ST. LOUIS, Jun 6 /PRNewswire-FirstCall/ -- Belden has entered into a definitive agreement to acquire Trapeze Networks, a leading provider of wireless local area networking (WLAN) equipment and management software, for $133 million in cash. The acquisition builds on Belden's market-leading position as a complete signal transmission solutions provider by adding a recognized leader in the wireless LAN market.
Wireless extends the reach of Belden's physical-layer cable and connectivity products and enables the company to address the growing mobility needs of customers. "Belden's strategic vision is to provide the best signal transmission solutions to our customers regardless of technology," said John Stroup, President and Chief Executive Officer of Belden. "We believe the acquisition of Trapeze Networks uniquely positions Belden to offer our enterprise customers tailored connectivity solutions that benefit from blending the strengths of copper, fiber and wireless technologies. Trapeze Networks Smart Mobile wireless LAN solutions deliver superior performance, security, reliability and management capabilities, making this a highly attractive wireless investment for Belden's future. The acquisition will make Belden the world's largest unified wired and wireless solutions provider and will provide expanded market access for Trapeze Networks' Smart Mobile solutions.
"We believe we are at an inflection point in enterprise wireless LAN expansion, a market that is already growing nearly 25 percent per year, and that wireless connectivity is no longer considered a luxury but is a customer expectation," added Mr. Stroup.
Trapeze Networks, a privately held company based in Pleasanton, California, with 2007 revenues of $56 million, sells its products into healthcare, education, manufacturing, retail, government and other enterprise verticals through OEMs and distribution channels. The Trapeze product portfolio is an end-to-end WLAN system built on a highly scalable and secure wireless operating system running on Trapeze Networks access points and controllers and features the industry's most robust management software capabilities. More than 4,000 organizations around the world have deployed Trapeze wireless platforms.
Jim Vogt, President and Chief Executive Officer of Trapeze, said, "During the past six years, enterprise customers around the world have invested in Trapeze Networks Smart Mobile because they can depend on it for constant connectivity and reliable mobility. The superior performance and cost benefits of our highly acclaimed wireless LAN products have fueled our global growth through distribution and through our OEM relationships with 3Com, Enterasys, Nortel and other large networking companies. Our customers can now be assured of continued product innovation and new capabilities from the combined resources of Belden and Trapeze."
Impact on Belden's Outlook
Because Trapeze Networks sells software as well as hardware and services, the company is required under accounting principles generally accepted in the United States to defer and amortize certain revenues over the lives of contracts until it can establish vendor-specific objective evidence of the fair market value of each separate deliverable. The majority of Trapeze Networks' revenue is deferred and is typically amortized over periods of a year or more. This accounting treatment makes the acquisition more dilutive to Belden's expected earnings in 2008 and 2009 than would otherwise be the case.
John Stroup said, "The acquisition of Trapeze Networks furthers our strategy, and we expect that it will provide a return on invested capital for Belden consistent with or better than that of our successful 2007 acquisitions. We expect that the total dilutive impact of revenue deferral and amortization for 6 months in 2008 to be $0.15 to $0.20 and in 2009 $0.25 to $0.30. Despite this impact, we expect the transaction to be neutral in operating cash flow in 2008 and a positive contributor to operating cash flow in 2009 and beyond.
"The expected dilution from the Trapeze acquisition, including the impact of revenue deferral and the recurring amortization of intangible assets resulting from the purchase, but excluding short-term, nonrecurring amortization, will be in the range of $0.27 to $0.32 in 2008 and $0.25 to $0.30 in 2009," said Mr. Stroup. "We expect that the acquisition will be accretive on a GAAP basis in 2010 and beyond.
"Our outlook for 2008 remains unchanged except for the expected effects of the planned acquisition. Because of the mid-year timing of the closing of this transaction and the deferral of Trapeze Networks' revenue, our expectations for consolidated revenue remain in the range of $2.2 to $2.3 billion. We expect our operating margin to be in the range of 11 to 12 percent, and we are adjusting our expectation for 2008 earnings per diluted share to the range of $3.15 to $3.35."
Conference Call
Belden will host a conference call with investors and analysts at 8:30 a.m. eastern time on Monday, June 9, 2008 to discuss the acquisition. To participate in the conference call, please dial 1-866-304-1238 or 1-913-312-6650 (no passcode is required). To listen to the Webcast, please go to http://investor.belden.com/MediaList.cfm. A slide presentation supporting the conference call will be available within the Webcast and will be posted at investor.belden.com. A telephonic replay of the conference call will be available for a limited time at 1-888-203-1112 with the passcode 4537617.
Forward Looking Statements
Statements in this release other than historical facts are "forward looking statements" made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on forecasts and projections about the industries served by the Company and about general economic conditions. They reflect management's beliefs and expectations. They are not guarantees of future performance and they involve risk and uncertainty. The Company's actual results may differ materially from these expectations. Some of the factors that may cause actual results to differ from the Company's expectations include demand for the Company's products; the cost and availability of materials including copper, plastic compounds derived from fossil fuels, and other materials; energy costs; the Company's ability to integrate successfully the acquired businesses; and other factors. For a more complete discussion of risk factors, please see our Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on February 29, 2008. Belden disclaims any duty to update any forward looking statements as a result of new information, future developments, or otherwise.
About Belden
Sending All the Right Signals -- from industrial automation to data centers, from broadcast studios to aerospace, from cutting-edge wireless communications to consumer electronics, Belden people are committed to delivering the best signal transmission solutions in the world. Our 8,000 associates worldwide work in copper cable, fiber, wireless technology, connectors, switches and active components to bring voice, video and data to your mission-critical application. With 2007 revenue of $2.0 billion, Belden has manufacturing capability in North America, Europe and Asia. To obtain additional information contact Investor Relations at 314-854-8054, or visit our website at http://www.belden.com/.
About Trapeze Networks
Trapeze Networks is a leading provider of enterprise wireless LAN equipment and management software. Trapeze was the first company to introduce NonStop Wireless -- delivering unmatched reliability to the enterprise wireless LAN and its solutions are optimized for companies requiring mobility and high bandwidth such as healthcare, education, and hospitality. Trapeze delivers Smart Mobile(TM) -- providing scalable wireless LANS for applications such as Voice over Wi-Fi, location services, and indoor/outdoor connectivity.
From: Belden Dee Johnson Director, Investor Relations and Corporate Communications 314.854.8054
