Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

Leases

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well as vehicles and 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 within 1 to 20 years; some of which include extension and termination options. 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. We have a few short-term operating leases with terms less than twelve months - these leases are not recorded on our balance sheet and the overall rent expense is not material.

We also have certain lease contracts that contain both lease and non-lease components. We have elected the practical expedient to account for these components together as a single, combined lease component. The rate implicit in most of our leases is not readily determinable. As a result, we utilize 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 of the lease, commencement date of the lease, local currency of the leased asset, and the credit rating of the legal entity leasing the asset.

Our lease agreements do not contain material residual value guarantees. Our variable lease expense was approximately $0.9 million and $0.8 million for the three months ended March 31, 2024 and April 2, 2023, respectively.

The components of lease expense were as follows:

	Three Months Ended
	March 31, 2024		April 2, 2023
	(In thousands)
Operating lease cost	$	6,875	$	5,517
Finance lease cost
Amortization of right-of-use asset	$	194	$	201
Interest on lease liabilities	109		80
Total finance lease cost	$	303	$	281

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
	March 31, 2024		April 2, 2023
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,727	$	4,665

Operating cash flows from finance leases were not material during the three months ended March 31, 2024 and April 2, 2023.

Supplemental balance sheet information related to leases was as follows:

	March 31, 2024		December 31, 2023
	(In thousands)
Operating leases:
Total operating lease right-of-use assets	$	124,690	$	89,686
Accrued liabilities	$	18,753	$	18,226
Long-term operating lease liabilities	108,174		74,941
Total operating lease liabilities	$	126,927	$	93,167

Finance leases:
Other long-lived assets, at cost	$	8,247	$	6,560
Accumulated depreciation	(1,555)		(1,347)
Other long-lived assets, net	$	6,692	$	5,213
Accrued liabilities	$	1,022	$	719
Other long-term liabilities	7,181		6,084
Total finance lease liabilities	$	8,203	$	6,803

The increases in operating lease right-of-use assets and lease liabilities are primarily due to the initial recognition of a new lease during the three months ended March 31, 2024 that had balances of $34.2 million and $33.2 million, respectively.

	March 31, 2024		December 31, 2023
Weighted Average Remaining Lease Term
Operating leases	10 years		6 years
Finance leases	8 years		9 years
Weighted Average Discount Rate
Operating leases	5.7	%	5.0	%
Finance leases	4.6	%	4.3	%

In addition, we guaranteed 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. As of March 31, 2024, the fixed, remaining base rent payments were approximately $21 million. As of March 31, 2024 and April 2, 2023, we had a liability for expected, future payments of $11.0 million and $8.8 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 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 within 1 to 20 years; some of which include extension and termination options. 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. We have a few short-term operating leases with terms less than twelve months - these leases are not recorded on our balance sheet and the overall rent expense is not material.

We also have certain lease contracts that contain both lease and non-lease components. We have elected the practical expedient to account for these components together as a single, combined lease component. The rate implicit in most of our leases is not readily determinable. As a result, we utilize 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 of the lease, commencement date of the lease, local currency of the leased asset, and the credit rating of the legal entity leasing the asset.

Our lease agreements do not contain material residual value guarantees. Our variable lease expense was approximately $0.9 million and $0.8 million for the three months ended March 31, 2024 and April 2, 2023, respectively.

The components of lease expense were as follows:

	Three Months Ended
	March 31, 2024		April 2, 2023
	(In thousands)
Operating lease cost	$	6,875	$	5,517
Finance lease cost
Amortization of right-of-use asset	$	194	$	201
Interest on lease liabilities	109		80
Total finance lease cost	$	303	$	281

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
	March 31, 2024		April 2, 2023
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,727	$	4,665

Operating cash flows from finance leases were not material during the three months ended March 31, 2024 and April 2, 2023.

Supplemental balance sheet information related to leases was as follows:

	March 31, 2024		December 31, 2023
	(In thousands)
Operating leases:
Total operating lease right-of-use assets	$	124,690	$	89,686
Accrued liabilities	$	18,753	$	18,226
Long-term operating lease liabilities	108,174		74,941
Total operating lease liabilities	$	126,927	$	93,167

Finance leases:
Other long-lived assets, at cost	$	8,247	$	6,560
Accumulated depreciation	(1,555)		(1,347)
Other long-lived assets, net	$	6,692	$	5,213
Accrued liabilities	$	1,022	$	719
Other long-term liabilities	7,181		6,084
Total finance lease liabilities	$	8,203	$	6,803

The increases in operating lease right-of-use assets and lease liabilities are primarily due to the initial recognition of a new lease during the three months ended March 31, 2024 that had balances of $34.2 million and $33.2 million, respectively.

	March 31, 2024		December 31, 2023
Weighted Average Remaining Lease Term
Operating leases	10 years		6 years
Finance leases	8 years		9 years
Weighted Average Discount Rate
Operating leases	5.7	%	5.0	%
Finance leases	4.6	%	4.3	%

In addition, we guaranteed 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. As of March 31, 2024, the fixed, remaining base rent payments were approximately $21 million. As of March 31, 2024 and April 2, 2023, we had a liability for expected, future payments of $11.0 million and $8.8 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.