Belden Inc (BDC) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated conference call. Operator: (Operator Instructions).

I would now like to turn the conference over to Mr. [Matt Trachtenberg], please go ahead sir.

Thank you, Amy. Good morning. And thank you for joining us today for Belden's Fourth Quarter 2011 Earnings Conference Call. My name is Matt Tractenberg, and I am Belden's Director of Investor Relations. With me here this morning are John Stroup, President and CEO, and Henk Derksen, CFO. John will provide a strategic overview of our business and then Henk will provide a detail review of our financial and operating results, followed by question and answer.

We issued our earnings release earlier this morning and we have prepared a slide presentation that we will reference on this call. The press release and the presentation are available online at investor.Belden.com. Please note that there is no www in that web address, just investor.Belden.com. Turning to slide two 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 and 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. During this call Management will reference certain non-GAAP financial information in accordance with Regulation G we have provided a reconciliation of the most closely associated GAAP financial information, to the non-GAAP financial information we communicate.

This reconciliation is the appendix of the presentation and has been posted separately to the Investor Relations section of our website. I will now turn the call over to our President and Chief Executive Officer, John Stroup. John.

Thank you, Matt. And good morning everyone. I am extremely pleased with our performance in 2011. Our fourth quarter results reflect a solid finish to a strong year. I want to thank all of our associates for their commitment and execution of the strategic priorities driving these results.

That includes the global deployment of our Market Delivery System, Lean Enterprise and Talent Management Initiatives. Please turn to slide three in our presentation for a review of our fourth quarter highlights. We executed well this quarter by a variety of measures. Among the most notable is our 159% year-over-year earnings growth.

We also grew revenues year-over-year and continue to buy shares of Belden common stock under our share repurchase program. Please turn to slide four to review the fourth quarter income statement. Revenue this quarter totalled $464.4 million, up 9.2% year-over-year.

Excluding acquisitions and currency effects, organic revenue growth was 3% for the quarter, approximately 1% after adjusting for changes in copper costs and approximately 6% after adjusting for inventory correction by our channel partners and customers. In total currency, copper and changes in channel and customer inventory levels had approximately a $50 million unfavorable impact on revenue sequentially. At $32 million changes in inventory levels was the largest impact.

This was expected but the magnitude was greater than anticipated. Uncertainty in Europe, volatile commodity prices and year end cash flow goals led our customers and channel partners to aggressively reduce inventory levels during the quarter. Moreover, our deliberate approach to shortening manufacturing lead time compounded this effect. Customer interest in Belden products, nonetheless remains strong as evidenced by strong sell-through performance from our distribution partners.

Fourth quarter gross and operating margins were 28.4% and 7.5% respectively. The gross and operating margins include $2.9 million and $7.6 million respectively in non-recurring charges taken during the quarter, primarily for restructuring actions to improve our cost position and flexibility in both Europe and Asia. After adjusting for restructuring, acquisitions, copper and currency, gross margins improved year-over-year by 30 basis points as a result of volume and mix, partially offset by issues in our consumer electronics business.

On the same basis operating margins declined sequentially by 60 basis points as a result of lower volume but partially offset by effective expense control. Turning now to slide five, our strong performance is even more evident in our full year highlights. I am particularly pleased that our earnings from continuing operations per diluted share increased 66% from $1.45 to $2.40 for the year and revenue grew 23% to $1.98 billion for the year, an increase from $1.62 billion in 2010.

Organic growth was 12%, and approximately 8% on a copper adjusted basis, which is at the high-end of our long-term goal of 6% to 8%. Revenue and earnings growth on this scale, especially in today's economic climate, affirms the progress we are making with our market delivery system and business transformation. We also achieved our stated goal of generating free cash flow in excess of net income. For the year we generated $145.7 million in free cash flow, which is 127% of net income and up 70% over 2010.

Turning to slide six to review our fourth quarter revenue mix. Our revenue by product group clearly reflects the richer quality of our portfolio. Total revenue for the connectivity and networking platforms was $142 million for the quarter, or 31% of our total revenue. Compared to the prior year's quarter the percentage of revenue from these two platforms is up 440 basis points. For the fourth quarter networking revenue grew by 31% and connectivity grew 24% year-over-year.

I am exceptionally pleased with the organic growth of these two platforms. Networking grew organically by 22% and connectivity grew by 7%, demonstrating the attractiveness of these product categories, our ability to innovate technically and the quality of our commercial execution. Looking at revenue by geography I am extremely pleased with 16% revenue growth and 6% organic growth in our Americas segment where we generated $297.8 million for the quarter, up from $261.1 million in 2010.

Revenues declined sequentially by 11% due largely to the inventory reductions by customers and channel partners and a decrease in copper prices. However, revenue was also impacted by normal seasonality and some delays in project spending. Our disappointment for the quarter was in our Asia-Pacific segment where our consumer electronics business struggled with a number of external factors including soft demand, competitive price pressures, inflation and short-term non-recurring impact from falling copper costs.

While revenue for the quarter was flat at $83.6 million, operating profit fell $4.6 million year-over-year. These results are clearly unacceptable. With excessive market over-capacity we have completed some restructuring actions and are evaluating our strategic options for remedying the situation. The news is much better in our EMEA Segment, where 11% revenue growth and favorable mix resulted in a 250% increase in operating profit year-over-year. This growth includes networking products that were developed and produced in Europe and sold by our affiliates in Asia and Americas.

In the emerging markets of Brazil, India and China we generated $287 million in revenue for the year, a 29% increase over 2010 and organic growth of 14%. As we have discussed previously, these countries are making significant investments in manufacturing, infrastructure and other key markets served by Belden. Turning now to slide seven for our key performance indicators. Inventory turnover was 6.6 in the fourth quarter, a .3 turn decline year-over-year and a .8 decline sequentially.

This decline is due to weaker than expected demand in December. Working capital turns were 10.5 for the quarter, flat year-over-year and up .8 turns sequentially largely due to improvement in receivables management. Property, plant and equipment turnover, a measure of fixed asset efficiency, was down .8 turns sequentially due to lower volume but up .4 turns year-over-year. That completes my portion of today's call. I will now ask Henk to provide additional insights into our fourth quarter and full year performance. Henk.

Thank you, John. I will start my comments with our operating results followed by an income statement review, a discussion of our results the balance sheet and close with our cash flow performance. Please turn to slide eight. Fourth quarter revenues totalled $464.4 million, up 9.2% year-over-year. Sequentially fourth quarter revenues declined 10.7% due to adjustments in inventory of approximately $32 million, copper prices of approximately $10 million and foreign exchange of $7.2 million.

As John mentioned earlier, our fourth quarter operating results include $7.6 million in non-recurring charges, primarily for restructuring actions taken to improve our cost position and flexibility in Europe and in our consumer electronic business in Asia. In the year-ago period operating results included $24.2 million of non-recurring restructuring and impairment charges, and costs associated with the acquisitions completed during the fourth quarter of 2010.

Excluding the impact of these charges, operating income for the fourth quarter 2011 was $42.5 million or 9.1%, compared to $40.9 million or 9.1% on an acquisition, copper and currency adjusted basis in the year-ago period. Organic revenue growth was 3% on a year-over-year basis. Year-over-year unfavorable currency translation $400,000 and sequential unfavorable currency translation of $7.2 million were due in part to favorable impact of the Chinese yuan and unfavorable impact of the Euro, Canadian dollar and Brazil real.

Acquisitions completed in the past year contributed $26.7 million to our fourth quarter revenues. Gross margins decreased 20 basis points year-over-year and 100 basis points sequentially on acquisition, currency, and excluded impact of restructuring and impairment charges gross margins increased 30 basis points year-over-year and decreased 40 basis points sequentially. Gross margins benefited from favorable mix of 90 basis points and leverage in cost structure year-over-year. However, price pressure in the consumer electronic business in Asia had an unfavorable impact of 40 basis points year-over-year and sequentially.

Fourth quarter SG&A expense was $81.3 million or 17.5% of revenue, an improvement of 50 basis points year-over-year. Sequentially SG&A declined $4.1 million. The year-over-year decline in SG&A expense, as a percent of revenue, demonstrates the operating leverage we have in our business as we continue to make strategic investments in areas aligned with our long-term goals. R&D expense was $13.9 million this quarter or 3% of revenue.

After adjusting for acquisitions, currency and copper, R&D was flat as a percentage of revenue year-over-year and flat in dollar terms sequentially. At $3.4 million for the quarter, amortization of intangible assets increased by $100,000 year-over-year attributable to our recently acquired companies. The effective tax rate for the fourth quarter was impacted by the non-recurring favorable items totaling $5.5 million as a result of favorable jurisdictional mix and tax planning. Adjusted for these non-recurring favorable items and our fourth quarter restructuring actions, the effective tax rate for the fourth quarter was 13.5%.

For the full year, the effective tax rate is 17.6%. For financial modeling of the first quarter and full year 2012, we suggest using a 25% effective tax rate which is the rate we incorporated in our guidance that we will discuss in a few moments. Turning to slide nine for segment revenue mix. As you can see, the Company's portfolio transformation towards a richer mix of combined connectivity and networking revenues continues and was realized most significantly in the Americas on a year-over-year basis with the media segment as the most balanced.

Portfolio transformation is one of the important drivers in achieving our stated multi-year goal of operating profits between 13% and 15%. Turning to slide ten for segment results. We will be discussing fourth quarter results. For full-year-results please refer to the appendix of this presentation. Segment results are reported including the full allocation of corporate administrative expenses. As you may recall from our first quarter call, we changed the reporting of operating income by segment to include the full allocation of corporate expenses.

Cost allocation and the resulting business segment presentation of performance provides a truer picture of the operating profit the Company is delivering through our segments. We believe this alignment of cost to segment will be helpful as a good benchmark to external comparables as well as an indicator of progress towards the accomplishment of our strategic profitability goals. In our Americas segment external revenues totalled $288.8 million, affiliate sales were $9 million and total revenues between $297.8 million. Fourth quarter external revenues increased 16.1% year-over-year and 5.9% on an organic basis.

Sequentially fourth quarter revenues declined 11.2%. Both year-over-year and sequential revenues were impacted by greater than expected adjustments in channel inventory. On a sequential basis, fourth quarter revenues declined by approximately $27 million or 9% due to a channel inventory correction approximately $6 million or 2% due to a decline in copper prices, and $2.9 million as a result of foreign currency. End market demand remains strong as evidenced by our sell-through data.

Fourth quarter 2011 operating income was $33.2 million or 11.2% of revenue, up 460 basis points year-over-year and down 60 basis points sequentially. After adjusting for the effects of the restructuring and impairment charges and costs associated with our Q4 2010 acquisitions, operating income improved 20 basis points year-over-year and declined 90 basis points sequentially. To better position Americas segment for continued growth in emerging markets, we continued our strategic investments most notably in Brazil.

In our EMEA Segment, fourth quarter 2011 external revenues totalled $92.4 million, affiliate sales were $36.4 million and total revenues $128.8 million. External revenues decreased .2% year-over-year and 10.9% sequentially. After adjusting for acquisition, currency and copper, revenue declined .6% year-over-year and 6.1% sequentially. In our connectivity business we were able to make significant improvements in our production cycle times. By reducing cycle times we are now better positioned to service customers with shorter lead times.

However, shorter lead times had a short-term unfavorable impact on fourth quarter revenues of approximately $5 million. The revenues in EMEA's Industrial Networking business grew by 19.3%, largely due to success in commercial execution. Operating income for the fourth quarter 2011 was $20.8 million or 16.1%, which was up 1,100 basis points year-over-year and down 80 basis sequentially. After adjusting for the effects of restructuring and impairment charges, operating income improved 650 basis points year-over-year and to 220 basis points sequentially.

We are very pleased with 19.1 adjusted operating margin for the fourth quarter which represents a third consecutive quarter of record performance. In our Asia-Pacific segment fourth quarter external revenues totalled $83.1 million. Affiliate sales were approximately $500,000 and total revenues were $83.6 million. Fourth quarter external revenues were down .7% year-over-year and 8.5% sequentially.

On a currency and copper adjusted basis revenues declined 6.3% year-over-year and 4.9% sequentially. Fourth quarter operating income was $2.8 million, up 3.3%. Down 550 basis points year-over-year and 440 basis sequentially. After adjusting for the effects of restructuring and impairment charges, operating income declined 600 basis points year-over-year and 300 basis sequentially. Our consumer electronics business with revenues of $36 million was unprofitable by several million in the fourth quarter. We took restructuring actions in the fourth quarter which short-term objective of restoring the business' profitability.

As John stated, these results are unacceptable and we are currently evaluating our strategic options. If you will turn to slide 11, I will begin with our balance sheet highlights. Cash and cash equivalents totalled $382.7 million at the end of the fourth quarter, up $34.5 million from the third quarter and $24 million year-over-year. Working capital turnover was 10.5 turns this quarter, up .8 turns from the third quarter and flat year-over-year.

Our sequential improvement highlights our continued success managing working capital. Inventory turnover was 6.6 turns this quarter, down from 7.4 turns in the third quarter due to weaker than expected demand in December. Year-over-year inventory turnover was down .3 turns. Days sales outstanding was 58 days in the fourth quarter, a three day improvement from 61 days in the third quarter and a four day improvement year-over-year.

In our second quarter earnings call we discussed our focus on accounts receivable collection and are pleased with the progress we made in improving this metric. Based upon our strong current cash position and liquidity available under our unused facility we currently have approximately $630 million of dry powder available to pursue M&A opportunities in combination with the share repurchase program.

Please turn to slide 12 for a few cash flow highlights. Cash flow from operating activities was $85.1 million in the fourth quarter compared to $56.1 million in the year-ago period. Net capital expenditures totalled $18.3 million compared to $8.9 million in the year-ago period. For the full year we generated $145.7 million and positive free cash flow which is 127% of net income and an increase of 70% over $85.8 million in 2010.

Our free cash flow generation funds our strategic initiatives. We have consistently maintained a balanced approach to our use of cash. In 2011 we used $60.5 million in cash to acquire businesses that we believe will bring long-term value to our shareholders. We also returned $50 million to our shareholders in the form of share repurchases and $9.4 million in dividends. As we indicated in second quarter earnings release, our Board of Directors authorized a $150 million share repurchase program.

This program is open ended. In the fourth quarter we purchased approximately 768,000 shares of Belden common stock for $25 million under this authorization leaving $100 million remaining available under this program. That completes my prepared remarks. I would now like to turn this call back to our CEO, John Stroup, for the outlook and his closing remarks. John.

Thank you, Henk. Please turn to slide 13 for our outlook regarding the first quarter and full year 2012 results. Global economic forecasts predict modest growth in the world economy in 2012 which could continue to weaken should the European economic situation deteriorate. We are focusing on our strategic goals including our market delivery system and lean enterprise initiatives which position us to perform in this uncertain environment. We are, therefore, reaffirming our previous outlook for 2012.

We expect our first quarter 2012 revenues to be $445 million to $455 million and income from continuing operations per diluted share to be between $0.48 and $0.53. For the full year 2012 the Company expects revenues to be $1.98 billion to $2.03 billion and income from continuing operations per diluted share of $2.70 and $2.90. That concludes our prepared remarks. Amy, please open the call to questions.

Thank you. (Operator Instructions). Henk Derksen, your first call is from Matt McCall BB&T Capital Markets.

Good morning, Matt.

Good morning everybody. Thank you. Thanks for the detail on the kind of the unfavorable impact in the quarter. I guess I will just focus my question on the $50 million. First, you know, that was a top line impact. What was the EBIT impact, if any, if there was any from those three items you talked about the inventory adjustment, currency and then copper? And then how did that compare to your expectations and then I guess the third part of my one question is what kind of pressure from those items is assumed in your guidance?

Okay. Matt, we had a channel inventory correction of $32 million as I pointed out. The impact EPS impact is about $0.04 and we modeled part of our guidance a $20 million decline. On currency the impact was $7 million unfavorable from Q3 to Q4 with an impact of about $0.04 EPS.

Okay. So those were just to clarify those are the sequential source of pressure?

Yes.

Okay. And then no impact from copper, right?The impact of copper sequentially in Q3 we generated a $519 million was about $10 million. No impact on OP, no impact on EPS.

Okay. And then one follow-up as it relates to the guidance and specifically Asia and I think you called out $4.6 million year-over-year pressure I think the way you referenced it, how should we look at that? Is that the, when you talk about evaluating your options if you evaluate your options is $4.6 million the opportunity or is there something that goes beyond that from a profitability perspective if you make some changes.

So the $4.6 billion is the year-over-year change in operating profit within the business and as Henk mentioned the consumer electronics business was unprofitable this year by $2 million to $3 million in the fourth quarter and the year-ago period it was profitable by about $1 million to $2 million. So almost all of that difference year-over-year is in the consumer electronics business.

So that is opportunity of the things that we're evaluating carefully obviously is what sort of operational maneuvers are available to us, what strategic options might be available to us, but we continue to see significant price pressure from indigenous competitors in an environment where demand is soft and capacity is way in excess of demand. So it's a clear area for us and a clear opportunity for us to improve.

Thank you.

Thank you. Shawn Harrison, Longbow Research.

Hi. Good morning everyone.

Morning, Shawn.

On the restructuring actions, the $7 million in charges this quarter, what is the payback period. Should we see all of that benefits in the March quarter and it sounds as if you may take some additional restructuring action. Will there be any cost in the March quarter as well.

So the benefit for the restructuring actions that we took we're not going to see all of that in the first quarter. A lot of those actions were taken in Europe and of course the payback there is a little bit longer. So we'll get, I think a significant piece of it next year or this current year 2012, probably 75% of the benefit in 2012, but I would say a minor benefit in the first quarter and then, Shawn, you had a second question.

I guess just as part of that restructure question are there going to be,is there additional restructuring cost in this guidance?

So no. The guidance does not reflect any additional restructuring costs. And if we were to do something in any of our businesses and most notably in consumer electronics, it's not clear to us that there would be restructuring costs necessarily to take that action, but if there were, it would be not included in this guidance.

Okay. Then as my follow-up, John, I'm just I guess trying to bridge the revenues for the March quarter, you know, being below I guess where anyone would at least we would have expected getting to the full year. You know how much of this inventory drag continues into the March quarter and maybe just helping us bridge to get to the back half of the year.

Yeah. Let me talk about that. So as we discussed from the third quarter to the fourth quarter there was a $32 million impact from inventory change. In the third quarter we saw a build of approximately $10 million. In the fourth quarter we saw a draw of approximately $22 million. That's the $30 million. Those are the two components.

We think that will be further inventory corrections in the first quarter, although it won't be as substantial as it was in the fourth quarter. So we're expecting that the inventory draw in the first quarter is going to be more like $10 billion to $15 million. So approximately a $5 million hit from inventory correction but that's actually a benefit from the fourth quarter.

So about a $5 million benefit from the fourth quarter to the first quarter. We have normal seasonality in the first quarter. We expect that to be about $12 million. The Euro is a little bit difficult to peg but right now we're expecting that that's going to be negative by about $4 million and we have about $8 million negative impact from Q4 to Q1 from copper. That leaves approximately $10 million of sequential improvement in market share.

Okay. Very helpful.

Thank you and our next question comes from Tony Kure with KeyBanc.

Morning Tony.

Hey. Good morning guys. Just wanted to, and to I'm not sure if you said this, but did you give the organic growth for the cable business ex-copper?

In the fourth quarter our cable business copper adjusted was down 4%.

And that excludes FX also, correct.

That is correct.

Okay.

That's correct. Now, the consolidated performance of the Company was 1% positive and 6% positive after adjusting for the inventory correction and most of the inventory correction was in the cable business.

Gotcha. Okay. And then just wanted to clarify the consumer electronics being $2 million to $3 million unprofitable in the fourth ,did that include the restructuring expense or did that excluded restructuring expense?

It excludes the restructuring expense.

Okay. Okay. So going forward from the consumer side did it worsened during the fourth quarter say relative to the beginning of December when you had your Analyst Day. First of all, is that the case? Second of all, do you, you know, with you retaining your guidance where would you expect to make that up as the year progresses?

So it is true. The December performance in our consumer electronics business was below our expectations and it was really two factors. One is pricing was more difficult than we thought it was going to be and the other issue that we had is that as copper fell we did take an impact , a non-recurring impact from falling copper. So the copper that we purchased was higher priced than the copper inherent in our pricing.

So some of the improvement that we'll see even in Q1 from Q4 is the fact that we don't have that non-recurring impact again in Q1. In terms of our full year guidance we do have some further improvement in our consumer electronics business incorporated into our guidance, and most of that comes in the form of new product growth that has higher margins. We had some of that in the full year this year and it also includes a better expense structure than what we had

Okay. Great. Thanks for the detail.

You're welcome.

Thank you. (Operator Instructions). Your next question is from Jeff Beach of Stifel Nicolaus.

Yes. Good morning John and Henk. Trying to avoid a little bit specific year-over-year comparisons when there's so much going on with copper and currency. Just to look at the general demand across the three geographic markets and maybe getting into a little bit more the product segments can you describe, you know, if the growth trends that are occurring, and what's the strongest areas and what are the weak areas outside of consumer electronics. I figured that out.

Sure, Jeff. So, you know, by far the strongest growth we're seeing continues to be in our networking segment and in the quarter our networking business grew 22% and our networking business grew for the full year at 25%. These are both organic numbers. So we continue to see good performance around the world in our networking business.

Our connectivity business had a good quarter, organically it grew 6.6% and that includes a fairly significant inventory correction with our industrial connector business in Europe. And that business has done a great job of reducing leadtimes. Leadtimes in that business a year ago were at eight weeks. Currently there are somewhere between five and ten days and as a result our customers have proactively reduced their inventory, which is a really good thing, but did have a negative impact in the quarter that was about $5 million impact in the quarter and we've already seen the order rates improve in that business starting in January.

The business that was toughest for us in the quarter was our enterprise business. We had more inventory correction in the enterprise business than any other business, Jeff. Some of that I believe was our distributors building inventory starting in Q2 on concerns of shortages with material as a result of the earthquake in Japan, tsunami and I think that they began to draw inventory down a little bit in Q3 but more aggressively in Q4.

Nonresidential as you know still shows declines. ABI was above 50, but it kind of bounces around so I think that in 2012 growth in the enterprise segment is going to be more difficult, it's going to have to come in the form of share capture. I can say that in January our daily order rate is already about 3% higher than it was in December. That's not typical. And I think that is indicative of that inventory correction that we saw in the fourth quarter.

So I think our view is from an end market point of view, Jeff, that things are shaping up pretty much the way we thought. Obviously you've got this big unknown in Europe that we're watching very, very carefully as Henk pointed out sequentially we took a hit on currency in terms of translation and then our situation with our consumer electronic business is obviously an area that we're putting a lot of attention on as an area of improvement, but the revenue results of the fourth quarter, I think if you don't take the time to understand the details, you could easily come to the wrong conclusion and that's why we have taken the time to make certain you understand the components.

And, again, just looking out at your organic growth targets for 2012. and looking at the geographic markets just describe them within your full year guidance for the Company.

Well, you know, our goal of course is to generates 6% to 8% organic growth. I think that depending on how 2012 shapes up it's possible we're going to be on the lower end of that scale for 2012. But here's how I think about it. I think that our geographies, our Americas business is likely to be in that range of 6% to 8%. I think that our Asia-Pacific business if I put aside the consumer for all that and just talk about our core business in Asia, I think we're going to be north of that 6% to 8%.

And I think EMEA is going to struggle to be within that range. The networking business I think will exceeds the 6% to 8% because of the secular trends, but I think that our cable and connector business is going to struggle to get into that 6% to 8% range given the ecoonomic conditions particularly in the southern part of the continent.

Thank you.

You're welcome.

Next we'll hear from Keith Johnson, Morgan Keegan.

Good morning everyone.

Morning, Keith.

Morning, Keith.

Just a couple questions here. I guess first when you made the comment I think just a few minutes ago about the effect of kind of inventory position relative to selling price in Asia. How much of a dollar effect was that in the fourth quarter?

I'm sorry. Can you ask the question again. I want to make sure I understand the question.

Okay. I think if I understood correctly what you were saying a little bit earlier you had a little bits of a copper effect in Asia where your inventory was I guess built with a higher priced metal and did the selling environment in the fourth quarter was more competitive. Is there a dollar figure with the effects of that?

Yes. It's about $2 million, Keith from Q3 to Q4.

And then on the restructuring charges, is there a way you could just kind of break that out by segment for us? What's the Americas, EMEA and Asia.

Yes, we can do that pretty quickly. Restructuring impact for the EMEA part is $3 million and the Americas is about $600,000 and in Asia-Pacific it's about $1.4 million, in corporate with which gets allocated back it's about $2.6 million.

Okay. And that $7.6 million is all the restructuring plus the impairment charge is that correct?

That's correct.

And then were there any additional higher than expected I guess business development cost for some of the M&A work that was going on during the fourth quarter that we should kind of take into consideration in the results.

So our fourth quarter results did include some M&A expense. There was obviously a fairly high profile events in the fourth quarter for us that included some expenses, but I don't think that they're noteworthy given the fact that we continue to actively pursue other opportunities that we would expect to encourage that in Q1 as well.

Okay. And I guess just final question. When you talk about your first quarter guidance understanding that there is a continued inventory correction effect on your revenue guidance, is that still, are you guys thinking that's still carry over from some of the inventory that was built up like you were saying earlier related to decisions after the earthquake in Japan or are there some other market fluctuations we need to kind of take into effect as we think about rolling into the first quarter, second quarter of 2012?

Well, here's what we think. In the fourth quarter it was pretty clear to us that a lot of our distributors were actively taking their inventory down and we think that was because there was a lot of concern about what was happening in Europe, people didn't want to get caught with too much inventory. Copper was fluctuating significantly. They didn't want to be sitting on copper that was high priced.

There's clearly year-end cash flow goals that companies have and many of our distributors were already doing very, very well through November on their rebate targets. So all those factors we think really drove a lot of the inventory correction in Q4. If people continue to be concerned about Europe, we think inventory in our channel partners will continue to go down in Q1 although it won't be as much as it was in Q4 and, therefore, sequentially is actually slightly favorable.

Okay. Alright. So really the biggest portion of I guess the concern there is still pointing to Europe even when you consider some of the trends you saw in the Americas.

Yes. But remember that any sort of significant downdraft in Europe is going to leak into our parts of the world and I think most of our channel partners recognize that.

Okay. Great. Okay. Good luck. Thanks a lot.

Thank you.

Thank you.

Mr. Derksen, there are no further questions at this time. Please continue.

Thank you everyone. This concludes our call. This concludes our call. We appreciate your interest in Belden and we look forward to talking to you soon.

Thank you, ladies and gentlemen. This concludes our call for today.