UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-12561

 

BELDEN INC.

Delaware		36-3601505
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ       No o.

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o       No o.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o       No þ.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

As of May 10, 2010, the Registrant had 46,754,845 outstanding shares of common stock.

 

 

PART I FINANCIAL INFORMATION

Item 1.		Financial Statements

BELDEN INC.
CONSOLIDATED BALANCE SHEETS

		April 4,				December 31,
		2010				2009
		(Unaudited)
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	238,883			$	308,879
Receivables, net			258,061				242,145
Inventories, net			160,675				151,262
Deferred income taxes			26,687				26,996
Other current assets			32,639				35,036
Total current assets			716,945				764,318
Property, plant and equipment, less accumulated depreciation			289,139				299,586
Goodwill			308,616				313,030
Intangible assets, less accumulated amortization			136,046				143,013
Deferred income taxes			36,190				37,205
Other long-lived assets			63,715				63,426
		$	1,550,651			$	1,620,578
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	186,541			$	169,763
Accrued liabilities			120,303				141,922
Current maturities of long-term debt			—				46,268
Total current liabilities			306,844				357,953
Long-term debt			544,048				543,942
Postretirement benefits			114,607				121,745
Other long-term liabilities			43,884				45,890
Stockholders’ equity:
Preferred stock			—				—
Common stock			503				503
Additional paid-in capital			593,067				591,917
Retained earnings			81,993				72,625
Accumulated other comprehensive income (loss)			(7,492	)			14,614
Treasury stock			(126,803	)			(128,611	)
Total stockholders’ equity			541,268				551,048
		$	1,550,651			$	1,620,578

The accompanying notes are an integral part of these Consolidated Financial Statements

BELDEN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		Three Months Ended
		April 4, 2010				March 29, 2009
		(In thousands, except per share amounts)
Revenues		$	400,349			$	328,512
Cost of sales			(281,941	)			(244,319	)
Gross profit			118,408				84,193
Selling, general and administrative expenses			(73,860	)			(76,697	)
Research and development			(14,797	)			(16,555	)
Amortization of intangibles			(4,266	)			(3,865	)
Income from equity method investment			2,641				1,290
Asset impairment			—				(24,723	)
Operating income (loss)			28,126				(36,357	)
Interest expense			(12,946	)			(7,323	)
Interest income			183				364
Other expense			—				(1,541	)
Income (loss) from continuing operations before taxes			15,363				(44,857	)
Income tax benefit (expense)			(3,480	)			12,403
Income (loss) from continuing operations			11,883				(32,454	)
Loss from discontinued operations, net of tax			(136	)			—
Net income (loss)		$	11,747			$	(32,454	)
Weighted average number of common shares and equivalents:
Basic			46,697				46,526
Diluted			47,510				46,526
Basic income (loss) per share
Continuing operations		$	0.25			$	(0.70	)
Discontinued operations			—				—
Net income (loss)		$	0.25			$	(0.70	)
Diluted income (loss) per share
Continuing operations		$	0.25			$	(0.70	)
Discontinued operations			—				—
Net income (loss)		$	0.25			$	(0.70	)
Dividends declared per share		$	0.05			$	0.05

The accompanying notes are an integral part of these Consolidated Financial Statements

BELDEN INC.
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)

		Three Months Ended
		April 4, 2010				March 29, 2009
		(In thousands)
Cash flows from operating activities:
Net income (loss)		$	11,747			$	(32,454	)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization			14,614				13,288
Share-based compensation			3,325				2,020
Provision for inventory obsolescence			919				2,548
Asset impairment			—				24,723
Amortization of discount on long-term debt			106				—
Pension funding in excess of pension expense			(6,004	)			(2,318	)
Tax deficiency related to share-based compensation			278				1,104
Income from equity method investment			(2,641	)			(1,290	)
Changes in operating assets and liabilities, net of the effects of currency exchange rate changes and acquired businesses:
Receivables			(20,255	)			40,847
Inventories			(12,520	)			29,497
Deferred cost of sales			2,539				228
Accounts payable			18,429				(31,204	)
Accrued liabilities			(15,408	)			(18,372	)
Deferred revenue			(5,885	)			(49	)
Accrued taxes			(1,191	)			(11,209	)
Other assets			759				(1,057	)
Other liabilities			(2,019	)			(3,679	)
Net cash provided by (used for) operating activities			(13,207	)			12,623
Cash flows from investing activities:
Capital expenditures			(7,002	)			(9,554	)
Proceeds from disposal of tangible assets			1,824				—
Cash provided by (used for) other investing activities			163				(18	)
Net cash used for investing activities			(5,015	)			(9,572	)
Cash flows from financing activities:
Payments under borrowing arrangements			(46,268	)			—
Cash dividends paid			(2,361	)			(2,373	)
Debt issuance costs			—				(1,541	)
Tax deficiency related to share-based compensation			(278	)			(1,104	)
Proceeds from exercise of stock options			543				—
Net cash used for financing activities			(48,364	)			(5,018	)
Effect of foreign currency exchange rate changes on cash and cash equivalents			(3,410	)			(1,003	)
Decrease in cash and cash equivalents			(69,996	)			(2,970	)
Cash and cash equivalents, beginning of period			308,879				227,413
Cash and cash equivalents, end of period		$	238,883			$	224,443

The accompanying notes are an integral part of these Consolidated Financial Statements

BELDEN INC.
CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENT
THREE MONTHS ENDED APRIL 4, 2010
(Unaudited)

																										Accumulated Other
																										Comprehensive Income (Loss)
										Additional																Translation				Pension and
		Common Stock								Paid-In				Retained				Treasury Stock								Component				Postretirement
		Shares				Amount				Capital				Earnings				Shares				Amount				of Equity				Liability				Total
		(In thousands)
Balance at December 31, 2009			50,335			$	503			$	591,917			$	72,625				(3,675	)		$	(128,611	)		$	58,060			$	(43,446	)		$	551,048
Net income															11,747																				11,747
Foreign currency translation			—				—				—				—				—				—				(22,106	)			—				(22,106	)
Comprehensive loss																																			(10,359	)
Exercise of stock options, net of tax withholding forfeitures			—				—				(294	)			—				36				754				—				—				460
Release of restricted stock, net of tax withholding forfeitures			—				—				(1,611	)			—				52				1,054				—				—				(557	)
Share-based compensation			—				—				3,047				—				—				—				—				—				3,047
Dividends ($0.05 per share)			—				—				8				(2,379	)			—				—				—				—				(2,371	)
Balance at April 4, 2010			50,335			$	503			$	593,067			$	81,993				(3,587	)		$	(126,803	)		$	35,954			$	(43,446	)		$	541,268

The accompanying notes are an integral part of these Consolidated Financial Statements

BELDEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation

The accompanying Consolidated Financial Statements include Belden Inc. and all of its subsidiaries (the Company, us, we, or our). We eliminate all significant affiliate accounts and transactions in consolidation.

The accompanying Consolidated Financial Statements presented as of any date other than December 31, 2009:

	•		Are prepared from the books and records without audit, and
	•		Are prepared in accordance with the instructions for Form 10-Q and do not include all of the information required by accounting principles generally accepted in the United States for complete statements, but
	•		Include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial statements.

These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Supplementary Data contained in our 2009 Annual Report on Form 10-K.

Business Description

We design, manufacture, and market cable, connectivity, and networking products in markets including industrial automation, enterprise, transportation, infrastructure, and consumer electronics.

Reporting Periods

Our fiscal year and fiscal fourth quarter both end on December 31. Historically, our fiscal first, second and third quarters each ended on the last Sunday falling on or before their respective calendar quarter-end. Beginning in 2010, our fiscal first quarter ends on the Sunday falling closest to 91 days after December 31, which was April 4, 2010, the 94^th day of our fiscal year 2010. Our fiscal second and third quarters will each have 91 days. Our fiscal fourth quarter will include 89 days and end on December 31, 2010. The three months ended March 29, 2009 included 88 days.

Reclassifications

We have made certain reclassifications to the 2009 Consolidated Financial Statements with no impact to reported net income (loss) in order to conform to the 2010 presentation.

Fair Value Measurement

Accounting guidance for fair value measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources or reflect our own assumptions of market participant valuation. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

	•		Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
	•		Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets, or financial instruments for which significant inputs are observable, either directly or indirectly;
	•		Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

As of and during the three months ended April 4, 2010 and March 29, 2009, we utilized Level 1 inputs to determine the fair value of cash equivalents, and we utilized Level 2 inputs to determine the fair value of certain long-lived assets (see Note 5).

Cash and Cash Equivalents

We classify cash on hand and deposits in banks, including commercial paper, money market accounts, and other investments with an original maturity of three months or less, that we hold from time to time, as cash and cash equivalents. We periodically have cash equivalents consisting of short-term money market funds and other investments. The primary objective of our investment activities is to preserve our capital for the purpose of funding operations. We do not enter into investments for trading or speculative purposes. The fair value of these cash equivalents as of April 4, 2010 was $96.9 million and is based on quoted market prices in active markets (i.e., Level 1 valuation).

Contingent Liabilities

We have established liabilities for environmental and legal contingencies that are probable of occurrence and reasonably estimable. We accrue environmental remediation costs, on an undiscounted basis, based on estimates of known environmental remediation exposures developed in consultation with our environmental consultants and legal counsel. We are, from time to time, subject to routine litigation incidental to our business. These lawsuits primarily involve claims for damages arising out of the use of our products, allegations of patent or trademark infringement, and litigation and administrative proceedings involving employment matters and commercial disputes. Based on facts currently available, we believe the disposition of the claims that are pending or asserted will not have a materially adverse effect on our financial position, results of operations or cash flow.

As of April 4, 2010, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $9.6 million, $8.2 million, and $1.6 million, respectively.

Revenue Recognition

We recognize revenue when all of the following circumstances are satisfied: (1) persuasive evidence of an arrangement exists, (2) price is fixed or determinable, (3) collectibility is reasonably assured, and (4) delivery has occurred. Delivery occurs in the period in which the customer takes title and assumes the risks and rewards of ownership of the products specified in the customer’s purchase order or sales agreement. We record revenue net of estimated rebates, price allowances, invoicing adjustments, and product returns. We charge revisions to these estimates to accounts receivable and revenue in the period in which the facts that give rise to each revision become known.

In October 2009, the FASB issued updates to existing guidance on revenue recognition that we adopted on a prospective basis on January 1, 2010. Under the new guidance, sales of tangible products that have

software components that are essential to the functionality of the tangible product are no longer within the scope of the software revenue recognition guidance and are now subject to other relevant revenue recognition guidance. Additionally, the FASB issued an update to existing guidance on revenue arrangements with multiple deliverables that are outside the scope of the software revenue recognition guidance. Under the new guidance, when Vendor Specific Objective Evidence (VSOE) or Third Party Evidence (TPE) of the selling price for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method.

Sales from our Wireless segment often involve multiple elements, principally hardware, software, hardware and software maintenance, and other support services (maintenance and other support services referred to as post-contract customer support). As a result of the adoption of the new accounting guidance, our Wireless segment’s sales of hardware that include software components are no longer subject to software revenue recognition requirements. In addition, the timing of revenue recognition and amount of revenue to be recognized for each deliverable changed such that less revenue is deferred on arrangements with multiple deliverables for which VSOE has not been established than prior to the adoption of this accounting guidance. For hardware deliverables, revenue is recognized upon delivery. For software deliverables, revenue is recognized upon delivery, unless post-contract customer support is included, in which case the revenue is deferred and recognized over the period of the post-contract customer support. For post-contract customer support, revenue is recognized ratably over the maintenance or support period. The allocation of the total revenue among the delivered items is based on the estimated selling price of the deliverables, as we have not established VSOE or TPE of selling price. The best estimate of the selling price for each deliverable is determined based on an analysis of the historical average price of such deliverable when sold on a stand-alone basis.

For fiscal years ending December 31, 2009 and prior, when a sale involved multiple elements, we allocated the proceeds from the arrangement to each respective element based on its VSOE of fair value, if established, and recognized revenue when each element’s revenue recognition criteria was met. VSOE of fair value for each element is established based on the price charged when the same element is sold separately. If VSOE of fair value could not be established, the proceeds from the arrangement were deferred and recognized ratably over the period related to the last delivered element. Through December 31, 2009, our Wireless segment did not establish VSOE of fair value of hardware, software, and post-contract customer support. As a result, the proceeds and related cost of sales from multiple-element revenue transactions involving these elements were deferred and recognized ratably over the post-contract customer support period, ranging from one to three years.

Our Wireless segment revenues and operating loss for the three months ended April 4, 2010 would have been $12.2 million and $5.3 million, respectively, prior to the adoption of this new accounting guidance; see Note 2 for actual operating results.

The following table shows the amount of deferred revenue and cost of sales related to our Wireless segment as of April 4, 2010 and December 31, 2009.

		April 4,				December 31,
		2010				2009
		(in thousands)
Deferred revenue:
Current		$	13,993			$	19,249
Long-term			2,852				3,481
Total			16,845				22,730
Deferred cost of sales:
Current			4,831				7,119
Long-term			936				1,187
Total			5,767				8,306
Deferred gross profit
Current			9,162				12,130
Long-term			1,916				2,294
Total		$	11,078			$	14,424

Discontinued Operations

During 2005, we completed the sale of our discontinued communications cable operation in Phoenix, Arizona. In connection with this sale and related tax deductions, we established a reserve for uncertain tax positions. In the three-month period ended April 4, 2010, we recognized $0.2 million of interest expense ($0.1 million net of tax) related to the uncertain tax positions, which is included in discontinued operations. Due to the utilization of other net operating loss carryforwards, we did not recognize interest expense related to this reserve in the comparable period of 2009.

Subsequent Events

We have evaluated subsequent events after the balance sheet date through the financial statement issuance date for appropriate accounting and disclosure.

Current-Year Adoption of Accounting Pronouncements

On January 1, 2010, we adopted changes issued by the FASB with regard to the disclosures of fair value measurements. This new guidance requires disclosures about transfers into and out of Level 1 and 2 fair value measurements, as well as separate disclosures about purchases, sales, issuances, and settlements relating to recurring Level 3 fair value measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The adoption of this guidance did not have a material impact on our financial statements.

Refer to the discussion above under Revenue Recognition for an analysis of the adoption of other new accounting guidance.

Note 2: Operating Segments

We have organized the enterprise around geographic areas, except for our wireless business. We conduct our operations through four reported operating segments—Americas; Europe, Middle East and Africa (EMEA); Asia Pacific; and Wireless.

										Asia								Total
		Americas				EMEA				Pacific				Wireless				Segments
		(In thousands)
As of and for the three months ended April 4, 2010
Total assets		$	472,932			$	421,696			$	251,459			$	111,179			$	1,257,266
External customer revenues			217,929				90,550				75,945				15,925				400,349
Affiliate revenues			12,737				14,743				—				—				27,480
Operating income (loss)			31,357				14,580				7,526				(3,169	)			50,294
As of and for the three months ended March 29, 2009
Total assets		$	430,038			$	485,658			$	238,799			$	109,285			$	1,263,780
External customer revenues			182,210				88,061				46,238				12,003				328,512
Affiliate revenues			7,991				12,473				—				—				20,464
Operating income (loss)			24,658				(41,955	)			3,334				(8,322	)			(22,285	)

The following table is a reconciliation of the total of the reportable segments’ operating income (loss) to consolidated income (loss) from continuing operations before taxes.

		Three Months Ended
		April 4, 2010				March 29, 2009
		(In thousands)
Segment operating income (loss)		$	50,294			$	(22,285	)
Corporate expenses			(12,904	)			(8,357	)
Eliminations			(9,264	)			(5,715	)
Total operating income (loss)			28,126				(36,357	)
Interest expense			(12,946	)			(7,323	)
Interest income			183				364
Other expense			—				(1,541	)
Income (loss) from continuing operations before taxes		$	15,363			$	(44,857	)

Note 3: Income (Loss) per Share

The following table presents the basis for the income (loss) per share computations:

		Three Months Ended
		April 4, 2010				March 29, 2009
		(in thousands, except per share amounts)
Numerator:
Income (loss) from continuing operations		$	11,883			$	(32,454	)
Loss from discontinued operations, net of tax			(136	)			—
Net income (loss)		$	11,747			$	(32,454	)
Denominator:
Weighted average shares outstanding, basic			46,697				46,526
Effect of dilutive common stock equivalents			813				—
Weighted average shares outstanding, diluted			47,510				46,526

For the three months ended April 4, 2010 and March 29, 2009, diluted weighted average shares outstanding do not include outstanding equity awards of 1.2 million and 2.9 million, respectively, because to do so would have been anti-dilutive.

Note 4: Inventories

The major classes of inventories were as follows:

		April 4,				December 31,
		2010				2009
		(In thousands)
Raw materials		$	62,978			$	50,973
Work-in-process			34,321				31,977
Finished goods			79,562				84,689
Perishable tooling and supplies			4,128				4,081
Gross inventories			180,989				171,720
Obsolescence and other reserves			(20,314	)			(20,458	)
Net inventories		$	160,675			$	151,262

Note 5: Long-Lived Assets

Disposals

During the three months ended April 4, 2010, we sold certain real estate of the EMEA segment for $1.8 million. There was no gain or loss recognized on the sale.

Impairments

We did not record any impairment losses during the three months ended April 4, 2010.

Prior to the sale of a German cable business in 2009, we determined that certain long-lived assets of that business were impaired. We estimated the fair market value of those assets based upon the terms of the sales agreement and recognized an impairment loss of $20.4 million in the operating results of the EMEA segment during the three months ended March 29, 2009. Of this total impairment loss, $14.1 million related to machinery and equipment and $2.7 million, $2.3 million, and $1.3 million related to trademarks, developed technology, and customer relationships intangible assets, respectively. During the three months ended March 29, 2009, we also recognized impairment losses on property, plant and equipment of $2.9 million, $1.0 million, and $0.4 million in the Americas, EMEA, and Asia Pacific segments, respectively, primarily related to our regional manufacturing strategies and corresponding decisions to consolidate capacity and dispose of excess machinery and equipment. The fair values of these assets were based upon quoted prices for identical assets (i.e., Level 2 valuation).

Depreciation and Amortization Expense

We recognized depreciation expense of $10.3 million and $9.4 million in the three-month periods ended April 4, 2010 and March 29, 2009, respectively. The increase in depreciation expense was due to $1.1 million of accelerated depreciation expense recorded on certain assets due to the closure of one of our manufacturing plants in Leominster, Massachusetts; see further discussion regarding the plant closure in Note 6.

We recognized amortization expense related to our intangible assets of $4.3 million and $3.9 million in the three-month periods ended April 4, 2010 and March 29, 2009, respectively.

Note 6: Restructuring Activities

Global Restructuring

In the fourth quarter of 2008, we announced our decision to further streamline our manufacturing, sales, and administrative functions worldwide in an effort to reduce costs and mitigate the impact of the weakening demand experienced throughout the global economy. During 2010, we continued to implement our plan to streamline these functions and recognized severance costs primarily in the Americas segment totaling $0.3 million (recorded in Cost of Sales) related to these restructuring activities and the planned closure of one of our manufacturing plants in Leominster, Massachusetts. From inception of these restructuring actions through April 4, 2010, we have recognized severance costs totaling $55.0 million. We expect to recognize approximately $1.1 million of additional severance costs in 2010 in the Americas segment associated with our plan that we announced in July 2009 to close one of our two manufacturing plants in Leominster, Massachusetts.

The table below sets forth restructuring activity that occurred during 2010. The balances are included in accrued liabilities.

		Global
		Restructuring
		(in thousands)
Balance at December 31, 2009		$	12,260
New charges			321
Cash payments			(5,373	)
Foreign currency translation			(629	)
Other adjustments			(83	)
Balance at April 4, 2010		$	6,496

We continue to review our business strategies and evaluate further restructuring actions. This could result in additional restructuring costs in future periods.

Note 7: Long-Term Debt and Other Borrowing Arrangements

Senior Subordinated Notes

In the third quarter of 2009, we issued $200.0 million in senior subordinated notes due 2019 with a coupon interest rate of 9.25% and an effective interest rate of 9.75%. The notes are guaranteed on a senior subordinated basis by certain of our domestic subsidiaries. The notes rank equal in right of payment with our senior subordinated notes due 2017 and with any future senior subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Interest is payable semiannually on June 15 and December 15. We used the $193.7 million in proceeds of this debt offering to repay amounts drawn under our senior secured credit facility. As of April 4, 2010, the carrying value of the notes was $194.0 million.

We also have outstanding $350.0 million aggregate principal amount of 7.0% senior subordinated notes due 2017. The notes are guaranteed on a senior subordinated basis by certain of our domestic subsidiaries. The notes rank equal in right of payment with our senior subordinated notes due 2019 and with any future senior subordinated debt; they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Interest is payable semiannually on March 15 and September 15.

Senior Secured Credit Facility

In the first quarter of 2009, we amended our senior secured credit facility and changed the definition of EBITDA used in the computation of the debt-to-EBITDA leverage ratio covenant. The amendment also increased the cost of borrowings under the facility by 100 basis points and we incurred $1.5 million of fees that are included in other expense in the Consolidated Statements of Operations. In the third quarter of 2009, we further amended the facility to extend the term from January 2011 to January 2013 and to reduce the size from $350.0 million to $250.0 million through January 2011. In January 2011, the size of the facility reduces from $250.0 million to $230.0 million. The amendment also alters the level of the total leverage ratio covenant, increases the cost of borrowing under the facility, and inserts an asset coverage ratio covenant when the total leverage ratio is in excess of certain levels. As of April 4, 2010, we were in compliance with all of the amended covenants of the facility.

As of April 4, 2010, there were not any outstanding borrowings under the facility, and we had $189.6 million in available borrowing capacity. The facility has a variable interest rate based on LIBOR or the prime rate and is secured by our overall cash flow and certain of our assets in the United States.

Fair Value of Long-Term Debt

The fair value of our debt instruments at April 4, 2010 was approximately $557.8 million based on sales prices of the debt instruments from recent trading activity. This amount represents the fair value of our senior subordinated notes with a face value of $550.0 million.

Note 8: Income Taxes

Income tax expense was $3.5 million for the three month period ended April 4, 2010. The most significant factor in the difference between the effective rate of 22.7% reflected in the provision for income taxes on income from continuing operations before taxes and the amount determined by applying

the applicable statutory United States tax rate of 35% for the three months ended April 4, 2010 is the tax rate differential associated with our foreign earnings.

Note 9: Pension and Other Postretirement Obligations

The following table provides the components of net periodic benefit costs for our pension plans:

		Pension Obligations								Other Postretirement Obligations
		April 4,				March 29,				April 4,				March 29,
Three Months Ended		2010				2009				2010				2009
		(In thousands)
Service cost		$	1,860			$	1,826			$	25			$	30
Interest cost			4,226				3,740				626				562
Expected return on plan assets			(4,324	)			(4,064	)			—				—
Amortization of prior service cost			16				28				(53	)			(48	)
Net loss recognition			944				542				58				170
Net periodic benefit cost		$	2,722			$	2,072			$	656			$	714

Note 10: Comprehensive Loss

The following table summarizes total comprehensive loss:

		Three Months Ended
		April 4, 2010				March 29, 2009
		(In thousands)
Net income (loss)		$	11,747			$	(32,454	)
Foreign currency translation loss			(22,106	)			(18,130	)
Total comprehensive loss		$	(10,359	)		$	(50,584	)

Note 11: Supplemental Guarantor Information

As of April 4, 2010, Belden Inc. (the Issuer) has outstanding $550.0 million aggregate principal amount senior subordinated notes. The notes rank equal in right of payment with any of our future senior subordinated debt. The notes are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Belden Inc. and its current and future material domestic subsidiaries have fully and unconditionally guaranteed the notes on a joint and several basis. The following consolidating financial information presents information about the Issuer, guarantor subsidiaries and non-guarantor subsidiaries. Investments in subsidiaries are accounted for on the equity basis. Intercompany transactions are eliminated.

Supplemental Condensed Consolidating Balance Sheets

		April 4, 2010
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	79,980			$	15,958			$	142,945			$	—			$	238,883
Receivables, net			250				75,506				182,305				—				258,061
Inventories, net			—				94,941				65,734				—				160,675
Deferred income taxes			—				22,188				4,499				—				26,687
Other current assets			4,409				11,130				17,100				—				32,639
Total current assets			84,639				219,723				412,583				—				716,945
Property, plant and equipment, less accumulated depreciation			—				118,691				170,448				—				289,139
Goodwill			—				242,593				66,023				—				308,616
Intangible assets, less accumulated amortization			—				79,818				56,228				—				136,046
Deferred income taxes			—				16,436				19,754				—				36,190
Other long-lived assets			13,356				2,747				47,612				—				63,715
Investment in subsidiaries			871,281				247,796				—				(1,119,077	)			—
		$	969,276			$	927,804			$	772,648			$	(1,119,077	)		$	1,550,651
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	—			$	76,172			$	110,369			$	—			$	186,541
Accrued liabilities			14,422				45,004				60,877				—				120,303
Total current liabilities			14,422				121,176				171,246				—				306,844
Long-term debt			544,048				—				—				—				544,048
Postretirement benefits			—				29,498				85,109				—				114,607
Other long-term liabilities			27,680				9,004				7,200				—				43,884
Intercompany accounts			324,247				(604,586	)			280,339				—				—
Total stockholders’ equity			58,879				1,372,712				228,754				(1,119,077	)			541,268
		$	969,276			$	927,804			$	772,648			$	(1,119,077	)		$	1,550,651

		December 31, 2009
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	49,878			$	8,977			$	250,024			$	—			$	308,879
Receivables, net			21				69,444				172,680				—				242,145
Inventories, net			—				86,960				64,302				—				151,262
Deferred income taxes			—				22,188				4,808				—				26,996
Other current assets			5,179				13,825				16,032				—				35,036
Total current assets			55,078				201,394				507,846				—				764,318
Property, plant and equipment, less accumulated depreciation			—				120,655				178,931				—				299,586
Goodwill			—				242,699				70,331				—				313,030
Intangible assets, less accumulated amortization			—				82,129				60,884				—				143,013
Deferred income taxes			—				16,436				20,769				—				37,205
Other long-lived assets			14,154				3,054				46,218				—				63,426
Investment in subsidiaries			853,555				321,200				—				(1,174,755	)			—
		$	922,787			$	987,567			$	884,979			$	(1,174,755	)		$	1,620,578
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	—			$	59,846			$	109,917			$	—			$	169,763
Accrued liabilities			15,552				57,423				68,947				—				141,922
Current maturities of long-term debt			46,268				—				—				—				46,268
Total current liabilities			61,820				117,269				178,864				—				357,953
Long-term debt			543,942				—				—				—				543,942
Postretirement benefits			—				35,000				86,745				—				121,745
Other long-term liabilities			27,636				9,581				8,673				—				45,890
Intercompany accounts			238,152				(527,873	)			289,721				—				—
Total stockholders’ equity			51,237				1,353,590				320,976				(1,174,755	)			551,048
		$	922,787			$	987,567			$	884,979			$	(1,174,755	)		$	1,620,578

Supplemental Condensed Consolidating Statements of Operations

		Three Months Ended April 4, 2010
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
Revenues		$	—			$	208,367			$	229,686			$	(37,704	)		$	400,349
Cost of sales			—				(145,293	)			(174,352	)			37,704				(281,941	)
Gross profit			—				63,074				55,334				—				118,408
Selling, general and administrative expenses			(256	)			(41,690	)			(31,914	)			—				(73,860	)
Research and development			—				(7,172	)			(7,625	)			—				(14,797	)
Amortization of intangibles			—				(2,291	)			(1,975	)			—				(4,266	)
Income from equity method investment			—				—				2,641				—				2,641
Operating income (loss)			(256	)			11,921				16,461				—				28,126
Interest expense			(12,761	)			(22	)			(163	)			—				(12,946	)
Interest income			46				4				133				—				183
Intercompany income (expense)			3,005				(2,302	)			(703	)			—				—
Income (loss) from equity investment in subsidiaries			17,889				11,443				—				(29,332	)			—
Income (loss) from continuing operations before taxes			7,923				21,044				15,728				(29,332	)			15,363
Income tax benefit (expense)			3,960				(3,155	)			(4,285	)			—				(3,480	)
Income (loss) from continuing operations			11,883				17,889				11,443				(29,332	)			11,883
Loss from discontinued operations, net of tax			(136	)			—				—				—				(136	)
Net income (loss)		$	11,747			$	17,889			$	11,443			$	(29,332	)		$	11,747

		Three Months Ended March 29, 2009
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
Revenues		$	—			$	171,958			$	187,767			$	(31,213	)		$	328,512
Cost of sales			—				(117,595	)			(157,937	)			31,213				(244,319	)
Gross profit			—				54,363				29,830				—				84,193
Selling, general and administrative expenses			(24	)			(34,654	)			(42,019	)			—				(76,697	)
Research and development			—				(7,403	)			(9,152	)			—				(16,555	)
Amortization of intangibles			—				(2,024	)			(1,841	)			—				(3,865	)
Income from equity method investment			—				—				1,290				—				1,290
Asset impairment			—				(3,303	)			(21,420	)			—				(24,723	)
Operating income (loss)			(24	)			6,979				(43,312	)			—				(36,357	)
Interest expense			(7,319	)			76				(80	)			—				(7,323	)
Interest income			5				80				279				—				364
Other expense			(1,541	)			—				—				—				(1,541	)
Intercompany income (expense)			2,942				(3,253	)			311				—				—
Income (loss) from equity investment in subsidiaries			(28,595	)			(31,333	)			—				59,928				—
Income (loss) before taxes			(34,532	)			(27,451	)			(42,802	)			59,928				(44,857	)
Income tax benefit (expense)			2,078				(1,144	)			11,469				—				12,403
Net income (loss)		$	(32,454	)		$	(28,595	)		$	(31,333	)		$	59,928			$	(32,454	)

Supplemental Condensed Consolidating Statements of Cash Flows

		Three Months Ended April 4, 2010
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
Net cash provided by (used for) operating activities		$	78,140			$	10,375			$	(101,722	)		$	—			$	(13,207	)
Cash flows from investing activities:
Capital expenditures			—				(5,037	)			(1,965	)			—				(7,002	)
Proceeds from disposal of tangible assets			—				1,806				18				—				1,824
Cash provided by other investing activities			163				—				—				—				163
Net cash provided by (used for) investing activities			163				(3,231	)			(1,947	)			—				(5,015	)
Cash flows from financing activities:
Payments under borrowing arrangements			(46,268	)			—				—				—				(46,268	)
Cash dividends paid			(2,361	)			—				—				—				(2,361	)
Tax deficiency related to share-based compensation			(278	)			—				—				—				(278	)
Proceeds from exercise of stock options			543				—				—				—				543
Intercompany capital contributions			163				(163	)			—				—				—
Net cash used for financing activities			(48,201	)			(163	)			—				—				(48,364	)
Effect of currency exchange rate changes on cash and cash equivalents			—				—				(3,410	)			—				(3,410	)
Increase (decrease) in cash and cash equivalents			30,102				6,981				(107,079	)			—				(69,996	)
Cash and cash equivalents, beginning of period			49,878				8,977				250,024				—				308,879
Cash and cash equivalents, end of period		$	79,980			$	15,958			$	142,945			$	—			$	238,883

		Three Months Ended March 29, 2009
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
Net cash provided by (used for) operating activities		$	47,520			$	(41,775	)		$	6,878			$	—			$	12,623
Cash flows from investing activities:
Capital expenditures			—				(5,822	)			(3,732	)			—				(9,554	)
Cash provided by (used for) other investing activities			—				(24	)			6				—				(18	)
Net cash used for investing activities			—				(5,846	)			(3,726	)			—				(9,572	)
Cash flows from financing activities:
Cash dividends paid			(2,373	)			—				—				—				(2,373	)
Debt issuance costs			(1,541	)			—				—				—				(1,541	)
Tax deficiency related to share-based compensation			(1,104	)			—				—				—				(1,104	)
Net cash used for financing activities			(5,018	)			—				—				—				(5,018	)
Effect of currency exchange rate changes on cash and cash equivalents			—				—				(1,003	)			—				(1,003	)
Increase (decrease) in cash and cash equivalents			42,502				(47,621	)			2,149				—				(2,970	)
Cash and cash equivalents, beginning of period			130				57,522				169,761				—				227,413
Cash and cash equivalents, end of period		$	42,632			$	9,901			$	171,910			$	—			$	224,443