<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999
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 April 25, 1999: 24,354,661 shares
================================================================================
Exhibit Index on Page 15 Page 1 of 16
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, December 31,
1999 1998
- --------------------------------------------------------------------------------------
(Unaudited)
(in thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 786 $ 3,291
Receivables 100,369 95,643
Inventories 83,548 89,633
Deferred income taxes 6,918 6,422
Net assets of discontinued operations 26,912 24,029
Other 3,051 3,211
- -----------------------------------------------------------------------------------
Total current assets 221,584 222,229
Property, plant and equipment, less
accumulated depreciation 181,869 183,745
Intangibles, less accumulated amortization 85,756 87,698
Other assets 616 629
- -----------------------------------------------------------------------------------
$ 489,825 $ 494,301
===================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 65,845 $ 64,452
Income taxes payable 4,828 3,177
- -----------------------------------------------------------------------------------
Total current liabilities 70,673 67,629
Long-term debt 157,457 162,850
Postretirement benefits other than pensions 14,394 14,747
Deferred income taxes 13,668 14,159
Other long-term liabilities 15,359 15,249
Stockholders' equity:
Preferred stock -- --
Common stock 262 262
Additional paid-in capital 48,140 48,482
Retained earnings 218,558 218,605
Treasury stock, at cost (38,010) (38,823)
Accumulated other comprehensive income (loss) (10,676) (8,859)
- -----------------------------------------------------------------------------------
Total stockholders' equity 218,274 219,667
- -----------------------------------------------------------------------------------
$ 489,825 $ 494,301
===================================================================================
</TABLE>
See accompanying notes.
-2-
<PAGE> 3
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
1999 1998
- ----------------------------------------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C>
Revenues $ 159,629 $ 173,615
Cost of sales 124,825 126,500
- ----------------------------------------------------------------------------------------
Gross profit 34,804 47,115
Selling, general and administrative expenses 22,382 20,409
Amortization of goodwill 494 423
- ----------------------------------------------------------------------------------------
Operating earnings 11,928 26,283
Interest expense 1,919 1,625
- ----------------------------------------------------------------------------------------
Income from continuing operations before tax 10,009 24,658
Income taxes 3,778 9,555
- ----------------------------------------------------------------------------------------
Income from continuing operations 6,231 15,103
Income/(loss) from discontinued business net of
tax of $54 in 1999 and $231 in 1998 89 365
Estimated loss on disposal of discontinued business
net of tax benefit of $3,123 (5,150) 0
- ----------------------------------------------------------------------------------------
Net income $ 1,170 $ 15,468
========================================================================================
Basic earnings per share from continuing operations $ .26 $ .58
Basic earnings per share $ .05 $ .59
========================================================================================
Diluted earnings per share from continuing operations $ .26 $ .57
Diluted earnings per share $ .05 $ .59
========================================================================================
</TABLE>
See accompanying notes
-3-
<PAGE> 4
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 6,231 $ 15,103
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Depreciation 4,934 3,907
Amortization 1,267 936
Deferred income taxes (988) 86
Changes in operating assets and liabilities(*):
Receivables (6,994) (2,208)
Inventories 4,141 (96)
Accounts payable and accrued liabilities (5,304) (1,616)
Income taxes payable 5,254 8,483
Other assets and liabilities, net (1,768) (5,560)
- --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 6,773 19,035
Cash flows from investing activities:
Capital expenditures (5,122) (8,436)
Cash paid for acquired businesses -- (14,948)
- --------------------------------------------------------------------------------------------------------
Net cash used for investing activities (5,122) (23,384)
Cash flows from financing activities:
Net borrowings/(paydown) under long-term credit facility and
credit agreements (855) 16,680
Exercise of stock options 471 441
Cash dividends paid (1,217) (1,308)
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities (1,601) 15,813
Cash flows from discontinued operations:
Income (loss) from discontinued operations (5,061) 365
Adjustments to reconcile income(loss) from discontinued
operations to net cash provided by (used for)
discontinued operations:
Depreciation and amortization 695 591
Loss on disposal and other non cash charges 8,273 --
Changes in operating assets and liabilities of discontinued
operations (6,115) (6,477)
Capital expenditures (416) (354)
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used for) discontinued operations (2,624) (5,875)
Effect of exchange rate changes on cash and cash equivalents 69 27
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in cash and cash equivalents (2,505) 5,616
Cash and cash equivalents, beginning of period 3,291 916
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 786 $ 6,532
========================================================================================================
</TABLE>
See accompanying notes.
(*)Net of the effects of exchange rate changes, acquired businesses, and
discontinued operations.
-4-
<PAGE> 5
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Common Stock Treasury Stock Other
-------------- Paid-In Retained --------------- Comprehensive
(in thousands) Shares Amount Capital Earnings Shares Amount Income (Loss) Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 26,180 $262 $49,370 $189,163 (38) $ (1,241) $(8,600) $228,954
Net Income 15,468 15,468
Foreign currency translation adjustments (1,434) (1,434)
--------
Comprehensive income (loss) 14,034
Issuance of common stock for:
Stock Options (464) 28 905 441
Cash dividends $(.05 per share) (1,308) (1,308)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1998 26,180 $262 $48,906 $203,323 (10) $ (336) $(10,034) $242,121
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 26,204 $262 $48,482 $218,605 (1,875) $ (38,823) $ (8,859) $219,667
Net Income 1,170 1,170
Foreign currency translation adjustments (1,817) (1,817)
--------
Comprehensive income (loss) (647)
Issuance of common stock for:
Stock Options (342) 26 813 471
Cash dividends ($.05 per share) (1,217) (1,217)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999 26,204 $262 $48,140 $218,558 (1,849) $ (38,010) $(10,676) $218,274
====================================================================================================================================
</TABLE>
-5-
<PAGE> 6
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 of its
subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation. The financial information presented as of any date
other than December 31, 1998 has been prepared from the books and records
without audit. The accompanying Consolidated Financial 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, 1998.
NOTE 2: SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for income taxes during the first three months of 1999 and 1998
amounted to $446,000 and $1,400,000 respectively.
Total interest paid, net of amounts capitalized, during the first three months
of 1999 and 1998 amounted to $3,450,000 and $2,897,000, respectively.
NOTE 3: INVENTORIES
<TABLE>
<CAPTION>
MARCH 31, December 31,
1999 1998
- ---------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Raw materials $ 18,431 $ 20,062
Work-in-process 12,829 12,714
Finished goods 59,888 63,353
Perishable tooling and supplies 4,029 4,226
- ---------------------------------------------------------------------
Total 95,177 100,355
Allowances (primarily LIFO reserves) (7,588) (7,400)
Other (4,041) (3,322)
- ---------------------------------------------------------------------
Net inventories $ 83,548 $ 89,633
=====================================================================
</TABLE>
-6-
<PAGE> 7
NOTE 4: PER SHARE INFORMATION
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------
Numerator: (in thousands, except per share data)
<S> <C> <C>
Income from continuing operations $ 6,231 $15,103
Net Income $ 1,170 $15,468
==========================================================================================================
Denominator:
Denominator for basic earnings per share - weighted
average shares 24,342 26,155
Effect of dilutive employee stock options 48 221
- ----------------------------------------------------------------------------------------------------------
Denominator for dilutive earnings per share - adjusted
weighted average shares 24,390 26,376
==========================================================================================================
Basic earnings per share from continuing operations $ .26 $ .58
Basic earnings per share $ .05 $ .59
==========================================================================================================
Diluted earnings per share from continuing operations $ .26 $ .57
Diluted earnings per share $ .05 $ .59
==========================================================================================================
</TABLE>
On May 6, 1999 the Company declared a quarterly cash dividend of $.05 per share
payable on July 2, 1999.
NOTE 5: DISCONTINUED OPERATIONS
During the first quarter of 1999, the Company enacted a plan to dispose of the
Cord Products operation. The business was sold on May 7, 1999. Accordingly, the
operating results of the Cord Products segment, including provisions for
estimated losses on the sale of $5.2 million, have been segregated from
continuing operations and reported separately in the consolidated income
statement and the net assets to be sold have been classified within the current
assets section of the balance sheet as "Net assets of discontinued operations".
Summarized financial information for the discontinued operations are as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
- --------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Revenues $15,260 $16,819
Income before tax $ 143 $ 596
Income from discontinued operations, net
of income taxes $ 89 $ 365
</TABLE>
-7-
<PAGE> 8
Included in income before tax is an allocation of interest expense based on the
level of identifiable assets of the segment to total identifiable assets. These
allocated costs were $181 in the first quarter of 1999 and $135 in the first
quarter of 1998.
Included in net assets of discontinued operations is primarily inventory,
accounts receivable, machinery and equipment, trade payables and certain accrued
liabilities.
NOTE 6: INDUSTRY SEGMENTS AND GEOGRAPHIC INFORMATION
The Company's continuing operations are conducted within one business segment;
which designs, manufactures and markets wire and cable for the electronics and
electrical markets.
The Electronics and Electrical segment includes products used for the
transmission of data, audio, video and electrical signals. These products are
sold primarily through distributors.
Geographic information
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
PERCENT OF Percent of
COUNTRY & REGION REVENUES REVENUE Revenues Revenue
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(in thousands)
US & Canada $107,515 67% $127,123 73%
Europe 34,514 22% 31,461 18%
Asia/Pacific 11,691 7% 8,211 5%
Latin America 4,494 3% 5,310 3%
Other 1,415 1% 1,510 1%
- --------------------------------------------------------------------------------
Total $159,629 100% $173,615 100%
- --------------------------------------------------------------------------------
</TABLE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF CONTINUING OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF CONTINUING OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998
All amounts below have been presented excluding the discontinued operations
described in footnote 5 to the financial statements.
Revenues
Revenues from continuing operations for the three months ended March 31, 1999
were $159.6 million compared with $173.6 million in the same period last year.
Price declines due to the pass-through of cheaper copper, reduced revenues in
the three months ended March 31, 1999 compared with 1998 by approximately $3.3
million. Included in the first quarter of 1999 is approximately $14.5 million of
additional revenues compared to the first quarter of 1998 related to the
acquisitions of Olex Communications Cable (Olex), completed February 28, 1998
and ABB Elektro-Isolierwerke GmbH
-8-
<PAGE> 9
(EIW), completed November 30, 1998. The following table shows the components of
the change in the Company's revenues for the first three months of 1999 compared
with 1998 in each of the Company's four served markets.
<TABLE>
<CAPTION>
% Increase (Decrease)
% of Total in 1999 Revenues
Revenues Compared with 1998
-------- ---------------------
<S> <C> <C>
Computer 46% (7)%
Audio/video 21 (12)
Industrial 22 -
Electrical 11 (18)
</TABLE>
Computer market revenues declined 7% in the first quarter of 1999 from the first
quarter of 1998. Within the computer market, networking and telecommunication
revenues were down 19%. This reduction is due to several factors. First, certain
major distributors reduced inventory levels dampening the Company's sales.
Second, pricing levels for most networking products, in the first quarter of
1999 were lower than prior year primarily due to increased competition. This
deterioration in pricing began in mid-1998 and continues. Third, copper costs
are down approximately 17% in the first quarter of 1999 from the first quarter
of 1998 and contribute further to the negative pricing environment for the
Company's products. Sales of the Company's computer interconnection products,
which link personal computers to discrete peripheral devices and mainframes to
terminals, were up 19% compared to the first three months of 1998 due to the
addition of EIW, acquired in the fourth quarter of 1998. Without the addition of
EIW, computer interconnect market revenues would be down 14%. This decline is
due to: (1) declining prices principally due to the pass-through of cheaper
copper costs; (2) inventory reductions at distributors; (3) lost share as
assembly and wire harness manufacturers (who purchase interconnect products)
move off shore; and (4) displacement of certain network products as companies
convert from mainframe to distributive process systems.
The revenue decline in the audio/video market was primarily due to soft demand
for cable television (CATV) in Europe. This soft demand not only affected volume
growth, but also negatively impacted selling prices. The Company's demand for
CATV drop cable in the United States has improved in the first quarter of 1999,
up 3%, from the first quarter of 1998 and pricing appears to have stabilized.
Broadcast revenues were down 14% in the first quarter of 1999 from the first
quarter of 1998 due primarily to the impact of lower copper costs on TV monitor
deflection coils manufactured in Europe. In addition, slow spending by
broadcasters on digital format changes continue to keep the market for
professional broadcast cable products soft. However, the Company believes its
offering of audio/video products is well positioned to take advantage of the
conversion efforts when they take hold.
Industrial market revenues were flat in the first three months of 1999 over
1998. Unit growth in terms of footage is up from the first quarter of 1998
however, lower copper costs have depressed the pricing environment. The increase
in footage is partially due to increased shipments in anticipation of announced
price increases. The industrial market remains under pressure from lower
commodity prices and weak capital spending, especially in the export markets.
Electrical market revenues declined 18% in the first three months of 1999
compared with 1998. The decline is primarily due to lower prices and economic
slowdowns in certain of our served markets, primarily Europe.
-9-
<PAGE> 10
U.S. revenues, which represented approximately 60% of total revenues in the
first three months of 1999, decreased 17% from 1998 due primarily to the lower
computer networking pricing and reduction of distributor inventories from the
extraordinarily high levels in the prior year. European revenues increased 10%
in the first three months of 1999 compared with 1998 due to the addition of EIW.
Without the addition of EIW, sales in Europe would be down 22%. Canadian
revenues increased 5% in the first three months of 1999 compared with 1998 due
primarily to stronger demand for the Company's industrial products. European and
Canadian revenues represented 22% and 7% of total revenues, respectively, for
the first three months of 1999. Sales to the Asia/Pacific region, which
represented 7% of the first three months of 1999 total revenues increased 42% in
the first three months of 1999 compared with 1998, due to the additional
revenues contributed from the February 28, 1998, acquisition of Olex. Without
the contribution of Olex, revenues would be down 14%. Sales into export markets,
primarily Latin America, were down 13% due to economic weakness in those
regions.
Costs, Expenses and Earnings
The following table sets forth information regarding the components of earnings
from continuing operations for the first three months of 1999 compared with the
same period in 1998.
<TABLE>
<CAPTION>
Three Months Ended
March 31, % Increase(Decrease)
---------------------------------- 1999 Compared
1999 1998 With 1998
- ----------------------------------------------------------------------------------------------
(in thousands, except % data)
<S> <C> <C> <C>
Gross profit $ 34,804 $47,115 (26.1)%
As a % of revenue 21.8% 27.1%
Operating earnings $ 11,928 $26,283 (54.6)%
As a % of revenue 7.5% 15.1%
Income before income taxes $ 10,009 $24,658 (59.4)%
As a % of revenue 6.3 % 14.2%
Income from continuing operations $ 6,231 $15,103 (58.7)%
As a % of revenue 3.9% 8.7%
</TABLE>
The decrease in the gross profit amount was due to lower revenues and the impact
of lower average prices in excess of the pass-through of lower copper costs. In
addition, the Company incurred additional overhead costs in the first quarter of
1999 versus 1998 as we transferred production from two higher cost facilities
into a new lower cost facility in Lancaster County, SC. The decrease in gross
profit as a percent of revenues in 1999 was primarily attributable to the
duplication of overhead and the inclusion of the currently less profitable
businesses acquired in 1998, Olex in February 1998 and EIW in November 1998.
These decreases are partially offset by cost saving programs put into effect in
the fourth quarter of 1998 including certain headcount reductions, material cost
reduction programs and the consolidation of manufacturing into the new lower
cost facility. The impact of these items, when fully realized in future quarters
are expected to favorably impact gross profit.
-10-
<PAGE> 11
Operating earnings and operating income as a percent of revenue decreased during
the first three months of 1999 compared to the first three months of 1998 due to
lower gross profit. In addition, the acquisitions of Olex and EIW in 1998 as
well as a full quarter of depreciation related to computer system conversions
completed earlier in 1998 led to an increase in selling, general and
administrative costs.
Income before income taxes decreased due to lower operating earnings and the
increase in interest costs, which was related to higher average debt levels
partially offset by lower effective interest rates. Debt levels are higher
primarily due to the acquisition of Olex late in the first quarter of 1998, the
1998 stock buyback program under which 1.9 million shares have been repurchased
as well as the acquisition of EIW in the fourth quarter of 1998. Average debt
during the first three months of 1999 and 1998 was $170 million and $134
million, respectively. The Company's average daily interest rate for the first
three months of 1999 was 5.5% compared to 6.3% for the same period in 1998.
The Company's effective tax rate was 37.8% and 38.8%, for the three months ended
March 31, 1999 and 1998 respectively.
-11-
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
The Company has a $200 million Credit Agreement with a group of six banks. The
Credit Agreement is unsecured and expires in November 2001. At March 31, 1999,
the Company had $117 million available under the Credit Agreement. In addition,
as of March 31, 1999, the Company had unsecured, uncommitted arrangements with
four banks under which it may borrow up to $91 million at prevailing interest
rates. At March 31, 1999, the Company had $28 million available under these
arrangements. The Company also had privately placed debt of $75 million
outstanding at March 31, 1999 that will mature in 2009.
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 three months of 1999, operating working capital (defined as
receivables and inventories less payables and accrued liabilities, excluding the
effect of exchange rate changes and business combinations and dispositions) used
cash of $6 million. The change in operating working capital was primarily due to
higher receivables and a decrease in accounts payables and accrued liabilities
partially offset by a decrease in inventory levels.
Capital Expenditures
For the first three months in 1999, the Company had capital expenditures of $5.1
million, primarily for modernization and enhancement of machinery and equipment.
The Company plans on spending approximately $25 million during 1999 on these and
similar projects.
Restructuring Activities
In the third and fourth quarters of 1998, the Company took a nonrecurring charge
totaling $2.9 million ($1.8 million after tax) for salary continuation, extended
medical coverage and other miscellaneous employee benefits related to a
reduction of 35 salaried employees in the Electronic and Electrical segment. All
employees were terminated prior to December 31, 1998. At March 31, 1999, $1.5
million remained to be paid related to this charge.
YEAR 2000 READINESS
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. Software failures due to processing
errors potentially arising from calculations using the Year 2000 date are a
known risk.
Primary Business Operating Systems
The Company completed the implementation of an integrated business information
system at several operating units representing approximately 97% of 1998
revenues. The primary purpose was to replace numerous old mainframe legacy
systems with an integrated enterprise-wide business system in an effort to
streamline business processes, reduce programming and maintenance efforts, and
improve efficiencies throughout the organization. The Company incurred a total
capitalized cost of approximately $19 million relating to implementing the new
system which will be amortized into earnings over five years. Although
implementing this new system was unrelated to specific concerns over the Year
2000 issue, a benefit of this initiative is that the resulting system is Year
2000 compliant.
-12-
<PAGE> 13
Certain operating units, primarily those acquired by the Company in 1998, have
not completed enterprise-wide system solutions and are incurring costs to deal
specifically with the Year 2000 issue. These units represented approximately 3%
of 1998 revenues. The Company expects to incur less than $500,000 in the
remainder of 1999 related to completing the Year 2000 projects at those
operating units.
Manufacturing and Other Systems
The Company is now in the process of inventorying, assessing, renovating and
testing as it relates to manufacturing systems, and other supplemental
information systems and applications necessary to achieve a Year 2000 date
conversion with no effect on customers or disruption to business operations. The
Company has completed substantially all of the inventory and assessment phases
of its plan, and is in the process of completing the renovation and testing
phase. Critical manufacturing systems include plant accounting and reporting,
planning, and process controls. Plant accounting and reporting as well as
planning were addressed as part of the integrated enterprise-wide business
system and are therefore largely compliant. Process control units have been
replaced over the last three years with Year 2000 compliant units in the normal
course of equipment upgrades. Noncompliant units represent less than 10% of the
units in production and are being replaced throughout 1999 as part of the normal
equipment upgrades or have been determined not to pose a risk to the
manufacturing process.
Third Party Readiness
The Company has initiated formal discussions with its key suppliers, customers
and financial institutions to determine the extent to which the Company is
vulnerable to third parties' failure to correct their own Year 2000 issues.
Contingency plans will be developed on a case-by-case basis for suppliers,
customers, or service providers where a problem is identified that cannot be
remedied in time. For virtually all products and services the Company has
multiple suppliers. The Company also has a diverse customer base with only one
customer representing more than 10% of revenue.
Due in part to the reliance placed on customers, suppliers and financial
institutions, and their own susceptibility to Year 2000 issues, there can be no
assurances that the Company will not be exposed to significant unfavorable
operating results related to Year 2000 issues.
Conclusion
The total cost of compliance and its effect on the Company's future results of
operations are not expected to be significant due to the recent implementation
of the integrated business information system. The expected completion date of
projects currently in process is the end of the third quarter of 1999, which is
prior to any anticipated impact on the Company's operations. Contingency plans
will be reevaluated on an ongoing basis.
-13-
<PAGE> 14
FORWARD-LOOKING STATEMENTS
The statements set forth in this Form 10-Q, other than historical facts, are
forward-looking statements made in reliance upon the safe harbor of the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from such forward-looking information for the reasons set forth below. The
economic downturn being experienced in the Asia/Pacific and Latin American
regions and its negative impact on revenues and earnings; heightened competition
from domestic and foreign competition, including new entrants; the success in
identifying, acquiring and integrating acquisitions; results from transfers of
production to new facilities; developments in technology; the threat of
displacement from competing technologies including wireless and fiber optic
technologies; acceptance of Belden's products; changes in raw material costs and
availability; foreign currency rates; pricing of Belden's products; changes in
the global economy; the success of cost saving initiatives and programs and
other specific factors discussed in the Company's Form 10-K and other Securities
and Exchange filings will have an impact on Belden's actual results. The
information contained herein represents management's best judgement as of the
date hereof based on information currently available; however, the Company does
not intend to update this information to reflect developments of information
obtained after the date hereof and disclaims any legal obligation to the
contrary.
-14-
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27.1: Financial Data Schedule
-15-
<PAGE> 16
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: May 11, 1999 By: /s/ C. Baker Cunningham
---------------------------------------
C. Baker Cunningham
Chairman of the Board, President
and Chief Executive Officer
Date: May 11, 1999 By: /s/ Richard K. Reece
---------------------------------------
Richard K. Reece
Vice President, Finance,
Treasurer and Chief Financial Officer
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 786
<SECURITIES> 0
<RECEIVABLES> 100,989
<ALLOWANCES> 620
<INVENTORY> 83,548
<CURRENT-ASSETS> 221,584
<PP&E> 335,593
<DEPRECIATION> 153,724
<TOTAL-ASSETS> 489,825
<CURRENT-LIABILITIES> 70,673
<BONDS> 0
0
0
<COMMON> 262
<OTHER-SE> 218,012
<TOTAL-LIABILITY-AND-EQUITY> 489,825
<SALES> 159,629
<TOTAL-REVENUES> 159,629
<CGS> 124,825
<TOTAL-COSTS> 124,825
<OTHER-EXPENSES> 22,886
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 1,919
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</TABLE>
