BELDEN INC. - Quarter Report: 2011 April (Form 10-Q)

CONSOLIDATED STOCKHOLDERS’ EQUITY STATEMENT
THREE MONTHS ENDED APRIL 3, 2011
(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, 2010			50,335			$	503			$	595,519			$	171,568				(3,290	)		$	(120,156	)		$	32,095			$	(41,014	)		$	638,515
Net income			—				—				—				21,890				—				—				—				—				21,890
Foreign currency translation			—				—				—				—				—				—				22,757				—				22,757
Comprehensive income																																			44,647
Exercise of stock options, net of tax withholding forfeitures			—				—				(1,436	)			—				215				5,025				—				—				3,589
Conversion of restricted stock units into commom stock, net of tax withholding forfeitures			—				—				(3,371	)			—				95				1,652				—				—				(1,719	)
Share-based compensation			—				—				4,593				—				—				—				—				—				4,593
Dividends ($0.05 per share)			—				—				—				(2,395	)			—				—				—				—				(2,395	)
Balance at April 3, 2011			50,335			$	503			$	595,305			$	191,063				(2,980	)		$	(113,479	)		$	54,852			$	(41,014	)		$	687,230

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, 2010:

•

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 2010 Annual Report on Form 10-K.

Business Description

We design, manufacture, and market a portfolio of cable, connectivity, and networking products in markets including industrial, enterprise, broadcast, and consumer electronics. Our products provide for the transmission of signals for data, sound, and video applications.

Reporting Periods

Our fiscal year and fiscal fourth quarter both end on December 31. Our fiscal first quarter ends on the Sunday falling closest to 91 days after December 31, which was April 3, 2011, the 93rd day of our fiscal year 2011. Our fiscal second and third quarters each have 91 days. The three months ended April 4, 2010 included 94 days.

Reclassifications

We have made certain reclassifications to the 2010 Consolidated Financial Statements with no impact to reported net income in order to conform to the 2011 presentation, including reclassifications associated with a discontinued operation.

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 3, 2011 and April 4, 2010, we utilized Level 1 inputs to determine the fair value of cash equivalents.

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 3, 2011 was $73.6 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 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 3, 2011, we were party to standby letters of credit, bank guaranties, and surety bonds totaling $10.7 million, $6.4 million, and $1.7 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 record revisions to these estimates in the period in which the facts that give rise to each revision become known.

Discontinued Operations

On December 16, 2010, we completed the sale of Trapeze Networks, Inc. (Trapeze). The Trapeze operations comprised the entirety of the former Wireless segment. For the three months ended April 4, 2010, we recognized a loss of $3.2 million ($2.5 million net of tax) related to the Trapeze operations, which is included in 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 each of the three months ended April 3, 2011, and 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.

Subsequent Events

We have evaluated subsequent events after the balance sheet date through the financial statement issuance date for appropriate accounting and disclosure. See Note 11.

Note 2: Acquisitions

We acquired ICM Corp. (ICM) for cash of $21.9 million on January 7, 2011. ICM is a broadcast connectivity product manufacturer located in Denver, Colorado. ICM’s strong brands and technology enhance our broadcast portfolio of products. The results of ICM have been included in our Consolidated Financial Statements from January 7, 2011, and are reported within the Americas segment. The ICM acquisition was not material to our financial position or results of operations reported as of and for the three months ended April 3, 2011.

We acquired Poliron Cabos Electricos Especiais Ltda (Poliron) on April 1, 2011. Poliron is an industrial cable manufacturer located in Sao Paulo, Brazil. The acquisition of Poliron expands our presence in emerging markets. The $29.2 million cash purchase price was paid on April 4, 2011, during our fiscal second quarter. As of April 3, 2011, the accrued liabilities balance includes a liability for the purchase price. The results of Poliron have been included in our Consolidated Financial Statements from April 1, 2011, and are reported within the Americas segment. The Poliron acquisition was not material to our financial position or results of operations reported as of and for the three months ended April 3, 2011.

Note 3: Operating Segments

We have organized the enterprise around geographic areas. We conduct our operations through three reported operating segments—Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific. A fourth operating segment, Wireless, has been eliminated as a result of the disposition of Trapeze and reporting it as a discontinued operation.

Beginning on January 1, 2011, we allocated corporate expenses to the segments for purposes of measuring segment operating income. Corporate expenses were allocated on the basis of each segment’s relative operating income prior to the allocation. The prior period presentation has been modified accordingly.

										Asia				Total
		Americas				EMEA				Pacific				Segments
						(In thousands)
For the three months ended April 3, 2011
External customer revenues		$	276,998			$	103,690			$	80,940			$	461,628
Affiliate revenues			12,068				22,666				101				34,835
Operating income			31,572				17,098				6,373				55,043
For the three months ended April 4, 2010
External customer revenues		$	217,929			$	90,550			$	75,945			$	384,424
Affiliate revenues			12,737				14,743				—				27,480
Operating income			23,788				11,061				5,710				40,559

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

		Three Months Ended
		April 3, 2011				April 4, 2010
		(In thousands)
Segment operating income		$	55,043			$	40,559
Eliminations			(12,970	)			(9,264	)
Total operating income			42,073				31,295
Interest expense			(11,808	)			(12,946	)
Interest income			159				182
Income from continuing operations before taxes		$	30,424			$	18,531

Revenues by major product group were as follows:

		Three Months Ended
		April 3, 2011				April 4, 2010
		(In thousands)
Cable products		$	319,128			$	291,311
Networking products			71,255				49,258
Connectivity products			71,245				43,855
Total revenues		$	461,628			$	384,424

The main categories of cable products are (1) copper cables, including shielded and unshielded twisted pair cables, coaxial cables, and stranded cables, (2) fiber optic cables, which transmit light signals through glass or plastic fibers, and (3) composite cables, which are combinations of multiconductor, coaxial, and fiber optic cables jacketed together or otherwise joined together to serve complex applications and provide ease of installation. Connectivity products include both fiber and copper connectors for the enterprise, broadcast, and industrial markets. Connectors are also sold as part of end-to-end structured cabling solutions. Networking products include Industrial Ethernet switches and related equipment, fiber optic interfaces and media converters used to bridge fieldbus networks over long distances, and load-moment indicators for mobile cranes and other load-bearing equipment.

Note 4: Income per Share

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

		Three Months Ended
		April 3, 2011				April 4, 2010
		(in thousands)
Numerator:
Income from continuing operations		$	22,018			$	14,330
Loss from discontinued operations, net of tax			(128	)			(2,583	)
Net income		$	21,890			$	11,747
Denominator:
Weighted average shares outstanding, basic			47,209				46,697
Effect of dilutive common stock equivalents			1,121				813
Weighted average shares outstanding, diluted			48,330				47,510

For the three months ended April 3, 2011 and April 4, 2010, diluted weighted average shares outstanding do not include outstanding equity awards of 0.4 million and 1.2 million, respectively, because to do so would have been anti-dilutive.

Note 5: Inventories

The major classes of inventories were as follows:

		April 3,				December 31,
		2011				2010
		(In thousands)
Raw materials		$	72,222			$	64,146
Work-in-process			45,958				42,193
Finished goods			109,698				87,982
Perishable tooling and supplies			3,239				3,615
Gross inventories			231,117				197,936
Obsolescence and other reserves			(23,037	)			(22,277	)
Net inventories		$	208,080			$	175,659

Note 6: Long-Lived Assets

Disposals

During the three months ended April 3, 2011, we sold certain real estate of the Americas segment for $1.1 million. There was no gain or loss recognized on the sale.

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.

Depreciation and Amortization Expense

We recognized depreciation expense in income from continuing operations of $9.2 million and $10.2 million in the three months ended April 3, 2011 and April 4, 2010, respectively.

We recognized amortization expense in income from continuing operations related to our intangible assets of $3.7 million and $2.7 million in the three months ended April 3, 2011 and April 4, 2010, respectively.

Note 7: Long-Term Debt and Other Borrowing Arrangements

Senior Subordinated Notes

We have outstanding $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. As of April 3, 2011, the carrying value of the notes was $201.1 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 January 2011, the size of the senior secured credit facility reduced from $250.0 million to $230.0 million. As of April 3, 2011, we were in compliance with all of the covenants of the facility.

As of April 3, 2011, there were not any outstanding borrowings under the facility, and we had $219.3 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. The facility was scheduled to mature in January 2013.

See Note 11 for a discussion of the refinancing of the senior secured credit facility subsequent to April 3, 2011.

Fair Value of Long-Term Debt

The fair value of our debt instruments at April 3, 2011 was approximately $581.3 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 $8.4 million for the three months ended April 3, 2011. The most significant factor in the difference between the effective tax rate of 27.6% 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 3, 2011 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 3,				April 4,				April 3,				April 4,
Three Months Ended		2011				2010				2011				2010
		(In thousands)
Service cost		$	1,349			$	1,860			$	40			$	25
Interest cost			2,811				4,226				681				626
Expected return on plan assets			(2,860	)			(4,324	)			—				—
Amortization of prior service cost			(36	)			16				(60	)			(53	)
Net loss recognition			1,543				944				119				58
Net periodic benefit cost		$	2,807			$	2,722			$	780			$	656

Note 10: Comprehensive Income (Loss)

The following table summarizes total comprehensive income (loss):

		Three Months Ended
		April 3, 2011				April 4, 2010
		(In thousands)
Net income		$	21,890			$	11,747
Foreign currency translation income (loss)			22,757				(22,106	)
Total comprehensive income (loss)		$	44,647			$	(10,359	)

Note 11: Subsequent Event

On April 25, 2011, we entered into a new senior secured credit facility. The borrowing capacity under the new facility is $400.0 million, and the term extends to April 2016. Interest on outstanding borrowings under the new facility is determined based on the three month LIBOR rate, plus a variable spread. The variable spread ranges from 1.75% to 2.75%, depending upon our leverage ratio. The new facility allows us to borrow and re-pay funds in local currencies.

Note 12: Supplemental Guarantor Information

As of April 3, 2011, 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 3, 2011
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	75,551			$	26,266			$	221,268			$	—			$	323,085
Receivables, net			16,166				104,342				202,048				—				322,556
Inventories, net			—				123,918				84,162				—				208,080
Deferred income taxes			(3,421	)			8,178				4,474				—				9,231
Other current assets			3,103				7,539				9,272				—				19,914
Total current assets			91,399				270,243				521,224				—				882,866
Property, plant and equipment, less accumulated depreciation			—				120,544				166,093				—				286,637
Goodwill			—				268,909				84,863				—				353,772
Intangible assets, less accumulated amortization			—				99,536				59,219				—				158,755
Deferred income taxes			17,077				(7,528	)			18,564				—				28,113
Other long-lived assets			10,278				1,738				56,630				—				68,646
Investment in subsidiaries			970,199				302,013				—				(1,272,212	)			—
		$	1,088,953			$	1,055,455			$	906,593			$	(1,272,212	)		$	1,778,789
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	2,630			$	99,894			$	126,061			$	—			$	228,585
Accrued liabilities			33,833				23,918				99,172				—				156,923
Total current liabilities			36,463				123,812				225,233				—				385,508
Long-term debt			551,056				—				—				—				551,056
Postretirement benefits			—				31,319				87,349				—				118,668
Other long-term liabilities			26,458				2,206				7,663				—				36,327
Intercompany accounts			369,346				(623,459	)			254,113				—				—
Total stockholders’ equity			105,630				1,521,577				332,235				(1,272,212	)			687,230
		$	1,088,953			$	1,055,455			$	906,593			$	(1,272,212	)		$	1,778,789

		December 31, 2010
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	139,895			$	33,804			$	184,954			$	—			$	358,653
Receivables, net			17,354				99,949				180,963				—				298,266
Inventories, net			—				109,127				66,532				—				175,659
Deferred income taxes			(3,421	)			9,011				3,883				—				9,473
Other current assets			2,581				7,618				8,605				—				18,804
Total current assets			156,409				259,509				444,937				—				860,855
Property, plant and equipment, less accumulated depreciation			—				120,857				158,009				—				278,866
Goodwill			—				258,094				64,462				—				322,556
Intangible assets, less accumulated amortization			—				93,695				50,125				—				143,820
Deferred income taxes			17,704				(8,362	)			18,223				—				27,565
Other long-lived assets			11,047				1,724				50,051				—				62,822
Investment in subsidiaries			941,412				286,547				—				(1,227,959	)			—
		$	1,126,572			$	1,012,064			$	785,807			$	(1,227,959	)		$	1,696,484
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	5,200			$	87,796			$	119,088			$	—			$	212,084
Accrued liabilities			32,195				45,818				67,827				—				145,840
Total current liabilities			37,395				133,614				186,915				—				357,924
Long-term debt			551,155				—				—				—				551,155
Postretirement benefits			—				27,949				84,477				—				112,426
Other long-term liabilities			26,495				3,552				6,417				—				36,464
Intercompany accounts			398,804				(647,855	)			249,051				—				—
Total stockholders’ equity			112,723				1,494,804				258,947				(1,227,959	)			638,515
		$	1,126,572			$	1,012,064			$	785,807			$	(1,227,959	)		$	1,696,484

Supplemental Condensed Consolidating Statements of Operations

		Three Months Ended April 3, 2011
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
										(In thousands)
Revenues		$	—			$	256,666			$	252,105			$	(47,143	)		$	461,628
Cost of sales			—				(185,576	)			(192,740	)			47,143				(331,173	)
Gross profit			—				71,090				59,365				—				130,455
Selling, general and administrative expenses			(79	)			(43,897	)			(30,960	)			—				(74,936	)
Research and development			—				(4,708	)			(8,921	)			—				(13,629	)
Amortization of intangibles			—				(1,710	)			(1,969	)			—				(3,679	)
Income from equity method investment			—				—				3,862				—				3,862
Operating income (loss)			(79	)			20,775				21,377				—				42,073
Interest expense			(11,846	)			64				(26	)			—				(11,808	)
Interest income			40				3				116				—				159
Intercompany income (expense)			843				(2,525	)			1,682				—				—
Income (loss) from equity investment in subsidiaries			28,787				15,466				—				(44,253	)			—
Income (loss) from continuing operations before taxes			17,745				33,783				23,149				(44,253	)			30,424
Income tax benefit (expense)			4,273				(4,996	)			(7,683	)			—				(8,406	)
Income (loss) from continuing operations			22,018				28,787				15,466				(44,253	)			22,018
Loss from discontinued operations, net of tax			(128	)			—				—				—				(128	)
Net income (loss)		$	21,890			$	28,787			$	15,466			$	(44,253	)		$	21,890

		Three Months Ended April 4, 2010
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
		(In thousands)
Revenues		$	—			$	192,442			$	229,686			$	(37,704	)		$	384,424
Cost of sales			—				(137,366	)			(174,352	)			37,704				(274,014	)
Gross profit			—				55,076				55,334				—				110,410
Selling, general and administrative expenses			(256	)			(36,565	)			(31,914	)			—				(68,735	)
Research and development			—				(2,683	)			(7,625	)			—				(10,308	)
Amortization of intangibles			—				(738	)			(1,975	)			—				(2,713	)
Income from equity method investment			—				—				2,641				—				2,641
Operating income (loss)			(256	)			15,090				16,461				—				31,295
Interest expense			(12,761	)			(22	)			(163	)			—				(12,946	)
Interest income			46				3				133				—				182
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				24,212				15,728				(29,332	)			18,531
Income tax benefit (expense)			3,960				(3,876	)			(4,285	)			—				(4,201	)
Income (loss) from continuing operations			11,883				20,336				11,443				(29,332	)			14,330
Loss from discontinued operations, net of tax			(136	)			(2,447	)			—				—				(2,583	)
Net income (loss)		$	11,747			$	17,889			$	11,443			$	(29,332	)		$	11,747

Supplemental Condensed Consolidating Statements of Cash Flows

		Three Months Ended April 3, 2011
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Total
						(In thousands)
Net cash provided by (used for) operating activities		$	(44,380	)		$	23,054			$	5,699			$	(15,627	)
Cash flows from investing activities:
Cash used to acquire businesses, net of cash acquired			(23,192	)			—				—				(23,192	)
Capital expenditures			—				(4,164	)			(2,634	)			(6,798	)
Proceeds from disposal of tangible assets			—				1,118				18				1,136
Net cash used for investing activities			(23,192	)			(3,046	)			(2,616	)			(28,854	)
Cash flows from financing activities:
Cash dividends paid			(2,392	)			—				—				(2,392	)
Tax benefit related to share-based compensation			1,668				—				—				1,668
Proceeds from exercise of stock options			3,952				—				—				3,952
Intercompany capital contributions and dividends			—				(27,546	)			27,546				—
Net cash provied by (used for) financing activities			3,228				(27,546	)			27,546				3,228
Effect of currency exchange rate changes on cash and cash equivalents			—				—				5,685				5,685
Increase (decrease) in cash and cash equivalents			(64,344	)			(7,538	)			36,314				(35,568	)
Cash and cash equivalents, beginning of period			139,895				33,804				184,954				358,653
Cash and cash equivalents, end of period		$	75,551			$	26,266			$	221,268			$	323,085

		Three Months Ended April 4, 2010
										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Total
						(In thousands)
Net cash provided by (used for) operating activities		$	78,303			$	10,212			$	(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
Net cash used for financing activities			(48,364	)			—				—				(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

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We design, manufacture, and market a portfolio of cable, connectivity, and networking products in markets including industrial, enterprise, broadcast, and consumer electronics.

We consider revenue growth, operating margin, cash flows, return on invested capital, and working capital management metrics to be our key operating performance indicators.

Trends and Events

The following trends and events during 2011 have had varying effects on our financial condition, results of operations, and cash flows.

Acquisitions

We completed two acquisitions during the three months ended April 3, 2011. We acquired ICM Corp. (ICM) for cash of $21.9 million on January 7, 2011. ICM is a broadcast connectivity product manufacturer located in Denver, Colorado. ICM’s strong brands and technology enhance our broadcast portfolio of products. On April 1, 2011, we acquired Poliron Cabos Electricos Especiais Ltda (Poliron), an industrial cable manufacturer located in Sao Paulo, Brazil. The acquisition of Poliron expands our presence in emerging markets. The $29.2 million cash purchase price was paid on April 4, 2011, during our fiscal second quarter. As of April 3, 2011, the accrued liabilities balance includes the liability for the purchase price. The results of both ICM and Poliron have been included in our Consolidated Financial Statements from the respective acquisition dates and are reported within the Americas segment.

Commodity prices

Our operating results can be affected by changes in prices of commodities, primarily copper, silver, and compounds, which are components in some of the products we sell. Generally, as the costs of inventory purchases increase due to higher commodity prices, we raise selling prices to customers to cover the increase in costs, resulting in higher sales revenue but a lower gross profit percentage. Conversely, a decrease in commodity prices would result in lower sales revenue but a higher gross profit percentage. Selling prices of our products are affected by many factors, including end market demand, capacity utilization, overall economic conditions, and commodity prices. Importantly, however, there is no exact measure of the effect of changing copper prices, as there are thousands of transactions in any given quarter, each of which has various factors involved in the individual pricing decisions. Therefore, all references to the effects of copper prices or other commodity prices are estimates.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or cash flows.

Critical Accounting Policies

During the three months ended April 3, 2011:

•

We did not change any of our existing critical accounting policies from those listed in our 2010 Annual Report on Form 10-K;

•

No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and

•

There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed.

Results of Operations

Consolidated Continuing Operations

		Three Months Ended								%
		April 3, 2011				April 4, 2010				Change
		(in thousands, except percentages)
Revenues		$	461,628			$	384,424				20.1	%
Gross profit			130,455				110,410				18.2	%
Selling, general and administrative expenses			74,936				68,735				9.0	%
Research and development			13,629				10,308				32.2	%
Operating income			42,073				31,295				34.4	%
Income from continuing operations before taxes			30,424				18,531				64.2	%
Income from continuing operations			22,018				14,330				53.6	%

Revenues increased in the three months ended April 3, 2011 from the comparable period of 2010 primarily for the following reasons:

•

Acquisitions contributed $29.5 million to the increase in revenues.

•

An increase in sales prices, partially due to increased copper prices, resulted in a revenue increase of $27.3 million.

•

An increase in unit sales volume, primarily due to growth and increased share in many of our end markets, resulted in a revenue increase of $17.9 million.

•

Favorable currency translation, primarily due to the Canadian dollar strengthening against the U.S. dollar, resulted in a revenue increase of $2.5 million.

Gross profit increased in the three months ended April 3, 2011 from the comparable period of 2010 due to the increase in revenues as discussed above and a decrease in severance and other restructuring costs. In the three months ended April 4, 2010, cost of sales included $5.0 million of severance and other restructuring costs, such as equipment relocation and contract termination costs. Cost of sales did not include any significant severance and other restructuring costs in the three months ended April 3, 2011. This decrease was due to the completion of our global restructuring actions.

Selling, general and administrative expenses increased in the three months ended April 3, 2011 from the comparable period of 2010. The increase is primarily due to higher payroll and commission costs, as well as higher discretionary spending for items such as travel costs. The increase in costs is also due in part to our recent acquisitions. The percentage increase in selling, general and administrative expenses compared to the prior year was less than the percentage increase in revenues due to the benefits of our completed restructuring actions and the successful execution of our Lean enterprise strategies.

The increase in research and development costs in the three months ended April 3, 2011 from the comparable period of 2010 is primarily due to our recent acquisitions. The increase in costs is also due in part to higher payroll costs and higher discretionary spending for such items as consulting fees.

Operating income increased in the three months ended April 3, 2011 from the comparable period of 2010 due to the increases in revenues and gross profit and the decreases in severance and other restructuring costs as discussed above. In addition, operating income increased due to the benefits of our completed restructuring actions, the successful execution of our regional manufacturing and Lean enterprise strategies, and our recent acquisitions.

Income from continuing operations before taxes increased in the three months ended April 3, 2011 due to the increases in operating income discussed above. In addition, interest expense was $1.1 million lower in the three months ended April 3, 2011 than the comparable period of 2010 due to lower average outstanding borrowings.

Our effective tax rate for the three months ended April 3, 2011 was 27.6% compared to 22.7% in the three months ended April 4, 2010. This change is primarily attributable to the jurisdictional mix of income from continuing operations before taxes. In addition, our effective tax rate for the three months ended April 4, 2010 included a net benefit from the impact of discrete items.

Americas Segment

		Three Months Ended									%
		April 3, 2011				April 4, 2010				Change
		(in thousands, except percentages)
Total revenues		$	289,066			$	230,666				25.3	%
Operating income			31,572				23,788				32.7	%
as a percent of total revenues			10.9	%			10.3	%

Americas total revenues, which include affiliate revenues, increased in the three months ended April 3, 2011 from the comparable period of 2010. Acquisitions contributed $29.5 million to the increase in revenues. Higher selling prices, primarily attributable to increases in copper prices, contributed $18.9 million to the increase in revenues. Higher unit sales volume resulted in an increase in revenues of $8.5 million. The increase in revenues was also due to favorable currency translation of $2.2 million, resulting primarily from the Canadian dollar strengthening against the U.S. dollar. The increases in revenues were partially offset by changes in affiliate sales, which resulted in a $0.7 million decrease in revenues.

Operating income increased in the three months ended April 3, 2011 from the comparable period of 2010 primarily due to the increase in revenues discussed above. Operating income also increased due to a reduction in severance and other restructuring costs. In the three months ended April 4, 2010, the segment recognized $4.3 million of severance and other restructuring costs. The segment did not recognize any significant severance or other restructuring costs in the three months ended April 3, 2011.

EMEA Segment

		Three Months Ended									%
		April 3, 2011				April 4, 2010				Change
		(in thousands, except percentages)
Total revenues		$	126,356			$	105,293				20.0	%
Operating income			17,098				11,061				54.6	%
as a percent of total revenues			13.5	%			10.5	%

EMEA total revenues, which include affiliate revenues, increased in the three months ended April 3, 2011 from the comparable period of 2010 due to an $11.6 million increase from higher unit sales volume. Higher affiliate sales also contributed $7.9 million to the increase in revenues. Higher selling prices, primarily attributable to increases in copper prices, contributed $2.7 million to the increase in revenues. These increases were partially offset by decreases in revenues of $1.1 million due to the impact of unfavorable currency translation, primarily from the U.S. dollar strengthening against the euro.

Operating income increased in the three months ended April 3, 2011 due to the increase in revenues, as discussed above, as well as a $1.2 million increase in income from an equity method investment. In addition, operating income was positively impacted by a decrease in restructuring costs. In the three months ended April 4, 2010, the segment recognized $1.0 million of costs related to various restructuring actions, such as equipment relocation and contract termination costs. The segment did not recognize any significant restructuring costs during the three months ended April 3, 2011.

Asia Pacific Segment

		Three Months Ended									%
		April 3, 2011				April 4, 2010				Change
		(in thousands, except percentages)
Total revenues		$	81,041			$	75,945				6.7	%
Operating income			6,373				5,710				11.6	%
as a percent of total revenues			7.9	%			7.5	%

Asia Pacific total revenues, which include affiliate revenues, increased in the three months ended April 3, 2011 from the comparable period of 2010 primarily due to a $5.7 million increase from higher selling prices, which resulted primarily from an increase in copper prices. Favorable currency translation, primarily from the Chinese renminbi strengthening against the U.S. dollar, resulted in $1.4 million of the increase in revenues. Higher affiliate sales contributed $0.1 million to the increase in revenues. These increases were partially offset by decreases in revenues of $2.1 million due to lower unit sales volume. The lower unit sales volume was due in part to competitive market pressures, as well as product portfolio actions taken to improve the profitability of our product mix in the Asia Pacific segment. Operating income increased in the three months ended April 3, 2011 due to the increase in revenues as discussed above.

Discontinued Operations

On December 16, 2010, we completed the sale of Trapeze. The Trapeze operations comprised the entirety of the Wireless segment. For the three months ended April 4, 2010, we recognized a loss of $3.2 million ($2.5 million net of tax) related to the Trapeze operations, which is included in 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 each of the three months ended April 3, 2011, and 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.

Liquidity and Capital Resources

Significant factors affecting our cash liquidity include (1) cash from operating activities, (2) disposals of tangible assets, (3) exercises of stock options, (4) cash used for acquisitions, restructuring actions, capital expenditures, share repurchases and dividends, and (5) our available credit facilities and other borrowing arrangements. In the first quarter of each year, cash from operating activities reflects the payments of annual rebates to our channel partners and incentive compensation to our associates. For the full year, we expect our operating activities to generate cash and believe our sources of liquidity are sufficient to fund current working capital requirements, capital expenditures, contributions to our retirement plans, quarterly dividend payments, and our short-term operating strategies. Our ability to continue to fund our future needs from business operations could be affected by many factors, including, but not limited to: economic conditions worldwide, customer demand, competitive market forces, customer acceptance of our product mix, and commodities pricing.

The following table is derived from our Consolidated Cash Flow Statements:

		Three Months Ended
		April 3, 2011				April 4, 2010
		(In thousands)
Net cash provided by (used for):
Operating activities		$	(15,627	)		$	(13,207	)
Investing activities			(28,854	)			(5,015	)
Financing activities			3,228				(48,364	)
Effects of currency exchange rate changes on cash and cash equivalents			5,685				(3,410	)
Decrease in cash and cash equivalents			(35,568	)			(69,996	)
Cash and cash equivalents, beginning of period			358,653				308,879
Cash and cash equivalents, end of period		$	323,085			$	238,883