Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

Leases

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well as vehicles and certain equipment. We make certain judgments in determining whether a contract contains a lease in accordance with ASU 2016-02. Our leases have remaining lease terms of less than 1 year to 15 years, some of which include options to extend the lease for a period of up to 15 years and some include options to terminate the leases within 1 year. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain material residual value guarantees, and our variable lease payments were $3.1 million and $2.9 million during the years ended December 31, 2023 and 2022, respectively.

We have entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on our balance sheet as of December 31, 2023 or 2022, and the rent expense for short-term leases was not material.

We have certain property and equipment lease contracts that may contain lease and non-lease components, and we have elected to utilize the practical expedient to account for these components together as a single combined lease component.

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

The components of lease expense were as follows:

	Years Ended December 31,
	2023		2022		2021
	(In thousands)
Operating lease cost	$	22,562	$	21,420	$	18,607
Finance lease cost
Amortization of right-of-use asset	$	780	$	878	$	528
Interest on lease liabilities	330		258		14
Total finance lease cost	$	1,110	$	1,136	$	542

Supplemental cash flow information related to leases was as follows:

	Years Ended December 31,
	2023		2022		2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	19,080	$	18,338	$	15,737

Operating and financing cash flows from finance leases were not material for the years ended December 31, 2023, 2022 and 2021.

Supplemental balance sheet information related to leases was as follows:

	December 31,
	2023		2022
	(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets	$	89,686	$	73,376
Accrued liabilities	$	18,226	$	16,442
Long-term operating lease liabilities	74,941		59,250
Total operating lease liabilities	$	93,167	$	75,692
Finance leases:
Other long-lived assets, at cost	$	6,560	$	6,323
Accumulated depreciation	(1,347)		(733)
Other long-lived assets, net	$	5,213	$	5,590
Accrued liabilities	$	719	$	391
Other long-term liabilities	6,084		5,928
Total finance lease liabilities	$	6,803	$	6,319

Weighted Average Remaining Lease Term
Operating leases	6 years	6 years
Finance leases	9 years	10 years
Weighted Average Discount Rate
Operating leases	5.0%	5.2	%
Finance leases	4.3%	4.2	%

The following table summarizes maturities of lease liabilities as of December 31, 2023 (in thousands):

2024	$	18,664
2025	18,173
2026	16,527
2027	9,074
2028	7,350
Thereafter	28,068
Total	$	97,856

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

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

In addition, we covenanted the lease payments for certain Grass Valley property leases with expiration dates extending up to 2035. These lease guarantees were retained by Belden and not transferred to the buyer of Grass Valley (see Note 5). As of December 31, 2023, the fixed, remaining base rent payments were $22 million. In 2023 and 2022, we recognized $4.1 million and $10.1 million, respectively, related to the guarantees in selling, general and administrative expenses. These costs were excluded from Segment EBITDA of our Enterprise Solutions segment. As of December 31, 2023 and 2022, we had a liability for expected, future payments of $11.3 million and $9.4 million, respectively. The liability is based on certain assumptions, such as receiving a level of sublease income, that we continually reassess on an ongoing basis. We will update the estimated liability balance for changes in assumptions as needed.

Leases

Leases

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well as vehicles and certain equipment. We make certain judgments in determining whether a contract contains a lease in accordance with ASU 2016-02. Our leases have remaining lease terms of less than 1 year to 15 years, some of which include options to extend the lease for a period of up to 15 years and some include options to terminate the leases within 1 year. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain material residual value guarantees, and our variable lease payments were $3.1 million and $2.9 million during the years ended December 31, 2023 and 2022, respectively.

We have entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on our balance sheet as of December 31, 2023 or 2022, and the rent expense for short-term leases was not material.

We have certain property and equipment lease contracts that may contain lease and non-lease components, and we have elected to utilize the practical expedient to account for these components together as a single combined lease component.

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

The components of lease expense were as follows:

	Years Ended December 31,
	2023		2022		2021
	(In thousands)
Operating lease cost	$	22,562	$	21,420	$	18,607
Finance lease cost
Amortization of right-of-use asset	$	780	$	878	$	528
Interest on lease liabilities	330		258		14
Total finance lease cost	$	1,110	$	1,136	$	542

Supplemental cash flow information related to leases was as follows:

	Years Ended December 31,
	2023		2022		2021
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	19,080	$	18,338	$	15,737

Operating and financing cash flows from finance leases were not material for the years ended December 31, 2023, 2022 and 2021.

Supplemental balance sheet information related to leases was as follows:

	December 31,
	2023		2022
	(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets	$	89,686	$	73,376
Accrued liabilities	$	18,226	$	16,442
Long-term operating lease liabilities	74,941		59,250
Total operating lease liabilities	$	93,167	$	75,692
Finance leases:
Other long-lived assets, at cost	$	6,560	$	6,323
Accumulated depreciation	(1,347)		(733)
Other long-lived assets, net	$	5,213	$	5,590
Accrued liabilities	$	719	$	391
Other long-term liabilities	6,084		5,928
Total finance lease liabilities	$	6,803	$	6,319

Weighted Average Remaining Lease Term
Operating leases	6 years	6 years
Finance leases	9 years	10 years
Weighted Average Discount Rate
Operating leases	5.0%	5.2	%
Finance leases	4.3%	4.2	%

The following table summarizes maturities of lease liabilities as of December 31, 2023 (in thousands):

2024	$	18,664
2025	18,173
2026	16,527
2027	9,074
2028	7,350
Thereafter	28,068
Total	$	97,856

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

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

In addition, we covenanted the lease payments for certain Grass Valley property leases with expiration dates extending up to 2035. These lease guarantees were retained by Belden and not transferred to the buyer of Grass Valley (see Note 5). As of December 31, 2023, the fixed, remaining base rent payments were $22 million. In 2023 and 2022, we recognized $4.1 million and $10.1 million, respectively, related to the guarantees in selling, general and administrative expenses. These costs were excluded from Segment EBITDA of our Enterprise Solutions segment. As of December 31, 2023 and 2022, we had a liability for expected, future payments of $11.3 million and $9.4 million, respectively. The liability is based on certain assumptions, such as receiving a level of sublease income, that we continually reassess on an ongoing basis. We will update the estimated liability balance for changes in assumptions as needed.