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
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FOR IMMEDIATE RELEASE
FEBRUARY 9, 2006
BELDEN CDT REPORTS FOURTH QUARTER RESULTS
REVENUE GROWTH IS 9.9% YEAR OVER YEAR
St. Louis, Missouri - Belden CDT Inc. (NYSE:BDC) today announced results of the
quarter and year ended December 31, 2005.
Revenue in the three months ended December 31, 2005 increased 9.9 percent
year-over-year to $362.9 million, compared with $330.3 million in the fourth
quarter of 2004. Operating income was $18.4 million, after pretax charges of
$12.4 million for severance, executive succession costs, and accelerated
depreciation. Net income for the quarter was $9.7 million or $0.21 per diluted
share.
Revenue for the year ended December 31, 2005 increased 39.9% to $1.35 billion
compared with $966.2 million the previous year. Operating income was $68.2
million, after $36.5 million pretax in impairment charges and expenses related
to merger integration, severance, executive succession, and accelerated
depreciation. Net income for the year 2005 was $47.6 million or $0.96 per
diluted share. Operating cash flow for the year was in excess of $50 million.
Operating income for the quarter, adjusted to exclude the charges, was $30.9
million or 8.5 percent of revenues. Because the Company's effective tax rate on
adjusted income from continuing operations for the year (and therefore the
quarter) was higher than expected, earnings per diluted share on such income
were lower than expected. Had the Company's effective tax rate remained at 34
percent as previously estimated, earnings per diluted share from adjusted income
from continuing operations would have been $0.39.
MANAGEMENT COMMENT
"We achieved the operating profit we expected, but we needed more revenue to do
so because of the rapid rise in copper. Revenue growth excluding the impact of
currency in the fourth quarter was 11.7 percent year over year. Demand in the
fourth quarter was strong in many end markets including industrial, broadcast,
networking, security, and aerospace markets," said John Stroup, President and
Chief Executive Officer. "In an environment of steeply rising material costs,
our North American Electronics businesses achieved very good price realization,
which contributed to a strong operating margin. In Europe, we initiated several
actions under our restructuring
plan, including streamlining the management structure and initiating workforce
reductions in three locations. In the North American networking market, we
continued to win projects for our end-to-end cable and connectivity solution,
including our 10-gigabit copper system, and revenue continued to grow. But
despite list price increases, our net pricing in that market did not keep pace
with rising material cost. On a consolidated basis, our operating profit came in
as expected, but it was a lower percentage of a higher revenue figure."
HIGHLIGHTS
During the fourth quarter and since year-end, the Company has taken several
actions to strengthen its operations and enhance its financial position.
o On February 7, 2006, Belden CDT announced a reorganization of its North
American operations to improve service to customers who use cable for
multiple applications and to improve its interaction with distributors. The
Company consolidated its Belden electronics and networking operations as
the Belden Americas Division. Mohawk, West Penn, and Thermax operations
will make up the Specialty Division.
o The Company moved ahead in its European restructuring program by announcing
it would close the wire mill in its Venlo, Netherlands operation this
month. This action, together with the consolidation of the administrative
staff and workforce reductions now in process elsewhere in Europe, will
reduce the Company's employment in Europe by 170 people, or about 9 percent
of total European employment excluding Manchester, by mid-year. Severance
charges of $7.7 million were recognized in connection with these actions
during the fourth quarter.
o The Company terminated its Netherlands defined-benefit pension plan and
settled its obligations by means of a transfer of assets to the Pensions
Foundation for the Metals and Electrical Industry (PME), changing the
nature of the Company's ongoing commitment to a defined contribution
design.
o During the fourth quarter, Belden CDT completed shipments totaling 3.8
million feet of broadcast cable for the XX Winter Olympic Games in Torino.
All the cable for this project was compliant with the most stringent
international and European fire test standards including low smoke, zero
halogen, nontoxicity, and flame retardance.
o The Company repurchased 2.7 million shares of its stock in the fourth
quarter, bringing the total shares purchased during 2005 to 5.2 million,
for a total cost of $109.4 million and an average price of $21.04 per
share. The Company has not purchased any shares to date in 2006. Shares
outstanding at year-end were 42.2 million.
o On January 24, 2006, the Company entered into a new $165 million credit
facility with a group of eight banks, expandable to $200 million, secured
by the Company's overall cash flow and its assets in the United States. The
new facility replaces a $75 million asset-backed line of credit.
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EFFECTIVE TAX RATE
The effective tax rate for the year was 43.1 percent, a higher rate than the
Company's previous estimate of 39.4 percent for the full year. The reason for
the increase is that the Company generated more income in higher tax
jurisdictions and more losses (including fourth-quarter severance charges) in
jurisdictions in which there is no current tax benefit available. The effective
tax rate for the fourth quarter includes the impact of the higher rate on not
only the fourth-quarter pretax earnings but also the pretax earnings of the
first three quarters of the year.
ELECTRONICS SEGMENT
External revenue of the Electronics Segment was $217.0 million in the quarter
ended December 31, 2005, and total revenue, including sales to affiliates, was
$240.5 million. Growth in fourth quarter external revenue was 10.7 percent year
over year and 8.7 percent sequentially. Segment operating profit was $32.5
million, after a charge of $1.3 million for accelerated depreciation on assets
whose lives were shortened by the Company's restructuring program in Europe.
Without this charge, the segment operating margin was 14.0 percent of total
revenue. Total revenue and operating income of the segment in the fourth quarter
of 2004 were $212.9 million and $25.6 million respectively.
For the year ended December 31, 2005, external customer revenue of the
Electronics Segment was $799.0 million, and total revenue, including sales to
affiliates, was $893.8 million. Operating profit for the year was $108.9
million, net of $4.0 million of charges for severance, accelerated depreciation,
and merger-related expenses. In the year ended December 31, 2004, external
revenue of the segment was $604.4 million, total revenue was $685.4 million, and
operating profit was $54.1 million.
NETWORKING SEGMENT
In the Networking Segment, external revenue for the quarter ended December 31,
2005, was $146.0 million, an increase of 8.7 percent year over year and an
increase of 2.2 percent sequentially. Total revenue of the segment, including
sales to affiliates, was $150.6 million in the quarter. The operating loss of
$1.6 million included severance charges of $7.7 million and accelerated
depreciation for the assets of the Manchester, U.K. plant, of $2.3 million.
Absent these charges, adjusted operating margin for the segment was 5.6 percent
of total sales. The operating income of the fourth quarter of 2005 and 2004
included $3.0 million of income from a minimum requirements contract, which
expired at the end of 2005.
For the year 2005, external customer revenue of the Networking Segment was
$553.1 million and total revenue, including sales to affiliates, was $567.6
million. Operating profit of the segment for the year was $13.0 million net of
$22.5 million of severance charges, asset impairment charges, accelerated
depreciation, and merger-related expenses.
OUTLOOK
The Company said in September 2005 that it intends to exit the
telecommunications cable market in the United Kingdom when its contract with
British Telecom plc (BT) expires in October 2006 or sooner, if BT can arrange
another source. The Company is actively exploring alternatives for
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disposition of the Manchester, U.K. plant. If unable to arrange a sale of the
business at an acceptable price, the Company plans to liquidate the business. In
2005, the Manchester plant generated revenue of $106.5 million and operating
profit of $7.4 million. The Company's 2006 guidance excludes Manchester and
therefore takes as its baseline 2005 revenue of $1.25 billion, operating income
of $97.3 million, and net income of $53.0 million.
"We look forward to a relatively strong end market in 2006 in North America and
Asia, although with continuing lower growth in Europe," said Mr. Stroup. "We
expect our revenue to grow 5 to 10 percent compared with 2005 and operating
margin to be between 9.0 and 9.5 percent of sales. We expect improvement in
operating profit from all parts of our Company, with a particular focus on
Europe and networking. Our restructuring in Europe is well under way, and we
believe our recent reorganization in North America will help us leverage our
strengths and improve the contribution of our networking products.
"We expect our effective tax rate to be 37 percent in 2006," said Mr. Stroup.
"Our 2006 outlook assumes 48.8 million shares for diluted EPS. We expect our
earnings per share, excluding any further restructuring charges, to be between
$1.50 and $1.60 per diluted share." The Company's guidance excludes option
expense, as options for 2006 have not yet been awarded.
"For the first quarter, we expect revenue to be between $310 and $320 million,
and earnings per share to be between $0.27 and $0.30 per diluted share,
excluding any severance charges or restructuring charges. The contribution from
Manchester, if still among the continuing operations at the end of the first
quarter, could be between zero and $0.01," Mr. Stroup concluded.
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 Company's degree of success in managing its European
operations during the restructuring; the outcome of the Company's efforts to
sell or liquidate its operations serving the telecom market in the United
Kingdom; 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.
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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. To obtain additional information
contact Investor Relations at 314-854-8054, or visit Belden CDT's website at
www.beldencdt.com.
CONTACT: Belden CDT Inc.
Dee Johnson, Director of Investor Relations
314-854-8054
www.beldencdt.com
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The following tables provide a reconciliation between results as reported in
accordance with accounting principles generally accepted in the United States
and results excluding certain unusual or infrequent charges and tax benefits.
ADJUSTED RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2005
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Adjusted
As Reported Adjusted Three Three Months
Three Months Months Ended Ended
Ended December 31, December 31, December 31,
2005 Adjustments (1) 2005 2004 (2)
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Results of Continuing Operations
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Revenues $362,930 $ -- $ 362,930 $ 330,310
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Operating Income 18,442 12,417 30,859 30,731
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Percent of revenue 5.1% 8.5% 9.3%
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Income from Continuing Operations 7,494 7,444 14,938(3) 20,132
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Income from Continuing Operations per
diluted share $ 0.16 $ 0.31 $ 0.40
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(1) Severance charges, accelerated depreciation, expenses for executive
succession, and a one-time tax benefit.
(2) Restated for discontinued operations and the change in inventory accounting
method for LIFO to FIFO, and adjusted for merger-related costs.
(3) Adjusted income from continuing operations per diluted share at an
effective tax rate of 34.0% would have been $0.39 ($28,302 of adjusted
income from continuing operations before taxes, less income taxes of $9,623
at 34.0%, plus $677 of tax-effected interest related to convertible debt
would have resulted in $19,356 of adjusted income from continuing
operations, divided by 49,763 diluted shares outstanding).
ADJUSTED RESULTS FOR THE YEAR ENDED DECEMBER 31, 2005
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Adjusted
As Reported Adjusted Three Three Months
Three Months Months Ended Ended
Ended December 31, December 31, December 31,
2005 Adjustments (1) 2005 2004 (2)
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Results of Continuing Operations
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Revenues $1,352,131 $ -- $1,352,131 $1,241,229
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Operating Income 68,151 36,514 104,665 83,334
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Percent of revenue 5.0% 7.7% 6.7%
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Income from Continuing Operations 32,642 25,574 58,216 44,112
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Income from Continuing Operations per
diluted share $ 0.68 $ 1.17 $ 0.89
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(1) Impairment charges, severance charges, accelerated depreciation,
merger-related costs, expenses for executive succession, and a 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.
Following are comparative condensed consolidated income statements of Belden CDT
Inc. for the three- and twelve-month periods ended December 31, 2005 and
December 31, 2004, segment information for the same periods, and condensed
consolidated balance sheets as of December 31, 2005, and December 31, 2004.
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BELDEN CDT INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------------- -------------------------
2005 2004 2005 2004
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(in thousands, except per share data)
Revenues $ 362,930 $ 330,310 $ 1,352,131 $ 966,174
Cost of sales (294,496) (251,651) (1,067,007) (766,101)
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Gross profit 68,434 78,659 285,124 200,073
Selling, general and administrative expenses (52,992) (54,453) (207,124) (151,438)
Asset impairment -- -- (12,849) (8,871)
Minimum requirements contract income 3,000 3,000 3,000 3,000
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Operating income 18,442 27,206 68,151 42,764
Interest expense, net (2,409) (3,011) (10,091) (12,881)
Minority interest (148) (146) (699) (371)
Other nonoperating income -- -- -- 1,732
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Income from continuing operations before taxes 15,885 24,049 57,361 31,244
Income tax expense (8,391) (15,453) (24,719) (15,891)
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Income from continuing operations 7,494 8,596 32,642 15,353
Gain (loss) from discontinued operations (1) 2,191 9,711 (247) (417)
Gain (loss) on disposal of discontinued operations (2) -- (1,238) 15,163 253
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Net income $ 9,685 $ 17,069 $ 47,558 $ 15,189
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Weighted average number of common shares and equivalents:
Basic 43,271 46,892 45,655 35,404
Diluted 49,763 53,748 52,122 38,724
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Basic income (loss) per share:
Continuing operations $ .17 $ .18 $ .72 $ .43
Discontinued operations .05 .21 (.01) (.01)
Disposal of discontinued operations -- (.03) .33 .01
Net income per share .22 .36 1.04 .43
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Diluted income (loss) per share:
Continuing operations $ .16 $ .17 $ .68 $ .43
Discontinued operations .05 .18 (.01) (.01)
Disposal of discontinued operations -- (.02) .29 .01
Net income per share .21 .33 .96 .43
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(1) Net of income tax benefit of $1,936, $11,930, $3,266 and $17,536,
respectively.
(2) Net of income tax benefit (expense) of $697, $(8,529) and $(142),
respectively.
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BELDEN CDT INC.
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SEGMENT INFORMATION
(Unaudited)
================================================================================
(in thousands)
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THREE MONTHS ENDED DECEMBER 31, 2005
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TOTAL
FINANCE AND CONTINUING
ELECTRONICS NETWORKING ADMINISTRATION ELIMINATIONS OPERATIONS
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EXTERNAL CUSTOMER REVENUES $ 216,979 $ 145,951 $ -- $ -- $ 362,930
AFFILIATE REVENUES 23,533 4,628 -- (28,161) --
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TOTAL REVENUES $ 240,512 $ 150,579 $ -- $ (28,161) $ 362,930
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OPERATING EARNINGS (LOSS) $ 32,460 $ (1,572) $ (5,029) $ (7,417) $ 18,442
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Three Months Ended December 31, 2004
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Total
Finance and Continuing
Electronics Networking Administration Eliminations Operations
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External customer revenues $ 196,034 $ 134,276 $ -- $ -- $ 330,310
Affiliate revenues 16,830 2,459 -- (19,289) --
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Total revenues $ 212,864 $ 136,735 $ -- $ (19,289) $ 330,310
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Operating earnings (loss) $ 25,561 $ 9,426 $ (6,494) $ (1,287) $ 27,206
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TWELVE MONTHS ENDED DECEMBER 31, 2005
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TOTAL
FINANCE AND CONTINUING
ELECTRONICS NETWORKING ADMINISTRATION ELIMINATIONS OPERATIONS
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EXTERNAL CUSTOMER REVENUES $ 798,986 $ 553,145 $ -- $ -- $1,352,131
AFFILIATE REVENUES 94,790 14,449 -- (109,239) --
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TOTAL REVENUES $ 893,776 $ 567,594 $ -- $ (109,239) $1,352,131
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OPERATING EARNINGS (LOSS) $ 108,899 $ 13,023 $ (30,767) $ (23,004) $ 68,151
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Twelve Months Ended December 31, 2004
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Total
Finance and Continuing
Electronics Networking Administration Eliminations Operations
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External customer revenues $ 604,372 $ 361,802 $ -- $ -- $ 966,174
Affiliate revenues 81,055 3,105 -- (84,160) --
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Total revenues $ 685,427 $ 364,907 $ -- $ (84,160) $ 966,174
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Operating earnings (loss) $ 54,100 $ 24,726 $ (24,534) $ (11,528) $ 42,764
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BELDEN CDT INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
================================================================================
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DECEMBER 31, December 31,
2005 2004
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(in thousands) (UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 134,640 $ 188,798
Receivables 198,106 174,554
Inventories 261,963 227,034
Deferred income taxes 27,845 15,911
Other current assets 8,223 11,885
Current assets of discontinued operations -- 19,573
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Total current assets 630,777 637,755
Property, plant and equipment, less
accumulated depreciation 304,337 338,247
Goodwill, less accumulated amortization 272,290 286,163
Other intangible assets, less accumulated amortization 72,459 78,266
Other long-lived assets 6,084 6,460
Long-lived assets of discontinued operations 129 24,330
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$ 1,286,076 $ 1,371,221
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 209,031 $ 185,035
Current maturities of long-term debt 59,000 15,702
Current liabilities of discontinued operations 388 17,541
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Total current liabilities 268,419 218,278
Long-term debt 172,051 232,823
Postretirement benefits other than pensions 33,167 30,089
Deferred income taxes 73,851 45,450
Other long-term liabilities 17,166 25,340
Minority interest 7,914 9,241
Stockholders' equity
Preferred stock -- --
Common stock 503 502
Additional paid-in capital 540,430 531,984
Retained earnings 290,870 252,114
Accumulated other comprehensive income (loss) (6,881) 27,862
Unearned deferred compensation (336) (2,462)
Treasury stock (111,078) --
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Total stockholders' equity 713,508 810,000
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$ 1,286,076 $ 1,371,221
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