Belden Inc (BDC) 2010 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Inc conference call. Just 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 Frank Milano. Please go ahead, sir.

Thank you, Clayton. Good morning, everyone, and thank you for joining us today for our fourth-quarter and full-year 2010 earnings conference call. My name is Frank Milano, and I serve as Director of Investor Relations at Belden. With me here this morning is John Stroup, President and CEO of Belden Inc; Gray Benoist, Senior Vice President and Chief Financial Officer; and Henk Derksen, Vice President and Treasurer. John will provide a strategic overview of our business. Gray will provide a detailed review of our financial and operating results. And Hank will be available for the question-and-answer portion of this call.

We issued our earnings release earlier this morning, and we've prepared a slide presentation that we'll be referencing on this call. Both the release and the presentation are available online at investor.belden.com. Please note there is no www in that address, just investor.belden.com.

Turning to slide 2 in the presentation, during this call, 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. Actual results could differ materially from any forward-looking statements that we make. And the Company disclaims any obligation to update this information to reflect future developments after this call. For a more complete discussion of factors that could have an impact on the Company's actual results, please review today's press release and our annual report on Form 10 K.

Turning to slide 3, during this call, management will reference certain non-GAAP financial information. In accordance with Regulation G., we have provided reconciliations of the most closely associated GAAP financial information to the non-GAAP financial information we communicate. Those reconciliations are in the appendix of the presentation, and have been posted separately to the Investor Relations section of our website.

We will limit this morning's call to one hour, which will include time for you to ask questions. During the Q&A portion of this call, please limit your questions to one primary and one follow-up question to enable others in the queue to participate in the discussion.

I will now turn the call over to our President and CEO, John Stroup. John?

Thank you, Frank, and good morning, everyone. Gray will review our financial results in detail in his portion of this call. My remarks will focus on our performance relative to our strategic objectives, and I will begin by referencing our non-GAAP financial results.

Please turn to slide 4 in our presentation to review our fourth-quarter highlights. In addition to posting a strong finish to a great year, we strengthened our connectivity and networking product platforms with two acquisitions this quarter, and generated a $44.8 million gain on the sale of Trapeze Networks. Please note that our fourth-quarter non-GAAP results exclude Trapeze Networks, our Coax Connectivity Solutions business, which was formerly known as the Thomas & Betts Communication Products business, and GarrettCom. We felt that excluding all of the partial quarter or stub-period results from each of these three transactions would provide you with the best insight into our financial performance.

Consistent with our performance throughout the year, we executed well this quarter. On both a sequential and year-over-year basis, we grew revenues, expanded operating profit margins, and increased earnings. Turning to slide 5, our strong performance is equally evident in our full-year highlights. I am particularly pleased that we achieved our goal of generating free cash flow in excess of earnings, despite having to fund our receivable balance in a year of extremely strong revenue growth. For the year, we generated $85.8 million in positive free cash flow, and we ended the year with cash and cash equivalents totaling $359 million, an increase of $50 million compared to year-end 2009.

Turning to slide 6, let's look at the numbers. Revenue this quarter totaled $419 million, up 7% year-over-year. Eliminating acquisitions and divestitures, and excluding currency effects, organic revenue growth was 12% in the fourth quarter. After adjusting for the impact of increased copper costs, and fewer days in the quarter than prior year, revenue growth was 11%. The gross profit percentage was 29.8% in the fourth quarter, down 90 basis points sequentially and 200 basis points compared to 31.8% in the fourth quarter last year.

Adjusting for the effects of exchange rates and copper prices, and excluding Trapeze Networks from the prior periods, the fourth-quarter 2010 gross profit percentage increased 20 basis points sequentially and increased 90 basis points compared to the year-ago period. These increases reflect several things. First, we benefited from improved operating leverage on higher sales. Second, we benefited from the continued improvement in our portfolio, based on the faster growth rates associated with our connectivity and networking product platforms. And third, we benefited from the ongoing cost savings associated with our Lean Enterprise initiative.

Income from continuing operations per diluted share totaled $0.55 this quarter, up 41% on a year-over-year basis compared to $0.39 in the fourth quarter of last year. Sequentially, income from continuing operations per diluted share improved 28% over the $0.43 we reported in Q3. These results reflect the continued focus and dedication of all our associates. I want to thank everyone at Belden for their contributions to this quarter's results, and for consistently delivering strong results throughout the year.

We have made remarkable progress this past year by strengthening our portfolio, completing our restructuring, and accelerating our sales and marketing efforts through the global deployment of our Market Delivery System. For more than 100 years, Belden has built its reputation by delivering solutions in demanding applications where reliability, performance, and ease of deployment are critical to our customers' success. Now, having positioned Belden as the technology leader in signal transmission, with the capability of solving customers' end-to-end requirements for high-bandwidth solutions, I am confident that the next chapter in our journey will be characterized by continued strong financial performance and record-breaking results as the economy improves and we continue to capture share.

Please turn to slide 7 to review our fourth-quarter revenue mix. We have adopted the year-over-year comparison format that we used in our December Investors Day presentation. And I will focus my remarks on the three pie charts on the left-hand side of the slide. The consistency in these results reflect the strength in our business, and enhances the predictability of our quarterly results. Revenue by product group clearly reflects the quality of our portfolio. Connectivity increased to 13% of our revenue, with year-over-year organic revenue growth up 30% in our Connectivity business this quarter. This performance is consistent with the strong growth trend we have witnessed in Connectivity throughout the year. Total Connectivity revenue was approximately $55 million this quarter.

Networking revenue was 14% of our total, and increased 8% organically year-over-year. We continued to make strong progress in North America and Asia, with organic growth rates of 19% and 34%, respectively. And we expect the combination of our Hirschmann and GarrettCom industrial networking products will create opportunities for us in additional end markets, such as power transmission and distribution. Total Networking revenue this quarter was approximately $60 million.

Cable revenue was 73% of our total this quarter, at more than $310 million, an increase of 10% compared to the fourth quarter of 2009. Organic growth was 11%. Strong growth in the Americas drove this quarter's overall performance, and we attribute our domestic strength to improved end markets and the successful execution of our share-capture programs. With the overall improvement in the US economy, our fourth-quarter growth rate in the US was 15%.

In addition, we are optimistic that the recent strength in the monthly Architectural Building Index, published by the American Institute of Architects, will translate into stabilization in our enterprise end markets. The ABI is a forward indicator of non-residential building contracts that should translate into our results after about 8 or 9 months. And we look forward to eliminating this headwind at the end of 2011.

Looking at revenue by geography, for the second time this year, our revenue in Asia exceeded that of Europe. This performance reflects our established presence in China, and our broad exposure to other emerging markets in the region. When you combine the revenue we achieved in Asia with the 5% from other emerging markets, you can see that over 0.25 of our portfolio benefits from participation in the fastest growing economies around the world. As we indicated at our Analyst Day event in December, we continue to actively pursue growth alternatives in Brazil and India. As a result, our outlook remains positive for emerging markets to continue to serve as a growth catalyst for Belden in the years ahead.

Looking at revenue across our vertical end markets, our Industrial segment represented 51% of our revenue in the fourth quarter of 2010. Industrial revenue growth was 18% this quarter, reflecting both the strength and reputation of our global brands, and the successful integration of our sales force. Despite having to deal with a market that has not yet recovered, our Enterprise business grew 16% this quarter, a testament to the effects of our market delivery system.

Our Broadcast business, which grew 25% this quarter, will benefit from the acquisition that we completed in the fourth quarter, which we now refer to as Coax Connectivity Solutions. The Belden brand is well-established and highly recognized in several sub-segments within Broadcast, including the professional broadcast market where we have consistently been selected for televising the Olympics, the World Cup games, and other major sporting events.

That completes my prepared remarks. I will now turn the call over to Gray so that he can discuss the quarter's results in further detail. Gray?

Thank you, John, and good morning, everyone. This is Gray Benoist, and I am Belden's CFO. I will begin my comments today with our GAAP net income and EPS results, coupled with a discussion of our reporting of continuing versus discontinued operations. Followed by a review of our GAAP results from continuing operations, and then our non-GAAP results. In addition, I will review our segment results, the balance sheet, our cash flow performance, and I'll close with a final review of our global restructuring programs. If I could have you please turn to slide 8.

Fourth-quarter GAAP net income was $56.4 million, or $1.17 per diluted share. We have applied GAAP treatment of discontinued operations to the current and retrospective results of our Wireless segment as a result of the disposition of Trapeze Networks. Our agreements with the purchaser, Juniper Networks, grants Belden a royalty pre-license to use Trapeze wireless technology in perpetuity. And our plan to develop and market wireless solutions for industrial end-markets remains a significant element of our strategy.

From an accounting perspective, however, the materiality of our future industrial wireless plans, when measured relative to Belden's existing businesses, was not deemed to meet the significant continuing involvement test required under GAAP for the Wireless segment to be reported as continuing operations. As such, our reporting of continuing operations this quarter and throughout 2011 will exclude Trapeze's historical results.

It is interesting to note that the Wireless segment earned $0.02 per diluted share on an after-tax basis in the fourth quarter, reported as discontinued operations in our consolidated statement of operations. Additionally, as John commented, the fourth-quarter earnings benefited from the gain on the sale of Trapeze Networks of $44.8 million after-tax, or $0.93 per diluted share.

If I could have you turn to slide 9, fourth-quarter GAAP revenues were $425.2 million. Revenues exclude Trapeze, as just discussed, as those revenues are now accounted for within discontinued operations. And our fourth-quarter revenue includes revenues from the stub periods related to the acquisition of Coax Connectivity Solutions and GarrettCom. In summary, GAAP revenue increased [7%] sequentially and 13% year-over-year.

Our GAAP results include the following four nonrecurring items. First, an $8.9 million non-cash IT system asset impairment charge, which reflects our decision to alter our approach on the use of contact relationship management tools combined with a more patient approach to the rollout of future ERP systems across the enterprise. Second, other non-cash asset impairments totaled $7.7 million, largely reflecting mark-to-market adjustments for real property. Third, a $6.8 million charge associated with the one-time purchase accounting effects, post-merger integration costs, M&A related advisory cost, and the stub period operating performance of the just-completed acquisitions.

And finally, fourth, an $800,000 charge to support the completion of the final earn-out provisions of previously announced acquisitions, and final costs associated with the closure of one of our two manufacturing locations in Leominster, Massachusetts. We have discussed both the earn-out and the Leominster restructuring in previous quarters. These four items have been excluded from our non-GAAP operating income. A full reconciliation of GAAP to non-GAAP results is provided in the appendix of today's slide presentation, and has been posted separately to the Investor Relations section of our website.

If I could have you please turn to slide 10. As John indicated, due to the inherent complexity of stub-period financial data, our fourth-quarter 2010 non-GAAP financial results exclude Trapeze and our acquisitions of Coax Connectivity Solutions and GarrettCom.

Non-GAAP external revenues were $418.6 million, an increase of 7% compared to $389.5 million in the fourth quarter of 2009. Foreign currency translation was unfavorable on a year-over-year basis by $6.2 million, reflecting the decline in the euro with a partial offset from the strengthening of the Canadian dollar and the Chinese yuan. On a sequential basis, results benefited from a strengthening of all major currencies against the US dollar, the euro in particular, which resulted in favorable currency translation of $7.1 million. Year-over-year revenue growth when adjusted for acquisitions, divestitures and foreign exchange differences was 12%.

John has already commented on the drivers for gross profit margin expansion and the effects of rising copper costs, so I will focus our discussion with respect to operating expenses. SG&A expense was $73.3 million, or 17.5% of fourth-quarter revenue, up 30 basis points sequentially and down 70 basis points year-over-year. Excluding divestitures, SG&A expense was up 90 basis points sequentially and up 20 basis points year-over-year.

Excellent operating performance this quarter enabled the acceleration of some incremental strategic investments in our Market Delivery System talent management and Lean Enterprise initiatives during the quarter. As we've indicated in previous calls, we opportunistically approve strategic spending during strong quarters in an attempt to match incremental investment to incremental funding. R&D expense was $10.9 [million], or 2.6% of revenue, down 100 basis points sequentially and down 150 basis points year-over-your. Excluding divestitures, R&D expense was down 10 basis points sequentially and down 50 basis points year-over-year.

The full-year tax rate was 20%. The lower full-year effective tax rate reflects a number of favorable outcomes, including -- we benefited in the US from the extension of the R&E tax credit and certain international tax provisions that were part of the tax legislation passed by Congress and signed by the President in December. We recorded positive returns of [provision] adjustments to tax expense associated with the completed filing of our US and several foreign tax returns. And we were able to record an aggregate favorable reduction in tax reserves associated with the expiration of the statute of limitations in several tax jurisdictions. For 2011 forecasting purposes, we suggest a 28% effective tax rate, which is included in our guidance update that John will address shortly.

If I could have you turn to slide 11, we'll now discuss a few of the balance sheet highlights. Cash and cash equivalents increased $63 million sequentially, to $358.7 million as of December 31, 2010. In addition to our strong cash position, we have $218 million available under the revolving credit facility. Together, and under the Company's general operating cash requirements, we have approximately $450 million in available liquidity to support strategic investments. That principle was unchanged at $550 million at year-end, and our leverage ratio improved this quarter to 2.43 times, now slightly favorable to our targeted long-term ratio of 2.5 times. Interest expense totaled $10.9 million, and our interest coverage ratio was 4.3 times in the fourth quarter. This compares to interest coverage of 4.4 times in the third quarter and 3.7 times in the fourth quarter of 2009.

Turning to slide 12, I'm going to discuss our segment results. In our Americas segment, external revenues were $242.3 million, affiliate sales were $12.3 million, and total revenues were $254.6 million. Excluding affiliate sales, fourth-quarter external revenues increased 4% sequentially and increased 18% year-over-year. The fourth-quarter non-GAAP operating income was $38.7 million, or 15.2%, which was down 100 basis points sequentially and 120 basis points year-over-year. Please note, although the results were excluded from our non-GAAP financial information we're sharing today, we are reporting both Coax Connectivity Solutions and the GarrettCom acquisition as part of our Americas segments.

In our EMEA segment, external revenues were $92.7 million, Affiliate sales were $23.1 million, and total revenue was $115.8 million. Excluding affiliate sales, fourth-quarter external revenues increased 3% sequentially and 3% year-over-year. Fourth-quarter non-GAAP operating income was $17.9 million, or 15.5%, which was down 150 basis points sequentially but up 40 basis points year-over-year. The impact of FX and higher sequential outsourced R&D spending reduced operating margins by approximately 130 basis points in the segment on a sequential basis.

In our Asia-Pac segment, both external revenues and total revenues were $83.7 million in the fourth quarter. Revenues increased 13% sequentially and increased 6% year-over-year. Fourth-quarter non-GAAP operating income in Asia was $12 million, or 14.4%, sequentially flat compared to Q3 and an increase of 100 basis points year-over-year. Asia-Pac benefited from a strong product mix in the quarter, with revenue growth of 20% sequentially and 12% year-over-year in our Belden-branded and Hirschmann-branded products, growth rates at about 2 times the growth in our lower-margin LTK business this quarter.

If I could now have you turn to slide 13, we'll discuss the fourth-quarter cash flow highlights. Cash flow from operating activities was $56.1 million in the fourth quarter. Adjusting for capital expenditures net of proceeds from disposal of tangible items, free cash flow was $47.2 million in the fourth quarter, and $85.8 million for the year. We achieved our goal of free cash flow in excess of net income despite funding nearly $40 million in accounts receivable during the year to support our strong sales growth.

If I could have you turn to slide 14, we'll discuss key performance indicators. Inventory turns increased sequentially to 6.9 turns this quarter. Working capital turns improved sequentially to 10.5 turns, and PP&E turns increased sequentially to 6.1 turns in the fourth quarter of 2010.

Finally, on slide 15, please, let's discuss the global restructuring program. Consistent with our expectations last quarter, full-year 2010 cost savings from our global restructuring programs totaled $56 million. And we anticipate fully implemented annual realized cost savings will be $60 million, with the remaining $4 million benefit expected to be realized during the first half of 2011.

That completes my prepared remarks. I will now turn the call back to our CEO, John Stroup, for a few closing remarks regarding our outlook for both the first quarter of 2011 and the full year ending December 31, 2011. John?

Thanks, Gray. Slide 16 reflects our guidance for the first quarter of 2011, and an increase in our full-year 2011 outlook. We expect first-quarter revenue of $445 million to $450 million, and income from continuing operations per diluted share to be between $0.42 and $0.45. Based on our strong fourth-quarter performance, the increased evidence of a sustainable economic recovery, and recent trends in copper prices, we expect revenue and earnings will increase compared to our prior guidance. We are increasing our full-year 2011 outlook to between $1.85 billion and $1.9 billion. And our outlook for income from continuing operations per diluted share is now between $2.05 and $2.25.

That completes my prepared remarks. I would now like to ask Clayton to open the call to questions.

(Operator Instructions) Anthony Kure with Keybanc.

A couple things. Just going through the regions. First, on the Europe, I think you mentioned something about increased R&D expense in the quarter. If you could just provide a little bit more color on that. And then what the impact might be into 2011, if any.

Opportunistically, Tony, we look for the ability to flex our R&D in Europe. A portion of it is outsourced to third parties, mostly in low-cost, Hungary most notably. And if we're in a situation where we see the opportunity to accelerate some spending, we do so. It's about $1 million, rough and tough, in the European segment for the quarter. And in theory, it is non-recurring, based on what the current positioning of the business is for the quarter. Over the long term, those costs need to be [expended], and it's a timing decision that we make. So, we had the opportunity to do the spending, so we did so.

Okay. Is that impact factored into the first-quarter EPS guidance then?

As we look forward to it, it's a non-recurring expense. So, when we look at first-quarter performance, we tend to have a conservative outlook with respect to our spending levels.

Okay. Switching over to non-resi performance in the fourth quarter from a headwind perspective. Was it overall flat from what you can understand? In other words, was it neutral to your growth performance, or did it still represent a headwind from what you can gauge?

It's not an exact science, of course, but I think that in the fourth quarter, after we look back on it, I suspect that the impact will probably be neutral. I think that we have experienced the bottom in non-res spending. As I mentioned before, our enterprise business was up year-over-year 16% in the fourth quarter. I think the overwhelming majority of that growth was share capture from our team. But I suspect we had either no headwind, or maybe even just a tad of tailwind in fourth quarter. So, our view on that segment has improved significantly from where we were. And it is probably one of the most positive things we have going into 2011 because as you know, we haven't had any help from that end market over the last, almost three years.

Okay. I'm sorry if I didn't catch this, but in the Americas, what would operating margins have been ex-GarrettCom and Coax? In other words, were those two dilutive? I know that's not on the Company total, but it is when you report the segment level. Correct me if I am wrong there.

Yes, you can take a look at the reconciliation between GAAP and non-GAAP, Tony. There you'll find that there was -- I think the number was around $7 million, $7.9 million worth of period expense, the stub periods, associated with the transactions, and fairly significant dilution.

Okay. So, that's a net number from the dollars they would have contributed to profit to what you spent on the restructuring. Is that correct?

And to bring you back to our public statement associated with the two acquisitions, we've stated inside, embedded in our 2011 guidance is about $0.05 of accretion associated with those two transactions.

Okay. Last question on full-year guidance. I think, John, you may have mentioned sustainable economic activity and copper driving the increase on the top line. Could you parse those out at all?

Yes, the improvement in the outlook for earnings is obviously increased confidence by us in terms of the economic environment. So, the increase in EPS is all that. On the top line, we have probably around $40 million to $50 million of increased revenue expected only from the impact of copper compared to the average cost of copper that we were seeing at the fourth quarter versus where it's gone to here recently. So, I think that for the purposes of thinking through the copper piece, it's about $40 million to $50 million of impact. And then of course, the earnings would all be real improvement in economic activity.

Okay. Thank you.

Thank you, Tony.

Shawn Harrison with Longbow Research.

Good morning, everyone. First, a clarification, to make sure I have this correct. What was the non-GAAP SG&A and also R&D for the fourth calendar quarter?

All right. $73 million, I think. The total OpEx for the SG&A and the R&D.

I guess the SG&A and R&D.

The non-GAAP R&D was $10.9 million.

Okay.

And the non-GAAP SG&A was $73 million.

Okay. And how should we expect that to trend into the first quarter, given that you won't have maybe some of the one-time R&D spend, but you will have the inclusion of the two acquisitions in the numbers.

Yes, the inclusion of the acquisitions is as you would expect. There is nothing in their business models that is unfamiliar with respect to their G&A levels, other than the impact of the purchase accounting. When you factor in the amortization of the intangibles, that SG&A looks a little peculiar associated with the amortization of those items. So, our average right now, which is about 20 points to 22 points, and if you're adding $25 million a quarter of revenue relative to the $100 million we outlined for these transactions, we're going to [have] somewhere around $5 million to $6 million of total OpEx, including the amortization of the intangibles on a sequential basis.

Okay. And given that you brought that up -- and this goes into the full-year guidance. I'm assuming that's a GAAP EPS number. So, what will be the amortization of intangibles plus any other associated cost with the two acquisitions for 2011? So, if we want to go on a non-GAAP basis, we can back that out of our models.

Do you want to adjust it for the amortization of the intangibles?

Yes, what would be the amortization? And are there any other costs in early 2011 as well from the M&A?

I think right now we are forecasting -- around $3 million is the amortization of the intangibles. [Doug], do you have that number, for the year? It's about $3 million, is the amortization of the intangibles on both transactions.

Okay. And are there any other one-time costs that will flow through?

We incurred them all in the fourth quarter. As best as I can tell, there's no residuals. And the first quarter should be clean. And that's why the steps that we took. We had a stub period in terms of margin contributions. We had a lot of acceleration associated with the elements we put in place for closing and implementation. We just thought it would be better, Shawn, just to take it out. Let's deal with it when it's clean. And we expect it to be really clean here in the first quarter.

Okay.

Shawn, this is John. The only thing I would just add is, if you think about the OpEx that we ran in the fourth quarter on a non-GAAP basis, that's about what you should expect us to do in the first quarter when you include the impact of the acquisitions. As Gray said, the SG&A expenses of those businesses, given that they're Connector and Networking, they're a little bit higher than Cable. So, I would expect that OpEx as a percentage of revenue in the first quarter would be similar.

Okay, and then just as a brief follow-up, hopefully. On copper, it seems as if you're managing the environment relatively well, although there was some pressure on non-GAAP EBIT margins in the Americas in the fourth calendar quarter. Do you see the environment taking on the price increases that you're putting through the market? I know there's always a little bit of a lag to get everything aligned, but how is pricing in the market versus where you need to see it?

I think it's reasonably good. The only comment I would make is that timing can be a little bit tricky. As you know, we are a FIFO company that has high inventory turns. And therefore, when copper is rising, we see the higher cost in our income statement sooner than other people do, particularly people that have inventory turns at say, half our rate. So, we do sometimes see our competitors a little bit slower to making adjustments to their pricing strategy because their costs don't go up as fast as ours do because of our operating efficiency. But I think if you take that into consideration, I would say that the pricing environment is good and rational, and one that I think we'll continue to manage well.

Okay. And I guess maybe that timing was one of the primary factors in the margin decline sequentially in the Americas in the fourth quarter, or were there other factors?

I think if you look at the margin in the Americas, I think you have two things. One is, you have just the math that you can't overcome, ie, if margin dollars remain constant and you have higher copper prices affecting revenue, and you're going to have an impact, obviously, on your margin percentage. The other thing is that we did make some investments in OpEx in the Americas in the fourth quarter, as well, where we took advantage of the opportunity to forward invest in some more sales and marketing activities to continue to drive share capture. So, I think those are the two things that affected the margin in the Americas.

Thank you very much, Gray and John, and congrats.

Thank you, Shawn.

Matt McCall from BB&T Capital Markets.

Thank you. Good morning, everybody.

Good morning, Matt.

John, you gave some good detail into some of your product categories and even geographies. Can we get into the end markets a little bit, and give me as much detail as you want, maybe by geography, but where are you seeing the most of it? Is there anything jumping out or is it pretty broad-based? Is it any one industry that's doing better, or maybe is surprising you from a level of strength standpoint?

In terms of end-market performance, I would say the stand out really is the Industrial vertical. We're seeing really, really good activity in our Industrial segment. I mentioned that that business is up 18% year-over-year, and that's on a sizable number. That's half of our business globally. It includes really broad-based improvement. We're seeing strong activity in all three categories, Cable, Networking and Connectivity in our industrial space. So, strong end markets, I think, in addition to good share capture activity.

I do think that the enterprise market was at least flat in the fourth quarter and maybe it even improved slightly. We'll have to see how the numbers shake out. But the fact that it's not going down like it had been in the past was a real nice positive change for us. And we saw a really strong activity in our Broadcast segment.Although it's a smaller percentage of our total business, that business was up almost 25%. That does include the impact of the acquisition, of course, but also strong growth.

I would say at this point, we're seeing good activity geographically around the world. The US was very strong. Good activity in most of our end markets. The only area right now that I would say is weak is southern Europe. We are seeing weakness in southern Europe right now, Spain, Italy. Some of those bigger projects that we've seen previously that might be tied to either federal or local funding, transportation, for example. That area is a little bit weak.

Okay. What about the make-up of the businesses? Are you seeing the orders tied to larger projects, and is that helping maybe build a backlog? You mentioned increased confidence was behind the earnings guidance bump. Is it anything from a project perspective, anything larger, backlog building? Help me understand what's building your confidence from December.

Well, our book-to-bill in the fourth quarter was positive, and our order rates through January, we ran another positive book-to-bill through January. And our growth rates in the fourth quarter, I may have mentioned, we did have 4 or 5 fewer days, depending on the geography in the fourth quarter this year than we did the year ago. And we were still able to generate high growth rates. So, I would say that consistency of our order rates are helping our confidence. The optimism that our operating units have right now in most of their end markets is contributing to our confidence, and we're not seeing a lot of variation in order patterns. So, right now, the order book is good and the order rates come in real clean.

And from a project size perspective, any change in what you've seen over the past few months or quarters?

No, I wouldn't say anything that I can point to in terms of size, but it seems to me in conversations with our sales associates and management team, that the confidence level our customers have on projects has improved. Funding is in place, CapEx is no longer being constrained the way it was. And if it's a good project, the likelihood of it occurring is high. And because generally our close rate is so high, the only thing we really worry about is that the project isn't going to happen. And now it seems like good projects are happening.

Very helpful. Thank you.

Thank you.

Gary Farber with CL King.

Yes, good morning. On acquisitions, can you speak to -- I mean your cash balance is growing very nicely. Can you speak to what you're seeing in the market for acquisitions, and how you're thinking about your cash balance?

The environment for acquisitions is still very positive. There are a number of high-quality assets that we've been looking at for some period of time that we think could become available in 2011. As I've mentioned before, the competition of course, is keen for those assets. So, it's important that we have strong relationships with the existing management teams, as was the case with GarrettCom and with the Thomas & Betts acquisition where we have something unique to offer. And as it relates to our cash position, we would of course, be delighted if we could put that cash to work into acquisitions that would be additive to our strategic position.

Connector businesses are of great interest to us, as are networking businesses and emerging markets. We're very active in Brazil and India. We're very active in the connector space, very active in the networking space. And we feel really good about the flexibility we have today, not just our cash position, but with our leverage ratios, as Gray said, where they ought to be, we have just a lot more flexibility to be able to take advantage of those opportunities. So, I'm very optimistic about our opportunities in 2011 on the M&A front.

Right. And then just one more. I don't know how much you've drilled out already on the call on this, but can you speak specifically about what you're seeing in Germany and China as far as opportunities for the Company?

The business in Germany continues to be strong. As we've mentioned before, a lot of our customers are exporting OEMs, and therefore they're benefiting from continued growth around the world. Our Connectivity business, which is largely a German business, not exclusively but the industrial piece is largely German, that business was up 35% year-over-year in the fourth quarter. So, another very strong performance in Connectivity.

Our Industrial Networking business was really strong in China, as well as the Americas. Not as strong in Europe this quarter, and largely because of the weakness in southern Europe I talked about. German business and German activity is still good. China continues to do well. We had a great quarter in our Networking in our Belden-branded products in China. The consumer electronics business for us in the fourth quarter was a little bit weaker than it was a year ago. But as you know, the margins on that business are not as high, so it doesn't have the same impact. I would say our feeling for Germany and China right now is very positive.

Okay. Thanks.

(Operator Instructions) Jeff Beach with Stifel Nicolaus.

Good morning, John and Gray.

Hi, Jeff.

In your discussion before about some of your trends and product lines and geographic markets, you generally described it as broad-based growth, but when I look at year-over-year fourth-quarter and year-to-year growth in EMEA and Asia-Pac, it's not nearly as strong as the Americas. Can you expand a little bit more on the geographic markets, specifically Europe and Asia-Pac, and talk about the pluses and the minuses that are coming together there.

Sure. In Europe, our business was up about 12% year-over-year on an organic basis, and that was led by strength in Connectivity. I mentioned to you before, our Connectivity business was up 30%, 35% globally. Our Cable business in Europe was up about 8% year-over-year. I think that our Cable business was negatively impacted by some correction with our channel partners in the fourth quarter. We had a couple of big channel partners in the fourth quarter that were managing their inventory down, so our POS is stronger than that. That bodes well for 2011.

Our Industrial Networking business in EMEA was actually down slightly, Jeff, in the fourth quarter. It was down about 3% organically. And like I said before, that's predominately weakness in southern Europe, and also some timing of projects. So, I'm not worried about that. I don't view that as a trend that's going to be concerning to us in 2011.

In Asia, our business was up about 6% year-over-year on an organic growth basis, and there was really two pieces to that. The Networking business was up substantially. It was up about 34%. But our Consumer Electronics business, our LTK business, was down year-over-year. It was down about 18% year-over-year. And that to us had more to do with some timing a year ago, as well as some timing this year. Again, it's not a concern to us, but as you think through the consolidated growth rate of the Corporation, those were the big drivers, positive and negative, that contributed to that number.

The organic growth that you just gave for Asia-Pac, that is excluding foreign currency?

The 6% I gave you was the growth rate. If I exclude FX and acquisitions -- pardon me, yes, the 6% is organic growth. If I make an adjustment for days and I make an adjustment for copper, the growth rate in Asia was about flat.

And back on that same number, because I missed it, for EMEA organic growth excluding FX and acquisitions, everything?

That was 12%, Jeff.

Okay. So the year-over-year revenue comparisons in EMEA masked by particularly FX.

Yes.

Okay, and the last thing, you talked about some timing. Can you expand a little bit more on the Consumer Electronics and LTK, and what you see developing out for 2011?

Yes, I think first of all, the fourth quarter of last year had some positive timing. This year, we have fewer days than we did last year, so that's part of the impact. And then also, as our revenue continues to improve as we come out of the recession, we're getting a lot more selective in certain product lines and customers that would have been positive to revenue, but not particularly accretive to earnings. And so our team locally is being a lot more selective about their business. Of course, as we localize more Belden-branded products, and we think about how to use capacity, we're being a lot more selective.

Any thoughts, is there going to be some moderate level of growth this year -- LTK?

Yes, I think so. I think we'll see growth in LTK year-over-year. I think that the growth rates at LTK year-over-year will be high single digit.

That's good. All right, thank you.

Thank you.

Thanks, Jeff.

Mr. Stroup, there are no other questions in queue at this time. Do you have any other further remarks or closing comments?

No, Clayton, thank you. I'd just like to thank everybody for their participation in today's call, and their continued interest in Belden. Thank you.

Good day, everybody.

Thank you, ladies and gentlemen. This does conclude our call for today. You may now disconnect from the call, and thank you for participating.