(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbols | Name of each exchange on which registered | ||
PART I | FINANCIAL INFORMATION |
September 29, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
(In thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Receivables, net | |||||||
Inventories, net | |||||||
Other current assets | |||||||
Total current assets | |||||||
Property, plant and equipment, less accumulated depreciation | |||||||
Operating lease right-of-use assets | — | ||||||
Goodwill | |||||||
Intangible assets, less accumulated amortization | |||||||
Deferred income taxes | |||||||
Other long-lived assets | |||||||
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued liabilities | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Postretirement benefits | |||||||
Deferred income taxes | |||||||
Long-term operating lease liabilities | — | ||||||
Other long-term liabilities | |||||||
Stockholders’ equity: | |||||||
Preferred stock | |||||||
Common stock | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Treasury stock | ( | ) | ( | ) | |||
Total Belden stockholders’ equity | |||||||
Noncontrolling interests | |||||||
Total stockholders’ equity | |||||||
$ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Gross profit | |||||||||||||||
Selling, general and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Research and development expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of intangibles | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Goodwill and other asset impairment | ( | ) | ( | ) | |||||||||||
Gain from patent litigation | |||||||||||||||
Operating income (loss) | ( | ) | ( | ) | |||||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Non-operating pension benefit | |||||||||||||||
Loss on debt extinguishment | ( | ) | |||||||||||||
Income (loss) before taxes | ( | ) | ( | ) | |||||||||||
Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income (loss) | ( | ) | ( | ) | |||||||||||
Less: Net income (loss) attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | |||||||||
Net income (loss) attributable to Belden | ( | ) | ( | ) | |||||||||||
Less: Preferred stock dividends | |||||||||||||||
Net income (loss) attributable to Belden common stockholders | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Weighted average number of common shares and equivalents: | |||||||||||||||
Basic | |||||||||||||||
Diluted | |||||||||||||||
Basic income (loss) per share attributable to Belden common stockholders | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Diluted income (loss) per share attributable to Belden common stockholders | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Comprehensive income (loss) attributable to Belden | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Common stock dividends declared per share | $ | $ | $ | $ |
Nine Months Ended | |||||||
September 29, 2019 | September 30, 2018 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | ( | ) | $ | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Goodwill and other asset impairment | |||||||
Depreciation and amortization | |||||||
Share-based compensation | |||||||
Loss on debt extinguishment | |||||||
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses: | |||||||
Receivables | ( | ) | |||||
Inventories | ( | ) | |||||
Accounts payable | ( | ) | ( | ) | |||
Accrued liabilities | ( | ) | ( | ) | |||
Income taxes | ( | ) | |||||
Other assets | ( | ) | ( | ) | |||
Other liabilities | ( | ) | ( | ) | |||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Cash used to acquire businesses, net of cash acquired | ( | ) | ( | ) | |||
Proceeds from disposal of tangible assets | |||||||
Proceeds from disposal of business | |||||||
Net cash used for investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Payments under share repurchase program | ( | ) | ( | ) | |||
Cash dividends paid | ( | ) | ( | ) | |||
Withholding tax payments for share-based payment awards | ( | ) | ( | ) | |||
Other | ( | ) | |||||
Payments under borrowing arrangements | ( | ) | |||||
Debt issuance costs paid | ( | ) | |||||
Redemption of stockholders' rights agreement | ( | ) | |||||
Borrowings under credit arrangements | |||||||
Net cash used for financing activities | ( | ) | ( | ) | |||
Effect of foreign currency exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | |||
Decrease in cash and cash equivalents | ( | ) | ( | ) | |||
Cash and cash equivalents, beginning of period | |||||||
Cash and cash equivalents, end of period | $ | $ |
Belden Inc. Stockholders | ||||||||||||||||||||||||||||||||||||||||
Mandatory Convertible | Additional | Accumulated Other | Non-controlling | |||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | Retained | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Shares | Amount | Income (Loss) | Interests | Total | ||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Exercise of stock options, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Conversion of restricted stock units into common stock, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Preferred stock dividends ($168.75 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Common stock dividends ($0.05 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Acquisition of business with noncontrolling interests | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Exercise of stock options, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||
Conversion of restricted stock units into common stock, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Share repurchase program | — | — | — | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Preferred stock dividends ($168.75 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Common stock dividends ($0.05 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ) | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Adjustment to acquisition of business with noncontrolling interests | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Exercise of stock options, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Conversion of restricted stock units into common stock, net of tax withoholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Share repurchase program | — | — | — | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Preferred stock conversion | ( | ) | ( | ) | — | — | ( | ) | — | — | — | |||||||||||||||||||||||||||||
Preferred stock dividends ($18.76 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Common stock dividends ($0.05 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Balance at September 29, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ |
Belden Inc. Stockholders | ||||||||||||||||||||||||||||||||||||||||
Mandatory Convertible | Additional | Accumulated Other | Non-controlling | |||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | Retained | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Earnings | Shares | Amount | Income (Loss) | Interests | Total | ||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
Cumulative effect of change in accounting principles | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Exercise of stock options, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||||||
Conversion of restricted stock units into common stock, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Share repurchase program | — | — | — | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Redemption of stockholders' rights agreement | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Preferred stock dividends ($168.75 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Common stock dividends ($0.05 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Balance at April 1, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||
Exercise of stock options, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Conversion of restricted stock units into common stock, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Share repurchase program | — | — | — | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Preferred stock dividends ($168.75 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Common stock dividends ($0.05 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Balance at July 1, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Exercise of stock options, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Conversion of restricted stock units into common stock, net of tax withholding forfeitures | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||||||
Share repurchase program | — | — | — | — | — | — | ( | ) | ( | ) | — | — | ( | ) | ||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Preferred stock dividends ($168.75 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Common stock dividends ($0.05 per share) | — | — | — | — | — | ( | ) | — | — | — | — | ( | ) | |||||||||||||||||||||||||||
Balance at Balance at September 30, 2018 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ |
• | Are prepared from the books and records without audit, and |
• | Are prepared in accordance with the instructions for Form 10-Q and do not include all of the information required by accounting principles generally accepted in the United States for complete statements, but |
• | Include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial statements. |
• | Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; |
• | Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets, or financial instruments for which significant inputs are observable, either directly or indirectly; and |
• | Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
Cable & Connectivity | Networking, Software & Security | Total Revenues | ||||||||||
Three Months Ended September 29, 2019 | (In thousands) | |||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Three Months Ended September 30, 2018 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Nine Months Ended September 29, 2019 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Nine Months Ended September 30, 2018 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ |
Americas | EMEA | APAC | Total Revenues | |||||||||||||
Three Months Ended September 29, 2019 | (In thousands) | |||||||||||||||
Enterprise Solutions | $ | $ | $ | $ | ||||||||||||
Industrial Solutions | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
Three Months Ended September 30, 2018 | ||||||||||||||||
Enterprise Solutions | $ | $ | $ | $ | ||||||||||||
Industrial Solutions | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
Nine Months Ended September 29, 2019 | ||||||||||||||||
Enterprise Solutions | $ | $ | $ | $ | ||||||||||||
Industrial Solutions | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
Nine Months Ended September 30, 2018 | ||||||||||||||||
Enterprise Solutions | $ | $ | $ | $ | ||||||||||||
Industrial Solutions | ||||||||||||||||
Total | $ | $ | $ | $ |
Products | Support & Services | Total Revenues | ||||||||||
Three Months Ended September 29, 2019 | (In thousands) | |||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Three Months Ended September 30, 2018 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Nine Months Ended September 29, 2019 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Nine Months Ended September 30, 2018 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ |
September 29, 2019 | September 30, 2018 | |||||||
(in thousands) | ||||||||
Accrued rebates | $ | $ | ||||||
Accrued returns | ||||||||
Price adjustments recognized against gross accounts receivable |
Nine Months Ended | ||||||||
September 29, 2019 | September 30, 2018 | |||||||
(In thousands) | ||||||||
Beginning balance | $ | $ | ||||||
New deferrals | ||||||||
Revenue recognized | ( | ) | ( | ) | ||||
Ending balance | $ | $ |
Three Months ended | Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(In thousands) | ||||||||||||||||
Sales commissions | $ | $ | $ | $ |
Receivables | $ | |||
Inventory | ||||
Prepaid and other current assets | ||||
Property, plant, and equipment | ||||
Intangible assets | ||||
Goodwill | ||||
Deferred income taxes | ||||
Operating lease right-to-use assets | ||||
Other long-lived assets | ||||
Total assets acquired | $ | |||
Accounts payable | $ | |||
Accrued liabilities | ||||
Long-term deferred tax liability | ||||
Long-term operating lease liability | ||||
Other long-term liabilities | ||||
Total liabilities assumed | $ | |||
Net assets | ||||
Noncontrolling interests | ||||
Net assets attributable to Belden | $ |
Fair Value | Amortization Period | |||||
(In thousands) | (In years) | |||||
Intangible assets subject to amortization: | ||||||
Developed technologies | $ | |||||
Customer relationships | ||||||
Sales backlog | ||||||
Trademarks | ||||||
Total intangible assets subject to amortization | $ | |||||
Intangible assets not subject to amortization: | ||||||
Goodwill | $ | n/a | ||||
Total intangible assets not subject to amortization | $ | |||||
Total intangible assets | $ | |||||
Weighted average amortization period |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||
Net income (loss) attributable to Belden common stockholders | ( | ) | ( | ) | ||||||||||||
Diluted income (loss) per share attributable to Belden common stockholders | $ | ( | ) | $ | $ | ( | ) | $ |
Receivables | $ | |||
Inventory | ||||
Prepaid and other current assets | ||||
Property, plant, and equipment | ||||
Intangible assets | ||||
Goodwill | ||||
Deferred income taxes | ||||
Other long-lived assets | ||||
Total assets acquired | $ | |||
Accounts payable | $ | |||
Accrued liabilities | ||||
Deferred revenue | ||||
Long-term debt | ||||
Postretirement benefits | ||||
Other long-term liabilities | ||||
Total liabilities assumed | $ | |||
Net assets | $ |
Fair Value | Amortization Period | |||||
(In thousands) | (In years) | |||||
Intangible assets subject to amortization: | ||||||
Developed technologies | $ | |||||
Customer relationships | ||||||
Sales backlog | ||||||
Trademarks | ||||||
Total intangible assets subject to amortization | $ | |||||
Intangible assets not subject to amortization: | ||||||
Goodwill | $ | n/a | ||||
Total intangible assets not subject to amortization | $ | |||||
Total intangible assets | $ | |||||
Weighted average amortization period |
Three Months Ended | Nine Months Ended | |||||||
September 30, 2018 | September 30, 2018 | |||||||
(In thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
Revenues | $ | $ | ||||||
Net income attributable to Belden common stockholders | ||||||||
Diluted income per share attributable to Belden common stockholders | $ | $ |
Enterprise Solutions | Industrial Solutions | Total Segments | ||||||||||
(In thousands) | ||||||||||||
As of and for the three months ended September 29, 2019 | ||||||||||||
Segment revenues | $ | $ | $ | |||||||||
Affiliate revenues | ||||||||||||
Segment EBITDA | ||||||||||||
Depreciation expense | ||||||||||||
Amortization of intangibles | ||||||||||||
Amortization of software development intangible assets | ||||||||||||
Severance, restructuring, and acquisition integration costs | ||||||||||||
Purchase accounting effects of acquisitions | ( | ) | ( | ) | ||||||||
Goodwill and other asset impairment | ||||||||||||
Segment assets | ||||||||||||
As of and for the three months ended September 30, 2018 | ||||||||||||
Segment revenues | $ | $ | $ | |||||||||
Affiliate revenues | ||||||||||||
Segment EBITDA | ||||||||||||
Depreciation expense | ||||||||||||
Amortization of intangibles | ||||||||||||
Amortization of software development intangible assets | ||||||||||||
Severance, restructuring, and acquisition integration costs | ||||||||||||
Purchase accounting effects of acquisitions | ||||||||||||
Deferred revenue adjustments | ||||||||||||
Segment assets | ||||||||||||
As of and for the nine months ended September 29, 2019 | ||||||||||||
Segment revenues | $ | $ | $ | |||||||||
Affiliate revenues | ||||||||||||
Segment EBITDA | ||||||||||||
Depreciation expense | ||||||||||||
Amortization of intangibles | ||||||||||||
Amortization of software development intangible assets | ||||||||||||
Severance, restructuring, and acquisition integration costs | ||||||||||||
Purchase accounting effects of acquisitions | ||||||||||||
Goodwill and other asset impairment | ||||||||||||
Segment assets | ||||||||||||
As of and for the nine months ended September 30, 2018 | ||||||||||||
Segment revenues | $ | $ | $ | |||||||||
Affiliate revenues | ||||||||||||
Segment EBITDA | ||||||||||||
Depreciation expense | ||||||||||||
Amortization of intangibles | ||||||||||||
Amortization of software development intangible assets | ||||||||||||
Severance, restructuring, and acquisition integration costs | ||||||||||||
Purchase accounting effects of acquisitions | ||||||||||||
Deferred revenue adjustments | ||||||||||||
Segment assets |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Total Segment Revenues | $ | $ | $ | $ | |||||||||||
Deferred revenue adjustments (1) | ( | ) | ( | ) | |||||||||||
Consolidated Revenues | $ | $ | $ | $ | |||||||||||
Total Segment EBITDA | $ | $ | $ | $ | |||||||||||
Goodwill and other asset impairment (2) | ( | ) | ( | ) | |||||||||||
Amortization of intangibles | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Depreciation expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Severance, restructuring, and acquisition integration costs (3) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of software development intangible assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Purchase accounting effects related to acquisitions (4) | ( | ) | ( | ) | ( | ) | |||||||||
Deferred revenue adjustments (1) | ( | ) | ( | ) | |||||||||||
Loss on sale of assets | ( | ) | |||||||||||||
Costs related to patent litigation | ( | ) | ( | ) | |||||||||||
Gain from patent litigation | |||||||||||||||
Eliminations | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Consolidated operating income (loss) | ( | ) | ( | ) | |||||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Non-operating pension benefit | |||||||||||||||
Loss on debt extinguishment | ( | ) | |||||||||||||
Consolidated income (loss) before taxes | $ | ( | ) | $ | $ | ( | ) | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Numerator: | |||||||||||||||
Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Less: Net income (loss) attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | |||||||||
Less: Preferred stock dividends | |||||||||||||||
Net income (loss) attributable to Belden common stockholders, basic | ( | ) | ( | ) | |||||||||||
Plus Preferred stock dividends | |||||||||||||||
Net income (loss) attributable to Belden common stockholders, diluted | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding, basic | |||||||||||||||
Assumed conversion of preferred stock into common stock | |||||||||||||||
Effect of dilutive common stock equivalents | |||||||||||||||
Weighted average shares outstanding, diluted |
September 29, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
Raw materials | $ | $ | |||||
Work-in-process | |||||||
Finished goods | |||||||
Gross inventories | |||||||
Excess and obsolete reserves | ( | ) | ( | ) | |||
Net inventories | $ | $ |
Three Months Ended | Nine Months Ended | |||||||
September 29, 2019 | ||||||||
(In thousands) | ||||||||
Operating lease cost | $ | ( | ) | $ | ( | ) | ||
Finance lease cost | ||||||||
Amortization of right-of-use asset | $ | ( | ) | $ | ( | ) | ||
Interest on lease liabilities | ( | ) | ( | ) | ||||
Total finance lease cost | $ | ( | ) | $ | ( | ) |
Three Months Ended | Nine Months Ended | |||||||
September 29, 2019 | ||||||||
(In thousands) | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | ( | ) | $ | ( | ) | ||
Operating cash flows from finance leases | ( | ) | ( | ) | ||||
Financing cash flows from finance leases | ( | ) | ( | ) |
September 29, 2019 | ||||
(In thousands, except lease term and discount rate) | ||||
Operating leases: | ||||
Total operating lease right-of-use assets | $ | |||
Accrued liabilities | $ | |||
Long-term operating lease liabilities | ||||
Total operating lease liabilities | $ | |||
Finance leases: | ||||
Other long-lived assets, at cost | $ | |||
Accumulated depreciation | ( | ) | ||
Other long-lived assets, net | $ |
Weighted Average Remaining Lease Term | |||
Operating leases | |||
Finance leases | |||
Weighted Average Discount Rate | |||
Operating leases | % | ||
Finance leases | % |
Operating Leases | Finance Leases | |||||||
(In thousands) | ||||||||
2019 | $ | $ | ||||||
2020 | ||||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
Thereafter | ||||||||
Total | $ | $ |
Severance | Other Restructuring and Integration Costs | Total Costs | ||||||||||
Three Months Ended September 29, 2019 | (In thousands) | |||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Three Months Ended September 30, 2018 | ||||||||||||
Enterprise Solutions | $ | ( | ) | $ | $ | |||||||
Industrial Solutions | ||||||||||||
Total | $ | ( | ) | $ | $ | |||||||
Nine Months Ended September 29, 2019 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ | |||||||||
Nine Months Ended September 30, 2018 | ||||||||||||
Enterprise Solutions | $ | $ | $ | |||||||||
Industrial Solutions | ||||||||||||
Total | $ | $ | $ |
Three Months ended | Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(In thousands) | ||||||||||||||||
Cost of sales | $ | $ | $ | $ | ||||||||||||
Selling, general and administrative expenses | ||||||||||||||||
Research and development expenses | ||||||||||||||||
Total | $ | $ | $ | $ |
September 29, 2019 | December 31, 2018 | ||||||
(In thousands) | |||||||
Revolving credit agreement due 2022 | $ | $ | |||||
Senior subordinated notes: | |||||||
3.875% Senior subordinated notes due 2028 | |||||||
3.375% Senior subordinated notes due 2027 | |||||||
4.125% Senior subordinated notes due 2026 | |||||||
2.875% Senior subordinated notes due 2025 | |||||||
Total senior subordinated notes | |||||||
Less unamortized debt issuance costs | ( | ) | ( | ) | |||
Long-term debt | $ | $ |
• | We recognized income tax expense of $ |
• | We recognized income tax expense of $ |
• | We recognized an income tax benefit of $ |
• | We recognized an income tax benefit of $ |
Pension Obligations | Other Postretirement Obligations | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(In thousands) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||
Interest cost | ||||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ||||||||||||
Amortization of prior service credit | ( | ) | ( | ) | ||||||||||||
Actuarial losses (gains) | ( | ) | ||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ | ||||||||||||
Nine Months Ended | ||||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||
Interest cost | ||||||||||||||||
Expected return on plan assets | ( | ) | ( | ) | ||||||||||||
Amortization of prior service credit | ( | ) | ( | ) | ||||||||||||
Actuarial losses (gains) | ( | ) | ||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||
Foreign currency translation gain (loss), net of $0.2 million, $0.5 million, $0.6 million, and $0.7 million tax, respectively | ( | ) | |||||||||||||
Adjustments to pension and postretirement liability, net of $0.0 million, $0.4 million, $0.2 million, and $0.9 million tax, respectively | |||||||||||||||
Total comprehensive income (loss) | ( | ) | ( | ) | |||||||||||
Less: Comprehensive income (loss) attributable to noncontrolling interests | ( | ) | ( | ) | |||||||||||
Comprehensive income (loss) attributable to Belden | $ | ( | ) | $ | $ | ( | ) | $ |
Foreign Currency Translation Component | Pension and Other Postretirement Benefit Plans | Accumulated Other Comprehensive Income (Loss) | |||||||||
(In thousands) | |||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income attributable to Belden before reclassifications | |||||||||||
Amounts reclassified from accumulated other comprehensive income | |||||||||||
Net current period other comprehensive gain attributable to Belden | |||||||||||
Balance at September 29, 2019 | $ | $ | ( | ) | $ | ( | ) |
Amount Reclassified from Accumulated Other Comprehensive Income | Affected Line Item in the Consolidated Statements of Operations and Comprehensive Income | ||||
(In thousands) | |||||
Amortization of pension and other postretirement benefit plan items: | |||||
Actuarial losses | $ | (1) | |||
Prior service credit | ( | ) | (1) | ||
Total before tax | |||||
Tax benefit | ( | ) | |||
Total net of tax | $ |
• | We did not change any of our existing critical accounting policies from those listed in our 2018 Annual Report on Form 10-K other than updating our lease accounting policies for the adoption of ASU 2016-02; |
• | No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and |
• | There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 29, 2019 | September 30, 2018 | % Change | September 29, 2019 | September 30, 2018 | % Change | ||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||
Revenues | $ | 620,318 | $ | 655,774 | (5.4 | )% | $ | 1,845,023 | $ | 1,929,978 | (4.4 | )% | |||||||||
Gross profit | 235,402 | 260,857 | (9.8 | )% | 701,153 | 749,047 | (6.4 | )% | |||||||||||||
Selling, general and administrative expenses | (120,169 | ) | (132,716 | ) | (9.5 | )% | (365,439 | ) | (396,430 | ) | (7.8 | )% | |||||||||
Research and development expenses | (31,351 | ) | (33,471 | ) | (6.3 | )% | (100,539 | ) | (107,781 | ) | (6.7 | )% | |||||||||
Amortization of intangibles | (22,243 | ) | (25,533 | ) | (12.9 | )% | (67,952 | ) | (74,990 | ) | (9.4 | )% | |||||||||
Goodwill and other asset impairment | (342,146 | ) | — | n/a | (342,146 | ) | — | n/a | |||||||||||||
Gain from patent litigation | — | 62,141 | (100.0 | )% | — | 62,141 | (100.0 | )% | |||||||||||||
Operating income (loss) | (280,507 | ) | 131,278 | (313.7 | )% | (174,923 | ) | 231,987 | (175.4 | )% | |||||||||||
Interest expense, net | (14,200 | ) | (14,472 | ) | (1.9 | )% | (42,561 | ) | (46,538 | ) | (8.5 | )% | |||||||||
Non-operating pension benefit | 489 | 1,356 | (63.9 | )% | 1,517 | 824 | 84.1 | % | |||||||||||||
Loss on debt extinguishment | — | — | n/a | — | (22,990 | ) | (100.0 | )% | |||||||||||||
Income (loss) before taxes | (294,218 | ) | 118,162 | (349.0 | )% | (215,967 | ) | 163,283 | (232.3 | )% |
• | Lower sales volume resulted in a $36.5 million and $72.9 million decrease in the three and nine months ended September 29, 2019, respectively. |
• | Currency translation had a $7.1 million and $31.9 million unfavorable impact on revenues in the three and nine months ended September 29, 2019, respectively. |
• | Copper prices had a $5.6 million and $17.0 million unfavorable impact on revenues in the three and nine months ended September 29, 2019, respectively. |
• | Acquisitions contributed an estimated $7.3 million and $36.8 million in the three and nine months ended September 29, 2019, respectively. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 29, 2019 | September 30, 2018 | % Change | September 29, 2019 | September 30, 2018 | % Change | ||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||
Income (loss) before taxes | $ | (294,218 | ) | $ | 118,162 | (349.0 | )% | $ | (215,967 | ) | $ | 163,283 | (232.3 | )% | |||||||
Income tax expense | 2,797 | 32,304 | (91.3 | )% | 13,580 | 46,063 | (70.5 | )% | |||||||||||||
Effective tax rate | (1.0 | )% | 27.3 | % | (6.3 | )% | 28.2 | % |
• | We recognized income tax expense of $3.8 million and $4.3 million, respectively, in the three and nine months ended September 30, 2018 as a result of changes in our valuation allowance for the “Tax Cuts and Jobs Act” (the Act). |
• | We recognized income tax expense of $1.8 million in the nine months ended September 30, 2018 as a result of a change in our valuation allowance on foreign tax credits associated with our euro debt refinancing. |
• | We recognized an income tax benefit of $3.3 million and $4.4 million, respectively, in the three and nine months ended September 30, 2018 primarily related to certain foreign tax credits. |
• | We recognized an income tax benefit of $1.2 million in the nine months ended September 30, 2018 due to a decrease in reserves for uncertain tax positions of prior years. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 29, 2019 | September 30, 2018 | % Change | September 29, 2019 | September 30, 2018 | % Change | ||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||
Adjusted Revenues | $ | 620,318 | $ | 659,003 | (5.9 | )% | $ | 1,845,023 | $ | 1,937,867 | (4.8 | )% | |||||||||
Adjusted EBITDA | 101,574 | 126,689 | (19.8 | )% | 289,817 | 352,552 | (17.8 | )% | |||||||||||||
as a percent of adjusted revenues | 16.4 | % | 19.2 | % | 15.7 | % | 18.2 | % |
• | Lower sales volume resulted in a $36.5 million and $72.9 million decrease in the three and nine months ended September 29, 2019, respectively. |
• | Currency translation had a $7.1 million and $31.9 million unfavorable impact on revenues in the three and nine months ended September 29, 2019, respectively. |
• | Copper prices had a $5.6 million and $17.0 million unfavorable impact on revenues in the three and nine months ended September 29, 2019, respectively. |
• | Acquisitions contributed an estimated $10.5 million and $28.9 million in the three and nine months ended September 29, 2019, respectively. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||
(In thousands, except percentages) | |||||||||||||||
GAAP revenues | $ | 620,318 | $ | 655,774 | $ | 1,845,023 | $ | 1,929,978 | |||||||
Deferred revenue adjustments (1) | — | 3,229 | — | 7,889 | |||||||||||
Adjusted revenues | $ | 620,318 | $ | 659,003 | $ | 1,845,023 | $ | 1,937,867 | |||||||
GAAP net income (loss) | $ | (297,015 | ) | $ | 85,858 | $ | (229,547 | ) | $ | 117,220 | |||||
Goodwill and other asset impairment (2) | 342,146 | — | 342,146 | — | |||||||||||
Amortization of intangible assets | 22,243 | 25,533 | 67,952 | 74,990 | |||||||||||
Interest expense, net | 14,200 | 14,472 | 42,561 | 46,538 | |||||||||||
Depreciation expense | 12,147 | 11,671 | 37,170 | 35,562 | |||||||||||
Income tax expense | 2,797 | 32,304 | 13,580 | 46,063 | |||||||||||
Severance, restructuring, and acquisition integration costs (3) | 4,045 | 11,688 | 10,904 | 57,010 | |||||||||||
Amortization of software development intangible assets | 1,197 | 620 | 3,206 | 1,344 | |||||||||||
Purchase accounting effects related to acquisitions (4) | (186 | ) | 821 | 1,845 | 2,359 | ||||||||||
Loss on debt extinguishment | — | — | — | 22,990 | |||||||||||
Deferred revenue adjustments (1) | — | 3,229 | — | 7,889 | |||||||||||
Costs related to patent litigation | — | 2,634 | — | 2,634 | |||||||||||
Gain from patent litigation | — | (62,141 | ) | — | (62,141 | ) | |||||||||
Loss on sale of assets | — | — | — | 94 | |||||||||||
Adjusted EBITDA | $ | 101,574 | $ | 126,689 | $ | 289,817 | $ | 352,552 | |||||||
GAAP net income (loss) margin | (47.9 | )% | 13.1 | % | (12.4 | )% | 6.1 | % | |||||||
Adjusted EBITDA margin | 16.4 | % | 19.2 | % | 15.7 | % | 18.2 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 29, 2019 | September 30, 2018 | % Change | September 29, 2019 | September 30, 2018 | % Change | ||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||
Segment Revenues | $ | 368,080 | $ | 392,080 | (6.1 | )% | $ | 1,064,469 | $ | 1,142,765 | (6.9 | )% | |||||||||
Segment EBITDA | 56,814 | 72,210 | (21.3 | )% | 149,855 | 199,943 | (25.1 | )% | |||||||||||||
as a percent of segment revenues | 15.4 | % | 18.4 | % | 14.1 | % | 17.5 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 29, 2019 | September 30, 2018 | % Change | September 29, 2019 | September 30, 2018 | % Change | ||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||
Segment Revenues | $ | 252,238 | $ | 266,923 | (5.5 | )% | $ | 780,554 | $ | 795,102 | (1.8 | )% | |||||||||
Segment EBITDA | 44,614 | 53,750 | (17.0 | )% | 139,531 | 153,401 | (9.0 | )% | |||||||||||||
as a percent of segment revenues | 17.7 | % | 20.1 | % | 17.9 | % | 19.3 | % |
Nine Months Ended | |||||||
September 29, 2019 | September 30, 2018 | ||||||
(In thousands) | |||||||
Net cash provided by (used for): | |||||||
Operating activities | $ | 89,517 | $ | 100,859 | |||
Investing activities | (125,000 | ) | (106,304 | ) | |||
Financing activities | (84,448 | ) | (220,932 | ) | |||
Effects of currency exchange rate changes on cash and cash equivalents | (3,937 | ) | (5,704 | ) | |||
Decrease in cash and cash equivalents | (123,868 | ) | (232,081 | ) | |||
Cash and cash equivalents, beginning of period | 420,610 | 561,108 | |||||
Cash and cash equivalents, end of period | $ | 296,742 | $ | 329,027 |
Principal Amount by Expected Maturity | Fair | ||||||||||||||
2019 | Thereafter | Total | Value | ||||||||||||
(In thousands, except interest rates) | |||||||||||||||
€350.0 million fixed-rate senior subordinated notes due 2028 | $ | — | $ | 383,460 | $ | 383,460 | $ | 405,946 | |||||||
Average interest rate | 3.875 | % | |||||||||||||
€450.0 million fixed-rate senior subordinated notes due 2027 | $ | — | $ | 493,020 | $ | 493,020 | $ | 518,844 | |||||||
Average interest rate | 3.375 | % | |||||||||||||
€200.0 million fixed-rate senior subordinated notes due 2026 | $ | — | $ | 219,120 | $ | 219,120 | $ | 233,420 | |||||||
Average interest rate | 4.125 | % | |||||||||||||
€300.0 million fixed-rate senior subordinated notes due 2025 | $ | — | $ | 328,680 | $ | 328,680 | $ | 336,608 | |||||||
Average interest rate | 2.875 | % | |||||||||||||
Total | $ | 1,424,280 | $ | 1,494,818 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | |||||||||
Balance at June 30, 2019 | $ | 277,185 | |||||||||||
July 1, 2019 through August 4, 2019 | 493 | $ | 55.17 | 493 | 250,000 | ||||||||
August 5, 2019 through September 1, 2019 | — | — | — | 250,000 | |||||||||
September 2, 2019 through September 29, 2019 | — | — | — | 250,000 | |||||||||
Total | 493 | $ | 57.47 | 493 | $ | 250,000 |
Exhibit 31.1 | ||
Exhibit 31.2 | ||
Exhibit 32.1 | ||
Exhibit 32.2 | ||
Exhibit 101.DEF | Definition Linkbase Document | |
Exhibit 101.PRE | Presentation Linkbase Document | |
Exhibit 101.LAB | Labels Linkbase Document | |
Exhibit 101.CAL | Calculation Linkbase Document | |
Exhibit 101.SCH | Schema Document | |
Exhibit 101.INS | Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
BELDEN INC. | |||||
Date: | November 4, 2019 | By: | /s/ John S. Stroup | ||
John S. Stroup | |||||
President, Chief Executive Officer, and Chairman | |||||
Date: | November 4, 2019 | By: | /s/ Henk Derksen | ||
Henk Derksen | |||||
Senior Vice President, Finance, and Chief Financial Officer | |||||
Date: | November 4, 2019 | By: | /s/ Douglas R. Zink | ||
Douglas R. Zink | |||||
Vice President and Chief Accounting Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Belden Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which the statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ John S. Stroup |
John S. Stroup |
President, Chief Executive Officer, and Chairman |
1. | I have reviewed this quarterly report on Form 10-Q of Belden Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which the statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Henk Derksen |
Henk Derksen |
Senior Vice President, Finance, and Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Long-Term Debt and Other Borrowing Arrangements (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Values of Long-Term Debt and Other Borrowing Arrangements | The carrying values of our long-term debt were as follows:
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Income per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income per Share | Income per Share The following table presents the basis for the income per share computations:
For the three and nine months ended September 29, 2019, diluted weighted average shares outstanding do not include outstanding equity awards of 1.4 million and 1.2 million, respectively, because to do so would have been anti-dilutive. In addition, for both the three and nine months ended September 29, 2019, diluted weighted average shares outstanding do not include outstanding equity awards of 0.3 million because the related performance conditions have not been satisfied. Furthermore, for the three and nine months ended September 29, 2019, diluted weighted average shares outstanding do not include the weighted average impact of 1.1 million and 4.9 million shares, respectively, related to converting preferred shares into common shares because deducting the preferred stock dividends from net income was more dilutive. For the three and nine months ended September 30, 2018, diluted weighted average shares outstanding do not include outstanding equity awards of 0.9 million and 0.8 million, respectively, because to do so would have been anti-dilutive. In addition, for the three and nine months ended September 30, 2018, diluted weighted average shares outstanding do not include outstanding equity awards of 0.3 million and 0.2 million, respectively, because the related performance conditions have not been satisfied. Furthermore, for the nine months ended September 30, 2018, diluted weighted average shares outstanding do not include the impact of preferred shares that were converted into 6.9 million common shares, because deducting the preferred stock dividends from net income was more dilutive. For purposes of calculating basic earnings per share, unvested restricted stock units are not included in the calculation of basic weighted average shares outstanding until all necessary conditions have been satisfied and issuance of the shares underlying the restricted stock units is no longer contingent. Necessary conditions are not satisfied until the vesting date, at which time holders of our restricted stock units receive shares of our common stock. For purposes of calculating diluted earnings per share, unvested restricted stock units are included to the extent that they are dilutive. In determining whether unvested restricted stock units are dilutive, each issuance of restricted stock units is considered separately. Once a restricted stock unit has vested, it is included in the calculation of both basic and diluted weighted average shares outstanding.
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Severance, Restructuring, and Acquisition Integration Activities |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance, Restructuring, and Acquisition Integration Activities | Severance, Restructuring, and Acquisition Integration Activities Opterna and FutureLink Integration program: 2019 In 2019, we began a restructuring program to integrate Opterna and FutureLink with our existing businesses. The restructuring and integration activities were focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $3.1 million and $5.6 million of severance and other restructuring costs for this program during the three and nine months ended September 29, 2019, respectively. These costs were incurred by the Enterprise Solutions segment. We do not expect to incur any more costs for this program. Grass Valley and SAM Integration Program: 2018 - 2019 In 2018, we began a restructuring program to integrate SAM with Grass Valley. The restructuring and integration activities were focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We did not recognize severance and other restructuring costs for this program during the three months ended September 29, 2019, and we recognized $3.0 million of severance and other restructuring costs for this program during the nine months ended September 29, 2019. We recognized $7.1 million and $36.6 million of severance and other restructuring costs for this program during the three and nine months ended September 30, 2018, respectively. The costs were incurred by the Enterprise Solutions segment. The integration of these businesses is complete, and thus, we do not expect to incur any more costs for this program. Industrial Manufacturing Footprint Program: 2016 - 2018 In 2016, we began a program to consolidate our manufacturing footprint. The manufacturing consolidation was complete as of December 31, 2018. We recognized $4.3 million and $15.8 million of severance and other restructuring costs for this program during the three and nine months ended September 30, 2018. The costs were incurred by the Enterprise Solutions and Industrial Solutions segments, as the manufacturing locations involved in the program serve both platforms. The following table summarizes the costs by segment of the various programs described above as well as other immaterial programs and acquisition integration activities:
The following table summarizes the costs of the various programs described above as well as other immaterial programs and acquisition integration activities by financial statement line item in the Condensed Consolidated Statement of Operations:
The other restructuring and integration costs primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs. The majority of the other restructuring and integration costs related to these actions were paid as incurred or are payable within the next 60 days. There were no significant severance accrual balances as of September 29, 2019 or December 31, 2018.
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Pension and Other Postretirement Obligations |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Obligations | Pension and Other Postretirement Obligations The following table provides the components of net periodic benefit costs for our pension and other postretirement benefit plans:
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Acquisitions |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions Opterna International Corp. We acquired 100% of the shares of Opterna International Corp. (Opterna) on April 15, 2019 for a preliminary purchase price, net of cash acquired, of $51.7 million. Of the $51.7 million purchase price, $45.5 million and $0.4 million was paid on April 15, 2019 and September 25, 2019, respectively, with cash on hand. The acquisition included a potential earnout, which is based upon future Opterna financial targets through April 15, 2021. The maximum earnout consideration is $25.0 million, but based upon a third party valuation specialist using certain assumptions in a discounted cash flow model, the estimated fair value of the earnout included in the purchase price is $5.8 million. Opterna is an international fiber optics solutions business based in Sterling, Virginia, which designs and manufactures a range of complementary fiber connectivity, cabinet, and enclosure products used in optical networks. The results of Opterna have been included in our Consolidated Financial Statements from April 15, 2019, and are reported within the Enterprise Solutions segment. Certain subsidiaries of Opterna include noncontrolling interests. Because Opterna has a controlling financial interest in these subsidiaries, they are consolidated into our financial statements. The results that are attributable to the noncontrolling interest holders are presented as net income attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations. An immaterial amount of Opterna's revenues are generated from transactions with the noncontrolling interests. The following table summarizes the estimated, preliminary fair values of the assets acquired and the liabilities assumed as of April 15, 2019 (in thousands):
The above purchase price allocation is preliminary, and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The preliminary measurement of receivables, inventories, intangible assets, goodwill, deferred income taxes, other assets and liabilities, and noncontrolling interests are subject to change. A change in the estimated fair value of the net assets acquired or noncontrolling interests will change the amount of the purchase price allocable to goodwill. During the third quarter 2019, we recorded measurement-period adjustments that decreased goodwill by approximately $9.4 million primarily for changes in the fair value of the earnout. The impact of these adjustments to the consolidated statement of operations was immaterial. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations. The preliminary fair value of acquired receivables is $5.3 million, which is equivalent to its gross contractual amount. For purposes of the above allocation, we based our preliminary estimate of the fair values for the acquired inventory, intangible assets, and noncontrolling interests on valuation studies performed by a third party valuation firm. We have estimated a preliminary fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets (Level 3 valuation). Our preliminary estimate of the fair values for the noncontrolling interests were based on the comparable EBITDA multiple valuation technique (Level 3 valuation). Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to expansion of product offerings in the optical fiber market. Our tax basis in the acquired goodwill is zero. The intangible assets related to the acquisition consisted of the following:
The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technology intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship and control of the items transfers. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks. Our consolidated revenues for the three and nine months ended September 29, 2019 included $9.1 million and $17.9 million, respectively, from Opterna. Our consolidated loss before taxes for the three and nine months ended September 29, 2019 included $(0.2) million and $(0.3) million, respectively, from Opterna. For the three months ended September 29, 2019, the loss before taxes included $3.1 million of severance and other restructuring costs, $1.4 million of amortization of intangible assets, and $(0.1) million of cost of sales related to the adjustment of acquired inventory to fair value. For the nine months ended September 29, 2019, the loss before taxes included $5.6 million of severance and other restructuring costs, $2.3 million of amortization of intangible assets, and $0.5 million of cost of sales related to the adjustment of acquired inventory to fair value. Our consolidated loss for the three and nine months ended September 29, 2019 included $0.0 million and $0.1 million, respectively, of net income attributable to noncontrolling interests of Opterna. The following table illustrates the unaudited pro forma effect on operating results as if the Opterna acquisition had been completed as of January 1, 2018.
The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition. FutureLink We acquired the FutureLink product line and related assets from Suttle, Inc. on April 5, 2019 for a purchase price of $5.0 million, which was funded with cash on hand. The acquisition of FutureLink allows us to offer a more complete set of fiber product offerings. The results from the acquisition of FutureLink have been included in our Condensed Consolidated Financial Statements from April 5, 2019, and are reported within the Enterprise Solutions segment. The acquisition of FutureLink was not material to our financial position or results of operations. Net-Tech Technology, Inc. We acquired 100% of the shares of Net-Tech Technology, Inc. (NT2) on April 25, 2018 for a purchase price of $8.5 million, which was funded with cash on hand. NT2 is an integrator of optical passive components and network optimization products used within broadband network applications where optical backhaul is used. NT2 is located in the United States. The results of NT2 have been included in our Consolidated Financial Statements from April 25, 2018, and are reported within the Enterprise Solutions segment. The NT2 acquisition was not material to our financial position or results of operations. Snell Advanced Media We acquired 100% of the outstanding ownership interest in Snell Advanced Media (SAM) on February 8, 2018 for a purchase price, net of cash acquired, of $104.6 million. Of the $104.6 million purchase price, $75.2 million was paid on February 8, 2018 and was funded with cash on hand. The acquisition included a potential earnout, which is based upon future combined earnings of SAM and Grass Valley through December 31, 2019. The maximum earnout consideration is $31.4 million, but based upon a third party valuation specialist using certain assumptions in a discounted cash flow model, the estimated fair value of the earnout included in the purchase price was $29.3 million. We assumed debt of $19.3 million and paid it off during the first quarter of 2018. During the first quarter of 2019, we signed a settlement agreement with the sellers of SAM for claims arising over the timing of the earnout consideration outlined in the purchase agreement, and as part of the settlement, the parties agreed that the maximum earnout consideration of $31.4 million would be payable during the first quarter 2020, unless earlier payment is required as per the terms of the purchase agreement. SAM designs, manufactures, and sells innovative content production and distribution systems for the broadcast and media markets. SAM is located in the United Kingdom. The results of SAM have been included in our Consolidated Financial Statements from February 8, 2018, and are reported within the Enterprise Solutions segment. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of February 8, 2018 (in thousands):
During 2019, we did not record any significant measurement-period adjustments. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations. The fair value of acquired receivables is $16.6 million, which is equivalent to its gross contractual amount. For purposes of the above allocation, we based our estimate of the fair values for the acquired inventory; property, plant, and equipment; intangible assets; and deferred revenue on valuation studies performed by a third party valuation firm. We have estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. To determine the value of the acquired property, plant, and equipment, we used various valuation methods, including both the market approach, which considers sales prices of similar assets in similar conditions (Level 2 valuation), and the cost approach, which considers the cost to replace the asset adjusted for depreciation (Level 3 valuation). We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the fair value of the identifiable intangible assets and deferred revenue (Level 3 valuation). Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to expected synergies and the assembled workforce. The expected synergies for the SAM acquisition may be gained from helping broadcast and media content creators, aggregators and distributors significantly improve their effectiveness and efficiency during a period of rapid change in technology, viewer and advertiser behavior and business models. Our tax basis in the acquired goodwill is zero. The intangible assets related to the acquisition consisted of the following:
The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technology intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks. SAM is included in our Grass Valley reporting unit, and as discussed further in Note 8, during the three and nine months ended September 29, 2019, we recognized a total goodwill and other asset impairment charge of $342.1 million for the Grass Valley reporting unit. Our consolidated revenues for the three and nine months ended September 30, 2018 included an estimated $25.3 million and $77.2 million, respectively, from SAM. Due to the integration of SAM into our existing business, we are unable to reasonably estimate the amount of income before taxes from SAM included in our consolidated financial statements. Our consolidated income before taxes for the three months ended September 30, 2018 included $7.1 million of severance and other restructuring costs, $3.7 million of amortization of intangible assets, and $0.6 million of cost of sales related to the adjustment of acquired inventory to fair value from SAM. Our consolidated income before taxes for the nine months ended September 30, 2018 included $36.6 million of severance and other restructuring costs, $8.7 million of amortization of intangible assets, and $1.8 million of cost of sales related to the adjustment of acquired inventory to fair value from SAM. The following table illustrates the unaudited pro forma effect on operating results as if the SAM acquisition had been completed as of January 1, 2017.
The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.
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Leases Additional Information (Details) |
9 Months Ended |
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Sep. 29, 2019 | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 15 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating and finance lease, term of contract | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating and finance lease, term of contract | 16 years |
Leases Supplemental Other Information Related To Leases (Details) |
Sep. 29, 2019 |
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Weighted Average Remaining Lease Term | |
Operating leases | 7 years |
Finance leases | 2 years |
Weighted Average Discount Rate | |
Operating leases | 6.90% |
Finance leases | 5.90% |
Severance, Restructuring and Acquisition Integration Activities - Severance, Restructuring and Integration Costs by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Restructuring Cost and Reserve [Line Items] | ||||
Severance | $ 269 | $ (1,147) | $ 489 | $ 10,475 |
Other Restructuring and Integration Costs | 3,776 | 12,835 | 10,415 | 46,535 |
Total Costs | 4,045 | 11,688 | 10,904 | 57,010 |
Enterprise Solutions | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance | 269 | (1,283) | 489 | 10,097 |
Other Restructuring and Integration Costs | 3,776 | 10,811 | 10,415 | 36,852 |
Total Costs | 4,045 | 9,528 | 10,904 | 46,949 |
Industrial Solutions | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance | 0 | 136 | 0 | 378 |
Other Restructuring and Integration Costs | 0 | 2,024 | 0 | 9,683 |
Total Costs | $ 0 | $ 2,160 | $ 0 | $ 10,061 |
Net Investment Hedge (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Cumulative translation adjustment | $ 33,732 | $ (17,904) | $ 45,619 | $ 10,943 |
Senior Subordinated Notes | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Cumulative translation adjustment | $ 6,900 | $ 66,500 | $ 62,100 | $ 46,300 |
Acquisitions - Schedule of Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Opterna International Corp. | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 620,318 | $ 666,048 | $ 1,853,639 | $ 1,957,512 |
Net income attributable to Belden common stockholders | $ (295,312) | $ 77,417 | $ (242,579) | $ 87,250 |
Diluted income (loss) per share attributable to Belden common stockholders (in usd per share) | $ (6.64) | $ 1.62 | $ (5.90) | $ 2.11 |
Snell Advanced Media | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 659,003 | $ 1,944,628 | ||
Net income attributable to Belden common stockholders | $ 92,769 | $ 126,937 | ||
Diluted income (loss) per share attributable to Belden common stockholders (in usd per share) | $ 2.13 | $ 3.08 |
Revenues - Sales Commissions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
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Revenue from Contract with Customer [Abstract] | ||||
Sales commissions | $ 5,112 | $ 5,931 | $ 15,881 | $ 18,392 |
Label | Element | Value |
---|---|---|
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (29,041,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (29,041,000) |
Subsequent Events |
9 Months Ended |
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Sep. 29, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Assets Held for Sale We classify assets and liabilities as held for sale (disposal group) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. We also consider whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. During the fourth quarter of 2019, we committed to a plan to sell Grass Valley, and at such time, met all of the criteria to classify the assets and liabilities of this business as held for sale. As a result, the Grass Valley disposal group, which is currently part of the Enterprise Solutions segment, will be included in discontinued operations commencing in the fourth quarter. We also ceased depreciating and amortizing the assets of the disposal group once they met the held for sale criteria in the fourth quarter. We intend to complete the sale of the Grass Valley disposal group during the next twelve months. As discussed in Note 8, we recognized an impairment charge for the disposal group of $342.1 million during the third quarter of 2019, which consisted of impairments to goodwill, customer relationships, and trademarks of $326.1 million, $14.4 million, and $1.6 million, respectively. As of September 29, 2019, Grass Valley had total assets and total liabilities of $491.8 million and $194.0 million, respectively, and accumulated other comprehensive losses of $73.2 million. Cost Reduction Program During the fourth quarter, we announced a cost reduction program designed to improve performance and enhance margins by streamlining the organizational structure and investing in technology to drive productivity. The cost reduction program is expected to deliver an estimated $40.0 million annualized reduction in selling, general, and administrative expenses, with some benefit in 2020, and the full benefit realized in 2021. We expect to incur severance and other related costs as part of this program but the timing and amounts of such costs are not yet known.
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Reportable Segments (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment Information | 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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Reconciliation of Total Reportable Segments' Revenues and EBITDA to Consolidated Revenues and Consolidated Income Before Taxes | The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues and consolidated income before taxes, respectively.
(1) Our segment results include revenues that would have been recorded by acquired businesses had they remained as independent entities. Our consolidated results do not include these revenues due to the purchase accounting effect of recording deferred revenue at fair value. See Note 3, Acquisitions, for details. (2) For the three and nine months ended September 29, 2019, we recognized a $342.1 million goodwill and other asset impairment charge for our Grass Valley reporting unit. See Note 8, Long-Lived Assets, for details. (3) See Note 9, Severance, Restructuring, and Acquisition Integration Activities, for details. (4) For the nine months ended September 29, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition. For the three and nine months ended September 29, 2019, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the Opterna and FutureLink acquisitions. For the three and nine months ended September 30, 2018, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the SAM and NT2 acquisitions.
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Reportable Segments - Additional Information (Details) - 9 months ended Sep. 29, 2019 |
Segment |
segment |
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Segment Reporting [Abstract] | ||
Number of global business platforms | 2 | 2 |
Share Repurchase |
9 Months Ended |
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Sep. 29, 2019 | |
Equity [Abstract] | |
Share Repurchase | Share Repurchase On November 29, 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable securities laws and other restrictions. This program is funded with cash on hand and cash flows from operating activities. The program does not have an expiration date and may be suspended at any time at the discretion of the Company. During the three months ended September 29, 2019, we repurchased 0.5 million shares of our common stock under the share repurchase program for an aggregate cost of $27.2 million and an average price per share of $55.17. During the nine months ended September 29, 2019, we repurchased 0.9 million shares of our common stock under the share repurchase program for an aggregate cost of $50.0 million and an average price per share of $56.19. During the three months ended September 30, 2018, we repurchased 0.3 million shares of our common stock under a previous share repurchase program for an aggregate cost of $25.0 million and an average price per share of $72.62. During the nine months ended September 30, 2018, we repurchased 1.8 million shares of our common stock under a previous share repurchase program for an aggregate cost of $125.0 million and an average price per share of $70.13.
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Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the estimated, preliminary fair values of the assets acquired and the liabilities assumed as of April 15, 2019 (in thousands):
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Schedule of Acquired Intangible Assets | The goodwill is primarily attributable to expansion of product offerings in the optical fiber market. Our tax basis in the acquired goodwill is zero. The intangible assets related to the acquisition consisted of the following:
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Schedule of Pro Forma Information | The following table illustrates the unaudited pro forma effect on operating results as if the SAM acquisition had been completed as of January 1, 2017.
The following table illustrates the unaudited pro forma effect on operating results as if the Opterna acquisition had been completed as of January 1, 2018.
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Pension and Other Postretirement Obligations (Tables) |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Costs | The following table provides the components of net periodic benefit costs for our pension and other postretirement benefit plans:
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Income Taxes |
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Sep. 29, 2019 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Income Taxes | Income Taxes For the three and nine months ended September 29, 2019, we recognized income tax expense of $2.8 million and $13.6 million, respectively, representing an effective tax rate of (1.0%) and (6.3%), respectively. The effective tax rates were impacted by an income tax benefit of $5.7 million as a result of changes in our estimated valuation allowance requirement related to foreign tax credits due to the restructuring of certain foreign operations. These effective rates are also reflective of the impact of more favorable statutory tax rates applied to the earnings of these foreign operations due to the restructuring efforts. The income tax expense for the three and nine months ended September 29, 2019 was also impacted by a $5.1 million income tax benefit for the partial deductibility of the goodwill and other asset impairment charge during the period. For the three and nine months ended September 30, 2018, we recognized income tax expense of $32.3 million and $46.1 million, respectively, representing an effective tax rate of 27.3% and 28.2%, respectively. The effective tax rate was impacted by the following significant factors:
• We recognized an income tax benefit of $1.2 million in the nine months ended September 30, 2018 due to a decrease in reserves for uncertain tax positions of prior years.Our income tax expense and effective tax rate in future periods may be impacted by many factors, including our geographic mix of income and changes in tax laws.
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Reportable Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Reportable Segments We are organized around two global business platforms: Enterprise Solutions and Industrial Solutions. Each of the global business platforms represents a reportable segment. The key measures of segment profit or loss are Segment Revenues and Segment EBITDA. Segment Revenues represent non-affiliate revenues and include revenues that would have otherwise been recorded by acquired businesses as independent entities but were not recognized in our Condensed Consolidated Statements of Operations and Comprehensive Income due to the effects of purchase accounting and the associated write-down of acquired deferred revenue to fair value. Segment EBITDA excludes certain items, including depreciation expense; amortization of intangibles; asset impairment; severance, restructuring, and acquisition integration costs; purchase accounting effects related to acquisitions, such as the adjustment of acquired inventory and deferred revenue to fair value; and other costs. We allocate corporate expenses to the segments for purposes of measuring Segment EBITDA. Corporate expenses are allocated on the basis of each segment’s relative EBITDA prior to the allocation. Our measure of segment assets does not include cash, goodwill, intangible assets, deferred tax assets, or corporate assets. All goodwill is allocated to reporting units of our segments for purposes of impairment testing.
The following table is a reconciliation of the total of the reportable segments’ Revenues and EBITDA to consolidated revenues and consolidated income before taxes, respectively.
(1) Our segment results include revenues that would have been recorded by acquired businesses had they remained as independent entities. Our consolidated results do not include these revenues due to the purchase accounting effect of recording deferred revenue at fair value. See Note 3, Acquisitions, for details. (2) For the three and nine months ended September 29, 2019, we recognized a $342.1 million goodwill and other asset impairment charge for our Grass Valley reporting unit. See Note 8, Long-Lived Assets, for details. (3) See Note 9, Severance, Restructuring, and Acquisition Integration Activities, for details. (4) For the nine months ended September 29, 2019, we recognized expenses related to the earnout consideration for the SAM acquisition. For the three and nine months ended September 29, 2019, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the Opterna and FutureLink acquisitions. For the three and nine months ended September 30, 2018, we recognized cost of sales for the adjustment of acquired inventory to fair value related to the SAM and NT2 acquisitions.
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Long-Lived Assets |
9 Months Ended |
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Sep. 29, 2019 | |
Property, Plant and Equipment [Abstract] | |
Long-Lived Assets | Long-Lived Assets Depreciation and Amortization Expense We recognized depreciation expense of $12.1 million and $37.2 million in the three and nine months ended September 29, 2019, respectively. We recognized depreciation expense of $11.7 million and $35.6 million in the three and nine months ended September 30, 2018, respectively. We recognized amortization expense related to our intangible assets of $23.4 million and $71.2 million in the three and nine months ended September 29, 2019. We recognized amortization expense related to our intangible assets of $26.2 million and $76.3 million in the three and nine months ended September 30, 2018, respectively. Impairment Due to its overall financial performance during the fiscal third quarter and a potential divestiture of the reporting unit, we performed an interim impairment test on the Grass Valley reporting unit, which resulted in a total goodwill and other asset impairment charge of $342.1 million for the three and nine months ended September 29, 2019. The Grass Valley reporting unit is part of our Enterprise Solutions Segment. The impairment charge consisted of impairments to goodwill, customer relationships, and trademarks of $326.1 million, $14.4 million, and $1.6 million, respectively. We determined the estimated fair values of the assets and of the reporting unit by calculating the present values of their estimated future cash flows.
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Preferred Stock Preferred Stock (Details) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
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Jul. 15, 2019
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Sep. 29, 2019
USD ($)
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Sep. 30, 2018
USD ($)
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Sep. 29, 2019
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Sep. 30, 2018
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Dec. 31, 2016
USD ($)
$ / shares
shares
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Class of Stock [Line Items] | ||||||
Preferred stock dividends | $ | $ 971 | $ 8,732 | $ 18,437 | $ 26,198 | ||
Depository Shares | ||||||
Class of Stock [Line Items] | ||||||
Depository shares issued (in shares) | 5,200,000 | |||||
Interest in preferred stock per depository share | 0.01 | |||||
Six Point Seven Five Percentage Series B Mandatory Convertible Preferred Stock | ||||||
Class of Stock [Line Items] | ||||||
Percentage of issued shares | 6.75% | |||||
Offering price per share (in usd per share) | $ / shares | $ 100 | |||||
Preferred stock converted in to common stock (in shares) | 132.50 | |||||
Number of common stock issued upon conversion (in shares) | 6,900,000 | |||||
Proceeds from offering, net | $ | $ 501,000 |
Revenues |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Revenues Revenues are recognized when control of the promised goods or services is transferred to our customers and in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Taxes collected from customers and remitted to governmental authorities are not included in our revenues. The following tables present our revenues disaggregated by major product category.
The following tables present our revenues disaggregated by geography, based on the location of the customer purchasing the product.
The following tables present our revenues disaggregated by products, including software products, and support and services.
We generate revenues primarily by selling products that provide secure and reliable transmission of data, sound, and video for mission critical applications. We also generate revenues from providing support and professional services. We sell our products to distributors, end-users, installers, and directly to original equipment manufacturers. At times, we enter into arrangements that involve the delivery of multiple performance obligations. For these arrangements, revenue is allocated to each performance obligation based on its relative selling price and recognized when or as each performance obligation is satisfied. Most of our performance obligations related to the sale of products are satisfied at a point in time when control of the product is transferred based on the shipping terms of the arrangement. Generally, we determine relative selling price using the prices charged to customers on a standalone basis. The amount of consideration we receive and revenue we recognize varies due to rebates, returns, and price adjustments. We estimate the expected rebates, returns, and price adjustments based on an analysis of historical experience, anticipated sales demand, and trends in product pricing. We adjust our estimate of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed. Adjustments to revenue for performance obligations satisfied in prior periods were not significant during the three and nine months ended September 29, 2019 and September 30, 2018. The following table presents estimated and accrued variable consideration:
Depending on the terms of an arrangement, we may defer the recognition of some or all of the consideration received because we have to satisfy a future obligation. Consideration allocated to support services under a support and maintenance contract is typically paid in advance and recognized ratably over the term of the service. Consideration allocated to professional services is typically recognized when or as the services are performed depending on the terms of the arrangement. As of September 29, 2019, total deferred revenue was $99.2 million, and of this amount, $86.5 million is expected to be recognized within the next twelve months, and the remaining $12.7 million is long-term and is expected to be recognized over a period greater than twelve months. The following table presents deferred revenue activity:
We expense sales commissions as incurred when the duration of the related revenue arrangement is one year or less. We capitalize sales commissions in other current and long-lived assets on our balance sheet when the original duration of the related revenue arrangement is longer than one year, and we amortize it over the related revenue arrangement period. Total capitalized sales commissions was $3.0 million as of September 29, 2019 and $2.3 million as of September 30, 2018. The following table presents sales commissions that are recorded within selling, general and administrative expenses:
|
Inventories - Major Classes of Inventories (Details) - USD ($) $ in Thousands |
Sep. 29, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 137,687 | $ 146,803 |
Work-in-process | 43,602 | 45,939 |
Finished goods | 136,559 | 152,572 |
Gross inventories | 317,848 | 345,314 |
Excess and obsolete reserves | (26,853) | (28,896) |
Net inventories | $ 290,995 | $ 316,418 |
Leases Supplemental Balance Sheet Information Related To Leases (Details) $ in Thousands |
Sep. 29, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Total operating lease right-of-use assets | $ 78,788 |
Accrued liabilities | 16,981 |
Long-term operating lease liabilities | 73,436 |
Total operating lease liabilities | 90,417 |
Other long-lived assets, at cost | 723 |
Accumulated depreciation | (592) |
Other long-lived assets, net | $ 131 |
Revenues - Deferred Revenue (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
|
Change in Contract with Customer, Liability [Abstract] | ||
Beginning balance | $ 113,347 | $ 104,412 |
New deferrals | 141,263 | 135,827 |
Revenue recognized | (155,400) | (149,400) |
Ending balance | $ 99,210 | $ 90,839 |
Severance, Restructuring, and Acquisition Integration Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Severance, restructuring, and acquisition integration costs | $ 4,045 | $ 11,688 | $ 10,904 | $ 57,010 |
Cost of sales | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance, restructuring, and acquisition integration costs | 792 | 4,820 | 1,777 | 21,482 |
Selling, general and administrative expenses | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance, restructuring, and acquisition integration costs | 3,253 | 6,341 | 8,364 | 30,287 |
Research and development expenses | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance, restructuring, and acquisition integration costs | $ 0 | $ 527 | $ 763 | $ 5,241 |
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 29, 2019 |
Sep. 30, 2018 |
Sep. 29, 2019 |
Sep. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) expense | $ 2,797 | $ 32,304 | $ 13,580 | $ 46,063 |
Effective tax rate | 1.00% | (27.30%) | 6.30% | (28.20%) |
Change in valuation allowance income tax benefit | $ 5,700 | $ 1,800 | ||
Income tax benefit for impairment | $ 5,100 | 5,100 | ||
Income tax expense related to debt refinance | 3,800 | $ 1,200 | 4,300 | 1,200 |
Tax Cuts and Jobs Act of 2017, income tax expense | $ 3,300 | $ 4,400 | $ 1,200 |
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