Belden Announces Third-Quarter Profit
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ST. LOUIS, Oct. 25 /PRNewswire/ -- Belden Inc. (NYSE: BWC - news) today announced its financial results for the third quarter. Net income for the three months ended September 30, 2001, was $7.2 million, or $0.29 per diluted share before net unusual items amounting to $0.14 per share. Including the unusual items, net income was $3.8 million, or $0.15 per share, compared with $14.8 million, or $0.60 per share, in the year-ago quarter. The two items were a bad-debt provision of $8.4 million (pre-tax), or $0.23 per share, and the non-cash favorable resolution of a prior period tax contingency of $2.3 million, or about $0.09 per share. Revenue for the quarter was $236.5 million, down 22.8 percent compared with $306.3 million in the same quarter a year ago.
For the nine-month period, net income excluding the unusual items was $27.9 million, or $1.13 per diluted share, compared with $36.6 million, or $1.48 per diluted share, in the first nine months of 2000. Including the unusual items, net income for the nine months was $24.6 million, or $0.99 per diluted share. Also included in year-to-date results is a first quarter net gain of $0.02 per share related to the sale of the Company's interest in a joint venture investment and the cumulative effect of adopting FASB Statement No. 133. Revenue for the nine-month period was $735.2 million, a 10.9 percent decrease compared with revenue of $825.5 million for the same period last year.
C. Baker Cunningham, Chairman, President, and Chief Executive Officer said, ``The weakening in our markets that we observed in the first half of the year accelerated in the third quarter. Sales into each of our market segments are down from a year ago. We have worked aggressively to reduce spending, control working capital, and lower our costs. As a result, even with our markets down from a year ago, we have been profitable, generating good cash flow, reducing our debt, and solidifying our market position. When the markets come back, our earnings should quickly benefit through improved operating leverage.''
Belden's third-quarter balance sheet and cash flow remained strong and improved over the second quarter. At September 30, 2001, the Company's debt as a percent of total capitalization was 45.4 percent, and the EBITDA interest coverage ratio was over six times. During the third quarter, Belden generated $45.8 million in operating cash flow from earnings and management of working capital, a 23 percent increase over the third quarter a year ago.
The net tax benefit of $2.4 million during the third quarter reflects the favorable resolution of a prior year contingency of $2.3 million and a reduction in the effective annual income tax rate.
Electronics Segment
For the Electronics segment, revenue for the quarter was $149.5 million, a 25.6 percent decline from $201.0 million in the same period last year and a sequential decline of 9.6 percent from second-quarter sales of $165.3 million. Operating earnings were $13.7 million, or 9.1 percent of sales, compared with $24.9 million or 12.4 percent of sales in the third quarter of 2000.
Weakness in Electronics markets, which was noted in the first half of the year, continued through the third quarter. The entertainment and OEM markets were significantly weaker than a year ago. Networking and industrial markets were also slower, reflecting ongoing weakness in capital spending. Sales continued lower in the United States but also declined in Europe. Sales in Asia were flat compared with the year-ago quarter.
During the quarter, Belden launched the HomeChoice(TM) product line to provide homebuilders with high-tech cabling solutions for networking computers, telephones, and entertainment and security systems, and to accommodate growing individual demand for broadband services.
Communications Segment
The Communications segment reported revenue of $91.9 million in the quarter, a decline of 20.7 percent from $115.9 million in the third quarter a year ago, and an increase of 5.3 percent sequentially from the second quarter. The segment's revenue declined year over year due to the loss of sales to a major private label customer and to capital spending reductions of major communications companies, particularly in the United Kingdom. The private label customer is obligated, under a take-or-pay contract, to compensate the Company because it has ceased its purchases. Under the terms of the agreement, Belden is entitled to recognize pre-tax income in the fourth quarter of 2001 of approximately $8.5 million. The revenue from this customer in the third quarter of 2000 was $15.8 million.
The Communications segment recorded the unusual bad-debt provision of $8.4 million during the quarter, due to the bankruptcy of Complas, Inc., a value-added reseller (VAR) that was contractually designated by a major communications customer for its purchase of Belden products. The segment's operating earnings excluding the bad-debt charge were $2.2 million, compared with $6.4 million in the third quarter of 2000. Operating margins were 2.4 percent in the third quarter of 2001, compared with 5.5 percent in the prior year. Including the charge, the segment's operating loss in the third quarter of 2001 was $6.1 million.
Outlook
``It's difficult to forecast revenue in market conditions like this,'' said Mr. Cunningham. ``To a large extent, the company's revenue picture depends on the level of confidence and investment in the United States economy as a whole. Manufacturing in the United States remains in a recession, and conditions in Europe are deteriorating. Right now, early in the fourth quarter, we sense more uncertainty than confidence. Our revenue forecast for the year is about 15 percent off from the prior year, and in fact we see revenue in the fourth quarter sequentially lower than the third quarter.
``As we noted earlier, the Communications segment expects recovery in the fourth quarter due to the take-or-pay agreement with a major customer. With that in mind, we expect Belden's fourth quarter earnings per share to be in the range of $0.25 to $0.30 per share, which would put earnings for the year at $1.38 to $1.43 per share, excluding the third quarter unusual items.
``We are accomplishing the cost reductions that we need both in response to the current market and to improve our operating performance in the future. For the long term, we are continuing to make the process changes that, in our business, tend to yield both long-term quality improvements and margin benefits. When things pick up, we expect to see a brisk recovery. I'm proud of how the company has performed in this challenging period and I'm confident that we're well positioned for 2002.''
Management will discuss the results of the third quarter during a conference call today at 10:30 a.m. Eastern Time, which Belden will broadcast live via the Internet. For all interested parties, the live, listen-only audio of the conference call will be broadcast in its entirety. To listen to the call, go to investor.belden.com. A replay of this conference call will be archived for a limited time on the web site as well. |
