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Discontinued Operations | 12 Months Ended
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Dec. 31, 2020
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations We classify assets and liabilities as held for sale (disposal group) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. We also consider whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. During the fourth quarter of 2019, we committed to a plan to sell Grass Valley, and at such time, met all of the criteria to classify the assets and liabilities of this business as held for sale. Furthermore, we determined a divestiture of Grass Valley represents a strategic shift that is expected to have a major impact on our operations and financial results. As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, is reported within discontinued operations. The Grass Valley disposal group excludes certain Grass Valley pension liabilities that Belden retained. We also ceased depreciating and amortizing the assets of the disposal group once they met the held for sale criteria in the fourth quarter of 2019. We wrote down the carrying value of Grass Valley and recognized asset impairments totaling $113.0 million and $521.4 million in 2020 and 2019, respectively. The 2019 impairment charge consisted of impairments to goodwill, customer relationships, and trademarks of $326.1 million, $14.4 million, and $1.6 million, respectively, as well as an impairment of the disposal group of $179.3 million ($180.4 million translated at year-end exchange rates). We determined the estimated fair values of the assets and of the reporting unit by calculating the present values of their estimated future cash flows. We completed the sale of Grass Valley to Black Dragon Capital on July 2, 2020 and recognized a loss of $9.9 million, net of $7.5 million income tax expense. The terms of the sale included gross cash consideration of $120.0 million, or approximately $56.2 million net of cash delivered with the business. The sale also included deferred consideration consisting of a $175.0 million seller’s note that is expected to mature in 2025, up to $88 million in PIK (payment-in-kind) interest on the seller’s note, and $178.0 million in potential earnout payments. Based upon a third party valuation specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note is $34.9 million, which we recorded in Other Long-Lived Assets. We accounted for the earnout under a loss recovery approach and did not record an asset as of the disposal date. Any subsequent recognition of an earnout will be based on the gain contingency guidance. As part of the transaction, we also invested $3.0 million for a 9% equity interest in Grass Valley with the right to put the equity back to Black Dragon Capital. We exercised our right during the fourth quarter of 2020 and sold our 9% equity interest in Grass Valley to Black Dragon Capital for $2.7 million. We deconsolidated Grass Valley as of July 2, 2020 and accounted for our equity interest under the cost method for the period that we owned a 9% interest in Grass Valley. As of December 31, 2020, we do not own any interest in Grass Valley. Grass Valley's operating results for periods after July 2, 2020 are not included in our Consolidated Financial Statements. The seller’s note accrues PIK interest at an annual rate of 8.5%. During the year ended December 31, 2020, the seller’s note accrued interest of $7.8 million, which we reserved for based on our expected loss allowance methodology. We are performing certain services for Grass Valley under a transition services agreement. During 2020, the amount of transition services totaled $2.0 million, which we expect to collect in 2021. The following table summarizes the operating results of the disposal group up to the July 2, 2020 disposal date for the years ended December 31, 2020, 2019 and 2018, respectively:
| Years Ended December 31,
| 2020 |  | 2019 |  | 2018
| (In thousands)
Revenues | $ | 109,195 |  |  | $ | 360,496 |  |  | $ | 419,666 |
Cost of sales | (70,199) |  |  | (208,173) |  |  | (241,164) |
Gross profit | 38,996 |  |  | 152,323 |  |  | 178,502 |
Selling, general and administrative expenses | (39,947) |  |  | (93,796) |  |  | (114,567) |
Research and development expenses | (15,083) |  |  | (37,172) |  |  | (49,033) |
Amortization of intangibles | — |  |  | (12,782) |  |  | (23,689) |
Asset impairment of discontinued operations | (113,007) |  |  | (521,441) |  |  | — |
Interest expense, net | (432) |  |  | (819) |  |  | (720) |
Non-operating pension cost | (169) |  |  | (221) |  |  | (243) |
Loss before taxes | $ | (129,642) |  |  | $ | (513,908) |  |  | $ | (9,750) |
The disposal group recognized depreciation and amortization expense of approximately $0.0 million, $23.7 million, and $35.1 million during the years ended December 31, 2020, 2019, and 2018, respectively. The disposal group also had capital expenditures of approximately $16.7 million, $29.4 million, and $22.6 million during the years ended December 31, 2020, 2019, and 2018, respectively. Furthermore, the disposal group incurred stock-based compensation expense/(credits) of $(0.9) million, $0.9 million, and $1.4 million during the years ended December 31, 2020, 2019, and 2018, respectively. The disposal group did not have any significant non-cash charges for investing activities during the years ended December 31, 2020, 2019, and 2018. The following table provides the major classes of assets and liabilities of the disposal group as of December 31, 2019 (in thousands):
Assets: |
Cash and cash equivalents | $ | 18,405 |
Receivables, net | 117,386 |
Inventories, net | 55,002 |
Other current assets | 35,187 |
Property, plant and equipment, less accumulated depreciation | 61,233 |
Operating lease right-of-use assets | 16,902 |
Goodwill | 26,707 |
Intangible assets, less accumulated amortization | 143,459 |
Deferred income taxes | 59,560 |
Other long-lived assets | 21,652 |
Impairment of disposal group | (180,358) |
Total assets of discontinued operations | $ | 375,135 |
Liabilities: |
Accounts payable | $ | 52,425 |
Accrued liabilities | 83,349 |
Postretirement benefits | 6,224 |
Deferred income taxes | 2,740 |
Long-term operating lease liabilities | 20,459 |
Other long-term liabilities | 5,082 |
Total liabilities of discontinued operations | $ | 170,279 |
The disposal group also had $42.3 million of accumulated other comprehensive losses as of December 31, 2019.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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