Published: 2023-02-24 00:00:00 ET

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Business Description

Belden Inc. (the Company, us, we, or our) is a leading global supplier of network infrastructure solutions built around two global businesses – Enterprise Solutions and Industrial Automation Solutions. We’re moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions. We are aligned with attractive secular growth markets, positioned to provide comprehensive solutions that drive customer outcomes, focused on new product innovation and technology leadership, and committed to sustainable ESG practices.

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

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

During 2022, 2021, and 2020 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 2022.

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, 2022 and 2021, we did not have any such cash equivalents on hand. The primary objective of our investment activities is to preserve our capital for the purpose of funding operations. We do not enter into investments for trading or speculative purposes.

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, such as price reductions, at December 31, 2022 and 2021 totaled $24.3 million and $23.4 million, respectively. Unprocessed Changes recognized as accrued liabilities, such as product returns, at December 31, 2022 and 2021 totaled $11.7 million and $12.5 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, 2022 and 2021, the allowance for doubtful accounts totaled $8.0 million and $4.9 million, respectively. We also recognized bad debt expense, net of recoveries, in selling, general and administrative expenses of $6.5 million, $0.4 million, and $2.3 million in 2022, 2021, and 2020, respectively.

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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, 2022 and 2021 totaled $45.9 million and $45.7 million, respectively.

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 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 and certain trademarks. 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 20 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 assets 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 2022, we performed a qualitative assessment over five of our reporting units.

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For our annual impairment test in 2022, we performed a quantitative assessment for one of our reporting units. Under a quantitative assessment for goodwill impairment, we determine the fair value using the income approach (using Level 3 inputs). 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 fair value over the carrying value for the reporting unit tested under the quantitative income approach was 48%. Using both an income approach and market approach, we determined that there was no impairment during 2022. During 2021 and 2020, we did not recognize any goodwill impairment from continuing operations other than a $1.7 million impairment in 2021 in connection with the sale of our oil and gas business in Brazil. See Notes 5 and 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 2022, 2021, or 2020. 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 2022, 2021, or 2020 other than a $1.0 million impairment in 2021 in connection with the sale of our oil and gas business in Brazil. See Note 5. Discontinued operations includes an impairment charge in 2021 of $131.2 million related to the Tripwire divestiture and an impairment charge in 2020 of $113.0 million related to the Grass Valley divestiture. 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, 2022 and 2021 totaled $55.6 million and $55.5 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.

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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.

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.

Equity Method Investment

During 2022, we invested $20.0 million in Litmus for a noncontrolling ownership interest. Litmus provides the critical data connectivity needed to monitor, visualize, analyze, and integrate industrial data. We account for this investment using the equity method of accounting. The carrying value of our investment is included in Other Long-Lived Assets in the Consolidated Balance Sheets. The results of our investment in Litmus were not material to our consolidated financial statements for the year ended December 31, 2022.

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.

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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 $13.7 million, $10.3 million, and $9.9 million for 2022, 2021, and 2020, respectively.

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, 2022, the valuation allowance of $142.3 million was primarily related to net operating losses and capital losses that we do not currently 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.

On August 16, 2022, the Inflation Reduction Act of 2022 (the Act) was signed into law. We are evaluating the effect that the Act will have on our consolidated financial statements and related disclosures. None of the tax provisions of the Act are expected to have a material impact to our consolidated financial statements and related disclosures.

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Current-Year Adoption of Accounting Pronouncements

None of the accounting pronouncements that became effective during 2022 had a material impact to our consolidated financial statements or disclosures.

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						Industrial Automation						Smart Buildings						Total  Revenues
Year Ended December 31, 2022
Enterprise Solutions						$	571,426					$	—					$	627,052					$	1,198,478
Industrial Automation Solutions						—						1,408,007						—						1,408,007
Total						$	571,426					$	1,408,007					$	627,052					$	2,606,485
Year Ended December 31, 2021
Enterprise Solutions						$	488,453					$	—					$	585,973					$	1,074,426
Industrial Automation Solutions						—						1,226,834						—						1,226,834
Total						$	488,453					$	1,226,834					$	585,973					$	2,301,260
Year Ended December 31, 2020
Enterprise Solutions						$	432,262					$	—					$	440,155					$	872,417
Industrial Automation Solutions						—						879,775						—						879,775
Total						$	432,262					$	879,775					$	440,155					$	1,752,192

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, 2022
Enterprise Solutions						$	915,491					$	149,327					$	133,660					$	1,198,478
Industrial Automation Solutions						816,508						372,473						219,026						1,408,007
Total						$	1,731,999					$	521,800					$	352,686					$	2,606,485
Year Ended December 31, 2021
Enterprise Solutions						$	785,253					$	150,790					$	138,383					$	1,074,426
Industrial Automation Solutions						703,790						323,915						199,129						1,226,834
Total						$	1,489,043					$	474,705					$	337,512					$	2,301,260
Year Ended December 31, 2020
Enterprise Solutions						$	636,492					$	130,982					$	104,943					$	872,417
Industrial Automation Solutions						494,743						238,300						146,732						879,775
Total						$	1,131,235					$	369,282					$	251,675					$	1,752,192

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. Typically, payments are due after control transfers.

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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. For example, our estimate of price adjustments is based on our historical price adjustments as a percentage of revenues and the average time period between the original sale and the issuance of the price adjustment. We adjust our estimate of revenue for variable consideration at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed. We adjust other current assets and cost of sales for the estimated level of returns. Adjustments to revenue for performance obligations satisfied in prior periods was not significant during the year ended December 31, 2022.

The following table presents estimated and accrued variable consideration:

						December 31, 2022						December 31, 2021
						(in thousands)
Accrued rebates included in accrued liabilities						$	55,559					$	55,520
Accrued returns included in accrued liabilities						11,700						12,500
Price adjustment recognized against gross accounts receivable						24,304						23,366

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. 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, 2022, total deferred revenue was $33.2 million, and of this amount, $26.2 million is expected to be recognized within the next twelve months, and the remaining $7.0 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, 2020						$	11,130
New deferrals						12,065
Acquisitions						7,172
Revenue recognized						(10,977)
Balance at December 31, 2021						$	19,390
New deferrals						30,472
Acquisitions						6,567
Revenue recognized						(23,186)
Balance at December 31, 2022						$	33,243

Service-type warranties represent $8.9 million of the deferred revenue balance at December 31, 2022, and of this amount $4.2 million is expected to be recognized in the next twelve months, and the remaining $4.7 million is long-term and will be recognized over a period greater than twelve months.

At December 31, 2022, we did not have any material contract assets recorded in the consolidated balance sheets.

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During 2022, we completed three acquisitions. On January 17, 2022, we acquired Macmon for $41.9 million, net of cash acquired. Macmon, based in Berlin, Germany, is a leading provider of products and services that secure network infrastructure in a variety of mission critical industries. On March 3, 2022, we acquired NetModule for $23.5 million, net of cash acquired. NetModule, based in Bern, Switzerland, is a leading provider of reliable, fast and secure wireless network infrastructures through advanced capabilities in 5G and WiFi6 technologies in a variety of mission critical industries with a strong focus on mass transit and intelligent traffic systems within the transportation vertical. On April 15, 2022, we acquired CAI for $19.0 million, net of cash acquired. CAI is headquartered in Anniston, Alabama and designs, manufactures, and sells a range of plug-in radio frequency filters used in outside plant hybrid fiber-coax nodes. The results of operations of each acquisition have been included in our results of operations from their respective acquisition dates. The three acquisitions were not material to our consolidated results of operations. Macmon and NetModule are included in the Industrial Automation Solutions segment, and CAI is included in the Enterprise Solutions segment. All three acquisitions were funded with cash on hand. The following table summarizes the estimated, preliminary fair values of the assets acquired and liabilities assumed for all three acquisitions in total as of their respective acquisition dates (in thousands):

Receivables						$	6,537
Inventory						8,278
Other current assets						345
Property, plant and equipment						2,342
Intangible assets						44,759
Goodwill						50,596
Operating lease right-of-use assets						6,167
Total assets acquired						$	119,024
Accounts payable						$	2,497
Accrued liabilities						6,888
Long-term debt						2,440
Deferred income taxes						11,460
Long-term operating lease liabilities						2,926
Other long-term liabilities						8,421
Total liabilities assumed						$	34,632
Net assets						$	84,392

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

The preliminary fair value of acquired receivables is $6.5 million, which is equivalent to its gross contractual amount. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.

For purposes of the above allocation, we based our preliminary estimate of the fair values for intangible assets on valuation studies performed by a third party valuation firm. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets (Level 3 valuation). Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to the expansion of industrial automation and broadband & 5G product offerings in end-to-end solutions. Our tax basis in the acquired goodwill is zero. The intangible assets related to the three acquisitions consisted of the following:

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						Fair Value						Amortization Period
						(In thousands)						(In years)
Intangible assets subject to amortization:
Developed technologies						$	26,626					4.0
Customer relationships						13,427						18.5
Trademarks						2,206						2.0
Sales backlog						2,300						0.9
Non-compete agreements						200						3.5
Total intangible assets subject to amortization						$	44,759
Intangible assets not subject to amortization:
Goodwill						$	50,596					n/a
Total intangible assets not subject to amortization						$	50,596
Total intangible assets						$	95,355
Weighted average amortization period												8.1

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

Opterna International Corp.

Tripwire

On February 22, 2022, we sold Tripwire for gross cash consideration of $350 million. The divestiture of Tripwire represented a strategic shift impacting our operations and financial results. As a result, the Tripwire disposal group, which was included in our Industrial Automation Solutions segment, is reported within discontinued operations. We recognized a loss on disposal of discontinued operations, net of tax of $9.2 million during 2022. The following table summarizes the operating results of the Tripwire disposal group up to the February 22, 2022 disposal date:

			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Revenues			$	12,067					$	106,840					$	110,524
Cost of sales			(3,256)						(24,321)						(22,857)
Gross profit			8,811						82,519						87,667
Selling, general and administrative expenses			(8,185)						(48,308)						(42,741)
Research and development expenses			(5,528)						(34,433)						(34,276)
Amortization of intangible assets			(638)						(7,716)						(35,354)
Asset impairments			—						(131,178)						—
Loss before taxes			$	(5,540)					$	(139,116)					$	(24,704)

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During the year ended December 31, 2022, the Tripwire disposal group did not have any capital expenditures and recognized share-based compensation expense of $0.2 million. During the year ended December 31, 2021, the Tripwire disposal group had capital expenditures of $6.1 million and recognized share-based compensation expense of $2.2 million. During the year ended December 31, 2020, the Tripwire disposal group had capital expenditures of $7.7 million and recognized share-based compensation expense of $2.6 million. The disposal group did not have any significant non-cash charges for investing activities during the years ended December 31, 2022, 2021, and 2020.

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

			December 31,
			2021
			(In thousands)
Assets:
Cash and cash equivalents			$	2,194
Receivables, net			28,773
Inventories, net			150
Other current assets			7,418
Property, plant and equipment, less accumulated depreciation			6,250
Operating lease right-of-use assets			3,893
Goodwill			331,024
Intangible assets, less accumulated amortization			63,541
Deferred income taxes			584
Other long-lived assets			5,325
Total assets of Tripwire disposal group			$	449,152
Liabilities:
Accounts payable			$	6,458
Accrued liabilities			56,208
Deferred income taxes			8,878
Long-term operating lease liabilities			5,257
Other long-term liabilities			20,192
Total liabilities of Tripwire disposal group			$	96,993

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

Brazil Oil & Gas Cable Business

During 2021, we sold 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 Automation 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 of $3.4 million (includes a goodwill impairment of $1.7 million and intangible asset impairment of $1.0 million) in 2021. The impairment charge was excluded from Segment EBITDA of our Industrial Automation Solutions segment. We completed the sale of our oil and gas cable business in Brazil during 2021 for $10.9 million, net of cash delivered with the business.

Grass Valley

During 2020, we sold Grass Valley to Black Dragon Capital for gross cash consideration of $120.0 million, or approximately $56.2 million net of cash delivered with the business. We recognized a loss of $9.9 million, net of $7.5 million income tax expense and recognized asset impairments totaling $113.0 million during the year ended December 31, 2020. The divestiture of Grass Valley represented a strategic shift impacting our operations and financial results. As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, is reported in discontinued operations.

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The sale also included deferred consideration consisting of a $175.0 million seller’s note, 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 was $34.9 million. During 2021, we sold the seller's note to a third party for $62.0 million and recognized a gain on sale of $27.0 million. 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 following table summarizes the operating results of the disposal group up to the July 2, 2020 disposal date for the year ended December 31, 2020:

			Year Ended December 31,
			2020
			(In thousands)
Revenues			$	109,195
Cost of sales			(70,199)
Gross profit			38,996
Selling, general and administrative expenses			(39,947)
Research and development expenses			(15,083)
Asset impairment of discontinued operations			(113,007)
Interest expense, net			(432)
Non-operating pension cost			(169)
Loss before taxes			$	(129,642)

We are organized around two global businesses: Enterprise Solutions and Industrial Automation Solutions. Each of the global businesses represents a reportable segment. In conjunction with the Tripwire divestiture during 2022, we changed the name of our former Industrial Solutions segment to Industrial Automation Solutions. The composition of the segment did not change as a result of this name change. 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; adjustments related to acquisitions and divestitures; and other costs. We allocate corporate expenses to the segments for purposes of measuring Segment EBITDA. Corporate expenses are allocated on the basis of each segment’s relative EBITDA prior to the allocation.

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

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Operating Segment Information

Enterprise Solutions			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Segment revenues			$	1,198,478					$	1,074,426					$	872,417
Segment EBITDA			161,517						144,509						99,333
Depreciation expense			23,387						21,627						20,655
Amortization of intangibles			17,595						17,595						21,662
Amortization of software development intangible assets			54						94						245
Adjustments related to acquisitions and divestitures			5,589						(7,052)						125
Severance, restructuring, and acquisition integration costs			9,200						13,800						7,720
Acquisition of property, plant and equipment			33,535						36,726						25,223
Segment assets			593,653						563,141						462,615

Industrial Automation Solutions			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Segment revenues			$	1,408,007					$	1,226,834					$	879,775
Segment EBITDA			277,079						222,684						132,302
Depreciation expense			23,282						21,446						18,684
Amortization of intangibles			20,265						13,035						7,379
Amortization of software development intangible assets			3,821						1,485						627
Adjustments related to acquisitions and divestitures			2,244						2,017						—
Severance, restructuring, and acquisition integration costs			7,485						10,067						3,944
Asset impairments			—						9,283						—
Acquisition of property, plant and equipment			58,713						41,269						37,002
Segment assets			677,235						600,380						471,320

Total Segments			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Segment revenues			$	2,606,485					$	2,301,260					$	1,752,192
Segment EBITDA			438,596						367,193						231,635
Depreciation expense			46,669						43,073						39,339
Amortization of intangibles			37,860						30,630						29,041
Amortization of software development intangible assets			3,875						1,579						872
Adjustments related to acquisitions and divestitures			7,833						(5,035)						125
Severance, restructuring, and acquisition integration costs			16,685						23,867						11,664
Asset impairments			—						9,283						—
Acquisition of property, plant and equipment			92,248						77,995						62,225
Segment assets			1,270,888						1,163,521						933,935

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.

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			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Segment Revenues and Consolidated Revenues			$	2,606,485					$	2,301,260					$	1,752,192
Total Segment EBITDA			$	438,596					$	367,193					$	231,635
Depreciation expense			(46,669)						(43,073)						(39,339)
Amortization of intangibles			(37,860)						(30,630)						(29,041)
Severance, restructuring, and acquisition integration costs (1)			(16,685)						(23,867)						(11,664)
Adjustments related to acquisitions and divestitures (2)			(7,833)						5,035						(125)
Amortization of software development intangible assets			(3,875)						(1,579)						(872)
Asset impairments (3)			—						(9,283)						—
Gain on sale of asset (4)			37,891						—						—
Eliminations			(231)						(120)						(480)
Consolidated operating income			363,334						263,676						150,114
Interest expense, net			(43,554)						(62,693)						(58,903)
Loss on debt extinguishment			(6,392)						(5,715)						—
Non-operating pension benefit (cost)			4,005						4,476						(395)
Gain on sale of note receivable			—						27,036						—
Consolidated income from continuing operations before taxes			$	317,393					$	226,780					$	90,816

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

(2)In 2022, we incurred $10.1 million for lease guarantees associated with the Grass Valley disposal (see Note 12), $2.2 million related to fair value adjustments of acquired inventory and investments, and gains of $4.5 million on collections from previously written off receivables associated with the sale of Grass Valley. 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 adjustments of acquired inventory to fair value, and recognized a $0.6 million loss on the sale of tangible assets. In 2020, we recognized $0.1 million of cost of sales related to adjustments of acquired inventory to fair value.

(3)In 2021, we recognized a $3.6 million impairment on assets held and used and a $5.7 million impairment on assets held for sale. See Note 11, Property, Plant, and Equipment, for details.

(4)During 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale. See Note 11, Property, Plant, and Equipment, for details.

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

			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Total segment assets			$	1,270,888					$	1,163,521					$	933,935
Cash and cash equivalents			687,676						641,563						500,666
Goodwill			862,253						821,448						789,736
Intangible assets, less accumulated amortization			246,830						238,155						219,092
Deferred income taxes			14,642						31,736						28,736
Corporate assets			79,386						72,102						83,943
Assets of discontinued operations			—						449,152						583,626
Total assets			$	3,161,675					$	3,417,677					$	3,139,734
Total segment acquisition of property, plant and equipment			$	92,248					$	77,995					$	62,225
Corporate acquisition of property, plant and equipment			12,846						6,855						3,605
Discontinued operations acquisition of property, plant and equipment			—						6,132						24,385
Total acquisition of property, plant and equipment			$	105,094					$	90,982					$	90,215

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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, 2022, 2021, and 2020 for the following countries: 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, 2022
Revenues			$	1,448,247					$	188,013					$	126,904					$	131,485					$	711,836					$	2,606,485
Percent of total revenues			56		%				7		%				5		%				5		%				27		%				100		%
Long-lived assets			$	203,070					$	12,805					$	45,866					$	44,061					$	122,565					$	428,367
Year ended December 31, 2021
Revenues			$	1,201,540					$	186,834					$	149,036					$	112,710					$	651,140					$	2,301,260
Percent of total revenues			52		%				8		%				7		%				5		%				28		%				100		%
Long-lived assets			$	170,420					$	12,578					$	46,776					$	37,208					$	106,140					$	373,122
Year ended December 31, 2020
Revenues			$	939,339					$	113,642					$	111,826					$	90,374					$	497,011					$	1,752,192
Percent of total revenues			54		%				7		%				6		%				5		%				28		%				100		%
Long-lived assets			$	154,078					$	31,925					$	44,824					$	63,100					$	113,836					$	407,763

Major Customer

Revenues generated in both the Enterprise Solutions and Industrial Automation Solutions segments from our largest customer were approximately $387.7 million (15% of revenues), $374.8 million (16% of revenues), and $271.6 million (16% of revenues) for the years ended December 31, 2022, 2021, and 2020, respectively. At December 31, 2022 and 2021, we had $28.8 million and $40.5 million in accounts receivable outstanding from this customer, which represented approximately 7% and 11% of our total accounts receivable balance as of December 31, 2022 and 2021, respectively.

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

			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Numerator:
Income from continuing operations			$	267,748					$	198,841					$	70,718
Less: Net income attributable to noncontrolling interest			159						392						104
Income from continuing operations attributable to Belden common stockholders			267,589						198,449						70,614
Add: Loss from discontinued operations, net of tax			(3,685)						(136,384)						(115,828)
Add: Gain (loss) on disposal of discontinued operations, net of tax			(9,241)						1,860						(9,948)
Net income (loss) attributable to Belden common stockholders			$	254,663					$	63,925					$	(55,162)
Denominator:
Weighted average shares outstanding, basic			43,845						44,802						44,778
Effect of dilutive common stock equivalents			692						559						159
Weighted average shares outstanding, diluted			44,537						45,361						44,937

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, 2022, 2021, and 2020, diluted weighted average shares outstanding exclude outstanding equity awards of 0.8 million, 1.1 million, and 1.5 million, respectively, which are anti-dilutive. In addition, for the years ended December 31, 2022, 2021, and 2020, diluted weighted average shares outstanding do not include outstanding equity awards of 0.2 million, 0.2 million, and 0.4 million, respectively, because the related performance conditions have not been satisfied.

For purposes of calculating basic earnings per share, unvested restricted stock units are not included in the calculation of basic weighted average shares outstanding until all necessary conditions have been satisfied and issuance of the shares underlying the restricted stock units is no longer contingent. Necessary conditions are not satisfied until the vesting date, at which time holders of our restricted stock units receive shares of our common stock.

For purposes of calculating diluted earnings per share, unvested restricted stock units are included to the extent that they are dilutive. In determining whether unvested restricted stock units are dilutive, each issuance of restricted stock units is considered separately.

Once a restricted stock unit has vested, it is included in the calculation of both basic and diluted weighted average shares outstanding.

Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments prospectively. This ASU replaced the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables.

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.

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Estimates are used to determine the allowance, which is based upon an assessment of anticipated payments as well as other information that is reasonably available. The following table presents the activity in the allowance for doubtful accounts for the years ended December 31, 2022 and 2021 (in thousands).

Balance at December 31, 2020						$	5,085
Current period provision						597
Write-offs						(326)
Recoveries collected						(227)
Disposals						(190)
Currency impact						(75)
Balance at December 31, 2021						$	4,864
Current period provision						6,615
Write-offs						(3,648)
Recoveries collected						(121)
Acquisitions						319
Currency impact						(75)
Balance at December 31, 2022						$	7,954

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

			December 31,
			2022						2021
			(In thousands)
Land and land improvements			$	25,547					$	27,579
Buildings and leasehold improvements			102,451						109,578
Machinery and equipment			631,680						620,646
Computer equipment and software			127,434						128,153
Construction in process			106,361						65,319
Gross property, plant and equipment			993,473						951,275
Accumulated depreciation			(611,609)						(607,711)
Net property, plant and equipment			$	381,864					$	343,564

Depreciation Expense

We recognized depreciation expense in income from continuing operations of $46.7 million, $43.9 million, and $39.3 million in 2022, 2021, and 2020, respectively.

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Gain on Sale of Asset

During 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale. This gain on sale was excluded from Segment EBITDA of our Industrial Automation Solutions segment.

Sale-Leaseback

During 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, 2022 and 2021, had a total right-of-use asset balance of $21.7 million and $25.3 million, respectively. When the assets met the held for sale criteria during 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 Automation Solutions segment.

Asset Impairment

During 2021, we sold our oil and gas business in Brazil and recognized an impairment charge of $3.4 million (includes a goodwill impairment of $1.7 million and intangible asset impairment of $1.0 million). 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 material residual value guarantees, and our variable lease payments were $2.9 million and $2.4 million during the years ended December 31, 2022 and 2021, respectively.

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, 2022 or 2021, 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.

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, commencement date, location, and local currency of the leased asset as well as the credit rating of the legal entity leasing the asset.

The components of lease expense were as follows:

			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Operating lease cost			$	21,420					$	18,607					$	17,009
Finance lease cost
Amortization of right-of-use asset			$	878					$	528					$	124
Interest on lease liabilities			258						14						16
Total finance lease cost			$	1,136					$	542					$	140

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Supplemental cash flow information related to leases was as follows:

			Years Ended December 31,
			2022						2021						2020
			(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	18,338					$	15,737					$	13,629

Operating and financing cash flows from finance leases were not material for the years ended December 31, 2022, 2021 and 2020.

Supplemental balance sheet information related to leases was as follows:

			December 31,
			2022						2021
			(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets			$	73,376					$	75,571
Accrued liabilities			$	16,442					$	16,377
Long-term operating lease liabilities			59,250						61,967
Total operating lease liabilities			$	75,692					$	78,344
Finance leases:
Other long-lived assets, at cost			$	6,323					$	3,650
Accumulated depreciation			(733)						(557)
Other long-lived assets, net			$	5,590					$	3,093
Accrued liabilities			$	391					$	140
Other long-term liabilities			5,928						323
Total finance lease liabilities			$	6,319					$	463

Weighted Average Remaining Lease Term
Operating leases			6 years						6 years
Finance leases			10 years						4 years
Weighted Average Discount Rate
Operating leases			5.2%						4.8		%
Finance leases			4.2%						4.3		%

The following table summarizes maturities of lease liabilities as of December 31, 2022 (in thousands):

2023						$	15,815
2024						14,809
2025						13,472
2026						11,964
2027						6,464
Thereafter						20,907
Total						$	83,431

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

2022						$	17,630
2023						15,129
2024						12,342
2025						11,040
2026						9,725
Thereafter						16,972
Total						$	82,838

The carrying values of intangible assets were as follows:

 

			December 31, 2022																		December 31, 2021
			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
			(In thousands)																		(In thousands)
Goodwill			$	862,253					$	—					$	862,253					$	821,448					$	—					$	821,448
Definite-lived intangible assets subject to amortization:
Developed technology			$	273,524					$	(190,808)					$	82,716					$	241,499					$	(171,455)					$	70,044
Customer relationships			253,275						(129,730)						123,545						241,395						(117,064)						124,331
Trademarks			40,951						(30,077)						10,874						39,618						(26,271)						13,347
Backlog			13,554						(11,192)						2,362						11,580						(8,827)						2,753
In-service research and development			5,507						(5,342)						165						5,551						(5,206)						345
Non-compete agreements			780						(612)						168						618						(283)						335
Total intangible assets subject to amortization			$	587,591					$	(367,761)					$	219,830					$	540,261					$	(329,106)					$	211,155
Indefinite-lived intangible assets not subject to amortization:
Trademarks			$	27,000					$	—					$	27,000					$	27,000					$	—					$	27,000
Total intangible assets not subject to amortization			$	27,000					$	—					$	27,000					$	27,000					$	—					$	27,000
Intangible assets			$	614,591					$	(367,761)					$	246,830					$	567,261					$	(329,106)					$	238,155

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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 Automation Solutions						Consolidated
			(In thousands)
Balance at December 31, 2020			$	474,747					$	314,988					$	789,735
Acquisitions			—						41,749						41,749
Impairment			—						(1,664)						(1,664)
Translation impact			(1,506)						(6,866)						(8,372)
Balance at December 31, 2021			$	473,241					$	348,207					$	821,448
Acquisitions			6,528						44,068						50,596
Translation impact			(1,935)						(7,856)						(9,791)
Balance at December 31, 2022			$	477,834					$	384,419					$	862,253

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

			Enterprise Solutions						Industrial Automation Solutions						Consolidated
			(In thousands)
Balance at December 31, 2020			$	27,000					$	4,063					$	31,063
Reclassify to definite-lived			—						(4,063)						(4,063)
Balance at December 31, 2021 and 2022			$	27,000					$	—					$	27,000

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 2022 goodwill impairment test, we performed a quantitative assessment for one of our reporting units and determined the estimated fair value by calculating the present value of its estimated future cash flows using Level 3 inputs. We determined that the fair value for the reporting unit was in excess of its carrying value. We performed a qualitative assessment for the remaining five reporting units, and determined that it was more likely than not that the fair value of each reporting unit was greater than its respective carrying value. Therefore, we did not record any goodwill impairment in 2022. We did not recognize any goodwill impairment from continuing operations in 2021 or 2020 other than a $1.7 million impairment in 2021 in connection with the sale of our oil and gas business in Brazil. See Note 5.

For our quantitative impairment test in 2022, the excess of the fair value over the carrying value for the reporting unit was 48%. The assumptions used to estimate fair value 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 assessment, the discount rate was 13.1%, the 2023 to 2032 compounded annual revenue growth rate was 4.9%, and the revenue growth rate beyond 2032 was 2.5%. 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 impairment charges that could be material.

We tested our indefinite-lived intangible asset, a trademark, for impairment during the fourth quarter using a quantitative assessment. 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 2022, 2021, or 2020.

Disposal Group Impairment

Prior to the Tripwire divestiture in 2022, we recognized a goodwill impairment charge of $131.2 million during 2021. We also wrote down the carrying value of the Grass Valley disposal group and recognized asset impairments totaling $113.0 million during 2020. See Note 5.

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Amortization Expense

We recognized amortization expense in income from continuing operations of $41.7 million, $32.2 million, and $29.9 million in 2022, 2021, and 2020, respectively. We expect to recognize annual amortization expense of $38.0 million in 2023, $34.2 million in 2024, $28.7 million in 2025, $18.2 million in 2026, and $16.3 million in 2027 related to our intangible assets balance as of December 31, 2022.

The weighted-average amortization period for our customer relationships, developed technology, trademarks, in-service research and development, non-compete agreements, and backlog is 19.0 years, 8.0 years, 6.6 years, 5.0 years, 3.5 years, and 0.9 years, respectively.

Manufacturing Footprint Program

We are consolidating our manufacturing footprint in the Americas region. We recognized $8.3 million of severance and other restructuring costs for this program during the year ended December 31, 2022. The costs were incurred by both the Enterprise Solutions and Industrial Automation Solutions segments.

Acquisition Integration Program

We are integrating our recent acquisitions with our existing businesses to achieve desired cost savings, which are primarily focused on consolidating existing and acquired facilities as well as other support functions. We recognized $8.2 million, $12.6 million, and $4.9 million of severance and other restructuring costs for this program during the years ended December 31, 2022, 2021, and 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Automation Solutions segments.

Cost Reduction Program

We executed a cost reduction program to streamline the organizational structure and invest in technology to drive productivity. We recognized $5.8 million and $4.0 million of severance and other restructuring costs for this program during the years ended December 31, 2021 and 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Automation Solutions segments.

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The following table summarizes the severance and other restructuring and integration costs of the Manufacturing Footprint Program, Acquisition Integration Program and Cost Reduction Program described above by segment:

 

			Severance						Other Restructuring and Integration Costs						Total Costs
									(In thousands)
Year Ended December 31, 2022
Enterprise Solutions			$	1,070					$	7,060					$	8,130
Industrial Automation Solutions			493						7,847						8,340
Total			$	1,563					$	14,907					$	16,470
Year Ended December 31, 2021
Enterprise Solutions			$	1,121					$	11,062					$	12,183
Industrial Automation Solutions			2,555						3,629						6,184
Total			$	3,676					$	14,691					$	18,367
Year Ended December 31, 2020
Enterprise Solutions			$	1,263					$	4,859					$	6,122
Industrial Automation Solutions			1,935						863						2,798
Total			$	3,198					$	5,722					$	8,920

The restructuring and integration costs incurred during 2022, 2021 and 2020 primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs. The majority of the restructuring and integration costs related to these actions were paid as incurred or are payable within the next 60 days.

There were no significant severance accrual balances as of December 31, 2022 or December 31, 2021.

The following table summarizes the severance and other restructuring and integration costs of the Manufacturing Footprint Program, Acquisition Integration Program and Cost Reduction Program described above by financial statement line item in the Consolidated Statement of Operations:

						Years Ended December 31,
						2022						2021						2020
						(In thousands)
Cost of sales						$	10,060					$	8,493					$	585
Selling, general and administrative expenses						6,410						9,874						8,335
Total						$	16,470					$	18,367					$	8,920

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

			December 31,
			2022						2021
			(In thousands)
Revolving credit agreement due 2026			$	—					$	—
Senior subordinated notes:
4.125% Senior subordinated notes due 2026			—						227,240
3.375% Senior subordinated notes due 2027			480,330						511,290
3.875% Senior subordinated notes due 2028			373,590						397,670
3.375% Senior subordinated notes due 2031			320,220						340,860
Total senior subordinated notes			1,174,140						1,477,060
Less unamortized debt issuance costs			(12,964)						(17,069)
Long-term debt			$	1,161,176					$	1,459,991

Revolving Credit Agreement due 2026

In 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. In 2021, 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, 2022, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $291.1 million.

In April 2020, we borrowed $190.0 million on our Revolver due to the initial uncertainties arising from the COVID-19 pandemic. We fully repaid the borrowings during 2020.

Senior Subordinated Notes

We had outstanding €300.0 million aggregate principal amount of 2.875% senior subordinated notes due 2025 (the 2025 Notes). In 2021, we repurchased the full €300.0 million 2025 Notes outstanding for cash consideration of €302.2 million ($358.5 million), including a redemption premium, and recognized a $5.7 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

We had outstanding €200.0 million aggregate principal amount of 4.125% senior subordinated notes due 2026 (the 2026 Notes). In 2022, we repurchased the full €200.0 million 2026 Notes outstanding for cash consideration of €204.1 million ($227.9 million), including a redemption premium, and recognized a $6.4 million loss on debt extinguishment including the write-off of unamortized debt issuance costs.

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, 2022 is $480.3 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 and 2028 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on January 15 and July 15 of each year.

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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, 2022 is $373.6 million. The 2028 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2028 Notes rank equal in right of payment with our senior subordinated notes due 2031 and 2027 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on March 15 and September 15 of each year.

In 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 $320.2 million. The 2031 Notes are guaranteed on a senior subordinated basis by our current and future domestic subsidiaries. The 2031 Notes rank equal in right of payment with our senior subordinated notes due 2028 and 2027 and with any future subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our Revolver. Interest is payable semiannually on January 15 and July 15 of each year, commencing January 15, 2022. In 2021, 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.

The senior subordinated notes due 2027, 2028, and 2031 are redeemable after 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
												2027												2028												2031
																								Year						Percentage						Year						Percentage						Year						Percentage
																								2022						101.688		%				2023						101.938		%				2026						101.688		%
																								2023						101.125		%				2024						101.292		%				2027						100.844		%
																								2024						100.563		%				2025						100.646		%				2028						100.422		%
																								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, 2022 was approximately $1,046.3 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 $1,174.1 million as of December 31, 2022.

Maturities

Maturities on outstanding long-term debt and other borrowings during each of the five years subsequent to December 31, 2022 are as follows (in thousands):

2023			$	—
2024			—
2025			—
2026			—
2027			480,330
Thereafter			693,810
			$	1,174,140

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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 $2.5 million, $2.7 million, and $31.0 million, in 2022, 2021, and 2020, respectively.

			Years Ended December 31,
			2022						2021						2020
Effective income tax rate reconciliation from continuing operations:
United States federal statutory rate			21.0%						21.0%						21.0%
State and local income taxes			1.2%						3.4%						(0.7)%
Impact of change in tax contingencies			0.1%						(0.7)%						1.5%
Foreign income tax rate differences			(10.9)%						0.7%						(27.9)%
Impact of change in deferred tax asset valuation allowance			(2.5)%						(19.1)%						3.0%
Domestic permanent differences and tax credits			6.3%						6.0%						25.5%
Impact of share-based compensation			0.4%						1.0%						1.0%
Impact of CARES act			—%						—%						(1.3)%
			15.6%						12.3%						22.1%

In 2022, the most significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of foreign tax rate differences. Foreign tax rate differences resulted in an income tax expense (benefit) of $(34.4) million, $1.5 million, and $(25.4) million in 2022, 2021, and 2020, respectively.

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 $20.0 million in 2022, primarily associated with our foreign income inclusions.

In addition, we recognized a total income tax benefit from changes in deferred tax asset valuation allowances of $7.9 million in 2022, primarily due to the release of a valuation allowance against the capital loss for the sale of certain real estate in the U.S.

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.

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The components of deferred income taxes were as follows:

			December 31,
			2022						2021
			(In thousands)
Components of deferred income tax balances:
Deferred income tax liabilities:
Plant, equipment, and intangibles			$	(94,189)					$	(89,632)
Right of use asset			(19,853)						(18,254)
			(114,042)						(107,886)
Deferred income tax assets:
Postretirement, pensions, and stock compensation			17,368						32,201
Reserves and accruals			25,519						20,362
Net operating loss, capital loss, and tax credit carryforwards			149,607						84,285
Lease liability			19,938						18,255
Valuation allowances			(142,330)						(66,594)
			70,102						88,509
Net deferred income tax liability			$	(43,940)					$	(19,377)

On February 22, 2022, we completed the divestiture of Tripwire. The increase in deferred tax assets related to net operating loss, capital loss, and tax credit carryforwards primarily relates to the $72.8 million deferred tax asset associated with the capital loss that was derived on the sale. A full valuation allowance has been placed against this deferred tax asset as we do not expect to be able to utilize it prior to its expiration.

As of December 31, 2022, we had $101.3 million of gross net operating loss carryforwards, $6.3 million of tax credit carryforwards, and $547.0 million of gross capital loss carryforwards. Unless otherwise utilized, net operating loss carryforwards will expire upon the filing of the tax returns for the following respective years: $1.5 million in 2022, $6.6 million between 2023 and 2025, and $50.5 million between 2026 and 2041. Net operating loss with an indefinite carryforward period total $42.7 million. Of the $101.3 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 $42.1 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 $6.3 million will expire as follows: $0.6 million in 2022, $0.7 million between 2023 and 2025, and $3.3 million between 2026 and 2041. Tax credit carryforwards with an indefinite carryforward period total $1.7 million. We have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $3.5 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.

Unless otherwise utilized, of the $547.0 million in gross capital loss carryforwards, $502.8 million will expire between 2025 and 2027 and the remaining $44.2 million have an indefinite carryforward period. A full valuation allowance has been recorded as we do not expect to be able to utilize the capital losses.

The following tables summarize our net operating loss carryforwards and tax credit carryforwards as of December 31, 2022 by jurisdiction:

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			Net Operating Loss Carryforwards
			(In thousands)
Australia			$	8,551
Germany			19,824
Netherlands			1,071
Other			10,502
United Kingdom			11,428
United States - Federal and various states			49,955
Total			$	101,331

			Tax Credit Carryforwards
			(In thousands)
Belgium			$	1,227
United States			5,072
Total			$	6,299

In 2022, we recognized a net $0.4 million increase to reserves for uncertain tax positions. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

			2022						2021
			(In thousands)
Balance at beginning of year			$	5,821					$	8,573
Additions based on tax positions related to the current year			359						422
Additions for tax positions of prior years			—						168
Reductions for tax positions of prior years - Settlement			—						(3,264)
Reduction for tax positions of prior years - Statute of limitations			—						(78)
Balance at end of year			$	6,180					$	5,821

The balance of $6.2 million at December 31, 2022 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 no accrual for the payment of interest and penalties as of December 31, 2022 and 2021.

Our federal tax return for the tax years 2014 and later remain subject to examination by the Internal Revenue Service. Our state and foreign income tax returns for the tax years 2012 and later remain subject to examination by various state and foreign tax authorities.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law. We are evaluating the effect that the Act will have on our consolidated financial statements and related disclosures. None of the tax provisions of the Act are expected to have a material impact to our consolidated financial statements and related disclosures.

We sponsor defined benefit pension plans and defined contribution plans that cover substantially all employees in Canada, the Netherlands, Switzerland, the United Kingdom, the U.S., and certain employees in Germany. Certain defined benefit plans in the United Kingdom are frozen and additional benefits are not being earned by the participants. The U.S. defined benefit pension plan is closed to new entrants. Annual contributions to retirement plans equal or exceed the minimum funding requirements of applicable local regulations. The assets of the funded pension plans we sponsor are maintained in various trusts and are invested primarily in equity and fixed income securities.

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 2022, 2021, and 2020 was $13.4 million, $12.2 million, and $8.8 million, respectively.

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We sponsor unfunded postretirement medical and life insurance benefit plans for certain 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,			2022						2021						2022						2021
									(In thousands)
Change in benefit obligation:
Benefit obligation, beginning of year			$	(471,834)					$	(492,925)					$	(27,625)					$	(29,498)
Service cost			(3,491)						(3,953)						(24)						(33)
Interest cost			(9,248)						(7,512)						(761)						(727)
Participant contributions			(350)						(143)						(5)						(4)
Actuarial gain			123,851						19,778						5,690						1,391
Acquisitions and divestitures			(9,257)						(12,886)						—						—
Settlements			6,567						5,855						—						—
Other			—						—						(21)						—
Foreign currency exchange rate changes			33,316						7,226						1,409						(227)
Benefits paid			13,022						12,726						1,393						1,473
Benefit obligation, end of year			$	(317,424)					$	(471,834)					$	(19,944)					$	(27,625)

During 2022, the actuarial gain was primarily due to increases in discount rates.

 

			Pension Benefits												Other Benefits
Years Ended December 31,			2022						2021						2022						2021
									(In thousands)
Change in plan assets:
Fair value of plan assets, beginning of year			$	394,026					$	361,802					$	—					$	—
Actual return on plan assets			(84,595)						32,467						—						—
Employer contributions			12,080						11,618						1,388						1,469
Plan participant contributions			350						143						5						4
Acquisitions and divestitures			6,772						9,339						—						—
Settlements			(6,567)						(5,790)						—						—
Foreign currency exchange rate changes			(27,712)						(2,827)						—						—
Benefits paid			(13,022)						(12,726)						(1,393)						(1,473)
Fair value of plan assets, end of year			$	281,332					$	394,026					$	—					$	—

Funded status, end of year			$	(36,092)					$	(77,808)					$	(19,944)					$	(27,625)
Amounts recognized in the balance sheets:
Prepaid benefit cost			$	16,251					$	20,177					$	—					$	—
Accrued benefit liability, current			(3,106)						(3,173)						(1,353)						(1,440)
Accrued benefit liability, noncurrent			(49,237)						(94,812)						(18,591)						(26,185)
Net funded status			$	(36,092)					$	(77,808)					$	(19,944)					$	(27,625)

The accumulated benefit obligation for all defined benefit pension plans was $305.7 million and $494.7 million at December 31, 2022 and 2021, 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 $262.7 million, $251.0 million, and $210.4 million, respectively, as of December 31, 2022 and $265.5 million, $261.3 million, and $167.5 million, respectively, as of December 31, 2021.

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 $19.9 million and $0.0 million, respectively, as of December 31, 2022 and were $27.6 million and $0.0 million, respectively, as of December 31, 2021. The following table provides the components of net periodic benefit costs for the plans.

			Pension Benefits																		Other Benefits
Years Ended December 31,			2022						2021						2020						2022						2021						2020
															(In thousands)
Components of net periodic benefit cost:
Service cost			$	3,491					$	3,953					$	3,930					$	24					$	33					$	33
Interest cost			9,248						7,512						9,729						761						727						809
Expected return on plan assets			(16,023)						(16,337)						(16,357)						—						—						—
Amortization of prior service cost			174						110						190						—						—						—
Settlement loss (gain)			1,189						(18)						3,153						—						—						—
Other adjustments			—						(191)						—						—						—						—
Net loss (gain) recognition			734						3,764						2,930						(73)						(43)						(59)
Net periodic benefit cost (income)			$	(1,187)					$	(1,207)					$	3,575					$	712					$	717					$	783

We recorded settlement losses totaling $1.2 million and $3.2 million during 2022 and 2020, respectively. 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,
			2022						2021						2022						2021
Weighted average assumptions for benefit obligations at year end:
Discount rate			4.9		%				2.0		%				5.2		%				2.9		%
Salary increase			3.2		%				3.3		%				N/A						N/A
Cash balance interest credit rate			4.5		%				4.7		%				N/A						N/A
Weighted average assumptions for net periodic cost for the year:
Discount rate			2.0		%				1.5		%				2.9		%				2.5		%
Salary increase			3.3		%				3.2		%				N/A						N/A
Cash balance interest credit rate			4.7		%				4.6		%				N/A						N/A
Expected return on assets			4.4		%				4.6		%				N/A						N/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year			N/A						N/A						5.3		%				5.4		%
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						2023						2027

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 50-60% in asset protection investments and 40-50% in asset growth investments and for our pension plans where the majority of the participants are in payment or terminated vested status is 60-90% in asset protection investments and 10-40% 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, 2022																								December 31, 2021
			Fair Market Value at December 31, 2022						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, 2021						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			$	49,153					$	4,384					$	—					$	44,769								$	77,687					$	2,913					$	—					$	83,047
Non-U.S. equities fund			51,227						5,393						—						45,834									77,299						6,267						—						56,028
Debt securities(b)
Government bond fund			56,318						—						2,011						54,307									64,255						—						731						97,646
Corporate bond fund			67,406						—						7,175						60,231									108,729						—						11,507						70,284
Fixed income fund(c)			22,680						—						—						22,680									16,939						—						—						7,320
Liability driven investment fund(d)			14,629						—						—						14,629									22,713						—						—						22,713
Other investments(e)			10,531						—						—						10,531									15,103						—						—						17,367
Cash & equivalents			9,388						3,242						—						6,146									11,301						5,271						—						5,344
Total			$	281,332					$	13,019					$	9,186					$	259,127								$	394,026					$	14,451					$	12,238					$	359,749

 

(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, 2022 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)
2023			$	20,837					$	1,388
2024			22,218						1,392
2025			20,155						1,395
2026			21,101						1,397
2027			20,756						1,403
2027-2031			97,066						7,062
Total			$	202,133					$	14,037

We anticipate contributing $8.2 million and $1.4 million to our pension and other postretirement plans, respectively, during 2023.

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, 2022 and the changes in these amounts during the year ended December 31, 2022 are as follows. 

			Pension Benefits						Other Benefits
			(In thousands)
Components of accumulated other comprehensive loss:
Net actuarial loss (gain)			$	11,695					$	(7,117)
Net prior service cost			2,197						—
			$	13,892					$	(7,117)

			Pension Benefits						Other Benefits
			(In thousands)
Changes in accumulated other comprehensive loss:
Net actuarial loss (gain), beginning of year			$	39,995					$	(1,770)
Amortization of actuarial gain (loss)			(734)						73
Actuarial gain			(123,851)						(5,690)
Asset loss			100,618						—
Settlement loss recognized			(1,189)						—
Currency impact			(3,144)						270
Net actuarial loss (gain), end of year			$	11,695					$	(7,117)
Prior service cost, beginning of year			$	2,661					$	—
Amortization of prior service cost			(174)						—
Currency impact			(290)						—
Prior service cost, end of year			$	2,197					$	—

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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, 2020			$	(131,181)					$	(60,670)					$	(191,851)
Other comprehensive income 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 income attributable to Belden			89,713						31,572						121,285
Balance at December 31, 2021			$	(41,468)					$	(29,098)					$	(70,566)
Other comprehensive income attributable to Belden before reclassifications			42,531						23,629						66,160
Amounts reclassified from accumulated other comprehensive income			(3,007)						1,542						(1,465)
Net current period other comprehensive income attributable to Belden			39,524						25,171						64,695
Balance at December 31, 2022			$	(1,944)					$	(3,927)					$	(5,871)

As of December 31, 2022, the tax balances included in accumulated other comprehensive income (loss) in the table above are not material.

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

			Amount Reclassified from Accumulated Other Comprehensive Income (Loss) (1)						Affected Line Item in the Consolidated Statements of Operations and Comprehensive Income (Loss)
			(In thousands)
Amortization of pension and other postretirement benefit plan items:
Settlement losses			$	1,189					(2)
Actuarial losses			661						(2)
Prior service cost			174						(2)
Total before tax			2,024
Tax benefit			(482)
Total net of tax			$	1,542

(1)We also reclassified $3.0 million of accumulated foreign currency translation gains associated with the sale of Tripwire.

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

Compensation cost included in income from continuing operations, 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,
			2022						2021						2020
			(In thousands)
Total share-based compensation cost			$	23,454					$	22,627					$	17,405
Income tax benefit			5,582						5,385						4,142

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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,
			2022						2021						2020
			(In thousands, except weighted average fair value and assumptions)
Weighted-average fair value of SARs granted			$	21.85					$	18.30					$	18.29
Total intrinsic value of SARs exercised			4,384						1,581						545
Tax benefit from SARs exercised			678						327						26
Weighted-average fair value of restricted stock units granted			61.61						51.76						41.75
Total fair value of restricted stock units vested			16,830						12,623						6,600
Expected volatility			43.00		%				45.34		%				37.55		%
Expected term (in years)			5.6						5.7						5.7
Risk-free rate			1.89		%				0.70		%				1.44		%
Dividend yield			0.37		%				0.44		%				0.39		%

			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, 2022			1,244						$	63.18					n/a						n/a						964						$	50.08
Granted			165						53.83						n/a						n/a						395						61.61
Exercised or converted			(340)						56.18						n/a						n/a						(307)						54.70
Forfeited or expired			(111)						62.64						n/a						n/a						(155)						51.37
Outstanding at December 31, 2022			958						$	64.13					4.8						$	10,017					897						$	54.59
Vested or expected to vest at December 31, 2022			282						$	50.19					8.5						$	6,132
Exercisable or convertible at December 31, 2022			676						$	69.95					3.3						$	3,885

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Concentrations of Credit

We sell our products to many customers in several markets across multiple geographic areas. The ten largest customers, of which eight are distributors, constitute in aggregate approximately 45%, 44%, and 43% of revenues in 2022, 2021, and 2020, respectively.

Unconditional Commodity Purchase Obligations

At December 31, 2022, we were committed to purchase approximately 4.2 million pounds of copper at an aggregate fixed cost of $15.6 million. At December 31, 2022, 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 25% of our labor force is covered by collective bargaining agreements that we expect to renegotiate during 2023.

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, 2022, we were party to unused standby letters of credit, bank guarantees, and surety bonds totaling $7.9 million, $5.6 million, and $3.8 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,
			2022						2021						2020
									(In thousands)
Income tax refunds received			$	16,480					$	6,120					$	4,460
Income taxes paid			(71,255)						(40,139)						(25,259)
Interest paid			(45,168)						(54,176)						(53,029)

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