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 nine months of 2009, we continued to implement our plan to streamline these functions and recognized severance costs and asset impairment losses of $26.3 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 units with service vesting conditions, and restricted stock units with performance vesting conditions. At September 27, 2009, the total unrecognized compensation cost related to all nonvested awards was $17.1 million. That cost is expected to be recognized over a weighted-average period of 1.8 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. 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.
Recent Accounting Pronouncements
Discussion regarding recent accounting pronouncements is included in Note 1 to the Consolidated Financial Statements.

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Table of Contents

Critical Accounting Policies
During the nine months ended September 27, 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.