e10vk
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2006
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or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission File
No. 001-12561
BELDEN CDT INC.
(Exact Name of Registrant as
Specified in Its Charter)
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Delaware
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36-3601505
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(State or Other Jurisdiction
of
Incorporation or Organization)
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(IRS Employer
Identification No.)
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7701 Forsyth Boulevard
Suite 800 St. Louis, Missouri 63105
(Address of Principal Executive
Offices and Zip Code)
(314) 854-8000
(Registrants Telephone
Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.01 par value
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The New York Stock Exchange
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Preferred Stock Purchase Rights
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The New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
The registrant (1) is a well-known seasoned issuer,
(2) is required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 (the
Act), (3) has filed all reports required to be
filed by Section 13 or 15(d) of the Act during the
preceding 12 months, and (4) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. þ
The registrant is a large accelerated filer and is not a shell
company.
At June 23, 2006, the aggregate market value of Common
Stock of Belden CDT Inc. held by non-affiliates was
$1,303,721,667 based on the closing price ($30.24) of such stock
on such date.
There were 44,609,213 shares of registrants Common
Stock outstanding on February 22, 2007.
DOCUMENTS
INCORPORATED BY REFERENCE
The registrant intends to file a definitive proxy statement for
its annual meeting of stockholders within 120 days of the
end of the fiscal year ended December 31, 2006 (the
Proxy Statement). Portions of such proxy statement
are incorporated by reference into Part III.
PART I
General
Belden CDT Inc. (Belden) designs, manufactures and markets
signal transmission products for data networking and a wide
range of specialty electronics markets. We focus on segments of
the worldwide cable and connectivity market that require highly
differentiated, high-performance products. We add value through
design, engineering, excellence in manufacturing, product
quality, and customer service.
On July 15, 2004, Belden Inc. and Cable Design Technologies
Corporation (CDT) completed a merger transaction pursuant to
which Belden Inc. became a wholly owned subsidiary of CDT and
CDT (as the surviving parent) changed its name to Belden CDT
Inc. Due in part to Belden Inc.s shareholders as a group
having received a larger portion of the voting rights in the
combined entity, Belden Inc. was considered the acquirer for
accounting purposes. As a result, the transaction was accounted
for as a reverse acquisition under the purchase method of
accounting for business combinations under accounting principles
generally accepted in the United States. For financial reporting
purposes, Belden Inc.s historical financial statements and
fiscal year are used for reporting following the merger. For
federal securities law purposes, CDT (now Belden CDT Inc.)
remains the reporting entity following the merger. For more
information about the merger, see Note 4 to the
Consolidated Financial Statements.
Belden CDT Inc. is a Delaware corporation incorporated in 1988.
Its affiliated company, Intercole Inc., began a series of more
than 20 acquisitions in the wire and cable industry in 1985. In
1993, CDT completed an initial public offering of its stock.
Belden Manufacturing Company originated in Chicago in 1902 and
began by manufacturing silk insulated wire and insulated magnet
wire. In 1980, the business was acquired by Crouse-Hinds Company
and, in 1981, by Cooper Industries, Inc. (Cooper) as part of
Coopers acquisition of Crouse-Hinds Company. In 1993, the
business was transferred to Belden Wire & Cable
Company, a wholly owned subsidiary of Belden Inc., in connection
with the October 6, 1993 initial public offering by Cooper
of the common stock of Belden Inc.
The Company reports in four segments: the Belden Americas
segment, the Specialty Products segment, the Europe segment and
the Asia Pacific segment. Financial information about the
Companys four operating segments appears in Note 3 to
the Consolidated Financial Statements.
As used herein, unless an operating segment is identified or the
context otherwise requires, Belden, the
Company and we refer to Belden CDT Inc.
and its subsidiaries as a whole.
Products
Belden produces and sells cable and wire products, connectivity
products, and other products. In each of the last three years,
cable and wire products accounted for more than 90 percent
of our revenues.
Our various cable and wire configurations are sold by all
segments and are manufactured by all segments except the Asia
Pacific segment. These configurations include:
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Multiconductor cables, consisting of two or more
insulated conductors that are twisted into pairs or quads and
cabled together, or run in a parallel configuration as a flat
cable.
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Coaxial cables, consisting of a central inner conductor
surrounded by a concentric outer conductor or shield. A
dielectric material separates the two conductors and a jacket
covers the overall construction. The inner conductor is usually
copper or copper-covered steel, while the outer conductor is
usually a metallic tape or a wire braid.
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Fiber optic cables, which transmit light signals through
glass or plastic fibers. We purchase coated fibers and
manufacture fiber optic cables for use in data networking and
other applications.
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Lead,
hook-up and
other wire products. Lead and
hook-up
wires consist of single insulated conductor wire that is used
for electrical leads. Insulation may be extruded or laminated
over bare or tinned copper conductors.
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Composite cable configurations. A composite
cable may be any combination of multiconductor, coaxial, and
fiber optic cables jacketed together or otherwise joined
together to serve a complex application and provide ease of
installation.
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Our connectivity products are produced and sold primarily for
data networking applications. Connectivity products include
connectors, patch panels, and interconnect hardware and other
components. They are typically sold as part of an
end-to-end
structured cabling solution.
Our other products include cabinets, enclosures, racks, raceways
and ties for organizing and managing cable; tubing and sleeving
products to protect and organize wire and cable; wireless
networking access points and switches; and passive components
such as Power Over Ethernet modules.
Markets
and Products, Belden Americas Segment
The Belden Americas segment designs, manufactures and markets
all of our cable, connectivity and other product types (as
described above under Products) for use in the
following principal markets: industrial; audio and video;
security; networking; and communications. This segment
contributed approximately 54%, 50%, and 60% of our consolidated
revenues in 2006, 2005, and 2004, respectively.
We define the industrial market broadly to include
applications ranging from advanced industrial networking and
robotics to traditional instrumentation and control systems. Our
cable products are used in discrete manufacturing and process
operations involving the connection of computers, programmable
controllers, robots, operator interfaces, motor drives, sensors,
printers and other devices. Many industrial environments, such
as petrochemical and other harsh-environment operations, require
cables with exterior armor or jacketing that can endure physical
abuse and exposure to chemicals, extreme temperatures and
outside elements. Other applications require conductors,
insulating, and jacketing materials that can withstand repeated
flexing. In addition to cable product configurations for these
applications, we supply heat-shrinkable tubing and wire
management products to protect and organize wire and cable
assemblies. We sell our industrial products primarily through
wire specialist distributors, industrial distributors and
re-distributors, and directly to original equipment
manufacturers (OEMs).
We manufacture a variety of multiconductor and coaxial products
which distribute audio and video signals for use in
broadcast television (including digital television and high
definition television), broadcast radio, pre- and
post-production facilities, recording studios and public
facilities such as casinos, arenas and stadiums. Our audio/video
cables are also used in connection with microphones, musical
instruments, audio mixing consoles, effects equipment, speakers,
paging systems and consumer audio products. We offer a complete
line of composite cables for the emerging market in home
networking. Our primary market channels for these broadcast,
music and entertainment products are broadcast specialty
distributors and audio systems installers. The Belden Americas
segment also sells directly to music OEMs and the major networks
including NBC, CBS, ABC and Fox.
We provide specialized cables for security applications
such as video surveillance systems, airport baggage screening,
building access control, motion detection, public address
systems, and advanced fire alarm systems. These products are
sold primarily through distributors and also directly to
specialty system integrators.
In the networking market, we supply structured cabling
solutions for the electronic and optical transmission of data,
voice, and video over local and wide area networks. End-use
applications are hospitals, financial institutions, government,
service providers, transportation, data centers, manufacturing,
industrial and enterprise customers. Products for this market
include high-performance copper cables (including 10-gigabit
Ethernet technologies over copper), fiber optic cables,
connectors, wiring racks, panels, interconnecting hardware,
intelligent patching devices, wireless networking access points
and switches, Power over Ethernet panels, and cable management
solutions for complete
end-to-end
network structured wiring systems. Our systems are installed
through a network of highly trained system integrators and are
supplied through authorized distributors.
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In the communications market, we manufacture flexible,
copper-clad coaxial cable for high-speed transmission of voice,
data and video (broadband), used for the drop
section of cable television (CATV) systems and satellite
direct broadcast systems. We also sell coaxial cables used in
connection with wireless applications, such as cellular,
Personal Communications Service, Personal Communications
Network, and Global Positioning System. These broadband, CATV
and wireless communication cables are sold primarily through
distributors.
Except for central office cable for telephone networks, we
exited the North American telecommunications market in 2004.
Markets
and Products, Specialty Products Segment
The Specialty Products segment designs, manufactures and markets
a wide variety of our cable products for use principally in the
networking, transportation and defense, sound and security, and
industrial markets. This segment contributed approximately 18%,
20%, and 11% of our consolidated revenues in 2006, 2005, and
2004, respectively.
In the networking market (as described with respect to
the Belden Americas segment above), the Specialty Products
segment supplies high-performance copper and fiber optic data
cable for users preferring an open architecture where
integrators specify our copper and fiber cables for use with the
connectivity components of other suppliers. These systems are
installed through a network of highly trained system
integrators/contractors and are supplied locally by authorized
distributors.
In the transportation and defense market, we provide
specialized cables for use in commercial and military aircraft,
including cables for
fly-by-wire
systems, fuel systems, and in-flight entertainment systems. Some
of these products withstand extreme temperatures (up to
2000º F), are highly flexible, or are highly resistant to
abrasion. We work with OEMs to have our products specified on
aircraft systems and sell either directly to the OEMs or to
specialized distributors or subassemblers. For the automotive
market, we supply specialized cables for oxygen sensors in
catalytic converters, for air-bag actuators, and for satellite
radio receivers. Other high-temperature cable products are
applied in industrial sensors and communication technology.
These automotive and other cables are sold primarily through
distributors.
The Specialty Products segment also designs, manufactures and
markets a wide range of sound and security cables that
are sold directly to system integrators and contractors, as well
as a variety of industrial coaxial and control cables
that are used in monitoring and control of industrial equipment
and systems, and are sold through industrial distributors and
re-distributors and directly to OEMs.
Markets
and Products, Europe Segment
The Europe segment designs, manufacturers and markets our cable,
connectivity, and other products, primarily to customers in
Europe, the Middle East, and Africa for use in the industrial,
networking, communications, audio and video, and security
markets (as such markets are described with respect to the
Belden Americas segment above), through distributors and to
OEMs. This segment contributed approximately 24%, 26%, and 24%
of our consolidated revenues in 2006, 2005, and 2004,
respectively.
In 2006 we exited the copper telecom cable business in the
United Kingdom. Elsewhere in Europe, we continue to provide
certain telecommunications wire and cable products, selling
directly to service providers and, to a lesser extent, through
distributors. We also manufacture copper-based CATV trunk
distribution cables that meet local specifications and are
widely used throughout the region, which are sold to cable TV
system operators and through distribution.
Markets
and Products, Asia Pacific Segment
The Asia Pacific segment markets our full range of products to
our customers operating in Asia, Australia and New Zealand.
These customers include a mix of local as well as global
customers from North America or Europe, in the industrial,
networking, communications, audio and video, and security
markets. We pursue both direct sales as well as channel sales
depending upon the nature and size of the market opportunities.
This segment contributed approximately 4%, 4%, and 5% of our
consolidated revenues in 2006, 2005, and 2004, respectively.
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Customers
We sell to distributors and directly to OEMs and installers of
equipment and systems. Sales to the distributor Anixter
International Inc. represented approximately 21% of our revenues
in 2006.
We have supply agreements with distributors and with OEM
customers in the United States, Canada, Europe, and elsewhere.
In general, our customers are not contractually obligated to buy
our products exclusively, in minimum amounts or for a
significant period of time. The loss of one or more large
customers or distributors could result in lower total revenues
and profits. However, we believe that our relationships with our
customers and distributors are satisfactory and that they choose
Belden products due to, among other reasons, the breadth of our
product offering and the quality and performance characteristics
of our products.
There are potential risks in our relationships with
distributors. For example, adjustments to inventory levels
maintained by distributors (which adjustments may be accelerated
through consolidation among distributors) may adversely affect
sales. Further, in each segment of our business certain
distributors are allowed to return certain inventory in exchange
for an order of equal or greater value. We have recorded a
liability for the estimated impact of this return policy.
If the costs of materials used in our products falls and
competitive conditions make it necessary for us to reduce our
list prices, we may be required, according to the terms of
contracts with certain of our distributors, to reimburse them
for a portion of the price they paid for our products in their
inventory.
International
Operations
We have manufacturing facilities in Canada, Mexico and Europe,
and during 2006, approximately 43% of Beldens sales were
for locations outside the United States. Our primary channels to
international markets include both distributors and direct sales
to end users and OEMs.
Changes in the relative value of currencies take place from time
to time and their effects on the Companys results of
operations may be favorable or unfavorable. On rare occasions,
we engage in foreign currency hedging transactions to mitigate
these effects. Much of the material we sell in Europe is made in
Europe, reducing our currency risk for that region.
The past few years have been characterized by consolidation of
manufacturing operations in our industry worldwide in response
to both changes in demand and improvements in productivity. A
risk associated with our European manufacturing operations is
the higher relative expense and length of time required to
reduce manufacturing employment in European operations if needed.
The Companys foreign operations are subject to economic
and political risks inherent in maintaining operations abroad
such as economic and political destabilization, international
conflicts, restrictive actions by foreign governments, and
adverse foreign tax laws.
Financial information for Belden by geographic area is shown in
Note 3 to the Consolidated Financial Statements.
Competition
Belden faces substantial competition in its major markets. The
number and size of our competitors varies depending on the
product line and operating segment.
For each of our operating segments, the market can be generally
categorized as highly competitive with many players. Some
multinational competitors have greater financial, engineering,
manufacturing and marketing resources than we have. There are
also many regional competitors that have more limited product
offerings.
The principal competitive factors in all our product markets are
product features, availability, price, customer support and
distribution coverage. The relative importance of each of these
factors varies depending on the customer. Some products are
manufactured to meet published industry specifications and
cannot be differentiated on the basis of product
characteristics. We believe, however, that Belden stands out in
many of its markets on the basis of its customer service,
delivery, product quality, and breadth of product line.
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Although we believe that we have certain technological and other
advantages over our competitors, realizing and maintaining such
advantages will require continued investment in engineering,
research and development, marketing and customer service and
support. There can be no assurance that we will continue to make
such investments or that we will be successful in maintaining
such advantages.
Research
and Development
Belden engages in continuing research and development programs,
including new and existing product development, testing and
analysis, process and equipment development and testing, and
compound materials development and testing. For information
about the amount spent on research and development, see
Note 2 to the Consolidated Financial Statements.
Patents
and Trademarks
Belden has a policy of seeking patents when appropriate on
inventions concerning new products, product improvements and
advances in equipment and processes as part of our ongoing
research, development, and manufacturing activities. We own many
patents and registered trademarks worldwide, with numerous
others for which applications are pending. Although in the
aggregate our patents and trademarks are of considerable
importance to the manufacturing and marketing of many of our
products, we do not consider any single patent or trademark or
group of patents or trademarks to be material to the business as
a whole, except for the
Belden®
trademark. Beldens patents and trademarks are used by all
operating segments.
Raw
Materials
The principal raw material used in many of our products, for all
operating segments, is copper. Other materials that we purchase
in large quantities include fluorinated ethylene-propylene (both
Teflon®
and other FEP) and polyvinyl chloride (PVC). We also use
polyethylene, color chips, insulating materials such as plastic
and rubber, shielding tape, plywood and plastic reels,
corrugated cartons, aluminum clad steel and copper clad steel
conductors, other metals, and optical fiber. With respect to all
major raw materials used by the Company, we generally have
either alternative sources of supply or access to alternative
materials. Supplies of these materials are generally adequate
and are expected to remain so for the foreseeable future.
Over the past three years, the prices of metals, particularly
copper, have been highly volatile. Copper rose rapidly in price
for much of this period and remains a volatile commodity.
Materials such as PVC and other plastics derived from
petrochemical feedstocks have also risen in price. Generally, we
have recovered much of the higher cost of raw materials through
higher pricing of our finished products. The majority of our
products are sold through distribution, and we manage the
pricing of these products through published price lists which we
update from time to time, with new prices taking effect a few
weeks after they are announced. Some OEM and telecom customer
contracts have provisions for passing through raw material cost
changes, generally with a lag of a few weeks to three months.
Belden sources a minor percentage of its finished products from
a network of manufacturers under private label agreements.
Backlog
Our business is characterized generally by short-term order and
shipment schedules, and many orders are shipped from inventory.
Accordingly, we do not consider backlog at any given date to be
indicative of future sales. Our backlog consists of product
orders for which we have received a customer purchase order or
purchase commitment and which are scheduled for shipment within
six months. Orders are subject to cancellation or rescheduling
by the customer, generally with a cancellation charge. At
December 31, 2006, the Companys backlog of orders
believed to be firm was $84.5 million compared with
$97.3 million at December 31, 2005. The Company
believes that all such backlog will be filled in 2007.
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Environmental
Matters
The Company is subject to numerous federal, state, provincial,
local and foreign laws and regulations relating to the storage,
handling, emission and discharge of materials into the
environment, including the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), the Clean Water Act,
the Clean Air Act, the Emergency Planning and Community
Right-To-Know
Act and the Resource Conservation and Recovery Act. We believe
that our existing environmental control procedures are adequate
and we have no current plans for substantial capital
expenditures in this area.
Our facility in Venlo, The Netherlands, was acquired in 1995
from Philips Electronics N.V. Soil and groundwater contamination
was identified on the site as a result of material handling and
past storage practices. Various soil and groundwater assessments
are being performed, the government authorities have advised
that some form of remediation will be necessary, and we plan to
install a groundwater remediation system in 2007. We have
recorded a liability for the estimated costs.
We are named as a defendant in the City of Lodi,
Californias federal lawsuit along with over 100 other
defendants. The complaint, brought under federal, state and
local statutory provisions, alleges that property previously
owned by our predecessor contributed to groundwater pollution in
Lodi. There has been no validation or investigation to
demonstrate or deny the Citys claim that the property
allegedly owned by our predecessor is a potential pollution
site. We are currently negotiating a settlement with the City,
and we have recorded a liability for the estimated costs related
to resolution of this matter.
The Company has been identified as a potentially responsible
party (PRP) with respect to two sites designated for
cleanup under CERCLA or similar state laws, which impose
liability for cleanup of certain waste sites and for related
natural resource damages without regard to fault or the legality
of waste generation or disposal. Persons liable for such costs
and damages generally include the site owner or operator and
persons that disposed or arranged for the disposal of hazardous
substances found at those sites. Although CERCLA imposes joint
and several liability on all PRPs, in application, the PRPs
typically allocate the investigation and cleanup costs based
upon the volume of waste contributed by each PRP. Settlements
can often be achieved through negotiations with the appropriate
environmental agency or the other PRPs. PRPs that contributed
less than 1% of the waste are often given the opportunity to
settle as de minimis parties, resolving their
liability for a particular site. The number of sites with
respect to which the Company has been identified as a PRP has
decreased in part as a result of de minimis
settlements.
Belden does not own or operate either waste site with respect to
which it has been identified as a PRP. In each case, Belden is
identified as a party that disposed of waste at the site. With
respect to one of the sites, Beldens share of the waste
volume is estimated to be less than 1%. At the other site,
Belden contributed less than 10% of the waste. Although no
estimates of cleanup costs have yet been completed for these
sites, we believe, based on our preliminary review and other
factors, including Beldens estimated share of the waste
volume at the sites, that the costs relating to these sites will
not have a material adverse effect on our results of operations,
financial condition or cash flow. We have recorded a liability
to the extent such costs are probable and estimable for such
sites.
We do not currently anticipate any material adverse effect on
our results of operations, financial condition, cash flow or
competitive position as a result of compliance with federal,
state, provincial, local or foreign environmental laws or
regulations, or cleanup costs at the facilities and sites
discussed above. However, some risk of environmental liability
and other costs is inherent in the nature of our business, and
there can be no assurance that material environmental costs will
not arise. Moreover, it is possible that future developments,
such as increasingly strict requirements of environmental laws
and enforcement policies thereunder, could lead to material
costs of environmental compliance and cleanup by the Company.
Employees
As of December 31, 2006, we had approximately 4,650
employees worldwide. We also utilized about 750 workers under
contract manufacturing arrangements in Mexico. Approximately
1,900 employees are covered by collective bargaining agreements
at various locations around the world. The Company believes that
its relationship with its employees is good.
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Importance
of New Products and Product Improvements;
Impact of Technological Change; Impact of Acquisitions
Many of the markets that we serve are characterized by advances
in information processing and communications capabilities,
including advances driven by the expansion of digital
technology, which require increased transmission speeds and
greater bandwidth. Our markets are also subject to increasing
requirements for mobility and information security. The relative
costs and merits of copper cable solutions, fiber optic cable
solutions, and wireless solutions could change in the future as
various competing technologies address the market opportunities.
We believe that our future success will depend in part upon our
ability to enhance existing products and to develop and
manufacture new products that meet or anticipate such changes.
An important element of our business strategy is to increase our
capabilities in the different modes of signal transmission
technology, specifically copper cable, optical fiber and
wireless.
Fiber optic technology presents a potential substitute for
certain of the copper-based products that comprise the majority
of Beldens sales. Fiber optic cables have certain
advantages over copper-based cables in applications where large
amounts of information must travel great distances and where
high levels of information security are required. While the cost
to interface electronic and light signals and to terminate and
connect optical fiber remains high, we expect that in future
years these disadvantages will diminish. We produce and market
fiber optic cables and many customers specify these products in
combination with copper cables.
Advances in copper cable technologies and data transmission
equipment have increased the relative performance of copper
solutions. For example, in early 2005 we introduced the Belden
System 10-GX for the data networking or enterprise market,
providing reliable 10
gigabits-per-second
performance over copper conductors. Beldens System 10-GX
accomplishes this using unshielded twisted pair cables and
patented connector technology. The planned finalization in early
2007 of the industrys 10-gig-over-copper technical
standards will, we expect, accelerate the adoption of these
higher-capacity copper network solutions.
The final stage of most networks remains almost exclusively
copper-based and we expect that it will continue to be copper
for some time. However, if a significant decrease in the cost of
fiber optic systems relative to the cost of copper-based systems
were to occur, such systems could become superior on a
price/performance basis to copper systems. We do not control our
own source of optical fiber production and, although we cable
optical fiber, we could be at a cost disadvantage to competitors
who both produce and cable optical fiber.
The installation of wireless devices has required the
development of new wired platforms and infrastructure. In the
future, we expect that wireless communications technology will
be an increasingly viable alternative technology to both copper
and fiber optic-based systems for certain applications. We
believe that problems such as insufficient signal security,
susceptibility to interference and jamming, and relatively slow
transmission speeds of current systems will gradually be
overcome, making the use of wireless technology more acceptable
in many markets, including not only office LANs but also
industrial and broadcast installations. In 2006 Belden
introduced wireless networking products and acquired a minority
interest in a wireless technology company, Extricom Ltd.
Continued strategic acquisitions are part of Beldens
strategy. In January 2007, Belden announced a definitive
agreement to acquire Hirschmann Automation and Control (HAC), a
Germany-based company that designs, manufactures and markets
industrial connectors, industrial ethernet switches, electronic
control systems, and related products. In February 2007, Belden
announced a definitive agreement to purchase LTK Wiring Co. Ltd.
(LTK), a Hong Kong-based cable manufacturer. Completion of each
of these acquisitions is subject to the fulfillment of certain
conditions. There can be no assurance that future acquisitions
will occur or that those that do occur will be successful.
Available
Information
We file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange
Commission (SEC). These reports, proxy statements and other
information contain additional information about us. You may
read and copy these materials at the SECs Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. Please
call the SEC at
1-800-SEC-0330
for more information about the operation of the Public Reference
Room. The SEC also maintains a web site that contains reports,
proxy and information statements,
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and other information about issuers who file electronically with
the SEC. The Internet address of the site is
http://www.sec.gov.
Belden maintains an Internet website at www.belden.com
where our Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K
and all amendments to those reports are available without
charge, as soon as reasonably practicable following the time
they are filed with or furnished to the SEC.
We will provide upon written request and without charge a
printed copy of our Annual Report on
Form 10-K.
To obtain such a copy, please write to the Corporate Secretary,
Belden CDT Inc., 7701 Forsyth Boulevard, Suite 800, St.
Louis, MO 63105.
New York
Stock Exchange Matters
Pursuant to the New York Stock Exchange (NYSE) listing
standards, the Company submitted a Section 12(a) CEO
Certification to the NYSE in 2006. Further, the Company is
herewith filing with the Securities and Exchange Commission (as
exhibits hereto), the Chief Executive Officer and Chief
Financial Officer certifications required under Section 302
of the Sarbanes-Oxley Act of 2002.
Executive
Officers
The following sets forth certain current information with
respect to the persons who are Belden executive officers as of
February 22, 2007. All executive officers are elected to
terms that expire at the organizational meeting of the Board of
Directors following the Annual Meeting of Shareholders.
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Name
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Age
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Position
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John S. Stroup
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President, Chief Executive Officer
and Director
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Gray G. Benoist
|
|
|
54
|
|
|
Vice President, Finance and Chief
Financial Officer
|
Kevin L. Bloomfield
|
|
|
55
|
|
|
Vice President, Secretary and
General Counsel
|
Robert Canny
|
|
|
50
|
|
|
Vice President, Operations and
President, Specialty Products
|
Stephen H. Johnson
|
|
|
57
|
|
|
Treasurer
|
Naresh Kumra
|
|
|
36
|
|
|
Vice President, Operations and
President, Asia Pacific Operations
|
John S. Norman
|
|
|
46
|
|
|
Controller and Chief Accounting
Officer
|
Louis Pace
|
|
|
35
|
|
|
Vice President, Business
Development
|
D. Larrie Rose
|
|
|
59
|
|
|
Vice President, Operations and
President, European Operations
|
Peter Sheehan
|
|
|
46
|
|
|
Vice President, Operations and
President, Belden Americas
|
Cathy O. Staples
|
|
|
56
|
|
|
Vice President, Human Resources
|
John S. Stroup was appointed President, Chief Executive
Officer and member of the Board effective October 31, 2005.
From 2000 to the date of his appointment with the Company, he
was employed by Danaher Corporation, a manufacturer of
professional instrumentation, industrial technologies, and tools
and components. At Danaher, he initially served as Vice
President, Business Development. He was promoted to President of
a division of Danahers Motion Group and later to Group
Executive of the Motion Group. Earlier, he was Vice President of
Marketing and General Manager with Scientific Technologies Inc.
He has a B.S. in mechanical engineering from Northwestern
University and an M.B.A. from the University of California at
Berkeley Haas School of Business.
Gray G. Benoist was appointed Vice President, Finance and
Chief Financial Officer effective August 24, 2006.
Mr. Benoist was most recently Senior Vice President,
Director of Finance of the Networks Segment of Motorola Inc., a
$6.3 billion business unit responsible for the global
design, manufacturing, and distribution of wireless and wired
telecom system solutions. During more than 25 years with
Motorola, Mr. Benoist served in senior financial and
general management roles across Motorolas portfolio of
businesses, including the Personal Communications Sector,
Integrated and Electronic Systems Sector, Multimedia Group,
Wireless Data Group, and Cellular
8
Infrastructure Group. He has a B.S. in Finance &
Accounting from Southern Illinois University and an M.B.A. from
the University of Chicago.
Kevin L. Bloomfield has been Vice President, Secretary
and General Counsel of the Company since July 16, 2004.
From August 1, 1993 until July 2004, Mr. Bloomfield
was Vice President, Secretary and General Counsel of Belden Inc.
He was Senior Counsel for Cooper from February 1987 to July
1993, and had been in Coopers Law Department from 1981 to
1993. He has a B.A. degree in economics, a J.D. degree from the
University of Cincinnati and an M.B.A. from The Ohio State
University.
Robert Canny has been Vice President, Operations and
President, Specialty Products, since July 16, 2004. He
previously held the position of Group Vice President, Specialty
Products for Cable Design Technologies Corp. and was Vice
President and General Manager of CDTs Thermax operation.
Prior to joining Thermax, Mr. Canny held management and
technical positions at Rockbestos, Times Fiber and RFS Cablewave
Systems. He holds a B.S. in physics from Southern Connecticut
State University and a M.S. in industrial engineering from the
University of New Haven.
Stephen H. Johnson has been Treasurer of the Company
since July 2004, and was Treasurer of Belden Inc. from July 2000
to July 2004. From November 2005 until August 2006 he served in
the additional capacity of Interim Chief Financial Officer of
the Company. He was Vice President, Finance of Belden
Electronics from September 1998 through June 2000 and Director,
Tax and Assistant Treasurer of Belden Inc. from October 1993
through August 1998. He was associated with the public
accounting firm of Ernst & Young LLP from 1980 through
September 1993 and was a partner with that firm since 1989.
Mr. Johnson has a B.A. in history from Austin College and a
Ph.D. in philosophy from the University of Texas at Austin. He
is a Certified Public Accountant.
Naresh Kumra joined Belden in March 2006 as Vice
President of Business Development, and was named President, Asia
Pacific Operations in June 2006. From 1999 to 2006, he worked
for McKinsey & Company, Inc., a global management
consulting firm, and his last position was Associate Principal
in the New York area, where he was responsible for co-leadership
of private equity and growth/innovation practices. From 1991 to
1997, he worked for industrial and electronics businesses of
Schlumberger Industries in New Delhi, India, and Poitiers,
France, initially as a software engineer, and subsequently as
manufacturing manager and product line manager. He graduated
from the Indian Institute of Technology in Delhi with a
bachelors degree in computer science and has an M.B.A.
from the Darden School at the University of Virginia in
Charlottesville, Virginia.
John S. Norman joined Belden in May 2005 as Controller
and was named Chief Accounting Officer in November 2005. He was
vice president and controller of Graphic Packaging International
Corporation, a paperboard packaging manufacturing company, from
1999 to 2003 and has 17 years experience in public
accounting with PricewaterhouseCoopers LLP. Mr. Norman has
a B.S. in accounting from the University of Missouri and is a
Certified Public Accountant.
Louis Pace was appointed Vice President, Business
Development effective June 2, 2006. He joined the Company
in May 2006 as Vice President, Marketing, in the Specialty
Division. He was previously a consultant with AEA Investors,
Inc. where he advised senior leadership on various aspects of
prospective transactions as well as strategic and operational
issues. Prior to that, Mr. Pace worked for Sovereign
Specialty Chemicals in progressively responsible positions, most
recently as the Vice President of Product Development and
Commercialization. He has an A.B. in economics from Harvard
University and an M.B.A. from the Kellogg Graduate School of
Management at Northwestern University.
D. Larrie Rose has been Vice President, Operations
and President, European Operations, since July 16, 2004. He
was Vice President, Operations of Belden Inc. and President,
Belden Holdings Inc., from April 2002 until July 2004. He served
as Vice President, Sales & Marketing for Belden
Electronics from 1998 until 2002. From 1981 until 1998,
Mr. Rose held various European management positions for
Belden Inc. including Vice President, International Operations
from 1995 until 1998. He has been with Belden since 1972.
Mr. Rose has a B.S. in social science and industrial arts
from Ball State University.
Peter Sheehan has been Vice President, Operations since
July 16, 2004, and President, Belden Americas, since
February 7, 2006. From July 2004 to February 2006, he was
President, Electronic Products. From December 1995 until July
2004 he was Executive Vice President of Cable Design
Technologies Corp. From 1990 to 1995 he was
9
Senior Vice President, Sales and Marketing, for Berk-Tek, an
Alcatel Company. Mr. Sheehan has a Bachelor of Arts and
Science degree from Boston College.
Cathy Odom Staples has been Vice President, Human
Resources of the Company since July 16, 2004, and held the
same position with Belden Inc. from May 1997 through July 2004.
She was Vice President, Human Resources for Beldens
Electronic Products Division from May 1992 to May 1997.
Ms. Staples has a B.S.B.A. degree in human resources from
Drake University.
We make forward-looking statements in this Annual Report on
Form 10-K,
in other materials we file with the SEC or otherwise release to
the public, and on our website. In addition, our senior
management might make forward-looking statements orally to
analysts, investors, the media and others. Statements concerning
our future operations, prospects, strategies, financial
condition, future economic performance (including growth and
earnings) and demand for our products and services, and other
statements of our plans, beliefs, or expectations, including the
statements contained in the Outlook section and
other portions of Item 7, Managements
Discussion and Analysis of Financial Condition and Results of
Operations, that are not historical facts, are
forward-looking statements. In some cases these statements are
identifiable through the use of words such as
anticipate, believe,
estimate, expect, intend,
plan, project, target,
can, could, may,
should, will, would and
similar expressions. You are cautioned not to place undue
reliance on these forward-looking statements. The
forward-looking statements we make are not guarantees of future
performance and are subject to various assumptions, risks, and
other factors that could cause actual results to differ
materially from those suggested by these forward-looking
statements. These factors include, among others, those set forth
below and in the other documents that we file with the SEC.
There also are other factors that we may not describe, generally
because we currently do not perceive them to be material, which
could cause actual results to differ materially from our
expectations.
We expressly disclaim any obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
Following is a discussion of some of the more significant risks
that could materially impact our financial condition, results of
operations and cash flows.
Any
change in the level of economic activity in North America and
Europe, our major geographical markets, may have an impact on
the level of demand for our products and our resulting revenue
and earnings.
The demand for many of our products is economically sensitive
and will vary with general economic activity, trends in
nonresidential construction, investment in manufacturing
facilities and automation, demand for information technology
equipment, and other economic factors.
Changes
in the price and availability of raw materials we use could be
detrimental to our profitability.
Copper is a significant component of the cost of most of our
products. Over the past three years, the prices of metals,
particularly copper, have been highly volatile. Copper rose
rapidly in price for much of this period and remains a volatile
commodity. Other materials we use, such as PVC and other
plastics derived from petrochemical feedstocks, have also risen
in price. Generally, we have recovered much of the higher cost
of raw materials through higher pricing of our finished
products. The majority of our products are sold through
distribution, and we manage the pricing of these products
through published price lists which we update from time to time,
with new prices taking effect a few weeks after they are
announced. Some OEM and telecom customer contracts have
provisions for passing through raw material cost changes,
generally with a lag of a few weeks to three months. If we are
unable to raise prices sufficiently to recover our material
costs, our earnings will be reduced. If we raise our prices but
competitors raise their prices less, we may lose sales, and our
earnings will be reduced. In recent months, the price of copper
has significantly declined. If this decline continues, we may be
forced to decrease prices, which could have a negative effect on
revenue, and we may be required, according to the terms of
contracts with certain of our distributors, to reimburse them
for a portion of the price they paid for our products in their
inventory. We believe the
10
supply of raw materials (copper, plastics, and other materials)
is adequate and we do not expect any substantial interruption of
supply or shortage of materials. If such a supply interruption
or shortage were to occur, however, this could have a negative
effect on revenue and earnings.
The
global wire and cable industry is highly
competitive.
We compete with other manufacturers of cable, wire, connectivity
and related products based in North America, Europe and Asia.
These companies compete on price, reputation and quality,
product characteristics, and terms. Actions that may be taken by
competitors, including pricing, business alliances, new product
introductions, and other actions, could have a negative effect
on our revenue and profitability.
We
rely on several key distributors in marketing our
product.
The majority of our sales are through distributors. These
distributors carry the products of competitors along with our
products. Our largest distributor customer, Anixter
International Inc., accounted for 21% of our revenue in 2006. If
we were to lose a key distributor, our revenue and profits would
likely be reduced, at least temporarily.
In the past, we have seen a few distributors acquired and
consolidated. If there were further consolidation of the
electronics and cable distributors, this could have an effect on
our relationships with these distributors. It could also result
in consolidation of distributor inventory, which would
temporarily depress our revenue. We have also experienced
financial failure of distributors from time to time, resulting
in our inability to collect accounts receivable in full.
Our
effective income tax rate may vary from year to year because of
the mix of income and losses among various tax jurisdictions in
which we do business.
Our effective income tax rate is the result of the income tax
rates in the various countries in which we do business. Our mix
of income and losses in these jurisdictions determines our
effective tax rate. More income in higher tax rate jurisdictions
or more losses in lower tax rate jurisdictions would increase
our effective tax rate and thus lower our net income. If we
generate losses in tax jurisdictions for which no benefits are
available, our effective income tax rate will increase.
We
might be unable to achieve planned cost savings.
The plans for our business include both revenue improvement and
cost saving initiatives. For example, the Company has undertaken
restructuring programs concerning manufacturing operations in
both North America and Europe. The restructuring programs are
expected to reduce manufacturing costs. We have also announced
plans to implement lean enterprise practices throughout our
organization, which are expected to reduce inventory and
manufacturing costs. If we do not achieve all the planned
savings, we might not achieve expected levels of profitability.
We are
subject to current environmental and other laws and
regulations.
We are subject to the environmental laws and regulations in each
jurisdiction where we do business. We are currently, and may in
the future be, held responsible for remedial investigations and
clean-up
costs of certain sites damaged by the discharge of hazardous
substances, including sites that have never been owned or
operated by us but at which we have been identified as a
potentially responsible party under federal and state
environmental laws. Changes in environmental and other laws and
regulations in both domestic and foreign jurisdictions could
adversely affect our operations due to increased costs of
compliance and potential liability for noncompliance.
If our
goodwill or other intangible assets become impaired, we may be
required to recognize charges that would reduce our
income.
Under accounting principles generally accepted in the United
States, goodwill and certain other intangible assets are not
amortized but must be reviewed for possible impairment annually,
or more often in certain circumstances if events indicate that
the asset values are not recoverable. We have incurred charges
in the past
11
for the impairment of goodwill and other intangible assets, and
we may be required to do so again in future periods. Such a
charge would reduce our income without any change to our
underlying cash flow.
Changes
in accounting rules and interpretation of these rules may affect
our reported earnings.
Accounting principles generally accepted in the United States
are complex and require interpretation. These principles change
from time to time, and such changes may result in changes to our
reported income without any change in our underlying cash flow.
Because
we do business in many countries, our results of operations are
affected by changes in currency exchange rates and are subject
to political and economic uncertainties.
A significant proportion of our sales are outside the United
States. Other than the United States dollar, the principal
currencies to which we are exposed through our manufacturing
operations and sales are the euro, the Canadian dollar and the
British pound. Most of our products sold in Europe are
manufactured there, resulting in a natural hedge, to some
degree. Most of our products sold in Asia are priced in
U.S. dollars. When the U.S. dollar strengthens against
other currencies, the results of our
non-U.S. operations
are translated at a lower exchange rate and thus into lower
reported earnings.
We have manufacturing facilities in Canada, Mexico and several
European countries. We rely on suppliers in many countries,
including China. Our foreign operations are subject to economic
and political risks inherent in maintaining operations abroad
such as economic and political destabilization, international
conflicts, restrictive actions by foreign governments, and
adverse foreign tax laws.
Our
future success depends on our ability to develop and introduce
new products.
Our markets are characterized by the introduction of
increasingly capable products, including fiber optic and
wireless signal transmission solutions that compete with the
copper cable solutions that comprise the majority of our
revenue. The relative costs and merits of copper cable
solutions, fiber optic cable solutions, and wireless solutions
could change in the future as various competing technologies
address the market opportunities. We believe that our future
success will depend in part upon our ability to enhance existing
products and to develop and manufacture new products that meet
or anticipate such changes. We have long been successful in
introducing successive generations of more capable products, but
if we were to fail to keep pace with technology or with the
products of competitors, we might lose market share and harm our
reputation and position as a technology leader in our markets.
Competing technologies could cause the obsolescence of many of
our products. See the discussion above in Part I,
Item 1, under Importance of New Products.
We
have defined benefit pension plans that are not fully
funded.
We have defined benefit pension plans in the United States, the
United Kingdom, Canada and Germany. The cash funding
requirements for these plans depends on the financial
performance of the funds assets, actuarial life
expectancies, discount rates and other factors. The fair value
of the assets in the plans is often less than the projected
benefit owed by the Company. In most years, we are required to
contribute cash to fund the pension plans and other
postretirement benefit plans, and the amount of funding required
may vary significantly.
Some
of our employees are members of collective bargaining groups,
and we might be subject to labor actions that would interrupt
our business.
Some of our employees, primarily outside the United States, are
members of collective bargaining units. We believe that the
Companys relations with employees are generally good.
However, if there were a dispute with one of these bargaining
units, the affected operations could be interrupted resulting in
lost revenues, lost profit contribution, and customer
dissatisfaction.
12
We
might have difficulty protecting our intellectual property from
use by competitors, or competitors might accuse us of violating
their intellectual property rights.
Disagreements about patents and intellectual property rights
occur in our industry. Sometimes these disagreements are settled
through an agreement for one party to pay royalties to another.
The unfavorable resolution of an intellectual property dispute
could preclude us from manufacturing and selling certain
products, could require us to pay a royalty on the sale of
certain products, or could impair our competitive advantage if a
competitor wins the right to sell products we believe we
invented. Intellectual property disputes could result in legal
fees and other costs.
We
have in the past closed plants and reduced the size of our
workforce, and we might elect to do so again in the
future.
Much of our manufacturing capacity is in North America and
Western Europe, which are relatively high-cost regions. Over the
past few years, as a result of the 2004 merger and in
furtherance of our regional manufacturing strategy, we
consolidated our capacity by closing several manufacturing
plants and we reduced the number of people we employ. We
incurred asset impairment charges, severance charges and other
costs in relation to these plant closures. If we decide to close
additional facilities, we could incur significant cash and
non-cash charges in connection with these actions.
If we
are unable to retain senior management and key employees, our
business operations could be adversely affected.
Our success has been largely dependent on the skills, experience
and efforts of our senior management and key employees. The loss
of any of our senior management or other key employees could
have an adverse effect on us. There can be no assurance that we
would be able to find qualified replacements for these
individuals if their services were no longer available, or if we
do identify replacements, that the integration of those
replacements will not be disruptive to our business.
We may
have difficulty integrating the operations of LTK and HAC.
Should we fail to integrate their operations, our results of
operations and profitability could be negatively
impacted.
We might not be successful in integrating the operations of LTK
and HAC with Belden, and we might not perform as we expect. Some
of the integration challenges we face include differences in
corporate culture and management styles, additional or
conflicting governmental regulations, preparation of the
operations of LTK and HAC for compliance with the Sarbanes-Oxley
Act of 2002, financial reporting that is not in compliance with
U.S. generally accepted accounting principles, disparate
company policies and practices, customer relationship issues and
retention of key officers and personnel. In addition, management
may be required to devote a considerable amount of time to the
integration process, which could decrease the amount of time
they have to manage Belden. HACs business involves
products with shorter life cycles than Belden, which might cause
more rapid shifts in market share, for better or worse. LTK has
greater customer concentration than Belden and shorter product
life cycles. We cannot make assurances that we will successfully
or cost-effectively integrate operations. The failure to do so
could have a negative effect on results of operations or
profitability. The process of integrating operations could cause
some interruption of, or the loss of momentum in, the activities
of one or more of our or LTKs or HACs businesses.
Beldens
strategic plan includes is likely to include further
acquisitions.
The number of suitable acquisition candidates may decline if the
competition for acquisition candidates increases or the cost of
acquiring suitable businesses becomes too expensive. As a
result, we may be unable to make acquisitions or be forced to
pay more or agree to less advantageous acquisition terms for the
companies that we are able to acquire. Alternatively, at the
time an acquisition opportunity presents itself, internal and
external pressures, including, but not limited to, our borrowing
capacity or the availability of alternative financing, may cause
us to be unable to pursue or complete an acquisition. Our
ability to implement our business strategy and grow our
business, particularly through acquisitions, may depend on our
ability to raise capital by selling equity or debt securities or
13
obtaining additional debt financing. We cannot make assurances
that we will be able to obtain financing when we need it or on
terms acceptable to us.
One
aspect of Beldens strategic plan is further expansion into
connectivity.
Beldens expansion of its connectivity product portfolio
will most likely take place through acquisitions. Connectivity
products are generally more complex and involve more research
and development spending, relative to sales, than cable
products. If we do not adequately invest in research and
development or if our efforts to introduce new products are not
successful, our revenue from the acquired businesses might not
meet our expectations. The customers for connectivity products
include OEMs with whom Belden has relatively little experience,
and the channel structure for these products might be different
from our traditional channels. We cannot make assurances that we
will successfully manage the commercial integration of
connectivity and other more highly engineered products with
Beldens existing business.
This list of risk factors is not exhaustive. Other
considerations besides those mentioned above might cause our
actual results to differ from expectations expressed in any
forward-looking statement.
|
|
Item 1B.
|
Unresolved
Staff Comments
|
None.
Belden has an executive office that it leases in St. Louis,
Missouri, and various manufacturing facilities, warehouses and
sales and administration offices. The significant facilities as
of December 31, 2006 are as follows:
Used by the Belden Americas operating segment:
|
|
|
|
|
|
|
Primary Character
|
|
|
|
|
(M=Manufacturing,
|
|
|
Number of Properties by Country
|
|
W=Warehouse)
|
|
Owned or Leased
|
|
United States-9
|
|
7 M, 2 W
|
|
7 owned
|
|
|
|
|
2 leased
|
Canada-2
|
|
M
|
|
2 owned
|
Mexico-1
|
|
M
|
|
1 leased
|
Used by the Specialty Products operating segment:
|
|
|
|
|
|
|
Primary Character
|
|
|
|
|
(M=Manufacturing,
|
|
|
Number of Properties by Country
|
|
W=Warehouse)
|
|
Owned or Leased
|
|
United States-9
|
|
7 M, 2W
|
|
4 owned
|
|
|
|
|
5 leased
|
Mexico -1
|
|
M
|
|
1 leased
|
Used by the Europe operating segment:
|
|
|
|
|
|
|
Primary Character
|
|
|
|
|
(M=Manufacturing,
|
|
|
Number of Properties by Country
|
|
W=Warehouse)
|
|
Owned or Leased
|
|
United Kingdom-2
|
|
1 M, 1 W
|
|
1 owned
|
|
|
|
|
1 leased
|
The Netherlands-1
|
|
M
|
|
1 owned
|
Germany-2
|
|
M
|
|
1 owned
|
|
|
|
|
l leased
|
Italy-3
|
|
M
|
|
1 owned
|
|
|
|
|
2 leased
|
Czech Republic-1
|
|
M
|
|
1 owned
|
Denmark-1
|
|
M
|
|
1 owned
|
Hungary-1
|
|
M
|
|
1 owned
|
Note: The Asia Pacific operating segment locations are of a
warehouse nature and operate under third party contractual
arrangements rather than being owned or leased.
14
The total size of all Belden Americas operating segment
locations is approximately 2.3 million square feet; the
total size of all Specialty Products operating segment locations
is approximately 0.8 million square feet; and the total
size of all Europe operating segment locations is approximately
1.9 million square feet. The Company believes its physical
facilities are suitable for their present and intended purposes
and adequate for the Companys current level of operations.
|
|
Item 3.
|
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 151 of which we were aware
at February 8, 2007, in which we are one of many
defendants, 24 of which are scheduled for trial during 2007.
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 heat-resistant
asbestos fiber. Our alleged predecessors had a small number of
products that contained the fiber, but ceased production of such
products more than 15 years ago. Through February 8,
2007, we have been dismissed, or reached agreement to be
dismissed, in approximately 180 similar cases without any going
to trial, and with only 11 of these involving any payment to the
claimant. We have insurance that we believe should cover a
significant portion of any defense or settlement costs borne by
us in these types of cases. 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.
See Item 1. Business Environmental
Matters regarding certain proceedings arising under
environmental laws.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
During the fourth quarter of the fiscal year covered by this
report, no matters were submitted to a vote of security holders
of the Company.
PART II
|
|
Item 5.
|
Market
for Registrants Common Equity and Related Shareholder
Matters
|
Our common stock is traded on the New York Stock Exchange under
the symbol BDC.
As of February 22, 2007, there were approximately 671
record holders of common stock of Belden CDT Inc.
We paid a dividend of $.05 per share in each quarter of
2005 and 2006. We anticipate that comparable cash dividends will
continue to be paid quarterly in the foreseeable future.
15
Common
Stock Prices and Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 (By Quarter)
|
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
Dividends per common share
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
Common stock prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
27.72
|
|
|
$
|
33.55
|
|
|
$
|
39.83
|
|
|
$
|
41.70
|
|
Low
|
|
$
|
23.92
|
|
|
$
|
25.92
|
|
|
$
|
28.45
|
|
|
$
|
35.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 (By Quarter)
|
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
Dividends per common share
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
Common stock prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
24.59
|
|
|
$
|
23.41
|
|
|
$
|
22.75
|
|
|
$
|
26.00
|
|
Low
|
|
|
18.93
|
|
|
|
17.65
|
|
|
|
19.08
|
|
|
|
18.65
|
|
Total
Return to Shareholders
(Includes reinvestment of dividends)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Return Percentage
|
|
|
|
Years Ended December 31,
|
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Belden CDT Inc.
|
|
|
(34.63)%
|
|
|
|
40.46%
|
|
|
|
10.79%
|
|
|
|
6.28%
|
|
|
|
60.96%
|
|
S&P 500 Index
|
|
|
(22.10)%
|
|
|
|
28.68%
|
|
|
|
10.88%
|
|
|
|
4.91%
|
|
|
|
15.79%
|
|
Dow Jones Electronic &
Electrical Equipment
|
|
|
(35.94)%
|
|
|
|
57.05%
|
|
|
|
0.25%
|
|
|
|
4.34%
|
|
|
|
13.75%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
Indexed Returns
|
|
|
|
Period
|
|
|
Years Ended December 31,
|
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
Belden CDT Inc.
|
|
|
100
|
|
|
|
65.37
|
|
|
|
91.81
|
|
|
|
101.72
|
|
|
|
108.10
|
|
|
|
174.00
|
|
S&P 500 Index
|
|
|
100
|
|
|
|
77.90
|
|
|
|
100.25
|
|
|
|
111.15
|
|
|
|
116.61
|
|
|
|
135.03
|
|
Dow Jones Electronic &
Electrical Equipment
|
|
|
100
|
|
|
|
64.06
|
|
|
|
100.60
|
|
|
|
100.85
|
|
|
|
105.23
|
|
|
|
119.70
|
|
16
|
|
Item 6.
|
Selected
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,495,811
|
|
|
$
|
1,245,669
|
|
|
$
|
864,725
|
|
|
$
|
553,743
|
|
|
$
|
567,126
|
|
Operating income
|
|
|
118,478
|
|
|
|
68,538
|
|
|
|
36,434
|
|
|
|
22,430
|
|
|
|
13,577
|
|
Income (loss) from continuing
operations
|
|
|
71,563
|
|
|
|
33,568
|
|
|
|
10,700
|
|
|
|
6,775
|
|
|
|
(4,603
|
)
|
Basic income (loss) per share from
continuing operations
|
|
|
1.65
|
|
|
|
0.74
|
|
|
|
0.30
|
|
|
|
0.27
|
|
|
|
(0.19
|
)
|
Diluted income (loss) per share
from continuing operations
|
|
|
1.48
|
|
|
|
0.69
|
|
|
|
0.31
|
|
|
|
0.27
|
|
|
|
(0.19
|
)
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
1,355,968
|
|
|
|
1,306,735
|
|
|
|
1,385,402
|
|
|
|
694,596
|
|
|
|
749,699
|
|
Long-term debt
|
|
|
110,000
|
|
|
|
172,051
|
|
|
|
232,823
|
|
|
|
136,000
|
|
|
|
203,242
|
|
Long-term debt, including current
maturities
|
|
|
172,000
|
|
|
|
231,051
|
|
|
|
248,525
|
|
|
|
201,951
|
|
|
|
203,242
|
|
Stockholders equity
|
|
|
843,901
|
|
|
|
713,508
|
|
|
|
810,000
|
|
|
|
281,540
|
|
|
|
315,205
|
|
Other data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common
shares outstanding
|
|
|
43,319
|
|
|
|
45,655
|
|
|
|
35,404
|
|
|
|
25,158
|
|
|
|
24,763
|
|
Diluted weighted average common
shares outstanding
|
|
|
50,276
|
|
|
|
52,122
|
|
|
|
38,724
|
|
|
|
25,387
|
|
|
|
24,763
|
|
Dividends per common share
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
In 2006, we recognized severance expense of $20.4 million,
asset impairment expense of $11.1 million, and adjusted
depreciation expense of $2.0 million related to our
decisions to restructure our European and North American
manufacturing operations and to eliminate positions worldwide to
reduce production, selling, and administrative costs. We also
recognized a $4.7 million favorable settlement of a
prior-period tax contingency.
In 2005, we recognized asset impairment expense of
$8.0 million, severance expense of $7.7 million, and
adjusted depreciation expense of $1.2 million related to
our decisions to exit the United Kingdom communications cable
market and to restructure our European manufacturing operations.
We also recognized executive succession expense of
$7.0 million during 2005.
In 2004, Belden Inc. merged with and became a wholly owned
subsidiary of Cable Design Technologies Corporation (CDT), which
then changed its name to Belden CDT Inc. For financial reporting
purposes, the results of operations of CDT are included in our
operating results from July 2004. We recognized
$21.7 million in restructuring and merger-related expenses
during 2004. We also recognized asset impairment expense of
$8.9 million related to the discontinuance of certain
product lines in Europe and excess capacity in the United States
resulting from the combined capacity after the merger.
In 2002, we recognized asset impairment expense of
$18.0 million, severance expense of $8.3 million, and
inventory obsolescence expense of $3.6 million related to
the discontinuance of certain product lines and manufacturing
facility closures in Europe and Australia.
17
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
Overview
We design, manufacture, and market signal transmission products
for data networking and a wide range of specialty electronics
markets including entertainment, industrial, security, and
aerospace applications. We strive to create shareholder value by:
|
|
|
|
|
Capitalizing on opportunities for cost and capital efficiency
improvement through operational excellence,
|
|
|
|
Capturing additional profits and market share via commercial
strategies such as product portfolio management and global
account development,
|
|
|
|
Capitalizing on new growth opportunities and minimizing
potential threats related to globalization, and
|
|
|
|
Capitalizing on higher product differentiation and additional
profit opportunities and minimizing potential threats related to
the growing adoption of wireless and light transmission
technologies and new adjacencies to existing copper-based
transmission technologies.
|
To accomplish these goals, we use a set of tools and processes
that are designed to continuously improve business performance
in the critical areas of quality, delivery, cost, and
innovation. We consider revenue growth, operating margin, cash
flows, and working capital management metrics to be our key
operating performance indicators. We also desire to acquire
businesses that we believe can help us achieve the objectives
described above. The extent to which appropriate acquisitions
are made and integrated can affect our overall growth, operating
results, financial condition and cash flows.
We are a multinational corporation with global operations.
Approximately 43% of our sales were derived outside the United
States in 2006. As a global business, our operations are
affected by worldwide, regional, and industry economic and
political factors. Our market and geographic diversity has
helped limit the impact of any one market or the economy of any
single country on our consolidated operating results. Given the
broad range of products manufactured and geographies served, we
use indices concerning general economic trends to predict our
outlook for the future. Our individual businesses monitor key
competitors and customers, including to the extent possible
their sales, to gauge relative performance and the outlook for
the future.
While differences exist among our businesses, we generally
continued to see broad-based market expansion during 2006, but
at lower rates than in 2005 and 2004. We believe that this
moderation in growth rates reflects slower growth in certain end
markets and current global economic conditions. Consolidated
revenues for 2006 increased 20.1% over 2005. Revenues derived
from existing businesses for the year (references to
revenues derived from existing businesses in this
report include revenues derived from acquired businesses
starting from and after the first anniversary of the
acquisition, but exclude currency effect) contributed 18.9%
growth. The impact of currency translation on revenues
contributed the additional 1.2% growth. Consolidated revenues
for 2005 increased 44.1% over 2004. Revenues derived from
existing businesses for the year contributed 8.7% growth.
Acquisitions accounted for approximately 35.0% growth. The
impact of currency translation on revenues contributed the
additional 0.4% growth.
In July 2004, Belden Inc. merged with and became a wholly owned
subsidiary of Cable Design Technologies Corporation (CDT), and
CDT changed its name to Belden CDT Inc. (the Merger). The Merger
was treated as a reverse acquisition under the purchase method
of accounting. For financial reporting purposes, the operating
results and cash flows of CDT are included in our Consolidated
Financial Statements from July 2004. CDT was a leading supplier
of both connectivity products and electronic data and signal
transmission products and had annual revenues of approximately
$443.6 million in 2003, excluding the approximately
$57.9 million of revenues attributable to discontinued
operations that have since been divested. We recognized
$4.5 million and $30.6 million of asset impairment,
restructuring, and incentive compensation expenses in 2005 and
2004, respectively, related to the Merger.
In January 2007, we announced the pending acquisition of
Germany-based Hirschmann Automation and Control GmbH (HAC). HAC
is a leading supplier of Industrial Ethernet solutions and
industrial connectors and had annual revenues of approximately
$250.0 million in 2006. If completed, this acquisition will
help us (1) expand our
18
overall connectivity portfolio, (2) improve our market
access in Europe, (3) provide additional solutions for our
industrial customers, and (4) provide additional
opportunities for the introduction of wireless and fiber optic
solutions to the industrial space.
In February 2007, we announced the pending acquisition of Hong
Kong-based LTK Wiring Co. Ltd. (LTK). LTK is a leading supplier
of electronic cable for the China market and had annual revenues
of approximately $220.0 million in 2006. If completed, this
acquisition will (1) allow us to grow our business in
China, (2) help us meet the demands of our current
customers in Asia through regional product development,
manufacturing, and sourcing, (3) provide us with a premium
brand and a leading position in a new market for us, consumer
electronics, and, (4) provide us with a depth of experience
in working directly with original equipment manufacturers.
We continue to operate in a highly competitive business
environment in the markets and geographies served. Our
performance will be impacted by our ability to address a variety
of challenges and opportunities in these markets and
geographies, including trends toward increased utilization of
the global labor force, expansion of market opportunities in
emerging markets such as China and India, migration away from a
fragmented,
sub-scale,
high-cost manufacturing footprint, and recent volatility in raw
material costs.
To address certain of these challenges and opportunities, we
implemented restructuring actions during 2005-2006 in both
Europe and North America and initiated worldwide position
eliminations in 2006. In Europe, we exited the United Kingdom
communications cable market, ceased the manufacture of certain
products in Hungary and the Netherlands, and sold both our
discontinued communications cable operation in the United
Kingdom and a manufacturing facility in Sweden in an effort to
reduce manufacturing floor space and overhead and to streamline
administrative processes. In North America, we announced the
construction of a new manufacturing facility in Mexico and the
pending closure of three manufacturing facilities in the United
States and the cessation of manufacturing at a facility in
Canada in an effort to increase our manufacturing presence in
low-cost regions near our major markets. We have initiated
worldwide position eliminations in an effort to streamline
production support, sales, and administrative operations. As a
result of these actions, we recognized severance, asset
impairment, and adjusted depreciation costs in 2005 and 2006. We
may recognize additional severance and adjusted depreciation
costs during 2007. We may also recognize additional asset
impairment expenses or gains (losses) on the disposal of assets
during the restructuring periods.
Although we use the United States dollar as our functional
currency for reporting purposes, a substantial portion of our
assets, liabilities, operating results, and cash flows reside in
or are derived from countries other than the United States.
These assets, liabilities, operating results, and cash flows are
translated from local currencies into the United States dollar
using exchange rates effective during the respective period. We
have generally accepted the exposure to currency exchange rate
movements without using derivative financial instruments to
manage this risk. Both positive and negative movements in
currency exchange rates against the United States dollar will
continue to affect the reported amount of assets, liabilities,
operating results, and cash flows in our consolidated financial
statements.
Liquidity
and Capital Resources
Significant factors affecting our cash liquidity include
(1) cash provided by operating activities,
(2) dispositions of tangible assets, (3) the exercise
of stock options, (4) cash used for business acquisitions,
capital expenditures, and dividends, and (5) the adequacy
of our available credit facilities and other borrowing
arrangements. We believe the sources listed above are sufficient
to fund the current requirements of working capital, to fund our
announced pending acquisitions of HAC and LTK, to make scheduled
contributions for our retirement plans, to fund scheduled debt
maturity payments, to fund quarterly dividend payments, and to
support our short-term operating strategies. Customer demand,
competitive market forces, commodities pricing, customer
acceptance of our product mix or economic conditions worldwide
could affect our ability to continue to fund our future needs
from business operations.
19
The following table is derived from our Consolidated Cash Flow
Statements:
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Net cash provided by (used for):
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$
|
141,156
|
|
|
$
|
49,149
|
|
Investing activities
|
|
|
(1,465
|
)
|
|
|
27,752
|
|
Financing activities
|
|
|
(22,673
|
)
|
|
|
(129,122
|
)
|
Effects of currency exchange rate
changes on cash and cash equivalents
|
|
|
2,495
|
|
|
|
(1,937
|
)
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
|
|
119,513
|
|
|
|
(54,158
|
)
|
Cash and cash equivalents,
beginning of year
|
|
|
134,638
|
|
|
|
188,796
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of
year
|
|
$
|
254,151
|
|
|
$
|
134,638
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities, a key source of our
liquidity, increased by $92.0 million in 2006 as compared
to 2005 primarily because of a favorable change in operating
assets and liabilities totaling $57.1 million, net income
growth totaling $18.4 million, and an increase in non-cash
charges totaling $29.6 million. Operating cash flow was
negatively impacted in 2006 by a $13.1 million increase in
the amount by which pension funding exceeded pension expense.
Cash provided by inventory reductions increased by
$83.8 million in 2006 as compared to 2005 because certain
of our businesses outperformed our strategic objective to
improve inventory turns by a least one full turn each year
beginning in 2006. Inventory turns (defined as annual cost of
sales divided by inventories) increased from 3.94 at
December 31, 2005 to 5.75 at December 31, 2006. Cash
used for accounts payable and accrued liabilities activity
increased by $31.2 million in 2006 as compared to 2005.
This fluctuation was triggered primarily by accounts payable,
accrued value-added taxes, and other miscellaneous accruals. The
amounts outstanding for these liabilities either stabilized or
decreased in 2006 following significant merger-related increases
in 2005. Days payables outstanding (defined as accounts payable
and accrued liabilities divided by the average daily cost of
sales and selling, general and administrative expenses
recognized during the year) decreased from 67.5 at
December 31, 2005 to 53.4 at December 31, 2006 for
this same reason. Cash used for receivables activity increased
by $6.5 million in 2006 as compared to 2005 because of the
greater unit sales volume and increased sales prices experienced
in 2006. Days sales outstanding in receivables (defined as
receivables divided by average daily revenues recognized during
the year) decreased from 57.1 at December 31, 2005 to 53.2
at December 31, 2006 for this same reason.
Net cash used for investing activities totaled $1.5 million
in 2006 as compared to net cash provided by investing activities
of $27.8 million in 2005. This decline in the cash flow
impact of investing activities resulted from a
$17.5 million decrease in proceeds generated from the
disposal of tangible assets in 2006 as compared to 2005 and an
$11.7 million increase in funds used to invest in or
acquire businesses in 2006 as compared to 2005. In 2006, we
received proceeds totaling $34.1 million related primarily
to the disposal of tangible assets at our discontinued
Manchester, United Kingdom business. In 2005, we received
proceeds totaling $51.5 million related primarily to the
disposal of tangible assets at our discontinued Phoenix, Arizona
business. In 2006, we used $6.7 million to buy out the
outstanding minority interest in one of our German subsidiaries
and we used $5.0 million to purchase approximately
1.7 million shares of convertible preferred stock issued by
Israel-based Extricom, Ltd.
In January 2007, we announced the pending acquisition of HAC for
approximately $260.0 million in cash. In February 2007, we
announced the pending acquisition of LTK for approximately
$195.0 million in cash. We anticipate that these and any
other acquisitions consummated in 2007 will be funded with
available cash, internally-generated funds, and cash obtained
through external borrowings.
Planned capital expenditures for 2007 are approximately
$60.0 million, which includes the construction of new
manufacturing facilities in Mexico and China. We anticipate that
these capital expenditures will be funded with
20
available cash, internally-generated funds, and cash obtained
through external borrowings. We have the ability to revise and
reschedule the anticipated capital expenditure program should
our financial position require it.
Net cash used for financing activities in 2006 totaled
$22.7 million as compared to $129.1 million in 2005.
This improvement in the cash flow impact of financing activities
primarily resulted from a $109.4 million decrease in funds
used to repurchase our common stock, a $31.9 million
increase in proceeds received from the exercise of stock
options, and a $7.4 million increase in excess tax benefits
recognized on share-based payments. A $41.6 million
increase in funds used to repay outstanding debt obligations
partially offset the positive impact that the nonrecurring
purchase of common stock, the exercise of stock options, and the
recognition of excess tax benefits on share-based payments had
on the financing cash flows comparison. During 2005, we
repurchased approximately 5.2 million shares of our common
stock in open market transactions at an aggregate cost of
$109.4 million. We received approximately
$38.8 million and $6.9 million in proceeds during 2006
and 2005, respectively, from the exercise of stock options
granted under our share-based compensation plans. An increase in
our average stock price from $21.28 per share in 2005 to
$32.70 per share in 2006 triggered an increase in the
number of stock option exercises initiated in 2006 as compared
to 2005. In 2006, we recognized excess tax benefits on
share-based payments totaling $7.4 million in connection
with the adoption of Statement of Financial Accounting Standards
(SFAS) No. 123(R), Share-Based Payment. During 2006,
we repaid outstanding medium-term notes totaling
$59.0 million. During 2005, we repaid outstanding
medium-term notes totaling $15.0 million and other
borrowings totaling $2.5 million.
Our outstanding debt obligations as of December 31, 2006
consisted of $110.0 million of 4.00% convertible
subordinated debentures due in 2023 and $62.0 million of
medium-term notes. In January 2007, we discovered that we were
in technical default of a covenant in each of our two
medium-term note agreements. Rather than request a waiver for
these covenant violations, we elected to redeem our outstanding
notes. In February 2007, we redeemed the notes in the aggregate
principal amount of $62.0 million and, in connection
therewith, we paid a make-whole premium of approximately
$2.0 million. The redemption was made with cash on hand.
During 2006, we maintained a revolving senior credit facility
totaling $165.0 million that was secured by our overall
cash flow and our tangible assets (other than real property) in
the United States. The facility had a fixed term expiring in
January 2011. There were no borrowings outstanding under this
facility at any time during 2006. In February 2007, we entered
into an amendment to our existing revolving senior credit
facility, which provides that the amount of the revolver
commitment be increased from $165.0 million to
$225.0 million as well as amends certain restrictive
covenants governing affiliate indebtedness and asset sales. The
agreement for our revolving credit facility contains various
customary affirmative and negative covenants and other
provisions, including restrictions on the incurrence of debt,
maintenance of a maximum leverage ratio, maintenance of a fixed
charge coverage ratio, and minimum net worth.
Additional discussion regarding our various borrowing
arrangements is included in Note 11 to the Consolidated
Financial Statements.
Contractual obligations outstanding at December 31, 2006
have the following scheduled maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
1-3
|
|
|
3-5
|
|
|
More than
|
|
|
|
Total
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
5 Years
|
|
|
|
(In thousands)
|
|
|
Long-term debt obligations(1)(2)(3)
|
|
$
|
172,000
|
|
|
$
|
62,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
110,000
|
|
Interest payments on long-term
debt obligations
|
|
|
78,986
|
|
|
|
8,586
|
|
|
|
8,800
|
|
|
|
8,800
|
|
|
|
52,800
|
|
Operating lease obligations(4)
|
|
|
14,270
|
|
|
|
6,309
|
|
|
|
6,371
|
|
|
|
1,523
|
|
|
|
67
|
|
Purchase obligations(5)
|
|
|
3,304
|
|
|
|
3,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term incentive compensation
|
|
|
2,820
|
|
|
|
1,441
|
|
|
|
1,379
|
|
|
|
|
|
|
|
|
|
Pension and other postemployment
obligations
|
|
|
86,632
|
|
|
|
13,055
|
|
|
|
15,915
|
|
|
|
15,869
|
|
|
|
38,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
355,012
|
|
|
$
|
94,695
|
|
|
$
|
32,465
|
|
|
$
|
26,192
|
|
|
$
|
201,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
(1) |
|
As described in Note 11 to the Consolidated Financial
Statements. |
|
(2) |
|
Amounts do not include interest or make-whole payments. Interest
and make-whole payments related to long-term debt obligations
are reflected on a separate line in the table. We redeemed our
$62.0 million medium-term notes in February 2007. |
|
(3) |
|
Holders of our 4.00% convertible subordinated debentures
due in 2023 may require us to purchase all or a part of the
debentures in 2008, 2013, and 2018 at a price equal to 100% of
the principal amount of the debentures plus accrued and unpaid
interest up to the repurchase date. The purchase price may be
paid, at our option, in cash, shares of our common stock, or a
combination of cash and shares of our common stock. |
|
(4) |
|
As described in Note 16 to the Consolidated Financial
Statements. |
|
(5) |
|
Includes agreements to purchase goods or services that are
enforceable and legally binding on us and that specify all
significant terms, including fixed or minimum quantities to be
purchased; fixed, minimum, or variable price provisions; and the
approximate timing of the transaction. |
Our commercial commitments expire or mature as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
|
|
|
1-3
|
|
|
3-5
|
|
|
More than
|
|
|
|
Total
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
5 Years
|
|
|
|
(In thousands)
|
|
|
Lines of credit
|
|
$
|
154,183
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
154,183
|
|
|
$
|
|
|
Standby financial letters of credit
|
|
|
7,192
|
|
|
|
7,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank guarantees
|
|
|
5,401
|
|
|
|
5,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surety bonds
|
|
|
3,923
|
|
|
|
3,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
170,699
|
|
|
$
|
16,516
|
|
|
$
|
|
|
|
$
|
154,183
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standby financial letters of credit, guarantees, and surety
bonds are generally issued to secure obligations we have for a
variety of commercial reasons such as risk self-insurance
programs, unfunded retirement plans, and the importation and
exportation of product.
Results
of Operations
Consolidated
Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2006 vs. 2005
|
|
|
2005 vs. 2004
|
|
|
|
(In thousands, except percentages)
|
|
|
Revenues
|
|
$
|
1,495,811
|
|
|
$
|
1,245,669
|
|
|
$
|
864,725
|
|
|
|
20.1
|
%
|
|
|
44.1
|
%
|
Gross profit
|
|
|
333,313
|
|
|
|
277,373
|
|
|
|
189,968
|
|
|
|
20.2
|
%
|
|
|
46.0
|
%
|
Operating income
|
|
|
118,478
|
|
|
|
68,538
|
|
|
|
36,434
|
|
|
|
72.9
|
%
|
|
|
88.1
|
%
|
Income from continuing operations
before taxes
|
|
|
112,276
|
|
|
|
57,540
|
|
|
|
24,597
|
|
|
|
95.1
|
%
|
|
|
133.9
|
%
|
Income from continuing operations
|
|
|
71,563
|
|
|
|
33,568
|
|
|
|
10,700
|
|
|
|
113.2
|
%
|
|
|
213.7
|
%
|
Revenues generated in 2006 increased from revenues generated in
2005 because of increased selling prices, increased unit sales
volume, favorable product mix, and favorable foreign currency
translation on international revenues. Price improvement
resulted primarily from the impact of sales price increases we
implemented during 2005-2006 across most product lines in
response to increases in the costs of copper and commodities
derived from petrochemical feedstocks and improved pricing
practices at certain of our operations. The price of copper, our
primary raw material, increased from $1.49 per pound at
December 31, 2004 to $2.16 per pound at
December 31, 2005 and $2.85 per pound at
December 31, 2006. Sales price increases contributed
approximately 17.9 percentage points of the revenue
increase. Favorable currency translation contributed
1.2 percentage points of revenue increase in 2006. Higher
unit sales of products with industrial, video/sound/security
(VSS), and transportation/defense (TD) applications were
partially offset by a decrease in unit sales of products with
communications/networking (CN)
22
applications, but still contributed approximately
1.0 percentage point of revenue increase. Unit sales of
products with industrial, VSS, and TD applications improved
during 2006 because of increased demand from customers in the
fossil fuels, power generation, and broadcast industries and
facilities manufacturing these products improved their order
fill rates and reduced their backlog. Unit sales of products
with CN applications declined in 2006 as a result of our product
portfolio management initiatives. Although unit sales of
products with CN applications decreased from 2005 to 2006, gross
margins improved as a result of our product portfolio management
actions.
Gross profit increased in 2006 from the prior year primarily
because of the revenue increase discussed above. Higher cost of
sales in the current year resulted from (1) increased
variable production costs necessary to support improved unit
sales, (2) the increase in copper and certain other raw
materials costs, (3) excess and obsolete inventory charges
resulting primarily from a change in the parameters we used to
identify such inventories that exceeded those recognized in 2005
by $14.8 million, (4) severance costs that exceeded
those recognized in 2005 by $9.3 million, and
(5) adjusted depreciation costs that exceeded those
recognized in 2005 by $0.9 million. In 2006, we recognized
severance expense totaling $17.2 million related primarily
to the restructuring actions in Europe and North America and
worldwide position eliminations. We also recognized adjusted
depreciation costs totaling $2.0 million in 2006 related to
the restructuring actions in Europe and North America. These
negative factors impacting the gross profit comparison were
partially offset by the positive impact of manufacturing cost
reduction actions (including the closures of 2 manufacturing
facilities in the United States and Sweden during 2005-2006).
Selling, general and administrative (SG&A) expenses
recognized in 2006 were relatively unchanged from those
recognized in 2005. In 2006, we recognized (1) share-based
compensation costs that exceeded those recognized in the prior
year by $2.2 million primarily because of the 2006 adoption
of SFAS No. 123(R), (2) severance costs that
exceeded those recognized in 2005 by $3.7 million, and
(3) travel costs that exceeded those recognized in the
prior year by $1.7 million because of increased travel
related to our various strategic initiatives. These increased
costs were offset by (1) salary costs recognized in 2005
that exceeded those recognized in the current year by
$6.4 million primarily because of 2006 employee
terminations related to the restructuring actions in Europe and
North America, (2) gains recognized on the disposals of
tangible assets in 2006 that exceeded those recognized in the
prior year by $2.3 million, and (3) other SG&A
expenses recognized in 2005 that exceeded those recognized in
the current year by $0.6 million. In 2006, we recognized
severance expense totaling $5.1 million related primarily
to the restructuring actions in Europe and North America and
worldwide position eliminations. In the current year, we also
recognized gains on disposals of tangible assets primarily in
our Netherlands, Czech Republic, and Sweden manufacturing
facilities totaling $2.5 million related to the
restructuring actions in Europe.
Operating income increased in 2006 from the prior year because
of the favorable gross profit comparison partially offset by
asset impairment charges recognized in 2006 that exceeded those
recognized in the prior year by $3.1 million and
$3.0 million in nonrecurring minimum requirements contract
income recognized in 2005. In 2006, we recognized asset
impairment expenses totaling $11.1 million related to the
restructuring actions in Europe and North America.
Income from continuing operations before taxes increased in 2006
from 2005 because of higher operating income, lower interest
expense, and higher interest income. Interest expense recognized
in 2006 decreased by $1.9 million from that recognized in
2005 because we repaid medium-term notes totaling
$15.0 million, $15.0 million, and $44.0 million
in August 2005, August 2006, and September 2006, respectively.
Interest income earned on cash equivalents in 2006 increased by
$2.3 million from 2005 because of higher cash equivalents
and increased interest rates.
Our effective annual tax rate changed from 41.7% in 2005 to
36.3% in 2006. This change is primarily attributable to a
decrease in deferred tax asset valuation allowances recognized
as a percentage of pretax income and to a decrease in goodwill
impairment charges on which no tax benefit was recognized.
Incremental deferred tax asset valuation allowances recognized
against foreign net operating loss carryforwards decreased from
$5.0 million in 2005 to $3.7 million in 2006. Goodwill
impairment charges decreased from $6.9 million in 2005 to
$0 in 2006.
Income from continuing operations increased in 2006 from the
prior year because of higher operating income partially offset
by higher income tax expense.
23
Revenues generated in 2005 increased from revenues generated in
2004 because of the impact of the Merger, increased selling
prices, increased unit sales volume, and favorable foreign
currency translation on international revenues. Incremental
revenues generated by the CDT operations during 2005 totaled
approximately $302.3 million and contributed
35.0 percentage points of revenue increase. Price
improvement resulted primarily from the impact of selling price
increases we implemented during 2004-2005 across most product
lines in response to increases in the costs of copper and
commodities derived from petrochemical feedstocks. Sales price
increases contributed approximately 5.0 percentage points
of the revenue increase. Higher unit sales of products with CN,
industrial, TD, and VSS applications contributed approximately
3.7 percentage points of revenue increase. Unit sales of
products with CN applications improved in 2005 as compared to
2004 because of stronger demand from several large
telecommunications customers and increased sales to channel
partners anticipating repairs to the damage that resulted from
the severe 2005 hurricane season in the United States. Unit
sales of products with industrial applications improved in 2005
as compared to the prior year because of increased capital
project activity within the industrial sector (primarily at
utilities and petrochemical refining companies) driven by rising
petroleum prices and sales of product for the 2006 Torino
Olympic Games. Favorable currency translation contributed
0.4 percentage points of revenue increase in 2005.
Gross profit increased in 2005 from the prior year primarily
because of the incremental gross profit generated by the CDT
operations during the year, the impact of selling price
increases we implemented during 2004-2005, and the favorable
impact of currency translation on the gross profit generated by
our international operations. The gross profit comparison was
also favorably impacted by manufacturing cost reduction actions
(including the 2005 closure of a manufacturing facility in the
United States) and severance costs recognized in 2004 that
exceeded those recognized in 2005 by $2.7 million.
Severance costs recognized in 2005 totaled $7.9 million and
related primarily to the restructuring actions in Europe.
Severance costs recognized in 2004 totaled $10.6 million
and related primarily to personnel reductions in North America
and Europe. The positive effect that the Merger, selling prices,
currency translation, and the cost reduction actions had on the
gross profit comparison were partially offset by increases in
the costs of copper and commodities derived from petrochemical
feedstocks and adjusted depreciation costs recognized in 2005
that exceeded those recognized in the prior year by
$1.2 million because of the restructuring actions in Europe.
SG&A expenses recognized in 2005 increased from those
recognized in 2004 primarily because of the addition of
incremental SG&A expenses related to the CDT operations and
executive succession costs totaling $7.0 million recognized
during 2005. These negative factors were partially offset by
severance costs recognized in 2004 that exceeded those
recognized in 2005 by $0.7 million and by both increased
incentive compensation costs and professional services costs
recognized in 2004 related to the Merger. Severance costs
recognized in 2005 totaled $1.4 million and related
primarily to the restructuring actions in Europe. Severance
costs recognized in 2004 totaled $2.1 million and related
primarily to personnel reductions in North America, Europe, and
Australia.
Operating income increased in 2005 from the prior year because
of the favorable gross profit comparison and asset impairment
charges recognized in 2004 that exceeded those recognized in
2005 by $0.9 million partially offset by the increase in
SG&A expenses. In 2005, we recognized goodwill impairment
charges totaling $6.9 million and tangible asset impairment
charges totaling $1.1 million related to the restructuring
actions in Europe. In 2004, we recognized tangible asset
impairment charges totaling $8.9 million related to product
line pruning in Europe and the disposal of excess equipment in
North America that resulted from the Merger.
Income from continuing operations before taxes increased in 2005
from 2004 because of higher operating income largely
attributable to the Merger and higher interest income partially
offset by higher interest expense. Interest income earned on
cash equivalents in 2005 increased by $3.2 million from
2004. Interest expense recognized in 2005 increased by
$0.3 million from that recognized in 2004. In July 2004, we
assumed convertible subordinated debentures totaling
$110.0 million from the CDT operations. We also repaid
medium-term notes totaling $64.0 million and
$15.0 million in September 2004 and August 2005,
respectively.
Our effective annual tax rate changed from 56.5% in 2004 to
41.7% in 2005. This change is primarily attributable to a
$4.4 million decrease in deferred tax asset valuation
allowances recognized against foreign net operating loss
carryforwards between 2004 and 2005.
24
Income from continuing operations increased in 2005 from the
prior year because of higher operating income resulting largely
from the Merger partially offset by higher income tax expense.
Belden
Americas Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2006 vs. 2005
|
|
|
2005 vs. 2004
|
|
|
|
(In thousands, except percentages)
|
|
|
Total revenues
|
|
$
|
868,713
|
|
|
$
|
700,662
|
|
|
$
|
564,033
|
|
|
|
24.0
|
%
|
|
|
24.2
|
%
|
Operating income
|
|
|
122,213
|
|
|
|
96,292
|
|
|
|
61,109
|
|
|
|
26.9
|
%
|
|
|
57.6
|
%
|
As a percent of total
revenues
|
|
|
14.1
|
%
|
|
|
13.7
|
%
|
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
Belden Americas total revenues, which includes affiliate
revenues, increased in 2006 from 2005 primarily because of
increased selling prices, favorable product mix, increased unit
sales volume, and favorable foreign currency translation on
international revenues. Price improvement resulted primarily
from the impact of price increases we implemented during
2005-2006 across most product lines in response to increased raw
materials costs and to improved pricing practices at certain of
our operations. Higher unit sales resulted from increased demand
from customers in the fossil fuels, power generation, and
broadcast industries coupled with improved order fill rates and
reduced backlog at plants manufacturing these products.
Operating income increased in 2006 from the prior year primarily
because of the favorable product mix, improved unit sales
volume, improved factory utilization that resulted from a 2005
restructuring action, and the impact of 2005 cost reduction
actions, including the closure of our manufacturing facility in
Vermont in June 2005. These positive factors affecting the
operating income comparison were partially offset primarily by
increased variable production costs necessary to support
improved unit sales, rising copper and certain other raw
materials costs, severance costs recognized in 2006 that
exceeded those recognized in 2005 by $9.9 million, and
asset impairment costs recognized in the current year that
exceeded those recognized in 2005 by $8.6 million. In 2006,
we recognized severance costs totaling $10.6 million
related primarily to the restructuring actions in North America
and worldwide position eliminations. Asset impairment costs
recognized in 2006 on tangible assets in our manufacturing
facilities in Illinois, South Carolina, and Quebec were also the
result of the North American restructuring actions.
Belden Americas total revenues increased in 2005 from 2004
primarily because of the impact of the Merger, increased selling
prices, increase unit sales volume, and favorable foreign
currency translation on international revenues. Price
improvement resulted primarily from the impact of selling price
increases we implemented during 2004-2005 across most product
lines in response to increases in the costs of copper and
commodities derived from petrochemical feedstocks. Higher unit
sales resulted from increased demand from customers in the
telecommunications, fossil fuels, and power generation
industries coupled with increased demand from channel partners
anticipating repairs to the damage that resulted from the severe
2005 hurricane season in the United States. Operating income
increased in 2005 from the prior year primarily because of
incremental operating income generated by the merged CDT
operations, severance costs recognized in 2004 that exceeded
those recognized in 2005 by $0.3 million and asset
impairment charges recognized in 2004 that exceeded those
recognized in 2005 by $3.2 million. In 2005, we recognized
severance costs totaling $1.5 million related to personnel
reductions and a manufacturing facility closure in Vermont.
Asset impairment costs recognized in 2004 related to excess
equipment that resulted from the Merger.
Specialty
Products Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2006 vs. 2005
|
|
|
2005 vs. 2004
|
|
|
|
(In thousands, except percentages)
|
|
|
Total revenues
|
|
$
|
292,415
|
|
|
$
|
262,880
|
|
|
$
|
100,513
|
|
|
|
11.2
|
%
|
|
|
161.5
|
%
|
Operating income
|
|
|
34,576
|
|
|
|
26,598
|
|
|
|
11,319
|
|
|
|
30.0
|
%
|
|
|
135.0
|
%
|
As a percent of total
revenues
|
|
|
11.8
|
%
|
|
|
10.1
|
%
|
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
Specialty Products total revenues increased in 2006 from 2005
primarily because of increased selling prices and favorable
product mix partially offset by decreased unit sales volume.
Price improvement resulted primarily
25
from the impact of price increases we implemented during
2005-2006 across most product lines in response to increased raw
materials costs and to improved pricing practices at certain of
our operations manufacturing networking products. Decreased unit
sales volume resulted from our product portfolio management
actions. Although unit sales volume decreased from 2005 to 2006,
gross margins improved as a result of our product portfolio
management actions. Operating income increased in 2006 from the
prior year primarily because of improved revenues partially
offset by rising raw material costs, increased excess and
obsolete inventory charges, and severance costs totaling
$0.5 million recognized in the current year because of
worldwide position eliminations.
Specialty Products total revenues increased in 2005 from 2004
because of the incremental revenues generated by the merged CDT
operations and increased selling prices. Price improvement
resulted primarily from the impact of price increases we
implemented during 2004-2005 across most product lines in
response to increased raw materials costs. Operating income
increased in 2005 from the prior year primarily because of
improved revenues partially offset by rising raw material costs.
Europe
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2006 vs. 2005
|
|
|
2005 vs. 2004
|
|
|
|
(In thousands, except percentages)
|
|
|
Total revenues
|
|
$
|
373,737
|
|
|
$
|
333,251
|
|
|
$
|
219,414
|
|
|
|
12.1
|
%
|
|
|
51.9
|
%
|
Operating income (loss)
|
|
|
4,072
|
|
|
|
(8,542
|
)
|
|
|
(9,136
|
)
|
|
|
147.7
|
%
|
|
|
6.5
|
%
|
As a percent of total
revenues
|
|
|
1.1
|
%
|
|
|
(2.6
|
)%
|
|
|
(4.2
|
)%
|
|
|
|
|
|
|
|
|
Europe total revenues increased in 2006 from the prior year
primarily because of increased selling prices, favorable product
mix, and favorable foreign currency translation partially offset
by decreased unit sales volume. Price improvement resulted
primarily from the impact of price increases we implemented
during 2005-2006 across most product lines in response to
increased raw materials costs. Decreased unit sales volume
resulted from our product portfolio management actions. Although
unit sales volume decreased from 2005 to 2006, gross margins
improved as a result of both product portfolio management and
cost reduction actions. Europe operating results improved from
an operating loss in 2005 to operating income in 2006 primarily
because of improved revenues, asset impairment charges
recognized in 2005 that exceeded those recognized in 2006 by
$3.1 million, and a 2006 gain recognized on the disposal of
tangible assets primarily in our Netherlands, Czech Republic,
and Sweden manufacturing facilities totaling $2.5 million.
These positive factors affecting the operating results
comparison were partially offset by rising raw materials costs
and severance costs recognized in 2006 that exceeded those
recognized in 2005 by $1.3 million. In 2006, we recognized
severance costs totaling $9.3 million related primarily to
the restructuring actions and worldwide position eliminations.
Europe total revenues increased in 2005 from 2004 primarily
because of the incremental revenues generated by the merged CDT
operations and increased selling prices partially offset by
decreased unit sales volume and unfavorable foreign currency
translation. Price improvement resulted primarily from the
impact of price increases we implemented during 2004-2005 across
most product lines in response to increased raw materials costs.
Decreased unit sales volume resulted from product portfolio
management actions. Europe operating results improved from 2004
to 2005 primarily because of improved revenues and severance
costs recognized in 2004 that exceeded those recognized in 2005
by $1.6 million. These positive factors on the operating
results comparison were partially offset by adjusted
depreciation costs recognized in 2005 that exceed those
recognized in 2004 by $1.2 million. In 2005, we recognized
severance costs totaling $8.0 million in the Netherlands,
Germany, and the Czech Republic related primarily to the
restructuring actions. In 2004, we recognized severance costs
totaling $9.6 million related primarily to personnel
reductions resulting from product portfolio management actions.
26
Asia
Pacific Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2006 vs. 2005
|
|
|
2005 vs. 2004
|
|
|
|
(In thousands, except percentages)
|
|
|
Total revenues
|
|
$
|
64,297
|
|
|
$
|
50,208
|
|
|
$
|
42,060
|
|
|
|
28.1
|
%
|
|
|
19.4
|
%
|
Operating income
|
|
|
6,803
|
|
|
|
2,838
|
|
|
|
(585
|
)
|
|
|
139.7
|
%
|
|
|
585.1
|
%
|
As a percent of total
revenues
|
|
|
10.6
|
%
|
|
|
5.7
|
%
|
|
|
(1.4
|
)%
|
|
|
|
|
|
|
|
|
Asia Pacific total revenues increased in 2006 from 2005
primarily because of increased unit sales volume and increased
selling prices. Higher unit sales resulted from increased demand
for products in all our served markets primarily because of
improvement in sales representation over the past year and
several large casino and hotel construction projects. Price
increases were implemented during 2005-2006 in response to
rising raw material costs. Operating income increased during
2006 from the prior year primarily because of the favorable
revenue comparison.
Asia Pacific total revenues increased in 2005 from 2004
primarily because of incremental revenues generated by the
merged CDT operations and increased selling prices partially
offset by a decrease in unit sales volume. Price increases were
implemented during 2004-2005 in response to rising raw material
costs. Unit sales volume decreased primarily because of turnover
in our sales representation in China and the closure of a
distribution facility in Australia. Operating income increased
during 2005 from 2004 primarily because of the favorable revenue
comparison partially offset by severance costs recognized in
2005 that exceeded those recognized in 2004 by
$0.2 million. In 2005, we recognized severance costs of
$0.2 million related to the closure of a distribution
facility in Australia.
Discontinued
Operations
During each of the periods presented we reported the operations
listed in Note 5 to the Consolidated Financial Statements
as discontinued operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Results of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
27,644
|
|
|
$
|
108,561
|
|
|
$
|
221,115
|
|
Loss before taxes
|
|
$
|
(1,900
|
)
|
|
$
|
(3,691
|
)
|
|
$
|
(11,307
|
)
|
Income tax benefit
|
|
|
570
|
|
|
|
2,518
|
|
|
|
15,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss)
|
|
$
|
(1,330
|
)
|
|
$
|
(1,173
|
)
|
|
$
|
4,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposal:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) before taxes
|
|
$
|
(6,140
|
)
|
|
$
|
23,692
|
|
|
$
|
393
|
|
Income tax benefit (expense)
|
|
|
1,842
|
|
|
|
(8,529
|
)
|
|
|
(140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss)
|
|
$
|
(4,298
|
)
|
|
$
|
15,163
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We recognized a loss on the disposal of discontinued operations
during 2006 related to the sale of our communications cable
operation in Manchester, United Kingdom. We recognized gains on
the disposal of discontinued operations during both 2005 and
2004 related to the sale of our communications cable operation
in Phoenix, Arizona.
At December 31, 2006, there were no remaining assets or
liabilities belonging to the discontinued operations.
Off-Balance
Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, results of operations, or cash flows that
are or would be considered material to investors.
27
Current-Year
Adoption of Recent Accounting Pronouncements
Discussion regarding our adoption of SFAS No. 123(R),
Share-Based Payment, is included in Notes 2 and 14
to the Consolidated Financial Statements. Discussion regarding
our adoption of SFAS No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement
Plans an amendment of FASB Statements No. 87,
88, 106, and 132(R), is included in Notes 2 and 13 to
the Consolidated Financial Statements.
Pending
Adoption of Recent Accounting Pronouncements
Discussion regarding our pending adoption of both Financial
Accounting Standards Board Interpretation No. 48,
Accounting for Uncertainty in Income Taxes an
interpretation of FASB Statement No. 109, and
SFAS No. 157, Fair Value Measurements, is
included in Note 2 to the Consolidated Financial Statements.
Critical
Accounting Policies
The preparation of financial statements and related disclosures
in conformity with accounting principles generally accepted in
the United States (GAAP) requires us to make estimates and
judgments that affect the amounts reported in our Consolidated
Financial Statements. We base our estimates and judgments on
historical experience or various assumptions that are believed
to be reasonable under the circumstances, and the results form
the basis for making judgments about the reported values of
assets, liabilities, revenues and expenses that are not readily
apparent from other sources. Actual results may differ from
these estimates. We believe the following critical accounting
policies affect our more significant estimates and judgments
used in the preparation of the Consolidated Financial
Statements. We provide a detailed discussion on the application
of these and other accounting policies in Note 2 to the
Consolidated Financial Statements.
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.
Receivables
Allowances
We sometimes grant trade, promotion, and other special price
reductions such as meet competition pricing, price protection,
contract pricing, and on-time payment discounts to certain of
our customers. We also adjust receivables balances for, among
other things, correction of billing errors, incorrect shipments,
and settlement of customer disputes. Customers are allowed to
return inventory if and when certain conditions regarding the
physical state of the inventory and our approval of the return
are met. Certain distribution customers are allowed to return
inventory at original cost, in an amount not to exceed three
percent of the prior years purchases, in exchange for an
order of equal or greater value. Until we can process these
reductions, corrections, and returns (together, the Adjustments)
through individual customer records, we estimate the amount of
outstanding Adjustments and recognize them as allowances against
our gross accounts receivable and gross revenues. We base these
estimates on historical and anticipated sales demand, trends in
product pricing, and historical and anticipated Adjustments
patterns. We charge revisions to these estimates back to
accounts receivable and revenues in the period in which the
facts that give rise to each revision become known. Future
market conditions and product transitions might require us to
take actions to increase price allowance and customer return
authorizations, possibly resulting in an incremental reduction
of accounts receivable and revenues at the time the allowance or
return is authorized.
We evaluate the collectibility of accounts receivable based on
the specific identification method. A considerable amount of
judgment is required in assessing the realization of accounts
receivable, including the current creditworthiness of each
customer and related aging of the past due balances. We perform
ongoing credit evaluations of our customers financial
condition. Through these evaluations, we may become aware of a
situation where a customer may not be able to meet its financial
obligations due to deterioration of its financial viability,
credit ratings or bankruptcy. In circumstances where we are
aware of a customers inability or unwillingness to pay
outstanding amounts, we record a specific reserve for bad debts
against amounts due to reduce the receivable to its
28
estimated collectible balance. There have been occasions in the
past where we recognized an expense associated with the rapid
collapse of a distributor for which no specific reserve had been
previously established. The reserve requirements are based on
the best facts available to us and are reevaluated and adjusted
as additional information is received.
Inventories
We evaluate the realizability of our inventory on a
product-by-product
basis in light of historical and anticipated sales demand,
technological changes, product life cycle, component cost
trends, product pricing and inventory condition. In
circumstances where inventory levels are in excess of historical
and anticipated market demand, where inventory is deemed
technologically obsolete or not saleable due to condition or
where inventory cost exceeds net realizable value, we record a
charge to cost of goods sold and reduce the inventory to its net
realizable value. In 2006, we changed the parameters we apply to
calculate our allowance for excess and obsolete inventories to
conform to our goal to better manage our working capital and
reduce our reliance on finished goods inventory. Revisions to
these inventory adjustments would be required if any of the
factors mentioned above differed from our estimates.
Deferred
Tax Assets
We recognize deferred tax assets resulting from tax credit
carryforwards, net operating loss carryforwards, and deductible
temporary differences between taxable income on our income tax
returns and income before taxes under GAAP. Deferred tax assets
generally represent future tax benefits to be received when
these carryforwards can be applied against future taxable income
or when expenses previously reported in our Consolidated
Financial Statements become deductible for income tax purposes.
A deferred tax asset valuation allowance is required when some
portion or all of the deferred tax assets will not be realized.
We are required to estimate taxable income in future years or
develop tax strategies that would enable tax asset realization
in each taxing jurisdiction and use judgment to determine
whether or not to record a deferred tax asset valuation
allowance for part or all of a deferred tax asset.
Income
Tax Contingencies
Our effective tax rate is based on expected income, statutory
tax rates, and tax planning opportunities available to us in the
various jurisdictions in which we operate. Significant judgment
is required in determining our effective tax rate and in
evaluating our tax positions. We establish accruals for certain
tax contingencies when, despite our belief that our tax return
positions are fully supported, a possibility exists that certain
positions are likely to be challenged and may not be fully
sustained. To the extent we were to prevail in matters for which
accruals have been established or be required to pay amounts in
excess of reserves, there could be a material effect on our
income tax provisions in the period in which each such
determination is made.
Long-Lived
Assets
The valuation and classification of long-lived assets and the
assignment of useful depreciation and amortization lives and
salvage values involve significant judgments and the use of
estimates. The testing of these long-lived assets under
established accounting guidelines for impairment also requires
significant use of judgment and assumptions, particularly as it
relates to the identification of asset groups and reporting
units and the determination of fair market value. We test our
tangible long-lived assets and intangible long-lived assets
subject to amortization for impairment when indicators of
impairment exist. We test our goodwill and intangible long-lived
assets not subject to amortization for impairment on an annual
basis during the fourth quarter or when indicators of impairment
exist. We base our estimates on assumptions we believe to be
reasonable, but which are not predictable with precision and
therefore are inherently uncertain. Actual future results could
differ from these estimates.
Accrued
Sales Rebates
We grant incentive rebates to selected customers as part of our
sales programs. The rebates are determined based on certain
targeted sales volumes. Rebates are paid quarterly or annually
in either cash or receivables credits.
29
Until we can process these rebates through individual customer
records, we estimate the amount of outstanding rebates and
recognize them as accrued liabilities and reductions in our
gross revenues. We base our estimates on both historical and
anticipated sales demand and rebate program participation. We
charge revisions to these estimates back to accrued liabilities
and revenues in the period in which the facts that give rise to
each revision become known. Future market conditions and product
transitions might require us to take actions to increase sales
rebates offered, possibly resulting in an incremental increase
in accrued liabilities and an incremental reduction in revenues
at the time the rebate is offered.
Contingent
Liabilities
We have established liabilities for environmental and legal
contingencies that are probable of occurrence and reasonably
estimable. A significant amount of judgment and use of estimates
is required to quantify our ultimate exposure in these matters.
We review the valuation of these liabilities on a quarterly
basis and adjust the balances to account for changes in
circumstances for ongoing issues and establish additional
liabilities for emerging issues. While we believe that the
current level of liabilities is adequate, future changes in
circumstances could impact these determinations.
Pension
and Other Postretirement Benefits
Our pension and other postretirement benefit costs and
obligations are dependent on the various actuarial assumptions
used in calculating such amounts. These assumptions relate to
discount rates, salary growth, long-term return on plan assets,
health care cost trend rates and other factors. We base the
discount rate assumptions on current investment yields on
high-quality corporate long-term bonds. The salary growth
assumptions reflect our long-term actual experience and future
or near-term outlook. Long-term return on plan assets is
determined based on historical portfolio results and
managements expectation of the future economic
environment. Our health care cost trend assumptions are
developed based on historical cost data, the near-term outlook
and an assessment of likely long-term trends. Our key
assumptions are described in further detail in Note 13 to
the Consolidated Financial Statements. Actual results that
differ from our assumptions are accumulated and, if in excess of
the lesser of 10% of the projected benefit obligation or the
fair market value of plan assets, amortized over the estimated
future working life of the plan participants.
Share-Based
Compensation
We compensate certain employees with various forms of
share-based payment awards and recognize compensation costs for
these awards based on their fair values. The fair values of
certain awards are estimated on the grant date using the
Black-Scholes-Merton option-pricing formula, which incorporates
certain assumptions regarding the expected term of an award and
expected stock price volatility. We develop the expected term
assumption based on the vesting period and contractual term of
an award, our historical exercise and post-vesting cancellation
experience, our stock price history, plan provisions that
require exercise or cancellation of awards after employees
terminate, and the extent to which currently available
information indicates that the future is reasonably expected to
differ from past experience. We develop the expected volatility
assumption based on monthly historical price data for our common
stock and other economic data trended into future years. After
calculating the aggregate fair value of an award, we use an
estimated forfeiture rate to discount the amount of share-based
compensation cost to be recognized in our operating results over
the service period of the award. We develop the forfeiture
assumption based on our historical pre-vesting cancellation
experience. Our key assumptions are described in further detail
in Note 14 to the Consolidated Financial Statements.
Business
Combination Accounting
We allocate the cost of an acquired entity to the assets and
liabilities acquired based upon their estimated fair values at
the business combination date. We also identify and estimate the
fair values of intangible assets that should be recognized as
assets apart from goodwill. We have historically relied upon the
use of third-party valuation specialists to assist in the
estimation of fair values for tangible long-lived assets and
intangible assets other than goodwill. The carrying values of
acquired receivables, inventories, and accounts payable have
historically approximated their fair values at the business
combination date. With respect to accrued liabilities acquired,
30
we use all available information to make our best estimates of
their fair values at the business combination date. When
necessary, we rely upon the use of third-party actuaries to
assist in the estimation of fair value for certain liabilities.
Outlook
Recently announced pending acquisitions are expected to add
significantly to our 2007 revenue. Full-year revenue for HAC in
2006 was approximately $250.0 million and for LTK
approximately $220.0 million. Each of these businesses is
expected to grow faster than our historical core business. If
the acquisitions are completed at or near the end of our first
quarter as planned, these businesses will contribute to our
revenue for approximately three quarters in 2007.
Progress made in 2006 with many of our strategic initiatives,
including product portfolio management and regional
manufacturing, together with the expected faster growth rate of
the pending acquisitions, positions us to profitably grow the
business 5 to 7 percent over the medium term, excluding the
effects of materials prices and currency exchange rates.
Including the additional revenue from the pending HAC and LTK
acquisitions, if completed, our outlook for 2007 consolidated
revenues is $1.9 to $2.0 billion.
Our outlook for operating profit in 2007 is in the range of
10.8% to 11.5%, inclusively for the whole portfolio. We expect
our effective tax rate to be approximately 37.0% in 2007. We
expect earnings per diluted share to be between $2.40 and $2.65
for the year, excluding any future charges for severance and
asset impairment that may result from restructuring actions
already announced.
With the two acquisitions, we will make some changes to our
capital structure. We expect that, after these changes, the
ratio of debt to total capitalization (debt plus
stockholders equity) will be in the range of 30 to
35 percent.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Market risks relating to our operations result primarily from
currency exchange rates, certain commodity prices, interest
rates and credit extended to customers. To manage the volatility
relating to exposures, we net the exposures on a consolidated
basis to take advantage of natural offsets. For residual
exposures, we sometimes use derivative financial instruments
pursuant to our policies in areas such as counterparty exposure
and hedging practices. We do not hold or issue derivative
financial instruments for trading purposes. The terms of such
instruments and the transactions to which they relate generally
do not exceed twelve months. Each of these risks is discussed
below.
Currency
Exchange Rate Risk
We manufacture and sell our products in a number of countries
throughout the world, and, as a result, are exposed to movements
in foreign currency exchange rates. The primary purpose of our
currency exchange rate management activities is to manage the
volatility associated with foreign currency purchases of
materials or sales of finished product and other assets and
liabilities created in the normal course of business. Our
currency exchange rate management strategy involves the use of
natural techniques, where possible, such as the offsetting or
netting of like-currency cash flows. Where natural techniques
are not possible, we will sometimes use foreign currency
derivatives, typically foreign currency forward contracts, with
durations of generally 12 months or less. We had no foreign
currency derivatives outstanding at December 31, 2006 and
did not employ any foreign currency derivatives during the year
then ended.
We generally view as long-term our investments in international
subsidiaries with functional currencies other than the United
States dollar. As a result, we do not generally use derivatives
to manage these net investments. In terms of foreign currency
translation risk, we are exposed primarily to exchange rate
movements between the United States dollar and the euro,
Canadian dollar, and British pound. Our net foreign currency
investment in foreign subsidiaries and affiliates translated
into United States dollars using year-end exchange rates was
$302.3 million and $238.1 million at December 31,
2006 and 2005, respectively. If completed, the pending
acquisitions of German-based HAC and Hong Kong-based LTK will
increase our foreign currency translation risk.
31
We would expect to incur increased exposure to exchange rate
movements between the United States dollar and the euro, Hong
Kong dollar, and Chinese renminbi.
Commodity
Price Risk
Certain raw materials used by us are subject to price volatility
caused by supply conditions, political and economic variables
and other unpredictable factors. The primary purpose of our
commodity price management activities is to manage the
volatility associated with purchases of commodities in the
normal course of business. We do not speculate on commodity
prices.
We are exposed to price risk related to our purchase of copper
used in the manufacture of our products. Our copper price
management strategy involves the use of natural techniques,
where possible, such as purchasing copper for future delivery at
fixed prices. Where natural techniques are not possible, we will
sometimes use commodity price derivatives, typically
exchange-traded forward contracts, with durations of generally
twelve months or less. We did not have any commodity price
derivatives outstanding at December 31, 2006 and did not
employ any commodity price derivatives during the year then
ended. The following table presents both unconditional copper
purchase obligations outstanding and our physical inventory of
copper on-hand at December 31, 2006. The unconditional
copper purchase obligations settle during 2007.
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
Fair
|
|
|
|
Amount
|
|
|
Value
|
|
|
|
(In thousands,
|
|
|
|
except average price)
|
|
|
Unconditional copper purchase
obligations:
|
|
|
|
|
|
|
|
|
Commitment volume in pounds
|
|
|
270
|
|
|
|
|
|
Weighted average price per pound
|
|
$
|
2.6973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment amounts
|
|
$
|
728
|
|
|
$
|
771
|
|
|
|
|
|
|
|
|
|
|
Raw copper in inventory:
|
|
|
|
|
|
|
|
|
Pounds on hand
|
|
|
2,287
|
|
|
|
|
|
Weighted average price per pound
|
|
$
|
3.4323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total value on hand
|
|
$
|
7,850
|
|
|
$
|
6,527
|
|
|
|
|
|
|
|
|
|
|
We are also exposed to price risk related to our purchase of
selected commodities derived from petrochemical feedstocks used
in the manufacture of our products. We generally purchase these
commodities based upon market prices established with the
vendors as part of the purchase process. Recent trends indicate
that pricing of these commodities may become more volatile due
to the increased prices of petrochemical feedstocks.
Historically, we have not used commodity financial instruments
to hedge prices for commodities derived from petrochemical
feedstocks.
Interest
Rate Risk
We have occasionally managed our debt portfolio by using
interest rate derivative instruments, such as swap agreements,
to achieve an overall desired position of fixed and floating
rates; however we were not a party to any interest rate
derivative instruments at December 31, 2006 or during the
year then ended.
We will use proceeds from external borrowings to fund the
pending acquisitions of HAC and LTK, if and when completed. Such
actions would expose us to additional interest rate risks.
32
The following table provides information about our financial
instruments that are sensitive to changes in interest rates. The
table presents principal cash flows and average interest rates
by expected maturity dates. The table also presents fair values
as of December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Amount by
|
|
|
|
|
|
|
Expected Maturity
|
|
|
|
|
|
|
2007
|
|
|
Thereafter
|
|
|
Total
|
|
|
Fair Value
|
|
|
|
(In millions, except interest rates)
|
|
|
Fixed-rate medium-term notes
|
|
$
|
45
|
|
|
$
|
|
|
|
$
|
45
|
|
|
$
|
49
|
|
Average interest rate
|
|
|
6.92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-rate medium-term notes
|
|
$
|
17
|
|
|
$
|
|
|
|
$
|
17
|
|
|
$
|
20
|
|
Average interest rate
|
|
|
8.06
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-rate convertible
subordinated debentures
|
|
$
|
|
|
|
$
|
110
|
|
|
$
|
110
|
|
|
$
|
110
|
|
Average interest rate
|
|
|
|
|
|
|
4.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
172
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our convertible subordinated debentures traded at an average
market price of 226.33% per $100 in face value on
December 31, 2006. We believe the premium associated with
these notes is attributable to factors such as changes in the
price of our common stock rather than changes in interest rate.
The fair value of our fixed-rate financial instruments at
December 31, 2006 represented 104% of the carrying value of
our fixed-rate financial instruments.
Concentrations
of Credit Risk
Financial instruments that potentially subject us to significant
concentrations of credit risk consist of cash and cash
equivalents and trade accounts receivable. We are exposed to
credit losses in the event of nonperformance by counterparties
to these financial instruments. We anticipate, however, that
counterparties will be able to fully satisfy their obligations
under these financial instruments. We place cash and cash
equivalents with various high-quality financial institutions
throughout the world, and exposure is limited at any one
financial institution. Although we do not obtain collateral or
other security to support these financial instruments, we do
periodically evaluate the credit standing of the counterparty
financial institutions. At December 31, 2006, we had
$25.5 million in trade accounts receivable outstanding from
Anixter International Inc. (Anixter). This represented
approximately 12% of our total trade accounts receivable
outstanding at December 31, 2006. Historically, Anixter
generally pays all outstanding receivables within thirty to
sixty days of invoice receipt.
33
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Belden CDT Inc.
We have audited the accompanying consolidated balance sheets of
Belden CDT Inc. as of December 31, 2006 and 2005, and the
related consolidated statements of operations,
stockholders equity, and cash flows for each of the three
years in the period ended December 31, 2006. Our audits
also included the financial statement schedule listed in the
Index at Item 15(a). These financial statements and
schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Belden CDT Inc. at December 31, 2006
and 2005, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
December 31, 2006, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
As discussed in Note 2 to the Consolidated Financial
Statements, on January 1, 2006, the Company changed its
method of accounting for share-based payments, and on
December 31, 2006, changed its method of accounting for
defined pension benefit and other postretirement benefit plans.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of Belden CDT Inc.s internal control over
financial reporting as of December 31, 2006 based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated February 28,
2007 expressed an unqualified opinion thereon.
St. Louis, Missouri
February 28, 2007
34
Belden
CDT Inc.
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except par value and number of shares)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
254,151
|
|
|
$
|
134,638
|
|
Receivables, less allowance for
doubtful accounts of $2,637 and $3,839 at 2006 and 2005,
respectively
|
|
|
217,908
|
|
|
|
195,018
|
|
Inventories, net
|
|
|
202,248
|
|
|
|
245,481
|
|
Deferred income taxes
|
|
|
34,664
|
|
|
|
27,845
|
|
Other current assets
|
|
|
10,465
|
|
|
|
8,015
|
|
Current assets of discontinued
operations
|
|
|
|
|
|
|
56,997
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
719,436
|
|
|
|
667,994
|
|
Property, plant and equipment, less
accumulated depreciation
|
|
|
272,285
|
|
|
|
287,778
|
|
Goodwill, less accumulated
amortization
|
|
|
275,134
|
|
|
|
272,290
|
|
Intangible assets, less accumulated
amortization
|
|
|
70,964
|
|
|
|
72,459
|
|
Other long-lived assets
|
|
|
18,149
|
|
|
|
6,214
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,355,968
|
|
|
$
|
1,306,735
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$
|
200,008
|
|
|
$
|
216,736
|
|
Current maturities of long-term debt
|
|
|
62,000
|
|
|
|
59,000
|
|
Current liabilities of discontinued
operations
|
|
|
|
|
|
|
13,342
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
262,008
|
|
|
|
289,078
|
|
Long-term debt
|
|
|
110,000
|
|
|
|
172,051
|
|
Postretirement benefits other than
pensions
|
|
|
43,397
|
|
|
|
33,167
|
|
Deferred income taxes
|
|
|
71,399
|
|
|
|
73,851
|
|
Other long-term liabilities
|
|
|
25,263
|
|
|
|
17,166
|
|
Minority interest
|
|
|
|
|
|
|
7,914
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Preferred stock, par value
$.01 per share 2,000,000 shares
authorized; no shares outstanding
|
|
|
|
|
|
|
|
|
Common stock, par value
$.01 per share 200,000,000 shares
authorized; 50,334,932 and 50,345,852 shares issued at 2006
and 2005, respectively; 44,151,185 and 42,336,178 shares
outstanding at 2006 and 2005, respectively
|
|
|
503
|
|
|
|
503
|
|
Additional paid-in capital
|
|
|
591,416
|
|
|
|
540,430
|
|
Retained earnings
|
|
|
348,069
|
|
|
|
290,870
|
|
Accumulated other comprehensive
income (loss)
|
|
|
15,013
|
|
|
|
(6,881
|
)
|
Unearned deferred compensation
|
|
|
|
|
|
|
(336
|
)
|
Treasury stock, at cost
6,183,747 and 8,009,674 shares at 2006 and 2005,
respectively
|
|
|
(111,100
|
)
|
|
|
(111,078
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
843,901
|
|
|
|
713,508
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,355,968
|
|
|
$
|
1,306,735
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements
35
Belden
CDT Inc.
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Revenues
|
|
$
|
1,495,811
|
|
|
$
|
1,245,669
|
|
|
$
|
864,725
|
|
Cost of sales
|
|
|
(1,162,498
|
)
|
|
|
(968,296
|
)
|
|
|
(674,757
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
333,313
|
|
|
|
277,373
|
|
|
|
189,968
|
|
Selling, general and
administrative expenses
|
|
|
(203,756
|
)
|
|
|
(203,825
|
)
|
|
|
(147,663
|
)
|
Asset impairment
|
|
|
(11,079
|
)
|
|
|
(8,010
|
)
|
|
|
(8,871
|
)
|
Minimum requirements contract
income
|
|
|
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
118,478
|
|
|
|
68,538
|
|
|
|
36,434
|
|
Interest expense
|
|
|
(13,096
|
)
|
|
|
(15,036
|
)
|
|
|
(14,709
|
)
|
Interest income
|
|
|
7,081
|
|
|
|
4,737
|
|
|
|
1,511
|
|
Other income (expense)
|
|
|
(187
|
)
|
|
|
(699
|
)
|
|
|
1,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
before taxes
|
|
|
112,276
|
|
|
|
57,540
|
|
|
|
24,597
|
|
Income tax expense
|
|
|
(40,713
|
)
|
|
|
(23,972
|
)
|
|
|
(13,897
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
71,563
|
|
|
|
33,568
|
|
|
|
10,700
|
|
Gain (loss) from discontinued
operations, net of tax
|
|
|
(1,330
|
)
|
|
|
(1,173
|
)
|
|
|
4,236
|
|
Gain (loss) on disposal of
discontinued operations, net of tax
|
|
|
(4,298
|
)
|
|
|
15,163
|
|
|
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
65,935
|
|
|
$
|
47,558
|
|
|
$
|
15,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares and equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
43,319
|
|
|
|
45,655
|
|
|
|
35,404
|
|
Diluted
|
|
|
50,276
|
|
|
|
52,122
|
|
|
|
38,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
1.65
|
|
|
$
|
0.74
|
|
|
$
|
0.30
|
|
Discontinued operations
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
0.12
|
|
Disposal of discontinued operations
|
|
|
(0.10
|
)
|
|
|
0.33
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1.52
|
|
|
$
|
1.04
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
1.48
|
|
|
$
|
0.69
|
|
|
$
|
0.31
|
|
Discontinued operations
|
|
|
(0.03
|
)
|
|
|
(0.02
|
)
|
|
|
0.11
|
|
Disposal of discontinued operations
|
|
|
(0.08
|
)
|
|
|
0.29
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1.37
|
|
|
$
|
0.96
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation between net income
and comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
65,935
|
|
|
$
|
47,558
|
|
|
$
|
15,189
|
|
Adjustments to translation
component of equity
|
|
|
33,193
|
|
|
|
(34,118
|
)
|
|
|
24,233
|
|
Adjustments to minimum pension
liability
|
|
|
4,152
|
|
|
|
(625
|
)
|
|
|
(3,832
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$
|
103,280
|
|
|
$
|
12,815
|
|
|
$
|
35,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements
36
Belden
CDT Inc.
Consolidated
Cash Flow Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
65,935
|
|
|
$
|
47,558
|
|
|
$
|
15,189
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
38,616
|
|
|
|
40,470
|
|
|
|
30,714
|
|
Deferred income tax expense
|
|
|
18,896
|
|
|
|
14,127
|
|
|
|
19,088
|
|
Provision for inventory
obsolescence
|
|
|
14,395
|
|
|
|
7,533
|
|
|
|
2,780
|
|
Asset impairment
|
|
|
11,079
|
|
|
|
12,849
|
|
|
|
8,871
|
|
Stock-based compensation expense
|
|
|
5,765
|
|
|
|
3,539
|
|
|
|
3,768
|
|
Retirement savings plan
contributions paid in stock
|
|
|
|
|
|
|
|
|
|
|
2,279
|
|
Loss (gain) on disposal of
tangible assets
|
|
|
3,690
|
|
|
|
(15,666
|
)
|
|
|
(3,348
|
)
|
Pension funding in excess of
pension expense
|
|
|
(21,273
|
)
|
|
|
(8,157
|
)
|
|
|
(4,876
|
)
|
Changes in operating assets and
liabilities, net of the effects of currency exchange rate
changes and acquired businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
(12,730
|
)
|
|
|
(6,213
|
)
|
|
|
2,435
|
|
Inventories
|
|
|
34,462
|
|
|
|
(49,355
|
)
|
|
|
(16,656
|
)
|
Accounts payable and accrued
liabilities
|
|
|
(15,130
|
)
|
|
|
16,085
|
|
|
|
(30,178
|
)
|
Other assets and liabilities, net
|
|
|
(2,549
|
)
|
|
|
(13,621
|
)
|
|
|
10,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
|
|
141,156
|
|
|
|
49,149
|
|
|
|
40,828
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from disposal of tangible
assets
|
|
|
34,059
|
|
|
|
51,541
|
|
|
|
89,007
|
|
Capital expenditures
|
|
|
(21,663
|
)
|
|
|
(23,789
|
)
|
|
|
(15,889
|
)
|
Cash used to invest in or acquire
businesses
|
|
|
(11,715
|
)
|
|
|
|
|
|
|
(6,196
|
)
|
Cash used in other investing
activities
|
|
|
(2,146
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for)
investing activities
|
|
|
(1,465
|
)
|
|
|
27,752
|
|
|
|
66,922
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments under borrowing
arrangements
|
|
|
(59,051
|
)
|
|
|
(17,474
|
)
|
|
|
(66,660
|
)
|
Cash dividends paid
|
|
|
(8,736
|
)
|
|
|
(9,116
|
)
|
|
|
(7,292
|
)
|
Debt issuance costs
|
|
|
(1,063
|
)
|
|
|
|
|
|
|
|
|
Payments under share repurchase
program
|
|
|
|
|
|
|
(109,429
|
)
|
|
|
|
|
Proceeds from exercises of stock
options
|
|
|
38,808
|
|
|
|
6,897
|
|
|
|
4,507
|
|
Excess tax benefits related to
share-based payments
|
|
|
7,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for financing
activities
|
|
|
(22,673
|
)
|
|
|
(129,122
|
)
|
|
|
(69,445
|
)
|
Effect of currency exchange rate
changes on cash and cash equivalents
|
|
|
2,495
|
|
|
|
(1,937
|
)
|
|
|
4,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
|
|
119,513
|
|
|
|
(54,158
|
)
|
|
|
42,935
|
|
Cash received from Belden CDT
merger
|
|
|
|
|
|
|
|
|
|
|
50,906
|
|
Cash and cash equivalents,
beginning of year
|
|
|
134,638
|
|
|
|
188,796
|
|
|
|
94,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of
year
|
|
$
|
254,151
|
|
|
$
|
134,638
|
|
|
$
|
188,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax refunds received
|
|
$
|
1,548
|
|
|
$
|
8,924
|
|
|
$
|
3,595
|
|
Income taxes paid
|
|
|
(29,212
|
)
|
|
|
(11,071
|
)
|
|
|
(5,773
|
)
|
Interest paid, net of amount
capitalized
|
|
|
(14,122
|
)
|
|
|
(14,857
|
)
|
|
|
(15,383
|
)
|
The accompanying notes are an integral part of these
Consolidated Financial Statements
37
Belden
CDT Inc.
Consolidated
Stockholders Equity Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
|
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
Translation
|
|
|
Minimum
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Retained
|
|
|
Treasury Stock
|
|
|
Compensation
|
|
|
Component
|
|
|
Pension
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Shares
|
|
|
Amount
|
|
|
(UDC)
|
|
|
of Equity
|
|
|
Liability
|
|
|
Total
|
|
|
|
($ in thousands)
|
|
|
Balance at December 31, 2003
|
|
|
26,204
|
|
|
$
|
262
|
|
|
$
|
39,022
|
|
|
$
|
244,217
|
|
|
|
(547
|
)
|
|
$
|
(7,722
|
)
|
|
$
|
(1,700
|
)
|
|
$
|
21,533
|
|
|
$
|
(14,072
|
)
|
|
$
|
281,540
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,189
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,233
|
|
|
|
|
|
|
|
24,233
|
|
Minimum pension liability, net of
$1.7 million deferred tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,832
|
)
|
|
|
(3,832
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,590
|
|
Exercise of stock options
|
|
|
175
|
|
|
|
2
|
|
|
|
4,384
|
|
|
|
|
|
|
|
77
|
|
|
|
121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,507
|
|
Employee benefits plans
|
|
|
12
|
|
|
|
|
|
|
|
661
|
|
|
|
|
|
|
|
122
|
|
|
|
1,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,517
|
|
Share-based compensation, net of
tax withholding forfeitures
|
|
|
|
|
|
|
|
|
|
|
1,811
|
|
|
|
|
|
|
|
505
|
|
|
|
1,160
|
|
|
|
(3,881
|
)
|
|
|
|
|
|
|
|
|
|
|
(910
|
)
|
UDC amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,645
|
|
|
|
|
|
|
|
|
|
|
|
3,645
|
|
Cash dividends ($.20 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,292
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,292
|
)
|
Merger between Belden and CDT
|
|
|
23,820
|
|
|
|
238
|
|
|
|
486,106
|
|
|
|
|
|
|
|
(3,166
|
)
|
|
|
4,585
|
|
|
|
(526
|
)
|
|
|
|
|
|
|
|
|
|
|
490,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2004
|
|
|
50,211
|
|
|
|
502
|
|
|
|
531,984
|
|
|
|
252,114
|
|
|
|
(3,009
|
)
|
|
|
|
|
|
|
(2,462
|
)
|
|
|
45,766
|
|
|
|
(17,904
|
)
|
|
|
810,000
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,558
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,118
|
)
|
|
|
|
|
|
|
(34,118
|
)
|
Minimum pension liability, net of
$1.0 million deferred tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(625
|
)
|
|
|
(625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,815
|
|
Exercise of stock options
|
|
|
122
|
|
|
|
1
|
|
|
|
6,991
|
|
|
|
|
|
|
|
265
|
|
|
|
(95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,897
|
|
Share-based compensation, net of
tax withholding forfeitures
|
|
|
13
|
|
|
|
|
|
|
|
1,069
|
|
|
|
|
|
|
|
(66
|
)
|
|
|
(1,554
|
)
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
(407
|
)
|
Share repurchase program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,200
|
)
|
|
|
(109,429
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(109,429
|
)
|
UDC amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,048
|
|
|
|
|
|
|
|
|
|
|
|
2,048
|
|
Cash dividends ($.20 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,116
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,116
|
)
|
Other
|
|
|
|
|
|
|
|
|
|
|
386
|
|
|
|
314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
50,346
|
|
|
|
503
|
|
|
|
540,430
|
|
|
|
290,870
|
|
|
|
(8,010
|
)
|
|
|
(111,078
|
)
|
|
|
(336
|
)
|
|
|
11,648
|
|
|
|
(18,529
|
)
|
|
|
713,508
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,935
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,193
|
|
|
|
|
|
|
|
33,193
|
|
Minimum pension liability, net of
$1.7 million deferred tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,152
|
|
|
|
4,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,280
|
|
Exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
38,510
|
|
|
|
|
|
|
|
1,822
|
|
|
|
298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,808
|
|
Share-based compensation, net of
tax withholding forfeitures
|
|
|
(11
|
)
|
|
|
|
|
|
|
12,812
|
|
|
|
|
|
|
|
4
|
|
|
|
(320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,492
|
|
Cash dividends ($.20 per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,736
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,736
|
)
|
Adoption of
SFAS No. 123(R)
|
|
|
|
|
|
|
|
|
|
|
(336
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adoption of SFAS No. 158,
net of $10.7 million deferred tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,451
|
)
|
|
|
(15,451
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
50,335
|
|
|
$
|
503
|
|
|
$
|
591,416
|
|
|
$
|
348,069
|
|
|
|
(6,184
|
)
|
|
$
|
(111,100
|
)
|
|
$
|
|
|
|
$
|
44,841
|
|
|
$
|
(29,828
|
)
|
|
$
|
843,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
Consolidated Financial Statements
38
Belden
CDT Inc.
Notes to
Consolidated Financial Statements
|
|
Note 1:
|
Basis of
Presentation
|
Business
Description
Belden CDT Inc. (the Company, Belden, we, us, or our) designs,
manufactures, and markets signal transmission products for data
networking and a wide range of specialty electronics markets
including entertainment, industrial, security, and aerospace
applications.
Consolidation
The accompanying Consolidated Financial Statements include
Belden CDT Inc. and all of its subsidiaries. We eliminate all
significant affiliate accounts and transactions in consolidation.
In July 2004, Belden Inc. merged with and became a wholly owned
subsidiary of Cable Design Technologies Corporation (CDT), and
CDT changed its name to Belden CDT Inc. (the Merger). The Merger
was treated as a reverse acquisition under the purchase method
of accounting. For financial reporting purposes, the operating
results and cash flows of CDT are included in our Consolidated
Financial Statements from July 2004.
Foreign
Currency Translation
For international operations with functional currencies other
than the United States dollar, we translate assets and
liabilities at current exchange rates; we translate income and
expenses using average exchange rates. We report the resulting
translation adjustments, as well as gains and losses from
certain affiliate transactions, in accumulated other
comprehensive income (loss), a separate component of
stockholders equity. We include exchange gains and losses
on transactions in operating income.
Reporting
Periods
Our fiscal year and fiscal fourth quarter both end on
December 31. Our fiscal first, second and third quarter
each end on the last Sunday falling on or before their
respective calendar quarter-end.
Use of
Estimates in the Preparation of the Financial
Statements
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
(GAAP) requires us to make estimates and assumptions that affect
the reported amounts of assets, liabilities, and operating
results and the disclosure of contingencies. Actual results
could differ from those estimates. We make significant estimates
in regard to receivables collectibility, inventory valuation,
realization of deferred tax assets, valuation of long-lived
assets, valuation of contingent liabilities, calculation of
share-based compensation, calculation of pension and other
postretirement benefits expense, and valuation of acquired
businesses.
Reclassifications
We have made certain reclassifications to the 2005 and 2004
Consolidated Financial Statements with no impact to reported net
income in order to conform to the 2006 presentation.
|
|
Note 2:
|
Summary
of Significant Accounting Policies
|
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.
39
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
Receivables
and Related Allowances
We classify amounts owed to us and due within twelve months,
arising from the sale of goods or services in the normal course
of business, as current receivables. We classify receivables due
after twelve months as other long-lived assets.
We sometimes grant trade, promotion, and other special price
reductions such as meet competition pricing, price protection,
contract pricing, and on-time payment discounts to certain of
our customers. We also adjust receivables balances for, among
other things, correction of billing errors, incorrect shipments,
and settlement of customer disputes. Customers are allowed to
return inventory if and when certain conditions regarding the
physical state of the inventory and our approval of the return
are met. Certain distribution customers are allowed to return
inventory at original cost, in an amount not to exceed three
percent of the prior years purchases, in exchange for an
order of equal or greater value. Until we can process these
reductions, corrections, and returns (together, the Adjustments)
through individual customer records, we estimate the amount of
outstanding Adjustments and recognize them as allowances against
our gross accounts receivable and gross revenues. We base these
estimates on historical and anticipated sales demand, trends in
product pricing, and historical and anticipated Adjustments
patterns. We charge revisions to these estimates back to
accounts receivable and revenues in the period in which the
facts that give rise to each revision become known. Future
market conditions and product transitions might require us to
take actions to increase price allowance and customer return
authorizations, possibly resulting in an incremental reduction
of accounts receivable and revenues at the time the allowance or
return is authorized. The allowances for unprocessed receivables
credits at December 31, 2006 and 2005 totaled
$11.1 million and $16.1 million, respectively.
We evaluate the collectibility of accounts receivable based on
the specific identification method. A considerable amount of
judgment is required in assessing the realization of accounts
receivable, including the current creditworthiness of each
customer and related aging of the past due balances. We perform
ongoing credit evaluations of our customers financial
condition. Through these evaluations, we may become aware of a
situation where a customer may not be able to meet its financial
obligations due to deterioration of its financial viability,
credit ratings or bankruptcy. In circumstances where we are
aware of a customers inability or unwillingness to pay
outstanding amounts, we record a specific reserve for bad debts
against amounts due to reduce the receivable to its estimated
collectible balance. We recognized bad debt expense of
$0.5 million, $0.7 million and $0.7 million in
2006, 2005, and 2004, respectively.
Inventories
and Related Reserves
Inventories are stated at the lower of cost or market. We
determine the cost of all raw materials,
work-in-process
and finished goods inventories by the first in, first out
method. Cost components of inventories include direct labor,
applicable production overhead and amounts paid to suppliers of
materials and products as well as freight costs and, when
applicable, duty costs to import the materials and products.
We evaluate the realizability of our inventory on a
product-by-product
basis in light of historical and anticipated sales demand,
technological changes, product life cycle, component cost
trends, product pricing and inventory condition. In
circumstances where inventory levels are in excess of
anticipated market demand, where inventory is deemed
technologically obsolete or not saleable due to condition or
where inventory cost exceeds net realizable value, we record a
charge to cost of goods sold and reduce the inventory to its net
realizable value. The allowances for excess and obsolete
inventories at December 31, 2006 and 2005 totaled
$15.2 million and $14.9 million, respectively.
Property,
Plant and Equipment
We record property, plant and equipment at cost. We calculate
depreciation on a straight-line basis over the estimated useful
lives of the related assets ranging from ten to forty years for
buildings, five to twelve years for
40
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
machinery and equipment and five years for computer equipment
and software. Construction in process reflects amounts incurred
for the configuration and build-out of property, plant and
equipment and for property, plant and equipment not yet placed
into service. We charge maintenance and repairs both
planned major activities and less-costly, ongoing
activities to expense as incurred. We capitalize
interest costs associated with the construction of capital
assets and amortize the costs over the assets useful lives.
We review property, plant and equipment to determine whether an
event or change in circumstances indicates the carrying values
of the assets may not be recoverable. We base our evaluation on
such impairment indicators as the nature of the assets, the
future economic benefit of the assets and any historical or
future profitability measurements, as well as other external
market conditions or factors that may be present. If such
impairment indicators are present or other factors exist that
indicate that the carrying amount of an asset may not be
recoverable, we determine whether impairment has occurred
through the use of an undiscounted cash flow analysis at the
lowest level for which identifiable cash flows exist. If
impairment has occurred, we recognize a loss for the difference
between the carrying amount and the fair value of the asset.
Intangible
Assets
Our intangible assets consist of (a) definite-lived assets
subject to amortization such as patents, favorable customer
contracts, customer relationships and backlog, and
(b) indefinite-lived assets not subject to amortization
such as goodwill and trademarks. We calculate amortization of
the definite-lived intangible assets on a straight-line basis
over the estimated useful lives of the related assets ranging
from less than one year for backlog to in excess of twenty-five
years for customer relationships.
We evaluate goodwill for impairment annually or at other times
if events have occurred or circumstances exist that indicate the
carrying value of goodwill may no longer be recoverable. We
compare the fair value of each reporting unit to its carrying
value. We determine the fair value using the income approach.
Under the income approach, we calculate the fair value of a
reporting unit based on the present value of estimated future
cash flows. If the fair value of the reporting unit exceeds the
carrying value of the net assets including goodwill assigned to
that unit, goodwill is not impaired. If the carrying value of
the reporting units net assets including goodwill exceeds
the fair value of the reporting unit, then we determine the
implied fair value of the reporting units goodwill. If the
carrying value of a reporting units goodwill exceeds its
implied fair value, then an impairment of goodwill has occurred
and we recognize an impairment loss for the difference between
the carrying amount and the implied fair value of goodwill as a
component of operating income.
We also evaluate intangible assets not subject to amortization
for impairment annually or at other times if events have
occurred or circumstances exist that indicate the carrying
values of those assets may no longer be recoverable. We compare
the fair value of the asset with its carrying amount. If the
carrying amount of the asset exceeds its fair value, we
recognize an impairment loss in an amount equal to that excess.
We review intangible assets subject to amortization whenever an
event or change in circumstances indicates the carrying values
of the assets may not be recoverable. We test intangible assets
subject to amortization for impairment and estimate their fair
values using the same assumptions and techniques we employ on
property, plant and equipment.
Pension
and Other Postretirement Benefits
Our pension and other postretirement benefit costs and
obligations are dependent on the various actuarial assumptions
used in calculating such amounts. These assumptions relate to
discount rates, salary growth, long-term return on plan assets,
health care cost trend rates and other factors. We base the
discount rate assumptions on current investment yields on
high-quality corporate long-term bonds. The salary growth
assumptions reflect our long-term actual experience and future
or near-term outlook. We determine the long-term return on plan
assets based on historical portfolio results and
managements expectation of the future economic
environment. Our health care cost
41
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
trend assumptions are developed based on historical cost data,
the near-term outlook and an assessment of likely long-term
trends. Actual results that differ from our assumptions are
accumulated and, if in excess of the lesser of 10% of the
projected benefit obligation or the fair market value of plan
assets, amortized over the estimated future working life of the
plan participants.
Accrued
Sales Rebates
We grant incentive rebates to selected customers as part of our
sales programs. The rebates are determined based on certain
targeted sales volumes. Rebates are paid quarterly or annually
in either cash or receivables credits. Until we can process
these rebates through individual customer records, we estimate
the amount of outstanding rebates and recognize them as accrued
liabilities and reductions in our gross revenues. We base our
estimates on both historical and anticipated sales demand and
rebate program participation. We charge revisions to these
estimates back to accrued liabilities and revenues in the period
in which the facts that give rise to each revision become known.
Future market conditions and product transitions might require
us to take actions to increase sales rebates offered, possibly
resulting in an incremental increase in accrued liabilities and
an incremental reduction in revenues at the time the rebate is
offered. Accrued sales rebates at December 31, 2006 and
2005 totaled $25.0 million and $24.9 million,
respectively.
Contingent
Liabilities
We have established liabilities for environmental and legal
contingencies that are probable of occurrence and reasonably
estimable. A significant amount of judgment and use of estimates
is required to quantify our ultimate exposure in these matters.
We review the valuation of these liabilities on a quarterly
basis and we adjust the balances to account for changes in
circumstances for ongoing issues and to recognize liability for
emerging issues.
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 expense environmental
compliance costs, which include maintenance and operating costs
with respect to ongoing monitoring programs, as incurred. We
generally depreciate capitalized environmental costs over a
15-year
life. We evaluate the range of potential costs to remediate
environmental sites. The ultimate cost of site cleanup is
difficult to predict given the uncertainties of our involvement
in certain sites, uncertainties regarding the extent of the
required cleanup, the availability of alternative cleanup
methods, variations in the interpretation of applicable laws and
regulations, the possibility of insurance recoveries with
respect to certain sites, and other factors.
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. Assessments regarding the ultimate cost of
lawsuits require judgments concerning matters such as the
anticipated outcome of negotiations, the number and cost of
pending and future claims, and the impact of evidentiary
requirements. Because most contingencies are resolved over long
periods of time, we may adjust liabilities balances in the
future because of new developments or changes in our settlement
strategy.
Business
Combination Accounting
We allocate the cost of an acquired entity to the assets and
liabilities acquired based upon their estimated fair values at
the business combination date. We also identify and estimate the
fair values of intangible assets that should be recognized as
assets apart from goodwill. We have historically relied upon the
use of third-party valuation specialists to assist in the
estimation of fair values for tangible long-lived assets and
intangible assets other than goodwill. The carrying values of
acquired receivables, inventories, and accounts payable have
historically approximated their fair values at the business
combination date. With respect to accrued liabilities acquired,
we use all available information to make our best estimates of
their fair values at the business combination date.
42
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
When necessary, we rely upon the use of third-party actuaries to
assist in the estimation of fair value for certain liabilities.
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 back to
revenue in the period in which the facts that give rise to each
revision become known. Future market conditions and product
transitions might require us to take actions to increase
customer rebates and price allowance offerings, possibly
resulting in an incremental reduction of revenue at the time the
rebate or allowance is offered. We recognized rebates,
allowances, adjustments, and product returns totaling
$101.4 million, $85.2 million and $68.2 million
as deductions to gross revenues in 2006, 2005, and 2004,
respectively.
Shipping
and Handling Costs
We recognize fees earned on the shipment of product to customers
as revenues and recognize costs incurred on the shipment of
product to customers as a cost of sales. We recognized certain
handling costs, primarily incurred at our distribution centers,
totaling $9.4 million, $7.1 million and
$8.3 million as selling, general and administrative
(SG&A) expenses in 2006, 2005, and 2004, respectively.
Research
and Development
Research and development expenditures are recognized as
incurred. Expenditures for research and development were
$10.1 million, $9.6 million and $8.5 million for
2006, 2005, and 2004, respectively.
Share-Based
Compensation
We compensate certain employees with various forms of
share-based payment awards and recognize compensation costs for
these awards based on their fair values. We estimate the fair
values of certain awards on the grant date using the
Black-Scholes-Merton option-pricing formula, which incorporates
certain assumptions regarding the expected term of an award and
expected stock price volatility. We develop the expected term
assumption based on the vesting period and contractual term of
an award, our historical exercise and post-vesting cancellation
experience, our stock price history, plan provisions that
require exercise or cancellation of awards after employees
terminate, and the extent to which currently available
information indicates that the future is reasonably expected to
differ from past experience. We develop the expected volatility
assumption based on monthly historical price data for our common
stock and other economic data trended into future years. After
calculating the aggregate fair value of an award, we use an
estimated forfeiture rate to discount the amount of share-based
compensation cost to be recognized in our operating results over
the service period of the award. We develop the forfeiture
assumption based on our historical pre-vesting cancellation
experience.
Income
Taxes
Income taxes are provided based on earnings reported for
financial statement purposes. The provision for income taxes
differs from the amounts currently payable to taxing authorities
because of the recognition of revenues and expenses in different
periods for income tax purposes than for financial statement
purposes. Income taxes are provided as if operations in all
countries, including the United States, were stand-alone
businesses filing separate tax returns. We have determined that
undistributed earnings from our international subsidiaries will
not be remitted to the United States in the foreseeable future
and, therefore, no additional provision for United States taxes
has been made on foreign earnings.
43
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
We recognize deferred tax assets resulting from tax credit
carryforwards, net operating loss carryforwards, and deductible
temporary differences between taxable income on our income tax
returns and pretax income under GAAP. Deferred tax assets
generally represent future tax benefits to be received when
these carryforwards can be applied against future taxable income
or when expenses previously reported in our Consolidated
Financial Statements become deductible for income tax purposes.
Our effective tax rate is based on expected income, statutory
tax rates and tax planning opportunities available to us in the
various jurisdictions in which we operate. Significant judgment
is required in determining our effective tax rate and in
evaluating our tax positions. We establish accruals for certain
tax contingencies when, despite the belief that our tax return
positions are fully supported, we believe that certain positions
are likely to be challenged and that our position may not be
fully sustained. To the extent we were to prevail in matters for
which accruals have been established or be required to pay
amounts in excess of reserves, there could be a material effect
on our income tax provisions or benefits in the period in which
such determination is made.
Current-Year
Adoption of Accounting Pronouncements
On January 1, 2006, we adopted Statement of Financial
Accounting Standards No. 123(R), Shared-Based Payments,
using the modified prospective method of adoption.
SFAS No. 123(R) required us to calculate compensation
costs related to share-based payment transactions using the fair
value method presented in SFAS No. 123, Accounting
for Stock-Based Compensation, and to recognize these costs
in the Consolidated Financial Statements. Prior to adoption of
this Statement, we measured compensation costs related to
share-based payment transactions using the intrinsic value
method presented in APB No. 25, Accounting for Stock
Issued to Employees, and provided pro forma disclosure in a
note to the Consolidated Financial Statements as to the effect
on our operating results of calculating compensation costs
related to share-based payment transactions using the fair value
method.
On December 31, 2006, we adopted SFAS No. 158,
Employers Accounting for Defined Benefit Pension and
Other Postretirement Plans an amendment of FASB
Statements No. 87, 88, 106, and 132(R). This Statement
required us to recognize the funded status of each of our
benefit plans measured as the difference between
plan assets at fair value and the benefit obligation
in our statement of financial position, recognize as a component
of other comprehensive income, net of tax, the gains or losses
and prior service costs or credits that arise during the period
but are not recognized as components of net periodic benefit
cost, measure defined benefit plan assets and obligations as of
the date of our fiscal year-end statement of financial position,
and disclose in the notes to financial statements additional
information about certain effects on net periodic benefit cost
for the next fiscal year that arise from delayed recognition of
the gains or losses, prior service costs or credits, and
transition asset or obligation.
Pending
Adoption of Recent Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB)
issued Interpretation (FIN) No. 48, Accounting for
Uncertainty in Income Taxes an interpretation of
FASB Statement No. 109. This Interpretation clarifies
the accounting for uncertainty in income taxes recognized in an
enterprises financial statements. This Interpretation
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. We have
reviewed our accounting for income taxes in light of the
provisions of FIN No. 48 and do not expect that
adoption will have a material impact on our financial statements.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements. This Statement establishes a
framework for measuring fair value within generally accepted
accounting principles, clarifies the definition of fair value
within that framework, and expands disclosures about the use of
fair value measurements. This Statement does not require any new
fair value measurements in generally accepted accounting
principles. However, the definition of fair value in
SFAS No. 157 may affect assumptions used by companies
in determining fair value. We are required to adopt this
Statement effective January 1, 2008. We have not completed
our evaluation of the impact
44
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
that adoption will have on our financial position, operating
results and cash flows, but currently believe adoption will not
require material modification of our fair value measurements and
will be primarily limited to expanded disclosures in the notes
to our consolidated financial statements.
|
|
Note 3:
|
Operating
Segments and Geographic Information
|
During the first quarter of 2006, we announced organizational
changes that resulted in a change in our reportable segments.
Management elected to organize the enterprise around geographic
areas and, within North America, around the brands under which
we sell our products in the market. We now conduct our
operations through four operating segments the
Belden Americas segment, the Specialty Products segment, the
Europe segment, and the Asia Pacific segment. The Belden
Americas segment, the Specialty Products segment, and the Europe
segment all design, manufacture, and market metallic cable,
fiber optic cable, connectivity products, and certain other
non-cable products with industrial, communications/networking,
video/sound/security, and transportation/defense applications.
The Asia Pacific segment markets these same products, but
currently has no design or manufacturing capabilities. We sell
these products principally through distributors or directly to
systems integrators, original equipment manufacturers, and large
telecommunications companies. We have reclassified prior year
segment disclosures to conform to the new segment presentation.
We evaluate segment performance and allocate resources based on
operating income. Operating income of the segments includes all
the ongoing costs of operations, but excludes interest and
income taxes. Allocations to or from these segments are not
significant. Transactions between the segments are conducted on
an arms-length basis. With the exception of unallocated
goodwill, certain unallocated tax assets, and tangible assets
located at our corporate headquarters, substantially all of our
assets are utilized by the segments.
Effective January 1, 2005, we began accounting for all
internal sourcing of product between our operating segments as
affiliate sales and directed any operating segment that sold
product it had sourced from an affiliate to recognize profit
applicable to both the manufacturing and selling efforts. In
prior years, an operating segment that sold product it had
sourced from an affiliate only recognized profit margin
applicable to the selling effort. We made this change as a
result of increased transactions between our operating segments
largely resulting from the Merger. We believe this change
provides more useful information for purposes of making
decisions about allocating resources to the operating segments
and assessing their performance. We have reclassified the
business segment information presented for the year ended
December 31, 2004 to reflect operating segment performance
as if we had implemented this new accounting procedure effective
January 1, 2004.
Operating
Segment Information
Amounts reflected in the column entitled Finance &
Administration (F&A) in the tables below represent corporate
headquarters operating expenses, treasury expenses, income tax
expenses, corporate assets, and corporate investment in certain
affiliates. Amounts reflected in the column entitled
Eliminations in the tables below represent the eliminations of
affiliate revenues, affiliate cost of sales, and certain
investments in affiliates.
45
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Belden
|
|
|
Specialty
|
|
|
|
|
|
Asia
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2006
|
|
Americas
|
|
|
Products
|
|
|
Europe
|
|
|
Pacific
|
|
|
F&A
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
|
External customer revenues
|
|
$
|
805,029
|
|
|
$
|
261,406
|
|
|
$
|
365,079
|
|
|
$
|
64,297
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,495,811
|
|
Affiliate revenues
|
|
|
63,684
|
|
|
|
31,009
|
|
|
|
8,658
|
|
|
|
|
|
|
|
|
|
|
|
(103,351
|
)
|
|
|
|
|
Total revenues
|
|
|
868,713
|
|
|
|
292,415
|
|
|
|
373,737
|
|
|
|
64,297
|
|
|
|
|
|
|
|
(103,351
|
)
|
|
|
1,495,811
|
|
Depreciation and amortization(1)
|
|
|
(17,883
|
)
|
|
|
(7,328
|
)
|
|
|
(10,297
|
)
|
|
|
(153
|
)
|
|
|
(232
|
)
|
|
|
|
|
|
|
(35,893
|
)
|
Asset impairment
|
|
|
(8,557
|
)
|
|
|
|
|
|
|
(2,522
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,079
|
)
|
Operating income (loss)
|
|
|
122,213
|
|
|
|
34,576
|
|
|
|
4,072
|
|
|
|
6,803
|
|
|
|
(29,219
|
)
|
|
|
(19,967
|
)
|
|
|
118,478
|
|
Identifiable assets
|
|
|
382,049
|
|
|
|
219,421
|
|
|
|
348,480
|
|
|
|
24,660
|
|
|
|
448,284
|
|
|
|
(66,926
|
)
|
|
|
1,355,968
|
|
Acquisition of property, plant and
equipment
|
|
|
13,837
|
|
|
|
2,907
|
|
|
|
4,166
|
|
|
|
385
|
|
|
|
368
|
|
|
|
|
|
|
|
21,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Belden
|
|
|
Specialty
|
|
|
|
|
|
Asia
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2005
|
|
Americas
|
|
|
Products
|
|
|
Europe
|
|
|
Pacific
|
|
|
F&A
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
|
External customer revenues
|
|
$
|
627,136
|
|
|
$
|
244,067
|
|
|
$
|
324,258
|
|
|
$
|
50,208
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,245,669
|
|
Affiliate revenues
|
|
|
73,526
|
|
|
|
18,813
|
|
|
|
8,993
|
|
|
|
|
|
|
|
|
|
|
|
(101,332
|
)
|
|
|
|
|
Total revenues
|
|
|
700,662
|
|
|
|
262,880
|
|
|
|
333,251
|
|
|
|
50,208
|
|
|
|
|
|
|
|
(101,332
|
)
|
|
|
1,245,669
|
|
Depreciation and amortization(1)
|
|
|
(18,785
|
)
|
|
|
(7,005
|
)
|
|
|
(9,862
|
)
|
|
|
(285
|
)
|
|
|
(239
|
)
|
|
|
|
|
|
|
(36,176
|
)
|
Asset impairment
|
|
|
|
|
|
|
|
|
|
|
(5,610
|
)
|
|
|
|
|
|
|
(2,400
|
)
|
|
|
|
|
|
|
(8,010
|
)
|
Operating income (loss)
|
|
|
96,292
|
|
|
|
26,598
|
|
|
|
(8,542
|
)
|
|
|
2,838
|
|
|
|
(30,717
|
)
|
|
|
(17,931
|
)
|
|
|
68,538
|
|
Identifiable assets(1)
|
|
|
407,186
|
|
|
|
224,234
|
|
|
|
291,119
|
|
|
|
24,667
|
|
|
|
350,904
|
|
|
|
(48,372
|
)
|
|
|
1,249,738
|
|
Acquisition of property, plant and
equipment(1)
|
|
|
11,961
|
|
|
|
3,849
|
|
|
|
6,680
|
|
|
|
148
|
|
|
|
395
|
|
|
|
|
|
|
|
23,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Belden
|
|
|
Specialty
|
|
|
|
|
|
Asia
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2004
|
|
Americas
|
|
|
Products
|
|
|
Europe
|
|
|
Pacific
|
|
|
F&A
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
|
External customer revenues
|
|
$
|
516,408
|
|
|
$
|
95,630
|
|
|
$
|
210,776
|
|
|
$
|
41,911
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
864,725
|
|
Affiliate revenues
|
|
|
47,625
|
|
|
|
4,883
|
|
|
|
8,638
|
|
|
|
149
|
|
|
|
|
|
|
|
(61,295
|
)
|
|
|
|
|
Total revenues
|
|
|
564,033
|
|
|
|
100,513
|
|
|
|
219,414
|
|
|
|
42,060
|
|
|
|
|
|
|
|
(61,295
|
)
|
|
|
864,725
|
|
Depreciation and amortization(1)
|
|
|
(16,504
|
)
|
|
|
(3,398
|
)
|
|
|
(8,174
|
)
|
|
|
(137
|
)
|
|
|
(287
|
)
|
|
|
|
|
|
|
(28,500
|
)
|
Asset impairment
|
|
|
(3,200
|
)
|
|
|
|
|
|
|
(5,671
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,871
|
)
|
Operating income (loss)
|
|
|
61,109
|
|
|
|
11,319
|
|
|
|
(9,136
|
)
|
|
|
(585
|
)
|
|
|
(24,124
|
)
|
|
|
(2,149
|
)
|
|
|
36,434
|
|
Identifiable assets(1)
|
|
|
382,909
|
|
|
|
219,656
|
|
|
|
342,480
|
|
|
|
27,217
|
|
|
|
367,234
|
|
|
|
(66,571
|
)
|
|
|
1,272,925
|
|
Acquisition of property, plant and
equipment(1)
|
|
|
4,763
|
|
|
|
1,073
|
|
|
|
4,636
|
|
|
|
197
|
|
|
|
19
|
|
|
|
|
|
|
|
10,688
|
|
|
|
|
(1) |
|
Excludes discontinued operations |
46
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
Total segment operating income differs from net income reported
in the Consolidated Financial Statements as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Operating income
|
|
$
|
118,478
|
|
|
$
|
68,538
|
|
|
$
|
36,434
|
|
Interest expense
|
|
|
(13,096
|
)
|
|
|
(15,036
|
)
|
|
|
(14,709
|
)
|
Interest income
|
|
|
7,081
|
|
|
|
4,737
|
|
|
|
1,511
|
|
Other income (expense)
|
|
|
(187
|
)
|
|
|
(699
|
)
|
|
|
1,361
|
|
Income tax expense
|
|
|
(40,713
|
)
|
|
|
(23,972
|
)
|
|
|
(13,897
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
71,563
|
|
|
|
33,568
|
|
|
|
10,700
|
|
Gain (loss) from discontinued
operations, net of tax
|
|
|
(1,330
|
)
|
|
|
(1,173
|
)
|
|
|
4,236
|
|
Gain (loss) on disposal of
discontinued operations, net of tax
|
|
|
(4,298
|
)
|
|
|
15,163
|
|
|
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
65,935
|
|
|
$
|
47,558
|
|
|
$
|
15,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
and Service Group Information
It is currently impracticable for all of our operations to
capture and report external customer revenues for each group of
similar products and services.
Geographic
Information
The following table identifies revenues by country based on the
location of the customer and long-lived assets by country based
on physical location.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
|
|
|
|
|
|
|
|
|
Rest of
|
|
|
|
|
|
|
States
|
|
|
Canada
|
|
|
Europe
|
|
|
World
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
855,390
|
|
|
$
|
158,259
|
|
|
$
|
336,277
|
|
|
$
|
145,885
|
|
|
$
|
1,495,811
|
|
Percent of total revenues
|
|
|
57
|
%
|
|
|
11
|
%
|
|
|
22
|
%
|
|
|
10
|
%
|
|
|
100
|
%
|
Long-lived assets
|
|
$
|
349,749
|
|
|
$
|
45,889
|
|
|
$
|
145,069
|
|
|
$
|
532
|
|
|
$
|
541,239
|
|
Year ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
697,714
|
|
|
$
|
134,759
|
|
|
$
|
306,815
|
|
|
$
|
106,381
|
|
|
$
|
1,245,669
|
|
Percent of total revenues
|
|
|
56
|
%
|
|
|
11
|
%
|
|
|
24
|
%
|
|
|
9
|
%
|
|
|
100
|
%
|
Long-lived assets
|
|
$
|
353,212
|
|
|
$
|
52,674
|
|
|
$
|
137,255
|
|
|
$
|
308
|
|
|
$
|
543,449
|
|
Year ended December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
494,173
|
|
|
$
|
81,445
|
|
|
$
|
198,998
|
|
|
$
|
90,109
|
|
|
$
|
864,725
|
|
Percent of total revenues
|
|
|
57
|
%
|
|
|
9
|
%
|
|
|
23
|
%
|
|
|
11
|
%
|
|
|
100
|
%
|
Long-lived assets
|
|
$
|
368,306
|
|
|
$
|
56,476
|
|
|
$
|
163,031
|
|
|
$
|
629
|
|
|
$
|
588,442
|
|
47
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
Major
Customer
The following table presents revenues generated from sales to
Anixter International Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
|
Amount
|
|
|
Revenues
|
|
|
|
(In thousands, except percentages)
|
|
|
Belden Americas Segment
|
|
$
|
260,092
|
|
|
|
18
|
%
|
|
$
|
176,969
|
|
|
|
14
|
%
|
|
$
|
164,820
|
|
|
|
19
|
%
|
Specialty Products Segment
|
|
|
34,028
|
|
|
|
2
|
%
|
|
|
32,135
|
|
|
|
2
|
%
|
|
|
25,948
|
|
|
|
3
|
%
|
Europe Segment
|
|
|
13,962
|
|
|
|
1
|
%
|
|
|
7,000
|
|
|
|
1
|
%
|
|
|
6,359
|
|
|
|
1
|
%
|
Asia Pacific Segment
|
|
|
1,669
|
|
|
|
0
|
%
|
|
|
408
|
|
|
|
0
|
%
|
|
|
496
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
309,751
|
|
|
|
21
|
%
|
|
$
|
216,512
|
|
|
|
17
|
%
|
|
$
|
197,623
|
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 4:
|
Belden
CDT Merger
|
Belden Inc. and CDT entered into an Agreement and Plan of
Merger, dated February 4, 2004 (the Merger Agreement),
pursuant to which Belden Inc. merged with and became a wholly
owned subsidiary of CDT on July 15, 2004. Pursuant to the
Merger Agreement, 25.6 million shares of Belden Inc. common
stock, par value $.01 per share, were exchanged for
25.6 million shares of CDT common stock, par value
$.01 per share, and CDT changed its name to Belden CDT Inc.
Belden Inc. and CDT each believed the Merger was in the best
interests of its respective stockholders because, as a result of
the Merger, the long-term value of an investment in the combined
company would likely be superior to the long-term value of an
investment in either stand-alone company. In deciding to
consummate the Merger, Belden Inc. and CDT considered various
factors, including the following:
|
|
|
|
|
The anticipated cost savings and synergies resulting from our
ability to identify low-cost sources for materials, eliminate
duplicative costs of two separate public companies, consolidate
manufacturing facilities and access each legacy companys
technology;
|
|
|
|
The potential to market products and businesses across a larger
customer base;
|
|
|
|
The anticipated increase in market liquidity and capital markets
access resulting from a larger equity base;
|
|
|
|
Increased visibility to analysts and investors;
|
|
|
|
Better access to lower cost manufacturing facilities; and
|
|
|
|
Improved financial leverage.
|
The Merger included the following significant related
transactions:
|
|
|
|
|
CDT effected a
one-for-two
reverse split of its common stock immediately prior to the
Merger;
|
|
|
|
Belden Inc. cancelled approximately 0.3 million shares of
common stock held in treasury on July 15, 2004;
|
|
|
|
We granted retention and integration awards to certain of our
executive officers and other key employees. Cash and share-based
awards were distributed in three installments
one-third on the Merger date and one third each on
the first and second anniversaries of the Merger date. We
recognized approximately $0.3 million, $1.6 million,
and $3.8 million of compensation expense during 2006, 2005,
and 2004, respectively, related to these awards; and
|
48
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
We recognized $2.9 million and $26.8 million of
restructuring and backlog amortization expenses in 2005 and
2004, respectively, related to the Merger.
|
Upon consummation of the Merger, we had approximately
46.6 million shares of common stock outstanding. On that
date, the former CDT stockholders and former Belden Inc.
stockholders respectively owned approximately 45% and 55% of our
common stock outstanding. The Merger was treated as a reverse
acquisition under the purchase method of accounting. Belden Inc.
was considered the acquiring enterprise for financial reporting
purposes because the Belden Inc. owners as a group retained or
received the larger portion of the voting rights in us and the
Belden Inc. senior management represented a majority of our
senior management. For financial reporting purposes, the
operating results and cash flows of CDT are included in our
Consolidated Financial Statements from July 16, 2004.
The cost to acquire CDT was $490.7 million and consisted of
the exchange of common stock discussed above, change of control
costs for legacy CDT management and costs incurred by Belden
Inc. related directly to the acquisition. The purchase price was
established primarily through the negotiation of a share
exchange ratio that was intended to value both Belden Inc. and
CDT so that neither company paid a premium over equity market
value for the other. We established a new accounting basis for
the assets and liabilities of CDT based upon their fair values
as of the Merger date. We assigned the following fair values to
each major asset and liability caption of CDT as of
July 15, 2004.
|
|
|
|
|
|
|
(In millions)
|
|
|
Cash and cash equivalents
|
|
$
|
50.4
|
|
Receivables
|
|
|
79.5
|
|
Inventories
|
|
|
114.3
|
|
Other current assets
|
|
|
24.4
|
|
Current assets of discontinued
operations
|
|
|
28.5
|
|
Property, plant and equipment
|
|
|
169.2
|
|
Goodwill
|
|
|
203.6
|
|
Other intangible assets
|
|
|
79.1
|
|
Other long-lived assets
|
|
|
20.9
|
|
Long-lived assets of discontinued
operations
|
|
|
13.9
|
|
|
|
|
|
|
Total assets
|
|
$
|
783.8
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
84.0
|
|
Current liabilities of
discontinued operations
|
|
|
18.5
|
|
Long-term debt
|
|
|
111.0
|
|
Other postretirement benefits
liabilities
|
|
|
20.8
|
|
Other long-term liabilities
|
|
|
44.2
|
|
Minority interest
|
|
|
14.6
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
293.1
|
|
|
|
|
|
|
49
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
Goodwill and other intangible assets reflected above were
determined to meet the criterion for recognition apart from
tangible assets acquired and liabilities assumed. Intangible
assets related to the Merger consisted of the following at
July 15, 2004:
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Amortization
|
|
|
|
Fair Value
|
|
|
Period
|
|
|
|
(In millions)
|
|
|
(In years)
|
|
|
Intangible assets subject to
amortization:
|
|
|
|
|
|
|
|
|
Customer relations
|
|
$
|
54.9
|
|
|
|
25.6
|
|
Developed technologies
|
|
|
6.0
|
|
|
|
20.0
|
|
Favorable contracts
|
|
|
1.1
|
|
|
|
3.5
|
|
Backlog
|
|
|
2.0
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets subject to
amortization
|
|
|
64.0
|
|
|
|
|
|
Intangible assets not subject to
amortization:
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
203.6
|
|
|
|
|
|
Trademarks
|
|
|
15.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets not
subject to amortization
|
|
|
218.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
$
|
282.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average amortization
period
|
|
|
|
|
|
|
24.1
|
|
|
|
|
|
|
|
|
|
|
We initially recognized goodwill of $203.0 million related
to the Merger at December 31, 2004. We increased goodwill
related to the Merger by $0.6 million during 2005 to
$203.6 million at the same time the carrying costs of
certain tangible assets held for sale decreased to the amount of
proceeds received upon their disposition and accrued severance
and other merger-related liabilities increased based on
finalization of the costs necessary to complete restructuring,
facility rationalization, and other merger-related activities.
Goodwill of $37.0 million, $16.7 million, and
$1.8 million was assigned to the Specialty Products
segment, the Europe segment, and the Belden Americas segment,
respectively. The residual goodwill of $148.1 million was
not assigned to a specific segment since we believed it
benefited the entire corporation; therefore, it was recognized
in F&A in our segment information. None of the goodwill is
deductible for tax purposes.
Trademarks have been determined by us to have indefinite lives
and are not being amortized, based on our expectation that the
trademarked products will generate cash flows for us for an
indefinite period. We expect to maintain use of trademarks on
existing products and introduce new products in the future that
will also display the trademarks, thus extending their lives
indefinitely.
The amortizable intangible assets reflected in the table above
were determined by us to have finite lives. The useful life for
the developed technologies intangible asset was based on the
remaining lives of the related patents. The useful life for the
customer base intangible asset was based on our forecasts of
customer turnover. The useful life for the favorable contracts
intangible asset was based on the remaining terms of the
contracts. The useful life of the backlog intangible asset was
based on our estimate of when the ordered items would ship. We
amortize these intangible assets over their remaining useful
lives on a straight-line basis. Annual amortization expense for
these intangible assets was $2.9 million, $4.8 million
and $1.5 million in 2006, 2005, and 2004, respectively. We
expect to recognize annual amortization expense of
$2.9 million in 2007 and approximately $2.6 million
thereafter.
The following table presents pro forma consolidated results of
our operations for the year ended December 31, 2004 as
though the Merger had been completed as of the beginning of that
period. The amounts for the CDT operations included in this pro
forma information are based on the historical results of the CDT
operations and, therefore, may not be indicative of their actual
results when operated as part of us. Moreover, the pro forma
information does not reflect all of the changes that resulted
from the Merger, including, but not limited to,
50
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
challenges of transition, integration and restructuring
associated with the transaction; achievement of further
synergies; the ability to retain qualified employees and
existing business alliances; and customer demand for CDT
products. The pro forma results reflect adjustments for interest
expense, depreciation, amortization and related income taxes.
The pro forma financial information should not be relied upon as
being indicative of the historical results that would have been
realized had the Merger occurred as of January 1, 2004 or
that may be achieved in the future.
|
|
|
|
|
|
|
2004
|
|
|
|
Pro forma
|
|
|
|
(Unaudited)
|
|
|
|
(In thousands, except per share data)
|
|
|
Revenues
|
|
$
|
1,139,780
|
|
Income from continuing operations
|
|
|
14,804
|
|
Net income
|
|
|
17,372
|
|
Diluted income per share:
|
|
|
|
|
Continuing operations
|
|
|
0.34
|
|
Net income
|
|
|
0.38
|
|
Income from continuing operations includes certain
Merger-related items, as listed below on an after-tax basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Merger-related retention awards
and other compensation
|
|
$
|
164
|
|
|
$
|
1,031
|
|
|
$
|
3,440
|
|
Merger-related plant closings and
other restructuring actions
|
|
|
|
|
|
|
1,592
|
|
|
|
13,657
|
|
Impact of inventory and
short-lived intangibles purchase adjustments
|
|
|
|
|
|
|
230
|
|
|
|
3,121
|
|
Merger-related professional fees
|
|
|
|
|
|
|
|
|
|
|
1,075
|
|
|
|
Note 5:
|
Discontinued
Operations
|
During 2006, we sold certain assets and liabilities of our
discontinued operation in Manchester, United Kingdom for
approximately $28.0 million cash and terminated, without
penalty, our supply agreement with British Telecom plc. We
recognized a $4.3 million after-tax loss on the disposal of
this discontinued operation.
During 2005, we sold substantially all of the remaining net
assets of our discontinued operations in Phoenix, Arizona;
Skelmersdale, United Kingdom; Auburn, Massachusetts; and
Barberton, Ohio, for approximately $40.0 million cash. We
recognized a $15.2 million after-tax gain on the disposal
of the discontinued operation assets in Phoenix. The net assets
for the other three discontinued operations were acquired
through the Merger. The net proceeds received from the sales of
the net assets of these three discontinued operations exceeded
their aggregate carrying values by $0.1 million. Upon the
finalization of purchase accounting, we increased the portion of
consideration we previously allocated to the tangible assets of
these discontinued operations and reduced the portion of
consideration we previously allocated to goodwill by this excess
amount.
During 2004, we sold certain net assets of our discontinued
operations in Phoenix, Arizona, and Wadsworth, Ohio for
approximately $78.3 million cash. We recognized a
$0.3 million after-tax gain on the disposal of the
discontinued operation assets in Phoenix. The net assets of our
discontinued operation in Wadsworth were acquired through the
Merger. The net proceeds received from the sale of the net
assets agreed to their aggregate carrying amount.
We recognized severance costs in loss from discontinued
operations in the amount of $1.0 million and
$0.1 million in 2005 because of personnel reductions at our
discontinued operations in Manchester and Phoenix, respectively.
We recognized severance costs of $5.6 million in gain from
discontinued operations during 2004 because of personnel
reductions at our discontinued operation in Phoenix. We also
recognized severance costs in the
51
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
amount of $3.8 million and $1.4 million in
2004 2005 because of personnel reductions at our
discontinued operations in Skelmersdale and Auburn. The
Skelmersdale and Auburn costs were recognized as liabilities
assumed in the Merger and were included in the cost to acquire
CDT. Each of these severance liabilities was paid by the end of
2006.
Operating results from discontinued operations include the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Results of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
27,644
|
|
|
$
|
108,561
|
|
|
$
|
221,115
|
|
Loss before taxes
|
|
$
|
(1,900
|
)
|
|
$
|
(3,691
|
)
|
|
$
|
(11,307
|
)
|
Income tax benefit
|
|
|
570
|
|
|
|
2,518
|
|
|
|
15,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss)
|
|
$
|
(1,330
|
)
|
|
$
|
(1,173
|
)
|
|
$
|
4,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposal:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) before taxes
|
|
$
|
(6,140
|
)
|
|
$
|
23,692
|
|
|
$
|
393
|
|
Income tax benefit (expense)
|
|
|
1,842
|
|
|
|
(8,529
|
)
|
|
|
(140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss)
|
|
$
|
(4,298
|
)
|
|
$
|
15,163
|
|
|
$
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Listed below are the major classes of assets and liabilities
belonging to the discontinued operations that remain as part of
the disposal group:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Receivables
|
|
$
|
|
|
|
$
|
23,747
|
|
Inventories
|
|
|
|
|
|
|
16,482
|
|
Property, plant and equipment
|
|
|
|
|
|
|
16,559
|
|
Other assets
|
|
|
|
|
|
|
209
|
|
|
|
|
|
|
|
|
|
|
Current assets of discontinued
operations
|
|
$
|
|
|
|
$
|
56,997
|
|
|
|
|
|
|
|
|
|
|
Current liabilities of
discontinued operations(1)
|
|
$
|
|
|
|
$
|
13,342
|
|
|
|
|
(1) |
|
Comprised exclusively of accounts payable and accrued liabilities |
52
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 6:
|
Income
(Loss) Per Share
|
The following table presents the basis of the income per share
computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Numerator for basic income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
71,563
|
|
|
$
|
33,568
|
|
|
$
|
10,700
|
|
Gain (loss) from discontinued
operations
|
|
|
(1,330
|
)
|
|
|
(1,173
|
)
|
|
|
4,236
|
|
Gain (loss) on disposal of
discontinued operations
|
|
|
(4,298
|
)
|
|
|
15,163
|
|
|
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
65,935
|
|
|
$
|
47,558
|
|
|
$
|
15,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator for diluted income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
71,563
|
|
|
$
|
33,568
|
|
|
$
|
10,700
|
|
Tax-effected interest expense on
convertible subordinated debentures
|
|
|
2,710
|
|
|
|
2,710
|
|
|
|
1,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from continuing
operations
|
|
|
74,273
|
|
|
|
36,278
|
|
|
|
11,972
|
|
Gain (loss) from discontinued
operations
|
|
|
(1,330
|
)
|
|
|
(1,173
|
)
|
|
|
4,236
|
|
Gain (loss) on disposal of
discontinued operations
|
|
|
(4,298
|
)
|
|
|
15,163
|
|
|
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
|
|
$
|
68,645
|
|
|
$
|
50,268
|
|
|
$
|
16,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic income per
share weighted average shares
|
|
|
43,319
|
|
|
|
45,655
|
|
|
|
35,404
|
|
Effect of dilutive common stock
equivalents
|
|
|
6,957
|
|
|
|
6,467
|
|
|
|
3,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted income per
share adjusted weighted average shares
|
|
|
50,276
|
|
|
|
52,122
|
|
|
|
38,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2006, 2005, and 2004, we
did not include 0.5 million, 2.4 million, and
2.5 million outstanding stock options, respectively, in our
development of the denominators used in the diluted income per
share computations because they were antidilutive. For the year
ended December 31, 2006, we also did not include
0.1 million restricted stock awards with performance
conditions in our development of the denominator used in the
diluted income per share computation because the performance
conditions had not yet been satisfied.
53
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
The major classes of inventories were as follows:
|
|
|
|
|
|
|
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Raw materials
|
|
$
|
54,542
|
|
|
$
|
75,229
|
|
Work-in-process
|
|
|
38,357
|
|
|
|
42,152
|
|
Finished goods
|
|
|
120,520
|
|
|
|
139,035
|
|
Perishable tooling and supplies
|
|
|
4,016
|
|
|
|
3,977
|
|
|
|
|
|
|
|
|
|
|
Gross inventories
|
|
|
217,435
|
|
|
|
260,393
|
|
Obsolescence and other reserves
|
|
|
(15,187
|
)
|
|
|
(14,912
|
)
|
|
|
|
|
|
|
|
|
|
Net inventories
|
|
$
|
202,248
|
|
|
$
|
245,481
|
|
|
|
|
|
|
|
|
|
|
In pursuit of our goal to manage better all aspects of working
capital, and especially to reduce our reliance on finished goods
inventory, we changed our inventory management process worldwide
in 2006. This included a change in the parameters we apply to
our allowances for excess and obsolete inventories. We
recognized pretax charges of approximately $11.1 million in
cost of sales during 2006 to reflect a change in accounting
estimate related to measurement of our allowances for excess and
obsolete inventories. The effect of this change on income from
continuing operations and income per diluted share from
continuing operations was approximately $7.3 million and
$.14 per share.
|
|
Note 8:
|
Property,
Plant and Equipment
|
The carrying values of property, plant and equipment were as
follows:
|
|
|
|
|
|
|
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Land and land improvements
|
|
$
|
24,981
|
|
|
$
|
23,670
|
|
Buildings and leasehold
improvements
|
|
|
133,001
|
|
|
|
128,498
|
|
Machinery and equipment
|
|
|
362,068
|
|
|
|
369,140
|
|
Computer equipment and software
|
|
|
36,797
|
|
|
|
35,569
|
|
Construction in process
|
|
|
19,572
|
|
|
|
10,056
|
|
|
|
|
|
|
|
|
|
|
Gross property, plant and equipment
|
|
|
576,419
|
|
|
|
566,933
|
|
Accumulated depreciation
|
|
|
(304,134
|
)
|
|
|
(279,155
|
)
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
$
|
272,285
|
|
|
$
|
287,778
|
|
|
|
|
|
|
|
|
|
|
Disposals
During 2006, we sold property, plant and equipment in Sweden,
the Czech Republic, and the Netherlands for $4.1 million
cash. We recognized an aggregate $2.5 million gain on the
disposals of these assets.
During 2005, we sold real estate in Canada and Germany for
$6.1 million cash. We recognized an aggregate
$0.5 million gain on the disposals of these assets. Also
during 2005, we sold real estate in the United States acquired
in the Merger for $1.4 million cash. The proceeds received
from the sale exceeded the carrying value of this facility by
less than $0.1 million. Upon the finalization of purchase
accounting, we increased the portion of Merger consideration we
had previously allocated to net assets acquired and reduced the
portion of Merger consideration we had previously allocated to
goodwill by this excess amount.
54
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
We sold certain equipment in the Netherlands along with
technology related to the production of deflection coils during
2003 and received a cash payment of $1.3 million. During
2004, the technical conditions of the sale were fulfilled, we
received a final $0.4 million cash payment, and we
recognized a $1.7 million gain on the disposal of these
assets.
Impairment
In 2006, we determined that certain asset groups in the Belden
Americas and Europe operating segments were impaired. The asset
groups in the Belden Americas operating segment were impaired
because of our pending closures of three manufacturing
facilities in the United States and the cessation of
manufacturing at a facility in Canada. The asset group in the
Europe operating segment was impaired because of product
portfolio management actions we initiated. We estimated the fair
values of the asset groups based upon anticipated net proceeds
from their sales and recognized impairment losses of
$8.6 million and $2.5 million in the Belden Americas
and Europe operating segments, respectively.
During 2005, we determined that a certain asset group in the
Europe operating segment was impaired because of product
portfolio management actions we initiated. We estimated the fair
value of the asset group based upon anticipated net proceeds
from its sale and recognized an impairment loss of
$1.1 million.
During 2004, we determined that certain asset groups in the
Europe and Belden Americas operating segments were impaired. The
asset groups in the Europe operating segment were impaired
because of product portfolio management actions we initiated.
The asset groups in the Belden Americas segment were impaired
due to excess capacity primarily as a result of the combined
capacity after the Merger. We estimated the fair values of these
asset groups based upon anticipated net proceeds from their
sales and recognized impairment losses of $5.7 million and
$3.2 million in the Europe and Belden Americas operating
segments, respectively.
Depreciation
Expense
We recognized depreciation expense of $33.1 million,
$32.9 million and $27.0 million in 2006, 2005, and
2004, respectively. We also recognized depreciation cost of
$2.7 million, $4.3 million, and $3.3 million
related to our various discontinued operations in gain (loss)
from discontinued operations during 2006, 2005, and 2004,
respectively.
55
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 9:
|
Intangible
Assets
|
The carrying values of intangible assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006
|
|
|
December 31, 2005
|
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
(In thousands)
|
|
|
Goodwill(1)
|
|
$
|
287,266
|
|
|
$
|
(12,132
|
)
|
|
$
|
275,134
|
|
|
$
|
284,435
|
|
|
$
|
(12,145
|
)
|
|
$
|
272,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets subject to
amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relations
|
|
$
|
55,389
|
|
|
|
(5,640
|
)
|
|
$
|
49,749
|
|
|
$
|
54,608
|
|
|
|
(3,237
|
)
|
|
$
|
51,371
|
|
Patents
|
|
|
6,247
|
|
|
|
(800
|
)
|
|
|
5,447
|
|
|
|
6,179
|
|
|
|
(654
|
)
|
|
|
5,525
|
|
Favorable contracts
|
|
|
1,094
|
|
|
|
(768
|
)
|
|
|
326
|
|
|
|
1,094
|
|
|
|
(456
|
)
|
|
|
638
|
|
Backlog
|
|
|
1,379
|
|
|
|
(1,379
|
)
|
|
|
|
|
|
|
1,976
|
|
|
|
(1,976
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets subject to
amortization
|
|
|
64,109
|
|
|
|
(8,587
|
)
|
|
|
55,522
|
|
|
|
63,857
|
|
|
|
(6,323
|
)
|
|
|
57,534
|
|
Trademarks(1)
|
|
|
15,442
|
|
|
|
|
|
|
|
15,442
|
|
|
|
14,925
|
|
|
|
|
|
|
|
14,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
$
|
79,551
|
|
|
$
|
(8,587
|
)
|
|
$
|
70,964
|
|
|
$
|
78,782
|
|
|
$
|
(6,323
|
)
|
|
$
|
72,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Accumulated amortization was recognized prior to our adoption of
SFAS No. 142, Goodwill and Other Intangible
Assets |
Segment
Allocation of Goodwill
Our goodwill is allocated among our operating segments as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
Change
|
|
|
|
(In thousands)
|
|
|
Belden Americas Segment
|
|
$
|
60,252
|
|
|
$
|
60,252
|
|
|
$
|
|
|
Specialty Products Segment
|
|
|
36,950
|
|
|
|
36,950
|
|
|
|
|
|
Europe Segment
|
|
|
33,671
|
|
|
|
30,474
|
|
|
|
3,197
|
|
Finance & Administration
|
|
|
144,261
|
|
|
|
144,614
|
|
|
|
(353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
275,134
|
|
|
$
|
272,290
|
|
|
$
|
2,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill allocated to the Europe segment increased during 2006
primarily because of the $3.3 million impact of translation
on goodwill denominated in currencies other than the United
States dollar and $0.4 million of other adjustments
partially offset by a $0.2 million reduction to
Merger-related accrued severance balances that were originally
recorded in purchase accounting and the $0.3 million impact
of our buyout of a minority interest holder in one of our German
subsidiaries. We believe that goodwill recognized in F&A
benefits the entire Company because it represents
acquirer-specific synergies unique to the Merger. Goodwill
recorded in F&A decreased during 2006 because of a reduction
to Merger-related accrued severance balances that were
originally recorded in purchase accounting.
Impairment
At December 31, 2006 and 2005, the carrying amounts of
goodwill, trademarks, and intangible assets subject to
amortization were considered recoverable.
56
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
During 2005, we determined that the carrying amount of goodwill
reported by the Europe segment and the goodwill amount allocated
from F&A to the Europe segment for the purpose of annual
impairment testing were impaired because of our decision to exit
the United Kingdom communications cable market. We determined
the estimated fair value of the Europe reporting unit by
calculating the present value of its estimated future cash
flows. We determined the implied fair value of goodwill
associated with the Europe reporting unit by subtracting the
estimated fair value of tangible assets and intangible assets
subject to amortization associated with the Europe reporting
unit from the estimated fair value of the unit. We recognized
impairment losses totaling $4.5 million in the Europe
segment and $2.4 million in F&A in 2005.
Amortization
Expense
The Company recognized amortization expense of
$2.9 million, $4.8 million and $1.5 million in
2006, 2005, and 2004, respectively. The Company expects to
recognize annual amortization expense of $2.9 million in
2007 and approximately $2.6 million in 2008, 2009, 2010,
and 2011.
|
|
Note 10:
|
Accounts
Payable and Accrued Liabilities
|
The carrying values of accounts payable and accrued liabilities
were as follows:
|
|
|
|
|
|
|
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Accounts payable
|
|
$
|
88,557
|
|
|
$
|
100,731
|
|
Wages, severance and related taxes
|
|
|
44,469
|
|
|
|
33,370
|
|
Employee benefits
|
|
|
14,344
|
|
|
|
34,526
|
|
Interest
|
|
|
3,878
|
|
|
|
5,485
|
|
Other (individual items less than
5% of total current liabilities)
|
|
|
48,760
|
|
|
|
42,624
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities
|
|
$
|
200,008
|
|
|
$
|
216,736
|
|
|
|
|
|
|
|
|
|
|
North
America Restructuring
In 2006, we announced our decision to restructure certain North
American operations in an effort to increase our manufacturing
presence in lower-labor-cost regions near our major markets,
starting with the planned construction of a new manufacturing
facility in Mexico, the upcoming closures of manufacturing
facilities in Kentucky; South Carolina; and Illinois; and the
cessation of manufacturing at our facility in Quebec. We
recognized severance costs of $8.7 million in cost of sales
within the Belden Americas segment in 2006. We expect to
recognize estimated severance costs of approximately
$2.8 million related to these restructuring actions during
2007.
Reduction
in Force
In 2006, we recognized severance costs totaling
$3.5 million ($1.2 million in cost of sales and
$2.3 million in SG&A expenses) related to worldwide
position eliminations resulting from our efforts to reduce
production, selling, and administrative costs. Severance costs
of $1.9 million, $1.0 million, $0.5 million, and
$0.1 million were recognized by the Belden Americas
segment, the Europe segment, the Specialty Products segment, and
the Asia Pacific segment, respectively. We expect to recognize
estimated severance costs of approximately $0.4 million
related to this restructuring action during 2007.
Europe
Restructuring
In 2005 and 2006, we announced various decisions to restructure
certain European operations in an effort to reduce manufacturing
floor space and overhead, starting with the closures of a
manufacturing facility in Sweden and sales offices in the United
Kingdom and Germany, as well as product portfolio actions in the
Czech Republic
57
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
and the Netherlands. We recognized severance costs within the
Europe segment totaling $8.2 million ($6.7 million in
cost of sales and $1.5 million in SG&A expenses) in
2006 and $7.7 million ($7.6 million in cost of sales
and $0.1 million in SG&A expenses) during 2005 related
to these restructuring actions. We do not expect to recognize
additional severance costs related to these restructuring
actions.
Belden
CDT Merger Restructuring
In 2004, we initiated plans to reduce personnel at several
legacy CDT locations and recognized severance costs of
$14.0 million ($6.7 million, $3.3 million,
$2.0 million, $1.7 million and $0.3 million in
the financial records of F&A, the Europe segment, the
Specialty Products segment, the Belden Americas segment, and the
Asia Pacific segment, respectively). These costs were recognized
as a liability assumed in the Merger and were included in the
cost to acquire CDT. During 2005 2006, we decided to
terminate certain of these restructuring plans because of
improved capacity utilization. In 2006, we reduced accrued
severance recorded within the Belden Americas segment and the
Europe segment by $0.2 million each. In 2005, we reduced
accrued severance recorded within the Specialty Products
segment, the Europe segment, and the Belden Americas segment by
$0.8 million, $0.8 million and $0.5 million,
respectively. In each of these years, we also reduced the
portion of the consideration we had previously allocated to
goodwill by the same amounts.
58
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
The following table sets forth restructuring activity that
occurred during 2004 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
Reduction
|
|
|
Europe
|
|
|
Belden CDT Merger
|
|
|
|
Restructuring
|
|
|
in Force
|
|
|
Restructuring
|
|
|
Restructuring
|
|
|
|
Accrual
|
|
|
Employee
|
|
|
Accrual
|
|
|
Employee
|
|
|
Accrual
|
|
|
Employee
|
|
|
Accrual
|
|
|
Employee
|
|
|
|
Activity
|
|
|
Count
|
|
|
Activity
|
|
|
Count
|
|
|
Activity
|
|
|
Count
|
|
|
Activity
|
|
|
Count
|
|
|
|
(In thousands, except number of employees)
|
|
|
Balance at December 31, 2003
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
New charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,549
|
|
|
|
210
|
|
Cash payments/employee terminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,162
|
)
|
|
|
(25
|
)
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162
|
|
|
|
|
|
Other adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,549
|
|
|
|
185
|
|
New charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ongoing benefits arrangement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,698
|
|
|
|
151
|
|
|
|
|
|
|
|
|
|
Merger restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,447
|
|
|
|
22
|
|
Cash payments/employee terminations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,909
|
)
|
|
|
(62
|
)
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
Other adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,107
|
)
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,698
|
|
|
|
151
|
|
|
|
1,978
|
|
|
|
69
|
|
New charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-time termination arrangement
|
|
|
8,731
|
|
|
|
451
|
|
|
|
3,501
|
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ongoing benefits arrangement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,307
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
Special termination benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
908
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Cash payments/employee terminations
|
|
|
(1,095
|
)
|
|
|
(182
|
)
|
|
|
(124
|
)
|
|
|
(3
|
)
|
|
|
(11,949
|
)
|
|
|
(181
|
)
|
|
|
(886
|
)
|
|
|
(22
|
)
|
Foreign currency translation
|
|
|
(71
|
)
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
577
|
|
|
|
|
|
|
|
43
|
|
|
|
|
|
Other adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(59
|
)
|
|
|
|
|
|
|
(423
|
)
|
|
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
$
|
7,565
|
|
|
|
269
|
|
|
$
|
3,373
|
|
|
|
115
|
|
|
$
|
4,482
|
|
|
|
53
|
|
|
$
|
712
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company continues to review its business strategies and
evaluate further restructuring actions. This could result in
additional severance and other related benefits charges in
future periods.
59
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
Environmental
Remediation Liabilities
Our accrued liability for environmental remediation and related
costs was approximately $6.2 million and $7.2 million
at December 31, 2006 and 2005, respectively. The Company
expects to fund these environmental remediation liabilities over
the next 4 years. It is reasonably possible that a change
in the estimated remediation costs will occur before remediation
is completed.
Executive
Succession Costs
In 2005, two former senior executives entered into separation of
employment agreements with us. The separation agreements
confirmed each executives entitlement and obligations
under his July 2001 change of control agreement as a result of
his separation of employment. We recognized SG&A expense of
$7.0 million in 2005 related to these separations of
employment and associated executive succession planning services.
|
|
Note 11:
|
Long-Term
Debt and Other Borrowing Arrangements
|
The carrying values of long-term debt and other borrowing
arrangements were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Contingently convertible notes,
face amount of $110,000 due 2023, contractual interest rate
4.00%, effective interest rate 4.00%
|
|
$
|
110,000
|
|
|
$
|
110,000
|
|
Medium-term notes, face amount of
$45,000 due from 2007 through 2009, contractual interest rate
6.92%, effective interest rate 6.92%
|
|
|
45,000
|
|
|
|
60,000
|
|
Medium-term notes, face amount of
$17,000 due 2009, contractual interest rate 7.95%, effective
interest rate 8.06%
|
|
|
17,000
|
|
|
|
17,000
|
|
Medium-term notes, face amount of
$44,000 due 2006, contractual interest rate 7.74%, effective
interest rate 7.85%
|
|
|
|
|
|
|
44,000
|
|
Variable-rate bank revolving
credit agreement, due 2011
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
Total debt and other borrowing
arrangements
|
|
|
172,000
|
|
|
|
231,051
|
|
Less current maturities
|
|
|
(62,000
|
)
|
|
|
(59,000
|
)
|
|
|
|
|
|
|
|
|
|
Long-term debt and other borrowing
arrangements
|
|
$
|
110,000
|
|
|
$
|
172,051
|
|
|
|
|
|
|
|
|
|
|
Contingently
Convertible Notes
At December 31, 2006, we had outstanding
$110.0 million of unsecured subordinated debentures. The
debentures are convertible into approximately 6.2 million
shares of common stock, at a conversion price of
$17.859 per share, upon the occurrence of certain events.
The conversion price is subject to adjustment for dividends and
other equity transactions. Holders may surrender their
debentures for conversion into shares of our common stock upon
satisfaction of any of the following conditions: (1) the
closing sale price of our common stock is at least 110% of the
conversion price for a minimum of 20 days in the 30
trading-day
period ending on the trading day prior to surrender;
(2) the senior implied rating assigned to us by
Moodys Investors Service, Inc. is downgraded to B2 or
below and the corporate credit rating assigned to us by
Standard & Poors is downgraded to B or below;
(3) we have called the debentures for redemption; or,
(4) upon the occurrence of certain corporate transactions
as specified in the indenture. As of December 31, 2006,
condition (1) had been met, but condition (2) had not
been met as the senior implied rating was Ba2 and the corporate
credit rating was BB-.
Interest of 4.0% is payable semiannually in arrears, on January
15 and July 15. The debentures mature on July 15,
2023, if not previously redeemed. We may call some or all of the
debentures on or after July 21, 2008 for
60
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
redemption in cash, at a price equal to 100% of the principal
amount of the debentures plus accrued and unpaid interest up to
the redemption date. Holders may require us to purchase all or
part of their debentures on July 15, 2008, July 15,
2013, or July 15, 2018, at a price equal to 100% of the
principal amount of the debentures plus accrued and unpaid
interest up to the redemption date, in which case the purchase
price may be paid in cash, shares of our common stock or a
combination of cash and our common stock, at our option.
Medium-Term
Notes
In 1999, we completed a private placement of $44.0 million
and $17.0 million of unsecured medium-term notes. We repaid
the $44.0 million tranche of these notes in 2006. The
agreement for the notes contains various customary affirmative
and negative covenants and other provisions, including
restrictions on the incurrence of debt, maintenance of a maximum
leverage ratio and minimum net worth.
In 1997, we completed a private placement of $75.0 million
of unsecured medium-term notes. The notes bear interest at 6.92%
and mature in 8 to 12 years from closing with an average
life of 10 years. We repaid $30.0 million of these
notes in 2005 2006. The agreement for the notes
contains various customary affirmative and negative covenants
and other provisions, including restrictions on the incurrence
of debt, maintenance of a maximum leverage ratio and minimum net
worth.
In January 2007, we discovered that we were in technical default
of a covenant in each agreement. Rather than request a waiver
for these covenant violations, we redeemed the outstanding notes
and consequently classified them as a current maturity in our
Consolidated Balance Sheet. Additional discussion regarding our
2007 redemption of these notes is included in Note 21 to
the Consolidated Financial Statements.
Senior
Credit Agreement
We executed a new credit agreement with a group of 8 banks in
January 2006 (the Senior Credit Agreement). The Senior Credit
Agreement provides us with a $165.0 million secured,
variable-rate and revolving credit facility expiring in January
2011. The facility is secured by our overall cash flow and our
assets in the United States. There were no borrowings
outstanding under this facility at any time during 2006. The
Senior Credit Agreement contains certain financial covenants,
including maintenance of maximum leverage and minimum fixed
charge coverage ratios, with which we are required to comply.
The Senior Credit Agreement replaced a $75.0 million
agreement executed in October 2003 between us and a group of 6
banks that would have expired in June 2006. We cancelled this
old credit agreement in January 2006.
Maturities
Maturities on outstanding long-term debt and other borrowings
during each of the five years subsequent to December 31,
2006 are as follows:
|
|
|
|
|
|
|
(In thousands)
|
|
|
2007
|
|
$
|
62,000
|
|
2008
|
|
|
|
|
2009
|
|
|
|
|
2010
|
|
|
|
|
2011
|
|
|
|
|
Thereafter
|
|
|
110,000
|
|
|
|
|
|
|
|
|
$
|
172,000
|
|
|
|
|
|
|
61
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
The net income tax expense of $40.7 million for 2006
resulted from income from continuing operations before taxes of
$112.3 million. We recorded an additional $3.7 million
deferred tax asset valuation reserve during 2006 with respect to
net operating losses generated primarily in the Netherlands and
Sweden. We consider income from foreign subsidiaries to be
indefinitely reinvested and, accordingly, have not recorded a
provision for United States federal and state income taxes for
foreign income. Undistributed income of our foreign subsidiaries
totaled $12.2 million in 2006. Upon distribution of foreign
subsidiary income, we may be subject to United States income
taxes (subject to an adjustment for foreign tax credits) and
withholding taxes payable to the various foreign countries.
We are party to a Tax Sharing and Separation Agreement (Tax
Agreement) with our former owner, Cooper Industries Ltd.
(Cooper). The Tax Agreement requires us to pay Cooper most of
the tax benefits resulting from basis adjustments arising from
our initial public offering on October 6, 1993. The effect
of the Tax Agreement is to put us in the same financial position
we would have been in had there been no increase in the tax
basis of our assets (except for a retained 10% benefit). The
retained 10% benefit reduced income tax expense for the years
ended December 31, 2006, 2005, and 2004 by
$1.2 million each year. Included in 2006 taxes paid were
$10.4 million paid to Cooper in accordance with the Tax
Agreement. There were no payments to Cooper under the Tax
Agreement in 2005 and 2004.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Income (loss) from continuing
operations before taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States operations
|
|
$
|
100,058
|
|
|
$
|
53,627
|
|
|
$
|
33,905
|
|
Foreign operations
|
|
|
12,218
|
|
|
|
3,913
|
|
|
|
(9,308
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
112,276
|
|
|
$
|
57,540
|
|
|
$
|
24,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
|
|
|
Currently payable (receivable):
|
|
|
|
|
|
|
|
|
|
|
|
|
United States federal
|
|
$
|
13,513
|
|
|
$
|
|
|
|
$
|
|
|
United States state and local
|
|
|
409
|
|
|
|
155
|
|
|
|
|
|
Foreign
|
|
|
7,895
|
|
|
|
9,690
|
|
|
|
(5,191
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,817
|
|
|
|
9,845
|
|
|
|
(5,191
|
)
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States federal
|
|
|
15,946
|
|
|
|
13,759
|
|
|
|
9,240
|
|
United States state and local
|
|
|
2,869
|
|
|
|
1,739
|
|
|
|
1,959
|
|
Foreign
|
|
|
81
|
|
|
|
(1,371
|
)
|
|
|
7,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,896
|
|
|
|
14,127
|
|
|
|
19,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
40,713
|
|
|
$
|
23,972
|
|
|
$
|
13,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Effective income tax rate
reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States federal statutory
rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
State and local income taxes
|
|
|
2.9
|
%
|
|
|
3.3
|
%
|
|
|
1.8
|
%
|
Increase in deferred tax asset
valuation allowance
|
|
|
3.3
|
%
|
|
|
8.7
|
%
|
|
|
38.2
|
%
|
Resolution of prior-period tax
contingency
|
|
|
-4.3
|
%
|
|
|
−6.5
|
%
|
|
|
−9.9
|
%
|
Foreign income tax rate differences
|
|
|
-0.2
|
%
|
|
|
1.9
|
%
|
|
|
−5.0
|
%
|
Other
|
|
|
-0.4
|
%
|
|
|
−0.7
|
%
|
|
|
−3.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36.3
|
%
|
|
|
41.7
|
%
|
|
|
56.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Components of deferred income tax
balances:
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities,
net:
|
|
|
|
|
|
|
|
|
Plant, equipment and intangibles
|
|
$
|
(105,362
|
)
|
|
$
|
(108,373
|
)
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets:
|
|
|
|
|
|
|
|
|
Postretirement and pension accruals
|
|
|
20,996
|
|
|
|
20,366
|
|
Reserves and accruals
|
|
|
31,982
|
|
|
|
21,975
|
|
Net operating loss carryforwards
|
|
|
46,902
|
|
|
|
47,812
|
|
Valuation allowances
|
|
|
(31,253
|
)
|
|
|
(27,786
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
68,627
|
|
|
|
62,367
|
|
|
|
|
|
|
|
|
|
|
Net deferred income tax liability
|
|
$
|
(36,735
|
)
|
|
$
|
(46,006
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
December 31,
|
|
Current
|
|
|
Noncurrent
|
|
|
Total
|
|
|
Current
|
|
|
Noncurrent
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Deferred income tax assets
|
|
$
|
34,664
|
|
|
$
|
33,963
|
|
|
$
|
68,627
|
|
|
|
27,845
|
|
|
$
|
$34,522
|
|
|
$
|
62,367
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
(105,362
|
)
|
|
|
(105,362
|
)
|
|
|
|
|
|
|
(108,373
|
)
|
|
|
(108,373
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
34,664
|
|
|
$
|
(71,399
|
)
|
|
$
|
(36,735
|
)
|
|
|
27,845
|
|
|
$
|
(73,851
|
)
|
|
$
|
(46,006
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes have been established for differences in
the basis of assets and liabilities for financial statement and
tax reporting purposes as adjusted for the Tax Agreement with
Cooper.
As of December 31, 2006, we had $220.5 million of net
operating loss carryforwards as adjusted by the Tax Agreement
with Cooper. Unless otherwise utilized, net operating loss
carryforwards will expire as follows: $11.7 million in
2007, $11.6 million in 2008, $13.6 million between
2009 and 2011, and $65.9 million between 2012 and 2025. Net
operating loss carryforwards with an indefinite carryforward
period total $117.7 million. The net operating loss
carryforwards expiring in 2007 through 2009 will not have a
significant impact on the effective tax rate because of deferred
tax asset valuation allowances recorded for those loss
carryforwards.
|
|
Note 13:
|
Pension
and Other Postretirement Benefits
|
Substantially all employees in Canada, the Czech Republic, the
Netherlands, the United Kingdom, and the United States are
covered by defined benefit or defined contribution pension
plans. We terminated our separate
63
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
defined benefit plan in the Netherlands at the end of 2005.
Employees in the Netherlands now participate in an industry
pension plan. Annual contributions to retirement plans equal or
exceed the minimum funding requirements of applicable local
regulations. The assets of the pension plans we sponsor are
maintained in various trusts and are invested primarily in
equity and fixed income securities.
Benefits provided to employees under defined contribution plans
include cash contributions by the Company based on either hours
worked by the employee or a percentage of the employees
compensation and in certain plans during 2005 a partial matching
of employees salary deferrals with our common stock.
Defined contribution expense for 2006, 2005, and 2004 was
$8.9 million, $6.0 million and $4.2 million,
respectively. The increase in contributions during 2006 resulted
primarily from contributions to the industry pension plan for
employees in the Netherlands and during 2005 from the Merger.
We sponsor unfunded postretirement medical and life insurance
benefit plans for certain of our employees in Canada and the
United States. The medical benefit portion of the United States
plan is only for employees who retired prior to 1989 as well as
certain other employees who were near retirement and elected to
receive certain benefits.
The following tables provide a reconciliation of the changes in
the plans benefit obligations and fair value of assets as
well as a statement of the funded status and balance sheet
reporting for these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
Years Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation, beginning of
year
|
|
$
|
(177,166
|
)
|
|
$
|
(263,913
|
)
|
|
$
|
(47,583
|
)
|
|
$
|
(41,279
|
)
|
Service cost
|
|
|
(6,163
|
)
|
|
|
(9,476
|
)
|
|
|
(646
|
)
|
|
|
(530
|
)
|
Interest cost
|
|
|
(9,146
|
)
|
|
|
(13,151
|
)
|
|
|
(2,326
|
)
|
|
|
(2,344
|
)
|
Participant contributions
|
|
|
(319
|
)
|
|
|
(1,300
|
)
|
|
|
(31
|
)
|
|
|
(40
|
)
|
Plan amendments
|
|
|
(545
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gain (loss)
|
|
|
(2,310
|
)
|
|
|
(16,056
|
)
|
|
|
2,607
|
|
|
|
(4,908
|
)
|
Special termination benefits
|
|
|
|
|
|
|
(5,869
|
)
|
|
|
|
|
|
|
|
|
Liability curtailments
|
|
|
3,129
|
|
|
|
17,250
|
|
|
|
|
|
|
|
|
|
Liability settlements
|
|
|
|
|
|
|
85,146
|
|
|
|
|
|
|
|
|
|
Foreign currency exchange rate
changes
|
|
|
(5,194
|
)
|
|
|
11,444
|
|
|
|
(230
|
)
|
|
|
(976
|
)
|
Benefits paid
|
|
|
13,096
|
|
|
|
18,759
|
|
|
|
2,724
|
|
|
|
2,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation, end of year
|
|
$
|
(184,618
|
)
|
|
$
|
(177,166
|
)
|
|
$
|
(45,485
|
)
|
|
$
|
(47,583
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
Years Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Change in Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets,
beginning of year
|
|
$
|
134,716
|
|
|
$
|
190,066
|
|
|
$
|
|
|
|
$
|
|
|
Actual return on plan assets
|
|
|
16,639
|
|
|
|
23,117
|
|
|
|
|
|
|
|
|
|
Employer contributions
|
|
|
28,198
|
|
|
|
26,071
|
|
|
|
2,693
|
|
|
|
2,454
|
|
Plan participants contributions
|
|
|
319
|
|
|
|
1,300
|
|
|
|
31
|
|
|
|
40
|
|
Liability settlements
|
|
|
|
|
|
|
(78,894
|
)
|
|
|
|
|
|
|
|
|
Foreign currency exchange rate
changes
|
|
|
4,603
|
|
|
|
(8,185
|
)
|
|
|
|
|
|
|
|
|
Benefits paid
|
|
|
(13,096
|
)
|
|
|
(18,759
|
)
|
|
|
(2,724
|
)
|
|
|
(2,494
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets, end of
year
|
|
$
|
171,379
|
|
|
$
|
134,716
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded Status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
$
|
(13,239
|
)
|
|
$
|
(42,450
|
)
|
|
$
|
(45,485
|
)
|
|
$
|
(47,583
|
)
|
Unrecognized net actuarial loss
|
|
|
35,580
|
|
|
|
43,559
|
|
|
|
11,151
|
|
|
|
14,351
|
|
Unrecognized prior service cost
|
|
|
468
|
|
|
|
(104
|
)
|
|
|
(408
|
)
|
|
|
(514
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued benefit cost
|
|
$
|
22,809
|
|
|
$
|
1,005
|
|
|
$
|
(34,742
|
)
|
|
$
|
(33,746
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Amounts recognized in the balance
sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid benefit cost
|
|
$
|
5,761
|
|
|
$
|
750
|
|
|
$
|
|
|
|
$
|
|
|
Accrued benefit liability (current)
|
|
|
(1,118
|
)
|
|
|
(18,678
|
)
|
|
|
(2,599
|
)
|
|
|
(2,949
|
)
|
Accrued benefit liability
(noncurrent)
|
|
|
(18,026
|
)
|
|
|
(10,954
|
)
|
|
|
(42,888
|
)
|
|
|
(30,797
|
)
|
Noncurrent deferred taxes
|
|
|
13,093
|
|
|
|
11,358
|
|
|
|
4,015
|
|
|
|
|
|
Accumulated other comprehensive
income
|
|
|
23,099
|
|
|
|
18,529
|
|
|
|
6,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized
|
|
$
|
22,809
|
|
|
$
|
1,005
|
|
|
$
|
(34,742
|
)
|
|
$
|
(33,746
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In 2006, the change in benefit obligation attributable to
actuarial gain or losses for pension benefits related primarily
to a change in the mortality assumption for the United Kingdom
plan and for other postretirement benefits related primarily to
favorable claims experience for the Canadian plan. In 2005, the
change in benefit obligation for pension and other
postretirement benefits attributable to actuarial gains or
losses related primarily to a decrease in the discount rate used
in the computation of such benefits.
The accumulated benefit obligation for all defined benefit
pension plans was $178.2 million and $164.0 million at
December 31, 2006 and 2005, respectively.
The projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plans
with an accumulated benefit obligation in excess of plan assets
were $131.9 million, $126.3 million, and
$112.8 million, respectively, as of December 31, 2006
and $165.4 million, $152.2 million, and
$122.3 million, respectively, as of December 31, 2005.
65
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
The following table provides the components of net periodic
benefit costs for the plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
Years Ended December 31,
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Components of net periodic benefit
cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
6,163
|
|
|
$
|
9,476
|
|
|
$
|
7,589
|
|
|
$
|
646
|
|
|
$
|
530
|
|
|
$
|
205
|
|
Interest cost
|
|
|
9,146
|
|
|
|
13,151
|
|
|
|
12,014
|
|
|
|
2,326
|
|
|
|
2,344
|
|
|
|
1,525
|
|
Expected return on plan assets
|
|
|
(10,814
|
)
|
|
|
(14,838
|
)
|
|
|
(13,047
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service cost
|
|
|
(27
|
)
|
|
|
(39
|
)
|
|
|
(39
|
)
|
|
|
(106
|
)
|
|
|
(106
|
)
|
|
|
(106
|
)
|
Special termination benefits
|
|
|
|
|
|
|
5,869
|
|
|
|
976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of liabilities
|
|
|
(45
|
)
|
|
|
863
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (gain) loss recognition
|
|
|
2,502
|
|
|
|
3,432
|
|
|
|
2,116
|
|
|
|
687
|
|
|
|
619
|
|
|
|
432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
6,925
|
|
|
$
|
17,914
|
|
|
$
|
9,655
|
|
|
$
|
3,553
|
|
|
$
|
3,387
|
|
|
$
|
2,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the assumptions used in determining
the benefit obligations and the net periodic benefit cost
amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
|
Other Benefits
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
Weighted average assumptions for
benefit obligations at year end:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.4
|
%
|
|
|
5.2
|
%
|
|
|
5.3
|
%
|
|
|
5.2
|
%
|
Salary increase
|
|
|
4.0
|
%
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Weighted average assumptions for
net periodic cost for the year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
5.2
|
%
|
|
|
5.4
|
%
|
|
|
5.2
|
%
|
|
|
5.8
|
%
|
Salary increase
|
|
|
4.0
|
%
|
|
|
4.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Expected return on assets
|
|
|
7.4
|
%
|
|
|
8.1
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Assumed health care cost trend
rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health care cost trend rate
assumed for next year
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
9.0
|
%
|
|
|
10.0
|
%
|
Rate that the cost trend rate
gradually declines to
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
Year that the rate reaches the
rate it is assumed to remain at
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
2011
|
|
|
|
2010
|
|
Measurement date
|
|
|
12/31/2006
|
|
|
|
12/31/2005
|
|
|
|
12/31/2006
|
|
|
|
12/31/2005
|
|
Assumed health care cost trend rates have a significant effect
on the amounts reported for the health care plan. A one
percentage-point change in the assumed health care cost trend
rates would have the following effects on 2006 expense and
year-end liabilities.
|
|
|
|
|
|
|
|
|
|
|
1% Increase
|
|
|
1% Decrease
|
|
|
|
(In thousands)
|
|
|
Effect on total of service and
interest cost components
|
|
$
|
408
|
|
|
$
|
(320
|
)
|
Effect on postretirement benefit
obligation
|
|
$
|
5,508
|
|
|
$
|
(4,427
|
)
|
66
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
In 2004, the FASB issued FASB Staff Position (FSP)
No. 106-2,
Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003 (the Act). FSP
No. 106-2
provides guidance on the accounting for and disclosure of the
subsidy available under the Act for employers that sponsor
postretirement health care plans providing prescription drug
benefits. We elected to apply the requirements of FSP
106-2 in the
second quarter of 2004, retroactive to the enactment date of the
Act. The reduction in the accumulated postretirement benefit
obligation attributed to past service as a result of the subsidy
available under the Act is $1.6 million. The effect of the
subsidy on the net periodic postretirement benefit cost for 2004
is $0.2 million.
The following table reflects the pension plans actual and
target asset allocations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
|
Actual
|
|
|
Actual
|
|
December 31,
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Asset Category:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
57
|
%
|
|
|
75
|
%
|
|
|
78
|
%
|
Debt securities
|
|
|
43
|
%
|
|
|
25
|
%
|
|
|
22
|
%
|
Real estate
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Other
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Absent regulatory or statutory limitations, the target asset
allocation for the investment of the assets for our ongoing
pension plans is 25% in debt securities and 75% in equity
securities and for our pension plans where the majority of the
participants are in payment or terminated vested status is 80%
in debt securities and 20% in equity securities. The plans only
invest in debt and equity instruments for which there is a ready
public market. We develop our expected long-term rate of return
assumptions based on the historical rates of returns for equity
and debt securities of the type in which our plans invest.
The following table reflects the benefits as of
December 31, 2006 expected to be paid in each of the next
five years and in the aggregate for the five years thereafter
from our pension and other postretirement plans as well as the
expected subsidy receipts available under the Act in these
years. Because our other postretirement plans are unfunded, the
anticipated benefits with respect to these plans will come from
our own assets. Because our pension plans are primarily funded
plans, the anticipated benefits with respect to these plans will
come primarily from the trusts established for these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicare
|
|
|
|
Pension
|
|
|
Other
|
|
|
Subsidy
|
|
|
|
Plans
|
|
|
Plans
|
|
|
Receipts
|
|
|
|
(In thousands)
|
|
|
2007
|
|
$
|
10,689
|
|
|
$
|
2,966
|
|
|
$
|
296
|
|
2008
|
|
|
10,846
|
|
|
|
2,980
|
|
|
|
293
|
|
2009
|
|
|
12,842
|
|
|
|
3,002
|
|
|
|
285
|
|
2010
|
|
|
13,181
|
|
|
|
2,990
|
|
|
|
276
|
|
2011
|
|
|
12,849
|
|
|
|
2,949
|
|
|
|
261
|
|
2012-2016
|
|
|
71,355
|
|
|
|
13,962
|
|
|
|
1,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
131,762
|
|
|
$
|
28,849
|
|
|
$
|
2,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We anticipate contributing $10.1 million and
$2.9 million to our pension and other postretirement plans,
respectively, during 2007.
The amounts in accumulated other comprehensive income that have
not yet been recognized as components of net periodic benefits
cost at December 31, 2006, the changes in these amounts
during the year ended December 31,
67
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
2006, and the expected amortization of these amounts as
components of net periodic benefit cost for the year ended
December 31, 2007 are as follows.
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
Other
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
|
(In thousands)
|
|
|
Components of accumulated other
comprehensive income:
|
|
|
|
|
|
|
|
|
Net actuarial loss
|
|
$
|
35,580
|
|
|
$
|
11,151
|
|
Net prior service cost (credit)
|
|
|
468
|
|
|
|
(408
|
)
|
Net transition obligation (asset)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
36,048
|
|
|
$
|
10,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
Other
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
|
(In thousands)
|
|
|
Changes in accumulated other
comprehensive income:
|
|
|
|
|
|
|
|
|
Net actuarial loss, beginning of
year
|
|
$
|
43,559
|
|
|
$
|
14,351
|
|
Amortization cost
|
|
|
(2,502
|
)
|
|
|
(687
|
)
|
Liability loss (gain)
|
|
|
2,310
|
|
|
|
(2,607
|
)
|
Asset gain
|
|
|
(5,825
|
)
|
|
|
|
|
Recognition of curtailment gain
|
|
|
(3,129
|
)
|
|
|
|
|
Recognition of settlement loss
|
|
|
45
|
|
|
|
|
|
Currency impact
|
|
|
1,122
|
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss, end of year
|
|
$
|
35,580
|
|
|
$
|
11,151
|
|
|
|
|
|
|
|
|
|
|
Prior service cost, beginning of
year
|
|
$
|
(104
|
)
|
|
$
|
(514
|
)
|
Amortization credit
|
|
|
27
|
|
|
|
106
|
|
Plan amendment
|
|
|
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost, end of year
|
|
$
|
468
|
|
|
$
|
(408
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
Other
|
|
|
|
Benefits
|
|
|
Benefits
|
|
|
|
(In thousands)
|
|
|
Expected 2007 amortization:
|
|
|
|
|
|
|
|
|
Amortization of net transition
obligation
|
|
$
|
|
|
|
$
|
|
|
Amortization of prior service cost
|
|
|
16
|
|
|
|
(106
|
)
|
Amortization of net losses
|
|
|
1,935
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,951
|
|
|
$
|
504
|
|
|
|
|
|
|
|
|
|
|
68
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
The following table provides the impact of adopting
SFAS No. 158 on our Consolidated Balance Sheet at
December 31, 2006.
|
|
|
|
|
|
|
Increase
|
|
|
|
(Decrease)
|
|
|
|
(In thousands)
|
|
|
Balance sheet components:
|
|
|
|
|
Long-lived assets
|
|
$
|
(18,281
|
)
|
Current liabilities
|
|
|
(6,981
|
)
|
Long-term liabilities
|
|
|
14,852
|
|
Deferred taxes
|
|
|
(10,701
|
)
|
Accumulated other comprehensive
income
|
|
|
(15,451
|
)
|
|
|
Note 14:
|
Share-Based
Compensation
|
On January 1, 2006, we adopted SFAS No. 123(R),
Share-Based Payment, using the modified prospective
method. Results for prior periods have not been restated.
Our operating results and cash flows for 2006 differ from
operating results and cash flows that would have resulted had we
continued to account for share-based compensation plans using
the intrinsic-value method by the following amounts:
|
|
|
|
|
|
|
Increase
|
|
|
|
(Decrease)
|
|
|
|
(In thousands, except
|
|
|
|
per share data)
|
|
|
Income from continuing operations
before taxes
|
|
$
|
(1,879
|
)
|
Income from continuing operations
|
|
|
(1,157
|
)
|
Net income
|
|
|
(1,157
|
)
|
Net income per basic share
|
|
|
(0.03
|
)
|
Net income per diluted share
|
|
|
(0.02
|
)
|
Cash provided by operating
activities
|
|
|
(7,369
|
)
|
Cash provided by financing
activities
|
|
|
7,369
|
|
Compensation cost charged against income and the income tax
benefit recognized for our share-based compensation arrangements
is included below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Total share-based compensation
cost(1)
|
|
$
|
5,765
|
|
|
$
|
3,539
|
|
|
$
|
3,768
|
|
Income tax benefit
|
|
|
2,214
|
|
|
|
1,359
|
|
|
|
1,447
|
|
|
|
|
(1) |
|
All compensation cost is charged to SG&A expenses. |
The following table illustrates the effect on net income and net
income per share if we had accounted for stock options using the
fair value method in 2005 and 2004. For the purpose of this pro
forma disclosure, the value of the
69
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
options is estimated using a Black-Scholes-Merton option-pricing
formula and amortized to expense over the options vesting
periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31, 2005
|
|
|
December 31, 2004
|
|
|
|
As Reported
|
|
|
Pro Forma
|
|
|
As Reported
|
|
|
Pro Forma
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Share-based employee compensation
cost, net of tax
|
|
$
|
2,180
|
|
|
$
|
2,649
|
|
|
$
|
2,321
|
|
|
$
|
4,708
|
|
Net income
|
|
|
47,558
|
|
|
|
47,089
|
|
|
|
15,189
|
|
|
|
12,802
|
|
Basic net income per share
|
|
|
1.04
|
|
|
|
1.03
|
|
|
|
0.43
|
|
|
|
0.36
|
|
Diluted net income per share
|
|
|
0.96
|
|
|
|
0.96
|
|
|
|
0.43
|
|
|
|
0.36
|
|
We currently have outstanding stock appreciation rights (SARs),
stock options, restricted stock shares, restricted stock units
with service vesting conditions, and restricted stock units with
performance vesting conditions. We grant SARs and stock options
with an exercise price equal to the market price of our common
stock on the grant date. SARs may be converted into shares of
our common stock in equal amounts on each of the first
3 anniversaries of the grant date and expire 10 years
from the grant date. Stock options become exercisable in equal
amounts on each of the first 3 anniversaries of the grant date
and expire 10 years from the grant date. Certain awards
provide for accelerated vesting if there is a change in control
of the Company. Both restricted stock shares and units with
service conditions cliff vest in either 3 or
5 years from the grant date. Restricted stock units with
performance conditions begin to vest upon satisfaction of
certain financial performance conditions on the first
anniversary of their grant date and then vest ratably on the
second and third anniversaries of their grant date. If the
financial performance conditions are not satisfied, the
restricted stock units will be forfeited. The performance
vesting conditions have been satisfied for all outstanding
restricted stock units with performance vesting conditions.
We recognize compensation cost for all awards based on their
fair values. The fair values for SARs and stock options are
estimated on the grant date using the Black-Scholes-Merton
option-pricing formula which incorporates the assumptions noted
in the following table. The fair value of restricted stock
shares and units is the market price of our common stock on the
date of grant. Compensation costs for awards with service
conditions are amortized to expense using the straight-line
method. Compensation costs for awards with performance
conditions are amortized to expense using the graded attribution
method.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands, except weighted average fair value and
assumptions)
|
|
|
Weighted-average fair value of
SARs and options granted
|
|
$
|
11.37
|
|
|
$
|
6.20
|
|
|
$
|
4.74
|
|
Total intrinsic value of SARs
converted and options exercised
|
|
|
20,516
|
|
|
|
2,045
|
|
|
|
1,321
|
|
Cash received for options exercised
|
|
|
38,808
|
|
|
|
6,897
|
|
|
|
4,507
|
|
Excess tax benefits realized from
SARs converted and options exercised
|
|
|
7,369
|
|
|
|
|
|
|
|
|
|
Weighted-average fair value of
restricted stock shares and units granted
|
|
|
28.96
|
|
|
|
19.93
|
|
|
|
20.61
|
|
Total fair value of restricted
stock shares and units vested
|
|
|
997
|
|
|
|
3,342
|
|
|
|
1,583
|
|
Expected volatility
|
|
|
36.92
|
%
|
|
|
37.76
|
%
|
|
|
39.53
|
%
|
Expected term (in years)
|
|
|
6.5
|
|
|
|
6.8
|
|
|
|
6.3
|
|
Risk-free rate
|
|
|
4.54
|
%
|
|
|
4.36
|
%
|
|
|
3.79
|
%
|
Dividend yield
|
|
|
0.76
|
%
|
|
|
4.10
|
%
|
|
|
6.31
|
%
|
70
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SARs and Stock Options
|
|
|
Restricted Shares
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
and Units
|
|
|
|
|
|
|
Weighted-
|
|
|
Average
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
|
|
Grant-Date
|
|
|
|
Number
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
|
Number
|
|
|
Fair Value
|
|
|
|
(In thousands, except exercise prices, fair values, and
contractual terms)
|
|
|
Outstanding at January 1, 2006
|
|
|
4,548
|
|
|
$
|
24.06
|
|
|
|
|
|
|
|
|
|
|
|
222
|
|
|
$
|
20.16
|
|
Granted
|
|
|
344
|
|
|
|
26.53
|
|
|
|
|
|
|
|
|
|
|
|
197
|
|
|
|
28.96
|
|
Exercised or converted
|
|
|
(1,843
|
)
|
|
|
21.17
|
|
|
|
|
|
|
|
|
|
|
|
(48
|
)
|
|
|
20.63
|
|
Forfeited or expired
|
|
|
(301
|
)
|
|
|
29.71
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
22.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
2006
|
|
|
2,748
|
|
|
$
|
25.57
|
|
|
|
5.0
|
|
|
$
|
38,430
|
|
|
|
368
|
|
|
$
|
24.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested or expected to vest at
December 31, 2006
|
|
|
2,716
|
|
|
$
|
25.59
|
|
|
|
5.0
|
|
|
$
|
37,946
|
|
|
|
|
|
|
|
|
|
Exercisable or convertible at
December 31, 2006
|
|
|
1,761
|
|
|
|
27.13
|
|
|
|
3.2
|
|
|
|
21,881
|
|
|
|
|
|
|
|
|
|
At December 31, 2006, the total unrecognized compensation
cost related to all nonvested awards was $12.5 million.
That cost is expected to be recognized over a weighted-average
period of 2.3 years.
Historically, we have issued treasury shares, if available, to
satisfy award conversions and exercises.
|
|
Note 15:
|
Stockholder
Rights Plan
|
Under our Stockholder Rights Plan, each share of our common
stock generally has attached to it one preferred
share purchase right. Each right, when exercisable, entitles the
holder to purchase 1/1000th of a share of our Junior
Participating Preferred Stock Series A at a purchase price
of $150.00 (subject to adjustment). Each
1/1000th of
a share of Series A Junior Participating Preferred Stock
will be substantially equivalent to one share of our common
stock and will be entitled to one vote, voting together with the
shares of common stock.
The rights will become exercisable only if, without the prior
approval of the Board of Directors, a person or group of persons
acquires or announces the intention to acquire 20% or more of
our common stock. If we are acquired through a merger or other
business combination transaction, each right will entitle the
holder to purchase $300.00 worth of the surviving companys
common stock for $150.00 (subject to adjustment). In addition,
if a person or group of persons acquires 20% or more of our
common stock, each right not owned by the 20% or greater
shareholder would permit the holder to purchase $300.00 worth of
our common stock for $150.00 (subject to adjustment). The rights
are redeemable, at our option, at $.01 per right at any
time prior to an announcement of a beneficial owner of 20% or
more of our common stock then outstanding. The rights expire on
December 9, 2016.
|
|
Note 16:
|
Operating
Leases
|
Operating lease expense incurred primarily for office space,
machinery and equipment was $13.8 million,
$12.5 million and $8.6 million in 2006, 2005, and
2004, respectively.
71
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
Minimum annual lease payments for noncancelable operating leases
in effect at December 31, 2006 are as follows:
|
|
|
|
|
|
|
(In thousands)
|
|
|
2007
|
|
$
|
6,309
|
|
2008
|
|
|
3,836
|
|
2009
|
|
|
2,535
|
|
2010
|
|
|
1,183
|
|
2011
|
|
|
340
|
|
Thereafter
|
|
|
67
|
|
|
|
|
|
|
|
|
$
|
14,270
|
|
|
|
|
|
|
Certain of our operating leases include step rent provisions and
rent escalations. We include these step rent provisions and rent
escalations in our minimum lease payments obligations and
recognize them as a component of rental expense on a
straight-line basis over the minimum lease term.
|
|
Note 17:
|
Market
Concentrations and Risks
|
Concentrations
of Credit
We sell our products to many customers in several markets across
multiple geographic areas. The ten largest customers, primarily
the larger distributors and communications companies, constitute
in aggregate approximately 46%, 42% and 52% of revenues in 2006,
2005, and 2004, respectively.
At December 31, 2006, we had $25.5 million in trade
accounts receivable outstanding from Anixter International Inc.
(Anixter). This represented approximately 12% of our total trade
accounts receivable outstanding at December 31, 2006.
Historically, Anixter generally pays all outstanding receivables
within thirty to sixty days of invoice receipt.
Unconditional
Copper Purchase Obligations
At December 31, 2006, we were committed to purchase
approximately 0.3 million pounds of copper at an aggregate
cost of $0.7 million. At December 31, 2006, the fixed
cost of this purchase was less than $0.1 million under the
market cost that would be incurred on a spot purchase of the
same amount of copper. The aggregate market cost was based on
the current market price of copper obtained from the New York
Mercantile Exchange. These commitments will mature in 2007.
Labor
Approximately 36% of our labor force is covered by collective
bargaining agreements at various locations around the world.
Approximately 29% of our labor force is covered by collective
bargaining agreements that we expect to renegotiate during 2007.
72
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
International
Operations
The carrying amounts of net assets belonging to our
international operations were as follows:
|
|
|
|
|
|
|
|
|
December 31,
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Europe
|
|
$
|
211,588
|
|
|
$
|
155,586
|
|
Canada
|
|
|
111,657
|
|
|
|
104,561
|
|
Rest of World
|
|
|
(20,865
|
)
|
|
|
(21,998
|
)
|
Fair
Value of Financial Instruments
Our financial instruments consist primarily of cash and cash
equivalents, trade receivables, trade payables, and debt
instruments. The carrying amounts of cash and cash equivalents,
trade receivables, and trade payables at December 31, 2006
are considered representative of their respective fair values.
The carrying amount of our debt instruments at December 31,
2006 was $172.0 million. The fair value of our debt
instruments at December 31, 2006 was approximately
$318.6 million estimated on a discounted cash flow basis
using currently obtainable rates for similar financing. Included
in this amount was an estimated $249.0 million fair value
of convertible subordinated debentures with a face value of
$110.0 million. The fair value premium of
$39.9 million related to these debentures as of the Merger
date, which related to the conversion option embedded within the
debentures, was recognized as an increase to both additional
paid-in capital and goodwill.
|
|
Note 18:
|
Contingent
Liabilities
|
General
Various claims are asserted against us in the ordinary course of
business including those pertaining to income tax examinations
and product liability, customer, employment, vendor and patent
matters. Based on facts currently available, management believes
that the disposition of the claims that are pending or asserted
will not have a materially adverse effect on our financial
position, operating results, or cash flow.
Letters
of Credit, Guarantees and Bonds
At December 31, 2006, we were party to unused standby
letters of credit and unused bank guarantees totaling
$7.2 million and $5.4 million, respectively. We also
maintain bonds totaling $3.9 million in connection with
workers compensation self-insurance programs in several states,
taxation in Canada, retirement benefits in Germany, and the
importation of product into the United States and Canada.
|
|
Note 19:
|
Minimum
Requirements Contract Income
|
We had a contractual sales incentive agreement with a customer
that required the customer to purchase quantities of product
from us generating at a minimum $3.0 million in gross
profit per annum or pay us compensation according to contractual
terms through December 31, 2005. During each of the years
2005 and 2004, the customer did not make the minimum required
purchases and we were entitled to receive compensation according
to the terms of the agreement. As a result, we recognized
$3.0 million in operating income in 2005 and 2004. The
contract expired upon receipt of the 2005 payment.
73
Belden
CDT Inc.
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 20:
|
Quarterly
Operating Results (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
1st
|
|
|
2nd (1)
|
|
|
3rd (2)
|
|
|
4th (3)
|
|
|
Year
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Number of days in quarter
|
|
|
85
|
|
|
|
91
|
|
|
|
91
|
|
|
|
98
|
|
|
|
365
|
|
Revenues
|
|
$
|
321,905
|
|
|
$
|
409,568
|
|
|
$
|
385,581
|
|
|
$
|
378,757
|
|
|
$
|
1,495,811
|
|
Gross profit
|
|
|
73,415
|
|
|
|
92,177
|
|
|
|
89,373
|
|
|
|
78,348
|
|
|
|
333,313
|
|
Operating income
|
|
|
26,956
|
|
|
|
36,803
|
|
|
|
35,617
|
|
|
|
19,102
|
|
|
|
118,478
|
|
Income from continuing operations
|
|
|
14,940
|
|
|
|
21,524
|
|
|
|
24,386
|
|
|
|
10,713
|
|
|
|
71,563
|
|
Gain (loss) from discontinued
operations
|
|
|
(1,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,330
|
)
|
Gain (loss) on disposal of
discontinued operations
|
|
|
(4,298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,298
|
)
|
Net income
|
|
|
9,312
|
|
|
|
21,524
|
|
|
|
24,386
|
|
|
|
10,713
|
|
|
|
65,935
|
|
Basic income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.35
|
|
|
$
|
0.50
|
|
|
$
|
0.56
|
|
|
$
|
0.24
|
|
|
$
|
1.65
|
|
Discontinued operations
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.03
|
)
|
Disposal of discontinued operations
|
|
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.10
|
)
|
Net income
|
|
|
0.22
|
|
|
|
0.50
|
|
|
|
0.56
|
|
|
|
0.24
|
|
|
|
1.52
|
|
Diluted income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.32
|
|
|
$
|
0.44
|
|
|
$
|
0.50
|
|
|
$
|
0.22
|
|
|
$
|
1.48
|
|
Discontinued operations
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.03
|
)
|
Disposal of discontinued operations
|
|
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.08
|
)
|
Net income
|
|
|
0.20
|
|
|
|
0.44
|
|
|
|
0.50
|
|
|
|
0.22
|
|
|
|
1.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
1st
|
|
|
2nd
|
|
|
3rd (4)
|
|
|
4th
|
|
|
Year
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Number of days in quarter
|
|
|
86
|
|
|
|
91
|
|
|
|
91
|
|
|
|
97
|
|
|
|
365
|
|
Revenues
|
|
$
|
286,268
|
|
|
$
|
311,438
|
|
|
$
|
316,480
|
|
|
$
|
331,483
|
|
|
$
|
1,245,669
|
|
Gross profit
|
|
|
62,785
|
|
|
|
72,276
|
|
|
|
74,002
|
|
|
|
68,310
|
|
|
|
277,373
|
|
Operating income
|
|
|
14,651
|
|
|
|
16,359
|
|
|
|
18,018
|
|
|
|
19,510
|
|
|
|
68,538
|
|
Income from continuing operations
|
|
|
7,382
|
|
|
|
8,858
|
|
|
|
9,118
|
|
|
|
8,210
|
|
|
|
33,568
|
|
Gain (loss) from discontinued
operations
|
|
|
(739
|
)
|
|
|
1,144
|
|
|
|
(3,053
|
)
|
|
|
1,475
|
|
|
|
(1,173
|
)
|
Gain on disposal of discontinued
operations
|
|
|
6,400
|
|
|
|
8,763
|
|
|
|
|
|
|
|
|
|
|
|
15,163
|
|
Net income
|
|
|
13,043
|
|
|
|
18,765
|
|
|
|
6,065
|
|
|
|
9,685
|
|
|
|
47,558
|
|
Basic income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.16
|
|
|
$
|
0.19
|
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
|
$
|
0.74
|
|
Discontinued operations
|
|
|
(0.02
|
)
|
|
|
0.02
|
|
|
|
(0.07
|
)
|
|
|
0.03
|
|
|
|
(0.03
|
)
|
Disposal of discontinued operations
|
|
|
0.14
|
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
0.33
|
|
Net income
|
|
|
0.28
|
|
|
|
0.40
|
|
|
|
0.13
|
|
|
|
0.22
|
|
|
|
1.04
|
|
Diluted income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.15
|
|
|
$
|
0.18
|
|
|
$
|
0.19
|
|
|
$
|
0.18
|
|
|
$
|
0.69
|
|
Discontinued operations
|
|
|
(0.01
|
)
|
|
|
0.02
|
|
|
|
(0.06
|
)
|
|
|
0.03
|
|
|
|
(0.02
|
)
|
Disposal of discontinued operations
|
|
|
0.12
|
|
|
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
0.29
|
|
Net income
|
|
|
0.26
|
|
|
|
0.36
|
|
|
|
0.13
|
|
|
|
0.21
|
|
|
|
0.96
|
|
|
|
|
(1) |
|
Includes asset impairment totaling $2.4 million. |
|
(2) |
|
Includes asset impairment totaling $2.5 million. |
|
(3) |
|
Includes asset impairment totaling $6.2 million. |
|
(4) |
|
Includes asset impairment totaling $8.0 million. |
74
|
|
Note 21:
|
Subsequent
Events (Unaudited)
|
Pending
Acquisitions
In January 2007, we announced the pending acquisition of
Germany-based Hirschmann Automation and Control GmbH (HAC) for
approximately $260.0 million cash. HAC is a leading
supplier of Industrial Ethernet solutions and industrial
connectors and had annual revenues of approximately
$250.0 million in 2006.
In February 2007, we announced the pending acquisition of Hong
Kong-based LTK Wiring Co. Ltd. (LTK) for approximately
$195.0 million cash. LTK is a leading supplier of
electronic cable for the China market and had annual revenues of
approximately $220.0 million in 2006.
We anticipate that these acquisitions will be funded with
available cash, internally-generated funds, and cash obtained
through external borrowings. The consummation of both of these
acquisitions is subject to customary closing conditions.
Long-Term
Debt and Other Borrowing Arrangements
On February 2, 2007, we received a commitment letter
(Commitment) from Wachovia Bank, National Association and
certain Wachovia affiliates (Wachovia) that set out the terms by
which Wachovia would provide us (i) a senior secured term
loan of up to $125 million and (ii) a senior secured
revolving credit facility of up to $200 million
(individually a Facility and together the Facilities). We may
use the Facilities to refinance our existing senior secured
credit facility or for ongoing working capital requirements and
other corporate purposes (including acquisitions). The
Commitment, unless accepted by us before March 2, 2007,
will expire. If we accept the Commitment before this deadline,
we will have until April 2, 2007 to complete the closing of
either Facility (or both); otherwise, the Commitment will expire
on such date. With the closing of the amendment to our Senior
Credit Agreement described below, Wachovias commitment for
a $200.0 million senior secured revolving credit facility
expired.
On February 16, 2007, we entered into an amendment to our
existing Senior Credit Agreement, which provides that the amount
of the commitment be increased from $165.0 million to
$225.0 million as well as amends certain restrictive
covenants governing affiliate indebtedness and asset sales.
On February 16, 2007, we redeemed our medium-term notes in
the aggregate principal amount of $62.0 million and, in
connection therewith, we paid a make-whole premium of
approximately $2.0 million. The redemption was made with
cash on hand.
75
|
|
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
Conclusion
Regarding the Effectiveness of Disclosure 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, as amended (the
Exchange Act)). 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.
Managements
Report on Internal Control over Financial Reporting
The management of Belden is responsible for establishing and
maintaining adequate internal control over financial reporting,
as such term is defined in Exchange Act
Rules 13a-15(f)
and
15d-15(f).
Belden management conducted an evaluation of the effectiveness
of our internal control over financial reporting as of
December 31, 2006. In conducting its evaluation, Belden
management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control Integrated
Framework. Based on that evaluation, our
management believes our internal control over financial
reporting was effective as of December 31, 2006.
Managements assessment of the effectiveness of our
internal control over financial reporting as of
December 31, 2006 has been audited by Ernst &
Young LLP, an independent registered public accounting firm, as
stated in their report that follows.
76
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Belden CDT Inc.
We have audited managements assessment, included in the
accompanying Managements Report on Internal Control Over
Financial Reporting, that Belden CDT Inc. maintained effective
internal control over financial reporting as of
December 31, 2006, based on criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Belden CDT Inc.s management is
responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness
of internal control over financial reporting. Our responsibility
is to express an opinion on managements assessment and an
opinion on the effectiveness of the Companys internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, evaluating
managements assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing
such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles and that receipts and expenditures of the company are
being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, managements assessment that Belden CDT
Inc. maintained effective internal control over financial
reporting as of December 31, 2006, is fairly stated, in all
material respects, based on the COSO criteria. Also, in our
opinion, Belden CDT Inc. maintained, in all material respects,
effective internal control over financial reporting as of
December 31, 2006, based on the COSO criteria.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Belden CDT Inc. as of
December 31, 2006 and 2005, and the related consolidated
statements of operations, stockholders equity, and cash
flows for each of the three years in the period ended
December 31, 2006 of Belden CDT Inc. and our report dated
February 28, 2007, expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
St. Louis, Missouri
February 28, 2007
77
|
|
Item 9B.
|
Other
Information
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
Information regarding directors is incorporated herein by
reference to Matters to Be Voted On:
Item 1 Election of Directors, as
described in the Proxy Statement. Information regarding
executive officers is set forth in Part I herein under the
heading Executive Officers. The additional
information required by this Item is incorporated herein by
reference to Board Structure and Compensation
(opening paragraph and table), Board Structure and
Compensation The Audit Committee,
Beneficial Ownership Table of Directors, Nominees and
Executive Officers Section 16(a) Beneficial
Ownership Reporting Compliance, Board Structure and
Compensation Nominating and Corporate Governance
Committee and the answer to May I propose actions
for consideration at next years annual meeting of
shareholders or nominate individuals to serve as
directors?, as described in the Proxy Statement.
|
|
Item 11.
|
Executive
Compensation
|
Incorporated herein by reference to Compensation
Discussion and Analysis, Compensation Committee
Report and Director Compensation as described
in the Proxy Statement.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters
|
Incorporated herein by reference to Equity Compensation
Plan Information and Stock Ownership of Certain
Beneficial Owners and Management as described in the Proxy
Statement.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Incorporated herein by reference to Executive
Compensation Certain Relationships and Related
Transactions and Board Structure and
Compensation (paragraph following the table) as described
in the Proxy Statement.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
Incorporated herein by reference to Board Structure and
Compensation Fees to Independent Registered Public
Accountants for 2006 and 2005 and Board Structure
and Compensation Audit Committees Pre-Approval
Policies and Procedures as described in the Proxy
Statement.
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedules
|
(a) Documents filed as part of this Report:
1. Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2006 and
December 31, 2005
Consolidated Statements of Operations for Each of the Three
Years in the Period Ended December 31, 2006
Consolidated Cash Flow Statements for Each of the Three Years in
the Period Ended December 31, 2006
78
Consolidated Stockholders Equity Statements for Each of
the Three Years in the Period Ended December 31, 2006
Notes to Consolidated Financial Statements
2. Financial Statement Schedule
Schedule II
Valuation and Qualifying Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
Costs and
|
|
|
Divestures/
|
|
|
Charge
|
|
|
|
|
|
Currency
|
|
|
Ending
|
|
|
|
Balance
|
|
|
Expenses
|
|
|
Acquisitions
|
|
|
Offs
|
|
|
Recoveries
|
|
|
Movement
|
|
|
Balance
|
|
|
|
(In thousands)
|
|
|
Accounts Receivable
Allowance for Doubtful Accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
3,839
|
|
|
$
|
477
|
|
|
$
|
|
|
|
$
|
(1,835
|
)
|
|
$
|
(28
|
)
|
|
$
|
184
|
|
|
$
|
2,637
|
|
2005
|
|
|
5,588
|
|
|
|
700
|
|
|
|
269
|
|
|
|
(2,056
|
)
|
|
|
(612
|
)
|
|
|
(51
|
)
|
|
|
3,839
|
|
2004
|
|
|
2,646
|
|
|
|
690
|
|
|
|
3,704
|
|
|
|
(1,655
|
)
|
|
|
|
|
|
|
204
|
|
|
|
5,588
|
|
Inventories
Obsolescence and Other Valuation Allowances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
14,912
|
|
|
$
|
14,395
|
|
|
$
|
|
|
|
$
|
(14,259
|
)
|
|
$
|
|
|
|
$
|
139
|
|
|
$
|
15,187
|
|
2005
|
|
|
21,385
|
|
|
|
7,006
|
|
|
|
|
|
|
|
(12,838
|
)
|
|
|
|
|
|
|
(641
|
)
|
|
|
14,912
|
|
2004
|
|
|
2,173
|
|
|
|
2,807
|
|
|
|
19,360
|
|
|
|
(4,411
|
)
|
|
|
|
|
|
|
1,456
|
|
|
|
21,385
|
|
Deferred Income Tax
Asset Valuation Allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
27,786
|
|
|
$
|
3,764
|
|
|
$
|
|
|
|
$
|
(264
|
)
|
|
$
|
(33
|
)
|
|
$
|
|
|
|
$
|
31,253
|
|
2005
|
|
|
22,565
|
|
|
|
5,510
|
|
|
|
|
|
|
|
|
|
|
|
(476
|
)
|
|
|
187
|
|
|
|
27,786
|
|
2004
|
|
|
9,792
|
|
|
|
9,473
|
|
|
|
3,370
|
|
|
|
|
|
|
|
(70
|
)
|
|
|
|
|
|
|
22,565
|
|
All other financial statement schedules not included in this
Annual Report on
Form 10-K
are omitted because they are not applicable.
3. Exhibits. The following exhibits are
filed herewith or incorporated herein by reference, as
indicated. Documents indicated by an asterisk (*) identify
each management contract or compensatory plan.
|
|
|
|
|
|
|
|
|
|
|
The filings referenced for incorporation by
|
Exhibit
|
|
|
|
reference are Company (Belden CDT Inc.) filings
|
Number
|
|
Description of Exhibit
|
|
unless noted to be those of Belden Inc.
|
|
|
2
|
.1
|
|
Purchase Agreement for Hirschmann
Automation and Control GmbH
|
|
February 2, 2007
Form 8-K,
Exhibit 2.1
|
|
2
|
.2
|
|
Purchase Agreement for LTK Wiring
|
|
February 9, 2007
Form 8-K,
Exhibit 2.1
|
|
3
|
.1
|
|
Certificate of Incorporation
|
|
Filed herewith; March 31,
2005
Form 10-K,
Exhibit 3.1
|
|
3
|
.2
|
|
Bylaws
|
|
December 6, 2005
Form 8-K,
Exhibit 3.01
|
|
4
|
.1
|
|
Rights Agreement
|
|
December 11, 1996
Form 8-A,
Exhibit 1.1
|
|
4
|
.2
|
|
Amendment to Rights Agreement
|
|
November 15, 2004
Form 10-Q,
Exhibit 4.1
|
|
4
|
.3
|
|
Amendment to Rights Agreement
|
|
December 8, 2006
Form 8-A/A,
Exhibit 4.2(a)
|
|
4
|
.4
|
|
Indenture relating to
4.00% Convertible Subordinated Debentures Due July 15,
2023
|
|
October 29, 2003
Form 10-K,
Exhibit 4.3
|
|
10
|
.1
|
|
Tax Sharing and Separation
Agreement
|
|
November 15, 1993
Form 10-Q,
Exhibit 10.6
|
|
10
|
.2
|
|
Trademark License Agreement
|
|
November 15, 1993
Form 10-Q
of Belden Inc., Exhibit 10.2
|
|
10
|
.3*
|
|
Belden Inc. Long-Term Incentive
Plan, as amended
|
|
Filed herewith.
|
79
|
|
|
|
|
|
|
|
|
|
|
The filings referenced for incorporation by
|
Exhibit
|
|
|
|
reference are Company (Belden CDT Inc.) filings
|
Number
|
|
Description of Exhibit
|
|
unless noted to be those of Belden Inc.
|
|
|
10
|
.4*
|
|
Belden Inc. 2003 Long-Term
Incentive Plan, as amended
|
|
Filed herewith.
|
|
10
|
.5*
|
|
Cable Design Technologies
Corporation (CDT) Long-Term Performance Incentive Plan
|
|
November 1, 1993
Form S-1,
Exhibit 10.18
|
|
10
|
.6*
|
|
CDT Supplemental Long-Term
Performance Incentive Plan
|
|
January 17, 1996 Proxy
Statement, Exhibit A
|
|
10
|
.7*
|
|
CDT 1999 Long-Term Performance
Incentive Plan
|
|
October 27, 1999
Form 10-K,
Exhibit 10.16
|
|
10
|
.8*
|
|
Amendment No. 2 to CDT 1999
Long-Term Performance Incentive Plan
|
|
October 27, 2000
Form 10-K,
Exhibit 10.15
|
|
10
|
.9*
|
|
Form of June 11, 1999 Stock
Option Grant
|
|
October 27, 1999
Form 10-K,
Exhibit 10.18
|
|
10
|
.10*
|
|
Form of April 23, 1999 Stock
Option Grant
|
|
October 27, 1999
Form 10-K,
Exhibit 10.19
|
|
10
|
.11*
|
|
CDT 2001 Long-Term Performance
Incentive Plan
|
|
April 13, 2006 Proxy
Statement, Appendix II
|
|
10
|
.12*
|
|
Amendments to CDT Long Term
Performance Incentive Plans
|
|
November 15, 2004
Form 10-Q,
Exhibit 10.61
|
|
10
|
.13*
|
|
Form of Director Nonqualified
Stock Option Grant
|
|
March 15, 2001
Form 10-Q,
Exhibit 99.2
|
|
10
|
.14*
|
|
Form of Restricted Stock Grant
|
|
December 16, 2002
Form 10-Q,
Exhibit 10.22
|
|
10
|
.15*
|
|
Form of Restricted Stock Grant
|
|
November 15, 2004
Form 10-Q,
Exhibit 10.20
|
|
10
|
.16*
|
|
Form of Restricted Stock Grant
|
|
May 19, 2005
Form 8-K,
Exhibit 10.01
|
|
10
|
.17*
|
|
Form of Stock Option Grant
|
|
May 10, 2005
Form 10-Q,
Exhibit 10.1
|
|
10
|
.18*
|
|
Form of Stock Appreciation Rights
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.1
|
|
10
|
.19*
|
|
Form of Performance Stock Units
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.2
|
|
10
|
.20*
|
|
Form of Restricted Stock Units
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.3
|
|
10
|
.21*
|
|
Form of Stock Appreciation Rights
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.4
|
|
10
|
.22*
|
|
Form of Performance Stock Units
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.5
|
|
10
|
.23*
|
|
Belden CDT Inc. Long-Term Cash
Performance Plan
|
|
March 31, 2005
Form 10-K,
Exhibit 10.36
|
|
10
|
.24*
|
|
Belden CDT Inc. Annual Cash
Incentive Plan
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.6
|
|
10
|
.25*
|
|
2004 Belden CDT Inc. Non-Employee
Director Deferred Compensation Plan
|
|
December 21, 2004
Form 8-K,
Exhibit 10.1
|
|
10
|
.26*
|
|
Belden CDT Inc. Retirement Savings
Plan
|
|
November 9, 2005
Form 10-Q,
Exhibit 10.1
|
|
10
|
.27*
|
|
First Amendment to Belden CDT Inc.
Retirement Savings Plan
|
|
March 16, 2006
Form 10-K,
Exhibit 10.48
|
|
10
|
.28*
|
|
Second Amendment to Belden CDT
Inc. Retirement Savings Plan
|
|
March 16, 2006
Form 10-K,
Exhibit 10.49
|
|
10
|
.29*
|
|
Third Amendment to Belden CDT Inc.
Retirement Savings Plan
|
|
Filed herewith.
|
|
10
|
.30*
|
|
Belden Wire & Cable
Company (BWC) Supplemental Excess Defined Benefit Plan, with
First, Second and Third Amendments
|
|
March 22, 2002
Form 10-K
of Belden Inc., Exhibits 10.14 and 10.15; March 14, 2003
Form 10-K
of Belden Inc., Exhibit 10.21; November 15, 2004
Form 10-Q,
Exhibit 10.50
|
|
10
|
.31*
|
|
BWC Supplemental Excess Defined
Contribution Plan, with First, Second and Third Amendments
|
|
March 22, 2002
Form 10-K
of Belden Inc., Exhibits 10.16 and 10.17; March 14, 2003
Form 10-K
of Belden Inc., Exhibit 10.24; November 15, 2004
Form 10-Q,
Exhibit 10.51
|
80
|
|
|
|
|
|
|
|
|
|
|
The filings referenced for incorporation by
|
Exhibit
|
|
|
|
reference are Company (Belden CDT Inc.) filings
|
Number
|
|
Description of Exhibit
|
|
unless noted to be those of Belden Inc.
|
|
|
10
|
.32*
|
|
Trust Agreement, with First
Amendment
|
|
November 15, 2004
Form 10-Q,
Exhibits 10.52 and 10.53
|
|
10
|
.33*
|
|
Trust Agreement, with First
Amendment
|
|
November 15, 2004
Form 10-Q,
Exhibits 10.54 and 10.55
|
|
10
|
.34*
|
|
Executive Employment Agreement
with John Stroup
|
|
September 27, 2005
Form 8-K,
Exhibit 10.01
|
|
10
|
.35*
|
|
Executive Employment Agreement
with Gray Benoist
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.3
|
|
10
|
.36*
|
|
Executive Employment Agreement
with Peter F. Sheehan
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.1
|
|
10
|
.37*
|
|
Executive Employment Agreement
with Robert Canny
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.2
|
|
10
|
.38*
|
|
Form of Change of Control
Employment Agreement with each of Cathy O. Staples, Kevin L.
Bloomfield, D. Larrie Rose and Stephen H. Johnson
|
|
Filed herewith.
|
|
10
|
.39*
|
|
Form of Indemnification Agreement
with each of the Directors and Gray Benoist, Kevin Bloomfield,
Robert Canny, Stephen Johnson, Larrie Rose, Peter Sheehan, Cathy
Staples and John Stroup
|
|
Filed herewith.
|
|
10
|
.40
|
|
Credit Agreement
|
|
January 27, 2006
Form 8-K,
Exhibit 10.1
|
|
10
|
.41
|
|
Credit Agreement Consent
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.4
|
|
10
|
.42
|
|
First Amendment to Credit
Agreement and Waiver
|
|
February 22, 2007
Form 8-K,
Exhibit 10.2
|
|
10
|
.43
|
|
Wachovia Commitment Letter
|
|
February 8, 2007
Form 8-K,
Exhibit 10.1
|
|
14
|
.1
|
|
Code of Ethics
|
|
Filed herewith.
|
|
21
|
.1
|
|
List of Subsidiaries of Belden CDT
Inc.
|
|
Filed herewith.
|
|
23
|
.1
|
|
Consent of Ernst & Young
LLP
|
|
Filed herewith.
|
|
24
|
.1
|
|
Powers of Attorney from Members of
the Board of Directors
|
|
Filed herewith.
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification of the Chief Executive Officer
|
|
Filed herewith.
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification of the Chief Financial Officer
|
|
Filed herewith.
|
|
32
|
.1
|
|
Section 1350 Certification of
the Chief Executive Officer
|
|
Filed herewith.
|
|
32
|
.2
|
|
Section 1350 Certification of
the Chief Financial Officer
|
|
Filed herewith.
|
|
|
|
* |
|
Management contract or compensatory plan |
Copies of the above Exhibits are available to shareholders at a
charge of $.25 per page, minimum order of $10.00. Direct
requests to:
Belden CDT Inc., Attention: Secretary
7701 Forsyth Boulevard, Suite 800
St. Louis, Missouri 63105
81
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BELDEN CDT INC.
John S. Stroup
President, Chief Executive Officer and Director
Date: March 1, 2007
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
date indicated.
|
|
|
|
|
|
|
/s/ JOHN
S. STROUP
John
S. Stroup
|
|
President, Chief Executive Officer
and Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ GRAY
G. BENOIST
Gray
G. Benoist
|
|
Vice President, Finance and Chief
Financial Officer
|
|
March 1, 2007
|
|
|
|
|
|
/s/ JOHN
S. NORMAN
John
S. Norman
|
|
Controller and Chief Accounting
Officer
|
|
March 1, 2007
|
|
|
|
|
|
/s/ BRYAN
C. CRESSEY*
Bryan
C. Cressey
|
|
Chairman of the Board and Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ LORNE
D. BAIN*
Lorne
D. Bain
|
|
Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ LANCE
BALK*
Lance
Balk
|
|
Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ DAVID
ALDRICH*
David
Aldrich
|
|
Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ MICHAEL
F.O.
HARRIS*
Michael
F.O. Harris
|
|
Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ GLENN
KALNASY*
Glenn
Kalnasy
|
|
Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ JOHN
M. MONTER*
John
M. Monter
|
|
Director
|
|
March 1, 2007
|
82
|
|
|
|
|
|
|
/s/ BERNARD
G. RETHORE*
Bernard
G. Rethore
|
|
Director
|
|
March 1, 2007
|
|
|
|
|
|
/s/ JOHN
S. STROUP
* By
John S. Stroup,
Attorney-in-fact
|
|
|
|
|
83
INDEX TO
EXHIBITS
|
|
|
|
|
|
|
|
|
|
|
The filings referenced for incorporation by
|
Exhibit
|
|
|
|
reference are Company (Belden CDT Inc.) filings
|
Number
|
|
Description of Exhibit
|
|
unless noted to be those of Belden Inc.
|
|
|
2
|
.1
|
|
Purchase Agreement for Hirschmann
Automation and Control GmbH
|
|
February 2, 2007
Form 8-K,
Exhibit 2.1
|
|
2
|
.2
|
|
Purchase Agreement for LTK Wiring
|
|
February 9, 2007
Form 8-K,
Exhibit 2.1
|
|
3
|
.1
|
|
Certificate of Incorporation
|
|
Filed herewith; March 31,
2005
Form 10-K,
Exhibit 3.1
|
|
3
|
.2
|
|
Bylaws
|
|
December 6, 2005
Form 8-K,
Exhibit 3.01
|
|
4
|
.1
|
|
Rights Agreement
|
|
December 11, 1996
Form 8-A,
Exhibit 1.1
|
|
4
|
.2
|
|
Amendment to Rights Agreement
|
|
November 15, 2004
Form 10-Q,
Exhibit 4.1
|
|
4
|
.3
|
|
Amendment to Rights Agreement
|
|
December 8, 2006
Form 8-A/A,
Exhibit 4.2(a)
|
|
4
|
.4
|
|
Indenture relating to
4.00% Convertible Subordinated Debentures Due July 15,
2023
|
|
October 29, 2003
Form 10-K,
Exhibit 4.3
|
|
10
|
.1
|
|
Tax Sharing and Separation
Agreement
|
|
November 15, 1993
Form 10-Q,
Exhibit 10.6
|
|
10
|
.2
|
|
Trademark License Agreement
|
|
November 15, 1993
Form 10-Q
of Belden Inc., Exhibit 10.2
|
|
10
|
.3*
|
|
Belden Inc. Long-Term Incentive
Plan, as amended
|
|
Filed herewith.
|
|
10
|
.4*
|
|
Belden Inc. 2003 Long-Term
Incentive Plan, as amended
|
|
Filed herewith.
|
|
10
|
.5*
|
|
Cable Design Technologies
Corporation (CDT) Long-Term Performance Incentive Plan
|
|
November 1, 1993
Form S-1,
Exhibit 10.18
|
|
10
|
.6*
|
|
CDT Supplemental Long-Term
Performance Incentive Plan
|
|
January 17, 1996 Proxy
Statement, Exhibit A
|
|
10
|
.7*
|
|
CDT 1999 Long-Term Performance
Incentive Plan
|
|
October 27, 1999
Form 10-K,
Exhibit 10.16
|
|
10
|
.8*
|
|
Amendment No. 2 to CDT 1999
Long-Term Performance Incentive Plan
|
|
October 27, 2000
Form 10-K,
Exhibit 10.15
|
|
10
|
.9*
|
|
Form of June 11, 1999 Stock
Option Grant
|
|
October 27, 1999
Form 10-K,
Exhibit 10.18
|
|
10
|
.10*
|
|
Form of April 23, 1999 Stock
Option Grant
|
|
October 27, 1999
Form 10-K,
Exhibit 10.19
|
|
10
|
.11*
|
|
CDT 2001 Long-Term Performance
Incentive Plan
|
|
April 13, 2006 Proxy
Statement, Appendix II
|
|
10
|
.12*
|
|
Amendments to CDT Long Term
Performance Incentive Plans
|
|
November 15, 2004
Form 10-Q,
Exhibit 10.61
|
|
10
|
.13*
|
|
Form of Director Nonqualified
Stock Option Grant
|
|
March 15, 2001
Form 10-Q,
Exhibit 99.2
|
|
10
|
.14*
|
|
Form of Restricted Stock Grant
|
|
December 16, 2002
Form 10-Q,
Exhibit 10.22
|
|
10
|
.15*
|
|
Form of Restricted Stock Grant
|
|
November 15, 2004
Form 10-Q,
Exhibit 10.20
|
|
10
|
.16*
|
|
Form of Restricted Stock Grant
|
|
May 19, 2005
Form 8-K,
Exhibit 10.01
|
|
10
|
.17*
|
|
Form of Stock Option Grant
|
|
May 10, 2005
Form 10-Q,
Exhibit 10.1
|
|
10
|
.18*
|
|
Form of Stock Appreciation Rights
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.1
|
|
10
|
.19*
|
|
Form of Performance Stock Units
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.2
|
|
10
|
.20*
|
|
Form of Restricted Stock Units
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.3
|
|
10
|
.21*
|
|
Form of Stock Appreciation Rights
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.4
|
|
10
|
.22*
|
|
Form of Performance Stock Units
Award
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.5
|
|
10
|
.23*
|
|
Belden CDT Inc. Long-Term Cash
Performance Plan
|
|
March 31, 2005
Form 10-K,
Exhibit 10.36
|
84
|
|
|
|
|
|
|
|
|
|
|
The filings referenced for incorporation by
|
Exhibit
|
|
|
|
reference are Company (Belden CDT Inc.) filings
|
Number
|
|
Description of Exhibit
|
|
unless noted to be those of Belden Inc.
|
|
|
10
|
.24*
|
|
Belden CDT Inc. Annual Cash
Incentive Plan
|
|
May 5, 2006
Form 10-Q,
Exhibit 10.6
|
|
10
|
.25*
|
|
2004 Belden CDT Inc. Non-Employee
Director Deferred Compensation Plan
|
|
December 21, 2004
Form 8-K,
Exhibit 10.1
|
|
10
|
.26*
|
|
Belden CDT Inc. Retirement Savings
Plan
|
|
November 9, 2005
Form 10-Q,
Exhibit 10.1
|
|
10
|
.27*
|
|
First Amendment to Belden CDT Inc.
Retirement Savings Plan
|
|
March 16, 2006
Form 10-K,
Exhibit 10.48
|
|
10
|
.28*
|
|
Second Amendment to Belden CDT
Inc. Retirement Savings Plan
|
|
March 16, 2006
Form 10-K,
Exhibit 10.49
|
|
10
|
.29*
|
|
Third Amendment to Belden CDT Inc.
Retirement Savings Plan
|
|
Filed herewith.
|
|
10
|
.30*
|
|
Belden Wire & Cable
Company (BWC) Supplemental Excess Defined Benefit Plan, with
First, Second and Third Amendments
|
|
March 22, 2002
Form 10-K
of Belden Inc., Exhibits 10.14 and 10.15; March 14, 2003
Form 10-K
of Belden Inc., Exhibit 10.21; November 15, 2004
Form 10-Q,
Exhibit 10.50
|
|
10
|
.31*
|
|
BWC Supplemental Excess Defined
Contribution Plan, with First, Second and Third Amendments
|
|
March 22, 2002
Form 10-K
of Belden Inc., Exhibits 10.16 and 10.17; March 14, 2003
Form 10-K
of Belden Inc., Exhibit 10.24; November 15, 2004
Form 10-Q,
Exhibit 10.51
|
|
10
|
.32*
|
|
Trust Agreement, with First
Amendment
|
|
November 15, 2004
Form 10-Q,
Exhibits 10.52 and 10.53
|
|
10
|
.33*
|
|
Trust Agreement, with First
Amendment
|
|
November 15, 2004
Form 10-Q,
Exhibits 10.54 and 10.55
|
|
10
|
.34*
|
|
Executive Employment Agreement
with John Stroup
|
|
September 27, 2005
Form 8-K,
Exhibit 10.01
|
|
10
|
.35*
|
|
Executive Employment Agreement
with Gray Benoist
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.3
|
|
10
|
.36*
|
|
Executive Employment Agreement
with Peter F. Sheehan
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.1
|
|
10
|
.37*
|
|
Executive Employment Agreement
with Robert Canny
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.2
|
|
10
|
.38*
|
|
Form of Change of Control
Employment Agreement with each of Cathy O. Staples, Kevin L.
Bloomfield, D. Larrie Rose and Stephen H. Johnson
|
|
Filed herewith.
|
|
10
|
.39*
|
|
Form of Indemnification Agreement
with each of the Directors and Gray Benoist, Kevin Bloomfield,
Robert Canny, Stephen Johnson, Larrie Rose, Peter Sheehan, Cathy
Staples and John Stroup
|
|
Filed herewith.
|
|
10
|
.40
|
|
Credit Agreement
|
|
January 27, 2006
Form 8-K,
Exhibit 10.1
|
|
10
|
.41
|
|
Credit Agreement Consent
|
|
November 3, 2006
Form 10-Q,
Exhibit 10.4
|
|
10
|
.42
|
|
First Amendment to Credit
Agreement and Waiver
|
|
February 22, 2007
Form 8-K,
Exhibit 10.2
|
|
10
|
.43
|
|
Wachovia Commitment Letter
|
|
February 8, 2007
Form 8-K,
Exhibit 10.1
|
|
14
|
.1
|
|
Code of Ethics
|
|
Filed herewith.
|
|
21
|
.1
|
|
List of Subsidiaries of Belden CDT
Inc.
|
|
Filed herewith.
|
|
23
|
.1
|
|
Consent of Ernst & Young
LLP
|
|
Filed herewith.
|
85
|
|
|
|
|
|
|
|
|
|
|
The filings referenced for incorporation by
|
Exhibit
|
|
|
|
reference are Company (Belden CDT Inc.) filings
|
Number
|
|
Description of Exhibit
|
|
unless noted to be those of Belden Inc.
|
|
|
24
|
.1
|
|
Powers of Attorney from Members of
the Board of Directors
|
|
Filed herewith.
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification of the Chief Executive Officer
|
|
Filed herewith.
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification of the Chief Financial Officer
|
|
Filed herewith.
|
|
32
|
.1
|
|
Section 1350 Certification of
the Chief Executive Officer
|
|
Filed herewith.
|
|
32
|
.2
|
|
Section 1350 Certification of
the Chief Financial Officer
|
|
Filed herewith.
|
86