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Article by DailyStocks_admin    (07-28-08 05:20 AM)

The Daily Magic Formula Stock for 07/27/2008 is Belden Inc. According to the Magic Formula Investing Web Site, the ebit yield is 14% and the EBIT ROIC is 25-50 %.

Dailystocks.com only deals with facts, not biased journalism. What is a better way than to go to the SEC Filings? It's not exciting reading, but it makes you money. We cut and paste the important information from SEC filings for you to get started on your research on a specific company.


Dailystocks.com makes NO RECOMMENDATIONS whatsoever, and provides this for informational purpose only.

BUSINESS OVERVIEW

General

Belden Inc. (Belden) designs, manufactures and markets signal transmission solutions, including cable, connectivity and active components for mission-critical applications in markets ranging from industrial automation to data centers, broadcast studios, and aerospace. We focus on market segments that require highly differentiated, high-performance products. We add value through design, engineering, excellence in manufacturing, product quality, and customer service.

In July 2004, Belden 1993 Inc. (then known as Belden Inc.) and Cable Design Technologies Corporation (CDT) combined to form Belden CDT Inc. Although CDT was the corporate survivor in the transaction, Belden 1993 Inc. was deemed to be the survivor for accounting purposes, and the accounting information that we provide reflects Belden 1993 Inc.’s historical performance. In May 2007, Belden CDT Inc. changed its name to Belden Inc.

During 2007, Belden completed three acquisitions: Hirschmann Automation and Control GmbH, LTK Wiring Co. Ltd. and Lumberg Automation Components. For more information regarding these acquisitions, see Note 3 to the Consolidated Financial Statements.

Belden Inc. is a Delaware corporation incorporated in 1988. The Company reports in four segments: the Belden Americas segment, the Specialty Products segment, the Europe segment and the Asia Pacific segment. Financial information about the Company’s four operating segments appears in Note 4 to the Consolidated Financial Statements.

As used herein, unless an operating segment is identified or the context otherwise requires, “Belden,” the “Company” and “we” refer to Belden Inc. and its subsidiaries as a whole.

Products

Belden produces and sells electronic cables, connectors, and other products.

We have thousands of different cable products within various cable configurations, including:


• Copper cables, including shielded and unshielded twisted pair cables, coaxial cables, stranded cables, and ribbon cables,

• Fiber optic cables, which transmit light signals through glass or plastic fibers, and

• Composite cable configurations , which are combinations of multiconductor, coaxial, and fiber optic cables jacketed together or otherwise joined together to serve complex applications and provide ease of installation.

We produce and sell our connectors (including patch panels and interconnect hardware) primarily for industrial and data networking applications. Connectors are also sold as part of an end-to-end structured cabling solution.

Our other products include Industrial Ethernet switches, wireless networking access points and switches, cabinets, enclosures, racks, raceways and ties for organizing and managing cable, and tubing and sleeving products to protect and organize wire and cable. We also design and manufacture electronic control systems (load-moment indicators and related controls) for mobile cranes and other load-bearing equipment.

Markets and Products, Belden Americas Segment

The Belden Americas segment designs, manufactures and markets all of our various cable product types (as described above under “Products”) for use in the following principal markets: industrial; audio and video; security; networking; and communications. The segment also designs, manufactures and markets connectivity, cable management products and cabinetry for the enterprise market, tubing and sleeving products, and Power over Ethernet modules. This segment contributed approximately 43%, 55%, and 51% of our consolidated revenues in 2007, 2006, and 2005, respectively.

For this segment, we define the industrial market to include applications ranging from advanced industrial networking and robotics to traditional instrumentation and control systems. Our cable products are used in discrete manufacturing and process operations involving the connection of computers, programmable controllers, robots, operator interfaces, motor drives, sensors, printers and other devices. Many industrial environments, such as petrochemical and other harsh-environment operations, require cables with exterior armor or jacketing that can endure physical abuse and exposure to chemicals, extreme temperatures and outside elements. Other applications require conductors, insulating, and jacketing materials that can withstand repeated flexing. In addition to cable product configurations for these applications, we supply heat-shrinkable tubing and wire management products to protect and organize wire and cable assemblies. We sell our industrial products primarily through wire specialist distributors, industrial distributors and re-distributors, and directly to original equipment manufacturers (OEMs).

We manufacture a variety of multiconductor and coaxial products which distribute audio and video signals for use in broadcast television (including digital television and high definition television), broadcast radio, pre- and post-production facilities, recording studios and public facilities such as casinos, arenas and stadiums. Our audio/video cables are also used in connection with microphones, musical instruments, audio mixing consoles, effects equipment, speakers, paging systems and consumer audio products. We offer a complete line of composite cables for the emerging market in home networking. Our primary market channels for these broadcast, music and entertainment products are broadcast specialty distributors and audio systems installers. The Belden Americas segment also sells directly to music OEMs and the major networks including NBC, CBS, ABC and Fox.

We provide specialized cables for security applications such as video surveillance systems, airport baggage screening, building access control, motion detection, public address systems, and advanced fire alarm systems. These products are sold primarily through distributors and also directly to specialty system integrators.

In the networking market, we supply structured cabling solutions for the electronic and optical transmission of data, voice, and video over local and wide area networks. End-use applications are hospitals, financial institutions, government, service providers, transportation, data centers, manufacturing, industrial and enterprise customers. Products for this market include high-performance copper cables (including 10-gigabit Ethernet technologies over copper), fiber optic cables, connectors, wiring racks, panels, interconnecting hardware, intelligent patching devices, wireless networking access points and switches, Power over Ethernet panels, and cable management solutions for complete end-to-end network structured wiring systems. Our systems are installed through a network of highly trained system integrators and are supplied through authorized distributors.

In the communications market, we manufacture flexible, copper-clad coaxial cable for high-speed transmission of voice, data and video (broadband), used for the “drop” section of cable television (CATV) systems and satellite direct broadcast systems. We also sell coaxial cables used in connection with wireless applications, such as cellular, Personal Communications Service, Personal Communications Network, and Global Positioning System. These broadband, CATV and wireless communication cables are sold primarily through distributors.

Markets and Products, Specialty Products Segment

The Specialty Products segment designs, manufactures and markets a wide variety of our cable products for use principally in the networking, transportation and defense, sound and security, and industrial markets. This segment contributed approximately 12%, 17%, and 19% of our consolidated revenues in 2007, 2006, and 2005, respectively.

In the networking market (as described with respect to the Belden Americas segment above), the Specialty Products segment supplies high-performance copper and fiber optic data cable for users preferring an open architecture where integrators specify our copper and fiber cables for use with the connectivity components of other suppliers. These systems are installed through a network of highly trained system integrators and contractors and are supplied locally by authorized distributors.

In the transportation and defense market, we provide specialized cables for use in commercial and military aircraft, including cables for fly-by-wire systems, fuel systems, and in-flight entertainment systems. Some of these products withstand extreme temperatures (up to 2000° F), are highly flexible, or are highly resistant to abrasion. We work with OEMs to have our products specified on aircraft systems and sell either directly to the OEMs or to specialized distributors or subassemblers. For the automotive market, we supply specialized cables for oxygen sensors in catalytic converters, for air-bag actuators, and for satellite radio receivers. Other high-temperature cable products are applied in industrial sensors and communication technology. These automotive and other cables are sold primarily through distributors.

The Specialty Products segment also designs, manufactures and markets a wide range of sound and security cables that are sold directly to system integrators and contractors, as well as a variety of industrial coaxial and control cables that are used in monitoring and control of industrial equipment and systems, and are sold through industrial distributors and re-distributors and directly to OEMs.

Markets and Products, Europe Segment

In addition to Europe’s cable operations, the segment includes the global operations of the Hirschmann and Lumberg Automation businesses acquired on March 26, 2007 and April 30, 2007, respectively. This segment contributed approximately 30%, 24%, and 26% of our consolidated revenues in 2007, 2006, and 2005, respectively.

We design, manufacture and market Industrial Ethernet switches and related equipment, both rail-mounted and rack-mounted, for factory automation and large-scale infrastructure projects such as bridges, wind farms and airport runways. Rail-mounted switches are designed to withstand harsh conditions including electronic interference and mechanical stresses. We also design, manufacture and market fiber optic interfaces and media converters used to bridge fieldbus networks over long distances. In addition, we design, manufacture and market a broad range of industrial connectors for sensors and actuators, cord-sets, distribution boxes and fieldbus communications. These products are used both as components of manufacturing equipment and in the installation and networking of such equipment. We also design, manufacture and market load moment indicators. Our switches, communications equipment, connectors and load-moment indicators are sold directly to industrial equipment OEMs and through a network of distributors.

In the segment’s cable operations, we design, manufacture and market our cable, enterprise connectivity, and other products primarily to customers in Europe, the Middle East, and Africa for use in the industrial, networking, communications, audio and video, and security markets (as such markets are described with respect to the Belden Americas segment above), through distributors and to OEMs. We also market copper-based CATV trunk distribution cables that meet local specifications to cable TV system operators and through distribution.

In 2006 we sold a copper telecom cable business in the United Kingdom, and in 2007 completed our global exit from the outside plant telecom cable business with the sale of our Czech cable operation.

Markets and Products, Asia Pacific Segment

The Asia Pacific segment includes the operations of LTK Wiring Co. Ltd. acquired on March 27, 2007, in addition to its Belden cable business. This segment contributed approximately 15%, 4%, and 4% of our consolidated revenues in 2007, 2006, and 2005, respectively.

The Asia Pacific segment designs, manufactures and markets cable products used in a wide range of consumer electronics and other manufactured consumer products. Under the LTK brand, we provide Appliance Wiring Materials (AWM) that are compliant with UL standards for the internal wiring of a wide range of electronic devices, coaxial and miniature coaxial cable for internal wiring in electronic game consoles, laptop computers, mobile telephones, personal digital assistant devices and global positioning systems, high-temperature resistant wire for heating mats and electronic ignitions, highly flexible and temperature resistant automotive wire, flexible cords, and miscellaneous audio and video cable. Some of our products manufactured in Asia have won recognition from customers and industry groups around the world for their inherent environmental responsibility. These products are sold principally within China to international and Chinese OEMs and contract manufacturers.

We also market the full range of Belden products to our customers operating in Asia, Australia and New Zealand. These customers include a mix of regional as well as global customers from North America or Europe, in the industrial, networking, communications, audio and video, and security markets. We pursue both direct and channel sales depending upon the nature and size of the market opportunities.

Customers

We sell to distributors and directly to OEMs and installers of equipment and systems. Sales to the distributor Anixter International Inc. represented approximately 17% of our consolidated revenues in 2007.

We have supply agreements with distributors and with OEM customers in the United States, Canada, Europe, and Asia. In general, our customers are not contractually obligated to buy our products exclusively, in minimum amounts or for a significant period of time. The loss of one or more large customers or distributors could result in lower total revenues and profits. However, we believe that our relationships with our customers and distributors are satisfactory and that they choose Belden products, among other reasons, because the breadth of our product offering and the quality and performance characteristics of our products.

There are potential risks in our relationships with distributors. For example, adjustments to inventory levels maintained by distributors (which adjustments may be accelerated through consolidation among distributors) may adversely affect sales. Further, in each segment of our business certain distributors are allowed to return certain inventory in exchange for an order of equal or greater value. We have recorded a liability for the estimated impact of this return policy.

If the costs of materials used in our products fall and competitive conditions make it necessary for us to reduce our list prices, we may be required, according to the terms of contracts with certain of our distributors, to reimburse them for a portion of the price they paid for our products in their inventory.

International Operations

We have manufacturing facilities in Canada, Mexico, China and Europe. During 2007, approximately 55% of Belden’s sales were for customers outside the United States. Our primary channels to international markets include both distributors and direct sales to end users and OEMs.

Changes in the relative value of currencies take place from time to time and their effects on our results of operations may be favorable or unfavorable. On rare occasions, we engage in foreign currency hedging transactions to mitigate these effects. In most cases, our revenue and costs are in the same currency, reducing our overall currency risk.

A risk associated with our European manufacturing operations is the higher relative expense and length of time required to reduce manufacturing employment if needed.

Our foreign operations are subject to economic and political risks inherent in maintaining operations abroad such as economic and political destabilization, international conflicts, restrictive actions by foreign governments, and adverse foreign tax laws.

Financial information for Belden by geographic area is shown in Note 4 to the Consolidated Financial Statements.

Competition

We face substantial competition in our major markets. The number and size of our competitors varies depending on the product line and operating segment.

For each of our operating segments, the market can be generally categorized as highly competitive with many players. Some multinational competitors have greater financial, engineering, manufacturing and marketing resources than we have. There are also many regional competitors that have more limited product offerings.

The principal competitive factors in all our product markets are product features, availability, price, customer support and distribution coverage. The relative importance of each of these factors varies depending on the customer. Some products are manufactured to meet published industry specifications and are less differentiated on the basis of product characteristics. We believe that Belden stands out in many of its markets on the basis of the breadth of our product offering, the quality and performance characteristics of our products, and our service and technical support.

Environmental Matters

We are subject to numerous federal, state, provincial, local and foreign laws and regulations relating to the storage, handling, emission and discharge of materials into the environment, including the Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Clean Air Act, the Emergency Planning and Community Right-To-Know Act and the Resource Conservation and Recovery Act. We believe that our existing environmental control procedures are adequate and we have no current plans for substantial capital expenditures in this area.

Our facility in Venlo, The Netherlands, was acquired in 1995 from Philips Electronics N.V. Groundwater contamination has been identified on the site as a result of material handling and past storage practices. The government authorities have advised that remediation is necessary and we installed a groundwater remediation system in 2007. We have recorded a liability for the estimated costs.

We do not currently anticipate any material adverse effect on our results of operations, financial condition, cash flow or competitive position as a result of compliance with federal, state, provincial, local or foreign environmental laws or regulations, including cleanup costs. However, some risk of environmental liability and other costs is inherent in the nature of our business, and there can be no assurance that material environmental costs will not arise. Moreover, it is possible that future developments, such as increasingly strict requirements of environmental laws and enforcement policies thereunder, could lead to material costs of environmental compliance and cleanup by us.

Employees

As of December 31, 2007, we had approximately 8,300 employees worldwide. We also utilized about 1,200 workers under contract manufacturing arrangements. Approximately 2,600 employees are covered by collective bargaining agreements at various locations around the world. We believe that our relationship with our employees is good.

Importance of New Products and Product Improvements;
Impact of Technological Change; Impact of Acquisitions

Many of the markets that we serve are characterized by advances in information processing and communications capabilities, including advances driven by the expansion of digital technology, which require increased transmission speeds and greater bandwidth. Our markets are also subject to increasing requirements for mobility and information security. The relative costs and merits of copper cable solutions, fiber optic cable solutions, and wireless solutions could change in the future as various competing technologies address the market opportunities. We believe that our future success will depend in part upon our ability to enhance existing products and to develop and manufacture new products that meet or anticipate such changes. An important element of our business strategy is to increase our capabilities in the different modes of signal transmission technology, specifically copper cable, optical fiber and wireless.

Fiber optic technology presents a potential substitute for certain of the copper-based products that comprise the majority of our sales. Fiber optic cables have certain advantages over copper-based cables in applications where large amounts of information must travel great distances and where high levels of information security are required. While the cost to interface electronic and light signals and to terminate and connect optical fiber remains high, we expect that in future years these disadvantages will diminish. We produce and market fiber optic cables and many customers specify these products in combination with copper cables.

Advances in copper cable technologies and data transmission equipment have increased the relative performance of copper solutions. For example, in early 2005 we introduced the Belden System 10-GX for the data networking or enterprise market, providing reliable 10 gigabits-per-second performance over copper conductors. Belden’s System 10-GX accomplishes this using unshielded twisted pair cables and patented connector technology. The finalization in February 2008 of the industry’s 10-gig-over-copper, Category 6A cabling standard and the recent 10GBASE-T product announcements should accelerate the adoption of these higher-capacity copper network solutions.

The final stage of most networks remains almost exclusively copper-based and we expect that it will continue to be copper for some time. However, if a significant decrease in the cost of fiber optic systems relative to the cost of copper-based systems were to occur, such systems could become superior on a price/performance basis to copper systems. We do not control our own source of optical fiber production and, although we cable optical fiber, we could be at a cost disadvantage to competitors who both produce and cable optical fiber.

The installation of wireless devices has required the development of new wired platforms and infrastructure. In the future, we expect that wireless communications technology will be an increasingly viable alternative technology to both copper and fiber optic-based systems for certain applications. We believe that problems such as insufficient signal security, susceptibility to interference and jamming, and relatively slow transmission speeds of current systems will gradually be overcome, making the use of wireless technology more acceptable in many markets, including not only office LANs but also industrial and broadcast installations.

In the industrial automation market, there is a growing trend toward adoption of Industrial Ethernet technology, bringing to the factory floor the advantages of digital communication and the ability to network devices made by different manufacturers and then link them to enterprise systems. Adoption of this technology is at a more advanced stage among European manufacturers than those in the United States and Asia, but we believe that the trend will globalize.

Our strategy includes continued acquisitions to support our signal transmission solutions strategy. There can be no assurance that future acquisitions will occur or that those that do occur will be successful.

CEO BACKGROUND

David Aldrich, 51, was appointed to the Company’s Board in February 2007. Since April 2000, he has served as President, Chief Executive Officer, and Director of Skyworks Solutions, Inc. (“Skyworks”). Skyworks is an innovator of high performance analog and mixed signal semiconductors enabling mobile connectivity. Mr. Aldrich received a B.S. degree in marketing and political science from Providence College and an M.B.A. degree from the University of Rhode Island.

Lorne D. Bain, 66, had been a director of Belden 1993 Inc. since 1993 and was appointed to the Company’s Board at the time of the merger of Belden 1993 Inc. and Cable Design Technologies Corporation in 2004 (the “Merger”). Until September 2000, he served as Chairman, President and Chief Executive Officer of WorldOil.com, a trade publication and Internet-based business serving the oilfield services industry. From 1997 to February 2000, he was Managing Director of Bellmeade Capital Partners, L.L.C., a venture capital firm. From 1991 to 1996, he was Chairman and Chief Executive Officer of Sanifill, Inc., an environmental services company. Mr. Bain received a B.B.A. degree from St. Edwards University and a J.D. degree from the University of Texas School of Law and has completed Harvard Business School’s Advanced Management Program.

Lance C. Balk, 50, has been a director of the Company since March 2000. Since November 2007, Mr. Balk has served as Senior Vice President and General Counsel of Siemens Healthcare Diagnostics. From May 2006 to November 2007, he served in those positions with Dade Behring, a leading supplier of products, systems and services for clinical diagnostics, which was acquired by Siemens Healthcare Diagnostics in November 2007. Siemens Healthcare Diagnostics is the world’s largest provider of diagnostic products, formed by the strategic combination of Bayer HealthCare Diagnostics Division, Diagnostic Products Corporation and Dade Behring. Previously, he had been a partner of Kirkland & Ellis LLP since 1989, specializing in securities law and mergers and acquisitions. Mr. Balk received a B.A. degree from Northwestern University and a J.D. degree and an M.B.A. degree from the University of Chicago.

Judy Brown, 39, was appointed to the Company’s Board in February 2008. Since July 2006, she has served as Executive Vice President, Chief Financial Officer and Chief Accounting Officer of Perrigo Company (“Perrigo”). Ms. Brown joined Perrigo in September 2004 as Vice President and Corporate Controller. Perrigo is a leading global healthcare supplier and the world’s largest manufacturer of over-the-counter pharmaceutical and nutritional products for store brand products sold by food, drug, mass merchandise, dollar store and club store retailers under their own labels. Previously, Ms. Brown held various senior positions in finance and operations at Whirlpool Corporation from 1998 to August 2004. She received a B.S. degree from the University of Illinois and an M.B.A. from the University of Chicago.

Bryan C. Cressey , 58, has been Chairman of the Board of the Company since 1988 and a director of the Company since 1985. For the past twenty-seven years, he has also been a General Partner and Principal of Golder, Thoma and Cressey and Thoma Cressey Equity Partners, both private equity firms. In February 2007, Thoma Cressey Equity Partners was renamed Thoma Cressey Bravo. Thoma Cressey Bravo specializes in software, healthcare, business services and other consolidating industries including education, distribution and consumer products. He is also a director of Select Medical Corporation and Jazz Pharmaceutical, both public companies, and several private companies. Mr. Cressey received a B.A. degree from the University of Washington and a J.D. degree and an M.B.A. degree from Harvard University.

Michael F.O. Harris, 69, has been a director of the Company since 1985. From 1982 to 2003, Mr. Harris was a Managing Director of The Northern Group, Inc., which acted as Managing General Partner of various investment partnerships that owned several manufacturing companies. Mr. Harris received a B.S. degree from Yale University and an M.B.A. degree from Harvard University.

Glenn Kalnasy, 64, has been a director of the Company since 1985. From February 2002 through October 2003, Mr. Kalnasy served as the Chief Executive Officer and President of Elan Nutrition Inc., a privately held company. From 1982 to 2003, he was a Managing Director of The Northern Group, Inc. Mr. Kalnasy received a B.S. degree from Southern Methodist University.

Mary S. McLeod , 51, was appointed to the Company’s Board in February 2008. Since April 2007, Ms. McLeod has served as Senior Vice President of Global Human Resources at Pfizer Inc. (“Pfizer”), the world’s largest research-based pharmaceutical company. Prior to joining Pfizer, from January to April 2007, Ms. McLeod was an executive vice president of Korn Consulting Group (“Korn”), a firm specializing in helping companies through large-scale change, where she spent much of her time consulting on behalf of Pfizer. Before joining Korn, from March 2005 to January 2007, Ms. McLeod led human resources for Symbol Technologies (“Symbol”), a worldwide supplier of mobile data capture and delivery equipment. Prior to joining Symbol, from October 2001 to February 2005, she was head of human resources for Charles Schwab. Ms. McLeod received a B.A. degree from Loyola University and a master’s degree from the University of Missouri.

John M. Monter, 60, had been a director of Belden 1993 Inc. since 2000 and was appointed to the Company’s Board at the time of the Merger. From 1993 to 1996, he was President of the Bussmann Division of Cooper Industries, Inc. Bussmann manufactures electrical and electronic fuses. From 1996 through 2004, he was President and Chief Executive Officer of Brand Services, Inc. (“Brand”) and also a member of the board of directors of the parent companies, Brand DLJ Holdings (1996-2002) and Brand Holdings, LLC (2002-2006). He was named Chairman of DLJ Holdings in 2001 and Chairman of Brand Holdings, LLC in 2002. From January 1, 2005 through April 30, 2006, he served as Vice Chairman, Brand Holdings, LLC. Brand is a supplier of scaffolding and specialty industrial services. In 2008, Mr. Monter was elected a director on the board of Environmental Logistics Services, a privately held company that is owned by Centre Partners. Environmental Logistics Services is a hauler and disposer of solid wastes. He received a B.S. degree in journalism from Kent State University and an M.B.A. degree from the University of Chicago.

Bernard G. Rethore, 66, had been a director of Belden 1993 Inc. since 1997 and was appointed to the Company’s Board at the time of the Merger. In 1995 he became Director, President and Chief Executive Officer of BW/IP, Inc., a supplier of fluid transfer equipment, systems and services, and was elected its Chairman in 1997. In July 1997, Mr. Rethore became Chairman and Chief Executive Officer of Flowserve Corporation, which was formed by the merger of BW/IP, Inc., and Durco International, Inc. In 2000, he retired as an executive officer and director and was named Chairman of the Board, Emeritus. From 1989 to 1995, Mr. Rethore was Senior Vice President of Phelps Dodge Corporation and President of Phelps Dodge Industries. He received a B.A. degree in economics (Honors) from Yale University and an M.B.A. degree from the Wharton School of the University of Pennsylvania. He also is a director of Dover Corporation, Walter Industries, Inc. and Mueller Water Products, Inc.

John S. Stroup , 41, was appointed President, Chief Executive Officer and member of the Board effective October 31, 2005. From 2000 to the date of his appointment with the Company, he was employed by Danaher Corporation, a manufacturer of professional instrumentation, industrial technologies, and tools and components. At Danaher, he initially served as Vice President, Business Development. He was promoted to President of a division of Danaher’s Motion Group and later to Group Executive of the Motion Group. Earlier, he was Vice President of Marketing and General Manager with Scientific Technologies Inc. He received a B.S. degree in mechanical engineering from Northwestern University and an M.B.A. degree from the University of California at Berkeley.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview

We design, manufacture, and market signal transmission solutions for data networking and a wide range of specialty electronics markets including entertainment, industrial, security, consumer electronics and aerospace applications. We strive to create shareholder value by:


• Managing our product portfolio to position products according to value, eliminate low-margin revenue, and increase revenue in higher margin and strategically important products;

• Protecting and enhancing the perceived value of the Belden brand and our family of brands;

• Continuously improving business processes throughout the enterprise via a comprehensive lean tool set and the institution of a continuous improvement mind-set across the company;

• Recruiting and developing the best talent we can find and improving the effectiveness of our performance management processes;

• Migrating our manufacturing capacity to low-cost locations within each major geographic region to be closer to our customers and to reduce the landed cost of our products;

• Investing in both organic and inorganic growth in fast-growing regions;

• Capturing additional market share by improving channel relationships, improving our capability to serve global accounts, and concentrating sales efforts on solution selling and vertical markets; and

• Migrating from copper-based transmission technologies to signal transmission solutions via fiber, wireless and copper, and enriching our product portfolio by offering connectors, passive and active components and embedded transmission solutions.

To accomplish these goals, we use a set of tools and processes that are designed to continuously improve business performance in the critical areas of quality, delivery, cost, and innovation. We consider revenue growth, operating margin, cash flows, return on invested capital and working capital management metrics to be our key operating performance indicators. We also desire to acquire businesses that we believe can help us achieve the objectives described above. The extent to which appropriate acquisitions are made and integrated can affect our overall growth, operating results, financial condition and cash flows.

We are a multinational corporation with global operations. Approximately 55% of our sales were derived outside the United States in 2007. As a global business, our operations are affected by worldwide, regional, and industry economic and political factors. Our market and geographic diversity has helped limit the impact of any one market or the economy of any single country on our consolidated operating results. Given the broad range of products manufactured and geographies served, we use indices concerning general economic trends to predict our outlook for the future. Our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future.

While differences exist among our businesses, we generally continued to see broad-based market expansion during 2007. We supplemented this market expansion with revenue growth derived from our three business acquisitions made during 2007. Consolidated revenues for 2007 increased 35.9% over 2006. Revenues from the acquired businesses contributed 33.1% of the total growth. Revenues derived from existing businesses for the year (references to “revenues derived from existing businesses” in this report include revenues derived from acquired businesses starting from the first anniversary of the acquisition, but exclude currency effect and revenues from divested operations) contributed 2.0% growth. The impact of currency translation on revenues contributed 2.6% growth. These increases were partially offset by lost revenues from divested operations that contributed a 1.8% reduction in revenue. Consolidated revenues for 2006 increased 20.1% over 2005. Revenues derived from existing businesses for the year contributed 18.9% growth. The impact of currency translation on revenues contributed the additional 1.2% growth.

We continue to operate in a highly competitive business environment in the markets and geographies served. Our performance will be impacted by our ability to address a variety of challenges and opportunities in these markets and geographies, including trends toward increased utilization of the global labor force, expansion of market opportunities in emerging markets such as China and India, migration away from a fragmented, sub-scale, high-cost manufacturing footprint, and potential volatility in raw material costs.

Although we use the United States dollar as our functional currency for reporting purposes, a substantial portion of our assets, liabilities, operating results, and cash flows reside in or are derived from countries other than the United States. These assets, liabilities, operating results, and cash flows are translated from local currencies into the United States dollar using exchange rates effective during the respective period. We have generally accepted the exposure to currency exchange rate movements without using derivative financial instruments to manage this risk. Both positive and negative movements in currency exchange rates against the United States dollar will continue to affect the reported amount of assets, liabilities, operating results, and cash flows in our consolidated financial statements.

Significant Events in 2007

During 2007, we completed three acquisitions. We acquired Hirschmann Automation and Control GmbH (Hirschmann) on March 26, 2007 for $257.9 million. Hirschmann has its headquarters in Germany and is a leading supplier of industrial ethernet solutions and industrial connectivity. The acquisition of Hirschmann enables us to deliver connectivity and networking solutions for demanding industrial environments and large-scale infrastructure projects worldwide. On March 27, 2007, we acquired LTK Wiring Co. Ltd. (LTK), a Hong Kong company, for $214.4 million. LTK is one of the largest manufacturers of electronic cable for the China market. LTK gives us a strong presence in China among OEM customers, including consumer electronics manufacturers. On April 30, 2007, we completed the purchase of the assets of Lumberg Automation Components (Lumberg Automation) for $117.5 million. Lumberg Automation has its headquarters in Germany and is a leading supplier of industrial connectors, high performance cord-sets and fieldbus communication components for factory automation machinery. Lumberg Automation complements the industrial connectivity portfolio of Hirschmann as well as our expertise in signal transmission. The results of operations of each acquisition have been included in our results of operations from their respective acquisition dates. Hirschmann and Lumberg Automation are included in the Europe segment, and LTK is included in the Asia Pacific segment.

We have implemented restructuring actions during 2005 — 2007 in both Europe and North America and initiated position eliminations worldwide in 2006. In Europe, we exited the United Kingdom telecommunications cable market, ceased to manufacture certain products in Hungary, the Czech Republic, and the Netherlands, sold our telecommunications cable operation in the Czech Republic, and sold a plant in Sweden in an effort to reduce manufacturing floor space and overhead and to streamline administrative processes. In North America, we have constructed a new plant in Mexico, sold plants in Canada, South Carolina, Illinois and Vermont, and announced the closure of a plant in Kentucky in an effort to reduce our manufacturing costs. We have initiated position eliminations worldwide in an effort to streamline production support, sales, and administrative operations. At the end of 2007, we announced a voluntary separation program to salaried associates in the United States who are at least 50 years of age and have 10 years of service with the Company. As a result of our restructuring actions, we recognized severance, asset impairment, and adjusted depreciation costs in 2005, 2006 and 2007. In 2008, we expect to recognize $4-$8 million of additional severance costs related to the voluntary separation program. We may also recognize additional asset impairment expenses including potential impairments of goodwill and intangible assets depending on how our restructuring actions impact our operating results. Furthermore, any new restructuring actions would likely result in additional charges for severance, adjusted depreciation and asset impairments.

Results of Operations

Revenues increased in 2007 compared to 2006 primarily for the following reasons:


• We acquired Hirschmann, LTK and Lumberg Automation in 2007, which contributed revenues of $495.1 million and represented 33.1 percentage points of the revenue increase.

• Revenues also increased due to increased selling prices and favorable product mix that resulted primarily from our strategic initiative in portfolio management to reposition many products for margin improvement. Sales price increases and favorable product mix contributed 6.6 percentage points of the revenue increase.

• Favorable currency translation contributed 2.6 percentage points of the revenue increase.

The positive impact that the factors listed above had on the revenue comparison were partially offset by the following factors:


• A decline in unit sales volume due to our strategic initiative in product portfolio management that increased prices of certain lower-margin products represented a 4.6 percentage point decrease.

• Lost sales from the disposal of our telecommunications cable operation in the Czech Republic represented a 1.8 percentage point decrease.

Gross profit increased in 2007 compared to 2006 primarily for the following reasons:


• The three recent acquisitions contributed in total $145.0 million of gross profit in 2007.

• We increased prices and deemphasized certain lower-margin products as part of our product portfolio management initiative.

• We closed plants in South Carolina, Illinois, and Sweden and reduced production at a plant in Kentucky as part of our regional manufacturing strategic initiative.

• We recognized $9.6 million of lower excess and obsolete inventory charges in 2007. The decrease in excess and obsolete inventory charges was primarily due to a change in 2006 in the parameters we used to identify such inventories. The parameters were changed to conform to our goal to better manage our working capital and reduce our reliance on finished goods inventory as well as to include a more consistent definition of what constitutes excess and obsolete inventory.

• We recognized $13.7 million of lower severance costs in 2007. Severance costs recognized in 2007 primarily related to North American restructuring actions. Severance costs recognized in 2006 primarily related to European restructuring actions.

The positive impact that the factors listed above had on the gross profit comparison were partially offset by the following factors:


• We incurred $13.3 million of additional cost of sales in 2007 due to the nonrecurring effects of purchase accounting, primarily inventory cost step-up related to the three recent acquisitions.

• We incurred redundant costs and inefficiencies as we continue to shift production from high cost to low cost locations.

Selling, general and administrative (SG&A) expenses increased in 2007 compared to 2006 primarily for the following reasons:


• The three recent acquisitions incurred in total $107.3 million of SG&A expenses in 2007, which includes $5.2 million of recurring amortization expense and $2.4 million of nonrecurring amortization expense of intangible assets.

• Excluding the impact of the recent acquisitions, we recognized share-based compensation costs in 2007 that exceeded those recognized in 2006 by $4.2 million primarily due to incremental expense from the annual equity awards made in February 2007.

• We incurred an increase in salaries, wages, and associated fringe benefits costs in 2007 primarily due to increased annual incentive plan compensation and additional headcount.

In 2007, we completed the sale of our telecommunications cable operation in the Czech Republic for $25.7 million and recorded a gain of $7.8 million. We also sold a plant in Illinois as part of our previously announced restructuring plan and recorded a gain of $0.7 million. In 2006, we sold property, plant and equipment in Sweden for a gain of $1.4 million.

In 2007, we identified certain tangible long-lived assets related to our plants in Czech Republic, the Netherlands and Canada for which the carrying values were not fully recoverable. We recognized an impairment loss related to these assets totaling $3.3 million. In 2006, we determined that certain asset groups in the Belden Americas and Europe operating segments were impaired and recognized impairment losses totaling $11.1 million.

Operating income increased in 2007 compared to 2006 primarily due to the favorable gross profit comparison, gain on sale of assets and lower asset impairment charges partially offset by the unfavorable SG&A expense comparison discussed above.

Income from continuing operations before taxes increased in 2007 compared to 2006 due to higher operating income partially offset by higher interest expense resulting from the March 2007 issuance of 7.0% senior subordinated notes with an aggregate principal amount of $350.0 million.

Our effective annual tax rate decreased from 36.3% in 2006 to 32.0% in 2007. This change is primarily attributable to the release of previously recorded deferred tax asset valuation allowances in the Netherlands and Germany in 2007 as a result of improved profitability in these regions and to a greater percentage of our income coming from low tax jurisdictions.

Income from continuing operations increased in 2007 compared to 2006 due to higher pretax income partially offset by higher income tax expense. Consequently, return on invested capital (defined as net income plus interest expense after tax divided by average total capital, which is the sum of stockholders’ equity, long-term debt and current debt) in 2007 was 11.5% compared to 7.5% in 2006.

Revenues generated in 2006 increased from revenues generated in 2005 because of increased selling prices, increased unit sales volume, favorable product mix, and favorable foreign currency translation on international revenues. Price improvement resulted primarily from the impact of sales price increases we implemented during 2005 — 2006 across most product lines in response to increases in the costs of copper and commodities derived from petrochemical feedstocks and improved pricing practices at certain of our operations. The price of copper, our primary raw material, increased from $1.49 per pound at December 31, 2004 to $2.16 per pound at December 31, 2005 and $2.85 per pound at December 31, 2006. Sales price increases contributed approximately 17.9 percentage points of the revenue increase. Favorable currency translation contributed 1.2 percentage points of revenue increase in 2006. Higher unit sales of products with industrial, video/sound/security (VSS), and transportation/defense (TD) applications were partially offset by a decrease in unit sales of products with communications/networking (CN) applications, but still contributed approximately 1.0 percentage point of revenue increase. Unit sales of products with industrial, VSS, and TD applications improved during 2006 because of increased demand from customers in the fossil fuels, power generation, and broadcast industries and facilities manufacturing these products improved their order fill rates and reduced their backlog. Unit sales of products with CN applications declined in 2006 as a result of our product portfolio management initiatives. Although unit sales of products with CN applications decreased from 2005 to 2006, gross margins improved as a result of our product portfolio management actions.

Gross profit increased in 2006 from the prior year primarily because of the revenue increase discussed above. Higher cost of sales in 2006 resulted from (1) increased variable production costs necessary to support improved unit sales, (2) the increase in copper and certain other raw materials costs, (3) excess and obsolete inventory charges resulting primarily from a change in the parameters we used to identify such inventories that exceeded those recognized in 2005 by $14.8 million, (4) severance costs that exceeded those recognized in 2005 by $9.3 million, and (5) adjusted depreciation costs that exceeded those recognized in 2005 by $0.9 million. In 2006, we recognized severance expense totaling $17.2 million related primarily to the restructuring actions in Europe and North America and worldwide position eliminations. We also recognized adjusted depreciation costs totaling $2.0 million in 2006 related to the restructuring actions in Europe and North America. These negative factors impacting the gross profit comparison were partially offset by the positive impact of manufacturing cost reduction actions (including the closures of two manufacturing facilities in the United States and Sweden during 2005 — 2006).

Selling, general and administrative expenses recognized in 2006 were relatively unchanged from those recognized in 2005. In 2006, we recognized (1) share-based compensation costs that exceeded those recognized in the prior year by $2.2 million primarily because of the 2006 adoption of SFAS No. 123(R), (2) severance costs that exceeded those recognized in 2005 by $3.7 million, and (3) travel costs that exceeded those recognized in the prior year by $1.7 million because of increased travel related to our various strategic initiatives. These increased costs were offset by (1) salary costs recognized in 2005 that exceeded those recognized in the current year by $6.4 million primarily because of 2006 employee terminations related to the restructuring actions in Europe and North America, (2) gains recognized on the disposals of tangible assets in 2006 that exceeded those recognized in the prior year by $2.3 million, and (3) other SG&A expenses recognized in 2005 that exceeded those recognized in 2006 by $0.6 million. In 2006, we recognized severance expense totaling $5.1 million related primarily to the restructuring actions in Europe and North America and worldwide position eliminations. In 2006, we also recognized gains on disposals of tangible assets primarily in our Netherlands, Czech Republic, and Sweden manufacturing facilities totaling $2.5 million related to the restructuring actions in Europe.

Operating income increased in 2006 from the prior year because of the favorable gross profit comparison partially offset by asset impairment charges recognized in 2006 that exceeded those recognized in the prior year by $3.1 million and $3.0 million in nonrecurring minimum requirements contract income recognized in 2005. In 2006, we recognized asset impairment expenses totaling $11.1 million related to the restructuring actions in Europe and North America.

Income from continuing operations before taxes increased in 2006 from 2005 because of higher operating income, lower interest expense, and higher interest income. Interest expense recognized in 2006 decreased by $1.9 million from that recognized in 2005 because we repaid medium-term notes totaling $15.0 million, $15.0 million, and $44.0 million in August 2005, August 2006, and September 2006, respectively. Interest income earned on cash equivalents in 2006 increased by $2.3 million from 2005 because of higher cash equivalents and increased interest rates.

Our effective annual tax rate changed from 41.7% in 2005 to 36.3% in 2006. This change is primarily attributable to a decrease in deferred tax asset valuation allowances recognized as a percentage of pretax income and to a decrease in goodwill impairment charges on which no tax benefit was recognized. Incremental deferred tax asset valuation allowances recognized against foreign net operating loss carryforwards decreased from $5.0 million in 2005 to $3.7 million in 2006. Goodwill impairment charges decreased from $6.9 million in 2005 to $0 in 2006.

Income from continuing operations increased in 2006 from the prior year because of higher operating income partially offset by higher income tax expense. Consequently, return on invested capital in 2006 was 7.5% compared to 5.5% in 2005.

Belden Americas total revenues, which include affiliate revenues, increased in 2007 from 2006 primarily due to increased selling prices, favorable mix and favorable foreign currency translation on international revenues. These increases were partially offset by a decrease in unit sales volume that was due to our strategic initiative in product portfolio management which involved price increases on many lower-margin products to reposition them or to reduce less profitable or unprofitable revenues. Operating income increased in 2007 from 2006 primarily due to the growth in revenues and favorable product mix. Operating income in 2007 also benefited from a $0.7 million gain on the sale of a plant in Illinois. The increase in operating income was also due to $13.5 million of lower severance and asset impairment charges in 2007 related to our North American restructuring actions. These positive factors affecting the operating results comparison were partially offset by redundant costs and inefficiencies incurred as we continue to shift production from high cost to low cost locations.

Belden Americas total revenues increased in 2006 from 2005 primarily because of increased selling prices, favorable product mix, increased unit sales volume, and favorable foreign currency translation on international revenues. Price improvement resulted primarily from the impact of price increases we implemented during 2005 — 2006 across most product lines in response to increased raw materials costs and to improved pricing practices at certain of our operations. Higher unit sales resulted from increased demand from customers in the fossil fuels, power generation, and broadcast industries coupled with improved order fill rates and reduced backlog at plants manufacturing these products. Operating income increased in 2006 from the prior year primarily because of the favorable product mix, improved unit sales volume, improved factory utilization that resulted from a 2005 restructuring action, and the impact of 2005 cost reduction actions, including the closure of our manufacturing facility in Vermont in June 2005. These positive factors affecting the operating income comparison were partially offset primarily by increased variable production costs necessary to support improved unit sales, rising copper and certain other raw materials costs, severance costs recognized in 2006 that exceeded those recognized in 2005 by $9.9 million, and asset impairment costs recognized in 2006 that exceeded those recognized in 2005 by $8.6 million. In 2006, we recognized severance costs totaling $10.6 million related primarily to the restructuring actions in North America and position eliminations worldwide. Asset impairment costs recognized in 2006 on tangible assets in our manufacturing facilities in Illinois, South Carolina, and Quebec were also the result of the North American restructuring actions.

Specialty Products total revenues, which include affiliate revenues, increased in 2007 from 2006 primarily due to increased affiliate revenues as more of the capacity in the Specialty Products segment was used to meet customer demand in the Belden Americas segment. External customer revenues decreased due to lower unit sales volume partially offset by increased selling prices and favorable product mix. Decreased unit sales volume and increased prices resulted from our strategic initiative in product portfolio management which involved price increases on many lower-margin products to reposition them or to reduce less profitable or unprofitable revenues. Gross margins improved as a result of these product portfolio management actions. Operating income increased in 2007 from 2006 primarily due to the improvement in revenues and gross margins as discussed above.

Specialty Products total revenues increased in 2006 from 2005 primarily because of increased selling prices and favorable product mix partially offset by decreased unit sales volume. Price improvement resulted primarily from the impact of price increases we implemented during 2005 — 2006 across most product lines in response to increased raw materials costs and to improved pricing practices at certain of our operations manufacturing networking products. Decreased unit sales volume resulted from our product portfolio management actions. Although unit sales volume decreased from 2005 to 2006, gross margins improved as a result of our product portfolio management actions. Operating income increased in 2006 from the prior year primarily because of improved revenues partially offset by rising raw material costs, increased excess and obsolete inventory charges, and severance costs totaling $0.5 million recognized in 2006 because of worldwide position eliminations.

MANAGEMENT DISCUSSION FOR LATEST QUARTER
Results of Operations

Revenues increased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily for the following reasons:
• The three acquisitions in the second quarter of 2007 contributed revenues of $167.0 million in the three-month period ended March 30, 2008 and contributed approximately 50 percentage points to the revenue increase. Lost sales from the disposal of our assembly and telecommunications cable operations in the Czech Republic represented a 3 percentage point decrease.

• Favorable currency translation contributed approximately 4 percentage points to the revenue increase in the three-month period ended March 30, 2008.

• For the three-month period ended March 30, 2008, organic revenue growth accounted for approximately 1 percentage point of the revenue increase. The revenue growth resulted from increased selling prices and favorable product mix, partially offset by a decrease in unit sales, which primarily resulted from lower demand in the United States.
Gross profit increased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily due to the increases in revenue as discussed above including an increase in gross profit of $57.7 million from the three acquisitions in the second quarter of 2007.
Selling, general and administrative (SG&A) expenses increased in the three-month period ended March 30, 2008 primarily for the following reasons:
• The three acquisitions in the second quarter of 2007 incurred $32.7 million of SG&A expenses in the three-month period ended March 30, 2008.

• We recognized more severance costs in the three-month period ended March 30, 2008 compared to the same period of 2007 by $5.9 million. Severance costs recognized in the three-month period ended March 30, 2008 primarily related to the Voluntary Separation Program. Severance costs recognized in the three-month period ended March 25, 2007 primarily related to Reduction in Force restructuring actions.

• Excluding the impact of the three acquisitions, we recognized share-based compensation costs in the three-month period ended March 30, 2008 that exceeded those recognized in the comparable period of 2007 by $1.2 million primarily due to incremental expense from the annual equity awards made in February 2008.
Beginning in the first quarter of 2008, we are separately disclosing research and development costs, which increased in the three-month period ended March 30, 2008 primarily due to the three acquisitions in the second quarter of 2007.
During the three-month period ended March 30, 2008, we sold and leased back certain Belden Americas segment real estate in Mexico. The sales price was $25.0 million, and we recognized a loss of $0.9 million on the transaction.
During the three-month period ended March 30, 2008, we recognized an impairment loss of $7.3 million in the operating results of our Specialty Products segment due to the decision to close our manufacturing facility in Manchester, Connecticut. We also recognized impairment losses of $3.8 million and $0.4 million in the operating results of our Specialty Products and Belden Americas segments, respectively, related to our decision to consolidate capacity and dispose of excess machinery and equipment.
During the three-month period ended March 25, 2007, we determined that certain asset groups related to our plants in the Czech Republic and the Netherlands were impaired due to product portfolio management and product sourcing actions. We estimated the fair market value of these long-lived assets based upon anticipated net proceeds from their eventual sale and recognized an impairment loss of $1.4 million in the operating results of our EMEA segment.
Operating income decreased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily due to increases in asset impairment charges, severance and other restructuring costs, and losses on sales of assets.

Income before taxes decreased in the three-month period ended March 30, 2008 from the comparable period in 2007 due to lower operating income and higher interest expense, which is a result of the March 2007 issuance of 7.0% senior subordinated notes with an aggregate principal amount of $350.0 million.
The effective tax rate was lower in 2008 due to the geographic mix of pretax income, partially offset by a discrete tax charge resulting from the enactment of tax rate changes affecting the operations of the companies we acquired in 2007. Net income decreased in the three-month period ended March 30, 2008 from the comparable period in 2007 due to lower pretax income partially offset by lower income tax expense.

Belden Americas total revenues, which include affiliate revenues, increased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily due to increased affiliate sales. Revenues from external customers were flat year over year as higher selling prices, favorable mix and favorable foreign currency translation on international revenues was offset by lower volume. Lower demand in the United States contributed to the lower volume as approximately 75% of the segment’s revenues are generated from customers in the United States. Operating income decreased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily due to a $2.6 million increase in severance costs driven by the Voluntary Separation Program. Operating income also decreased in the three-month period ended March 30, 2008 due to a $0.9 million loss on the sale of real estate, and a $0.4 million asset impairment charge.

Specialty Products total revenues, which include affiliate revenues, increased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily due to increased affiliate revenues as more of the capacity in the Specialty Products segment was used to meet customer demand in our other segments. External customer revenues decreased approximately 6% due to lower unit sales volume, primarily from networking applications. Operating income decreased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily due to asset impairment charges totaling $11.1 million. The asset impairment charges are due to the decision to close our manufacturing facility in Manchester, Connecticut and our decision to consolidate capacity and dispose of excess machinery and equipment. Operating income also decreased due to recognizing $3.0 million of severance costs primarily related to the Voluntary Separation Program.

EMEA total revenues, which include affiliate revenues, increased in the three-month period ended March 30, 2008 from the comparable period in 2007 primarily due to the acquisitions of Hirschmann and Lumberg Automation and favorable foreign currency translation partially offset by lost revenues from the disposal of our assembly and telecommunications cable operations in the Czech Republic. In the three-month period ended March 30, 2008, Hirschmann and Lumberg Automation had revenues in total of $101.1 million. Favorable foreign currency translation contributed $9.8 million to the revenue increase as the euro continues to strengthen against the U.S. dollar. Revenues from external customers also increased approximately 3% due to higher unit sales volume and selling prices from Belden branded products.
EMEA operating results improved in the three-month period ended March 30, 2008 primarily due to the acquisitions of Hirschmann and Lumberg Automation, which contributed $13.0 million to the operating income increase, excluding $4.8 million of severance and other restructuring costs related to the integration of the acquired companies. In the three-month period ended March 30, 2008, operating income from Belden branded products was 10.7% of total revenues, up from 6.1% in the prior year period, excluding the $1.4 million impairment charge in the three-month period ended March 25, 2007 related to product portfolio management and product sourcing actions at our plants in the Czech Republic and the Netherlands.

Asia Pacific total revenues increased in the three-month period ended March 30, 2008 from the comparable period of 2007 primarily due to the acquisition of LTK and 78% organic growth from Belden branded products. In the three-month period ended March 30, 2008, LTK had revenues of $66.0 million. In the three-month period ended March 30, 2008, revenues from Belden branded products increased primarily from higher unit sales volume, which were caused by strong demand in the industrial and video, sound and security applications. Operating income increased during the three-month period ended March 30, 2008 from the comparable period of 2007 primarily due to operating income generated from LTK of $6.4 million. Operating income also increased due to the increase in revenues from Belden branded products.

Liquidity and Capital Resources
Significant factors affecting our cash include (1) cash provided by operating activities, (2) disposals of tangible assets, (3) exercises of stock options, (4) cash used for business acquisitions, capital expenditures, share repurchases and dividends, and (5) our available credit facilities and other borrowing arrangements. We believe our sources of liquidity are sufficient to fund current working capital requirements, planned capital expenditures, scheduled contributions for our retirement plans, quarterly dividend payments, and our short-term operating strategies. Customer demand, competitive market forces, commodities pricing, customer acceptance of our product mix or economic conditions worldwide could affect our ability to continue to fund our future needs from business operations.

CONF CALL

Dee Johnson - Director of Investor Relations

Thank you, Katie. Good morning everyone and thank you for joining us today for the first quarter earnings conference call at Belden. With me here in St. Louis today are John Stroup, President and CEO of Belden and Gray Benoist, Vice President, Finance and Chief Financial Officer.

Some logistics, we have a few slides on the web. To see those please go to investor.belden.com and sign on to the webcast. There's no www, it's just investor.belden.com. If you need a copy of our press release, you will find it in that same place

During the call today, management will make certain forward-looking statements. I would like to remind you that any forward-looking information we provide is given in reliance upon the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The comments we will make today are management's best judgment based on information currently available. Our actual results could differ materially from any forward-looking statements that we might make. However, the company does not intend to update this information to reflect developments after today and disclaims any legal obligation to do so. Please review today's press release and our Annual Report on Form 10-K for more complete discussion of factors that could have an impact on the company's actual results.

This morning, John will begin with comments about the performance of the business in the first quarter; Gray will review some additional financial results and segment analysis; and then John will speak about our outlook for the business for the remainder of 2008, and then finally we'll open up the line for questions.

So, at this time let's turn to our President and CEO, John Stroup.

John S. Stroup - President and Chief Executive Officer

Thank you, Dee. Good morning everyone. We are pleased to announce another quarter of strong earnings growth. On an adjusted basis, earnings per share increased 37% and operating income increased 27%. At the same time, we realized the benefits of our new global portfolio. As a reminder, we made three strategic acquisitions in 2007 that expanded our connectivity division and increased our revenue outside the United States.

As I will discuss, this change is helping us navigate through a more challenging domestic market. The organic growth of the legacy Belden business was about 1%, as our mix of revenue continues to shift further away from North America towards Europe and Asia. I'd like to begin today by first addressing the situation in North America, where we experienced some challenges in the first quarter and then turn our focus to the other regions where we had some very good results.

In the North American markets, we experienced a low single-digits revenue growth we expected in the parts of the business that are most attractive to us, but gave up more volume than we had anticipated in some of the more commodity-sensitive portions of the market. We had expected organic growth in the two segments based in North America to be approximately 3%. Instead organic growth was negative in the combined belt in Americas and specialty segments by about 3%. The difference is about $12 million in revenue.

The North American market is now more challenging than it was one year ago. We have not achieved anticipated sales for some product lines where we have raised prices to recover higher material costs partly because some of the competition has chosen to simply absorb the additional costs and receive lower margins on such product sales. We believe that in the less differentiated product lines such as our lower category data cable and high-metal content industrial cables, where all of the manufacturers are facing commodity cost pressures including not only the inflation in copper, but also in compounds, fuel and freight [ph] that neither industry pricing or demand is very stable.

We estimate that about one-fourth of our North American revenue is in this category of less differentiated products with higher metal content and more competitive pricing. The increased pricing pressure was most intense in our North American networking business where our revenue compared negatively year-over-year. Networking is about 24% of our global business, but it's 38% our combined North American volume.

Within networking as you know we drive distinction between the more attractive products such as higher category cables and connectivity versus the less attractive products, which will be mostly categorized by A/V Cable. Today our mix is about 50/50. Our attractive networking products grew at or above what we perceived to be the market growth rate of upper mid-single digit. But we had a negative volume comparison in the less attractive networking products. In this area, we saw competitive price maneuvers by certain manufacturers who may have been struggling with their capacity and unable to flex their cost structure.

As you would expect we were raising prices to offset rising commodity costs. Our broadcast, sound & security products all displayed strong growth in the quarter. Industrial volume grew slightly year-over-year, however, some of our lower spec industrial products produced in our Canada factory fell in volume due to the same competitive price pressures we experienced within our networking business, which were exasperated by having our costs in Canadian dollars.

With ongoing market volatility, we moved to drive cost out of the business and accordingly we launched the counter measures we had prepared for such a situation. We continue to improve the performance of our plant in Nogales, Mexico. We estimate that we achieve $3 million of manufacturing cost savings in North America.

On an annualized basis, this represents more than half of our $26 million savings in production costs that we have promised for 2008. In December, we had already initiated the Voluntary Separation Program and we have elected not to backfill the vacated positions for now. We had about a 100 salaried associates leave under the program with most of them exiting at the end of March.

We moved ahead with the closing of our Connecticut plant. It's a smaller plant and not easy to flex, so it made sense to move the production to the new Nogales plant. The process will take about two quarters to complete and we have indicated that will be 2009 before we have net savings from the transfer. Elsewhere, we reduced our workforce to meet the lower demand.

I am trying to give you a full picture of the North American situation because I know that's the concern for many of you, but let me just remind you of how much revenue diversification we have accomplished over the past two years. We've increased the proportion of connectivity and active components in our mix from 8% to 23%, we changed the geographic mix of our sales from 69% North America to less than 48% and by selling our telecom cable operation and acquiring businesses with industrial and consumer OEM emphasis, we decreased our reliance on the networking and communications sector from 40% to 24%.

Let me now turn to Europe. The organic growth for our legacy Europe business was 2.6% in the first quarter. Remember we sold our KDP telco and assembly operations in 2007 and the first quarter of 2008 respectively, so you need to adjust the base line for first quarter growth by about $11 million. We are very pleased to report that this group gave us an operating margin of 10.7% aided by our ATW business in Germany, which correct the operating issues that were holding us back in the fourth quarter.

Remember this was a breakeven business two years ago, when we set a challenging goal of getting the business to 10% operating margin by the end of 2007. Although we are one quarter late in delivering on that goal we are proud of our achievement and excited about the future growth prospects for this business. It's our expectation that our Europe legacy business and the Europe segment as a whole will remain in the double digit operating margins for the remainder of the year. Our European operations are now integrated and the entire segment has been placed under the leadership of Wolfgang Babel who joined us in 2007 to manage the Hirschmann and Lumberg automation businesses.

Let's now turn our attention to the Belden Asia business, which reported record results in the first quarter. The legacy business grew 78% organically compared to the first quarter of 2007. Overall, growth within this business has been very strong recently; 10% in the third quarter, 50% in the fourth quarter, and now 80%. Bookings continued strong in the first quarter. The sales team is improving everyday and selling to end user customers and shifting our mix to include more systems and connectivity. Although the comps are getting tougher, we still have aggressive growth expectations for this business but it is closer to 20%, rather than these remarkable recent figures.

Additionally, the legacy business in Asia is maintaining operating margins in the high teens, and they have yet to capture the benefits of local production that will become available for them, when we complete the new LTK plant later this year. And can manufacture more of our Belden products in China.

Our acquisitions from 2007 continue to perform at or above expectations. They are making good progress with the integration of our Hirschman and Lumberg businesses, and we've had some good examples of U.S. commercial win through the synergy of our Belden sales force.

Overall, our operating margin in the first quarter was 10%, compared with 12% in the first quarter a year ago. This is reflective of our business mix, with LTK having operating margins around 9%, Europe growing to 28% of our total revenue, and North America representing less of the mix. Our operating margin has a much different composition compared with the prior year. However, this geographic margin mix change is a company by a natural countermeasure in the form of lower tax rate in non-U.S. jurisdictions. So you see our effective tax rate coming in below 30% and that's precisely reflective of this geographic shift in revenues and profits.

We generated $24 million in free cash flow in the first quarter and our ending cash balance was $197 million. We've repurchased approximately 900,000 shares using $36 million. We remain committed to the repurchase of our stock and see it as a great opportunity. However, we also have a very active acquisition funnel and we will continue to use our cash efficiently as we evaluate opportunities that we believe are a strategic fit to our long-term growth strategy.

I was very pleased to announce during the first quarter that Steve Biegacki has joined us as Vice President, Global Sales and Marketing. Steve was formally at Rockwell Automation and has highly relevant experience in solution selling, globalizing the sales and marketing functions and organizing a verticals market approach, exactly the mission we have set for ourselves. I believe the addition of Steve to our team will help us greatly in the execution of all our go-to-market initiatives.

And I am going to turn the call over to Gray for more discussion of the business results. Gray?

Gray G. Benoist - Chief Financial Officer and Vice President-Finance

Thank you, John. Good morning everyone and thank you for joining us this morning. I will begin my comments with the discussion of the consolidated results of operations for the quarter, followed by the segment results and the cash flow, asset management and then working capital.

Starting with revenue. This quarter revenues of $511.8 million was an increase of 52% year-over-year. 2007 acquired businesses contributed $167 million and currency translation was $15.3 million. The Czech telco and assembly businesses we divested last year and at the beginning of this quarter, generated $10.6 million of revenue in the first quarter of 2007. Taking these elements into consideration, year-over-year organic revenue growth as John mentioned was 1% for the quarter.

I could ask you to turn to slide 7, please. Geographic mix of revenue as plan continues to ship towards Europe and Asia. Year-over-year this change is striking. In the first quarter of 2008, 41% of our revenue was in the United States, whereas a year ago the US contributed 58%. In Canada, although revenue dollars are about the same as a year ago, the proportion of consolidated revenue attributable to this market has fallen from over 10% in Q1 2007 to about 7% now. Europe sales were 28% in the first quarter, Asia Pac 19% and the rest of the world around 5%. We are achieving our targeted geographic revenue diversification and thus benefiting from faster economic growth rates in the emerging markets at a time when this approach helps consulate us from some of the uncertainty in the U.S. economy.

High chart on the right depicts our revenue by vertical market. Vertical mix is little change from the fourth quarter of like the geographic mix significantly different year-over-year. Industrial market continues to grow and it is now 47% of our total revenue and networking vertical at 24% of our revenue is unchanged sequentially, but down from approximately 39% a year ago. Video sound and security market continues at about 12% of total revenue. This includes about 1.5 million in question sales in Asia for the Beijing Olympic venues. The transportation of defense vertical remains at about 4%.

Consumer electronics and consumer OEM market served by LTK was about 13% of our revenue this quarter.

To continue with the results of operations; in the first quarter GAAP results were earnings of $0.27 per diluted share. These results include a number of non-recurring items which I will quickly discuss. As we previously announced and as John mentioned, we are executing the plan to close our plant in Manchester, Connecticut. Consolidating that production volume with other facilities primarily within our new Nogales plant and writing off and disposing of excess manufacturing equipment and capacity. This resulted in an asset impairment charge of $11.5 million pretax. Secondly for the voluntary separation program announced in December we paid first quarter severance charges of $6.5 million. There about a 100 people who accepted the separation package and as they exited the organization in March we have elected to leave many of these positions vacant by realigning and consolidated responsibilities enabling cost control. Thirdly we incurred restructuring charges of $5.6 million pretax associated with the reorganization and consolidation of our European segment enhancing its productivity and future organizational effectiveness. More as we sold and lease backed our newly constructed Nogales Mexico plant. Because of currency fluctuations we incurred a loss on this transaction of about $1 million. We booked a pretax charge of $2 million in the quarter resulting from the enactment of tax rate changes in non-US jurisdictions.

A lowering of tax rates most notably in Germany, drove the need to adjust our deferred tax assets and liabilities associated with the first quarter true up of first accounting, most notably with respect to the Hirschmann acquisition. I will focus the remainder of my comments on adjusted results without these charges. For you benefit the reconciliation between GAAP and adjusted results has been provided as part of today's press release and is also available at the end of today's slide presentation. I could have you review the adjusted results on slide 8. Gross profit margin was 29.3% in the first quarter. The expansion of 60 basis points from the fourth quarter and 60 basis points higher than the average of our post acquisition consolidated gross profit percentages from quarters two, three and four last year. As we will address more thoroughly in the SG&A discussion, there is a reclassification, it gives us a benefit of 40 basis points in gross margin in the first quarter.

However, on our seasonally lower Q1 revenue and facing rising commodity cost beyond just copper, our gross profit performance is clearly starting to show the progress that we have expected. Sequential improvement in gross profit was recorded in most of the business units with the notable exception of the Specialty division. More appropriately our most significant countermeasures were enacted.

As John noted earlier, the European legacy business within the European division showed a 300 basis point improvement in sequential gross profit and the quarter based on stabilizing manufacturing and executing on a focused sales strategy, actions that we discussed in our fourth quarter conference call.

I'd like to ask you to please reference slide 9, 2008 mark several changes to our reporting of SG&A and we hope we'll provide better, more meaningful disclosure of information going forward. The first change is to identify our R&D spend on a new line and the income statement. Our investment in new products and technology is become exceptionally important; it is a focus area of the company. Previously elements of R&D had been included in both cost of goods sold and SG&A expense.

Additionally we have aligned 100% of the company's finance, HR, IT, legal and administration cost in the SG&A where depending on the businesses some portion of these costs have been previously recorded in cost of goods sold. We are now classifying 100% of the company's distribution center activities in the [cost]. Again depending on the business some of these costs have been classified as SG&A previously. We are very pleased to have our financial statements better identify these areas of investment and cost and to present better SG&A matrix, providing us all more insight into these areas.

Net reclassification from cost of goods sold to SG&A and R&D was $1.9 million in the first quarter, a 40 basis point increase in gross profit and a corresponding 40 basis point increase in the combination of R&D and SG&A expense. First quarter SG&A and R&D expenses were $98.5 million. This is down $5.7 million sequentially and down $9.1 million sequentially when adjusted for the reclassifications I just reviewed and the Q1 FX impacts resulting from a stronger euro. Other income in the quarter, which is income from our manufacturing joint ventures in China, was $1.2 million favorable to the guidance of $1 million that we discussed in February.

For the income taxes you can reference slide 10. Income tax expense was $13.4 million in the adjusted results or 29.4% of pretax income for the quarter. This is a lower effective tax rate than we had earlier predicted in our outlook and reflects the change in our geographical distribution of operating earnings. Going forward we expect this distribution of earnings to remain relatively constant for the year and therefore we're adjusting our 2008 outlook for the effective tax rate from 32% to 30%.

We continued our share repurchase program as John had mentioned in the first quarter, buying back 900,000 shares for total outlay of $36.3 million and our average diluted shares for the first quarter were $48.4 million. Also note that management has remaining share repurchase authorization of $32 million.

Now I would like to turn to the segment results. External revenues at Belden Americas segment was $186.3 million, flat compared with a year-ago period. Inter-divisional sales were $19.8 million a significant year-over-year increase driven by strong demand in Asia. Including the inter-divisional sales total shipments of Belden Americas increased 4.3% year-over-year. Segment operating income adjusted by 4.8 million for the VST severance charges and the loss in the sale of Nogales was $36.1 million or 17.5% of total segment revenues, compared with 18.3% in the first quarter of 2007.

Specialty products segments external revenue in the first quarter was $53.4 million which is lower by 5.7% compared with the first quarter a year ago. The year-over-year change was driven by our Mohawk business which was required to manage through a very difficult competitive situation is some less attractive networking products as John discussed earlier.

Divisions revenue from affiliates increased 47.7% compared with a year ago, but was lower sequentially reflecting the successful ramp up production at the Nogales plant, now able to effectively supply an increasing proportion of our North American requirements. The operating profit of the specialty segment adjusted by $14.2 million for the asset impairments in VST severance charges was $7.1 million or 9.9% of total revenue compared with 14.9% operating margins in the prior year quarter.

The European segment's external revenue was $184.6 million in the first quarter, including $101.1 million from the businesses acquired in 2007. A legacy Belden portion of the segment grew 2.6% organically after adjusting for the Czech businesses sold during 2007 and 2008.

Operating income of the European segment was $21.7 million or 11.4% of total revenue after adjusting for the restructuring charges of $4.8 million. The legacy Belden portion of the segment, as John mentioned earlier, generated a 10.7% operating margin achieving a goal that we established several quarters ago of managing the businesses performance to double-digit operating profit. Each specific segment had first quarter external revenues of $87.6 million of which $66 million was attributable to LTK.

The legacy Belden Asia-Pacific business experienced year-over-year revenue growth of over 80%, 78% organically. Of the Asia-Pacific segment as a whole, operating income was $8.9 million or 10.2% of revenue reflecting seasonally lower sales for LTK and a very good high-teens operating margins in the legacy business.

Free cash flow in the first quarter was $23.8 million and operating cash flow was $30.7 million, our eighth straight quarter of positive operating cash flow. Depreciation and amortization was $13.8 million in the quarter. With respect to capital expenditures and our asset light objectives in 2007, you recall we incurred $64 million of capital expenditures and sold $38 million of assets, resulting in net capital expenditures of $26 million. In the first quarter of 2008, the execution continues with the capital outlays of $6.9 million offset by $23 million of asset sales for net capital expenditures of a negative $16 million.

Additionally, assets in working capital were sold in the first quarter as we exceeded the cable assembly businesses in Decin, Czech Republic, a follow-on transaction of sale reduction telco business in the third quarter of 2007. As I mentioned, we used $36.3 million for repurchase of shares during the quarter and our ending cash balance was a $196.8 million.

I could ask you to turn to slide 11 please. First quarter 2008 working capital turns were 5.7, down 0.3 turns from the fourth quarter of 1 turn favorable to prior year. We had modest growth performance in DSO and DPO; however inventory turns degraded from Q4 levels of 6.6 turns to 5.6 turns as we held finished good inventory at the end of Q1, fuel [ph] demand that did not materialize in time to ship in the quarter. Year-over-year inventory turns improved 0.5 turns from 2007 Q1. As a result, our net use of cash for working capital was $11 million in the quarter, which I view is creating greater opportunity for operating cash flow improvements throughout the remainder of the year.

At this time I would like to turn it back to our CEO, John Stroup for a few remarks about our 2008 outlook. John?

John S. Stroup - President and Chief Executive Officer

Thank you, Gray. I want to share with you some of the information and the thought process that has gone into our current outlook. Despite falling short of our own revenue goal for the quarter, we did build approximately $20 million of backlog and had a book-to-bill ratio of $1.04. During the first quarter, our North America channel partners reduced their inventory by approximately $10 million, while their daily sell-through rate showed good momentum throughout the quarter.

Additionally, our expectations for the second quarter and full year are based on our normal seasonal pattern and no change in the current U.S. demand profile. We bridge from our first quarter performance through our full year outlook by looking at revenue seasonality and cost reduction actions. Our first quarter revenue was typically 50 to $75 million lower than quarters two, three and four due to seasonality. Leverage of this volume will expand margins by about 200 basis points dependent on mix.

Additionally, making good on the remaining elements of our 2008 annual cost reduction pledge of $26 million provides additional expansion. We are maintaining our revenue outlook at $2.2 billion to $2.3 billion, but the composition of that revenue will be shifted toward revenue outside the United States. Based on this updated revenue composition, we are expecting full year operating margin to be between 12% and 13%. This geographic mix creates the benefit of a more favorable effective tax rate for the year. To reflect the completion of the first quarter, we are narrowing our full year outlook for earnings per share. Our previous range was $3.45 to $3.75. We now estimate this range to be $3.45 to $3.65. At the midpoint of the range, we will have EPS growth year-over-year of 24%.

Thanks to all of you on the call for your interest in Belden. This concludes our prepared remarks. We now have some time for your questions. Our operator, Katie will remind you of the procedures for asking your question.

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