Vice President and Chief Accounting Officer

~~- 36-~~

-39-



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



	Enterprise Solutions		Industrial Solutions		Total Segments

	(In thousands)
As of and for the three months ended June 30, 2019
Segment revenues	$	369,862	$	267,668	$	637,530
Affiliate revenues	893		—		893
Segment EBITDA	53,483		47,458		100,941
Depreciation expense	7,540		4,761		12,301
Amortization of intangibles	9,320		13,048		22,368
Amortization of software development intangible assets	1,044		28		1,072
Severance, restructuring, and acquisition integration costs	3,082		—		3,082
Purchase accounting effects of acquisitions	718		—		718
Segment assets	822,402		478,894		1,301,296
As of and for the three months ended July 1, 2018
Segment revenues	$	399,695	$	271,746	$	671,441
Affiliate revenues	1,496		17		1,513
Segment EBITDA	70,281		53,225		123,506
Depreciation expense	7,153		4,873		12,026
Amortization of intangibles	11,809		13,230		25,039
Amortization of software development intangible assets	488		—		488
Severance, restructuring, and acquisition integration costs	22,887		2,041		24,928
Purchase accounting effects of acquisitions	1,036		—		1,036
Deferred revenue adjustments	2,802		—		2,802
Segment assets	759,334		436,885		1,196,219
As of and for the six months ended June 30, 2019
Segment revenues	$	696,389	$	528,316	$	1,224,705
Affiliate revenues	2,263		17		2,280
Segment EBITDA	93,041		94,917		187,958
Depreciation expense	15,273		9,748		25,021
Amortization of intangibles	19,490		26,219		45,709
Amortization of software development intangible assets	1,958		51		2,009
Severance, restructuring, and acquisition integration costs	6,860		—		6,860
Purchase accounting effects of acquisitions	2,031		—		2,031
Segment assets	822,402		478,894		1,301,296
As of and for the six months ended July 1, 2018
Segment revenues	$	750,685	$	528,179	$	1,278,864
Affiliate revenues	2,542		46		2,588
Segment EBITDA	127,733		99,651		227,384
Depreciation expense	14,373		9,518		23,891
Amortization of intangibles	22,979		26,478		49,457
Amortization of software development intangible assets	724		—		724
Severance, restructuring, and acquisition integration costs	37,421		7,901		45,322
Purchase accounting effects of acquisitions	1,538		—		1,538
Deferred revenue adjustments	4,660		—		4,660
Segment assets	759,334		436,885		1,196,219



	Foreign Currency Translation Component			Pension and Other Postretirement Benefit Plans			Accumulated Other Comprehensive Income (Loss)

	(In thousands)
Balance at December 31, 2018	$	(41,882	)	$	(33,025	)	$	(74,907	)
Other comprehensive income attributable to Belden before reclassifications	11,846			—			11,846
Amounts reclassified from accumulated other comprehensive income	—			470			470
Net current period other comprehensive gain attributable to Belden	11,846			470			12,316
Balance at June 30, 2019	$	(30,036	)	$	(32,555	)	$	(62,591	)