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What changed in BELDEN INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BELDEN INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+239 added−247 removedSource: 10-K (2024-02-13) vs 10-K (2023-02-24)

Top changes in BELDEN INC.'s 2023 10-K

239 paragraphs added · 247 removed · 192 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Human Resources, Talent Acquisition teams and Business Units also hold meetings throughout the year to ensure alignment with our DEI strategy to practice and uphold our commitment to diversity throughout the Company. We are also a proud signatory of the CEO Action for Diversity & Inclusion pledge.
Biggest changeThese efforts include providing education in 12 languages to employees, such as unconscious biases training for all employees and inclusive leadership training for all people leaders. Our Human Resources, Talent Acquisition teams, and Business Units also hold meetings throughout the year to ensure alignment with our DEI strategy to practice and uphold our commitment to diversity throughout the Company.
Within Enterprise Solutions, our Smart Buildings products offer in-building wired and wireless infrastructures, fiber technology innovation, and design collaboration & customization to connect people with facilities through innovative solutions for enhanced human engagement, productivity, and security.
Within Enterprise Solutions, our Smart Buildings products offer in-building wired and wireless infrastructures, fiber technology innovation, and design collaboration and customization to connect people with facilities through innovative solutions for enhanced human engagement, productivity, and security.
Segments We operate our business under the two segments – Enterprise Solutions and Industrial Automation Solutions. A synopsis of the segments is included below: Enterprise Solutions The Enterprise Solutions (Enterprise) segment is a leading provider in network infrastructure and broadband solutions, as well as cabling and connectivity solutions for commercial audio/video and security applications.
Segments We operate our business under two segments – Enterprise Solutions and Industrial Automation Solutions. A synopsis of the segments is included below: Enterprise Solutions The Enterprise Solutions (Enterprise) segment is a leading provider in network infrastructure and broadband solutions, as well as cabling and connectivity solutions for commercial audio/video and security applications.
Priority areas for our Human Capital Management strategy are Diversity, Equity, and Inclusion (DEI), Employee Growth & Development, and Employee Well-Being & Engagement.
Priority areas for our Human Capital Management strategy are Diversity, Equity, and Inclusion (DEI), Employee Growth and Development, and Employee Well-Being and Engagement.
Item 1. Business General Belden Inc. (the Company, us, we, or our) is a leading global supplier of network infrastructure solutions that makes the digital journey simpler, smarter and secure. We’re moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions.
Item 1. Business General Belden Inc. (the Company, us, we, or our) is a leading global supplier of network infrastructure and digitization solutions that makes the digital journey simpler, smarter and secure. We’re moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions.
We consider our patents and trademarks to be valuable assets. Our most prominent trademarks are: Belden®, Alpha Wire™, GarrettCom®, Hirschmann®, Lumberg Automation™, Mohawk®, OTN Systems™, PPC®, ProSoft Technology®, Thinklogical®, Tofino®, and West Penn Wire™. Raw Materials The principal raw material used in many of our cable products is copper.
We consider our patents and trademarks to be valuable assets. Our most prominent trademarks are: Belden®, Alpha Wire™, Hirschmann®, Lumberg Automation™, Mohawk®, OTN Systems™, PPC®, ProSoft Technology®, Thinklogical®, Tofino®, and West Penn Wire™. Raw Materials The principal raw material used in many of our cable products is copper.
Also within Enterprise Solutions, our Broadband & 5G products offer a broad portfolio of end-to-end solutions, industry-leading innovation & technology, and worldwide technical service & support to enable a connected, digital world through broadband and wireless innovation.
Also within Enterprise Solutions, our Broadband Solutions products offer a broad portfolio of end-to-end solutions, industry-leading innovation and technology, and worldwide technical service and support to enable a connected, digital world through broadband and wireless innovation.
We believe that our relationships with our customers and distributors are good and that they are loyal to Belden products as a result of our reputation, the breadth of our product portfolio, the quality and performance characteristics of our products, and our customer service and technical support, among other reasons. 3 Table of Contents International Operations In addition to manufacturing facilities in the United States (U.S.), we have manufacturing and other operating facilities in Canada, China, India, Mexico, and Tunisia, as well as various countries in Europe .
We believe that our relationships with our customers and distributors are good and that they are loyal to Belden products as a result of our reputation, the breadth of our product portfolio, the quality and performance characteristics of our products, and our customer service and technical support, among other reasons. 3 International Operations In addition to manufacturing facilities in the United States (U.S.), we have manufacturing and other operating facilities in Canada, China, India, Mexico, and Tunisia, as well as various countries in Europe .
Even with the explosive growth in fiber, connections to the end devices that consumers utilize to live, work and play, be it wireless access points or IoT devices, are still going to strongly benefit from the remaining advantages of copper-based connectivity, with a heavy focus on powering the ever-increasing collection of data consuming and generating devices connected to our increasingly digitized world.
Even with the explosive growth in fiber, connections to the end devices that consumers utilize to live, work and play, be it wireless access points or the internet of things (IoT) devices, are still going to strongly benefit from the remaining advantages of copper-based connectivity, with a heavy focus on powering the ever-increasing collection of data consuming and generating devices connected to our increasingly digitized world.
We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 9
Our R&D efforts are focused on the development of fiber connectivity and 5G solutions that support the investment plans of the broadband service providers. 4 Table of Contents The ability to integrate across the multitude of applications within service providers and on-premise networks requires a deep understanding of the unique challenges posed by heavier and faster transmission of data.
Our R&D efforts are focused on the development of fiber connectivity and 5G solutions that support the investment plans of the broadband service providers. 4 The ability to integrate across the multitude of applications within service providers and on-premise networks requires a deep understanding of the unique challenges posed by heavier and faster transmission of data.
Some OEM customer contracts have provisions for passing through raw material cost changes, generally with a lag of a few weeks to three months. 5 Table of Contents Backlog Our business is characterized generally by short-term order and shipment schedules.
Some OEM customer contracts have provisions for passing through raw material cost changes, generally with a lag of a few weeks to three months. 5 Backlog Our business is characterized generally by short-term order and shipment schedules.
The results of CAI have been included in our Consolidated Financial Statements as of the acquisition date and are reported within the Enterprise Solutions segment. The results of NetModule, Macmon and OTN Systems have been included in our Consolidated Financial Statements from their respective acquisition dates and are reported within the Industrial Automation Solutions segment.
The results of Sichert and CAI have been included in our Consolidated Financial Statements as of the acquisition date and are reported within the Enterprise Solutions segment. The results of CloudRail, NetModule, Macmon and OTN Systems have been included in our Consolidated Financial Statements from their respective acquisition dates and are reported within the Industrial Automation Solutions segment.
Over the past three years, the prices of metals, particularly copper, have been highly volatile.
Over the past three years, the prices of metals, particularly copper, have been volatile.
While we generally are able to adjust our pricing for fluctuations in commodity prices, we can experience short-term favorable or unfavorable variances. When the cost of raw materials increases, we are generally able to recover these costs through higher pricing of our finished products.
While we generally are able to adjust our pricing for fluctuations in commodity prices, we can experience short-term favorable or unfavorable variances. When the costs of raw materials increase, we are generally able to recover these costs through higher pricing of our finished products.
Louis School of Law. 7 Table of Contents Brian Lieser was appointed Executive Vice President, Industrial Automation Solutions on February 22, 2023. Prior to that, he served as Vice President of Global Products of Industrial Automation Solutions where he was responsible for product strategy, roadmap, and development as well as domestic and international growth, particularly within Asia and Europe. Mr.
Louis School of Law. 8 Brian Lieser was appointed Executive Vice President, Industrial Automation Solutions on February 22, 2023. Prior to that, he served as Vice President of Global Products of Industrial Automation Solutions where he was responsible for product strategy, roadmap, and development as well as domestic and international growth, particularly within Asia and Europe. Mr.
During 2022, approximately 44% of Belden’s sales were to customers outside the U.S. Our primary channels to international markets include both distributors and direct sales to end users and OEMs. Financial information for Belden by country is shown in Note 6 to the Co nsolidated Financial Statements.
During 2023, approximately 45% of Belden’s sales were to customers outside the U.S. Our primary channels to international markets include both distributors and direct sales to end users and OEMs. Financial information for Belden by country is shown in Note 6 to the Co nsolidated Financial Statements.
Information about our Executive Officers The following table sets forth certain information with respect to the persons who were Belden executive officers as of February 24, 2023. All executive officers are elected to terms that expire at the organizational meeting of the Board of Directors following the Annual Meeting of Shareholders.
Information about our Executive Officers The following table sets forth certain information with respect to the persons who were Belden executive officers as of February 13, 2024. All executive officers are elected to terms that expire at the organizational meeting of the Board of Directors following the Annual Meeting of Shareholders.
For more information regarding these transactions, see Note 4 to the Consolidated Financial Statements. Customers We sell to distributors, OEMs, installers, and end-users. For the year ended December 31, 2022, sales to our largest distributor represented approximately 15% of our consolidated revenues. No other customer accounted for more than 10% of our revenues in 2022.
For more information regarding our most recent transactions, see Note 4 to the Consolidated Financial Statements. Customers We sell to distributors, OEMs, installers, and end-users. For the year ended December 31, 2023 , sales to our largest distributor represented approximately 15% of our consolidated revenues. No other customer accounted for more than 10% of our revenues in 2023.
The Be Well program that formally launched in the United States now encompasses our entire operational footprint to support our workforce’s physical, emotional, social, and financial wellbeing with almost 50% of our workforce participating.
The Be Well program that formally launched in the United States now encompasses our entire operational footprint to support our workforce’s physical, emotional, social, and financial well-being with almost 65% of our workforce participating.
Within Industrial Automation Solutions, we are uniquely positioned to support digital transformation by providing end-to-end digitization infrastructure focused on robust network infrastructure, secure remote access, accelerated IT/OT convergence, and edge & data analytics. Our customers are building the future, and we build the network that makes it possible.
Within Industrial Automation Solutions, we are uniquely positioned to support digital transformation by providing end-to-end digitization infrastructure focused on robust network infrastructure, secure remote access, accelerated convergence of information technology systems with operational technology (IT/OT), and edge and data analytics. Our customers are building the future, and we build the network that makes it possible.
We believe that our future success will depend in part upon our ability to enhance existing products and to develop, manufacture and deliver new products that meet or anticipate such changes in our served markets. In our Industrial Automation Solutions segment, customers are rapidly adopting new technology to enable digital transformations and improve their environmental impact.
We believe that our future success will depend in part upon our ability to enhance existing products and to develop, manufacture and deliver new products that meet or anticipate such changes in our served markets. In our Industrial Automation Solutions segment, customers are rapidly adopting new technologies that enable digital transformations.
The chart below illustrates the high and low spot prices per pound of copper over the last three years. 2022 2021 2020 Copper spot prices per pound High $ 4.93 $ 4.78 $ 3.63 Low 3.21 3.54 2.12 Prices for materials such as PVC and other plastics derived from petrochemical feedstocks have also fluctuated.
The chart below illustrates the high and low spot prices per pound of copper over the last three years. 2023 2022 2021 Copper spot prices per pound High $ 4.27 $ 4.93 $ 4.78 Low 3.54 3.21 3.54 Prices for materials such as PVC and other plastics derived from petrochemical feedstocks have also fluctuated.
We continue to live our value of “We Invest in Talent” with 74% of our top 150 positions being filled with people that have been promoted from within. Moreover, our Early Career Leadership Program (ECLP) gives us the ability to recruit and retain high caliber candidates at an early stage with 22 graduates in 2022.
We continue to live our value of “We Invest in Talent” with 85% of our top 156 positions being filled with people that have been promoted from within. Moreover, our Early Career Leadership Program (ECLP) gives us the ability to recruit and retain high caliber candidates at an early stage with 13 graduates in 2023.
When we identify acquisition candidates, we conduct rigorous financial and cultural analyses to make certain that they meet both our strategic plan targets and our goal for return on invested capital. We have completed a number of acquisitions in recent years as part of this strategy. Most recently, in April 2022, we acquired Communication Associates, Inc.
When we identify acquisition candidates, we conduct rigorous financial and cultural analyses to make certain that they meet both our strategic plan targets and our goal for return on invested capital. We have completed a number of acquisitions in recent years as part of this strategy.
The principal competitive factors in all our product markets are technical features, quality, availability, price, customer support, and distribution coverage. The relative importance of each of these factors varies depending on the customer. Some products are manufactured to meet published industry specifications and are less differentiated on the basis of product characteristics.
The principal competitive factor in our markets is the ability to solve customer problems based on product features, quality, availability, price, customer support, and distribution coverage. The relative importance of each of these factors varies depending on the customer. Some products are manufactured to meet published industry specifications and are less differentiated on the basis of product characteristics.
Once again, we are recognized as a Great Place to Work® in various global locations, including Canada, Denmark, France, Germany, Hong Kong, Hungary, India, Mexico, Singapore, Spain, United Kingdom, and the United States – a testament of Belden’s commitment to our employees.
Once again, we are recognized as a Great Place to Work® in various global locations, including Belgium, China, Denmark, France, Germany, Hong Kong, Hungary, India, Mexico, Netherlands, Singapore, Spain, Switzerland, Tunisia, United Arab Emirates United Kingdom, and the United States – a testament of Belden’s commitment to our employees.
Our backlog consists of product orders for which we have received a customer purchase order or purchase commitment and which have not yet been shipped. As of December 31, 2022 and 2021, our backlog wa s $800.4 million and $665.2 million, respectively. The majority of the backlog at December 31, 2022 is scheduled to ship in 2023.
Our backlog consists of product orders for which we have received a customer purchase order or purchase commitment and which have not yet been shipped. As of December 31, 2023 and 2022, our backlog wa s $539.6 million and $800.4 million, respectively. Almost all of the backlog at December 31, 2023 is scheduled to ship in 2024.
We also extend offers to high performing interns from our internship program to participate in our ECLP. 6 Table of Contents Employee Well-Being & Engagement To ensure we are working towards the betterment of our employees’ well-being, we conduct a bi-annual employee engagement survey, for which we saw a 83% participation rate in 2022 with an overall sustainable engagement score of 88%.
We also extend offers to high performing interns from our internship program to participate in our ECLP. 7 Employee Well-Being & Engagement To ensure we are working towards the betterment of our employees’ well-being, we conduct a bi-annual employee engagement survey, for which we saw an 80% participation rate in 2023 with an overall sustainable engagement score of 86%.
Voluntary turnover of management and professional staff remained low at 10% while the overall company Lost Time Incident Rate (LTIR) and Total Recordable Incident Rate (TRIR) were 0.41 and 0.55, respectively.
Voluntary turnover of management and professional staff remained low at 5% while the overall company Lost Time Incident Rate (LTIR) and Total Recordable Incident Rate (TRIR) were 0.43 and 0.53, respectively.
This includes deploying Industry 4.0 to increase visibility of their digitized assets and adopting Artificial Intelligence (AI) to increase analytics and autonomous decision-making in their systems. These approaches need users to refine workflows by collecting data from disparate sources, transmitting it to points of consolidation and decision making, and converting it to standard formats that application software can use.
This includes deploying Industry 4.0 to increase visibility of their digitized assets and adopting Artificial Intelligence (AI) to increase analytics and autonomous decision-making in their systems. Digital transformations require users to refine workflows by collecting data from disparate sources, transmitting it to points of consolidation and decision making, and converting it to standard formats.
We believe that Belden stands out in many of our markets on the basis of the breadth of our product portfolio, the quality and performance characteristics of our products, our customer service, and our technical support.
We believe that Belden stands out in many of our markets on the basis of our ability to offer complete network solutions that solve customer problems, the breadth of our product portfolio, the quality and performance characteristics of our products, our customer service, and our technical support.
Name Age Position Ashish Chand 48 President and Chief Executive Officer Brian Anderson 48 Senior Vice President, Legal, General Counsel and Corporate Secretary Brian Lieser 57 Executive Vice President, Industrial Automation Solutions Anshu Mehrotra 52 Executive Vice President, Broadband & 5G Jeremy Parks 47 Senior Vice President, Finance, and Chief Financial Officer Leah Tate 46 Senior Vice President, Human Resources Doug Zink 47 Vice President and Chief Accounting Officer Ashish Chand was appointed President and Chief Executive Officer on February 22, 2023.
Name Age Position Ashish Chand 49 President and Chief Executive Officer Brian Anderson 49 Senior Vice President, Legal, General Counsel and Corporate Secretary Brian Lieser 58 Executive Vice President, Industrial Automation Solutions Jeremy Parks 48 Senior Vice President, Finance, and Chief Financial Officer Leah Tate 47 Senior Vice President, Human Resources Jay Wirts 53 Executive Vice President, Enterprise Solutions Doug Zink 48 Vice President and Chief Accounting Officer Ashish Chand was appointed President and Chief Executive Officer on February 22, 2023.
Our acquisition strategy is based on targeting leading companies that offer innovative products that complement our existing solutions and strong brands. We utilize a disciplined approach to acquisitions based on product and market opportunities.
Acquisitions A key part of our business strategy includes acquiring companies to support our growth and enhance our product portfolio. Our acquisition strategy is based on targeting leading companies that offer innovative products that complement our existing solutions and strong brands. We utilize a disciplined approach to acquisitions based on product and market opportunities.
Employee Growth & Development We believe in the potential of our employees and the importance of providing career development opportunities within our Company for those who wish to learn and grow with us.
We are also a proud signatory of the CEO Action for Diversity and Inclusion pledge. Employee Growth and Development We believe in the potential of our employees and the importance of providing career development opportunities within our Company for those who wish to learn and grow with us.
Our research and development enables customized enhanced solutions to support customers' innovative methods surrounding the collection, analysis, and transmission of data. There is a growing trend toward adoption of Industrial Ethernet technology, bringing to the critical infrastructure the advantages of digital communication and the ability to network devices made by different manufacturers and integrate them with enterprise systems.
Our research and development enables customized enhanced solutions to support customers' innovative methods surrounding the collection, analysis, and transmission of data. There is a growing trend toward adoption of Industrial Ethernet technology, which enhances the ability to connect and integrate devices made by different manufacturers.
While we believe that our existing environmental control procedures are adequate, we will continue to evaluate and update our procedures as needed to address new or changing aspects of environmental matters.
While we believe that our existing environmental control procedures are adequate, we will continue to evaluate and update our procedures as needed to address new or changing aspects of environmental matters. Environmental, Social, and Governance (ESG) at Belden At Belden, we have built a company and culture that is unique in our industry.
We serve customers in markets such as hospitality, healthcare, education, financial, government, commercial real estate, and broadband and wireless service providers, as well as end-markets, including data centers, sport venues, stadiums, military installations, and academia.
Our priority vertical markets for our Smart Buildings Solutions include data centers, government, healthcare, and hospitality. We also serve customers in markets such as commercial real estate, education, financial, stadiums and venues, and military installations. Our Broadband Solutions primarily serve broadband and wireless service providers.
As of December 31, 2022, our global team members totaled 8,000 employees of which 25% are in the United States, 4% in Canada, 11% in China, 3% in India, 23% in Mexico, and 28% in the European Union. Of our workforce, 38% identify as women and they represent 22% of the senior management and 33% of our Board of Directors.
As of December 31, 2023, our global team members totaled approximately 8,000 employees of which 25% are in the United States, 4% in Canada, 11% in China, 3% in India, 23% in Mexico, and 33% in the EMEA region.
The Enterprise product portfolio is designed to support Internet Protocol convergence, the increased use of wireless communications, and cloud-based data centers by our customers. 2 Table of Contents Industrial Automation Solutions The Industrial Automation Solutions (Industrial Automation) segment is a leading provider of high performance networking and machine connectivity products.
The Enterprise product portfolio is designed to support Internet Protocol convergence, the increased use of wireless communications, and cloud-based data centers by our customers. 2 Industrial Automation Solutions The Industrial Automation Solutions segment at Belden provides network infrastructure and digitization solutions to enable our customers to make informed decisions.
Under the guidance of our Vice President of Diversity, Equity & Inclusion, the Authentic Voices for Inclusion and Diversity (AVID) Council supports our workplace culture and diversity initiatives across the company.
Diversity, Equity, and Inclusion (DEI) At Belden, we are dedicated to creating a culture of equity, inclusivity and diversity for the people that we employ. Under the guidance of our Vice President of DEI and the Global DEI Council, they support our workplace culture and diversity initiatives across the company.
(CAI), a leading designer and manufacturer of various plug-in radio frequency filters used in outside plant hybrid fiber-coax nodes.
In April 2023, we acquired Berthold Sichert GmbH (Sichert), which designs and manufactures a portfolio of polycarbonate street cabinets utilized in outside plant passive optical networks (“PON”) and 5G networks. In April 2022, we acquired Communication Associates, Inc. (CAI), a leading designer and manufacturer of various plug-in radio frequency filters used in outside plant hybrid fiber-coax nodes.
Tate holds a Bachelor of Science degree in Management and a Master of Science degree in Human Resource Management from Purdue University. Doug Zink has been Vice President and Chief Accounting Officer since September 2013.
Tate holds a Bachelor of Science degree in Management and a Master of Science degree in Human Resource Management from Purdue University. Jay Wirts was appointed Executive Vice President, Enterprise Solutions in June 2023. Prior to that, he served as President, Smart Buildings and has served in other leadership roles since joining Belden in 2018. Prior to Belden, Mr.
Industrial Automation products are sold directly to industrial equipment OEMs and through a network of industrial distributors, value-added resellers, and system integrators. See Note 6 to the Consolidated Financial Statements for additional information regarding our segments. Acquisitions A key part of our business strategy includes acquiring companies to support our growth and enhance our product portfolio.
Industrial Automation products are sold directly to industrial equipment OEMs and through a network of industrial distributors, value-added resellers and system integrators for broader reach. We help customers increase uptime and ensure network data availability, integrity and confidentiality.
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Industrial Automation products include physical network and fieldbus infrastructure components and on-machine connectivity systems to meet end user and OEM needs. Products are designed to provide reliability and confidence of performance for a wide range of industrial automation applications. The products are used in markets that include discrete automation, process automation, energy and mass transit.
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We accelerate digital transformation by providing reliable and secure networks designed for the digitization and automation of industries and infrastructure. Our products and solutions encompass the four aspects of data handling including acquisition, transmission, orchestration and management. Our primary markets include discrete automation, process automation, energy, and mass transit.
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Applications include network and fieldbus infrastructure; sensor and actuator connectivity; and power, control, and data transmission. Industrial Automation products include solutions such as industrial Ethernet switches, network management software, routers, firewalls, gateways, input/output (I/O) connectors/systems, industrial Ethernet cables, optical fiber industrial Ethernet cables, Fieldbus cables, IP and networking cables, I/O modules, distribution boxes, and customer specific wiring solutions.
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We understand the operational, quality, safety and innovation demands of our customers and empower them to succeed by making the most of real-time operational technology data. Our industrial automation capabilities span networking, connectivity, and network security to design industrial networks and securely transmit data.
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Our industrial cable products are used in discrete manufacturing and process operations involving the connection of computers, programmable controllers, robots, operator interfaces, motor drives, sensors, printers, and other devices. Many industrial environments, such as petrochemical and other harsh-environment operations, require cables with exterior armor or jacketing that can endure physical abuse and exposure to chemicals, extreme temperatures, and outside elements.
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Our global team of engineers and consultants at our Customer Innovation Centers work directly with customers to understand operational issues, anticipate what successful outcomes require and solve unique networking needs. See Note 6 to the Consolidated Financial Statements for additional information regarding our segments.
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Other applications require conductors, insulation, and jacketing materials that can withstand repeated flexing. In addition to cable product configurations for these applications, we supply heat-shrinkable tubing and wire management products to protect and organize wire and cable assemblies.
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Most recently, in August 2023, we acquired CloudRail GmbH (CloudRail), which spec ializes in sensor to cloud data solutions allowing end users to quickly connect sensors on their machinery to cloud providers to drive business insights and improve outcomes.
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Our industrial connector products are primarily used as sensor and actuator connections in factory automation supporting various fieldbus protocols as well as power connections in building automation. These products are used both as components of manufacturing equipment and in the installation and networking of such equipment.
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Through our people and our strong commitment to our values, we continually strive to serve the needs of our customers and improve the communities where we live and work. We have a responsibility to make a positive, meaningful impact on the world around us, which is why our commitment to ESG is so important.
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Environmental, Social, and Governance (ESG) at Belden Belden believes in creating shared value for all our stakeholders, including our employees, customers, the communities we touch across our value chain, and the planet. Responsible stewardship, managing our climate impacts, and driving sustainability through innovation is core to our business strategy.
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We are committed to leaving the world better than we found it. We are dedicated to continuously improving our global impact through visible and measurable progress. Our ESG strategy is overseen by our Board of Directors through the Nominating and Corporate Governance Committee.
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We are dedicated to making progress towards our 2025 goals for the topics most material to our business and are working across our operations to further integrate ESG matters into how we operate.
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Under the leadership of our Senior Vice President-Legal, General Counsel and Corporate Secretary, our ESG Steering Committee is responsible for implementation of our strategy and comprises cross-functional members of the organization. This Committee meets quarterly to discuss strategy and progress towards our goals.
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As part of our efforts towards stakeholder transparency, we look forward to sharing our progress and work under way in our inaugural ESG Report, which we expect to publish during 2023. Our ESG matters are overseen by our Board of Directors through the Nominating and Corporate Governance Committee. Belden’s ESG Steering Committee manages our global ESG strategy and implementation.
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Additionally, the committee reports to our Board on a quarterly basis and regularly brings forth ESG matters to be discussed at the Senior Leadership Team (SLT) level, with our CEO overseeing the incorporation of our strategy and goals throughout our business.
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Individuals of ethnically diverse backgrounds make up 24% of our U.S. workforce and 11% of our Board of Directors. Diversity, Equity, and Inclusion (DEI) At Belden, we are dedicated to creating a culture of equity, inclusivity and diversity for the people that we employ.
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Since 2022, Belden became signatories of the United Nations and Caring for Climate Pledge and also recommitted to the UN Global Compact (UNGC). The UNGC is the world’s largest corporate sustainability initiative, comprised of over 20,000 companies across 160 countries.
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Anshu Mehrotra was appointed Executive Vice President, Broadband & 5G in August 2022. Prior to that, he served as Senior Vice President, Sales and Marketing since January 2021. Prior to joining Belden, he was Group President for Welding at Illinois Tool Works (ITW), leading the global Industrial Welding platform.
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The UNGC embraces principles on human rights, labor, the environment, and anti-corruption, all of which we hope to support and advance to create a better tomorrow.
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Prior to ITW, he has had a number of leadership roles in general management and sales at Ingersoll Rand, Allegion and Johnson Controls. He has a B.S. in Electronics Engineering from Delhi University, an M.S. in Industrial Engineering from Northern Illinois University and an M.B.A. from Northwestern University at Kellogg School of Management.
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Belden also joined the Responsible Business Alliance in the pursuit of creating an ethical and sustainable supply chain with other industry partners by advancing the environmentally responsible procurement of materials and a workforce free of forced labor and ethical injustices.
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Our ESG goals span each pillar of our framework with a target completion date of 2025 are as follows: Environmental • Reduce Scope 1 and Scope 2 total combined emissions by 25% (FY19 baseline) for all global locations greater than 15,000 square feet. • Increase the use of electricity generated from site specific renewable sources from 2019 levels at our manufacturing and distribution locations. • Increase total global electricity use efficiency from 2019 levels at manufacturing and distribution locations. • Achieve at least 90% of waste diverted from landfill for manufacturing and distribution locations. • Increase the use of renewable or recyclable materials in packaging by 20% (FY21 baseline). 6 Social • As a first step towards our vision of a diverse, equitable, and inclusive workplace, we will deliver unconscious bias training to 100% of the Belden team worldwide. • Global team members will be encouraged to participate in an average of 16 hours per year of community related activities. • 60% of global team members will participate in company wellness programs. • 75% of Belden’s top leadership positions will be filled with talent that has been developed from within our company. • Over 200 professionals will have graduated from our Early Career Leadership Program and our Intern Program. • >85% of team members will agree that they have the opportunity for development and growth at Belden. • Assess the responsible sourcing risks in Belden’s supply chain, conduct audits of most at-risk tier 1 direct suppliers, and engage 100% of conflict minerals suppliers.
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Governance • Achieve understanding of the Code of Conduct (CoC) from 100% of global non-production team members. • Be recognized as one of the most ethical global companies. As we progress towards our goals highlighted above, we build on existing initiatives and explore new technologies to reduce our greenhouse gas (GHG) emissions, waste sent to landfill, and water consumption.
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Energy conservation and solar generation projects have been identified and are being implemented. Thus far, we have seen a decrease in Scope 1 and 2 absolute emissions by 9.5% and a decrease in Scope 1 and 2 GHG intensity by 25.0%.
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Our onsite green energy initiative has allowed us to reduce the consumption of energy from the local GHG emission-producing grid, and instead utilize green energy solar panels at our manufacturing facilities in China and India and soon in Germany and Hungary as well.
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At Belden, we are also increasing our use of reusable materials to include a focus on expanding the use of biodegradable materials by launching a global reusable cardboard packaging program to reduce plastic use from drop cable. This improvement will directly eliminate the use of 21 tons of plastic waste per year per 500 foot cables.
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Of our workforce, 39% identify as women and they represent 23% of the senior management and 40% of our Board of Directors. Individuals of ethnically diverse backgrounds make up 25% of our U.S. workforce and 30% of our Board of Directors.
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Wirts served in various roles in Emerson and Vertiv following more than six years in the U.S. Marine Corps. He has a bachelor’s degree in History from Colgate University and an MBA from Northwestern University. Doug Zink has been Vice President and Chief Accounting Officer since September 2013.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

51 edited+10 added−17 removed65 unchanged
Biggest changeFurther, the supply chain in the fiber market is highly constrained, with a small number of vertically integrated firms controlling critical inputs and the related intellectual property. Similarly, in our non-cable businesses, customers could rapidly shift the methods by which they capture and transmit signals in ways that could lead to decreased demand for our current or future products.
Biggest changeSimilarly, in our non-cable businesses, customers could rapidly shift the methods by which they capture and transmit signals in ways that could lead to decreased demand for our current or future products. These factors, either together or in isolation, may negatively impact revenue and profitability. Cyber security incidents have and could in the future interfere with our business and operations.
However, if there were a dispute with one of these bargaining groups, the affected operations could be interrupted, resulting in lost revenues, lost profit contribution, and customer dissatisfaction. Item 1B. Unresolved Staff Comments None. 17
However, if there were a dispute with one of these bargaining groups, the affected operations could be interrupted, resulting in lost revenues, lost profit contribution, and customer dissatisfaction. Item 1B. Unresolved Staff Comments None.
Nevertheless, we may be subject to unanticipated obligations regarding our products which incorporate or use open source software. If our goodwill or other intangible assets become impaired, we would be required to recognize charges that would reduce our income.
Nevertheless, we may be subject to unanticipated obligations regarding our products which incorporate or use open source software. 17 If our goodwill or other intangible assets become impaired, we would be required to recognize charges that would reduce our income.
In addition to manufacturing and other operating facilities in the U.S., we have manufacturing and other operating facilities in Canada, China, India, Mexico, and several European countries. We rely on suppliers in many countries, including China.
In addition to manufacturing and other operating facilities in the U.S., we have manufacturing and other operating facilities in Canada, China, India, Mexico, Tunisia and several European countries. We rely on suppliers in many countries, including China.
We also face political risks in the U.S., including tax or regulatory risks or potential adverse impacts from legislative impasses over, or significant legislative, regulatory or executive changes in fiscal or monetary policy and other foreign and domestic government policies, including, but not limited to, trade policies and import/export policies. Approximately 44% of our sales are outside the U.S.
We also face political risks in the U.S., including tax or regulatory risks or potential adverse impacts from legislative impasses over, or significant legislative, regulatory or executive changes in fiscal or monetary policy and other foreign and domestic government policies, including, but not limited to, trade policies and import/export policies. Approximately 45% of our sales are outside the U.S.
Similarly, if the Company’s customers experience production challenges due to the inability to obtain certain components, this may negatively impact the customers’ ordering patterns from the Company. The presence of substitute products in the marketplace may reduce demand for our products and negatively impact our business. Fiber optic systems are increasingly substitutable for copper-based cable systems.
Similarly, if the Company’s customers experience production challenges due to the inability to obtain certain components, this may negatively impact the customers’ ordering patterns from the Company. 12 The presence of substitute products in the marketplace may reduce demand for our products and negatively impact our business. Fiber optic and wireless systems are increasingly substitutable for copper-based cable systems.
We, and others on our behalf, also store “personally identifiable information” (“PII”) with respect to employees, vendors, customers, and others. While we have implemented safeguards to protect the privacy of this information, it is possible that hackers or others might obtain this information in the future, as occurred in 2020.
We, and others on our behalf, also have possession of “personally identifiable information” (“PII”) with respect to employees, vendors, customers, and others. While we have implemented safeguards to protect the privacy of this information, it is possible that hackers or others might obtain this information in the future, as occurred in 2020.
Furthermore, we rely on our information systems and those of third parties for storing proprietary company information about our products and intellectual property, as well as for processing customer orders, manufacturing and shipping products, billing our customers, tracking inventory, supporting accounting functions and financial statement preparation, paying our employees, and otherwise running our business.
Furthermore, we rely on our information systems and those of third parties that maintain proprietary company information about our products and intellectual property, as well as for processing customer orders, manufacturing and shipping products, billing our customers, tracking inventory, supporting accounting functions and financial statement preparation, paying our employees, and otherwise running our business.
A global economic downturn could cause financial difficulties (including bankruptcy) for our distributors and other customers, which could adversely affect our results of operations. 13 Table of Contents Actions of activists could cause us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business.
A global economic downturn could cause financial difficulties (including bankruptcy) for our distributors and other customers, which could adversely affect our results of operations. Actions of activists could cause us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business.
For example, our MDS initiative may not succeed or we may lose market share due to challenges in choosing the right products to market or the right customers for these products, integrating products of acquired companies into our sales and marketing strategy, or strategically bidding against OEM partners. We may fail to identify growth opportunities.
For example, our commercial initiatives may not succeed or we may lose market share due to challenges in choosing the right products to market or the right customers for these products, integrating products of acquired companies into our sales and marketing strategy, or strategically bidding against OEM partners. We may fail to identify growth opportunities.
If we are not able to respond to and manage the impact of such events effectively, our business will be affected. 14 Table of Contents Inflation and changes in the price and availability of raw materials may lead to higher input and labor costs in a way that could be detrimental to our profitability.
If we are not able to respond to and manage the impact of such events effectively, our business may be affected. Inflation and changes in the price and availability of raw materials may lead to higher input and labor costs in a way that could be detrimental to our profitability.
Component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms. Health crises, like the COVID-19 pandemic, could lead to quarantines or labor shortages, thus impacting the output of key suppliers.
Component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms. Health crises, such as a pandemic, could lead to quarantines or labor shortages, thus impacting the output of key suppliers.
We are subject to laws and regulations worldwide, changes to which could increase our costs and individually or in the aggregate adversely affect our business. We are subject to laws and regulations affecting our domestic and international operations in a number of areas.
We are subject to laws and regulations worldwide, changes to which could increase our costs and individually or in the aggregate adversely affect our business. We are subject to laws and regulations affecting our global operations in a number of areas.
As a result, we may be unable to make acquisitions or be forced to pay more or agree to less advantageous acquisition terms for companies we would like to acquire. 12 Table of Contents We may also have difficulty integrating acquired businesses or future acquisitions may be unable to meet our performance expectations.
As a result, we may be unable to make acquisitions or be forced to pay more or agree to less advantageous acquisition terms for companies we would like to acquire. We may also have difficulty integrating acquired businesses or future acquisitions may be unable to meet our performance expectations.
The frequency of such delays can be difficult to predict. As a result, it is difficult to precisely forecast revenue and operating results for future quarters. In addition, our revenue can be difficult to forecast due to unexpected changes in the level of our products held as inventory by our channel partners and customers.
As a result, it is difficult to precisely forecast revenue and operating results for future quarters. 11 In addition, our revenue can be difficult to forecast due to unexpected changes in the level of our products held as inventory by our channel partners and customers.
As a result of increased inflation, costs of raw materials and labor may increase in a way that we are unable to offset in a timely manner through higher prices for finished goods. Copper is a significant component of the cost of most of our cable products.
As a result of increased inflation, costs of raw materials and labor may increase in a way that we are unable to offset in a timely manner through higher prices for finished goods. Copper is a significant component of the cost of most of our cable products. Historically, the prices of metals, particularly copper, have been volatile.
The duration and extent of the impact from the COVID-19 pandemic or any future epidemic, pandemic or major disaster depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus (including variant mutations of the virus), the extent and effectiveness of containment actions, treatments and vaccinations, the effects of measures enacted by policy makers and central banks around the globe, and the impact of these and other factors on our employees, customers, channel partners and suppliers.
The duration and extent of the impact from any future epidemic, pandemic or major disaster depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, treatments and vaccinations, the effects of measures enacted by policy makers and central banks around the globe, and the impact of these and other factors on our employees, customers, channel partners and suppliers.
Customers may shift demand to fiber optic systems with greater capabilities than copper-based cable systems, leading to a reduction in demand for copper-based cable. We may not be able to offset the effects of a reduction in demand for our copper-based cable systems with an increase in demand for our existing fiber optic systems.
Customers may shift demand to systems with greater capabilities than copper-based cable systems, leading to a reduction in demand for copper-based cable. We may not be able to offset the effects of a reduction in demand for our copper-based cable systems.
Our revenue for any particular period can be difficult to forecast, especially in light of the challenging and inconsistent global macroeconomic environment and related market uncertainty. Our revenue may grow at a slower rate than in past periods or even decline on a year-over-year basis.
Our revenue for any particular period can be difficult to forecast, especially in light of the challenging and inconsistent global macroeconomic environment and related market uncertainty. Our revenue may grow at a slower rate than in past periods or even decline on a year-over-year basis. Changes in market growth rates can have a significant effect on our operating results.
We have a disciplined process for deploying this strategic plan through our associates. There is a risk that we may not be successful in developing or executing these measures to achieve the expected results for a variety of reasons, including market developments, economic conditions, shortcomings in establishing appropriate action plans, or challenges with executing multiple initiatives simultaneously.
There is a risk that we may not be successful in developing or executing these measures to achieve the expected results for a variety of reasons, including market developments, economic conditions, shortcomings in establishing appropriate action plans, or challenges with executing multiple initiatives simultaneously.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employees, and joint venture partners, and cause our stock price to experience periods of volatility.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, employees, and joint venture partners, and cause our stock price to experience periods of volatility. 14 Perceived failure of our signal transmission solutions to provide expected results may result in negative publicity and harm our business and operating results.
This may negatively impact one or more of our businesses in a number of ways, including: • Consolidation of procurement power leading to the commoditization of IT products; • Reduction in the demand for infrastructure products previously used to support on-site data centers; • Lowering barriers to entry for certain markets, leading to new market entrants and enhanced competition; and • Preferences for software as a service billing and pricing models may reduce demand for non-cloud “packaged” software.
This may negatively impact one or more of our businesses in a number of ways, including: • Consolidation of procurement power leading to the commoditization of IT products; • Reduction in the demand for infrastructure products previously used to support on-site data centers; • Lowering barriers to entry for certain markets, leading to new market entrants and enhanced competition; and • Preferences for software as a service billing and pricing models may reduce demand for non-cloud “packaged” software. 13 We may have difficulty integrating the operations of acquired businesses, which could negatively affect our results of operations, profitability, and achievement of our strategic plan.
See the discussion above in Part I, Item 1, under Research and Development . 9 Table of Contents We may be unable to achieve our goals related to revenue growth. In order to meet the goals in our strategic plan, we must execute our Market Delivery System ("MDS") and grow our business, both organically and through acquisitions.
See the discussion above in Part I, Item 1, under Research and Development . We may be unable to achieve our goals related to revenue growth. In order to meet the goals in our strategic plan, we must execute our commercial strategy and grow our business, both organically and through acquisitions.
Governmental tax authorities are increasingly scrutinizing the tax positions of companies. The U.S. federal and state governments, countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws, including a corporate minimum tax.
The U.S. federal and state governments, countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development (OECD), are actively implementing changes to existing tax laws, including a global minimum tax.
Over the past few years, and in particular in 2021 and 2022, the prices of metals, particularly copper, have been volatile. Prices of other materials we use, such as PVC and other plastics derived from petrochemical feedstocks, have also been volatile. Generally, we have recovered much of the higher cost of raw materials through higher pricing of our finished products.
Prices of other materials we use, such as PVC and other plastics derived from petrochemical feedstocks, have also been volatile. Generally, we have recovered much of the higher cost of raw materials through higher pricing of our finished products.
We may have difficulty integrating the operations of acquired businesses, which could negatively affect our results of operations, profitability, and achievement of our strategic plan. As part of our strategic plan initiatives, we periodically execute acquisitions and divestitures. The extent to which appropriate acquisitions are made will affect our overall growth, operating results, financial condition, and cash flows.
As part of our strategic plan initiatives, we periodically execute acquisitions and divestitures. The extent to which appropriate acquisitions are made will affect our overall growth, operating results, financial condition, and cash flows.
Though it is difficult to determine what, if any, harm may directly result from any specific attack or interruption, such events could also be expensive to remedy, harm our reputation or brands, and/or lead users to lose trust and confidence in our business.
Computer hacking, malware, phishing, and spamming attacks against online networking platforms have become more prevalent. Though it is difficult to determine what, if any, harm may directly result from any specific attack or interruption, such events could also be expensive to remedy, harm our reputation or brands, and/or lead users to lose trust and confidence in our business.
While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be contested or overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes. 15 Table of Contents Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied.
While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be contested or overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.
If we are unable to achieve our goals related to revenue growth, it could have a material adverse effect on our results of operations, financial position, and cash flows. We may be unable to implement our strategic plan successfully.
If we are unable to achieve our goals related to revenue growth, it could have a material adverse effect on our results of operations, financial position, and cash flows. Our revenue for any particular period can be difficult to forecast.
These U.S. and foreign laws and regulations affect our activities including, but not limited to, in areas of labor, advertising, real estate, billing, e-commerce, promotions, quality of services, property ownership and infringement, tax, import and export requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy requirements, anti-competition, environmental, health and safety.
These U.S. and foreign laws and regulations affect our activities including, but not limited to, in areas of labor, advertising, real estate, billing, e-commerce, promotions, quality of services, property ownership and infringement, tax, import and export requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, machine learning and artificial intelligence, data privacy requirements, anti-competition, environmental, health and safety. 16 Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business.
Perceived failure of our signal transmission solutions to provide expected results may result in negative publicity and harm our business and operating results. Our customers use our signal transmission solutions in a wide variety of IT systems and application environments in order to help reduce security vulnerabilities and demonstrate compliance.
Our customers use our signal transmission solutions in a wide variety of IT systems and application environments in order to help reduce security vulnerabilities and demonstrate compliance.
Changes in market growth rates can have a significant effect on our operating results. 11 Table of Contents The timing of orders for customer projects can also have a significant effect on our operating results in the period in which the products are shipped and recognized as revenue.
The timing of orders for customer projects can also have a significant effect on our operating results in the period in which the products are shipped and recognized as revenue. The timing of such projects is difficult to predict, and the timing of revenue recognition from such projects may affect period to period changes in revenue.
As we are dependent upon our channel partners and customers to provide us with information regarding the amount of our products that they own and hold in their inventory, unexpected changes can occur and impact our revenue forecast. We may experience significant variability in our quarterly and annual effective tax rate which would affect our reported net income.
As we are dependent upon our channel partners and customers to provide us with information regarding the amount of our products that they own and hold in their inventory, unexpected changes can occur and impact our revenue forecast. We may be unable to implement our strategic plan successfully.
Our ability to implement our business strategy and grow our business, particularly through acquisitions, may depend on our ability to raise capital by selling equity or debt securities or obtaining additional debt financing. Market conditions including changes in interest rates may prevent us from obtaining financing when we need it or on terms acceptable to us.
Our ability to implement our business strategy and grow our business, particularly through acquisitions, may depend on our ability to raise capital by selling equity or debt securities or obtaining additional debt financing.
Further, certain distributors are allowed to return certain inventory in exchange for an order of equal or greater value. We have recorded reserves for the estimated impact of these inventory policies. Consolidation of our distributors could adversely impact our revenues and earnings. It could also result in consolidation of distributor inventory, which would temporarily depress our revenues.
Changes in the inventory levels of our products owned and held by our distributors can result in significant variability in our revenues. Further, certain distributors are allowed to return certain inventory in exchange for an order of equal or greater value. We have recorded reserves for the estimated impact of these inventory policies.
There may be additional risks that impact our business that we currently do not recognize as, or that are not currently, material to our business. 8 Table of Contents Business and Operational Risks A challenging global economic environment or a downturn in the markets we serve could adversely affect our operating results and stock price in a material manner.
Business and Operational Risks A challenging global economic environment or a downturn in the markets we serve could adversely affect our operating results and stock price in a material manner.
Deterioration of social, political, labor, or economic conditions in a specific country or region may adversely affect our operations or financial results. Emerging markets may not meet our growth expectations, and we may be unable to maintain such growth or to balance such growth with financial goals and compliance requirements.
We may be unable to attract, develop, and retain appropriate talent to manage our businesses in emerging markets. Deterioration of social, political, labor, or economic conditions in a specific country or region may adversely affect our operations or financial results.
Item 1A. Risk Factors Following is a discussion of some of the more significant risks that could materially impact our business.
Item 1A. Risk Factors Following is a discussion of some of the more significant risks that could materially impact our business. There may be additional risks that impact our business that we currently do not recognize as, or that are not currently, material to our business.
In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services. 16 Table of Contents Increasing expectations with respect to Environmental, Social and Governance (ESG) matters by our various stakeholders could adversely affect our business and operating results.
In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our services.
Generally, we have revenues and costs in the same currency, thereby reducing our overall currency risk, although any realignment of our manufacturing capacity among our global facilities could alter this balance. When the U.S. dollar strengthens against other currencies, the results of our non-U.S. operations are translated at a lower exchange rate and thus into lower reported revenues and earnings.
Generally, we have revenues and costs in the same currency, thereby reducing our overall currency risk, although any realignment of our manufacturing capacity among our global facilities could alter this balance.
We have a complex tax profile due to the global nature of our operations, which encompass multiple taxing jurisdictions.
We may experience significant variability in our quarterly and annual effective tax rate which would affect our reported net income. We have a complex tax profile due to the global nature of our operations, which encompass multiple taxing jurisdictions.
We have also experienced financial failure of distributors from time to time, resulting in our inability to collect accounts receivable in full.
Consolidation of our distributors could adversely impact our revenues and earnings. It could also result in consolidation of distributor inventory, which would temporarily depress our revenues. We have also experienced financial failure of distributors from time to time, resulting in our inability to collect accounts receivable in full.
We may not be able to acquire businesses that fit our strategic plan on acceptable business terms, and we may not achieve our other strategic priorities. Our results of operations are subject to foreign and domestic political, social, economic, and other uncertainties and are affected by changes in currency exchange rates.
We may not be able to acquire businesses that fit our strategic plan on acceptable business terms, and we may not achieve our other strategic priorities.
A reduction or interruption in supply, including interruptions due to COVID-19 or geopolitical unrest beyond the Company’s control, an inability to procure quality raw materials in a cost effective manner and constrain volatile materials costs, a failure to monitor contract compliance to ensure and sustain sourcing savings, a failure to procure adequate inventory or raw materials from our suppliers, or regulatory changes may lead to delays in manufacturing and increases in costs. 10 Table of Contents Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages that could materially adversely affect the Company’s financial condition and operating results.
A reduction or interruption in supply, an inability to procure quality raw materials in a cost effective manner and constrain volatile materials costs, a failure to monitor contract compliance to ensure and sustain sourcing savings, a failure to procure adequate inventory or raw materials from our suppliers, or regulatory changes may lead to delays in manufacturing and increases in costs.
A decline in energy prices, therefore, can have a negative impact on our revenues and results of operations. The global markets in which we operate are highly competitive. We face competition from other manufacturers for each of our global business platforms and in each of our geographic regions.
When the U.S. dollar strengthens against other currencies, the results of our non-U.S. operations are translated at a lower exchange rate and thus into lower reported revenues and earnings. 10 The global markets in which we operate are highly competitive. We face competition from other manufacturers for each of our global business platforms and in each of our geographic regions.
Similarly, we are often informed by our customers well in advance that such customer intends to place an order related to a specific project in a given quarter. Such a customer’s timeline for execution of the project, and the resulting purchase order, may be unexpectedly delayed to a future quarter, or cancelled.
As a result, our operating results could vary materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as revenue. Similarly, we are often informed by our customers well in advance that such customer intends to place an order related to a specific project in a given quarter.
We may be unable to achieve our strategic priorities in emerging markets. Emerging markets are a significant focus of our strategic plan. The developing nature of these markets presents a number of risks. We may be unable to attract, develop, and retain appropriate talent to manage our businesses in emerging markets.
Market conditions including changes in interest rates may prevent us from obtaining financing when we need it or on terms acceptable to us. 15 We may be unable to achieve our strategic priorities in emerging markets. Emerging markets are a significant focus of our strategic plan. The developing nature of these markets presents a number of risks.
If we were to lose one of these key distributors, our revenue and profits would likely decline, at least temporarily. Changes in the inventory levels of our products owned and held by our distributors can result in significant variability in our revenues.
Our revenue and profits would likely decline, at least temporarily, if we were to lose a key distributor. We rely on several key distributors in marketing our products. Distributors purchase the products of our competitors along with our products.
General Industry and Economic Risks The effects of the COVID-19 pandemic continued to materially affect how we and our customers operated our businesses in 2022, and the duration and extent to which this or future epidemics, pandemics or other major disasters will impact our future results of operations and overall financial performance remains uncertain.
General Industry and Economic Risks Future epidemics, pandemics or other major disasters could impact our future results of operations and overall financial performance. In the past, our operations and the operations of our suppliers, channel partners and customers have been disrupted to varying degrees by a pandemic.
Certain changes in tax laws and related regulations may materially impact our financial results. Given the unpredictability of these possible changes and their potential interdependency, it is possible such changes could adversely impact our financial results. Changes in global tariffs and trade agreements may have a negative impact on global economic conditions, markets and our business.
We will continue to monitor pending legislation and implementation by individual countries and are in the process of evaluating the potential impact on our business in future periods. Changes in global tariffs and trade agreements may have a negative impact on global economic conditions, markets and our business.
We rely on several key distributors in marketing our products. Distributors purchase the products of our competitors along with our products. Our largest distributor, WESCO, accounted for approximately 15% of our revenue in 2022 and our top eight distributors, including WESCO, accounted for a total of 34% of our reven ue in 2022.
Our largest distributor, WESCO, accounted for app roximately 15% of our revenue in 2023 and our top seven distributors, including WESCO, accounted for a total of 31% of o ur reven ue in 2023. If we were to lose one of these key distributors, our revenue and profits would likely decline, at least temporarily.
Removed
Our strategic plan is designed to continually enhance shareholder value by improving revenues and profitability, reducing costs, and improving working capital management.
Added
A decline in energy prices, therefore, can have a negative impact on our revenues and results of operations. Our results of operations are subject to foreign and domestic political, social, economic, and other uncertainties and are affected by changes in currency exchange rates.
Removed
To achieve these goals, our strategic priorities are reliant on our Belden Business System, which includes continuing deployment of our MDS to capture market share through end-user engagement, channel management, outbound marketing, and careful vertical market selection; improving our recruitment and development of talented associates; developing strong global business platforms; acquiring businesses that fit our strategic plan; and continuing to be a leading Lean company.
Added
Such a customer’s timeline for execution of the project, and the resulting purchase order, may be unexpectedly delayed to a future quarter, or cancelled. The frequency and length of such delays can be difficult to predict.
Removed
These factors, either together or in isolation, may negatively impact revenue and profitability. Cyber security incidents have and could in the future interfere with our business and operations. Computer hacking, malware, phishing, and spamming attacks against online networking platforms have become more prevalent.
Added
Our strategic plan was developed based upon market and technology trends that we believe present revenue growth opportunities that will lead to increased shareholder value. In order to capture that revenue growth, we will increasingly focus on offering solutions, although selling products will remain a core focus of the business.
Removed
If we are unable to successfully implement potential future information systems enhancements, our financial position, results of operations, and cash flows could be negatively impacted. Our revenue for any particular period can be difficult to forecast.
Added
To achieve these goals, we have identified a series of strategic priorities to drive growth and improve efficiency, addressing our commercial, innovation, and operational processes. We have a disciplined process for deploying this strategic plan through our associates.
Removed
The timing of such projects is difficult to predict, and the timing of revenue recognition from such projects may affect period to period changes in revenue. As a result, our operating results could vary materially from quarter to quarter based on the receipt of such orders and their ultimate recognition as revenue.
Added
Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages that could materially adversely affect the Company’s financial condition and operating results.
Removed
The increased influence of chief information officers and similar high-level executives may negatively impact demand for our products. As a result of the increasing interconnectivity of a wide variety of systems, chief information officers and similar executives are more heavily involved in operation areas that have not historically been associated with information technology.
Added
Emerging markets may not meet our growth expectations, and we may be unable to maintain such growth or to balance such growth with financial goals and compliance requirements.
Removed
As a result, CIOs and IT departments are exercising influence over the procurement and purchasing process at the expense of engineers, plant managers and operation personnel that have historically driven demand for many of our products. When making purchasing decisions, CIO’s often value interoperability, standardization, cloud-readiness and security over domain expertise and niche application knowledge.
Added
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Governmental tax authorities are increasingly scrutinizing the tax positions of companies.
Removed
As a result of the influences of CIOs and IT departments, we may face increased competition from IT-industry companies that have not traditionally had major presences in the markets in which we operate.
Added
Numerous countries have agreed to a statement in support of the OECD model rules that propose a global minimum tax rate of 15% and European Union member states have agreed to implement the global minimum tax.
Removed
Further, the variance in considerations that drive purchasing decisions between CIOs and those with niche application expertise may result in increased competition based on price and a reduction in demand for our products.
Added
Various countries have enacted or are expected to enact legislation to be effective as early as 2024, with widespread implementation of a global minimum tax expected by 2025. As the legislation becomes effective in countries in which we do business, our taxes could increase and negatively impact our provision for income taxes.
Removed
Alterations to our product mix and go-to-market strategies designed to respond to the changes in the marketplace presented by cloud computing may be disruptive to our business and lead to increase expenses, which may result in lower revenues and profitability.
Added
Increasing expectations with respect to Environmental, Social and Governance (ESG) matters by our various stakeholders and ESG regulation could adversely affect our business and operating results.
Removed
Further, if a competitor is able to more quickly or efficiently adapt, or if cloud computing results in significantly lower barriers to entry and new competitors enter our markets, demand for our products may be reduced. Our revenue and profits would likely decline, at least temporarily, if we were to lose a key distributor.
Removed
In December 2019, a novel coronavirus disease (“COVID-19”) was first reported and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic that has yet to fully recede. The widespread health crisis is adversely affecting the broader economies, financial markets and may adversely affect the overall demand environment for many of our products.
Removed
Our operations and the operations of our suppliers, channel partners and customers were and continue to be disrupted to varying degrees by a range of external factors related to the COVID-19 pandemic, some of which are not within our control.
Removed
Many governments imposed, and may yet impose or may re-impose, a wide range of restrictions on the physical movement or congregation of people in order to limit the spread of COVID-19.
Removed
The COVID-19 pandemic has had, and likely will continue to have, an impact on the attendance and productivity of our employees, and those of our channel partners or customers, resulting in negative impacts to our results of operations and overall financial performance.
Removed
Additionally, COVID-19 has resulted, and may result in future periods, in delays in non-residential construction, non-crisis-related IT purchases and project completion schedules in general, all of which can negatively impact our results in both current and future periods.
Removed
Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed0 unchanged
Biggest changeEnterprise Solutions Industrial Solutions Both Segments Total Belgium — 1 — 1 Canada — 1 — 1 China 1 — 1 2 Czech Republic — 1 — 1 Denmark 2 — — 2 Germany 1 1 — 2 Hungary — — 1 1 India — — 1 1 Italy — — 1 1 Mexico — — 2 2 Netherlands — — 1 1 Tunisia 1 — — 1 United Kingdom 1 — — 1 United States 4 3 2 9 Total 10 7 9 26 In addition to the manufacturing and other operating facilities summarized above, our business operations also utilize approximately 9 warehouses worldwide.
Biggest changeEnterprise Solutions Industrial Solutions Both Segments Total Belgium — 1 — 1 Canada — 1 — 1 China 1 — 1 2 Czech Republic — 1 — 1 Denmark 2 — — 2 Germany 1 1 — 2 Hungary — — 1 1 India — — 1 1 Italy — — 1 1 Mexico — — 2 2 Netherlands — — 1 1 Poland 1 — — 1 Tunisia 1 — — 1 United Kingdom 1 — — 1 United States 5 2 2 9 Total 12 6 9 27 In addition to the manufacturing and other operating facilities summarized above, our business operations also utilize approximately 8 warehouses worldwide.
As of December 31, 2022, we owned or leased a total of approximately 6 million square feet of facility space worldwide. We believe that our production facilities are suitable for their present and intended purposes and adequate for our current level of operations.
As of December 31, 2023, we owned or leased a total of approximately 6 million square feet of facility space worldwide. We believe that our production facilities are suitable for their present and intended purposes and adequate for our current level of operations.
The table below summarizes the geographic locations of our manufacturing and other operating facilities utilized by our segments as of December 31, 2022.
The table below summarizes the geographic locations of our manufacturing and other operating facilities utilized by our segments as of December 31, 2023.
Item 2. Properties Belden owns and leases manufacturing, warehousing, sales, and administrative space in locations around the world. We also have a corporate office that we lease in St. Louis, Missouri. The leases are of varying terms, expiring from 2023 through 2037 .
Item 2. Properties Belden owns and leases manufacturing, warehousing, sales, and administrative space in locations around the world. We also have a corporate office that we lease in St. Louis, Missouri. The leases are of varying terms, expiring from 2024 through 2039.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, since the trends and outcome of this litigation are inherently uncertain, we cannot give absolute assurance regarding the future resolution of such litigation, or that such litigation may not become material in the future. Item 4. Mine Safety Disclosures Not applicable. 18 PART II
Biggest changeHowever, since the trends and outcome of this litigation are inherently uncertain, we cannot give absolute assurance regarding the future resolution of such litigation, or that such litigation may not become material in the future. Item 4. Mine Safety Disclosures Not applicable. 20 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(45.7) % 32.1 % (23.4) % 57.5 % 9.7 % S&P 500 Index (4.4) % 31.5 % 18.4 % 28.7 % (18.1) % S&P 1500 Industrials Index (13.4) % 29.8 % 11.7 % 22.2 % (6.4) % INDEXED RETURNS Years Ended December 31, Company Name / Index Base Period 2017 2018 2019 2020 2021 2022 Belden Inc. $ 100.00 $ 54.30 $ 71.76 $ 54.97 $ 86.56 $ 94.99 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 S&P 1500 Industrials Index 100.00 86.82 112.43 125.58 153.43 143.57
Biggest changeTotal Return To Shareholders (Includes reinvestment of dividends) ANNUAL RETURN PERCENTAGE Years Ended December 31, Company Name / Index 2019 2020 2021 2022 2023 Belden Inc. 32.1 % (23.4) % 57.5 % 9.7 % 7.7 % S&P 500 Index 31.5 % 18.4 % 28.7 % (18.1) % 26.3 % S&P 1500 Industrials Index 29.8 % 11.7 % 22.2 % (6.4) % 20.4 % INDEXED RETURNS Years Ended December 31, Company Name / Index Base Period 2018 2019 2020 2021 2022 2023 Belden Inc. $ 100.00 $ 132.14 $ 101.22 $ 159.39 $ 174.92 $ 188.38 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P 1500 Industrials Index 100.00 129.80 144.98 177.13 165.75 199.52 Item 6.
The comparison assumes $100 was invested on December 31, 2017, in Belden’s common stock and in each of the foregoing indices and assumes reinvestment of dividends.
The comparison assumes $100 was invested on December 31, 2018, in Belden’s common stock and in each of the foregoing indices and assumes reinvestment of dividends.
The stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price performance. 19 Table of Contents (1) The chart above and the accompanying data are “furnished,” not “filed,” with the SEC.
The stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price performance. 21 (1) The chart above and the accompanying data are “furnished,” not “filed,” with the SEC.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “BDC.” As of February 17, 2023, there were 216 recor d holders of common stock of Belden Inc.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the symbol “BDC.” As of February 7, 2024, there were 203 recor d holders of common stock of Belden Inc.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of shares Repurchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs Balance at October 3, 2022 $ 78,664 October 3, 2022 through November 6, 2022 217 $ 62.85 217 65,000 November 7, 2022 through December 4, 2022 — — — 65,000 December 5, 2022 through December 31, 2022 — — — 65,000 Total 217 $ 62.85 217 $ 65,000 Stock Performance Graph The following graph compares the cumulative total shareholder return on Belden’s common stock over the five-year period ended December 31, 2022, with the cumulative total return during such period of the Standard and Poor’s 500 Stock Index and the Standard and Poor’s 1500 Industrials Index.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of shares Repurchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs Balance at October 1, 2023 $ 215,000 October 2, 2023 through November 5, 2023 — $ — — 215,000 November 6, 2023 through December 3, 2023 — — — 215,000 December 4, 2023 through December 31, 2023 576 73.17 576 172,865 Total 576 $ 73.17 576 $ 172,865 Stock Performance Graph The following graph compares the cumulative total shareholder return on Belden’s common stock over the five-year period ended December 31, 2023, with the cumulative total return during such period of the Standard and Poor’s 500 Stock Index and the Standard and Poor’s 1500 Industrials Index.
In 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable security laws and other regulations. This program is funded with cash on hand and cash flows from operating activities.
In 2018, our Board of Directors authorized a share repurchase program, which allows us to purchase up to $300.0 million of our common stock through open market repurchases, negotiated transactions, or other means, in accordance with applicable security laws and other regulations. In April 2023, our Board of Directors authorized an additional $300.0 million under the share repurchase program.
Set forth below is information regarding our stock repurchases for the three months ended December 31, 2022 (in thousands, except per share amounts).
As of December 31, 2023, we had $172.9 million of authorizations remaining under the program. Set forth below is information regarding our stock repurchases for the three months ended December 31, 2023 (in thousands, except per share amounts).
During 2022, we repurchased 2.6 million shares of our common stock for an aggregate cost of $150.0 million at an average price per share of $57.95. As of Dec ember 31, 2022, we had $65.0 million of authorizations remaining under the program.
From inception of our program, we have repurchased 6.7 million shares of our common stock for an aggregate cost of $427.1 million and an average price per share of $63.67. During 2023, we repurchased 2.3 million shares of our common stock for an aggregate cost of $192.1 million at an average price per share of $85.27.
The program does not have an expiration date and may be suspended at any time at the discretion of the Company. From inception of our program, we have repurchased 4.5 million shares of our common stock for an aggregate cost of $235.0 million and an average price of $52.75.
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.
Removed
Total Return To Shareholders (Includes reinvestment of dividends) ANNUAL RETURN PERCENTAGE Years Ended December 31, Company Name / Index 2018 2019 2020 2021 2022 Belden Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSee Note 2. 23 Table of Contents Results of Operations Consolidated Income from Continuing Operations before Taxes Years Ended December 31, Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) Revenues $ 2,606,485 $ 2,301,260 $ 1,752,192 13.3 % 31.3 % Gross profit 916,289 771,843 575,622 18.7 % 34.1 % Selling, general and administrative expenses 448,636 378,027 323,447 18.7 % 16.9 % Research and development expenses 104,350 90,227 73,020 15.7 % 23.6 % Amortization of intangibles 37,860 30,630 29,041 23.6 % 5.5 % Asset impairments — 9,283 — 100.0 % n/a Gain on sale of asset 37,891 — — n/a n/a Operating income 363,334 263,676 150,114 37.8 % 75.7 % Interest expense, net 43,554 62,693 58,903 (30.5) % 6.4 % Non-operating pension benefit (cost) 4,005 4,476 (395) 10.5 % (1,233.2) % Gain on sale of note receivable — 27,036 — 100.0 % n/a Loss on debt extinguishment 6,392 5,715 — (11.8) % n/a Income from continuing operations before taxes 317,393 226,780 90,816 40.0 % 149.7 % 2022 Compared to 2021 Revenues increased $305.2 million from 2021 to 2022 due to the following factors: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G products resulted in a $365.0 million increase in revenues. • Acquisitions, net of disposals contributed an estimated $19.3 million in revenues. • Currency translation had a $65.3 million unfavorable impact on revenues. • Copper prices had a $13.8 million unfavorable impact on revenues.
Biggest changeSee Note 2. 24 Results of Operations Consolidated Income from Continuing Operations before Taxes Years Ended December 31, Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) Revenues $ 2,512,084 $ 2,606,485 $ 2,301,260 (3.6) % 13.3 % Gross profit 954,966 916,289 771,843 4.2 % 18.7 % Selling, general and administrative expenses 492,702 448,636 378,027 9.8 % 18.7 % Research and development expenses 116,427 104,350 90,227 11.6 % 15.7 % Amortization of intangibles 40,375 37,860 30,630 6.6 % 23.6 % Asset impairments — — 9,283 n/a (100.0) % Gain on sale of assets 12,056 37,891 — (68.2) % n/a Operating income 317,518 363,334 263,676 (12.6) % 37.8 % Interest expense, net 33,625 43,554 62,693 (22.8) % (30.5) % Non-operating pension benefit 1,863 4,005 4,476 53.5 % (10.5) % Gain on sale of note receivable — — 27,036 n/a (100.0) % Loss on debt extinguishment — 6,392 5,715 100.0 % 11.8 % Income from continuing operations before taxes 285,756 317,393 226,780 (10.0) % 40.0 % 2023 Compared to 2022 Revenues decreased $94.4 million from 2022 to 2023 due to the following factors: • Lower sales volume resulted in a $108.4 million decrease in revenues. • Copper prices had a $19.9 million unfavorable impact on revenues. • Divestitures had a $1.4 million unfavorable impact on revenues. • Currency translation had a $0.4 million unfavorable impact on revenues. • Acquisitions contributed $35.7 million in revenues.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Belden is a leading global supplier of network infrastructure solutions that makes the digital journey simpler, smarter and secure. We’re moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Belden is a leading global supplier of network infrastructure and digitization solutions that makes the digital journey simpler, smarter and secure. We’re moving beyond connectivity, from what we make to what we make possible through a performance-driven portfolio, forward-thinking expertise and purpose-built solutions.
If actual results are materially different than the assumptions we used to determine fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on our net earnings. See Note 4.
If actual results are materially different than the assumptions we used to determine fair value of the assets and liabilities acquired through a business combination, it is possible that adjustments to the carrying values of such assets and liabilities will have an impact on our net earnings. See Note 4. 34
However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Our significant accounting policies are discussed in Note 2 of our Consolidated Financial Statements.
However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. 31 Our significant accounting policies are discussed in Note 2 of our Consolidated Financial Statements.
Our current business goals are to: • Drive organic revenue growth in excess of GDP; • Deliver incremental Adjusted EBITDA margins of approximately 30%; • Generate free cash flows of approximately $1 billion cumulatively from 2022 through 2025; • Execute a disciplined capital allocation strategy while maintaining net leverage of approximately 1.5x; and • Drive Adjusted EPS to $8.00 by 2025.
Our current business goals are to: • Drive organic revenue growth in excess of GDP; • Deliver incremental Adjusted EBITDA margins of approximately 30%; • Generate free cash flows of approximately $1 billion cumulatively from 2022 through 2025; • Execute a disciplined capital allocation strategy while maintaining net leverage of approximately 1.5x; and • Drive Adjusted EPS to at least $8.00 by 2025.
We expect our operating activities to generate cash in 2023 and believe our sources of liquidity are sufficient to fund current working capital requirements, capital expenditures, contributions to our retirement plans, share repurchases, senior subordinated note repurchases, quarterly dividend payments, and our short-term operating strategies. However, we may require external financing were we to complete a significant acquisition.
We expect our operating activities to generate cash in 2024 and believe our sources of liquidity are sufficient to fund current working capital requirements, capital expenditures, contributions to our retirement plans, share repurchases, senior subordinated note repurchases, quarterly dividend payments, and our short-term operating strategies. However, we may require external financing were we to complete a significant acquisition.
The accounting guidance allows for the performance of an optional qualitative assessment, similar to that described above for goodwill, but we did not perform a qualitative assessment as part of our indefinite-lived intangible asset impairment testing for 2022. Rather, we performed a quantitative assessment for our indefinite-lived trademark in 2022.
The accounting guidance allows for the performance of an optional qualitative assessment, similar to that described above for goodwill, but we did not perform a qualitative assessment as part of our indefinite-lived intangible asset impairment testing for 2023. Rather, we performed a quantitative assessment for our indefinite-lived trademark in 2023.
See Notes 5, 11 and 12. Gain on sale of asset increased $37.9 million from 2021 to 2022. During 2022, we sold certain real estate in the United States and recognized a $37.9 million pre-tax gain on sale. See Note 11.
See Notes 5, 11 and 12. Gain on sale of assets increased $37.9 million from 2021 to 2022. During 2022, we sold certain real estate in the United States and recognized a $37.9 million pre-tax gain on sale. See Note 11.
Our health care cost trend assumptions are developed based on historical cost data, the near-term outlook, and an assessment of likely long-term trends. Our key assumptions are described in further detail in Note 18 to the Consolidated Financial Statements.
Our health care cost trend assumptions are developed based on historical cost data, the near-term outlook, and an assessment of likely long-term trends. Our key assumptions are described in further detail in Note 19 to the Consolidated Financial Statements.
Within those operating segments, we have identified reporting units based on whether there is discrete financial information prepared that is regularly reviewed by segment management. As a result of this evaluation, we have identified three reporting units within Enterprise Solutions and three reporting units within Industrial Automation Solutions for purposes of goodwill impairment testing.
Within those operating segments, we have identified reporting units based on whether there is discrete fina ncial information prepared that is regularly reviewed by segment management. As a result of this evaluation, we have identified three reporting units within Enterprise Solutions and three reporting units within Industrial Automation Solutions for purposes of goodwill impairment testing.
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material. A 10% change in our sales reserve for such Changes as of December 31, 2022 would have affected net income by approximately $2.0 million in 2022 .
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material. A 10% change in our sales reserve for such Changes as of December 31, 2023 would have affected net income by approximately $2.5 million in 2023 .
Research and development expenses increased $14.1 million from 2021 to 2022 primarily due to increased investments as we further strengthen our product offering and continue our commitment to growth initiatives. Amortization of intangibles increased $7.2 million from 2021 to 2022 primarily due to acquisitions. See Note 4.
Research and development expenses increased $14.1 million from 2021 to 2022 primarily due to increased investments as we further strengthen our product offering and continue our commitment to growth initiatives. Amortization of intangibles increased $7.2 million from 2021 to 2022 primarily due to acquisitions.
The effective tax rate was primarily impacted by foreign tax rate differences, and domestic permanent differences and tax credits primarily associated with our foreign income inclusions. See Note 18. 2021 We recognized income tax expense of $27.9 million in 2021, representing an effective tax rate of 12.3%.
The effective tax rate was primarily impacted by foreign tax rate differences, domestic permanent differences, and tax credits primarily associated with our foreign income inclusions. 2021 We recognized income tax expense of $27.9 million in 2021, representing an effective tax rate of 12.3%.
At December 31, 2022, the following contractual obligations and commercial commitments were outstanding: a. Principal payments on long-term debt of $1.2 billion, none of which is due in 2023 (see Note 16).
At December 31, 2023, the following contractual obligations and commercial commitments were outstanding: a. Principal payments on long-term debt totaled $1.2 billion, none of which is due in 2024 (see Note 16).
Current-Year Adoption of Recent Accounting Pronouncements Discussion regarding our adoption of accounting pronouncements is included in Note 2 to the Consolidated Financial Statements. 30 Table of Contents Critical Accounting Estimates Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the U.S. (GAAP).
Current-Year Adoption of Recent Accounting Pronouncements Discussion regarding our adoption of accounting pronouncements is included in Note 2 to the Consolidated Financial Statements. Critical Accounting Estimates Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the U.S. (GAAP).
Our outstanding debt obligations as of December 31, 2022 consisted of $1.2 billion of senior subordinated notes. As of December 31, 2022, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $291.1 million. Additional discussion regarding our various borrowing arrangements is included in Note 16 to the Consolidated Financial Statements.
Our outstanding debt obligations as of December 31, 2023 consisted of $1.2 billion of senior subordinated notes. As of December 31, 2023, we had no borrowings outstanding on the Revolver, and our available borrowing capacity was $289.1 million. Additional discussion regarding our various borrowing arrangements is included in Note 16 to the Consolidated Financial Statements.
Consideration is given to the financial conditions and operating performance of the reporting unit being valued relative to those publicly-traded companies operating in the same or similar lines of business. For our annual impairment test in 2022, we performed a quantitative assessment over one of our reporting units.
Consideration is given to the financial conditions and operating performance of the reporting unit being valued relative to those publicly-traded companies operating in the same or similar lines of business. For our annual impairment test in 2023, we performed a quantitative assessment over three of our reporting units.
The loss on debt extinguishment in 2022 represents the premium paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off.
The loss on debt extinguishment in 2022 represents the premium paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off. See Note 16.
The loss on debt extinguishment in 2021 represents the premium paid to the bond holders to retire the 2025 Notes and for the unamortized debt issuance costs on the 2025 Notes that we were required to write-off. See Note 16.
The loss on debt extinguishment in 2021 represents the premium paid to the bond holders to retire the 2025 Notes and for the unamortized debt issuance costs on the 2025 Notes that we were required to write-off.
Under the quantitative assessment, we determined the fair value of the trademark using a relief from royalty methodology and compared the fair value to the carrying value. We determined that our trademark was not impaired during 2022. Significant assumptions to determine fair value included sales growth, royalty rates, and discount rates.
Under the quantitative assessment, we determined the fair value of the trademark using a relief from royalty methodology and compared the fair value to the carrying value. We determined that our trademark was not impaired during 2023. Significant assumptions to determine fair value included sales growth, a royalty rate, and a discount rate.
Obligations for uncertain tax positions of $6.2 million, none of which is due in 2023 (see Note 18). Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows that are or would be considered material to investors.
Obligations for uncertain tax positions of $7.1 million, none of which is due in 2024 (see Note 18). Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows that are or would be considered material to investors.
Depending on the conditions in the credit markets, we may refinance this debt, or we may use cash from operations, including temporarily accessing our Revolving Credit Agreement, to repay this debt. b. Interest payments on long-term debt of $309.1 million, of which $44.2 million is due in 2023. c.
Depending on the conditions in the credit markets, we may refinance this debt, or we may use cash from operations, including temporarily accessing our Revolving Credit Agreement, to repay this debt. b. Interest payments on long-term debt of $216.0 million, of which $44.2 million is due in 2024. c.
A 50 basis point decline in the expected return on plan assets would have resulted in an increase in the 2022 net periodic benefit cost of approximately $1.8 million.
A 50 basis point decline in the expected return on plan assets would have resulted in an increase in the 2023 net periodic benefit cost of approximately $1.5 million.
(2) In 2022, we incurred $10.1 million for lease guarantees associated with the Grass Valley disposal (see Note 12), $2.2 million related to fair value adjustments of acquired inventory and investments, and gains of $4.5 million on collections from previously written off receivables associated with the sale of Grass Valley.
In 2022, we incurred $10.1 million for lease guarantees associated with the Grass Valley disposal, $2.2 million related to fair value adjustments of acquired inventory and other assets, and gains of $4.5 million on collections from previously written off receivables associated with the sale of Grass Valley.
A 50 basis point increase in the expected return on plan assets would have resulted in a decrease in the 2022 net periodic benefit cost of approximately $1.8 million. 33 Table of Contents Acquisition Accounting We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values.
A 50 basis point increase in the expected return on plan assets would have resulted in a decrease in the 2023 net periodic benefit cost of approximately $1.5 million. Acquisition Accounting We allocate the consideration of an acquired business to its identifiable assets and liabilities based on estimated fair values.
Comparisons of our results between periods can be impacted by changes in the levels of channel inventory. We are dependent upon our channel partners to provide us with information regarding the amount of our products that they own and hold in their inventory. As such, all references to the effect of channel inventory changes are estimates.
Comparisons of our results between periods can be impacted by changes in the levels of channel inventory. We are dependent upon our channel partners to provide us with information regarding the amount of our products that they own and hold in their inventory.
As a sensitivity measure, the effect of a 50 basis point decline in the assumed discount rate would have resulted in a decrease in the 2022 net periodic benefit cost of less than $0.1 million and an increase in the projected benefit obligations of approximately $17.8 million as of December 31, 2022.
As a sensitivity measure, the effect of a 50 basis point decline in the assumed discount rate would have resulted in a decrease in the 2023 net periodic benefit cost of approximately $0.1 million and an increase in the projected benefit obligations of approximately $19.8 million as of December 31, 2023.
We generally expect that our unit sales volume will increase or decrease consistently with the market growth rate. Our strategic goal is to utilize our Market Delivery System to target faster growing geographies, applications, and trends within our end markets, in order to achieve growth that is higher than the general market growth rate.
We generally expect that our unit sales volume will increase or decrease consistently with the market growth rate. Our strategic goal is to transition to a solutions provider and target faster growing geographies, applications, and trends within our end markets, in order to achieve growth that is higher than the general market growth rate.
The excess of the fair value over the carrying value under the income approach was 48%. The assumptions used to estimate fair values were based on the past performance of the reporting unit as well as the projections incorporated in our strategic plan.
The excess of the fair value over the carrying value under the income approach ranged from 30% to 106%. The assumptions used to estimate fair values were based on the past performance of the reporting unit as well as the projections incorporated in our strategic plan.
Adjusted EBITDA increased $137.7 million in 2021 from 2020 primarily due to the leverage on higher sales volume, as discussed above. Accordingly, Adjusted EBITDA margins expanded to 16.1% from 13.3% in the year ago period. Segment Results of Operations For additional information regarding our segment measures, see Note 6 to the Consolidated Financial Statements.
Adjusted EBITDA increased $72.0 million in 2022 from 2021 primarily due to the leverage on higher sales volume, as discussed above. Accordingly, adjusted EBITDA margins expanded to 17.0% from 16.1% in the year ago period. Segment Results of Operations For additional information regarding our segment measures, see Note 6 to the Consolidated Financial Statements.
Industrial Automation EBITDA increased $90.4 million in 2021 as compared to 2020 primarily as a result of the increase in revenues discussed above. Accordingly, Adjusted EBITDA margins expanded to 18.2% from 15.0% in the year ago period.
Industrial Automation EBITDA increased $54.4 million in 2022 as compared to 2021 primarily as a result of the increase in revenues discussed above. Accordingly, Adjusted EBITDA margins expanded to 19.7% from 18.2% in the year ago period.
Conversely, the effect of a 50 basis point increase in the assumed discount rate would have resulted in an increase in the 2022 net periodic benefit cost of approximately $0.6 million and a decrease in the projected benefit obligation of approximately $16.3 million as of December 31, 2022.
Conversely, the effect of a 50 basis point increase in the assumed discount rate would have resulted in a decrease in the 2023 net periodic benefit cost of less than $0.1 million and a decrease in the projected benefit obligation of approximately $18.3 million as of December 31, 2023.
If actual results are significantly different from our estimates or assumptions, we may have to recognize impairment charges that could be material. We also test our indefinite-lived intangible asset, a trademark, for impairment on an annual basis during the fourth quarter.
There is inherent risk associated with using an income approach to estimate fair values. If actual results are significantly different from our estimates or assumptions, we may have to recognize impairment charges that could be material. 33 We also test our indefinite-lived intangible asset, a trademark, for impairment on an annual basis during the fourth quarter.
The effective tax rate was primarily impacted by a change in the deferred tax asset valuation allowance due to the release of a valuation allowance against the foreign tax credits in the U.S. and a pension deferred tax asset in a foreign jurisdiction. 2020 We recognized income tax expense of $20.1 million in 2020, representing an effective tax rate of 22.1%.
The effective tax rate was primarily impacted by a change in the deferred tax asset valuation allowance due to the release of a valuation allowance against the foreign tax credits in the U.S. and a pension deferred tax asset in a foreign jurisdiction.
Of this amount, $198.9 million was held outside of the U.S. in our foreign operations. Substantially all of the foreign cash and cash equivalents are readily convertible into U.S. dollars or other foreign currencies.
Our cash and cash equivalents balance was $597.0 million as of December 31, 2023. Of this amount, $303.2 million was held outside of the U.S. in our foreign operations. Substantially all of the foreign cash and cash equivalents are readily convertible into U.S. dollars or other foreign currencies.
Operating income increased $99.7 million from 2021 to 2022 primarily as a result of the increase in gross profit, the gain on sale of asset in 2022, and lack of asset impairment charges as compared to 2021, partially offset by the increase in selling, general and administrative expenses; research and development expenses; and amortization of intangibles expense discussed above. 24 Table of Contents Net interest expense decreased $19.1 million from 2021 to 2022 primarily due to the repurchase of senior subordinated notes previously due 2026 and currency translation.
Operating income increased $99.7 million from 2021 to 2022 primarily as a result of the increase in gross profit, the gain on sale of assets in 2022, and lack of asset impairment charges as compared to 2021, partially offset by the increase in selling, general and administrative expenses; research and development expenses; and amortization of intangibles expense discussed above.
If it is more likely than not that the fair value is less than the carrying value, then a quantitative assessment is required for the reporting unit, as described in the paragraph below.
If it is more likely than not that the fair value is less than the carrying value, then a quantitative assessment is required for the reporting unit, as described in the paragraph below. In 2023, we performed a qualitative assessment over three of our re porting units.
Loss on debt extinguishment increased $5.7 million from 2020 to 2021 due to the debt refinancing that took place during 2021. The $5.7 million loss on debt extinguishment represents the premium paid to the bond holders to retire the 2025 Notes and for the unamortized debt issuance costs on the 2025 Notes that we were required to write-off.
See Note 5. Loss on debt extinguishment increased $0.7 million from 2021 to 2022. The loss on debt extinguishment in 2022 represents the premium paid to the bond holders to retire the 2026 Notes and for the unamortized debt issuance costs on the 2026 Notes that we were required to write-off.
In 2022, we performed a qualitative assessment over five of our reporting units. 32 Table of Contents When we evaluate goodwill for impairment using a quantitative assessment, we compare the fair value of each reporting unit to its carrying value. We determine the fair value using an income approach.
When we evaluate goodwill for impairment using a quantitative assessment, we compare the fair value of each reporting unit to its carrying value. We determine the fair value using an income approach.
(4) In 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale. See Note 11, Property, Plant, and Equipment , for details.
(4) In 2023, we sold certain real estate in Canada for $13.8 million, net of transaction costs and recognized a $12.1 million pre-tax gain on sale. In 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale.
Consolidated Adjusted EBITDA Years Ended December 31, 2022 2021 2020 (In thousands, except percentages) GAAP and Adjusted Revenues $ 2,606,485 $ 2,301,260 $ 1,752,192 GAAP income from continuing operations $ 267,748 $ 198,841 $ 70,718 Income tax expense 49,645 27,939 20,098 Depreciation expense 46,669 43,073 39,413 Interest expense, net 43,554 62,693 58,903 Amortization of intangibles 37,860 30,630 29,041 Loss on debt extinguishment 6,392 5,715 — Severance, restructuring, and acquisition integration costs (1) 16,685 23,867 11,555 Adjustments related to acquisitions and divestitures (2) 7,833 (5,035) 125 Amortization of software development intangible assets 3,875 1,579 872 Non-operating pension settlement loss 1,189 — 3,153 Asset impairments (3) — 9,283 — Gain on sale of asset (4) (37,891) — — Gain on note receivable (5) — (27,036) — Adjusted EBITDA $ 443,559 $ 371,549 $ 233,878 GAAP income from continuing operations margin 10.3 % 8.6 % 4.0 % Adjusted EBITDA margin 17.0 % 16.1 % 13.3 % 26 Table of Contents (1) See Note 15, Severance, Restructuring, and Acquisiti on Integration Activities, for details .
Consolidated Adjusted EBITDA Years Ended December 31, 2023 2022 2021 (In thousands, except percentages) GAAP and Adjusted Revenues $ 2,512,084 $ 2,606,485 $ 2,301,260 GAAP income from continuing operations $ 242,556 $ 267,748 $ 198,841 Depreciation expense 51,379 46,669 43,073 Income tax expense 43,200 49,645 27,939 Amortization of intangibles 40,375 37,860 30,630 Interest expense, net 33,625 43,554 62,693 Severance, restructuring, and acquisition integration costs (1) 25,152 16,685 23,867 Amortization of software development intangible assets 7,692 3,875 1,579 Adjustments related to acquisitions and divestitures (2) 6,177 7,833 (5,035) Loss on debt extinguishment — 6,392 5,715 Non-operating pension settlement loss — 1,189 — Asset impairments (3) — — 9,283 Gain on sale of assets (4) (12,056) (37,891) — Gain on sale of note receivable (5) — — (27,036) Adjusted EBITDA $ 438,100 $ 443,559 $ 371,549 GAAP income from continuing operations margin 9.7 % 10.3 % 8.6 % Adjusted EBITDA margin 17.4 % 17.0 % 16.1 % 27 (1) Includes costs from programs described in Note 15, Restructuring Activities as well as other immaterial programs.
The effective tax rate was impacted by foreign tax rate differences, and domestic permanent differences and tax credits primarily associated with our foreign income inclusions. 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.
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.
The following table is derived from our Consolidated Cash Flow Statements and includes the results and cash flow activity of discontinued operations up to the February 22, 2022 disposal date consistent with the Consolidated Cash Flow Statements: Years Ended December 31, 2022 2021 (In thousands) Net cash provided by (used for): Operating activities $ 281,296 $ 272,055 Investing activities 168,411 (92,003) Financing activities (393,214) (32,926) Effects of currency exchange rate changes on cash and cash equivalents (12,574) (5,363) Increase in cash and cash equivalents 43,919 141,763 Cash and cash equivalents, beginning of year 643,757 501,994 Cash and cash equivalents, end of year $ 687,676 $ 643,757 Net cash provided by operating activities totaled $281.3 million for 2022 compared to $272.1 million for 2021.
The following table is derived from our Consolidated Cash Flow S tatements and includes the results and cash flow activity of discontinued operations up to the February 22, 2022 disposal date : Years Ended December 31, 2023 2022 (In thousands) Net cash provided by (used for): Operating activities $ 319,638 $ 281,296 Investing activities (200,358) 168,411 Financing activities (211,932) (393,214) Effects of currency exchange rate changes on cash and cash equivalents 2,020 (12,574) Increase (decrease) in cash and cash equivalents (90,632) 43,919 Cash and cash equivalents, beginning of year 687,676 643,757 Cash and cash equivalents, end of year $ 597,044 $ 687,676 Net cash provided by operating activities totaled $319.6 million for 2023 compared to $281.3 million for 2022.
In 2020, we recognized $0.1 million of cost of sales related to adjustments of acquired inventory to fair value. (3) In 2021, we recognized a $3.6 million impairment on assets held and used and a $5.7 million impairment on assets held for sale . See Note 11, Property, Plant, and Equipment , for details.
(3) In 2021, we recognized a $3.6 million impairment on assets held and used and a $5.7 million impairment on assets held for sale . See Note 11, Property, Plant, and Equipment , for details.
Net interest expense increased $3.8 million from 2020 to 2021 primarily due to currency translation. Gain on sale of note receivable increased $27.0 million from 2020 to 2021 as a result of the sale of the Seller’s Note in 2021 related to the 2020 divestiture of Grass Valley. See Note 5.
Net interest expense decreased $19.1 million from 2021 to 2022 primarily due to the repurchase of senior subordinated notes previously due 2026 and currency translation. Gain on sale of note receivable decreased $27.0 million from 2021 to 2022 as a result of the sale of the Seller’s Note in 2021 related to the 2020 divestiture of Grass Valley.
Income from continuing operations before taxes increased $90.6 million from 2021 to 2022 primarily due to the increase in operating income discussed above. 2021 Compared to 2020 Revenues increased $549.1 million from 2020 to 2021 due to the following factors: • Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $376.8 million increase in revenues. • Copper prices had a $117.2 million favorable impact on revenues. • Currency translation had a $26.7 million favorable impact on revenues. • Acquisitions contributed an estimated $37.7 million in revenues. • Divestitures had a $9.3 million unfavorable impact on revenues.
Income from continuing operations before taxes decreased $31.6 million from 2022 to 2023 primarily due to the decrease in operating income discussed above. 2022 Compared to 2021 Revenues increased $305.2 million from 2021 to 2022 due to the following factors: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband products resulted in a $365.0 million increase in revenues. • Acquisitions, net of disposals contributed $19.3 million in revenues. • Currency translation had a $65.3 million unfavorable impact on revenues. • Copper prices had a $13.8 million unfavorable impact on revenues.
Enterprise Solutions Year Ended December 31, Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) Segment Revenues $ 1,198,478 $ 1,074,426 $ 872,417 11.5 % 23.2 % Segment EBITDA 161,517 144,509 99,333 11.8 % 45.5 % as a percent of segment revenues 13.5 % 13.4 % 11.4 % 2022 Compared to 2021 Enterprise revenues increased $124.1 million in 2022 as compared to 2021.
Enterprise Solutions Years Ended December 31, Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) Segment Revenues $ 1,122,831 $ 1,198,478 $ 1,074,426 (6.3) % 11.5 % Segment EBITDA 149,107 161,517 144,509 (7.7) % 11.8 % as a percent of segment revenues 13.3 % 13.5 % 13.4 % 2023 Compared to 2022 Enterprise revenues decreased $75.6 million in 2023 as compared to 2022.
Income Taxes Year Ended December 31, Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) Income from continuing operations before taxes $ 317,393 $ 226,780 $ 90,816 40.0 % 149.7 % Income tax expense (49,645) (27,939) (20,098) 77.7 % 39.0 % Effective tax rate 15.6 % 12.3 % 22.1 % 2022 We recognized income tax expense of $49.6 million in 2022, representing an effective tax rate of 15.6%.
Income from continuing operations before taxes increased $90.6 million from 2021 to 2022 primarily due to the increase in operating income discussed above. 26 Income Taxes Years Ended December 31, Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) Income from continuing operations before taxes $ 285,756 $ 317,393 $ 226,780 (10.0) % 40.0 % Income tax expense (43,200) (49,645) (27,939) (13.0) % 77.7 % Effective tax rate 15.1 % 15.6 % 12.3 % 2023 We recognized income tax expense of $43.2 million in 2023, representing an effective tax rate of 15.1%.
Accordingly, adjusted EBITDA margins expanded to 17.0% from 16.1% in the year ago period. 27 Table of Contents 2021 Compared to 2020 Revenues increased $549.1 million from 2020 to 2021 due to the following factors: • Higher sales volume from industrial automation, smart buildings, and broadband & 5G products resulted in a $376.8 million increase in revenues. • Copper prices had a $117.2 million favorable impact on revenues. • Currency translation had a $26.7 million favorable impact on revenues. • Acquisitions contributed an estimated $37.7 million in revenues. • Divestitures had a $9.3 million unfavorable impact on revenues.
Adjusted EBITDA margins expanded to 17.4% from 17.0% in the year ago period. 28 2022 Compared to 2021 Revenues increased $305.2 million from 2021 to 2022 due to the following factors: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband products resulted in a $365.0 million increase in revenues. • Acquisitions, net of disposals contributed $19.3 million in revenues. • Currency translation had a $65.3 million unfavorable impact on revenues. • Copper prices had a $13.8 million unfavorable impact on revenues.
Operating lease obligations of $77.2 million, of which $15.5 million is due in 2023 (see Note 12). d. Pension and other postemployment obligations of $84.3 million, of which $9.6 million is due in 2023 (see Note 19). e. Obligations to purchase goods or services that are enforceable and legally binding of $26.7 million.
Opera ting lease obligations of $91.5 million, of which $18.0 million is due in 2024 (see Note 12). d. Pension and other postemployment obligation s of $106.6 million, of which $12.3 million is d ue in 2024 (see Note 19). e. Obligations to purchase goods or services that are enforceable and legally binding of $43.7 million.
All of these obligations are due in 2023. f. Standby financial letters of credit, bank guarantees, and surety bonds totaling $17.3 million, of which $15.3 million are scheduled to expire or mature in 2023.
All of these obligations are due in 2024. f. Standby financial letters of credit, bank guarantees, and surety bonds totaled $19.9 million, of which $13.5 million will expire or mature in 2024.
As the U.S. dollar strengthens or weakens against foreign currencies, it results in a relative price increase or decrease for certain of our products that are priced in U.S. dollars in a foreign location. Inflation D uring periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline.
As the U.S. dollar strengthens or weakens against foreign currencies, it results in a relative price increase or decrease for certain of our products that are priced in U.S. dollars in a foreign location.
Year Ended December 31, Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) GAAP and Adjusted Revenues $ 2,606,485 $ 2,301,260 $ 1,752,192 13.3 % 31.3 % Adjusted EBITDA 443,559 371,549 233,878 19.4 % 58.9 % as a percent of adjusted revenues 17.0 % 16.1 % 13.3 % 2022 Compared to 2021 Revenues increased $305.2 million from 2021 to 2022 due to the following factors: • Higher sales volume and favorable pricing from industrial automation, smart buildings, and broadband & 5G products resulted in a $365.0 million increase in revenues. • Acquisitions, net of disposals contributed an estimated $19.3 million in revenues. • Currency translation had a $65.3 million unfavorable impact on revenues. • Copper prices had a $13.8 million unfavorable impact on revenues.
Year Ended December 31, Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) GAAP and Adjusted Revenues $ 2,512,084 $ 2,606,485 $ 2,301,260 (3.6) % 13.3 % Adjusted EBITDA 438,100 443,559 371,549 (1.2) % 19.4 % as a percent of adjusted revenues 17.4 % 17.0 % 16.1 % 2023 Compared to 2022 Revenues decreased $94.4 million from 2022 to 2023 due to the following factors: • Lower sales volume resulted in a $108.4 million decrease in revenues. • Copper prices had a $19.9 million unfavorable impact on revenues. • Divestitures had a $1.4 million unfavorable impact on revenues. • Currency translation had a $0.4 million unfavorable impact on revenues. • Acquisitions contributed $35.7 million in revenues.
Accordingly, Adjusted EBITDA margins expanded to 19.7% from 18.2% in the year ago period. 2021 Compared to 2020 Industrial Automation revenues increased $347.1 million in 2021 as compared to 2020 primarily due to increases in volume; higher copper prices; acquisitions, net of disposals; and favorable currency translation of $233.2 million, $66.8 million, $28.4 million, and $18.7 million, respectively.
Accordingly, Adjusted EBITDA margins expanded to 20.7% from 19.7% in the year ago period. 2022 Compared to 2021 Industrial Automation revenues increased $181.2 million in 2022 as compared to 2021 primarily due to increases in volume and favorable pricing of $230.1 million and acquisitions, net of disposals of $13.9 million, partially offset by unfavorable currency translation and lower copper pass-through pricing of $52.0 million and $10.8 million, respectively.
(5) In 2021, we sold the seller's note associated with the Grass Valley disposal to a third party for $62.0 million and recognized a gain on sale of $27.0 million. See Note 5, Disposals . Use of Non-GAAP Financial Information Adjusted Revenues, Adjusted EBITDA, Adjusted EBITDA margin, and free cash flow are non-GAAP financial measures.
See Note 11, Property, Plant, and Equipment , for details. (5) In 2021, we sold the seller's note associated with the Grass Valley disposal to a third party for $62.0 million and recognized a pre-tax gain on sale of $27.0 million. See Note 5, Disposals .
Industrial Automation Solutions Year Ended December 31, Percentage Change 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) Segment Revenues $ 1,408,007 $ 1,226,834 $ 879,775 14.8 % 39.4 % Segment EBITDA 277,079 222,684 132,302 24.4 % 68.3 % as a percent of segment revenues 19.7 % 18.2 % 15.0 % 2022 Compared to 2021 Industrial Automation revenues increased $181.2 million in 2022 as compared to 2021 primarily due to increases in volume and favorable pricing of $230.1 million and acquisitions, net of disposals of $13.9 million, partially offset by unfavorable currency translation and lower copper pass-through pricing of $52.0 million and $10.8 million, respectively. 28 Table of Contents Industrial Automation EBITDA increased $54.4 million in 2022 as compared to 2021 primarily as a result of the increase in revenues discussed above.
Industrial Automation Solutions Years Ended December 31, Percentage Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) Segment Revenues $ 1,389,253 $ 1,408,007 $ 1,226,834 (1.3) % 14.8 % Segment EBITDA 287,328 277,079 222,684 3.7 % 24.4 % as a percent of segment revenues 20.7 % 19.7 % 18.2 % 29 2023 Compared to 2022 Industrial Automation revenues decreased $18.8 million in 2023 as compared to 2022 primarily due to decreases in volume and lower copper prices of $15.9 m illion and $9.7 million, respectively, partially offset by favorable currency translation and acquisitions, net of disposals of $4.2 million and $2.6 million, respectively.
We are mindful of ongoing inflationary pressures and as a result, proactively implement selling price increases and cost control measures. 21 Table of Contents Commodity Prices Our operating results can be affected by changes in prices of commodities, primarily copper and compounds, which are components in some of the products we sell.
Commodity Prices Our operating results can be affected by changes in prices of commodities, primarily copper and compounds, which are components in some of the products we sell.
Investing activities for 2022 included proceeds of $334.6 million and $43.5 million from the sale of the Tripwire disposal group and tangible property, respectively, as well as $105.1 million for capital expenditures and $104.6 million for the investment in Litmus and acquisitions of Macmon, NetModule and CAI.
Investing activities for 2022 included proceeds of $334.6 million and $43.5 million from the sale of the Tripwire disposal group and tangible property, respectively, partially offset by $105.1 million for capital expenditures and $104.6 million primarily for the acquisitions of Macmon, NetModule and CAI. 30 Net cash flows used for financing activities totaled $211.9 million for 2023 compared to $393.2 million for 2022.
Significant Trends and Events in 2022 The following trends and events during 2022 had varying effects on our financial condition, results of operations, and cash flows. Pandemic In 2020, the World Health Organization (WHO) declared the outbreak of the novel coronavirus (COVID-19) a pandemic.
Significant Trends and Events in 2023 The following trends and events during 2023 had varying effects on our financial condition, results of operations, and cash flows.
In the future, if we prevail in matters for which accruals have been established previously or pay amounts in excess of reserves, there could be a material effect on our income tax provisions in the period in which such determination is made. On August 16, 2022, the Inflation Reduction Act of 2022 (the Act) was signed into law.
In the future, if we prevail in matters for which accruals have been established previously or pay amounts in excess of reserves, there could be a material effect on our income tax provisions in the period in which such determination is made. 32 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures (ASU 2023-09) enhancing the transparency and decision usefulness of income tax disclosures.
A substantial acquisition in one of our served markets would be necessary to meaningfully change our estimated market share percentage.
Based on available data for our served markets, we estimate that our market share across our segments is significant, ranging from approximately 5% – 15% . A substantial acquisition in one of our served markets would be necessary to meaningfully change our estimated market share percentage.
When professional services are not distinct from goods, the professional services and goods are combined into one performance obligation, and revenue allocated to that performance obligation is recognized when (or as) the performance obligation is satisfied. 31 Table of Contents Income Taxes We recognize deferred tax assets resulting from tax credit carryforwards, net operating loss carryforwards, and deductible temporary differences between taxable income on our income tax returns and income before taxes under GAAP.
Income Taxes We recognize deferred tax assets resulting from tax credit carryforwards, net operating loss carryforwards, and deductible temporary differences between taxable income on our income tax returns and income before taxes under GAAP.
In our quantitative assessment, the discount rate was 13.1%, the 2023 to 2032 compounded annual revenue growth rate was 4.9%, and the revenue growth rate beyond 2032 was 2.5%. By their nature, these assumptions involve risks and uncertainties. There is inherent risk associated with using an income approach to estimate fair values.
In our quantitative assessment, the discount rate ranged from 11.9% to 13.8%, the 2024 to 2033 compounded annual revenue growth rate ranged from 4.2% to 6.3%, and the revenue growth rate beyond 2033 ranged from 2.0% to 3.0%. By their nature, these assumptions involve risks and uncertainties.
Gain on Sale of Asset During 2022, we sold certain real estate in the United States for $42.2 million, net of transaction costs and recognized a $37.9 million pre-tax gain on sale. This gain on sale was excluded from Segment EBITDA of our Industrial Automation Solutions segment. See Note 11.
Amortization of intangibles increased $2.5 million from 2022 to 2023 primarily due to acquisitions. Gain on sale of assets decreased $25.8 million from 2022 to 2023. During 2022 and 2023, we sold certain real estate in the United States and Canada and recognized a $37.9 million and $12.1 million pre-tax gain on sale, respectively. See Note 11.
See Note 4. 22 Table of Contents Share Repurchase Program During 2022, we repurchased 2.6 million shares of our common stock under the share repurchase program for an aggregate cost of $150.0 million at an average price per share of $57.95. See Note 22.
We monitor inflation pressures and proactively implement selling price increases and cost control measures as appropriate. Share Repurchase Program During 2023, we repurchased 2.3 million shares of our common stock for an aggregate cost of $192.1 million at an average price per share of $85.27. See Note 22.
We are evaluating the effect that the Act will have on our consolidated financial statements and related disclosures. None of the tax provisions of the Act are expected to have a material impact to our consolidated financial statements and related disclosures. See Note 18, Income Taxes, to the consolidated financial statements for further information regarding income taxes.
The amendments in ASU 2023-09 are applied on a prospective basis, though retrospective application is permitted. We did not early adopt this pronouncement and are in the process of evaluating its impact on our consolidated financial statements and related disclosures. See Note 18, Income Taxes, to the consolidated financial statements for further information regarding income taxes.
Financing activities for 2021 included repayments of debt obligations of $360.3 million, cash dividend payments of $9.0 million, debt issuance costs of $8.2 million, net payments related to share based compensation activities of $5.6 million, financing lease payments of $3.1 million, payments to noncontrolling interests of $2.7 million, and borrowings under credit arrangements of $356.0 million.
Financing activities for 2023 included payments under our share repurchase program of $192.1 million, payments related to share based compensation activities of $17.4 million, cash dividend payments of $8.5 million, financing lease payments of $0.4 million, and proceeds from the issuance of common stock of $6.5 million.
Market Growth and Market Share The markets in which we operate can generally be characterized as highly competitive and highly fragmented, with many players. Based on available data for our served markets, we estimate that our market share across our segments is significant, ranging from approximately 5% – 15% .
As such, all references to the effect of channel inventory changes are estimates. 23 Market Growth and Market Share The markets in which we operate can generally be characterized as highly competitive and highly fragmented, with many players.
Enterprise EBITDA increased $45.2 million in 2021 as compared to 2020 primarily due to the leverage on higher sales volume, as discussed above. Accordingly, Adjusted EBITDA margins expanded to 13.4% from 11.4% in the year ago period.
Accordingly, Adjusted EBITDA margins expanded to 13.5% from 13.4% in the year ago period.
Research and development expenses increased $17.2 million from 2020 to 2021 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives. Amortization of intangibles increased $1.6 million from 2020 to 2021 primarily due to currency translation.
Strategic investments to enhance our solution selling capabilities, acquisitions, and severance actions contributed to the increase in selling, general and administrative expenses; partially offset by a decrease in incentive compensation. Research and development expenses increased $12.1 million from 2022 to 2023 primarily due to increased investments in R&D projects as we continue our commitment to growth initiatives.
Adjusted EBITDA increased $72.0 million in 2022 from 2021 primarily due to the leverage on higher sales volume, as discussed above.
Enterprise EBITDA decreased $12.4 million in 2023 as compared to 2022 primarily due to the decreases in revenues discussed above. 2022 Compared to 2021 Enterprise revenues increased $124.1 million in 2022 as compared to 2021.
Removed
Since the beginning of the pandemic, our foremost focus has been on the health and safety of our employees and customers. In response to the outbreak, to protect the health and safety of our employees, we modified practices at our manufacturing locations and offices to adhere to guidance from the WHO, the U.S.
Added
To the extent that we exceed the market growth rates, we consider it to be the result of capturing market share. Inflation D uring periods of inflation, if we are unable to raise prices timely and sufficiently to recover our material costs, our earnings could decline. Furthermore, inflation may impact labor, energy, and other costs.
Removed
Centers for Disease Control and Prevention and other local health and governmental authorities with respect to social distancing, physical separation, personal protective equipment and sanitization. In light of variant mutations of the virus, even as vaccinations become more prevalent and more employees return to our offices, many of these safeguards will continue.
Added
Sichert Acquisition During 2023, we acquired Sichert with cash on hand for $97.5 million, net of cash acquired. Sichert, based in Berlin Germany, designs and manufactures a portfolio of polycarbonate street cabinets utilized in outside plant passive optical networks (“PON”) and 5G networks. Sichert is reported within the Enterprise Solutions segment. See Note 4.
Removed
Our suppliers, distributors, and other partners have similarly had their operations disrupted, and in regions of the world where infection rates have remained high, human suffering and market disruptions have persisted.
Added
CloudRail Acquisition During 2023, we acquired CloudRail with cash on hand for $9.2 million, net of cash acquired. CloudRail, based in Mannheim, Germany, spec ializes in sensor to cloud data solutions allowing end users to quickly connect sensors on their machinery to cloud providers to drive business insights and improve outcomes. CloudRail is reported within the Industrial Automation Solutions segment.
Removed
We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by local or foreign governmental authorities, or that we determine are in the best interests of our employees and customers.
Added
See Note 4. Gain on Sale of Assets During 2023, we sold our property in Ontario, Canada as part of a sale and leaseback transaction for $13.8 million and recognized a $12.1 million pre-tax gain on sale. This gain on sale was excluded from Segment EBITDA. See Note 11.
Removed
Furthermore, inflation may impact labor, energy, and other costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+0 added−0 removed11 unchanged
Biggest changeOur exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee, and Swiss franc. 34 Table of Contents Commodity Price Risk Certain raw materials used by us are subject to price volatility caused by supply conditions, political and economic variables, and other unpredictable factors.
Biggest changeOur exposure to currency rate fluctuations primarily relates to exchange rate movements between the U.S. dollar and the euro, Canadian dollar, Hong Kong dollar, Chinese yuan, Mexican peso, Australian dollar, British pound, Indian rupee, and Swiss franc.
Interest Rate Risk We have occasionally managed our debt portfolio by using interest rate derivative instruments, such as swap agreements, to achieve an overall desired position of fixed and floating rates. We were not a party to any interest rate derivative instruments as of or for the years ended December 31, 2022 or 2021.
Interest Rate Risk We have occasionally managed our debt portfolio by using interest rate derivative instruments, such as swap agreements, to achieve an overall desired position of fixed and floating rates. We were not a party to any interest rate derivative instruments as of or for the years ended December 31, 2023 or 2022.
However, we re-evaluate our strategy as the foreign currency environment changes, and it is possible that we could utilize derivative financial instruments to manage this risk in the future. We did not have any foreign currency derivatives outstanding as of December 31, 2022.
However, we re-evaluate our strategy as the foreign currency environment changes, and it is possible that we could utilize derivative financial instruments to manage this risk in the future. We did not have any foreign currency derivatives outstanding as of December 31, 2023.
The following table provides information about our financial instruments that are sensitive to changes in interest rates. The following table presents principal amounts by expected maturity date and fair value as of December 31, 2022.
The following table provides information about our financial instruments that are sensitive to changes in interest rates. The following table presents principal amounts by expected maturity date and fair value as of December 31, 2023.
However, we designated euro debt issued by Belden Inc., a USD functional currency entity, as a net investment hedge of certain international subsidiaries. See Note 16 for further discussion.
However, we designated euro debt issued by Belden Inc., a USD functional currency entity, as a net investment hedge of certain international subsidiaries. See Note 17 for further discussion.
That increase or decrease in expected functional currency cash flows is a foreign exchange transaction gain or loss that is included in our operating income in the Consolidated Statements of Operatio ns. In 2022 and 2021, we recorded approximately $2.8 million and $1.7 million, respectively, of net foreign currency transaction losses.
That increase or decrease in expected functional currency cash flows is a foreign exchange transaction gain or loss that is included in our operating income in the Consolidated Statements of Operatio ns. In 2023 and 2022, we recorded approximately $1.8 million and $2.8 million, respectively, of net foreign currency transaction losses.
We do not generally use commodity price derivatives and did not have any outstanding at December 31, 2022 or 2021. The following table presents unconditional commodity purchase obligations outstanding as of December 31, 2022. The unconditional purchase obligations will settle during 2023.
We do not generally use commodity price derivatives and did not have any outstanding at December 31, 2023 or 2022. The following table presents unconditional commodity purchase obligations outstanding as of December 31, 2023. The unconditional purchase obligations are expected to settle during 2024.
Although we do not obtain collateral or other security to support these financial instruments, we evaluate the credit standing of the counterparty financial institutions. As of December 31, 2022, we had $28.8 million in accounts receivable outstanding from our largest customer. This represented approximately 7% of our total accounts receivable outstanding at December 31, 2022.
Although we do not obtain collateral or other security to support these financial instruments, we evaluate the credit standing of the counterparty financial institutions. As of December 31, 2023, we ha d $61.9 million in accounts receivable outstanding from our largest customer. This represented approximately 15% of our total accounts receivable outstanding at December 31, 2023.
Outstanding receivables are generally paid within thirty to sixty days of invoice receipt. 35 Table of Contents
Outstanding receivables are generally paid within thirty to sixty days of invoice receipt. 36
Purchase Amount Fair Value (In thousands, except average price) Unconditional copper purchase obligations: Commitment volume in pounds 4,177 Weighted average price per pound $ 3.73 Commitment amounts $ 15,564 $ 15,894 We are also exposed to price risk related to our purchase of selected commodities derived from petrochemical feedstocks used in our products.
Purchase Amount Fair Value (In thousands, except average price) Unconditional copper purchase obligations: Commitment volume in pounds 2,697 Weighted average price per pound $ 3.89 Commitment amounts $ 10,500 $ 10,376 35 We are also exposed to price risk related to our purchase of selected commodities derived from petrochemical feedstocks used in our products.
Principal Amount by Expected Maturity Fair Value 2023 Thereafter Total (In thousands, except interest rates) €450.0 million fixed-rate senior subordinated notes due 2027 $ — $ 480,330 $ 480,330 $ 438,301 Average interest rate 3.375 % €350.0 million fixed-rate senior subordinated notes due 2028 $ — $ 373,590 $ 373,590 $ 341,368 Average interest rate 3.875 % €300.0 million fixed-rate senior subordinated notes due 2031 $ — 320,220 $ 320,220 $ 266,583 Average interest rate 3.375 % Total $ 1,174,140 $ 1,046,252 Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and cash equivalents and accounts receivable.
Principal Amount by Expected Maturity Fair Value 2024 Thereafter Total (In thousands, except interest rates) €450.0 million fixed-rate senior subordinated notes due 2027 $ — $ 497,025 $ 497,025 $ 477,765 Average interest rate 3.375 % €350.0 million fixed-rate senior subordinated notes due 2028 $ — $ 386,575 $ 386,575 $ 372,079 Average interest rate 3.875 % €300.0 million fixed-rate senior subordinated notes due 2031 $ — $ 331,350 $ 331,350 $ 292,002 Average interest rate 3.375 % Total $ 1,214,950 $ 1,141,846 Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and cash equivalents and accounts receivable.
The primary purpose of our commodity price management activities is to manage the volatility associated with purchases of commodities in the normal course of business. We do not speculate on commodity prices.
Commodity Price Risk Certain raw materials used by us are subject to price volatility caused by supply conditions, political and economic variables, and other unpredictable factors. The primary purpose of our commodity price management activities is to manage the volatility associated with purchases of commodities in the normal course of business. We do not speculate on commodity prices.

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