Feb 5, 2009
Executives
Gray Benoist – CFO John Stroup – President and CEO
Analysts
Celeste Santangelo – Bank of America-Merrill Lynch Matt Mccall – BB&T Capital Markets Jeff Beach – Stifel Nicolaus Gary Farber – CL King Nat Kellogg – Next Generation Keith Johnson – Morgan Keegan
Operator
Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated conference call.
Just as a reminder, this call is being recorded. At this time, you are in a listen-only mode.
Later, we will conduct a question-and-answer session (Operator instructions). I would now like to turn the call over to Mr.
Gray Benoist, Chief Financial Officer of Belden. Please go ahead sir.
Gray Benoist
Thank you Bill. Hello, good morning everyone.
My name is Gray Benoist; I am the CFO of Belden, thank you for joining us today for our fourth quarter and full year 2008 earnings conference call at Belden. Joining me on the call today here from St.
Louis is John Stroup, President and CEO of Belden. For some logistics, we have a few slides on the web.
To see those, please go to investor.belden.com, sign into our webcast. There is no www in that address, just investor.belden.com.
If you need a copy of our press release, you will find that in the same location. 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. 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 a 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 fourth quarter and the full year 2008 after which I will review some additional financial results and segment analysis, then John will speak about our outlook for the business, and finally we will open up the line for questions.
So at this time, let us turn to our President and CEO, John Stroup. John?
John Stroup
Thank you Gray and good morning everyone. During 2008, the US economy entered a recession and economic activity turned down globally.
In response, we have been very proactive in restructuring our operations and reducing our costs and in the fourth quarter we took significant restructuring in cost reduction actions. In this regard, we are continuing to make progress on our efforts to position the company for success when economic conditions improve and industry sales and production levels recover.
Please turn to slide 3. Revenue during the fourth quarter was $417 million compared with $584 million a year earlier.
Excluding acquisitions, divestitures and the effect of currency translation the organic change in revenue in the fourth quarter was a contraction of 26%. We estimate 5% of that decline with the result of price reductions due to lower copper prices.
Before I discuss our operating and net income results for the quarter, I would like to briefly address the $461 million non-cash goodwill and other asset impairment charge you may have seen in our press release from earlier today. We recorded this charge in connection with our required annual goodwill and other asset impairment testing and is largely the result of the significant deterioration of the broader equity markets during the fourth quarter.
We cannot stress enough that this is a non-cash item and it will not impact our cash flows, liquidity or borrowing capacity under our existing credit facilities and is in no way an indicator of our business outlook or our ability to build long-term shareholder value. Gray will provide additional information on this charge in a few moments.
Adjusting for the impact of this charge as well as the effects of restructuring charges and the deferred revenue impact in the wireless segment, operating margin in the fourth quarter was 4.4% of revenue. Excluding the wireless business acquired in 2008, adjusted operating margin was 6.2% down from 10.9% in the fourth quarter of 2007.
Similarly adjusted, diluted earnings per share were $0.26 in the quarter compared with $0.83 in the prior year quarter. The fourth quarter 2008 results compare favorably to the range discussed in our outlook update in January due to a slightly better operating performance and the favorable effects of full year tax adjustments on the quarter.
For the full year 2008, we had revenue of just over $2 billion, roughly 1% lower than in 2007. Adjusted operating margins for 2008 were 9.7% compared to 11.5% in 2007 and adjusted earnings were $2.68 per share compared to $2.87 per share in 2007.
Would you turn now to slide 4 please? During the fourth quarter we generated $46 million in cash from operations, an amount in excess of net income for the period even ignoring the large non-cash goodwill impairment charge.
That brings cash flow from operations for the full year to $173.9 million and free cash flow that is cash flow from operations, less $53.6 million in capital expenditures during the year to $120.3 million. Our liquidity coming out of 2008 into 2009 is in excess of $300 million.
It consists of $227.4 million in cash and $103.2 million in unutilized capacity under the company’s revolving credit facility. We can manage our liquidity as we move forward into 2009 by adjusting the level of our capital expenditures as well as by harvesting cash from working capital as we bring working capital down to a level commensurate with the level of demand.
The combination of our good liquidity and modest leverage puts the company in a strong position to fund its strategic priorities during these difficult times and to capitalize on business opportunities as the economy emerges from these current difficulties. One of the businesses opportunities we identified in 2008 was Trapeze Networks.
Last quarter we made the decision to break out Trapeze Networks and report its results as a separate segment. Consistent with the third quarter, we have again deferred the revenue from this segment in our GAAP results as we continue to work to satisfy VSOE requirements.
Moving on, copper prices throughout 2008 demonstrated historical levels of volatility. As the result of these swings, one of the enduring questions that we receive from investors is how does the price of copper impact Belden’s operations.
As a reminder, Belden is a FIFO based company and as a result copper prices have a trailing effect on our results. Given the amount of volatility associated with copper prices, it is difficult to predict with any certainty where it is heading as we manage through this cycle of purging out the older, higher-cost copper and we start purchasing lower cost copper it is going to have a positive impact on our inventory turns and may also have a positive impact on our margins depending on how pricing goes.
But we always manage the business to be copper neutral and we think the value is really independent of copper. I believe we have done a pretty good job of managing that on the way up and the way down in the past and I expect we will do that again.
If you turn to slide 5, in December we took significant action towards reducing our cost structure and made a commitment towards achieving $30 million in savings in 2009 and $50 million on an annualized basis. Based on the market conditions at the time, as well as our initial projections for the economic landscape in 2009, we felt it was necessary to devise [ph] a sustainable cost structure that would allow us to succeed during this prolonged period of weaker demand.
During the fourth quarter we announced and enacted several specific actions that well position us to accomplish our goals. Additional actions that are part of the overall fourth quarter restructuring plan will be forthcoming during the first half of 2009.
Some of the actions that we have already announced include the closure of our plant in Hoyerswerda, Germany which is the first step in our goal towards achieving European low-cost manufacturing consolidation. Additionally, we announced three separate actions in North America.
We consolidated two West Penn Wire manufacturing plants in Washington, Pennsylvania into one and as it relates to our specialty business in Mexico, historically their operations were housed in several separate buildings. Through the implementation of Lean techniques, we were able to consolidate operations and reduce the overall footprint.
We also consolidated a warehouse that was designed for specialty products in California with our new Americas division, West Coast Warehouse. Additionally, as part of our restructuring initiatives that we announced in December, we made the decision to combine the Belden Americas and specialty products businesses in 2009.
By combining these businesses we will be able to operate with less cost and we feel this change will facilitate and accelerate our progress regarding product, brand and channel management. Denis Suggs will lead the newly combined division.
These are always extremely difficult decisions to make and we feel bad for those people that have been impacted by this economic crisis. At this point in time, I can comfortably say that we are on schedule to achieve both of the 2009 and full year annualized cost savings goals and that we firmly believe these actions provide us flexibility while also position us well for the upturn that will follow.
Let’s take a few moments to look at some of the macro factors that we follow and care about. As you have seen from the disclosures of other industrial players, Europe is really struggling right now and recent reports indicate that German exports were down between 10% and 11% in December; this followed a monthly decline of 10% in November.
As a result of this pullback, our businesses have also suffered. Our HEW business, which manufactures highly specialized cable for the high temperature sector is strongly tied to the German automotive industry.
The overall decline in exports adversely impacted the results and they posted the lowest quarterly margins in over four years. In addition to HEW, we are seeing weakness across all of Europe as a significant portion of our cabling business is tied to industrial applications which are also struggling.
Although most reports on new construction are lagging in nature, the Architecture Billing Index known as the ABI is a leading indicator of construction activity. The ABI reflects the approximate nine to twelve-month lag time between architecture billing and actual construction spending.
Recent ABI ratings have been well below the median mark of 50 which signifies an increase in billing. The ABI Index was 34.7 in November and 36.4 in December.
One of the traditional lagging indicators we follow is non-residential construction reports. Based on the most recent data for November 2008, industry analysts are forecasting a moderate downturn in non-residential construction spending growth rates.
They are basing this on current levels of supply and demand, the shorter recovery cycle from the previous recession and that in general this sector has seen spending growth for 25 consecutive years. Although we have significantly reduced our exposure to this sector, we keep a close watch on these reports and track order flow after each monthly release.
Throughout the fourth quarter, the Bishop Worldwide Connector Confidence Index continued its negative trend and fell as far as 19.3 during the fourth quarter. Based on the new January report, the Index has posted a new all-time low of 11.5 points out of a total 100.
When asked to rate the current business conditions in the month of December, individuals of the United States and Europe averaged a score that was less than 10 while those in Japan provided a score of 0 confidence. After seeing this report we were not surprised that our European segment, which has already been adversely affected by lower exports, reported a sequential revenue decline of 21%.
The Institute for Supply Management conducted a survey in late November 2008 to gauge the impact of the current economic climate on capital spending and future production capacity. As one might expect, the results of the survey confirmed that many are preparing for a prolonged period of difficult economic conditions.
For example, over 75% of these respondents indicated they had plans to reduce their capital spending in 2009, within that subset of respondents nearly 65% cited economic uncertainty as the primary driver behind their decision to halt spending. We are seeing very similar patterns in our end markets as well.
Orders are being delayed or pushed back and competition for projects is intensifying. However our refined go-to-market strategy and focus on building better relationships with our channel partners has prepared us to weather the storm.
When we recently evaluated the consumer electronic space, we saw the same things that you like we did. Many of the industry leaders reported weaker than expected earnings for the fourth quarter as well as for the full year 2008.
Given that LTK has significant ties to the consumer electronic space and its extensive supply chain, this business has been feeling the pinch of the slowing economy. To counteract the current economic climate, we have increased our efforts to localize the Belden product portfolio for Asian markets to absorb LTK’s manufacturing and engineering capabilities.
I would like now to spend a few moments talking about a few of the brighter spots in our portfolio. First, let’s discuss some of the synergies that we have seen with Trapeze Networks after only two quarters.
Trapeze has a strong brand that is already established within the wireless industry but when coupled with the Belden brand and its worldwide reach and presence, we believe significant growth is possible. Together we are able to solidify positions within the healthcare and education markets but most of all as a combined entity we have the capability to offer a full complement of solutions to any customer.
Moving to our Industrial Ethernet solutions, it is important to understand that it is different from Commercial Ethernet because we designed unique protocols that are suited for machine control, data collection and device configuration. The environment in which these devices will be used is particularly harsh.
The operation of the machines is viewed as mission critical and cannot afford to be interrupted nor can the security of those machines be compromised. Despite the headwind in the industrial market, this business experienced sequential top line growth and is in line with the prior year.
This is due to the ongoing trends of decentralized communications and the adoption of Ethernet on the factory floor. As we noted last quarter, we did not expect to see inventory increases at our channel partners in the fourth quarter.
Unfortunately our assumption proved to be correct as inventory levels have not come back and in fact we stopped further inventory corrections which had a significant impact on the 19% sequential decline in our top line performance during the quarter. However, we know that our channel partners are going to actively manage their inventory levels as they just like us are trying to find the ideal operating structure to withstand the current market condition.
We continue to work on strengthening our relationships with our channel partners and are developing a closer relationship with them to improve planning, better cooperation and crisper execution. The combination of these things will yield successful results for both Belden and our channel partners.
Our go-to-market model is transitioning to our customer focused, single point of accountability performance organization. For those of you that attended or listened to our Analysts Day Presentation, you know that we have recently transitioned to a vertically aligned demand creation sales model and implemented an end-user focused sales bundle [ph] process.
We have designated resources for end users; we always offer the full Belden portfolio to address their needs not just cable. We build and leverage our relationships but sell solutions that are based on the customer’s needs.
In the fourth quarter while we saw a mix of new project business we also had a continuation of project delays, pushouts and cancellations. The uncertainty is global and project spending has reduced significantly.
To counteract this, we are becoming smarter in terms of how we go after this type of business especially since the environment will likely become even more competitive going forward. By focusing our efforts on strengthening the skills of our sales team leaders, we will not only be able to penetrate new markets throughout 2009 but also create sustainable demand in the future.
We believe this new sales platform will greatly enhance our organic growth opportunities in all economic situations. We began our implementation of a Lean culture in 2006.
In 2008, we built on our successful (inaudible) activities, an initial strategy deployment process and took them deeper into the organization. We focused on Lean daily management of KPIs, a structured process to focus resources on the right data to drive daily improvements and we laid the groundwork for additional value stream improvement.
By implementing a functioning culture of Lean, we are able to better manage our workflow and balance customer needs in this difficult environment. This truly was a cultural transformation here at Belden.
With Lean manufacturing, we are not only able to do more with less but we are able to do it with less of the dependency on fixed assets and working capital through cycle time reduction. Our Lean initiatives are a key driver of our free cash flow.
For example, we have identified an additional $40 million to $50 million potential cash that can be unlocked through Lean and our asset life initiatives. As we have said in the past, being able to identify and access additional sources of liquidity will provide us the financial flexibility needed during this economic downturn.
Now, I am going to turn the call over to Gray for more discussion of the business results. Gray?
Gray Benoist
Thank you very much John. On January 15, the company pre-announced our fourth quarter results and provided our fourth quarter adjusted EPS range of $0.12 to $0.17 as we finalized what has turned out to be a deeply complex business and accounting quarter.
We are pleased to deliver adjusted EPS at $0.26 in this release, about twice the level we had anticipated. You can imagine our conservative nature when creating estimates in these times but the improved result for mid January today does reflect better than expected final performance in both operating income margins from about $0.03 to $0.05 and the final effective tax rate of about $0.08.
I will talk to both of these items in more detail later. For now, I will continue my comments with the discussion of the consolidated results of operations for the fourth quarter and the full year and then turn into the segment results, followed by a discussion of our cash flow, asset management, liquidity and working capital.
If I could have you turn to slide 6 please, the weakening global economy and the resulting slowdown in orders hit us hard during the fourth quarter. Revenue of $417.3 million was 28.6% lower than a year ago.
The company looks at many macro and micro economic indicators of the markets we serve. John shared with you many of the examples such as non-residential construction, the Architecture Billing Index, US industrial CapEx, Germany and China export trends, the Bishop report on connectivity.
Both Gartner and (inaudible) reports on enterprise and wireless demand are excellent. These are all good, fairly reliable sources of market information.
As we regularly examine these many road signs, there remains a general murkiness that makes the review of current period demand and the market analysis challenging and the future view of demand and market dynamics very difficult to predict. That said, the US dollar’s continued strength in the fourth quarter resulted in an unfavorable currency effect of $14.8 million or 2.6%.
Year over year organic revenue growth for the fourth quarter without the effects of currency, acquisitions and divestitures was negative 26.3%. Lower organic revenues resulted, as John noted, from market, channel and portfolio activities.
Additionally, both theoretical but consistent with our desire for a neutral net position with respect to changing commodity metals cost on the business, we estimate that the organic change in revenue could have been negatively impacted by approximately 500 basis points in the quarter by the year-over-year and sequential decrease in pricing resulting from the dramatic decline in metal commodity costs most notably copper. Full year 2008 revenue of just over $2 billion was basically flat when compared to total revenue in 2007.
For the year, annual organic revenue growth with the effects of currency, acquisitions, and divestitures without the effect of those was a negative 11.2%. Again on slide 6, revenue in the United States was 45%, Canada 7%, Europe 23%, and Asia 20%.
The US and Canada generated 52% of our revenue in the quarter which is a sequential increase in the US and a sequential decline proportionately in Europe. I will discuss segment performance in more detail later in these comments.
The pie chart at the top to fix revenue by vertical market we include revenue from Trapeze Networks, our wireless segment in the enterprise vertical thereby the expansion of this market to 29% of our revenue, up from 25% a year ago. Additionally, as has been the pattern all through 2008, we continued to see year-on-year market growth and or stability and higher bandwidth enterprise structured cable solutions and decreasing demand at the low end of the enterprise products family.
These are consistent with our expectations. Sales in the industrial market were 47% of the total revenue.
Results in this vertical include cable products, Industrial Ethernet, and our industrial connectivity businesses. We experienced declines in industrial cable revenue both sequentially and year over year, the decline was most pronounced in Europe, for two consecutive quarters we have experienced significant sales reductions.
A survey recently conducted with 3000 European manufacturers noted that Germany specifically showed signs of deepening contraction here again in January. Despite this negative environment, our Europe based Industrial Ethernet business showed growth in top line sequentially and was up slightly year over year, a positive indicator for the future of this product family.
The video sound and security market is about 12% of total revenue. The transportation and defense vertical remains about 4, and the consumer electronics and consumer OEM markets served by LTK, our attention to portfolio management activities and sharpened market focus on serving specific vertical segments resulted in the conclusion this quarter to ship about 5% of our revenues previously reported in our consumer vertical to the industrial or enterprise or transportation and defense verticals which resulted in a net position of consumer verticals of a less pronounced 8% of our total revenue.
If I could ask you to turn to slide 7 please, as mentioned in our press release, the company recorded a significant goodwill impairment charge and restructuring charges that adversely impacted our reported GAAP results during the fourth quarter. First on restructuring, we recorded a charge of $32.7 million for severance, fixed asset impairments, and the loss from the sales of assets related to the actions we announced during the fourth quarter.
Slide 5 detail the actions we have taken so far and the forecasted calendarization of the income statement benefits expected in 2009. There are additional actions to be announced in 2009 most of which are to be finalized with employees or works councils during the first half of the year.
Secondly, in connection with our acquired annual goodwill and other asset impairment testing, we recorded a non-cash goodwill and other asset impairment charge of $461.1 million or $9.47 per share. The non-cash charge relates to the application of FAS142 which requires an annual assessment of potential goodwill impairment as predicated by the accounting literature.
The determination of goodwill impairment is highly dependent on the company’s market capitalization at the point in time the annual impairment testing is performed. As our total market capitalization was significantly impacted during the fourth quarter downturn in the equity markets a goodwill impairment charge was required under Generally Accepted Accounting Principles.
Primarily via the calculation we needed to reconcile our book value to our then current market value, this is the required accounting truth. All of our acquisitions continued to perform well and either are meeting or exceeding our expectations for adding long-term value to Belden.
Given that the one-time charges we incurred during the quarter do not reflect the ongoing operational environment of the company, I will focus the remainder of my comments on the adjusted results without these charges. For your benefit, reconciliation between GAAP and adjusted results have been provided as part of today’s press release and are also available at the end of today’s slide presentation.
Adjusted for these items, operating income in the fourth quarter was $18.9 million or 4.4% of revenue and adjusted earnings per diluted share were $0.26. As a reminder in the third quarter of 2008 and again this fourth quarter discussion, we look to improve the transparency of our operational performance in light of the complex accounting associated with SOP 972 on software revenue recognition.
As such we continue our practice of adjusting revenue and gross profit for the effect of all revenue deferrals at Trapeze Networks. John’s earlier comments captured the current performance and opportunities with respect to Trapeze operationally.
I will add some additional color on the state of vendors’ specific objective evidence and revenue recognition later in my remarks. Gross profit margin was 27.7% in the fourth quarter, 100 basis points lower than the fourth quarter of last year and 240 basis points lower sequentially.
For the full year, gross profit margin was 29.4%, an improvement of 100 basis points over 2007. Commitment to a deep and continuously active regional manufacturing rationalization program has allowed the company to successfully deliver our plans and committed objectives of $26 million in annual savings for 2008.
Despite cost increases associated with transportation and non-metals raw materials, now coupled with the additional challenges reflects our global manufacturing cost commensurate with the drop in Q4 production we were still able to accomplish this goal. The ability to hold gross profit margins at a relatively stable level considering the economic deterioration experienced globally compounded with volatile commodity costs highlights the effectiveness of the manufacturing rationalization initiative we have been working on for the past 18 months.
As John mentioned, we are a FIFO company, we have about six turns of inventory, thus much of our fourth quarter COGS was reflective of third quarter input costs the addition [ph] made more difficult by the abrupt nature of the production drop in November and December. Fourth quarter SG&A expenses were $82.3 million or 19.3% of revenue.
Excluding the results of the wireless segment, SG&A expenses were $73 million or 17.8% of revenue. In making comparisons to 2007 results you may recall we did not identify R&D expenses at that period.
Adjusting for this particular and creating an apples-to-apples comparison, SG&A excluding the wireless segment is $6.9 million lower sequentially and $21.8 million lower year over year. Currency translation had a favorable impact of about $3 million SG&A year over year.
Excluding this translation impact, SG&A was $18.8 million lower year over year. Our focus on controlling costs enables us to continue to make important investments in our strategic initiatives of Lean talent management in global sales and marketing.
We believe that these initiatives are the keys to emerging as a healthy and formidable player in the signal transition space as the economy recovers. R&D expense was $13 million in the fourth quarter or 3% of revenue.
Excluding the results of the wireless segment, R&D expenses were $9.3 million compared with $11.4 million in the third quarter of 2008 and $10.5 million a year ago. We deployed a somewhat flexible contraction model in much of our connectivity and Industrial Ethernet R&D expenses that allows for fairly quick cost reduction in certain areas while advancing our investment in new product development.
It is critical to differentiate it for our leadership product positions. Other income in the quarter, which represents the income from non-consolidated manufacturing and marketing joint ventures in China, was $2.4 million.
Intangible amortization expense was $3.8 million in the quarter. In the third quarter, we started to break out the amortization of intangibles in the body of the income statement.
The edification of this cost element is important not only because it is a significant non-cash expense item impacting our operating income but also to aid in analytical comparisons of our results with others as many companies set aside their expenses as pro forma items. If I could have you turn to slide 8 please, interest expense for the fourth quarter was $9.6 billion and our interest coverage ratio was 3.7 times.
Our current status relative to our revolver debt covenants is included on slides 11 and 12. Income tax expense was $0.7 million in the adjusted results or 5.2% of pre-tax income for the quarter.
During the quarter we recognized a tax benefit of $1.2 million from the release of valuation allowances in both Hong Kong and Sweden NOLs. In addition, we recognized the tax benefit of $2.6 million from the recognition of US manufacturing tax credits and a one-time opportunity to step off our tax basis of goodwill in Italy.
These tax benefits were partially offset due to the recording of additional tax reserves of $1.1 million in the quarter related to the tax return positions taken in Europe and Asia as required under 1048. For the full year, 2008 adjusted results income tax expense was $46.3 million and the effective tax rate was 26.7%.
Adjusted net income for the fourth quarter was $12.2 million and adjusted earnings per diluted share were $0.26. For the year, we reported adjusted net income of $127.1 million or $2.68 per diluted share.
If I could have you turn to slide 9, external revenue of the Belden Americas segment was $169.5 million which is lower by 24.8% compared with the fourth quarter a year ago and lower by 16.3% sequentially. Inter-divisional sales were $12.
8 million including the inter-divisional sales total shipments of Belden Americas were $182.3 million. Segment adjusted operating income was $27.2 million or 14.9%.
The 14.9% adjusted operating margin is a contraction of 610 basis points over the Americas record performance in the third quarter of adjusted operating income of $46.3 million or 21% and a 300 basis points contraction year over year. As we have noted, the actions we announced on December 3 with respect to restructuring and the resulting benefits in 2009 are expected to improve our cost structure by $3 million to $11 million from Q1 to Q4 in 2009 and $50 million annually when fully implemented in 2011.
Each of our segments will benefit with the restoration of operating margins associated with these actions of between 150 basis points and 350 basis points. The specialty products segments’ external revenue in the fourth quarter was $42 million which is lower by 33.8% compared with the fourth quarter a year ago and lower by 25.8% as compared to the previous quarter.
The division’s revenue from affiliates is $9.1 million representing a 57.4% and 42.4% decline from the previous year and previous quarter respectively. Operating profits in the fourth quarter were $1.1 million or 2.2%, down 890 basis points sequentially.
The EMEA segments external revenue was $130.4 million in the fourth quarter, a 31.5% decrease year over year and a 20.6% decrease sequentially. Operating income of the EMEA segment was $6.4 million or 4.8% of total revenue.
This compares with the prior year results of $18.2 million or 9.3% of revenue and prior quarter results of $12.9 million or 7.6% of revenue. The EMEA segment results reflect weakness generally in the automotive and industrial markets and a global connectivity product business which is facing rapidly deteriorating economic conditions.
As we discussed in the third quarter and reinforced in our December restructuring actions, our ability to flex manufacturing costs and align more capacity to more favorable cost environments has a heightened focus and heightened activity level in Europe. The Asia Pacific segment had fourth quarter external revenues of $69.4 million, a sequential decrease of 22.2% and a 34.1% decline from the previous year.
The lower comparative revenue was driven by consumer product demand contraction for our LTK brand products and slowing China demand for Belden brand of products. As a result, segment operating income was $5.6 million or 8% of revenue down from $8.8 million in the previous quarter and $12.
3 million in the previous year. The fourth quarter marked the first full quarter that Trapeze Networks was operated as a Belden company.
We will continue to make every effort to ensure that transparency results within this segment especially given the complexities associated with the GAAP requirements to recognize revenue associated with the VSOE. Deferred revenue increased $9.5 million during the quarter and $18.3 million for 2008 while deferred cost of sales had an increase of $4 million in the fourth quarter, the net benefit to cash flow and the corresponding deferral of gross profits for GAAP is equal to $5.5 million.
This is the net impact to our GAAP results in the fourth quarter related to Trapeze’s revenue recognition. This translates to a negative impact to our reported GAAP results of $0.07 per share in the quarter related to the SOE.
We continue to make progress on institutionalizing processes managing the documentation and establishing business practices to achieve VSOE in a timely fashion. The wireless segment had non-GAAP revenues of $15.7 million and an adjusted operating loss of $6.6 million in the fourth quarter.
The business had good year-over-year growth as external buildings increased approximately 14% when comparing the full year 2008 to full year 2007. If I can have you turn to slide 10 please, the company had $227.4 million in cash at the end of 2008, $97.5 million is in depository accounts that are used in the day-to-day operation of the business and $130 million is in short-term investment accounts focused on government issues.
Free cash flow in the fourth quarter was $24.9 million comprised of net operating cash flow of $46 million less capital expenditures of $21.1 million. Free cash flow year to date is $120.3 million.
At the end of 2008, we had $590 million in outstanding debt, $240 million bearing interest at 3.38% under our revolving credit facility and $350 million bearing 7% interest in our senior subordinated notes. In addition to the cash on the balance sheet, the company had $103.2 million in additional liquidity available under its revolving credit facility.
The facility is fully supported and runs to the end of 2010. If I could ask you to turn to slide 13 please, inventory turns in the fourth quarter were 5.9, up sequentially compared to a 5.5 turns in the third quarter but lower than the 6.6 turns we experienced in the fourth quarter of 2007.
Absolute inventory dollars decreased $49 million sequentially as a function of reduced commodity costs and improved inventory management. Working capital turns at 6.9 turns this quarter were favorable sequentially and year over year.
We continued to stress the fundamentals of Lean and remain committed to a one-turn improvement in working capital again in 2009. Property, plant and equipment turns were 5.1 lower than the 6.2 turns of the third quarter and lower than a year ago.
The capital and real estate markets remain soft therefore our asset-like [ph] results will be more difficult to accomplish in the near term yet we are reinforcing our 2009 goal to balance our 2009 capital budgeting expenditures with asset-like activities to deliver a net zero increase in the fixed asset investment in the company. At this point, I will to turn back to our CEO, John Stroup for a few remarks about our outlook for the first quarter of 2009.
John?
John Stroup
Thank you Gray. If you could now turn to slide 14, over the last few weeks since we provided you our updated guidance not a lot has changed.
Visibility has remained poor and business conditions are very tough however we have proven able to tackle difficult challenges swiftly and execute effectively. As a result of our strategic actions, we made progress in reducing our costs and are well positioned to withstand the downturn and emerge ready to capitalize on the recovery.
Although it may take us slightly longer to meet our long-term objectives, we will continue to take actions and prioritize what investments we do make to achieve our stated goals when conditions moderate. These long-term goals remain organic revenue growth between 6% and 8%, operating margins of 15%, free cash flow to exceed net income, and return on equity of between 15% and 17%.
As we noted in our Investors Day in December, until visibility improves we believe it is prudent for us to provide guidance on a quarter-by-quarter basis. For the first quarter of 2009, we expect adjusted revenue and diluted earnings per share to be in a range of $330 million and $350 million and $0.10 and $0.15 respectively.
The first quarter of this year is typically our weakest quarter especially for the cable business because of the weather and the amount of construction that is being done. As we navigate through what is an extraordinary period in our economy, we remain focused on our efforts to implement our restructuring and Lean initiatives to strengthen our channel relationships and expand end-user demand to offset weak markets.
We feel that our balance sheet and liquidity will work to our advantage and that as a Lean company we could be nimble and opportunistic to satisfy volatile demand. We feel that we have taken the right steps to be ready for difficult times and they are consistent with our management philosophy and historical actions.
We will do the best we can for our customers and our shareholders. We will emerge from this difficult economic climate a stronger company, one with an even more attractive competitive position and one with a balanced portfolio of solutions that will continue to win the trust and loyalty of customers.
In other words, we will become one of the true leaders in our market. Thanks to all of you in the call for your interest in Belden, this concludes our prepared remarks; we now have some time for your questions.
Our operator Bill will remind you of the procedures for asking your questions.
Operator
Thank you. (Operator instructions) Mr.
Benoist, your first question comes from Celeste Santangelo, Bank of America-Merrill Lynch.
Celeste Santangelo – Bank of America-Merrill Lynch
Good morning.
Gray Benoist
Hi Celeste.
John Stroup
Good morning Celeste.
Celeste Santangelo – Bank of America-Merrill Lynch
A quick question, could you provide a little more detail on the upside in the quarter, Gray, I think you identified the margin upside at $0.03 to $0.05, where exactly do that – what surprised you in –?
Gray Benoist
We are in the process of closing the book Celeste. We had general accruals on the balance sheet, they needed to be reviewed and (inaudible) both internally as well as with the external auditors and through that process many of those positions were released most of those positions being in Europe.
So we were surprised in our cost structure, most if it in SG&A associated with the release of those accruals, it was a very favorable circumstance. On the tax rate, there was really a balanced set of items, a very interesting set of items.
First, we had not completed our 1048 work and the list of issues that we were dealing with was quite profound. So we are very conservative in our estimation of what the 1048 impacts would be.
And then during the review of our final tax provision, several items associated with the complexity of our relationship with Cooper, which is a very complex relationship that goes back to a spin-off in 1993, surfaced that created some advantages for us most notably around the claim of the credit associated with the manufacturing tax credit allowance for US manufacturers. So, we have got some very nice pleasant surprises during the close [ph], I would say that there were a couple of negatives that surfaced as well but basically everything sort of just went in our direction, it was a very nice circumstance over the last couple of weeks.
Celeste Santangelo – Bank of America-Merrill Lynch
Then, looking at the Q1 outlook, if you look at the midpoint, it looks like operating margin should be relatively stable going into Q1, you outlined the kind of cost savings, the pace of cost savings throughout the year is $3 million in Q1, but how should we think about the benefit from lower raw materials given the demand stays basically where it is and assuming copper is where it is today, is that not really a benefit to Q2 because you still have inventory to work down or how should we think about that from maybe just a margin production standpoint?
John Stroup
Celeste, this is John and I will start (inaudible), I think if you look at Q4 to Q1, clearly you have got lower revenue in Q1 than you do in Q4 largely because of seasonality that we typically see in Q1 but also we saw a significant deceleration through the fourth quarter. So our December run rate was significantly lower than November and significantly lower than October.
So, you have got less revenue in Q1 than you have in Q4 and of course the very low margin impact on that is significantly negative. Offsetting that however is cost actions that we took that is going to give us benefit in Q1 compared to the fourth quarter and then of course also we are expecting to see some benefit in the first quarter on raw material because as we indicated in the fourth quarter, we had to start adjusting prices in the fourth quarter appropriately but then we were eating copper that had been purchased in the third quarter.
So if you think about the break from Q4 to Q1, I think you should think about it as (inaudible) margin fall off in the first quarter and lower margin offset by improved cost as we talked about and also the fact that we will start to see some of the benefits of the lower cost of copper coming through the income statement. And I would reiterate in Q1 there is really two things driving the volume, one is that we exited Q4 lower than we entered and then secondly we typically have seasonality in Q1 which we would expect to see again.
Celeste Santangelo – Bank of America-Merrill Lynch
Okay and then just talking about the deterioration, the linearity in the quarter particularly in enterprise, I believe you talked about projects getting – although the new ones are rolling in, project cancellations or push-outs, was that broad based upon the whole business or can you talk maybe specifically about enterprise?
John Stroup
I would say it was relatively broad based. We saw a pretty significant decline in November compared to October and then another decline in December compared to November and our enterprise business is more project driven system over other businesses and so we started seeing some signs of using the sales perhaps a little bit earlier.
I would say though that if you look at our Q4 revenue numbers and you annualize that and you compare it to the full year numbers, you will see that we saw a more significant downturn in Europe and a more significant downturn in Asia than we did in the United States just doing the math. So, that was clearly a big part of what we saw but I think like we have heard from other companies and you probably heard as well, there was a very, very significant downward slope in the fourth quarter.
Celeste Santangelo – Bank of America-Merrill Lynch
Okay, thank you.
John Stroup
Thank you.
Operator
Your next question comes from Matt Mccall, BB&T Capital Markets.
Matt McCall – BB&T Capital Markets
Good morning, everybody.
John Stroup
Hi, Matt.
Matt McCall – BB&T Capital Markets
I guess following up on the last question. In the guidance, I think in Q4 some of the non-operating items were maybe a little different than expected.
Can you talk us through what’s baked into that guidance from looking at the other income lines, the tax rate, and share count?
Gray Benoist
You’re talking about first quarter guidance then, Matt, with respect to the key assumptions?
Matt McCall – BB&T Capital Markets
Yes.
Gray Benoist
Tax rate at 30%, right, the 26.7% was driven by a series of extraordinary items and for conservatism, we’re not currently forecasting the continuation of many of those items, so 30% on the effective tax rate seems to be a fairly good conservative assumption. With respect to other elements that drive performance, there is no change expected in the share count, so using the 46.8% that we just closed at seems to be a fairly good number.
But as John mentioned, what we are guiding right now are adjusted results. So, they do not include other items that may surface associated with the fourth quarter restructuring.
Let me reiterate that. And we had indicated on December 3 that the total program cost were going to be somewhere between $55 million and $65 million.
We’ve incurred $33 million of that here in the fourth quarter. I think your expectation should be for modeling purposes on a GAAP basis, if in fact you’re interested in that, but we do have another $30 million of the charges that are currently in process, both cash as well as impairments associated with the completion of the fourth quarter restructuring activity.
So, we are not guiding with respect to that per se, other than the fact that we hope we can get the majority of those activities concluded by the first half.
Matt McCall – BB&T Capital Markets
All right. Thank you.
And, Gray, you’ve said that – I think the words were you could have experienced about 500 basis points of top line pressure from copper. Walk me through the math of how that could have impacted your –
Gray Benoist
Good, this is really theoretical, Matt.
Matt McCall – BB&T Capital Markets
That’s right, that’s right, how that could have impacted your operating margin lines from this.
Gray Benoist
I think, I would say generally, and this is just a general comment, where the value proposition has equity, has value, which is the majority of our portfolio, us and others in the industry have not seen the significant movement in pricing. The pricing has been fairly stable, but that is not true for the entire portfolio.
Elements of our portfolio, most notably, the portfolio that’s in Thermex, on some of their high-temp cable, almost the complete portfolio at LTK is tied to the underlying commodity with respect to certain relationships they have with their customers. So, when we do the calculation, we’re using about a half-rate convention on price degradation associated with LTK and Thermex, a couple of other elements of the portfolio.
And the theoretical calculations, just for the others on the call, have to do with the fact that the total copper that we consume on an annual basis is somewhere around 100 million to 110 million pounds. And when copper goes from $3.50 to $1.50, that’s about a $200 million impact associated with the input cost of the business; and if 100% of that were to be passed through, then you would see about a $200 million decline in the top line without any incumbent change in either your operating or your gross profit dollars.
That’s the theoretical. And since pricing is held fairly consistently, at least till this last quarter, not to say that it will continue to be so in the future because we are looking for neutrality in our business model, not advantages or disadvantages associated with copper, we use about a half-rate convention for the fourth quarter.
So, when you do that math, just quick and dirty, you can see $200 million divided by $2 billion is 10%, divided by two is five.
Matt McCall – BB&T Capital Markets
Got you. Okay.
And then, you also commented on the inventory issue in the channel said that it was part of the 19%, I think, sequential decline. Similar question, how much of a part and maybe what was the impact on your margins in general in the quarter?
And what’s baked into the guidance there? Is that kind of like that situation maybe gotten a little better?
John Stroup
It did not really affect our margins. What it really did is put pressure on top line because our channel partners are managing their inventory exactly the way they should.
They are trying to adjust their inventory investment with the new sort of reality of demand, but we saw inventory in our channel partners come down again in the fourth quarter compared to the third, again, it is not surprising given the environment. And as we look at sell-through information with our channel partners, our performance was obviously better than it was on a billing basis.
For example, we had a very good quarter with Anixter, Anixter announced great results earlier in the week, they did really very, very well and we were pleased that we did well with them also. So that is the relationship that we continue to value very much.
I think that our expectations are that the channel inventory is probably going to either come down some more or it is going to remain stable. We have no expectation that in the short run it’s going to come back up.
Matt McCall – BB&T Capital Markets
Okay. And then, final question, Gray, did I understand correctly or John, I’m sorry if it was you, but it sounded like it was more, the potential for more restructuring announcements to come or were you speaking about the savings?
Did I misunderstand that?
John Stroup
I think what we try to say, Matt, is that we have a plan, the plan has been completed for some time, the plan was complete at the time we shared with all of you the cost and the benefit. But some of the details associated with that plan have not been completely articulated.
And as we make those announcements as we complete spending them, we will update you on that.
Matt McCall – BB&T Capital Markets
No expected incremental savings?
John Stroup
Nothing above what we have already committed.
Matt McCall – BB&T Capital Markets
Got you, okay. Alright, thank you all.
Operator
And your next question comes from Jeff Beach, Stifel Nicolaus.
Jeff Beach – Stifel Nicolaus
Good morning, John and Gray.
John Stroup
Good morning, Jeff
Gray Benoist
Hey Jeff
Jeff Beach – Stifel Nicolaus
You were just talking a little about the impact of lower copper on a couple of businesses but if you can to some degree, step away from the copper, can you just run through all your businesses not only cable but the connectors and the other businesses Trapeze and talk in general about the pricing trends, let’s say, through the fourth quarter but also what you’ve seen in January.
John Stroup
Sure. Let me try to do that for you.
First of all, I would say our industrial Ethernet business; the pricing situation is quite stable. No significant shift in either direction.
It is a business that has relatively shorter product life cycles and you are continuously trying to obsolete your own product through better technology, but I’d say the price environment there is really stable. At Trapeze, I think, the pricing environment has gotten more competitive as the growth rates are expected to come down.
Companies like Aruba and Cisco and others in the space, I think are going to become more aggressive. And so, our team at Trapeze is working on how to deal with that effectively and modeling that appropriately.
And then in our connector business, that is more of an OEM business Jeff, and therefore it is more of a design win business. And so I’d say the pricing environment there is also relatively stable.
As we compete for new design wins that will have an impact on the future there might be a little bit more price pressure but I do not think that’s going to be significant. In the area of the cable products, I think as Gray appropriately said, you really have two sort of worlds, you got the product lines where the pricing tends to be relatively stable, largely because the product lines are highly differentiated, and the product lines, in many cases, have a much larger daily order rate or MRO component to them and we think that pricing environment will probably remain fairly stable.
But then we have other product lines where it is more project-oriented, particularly in the enterprise segment and certain parts of our industrial segment where it is far more project-oriented, and we would expect that pricing pressure there will be very high. And in fact, we saw that in the fourth quarter already where our team did in fact take business at price level that makes sense based on current copper cost but were quite challenging based on the copper cost within our income statement.
So that is a relative, Jeff, view of kind of the portfolio on the product line basis.
Jeff Beach – Stifel Nicolaus
Alright. Another question, particularly in Europe where the volume is falling off the sharpest in your company, you’ve taken a lot of actions to cut cost, but employment, agreements, other things cause a lag there, when do you think that you’ll be effectively catching up with your lower cost, particularly in Europe and other markets with the lower demand that’s occurring?
John Stroup
We’re going to see some of that improvement in the first quarter, Jeff, but I think that we’ll see sequential improvement again in the second quarter. You’re right, it does take longer to take the actions necessary to reduce your cost structure in Europe than it does in North America or even Asia, but I think sequentially, we’ll see improvement from Q4 to Q1.
The team has made good progress. We’ve been negotiating intensely with the various constituents in Germany and other parts of Europe over the last two to three months.
I think the leadership team is doing a good job in Europe, making good sound business decisions but also in a very sensitive and appropriate way. So, I think we will see sequential improvement, Jeff, but in Europe especially, we’ll probably see another ratchet from Q1 to Q2.
Jeff Beach – Stifel Nicolaus
And by second quarter midyear, do you think unless the volume continues to deteriorate sequentially that even though you might continue to cut cost, that by then a lot of the actions you’ve taken are effective in stabilizing margins?
John Stroup
I would say the current plans right now, Jeff, most of that will be completed in the first half as we indicated, but we’re watching the European business very, very closely. And we have got a couple of business that are especially tied to some segment that we think are going to continue to go through difficult times like the automotive industry, and so I can’t rule out at this point that we might not take additional actions in Europe, if that is what is required.
Jeff Beach – Stifel Nicolaus
Last question. Back on Trapeze on a standpoint of a cash basis recognizing all of the revenues, is Trapeze near breakeven or losing money?
Can you make a comment about that?
John Stroup
When you adjust for the revenue and the gross margin deferral as we have in these results, Jeff, they did have a loss in the fourth quarter. And we believe that we’ve got the actions in place to turn that business breakeven in 2009, and that is what we are focused on.
The team has already done some very good things in reducing cost particularly in sales and marketing. And, Jeff, as you recall, a big part of this transaction was what we believe a significant opportunity to leverage the existing Belden sales and marketing organization to their benefit, so the R&D investment in the business continues to be at a very stable rate.
We’re looking at ways to make it more efficient, but the investments are at a very stable rate. What we are really focused on is driving a much, much better productivity from the sales and marketing point of view to get that business to breakeven as quickly as possible.
Jeff Beach – Stifel Nicolaus
Alright thank you.
John Stroup
Thank you, Jeff.
Operator
And we’ll go next to Gary Farber of CL King.
Gary Farber – CL King
Yes, hi. Can you just talk in aggregate for foreign currency, the aggregate dollar value of foreign currency benefit to revenue in the past year?
John Stroup
The aggregate, Gary, I do have, and if you go to your next question, I’ll retrieve the answer to that.
Gary Farber – CL King
That’s the only question I have.
John Stroup
Well, that’s not fair Gary. Somebody want to pull up the reconciliation?
Gary, you’re looking for full year FX?
Gary Farber – CL King
Right.
Gary Benoist
Okay. That is the year over year; he’s looking for the full year.
We already mentioned on the call that the quarter year over year was $14.8 million, unfavorable, but Gary is asking what the full year impact was of FX.
John Stroup
Gary, we only have that right off the top, so if you don’t mind, we’ll try to get it while the call is still open.
Gary Farber – CL King
Okay, sure.
John Stroup
And we’ll pass that answer out to you, okay?
Gary Farber – CL King
All right. Thank you.
John Stroup
Thank you.
Operator
And we’ll go next to Nat Kellogg, Next Generation.
Nat Kellogg – Next Generation
Hi, guys, just a quick question, do you expect any change in the amortization expense given the goodwill and what not, write-downs, do they have any effect on amortization going forward?
John Stroup
So interesting the way the FAS 142 is written out. The majority of the intangibles, I would say well almost 100% of the intangibles are staying on the balance sheet.
Only the goodwill is being impaired, so we have a total balance in the excess of $150 million in intangibles, which are not impaired. The methodology that you utilized is associated with the impairment approach.
So that is another anomaly associated with how FAS 142 is written. Great question, one that we addressed here in a lot of details just to understand how those mechanics work under 142.
And I’m going to pause because I have the answer to Gary Farber’s question, and the answer Gary is $45.6 million [ph] favorable in our annual year-over-year results. And we recall that we said our organic growth adjusted for FX investitures and acquisitions was a minus 11.2.
So you can see that about 2-1/2% of that relates to the FX adjustment. My apologies and now back to you Nat.
Nat Kellogg – Next Generation
I think you guys gave the gross for Trapeze for the full year of 14% but I was just wondering what it was in the quarter. You may have said, I’m sorry if I missed it.
Gray Benoist
Quarter Trapeze, John.
John Stroup
We’ll have to get back to you on that.
Nat Kellogg – Next Generation
Okay, that is okay. And that is all I got, thanks for taking my questions.
I appreciate it.
Operator
And we’ll go to Keith Johnson – Morgan Keegan.
Keith Johnson – Morgan Keegan
Good morning. Just have a couple of questions real quick.
I guess maybe just housekeeping as far as how should we look at CapEx, now looking at it for the year in 2009.
John Stroup
Our CapEx for 2009, we have established a target similar to last year’s target when we met at the investor’s meeting on the 11th of December. We have modified our expectations.
We are having a full review with the business groups here in the middle of February. I think it is going to be sitting in about 50% of our current appetite but we still have not finalized that.
So somewhere around $30 million perhaps a little above or a little below depending on the prioritization of the projects, but we certainly have to cut back our appetite, and we have the processes in place to make sure that we are prioritizing the right programs for 2009. So, there is a place marked for free cash flow I would suggest using around $30 million in this juncture.
Gray Benoist
And I would just add to that, remember that in the last two years, we had significant building investments, one in Nogales Mexico and the other in Shouzou, China that affected our 2007 and 2008 capital spending. We have nothing like that planned in 2009.
Keith Johnson – Morgan Keegan
Okay. And if I understood correctly I am talking about a 30% tax rate for 2009?
John Stroup
I think that is a good number to be utilizing at this juncture, yes.
Keith Johnson – Morgan Keegan
Okay. If you could give a little bit more color on the new plan in China, I guess you’re ramping up with LTK Products first then followed by Belden Specific products next.
As we look in 2009, would we expect any logistics savings or some type of savings as we get further into the year for that plan?
John Stroup
We actually have two shelves in the new factory that are Belden branded cells. I was at the factory in January and so I got to see production in the new facility, so we actually do have two cells that are Belden branded localized production, so we do expect that our 2009 results will include the benefit of localization and the benefit of reduced logistic cost as we no longer have to import that from Europe and the United States.
Keith Johnson – Morgan Keegan
Any way to put a little color around the possible value there versus what you guys were doing in 2008 in that amount?
John Stroup
Yes. I think that – the way we try to describe it previously is that if you look at the average cost of labor and transportation, you’re looking at anywhere from 10% to 20% benefit and then we think that benefit will either translate into expanded margin or improved growth rate.
So I think that in 2009, I think if you look at the Belden portfolio and the Belden branded products, you should expect that we would see 100 to 200 basis points margin improvement in that product line going in 2009 versus 2008.
Keith Johnson – Morgan Keegan
Okay and then just a couple of last question. I guess, first off, you talked about nonmetal inflation cost coming through in 2008, is there a way you give us the dollar amount or what you would attribute to the dollar amount in 2008 for the year?
Gary Benoist
Compared to 2007, copper was basically flat year over year.
Keith Johnson – Morgan Keegan
Okay.
Gary Benoist
Was it nonmetal? Non metal is about $10 million to $15 million worth of headwind that we needed to recover in order to get towards our $26 million target.
Keith Johnson – Morgan Keegan
Okay, and then a final question, how long is the kind of the credit status or any change in bad debt expense as you kind of look at – I know you deal with some large customers but if you look at your customer profile is there increasing risk there of potential credit problems?
Gary Benoist
Yes, and again the heightened level of attention, obviously, just about every other company making sure that the balance sheet is incredibly clean with respect to our activities with our customers and receivables. We have a luxury or the advantage of dealing with very, very strong channel partners.
So the majority of our receivables are well defended and protected with very well-capitalized channel partners that is generally the case. There are exceptions and most notably in China, the exceptions where we deal in an extender or protracted supply chain with the LTK products, there are risks.
And several of those risks were recorded in our balance sheet and income statement of the close. We increased our reserve for bad debt allowance in China specifically by almost $2 million in the quarter.
And we also took a specific action associated with the declaration of bankruptcy at Nortel and the incumbent risks that were associated with that as Nortel is a critical OEM partner for Trapeze. We fully depended both the balance sheet as well as the income statement associated with those positions in our fourth quarter was a very good question, Keith, and various astute the things that we are dealing with.
Keith Johnson – Morgan Keegan
Okay. So to make sure, the dollar amount, I guess was the $2 million related to the China account and then reviewed the Nortel situation?
Gary Benoist
Yes the Nortel issue has been fully reserved that you would expect associated with our exposure at Nortel was under $1 million.
Keith Johnson – Morgan Keegan
Okay, thank you.
Operator
And due to time constraints that will conclude today’s question and answer session. Mr.
Benoist, I would like to turn the conference back over to you for any additional or closing remarks.
Gray Benoist
Okay, thank you Bill. And thank you for everybody’s participation on today’s call.
If we did not get to you, please give us a call this afternoon. Thanks again for joining us on the Belden earnings conference call.
We sincerely appreciate your interest and we will be happy to entertain the follow-up questions if you have missed our call today. Thank you very much.
Operator
Thank you ladies and gentlemen. This does conclude your call for today.
You may now disconnect from the call and thank you for your participation.