Published: 2022-02-15 00:00:00 ET

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Business Description

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

Consolidation

The accompanying Consolidated Financial Statements include Belden Inc. and all of its subsidiaries, including variable interest entities for which we are the primary beneficiary. We eliminate all significant affiliate accounts and transactions in consolidation.

Foreign Currency

For international operations with functional currencies other than the United States (U.S.) dollar, we translate assets and liabilities at current exchange rates; we translate income and expenses using average exchange rates. We report the resulting translation adjustments, as well as gains and losses from certain affiliate transactions, in accumulated other comprehensive income (loss), a separate component of stockholders’ equity. We include exchange gains and losses on transactions in operating income.

We determine the functional currency of our foreign subsidiaries based upon the currency of the primary economic environment in which each subsidiary operates. Typically, that is determined by the currency in which the subsidiary primarily generates and expends cash. We have concluded that the local currency is the functional currency for all of our material subsidiaries.

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. Our fiscal second and third quarters each have 91 days.

Use of Estimates in the Preparation of the Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and operating results and the disclosure of contingencies. Actual results could differ from those estimates. We make significant estimates with respect to the collectability and valuation of receivables, the valuation of inventory, the realization of deferred tax assets, the valuation of goodwill and indefinite-lived intangible assets, the valuation of contingent liabilities, the calculation of share-based compensation, the calculation of pension and other postretirement benefits expense, and the valuation of acquired businesses.

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.

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During 2021, 2020, and 2019 we utilized Level 1 inputs to determine the fair value of cash equivalents and Level 2 and Level 3 inputs to determine the fair value of net assets acquired in business combinations (see Note 4) and for impairment testing (see Note 13). We did not have any transfers between Level 1 and Level 2 fair value measurements during 2021.

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 December 31, 2021 and 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.

Accounts Receivable and Revenue Reserves

We classify amounts owed to us and due within twelve months, arising from the sale of goods or services and from other business activities, as current receivables. We classify receivables due after twelve months as other long-lived assets.

At the time of sale, we establish an estimated reserve for trade, promotion, and other special price reductions such as contract pricing, discounts to meet competitor pricing, and on-time payment discounts. We also adjust receivable balances for, among other things, correction of billing errors, incorrect shipments, and settlement of customer disputes. Customers are allowed to return inventory if and when certain conditions regarding the physical state of the inventory and our approval of the return are met. Certain distribution customers are allowed to return inventory at original cost, in an amount not to exceed three percent of the prior year’s purchases, in exchange for an order of equal or greater value. Until we can process these reductions, corrections, and returns (together, the Changes) through individual customer records, we estimate the amount of outstanding Changes and recognize them by reducing revenues. We base these estimates on historical and anticipated sales demand, trends in product pricing, and historical and anticipated Changes patterns. We make revisions to these estimates in the period in which the facts that give rise to each revision become known. Future market conditions might require us to take actions to further reduce prices and increase customer return authorizations. Unprocessed Changes recognized against our gross accounts receivable balance at December 31, 2021 and 2020 totaled $23.4 million and $25.5 million, respectively. Unprocessed Changes recognized as accrued liabilities at December 31, 2021 and 2020 totaled $12.5 million and $13.0 million, respectively.

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. As of December 31, 2021 and 2020, the allowance for doubtful accounts totaled $6.3 million and $5.1 million, respectively. We also recognized bad debt expense, net of recoveries, of $1.8 million, $2.4 million, and $0.1 million in 2021, 2020, and 2019, respectively.

Inventories and Related Reserves

Inventories are stated at the lower of cost or net realizable value. We determine the cost of all raw materials, work-in-process, and finished goods inventories by the first in, first out method. Cost components of inventories include direct labor, applicable production overhead, and amounts paid to suppliers of materials and products as well as freight costs and, when applicable, duty costs to import the materials and products.

We evaluate the realizability of our inventory on a product-by-product basis in light of historical and anticipated sales demand, technological changes, product life cycle, component cost trends, product pricing, and inventory condition. In circumstances where inventory levels are in excess of anticipated market demand, where inventory is deemed technologically obsolete or not saleable due to condition, or where inventory cost exceeds net realizable value, we record a charge to cost of sales and reduce the inventory to its net realizable value. The allowances for excess and obsolete inventories at December 31, 2021 and 2020 totaled $45.7 million and $32.3 million, respectively.

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Property, Plant and Equipment

We record property, plant and equipment at cost. We calculate depreciation on a straight-line basis over the estimated useful lives of the related assets ranging from 10 to 40 years for buildings, 5 to 12 years for machinery and equipment, and 5 to 10 years for computer equipment and software. Construction in process reflects amounts incurred for the configuration and build-out of property, plant and equipment and for property, plant and equipment not yet placed into service. We charge maintenance and repairs—both planned major activities and less-costly, ongoing activities—to expense as incurred. We capitalize interest costs associated with the construction of capital assets and amortize the costs over the assets’ useful lives. Depreciation expense is included in costs of sales; selling, general and administrative expenses; and research and development expenses in the Consolidated Statements of Operations based on the specific categorization and use of the underlying assets being depreciated.

We review property, plant and equipment to determine whether an event or change in circumstances indicates the carrying values of the assets may not be recoverable. We base our evaluation on the nature of the assets, the future economic benefit of the assets, and any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of an asset may not be recoverable, we determine whether impairment has occurred through the use of an undiscounted cash flow analysis. If impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset.

For purposes of impairment testing of long-lived assets, we have identified asset groups at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Generally, our asset groups are based on an individual plant or operating facility level. In some circumstances, however, a combination of plants or operating facilities may be considered the asset group due to interdependence of operational activities and cash flows.

Goodwill and Intangible Assets

Our intangible assets consist of (a) definite-lived assets subject to amortization such as developed technology, customer relationships, in-service research and development, certain trademarks, backlog, and capitalized software intangible assets, and (b) indefinite-lived assets not subject to amortization such as goodwill, certain trademarks, and in-process research and development intangible assets. We record amortization of the definite-lived intangible assets over the estimated useful lives of the related assets, which generally range from one year or less for backlog to more than 25 years for certain of our customer relationships. We determine the amortization method for our definite-lived intangible assets based on the pattern in which the economic benefits of the intangible asset are consumed. In the event we cannot reliably determine that pattern, we utilize a straight-line amortization method.

We test our goodwill and other indefinite-lived intangible asset not subject to amortization for impairment on an annual basis as of our fiscal November month-end or when indicators of impairment exist. We base our estimates on assumptions we believe to be reasonable, but which are not predictable with precision and therefore are inherently uncertain. Actual future results could differ from these estimates.

The accounting guidance related to goodwill impairment testing allows for the performance of an optional qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Such an evaluation is made based on the weight of all available evidence and the significance of all identified events and circumstances that may influence the fair value of a reporting unit. If it is more likely than not that the fair value is less than the carrying value, then a quantitative assessment is required for the reporting unit, as described in the paragraph below. In 2021, we did not perform a qualitative assessment over any of our reporting units.

For our annual impairment test in 2021, we performed a quantitative assessment for all six of our reporting units. Under a quantitative assessment for goodwill impairment, we determine the fair value using the income approach (using Level 3 inputs) as reconciled to our aggregate market capitalization. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. 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. Based on our annual goodwill impairment test, the excess of the fair values over the carrying values for five of the six reporting units tested under a quantitative income approach ranged from 51% - 436%. The estimated fair value for the Tripwire reporting unit was $131.2 million less than its carrying value, and as such, we recognized a goodwill impairment charge of $131.2 million during the fourth quarter of 2021. For the other five reporting units, using both an income approach and market approach, we determined that there was no impairment

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during 2021. During 2020 and 2019, we did not recognize any goodwill impairment from continuing operations. See Note 13 for further discussion.

We also evaluate indefinite lived intangible assets for impairment annually or at other times if events have occurred or circumstances exist that indicate the carrying values of those assets may no longer be recoverable. We compare the fair value of the asset with its carrying amount. If the carrying amount of the asset exceeds its fair value, we recognize an impairment loss in an amount equal to that excess. We did not recognize impairment charges for our indefinite lived intangible assets from continuing operations in 2021, 2020, or 2019. See Note 13 for further discussion.

We review intangible assets subject to amortization whenever an event or change in circumstances indicates the carrying values of the assets may not be recoverable. We test intangible assets subject to amortization for impairment and estimate their fair values using the same assumptions and techniques we employ on property, plant and equipment. We did not recognize any impairment charges for amortizable intangible assets from continuing operations in 2021, 2020, or 2019.

During the years ended December 31, 2020 and 2019, we performed impairment tests on the Grass Valley disposal group due to its overall financial performance and discontinued operations classification, which resulted in total asset impairments of $113.0 million and $521.4 million, respectively. The 2019 impairment charge consisted of impairments to goodwill, customer relationships, and trademarks of $326.1 million, $14.4 million, and $1.6 million, respectively, as well as an impairment of the disposal group of $179.3 million ($180.4 million translated at year-end exchange rates). 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. See Notes 5 and 13.

Pension and Other Postretirement Benefits

Our pension and other postretirement benefit costs and obligations are dependent on the various actuarial assumptions used in calculating such amounts. These assumptions relate to discount rates, salary growth, long-term return on plan assets, health care cost trend rates, mortality tables, and other factors. We base the discount rate assumptions on current investment yields on high-quality corporate long-term bonds. The salary growth assumptions reflect our long-term actual experience and future or near-term outlook. We determine the long-term return on plan assets based on historical portfolio results and management’s expectation of the future economic environment. Our health care cost trend assumptions are developed based on historical cost data, the near-term outlook, and an assessment of likely long-term trends. Actual results that differ from our assumptions are accumulated and, if in excess of the lesser of 10% of the projected benefit obligation or the fair market value of plan assets, are amortized over the estimated future working life of the plan participants.

Accrued Sales Rebates

We grant incentive rebates to participating customers as part of our sales programs. The rebates are determined based on certain targeted sales volumes. Rebates are paid quarterly or annually in either cash or receivables credits. Until we can process these rebates through individual customer records, we estimate the amount of outstanding rebates and recognize them as accrued liabilities and reductions in our gross revenues. We base our estimates on both historical and anticipated sales demand and rebate program participation. We charge revisions to these estimates back to accrued liabilities and revenues in the period in which the facts that give rise to each revision become known. Future market conditions and product transitions might require us to take actions to increase sales rebates offered, possibly resulting in an incremental increase in accrued liabilities and an incremental reduction in revenues at the time the rebate is offered. Accrued sales rebates at December 31, 2021 and 2020 totaled $55.5 million and $32.2 million, respectively.

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. A significant amount of judgment and use of estimates is required to quantify our ultimate exposure in these matters. We review the valuation of these liabilities on a quarterly basis, and we adjust the balances to account for changes in circumstances for ongoing and emerging issues.

We accrue environmental remediation costs based on estimates of known environmental remediation exposures developed in consultation with our environmental consultants and legal counsel, the amounts of which are not currently material. We expense environmental compliance costs, which include maintenance and operating costs with respect to ongoing monitoring programs, as incurred. We evaluate the range of potential costs to remediate environmental sites. The ultimate cost of site clean-up is difficult to predict given the uncertainties of our involvement in certain sites, uncertainties regarding the extent of the required clean-up, the availability of alternative clean-up methods, variations in the interpretation of applicable laws and regulations, the possibility of insurance recoveries with respect to certain sites, and other factors.

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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. Assessments regarding the ultimate cost of lawsuits require judgments concerning matters such as the anticipated outcome of negotiations, the number and cost of pending and future claims, and the impact of evidentiary requirements. 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.

Acquisition Accounting

We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the consideration over the amount allocated to the assets and liabilities, if any, is recorded to goodwill. We use all available information to estimate fair values. We typically engage third party valuation specialists to assist in the fair value determination of inventories, tangible long-lived assets, and intangible assets other than goodwill. The carrying values of acquired receivables and accounts payable have historically approximated their fair values as of the acquisition date. As necessary, we may engage third party specialists to assist in the estimation of fair value for certain liabilities, such as postretirement benefit liabilities. We adjust the preliminary acquisition accounting, as necessary, typically up to one year after the acquisition closing date as we obtain more information regarding asset valuations and liabilities assumed.

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 3.

Cost of Sales

Cost of sales includes our total cost of inventory sold during the period, including material, labor, production overhead costs, variable manufacturing costs, and fixed manufacturing costs. Production overhead costs include operating supplies, applicable utility expenses, maintenance costs, and scrap. Variable manufacturing costs include inbound, interplant, and outbound freight, inventory shrinkage, and charges for excess and obsolete inventory. Fixed manufacturing costs include the costs associated with our purchasing, receiving, inspection, warehousing, distribution centers, production and inventory control, and manufacturing management. Cost of sales also includes the costs to provide maintenance and support and other professional services.

Shipping and Handling Costs

We recognize fees earned on the shipment of product to customers as revenues and recognize costs incurred on the shipment of product to customers as a cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include expenses not directly related to the production of inventory. They include all expenses related to selling and marketing our products, as well as the salary and benefit costs of associates performing the selling and marketing functions. Selling, general and administrative expenses also include salary and benefit costs, purchased services, and other costs related to our executive and administrative functions.

Research and Development Costs

Research and development costs are expensed as incurred.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were $12.8 million, $11.6 million, and $14.7 million for 2021, 2020, and 2019, respectively.

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Share-Based Compensation

We compensate certain employees and non-employee directors with various forms of share-based payment awards and recognize compensation costs for these awards based on their fair values. We estimate the fair values of certain awards, primarily stock appreciation rights (SARs), on the grant date using the Black-Scholes-Merton option-pricing formula, which incorporates certain assumptions regarding the expected term of an award and expected stock price volatility. We develop the expected term assumption based on the vesting period and contractual term of an award, our historical exercise and cancellation experience, our stock price history, plan provisions that require exercise or cancellation of awards after employees terminate, and the extent to which currently available information indicates that the future is reasonably expected to differ from past experience. We develop the expected volatility assumption based on historical price data for our common stock. We estimate the fair value of certain restricted stock units with service vesting conditions and performance vesting conditions based on the grant date stock price. We estimate the fair value of certain restricted stock units with market conditions using a Monte Carlo simulation valuation model with the assistance of a third party valuation firm.

After calculating the aggregate fair value of an award, we use an estimated forfeiture rate to discount the amount of share-based compensation cost expected to be recognized in our operating results over the service period of the award. We develop the forfeiture assumption based on our historical pre-vesting cancellation experience.

Income Taxes

Income taxes are provided based on earnings reported for financial statement purposes. The provision for income taxes differs from the amounts currently payable to taxing authorities due to the temporary or permanent timing differences with respect to the recognition of revenues, expenses, and tax attributes for income tax purposes compared to financial statement purposes. Income taxes are provided as if operations in all countries, including the U.S., were stand-alone businesses filing separate tax returns.

Deferred income taxes are recognized by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating loss and tax credit carryforwards. Deferred tax assets generally represent future tax benefits to be received when these carryforwards can be applied against future taxable income or when expenses previously reported in our Consolidated Financial Statements become deductible for income tax purposes. A deferred tax asset valuation allowance is required when some portion or all of the deferred tax assets may not be realized. At December 31, 2021, the valuation allowance of $68.7 million was primarily related to net operating losses and capital losses that we do not expect to realize.

Our effective tax rate is based on expected income, statutory tax rates, and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our effective tax rate and in evaluating our tax positions. We establish accruals for uncertain tax positions when we believe that the full amount of the associated tax benefit may not be realized. To the extent we were to prevail in matters for which accruals have been established or would be required to pay amounts in excess of reserves, there could be a material effect on our income tax provisions in the period in which such determination is made.

Current-Year Adoption of Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (“ASU 2019-12”) which removes certain exceptions for investments, intra-period allocations and interim tax calculations, and adds guidance to reduce the complexity in accounting for income taxes. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. The various amendments in ASU 2019-12 are applied on a retrospective basis, modified retrospective basis and prospective basis, depending upon the amendment. The impact of adopting ASU 2019-12 on our consolidated financial statements was not material.

In October 2021, the FASB issued Accounting Standards Update No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new standard eliminates the complexity of determining the fair value of contract liabilities and delivers revenue recognition consistency for contract assets and liabilities between the acquirer and acquiree in a business combination. The ASU is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. The amendments should be applied prospectively; however, an entity that elects to early adopt in an interim period should apply the amendments to all business combinations that occurred during the fiscal year that includes that interim period. We adopted ASU 2021-08 during the fourth quarter of 2021, which resulted in an increase in consolidated revenues of $1.4 million. See Note 4.

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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. We do not evaluate a contract for a significant financing component when the time between cash collection and performance is less than one year.

The following table presents our revenues disaggregated by major product category (in thousands).

						Broadband and 5G						Cyber-Security						Industrial Automation						Smart Buildings						Total  Revenues
Year Ended December 31, 2021
Enterprise Solutions						$	488,453					$	—					$	—					$	585,973					$	1,074,426
Industrial Solutions						—						106,850						1,226,824						—						1,333,674
Total						$	488,453					$	106,850					$	1,226,824					$	585,973					$	2,408,100
Year Ended December 31, 2020
Enterprise Solutions						$	432,262					$	—					$	—					$	440,155					$	872,417
Industrial Solutions						—						110,524						879,775						—						990,299
Total						$	432,262					$	110,524					$	879,775					$	440,155					$	1,862,716
Year Ended December 31, 2019
Enterprise Solutions						$	401,415					$	—					$	—					$	544,626					$	946,041
Industrial Solutions						—						133,039						1,052,198						—						1,185,237
Total						$	401,415					$	133,039					$	1,052,198					$	544,626					$	2,131,278

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

						Americas						EMEA						APAC						Total Revenues
Year Ended December 31, 2021
Enterprise Solutions						$	785,253					$	150,790					$	138,383					$	1,074,426
Industrial Solutions						781,362						344,379						207,933						1,333,674
Total						$	1,566,615					$	495,169					$	346,316					$	2,408,100
Year Ended December 31, 2020
Enterprise Solutions						$	636,492					$	130,982					$	104,943					$	872,417
Industrial Solutions						577,929						256,673						155,697						990,299
Total						$	1,214,421					$	387,655					$	260,640					$	1,862,716
Year Ended December 31, 2019
Enterprise Solutions						$	695,008					$	135,732					$	115,301					$	946,041
Industrial Solutions						742,563						274,030						168,644						1,185,237
Total						$	1,437,571					$	409,762					$	283,945					$	2,131,278

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 standalone selling price and recognized when or as each performance obligation is satisfied. Generally, we determine standalone selling price using the prices charged to customers on a standalone basis. In arrangements where software licenses with highly variable standalone selling prices are sold with either support or professional services, we generally determine the standalone selling price of the software license using the residual approach. Typically, payments are due after control transfers, which is less than one year from satisfaction of the performance obligation.

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

The amount of consideration we receive and revenue we recognize varies due to rebates, returns, and price adjustments. We estimate the expected rebates, returns, and price adjustments based on an analysis of historical experience, anticipated sales demand, and trends in product pricing. We adjust our estimate of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed. Adjustments to revenue for performance obligations satisfied in prior periods was not significant during the year ended December 31, 2021.

The following table presents estimated and accrued variable consideration:

						December 31, 2021						December 31, 2020
						(in thousands)
Accrued rebates included in accrued liabilities						$	55,525					$	32,192
Accrued returns included in accrued liabilities						12,530						13,016
Price adjustment recognized against gross accounts receivable						23,035						25,244

Depending on the terms of an arrangement, we may defer the recognition of a portion of the consideration received because we must satisfy a future performance obligation. Consideration allocated to support services under a support and maintenance contract is typically paid in advance and recognized ratably over the term of the service. The typical use of a time-elapsed unit of measure for support and maintenance contracts reflects the benefit and same pattern of transfer the customer receives from our services under this arrangement over the term of the contract. Consideration allocated to professional services is recognized when or as the services are performed depending on the terms of the arrangement. As of December 31, 2021, total deferred revenue was $86.8 million, and of this amount, $60.9 million is expected to be recognized within the next twelve months, and the remaining $25.9 million is long-term and will be recognized over a period greater than twelve months.

The following table presents deferred revenue activity (in thousands):

Balance at December 31, 2019						$	70,070
New deferrals						101,066
Revenue recognized						(93,488)
Balance at December 31, 2020						$	77,648
New deferrals						97,940
Acquisitions						7,172
Revenue recognized						(95,915)
Balance at December 31, 2021						$	86,845

Service-type warranties represent $9.6 million of the deferred revenue balance at December 31, 2021, and of this amount $4.1 million is expected to be recognized in the next twelve months, and the remaining $5.5 million is long-term and will be recognized over a period greater than twelve months.

At December 31, 2021, we did not have any material contract assets recorded in the consolidated balance sheets.

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OTN Systems N.V.

We acquired 100% of the shares of OTN Systems on January 29, 2021 for a purchase price, net of cash acquired, of $73.3 million, which was funded with cash on hand. OTN Systems, based in Olen, Belgium, is a leading provider of easy to use and highly-reliable network solutions tailored for specific applications in harsh, mission-critical environments. The acquisition of OTN Systems supports one of our key strategic priorities related to the growing demand for industrial automation by adding proprietary technology and mission-critical hardware and software products for more complete end-to-end solutions. The results of OTN Systems have been included in our Consolidated Financial Statements from January 29, 2021, and are reported within the Industrial Solutions segment. Belden assumed $1.8 million of OTN Systems' debt as part of the transaction, which was subsequently paid on the acquisition date. A subsidiary of OTN Systems includes a noncontrolling interest. Because OTN Systems has a controlling financial interest in the subsidiary, it is consolidated into our financial statements. The results that are attributable to the noncontrolling interest holder are presented as net income (loss) attributable to noncontrolling interests in the Consolidated Statements of Operations.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of January 29, 2021 (in thousands):

Receivables						$	6,009
Inventories						10,731
Other current assets						768
Property, plant, and equipment						602
Intangible assets						39,930
Goodwill						41,749
Operating lease right-of-use assets						4,144
Other long-lived assets						416
Total assets acquired						$	104,349
Accounts payable						$	6,884
Accrued liabilities						8,735
Long-term debt						1,841
Postretirement benefits						3,581
Deferred income taxes						2,980
Long-term operating lease liabilities						3,271
Other long-term liabilities						3,692
Total liabilities assumed						$	30,984
Net assets						73,365
Noncontrolling interests						20
Net assets attributable to Belden						$	73,345

The fair value of acquired receivables is $6.0 million, which is equivalent to its gross contractual amount.

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

For purposes of the above allocation, we based our estimate of the fair values for the acquired inventory, intangible assets, and postretirement benefits 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. 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 (Level 3 valuation).

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Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to the expansion of industrial automation product offerings in complete end-to-end solutions. Our tax basis in the acquired goodwill is zero.

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

						Fair Value						Amortization Period
						(In thousands)						(In years)
Intangible assets subject to amortization
Developed technologies						$	26,400					6.8
Customer relationships						6,200						15.0
Sales backlog						3,600						5.0
Trademarks						3,070						14.8
Non-compete agreements						660						2.0
Total intangible assets subject to amortization						$	39,930
Intangible assets not subject to amortization:
Goodwill						$	41,749
Total intangible assets not subject to amortization						$	41,749
Total intangible assets						$	81,679
Weighed average amortization period												8.5

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

Our consolidated revenues and income (loss) before taxes for the year ended December 31, 2021 included $37.6 million and $(1.8) million, respectively, from OTN Systems. For the year ended December 31, 2021, loss before taxes included $5.1 million of amortization of intangible assets, $3.0 million of severance and other restructuring costs, and $2.4 million of cost of sales related to the adjustment of acquired inventory to fair value for OTN Systems.

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

						Years Ended December 31,
						2021						2020
						(In thousands, except per share data)
						(Unaudited)
Revenues						$	2,409,851					$	1,900,646
Net income (loss) attributable to Belden common stockholders						65,377						(59,150)
Diluted income (loss) per share attributable to Belden common stockholders						$	1.44					$	(1.32)

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.

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We classify assets and liabilities as held for sale (disposal group) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. We also consider whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Brazil Oil & Gas Cable Business

During the first quarter of 2021, we committed to a plan to sell our oil and gas cable business in Brazil that met all of the criteria to classify the assets and liabilities of this business, formerly part of the Industrial Solutions segment, as held for sale. At such time, the carrying value of the disposal group exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $3.4 million. Therefore, we recognized an impairment charge equal to this amount in the first quarter of 2021. The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment. We completed the sale of our oil and gas cable business in Brazil during the second quarter of 2021 for $10.9 million, net of cash delivered with the business.

Grass Valley

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, is reported within discontinued operations. We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $113.0 million and $521.4 million in 2020 and 2019, 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.

We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 and recognized a loss of $9.9 million, net of $7.5 million income tax expense. The terms of the sale included gross cash consideration of $120.0 million, or approximately $56.2 million net of cash delivered with the business. The sale also included deferred consideration consisting of a $175.0 million seller’s note that is expected to mature in 2025, up to $88 million in PIK (payment-in-kind) interest on the seller’s note, and $178.0 million in potential earnout payments. Based upon a third party valuation specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note is $34.9 million, which we recorded in Other Long-Lived Assets. We accounted for the earnout under a loss recovery approach and did not record an asset as of the disposal date. Any subsequent recognition of an earnout will be based on the gain contingency guidance.

The seller’s note accrues PIK interest at an annual rate of 8.5%. During the year ended December 31, 2021, the seller’s note accrued interest of $13.9 million, which we reserved for based on our expected loss allowance methodology. During 2021, we sold the seller's note to a third party for $62.0 million and recognized a gain on sale of approximately $27.0 million.

The following table summarizes the operating results of the disposal group up to the July 2, 2020 disposal date for the years ended December 31, 2020 and 2019, respectively:

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We are organized around two global businesses: Enterprise Solutions and Industrial Solutions. Each of the global businesses represents a reportable segment. The segments design, manufacture, and market a portfolio of signal transmission solutions for mission critical applications used in a variety of end markets. We sell the products manufactured by our segments through distributors or directly to systems integrators, original equipment manufacturers (OEMs), end-users, and installers.

The key measures of segment profit or loss reviewed by our chief operating decision maker are Segment Revenues and Segment EBITDA. Segment Revenues represent non-affiliate revenues. 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 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.

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Operating Segment Information

Enterprise Solutions			Years ended December 31,
			2021						2020						2019
			(In thousands)
Segment revenues			$	1,074,426					$	872,415					$	946,041
Segment EBITDA			143,236						99,333						126,925
Depreciation expense			21,594						20,655						19,771
Amortization of intangibles			17,595						21,662						22,324
Amortization of software development intangible assets			94						245						175
Adjustments related to acquisitions and divestitures			(6,828)						125						592
Severance, restructuring, and acquisition integration costs			13,800						7,720						10,808
Acquisition of property, plant and equipment			36,726						25,223						42,289
Segment assets			563,141						462,615						487,125

Industrial Solutions			Years ended December 31,
			2021						2020						2019
			(In thousands)
Segment revenues			$	1,333,674					$	990,301					$	1,185,237
Segment EBITDA			227,946						147,626						226,110
Depreciation expense			24,346						21,815						20,638
Amortization of intangibles			20,751						42,733						52,285
Amortization of software development intangible assets			2,806						1,576						350
Adjustments related to acquisitions and divestitures			1,792						—						—
Severance, restructuring, and acquisition integration costs			10,092						4,538						15,736
Goodwill and other asset impairment			140,461						—						—
Acquisition of property, plant and equipment			47,401						44,675						35,189
Segment assets			652,188						522,637						504,482

Total Segments			Years ended December 31,
			2021						2020						2019
			(In thousands)
Segment revenues			$	2,408,100					$	1,862,716					$	2,131,278
Segment EBITDA			371,182						246,959						353,035
Depreciation expense			45,940						42,470						40,409
Amortization of intangibles			38,346						64,395						74,609
Amortization of software development intangible assets			2,900						1,821						525
Adjustments related to acquisitions and divestitures			(5,036)						125						592
Severance, restructuring, and acquisition integration costs			23,892						12,258						26,544
Goodwill and other asset impairment			140,461						—						—
Acquisition of property, plant and equipment			84,127						69,898						77,478
Segment assets			1,215,329						985,252						991,607

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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.

			Years Ended December 31,
			2021						2020						2019
			(In thousands)
Segment Revenues and Consolidated Revenues			$	2,408,100					$	1,862,716					$	2,131,278
Total Segment EBITDA			$	371,182					$	246,959					$	353,035
Goodwill and other asset impairment			(140,461)						—						—
Depreciation expense			(45,940)						(42,470)						(40,409)
Amortization of intangibles			(38,346)						(64,395)						(74,609)
Severance, restructuring, and acquisition integration costs (1)			(23,892)						(12,258)						(26,544)
Amortization of software development intangible assets			(2,900)						(1,821)						(525)
Adjustments related to acquisitions and divestitures (2)			5,036						(125)						(592)
Eliminations			(119)						(480)						(3,149)
Consolidated operating income			124,560						125,410						207,207
Interest expense, net			(62,695)						(58,888)						(55,814)
Non-operating pension benefit (cost)			4,476						(395)						1,017
Gain on sale of note receivable			27,036						—						—
Loss on debt extinguishment			(5,715)						—						—
Consolidated income from continuing operations before taxes			$	87,662					$	66,127					$	152,410

(1)See Note 15, Severance, Restructuring, and Acquisition Integration Activities, for details.

(2)In 2021, we collected $2.2 million of receivables associated with the sale of Grass Valley and acquisition of SPC that were previously written off, reduced the Opterna earn-out liability by $5.8 million, recognized cost of sales of $2.3 million related to purchase accounting adjustments of acquired inventory to fair value for the OTN Systems acquisition, and recognized a $0.6 million loss on the sale of tangible assets. In 2020 and 2019, we collectively recognized $0.1 million and $0.6 million, respectively, of cost of sales related to acquisition accounting adjustments of acquired inventory to fair value for both our SPC and Opterna acquisitions.

Below are reconciliations of other segment measures to the consolidated totals. 

			Years Ended December 31,
			2021						2020						2019
			(In thousands)
Total segment assets			$	1,215,329					$	985,252					$	991,607
Cash and cash equivalents			643,757						501,994						407,480
Goodwill			1,152,472						1,251,938						1,243,669
Intangible assets, less accumulated amortization			301,696						287,071						339,505
Deferred income taxes			32,321						29,536						25,216
Corporate assets			72,102						83,943						24,147
Assets of discontinued operations			—						—						375,135
Total assets			$	3,417,677					$	3,139,734					$	3,406,759
Total segment acquisition of property, plant and equipment			$	84,127					$	69,898					$	77,478
Corporate acquisition of property, plant and equipment			6,855						3,605						3,110
Discontinued operations acquisition of property, plant and equipment			—						16,712						29,414
Total acquisition of property, plant and equipment			$	90,982					$	90,215					$	110,002

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Geographic Information

The Company attributes foreign sales based on the location of the customer purchasing the product. The table below summarizes net sales and long-lived assets for the years ended December 31, 2021, 2020, and 2019 for the following countries: the U.S., Canada, China, and Germany. No other individual foreign country’s net sales or long-lived assets are material to the Company.

			United  States						Canada						China						Germany						All Other						Total
			(In thousands, except percentages)
Year ended December 31, 2021
Revenues			$	1,273,239					$	191,493					$	149,036					$	113,529					$	680,803					$	2,408,100
Percent of total revenues			53		%				8		%				6		%				5		%				28		%				100		%
Long-lived assets			$	181,002					$	12,666					$	46,776					$	37,208					$	106,986					$	384,638
Year ended December 31, 2020
Revenues			$	1,015,340					$	119,700					$	111,835					$	91,187					$	524,654					$	1,862,716
Percent of total revenues			55		%				6		%				6		%				5		%				28		%				100		%
Long-lived assets			$	163,731					$	32,063					$	44,824					$	63,100					$	114,286					$	418,004
Year ended December 31, 2019
Revenues			$	1,167,033					$	162,975					$	109,522					$	92,913					$	598,835					$	2,131,278
Percent of total revenues			55		%				8		%				5		%				4		%				28		%				100		%
Long-lived assets			$	152,214					$	16,452					$	40,247					$	48,272					$	101,179					$	358,364

Major Customer

Revenues generated in both the Enterprise Solutions and Industrial Solutions segments from our largest customer were approximately $374.8 million (16% of revenues), $271.6 million (15% of revenues), and $328.2 million (15% of revenues) for the years ended December 31, 2021, 2020, and 2019, respectively. At December 31, 2021 and 2020, we had $40.5 million and $17.5 million in accounts receivable outstanding from this customer, which represented approximately 10% and 6% of our total accounts receivable balance as of December 31, 2021 and 2020, respectively.

We have a 51% ownership percentage in a joint venture with Shanghai Hi-Tech Control System Co, Ltd (Hite). The purpose of the joint venture is to develop and provide certain Industrial Solutions products and integrated solutions to customers in China. Belden and Hite are committed to fund $1.53 million and $1.47 million, respectively, to the joint venture in the future. The joint venture is determined to not have sufficient equity at risk; therefore, it is considered a variable interest entity. We have determined that Belden is the primary beneficiary of the joint venture, due to both our ownership percentage and our control over the activities of the joint venture that most significantly impact its economic performance based on the terms of the joint venture agreement with Hite. Because Belden is the primary beneficiary of the joint venture, we have consolidated the joint venture in our financial statements. The results of the joint venture attributable to Hite’s ownership are presented as net income (loss) attributable to noncontrolling interest in the Consolidated Statements of Operations. The joint venture is not material to our consolidated financial statements as of or for the years ended December 31, 2021, 2020, or 2019.

Certain subsidiaries of Opterna included noncontrolling interests, which generated an immaterial amount of Opterna's annual revenues. Because we had a controlling financial interest in these subsidiaries, they were consolidated into our financial statements, and the results that were attributable to the noncontrolling interest holders were presented as net income (loss) attributable to noncontrolling interests in the Consolidated Statements of Operations. In 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 was paid in 2021. In November 2021, we purchased the remaining noncontrolling interests for a purchase price of $2.3 million. As of December 31, 2021, Opterna does not include any noncontrolling interests.

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

			Years Ended December 31,
			2021						2020						2019
			(In thousands)
Numerator:
Income from continuing operations			$	62,457					$	54,403					$	109,891
Less: Net income attributable to noncontrolling interest			392						104						239
Less: Preferred stock dividends			—						—						18,437
Income from continuing operations attributable to Belden common stockholders			62,065						54,299						91,215
Add: Loss from discontinued operations, net of tax			—						(99,513)						(486,667)
Add: Gain (loss) on disposal of discontinued operations, net of tax			1,860						(9,948)						—
Net income (loss) attributable to Belden common stockholders			$	63,925					$	(55,162)					$	(395,452)
Denominator:
Weighted average shares outstanding, basic			44,802						44,778						42,203
Effect of dilutive common stock equivalents			559						159						213
Weighted average shares outstanding, diluted			45,361						44,937						42,416

Basic weighted average shares outstanding is used to calculate diluted loss per share when the numerator is a loss because using diluted weighted average shares outstanding would be anti-dilutive.

For the years ended December 31, 2021, 2020, and 2019, diluted weighted average shares outstanding exclude outstanding equity awards of 1.1 million, 1.5 million, and 1.2 million, respectively, which are anti-dilutive. In addition, for the years ended December 31, 2021, 2020, and 2019, diluted weighted average shares outstanding do not include outstanding equity awards of 0.2 million, 0.4 million, and 0.3 million, respectively, because the related performance conditions have not been satisfied. Furthermore, for the year ended December 31, 2019, diluted weighted average shares outstanding do not include the weighted average impact of preferred shares that were convertible into 3.7 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.

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We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of accounts receivable that may not be collected is based upon the aging of 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 the years ended December 31, 2021 and 2020 (in thousands).

Balance at December 31, 2019						$	2,569
Adoption adjustment						1,011
Current period provision						2,282
Currency impact						39
Write-offs						(114)
Recoveries collected						(637)
Balance at December 31, 2020						$	5,150
Current period provision						1,960
Currency impact						(74)
Disposals						(190)
Recoveries collected						(227)
Write-offs						(367)
Balance at December 31, 2021						$	6,252

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The carrying values of property, plant and equipment were as follows: 

			December 31,
			2021						2020
			(In thousands)
Land and land improvements			$	27,579					$	29,321
Buildings and leasehold improvements			113,281						136,427
Machinery and equipment			622,002						608,618
Computer equipment and software			150,229						137,512
Construction in process			66,407						63,589
Gross property, plant and equipment			979,498						975,467
Accumulated depreciation			(629,684)						(606,847)
Net property, plant and equipment			$	349,814					$	368,620

Depreciation Expense

We recognized depreciation expense in income from continuing operations of $45.9 million, $42.5 million, and $40.4 million in 2021, 2020, and 2019, respectively.

Sale-Leaseback

During the fourth quarter of 2021, we sold certain real estate in Germany as part of a sale and leaseback transaction for €24.5 million (approximately $27.8 million) and recognized a $0.6 million loss on the sale. The lease is for a term of 10 years and as of December 31, 2021, had a total right-of-use asset balance of $25.3 million. When the assets met the held for sale criteria during the third quarter of 2021, we performed a recoverability test and determined that the carrying values of the assets were not recoverable and as a result, recognized a $2.3 million impairment charge to write them down to fair value. The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment.

Asset Impairment

During the first quarter of 2021, we committed to a plan to sell our oil and gas business in Brazil and recognized an impairment charge of $3.4 million (includes a goodwill impairment of $1.7 million). During the second quarter of 2021, we completed the sale of this business. See Note 5.

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well as vehicles and certain equipment. We make certain judgments in determining whether a contract contains a lease in accordance with ASU 2016-02. Our leases have remaining lease terms of less than 1 year to 15 years, some of which include options to extend the lease for a period of up to 15 years and some include options to terminate the leases within 1 year. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain any material residual value guarantees or material variable lease payments.

We have entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on our balance sheet as of December 31, 2021 or 2020, and 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.

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

We are party to a lease guarantee, whereby Belden has covenanted the lease payments for one of Snell Advanced Media's (SAM) property leases through its 2035 expiration date. The lease guarantee was executed in 2018 following the acquisition of SAM, which we subsequently sold on July 2, 2020 as part of the Grass Valley disposal group (see Note 5). This lease guarantee was retained by Belden and not transferred to Black Dragon Capital as part of the sale of Grass Valley. Belden would be required to make lease payments only if the primary obligor, Black Dragon Capital, fails to make the payments. As of December 31, 2021, the SAM lease has approximately $20.0 million of lease payments remaining. We have not recorded a liability associated with this guarantee.

The components of lease expense were as follows:

			Years Ended December 31,
			2021						2020						2019
			(In thousands)
Operating lease cost			$	20,340					$	14,348					$	14,622
Finance lease cost
Amortization of right-of-use asset			$	534					$	133					$	142
Interest on lease liabilities			14						17						22
Total finance lease cost			$	548					$	150					$	164

Supplemental cash flow information related to leases was as follows:

			Years Ended December 31,
			2021						2020						2019
			(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	17,641					$	15,489					$	14,594
Operating cash flows from finance leases			15						16						25
Financing cash flows from finance leases			3,151						158						258

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Supplemental balance sheet information related to leases was as follows:

			December 31,
			2021						2020
			(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets			$	79,464					$	54,787
Accrued liabilities			$	18,176					$	14,742
Long-term operating lease liabilities			67,225						46,398
Total operating lease liabilities			$	85,401					$	61,140
Finance leases:
Other long-lived assets, at cost			$	3,682					$	764
Accumulated depreciation			(563)						(483)
Other long-lived assets, net			$	3,119					$	281

Weighted Average Remaining Lease Term
Operating leases			6 years						5 years
Finance leases			4 years						3 years
Weighted Average Discount Rate
Operating leases			5.0%						6.6		%
Finance leases			4.3%						4.9		%

The following table summarizes maturities of lease liabilities as of December 31, 2021 (in thousands):

2022						$	22,838
2023						18,738
2024						15,307
2025						14,015
2026						10,987
Thereafter						17,967
Total						$	99,852

The following table summarizes maturities of lease liabilities as of December 31, 2020 (in thousands):

2021						$	19,250
2022						16,305
2023						12,552
2024						9,516
2025						8,718
Thereafter						8,901
Total						$	75,242

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The carrying values of intangible assets were as follows:

 

			December 31, 2021																		December 31, 2020
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(In thousands)																		(In thousands)
Goodwill			$	1,152,472					$	—					$	1,152,472					$	1,251,938					$	—					$	1,251,938
Definite-lived intangible assets subject to amortization:
Developed technology			$	471,931					$	(383,922)					$	88,009					$	428,187					$	(369,849)					$	58,338
Customer relationships			297,395						(143,197)						154,198						295,382						(128,796)						166,586
Trademarks			70,619						(41,771)						28,848						65,861						(36,539)						29,322
Backlog			14,580						(11,827)						2,753						11,421						(11,421)						—
In-service research and development			11,550						(10,997)						553						11,536						(9,774)						1,762
Non-compete agreements			618						(283)						335						—						—						—
Total intangible assets subject to amortization			$	866,693					$	(591,997)					$	274,696					$	812,387					$	(556,379)					$	256,008
Indefinite-lived intangible assets not subject to amortization:
Trademarks			$	27,000					$	—					$	27,000					$	31,063					$	—					$	31,063
Total intangible assets not subject to amortization			$	27,000					$	—					$	27,000					$	31,063					$	—					$	31,063
Intangible assets			$	893,693					$	(591,997)					$	301,696					$	843,450					$	(556,379)					$	287,071

Segment Allocation of Goodwill and Trademarks

The changes in the carrying amount of goodwill assigned to reporting units in our reportable segments are as follows:

 

			Enterprise Solutions						Industrial Solutions						Consolidated
			(In thousands)
Balance at December 31, 2019			$	470,031					$	773,638					$	1,243,669
Acquisitions and purchase accounting adjustments			2,420						—						2,420
Translation impact			2,296						3,553						5,849
Balance at December 31, 2020			$	474,747					$	777,191					$	1,251,938
Acquisitions and purchase accounting adjustments			—						41,749						41,749
Impairment			—						(132,843)						(132,843)
Translation impact			(1,506)						(6,866)						(8,372)
Balance at December 31, 2021			$	473,241					$	679,231					$	1,152,472

The changes in the carrying amount of indefinite-lived trademarks are as follows:

			Enterprise Solutions						Industrial Solutions						Consolidated
			(In thousands)
Balance at December 31, 2019			$	27,000					$	13,106					$	40,106
Reclassify to definite-lived			—						(9,043)						(9,043)
Balance at December 31, 2020			$	27,000					$	4,063					$	31,063
Reclassify to definite-lived			—						(4,063)						(4,063)
Balance at December 31, 2021			$	27,000					$	—					$	27,000

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Annual Impairment Test

The annual measurement date for our goodwill and indefinite-lived intangible assets impairment test is our fiscal November month-end. For our 2021 goodwill impairment test, we performed a quantitative assessment for all six of our reporting units and determined the estimated fair values of our reporting units by calculating the present values of their estimated future cash flows using Level 3 inputs. We did not perform a qualitative assessment over our reporting units. We determined that the fair values for five of the six reporting units were in excess of their carrying values; therefore, we did not record any goodwill impairment for these reporting units. The estimated fair value for the Tripwire reporting unit in our Industrial Solutions segment was $131.2 million less than its carrying value, and as such, we recognized a goodwill impairment charge of $131.2 million during the fourth quarter of 2021. For the Tripwire reporting unit, we determined the estimated fair value by calculating the present value of estimated future cash flows, which was based in part on the assumed proceeds from a divestiture of Tripwire. On February 7, 2022, we signed an agreement to sell Tripwire. See Note 26. We did not recognize any goodwill impairment from continuing operations in 2020 or 2019 based upon the results of our annual goodwill impairment testing.

For our annual impairment test in 2021, the excess of the fair values over the carrying values for the reporting units other than Tripwire ranged from 51% - 436%. The assumptions used to estimate fair values were based on the past performance of the reporting unit as well as the projections incorporated in our strategic plan. Significant assumptions 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 assessments, the discount rates ranged from 11.3% to 13.7%, the 2022 to 2031 compounded annual revenue growth rates ranged from 3.8% to 9.7%, and the revenue growth rates beyond 2031 ranged from 2.0% to 3.0%. By their nature, these assumptions involve risks and uncertainties. There is inherent risk associated with using an income approach to estimate fair values. If actual results are significantly different from our estimates or assumptions, we may have to recognize additional impairment charges that could be material.

We test our indefinite-lived intangible asset, a trademark, for impairment on an annual basis during the fourth quarter. The accounting guidance related to impairment testing for such intangible assets allows for the performance of an optional qualitative assessment, similar to that described above for goodwill. We did not perform any qualitative assessments as part of our indefinite-lived intangible asset impairment testing for 2021. Rather, we performed a quantitative assessment over our indefinite-lived trademark in 2021. Under the quantitative assessments, we determined the fair value of the trademark using a relief from royalty methodology and compared the fair value to the carrying value. Significant assumptions to determine fair value included sales growth, royalty rates, and discount rates. We did not recognize any indefinite-lived intangible asset impairment charges in 2021, 2020, or 2019.

Disposal Group Impairment

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, previously included in our Enterprise Solutions segment, was reported within discontinued operations. We also ceased depreciating and amortizing the assets of the disposal group once they met the held for sale criteria in the fourth quarter of 2019. During 2019, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $521.4 million, which consisted of impairments to goodwill, customer relationships, and trademarks of $326.1 million, $14.4 million, and $1.6 million, respectively, as well as an impairment of the disposal group of $179.3 million ($180.4 million translated at year-end exchange rates). During 2020, we wrote down the carrying value of Grass Valley and recognized asset impairments totaling $113.0 million. 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, which was based in part on the assumed proceeds from a divestiture of Grass Valley. See Note 5.

Amortization Expense

We recognized amortization expense in income from continuing operations of $41.2 million, $66.2 million, and $74.6 million in 2021, 2020, and 2019, respectively. We expect to recognize annual amortization expense of $38.1 million in 2022, $36.1 million in 2023, $34.0 million in 2024, $29.5 million in 2025, and $24.9 million in 2026 related to our intangible assets balance as of December 31, 2021.

The weighted-average amortization period for our customer relationships, developed technology, trademarks, and in-service research and development is 18.2 years, 9.0 years, 8.8 years, and 5.0 years, respectively.

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Cost Reduction Program

We have executed a cost reduction program to streamline the organizational structure and invest in technology to drive productivity. We recognized $5.8 million, $4.0 million, and $19.6 million of severance and other restructuring costs for this program during the years ended December 31, 2021, 2020, and 2019, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments. The cost reduction program is substantially complete and has delivered a reduction in selling, general, and administrative expenses of approximately $60 million on an annual basis. We expect to recognize costs of approximately $3 million for this program in 2022.

Acquisition Integration Program

We are integrating our recent acquisitions such as OTN Systems, SPC, and Opterna with our existing businesses. The restructuring and integration activities are focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $12.6 million, $4.9 million, and $6.1 million of severance and other restructuring costs for this program during the years ended December 31, 2021, 2020, and 2019, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments. We do not expect to incur significant incremental costs for this program in 2022.

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The following table summarizes the costs by segment of the programs described above as well as other immaterial programs and acquisition integration activities:

 

			Severance						Other Restructuring and Integration Costs						Total Costs
									(In thousands)
Year Ended December 31, 2021
Enterprise Solutions			$	1,312					$	12,488					$	13,800
Industrial Solutions			4,119						5,973						10,092
Total			$	5,431					$	18,461					$	23,892
Year Ended December 31, 2020
Enterprise Solutions			$	1,345					$	6,374					$	7,719
Industrial Solutions			1,706						2,833						4,539
Total			$	3,051					$	9,207					$	12,258
Year Ended December 31, 2019
Enterprise Solutions			$	5,018					$	5,790					$	10,808
Industrial Solutions			15,736						—						15,736
Total			$	20,754					$	5,790					$	26,544

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

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

						Years ended December 31,
						2021						2020						2019
						(In thousands)
Cost of sales						$	11,308					$	704					$	3,425
Selling, general and administrative expenses						12,584						11,554						23,119
Total						$	23,892					$	12,258					$	26,544

Accrued Severance

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

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The carrying values of our long-term debt and other borrowing arrangements were as follows:

			December 31,
			2021						2020
			(In thousands)
Revolving credit agreement due 2026			$	—					$	—
Senior subordinated notes:
2.875% Senior subordinated notes due 2025			—						367,110
4.125% Senior subordinated notes due 2026			227,240						244,740
3.375% Senior subordinated notes due 2027			511,290						550,665
3.875% Senior subordinated notes due 2028			397,670						428,295
3.375% Senior subordinated notes due 2031			340,860						—
Total senior subordinated notes			1,477,060						1,590,810
Less unamortized debt issuance costs			(17,069)						(17,084)
Long-term debt			$	1,459,991					$	1,573,726

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Revolving Credit Agreement due 2026

In June 2021, we entered into an amended and restated Revolving Credit Agreement that provides a $300.0 million multi-currency asset-based revolving credit facility (the Revolver). The maturity date of the Revolver is June 2, 2026. The borrowing

base under the Revolver includes eligible accounts receivable; inventory; and property, plant and equipment of certain of our subsidiaries in the United States, Canada, Germany, the United Kingdom and the Netherlands. Interest on outstanding borrowings is variable, based upon LIBOR or other similar indices in foreign jurisdictions, plus a spread that ranges from 1.25%-1.75%, depending upon our leverage position. Outstanding borrowings in the U.S. and Canada may also, at our election,

be priced on a base rate plus a spread that ranges from 0.25% — 0.75%, depending on our leverage position. We pay a commitment fee on our available borrowing capacity of 0.25%. In the event we borrow more than 90% of our combined borrowing base or our borrowing base availability is less than $20.0 million, we are subject to a fixed charge coverage ratio covenant. We paid approximately $2.3 million of fees when we amended the Revolver, which are being amortized over the remaining term of the Revolver. As of December 31, 2021, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $274.2 million.

In April 2020, we borrowed $190.0 million on our Revolver out of an abundance of caution due to the initial uncertainties arising from the COVID-19 pandemic. As a result of improved and sufficient liquidity and cash flow, we fully repaid the borrowings during 2020 and as of December 31, 2020, we had no borrowings outstanding on the Revolver.

Senior Subordinated Notes

We had outstanding €300.0 million aggregate principal amount of 2.875% senior subordinated notes due 2025 (the 2025 Notes). In September 2021, we repurchased the full €300.0 million 2025 Notes outstanding for cash consideration of €300.0 million ($358.5 million), including a prepayment penalty, and recognized a $5.7 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

We have outstanding €200.0 million aggregate principal amount of 4.125% senior subordinated notes due 2026 (the 2026 Notes). The carrying value of the 2026 Notes as of December 31, 2021 is $227.2 million. The 2026 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The notes rank equal in right of payment with our senior subordinated notes due 2031, 2028, and 2027 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on April 15 and October 15 of each year.

We have outstanding €450.0 million aggregate principal amount of 3.375% senior subordinated notes due 2027 (the 2027 Notes). The carrying value of the 2027 Notes as of December 31, 2021 is $511.3 million. The 2027 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2027 Notes rank equal in right of payment with our senior subordinated notes due 2031, 2028, and 2026 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on January 15 and July 15 of each year.

We have outstanding €350.0 million aggregate principal amount of 3.875% senior subordinated notes due 2028 (the 2028 Notes). The carrying value of the 2028 Notes as of December 31, 2021 is $397.7 million. The 2028 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2028 Notes rank equal in right of payment with our senior subordinated notes due 2031, 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.

In July 2021, we completed an offering for €300.0 million ($356.0 million at issuance) aggregate principal amount of 3.375% senior subordinated notes due 2031 (the 2031 Notes). The carrying value of the 2031 Notes as of December 31, 2021 is $340.9 million. The 2031 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2031 Notes rank equal in right of payment with our senior subordinated notes due 2028, 2027, and 2026 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on January 15 and July 15 of each year, commencing January 15, 2022. We paid approximately $5.9 million of fees associated with the issuance of the 2031 Notes, which are being amortized over the life of the 2031 Notes using the effective interest method. We used the net proceeds from this offering, along with cash on hand, to fund the full redemption of the 2025 Notes - see further discussion above.

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The senior subordinated notes due 2026, 2027, 2028, and 2031 are redeemable after October 15, 2021, July 15, 2022, March 15, 2023, and July 15, 2026 respectively, at the following redemption prices as a percentage of the face amount of the notes: 

												Senior Subordinated Notes due
						2026												2027												2028												2031
												Year						Percentage						Year						Percentage						Year						Percentage						Year						Percentage
												2021						102.063		%				2022						101.688		%				2023						101.938		%				2026						101.688		%
												2022						101.375		%				2023						101.125		%				2024						101.292		%				2027						100.844		%
												2023						100.688		%				2024						100.563		%				2025						100.646		%				2028						100.422		%
												2024 and thereafter						100.000		%				2025 and thereafter						100.000		%				2026 and thereafter						100.000		%				2029 and thereafter						100.000		%

Fair Value of Long-Term Debt

The fair value of our senior subordinated notes as of December 31, 2021 was approximately $1,509.2 million based on quoted prices of the debt instruments in inactive markets (Level 2 valuation). This amount represents the fair values of our senior subordinated notes with a carrying value of $1,477.1 million as of December 31, 2021.

Maturities

Maturities on outstanding long-term debt and other borrowings during each of the five years subsequent to December 31, 2021 are as follows (in thousands):

2022			$	—
2023			—
2024			—
2025			—
2026			227,240
Thereafter			1,249,820
			$	1,477,060

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In addition to the above income tax expense associated with continuing operations, we also recorded an income tax benefit associated with discontinued operations of $1.9 million, $22.6 million, and $27.2 million, in 2021, 2020, and 2019, respectively.

			Years Ended December 31,
			2021						2020						2019
Effective income tax rate reconciliation from continuing operations:
United States federal statutory rate			21.0%						21.0%						21.0%
State and local income taxes			8.5%						(2.6)%						1.2%
Impact of change in tax contingencies			(1.3)%						2.3%						—%
Foreign income tax rate differences			1.9%						(38.2)%						(8.6)%
Impact of change in deferred tax asset valuation allowance			(49.4)%						2.3%						9.5%
Domestic permanent differences and tax credits			45.6%						33.3%						4.7%
Impact of share-based compensation			2.5%						1.4%						0.1%
Impact of CARES act			—%						(1.8)%						—%
			28.8%						17.7%						27.9%

In 2021, the most significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of a change in the deferred tax asset valuation allowance, primarily due to the release of a valuation allowance against the foreign tax credits in the U.S. and a pension deferred tax asset in a foreign jurisdiction.

An additional significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of domestic permanent differences and tax credits. We recognized a total income tax expense from domestic permanent differences and tax credits of $39.8 million in 2021, primarily associated with a goodwill impairment in the U.S., and our foreign income inclusions.

Foreign tax rate differences resulted in an income tax expense (benefit) of $1.7 million, $(25.3) million, and $(13.1) million in 2021, 2020, and 2019, respectively. Additionally, in 2021, 2020, and 2019, our income tax expense was reduced by $3.1 million, $4.0 million, and $3.9 million, respectively, due to a tax holiday for our operations in St. Kitts. The tax holiday in St. Kitts is scheduled to expire in 2023.

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If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation. However, it is our intent to permanently reinvest the earnings of our non-U.S. subsidiaries in those operations and for continued non-U.S. growth opportunities.

The components of deferred income were as follows:

			December 31,
			2021						2020
			(In thousands)
Components of deferred income tax balances:
Deferred income tax liabilities:
Plant, equipment, and intangibles			$	(105,986)					$	(92,271)
Right of use asset			(19,139)						(17,610)
			(125,125)						(109,881)
Deferred income tax assets:
Postretirement, pensions, and stock compensation			32,139						35,394
Reserves and accruals			19,617						24,388
Net operating loss, capital loss, and tax credit carryforwards			94,537						107,028
Lease liability			19,881						18,515
Valuation allowances			(68,719)						(84,308)
			97,455						101,017
Net deferred income tax liability			$	(27,670)					$	(8,864)

The net decrease in deferred tax assets related to net operating loss, capital loss, and tax credit carryforwards is primarily due to the utilization of foreign tax credits during the year.

The net decrease in deferred tax valuation allowances is primarily due to the release of the valuation allowance against the foreign tax credit as we expect we will have sufficient foreign source income to utilize the foreign tax credits as a result of tax planning strategies. The remaining valuation allowances are primarily related to the capital losses in the U.S. and net operating losses in foreign jurisdictions.

As of December 31, 2021, we had $163.9 million of gross net operating loss carryforwards and $17.2 million of tax credit carryforwards. Unless otherwise utilized, net operating loss carryforwards will expire upon the filing of the tax returns for the following respective years: $1.4 million in 2021, $12.9 million between 2022 and 2024, and $99.8 million between 2025 and 2041. Net operating loss with an indefinite carryforward period total $49.8 million. Of the $163.9 million in net operating loss carryforwards, we have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $102.2 million of these net operating loss carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the net operating loss carryforwards.

Unless otherwise utilized, tax credit carryforwards of $17.2 million will expire as follows: $0.6 million in 2021, $1.1 million between 2022 and 2024, and $11.1 million between 2025 and 2041. Tax credit carryforwards with an indefinite carryforward period total $4.4 million. We have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $12.0 million of these tax credit carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the tax credit carryforwards.

As of December 31, 2021, we had $227.1 million of gross capital loss carryforwards in the U.S. with a full valuation allowance as we do not expect to be able to utilize the capital loss prior to expiration.

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The following tables summarize our net operating losses carryforwards and tax credit carryforwards as of December 31, 2021 by jurisdiction:

			Net Operating Loss Carryforwards
			(In thousands)
Australia			$	10,134
Belgium			5,069
Germany			14,718
Netherlands			3,975
Other			16,547
United Kingdom			11,737
United States - Federal and various states			101,670
Total			$	163,850

			Tax Credit Carryforwards
			(In thousands)
Belgium			$	1,088
Canada			663
United States			15,416
Total			$	17,167

In 2021, we recognized a net $2.8 million decrease to reserves for uncertain tax positions. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

			2021						2020
			(In thousands)
Balance at beginning of year			$	8,573					$	6,779
Additions based on tax positions related to the current year			422						548
Additions for tax positions of prior years			168						1,574
Reductions for tax positions of prior years - Settlement			(3,264)						(328)
Reduction for tax positions of prior years - Statute of limitations			(78)						—
Balance at end of year			$	5,821					$	8,573

The balance of $5.8 million at December 31, 2021 reflects tax positions that, if recognized, would impact our effective tax rate.

Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses, respectively. We have approximately $0.0 million and $0.2 million accrued for the payment of interest and penalties as of December 31, 2021 and 2020, respectively.

Our federal tax return for the tax years 2017 and later remain subject to examination by the Internal Revenue Service. Our state and foreign income tax returns for the tax years 2011 and later remain subject to examination by various state and foreign tax authorities.

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Benefits provided to employees under defined contribution plans include cash and stock contributions by the Company based on either hours worked by the employee or a percentage of the employee’s compensation. Defined contribution expense for 2021, 2020, and 2019 was $13.6 million, $10.0 million, and $12.1 million, respectively.

We sponsor unfunded postretirement medical and life insurance benefit plans for certain of our employees in Canada and the U.S. The medical benefit portion of the U.S. plan is only for employees who retired prior to 1989 as well as certain other employees who were near retirement and elected to receive certain benefits.

The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets as well as a statement of the funded status and balance sheet reporting for these plans.

			Pension Benefits												Other Benefits
Years Ended December 31,			2021						2020						2021						2020
									(In thousands)
Change in benefit obligation:
Benefit obligation, beginning of year			$	(492,925)					$	(461,352)					$	(29,498)					$	(29,470)
Service cost			(3,953)						(3,930)						(33)						(33)
Interest cost			(7,512)						(9,729)						(727)						(809)
Participant contributions			(143)						(73)						(4)						(5)
Actuarial gain (loss)			19,778						(42,284)						1,391						(110)
Acquisitions and divestitures			(12,886)						(910)						—						—
Settlements			5,855						26,970						—						—
Curtailments			—						236						—						—
Plan amendments			—						(226)						—						—
Foreign currency exchange rate changes			7,226						(15,345)						(227)						(427)
Benefits paid			12,726						13,718						1,473						1,356
Benefit obligation, end of year			$	(471,834)					$	(492,925)					$	(27,625)					$	(29,498)

 

			Pension Benefits												Other Benefits
Years Ended December 31,			2021						2020						2021						2020
									(In thousands)
Change in plan assets:
Fair value of plan assets, beginning of year			$	361,802					$	355,726					$	—					$	—
Actual return on plan assets			32,467						32,470						—						—
Employer contributions			11,618						6,393						1,469						1,351
Plan participant contributions			143						73						4						5
Acquisitions and divestitures			9,339						—						—						—
Settlements			(5,790)						(26,945)						—						—
Foreign currency exchange rate changes			(2,827)						7,803						—						—
Benefits paid			(12,726)						(13,718)						(1,473)						(1,356)
Fair value of plan assets, end of year			$	394,026					$	361,802					$	—					$	—

Funded status, end of year			$	(77,808)					$	(131,123)					$	(27,625)					$	(29,498)
Amounts recognized in the balance sheets:
Prepaid benefit cost			$	20,177					$	4,780					$	—					$	—
Accrued benefit liability, current			(3,173)						(3,558)						(1,440)						(1,443)
Accrued benefit liability, noncurrent			(94,812)						(132,345)						(26,185)						(28,055)
Net funded status			$	(77,808)					$	(131,123)					$	(27,625)					$	(29,498)

The accumulated benefit obligation for all defined benefit pension plans was $494.7 million and $518.4 million at December 31, 2021 and 2020, respectively.

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The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with a projected benefit obligation in excess of plan assets were $265.5 million, $261.3 million, and $167.5 million, respectively, as of December 31, 2021 and $463.2 million, $459.2 million, and $297.8 million, respectively, as of December 31, 2020.

The accumulated benefit obligation and fair value of plan assets for other postretirement benefit plans with an accumulated benefit obligation in excess of plan assets were $27.6 million and $0.0 million, respectively, as of December 31, 2021 and were $29.5 million and $0.0 million, respectively, as of December 31, 2020. The following table provides the components of net periodic benefit costs for the plans.

			Pension Benefits																		Other Benefits
Years Ended December 31,			2021						2020						2019						2021						2020						2019
															(In thousands)
Components of net periodic benefit cost:
Service cost			$	3,953					$	3,930					$	3,668					$	33					$	33					$	35
Interest cost			7,512						9,729						12,261						727						809						960
Expected return on plan assets			(16,337)						(16,357)						(15,699)						—						—						—
Amortization of prior service cost			110						190						169						—						—						—
Settlement loss (gain)			(18)						3,153						(7)						—						—						—
Other adjustments			(191)						—						—						—						—						—
Net loss (gain) recognition			3,764						2,930						1,432						(43)						(59)						(133)
Net periodic benefit cost (income)			$	(1,207)					$	3,575					$	1,824					$	717					$	783					$	862

We recorded settlement losses totaling $3.2 million during 2020. The settlement losses were the result of lump-sum payments to participants that exceeded the sum of the pension plan's respective annual service cost and interest cost amounts.

The following table presents the assumptions used in determining the benefit obligations and the net periodic benefit cost amounts.

			Pension Benefits												Other Benefits
			Years Ended December 31,												Years Ended December 31,
			2021						2020						2021						2020
Weighted average assumptions for benefit obligations at year end:
Discount rate			2.0		%				1.5		%				2.9		%				2.5		%
Salary increase			3.3		%				3.3		%				N/A						N/A
Cash balance interest credit rate			4.7		%				4.6		%				N/A						N/A
Weighted average assumptions for net periodic cost for the year:
Discount rate			1.5		%				2.2		%				2.5		%				2.9		%
Salary increase			3.2		%				3.5		%				N/A						N/A
Cash balance interest credit rate			4.6		%				4.0		%				N/A						N/A
Expected return on assets			4.6		%				4.9		%				N/A						N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year			N/A						N/A						5.4		%				5.5		%
Rate that the cost trend rate gradually declines to			N/A						N/A						5.0		%				5.0		%
Year that the rate reaches the rate it is assumed to remain at			N/A						N/A						2027						2026

Plan assets are invested using a total return investment approach whereby a mix of equity securities and fixed income securities are used to preserve asset values, diversify risk, and achieve our target investment return benchmark. Investment strategies and asset allocations are based on consideration of the plan liabilities, the plan’s funded status, and our financial condition. Investment performance and asset allocation are measured and monitored on an ongoing basis. Plan assets are managed in a balanced portfolio comprised of two major components: an asset growth portion and an asset protection portion. The expected role of asset growth investments is to maximize the long-term real growth of assets, while the role of asset protection

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investments is to generate current income, provide for more stable periodic returns, and provide some protection against a permanent loss of capital.

Absent regulatory or statutory limitations, the target asset allocation for the investment of the assets for our ongoing pension plans is 30-50% in asset protection investments and 50-70% in asset growth investments and for our pension plans where the majority of the participants are in payment or terminated vested status is 50-90% in asset protection investments and 10-50% in asset growth investments. Asset growth investments include a diversified mix of U.S. and international equity, primarily invested through investment funds. Asset protection investments include government securities and investment grade corporate bonds, primarily invested through investment funds and group insurance contracts. We develop our expected long-term rate of return assumptions based on the historical rates of returns for securities and instruments of the type in which our plans invest.

The expected long-term rate of return on plan assets reflects the average rate of earnings expected on the invested assets and future assets to be invested to provide for the benefits included in the projected benefit obligation. We use historic plan asset returns combined with current market conditions to estimate the rate of return. The expected rate of return on plan assets is a long-term assumption based on an analysis of historical and forward looking returns considering the plan’s actual and target asset mix.

The following table presents the fair values of the pension plan assets by asset category. 

			December 31, 2021																								December 31, 2020
			Fair Market Value at December 31, 2021						Quoted  Prices in Active Markets for Identical Assets (Level 1)						Significant Observable Inputs (Level 2)						Investments Measured at Net Asset Value									Fair Market Value at December 31, 2020						Quoted  Prices in Active Markets for Identical Assets (Level 1)						Significant Observable Inputs (Level 2)						Investments Measured at Net Asset Value
			(In thousands)																								(In thousands)
Asset Category:
Equity securities(a)
U.S. equities fund			$	77,687					$	2,913					$	—					$	74,774								$	86,059					$	3,012					$	—					$	83,047
Non-U.S. equities fund			77,299						6,267						—						71,032									61,630						5,602						—						56,028
Debt securities(b)
Government bond fund			64,255						—						731						63,524									98,418						—						772						97,646
Corporate bond fund			108,729						—						11,507						97,222									82,434						—						12,150						70,284
Fixed income fund(c)			16,939						—						—						16,939									7,320						—						—						7,320
Liability driven investment fund(d)			22,713						—						—						22,713									—						—						—						—
Other investments(e)			15,103						—						—						15,103									17,367						—						—						17,367
Cash & equivalents			11,301						5,271						—						6,030									8,574						3,230						—						5,344
Total			$	394,026					$	14,451					$	12,238					$	367,337								$	361,802					$	11,844					$	12,922					$	337,036

 

(a)This category includes investments in actively managed and indexed investment funds that invest in a diversified pool of equity securities of companies located in the U.S., Canada, Western Europe and other developed countries throughout the world. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. Equity securities held in separate accounts are valued based on observable quoted prices on active exchanges.

(b)This category includes investments in investment funds that invest in U.S. treasuries; other national, state and local government bonds; and corporate bonds of highly rated companies from diversified industries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(c)This category includes guaranteed insurance contracts and annuity policies.

(d)This category includes investments in funds that are designed to provide leveraged exposure to changes in interest rates. The fund purchases shares of funds that invest in government bonds, debt repurchase agreements, total return swaps and interest rate swaps.

(e)This category includes investments in hedge funds that pursue multiple strategies in order to provide diversification and balance risk/return objectives, real estate funds, and private equity funds.

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The plans do not invest in individual securities. All investments are through well diversified investment funds. As a result, there are no significant concentrations of risk within the plan assets.

The following table reflects the benefits as of December 31, 2021 expected to be paid in each of the next five years and in the aggregate for the five years thereafter from our pension and other postretirement plans. Because our other postretirement plans are unfunded, the anticipated benefits with respect to these plans will come from our own assets. Because our pension plans are primarily funded plans, the anticipated benefits with respect to these plans will come primarily from the trusts established for these plans. 

			Pension Plans						Other Plans
			(In thousands)
2022			$	19,363					$	1,460
2023			20,383						1,458
2024			23,199						1,463
2025			20,531						1,468
2026			21,461						1,472
2027-2031			108,900						7,463
Total			$	213,837					$	14,784

We anticipate contributing $11.8 million and $1.5 million to our pension and other postretirement plans, respectively, during 2022.

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at December 31, 2021 and the changes in these amounts during the year ended December 31, 2021 are as follows. 

			Pension Benefits						Other Benefits
			(In thousands)
Components of accumulated other comprehensive loss:
Net actuarial loss (gain)			$	39,995					$	(1,770)
Net prior service cost			2,661						—
			$	42,656					$	(1,770)

			Pension Benefits						Other Benefits
			(In thousands)
Changes in accumulated other comprehensive loss:
Net actuarial loss (gain), beginning of year			$	80,671					$	(436)
Amortization of actuarial gain (loss)			(3,764)						43
Actuarial gain			(19,778)						(1,391)
Asset gain			(16,130)						—
Settlement gain recognized			18						—
Other adjustments			191						—
Currency impact			(1,213)						14
Net actuarial loss (gain), end of year			$	39,995					$	(1,770)
Prior service cost, beginning of year			$	2,798					$	—
Amortization of prior service cost			(110)						—
Currency impact			(27)						—
Prior service cost, end of year			$	2,661					$	—

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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, 2019			$	(18,225)					$	(45,193)					$	(63,418)
Other comprehensive loss attributable to Belden before reclassifications			(123,101)						(20,800)						(143,901)
Amounts reclassified from accumulated other comprehensive income			10,145						5,323						15,468
Net current period other comprehensive loss attributable to Belden			(112,956)						(15,477)						(128,433)
Balance at December 31, 2020			$	(131,181)					$	(60,670)					$	(191,851)
Other comprehensive loss attributable to Belden before reclassifications			$	90,690					$	28,653					$	119,343
Amounts reclassified from accumulated other comprehensive income			(977)						2,919						1,942
Net current period other comprehensive loss attributable to Belden			89,713						31,572						121,285
Balance at December 31, 2021			$	(41,468)					$	(29,098)					$	(70,566)

The following table summarizes the effects of reclassifications from accumulated other comprehensive income (loss):

			Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (2)						Affected Line Item in the Consolidated Statements of Operations and Comprehensive Income (Loss)
			(In thousands)
Amortization of pension and other postretirement benefit plan items:
Actuarial losses			$	3,721					(1)
Prior service cost			110						(1)
Total before tax			3,831
Tax benefit			(912)
Total net of tax			$	2,919

(1)The amortization of these accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit costs (see Note 19).

(2)In addition, we reclassified $1.0 million of accumulated foreign currency translation gains associated with the sale of our oil and gas cable business in Brazil.

Compensation cost charged against income, primarily selling, general and administrative expense, and the income tax benefit recognized for our share-based compensation arrangements is included below:

 

			Years Ended December 31,
			2021						2020						2019
			(In thousands)
Total share-based compensation cost			$	24,871					$	19,171					$	16,802
Income tax benefit			5,919						4,563						3,999

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We currently have outstanding stock appreciation rights (SARs), restricted stock units with service vesting conditions, restricted stock units with performance vesting conditions, and restricted stock units with market conditions. We grant SARs with an exercise price equal to the closing market price of our common stock on the grant date. Generally, SARs may be converted into shares of our common stock in equal amounts on each of the first three anniversaries of the grant date and expire 10 years from the grant date. Certain awards provide for accelerated vesting in certain circumstances, including following a change in control of the Company. Restricted stock units with service conditions generally vest 3-5 years from the grant date. Restricted stock units issued based on the attainment of the performance conditions generally vest on the second or third anniversary of their grant date. Restricted stock units issued based on the attainment of market conditions generally vest on the third anniversary of their grant date.

We recognize compensation cost for all awards based on their fair values. The fair values for SARs are estimated on the grant date using the Black-Scholes-Merton option-pricing formula which incorporates the assumptions noted in the following table. Expected volatility is based on historical volatility, and expected term is based on historical exercise patterns of SAR holders. The fair value of restricted stock units with service vesting conditions or performance vesting conditions is the closing market price of our common stock on the date of grant. We estimate the fair value of certain restricted stock units with market conditions using a Monte Carlo simulation valuation model with the assistance of a third party valuation firm. Compensation costs for awards with service conditions are amortized to expense using the straight-line method. Compensation costs for awards with performance conditions and graded vesting are amortized to expense using the graded attribution method. 

During the year ended December 31, 2020, certain restricted stock units with performance vesting conditions were modified as a result of approved changes to the performance targets. There were no other changes to the terms of the restricted stock units. The modification was applicable to all employees who were previously granted the affected restricted stock units. Prior to the modification, the performance targets were not expected to be achieved. Therefore, we had not recognized any expense for these restricted stock units on a cumulative basis. As of the modification date, we expected to recognize total incremental compensation expense as a result of the modification of $4.4 million. The expense will be recognized over the applicable service periods, which extend to 2023.

			Years Ended December 31,
			2021						2020						2019
			(In thousands, except weighted average fair value and assumptions)
Weighted-average fair value of SARs granted			$	18.30					$	18.29					$	22.31
Total intrinsic value of SARs exercised			1,581						545						354
Tax benefit from SARs exercised			327						26						176
Weighted-average fair value of restricted stock units granted			51.76						41.75						64.61
Total fair value of restricted stock units vested			12,623						6,600						10,325
Expected volatility			45.34		%				37.55		%				35.05		%
Expected term (in years)			5.7						5.7						5.7
Risk-free rate			0.70		%				1.44		%				2.56		%
Dividend yield			0.44		%				0.39		%				0.32		%

			SARs																								Restricted Stock Units
			Number						Weighted- Average Exercise Price						Weighted- Average Remaining Contractual Term						Aggregate Intrinsic Value						Number						Weighted- Average Grant-Date Fair Value
			(In thousands, except exercise prices, fair values, and contractual terms)
Outstanding at January 1, 2021			1,311						$	64.06					n/a						n/a						953						$	52.50
Granted			205						44.93						n/a						n/a						335						51.76
Exercised or converted			(155)						42.47						n/a						n/a						(269)						46.86
Forfeited or expired			(117)						68.59						n/a						n/a						(55)						48.61
Outstanding at December 31, 2021			1,244						$	63.18					4.7						$	9,582					964						$	50.08
Vested or expected to vest at December 31, 2021			313						$	48.46					8.7						$	5,399
Exercisable or convertible at December 31, 2021			931						$	68.12					3.4						$	4,183

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At December 31, 2021, the total unrecognized compensation cost related to all nonvested awards was $25.7 million. That cost is expected to be recognized over a weighted-average period of 2.0 years.

Historically, we have issued treasury shares, if available, to satisfy award conversions and exercises.

Concentrations of Credit

We sell our products to many customers in several markets across multiple geographic areas. The ten largest customers, of which seven are distributors, constitute in aggregate approximately 42%, 40%, and 39% of revenues in 2021, 2020, and 2019, respectively.

Unconditional Commodity Purchase Obligations

At December 31, 2021, we were committed to purchase approximately 4.8 million pounds of copper at an aggregate fixed cost of $20.9 million. At December 31, 2021, this fixed cost was $0.3 million less than the market cost that would be incurred on a spot purchase of the same amount of copper. The aggregate market cost was based on the current market price of copper obtained from the New York Mercantile Exchange.

Labor

Approximately 27% of our labor force is covered by collective bargaining agreements at various locations around the world. Approximately 18% of our labor force is covered by collective bargaining agreements that we expect to renegotiate during 2022.

Fair Value of Financial Instruments

General

Various claims are asserted against us in the ordinary course of business including those pertaining to income tax examinations, product liability, customer, employment, vendor, and patent matters. Based on facts currently available, management believes that the disposition of the claims that are pending or asserted will not have a materially adverse effect on our financial position, operating results, or cash flow.

Letters of Credit, Guarantees and Bonds

At December 31, 2021, we were party to unused standby letters of credit, bank guarantees, and surety bonds totaling $17.8 million, $6.9 million, and $3.3 million, respectively. These commitments are generally issued to secure obligations we have for a variety of commercial reasons, such as workers compensation self-insurance programs in several states and the importation and exportation of product.

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Supplemental cash flow information is as follows:

			Years Ended December 31,
			2021						2020						2019
									(In thousands)
Income tax refunds received			$	6,120					$	4,460					$	4,695
Income taxes paid			(40,139)						(25,259)						(40,760)
Interest paid			(54,176)						(53,029)						(51,160)

Definitive Agreement to Divest Tripwire

On February 7, 2022, we signed a definitive agreement to divest Tripwire for $350 million in cash. The transaction is expected to close in the first quarter of 2022. During the fourth quarter of 2021, we recognized a goodwill impairment charge for the Tripwire reporting unit of $131.2 million, representing the reporting unit's excess carrying value over its present value of estimated future cash flows, which was based in part on the assumed proceeds from the divestiture. The impairment charge was excluded from Segment EBITDA of our Industrial Solutions segment.

The following table provides the major classes of assets and liabilities of the Tripwire disposal group:

			December 31, 2021						December 31, 2020
			(In thousands)
Assets:
Cash and cash equivalents			$	2,194					$	1,328
Receivables, net			28,773						26,001
Inventories, net			150						126
Other current assets			7,418						9,798
Property, plant and equipment, less accumulated depreciation			6,250						7,588
Operating lease right-of-use assets			3,893						5,151
Goodwill			331,024						462,202
Intangible assets, less accumulated amortization			63,541						67,979
Deferred income taxes			834						800
Other long-lived assets			5,325						2,653
Total assets of Tripwire disposal group			$	449,402					$	583,626
Liabilities:
Accounts payable			$	6,458					$	4,868
Accrued liabilities			56,208						61,769
Deferred income taxes			10,964						12,599
Long-term operating lease liabilities			5,257						7,019
Other long-term liabilities			20,192						17,214
Total liabilities of Tripwire disposal group			$	99,079					$	103,469

The Tripwire disposal group also had $3.4 million and $3.5 million of accumulated other comprehensive income as of December 31, 2021 and 2020, respectively.

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The Tripwire disposal group had revenues of $106.8 million, $110.5 million, and $133.0 million for the years ended December 31, 2021, 2020, and 2019, respectively. The Tripwire disposal group had losses before taxes of $(139.1) million, $(24.8) million and $(16.0) million for the years ended December 31, 2021, 2020, and 2019, respectively. In 2021, loss before taxes includes a goodwill impairment charge of $131.2 million. In addition, the Tripwire disposal group recognized depreciation and amortization expense of $11.9 million, $39.4 million, and $47.9 million during the years ended December 31, 2021, 2020, and 2019, respectively.

Acquisition of macmon secure GmbH

On January 17, 2022, we acquired macmon secure GmbH (Macmon), a leading provider of products and services that secure network infrastructures in a variety of mission critical industries, for approximately $43.3 million, net of cash acquired. The acquisition was funded with cash on hand. Headquartered in Berlin, Germany, Macmon brings proven products and technologies that protect network infrastructure and extend our offerings in the areas of segmentation, zoning and access control.

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