FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|
|
|
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
|
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(I.R.S. Employer |
incorporation or organization)
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|
Identification No.) |
7733 Forsyth Boulevard, Suite 800
St. Louis, Missouri 63105
(Address of principal executive offices)
(314) 854-8000
Registrants 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):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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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
BELDEN INC.
CONSOLIDATED BALANCE SHEETS
|
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June 28, |
|
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December 31, |
|
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|
2009 |
|
|
2008 |
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|
(Unaudited) |
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|
|
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|
(In thousands) |
|
ASSETS
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
274,640 |
|
|
$ |
227,413 |
|
Receivables, net |
|
|
245,672 |
|
|
|
292,236 |
|
Inventories, net |
|
|
155,635 |
|
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|
216,022 |
|
Deferred income taxes |
|
|
20,647 |
|
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|
22,606 |
|
Other current assets |
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51,258 |
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34,826 |
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|
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|
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|
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Total current assets |
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747,852 |
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|
793,103 |
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Property, plant and equipment, less accumulated depreciation |
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298,548 |
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324,569 |
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Goodwill |
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314,194 |
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|
321,478 |
|
Intangible assets, less accumulated amortization |
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|
142,183 |
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|
156,025 |
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Deferred income taxes |
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|
2,625 |
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|
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Other long-lived assets |
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52,640 |
|
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|
53,388 |
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|
|
|
|
|
|
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$ |
1,558,042 |
|
|
$ |
1,648,563 |
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LIABILITIES AND STOCKHOLDERS EQUITY
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Current liabilities: |
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Accounts payable |
|
$ |
142,367 |
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$ |
160,744 |
|
Accrued liabilities |
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|
147,974 |
|
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|
180,801 |
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|
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Total current liabilities |
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290,341 |
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|
341,545 |
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Long-term debt |
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590,000 |
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|
590,000 |
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Postretirement benefits |
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|
120,370 |
|
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|
120,256 |
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Deferred income taxes |
|
|
|
|
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|
4,270 |
|
Other long-term liabilities |
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19,842 |
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21,624 |
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Stockholders equity: |
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Preferred stock |
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Common stock |
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|
503 |
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|
503 |
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Additional paid-in capital |
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|
585,650 |
|
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|
585,704 |
|
Retained earnings |
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|
64,904 |
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|
106,949 |
|
Accumulated other comprehensive income |
|
|
16,107 |
|
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|
10,227 |
|
Treasury stock |
|
|
(129,675 |
) |
|
|
(132,515 |
) |
|
|
|
|
|
|
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|
Total stockholders equity |
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|
537,489 |
|
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|
570,868 |
|
|
|
|
|
|
|
|
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$ |
1,558,042 |
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|
$ |
1,648,563 |
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The accompanying notes are an integral part of these Consolidated Financial Statements
-1-
BELDEN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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Six Months Ended |
|
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|
June 28, 2009 |
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June 29, 2008 |
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|
June 28, 2009 |
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|
June 29, 2008 |
|
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|
(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 |
) |
|
|
|
|
|
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|
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|
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|
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Gross profit |
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108,518 |
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|
166,473 |
|
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192,711 |
|
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|
312,290 |
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|
Selling, general and
administrative expenses |
|
|
(67,579 |
) |
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|
(86,913 |
) |
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|
(144,276 |
) |
|
|
(182,076 |
) |
Research and development |
|
|
(14,122 |
) |
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|
(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 |
) |
|
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|
|
|
|
|
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|
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Operating income (loss) |
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|
4,269 |
|
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|
65,858 |
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|
(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 |
|
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|
3,154 |
|
|
|
|
|
|
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|
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|
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|
Income (loss) before taxes |
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|
(3,693 |
) |
|
|
58,653 |
|
|
|
(48,550 |
) |
|
|
79,033 |
|
|
Income tax benefit (expense) |
|
|
(1,193 |
) |
|
|
(16,848 |
) |
|
|
11,210 |
|
|
|
(24,343 |
) |
|
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|
|
|
|
|
|
|
|
|
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|
Net income (loss) |
|
$ |
(4,886 |
) |
|
$ |
41,805 |
|
|
$ |
(37,340 |
) |
|
$ |
54,690 |
|
|
|
|
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|
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|
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|
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|
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Weighted average number of common
shares and equivalents: |
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
Basic |
|
|
46,587 |
|
|
|
43,506 |
|
|
|
46,557 |
|
|
|
43,821 |
|
Diluted |
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|
46,587 |
|
|
|
47,478 |
|
|
|
46,557 |
|
|
|
47,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share |
|
$ |
(0.10 |
) |
|
$ |
0.96 |
|
|
$ |
(0.80 |
) |
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Diluted income (loss) per share |
|
$ |
(0.10 |
) |
|
$ |
0.88 |
|
|
$ |
(0.80 |
) |
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
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|
|
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|
Dividends declared per share |
|
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
The accompanying notes are an integral part of these Consolidated Financial Statements
-2-
BELDEN INC.
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
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|
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|
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|
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
-3-
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
-4-
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
-5-
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 customers
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.
-6-
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 elements 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.
-7-
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 segmentsAmericas; Wireless; Europe, Middle East and Africa
(EMEA); and Asia Pacific. We have reclassified prior year segment disclosures to conform to the new
segment presentation.
-8-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-9-
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
-10-
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.
-11-
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).
-12-
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 Beldens 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.
-13-
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-14-
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.
-15-
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-16-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-17-
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-18-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-19-
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-20-
Item 2: Managements 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.
-21-
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.
|
-22-
|
|
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.
-23-
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 segments 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.
-24-
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 Trapezes 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 segments 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.
-25-
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.
-26-
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 |
|
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|
|
|
|
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|
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.
-27-
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 Managements
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 managements 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:
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The current global economic slowdown may adversely impact our results; |
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Turbulence in financial markets may increase our borrowing costs; |
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The availability of credit for our customers and distributors; |
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Our ability to successfully integrate acquired businesses; |
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Demand and acceptance of our products by customers and end users; |
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Worldwide economic conditions, which could impact demand for our products; |
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Changes in the cost and availability of raw materials (specifically, copper, commodities
derived from petrochemical feedstocks, and other materials); |
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The degree to which we will be able to respond to raw materials cost fluctuations through
the pricing of our products; |
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Our ability to meet customer demand successfully as we also reduce working capital; |
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Our ability to implement successfully our announced restructuring plans (for which we may
incur additional costs); and |
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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.
-28-
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.
There have been no material changes with respect to risk factors as previously disclosed in our
2008 Annual Report on Form 10-K.
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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.
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Shares Voted For |
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Shares Withheld |
David Aldrich |
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38,831,495 |
|
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5,584,695 |
|
Lorne D. Bain |
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39,940,910 |
|
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4,475,280 |
|
Lance C. Balk |
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40,937,797 |
|
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3,478,393 |
|
Judy L. Brown |
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40,136,206 |
|
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4,279,984 |
|
Bryan C. Cressey |
|
|
40,704,421 |
|
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3,711,769 |
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Glenn Kalnasy |
|
|
38,493,804 |
|
|
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5,922,386 |
|
Mary S. McLeod |
|
|
38,844,861 |
|
|
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5,571,329 |
|
John M. Monter |
|
|
38,858,398 |
|
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5,557,792 |
|
Bernard G. Rethore |
|
|
37,459,237 |
|
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6,956,953 |
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John S. Stroup |
|
|
41,046,315 |
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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.
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Shares Voted For |
|
Shares Voted Against |
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Abstentions |
|
Broker Non-Votes |
30,351,776
|
|
10,464,662
|
|
54,399
|
|
3,545,353 |
-29-
Item 6: Exhibits
Exhibits
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Exhibit 31.1
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Certificate of the Chief Executive Officer pursuant to § 302
of the Sarbanes-Oxley Act of 2002. |
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Exhibit 31.2
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Certificate of the Chief Financial Officer pursuant to § 302
of the Sarbanes-Oxley Act of 2002. |
|
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Exhibit 32.1
|
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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. |
|
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Exhibit 32.2
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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. |
-30-
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.
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BELDEN INC.
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Date: August 4, 2009 |
By: |
/s/ John S. Stroup
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John S. Stroup |
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President, Chief Executive Officer and Director |
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Date: August 4, 2009 |
By: |
/s/ Gray G. Benoist
|
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|
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Gray G. Benoist |
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Senior Vice President, Finance and Chief Financial Officer |
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Date: August 4, 2009 |
By: |
/s/ John S. Norman
|
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|
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John S. Norman |
|
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Vice President, Controller and Chief Accounting
Officer |
|
-31-