<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File Number 1-12280
BELDEN INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0412617
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7701 Forsyth Boulevard, Suite 800
St. Louis, Missouri 63105
(Address of Principal Executive Offices and Zip Code)
(314) 854-8000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 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
requirement for the past 90 days.
Yes X No
Number of shares outstanding of the issuer's Common Stock, par
value $.01 per share, as of July 28, 1996: 26,137,882 shares
Page 1 of 13 <PAGE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1: Financial Statements
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
(in thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,377 $ 750
Receivables 97,100 93,931
Inventories 78,094 67,961
Deferred income taxes 5,930 6,906
Other 2,716 3,616
Total current assets 185,217 173,164
Property, plant and equipment, less
accumulated depreciation 145,239 143,648
Intangibles, less accumulated amortization 14,515 15,862
Other assets 18 113
$344,989 $332,787
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 74,229 $ 78,847
Income taxes payable 3,932 4,399
Total current liabilities 78,161 83,246
Long-term debt 78,860 81,458
Postretirement benefits other than pensions 17,849 18,555
Deferred income taxes 6,552 8,014
Other long-term liabilities 10,942 9,612
Stockholders' equity:
Preferred stock - -
Common stock 261 261
Additional paid-in capital 51,071 51,034
Retained earnings 106,998 83,717
Translation component (3,942) (3,110)
Treasury stock, at cost (1,763) -
Total stockholders' equity 152,625 131,902
$344,989 $332,787
</TABLE>
See accompanying notes.
- 2 - <PAGE>
<PAGE>
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1996 1995 1996 1995
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues $336,924 $274,071 $167,649 $159,986
Cost of sales 253,997 204,725 126,134 121,408
Gross profit 82,927 69,346 41,515 38,578
Selling, general and administrative expenses 38,443 33,888 18,705 19,447
Operating earnings 44,484 35,458 22,810 19,131
Interest expense 1,873 1,779 890 1,264
Income before income taxes 42,611 33,679 21,920 17,867
Income taxes 16,725 13,219 8,604 7,013
Net income 25,886 20,460 13,316 10,854
Net income per share $ .99 $ .78 $ .51 $ .41
</TABLE>
See accompanying notes.
- 3 -<PAGE>
<PAGE>
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 25,886 $ 20,460
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 7,876 6,333
Amortization 798 778
Deferred income taxes (486) 242
Changes in operating assets and liabilities (*):
Receivables (4,493) 1,421
Inventories (11,028) (7,815)
Accounts payable and accrued liabilities (2,788) (821)
Income taxes payable (329) 1,228
Other assets and liabilities, net 2,822 817
Net cash provided by operating activities 18,258 22,643
Cash flows from investing activities:
Capital expenditures (12,457) (8,485)
Cash paid for acquired businesses - (59,789)
Proceeds from sales of property, plant and equipment 91 88
Net cash used for investing activities (12,366) (68,186)
Cash flows from financing activities:
Net repayments under long-term credit facility
and credit agreements (654) 47,506
Exercise of stock options 725 255
Purchase of treasury stock (2,425) -
Cash dividends paid (2,605) (2,608)
Net cash used for financing activities (4,959) 45,153
Effect of exchange rate changes on cash and cash equivalents (306) 120
Increase (decrease) in cash and cash equivalents 627 (270)
Cash and cash equivalents, beginning of period 750 4,700
Cash and cash equivalents, end of period $ 1,377 $ 4,430
</TABLE>
(*)Net of the effects of exchange rate changes and acquired business.
See accompanying notes.
- 4 - <PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Consolidated Financial Statements include Belden and all
o f i t s subsidiaries. All significant intercompany accounts and
transactions are eliminated in consolidation. The financial information
presented as of any date other than December 31, 1995, has been prepared
from the books and records without audit. The accompanying Consolidated
F i n a ncial Statements have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and
the footnotes required by generally accepted accounting principles for
complete statements. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of such financial statements have been included. These
Consolidated Financial Statements should be read in conjunction with the
Consolidated Financial Statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Note 2: Supplemental Cash Flow Information
Cash payments for income taxes during the first six months of 1996 and
1995 amounted to $17,551,000 and $11,473,000, respectively. Included in
these amounts were $5,600,000 and $6,000,000 paid to Cooper Industries,
Inc. in the first six months of 1996 and 1995, respectively, in accordance
with a Tax Sharing and Separation Agreement.
Total interest paid, net of amounts capitalized, during the first six
m o n ths of 1996 and 1995 amounted to $1,943,000 and $1,843,000,
respectively.
Note 3: Inventories
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Raw materials $ 17,238 $ 17,449
Work-in-process 18,690 19,374
Finished goods 57,810 46,236
Perishable tooling and supplies 3,728 3,512
Total 97,466 86,571
Allowances (primarily LIFO reserves) (19,372) (18,610)
Net inventories $ 78,094 $ 67,961
</TABLE>
- 5 -<PAGE>
<PAGE>
Note 4: Per Share Information
Earnings per share have been computed based on the weighted average number
of common shares outstanding and common stock options which are dilutive,
using the treasury stock method. The shares used in the computation for
the three months ended June 30, 1996 and 1995 were 26,240,000 and
26,227,000, respectively. The shares used in the computation for the six
months ended June 30, 1996 and 1995 were 26,226,000 and 26,206,000,
respectively.
On May 9, 1996, the Company declared a quarterly cash dividend of $.05 per
share payable on July 2, 1996.
Item 2: Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Six Months Ended June 30, 1996 Compared With Six Months Ended June 30,
1995
Revenues
Revenues for the six months ended June 30, 1996 were $336.9 million
compared with $274.1 million in the same period last year, an increase of
23%, the majority of which was due to the acquisitions of Pope Cable and
Wire B.V. (Pope) and American Electric Cordsets (AEC). Revenues increased
9% when including revenues of Pope (acquired April 3, 1995) and AEC
(acquired March 23, 1995) as if they had been acquired at the beginning of
the period. The following table shows the components of the 23% increase
in the Company's revenues for the first six months of 1996 in each of the
Company's four served markets.
<TABLE>
<CAPTION>
% Increase
% of Total in 1996 Revenues
Revenues Compared with 1995
<S> <C> <C>
Computer 33% 19%
Audio/video 26 32
Industrial 17 24
Electrical 24 18
</TABLE>
The increase in the computer market revenues was due to additional
revenues associated with the acquisition of Pope and growth in networking
of computers, workstations and servers, which resulted in increased sales
of the Company's high performance twisted pair products. The rate of
increases in revenues for the Company s networking cables slowed during
the second quarter due to increases in inventory levels at certain
significant customers, which negatively affected orders. Management
expects this impact to continue in the third quarter as these customers
w o r k d own inventory levels. Sales of the Company s computer
interconnection products, which link personal computers to discrete
peripheral devices and mainframes to terminals, were down slightly
- 6 -<PAGE>
<PAGE>
compared to the first six months of 1995. The decline in revenues was due
to weaker demand in this mature market and price reductions taken by the
Company to be more competitive.
The revenue growth in the audio/video market was due to additional
revenues from the acquisition of Pope and increased sales of the Company s
cable television (CATV) and broadcast products. Demand for domestic CATV
drop cable has declined as CATV providers have delayed spending due to
uncertainties regarding telecommunication network architecture and the
effect of the telecommunications legislation enacted earlier this year.
T h i s decline in domestic CATV revenues was offset by increased
international sales of CATV drop and fiber optic cables.
Continued capital investment by manufacturers, market penetration by the
Company, including the introduction of new signal and alarm products, and
the acquisition of Pope, resulted in growth for the Company s industrial
products.
The acquisitions of Pope and AEC contributed the majority of the growth in
electrical market revenues in the first six months of 1996. In addition,
increased demand for the Company's electrical cords used on power tools,
appliances and other electrical equipment contributed to the growth. These
increases were partially offset by a decline in revenues from electrical
products sold in Canada and Europe. The causes of this decline were
reductions in price primarily due to lower copper costs and weak demand.
Management expects continued decline in demand throughout 1996 for
electrical products sold in Canada and Europe.
Average prices for the Company's products were down in the first six
months of 1996 compared with 1995. This decline was primarily attributable
to a decline in copper costs during the period and price reductions on
CATV and computer interconnect products to be more competitive in the
market. Revenues were also adversely affected by the impact of foreign
currency exchange rates.
- 7 -<PAGE>
<PAGE>
Costs, Expenses and Earnings
The following table sets forth information regarding the components of
earnings for the first six months of 1996 compared with the same period
in 1995.
<TABLE>
<CAPTION>
Six Months Ended % Increase
June 30, 1996 Compared
1996 1995 With 1995
(in thousands, except % data)
<S> <C> <C> <C>
Gross profit $82,927 $69,346 19.6%
As a % of revenue 24.6% 25.3%
Operating earnings $44,484 $35,458 25.5%
As a % of revenue 13.2% 12.9%
Income before income taxes $42,611 $33,679 26.5%
As a % of revenue 12.6% 12.3%
Net income $25,886 $20,460 26.5%
As a % of revenue 7.7% 7.5%
</TABLE>
The increase in the gross profit amount was due to higher revenues. The
decline in the gross profit as a percent of revenues for the first six
months of 1996 compared to the same period in 1995 was primarily due to
the impact of including the currently less profitable Pope and AEC. This
decline was partially offset by productivity gains at our European
facility and the impact of lower copper and other raw material costs.
Operating earnings increased during the first six months of 1996 compared
to the first six months of 1995 due to greater gross profit. This increase
was partially offset by an increase in selling, general and administrative
costs mainly due to acquisitions. Operating earnings as a percent of
revenues for the first six months of 1996 increased from the same period
in 1995 due primarily to savings from the consolidation of the Company's
operations in Europe.
Income before income taxes increased due to greater operating earnings.
This increase in operating earnings was partially offset by higher
interest costs associated with the increase in debt levels in conjunction
with the acquisitions. Average debt during the first six months of 1996
and 1995 was $85 million and $62 million, respectively. The Company's
average daily interest rate for the first six months of 1996 was 5.0%
compared to 5.9% for the same period in 1995.
The Company's effective tax rate was 39.3% and 39.2%, respectively, for
the first six months of 1996 and 1995.
- 8 -<PAGE>
<PAGE>
Three Months Ended June 30, 1996 Compared With Three Months Ended June 30,
1995
Revenues
Revenues for the three months ended June 30, 1996 were $167.6 million
compared with $160.0 million in the same period last year, an increase of
5%. The following table shows the components of the 5% increase in the
Company's second quarter 1996 revenues in each of the Company's four
served markets.
<TABLE>
<CAPTION>
% Change
% of Total in 1996 Revenues
Revenues Compared with 1995
<S> <C> <C>
Computer 32% 3%
Audio/video 27 9
Industrial 17 18
Electrical 24 (4)
</TABLE>
Factors affecting the revenue improvement, excluding the acquisitions, in
the three months ended June 30, 1996 and 1995, were essentially the same
as those noted above in the comparison of the six months ended June 30,
1996 and 1995. However, the impact of lower copper prices and unfavorable
foreign currency translation was more severe in the second quarter of 1996
compared to 1995.
Costs, Expenses and Earnings
The following table sets forth information regarding the components of
earnings for the second quarter of 1996 compared with the same period in
1995.
<TABLE>
<CAPTION>
Three Months Ended % Increase
June 30, 1996 Compared
1996 1995 With 1995
(in thousands, except % data)
<S> <C> <C> <C>
Gross profit $41,515 $38,578 7.6%
As a % of revenue 24.8% 24.1%
Operating earnings $22,810 $19,131 19.2%
As a % of revenue 13.6% 12.0%
Income before income taxes $21,920 $17,867 22.7%
As a % of revenue 13.1% 11.2%
Net income $13,316 $10,854 22.7%
As a % of revenue 7.9% 6.8%
</TABLE>
- 9 -<PAGE>
<PAGE>
The increase in gross profit was primarily due to higher revenues. The
improvement in gross profit as a percent of revenues was primarily
attributable to productivity gains at our European facility and the impact
of lower copper and other raw material costs.
Operating earnings increased during the three months ended June 30, 1996
compared with the same period in 1995 due to greater gross profit and
savings realized from the consolidation of the Company's operations in
Europe. The increase in operating earnings as a percent of revenues from
the second quarter of 1995 to the second quarter of 1996 was attributable
to the increase in gross profit as a percent of revenues and a reduction
in selling, general and administrative costs primarily due to savings
realized from consolidation of the European operations.
The increase in income before income taxes was due to higher operating
earnings and lower interest costs during the second quarter of 1996
compared to the same period in 1995. A decline in average debt levels and
average interest rates contributed to the decrease in interest costs.
Average debt during the second quarter of 1996 and 1995 was $84 million
and $89 million, respectively. The Company's average daily interest rate
for the second quarter of 1996 was 4.9% compared with 5.7% for the same
period in 1995.
The Company's effective tax rate was 39.3% for the second quarter of 1996
and 1995.
Financial Condition
Liquidity and Capital Resources
The Company has a $150 million multicurrency variable rate bank revolving
credit agreement ("Credit Agreement") with a group of eight banks. The
Credit Agreement is unsecured and expires in August 1999. At June 30,
1996, the Company had $71 million available under the Credit Agreement. In
addition, as of June 30, 1996, the Company had unsecured, uncommitted
arrangements with five banks under which it may borrow up to $70 million
at prevailing interest rates. At June 30, 1996, the Company had $43
million available under these arrangements. The Company expects that cash
provided by operations and borrowings available under the Credit Agreement
will provide it with sufficient liquidity to meet its operating needs and
fund its normal dividends and anticipated capital expenditures.
Working Capital
During the first six months of 1996, operating working capital (defined as
receivables and inventories less payables and accrued liabilities,
excluding the effect of exchange rate changes)increased $17.0 million. The
increase was primarily due to increases in inventories to support current
and future growth, increases in receivables associated with higher
revenues, decreases in accounts payable and accrued liabilities associated
with spending related to restructuring reserves.
- 10 -<PAGE>
<PAGE>
Capital Expenditures
For the first six months in 1996, the Company had capital expenditures of
$18.6 million, primarily for modernization and enhancement of machinery
and equipment and capacity expansion of machinery and equipment for the
production of twisted pair wire and CATV coaxial cable. The Company
currently plans on spending approximately $14 million during the remainder
of 1996, primarily on machinery and equipment.
All of the statements in this document other than historical facts are
forward looking statements made in reliance upon the Safe Harbor of the
Private Securities Litigation Reform Act of 1955. There can be no
assurances that the Company s actual results will be materially consistent
with such forward looking information. Developments in technology,
acceptance of the Company s products, changes in raw material costs,
pricing of the Company s products, foreign currency rates and changes in
the economy will have an impact on the Company s actual results.
- 11 -<PAGE>
<PAGE>
PART II OTHER INFORMATION
Item 1: Legal Proceedings
The Company and Cooper Industries, Inc. (Cooper) have been
engaged in arbitration proceedings in Houston, Texas with respect
to whether the Company must make additional payments to Cooper
pursuant to a price adjustment provision of an Asset Transfer
Agreement that Belden Wire & Cable Company and Cooper entered
into in connection with the initial public offering of the
Company by Cooper. On April 19, 1996, the arbitration panel
issued a ruling denying Cooper s claims in their entirety.
Item 4: Submission of Matters to a Vote of Security Holders
On May 9, 1996, the Company held its regular Annual Meeting of
Stockholders ( Meeting ). The following items were approved by
the stockholders at the Meeting:
1. Election of Director: Mr. C. Baker Cunningham was elected to
a three-year term. He served as a director of the Company
since 1993. There were 22,310,160 shares For, and 173,795
shares Withheld for Mr. Cunningham. The terms of the other
directors, Messrs. Joseph R. Coppola, Alan E. Riedel, Lorne
D. Bain and Christopher Byrnes, expire after 1996.
2. Approval of an Amendment to the Belden Inc. Long-Term
Incentive Plan ( Plan ) eliminating the requirement that an
e m ployee be employed for at least six months before
participating in all offerings under the Plan. There were
23,116,565 shares For, 337,228 shares Against, and 30,162
shares Abstained for the proposal.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibit 27: Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
- 12 -<PAGE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BELDEN INC.
Date: August 13, 1996 By: /s/ C. Baker Cunningham
C. Baker Cunningham
Chairman of the Board, President
and Chief Executive Officer
Date: August 13, 1996 By: /s/ Richard K. Reece
Richard K. Reece
Vice President, Finance, Treasurer
and Chief Financial Officer
- 13 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1377
<SECURITIES> 0
<RECEIVABLES> 98076
<ALLOWANCES> 976
<INVENTORY> 78094
<CURRENT-ASSETS> 185217
<PP&E> 271678
<DEPRECIATION> 126439
<TOTAL-ASSETS> 344989
<CURRENT-LIABILITIES> 78161
<BONDS> 0
0
0
<COMMON> 261
<OTHER-SE> 152634
<TOTAL-LIABILITY-AND-EQUITY> 344989
<SALES> 167649
<TOTAL-REVENUES> 167649
<CGS> 126134
<TOTAL-COSTS> 126134
<OTHER-EXPENSES> 18705
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 890
<INCOME-PRETAX> 21920
<INCOME-TAX> 8604
<INCOME-CONTINUING> 13316
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13316
<EPS-PRIMARY> .51
<EPS-DILUTED> .51
</TABLE>
