Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
We design, manufacture, and market signal transmission solutions, including cable, connectivity and active components for mission-critical applications in markets ranging from industrial automation to data centers, broadcast studios, and aerospace.
We consider revenue growth, operating margin, cash flows, return on invested capital, and working capital management metrics to be our key operating performance indicators.
Trends and Events
The following trends and events arising during 2009 have had varying effects on our financial condition, results of operations and cash flows. Global Restructuring Activities
In 2008, we announced our decision to further streamline our manufacturing, sales and administrative functions worldwide in an effort to reduce costs and mitigate the weakening demand experienced throughout the global economy. In the first six months of 2009, we continued to implement our plan to streamline these functions and recognized severance costs and asset impairment losses of $26.0 million and $26.2 million, respectively, related to these restructuring actions. We continuously review our business strategies and evaluate potential restructuring actions. This could result in additional restructuring costs in future periods.
Share-Based Compensation
We provide certain employees with share-based compensation in the form of stock options, stock appreciation rights, restricted stock shares, restricted stock units with service vesting conditions, and restricted stock units with performance vesting conditions. At June 28, 2009, the total unrecognized compensation cost related to all nonvested awards was $22.1 million. That cost is expected to be recognized over a weighted-average period of 1.9 years. Product Demand
Many of our customers are distributors that stock inventory for resale. Due to the weakening demand experienced throughout the global economy, many of our customers have lowered their inventory balances. Our revenues are negatively impacted by these inventory reductions. Our customers may continue this trend if overall demand remains weak.
Subsequent Events
In our fiscal third quarter of 2009, we completed the issuance of $200.0 million in senior subordinated notes due 2019 with a coupon interest rate of 9.25% and an effective interest rate of 9.75%. The notes are guaranteed on a senior subordinated basis by certain of our domestic subsidiaries. The notes rank equal in right of payment with our current senior subordinated notes due 2017 and with any future senior subordinated debt, and they are subordinated to all of our senior debt and the senior debt of our subsidiary guarantors, including our senior secured credit facility. Interest is payable semiannually on June 15 and December 15. We used the $193.7 million in net proceeds of this debt offering to repay amounts drawn under our senior secured credit facility.

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We also amended and extended our senior secured credit facility in our fiscal third quarter of 2009. The amendment alters the level of the total leverage ratio covenant, increases the cost of borrowing under the facility, and inserts an asset coverage ratio covenant when the total leverage ratio is in excess of certain levels. The amendment extends the term of the facility from January 2011 to January 2013, and reduces the size of the facility from $350.0 million to $250.0 million through January 2011 and in January 2011 from $250.0 million to $230.0 million until its expiration in January 2013. Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, or cash flows.
Adoption of Recent Accounting Pronouncements Discussion regarding our adoption of recent accounting pronouncements is included in Note 1 to the Consolidated Financial Statements. Critical Accounting Policies
During the six months ended June 28, 2009:
• We did not change any of our existing critical accounting policies from those listed in our 2008 Annual Report on Form 10-K;

• No existing accounting policies became critical accounting policies because of an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and

• There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed.