EXHIBIT 99.1
(BELDEN CDT LOGO) NEWS RELEASE
Belden CDT Inc.
7701 Forsyth Boulevard, Suite 800
St. Louis, Missouri 63105
314-854-8000
www.beldencdt.com
FOR IMMEDIATE RELEASE
November 8, 2005
BELDEN CDT REPORTS STRONG THIRD QUARTER OPERATING PERFORMANCE
SALES OF $342 MILLION REFLECT 11.8% ORGANIC GROWTH
OPERATING PROFIT REACHES 8.9% OF SALES EXCLUDING SPECIAL ITEMS
DILUTED EPS OF $0.37 EXCLUDING SPECIAL ITEMS
St. Louis - Belden CDT Inc. (NYSE:BDC) announced today that revenue from
continuing operations for the quarter ended September 30, 2005 was $342.4
million, compared with revenue of $281.5 million reported in the third quarter
of 2004. Compared with year-ago revenue adjusted as if the merger of Belden and
CDT had happened on July 1, 2004 instead of July 15, 2004, revenue increased
12.7% year over year. Income from continuing operations was $6.1 million in the
third quarter of 2005 or $0.13 per diluted share, including charges (previously
announced) for asset impairment, severance, and merger-related items and a
one-time tax benefit. Excluding the charges and the one-time tax benefit, income
from continuing operations was $18.4 million and diluted earnings per share were
$0.37 for the third quarter.
HIGHLIGHTS OF THE QUARTER
- Revenue increased 11.8 percent organically year-over-year (compared
with pro-forma 2004 third-quarter revenue), reflecting increases in
both volume and price in the North American market, with the strongest
volume improvement in the North American networking operations.
Revenue increased an additional 0.9 percent because of currency
exchange rates.
- Operating profit from continuing operations, excluding the special
charges, was $30.3 million, or 8.9 percent of sales, an increase of
$6.3 million year over year and an increase of $5.0 million
sequentially. This improvement is the result primarily of the
Company's cost reduction work over the past four quarters, which
included the closing of three manufacturing plants at mid-year.
- On September 29 the Company announced restructuring plans for its
European operations. The Company expects that these actions will
result in a 10 percent reduction in European manufacturing floor space
and overhead between now and the end of 2006.
- The Company continued its share repurchase program. On May 23, the
Board of Directors authorized a share repurchase program of up to $125
million. Between the
authorization date and September 30, 2005, the Company repurchased 2.5
million shares of common stock (approximately 5% of the shares
previously outstanding) at an aggregate cost of $51.7 million.
MANAGEMENT COMMENT
"We were pleased to see the revenue increase coming from volume to a much
greater extent than from pricing," said Richard K. Reece, Vice President Finance
and Chief Financial Officer. "The Networking segment in North America in
particular had a very good sales quarter, which we believe indicates that this
group is recovering its market share that dipped late last year and early this
year as we launched our new brand. The recent consolidation of capacity is
yielding improved manufacturing productivity, and the North American operations
of our Electronics segment are enjoying operating margins in the mid-teens. We
can clearly see in the operating results the benefit of the cost reduction work
that the Company has been pursuing for the last several quarters. With the
restructuring actions announced September 29, the Company is taking additional
steps to enhance the profitability of its European operations, which should
significantly help our consolidated results over the next year and beyond."
John Stroup, who joined Belden CDT Inc. as President and Chief Executive Officer
on October 31, 2005, said, "Belden CDT is a company with many strengths: its
people, brands, outstanding products, channel relationships, profitability,
excellent cash generation, a sound financial foundation, and good governance. I
am delighted at the opportunity to join and lead this team."
BACKGROUND - MERGER OF BELDEN AND CDT IN 2004
On July 15, 2004, the Company, formerly called Cable Design Technologies
Corporation (CDT), merged with Belden Inc. (Belden) and changed its name to
Belden CDT Inc. For accounting purposes, the Company treated the merger as an
acquisition by Belden. Results of the legacy CDT operations are included in 2004
results from July 16 onwards. Prior-year results in this release (other than pro
forma results) reflect the results of Belden only.
ADJUSTED RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005
Adjusted Pro
As Reported Adjusted Three Forma Three
Three Months Months Ended Months Ended
Ended September September 30, September 30,
30, 2005 Adjustments (1) 2005 2004 (2)
--------------- --------------- -------------- -------------
Results of Continuing Operations
Revenues $342,389 $ -- $342,389 $303,779
Operating Profit 14,774 15,530 30,304 24,024
Percent of revenue 4.3% 8.9% 7.9%
Income from Continuing Operations 6,078 12,330 18,408 10,994
Income from Continuing Operations per
diluted share $ 0.13 $ 0.37 $ 0.22
(1) Impairment charges, severance charges, merger-related costs, expenses for
executive succession, and one-time tax benefit.
(2) Pro forma results, as if Belden and CDT were combined at the beginning of
the third quarter of 2004, restated for discontinued operations, the change
in inventory accounting method from LIFO to FIFO, merger-related costs, and
the gain on the 2004 sale of a Belden European operation.
2
YEAR-TO-DATE RESULTS
For the nine months ended September 30, 2005, revenue was $989.2 million.
Operating earnings for the period were $49.7 million, and income from continuing
operations was $25.1 million, or $0.51 per diluted share including the dilutive
effect of the Company's convertible debentures. These results included
$24.1million in impairment charges and pretax expenses related to merger
integration and executive succession, which together amounted to $0.34 per
diluted share.
ADJUSTED RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
Adjusted Pro
As Reported Adjusted Nine Forma Nine
Nine Months Months Ended Months Ended
Ended September September 30, September 30,
30, 2005 Adjustments (1) 2005 2004 (2)
--------------- --------------- -------------- -------------
Results of Continuing Operations
Revenues $989,201 $ -- $989,201 $910,919
Operating Profit 49,709 24,097 73,806 52,603
Percent of revenue 5.0% 7.5% 5.8%
Income from Continuing Operations 25,148 18,130 43,278 23,980
Income from Continuing Operations per
diluted share $ 0.51 $ 0.85 $ .50
(1) Impairment charges, expenses for executive succession, merger-related
costs, severance charges and one-time tax benefit.
(2) Pro forma results, as if Belden and CDT were combined at the beginning of
2004, restated for discontinued operations, the change in inventory
accounting method from LIFO to FIFO, merger-related costs, and the gain on
the 2004 sale of a Belden European operation.
EUROPEAN RESTRUCTURING AND OTHER CHARGES
Third quarter 2005 results include pretax charges of $15.5 million, as follow:
- A $2.2 million charge for non-cash impairment of assets of the
Company's Manchester, U.K. operation and a related $2.7 million
adjustment to goodwill. The Company said, in a September 29, 2005
announcement, that it is reexamining its participation in the
telecommunications cable market in the United Kingdom and is
considering alternatives for the Manchester operation.
- Additional non-cash impairment charges of $7.9 million related to
restructuring activities in Europe that were announced on September
29.
- Charges of $2.7 million for severance, merger-related costs, and
executive succession.
TAX MATTERS
Year-to-date income tax expense reflects the non-deductibility of certain
goodwill impairment charges, the establishment of valuation allowances against
the net operating losses in certain European jurisdictions, and one-time
third-quarter items amounting to $0.9 million resulting from the favorable
resolution of prior-period tax matters. In its pro forma analysis of results
excluding the charges and excluding the one-time tax benefits, the Company's
effective tax rate for the nine months ending September 30, 2005 was 34.0%.
3
ELECTRONICS SEGMENT
External customer revenue of the Electronics segment for the quarter ended
September 30, 2005 was $199.5 million, and total sales including sales to
affiliates were $219.8 million. Operating profit of the segment was $28.9
million, or 13.1 percent of total revenues. Included in this result were
severance and merger-related costs of $0.4 million. Without these charges,
operating income of the segment for the quarter was 13.3 percent of sales. Total
revenue and operating income of this segment in the third quarter of 2004 were
$187.2 million and $1.9 million, respectively.
"The Electronics segment has benefited from rising economic activity and from
technology-driven growth in security applications, in-flight entertainment, and
other specialty markets," said Mr. Reece. "Our capacity utilization is high in
North America and improving in Europe, where restructuring will drive further
improvement. The North American operations in the Electronics segment have been
very effective in continuing to raise prices this year to keep pace with rising
material costs. In Europe, we are making some progress in raising prices but
pricing continues to lag material cost."
Year to date, external customer revenue of the Electronics segment was $582.0
million, and total revenue including sales to affiliates was $653.3 million.
Operating profit of the segment year-to-date was $76.4 million including $2.7
million of charges and merger-related costs. In the nine months ended September
30, 2004, revenue of the segment was $472.6 million in total and operating
earnings were $28.5 million.
NETWORKING SEGMENT
Revenue from external customers of the Networking segment for the quarter ended
September 30, 2005 was $142.9 million, and total revenue, including sales to
affiliates, was $146.9 million. The operating loss of the segment was $1.0
million. Excluding impairment charges and merger-related costs of $11.8 million,
operating profit of the Networking segment was $10.8 million or 7.3 percent of
sales for the quarter. Total revenues and operating profit in the third quarter
of 2004 were respectively $109.5 million and $7.1 million for this segment. The
year-over-year increase in segment revenue was because of stronger volume in the
North American market, the impact of the merger, improved pricing, and currency
translation effects.
"We are delighted with the strong performance of our Networking group in North
America and in Europe," said Mr. Reece. "We are experiencing significant volume
improvement year-over-year and sequentially, accompanied by favorable trends
toward higher category cables and more connectivity, which improve our margin
mix," he said.
Year to date, external customer revenue of the Networking segment was $407.2
million and total revenue, including affiliate sales, was $417.0 million.
Operating profit of the segment year-to-date was $14.6 million including $12.4
million of charges and merger-related costs. For the first nine months of 2004,
total revenue of the Networking segment was $228.2 million and operating profit
was $15.3 million.
4
OUTLOOK
"We expect to see favorable trends in the Networking market continue into the
fourth quarter and next year," said Mr. Reece. "Two developments that are
enriching our mix are the accelerating migration of customer demand from
category 5e cable to categories 6 and above and an increase in the proportion of
connectivity products in our mix. We also perceive a strengthening of major
project business, which boosts overall demand. In the electronics and specialty
markets we believe we will continue to experience technology-driven growth in
certain niches such as security cables and in-flight entertainment, while the
majority of the business, which is more economically driven, will continue to
grow at a moderate pace with economic activity in our served markets.
"For the fourth quarter of 2005," Mr. Reece said, "we expect that the level of
revenue will be similar to the third quarter, and that our operating margin will
be between 8 and 9 percent of sales, excluding any further restructuring or
severance charges and excluding $3 million from our sales incentive agreement
with a private-label customer.
"In 2006, we believe that revenue will rise because of both price increases
designed to compensate for rising material costs and modest growth of market
volume. We expect that our operating earnings in 2006 will benefit from the
full-year impact of the merger-related cost reductions and will be helped by
stability in raw material costs. In addition to improvements in operating
margins that we plan to achieve in 2006, our earnings per share will benefit
from the impact of the share repurchase program," he concluded.
The Company expects that in 2006 depreciation expense will be about $37 million,
capital expenditures about $30 million, and the effective tax rate 34.0 percent.
FORWARD-LOOKING STATEMENTS
Statements in this release other than historical facts are "forward-looking
statements" made in reliance upon the safe harbor of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
forecasts and projections about the industries served by the Company and about
general economic conditions. They reflect management's beliefs and expectations.
They are not guarantees of future performance and they involve risk and
uncertainty. The Company's actual results may differ significantly from these
expectations. Some of the factors that may cause actual results to differ from
the Company's expectations include the Company's ability to implement its
restructuring plans; the outcome of negotiations with British Telecom plc; the
Company's degree of success in managing its European operations during the
restructuring; the outcome of discussions with labor; general economic
conditions; the cost and availability of materials including copper, plastic
compounds derived from fossil fuels, and other materials; energy costs; the
degree to which the Company will be able to compensate for rising costs through
the pricing of its products; demand for the Company's products; and other
factors. For a more complete discussion of risk factors, please see Belden CDT's
Annual Report on Form 10-K for the year ended December 31, 2004, filed with the
SEC on March 31, 2005. Belden CDT Inc. assumes no responsibility to update any
forward-looking statements as a result of new information or future
developments.
5
ABOUT BELDEN CDT
Belden CDT Inc. is one of the largest U.S.-based manufacturers of high-speed
electronic cables and focuses on products for the specialty electronics and data
networking markets, including connectivity. The Company, formed in July 2004
through a merger of equals, had combined pro forma sales in 2004 of $1.2
billion. Belden CDT's 2004 annual report is available at www.beldencdt.com.
CONTACT: Belden CDT Inc.
Dee Johnson, Director of Investor Relations
314-854-8054
www.beldencdt.com
Following are comparative consolidated income statements of Belden CDT Inc. for
the three- and nine-month periods ended September 30, 2005 and September 30,
2004, segment information for the same periods, and condensed consolidated
balance sheets as of September 30, 2005, and December 31, 2004.
6
BELDEN CDT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(in thousands, except per share data)
Revenues $ 342,389 $ 281,454 $ 989,201 $ 635,864
Cost of sales (266,044) (228,243) (772,511) (514,450)
--------- --------- --------- ---------
Gross profit 76,345 53,211 216,690 121,414
Selling, general and administrative expenses (48,722) (47,527) (154,132) (96,985)
Asset impairment (12,849) (8,871) (12,849) (8,871)
--------- --------- --------- ---------
Operating earnings (loss) 14,774 (3,187) 49,709 15,558
Interest expense, net (2,198) (3,537) (7,682) (9,870)
Minority interest (215) (225) (551) (225)
Other nonoperating income -- -- -- 1,732
--------- --------- --------- ---------
Income (loss) from continuing operations before taxes 12,361 (6,949) 41,476 7,195
Income tax benefit (expense) (6,283) 3,748 (16,328) (438)
--------- --------- --------- ---------
Income (loss) from continuing operations 6,078 (3,201) 25,148 6,757
Loss from discontinued operations(1) (13) (2,809) (2,438) (10,128)
Gain (loss) on disposal of discontinued operations(2) -- (1,529) 15,163 1,491
========= ========= ========= =========
Net income (loss) $ 6,065 $ (7,539) $ 37,873 $ (1,880)
========= ========= ========= =========
Weighted average number of common shares and equivalents:
Basic 45,540 42,517 46,518 31,266
Diluted 52,213 42,517 53,167 31,643
========= ========= ========= =========
Basic income (loss) per share:
Continuing operations $ .13 $ (.08) $ .54 $ .21
Discontinued operations -- (.07) (.05) (.32)
Disposal of discontinued operations -- (.03) .32 .05
Net income (loss) per share .13 (.18) .81 (.06)
========= ========= ========= =========
Diluted income (loss) per share:
Continuing operations $ .13 $ (.08) $ .51 $ .21
Discontinued operations -- (.07) (.05) (.32)
Disposal of discontinued operations -- (.03) .29 .05
Net income (loss) per share .13 (.18) .75 (.06)
========= ========= ========= =========
(1) Net of income tax benefit of $49, $1,489, $1,330 and $5,606, respectively.
(2) Net of income tax benefit (expense) of $806, $(8,529) and $(839),
respectively.
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BELDEN CDT INC.
SEGMENT INFORMATION
(Unaudited)
(in thousands)
THREE MONTHS ENDED SEPTEMBER 30, 2005
TOTAL
FINANCE AND CONTINUING
ELECTRONICS NETWORKING ADMINISTRATION ELIMINATIONS OPERATIONS
----------- ---------- -------------- ------------ ----------
EXTERNAL CUSTOMER REVENUES $199,529 $142,860 $ -- $ -- $342,389
AFFILIATE REVENUES 20,256 4,016 -- (24,272) --
-------- -------- ------- -------- --------
TOTAL REVENUES $219,785 $146,876 $ -- $(24,272) $342,389
======== ======== ======= ======== ========
OPERATING EARNINGS (LOSS) $ 28,857 $ (961) $(7,826) $ (5,296) $ 14,774
======== ======== ======= ======== ========
Three Months Ended September 30, 2004
Total
Finance and Continuing
Electronics Networking Administration Eliminations Operations
----------- ---------- -------------- ------------ ----------
External customer revenues $171,972 $109,482 $ -- $ -- $281,454
Affiliate revenues 15,208 -- -- (15,208) --
-------- -------- ------- -------- --------
Total revenues $187,180 $109,482 $ -- $(15,208) $281,454
======== ======== ======= ======== ========
Operating earnings (loss) $ 1,902 $ 7,087 $(9,774) $ (2,402) $ (3,187)
======== ======== ======= ======== ========
NINE MONTHS ENDED SEPTEMBER 30, 2005
TOTAL
FINANCE AND CONTINUING
ELECTRONICS NETWORKING ADMINISTRATION ELIMINATIONS OPERATIONS
----------- ---------- -------------- ------------ ----------
EXTERNAL CUSTOMER REVENUES $582,007 $407,194 $ -- $ -- $989,201
AFFILIATE REVENUES 71,257 9,821 -- (81,078) --
-------- -------- -------- -------- --------
TOTAL REVENUES $653,264 $417,015 $ -- $(81,078) $989,201
======== ======== ======== ======== ========
OPERATING EARNINGS (LOSS) $ 76,439 $ 14,595 $(25,738) $(15,587) $ 49,709
======== ======== ======== ======== ========
Nine Months Ended September 30, 2004
Total
Finance and Continuing
Electronics Networking Administration Eliminations Operations
----------- ---------- -------------- ------------ ----------
External customer revenues $408,338 $227,526 $ -- $ -- $635,864
Affiliate revenues 64,225 646 -- (64,871) --
-------- -------- -------- -------- --------
Total revenues $472,563 $228,172 $ -- $(64,871) $635,864
======== ======== ======== ======== ========
Operating earnings (loss) $ 28,539 $ 15,300 $(18,140) $(10,141) $ 15,558
======== ======== ======== ======== ========
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BELDEN CDT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, December 31,
2005 2004
------------- ------------
(in thousands) (UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 177,915 $ 188,798
Receivables 218,511 174,554
Inventories 241,908 227,034
Deferred income taxes 16,190 15,911
Other current assets 5,209 8,883
Current assets of discontinued operations 12,972 34,138
---------- ----------
Total current assets 672,705 649,318
Property, plant and equipment, less
accumulated depreciation 319,141 338,247
Goodwill, less accumulated amortization 275,573 286,163
Other intangible assets, less accumulated amortization 73,530 78,266
Other long-lived assets 5,863 6,460
Long-lived assets of discontinued operations 12,692 36,984
---------- ----------
$1,359,504 $1,395,438
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 213,047 $ 185,035
Accrued income taxes 6,467 --
Current maturities of long-term debt 59,052 15,702
Current liabilities of discontinued operations 8,955 17,534
---------- ----------
Total current liabilities 287,521 218,271
Long-term debt 172,052 232,823
Postretirement benefits other than pensions 32,671 30,089
Deferred income taxes 73,710 68,158
Other long-term liabilities 15,234 25,340
Long-term liabilities of discontinued operations 1,715 1,516
Minority interest 8,384 9,241
Stockholders' equity
Preferred stock -- --
Common stock 503 502
Additional paid-in capital 535,981 531,984
Retained earnings 283,322 252,114
Accumulated other comprehensive income 1,266 27,862
Unearned deferred compensation (613) (2,462)
Treasury stock (52,242) --
---------- ----------
Total stockholders' equity 768,217 810,000
---------- ----------
$1,359,504 $1,395,438
========== ==========
9