Belden Reports Fourth-Quarter Profits
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ST. LOUIS, Jan. 31 /PRNewswire-FirstCall/ -- Belden Inc. (NYSE: BWC) today announced that net income for the quarter ended December 31, 2001, was $6.4 million, or $0.26 per diluted share, compared with $16.2 million, or $0.66 per share, in the fourth quarter of 2000. Revenues were $204.8 million, down 33.9 percent from record revenues of $309.9 million in the year-ago quarter.
Belden reduced debt by $22.5 million in the quarter and $37.9 million during the year, bringing the ratio of debt to total capitalization to 42.8 percent, from 48.7 percent a year ago. Net cash from operations was $20.3 million in the quarter and $72.7 million for the year.
For the year, net income was $31.0 million, or $1.25 per share diluted, versus $52.8 million, or $2.14 per share, in 2000. Revenues were $940.0 million, a decrease of 17.2 percent from $1,135.3 million in the prior year. Net income excluding the effect of unusual items was $33.8 million, or $1.37 per share diluted. The unusual items consisted of a bad debt expense and the favorable resolution of a prior-period tax contingency, both recorded in the third quarter, and a gain related to the sale of the Company's interest in a joint venture investment and the cumulative effect of adopting SFAS Statement No. 133, both recorded in the first quarter.
Baker Cunningham, Chairman, President, and CEO, said, ``We began the fourth quarter anticipating further contraction in the electronics and communications markets, both in North America and in Europe. As things turned out, these markets were weaker than we had expected, but we managed to maintain profitability as we had in every quarter of 2001. During the year, we reduced our employee base and aggressively cut costs. We have reduced our working capital and curtailed our capital spending, focusing on projects that improve manufacturing processes and deliver simultaneous cost and quality benefits. We generated strong cash flow, enabling us to reduce our debt by $38 million during the year.
``Despite the market weakness, I am particularly pleased with Belden's position in the market,'' continued Mr. Cunningham. ``In networking, we clearly have the richest mix of high-performance cable in the industry, with substantially all of our data-networking products meeting category 5e technical standards or higher. Our patented bonded-pair technology, which represents over 40 percent of our data networking cable revenue, provides uniquely superior installed performance. We also have by far the strongest brand in broadcast and industrial markets. Furthermore, during 2001 we gained market share in exterior copper telecommunications cable to become the largest provider in the world.''
Electronics Segment
Revenues of the Electronics segment were $141.9 million in the quarter, a decline of 33.1 percent from $212.2 million in the fourth quarter of 2000, and a sequential decline of 5.0 percent from the third quarter of 2001. Operating income of the segment was $10.7 million, or 7.5 percent of revenue, for the quarter, compared with $30.0 million, or 14.1 percent of revenue, in the year- ago quarter.
All the markets served by the Electronics segment experienced year-over- year declines for the fourth quarter. Revenue in the networking market was stable sequentially as volume improved, partially offset by pricing actions taken in response to competitive conditions. Industrial product revenues were sequentially lower from the third quarter 2001, reflecting an ongoing recession in the manufacturing sector.
For the year, segment revenues were $622.8 million, 21.2 percent lower than $790.4 million in 2000. Operating earnings for 2001 were $61.9 million, down 36.4 percent compared to prior-year operating income of $97.4 million.
Communications Segment
In the Communications segment, revenues for the quarter were $65.5 million, a decline of 37.6 percent from $104.9 million in the year-ago quarter and a sequential decrease of 28.8 percent, which reflected lower sales to major communications customers in both Europe and North America and the absence of orders from a private-label customer.
Operating earnings of the segment were $4.7 million, essentially equal to operating income in the fourth quarter of 2000. Included in the fourth quarter of 2001 was $8.3 million of other operating earnings, or $.23 per share, which was income under a take-or-pay agreement with a private-label customer. That customer's purchases under the agreement were approximately $19.0 million in the fourth quarter of 2000; there were no purchases under the contract in the fourth quarter of 2001. The take-or-pay contract remains in effect, and unless the customer resumes purchases under the contract, the Company expects to recognize similar compensation in 2002.
Revenues of the Communications segment for the year were $337.3 million, a decline of 11.2 percent from year-earlier revenues of $379.9 million. Segment operating income for the year was $6.3 million, down 62.3 percent from $16.7 million in 2000. The decline in segment operating income for the year is primarily due to the loss of the private-label business, the unusual bad debt expense, and lower earnings in Europe due to weaker demand.
Outlook
``Our revenue and earnings for 2002 will be largely dependent on the level of investment by the technology and communications industries, and on the timing of any general economic recovery,'' said Mr. Cunningham. ``Near term, we expect challenging market conditions to continue. So, Belden has taken additional action to reduce cost and staffing commensurate with market demand. Total staffing has been reduced from more than 6,000 people at the beginning of 2001 to about 5,000 at year-end. In January 2002, we further adjusted our cost structure by initiating a reduction of our staffing in Europe and eliminating certain positions in the United States. These actions will cost approximately $3 million pretax, or around $.08 per share, and will be recorded in the first quarter of 2002.
``If the prevailing views of gradual economic recovery later in 2002 prove true, we should see both revenues and earnings step up quarter-by-quarter, and we would anticipate favorable year-over-year comparisons in the later quarters of the year. However, we are planning for 2002 revenues to be down about 5 percent from 2001 in light of the ongoing weakness in the early part of the year. Assuming a gradual recovery later in the year, our best estimate of 2002 earnings per share at this time is $1.35 to $1.45. As we compare expected earnings per share of 2002 to 2001, we benefit from cost reductions we have already made, and we won't be amortizing goodwill because of the accounting change. Working against us in 2002 are lower expected revenues and the adverse margin effect of price competition in networking cable.
``The first quarter is typically a seasonally low period for us. In the first quarter of 2002, we expect that our revenue will be sequentially flat or slightly lower than the fourth quarter of 2001. The workforce reductions we enacted earlier this month involve severance expenses which, although benefiting future quarters, add cost to the first quarter. Without these severance costs, we would have expected earnings in the first quarter to be similar to those of the fourth quarter but without income under the take-or- pay contract -- say $.04 to $.06 cents per share. With the first-quarter severance costs of approximately $.08 per share, we are estimating first- quarter results in the range of a $.05 per share loss to breakeven. We are, of course, working very hard to improve results, but we feel this is realistic guidance given what we know today.
``Belden has taken a number of steps to improve its operating leverage. We have made permanent cost reductions in both segments of our business, implemented further process improvements, and reduced our inventory. We have the best product line in the industry and have solidified our position during this downturn,'' said Mr. Cunningham. ``We are confident that any recovery in our markets will quickly improve our bottom line.'' |
