Belden Inc (BDC) 2004 Q2 法說會逐字稿

Good day everyone and thank you for standing by. Welcome to this morning's Belden CDT Incorporated conference call.

(OPERATOR INSTRUCTIONS).

I would now like to turn the call over to Mr. Richard Reece, Vice President of Finance and Chief Financial Officer of Belden CDT. Please go ahead sir.

Thank you Dennis. Good morning and thank you for joining us today. With me here in St. Louis is Baker Cunningham, our President and CEO. This is the first investor conference call of our newly merged company Belden CDT Inc.

Today we are presenting the results for Belden Inc. for the quarter ended June 30 2004 before the merger.

So, these results do not reflect the activities of CDT nor do they reflect the merged company, although we will be sharing lights on the combine business Belden CDT going forward. If you need a copy of our press release, please check our website beldencdt.com or if you need a copy faxed to you, please call Marilyn at 314-854-8054.

I need to remind you that any forward-looking statements we provide are made in reliance upon the Safe Harbor Provision 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 the developments after today and disclaims any legal obligations to do so. Please review today's press release and the 2003 Annual Report on Form-10-K, CDT's 10-K and the merger perspectives on From-S-4 by CDT for more complete discussion of factors that could have an impact on the company's actual results.

This morning, Baker will make some comments about our markets and about the newly formed Belden CDT organization. Then I will review some of the highlights of the quarter's financial results and talk a bit about the accounting for the merger and what implications that might have for future results. Then Baker will discuss our revenue outlook and gave you an update on the merger synergies and finally we will open up the lines for your questions. Baker?

Well, thanks Reece. First I have few observations about the recent quarter for Belden pre-merger then I have a few comments about how the company is organized going forward. I think we can clearly say now that our real recovery is underway in most of our markets. Total Belden revenue was up almost 20% in the second quarter compared to a year ago and over 8% compared with the first quarter. Price increases played a part in that and currency exchange rate helped us a bit.

But the primary driver of the revenue increase was higher unit volume shift. This is true in the North American Electronics business, it was true in Europe both in the UK Communications business and in the European Electronics business even though we have discontinued some product lines over the course of the last year and it was true in Asia, although that improvement was offset by lower volume in Australia.

Bisecting the sacking business by application, we saw our strongest year-over-year improvements in the United Kingdom - tele communication business, which is now running at a rate of $100 million in sales per year similar to what it was in the year 2000 and that's a considerable recovery from the drop over the past three years. This business is heavily dependent on British Telecom, and can be volatile from one quarter to the next, but recent history has been in upward trend.

Our industrial markets improved significantly, with sales of products like instrumentation and control cable, and high temperature lead and Hook-Up wiring increasing the fastest. Our alarm and security products, and signal low voltage cable also improved nicely year-over-year. We saw improvement in our sales of coaxial cable for satellite dish and cable TV systems both in North America and in Europe.

In the broadcast market our sales benefited from shipments for the Democratic and Republican national conventions, the Olympics coming up in the Athens and there is European football tournament. Partly offsetting this improvements were the products we discontinued last year, which amounted to about $10 million in sales per year historically.

One application market were we really did not see improvement in the second quarter was in data networking. In the first quarter of 2004, the recovery in data volume out phased other markets and we certainly thought some contractor and end-users were stock pilling cable products ahead of our market price increase, and out of concern that the price of copper might continue to climb. Based on this quarter's overall flat revenue and data networking, actually our analysis was correct.

In Europe the pricing environment for data networking has been extremely competitive. We implemented a double-digit price increase, for us all product lines in Europe in May to try to catch up with our rising cost for copper and other materials. But we have little slow fall, especially in data networking, were we experience net price erosion, because of meeting competitions prices in many cases.

I think this results from a couple of factors. First, we have yet to see the same level of cyclical improvement in demand in Europe as we have seen in North America, and second it just takes a lot longer and is much more expensive to make any download adjustments in capacity in Europe. Demand will continue to recover, and the industry will get self-sorted out in Europe, but it's going to take little time.

Turning to the merger of Belden CDT, which became effective at the close of business on July 15th, I would like to talk a little bit about how we have organized the company. David Kuznick and George Graeber, recently the CEO and COO of CDT respectively, will continue to work on integration matters through the end of this year. Ricky still the CFO, also reporting to me our five operating divisions.

The electronics division that's the legacy Belden Electronics Division is headed by Peter Sheehan who comes from CDT. The Networking Division will be headed by Bob Matz, who comes from Belden, although much of the manufacturing base of this division comes from CDT side of the business.

Both of these businesses will continue to utilize distributors and other established channels such as manufacturers in some cases to serve this market. By appointing executives to roles that mix our separate Belden and CDT experiences, we hope that we have created an opportunity in these two groups, where people directly learn from each other and we have set the stage for openness to cultural and organizational change.

The specialty division is lead by Bob Canny, coming from CDT. And this division is made up of Thermex, Dearborn and other companies from the specialty segment of CDT. These companies are mostly OEM focused, and make such products as high temperature cables for aerospace and similar demanding markets.

Our forth division, West Penn Wire, is a company with a well established brand and sound security cable, that will continue to be led by Dave Harden, who has been managing that business for CDT. Our fifth division is our European operations headed up by Larry Ross from Belden.

The European group is organized into three units under Larry. Communication network will focus on data networking products and the telecommunications cable business serving British Telecom and Deustche Telecom. Electronics will serve the industrial and specialty markets and HEW, a German business from the CDT side where we have some minority partners, will operate under its own brand and continue as more or less as stand alone operation, focusing on aerospace and transportation OEM market. I must say I am really delighted with the product portfolio, the people, and resources that we have brought together in this merger. I would not trade our position for that of anyone else in this industry. I think we have got great opportunity going forward. So, now let me turn it back over to Reece.

Thank you Baker. Baker has discussed our revenue for the quarter. I would like to just take you through some of the highlights of the Belden quarterly results below the revenue line and I would not try to repeat all the data that is in the press release. Then, I will explain in a non-technical manner I hope, some of the accounting for the merger and the impact that will have on future results.

The operating margin for Belden continuing operations, overall, in the second quarter of 2004 was 4.9%, up from 3.0% in the second year, a year ago and up sequentially from the first quarter of 2004 when it was 4.1%. Drilling down in to that as you can see, our remaining communications business in Europe had an operating margin of 5.1 %, which was an improvement both year-over-year and sequentially.

The electronic segment operating margins was 7.5%compared with 5.2% a year ago and also an improvement sequentially. Similar to our first quarter, we had very different experience in Europe versus North America in the electronic segment, with volume slower to come back in Europe in a very difficult pricing environment, where we have not been able to increase prices to recover the rising cost of raw materials. We lost money in the European electronics business for the quarter.

On the other hand, our operating margin for the North American operations where we also consolidate most of our Asia Pacific sales was over 12% and improved both sequentially and year-over-year. For every dollar of sales increase in North American Electronics year-over-year, we took between $0.34 and $0.35 to the operating profit line. So, the operating leverage we have been looking forward to throughout the recession is a reality.

We believe that as our European volume recovers and we work through some of the their remaining issues, we will see positive operating leverage begin to happen in Europe as well. Although with the social priorities of Europe, we might not have the same level of earnings potential.

The non-operating earnings in our income statement for the second quarter $1.7 million are the gain on the sale of the deflection coil business in Europe. Most of the cash for this sale was received in the fall of 2003 and we were awaiting until the customer agreed that the new owner had met the production specifications before we could consider the sale finalized. We received the customer approval during the second quarter and booked the gain, that equates the $0.5 per share. Our effective tax rates for the quarter was 25% lower than the statutory rate because of the favorable outcome of a prior year tax matter. Net income from continuing operations was $5.6 million for the quarter or $0.22 per share including $0.5 from the gain on the sale of the European asset.

As you all probably aware we completed the sale of certain assets of our North American communication business on June 1st. We sold certain equipment for $35 million and about $47 million of inventory to Superior Essex and Superior took over global contracts with major telecommunications customers. We realized the gain of $3 million on the sale of these assets.

There is an additional payment are up to $10 million from Superior that we expect to receive in spring 2005, depending on the successful transitions of certain customer relationships. We originally stated that the total purchase price adds up to $95 million. 85 million in cash and $2 million deferred.

The cash portion of the price was actually $82.1 million. Debit cost we sold more products to customers prior to the closing date than we had expected. So we receive value for the difference in the form of customer revenue. There may still be adjustments and corrections to the final inventory, resulting in the true up of the final price pay. The loss from the discontinued operations was $5.8 million in the quarter compare with the last from the same operation in a year ago quarter of $1.3 million.

We are making the remaining equipment available to our other operations Belden CDT and will auction whatever is lost that we don't need. We expect the sell the real estate in Phoenix for $15 to $ 20 million. Turning to an analysis of revenue by geographic area, the following information is based on the continuing operations only.

The United States and Canada accounted for 59% of first quarter revenues compared with 58% a year ago. US and Canadian sales worth 22% higher than they were a year ago and less than half of 1% of that increase came from the Exchange rate for the Canadian dollars. Europe made up 31% of the quarters revenues compared with 30% a year ago and European sales were up 24% year-over-year in dollar terms and up14% excluding the currency effect due to a very strong increase in communication sales.

The rest of the world primarily Asia pacific and Latin America were essentially flat year-over-year and made up 10% of our sales for the second quarter of 2004 compared with 12% a year ago.

Sales in Asia were lower because last year some of the deflection coil sales from Europe went into Asia and that product is now discontinued. Sales increased in the Latin America and the Middle East approximately off setting the lower sales in Asia.

Now turning to our balance sheet and cash flow. Cash flow from operations including the discontinued operations was an inflow of $3.7 million. Belden's depreciation and amortization for the quarter was $5.7 million and capital expenditures were $1.6 million in the second quarter and $3.5 million year-to-date. With the influx of cash from the sale of the North American communications asset Belden's cash stood at 168.9 million on June 30th compared with $95 million at December 31st 2003.

We will pay down the current portion of Belden's long-term debt on September 1st $64 million. We calculate net debt, debt less cash as a percentage of total capitalization's to illustrate how far we could reduce our leverage if we were to prepay the notes. Net debt, the total cap is now just 10% compared with about 33% one year ago. The ratio of net debt to EBITDA from continuing operations is now less than one. So the balance sheet is in the best shape in years.

Now a few comments about the post merger company Belden CDT. Even though CDT was the legal acquirer, since Belden shareholders own more than 50% of the company, Belden's financials will be the historical financials of the combined company and the assets of CDT will be forwarded into Belden balance sheet. Belden CDT will begin adding legacy CDT operating results with legacy Belden results effective with the merger date, July 15th.

Belden CDT will report on a calendar year basis, our third quarter will have the full quarter of the legacy Belden results and 11 out of 13 weeks of CDT's results. We expect to increase CDT's net assets by about a $150 million which reflects the excess of the market value of CDT's outstanding shares compared with the net booked value of its assets.

We are still in the process of assigning values to a range of CDT's tangible and intangible assets and liabilities. The accounting rules require that we assign values and lives to various categories of intangible assets such as patents, sales contracts, customer relationships and backlog, which we then amortize over those estimated lives.

Some identifiable intangible assets such as backlog in contracts can have short lives resulting in a fairly rapid amortization period. While other intangibles like patents and customer relationships may have estimated lives and therefore amortization periods of several decades. CDT's property plant and equipment values will be adjusted to current replacement cost or fair value at today's to be sold and the newly assigned values will be amortized over their estimated lives.

We are required to adjust the value of CDT's inventory to selling price less the cost to complete production and bring the goods to market. That means significantly reduced gross margin as the CDT inventory that was on Legacy CDT at the time of the merger turns which should largely occur during the third quarter.

Liabilities will also be adjusted to fair value which could differ significantly from the historical values in CDT's balance sheets for certain liabilities like pensions and other post retirement benefit obligations. New liabilities may be established in purchase accounting for any plan closing or other expenses incident to the merger. If we were to close the CDT facility, recording that liability would not directly affect income.

However, we would have closed a Belden facility that would result in a charge against earnings, and of course after all the revaluation of tangible and intangible assets and liabilities that has complete, any residual amount of the excess of the fair value of CDT stock will be recorded as goodwill, which is not amortized. We will complete our preliminary allocation during the third quarter and Belden CDT September 30 2004 10-Q will reflect the allocation effective as at the July 15th closing date.

With all this evaluation work still in process, it is difficult to estimate our depreciation and amortization expense going forward. But if I may give you our wide range, our best estimates is that depreciation and amortization for the second half of 2004 will be between $20 and $25 million. Capital spending will be much less than depreciation. We expect capital spending to be in the range of $10 to $11 million in the second half.

With all the equipment and capacity that we have in Belden CDT, our capital spending should remain well below the levels of depreciation for sometime to come. I would also like to give you some guidance on our effective tax rate going forward.

We expect the effective tax rate for the combined company to be approximately 38% in the second half of 2004. However, because of the significant net operating loss carry forwards, we expect Belden CDT to make only minimal cash tax payments through the remainder of 2004 and 2005. As to Belden CDT's capital structure, we will have debt of about $310 million initially, but after a September 1st payment of $64 million it will be reduced to $246 million of which $110 million is a convertible debenture with interest at 4%.

Remaining debt is privately placed with an average fixed rate of about 7.4%. Belden CDT's initial equity will be about $730 million resulting in a debt-to-total capital of about 30%. In addition Belden CDT will begin on July 16 with about $200 million of cash. I am very comfortable with our strong financial foundation, which should provide a great platform for future growth. I would now like to turn it back to our CEO, Baker Cunningham.

Well, as you can chart from Reece's remarks, we still have a lot of work ahead of us. And that's why our guidance is rather limited. There are just a lot of moving parts right now. Our combined Belden CDT financial organization is working together very well and we have been able to make the first run through combined forecasting process.

Generally our expectation is that market demand will continue at a similar pace to the recent past, which represents a significant year-over-year improvement. Since the third quarter will include a full quarter of Belden sales with only weeks of CDT sales, we expect the total sales in the third quarter will be in the range from $280 to $300 million. In the fourth quarter, sales should be between $310 and $330 million. We expect to report sales in two segments, Networking and Electronics. We estimate that 40% of our sales will be in the Networking segment and 60% in Electronics. That was our earlier estimate back when we announced the merger and its been borne out by the forecasting we have done recently.

Geographically, we expect about 30% of the volume to be in the second half about -- 30% of the volume in the second half will come from Europe. We are moving quickly to achieve the merger synergies. We expect to get $25 million per year of savings, net of certain increase costs within 18 to 24 a month of the merger. We have said that we can get 5 million of that in the second half of 2004. I am pleased to tell you that we are on track to do that. One of the areas where we are achieving the earlier savings is in purchasing. About one third of the total long-term synergies are in the area of purchasing savings.

Our integration team is already achieved $2 million of purchasing savings for 2004. Those savings are flowing already, and they can probably get another million dollars yet this year. Other immediate savings include the elimination of (inaudible) corporate costs, such as salaries and wages, financial reporting, auditing, and other professional fees, where we estimate that we will save over $1 million this year. Those would be obvious and relatively straightforward savings that we tract as soon as the merger became official.

Next issue is, is the adoption of the best practices that we have identified especially in the manufacturing processes. Significant savings have been identified, by project and product line, and these benefits should start flowing in the early part of next year. Finally, we have the more complex projects of facilities rationalization to maximize efficiency and increase asset utilization. These projects are more complicated, because it is a little bit like rebuilding a freeway.

We have to keep the traffic flowing or in our case a productive output flowing while the project is underway. We do not have the luxury as simply closing the freeway or the factory in our case, if we are going to continue to service our customers. And that's particularly true in this time of rising demand. And we will have more specifics on these projects in the coming month.

Well that completes my prepared remarks, now back to you Reece.

Thank you Baker. I would now like to ask the operator Dennis to come back on and remind you of the procedures for asking your questions.

Thank you sir.

(OPERATOR INSTRUCTIONS).

And our first question comes from Steven Fox with Merrill Lynch. Your line is open sir, please go ahead.

Hi, good morning, can you hear me.

Yes Steve, how are you?

Good. Thanks for all the details. I was wondering if I could ask for a little bit more on a couple of issues. First of all on networking cable, can you describe the total global growth in your business, quarter-on-quarter because some of your competitors and distributors sounded a little more optimistic about what was going on in the business recently. Can you just talk about that in more detail?

Yes we in the networking area, as we signaled at the end of the first quarter it felt like there had been some gathering in the channel of inventory that's people were buying ahead of the price increases we had enacted and certain people thought later price increases may continue to forecast where copper was going.

Consequently, we think our sales may lag what a distributor for example may report who is closer to the end-use and does not have that contraction and or expansion and contraction in the channel inventory.

So, it wouldn't surprise us - doesn't surprise us that our sales in the second quarter might lag what the end market demand was conversely the growth we enjoyed in the first quarter may have exaggerated what the end market was. But in total in networking we were up just modestly in the very low single digits and that was partially due to price because certainly we had enacted price year-over-year.

So, in the volume area we were really very flat year-over-year. Sequentially, we were actually down a little bit again reflecting the sales we think that grew in the channel or the inventory sales -- the sales we have to grew inventory in the channel.

You are also saying that North America performed better than Europe. Is that correct?

It did. North America was more in the mid-single digits in terms of its growth year-over-year. Again a portion of that certainly be in price, but they saw more growth than we did in Europe. That's correct.

OK. And then just on the income statement I understand that complexities with purchase accounting. Could you talk a little bit may be I don't know Reece you have a decent hand on SG&A for the combined companies for the next couple of quarters? If not may be just how it's how it's going to trend and then gross margin obviously is more complicated but if you take a look it just the separate businesses, how you would expect gross margin to trend in the next couple of quarters excluding some of the purchase accounting issues?

Yes, again I am going to not be very specific to your question Steve. I think on the SG&A side clearly we think one plus one will be less than two as we merge these two businesses together in SG&A. Baker, spoke to the million plus savings we would anticipate in the second half relative to corporate type cost, all of which should be in the SG&A line. There may be some additional rationalization as well in sales general and administrative costs, as we combine the two businesses.

So, clearly I would expect the savings from the run rate of a two business combined but not really in a position at this stage to give you any more specifics. In terms of gross margin, I think as we look at the North American business where we really enjoyed is, is I made in the comment in the prepared remarks very nice incremental earnings on their sales. I think the gross margins for the legacy Belden for the electronics North American business while we see may be some minimal opportunity for additional expansion and really not forecasting that. Europe is where I would hope to see some improvement in the gross margin and then some of these synergies should help combined Belden CDT as we bring the two together.

But I can't really provide too much specifics in that area, all of which could also be affected a little bit by the allocation. Now the purchase price, which could affect depreciation, that causes in the general gross margin line as well.

Thank you.

Thank you sir.

(OPERATOR INSTRUCTIONS).

From Stifel Nicolaus, it's Jeffrey Beach. The line is open sir. Please go ahead.

Hi, thanks. I have two questions. First can you talk about the trends of businesses a little more specific and you are up where demand is softened not on the communication side that was pretty clear, but on the breakup of the electronics in the some of the end markets and talk about trends and pricing unit volume anything you can to help us a little there and particularly going into the second half of the year.

Yes I think in Europe it's clear that the biggest challenges in networking both in volume and certainly in price. As I mentioned to Steve Fox's comment, we did not see really any unit growth in Europe in networking and continue to find price very difficult to get, in fact, I think in some instances we seen price continued to erode on some of the project type business.

But when you move away from that, we did see some nice trends in our industrial business there and saw also nice trends in our entertainment business there, largely due to the projects such as the Olympic games and the European Football deal, which obviously are kind of one-time events.

So, the underline trend there, I think is still good in CATV and other areas but may be not quite as robust as we saw in the second quarter. So Jeff I think that level of demand in Europe excluding networking were seeing some recovery nowhere near the level that we enjoy in North America but are seeing recovery more in the mid single digit range to may be upper single digit given some of the projects that we enjoyed in the second quarter versus the double digit you know that we saw in the North America.

Pricing outside networking did stick reasonably well, we did put, as Baker said, double digit price increases across all product lines on May 1st throughout Europe and while we are not able to enjoy much of that in networking and the other product lines, it did seem to hold and we saw some nice improvement excluding networking and gross margins sequentially as a result of those pricing increases and this third quarter we, of course, should see the full quarter impact of those May 1 price increases.

So, as I mentioned to Steve Fox's comments, we had hoped to see some gross margins improvement in legacy Belden in Europe based on what I know today.

All right. The other question I had, you talked about increase or the mark-up in CDT's inventories ahead and even though you maybe are working on some, can you give us some idea of the impact there and how long that that negative impact is going to last?

I can indicate that in the S4, we had a preliminary estimate of about $4 million of a step-up in the inventory, which would turn virtually all within you know next 2 to 4 months, so most of that in the third quarter. So, you are looking at a pretty meaningful contraction of the margin in the third quarter, again this is accounting, this isn't cash but the accounting will have it. The 4 million estimate that's in there for, I am not in a position to update it this time, Jeff.

All right, thank you.

Thank you, sir.

(OPERATOR INSTRUCTIONS).

We have one name remaining in roster, Steve Wilson of Russian Time (ph). Please go ahead, your line is open sir.

Thank you. Couple of questions, I was very disappointed to see the lack of earnings leverage in the European Communications business with such a robust revenue gain. Could you just address what happened there and why given fixed clause nature you weren't able to bring more of that to the bottom line?

Yes, fairly simple explanation, majority of that revenue increase we were not able to supply internally. So, we have a relationship with some outside suppliers when we get these kind of quick spikes in demand and we went outside to help support that demand and obviously the incremental margins on that were shared with the supplier of that.

Now with Belden CDT, we have a lot more capacity available to us particularly in the CDT facility that's in the Czech Republic that currently makes telecom products for Deutsche telecom. So our hope would be one of the synergies of this merger is that we could begin sourcing more of these spikes in demand that we periodically get from BT internally and be able to get more of that profit to our bottom line or more that incremental demands to our bottom line profit.

Put differently with that kind of revenue increase, what should you have taken down. You were helpful in saying it was 34, 35% in the North American business?

Yes in over there the gross margins are not as robust you are looking at probably at half that kind of leverage on that business or more in the mid teen.

And then second question just again focusing on Europe, you talked about the difficulty in terms of not only not getting your price increase but price still coming down.

That says two things one either there is something going on in the competitive environment with other players who have a lower cost structure and therefore they can absorb that and still make some money or that there is a number of players who are losing along the lines of the sums that you are and that clearly can be sustainable.

Could you just address you know how that takes place when everyone is facing the same cost pressure of the magnitude that we are seeing?

Yes, I will try to address that. One issue is that they are not seeing exact the same cost increase as we are because of the difference in the currency sets it in dollar terms in a (inaudible) looks like its grown up a lot more than what happened to Euro terms sort of you are totally Euro based, there wasn't quite the same as if you are being dollar based like we are.

Secondly in Europe its so expensive to close down capacity that we have not seen the rationalization of capacity there are as we have in North America such that I believe that we are sourcing to place were people were trying to scramble to fill up your factories because if any increase in demand they are trying to again bank on the leverage.

The practical side of it is that almost all costs are fixed in Europe for a longer period of time and they are here and when you start looking at Europe all of your cost being fixed you have a different view on the benefit of low balling the price if you were to fill up the factory, I think the third factor is I do believe we are seeing a little bit more in-road cable coming up, particularly of data cable coming up of the Far East where they clearly have a lot of cost structures and in Europe more so than we are seeing in the United States.

So I think when you combine all those factors that's what's creates the situation of not being able to get the pricing relief in Europe as the utilization picks up and we kind of eat up this excess capacity that should correct itself to a certain degree and we were certainly hoping that's the case as we go forward.

Just help me because given the heavy nature of materials if the products coming in from Asia, there dollar based economy is paying a dollar based price. So then your original argument of the others are insulated will not apply to them?

True, but they have substantially lower labor costs than either of North American or European producers and that labor -- Dean was measuring the freight issue but you know that may be obviously, when it come down out of the far east they basically cherry pick the most popular item in the shipment, you know, containing low quantities where we expected to supply the entire range and so, that's an issue that we all have to deal with but it is not unusual or new to this particular market. I mean that's sort of standard, almost every product is comes where they manufacture in Far East. But it also expands beyond just direct labor and into some of the indirect labor in other areas.

So, they do have a labor cost advantage and there is a certain part in that market that is very price sensitive particularly on the very standard category, five cables. We have seen that kind of commoditization process go on, kind of repetitively as we moved up the technology scale and data. If you go back two years ago, we saw the exact same thing happened to category three product, category four products, standard category five product.

So, this is just kind of a continuing drama, if you will, if we keep trying to stay a step ahead of the technology curve with a higher check products focussing on now with the higher performance products and you know I think we will continue to do that going forward.

And just one last question, may be you can help us here because of the nature of the calendar. We really have no insight into what's happening on the old CDT side? Are the trends that their operation saw over this overlapping period is the same is yours or for any reason were their experience have been different in the second quarter?

Yes, the trends that we are seeing from the data that's just we have on legacy CDT businesses are very similar both geographically and by products sub-groups as to what Belden has seeing both on volumes as well as in pricing.

Any additional follow up Mr. Wilson?

No, I am done, thanks.

Thank you sir.

(OPERATOR INSTRUCTIONS).

Mr. Reece, Mr. Cunningham, we have no further questions in the queue. I will turn the call back over to you for any additional or closing remarks, gentlemen.

Well thank you and I would like to thank all of you for joining us today on the first Belden CDT earnings conference call.

We are sincerely appreciative of your interest in Belden CDT and if you have any follow up questions, feel free to give either D. Johnson or myself a call as we would certainly be happy to try to clarify any confusion, which you might have.

Thank you and have a great day.

Thank you, sir. This concludes Belden Wire and Cable Company's second quarter earnings release conference call.

Thank you all for your participation. Have a great day.