FORM 10-Q
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
     
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 2009
Commission File No. 001-12561
 
BELDEN INC.
(Exact name of registrant as specified in its charter)
 
     
Delaware   36-3601505
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
7733 Forsyth Boulevard, Suite 800
St. Louis, Missouri 63105
(Address of principal executive offices)
(314) 854-8000
Registrant’s telephone number, including area code
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o.
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ.
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
        (Do not check if a smaller reporting company)    
As of August 3, 2009, the Registrant had 46,607,306 outstanding shares of common stock.
 
 

 


TABLE OF CONTENTS

PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures about Market Risks
Item 4: Controls and Procedures
PART II OTHER INFORMATION
Item 1: Legal Proceedings
Item 1A: Risk Factors
Item 4: Submission of Matters to a Vote of Security Holders
Item 6: Exhibits
EX-31.1
EX-31.2
EX-32.1
EX-32.2


Table of Contents

PART I FINANCIAL INFORMATION
Item 1. Financial Statements
BELDEN INC.
CONSOLIDATED BALANCE SHEETS
                 
    June 28,     December 31,  
    2009     2008  
    (Unaudited)          
    (In thousands)  
ASSETS
Current assets:
               
Cash and cash equivalents
  $ 274,640     $ 227,413  
Receivables, net
    245,672       292,236  
Inventories, net
    155,635       216,022  
Deferred income taxes
    20,647       22,606  
Other current assets
    51,258       34,826  
 
           
 
               
Total current assets
    747,852       793,103  
 
               
Property, plant and equipment, less accumulated depreciation
    298,548       324,569  
Goodwill
    314,194       321,478  
Intangible assets, less accumulated amortization
    142,183       156,025  
Deferred income taxes
    2,625        
Other long-lived assets
    52,640       53,388  
 
           
 
  $ 1,558,042     $ 1,648,563  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
               
Accounts payable
  $ 142,367     $ 160,744  
Accrued liabilities
    147,974       180,801  
 
           
 
Total current liabilities
    290,341       341,545  
 
               
Long-term debt
    590,000       590,000  
Postretirement benefits
    120,370       120,256  
Deferred income taxes
          4,270  
Other long-term liabilities
    19,842       21,624  
 
               
Stockholders’ equity:
               
Preferred stock
           
Common stock
    503       503  
Additional paid-in capital
    585,650       585,704  
Retained earnings
    64,904       106,949  
Accumulated other comprehensive income
    16,107       10,227  
Treasury stock
    (129,675 )     (132,515 )
 
           
 
Total stockholders’ equity
    537,489       570,868  
 
           
 
  $ 1,558,042     $ 1,648,563  
 
           
The accompanying notes are an integral part of these Consolidated Financial Statements

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BELDEN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 28, 2009     June 29, 2008     June 28, 2009     June 29, 2008  
    (In thousands, except per share data)  
Revenues
  $ 343,821     $ 556,303     $ 672,333     $ 1,068,129  
Cost of sales
    (235,303 )     (389,830 )     (479,622 )     (755,839 )
 
                       
 
Gross profit
    108,518       166,473       192,711       312,290  
 
Selling, general and administrative expenses
    (67,579 )     (86,913 )     (144,276 )     (182,076 )
Research and development
    (14,122 )     (11,093 )     (30,677 )     (20,164 )
Amortization of intangibles
    (3,911 )     (2,609 )     (7,776 )     (5,161 )
Asset impairment
    (1,453 )           (26,176 )     (11,549 )
Loss on sale of assets
    (17,184 )           (17,184 )     (884 )
 
                       
 
Operating income (loss)
    4,269       65,858       (33,378 )     92,456  
 
Interest expense
    (8,895 )     (11,066 )     (16,218 )     (19,409 )
Interest income
    238       1,875       602       2,832  
Other income
    695       1,986       444       3,154  
 
                       
 
Income (loss) before taxes
    (3,693 )     58,653       (48,550 )     79,033  
 
Income tax benefit (expense)
    (1,193 )     (16,848 )     11,210       (24,343 )
 
                       
Net income (loss)
  $ (4,886 )   $ 41,805     $ (37,340 )   $ 54,690  
 
                       
 
                               
Weighted average number of common shares and equivalents:
                               
Basic
    46,587       43,506       46,557       43,821  
Diluted
    46,587       47,478       46,557       47,926  
 
                               
Basic income (loss) per share
  $ (0.10 )   $ 0.96     $ (0.80 )   $ 1.25  
 
                               
Diluted income (loss) per share
  $ (0.10 )   $ 0.88     $ (0.80 )   $ 1.14  
 
                               
Dividends declared per share
  $ 0.05     $ 0.05     $ 0.10     $ 0.10  
The accompanying notes are an integral part of these Consolidated Financial Statements

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BELDEN INC.
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
                 
    Six Months Ended  
    June 28, 2009     June 29, 2008  
    (In thousands)  
Cash flows from operating activities:
               
Net income (loss)
  $ (37,340 )   $ 54,690  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    26,842       27,503  
Asset impairment
    26,176       11,549  
Loss on sale of assets
    17,184       884  
Share-based compensation
    4,719       7,292  
Provision for inventory obsolescence
    4,273       4,132  
Tax deficiency (benefit) related to share-based compensation
    1,469       (1,141 )
Pension funding in excess of pension expense
    (6,452 )     (3,339 )
Amortization of discount on convertible subordinated notes
          1,069  
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses:
               
Receivables
    42,655       (21,827 )
Inventories
    42,161       (3,746 )
Accounts payable
    (15,669 )     32,910  
Accrued liabilities
    (25,931 )     (32,397 )
Deferred revenue
    782        
Accrued taxes
    (16,558 )     2,931  
Other assets
    1,484       (8,060 )
Other liabilities
    3,539       2,125  
 
           
 
               
Net cash provided by operating activities
    69,334       74,575  
 
               
Cash flows from investing activities:
               
Capital expenditures
    (18,342 )     (18,185 )
Cash used to invest in and acquire businesses
          (7,891 )
Proceeds from disposal of tangible assets
    367       40,249  
 
           
 
               
Net cash provided by (used for) investing activities
    (17,975 )     14,173  
 
               
Cash flows from financing activities:
               
Cash dividends paid
    (4,707 )     (4,458 )
Debt issuance costs
    (1,541 )      
Tax benefit (deficiency) related to share-based compensation
    (1,469 )     1,141  
Proceeds from exercise of stock options
    23       5,171  
Payments under share repurchase program
          (68,336 )
 
           
 
               
Net cash used for financing activities
    (7,694 )     (66,482 )
 
               
Effect of foreign currency exchange rate changes on cash and cash equivalents
    3,562       7,436  
 
           
 
               
Increase in cash and cash equivalents
    47,227       29,702  
Cash and cash equivalents, beginning of period
    227,413       159,964  
 
           
 
               
Cash and cash equivalents, end of period
  $ 274,640     $ 189,666  
 
           
The accompanying notes are an integral part of these Consolidated Financial Statements

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BELDEN INC.
CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENT
SIX MONTHS ENDED JUNE 28, 2009
(Unaudited)
                                                                         
                                                    Accumulated Other        
                                                    Comprehensive Income (Loss)        
                    Additional                             Translation     Pension and        
    Common Stock     Paid-In     Retained     Treasury Stock     Component     Postretirement        
    Shares     Amount     Capital     Earnings     Shares     Amount     of Equity     Liability     Total  
    (In thousands)  
Balance at December 31, 2008
    50,335     $ 503     $ 585,704     $ 106,949       (3,844 )   $ (132,515 )   $ 45,675     $ (35,448 )   $ 570,868  
Net loss
                            (37,340 )                                     (37,340 )
Foreign currency translation
                                                    5,880               5,880  
 
                                                                     
 
                                                                       
Comprehensive loss
                                                                    (31,460 )
 
Release of restricted stock, net of tax withholding forfeitures
                    (3,316 )             115       2,814                       (502 )
Exercise of stock options
                    (3 )             1       26                       23  
Share-based compensation
                    3,250                                               3,250  
Dividends ($0.10 per share)
                    15       (4,705 )                                     (4,690 )
 
                                                     
 
                                                                       
Balance at June 28, 2009
    50,335     $ 503     $ 585,650     $ 64,904       (3,728 )   $ (129,675 )   $ 51,555     $ (35,448 )   $ 537,489  
 
                                                     
The accompanying notes are an integral part of these Consolidated Financial Statements

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BELDEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Consolidated Financial Statements include Belden Inc. and all of its subsidiaries (the Company, us, we, or our). We eliminate all significant affiliate accounts and transactions in consolidation.
The accompanying Consolidated Financial Statements presented as of any date other than December 31, 2008:
    Are prepared from the books and records without audit, and
    Are prepared in accordance with the instructions to Form 10-Q and do not include all of the information required by accounting principles generally accepted in the United States for complete statements, but
    Include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial statements.
These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Supplementary Data contained in our 2008 Annual Report on Form 10-K.
Business Description
We design, manufacture, and market signal transmission solutions, including cable, connectivity and active components for mission-critical applications in markets ranging from industrial automation to data centers, broadcast studios, and aerospace.
Reporting Periods
Our fiscal year and fiscal fourth quarter both end on December 31. Our fiscal first, second and third quarter each end typically on the last Sunday falling on or before their respective calendar quarter-end. The six months ended June 28, 2009 and June 29, 2008 include 179 and 181 calendar days, respectively.
Reclassifications
We have made certain reclassifications to the 2008 Consolidated Financial Statements with no impact to reported net income in order to conform to the 2009 presentation.
Fair Value Measurement
On January 1, 2008, we adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurement, related to financial assets and financial liabilities. In accordance with Financial Accounting Standards Board (FASB) Staff Position 157-2, Effective Date of FASB Statement No. 157, we adopted the provisions of SFAS No. 157 related to nonfinancial assets and nonfinancial liabilities on January 1, 2009.
SFAS No. 157 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data

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obtained from independent sources or reflect our own assumptions of market participant valuation. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
    Level 1 — Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
 
    Level 2 — Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;
    Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
As of and during the six months ended June 28, 2009, we utilized Level 1 inputs to determine the fair value of short-term investments included in cash equivalents, and we utilized Level 2 inputs to determine the fair value of certain long-lived assets (see Note 5).
Cash and Cash Equivalents
We classify cash on hand and deposits in banks, including commercial paper, money market accounts, and other investments with an original maturity of three months or less, that we hold from time to time, as cash and cash equivalents. We periodically have cash equivalents consisting of short-term money market funds and other investments. The primary objective of our short-term investment activities is to preserve our capital for the purpose of funding operations. We do not enter into short-term investments for trading or speculative purposes. The fair value of these short-term investments as of June 28, 2009 was $91.5 million and is based on quoted market prices in active markets.
Contingent Liabilities
We have established liabilities for environmental and legal contingencies that are probable of occurrence and reasonably estimable. We accrue environmental remediation costs, on an undiscounted basis, based on estimates of known environmental remediation exposures developed in consultation with our environmental consultants and legal counsel. We are, from time to time, subject to routine litigation incidental to our business. These lawsuits primarily involve claims for damages arising out of the use of our products, allegations of patent or trademark infringement, and litigation and administrative proceedings involving employment matters and commercial disputes. Based on facts currently available, we believe the disposition of the claims that are pending or asserted will not have a materially adverse effect on our financial position, results of operations or cash flow.
At June 28, 2009, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $9.3 million, $7.1 million, and $2.6 million, respectively.
Revenue Recognition
We recognize revenue when all of the following circumstances are satisfied: (1) persuasive evidence of an arrangement exists, (2) price is fixed or determinable, (3) collectibility is reasonably assured, and (4) delivery has occurred. Delivery occurs in the period in which the customer takes title and assumes the risks and rewards of ownership of the products specified in the customer’s purchase order or sales agreement. We record revenue net of estimated rebates, price allowances, invoicing adjustments, and product returns. We charge revisions to these estimates to accounts receivable and revenue in the period in which the facts that give rise to each revision become known.

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Our Wireless segment accounts for revenue in accordance with Statement of Position No. 97-2, Software Revenue Recognition (SOP 97-2). Sales from our Wireless segment often involve multiple elements, principally hardware, software, hardware and software maintenance and other support services. When a sale involves multiple elements, we allocate the proceeds from the arrangement to each respective element based on its Vendor Specific Objective Evidence (VSOE) of fair value and recognize revenue when each element’s revenue recognition criteria are met. VSOE of fair value for each element is established based on the price charged when the same element is sold separately. If VSOE of fair value cannot be established for the undelivered element of an agreement, the proceeds from the arrangement are deferred and recognized ratably over the period that the service or element is delivered. Through June 28, 2009, our Wireless segment did not establish VSOE of fair value of post-contract customer support. As a result, the proceeds and related cost of sales from revenue transactions involving multiple-element arrangements are deferred and recognized ratably over the post-contract customer support period, ranging from one to three years. As of June 28, 2009, total deferred revenue and deferred cost of sales were $20.9 million and $7.2 million, respectively. Of the total deferred revenue, $17.7 million is included in accrued liabilities, and $3.2 million is included in other long-term liabilities. Of the total deferred cost of sales, $6.1 million is included in other current assets and $1.1 million is included in other long-lived assets.
Subsequent Events
We have evaluated subsequent events after the balance sheet date through the financial statement issuance date for appropriate accounting and disclosure (see Note 11).
Current-Year Adoption of Accounting Pronouncements
On January 1, 2009, we adopted SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141 and retains the fundamental requirements in SFAS No. 141, including that the purchase method be used for all business combinations and for an acquirer to be identified for each business combination. This standard defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control instead of the date that the consideration is transferred. SFAS No. 141(R) requires an acquirer in a business combination to recognize the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. It also requires the recognition of assets acquired and liabilities assumed arising from certain contractual contingencies as of the acquisition date, measured at their acquisition-date fair values. SFAS No. 141(R) will affect our accounting treatment for any future business combinations.

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On January 1, 2009, we adopted FASB Staff Position (FSP) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). This FSP changes the accounting for our $110.0 million aggregate principal convertible subordinated debentures that were converted into cash and shares of common stock in 2008 (see Note 7). The FSP requires that we allocate the proceeds from the debt issuance between debt and equity components in a manner that reflects our nonconvertible debt borrowing rate. The equity component reflects the value of the conversion feature of the debentures. The FSP requires retrospective application to all periods presented and does not grandfather existing debt instruments. As such, we have adjusted our prior year financial statements. The cumulative impact of the adjustments as of January 1, 2009 was a $1.7 million decrease to retained earnings with a corresponding increase to additional paid in capital. The following table summarizes the impact of the adjustments on the three and six months ended June 29, 2008.
                                 
    Three Months Ended June 29, 2008     Six Months Ended June 29, 2008  
    As Previously             As Previously        
    Reported     As Adjusted     Reported     As Adjusted  
    (In thousands, except per share amounts)  
Interest expense
  $ (10,528 )   $ (11,066 )   $ (18,347 )   $ (19,409 )
 
                               
Income before taxes
    59,191       58,653       80,095       79,033  
Income tax expense
    (17,041 )     (16,848 )     (24,725 )     (24,343 )
 
                       
Net income
  $ 42,150     $ 41,805     $ 55,370     $ 54,690  
 
                       
 
                               
Basic income per share
  $ 0.97     $ 0.96     $ 1.26     $ 1.25  
 
                               
Diluted income per share
  $ 0.89     $ 0.88     $ 1.16     $ 1.14  
Note 2: Operating Segments
In 2009, we made organizational changes to consolidate our North American operations, primarily consisting of consolidating our former Specialty Products and Belden Americas segments. This reorganization resulted in a change in our reported operating segments. We have organized the enterprise around geographic areas except for our wireless business. We now conduct our operations through four reported operating segments—Americas; Wireless; Europe, Middle East and Africa (EMEA); and Asia Pacific. We have reclassified prior year segment disclosures to conform to the new segment presentation.

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                            Asia   Total
    Americas   Wireless   EMEA   Pacific   Segments
    (In thousands)
Three Months Ended June 28, 2009
                                       
Total assets
  $ 526,580     $ 123,408     $ 495,276     $ 229,645     $ 1,374,909  
External customer revenues
    186,734       13,234       86,237       57,616       343,821  
Affiliate revenues
    10,888             13,109             23,997  
Operating income (loss)
    33,521       (7,978 )     (13,380 )     8,262       20,425  
 
                                       
Three Months Ended June 29, 2008
                                       
 
                                       
Total assets
  $ 583,639     $     $ 944,793     $ 390,484     $ 1,918,916  
External customer revenues
    278,578             171,688       106,037       556,303  
Affiliate revenues
    17,017             23,767       111       40,895  
Operating income
    48,819             24,398       15,775       88,992  
 
                                       
Six Months Ended June 28, 2009
                                       
 
                                       
Total assets
  $ 526,580     $ 123,408     $ 495,276     $ 229,645     $ 1,374,909  
External customer revenues
    368,944       25,237       174,298       103,854       672,333  
Affiliate revenues
    18,879             25,582             44,461  
Operating income (loss)
    58,179       (16,300 )     (56,625 )     11,596       (3,150 )
 
                                       
Six Months Ended June 29, 2008
                                       
 
                                       
Total assets
  $ 583,639     $     $ 944,793     $ 390,484     $ 1,918,916  
External customer revenues
    535,172             333,218       199,739       1,068,129  
Affiliate revenues
    37,377             44,665       111       82,153  
Operating income
    70,480             41,229       27,062       138,771  
The following table is a reconciliation of the total of the reportable segments’ operating income (loss) to consolidated income (loss) before taxes.
                                 
    Three Months Ended     Six Months Ended  
    June 28, 2009     June 29, 2008     June 28, 2009     June 29, 2008  
    (In thousands)  
Segment operating income (loss)
  $ 20,425     $ 88,992     $ (3,150 )   $ 138,771  
Corporate expenses
    (9,310 )     (12,327 )     (17,667 )     (26,223 )
Eliminations
    (6,846 )     (10,807 )     (12,561 )     (20,092 )
 
                       
Total operating income (loss)
    4,269       65,858       (33,378 )     92,456  
Interest expense
    (8,895 )     (11,066 )     (16,218 )     (19,409 )
Interest income
    238       1,875       602       2,832  
Other income
    695       1,986       444       3,154  
 
                       
 
                               
Income (loss) before taxes
  $ (3,693 )   $ 58,653     $ (48,550 )   $ 79,033  
 
                       

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Note 3: Income (Loss) per Share
The following table presents the basis for the income (loss) per share computations:
                                 
    Three Months Ended     Six Months Ended  
    June 28,     June 29,     June 28,     June 29,  
    2009     2008     2009     2008  
    (in thousands, except per share amounts)  
Numerator:
                               
Net income (loss)
  $ (4,886 )   $ 41,805     $ (37,340 )   $ 54,690  
 
                               
Denominator:
                               
Weighted average shares outstanding, basic
    46,587       43,506       46,557       43,821  
Effect of dilutive common stock equivalents
          3,972             4,105  
 
                       
 
                               
Weighted average shares outstanding, diluted
    46,587       47,478       46,557       47,926  
 
                       
 
                               
Net income (loss) per share:
                               
Basic
  $ (0.10 )   $ 0.96     $ (0.80 )   $ 1.25  
Diluted
  $ (0.10 )   $ 0.88     $ (0.80 )   $ 1.14  
For the three and six months ended June 28, 2009, diluted weighted average shares outstanding do not include outstanding equity awards of 3.5 million and 3.2 million, respectively, because to do so would have been anti-dilutive.
Note 4: Inventories
The major classes of inventories were as follows:
                 
    June 28,     December 31,  
    2009     2008  
    (In thousands)  
Raw materials
  $ 59,676     $ 62,701  
Work-in-process
    33,261       45,900  
Finished goods
    82,248       128,672  
Perishable tooling and supplies
    3,884       3,946  
 
           
Gross inventories
    179,069       241,219  
Obsolescence and other reserves
    (23,434 )     (25,197 )
 
           
Net inventories
  $ 155,635     $ 216,022  
 
           
Note 5: Long-Lived Assets
Disposals
On June 1, 2009, we sold a 95% ownership interest in a German cable business that sells primarily to the automotive industry. The sales price was $0.4 million, and we recognized a loss of $17.2 million on the transaction. In addition to retaining a 5% interest in the business, we retained the associated land and building, which we are leasing to the buyer. The lease term is 15 years with a lessee option to renew up to an additional 10 years.
During the six months ended June 29, 2008, we sold and leased back under a normal sale-leaseback certain Americas segment real estate in Mexico. The sales price was $25.0 million, and we recognized a

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loss of $0.9 million on the transaction. The lease term is 15 years with an option to renew up to an additional 10 years. We also sold our assembly operation in the Czech Republic for $8.2 million. We did not recognize a significant gain or loss on the transaction.
Impairments
During the six months ended June 28, 2009, we determined that certain long-lived assets of the German cable business that we sold on June 1, 2009 were impaired. We estimated the fair market value of these assets based upon the terms of the sales agreement and recognized an impairment loss of $20.4 million in the operating results of the EMEA segment. Of this total impairment loss, $14.1 million related to machinery and equipment and $2.7 million, $2.3 million, and $1.3 million related to trademarks, developed technology, and customer relations intangible assets, respectively. We also recognized impairment losses on property, plant and equipment of $3.6 million, $1.2 million, and $1.0 million in the Americas, EMEA, and Asia Pacific segments, respectively, primarily related to our Lean enterprise strategies and corresponding decisions to consolidate capacity and dispose of excess machinery and equipment. The fair values of these assets were based upon quoted prices for identical assets.
During the six months ended June 29, 2008, we recognized an impairment loss of $7.3 million in the operating results of our Americas segment due to the decision to close our manufacturing facility in Manchester, Connecticut. We also recognized an impairment loss of $4.2 million in the operating results of this segment related to our decision to consolidate capacity and dispose of excess machinery and equipment.
Depreciation and Amortization Expense
We recognized depreciation expense of $9.7 million and $19.0 million in the three- and six-month periods ended June 28, 2009, respectively. We recognized depreciation expense of $11.1 million and $22.3 million in the three- and six-month periods ended June 29, 2008, respectively.
We recognized amortization expense related to our intangible assets of $3.9 million and $7.8 million in the three- and six-month periods ended June 28, 2009, respectively. We recognized amortization expense related to our intangible assets of $2.6 million and $5.2 million in the three- and six-month periods ended June 29, 2008, respectively.
Note 6: Restructuring Activities
Global Restructuring
In 2008, we announced our decision to further streamline our manufacturing, sales and administrative functions worldwide in an effort to reduce costs and mitigate the weakening demand experienced throughout the global economy. During the first six months of 2009, we continued to implement our plan to streamline these functions and recognized severance costs primarily in the EMEA segment totaling $26.0 million ($15.8 million in cost of sales; $8.5 million in selling, general and administrative expenses; and $1.7 million in research and development) related to these restructuring actions. From inception of these restructuring actions through June 28, 2009, we have recognized severance costs totaling $52.3 million. We expect to recognize approximately $3.0 million of additional severance costs in the Americas segment associated with our plan that we announced in July 2009 to close one of our two manufacturing plants in Leominster, Massachusetts.

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EMEA Manufacturing Restructuring
In prior years, we announced various decisions to realign our EMEA operations in order to consolidate manufacturing capacity. We did not recognize any new charges in 2009 related to these previous restructuring actions. From inception of these restructuring actions through June 28, 2009, we have recognized severance costs totaling $42.6 million (including amounts accounted for through purchase accounting). We do not expect to recognize additional costs related to these restructuring actions.
Voluntary Separation Program
In 2007, we announced a voluntary separation program primarily for associates in the United States who were at least 50 years of age and had 10 years of service with the Company. We did not recognize any costs in 2009 nor do we expect to recognize any future costs related to this program. In prior years, we recognized severance costs totaling $7.2 million related to this program.
The table below sets forth restructuring activity that occurred during the three and six months ended June 28, 2009. The balances are included in accrued liabilities.
                         
            EMEA     Voluntary  
    Global     Manufacturing     Separation  
    Restructuring     Restructuring     Program  
Balance at December 31, 2008
  $ 24,957     $ 24,357     $ 1,441  
New charges
    25,920              
Purchase accounting adjustment
          (2,109 )      
Cash payments
    (13,157 )     (9,234 )     (442 )
Foreign currency translation
    995       (814 )      
Other adjustments
    (215 )     (53 )      
 
                 
 
                       
Balance at March 29, 2009
    38,500       12,147       999  
 
                       
New charges
    55              
Cash payments
    (10,092 )     (2,170 )     (550 )
Foreign currency translation
    758       254        
Other adjustments
    (290 )           (77 )
 
                 
 
                       
Balance at June 28, 2009
  $ 28,931     $ 10,231     $ 372  
 
                 
We continue to review our business strategies and evaluate further restructuring actions. This could result in additional restructuring costs in future periods.
Note 7: Long-Term Debt and Other Borrowing Arrangements
Senior Subordinated Notes
We have outstanding $350.0 million aggregate principal amount of 7.0% senior subordinated notes due 2017. The notes are guaranteed on a senior subordinated basis by certain of our domestic subsidiaries. The notes rank equal in right of payment with any of our future senior subordinated debt, and are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Interest is payable semiannually on March 15 and September 15.
In our fiscal third quarter of 2009, we issued $200.0 million in senior subordinated notes due 2019 (see Note 11).

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Senior Secured Credit Facility
As of June 28, 2009, we had a senior secured credit facility with a $350.0 million commitment. The facility was scheduled to mature in January 2011, had a variable interest rate based on LIBOR or the prime rate and was secured by our overall cash flow and certain of our assets in the United States. At June 28, 2009, there were outstanding borrowings of $240.0 million under the facility at a 3.2% interest rate, and we had $100.7 million in available borrowing capacity, net of letters of credit. During the six months ended June 28, 2009, we amended the facility and changed the definition of EBITDA used in the computation of the debt-to-EBITDA leverage ratio covenant. The amendment also increased the cost of borrowings under the facility by 100 basis points, and we incurred $1.5 million of fees that are included in other expense in the Consolidated Statements of Operations. As of June 28, 2009, we were in compliance with all of the amended covenants of the facility.
In our fiscal third quarter of 2009, we amended and extended our senior secured credit facility (see Note 11).
Convertible Subordinated Debentures
In 2008, we had outstanding $110.0 million aggregate principal of 4.0% convertible subordinated debentures due 2023. The convertible debentures contained a net share settlement feature requiring us upon conversion to pay the principal amount in cash and to pay any conversion consideration in excess of the principal amount in shares of our common stock. In July 2008, we called all of our convertible subordinated debentures for redemption. As a result of the call for redemption, holders of the debentures had the option to convert each $1,000 principal amount of their debentures and receive value in a combination of cash and shares equal to 56.8246 shares of Belden’s common stock (a conversion price of $17.598). All holders of the debentures elected to convert their debentures. Upon conversion, we paid $110.0 million in cash and issued 3,343,509 shares of common stock. We financed the cash portion of the conversion through borrowings under our senior secured credit facility.
Fair Value of Long-Term Debt
The fair value of our debt instruments at June 28, 2009 was approximately $549.8 million based on sales prices of the debt instruments from recent trading activity. Included in this amount is an estimated $309.8 million fair value of senior subordinated notes with a face value of $350.0 million and an estimated $240.0 million fair value of borrowings under our senior secured credit facility.

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Note 8: Income Taxes
The tax benefit of $11.2 million for the six months ended June 28, 2009 resulted from a loss before taxes of $48.6 million. The difference between the effective rate reflected in the provision for income taxes on income before taxes and the amount determined by applying the applicable statutory United States tax rate for the six months ended June 28, 2009 is analyzed below:
                 
    Amount     Rate  
    (in thousands, except rate data)  
United States federal statutory rate
  $ (16,993 )     35.0 %
State and local income taxes
    2,177       (4.5 )
Change in uncertain tax positions
    (153 )     0.3  
Foreign tax rate variances and other
    3,759       (7.7 )
 
           
Total tax benefit
  $ (11,210 )     23.1 %
 
           
Note 9: Pension and Other Postretirement Obligations
The following table provides the components of net periodic benefit costs for the plans:
                                 
    Pension Obligations     Other Postretirement Obligations  
    June 28, 2009     June 29, 2008     June 28, 2009     June 29, 2008  
    (In thousands)  
Three Months Ended
                               
Service cost
  $ 751     $ 1,455     $ 17     $ 34  
Interest cost
    2,608       3,203       733       637  
Expected return on plan assets
    (2,143 )     (3,076 )            
Amortization of prior service cost
    18       4       (74 )     (54 )
Settlement loss
          1,760              
Net loss recognition
    744       359       44       171  
 
                       
 
                               
Net periodic benefit cost
  $ 1,978     $ 3,705     $ 720     $ 788  
 
                       
 
                               
Six Months Ended
                               
Service cost
  $ 2,577     $ 2,855     $ 47     $ 69  
Interest cost
    6,348       6,432       1,295       1,290  
Expected return on plan assets
    (6,207 )     (6,246 )            
Amortization of prior service cost
    46       8       (122 )     (108 )
Settlement loss
          1,760              
Net loss recognition
    1,286       682       214       342  
 
                       
 
                               
Net periodic benefit cost
  $ 4,050     $ 5,491     $ 1,434     $ 1,593  
 
                       

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Note 10: Comprehensive Income (Loss)
The following table summarizes total comprehensive income (loss):
                                 
    Three Months Ended     Six Months Ended  
    June 28, 2009     June 29, 2008     June 28, 2009     June 29, 2008  
    (In thousands)  
Net income (loss)
  $ (4,886 )   $ 41,805     $ (37,340 )   $ 54,690  
Foreign currency translation gain (loss)
    24,010       (533 )     5,880       60,244  
 
                       
Total comprehensive income (loss)
  $ 19,124     $ 41,272     $ (31,460 )   $ 114,934  
 
                       
Note 11: Subsequent Events
In our fiscal third quarter of 2009, we completed the issuance of $200.0 million in senior subordinated notes due 2019 with a coupon interest rate of 9.25% and an effective interest rate of 9.75%. The notes are guaranteed on a senior subordinated basis by certain of our domestic subsidiaries. The notes rank equal in right of payment with our current senior subordinated notes due 2017 and with any future senior subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Interest is payable semiannually on June 15 and December 15. We used the $193.7 million in net proceeds of this debt offering to repay amounts drawn under our senior secured credit facility.
We also amended and extended our senior secured credit facility in our fiscal third quarter of 2009. The amendment alters the level of the total leverage ratio covenant, increases the cost of borrowing under the facility, and inserts an asset coverage ratio covenant when the total leverage ratio is in excess of certain levels. The amendment extends the term of the facility from January 2011 to January 2013, and reduces the size of the facility from $350.0 million to $250.0 million through January 2011 and in January 2011 from $250.0 million to $230.0 million until its expiration in January 2013.
Note 12: Supplemental Guarantor Information
As of June 28, 2009, Belden Inc. (the Issuer) has outstanding $350.0 million aggregate principal amount of 7.0% senior subordinated notes due 2017. The notes rank equal in right of payment with any of our future senior subordinated debt, and are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Belden Inc. and its current and future material domestic subsidiaries have fully and unconditionally guaranteed the notes on a joint and several basis. The following consolidating financial information presents information about the Issuer, guarantor subsidiaries and non-guarantor subsidiaries. Investments in subsidiaries are accounted for on the equity basis. Intercompany transactions are eliminated.

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Supplemental Condensed Consolidating Balance Sheets
                                         
    June 28, 2009  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
ASSETS
Current assets:
                                       
Cash and cash equivalents
  $ 59,539     $ 11,306     $ 203,795     $     $ 274,640  
Receivables, net
          82,315       163,357             245,672  
Inventories, net
          86,149       69,486             155,635  
Deferred income taxes
          (12,344 )     32,991             20,647  
Other current assets
    3,150       12,533       35,575             51,258  
 
                             
 
                                       
Total current assets
    62,689       179,959       505,204             747,852  
 
                                       
Property, plant and equipment, less accumulated depreciation
          121,965       176,583             298,548  
Goodwill
          241,870       72,324             314,194  
Intangible assets, less accumulated amortization
          79,536       62,647             142,183  
Deferred income taxes
          18,677       (16,052 )           2,625  
Investment in subsidiaries
    808,299       326,407             (1,134,706 )      
Other long-lived assets
    7,412       2,420       42,808             52,640  
 
                             
 
                                       
 
  $ 878,400     $ 970,834     $ 843,514     $ (1,134,706 )   $ 1,558,042  
 
                             
 
                                       
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
                                       
Accounts payable
  $ 567     $ 61,637     $ 80,163     $     $ 142,367  
Accrued liabilities
    12,202       51,455       84,317             147,974  
 
                             
 
                                       
Total current liabilities
    12,769       113,092       164,480             290,341  
 
                                       
Long-term debt
    590,000                         590,000  
Postretirement benefits
          48,274       72,096             120,370  
Other long-term liabilities
    10,021       4,556       5,265             19,842  
Intercompany accounts
    203,960       (474,126 )     270,166              
Total stockholders’ equity
    61,650       1,279,038       331,507       (1,134,706 )     537,489  
 
                             
 
                                       
 
  $ 878,400     $ 970,834     $ 843,514     $ (1,134,706 )   $ 1,558,042  
 
                             

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    December 31, 2008  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
ASSETS
Current assets:
                                       
Cash and cash equivalents
  $ 130     $ 57,522     $ 169,761     $     $ 227,413  
Receivables, net
          83,923       208,313             292,236  
Inventories, net
          110,018       106,004             216,022  
Deferred income taxes
          (12,344 )     34,950             22,606  
Other current assets
    1,782       7,133       25,911             34,826  
 
                             
 
                                       
Total current assets
    1,912       246,252       544,939             793,103  
 
                                       
Property, plant and equipment, less accumulated depreciation
          123,530       201,039             324,569  
Goodwill
          243,233       78,245             321,478  
Intangible assets, less accumulated amortization
          83,586       72,439             156,025  
Investment in subsidiaries
    838,088       362,329             (1,200,417 )      
Other long-lived assets
    7,753       2,323       43,312             53,388  
 
                             
 
                                       
 
  $ 847,753     $ 1,061,253     $ 939,974     $ (1,200,417 )   $ 1,648,563  
 
                             
 
                                       
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
                                       
Accounts payable
  $     $ 49,738     $ 111,006     $     $ 160,744  
Accrued liabilities
    12,723       56,290       111,788             180,801  
 
                             
 
                                       
Total current liabilities
    12,723       106,028       222,794             341,545  
 
                                       
Long-term debt
    590,000                         590,000  
Postretirement benefits
          49,561       70,695             120,256  
Deferred income taxes
          (14,366 )     18,636             4,270  
Other long-term liabilities
    9,991       5,807       5,826             21,624  
Intercompany accounts
    130,852       (386,116 )     255,264              
Total stockholders’ equity
    104,187       1,300,339       366,759       (1,200,417 )     570,868  
 
                             
 
                                       
 
  $ 847,753     $ 1,061,253     $ 939,974     $ (1,200,417 )   $ 1,648,563  
 
                             

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Supplemental Condensed Consolidating Statements of Operations
                                         
    Three Months Ended June 28, 2009  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
Revenues
  $     $ 181,854     $ 202,556     $ (40,589 )   $ 343,821  
Cost of sales
          (122,483 )     (153,409 )     40,589       (235,303 )
 
                             
 
                                       
Gross profit
          59,371       49,147             108,518  
Selling, general and administrative expenses
    (140 )     (37,031 )     (30,408 )           (67,579 )
Research and development
          (7,238 )     (6,884 )           (14,122 )
Amortization of intangibles
          (2,026 )     (1,885 )           (3,911 )
Asset impairment
          (737 )     (716 )           (1,453 )
Loss on sale of assets
                (17,184 )           (17,184 )
 
                             
 
                                       
Operating income (loss)
    (140 )     12,339       (7,930 )           4,269  
Interest expense
    (8,871 )     (5 )     (19 )           (8,895 )
Interest income
    51       5       182             238  
Other income
                695             695  
Intercompany income (expense)
    3,042       (8,925 )     5,883              
Income (loss) from equity investment in subsidiaries
    (1,194 )     (4,789 )           5,983        
 
                             
 
                                       
Income (loss) before taxes
    (7,112 )     (1,375 )     (1,189 )     5,983       (3,693 )
Income tax benefit (expense)
    2,226       181       (3,600 )           (1,193 )
 
                             
 
                                       
Net income (loss)
  $ (4,886 )   $ (1,194 )   $ (4,789 )   $ 5,983     $ (4,886 )
 
                             
                                         
    Three Months Ended June 29, 2008  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
Revenues
  $     $ 258,826     $ 353,623     $ (56,146 )   $ 556,303  
Cost of sales
          (185,290 )     (260,686 )     56,146       (389,830 )
 
                             
 
                                       
Gross profit
          73,536       92,937             166,473  
Selling, general and administrative expenses
    (22 )     (38,597 )     (48,294 )           (86,913 )
Research and development
          (1,596 )     (9,497 )           (11,093 )
Amortization of intangibles
          (478 )     (2,131 )           (2,609 )
 
                             
 
                                       
Operating income (loss)
    (22 )     32,865       33,015             65,858  
Interest expense
    (8,862 )     33       (2,237 )           (11,066 )
Interest income
          24       1,851             1,875  
Other income
                1,986             1,986  
Intercompany income (expense)
    3,050       (4,676 )     1,626              
Income (loss) from equity investment in subsidiaries
    44,937       25,455             (70,392 )      
 
                             
 
                                       
Income (loss) before taxes
    39,103       53,701       36,241       (70,392 )     58,653  
Income tax benefit (expense)
    2,702       (8,764 )     (10,786 )           (16,848 )
 
                             
 
                                       
Net income (loss)
  $ 41,805     $ 44,937     $ 25,455     $ (70,392 )   $ 41,805  
 
                             

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Table of Contents

                                         
    Six Months Ended June 28, 2009  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
Revenues
  $     $ 353,812     $ 390,323     $ (71,802 )   $ 672,333  
Cost of sales
          (240,078 )     (311,346 )     71,802       (479,622 )
 
                             
 
                                       
Gross profit
          113,734       78,977             192,711  
Selling, general and administrative expenses
    (164 )     (71,685 )     (72,427 )           (144,276 )
Research and development
          (14,641 )     (16,036 )           (30,677 )
Amortization of intangibles
          (4,050 )     (3,726 )           (7,776 )
Asset impairment
          (4,040 )     (22,136 )           (26,176 )
Loss on sale of assets
                (17,184 )           (17,184 )
 
                             
 
                                       
Operating income (loss)
    (164 )     19,318       (52,532 )           (33,378 )
Interest expense
    (16,190 )     71       (99 )           (16,218 )
Interest income
    56       85       461             602  
Other income (expense)
    (1,541 )           1,985             444  
Intercompany income (expense)
    5,984       (12,178 )     6,194              
Income (loss) from equity investment in subsidiaries
    (29,789 )     (36,122 )           65,911        
 
                             
 
                                       
Income (loss) before taxes
    (41,644 )     (28,826 )     (43,991 )     65,911       (48,550 )
Income tax benefit (expense)
    4,304       (963 )     7,869             11,210  
 
                             
 
                                       
Net income (loss)
  $ (37,340 )   $ (29,789 )   $ (36,122 )   $ 65,911     $ (37,340 )
 
                             
                                         
    Six Months Ended June 29, 2008  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
Revenues
  $     $ 496,226     $ 678,824     $ (106,921 )   $ 1,068,129  
Cost of sales
          (358,720 )     (504,040 )     106,921       (755,839 )
 
                             
 
                                       
Gross profit
          137,506       174,784             312,290  
Selling, general and administrative expenses
    (33 )     (78,628 )     (103,415 )           (182,076 )
Research and development
          (3,363 )     (16,801 )           (20,164 )
Amortization of intangibles
          (978 )     (4,183 )           (5,161 )
Asset impairment
          (11,549 )                 (11,549 )
Loss on sale of assets
                (884 )           (884 )
 
                             
 
                                       
Operating income (loss)
    (33 )     42,988       49,501             92,456  
Interest expense
    (17,507 )     39       (1,941 )           (19,409 )
Interest income
          187       2,645             2,832  
Other income
                3,154             3,154  
Intercompany income (expense)
    6,852       (9,285 )     2,433              
Income (loss) from equity investment in subsidiaries
    60,971       37,676             (98,647 )      
 
                             
 
                                       
Income (loss) before taxes
    50,283       71,605       55,792       (98,647 )     79,033  
Income tax benefit (expense)
    4,407       (10,634 )     (18,116 )           (24,343 )
 
                             
 
                                       
Net income (loss)
  $ 54,690     $ 60,971     $ 37,676     $ (98,647 )   $ 54,690  
 
                             

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Table of Contents

Supplemental Condensed Consolidating Statements of Cash Flows
                                         
    Six Months Ended June 28, 2009  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
Net cash provided by (used for) operating activities
  $ 67,103     $ (35,736 )   $ 37,967     $     $ 69,334  
 
                                       
Cash flows from investing activities:
                                       
Capital expenditures
          (10,462 )     (7,880 )           (18,342 )
Proceeds from disposal of tangible assets
          (18 )     385             367  
 
                             
Net cash used for investing activities
          (10,480 )     (7,495 )           (17,975 )
 
                                       
Cash flows from financing activities:
                                       
Cash dividends paid
    (4,707 )                       (4,707 )
Debt issuance costs
    (1,541 )                       (1,541 )
Tax deficiency related to share-based compensation
    (1,469 )                       (1,469 )
Proceeds from exercises of stock options
    23                         23  
 
                             
Net cash used for financing activities
    (7,694 )                       (7,694 )
 
                                       
Effect of currency exchange rate changes on cash and cash equivalents
                3,562             3,562  
 
                             
 
                                       
Increase (decrease) in cash and cash equivalents
    59,409       (46,216 )     34,034             47,227  
Cash and cash equivalents, beginning of period
    130       57,522       169,761             227,413  
 
                             
Cash and cash equivalents, end of period
  $ 59,539     $ 11,306     $ 203,795     $     $ 274,640  
 
                             
                                         
    Six Months Ended June 29, 2008  
                    Non-              
            Guarantor     Guarantor              
    Issuer     Subsidiaries     Subsidiaries     Eliminations     Total  
    (In thousands)  
Net cash provided by (used for) operating activities
  $ 196,734     $ (107,789 )   $ (14,370 )   $     $ 74,575  
 
                                       
Cash flows from investing activities:
                                       
Capital expenditures
          (4,608 )     (13,577 )           (18,185 )
Cash used to invest in and acquire businesses
          (2,500 )     (5,391 )           (7,891 )
Proceeds from disposal of tangible assets
          30       40,219             40,249  
 
                             
Net cash provided by (used for) investing activities
          (7,078 )     21,251             14,173  
 
                                       
Cash flows from financing activities:
                                       
Cash dividends paid
    (4,458 )                       (4,458 )
Excess tax benefits related to share-based compensation
    1,141                         1,141  
Proceeds from exercises of stock options
    5,171                         5,171  
Payments under share repurchase program
    (68,336 )                       (68,336 )
Intercompany capital contributions
    (130,242 )     130,242                    
 
                             
Net cash provided by (used for) financing activities
    (196,724 )     130,242                   (66,482 )
 
                                       
Effect of currency exchange rate changes on cash and cash equivalents
                7,436             7,436  
 
                             
 
                                       
Increase in cash and cash equivalents
    10       15,375       14,317             29,702  
Cash and cash equivalents, beginning of period
          13,947       146,017             159,964  
 
                               
Cash and cash equivalents, end of period
  $ 10     $ 29,322     $ 160,334     $     $ 189,666  
 
                             

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We design, manufacture, and market signal transmission solutions, including cable, connectivity and active components for mission-critical applications in markets ranging from industrial automation to data centers, broadcast studios, and aerospace.
We consider revenue growth, operating margin, cash flows, return on invested capital, and working capital management metrics to be our key operating performance indicators.
Trends and Events
The following trends and events arising during 2009 have had varying effects on our financial condition, results of operations and cash flows.
Global Restructuring Activities
In 2008, we announced our decision to further streamline our manufacturing, sales and administrative functions worldwide in an effort to reduce costs and mitigate the weakening demand experienced throughout the global economy. In the first six months of 2009, we continued to implement our plan to streamline these functions and recognized severance costs and asset impairment losses of $26.0 million and $26.2 million, respectively, related to these restructuring actions. We continuously review our business strategies and evaluate potential restructuring actions. This could result in additional restructuring costs in future periods.
Share-Based Compensation
We provide certain employees with share-based compensation in the form of stock options, stock appreciation rights, restricted stock shares, restricted stock units with service vesting conditions, and restricted stock units with performance vesting conditions. At June 28, 2009, the total unrecognized compensation cost related to all nonvested awards was $22.1 million. That cost is expected to be recognized over a weighted-average period of 1.9 years.
Product Demand
Many of our customers are distributors that stock inventory for resale. Due to the weakening demand experienced throughout the global economy, many of our customers have lowered their inventory balances. Our revenues are negatively impacted by these inventory reductions. Our customers may continue this trend if overall demand remains weak.
Subsequent Events
In our fiscal third quarter of 2009, we completed the issuance of $200.0 million in senior subordinated notes due 2019 with a coupon interest rate of 9.25% and an effective interest rate of 9.75%. The notes are guaranteed on a senior subordinated basis by certain of our domestic subsidiaries. The notes rank equal in right of payment with our current senior subordinated notes due 2017 and with any future senior subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Interest is payable semiannually on June 15 and December 15. We used the $193.7 million in net proceeds of this debt offering to repay amounts drawn under our senior secured credit facility.

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We also amended and extended our senior secured credit facility in our fiscal third quarter of 2009. The amendment alters the level of the total leverage ratio covenant, increases the cost of borrowing under the facility, and inserts an asset coverage ratio covenant when the total leverage ratio is in excess of certain levels. The amendment extends the term of the facility from January 2011 to January 2013, and reduces the size of the facility from $350.0 million to $250.0 million through January 2011 and in January 2011 from $250.0 million to $230.0 million until its expiration in January 2013.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or cash flows.
Adoption of Recent Accounting Pronouncements
Discussion regarding our adoption of recent accounting pronouncements is included in Note 1 to the Consolidated Financial Statements.
Critical Accounting Policies
During the six months ended June 28, 2009:
  We did not change any of our existing critical accounting policies from those listed in our 2008 Annual Report on Form 10-K;
  No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and
  There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed.
Results of Operations
Consolidated Continuing Operations
                                                 
    Three Months Ended           Six Months Ended    
    June 28,   June 29,   %   June 28,   June 29,   %
    2009   2008   Change   2009   2008   Change
    (in thousands, except percentages)
Revenues
  $ 343,821     $ 556,303       -38.2 %   $ 672,333     $ 1,068,129       -37.1 %
Gross profit
    108,518       166,473       -34.8 %     192,711       312,290       -38.3 %
Selling, general and administrative expenses
    67,579       86,913       -22.2 %     144,276       182,076       -20.8 %
Research and development
    14,122       11,093       27.3 %     30,677       20,164       52.1 %
Operating income (loss)
    4,269       65,858       -93.5 %     (33,378 )     92,456       -136.1 %
Income (loss) before taxes
    (3,693 )     58,653       -106.3 %     (48,550 )     79,033       -161.4 %
Net income (loss)
    (4,886 )     41,805       -111.7 %     (37,340 )     54,690       -168.3 %
Revenues decreased in the three- and six-month periods ended June 28, 2009 for the following reasons:
  A decrease in unit sales volume due to broad-based market declines resulted in a revenue decrease of $161.0 million and $304.8 million, respectively.

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  A decrease in copper prices resulted in sales price decreases totaling $32.5 million and $61.4 million, respectively.
  Unfavorable currency translation of $19.4 million and $38.4 million, respectively, due to the U.S. dollar strengthening against many foreign currencies including the euro and Canadian dollar.
  Lost sales from the disposal of two businesses in Europe resulted in a revenue decrease of $12.8 million and $16.4 million, respectively.
The negative impact that the factors listed above had on the revenue comparison was partially offset by $13.2 million and $25.2 million, respectively, of revenues from Trapeze Networks, Inc. (Trapeze), which we acquired on July 16, 2008.
Gross profit decreased in the three- and six-month periods ended June 28, 2009 from the comparable periods in 2008 due to the decreases in revenue as discussed above and increases in severance and other restructuring costs. In the three- and six-month periods ended June 28, 2009, cost of sales included $4.8 million and $22.7 million, respectively, of severance and other restructuring costs compared to $2.3 million and $6.2 million, respectively, in the comparable periods of 2008. These increases were due to global restructuring actions to further streamline our manufacturing functions worldwide in an effort to reduce costs and mitigate the weakening demand experienced throughout the global economy. Excluding the impact of the severance and other restructuring costs, gross profit margin in the three- and six-month periods ended June 28, 2009 increased 280 basis points and 230 basis points, respectively, due to cost reductions from our Lean enterprise strategies and global restructuring actions.
Selling, general and administrative expenses decreased more than 20% in each of the three- and six-month periods ended June 28, 2009 from the comparable periods in 2008. These decreases are primarily due to lower payroll costs associated with a decrease in sales and administration employees and lower discretionary spending for items such as consulting fees, travel costs, and advertising.
The increase in research and development costs in the three- and six-month periods ended June 28, 2009 is primarily due to the acquisition of Trapeze in July 2008. Trapeze incurred $5.4 million and $11.2 million of research and development costs in the three- and six-month periods ended June 28, 2009, respectively.
During the first six months of 2009, we recognized asset impairment losses totaling $26.2 million primarily related to a German cable business that we sold in the second quarter of 2009. In the first six months of 2008, we recognized an impairment loss of $7.3 million due to the decision to close our manufacturing facility in Manchester, Connecticut. We also recognized an impairment loss of $4.2 million in 2008 related to our decision to consolidate capacity and dispose of excess machinery and equipment.
During the second quarter of 2009, we sold a 95% ownership interest in a German cable business that sells primarily to the automotive industry. The sales price was $0.4 million, and we recognized a loss of $17.2 million on the transaction. We did not have any significant gains or losses on the sale of assets in 2008.
We recognized income tax expense of $1.2 million in the second quarter of 2009 despite incurring a loss before taxes because the income tax benefit associated with the loss on sale of a German cable business was based on a lower statutory tax rate than the average rate applied to the rest of our income before taxes. Our effective tax rate for the six-month period ended June 28, 2009 was a 23.1% benefit compared to an expense of 30.8% in 2008. This change is primarily attributable to the decrease in income before taxes as well as the impact of the income tax benefit associated with the loss on sale of a German cable business.

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Americas Segment
                                                 
    Three Months Ended           Six Months Ended    
    June 28,   June 29,   %   June 28,   June 29,   %
    2009   2008   Change   2009   2008   Change
    (in thousands, except percentages)
Total revenues
  $ 197,622     $ 295,595       -33.1 %   $ 387,823     $ 572,549       -32.3 %
Operating income
    33,521       48,819       -31.3 %     58,179       70,480       -17.5 %
as a percent of total revenues
    17.0 %     16.5 %             15.0 %     12.3 %        
Americas total revenues, which include affiliate revenues, decreased in the three- and six-month periods ended June 28, 2009 from the comparable periods in 2008 due to lower unit sales volume of $67.9 million and $120.4 million, respectively. Lower demand in the United States contributed to lower volume across all vertical markets as more than 75% of the segment’s external customer revenues are generated from customers located in the United States. Similarly, lower demand in Europe and Asia resulted in a decrease in affiliate revenues in the three- and six-month periods ended June 28, 2009 of $6.1 million and $18.5 million, respectively. A decrease in copper prices resulted in lower selling prices that contributed $19.1 million and $35.5 million, respectively, to the decrease in revenues. The remaining decrease in revenues was due to unfavorable currency translation, which was primarily a result of the U.S. dollar strengthening against the Canadian dollar.
Operating income decreased in the three- and six-month periods ended June 28, 2009 due to the decrease in revenues as discussed above. However, operating margins improved in 2009 due to manufacturing cost savings resulting from the benefits of our restructuring actions and the successful execution of our regional manufacturing and Lean enterprise strategies. Operating margins were also affected by asset impairment and restructuring charges. In the second quarter of 2009, the segment recognized $0.7 million of asset impairment losses and $4.0 million of severance and other restructuring charges primarily related to our global restructuring actions. In the second quarter of 2008, the segment recognized severance and other restructuring charges of $3.6 million. Excluding the impact of these charges, operating margins for the second quarter increased from 17.7% in 2008 to 19.3% in 2009.
Wireless Segment
                                                 
    Three Months Ended           Six Months Ended    
    June 28,   June 29,   %   June 28,   June 29,   %
    2009   2008   Change   2009   2008   Change
    (in thousands, except percentages)
Total revenues
  $ 13,234     $       n/a     $ 25,237     $       n/a  
Operating loss
    (7,978 )           n/a       (16,300 )           n/a  
as a percent of total revenues
    -60.3 %     n/a               -64.6 %     n/a          
The Wireless segment consists of Trapeze, which we acquired on July 16, 2008. Sales transactions from our Wireless segment often involve multiple elements in which the sales proceeds are deferred and recognized ratably over the period related to the last delivered element. As of June 28, 2009, total deferred revenue and deferred cost of sales were $20.9 million and $7.2 million, respectively. The deferred revenue and deferred cost of sales are expected to be amortized over various periods ranging from one to three years.

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The changes in the deferred revenue and deferred cost of sales balances are as follows (in thousands):
                         
    Deferred     Deferred Cost     Deferred  
    Revenue     of Sales     Gross Profit  
Balance, December 31, 2008
  $ 20,166     $ 7,270     $ 12,896  
Balance, June 28, 2009
    20,948       7,235       13,713  
 
                 
Increase (decrease)
  $ 782     $ (35 )   $ 817  
 
                 
In January 2009, one of Trapeze’s significant OEM customers, Nortel Networks (Nortel), filed for bankruptcy protection. As part of its bankruptcy restructuring activities, Nortel is in the process of selling its various business units. Our relationship with Nortel may be affected by the outcome of this process. The financial difficulty of Nortel has resulted in lower than expected revenues for Trapeze and has contributed to the segment’s operating loss.
EMEA Segment
                                                 
    Three Months Ended           Six Months Ended    
    June 28,   June 29,   %   June 28,   June 29,   %
    2009   2008   Change   2009   2008   Change
    (in thousands, except percentages)
Total revenues
  $ 99,346     $ 195,455       -49.2 %   $ 199,880     $ 377,883       -47.1 %
Operating income (loss)
    (13,380 )     24,398       -154.8 %     (56,625 )     41,229       -237.3 %
as a percent of total revenues
    -13.5 %     12.5 %             -28.3 %     10.9 %        
EMEA total revenues, which include affiliate revenues, decreased in the three- and six-month periods ended June 28, 2009 from the comparable periods in 2008 due to lower unit sales volume of $56.6 million and $111.1 million, respectively. The broad-based market declines have continued in Europe resulting in lower volume across all vertical markets. Similarly, lower demand in the United States and Asia resulted in a decrease in affiliate revenues in the three- and six-month periods ended June 28, 2009 of $10.7 million and $19.1 million, respectively. The decrease in revenues was also due to $13.6 million and $27.2 million, respectively, of unfavorable currency translation, primarily from the U.S. dollar strengthening against the euro. A decrease in copper prices resulted in lower selling prices that contributed $2.4 million and $4.2 million, respectively, to the decrease in revenues. The remaining decrease in revenues was due to lost sales from the disposal of two businesses.
Operating income decreased in the three- and six-month periods ended June 28, 2009 due to the decrease in revenues as discussed above, a loss on sale of assets, and an increase in asset impairment and severance charges. In the second quarter of 2009, the segment recognized a $17.2 million loss on the sale of a German cable business. It also recognized $0.7 million of asset impairment losses and $2.6 million of severance and other restructuring charges primarily related to our global restructuring actions. In the second quarter of 2008, the segment recognized severance and other restructuring charges of $0.6 million. Excluding the impact of these charges, operating margins for the second quarter decreased from 12.8% in 2008 to 7.1% in 2009 as the decrease in revenues more than offset the cost savings from our various restructuring actions.

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Asia Pacific Segment
                                                 
    Three Months Ended           Six Months Ended    
    June 28,   June 29,   %   June 28,   June 29,   %
    2009   2008   Change   2009   2008   Change
    (in thousands, except percentages)
Total revenues
  $ 57,616     $ 106,148       -45.7 %   $ 103,854     $ 199,850       -48.0 %
Operating income
    8,262       15,775       -47.6 %     11,596       27,062       -57.2 %
as a percent of total revenues
    14.3 %     14.9 %             11.2 %     13.5 %        
Asia Pacific total revenues decreased in the three- and six-month periods ended June 28, 2009 from the comparable periods in 2008 due to lower unit sales volume of $36.5 million and $73.3 million, respectively. The broad-based market declines have continued in Asia resulting in lower volume across most vertical markets. A decrease in copper prices resulted in lower selling prices that contributed $11.0 million and $21.7 million, respectively, to the decrease in revenues. The remaining decrease in revenues was due to unfavorable currency translation.
Operating income decreased in the three- and six-month periods ended June 28, 2009 due to the decrease in revenues as discussed above. Despite the significant decrease in revenues, operating margins remained above 10.0% in 2009 due to gross profit margin improvement from our product portfolio management actions and cost savings from our restructuring actions.
Corporate Expenses
                                                 
    Three Months Ended           Six Months Ended    
    June 28,   June 29,   %   June 28,   June 29,   %
    2009   2008   Change   2009   2008   Change
            (in thousands, except percentages)        
Total corporate expenses
  $ (9,310 )   $ (12,327 )     -24.5 %   $ (17,667 )   $ (26,223 )     -32.6 %
Corporate expenses include administrative and other costs that are not allocated to the segments. These expenses decreased in the three- and six-month periods ended June 28, 2009 from the comparable periods in 2008 due to lower payroll costs, consulting fees, and other discretionary items such as travel costs.
Liquidity and Capital Resources
Significant factors that have affected or may affect our cash liquidity include (1) cash provided by operating activities, (2) disposals of tangible assets, (3) exercises of stock options, (4) cash used for business acquisitions, restructuring actions, capital expenditures, share repurchases and dividends, and (5) our available credit facilities and other borrowing arrangements. We expect our operating activities to generate cash throughout 2009 and believe our sources of liquidity are sufficient to fund current working capital requirements, capital expenditures, contributions for our retirement plans, quarterly dividend payments, severance payments from our restructuring actions, and our short-term operating strategies. Customer demand, competitive market forces, commodities pricing, customer acceptance of our product mix and economic conditions worldwide could affect our ability to continue to fund our future needs from business operations.

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The following table is derived from our Consolidated Cash Flow Statements:
                 
    Six Months Ended  
    June 28, 2009     June 29, 2008  
    (In thousands)  
Net cash provided by (used for):
               
Operating activities
  $ 69,334     $ 74,575  
Investing activities
    (17,975 )     14,173  
Financing activities
    (7,694 )     (66,482 )
Effects of currency exchange rate changes on
               
cash and cash equivalents
    3,562       7,436  
 
           
 
               
Increase in cash and cash equivalents
    47,227       29,702  
Cash and cash equivalents, beginning of period
    227,413       159,964  
 
           
 
               
Cash and cash equivalents, end of period
  $ 274,640     $ 189,666  
 
           
Net cash provided by operating activities, a key source of our liquidity, decreased by $5.2 million in the six-month period ended June 28, 2009 from the comparable period in 2008 primarily due to a decrease in income partially offset by a favorable net change in operating assets and liabilities. This favorable change was primarily due to improvements in receivables and inventories as we reduced production and inventory levels consistent with the decrease in customer demand. These improvements were partially offset by unfavorable changes in accounts payable and accrued liabilities, which included $35.6 million of total severance payments during the six months ended June 28, 2009 related to our restructuring actions. Total severance payments during the six months ended June 29, 2008 were $3.8 million.
Net cash used for investing activities totaled $18.0 million in the first six months of 2009 compared to cash provided by investing activities of $14.2 million in the first six months of 2008. Investing activities in the first six months of 2009 primarily related to capital expenditures for enterprise resource planning software and capacity enhancements at certain locations. Net cash provided by investing activities in the first six months of 2008 included $24.4 million of net proceeds received from the sale of certain real estate in Mexico, $15.0 million received from the sale and collection of a receivable related to the sale of our assembly and telecommunications cable operations in the Czech Republic, and $0.7 million received from the collection of a receivable related to our sale of certain real estate in the Netherlands. These proceeds were partially offset by capital expenditures of $18.2 million that included payments for construction of a new manufacturing facility in China. We anticipate that future capital expenditures will be funded with available cash.
Net cash used for financing activities in the first six months of 2009 totaled $7.7 million compared to $66.5 million in the first six months of 2008. This change is primarily due to a decrease in payments under our share repurchase program, which we completed in 2008, and a decrease in proceeds from the exercise of stock options.
Our outstanding debt obligations as of June 28, 2009 consisted of $350.0 million aggregate principal of 7.0% senior subordinated notes due 2017 and $240.0 million of outstanding borrowings under our senior secured credit facility, which matures in 2011 and has a variable interest rate based on LIBOR or the prime rate. During the six months ended June 28, 2009, we amended the facility and changed the definition of EBITDA used in the computation of the 3.5 gross debt-to-EBITDA leverage ratio covenant. Although the amendment increased the cost of borrowings under the facility by 100 basis points, it provides us with additional flexibility in managing liquidity through the weaker global demand in our served markets. As of June 28, 2009, we had $100.7 million in available borrowing capacity under our senior secured credit facility, and we were in compliance with all of its covenants.

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In our fiscal third quarter of 2009, we issued $200.0 million in senior subordinated notes due 2019 and amended and extended our senior secured credit facility. Additional discussion regarding these subsequent events is included in Note 11 to the Consolidated Financial Statements and the Overview section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Statements in this report other than historical facts are forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on forecasts and projections about the industries which we serve and about general economic conditions. They reflect management’s beliefs and assumptions. They are not guarantees of future performance and they involve risk and uncertainty. Our actual results may differ materially from these expectations. Some of the factors that may cause actual results to differ from our expectations include:
  The current global economic slowdown may adversely impact our results;
  Turbulence in financial markets may increase our borrowing costs;
  The availability of credit for our customers and distributors;
  Our ability to successfully integrate acquired businesses;
  Demand and acceptance of our products by customers and end users;
  Worldwide economic conditions, which could impact demand for our products;
  Changes in the cost and availability of raw materials (specifically, copper, commodities derived from petrochemical feedstocks, and other materials);
  The degree to which we will be able to respond to raw materials cost fluctuations through the pricing of our products;
  Our ability to meet customer demand successfully as we also reduce working capital;
  Our ability to implement successfully our announced restructuring plans (for which we may incur additional costs); and
  Other factors noted in this report and our other Securities Exchange Act of 1934 filings.
For a more complete discussion of risk factors, please see our 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2009. We disclaim any duty to update any forward-looking statements as a result of new information, future developments, or otherwise.
Item 3: Quantitative and Qualitative Disclosures about Market Risks
Item 7A of our 2008 Annual Report on Form 10-K provides more information as to the practices and instruments that we use to manage market risks. There were no material changes in our exposure to market risks since December 31, 2008.
Item 4: Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

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There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
Item 1: Legal Proceedings
We are a party to various legal proceedings and administrative actions that are incidental to our operations. These proceedings include personal injury cases, about 96 of which we were aware at July 22, 2009, in which we are one of many defendants. Electricians have filed a majority of these cases, primarily in New Jersey and Pennsylvania, generally seeking compensatory, special and punitive damages. Typically in these cases, the claimant alleges injury from alleged exposure to a heat-resistant fiber. Our alleged predecessors had a small number of products that contained the fiber, but ceased production of such products more than 20 years ago. Through July 22, 2009, we have been dismissed, or reached agreement to be dismissed, in approximately 313 similar cases without any going to trial, and with only 38 of these involving any payment to the claimant. In our opinion, the proceedings and actions in which we are involved should not, individually or in the aggregate, have a material adverse effect on our financial condition, operating results, or cash flows.
Item 1A: Risk Factors
There have been no material changes with respect to risk factors as previously disclosed in our 2008 Annual Report on Form 10-K.
Item 4: Submission of Matters to a Vote of Security Holders
On May 20, 2009, the Company held its regular Annual Meeting of Stockholders. The stockholders considered two proposals. Both proposals were approved.
Proposal 1: Election of 10 directors for a one-year term.
                 
    Shares Voted For   Shares Withheld
David Aldrich
    38,831,495       5,584,695  
Lorne D. Bain
    39,940,910       4,475,280  
Lance C. Balk
    40,937,797       3,478,393  
Judy L. Brown
    40,136,206       4,279,984  
Bryan C. Cressey
    40,704,421       3,711,769  
Glenn Kalnasy
    38,493,804       5,922,386  
Mary S. McLeod
    38,844,861       5,571,329  
John M. Monter
    38,858,398       5,557,792  
Bernard G. Rethore
    37,459,237       6,956,953  
John S. Stroup
    41,046,315       3,369,875  
Proposal 2: To authorize an additional 2,200,000 shares for the Cable Design Technologies Corporation 2001 Long-Term Performance Incentive Plan and approve other Plan amendments.
             
Shares Voted For   Shares Voted Against   Abstentions   Broker Non-Votes
30,351,776
  10,464,662   54,399   3,545,353

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Item 6: Exhibits
Exhibits
     
Exhibit 31.1
  Certificate of the Chief Executive Officer pursuant to § 302 of the Sarbanes-Oxley Act of 2002.
 
   
Exhibit 31.2
  Certificate of the Chief Financial Officer pursuant to § 302 of the Sarbanes-Oxley Act of 2002.
 
   
Exhibit 32.1
  Certificate of the Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
 
   
Exhibit 32.2
  Certificate of the Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  BELDEN INC.
 
 
Date: August 4, 2009  By:   /s/ John S. Stroup    
    John S. Stroup   
    President, Chief Executive Officer and Director   
 
     
Date: August 4, 2009  By:   /s/ Gray G. Benoist    
    Gray G. Benoist   
    Senior Vice President, Finance and Chief Financial Officer   
 
     
Date: August 4, 2009  By:   /s/ John S. Norman    
    John S. Norman   
    Vice President, Controller and Chief Accounting Officer   

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