Acquisitions

12 Months Ended

Dec. 31, 2021

OTN Systems N.V.

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

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


Receivables	$	6,009
Inventories	10,731
Other current assets	768
Property, plant, and equipment	602
Intangible assets	39,930
Goodwill	41,749

Operating lease right-of-use assets	4,144
Other long-lived assets	416
Total assets acquired	$	104,349

Accounts payable	$	6,884
Accrued liabilities	8,735
Long-term debt	1,841
Postretirement benefits	3,581
Deferred income taxes	2,980
Long-term operating lease liabilities	3,271
Other long-term liabilities	3,692
Total liabilities assumed	$	30,984

Net assets	73,365
Noncontrolling interests	20
Net assets attributable to Belden	$	73,345

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

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

For purposes of the above allocation, we based our estimate of the fair values for the acquired inventory, intangible assets, and postretirement benefits on valuation studies performed by a third party valuation firm. We have estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the fair value of the identifiable intangible assets (Level 3 valuation).

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

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


	Fair Value		Amortization Period
	(In thousands)		(In years)
Intangible assets subject to amortization
Developed technologies	$	26,400	6.8
Customer relationships	6,200		15.0
Sales backlog	3,600		5.0
Trademarks	3,070		14.8
Non-compete agreements	660		2.0
Total intangible assets subject to amortization	$	39,930

Intangible assets not subject to amortization:
Goodwill	$	41,749
Total intangible assets not subject to amortization	$	41,749

Total intangible assets	$	81,679
Weighed average amortization period			8.5

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

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

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


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

The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.