Belden Announces Third Quarter 2008 Results

Third Quarter 2008 Highlights

ST. LOUIS, Oct. 23 /PRNewswire-FirstCall/ -- Belden (NYSE: BDC), a leader
in the design, manufacture, and marketing of signal transmission solutions for
industrial automation, data networking, and a wide range of specialty
electronics markets, today announced results of the third quarter ended
September 28, 2008.
Third Quarter 2008 Results
In the quarter, revenue was $520.5 million and operating income was $47.7
million. Net income was $31.7 million, or $0.67 per diluted share. The
quarter's revenue included $17.1 million of favorable currency translation as
compared to the prior-year third quarter.
During the quarter, Belden recorded nonrecurring purchase accounting
effects of $1.2 million pretax related to the July 16 acquisition of Trapeze
Networks and an asset impairment charge of $0.8 million related to its North
American manufacturing restructuring. The gross profit impact of revenue
deferral in the Wireless Segment (Trapeze Networks) was $6.3 million. In the
third quarter of 2007, the Company recorded a pre-tax gain of $8.6 million on
the sale of assets, a $0.4 million pretax favorable adjustment related to
restructuring activities in North America, and a $3.1 million income tax
benefit associated with the enactment of lower tax rates applicable to its
German operations.
Adjusted operating income in the third quarter was $56.1 million or 10.6
percent of revenue. Earnings per diluted share, similarly adjusted, were
$0.78 in the quarter, compared with $0.77 in the third quarter a year ago.
Excluding the adjusted operating loss of the Wireless Segment for
comparability, operating margin was 11.2 percent in the third quarter, versus
11.3 percent a year earlier, despite organic revenue contracting 10.7 percent
year over year.
"The weakness in demand that we saw earlier in the year in North America
is now apparent throughout Europe and Asia, and distributors have reduced
their inventories in anticipation of a weaker global economy," said John
Stroup, President and Chief Executive Officer. "Our North American demand was
flat sequentially, but in Europe and Asia the sequential decline in revenue
was steeper than historic seasonal patterns. Despite this decline, our
connectivity and wireless businesses showed year-over-year growth. In
addition, we are pleased to note that our Belden Americas division posted
record operating profit this quarter, $46.3 million, 21.0 percent of total
segment revenue. This achievement in the face of lower volume reflects
manufacturing cost savings resulting from the successful execution of our
manufacturing strategy.
"Cash flow from operations in the quarter was $53.3 million, and net of
capital expenditures, free cash flow was $39.1 million. Free cash flow for
the quarter exceeded net income," he continued. "Our strong balance sheet,
with very moderate leverage and good liquidity, will be an advantage for us as
we enter difficult times."
Outlook
"In light of a troubled global economic environment, we are revising our
outlook for 2008," said Mr. Stroup. "We believe revenue will be about $2.1
billion for the year. We are confident that we are on target to deliver the
North American manufacturing cost savings from our 2007 restructuring. We
expect that earnings per diluted share, adjusted for restructuring charges,
wireless revenue deferral, and nonrecurring purchase accounting effects, will
be $2.95 to $3.00. This implies fourth quarter adjusted EPS of $0.54 to
0.59."
The Company's previous guidance was for 2008 adjusted diluted EPS in the
range $3.15 to $3.35, adjusted for restructuring charges and nonrecurring
purchase accounting effects but not adjusted for revenue deferral. The
revenue deferral impact for the combined third and fourth quarters (the
portion of the year in which Belden owned Trapeze Networks) was estimated to
be $0.15 to $0.20. If adjusted for the effect of revenue deferral, previous
guidance would have been $3.35 to $3.50.
Forward Looking Statements
Statements in this release other than historical facts are "forward
looking statements" made in reliance upon the safe harbor of the Private
Securities Litigation Reform Act of 1995. These forward looking statements
are based on forecasts and projections about the industries served by the
Company and about general economic conditions. They reflect management's
beliefs and expectations. They are not guarantees of future performance and
they involve risk and uncertainty. The Company's actual results may differ
materially from these expectations. The current global economic slowdown has
adversely impacted our results of operations and may continue to do so.
Turbulence in financial markets has increased the costs to borrow under our
variable-rate revolving credit facility, and may continue to increase our
borrowing costs. Some additional factors that may cause actual results to
differ from the Company's expectations include demand for the Company's
products; the cost and availability of materials including copper, plastic
compounds derived from fossil fuels, and other materials; energy costs; the
Company's ability to integrate successfully the acquired businesses; and other
factors. For a more complete discussion of risk factors, please see our
Annual Report on Form 10-K for the year ended December 31, 2007, filed with
the SEC on February 29, 2008. Belden disclaims any duty to update any forward
looking statements as a result of new information, future developments, or
otherwise.
About Belden
Sending All the Right Signals -- from industrial automation to data
centers, from broadcast studios to aerospace, from cutting-edge wireless
communications to consumer electronics, Belden people are committed to
delivering the best signal transmission solutions in the world. Our 8,000
associates worldwide work in copper cable, fiber, wireless technology,
connectors, switches and active components to bring voice, video and data to
your mission-critical application. With 2007 revenue of $2.0 billion, Belden
has manufacturing capability in North America, Europe and Asia. To obtain
additional information contact Investor Relations at 314-854-8054, or visit
our website at http://www.belden.com.
Contact:
Belden
Dee Johnson, Director of Investor Relations and Corporate
Communications
314-854-8054

The following schedules are provided:
-- Comparative condensed consolidated statements of operations for the
three- and nine-month periods ended September 28, 2008, and September
23, 2007.
-- Segment results for the same periods.
-- Comparative condensed consolidated cash flow statements for the
nine-month periods ended September 28, 2008, and September 23, 2007.
-- Condensed consolidated balance sheets as of September 28, 2008, and
December 31, 2007.
-- A supplemental schedule of adjusted consolidated results for the
quarter, year to date, and the prior-year comparable periods, excluding
certain items.

BELDEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended Nine Months Ended
September September September September
28, 2008 23, 2007 28, 2008 23, 2007
(In thousands, except per share data)

Revenues $520,494 $561,611 $1,588,623 $1,448,257
Cost of sales (366,842) (403,914) (1,122,681) (1,048,671)
Gross profit 153,652 157,697 465,942 399,586
Selling, general and
administrative expenses (85,149) (85,567) (267,225) (224,095)
Research and development (15,887) (5,504) (36,051) (10,776)
Amortization of intangibles (4,125) (2,685) (9,286) (8,535)
Gain (loss) on sale of assets - 8,556 (884) 8,556
Asset impairment (753) - (12,302) (3,262)
Operating income 47,738 72,497 140,194 161,474
Interest expense (8,671) (7,561) (27,018) (18,769)
Interest income 1,226 803 4,058 5,286
Other income (expense) 813 581 3,967 (864)
Income before taxes 41,106 66,320 121,201 147,127
Income tax expense (9,453) (16,904) (34,178) (45,593)
Net income $31,653 $49,416 $87,023 $101,534

Weighted average number of
common shares and equivalents:
Basic 44,571 45,084 44,072 44,887
Diluted 47,082 50,131 47,643 50,893

Basic income per share $0.71 $1.10 $1.97 $2.26

Diluted income per share $0.67 $0.99 $1.83 $2.01

Dividends declared per share $0.05 $0.05 $0.15 $0.15

BELDEN INC.
OPERATING SEGMENT INFORMATION
(Unaudited)

Three Months Ended External Operating
September 28, 2008 Customer Affiliate Total Income
Revenues Revenues Revenues (Loss)
(In thousands)
Belden Americas $202,565 $17,558 $220,123 $46,318
Specialty Products 56,536 15,855 72,391 7,107
Wireless 7,792 38 7,830 (8,784)
EMEA 164,352 4,587 168,939 12,976
Asia Pacific 89,249 - 89,249 8,843
Total Segments 520,494 38,038 558,532 66,460
Finance and Administration - - - (10,824)
Eliminations - (38,038) (38,038) (7,898)
Total $520,494 $- $520,494 $47,738

Three Months Ended
September 23, 2007

Belden Americas $231,625 $18,069 $249,694 $44,929
Specialty Products 60,575 26,459 87,034 14,557
EMEA 171,828 7,271 179,099 23,627
Asia Pacific 97,583 - 97,583 10,276
Total Segments 561,611 51,799 613,410 93,389
Finance and Administration - - - (10,680)
Eliminations - (51,799) (51,799) (10,212)
Total $561,611 $- $561,611 $72,497

Nine Months Ended
September 28, 2008

Belden Americas $588,906 $56,790 $645,696 $117,882
Specialty Products 169,620 52,438 222,058 10,196
Wireless 7,792 38 7,830 (8,784)
EMEA 548,180 16,282 564,462 56,203
Asia Pacific 274,125 111 274,236 29,054
Total Segments 1,588,623 125,659 1,714,282 204,551
Finance and Administration - - - (37,047)
Eliminations - (125,659) (125,659) (27,310)
Total $1,588,623 $- $1,588,623 $140,194

Nine Months Ended
September 23, 2007

Belden Americas $639,661 $47,766 $687,427 $121,590
Specialty Products 181,808 62,097 243,905 40,962
EMEA 430,115 15,012 445,127 33,382
Asia Pacific 196,673 - 196,673 18,596
Total Segments 1,448,257 124,875 1,573,132 214,530
Finance and Administration - - - (29,872)
Eliminations - (124,875) (124,875) (23,184)
Total $1,448,257 $- $1,448,257 $161,474

BELDEN INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)

Nine Months Ended
September 28, September 23,
2008 2007
(In thousands)
Cash flows from operating activities:
Net income $87,023 $101,534
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 42,394 38,701
Asset impairment 12,302 3,262
Pension funding in excess of
pension expense (1,114) (1,724)
Share-based compensation 10,614 7,516
Provision for inventory
obsolescence 6,495 5,731
Loss (gain) on disposal of
tangible assets 884 (8,556)
Excess tax benefits related
to share-based compensation (1,297) (7,041)
Changes in operating assets
and liabilities, net of the
effects of acquisitions
and currency exchange rate
changes:
Receivables (9,297) (41,887)
Inventories (7,440) 10,161
Deferred cost of sales (3,300) -
Accounts payable 21,148 15,493
Accrued liabilities (33,154) 33,729
Deferred revenue 8,721 -
Accrued taxes (5,441) 24,090
Other assets (1,987) (3,309)
Other liabilities 1,316 (9,384)
Net cash provided by
operating activities 127,867 168,316

Cash flows from investing activities:
Cash used to invest in and
acquire businesses (144,625) (588,426)
Proceeds from disposal of
tangible assets 40,488 24,056
Capital expenditures (32,421) (41,483)
Net cash used in
investing activities (136,558) (605,853)

Cash flows from financing activities:
Proceeds from exercise of stock
options 5,957 29,132
Excess tax benefits related to
share-based compensation 1,297 7,041
Payments under share repurchase
program (68,336) (10,626)
Cash dividends paid (6,616) (6,750)
Debt issuance costs - (10,212)
Borrowings under credit
arrangements 240,000 546,000
Payments under borrowing
arrangements (110,000) (258,000)
Net cash provided by
financing activities 62,302 296,585

Effect of foreign currency exchange
rate changes on cash and cash
equivalents 1,864 7,125

Increase (decrease) in cash and cash
equivalents 55,475 (133,827)
Cash and cash equivalents, beginning
of period 159,964 254,151
Cash and cash equivalents, end of
period $215,439 $120,324

BELDEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

September 28, December 31,
2008 2007
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $215,439 $159,964
Receivables 383,527 373,108
Inventories, net 264,851 257,540
Deferred income taxes 21,578 28,578
Other current assets 25,459 17,392

Total current assets 910,854 836,582

Property, plant and equipment, less
accumulated depreciation 334,114 369,803
Goodwill 780,558 648,882
Intangible assets, less accumulated
amortization 179,194 154,786
Other long-lived assets 60,139 58,796

$2,264,859 $2,068,849

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $220,830 $190,018
Accrued liabilities 166,698 160,029
Current maturities of long-term debt - 110,000

Total current liabilities 387,528 460,047

Long-term debt 590,000 350,000
Postretirement benefits 100,869 98,084
Deferred income taxes 51,444 78,140
Other long-term liabilities 14,877 9,915
Stockholders' equity:
Common stock 503 503
Additional paid-in capital 581,202 638,690
Retained earnings 559,059 478,776
Accumulated other comprehensive
income 112,133 93,198
Treasury stock (132,756) (138,504)

Total stockholders' equity 1,120,141 1,072,663

$2,264,859 $2,068,849

BELDEN INC.
ADJUSTED OPERATING RESULTS
(Unaudited)

In addition to reporting financial results in accordance with accounting
principles generally accepted in the United States, we provide operating
results adjusted for certain purchase accounting effects related to
acquisitions (inventory cost step-up, amortization of the sales backlog
intangible, and in-process research and development charges), revenue
deferrals related to Trapeze Networks, severance charges, adjusted
depreciation, asset impairment, gains (losses) recognized on the disposal
of certain tangible assets, and one-time tax benefits (charges). We
utilize the adjusted results to review our ongoing operations without the
effect of these adjustments and for comparison to budgeted operating
results. We believe these adjusted results are useful to investors because
they help them compare our results to previous periods and provide
insights into underlying trends in the business. Adjusted results should
be considered only in conjunction with results reported according to
accounting principles generally accepted in the United States.

As
Three Months Ended September 28, 2008 Reported Adjustments Adjusted
(In thousands, except percentages
and per share amounts)

Revenues $520,494 $8,721 $529,215

Gross profit $153,652 $5,754 $159,406
as a percent of revenues 29.5% 30.1%

Operating income $47,738 $8,389 $56,127
as a percent of revenues 9.2% 10.6%

Net income $31,653 $5,173 $36,826
as a percent of revenues 6.1% 7.0%

Net income per diluted share $0.67 $0.11 $0.78

Three Months Ended September 23, 2007

Revenues $561,611 $- $561,611

Gross profit $157,697 $(435) $157,262
as a percent of revenues 28.1% 28.0%

Operating income $72,497 $(8,973) $63,524
as a percent of revenues 12.9% 11.3%

Net income $49,416 $(11,015) $38,401
as a percent of revenues 8.8% 6.8%

Net income per diluted share $0.99 $(0.22) $0.77

Adjustments for the three months ended September 28, 2008 included
pre-tax income impacts for revenue deferrals, purchase accounting effects
for acquisitions, asset impairment, and severance of $6.3 million, $1.2
million, $0.8 million, and $0.1 million, respectively.

Adjustments for the three months ended September 23, 2007 included a
pre-tax gain on sales of assets and adjusted depreciation of $8.6 million
and $0.4 million, respectively.

As
Nine Months Ended September 28, 2008 Reported Adjustments Adjusted
(In thousands, except percentages
and per share amounts)

Revenues $1,588,623 $8,721 $1,597,344

Gross profit $465,942 $11,996 $477,938
as a percent of revenues 29.3% 29.9%

Operating income $140,194 $37,353 $177,547
as a percent of revenues 8.8% 11.1%

Net income $87,023 $27,811 $114,834
as a percent of revenues 5.5% 7.2%

Net income per diluted share $1.83 $0.58 $2.41

Nine Months Ended September 23, 2007

Revenues $1,448,257 $- $1,448,257

Gross profit $399,586 $10,374 $409,960
as a percent of revenues 27.6% 28.3%

Operating income $161,474 $9,418 $170,892
as a percent of revenues 11.1% 11.8%

Net income $101,534 $1,421 $102,955
as a percent of revenues 7.0% 7.1%

Net income per diluted share $2.01 $0.03 $2.04

Adjustments for the nine months ended September 28, 2008 included pre-tax
charges for asset impairment, severance associated with the Voluntary Sepa
ration Program, revenue deferrals, purchase accounting effects for
acquisitions, pension settlements, adjusted depreciation, severance and
other restructuring costs, and a loss on the disposal of certain tangible
assets of $12.3 million, $6.5 million, $6.3 million, $1.2 million, $2.0
million, $0.7 million, $7.0 million, and $1.4 million, respectively.

Adjustments for the nine months ended September 23, 2007 included pre-tax
income impacts of purchase accounting effects for acquisitions, asset
impairment, severance, and adjusted depreciation of $12.2 million, $3.3
million, $1.2 million, and $1.2 million, respectively, partially offset by
a $8.3 million pre-tax gain on sales of assets and a $0.2 million pre-tax
pension credit.

SOURCE Belden

Dee Johnson, Director of Investor Relations and Corporate Communications,
Belden, +1-314-854-8054